File Nos. 33-76190
811-05618
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ( )
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. 12/ (X)
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ( )
Amendment No. 71 (X)
(Check appropriate box or boxes.)
ALLIANZ LIFE VARIABLE ACCOUNT B
-------------------------------
(Exact Name of Registrant)
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
-----------------------------------------------
(Name of Depositor)
1750 Hennepin Avenue, Minneapolis, MN 55403
------------------------------------- ---------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 347-6596
Name and Address of Agent for Service
-------------------------------------
Suzanne J. Pepin
Allianz Life Insurance Company of North America
1750 Hennepin Avenue
Minneapolis, MN 55403
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph(b) of Rule 485
_X_ on July 1, 2000 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Registered:
Individual Immediate Variable Annuity Contracts
CROSS REFERENCE SHEET
(Required by Rule 495)
<TABLE>
<CAPTION>
Item No. Location
-------- --------
<S> <C> <C>
PART A
Item 1. Cover Page. . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Definitions . . . . . . . . . . . . . . . . . . Index of Terms
Item 3. Synopsis or Highlights. . . . . . . . . . . . . Summary
Item 4. Condensed Financial Information . . . . . . . . Appendix
Item 6. Deductions. . . . . . . . . . . . . . . . . . . Expenses
Item 7. General Description of Registrant,
Depositor, and Portfolio Companies . . . . . . The Franklin
Templeton Valuemark
Income Plus Immediate
Variable Annuity
Contract
Item 8. Annuity Period. . . . . . . . . . . . . . . . . Annuity Payments (The
Payout Phase)
Item 9. Death Benefit. . . . . . . . . . . . . . . . . Death Benefit
Item 10. Purchases and Contract Value. . . . . . . . . . Purchase
Item 11. Redemptions . . . . . . . . . . . . . . . . . . Access To Your Money
Item 12. Taxes . . . . . . . . . . . . . . . . . . . . . Taxes
Item 13. Legal Proceedings . . . . . . . . . . . . . . . Not Applicable
Item 14. Table of Contents of the Statement of
Additional Information. . . . . . . . . . . . . Table of Contents of
the Statement of Ad-
ditional Information
</TABLE>
CROSS REFERENCE SHEET (cont'd)
(Required by Rule 495)
<TABLE>
<CAPTION>
Item No. Location
-------- --------
<S> <C> <C>
PART B
Item 15. Cover Page. . . . . . . . . . . . . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . . . . . The Company
Item 18. Services. . . . . . . . . . . . . . . . . . . . Not Applicable
Item 19. Purchase of Securities Being Offered. . . . . . Not Applicable
Item 20. Underwriters. . . . . . . . . . . . . . . . . . Distributor
Item 21. Calculation of Performance Data . . . . . . . . Calculation of
Performance Data
Item 22. Annuity Payments. . . . . . . . . . . . . . . . Annuity Provisions
Item 23. Financial Statements. . . . . . . . . . . . . . Financial
Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered, in Part C to this Registration Statement.
<PAGE>
PART A
THE VALUEMARK(R) INCOME PLUS
IMMEDIATE VARIABLE ANNUITY CONTRACT
ISSUED BY
ALLIANZ LIFE VARIABLE ACCOUNT B
AND
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
--------------------------------------------------------------------------------
This prospectus describes the Valuemark Income Plus Immediate Variable Annuity
Contract with a Fixed Payment Option. The Contract is offered by Allianz Life
Insurance Company of North America (Allianz Life). All references to "we", "us"
and "our" refer to Allianz Life.
The annuity offers the Variable Options listed below, and a Fixed Payment Option
of Allianz Life. Each Variable Option invests in a Portfolio of the
corresponding fund listed below. You can select up to 10 investment choices
(which includes any of the Variable Options and the Fixed Payment Option). The
Fixed Payment Option and one or more of the Variable Options may not be
available in your state.
<TABLE>
VARIABLE OPTIONS:
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Growth Fund
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST+:
Franklin Aggressive Growth Securities Fund
Franklin Global Communications Securities Fund*
Franklin Growth and Income Securities Fund*
Franklin High Income Fund
Franklin Income Securities Fund
Franklin Large Cap Growth Securities Fund*
Franklin Money Market Fund
Franklin Real Estate Fund*
Franklin Rising Dividends Securities Fund*
Franklin S&P 500 Index Fund
Franklin Small Cap Fund
Franklin Technology Securities Fund
Franklin Value Securities Fund
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Templeton Asset Strategy Fund*
Templeton Developing Markets Securities Fund*
Templeton Growth Securities Fund*
Templeton International Securities Fund*
Templeton International Smaller Companies Fund
Templeton Pacific Growth Securities Fund*
USALLIANZ VARIABLE INSURANCE
PRODUCTS TRUST:
USAllianz VIP Diversified Assets Fund
USAllianz VIP Fixed Income Fund
USAllianz VIP Growth Fund
+Effective May 1, 2000, the funds of Templeton Variable Products Series Fund
were merged into similar funds of Franklin Templeton Variable Insurance Products
Trust.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
* The fund's name changed as follows:
CURRENT NAME PREVIOUS NAME
-----------------------------------------------------------------------------------------------------
<S> <C>
Franklin Global Communications Securities Fund Franklin Global Utilities Securities Fund
Franklin Growth and Income Securities Fund Franklin Growth and Income Fund
Franklin Large Cap Growth Securities Fund Franklin Capital Growth Fund
Franklin Real Estate Fund Franklin Real Estate Securities Fund
Franklin Rising Dividends Securities Fund Franklin Rising Dividends Fund
Templeton Asset Strategy Fund Templeton Global Asset Allocation Fund
Templeton Developing Markets Securities Fund Templeton Developing Markets Equity Fund
Templeton Growth Securities Fund Templeton Global Growth Fund
Templeton International Securities Fund Templeton International Equity Fund
Templeton Pacific Growth Securities Fund Templeton Pacific Growth Fund
</TABLE>
<PAGE>
Please read this prospectus before investing and keep it for future reference.
It contains important information about the Valuemark Income Plus Immediate
Variable Annuity Contract with a Fixed Payment Option.
To learn more about the annuity offered by this prospectus, you can receive a
copy of the Statement of Additional Information (SAI) dated July 1, 2000. The
SAI has been filed with the Securities and Exchange Commission (SEC) and is
legally a part of this prospectus. The Table of Contents of the SAI is on Page
22 of this prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference and other information about
companies that file electronically with the SEC. For a free copy of the SAI,
call us at 1-800-542-5427 or write us at: 1750 Hennepin Avenue, Minneapolis,
Minnesota 55403-2195.
THE VALUEMARK INCOME PLUS IMMEDIATE VARIABLE
ANNUITY CONTRACTS:
O ARE NOT BANK DEPOSITS
O ARE NOT FEDERALLY INSURED
O ARE NOT ENDORSED BY ANY BANK OR GOVERNMENT AGENCY
O ARE NOT GUARANTEED AND MAY BE SUBJECT TO LOSS OF PRINCIPAL.
This prospectus is not an offering of the securities in any state, country, or
jurisdiction in which we are not authorized to sell the Contracts. You should
rely only on the information contained in this prospectus or that we have
referred you to. We have not authorized anyone to provide you with information
that is different.
Dated: July 1, 2000.
<PAGE>
Immediate Variable Annuity Prospectus 3
TABLE OF CONTENTS
--------------------------------------------------------------------------------
INDEX OF TERMS 4
SUMMARY 5
FEE TABLE 7
1. THE VALUEMARK INCOME PLUS IMMEDIATE
VARIABLE ANNUITY CONTRACT 12
2.OWNERSHIP 12
Contract Owner/Annuitant 12
Joint Owner/Joint Annuitant 12
Beneficiary 12
Assignment 12
3. ANNUITY PAYMENTS (THE PAYOUT PHASE) 13
Income Date 13
Annuity Payments 13
Assumed Investment Return 13
Annuity Options 13
4. PURCHASE 14
Purchase Payment 14
Allocation of Purchase Payment 14
Free Look 15
VIP Units 15
5. INVESTMENT OPTIONS 15
Transfers 17
Telephone Transfers 17
Voting Privileges 17
Substitution 17
6. EXPENSES 18
Insurance Charges 18
Mortality and Expense Risk Charge 18
Administrative Expense Charge 18
Commutation Fee 18
Premium Taxes 18
Income Taxes 18
Portfolio Expenses 18
7. TAXES 18
Annuity Contracts in General 18
Qualified and Non-Qualified Contracts 19
Liquidations - Non-Qualified Contracts 19
Liquidations - Qualified Contracts 19
Diversification 20
8. ACCESS TO YOUR MONEY 20
Suspension of Payments or Transfers 21
9. PERFORMANCE 21
10. DEATH BENEFIT 21
Death of Beneficiary 21
11. OTHER INFORMATION 22
Allianz Life 22
The Separate Account 22
Distribution 22
Administration 22
Financial Statements 22
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION 22
APPENDIX A - CONDENSED FINANCIAL
INFORMATION 23
APPENDIX B - ILLUSTRATION OF
ANNUITY INCOME 28
<PAGE>
INDEX OF TERMS
--------------------------------------------------------------------------------
This prospectus is written in plain English. However, there are some technical
terms used which are capitalized in the prospectus. The page that is indicated
below is where you will find the definition for the word or term.
PAGE
Annuitant 12
Annuity Calculation Date 13
Annuity Options 13
Annuity Payments 13
Annuity Unit 15
Assumed Investment Return (AIR) 13
Beneficiary 12
Contract 12
Contract Owner 12
Fixed Payment Option 12
Income Date 13
PAGE
Joint Annuitant 12
Joint Owner 12
Non-Qualified 19
Payout Phase 13
Portfolios 15
Purchase Payment 14
Qualified 19
Tax Deferral 18
Total Liquidation Value 20
Variable Option 12
VIP Unit 15
<PAGE>
Immediate Variable Annuity Prospectus 5
SUMMARY
--------------------------------------------------------------------------------
The sections in the summary correspond to sections in this prospectus which
discuss the topics in more detail.
THE IMMEDIATE VARIABLE ANNUITY CONTRACT:
The annuity contract (Contract) offered by Allianz Life provides a means for
investing in an immediate variable annuity Contract in both Variable Options and
the Allianz Life Fixed Payment Option (referred to in the Contract as the "Fixed
Account"). In return for your one time payment, the Contract provides for income
to you and another person (if elected) under a payment plan you select.
ANNUITY PAYMENTS:
When you buy the Contract, you select an Income Date. You can start to receive
regular income from your annuity by choosing an Annuity Option. Under most
Annuity Options, you can choose whether to receive your Annuity Payments as a
variable payout, a fixed payout, or both. If you choose to have any part of your
Annuity Payments come from the Variable Options, the dollar amount of your
Annuity Payments may go up or down based on the performance of the Portfolios.
PURCHASE:
You can buy the Contract with $35,000 or more under most circumstances. You
cannot add to your Contract at a later date (i.e., it is a single purchase
payment contract). Your investment representative can help you complete the
appropriate forms.
INVESTMENT OPTIONS:
You can put your money in the Variable Options and/or you can receive Annuity
Payments from the Allianz Life Fixed Payment Option. Your income will fluctuate
up or down based on the Portfolios' performance. No minimum payment amount is
guaranteed. You can make transfers between the Variable Options. You cannot make
transfers from the Fixed Payment Option to the Variable Options.
EXPENSES:
The Contract has insurance features and investment features, and there are costs
related to each.
Allianz Life deducts a mortality and expense risk charge which is equal, on an
annual basis, to 1.25% of the average daily value of the Contract invested in a
Variable Option. Allianz Life also deducts an administrative expense charge
which is equal, on an annual basis, to 0.15% of the average daily value of the
Contract invested in a Variable Option.
Certain Annuity Options allow liquidations (withdrawals). If you take money out
of the Contract, Allianz Life may assess a commutation fee which is a percentage
of the amount liquidated (withdrawn). If you choose Annuity Options 2 or 4, you
may make a partial liquidation. A commutation fee of 5% in Contract year 2,
reducing by 1% each year until it is 1% for Contract year 6 and thereafter will
apply. If you choose Annuity Option 6, you may make a full or partial
liquidation, a commutation fee of 5% in Contract years 1 and 2, reducing by 1%
each year until it is 1% for Contract year 6 and thereafter will apply.
You currently can make as many transfers as you want each year. Allianz Life may
limit this in the future. However, you will always be allowed at least 6
transfers each year.
There are also annual Portfolio operating expenses, which vary depending upon
the Variable Options you select. In 1999, these expenses ranged from 0.49% to
1.56% of the average daily value of the Portfolios.
Allianz Life may assess a state premium tax charge, which ranges from 0% to 3.5%
of your Purchase Payment (depending upon the state).
TAXES:
Your earnings are not taxed until you take them out. If the Contract is
tax-qualified, the entire payment may be taxable. If you make a partial
liquidation, the earnings come out first and are taxed as income. If you are
younger than 591 1/42 when you take the money out, you may be charged a 10%
federal tax penalty.
ACCESS TO YOUR MONEY:
Generally, you may not make liquidations (withdrawals) from your Contract.
However, under certain circumstances, you may make one liquidation each Contract
year after the Income Date if you selected Annuity Option 2, 4 or 6.
Liquidations made after the Income Date may be subject to a commutation fee. You
may also have to pay income tax and a tax penalty on any money you take out.
DEATH BENEFIT:
If you die before the Income Date and there is no Joint Annuitant, the Contract
will be treated as if it had never been issued. We will return your Purchase
Payment to your estate. If you have chosen an Annuity Option with a Joint
Annuitant and either you or the Joint Annuitant dies before the Income Date, the
Annuity Option will be changed to Option 2 (with 10 years of payments
<PAGE>
guaranteed or 5 years of payments guaranteed if the survivor's life expectancy
is less than 10 years).
INQUIRIES:
If you have questions about your Contract or need more information, please
contact us at:
USAllianz Service Center
300 Berwyn Park
P.O. Box 3031
Philadelphia, Pennsylvania 19312-0031
1-800-792-7198
<PAGE>
Immediate Variable Annuity Prospectus 7
FEE TABLE
--------------------------------------------------------------------------------
The purpose of this Fee Table is to help you understand the costs of investing
in the Contract. It reflects expenses of the Separate Account as well as the
Portfolios.
We have provided "Illustrations of Annuity Income" in Appendix B to show you the
effects of the charges, expenses and investment performance on annuity income.
CONTRACT OWNER TRANSACTION FEES
Commutation Fee*
(as a percentage of the amount taken out [liquidated])
CONTRACT YEAR CHARGE
------------------------
1 5%
2 5%
3 4%
4 3%
5 2%
6 (& thereafter) 1%
*After the first Contract year, you may make one liquidation from your Contract
each year if you have selected Annuity Options 2 or 4. If you have selected
Annuity Option 6, you may make a liquidation once each year beginning in the
first year.
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average daily account value)
Mortality and Expense Risk Charge 1.25%
Administrative Expense Charge .15%
-----
Total Separate Account Annual Expense 1.40%
<PAGE>
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES
(as a percentage of the Portfolios' average daily net assets). See the accompanying fund prospectuses for more
information.
MANAGEMENT OTHER TOTAL ANNUAL
FEES1 12B-1 FEES EXPENSES EXPENSES
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund .63% -- .10% .73%
------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio .75% -- .04% .79%
------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio2 .85% -- .08% .93%
------------------------------------------------------------------------------------------------------------------------
Franklin Aggressive Growth Securities Fund3 - Class 1 .50% -- .22% .72%
------------------------------------------------------------------------------------------------------------------------
Franklin Global Communications Securities Fund - Class 1 .48% -- .03% .51%
------------------------------------------------------------------------------------------------------------------------
Franklin Growth and Income Securities Fund - Class 1 .47% -- .02% .49%
------------------------------------------------------------------------------------------------------------------------
Franklin High Income Fund - Class 1 .51% -- .03% .54%
------------------------------------------------------------------------------------------------------------------------
Franklin Income Securities Fund - Class 1 .48% -- .02% .50%
------------------------------------------------------------------------------------------------------------------------
Franklin Large Cap Growth Securities Fund4 - Class 1 .75% -- .02% .77%
------------------------------------------------------------------------------------------------------------------------
Franklin Money Market Fund - Class 1 .52% -- .01% .53%
------------------------------------------------------------------------------------------------------------------------
Franklin Real Estate Fund - Class 1 .56% -- .02% .58%
------------------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund - Class 1 .73% -- .02% .75%
------------------------------------------------------------------------------------------------------------------------
Franklin S&P 500 Index Fund5 - Class 1 .15% -- .38% .53%
------------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund6 - Class 1 .55% -- .27% .82%
------------------------------------------------------------------------------------------------------------------------
Franklin Technology Securities Fund3 - Class 1 .55% -- .38% .93%
------------------------------------------------------------------------------------------------------------------------
Franklin Value Securities Fund - Class 1 .60% -- .21% .81%
------------------------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund - Class 1 .80% -- .21% 1.01%
------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund4 - Class 1 .60% -- .19% .79%
------------------------------------------------------------------------------------------------------------------------
Templeton Asset Strategy Fund6 - Class 1 .60% -- .18% 78%
------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Fund6 - Class 1 1.25% -- .31% 1.56%
------------------------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund4 - Class 1 .83% -- .05% .88%
------------------------------------------------------------------------------------------------------------------------
Templeton International Securities Fund6 - Class 1 .69% -- .19% .88%
------------------------------------------------------------------------------------------------------------------------
Templeton International Smaller Companies Fund - Class 1 .85% -- .26% 1.11%
------------------------------------------------------------------------------------------------------------------------
Templeton Pacific Growth Securities Fund - Class 1 1.00% -- .08% 1.08%
------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Fixed Income Fund5/7 .50% .25% -- .75%
------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Growth Fund5/7 .65% .25% -- .90%
------------------------------------------------------------------------------------------------------------------------
<FN>
1.Certain portfolios of Franklin Templeton Variable Insurance Products Trust incur a Portfolio Administration Fee. The
Portfolio Administration Fee is a direct expense for the Franklin Aggressive Growth Securities Fund, the Franklin
S&P 500 Index Fund, the Franklin Small Cap Fund, the Franklin Technology Securities Fund, the Franklin Value
Securities Fund, the Mutual Discovery Securities Fund, the Mutual Shares Securities Fund, the Templeton Asset
Strategy Fund, the Templeton Developing Markets Securities Fund, the Templeton International Securities Fund, and
the Templeton International Smaller Companies Fund. Other Portfolios of Franklin Templeton Variable Insurance
Products Trust pay for similar services indirectly through the Management Fee. See the Franklin Templeton Variable
Insurance Products Trust prospectus for further information regarding these fees.
2. Other expenses for the Alger American Leveraged AllCap Portfolio include 0.01% of interest expense.
<PAGE>
Immediate Variable Annuity Prospectus 9
3.The Franklin Aggressive Growth Securities Fund and the Franklin Technology Securities Fund commenced operations May
1, 2000. The expenses shown above for these Portfolios are therefore estimated for the funds' current fiscal year.
4.On 2/8/00, a merger and reorganization was approved that combined the fund with a similar fund of Templeton Variable
Products Series Fund, effective 5/1/00. The table shows total expenses based on the fund's assets as of 12/31/99,
and not the assets of the combined fund. However, if the table reflected combined assets, the fund's Management
Fees, Other Expenses, and Total Fund Operating Expenses after 5/1/00 would be estimated as: 0.75%, 0.02%, and 0.77%
respectively for the Franklin Large Cap Growth Securities Fund; 0.60%, 0.19%, and 0.79% respectively for the Mutual
Shares Securities Fund; and 0.80%, 0.05%, and 0.85% respectively for the Templeton Growth Securities Fund.
5.The Franklin S&P 500 Index Fund, the USAllianz VIP Diversified Assets Fund, the USAllianz VIP Fixed Income Fund, and
the USAllianz VIP Growth Fund commenced operations November 12, 1999. The expenses shown above for these Portfolios
are therefore estimated for the funds' current fiscal year.
6.On 2/8/00, shareholders approved a merger and reorganization that combined the assets of the fund with a similar
fund of the Templeton Variable Products Series Fund, effective 5/1/00. The shareholders of the fund had approved
new management fees, which apply to the combined fund effective 5/1/00. The table shows restated total expenses
based on the new fees and assets of the fund as of 12/31/99, and not the assets of the combined fund. However, if
the table reflected both the new fees and the combined assets, the fund's Management Fees, Other Expenses, and
Total Fund Operating Expenses after 5/1/00 would be estimated as: 0.55%, 0.27%, and 0.82% respectively for the
Franklin Small Cap Fund; 1.25%, 0.29%, and 1.54% respectively for the Templeton Developing Markets Securities Fund;
0.60%, 0.14%, and 0.74% respectively for the Templeton Asset Strategy Fund; and 0.65%, 0.20%, and 0.85%
respectively for the Templeton International Securities Fund.
7.Certain expenses of the USAllianz VIP Funds have been assumed by the Adviser. Had those expenses not been assumed,
total return would have been lower and total fund expenses would have been 3.80% for the Diversified Assets Fund,
3.77% for the Fixed Income Fund, and 3.90% for the Growth Fund.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXAMPLES
o The examples below should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
o The examples assume you invested $1,000 with annual payments based on a 15
year period certain payout under Annuity Option 6 with a 5% Assumed
Investment Return.
o Premium taxes are not reflected in the tables. Premium taxes may apply.
o For additional information, see Section 5 - "Expenses" and the accompanying
portfolio prospectus.
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money (compounded annually) if you surrender your Contract
under Annuity Option 6 at the end of each time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund $66 $87 $98 $137
-------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio $67 $88 $100 $141
-------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio $68 $92 $105 $149
-------------------------------------------------------------------------------------------------------------------------
Franklin Aggressive Growth Securities Fund* - Class 1 $66 $87 $97 $137
-------------------------------------------------------------------------------------------------------------------------
Franklin Global Communications Securities Fund - Class 1 $64 $82 $90 $125
-------------------------------------------------------------------------------------------------------------------------
Franklin Growth and Income Securities Fund - Class 1 $64 $81 $89 $124
-------------------------------------------------------------------------------------------------------------------------
Franklin High Income Fund - Class 1 $65 $82 $91 $126
-------------------------------------------------------------------------------------------------------------------------
Franklin Income Securities Fund - Class 1 $64 $81 $89 $124
-------------------------------------------------------------------------------------------------------------------------
Franklin Large Cap Growth Securities Fund - Class 1 $67 $88 $99 $140
-------------------------------------------------------------------------------------------------------------------------
Franklin Money Market Fund - Class 1 $65 $82 $90 $126
-------------------------------------------------------------------------------------------------------------------------
Franklin Real Estate Fund - Class 1 $65 $83 $92 $129
-------------------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund - Class 1 $67 $87 $98 $139
-------------------------------------------------------------------------------------------------------------------------
Franklin S&P 500 Index Fund* - Class 1 $65 $82 $90 $126
-------------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund - Class 1 $67 $89 $101 $143
-------------------------------------------------------------------------------------------------------------------------
Franklin Technology Securities Fund* - Class 1 $68 $92 $105 $149
-------------------------------------------------------------------------------------------------------------------------
Franklin Value Securities Fund - Class 1 $67 $89 $101 $142
-------------------------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund - Class 1 $69 $94 $108 $153
-------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund - Class 1 $67 $88 $100 $141
-------------------------------------------------------------------------------------------------------------------------
Templeton Asset Strategy Fund - Class 1 $67 $88 $100 $140
-------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Fund - Class 1 $73 $107 $128 $183
-------------------------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund - Class 1 $68 $90 $103 $146
-------------------------------------------------------------------------------------------------------------------------
Templeton International Securities Fund - Class 1 $68 $90 $103 $146
-------------------------------------------------------------------------------------------------------------------------
Templeton International Smaller Companies Fund - Class 1 $70 $96 $112 $159
-------------------------------------------------------------------------------------------------------------------------
Templeton Pacific Growth Securities Fund - Class 1 $69 $95 $111 $157
-------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Diversified Assets Fund* $67 $87 $98 $139
-------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Fixed Income Fund* $64 $81 $89 $124
-------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Growth Fund* $66 $85 $95 $133
-------------------------------------------------------------------------------------------------------------------------
<FN>
*Estimated
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Immediate Variable Annuity Prospectus 11
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money (compounded annually) if your Contract is not
surrendered:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund $20 $55 $84 $134
-------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio $20 $56 $87 $137
-------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio $21 $60 $92 $145
-------------------------------------------------------------------------------------------------------------------------
Franklin Aggressive Growth Securities Fund* - Class 1 $20 $54 $84 $133
-------------------------------------------------------------------------------------------------------------------------
Franklin Global Communications Securities Fund - Class 1 $18 $49 $76 $121
-------------------------------------------------------------------------------------------------------------------------
Franklin Growth and Income Securities Fund - Class 1 $17 $49 $75 $120
-------------------------------------------------------------------------------------------------------------------------
Franklin High Income Fund - Class 1 $18 $50 $77 $123
-------------------------------------------------------------------------------------------------------------------------
Franklin Income Securities Fund - Class 1 $18 $49 $76 $121
-------------------------------------------------------------------------------------------------------------------------
Franklin Large Cap Growth Securities Fund - Class 1 $20 $56 $86 $136
-------------------------------------------------------------------------------------------------------------------------
Franklin Money Market Fund - Class 1 $18 $50 $77 $122
-------------------------------------------------------------------------------------------------------------------------
Franklin Real Estate Fund - Class 1 $18 $51 $79 $125
-------------------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund - Class 1 $20 $55 $85 $135
-------------------------------------------------------------------------------------------------------------------------
Franklin S&P 500 Index Fund* - Class 1 $18 $50 $77 $122
-------------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund - Class 1 $20 $57 $88 $139
-------------------------------------------------------------------------------------------------------------------------
Franklin Technology Securities Fund* - Class 1 $21 $60 $92 $145
-------------------------------------------------------------------------------------------------------------------------
Franklin Value Securities Fund - Class 1 $20 $57 $87 $139
-------------------------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund - Class 1 $22 $62 $95 $150
-------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund - Class 1 $20 $56 $87 $137
-------------------------------------------------------------------------------------------------------------------------
Templeton Asset Strategy Fund - Class 1 $20 $56 $86 $137
-------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Fund - Class 1 $27 $75 $115 $180
-------------------------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund - Class 1 $21 $58 $90 $143
-------------------------------------------------------------------------------------------------------------------------
Templeton International Securities Fund - Class 1 $21 $58 $90 $143
-------------------------------------------------------------------------------------------------------------------------
Templeton International Smaller Companies Fund - Class 1 $23 $64 $99 $155
-------------------------------------------------------------------------------------------------------------------------
Templeton Pacific Growth Securities Fund - Class 1 $23 $63 $97 $154
-------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Diversified Assets Fund* $20 $55 $85 $135
-------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Fixed Income Fund* $18 $49 $76 $121
-------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Growth Fund* $19 $53 $81 $129
-------------------------------------------------------------------------------------------------------------------------
<FN>
* Estimated
</FN>
</TABLE>
See Appendix A - Condensed Financial Information for unit values.
<PAGE>
1. THE VALUEMARK INCOME
PLUS IMMEDIATE VARIABLE
ANNUITY CONTRACT
-------------------------------------------------------------------------------
This prospectus describes an immediate variable annuity contract (Contract) with
a Fixed Payment Option offered by Allianz Life.
An annuity is a contract between you, the owner, and an insurance company (in
this case Allianz Life), where the insurance company promises to pay you (or
someone else you choose) an income, in the form of Annuity Payments. The Annuity
Payments must begin on a designated date that is no later than 60 days after we
allocate your Purchase Payment. This is called the Income Date.
The Contract benefits from Tax Deferral. Tax Deferral means that you are not
taxed on any earnings or appreciation on the assets in your Contract until you
take money out of your Contract.
The Contract is called a variable annuity because you can choose among 27
Variable Options, and, depending upon market conditions, your payments can go up
or down based on the Portfolios' investment performance. The Portfolios are
designed to offer a better return than the Fixed Payment Option. However, this
is not guaranteed. Your payments may go up or down based on the investment
performance of the Portfolio(s) you select.
The Contract also contains a Fixed Payment Option (referred to in the Contract
as the "Fixed Account"). The Fixed Payment Option offers an interest rate that
is guaranteed by Allianz Life. If you select the Fixed Payment Option, your
money will be placed with the other general assets of Allianz Life. Any portion
of your Purchase Payment allocated to the Fixed Payment Option will be
temporarily allocated to the Franklin Money Market Fund on the day we allocate
your Purchase Payment. It will then be allocated to the Fixed Payment Option
when you begin receiving Annuity Payments from your Contract.
We will not make any changes to your Contract without your permission except as
may be required by law. We may, however, add endorsements to your Contract from
time to time.
2. OWNERSHIP
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CONTRACT OWNER/ANNUITANT
You are the Contract Owner and the Annuitant. You, as the Contract Owner, have
all the rights under the Contract. The Contract Owner is as designated at the
time the Contract is issued.
An Annuitant is the natural person on whose life we base Annuity Payments.
JOINT OWNER/JOINT ANNUITANT
If there is more than one Contract Owner, each Contract Owner is a Joint Owner
of the Contract. Joint Owners have equal ownership rights. You both must
authorize those ownership rights unless otherwise allowed by Allianz Life. You
can name a Joint Annuitant. Each Joint Owner must be either an Annuitant or
Joint Annuitant.
IF YOU DIE BEFORE THE INCOME DATE AND THERE IS NO JOINT ANNUITANT, WE WILL TREAT
THE CONTRACT AS IF WE NEVER ISSUED IT AND WILL RETURN THE PURCHASE PAYMENT TO
YOUR ESTATE.
If you die while the Contract is in force, the Joint Annuitant (if not already a
Joint Owner) will become the Contract Owner. On or after the Income Date, if
there is no Joint Annuitant or when the Joint Annuitant dies, the
Beneficiary(ies) will be the Owner(s) of their respective shares.
BENEFICIARY
The Beneficiary is the person(s) or entity you name to receive any death
benefit. You can also name a contingent Beneficiary. The contingent Beneficiary
will receive any death benefit if the Beneficiary is not alive when you and any
Joint Annuitant die. The Beneficiary is named at the time the Contract is issued
unless changed at a later date. Unless an irrevocable Beneficiary has been
named, you can change the Beneficiary or contingent Beneficiary.
ASSIGNMENT
You can transfer ownership of (assign) the Contract at any time during your
lifetime. We will not be liable for any payment we make, or other action we
take, in accordance with the Contract before we receive written notice of the
assignment. AN ASSIGNMENT MAY BE A TAXABLE EVENT.
If the Contract is issued under a Qualified plan, you may be unable to assign
the Contract.
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Immediate Variable Annuity Prospectus 13
3. ANNUITY PAYMENTS
(THE PAYOUT PHASE)
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INCOME DATE
You can receive regular income payments under your Contract as long as you and
any Joint Annuitant are alive on the Income Date. We call the date that your
Annuity Payments begin the Income Date. We ask you to choose your Income Date
when you purchase the Contract. Your Income Date must be the first or fifteenth
day of a calendar month and must not be later than 60 days from the day we
allocate your Purchase Payment.
ANNUITY PAYMENTS
Under Annuity Options 1-5, you may elect to receive your Annuity Payments as a
variable payout, a fixed payout, or a combination of both. Under Annuity Option
6, Annuity Payments will come from the Variable Options only (variable payout).
If you choose a Fixed Payment Option, all of the Annuity Payments will be the
same dollar amount (equal installments). If you choose a variable payout, you
can select from the available Variable Options.
If you choose to receive variable payments, we determine the amount of your
first variable payment based on:
1) your Contract value on the Annuity Calculation Date (no more than 10 days
before the first payment),
2) your age and the age of any Joint Annuitant on the Annuity Calculation Date
(except in Option 6);
3) the Assumed Investment Return (AIR), a benchmark you select, and
4) the Annuity Option you select.
We credit your Contract with a fixed number of Annuity Units for each Variable
Option you select. We do this by allocating the first payment amount among the
Variable Options according to your instructions, and dividing the amount
allocated to each Variable Option by the Annuity Unit value on the Annuity
Calculation Date. The number of Annuity Units in your Contract remains the same
unless you make a liquidation or transfer.
After the first payment, your payments will change based on the change in value
of the Annuity Units credited to your Contract. The amount of each change will
depend on how the Annuity Units in your Contract perform as compared to your AIR
benchmark.
You can choose the frequency of Annuity Payments (for example, monthly,
quarterly, semi-annually or annually).
The SAI contains a discussion of how we calculate Annuity Unit values.
ASSUMED INVESTMENT RETURN
We base your Annuity Payments on the Assumed Investment Return. You can choose
either a 7%, 5% or 3% per year AIR. The 7% AIR is not available in all states
(check with your registered representative for availability). If you do not
choose one, the 5% AIR will automatically apply. If the actual performance
exceeds the AIR you choose, your Annuity Payments will increase. Similarly, if
the actual rate is less than the AIR you choose, your Annuity Payments will
decrease. If you choose a higher AIR, the initial amount of income will be
higher, but income will increase more slowly during periods of good investment
performance and decrease faster during periods of poor investment performance.
ANNUITY OPTIONS
You can choose among income plans. We call those Annuity Options. Except for
Annuity Option 6, once you select an Annuity Option you may not change it.
You can choose one of the following Annuity Options. You can also choose any
other Annuity Option you want as long as Allianz Life agrees to provide it.
OPTION 1. LIFE ANNUITY. Under this option, we will make periodic Annuity
Payments so long as the Annuitant is alive. After the Annuitant dies, we will
stop making Annuity Payments.
OPTION 2. LIFE ANNUITY WITH 5, 10, 15 OR 20 YEAR PAYMENTS GUARANTEED. Under this
option, we will make periodic Annuity Payments so long as the Annuitant is
alive. However, if the Annuitant dies before the end of the selected guaranteed
period, we will continue to make Annuity Payments to the Beneficiary for the
rest of the guaranteed period. If the Beneficiary does not want to receive
Annuity Payments after the Annuitant's death, he or she can ask us for a single
lump sum. The amount of the lump sum payment is described in your Contract.
OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. Under this option, we will make
periodic Annuity Payments during the joint lifetime of you and the Joint
Annuitant. When you die, if the Joint Annuitant is still alive, we will continue
to make Annuity Payments during the Joint Annuitant's life. The amount of the
Annuity Payments we will make to the Joint Annuitant can be equal to 100%,
<PAGE>
75% or 50% of the amount that was being paid when both you and the Joint
Annuitant were alive. You choose this percentage when you apply for the
Contract. The Annuity Payments will end when the last surviving Annuitant dies.
OPTION 4. JOINT AND LAST SURVIVOR ANNUITY WITH 5, 10, 15 OR 20 YEAR PAYMENTS
GUARANTEED. Under this option, we will make periodic Annuity Payments during the
joint lifetime of you and the Joint Annuitant. When you die, if the Joint
Annuitant is still alive, we will continue to make Annuity Payments during the
life of the surviving Annuitant. The payments will be 100% of the amount that
was being paid when you were both alive. If, when the last death occurs, we have
made Annuity Payments for less than the selected guaranteed period, we will
continue to make Annuity Payments to the Beneficiary for the rest of the
guaranteed period. If the Beneficiary does not want to receive Annuity Payments,
he or she can ask us for a single lump sum. The amount of the lump sum payment
is described in your Contract.
OPTION 5. REFUND LIFE ANNUITY. Under this option, we will make periodic Annuity
Payments during your lifetime. The last Annuity Payment will be made before you
die. If the value of the Annuity Payments made is less than the value applied to
the Annuity Option, then the Beneficiary will receive a refund as set forth in
the Contract.
OPTION 6. SPECIFIED PERIOD CERTAIN ANNUITY. Under this option, we will make
periodic Annuity Payments for a specified period that you choose. The period can
be from 5 to 30 years (you must use whole numbers of years). If at the time both
you and any Joint Annuitant die, we have made Annuity Payments for less than the
selected guaranteed period, we will continue to make Annuity Payments to the
Beneficiary for the rest of the guaranteed period. This option may not be
available in all states. This option can only be elected as a variable payout.
After the first Contract anniversary, you can exchange an Annuity Option 6
payout for a payout under Annuity Options 1-5. You can do this if the Total
Liquidation Value of your Contract is at least $25,000. Furthermore, if you own
a Non-Qualified Contract you must be 591 1/42 or older. If you own a Qualified
Contract you may make the exchange after the later of your reaching age 591 1/42
or 5 years from the date of the first Annuity Payment and prior to the year in
which you reach age 701 1/42. A new Contract will be issued to you for your
existing Contract. You must return your existing Contract to us. The Contract
Owner/Annuitant and Joint Annuitant (if any) must be the same under both
Contracts.
4. PURCHASE
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PURCHASE PAYMENT
The Purchase Payment is the money you put into the Contract. The minimum payment
Allianz Life will accept is $35,000. The Contract is a single payment Contract.
This means that you cannot add money to your Contract after you buy it. If you
buy more than one Contract, the Purchase Payment for each Contract does not need
to be $35,000 if the average payment for each Contract is $35,000 or more. When
you make your Purchase Payment, we will deduct any premium taxes that you owe
before we allocate it to the Variable Options.
This product is not designed for market timers.
ALLOCATION OF PURCHASE PAYMENT
When you purchase a Contract, we will allocate your Purchase Payment to one or
more of the Variable Options you have selected. If you want any portion of the
Purchase Payment to be allocated to the Fixed Payment Option, we will
temporarily allocate it to the Franklin Money Market Fund. It will be moved to
the Fixed Payment Option on the day we calculate your first Annuity Payment
(Annuity Calculation Date). The Annuity Calculation Date will be no more than 10
business days before the Income Date. We ask that you allocate your money in
whole percentages. Each allocation must be at least 10%.
Currently, you may invest in 10 investment choices at any one time (which
includes the Variable Options and the Fixed Payment Option). We may, in the
future, limit the number of Variable Options that you may invest in at one time
(except in Texas).
Once we receive your Purchase Payment and the necessary information, we will
issue your Contract and allocate your Purchase Payment within 2 business days.
If you do not give us all of the information we need, we will contact you or
your registered representative to get it. If for some reason we are unable to
complete this process within 5 business days, we will either send back your
money or get your permission to keep it until we get all of the necessary
information. Our business day closes when the New York Stock Exchange closes,
which is usually at 4:00 p.m. Eastern Time.
<PAGE>
Immediate Variable Annuity Prospectus 15
FREE LOOK
If you change your mind about owning the Contract, you can cancel it within 10
days after receiving it (or the period required in your state). You will receive
back the value of your Contract on the day we receive your request, less any
Annuity Payments paid in states where permitted. In certain states, or if you
have purchased the Contract as an IRA, we may be required to give you back your
Purchase Payment if you decide to cancel your Contract within 10 days after
receiving it (or the period required in your state). If that is the case, we
reserve the right to allocate your Purchase Payment to the Franklin Money Market
Fund for 15 days after we receive it. (In some states, the period may be
longer.) At the end of that period, we will re-allocate your money as you
selected. Currently, however, we will directly allocate your money to the
Variable Option(s) you have selected.
VIP UNITS
The value of the portion of your Contract allocated to the Variable Options will
go up or down based upon the investment performance of the Variable Option(s)
you choose. The value of your Contract will also depend on the expenses of the
Contract. In order to keep track of the value of your Contract prior to the
Annuity Calculation Date, we use a measurement called a VIP Unit (which is like
a share of a mutual fund). On and after the Annuity Calculation Date, we call it
an Annuity Unit.
Every business day we determine the value of a VIP Unit for each Variable Option
by multiplying the VIP Unit value for the previous period by a factor for the
current period. The factor is determined by:
1. dividing the value of a Portfolio at the end of the current period by the
value of a Portfolio for the previous period; and
2. multiplying it by one minus the daily amount of the insurance charges and any
charges for taxes.
The value of a VIP Unit may go up or down from day to day.
When you make the Purchase Payment, we credit your Contract with VIP Units. The
number of VIP Units we credit your Contract with is determined by dividing the
amount of the Purchase Payment allocated to a Variable Option by the value of
the corresponding VIP Unit.
We calculate the value of each VIP Unit after the New York Stock Exchange closes
each day and then credit your Contract.
EXAMPLE:
On Monday we receive your Purchase Payment of $35,000. You have told us you want
this to go to the Franklin Growth and Income Securities Fund. When the New York
Stock Exchange closes on that Tuesday, we determine that the value of a VIP Unit
based on an investment in the Franklin Growth and Income Securities Fund is
$12.50. We then divide $35,000 by $12.50 and credit your Contract on Tuesday
night with 2800 VIP Units. (This example assumes there are no premium taxes in
your state.)
5. INVESTMENT OPTIONS
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The Contract offers Variable Options, which invest in Portfolios of AIM Variable
Insurance Funds, The Alger American Fund, Franklin Templeton Variable Insurance
Products Trust, and USAllianz Variable Insurance Products Trust. The Contract
also offers a Fixed Payment Option of Allianz Life. Additional Portfolios may be
available in the future.
You should read the accompanying fund prospectuses (which are attached to this
prospectus) carefully before investing.
AIM Variable Insurance Funds, The Alger American Fund, Franklin Templeton
Variable Insurance Products Trust, and USAllianz Variable Insurance Products
Trust are the funds underlying your Contract. Each Portfolio has its own
investment objective.
Franklin Templeton Variable Insurance Products Trust (formerly, Franklin
Valuemark Funds) issues two classes of shares which are described in the
attached prospectus for Franklin Templeton Variable Insurance Products Trust.
Only Class 1 shares are available with your Contract. Effective May 1, 2000, the
funds of Templeton Variable Products Series Fund were merged into similar funds
of Franklin Templeton Variable Insurance Products Trust.
Investment advisers for each Portfolio are listed in the table below and are as
follows: A I M Advisors, Inc., Allianz of America, Inc., Fred Alger Management,
Inc., Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Mutual
Advisers, LLC, Templeton Asset Management Ltd., Templeton Global Advisors
Limited, and Templeton Investment Counsel, Inc. Certain advisers have retained
one or more subadvisers to help them manage the Portfolios.
The investment objectives and policies of certain Portfolios are similar to the
investment objectives and policies of other mutual funds that the same
investment
<PAGE>
advisers manage. Although the objectives and policies may be similar, the
investment results of the Portfolios may be higher or lower than the results of
such other mutual funds. The investment advisers cannot guarantee, and make no
representation, that the investment results of similar funds will be comparable
even though the Portfolios have the same investment advisers.
A Portfolio's performance may be affected by risks specific to certain types of
investments, such as foreign securities, derivative investments, non-investment
grade debt securities, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other investment techniques
may have a magnified performance impact on a Portfolio with a small asset base.
A Portfolio may not experience similar performance as its assets grow.
<TABLE>
<CAPTION>
The following is a list of the Portfolios available under the Contract and the
investment adviser for each Portfolio:
AVAILABLE PORTFOLIOS INVESTMENT ADVISERS
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<S> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Growth Fund A I M Advisors, Inc.
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio Fred Alger Management, Inc.
Alger American Leveraged AllCap Portfolio Fred Alger Management, Inc.
(seeks long-term capital appreciation)
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST:
Franklin Aggressive Growth Securities Fund Franklin Advisers, Inc.
Franklin Global Communications Securities Fund* Franklin Advisers, Inc.
Franklin Growth and Income Securities Fund* Franklin Advisers, Inc.
Franklin High Income Fund Franklin Advisers, Inc.
Franklin Income Securities Fund Franklin Advisers, Inc.
Franklin Large Cap Growth Securities Fund* Franklin Advisers, Inc.
Franklin Money Market Fund Franklin Advisers, Inc.
Franklin Real Estate Fund* Franklin Advisers, Inc.
Franklin Rising Dividends Securities Fund* Franklin Advisory Services, LLC
Franklin S&P 500 Index Fund Franklin Advisers, Inc.
Franklin Small Cap Fund Franklin Advisers, Inc.
Franklin Technology Securities Fund Franklin Advisers, Inc.
Franklin Value Securities Fund Franklin Advisory Services, LLC
Mutual Discovery Securities Fund (capital appreciation) Franklin Mutual Advisers, LLC
Mutual Shares Securities Fund (capital appreciation with
income as a secondary goal) Franklin Mutual Advisers, LLC
Templeton Asset Strategy Fund* Templeton Investment Counsel, Inc.
Templeton Developing Markets Securities Fund* Templeton Asset Management Ltd.
Templeton Growth Securities Fund* Templeton Global Advisors Limited
Templeton International Securities Fund* Templeton Investment Counsel, Inc.
Templeton International Smaller Companies Fund Templeton Investment Counsel, Inc.
Templeton Pacific Growth Securities Fund* Franklin Advisers, Inc.
USALLIANZ VARIABLE INSURANCE
PRODUCTS TRUST:
USAllianz VIP Diversified Assets Fund Allianz of America, Inc.
USAllianz VIP Fixed Income Fund Allianz of America, Inc.
USAllianz VIP Growth Fund Allianz of America, Inc.
<PAGE>
Immediate Variable Annuity Prospectus 17
<FN>
* The fund's name changed as of the effective date listed below:
CURRENT NAME PREVIOUS NAME EFFECTIVE DATE
--------------------------------------------------------------------------------------------------------------------
Franklin Global Communications Securities Fund Franklin Global Utilities Securities Fund 11-15-1999
Franklin Growth and Income Securities Fund Franklin Growth and Income Fund 05-01-2000
Franklin Large Cap Growth Securities Fund Franklin Capital Growth Fund 12-15-1999
Franklin Real Estate Fund Franklin Real Estate Securities Fund 11-15-1999
Franklin Rising Dividends Securities Fund Franklin Rising Dividends Fund 11-15-1999
Templeton Asset Strategy Fund Templeton Global Asset Allocation Fund 05-01-2000
Templeton Developing Markets Securities Fund Templeton Developing Markets Equity Fund 05-01-2000
Templeton Growth Securities Fund Templeton Global Growth Fund 05-01-2000
Templeton International Securities Fund Templeton International Equity Fund 05-01-2000
Templeton Pacific Growth Securities Fund Templeton Pacific Growth Fund 05-01-2000
</FN>
</TABLE>
Shares of the Portfolios may be offered in connection with certain variable
annuity contracts and variable life insurance policies of various insurance
companies which may or may not be affiliated with Allianz Life. Certain
Portfolios may also be sold directly to Qualified plans. The investment advisers
believe that offering their shares in this manner will not be disadvantageous to
you.
Allianz Life may enter into certain arrangements under which it is reimbursed by
the funds' advisers, distributors and/or affiliates for the administrative
services which it provides to the Portfolios.
TRANSFERS
You can transfer money among the Variable Options. You cannot make transfers
from the Fixed Payment Option to the Variable Options. Allianz Life currently
allows you to make as many transfers as you want each year. We may limit this in
the future. However, you will always be allowed at least 6 transfers each year.
This product is not designed for professional market timing organizations or
other persons using programmed, large, or frequent transfers. Such activity may
be disruptive to a Portfolio. We may reject any specific Purchase Payment
allocation or transfer request from any person, if in the Portfolio managers'
judgment, a Portfolio would be unable to invest effectively in accordance with
its investment objectives and policies, or if the Portfolio would be potentially
adversely affected.
The following applies to any transfer:
1. You cannot make transfers during the free look period.
2. Your request for a transfer must clearly state which Variable Options or the
Fixed Payment Option is involved in the transfer.
3. Your request for a transfer must clearly state how much the transfer is for.
4. You cannot make a transfer if it would cause any Variable Option or the Fixed
Payment Option to pro- vide less than 10% of the benefits under your
Contract.
5. You can make at least one allocation to the Fixed Payment Option. Both your
initial allocation to the Fixed Payment Option and each transfer to the Fixed
Payment Option will be treated as an allocation.
TELEPHONE TRANSFERS
You can make transfers by telephone. We may allow you to authorize someone else
to make transfers by telephone on your behalf. If you own the Contract with a
Joint Owner, we will accept instructions from either one of you unless you
instruct us otherwise. We will use reasonable procedures to confirm that
instructions given to us by telephone are genuine. If we do not use such
procedures, we may be liable for any losses due to unauthorized or fraudulent
instructions. We tape record all telephone instructions.
VOTING PRIVILEGES
We are the legal owner of the Portfolio shares. However, when a Portfolio
solicits proxies in conjunction with a shareholder vote, which affects your
investment, we will obtain from you and other Contract Owners instructions as to
how to vote those shares. When we receive those instructions, we will vote all
of the shares we own in proportion to those instructions. This will also include
any shares that we own on our own behalf. If we determine that we are no longer
required to comply with the above, we will vote the shares in our own right.
SUBSTITUTION
Allianz Life may substitute one of the Variable Options you have selected with
another Variable Option. We will not do this without the prior approval of the
Securities and Exchange Commission. We will give you notice of our intention to
do this. We may also limit further investment in a Variable Option if we deem
the investment inappropriate.
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6. EXPENSES
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There are charges and other expenses associated with the Contract that will
reduce your investment return. These charges and expenses are:
INSURANCE CHARGES
Each day, we make a deduction for insurance charges. We do this as part of our
calculation of the value of the VIP Units and the Annuity Units. The insurance
charge has two parts: 1) the mortality and expense risk charge, and 2) the
administrative expense charge.
MORTALITY AND EXPENSE RISK CHARGE. This charge is equal, on an annual basis, to
1.25% of the average daily value of the Contract invested in a Variable Option.
This charge compensates us for all the insurance benefits provided by your
Contract (for example, our contractual obligation to make Annuity Payments,
certain expenses related to the Contract, and for assuming the risk (expense
risk) that the current charges will be insufficient in the future to cover the
cost of administering the Contract).
ADMINISTRATIVE EXPENSE CHARGE. This charge is equal, on an annual basis, to .15%
of the average daily value of the Contract invested in a Variable Option. This
charge is for all the expenses associated with the administration of the
Contract. Some of these expenses include: preparation of the Contract,
confirmations, annual statements, maintenance of Contract records, personnel
costs, legal and accounting fees, filing fees, and computer and systems costs.
COMMUTATION FEE
Under certain circumstances, you can liquidate (withdraw) all or part of a
Variable Option of the Contract. When you make a liquidation, the amount you
receive will be reduced by the commutation fee. The commutation fee is a
percentage of the amount withdrawn. The commutation fee is equal to:
CONTRACT YEAR CHARGE
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1 5%
2 5%
3 4%
4 3%
5 2%
6 (& thereafter) 1%
After the first Contract year, you may make one liquidation from your Contract
each year if you have selected Annuity Options 2 or 4. If you have selected
Annuity Option 6, you may make a liquidation once each year beginning in the
first year.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for the payment of these
taxes. We will make a deduction from the value of the Contract for them. Some of
these taxes are due when the Contract is issued, others are due when Annuity
Payments begin. Premium taxes generally range from 0% to 3.5% of the Purchase
Payment, depending on the state. For information regarding premium taxes in your
state, contact your agent or our VIP Service Center.
INCOME TAXES
We reserve the right to deduct from the Contract for any income taxes which we
may incur because of the Contract. Currently, we are not making any such
deductions.
PORTFOLIO EXPENSES
There are deductions from the assets of the various Portfolios for operating
expenses (including management fees), which are described in the Fee Table in
this prospectus and the accompanying fund prospectuses.
7. TAXES
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NOTE: ALLIANZ LIFE HAS PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL
DISCUSSION OF THE SUBJECT. IT IS NOT INTENDED AS TAX ADVICE TO ANY INDIVIDUAL.
YOU SHOULD CONSULT YOUR OWN TAX ADVISER ABOUT YOUR OWN CIRCUMSTANCES. ALLIANZ
LIFE HAS INCLUDED AN ADDITIONAL DISCUSSION REGARDING TAXES IN THE STATEMENT OF
ADDITIONAL INFORMATION.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs and for
providing a series of periodic payments for life or a fixed number of years.
Congress recognized how important saving for retirement was and provided special
rules in the Internal Revenue Code (Code) for annuities.
Simply stated, these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as Tax Deferral. There are different rules as to how you will be
taxed depending on how you take the money out
<PAGE>
Immediate Variable Annuity Prospectus 19
and the type of Contract-- Qualified or Non-Qualified (see following sections).
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the Contract as an individual and not as an individual
retirement annuity, your Contract is referred to as a Non-Qualified Contract.
If you purchase the Contract as an individual retirement annuity, your Contract
is referred to as a Qualified Contract.
A Qualified Contract will not provide any necessary or additional Tax Deferral
if it is used to fund a Qualified plan that is tax deferred. However, the
Contract has features and benefits other than Tax Deferral that may make it an
appropriate investment for a Qualified plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a Qualified Contract.
LIQUIDATIONS -- NON-QUALIFIED CONTRACTS
You, as the Owner, will not be taxed on increases in the value of your Contract
until a distribution occurs -- either as a surrender or as Annuity Payments.
When you make a surrender you are taxed on the amount of the surrender from your
Contract that is earnings. For Annuity Payments, different rules apply. A
portion of each Annuity Payment is treated as a partial return of your Purchase
Payment and will not be taxed. The remaining portion of the Annuity Payment will
be treated as ordinary income. How the Annuity Payment is divided between
taxable and non-taxable portions depends upon the period over which the Annuity
Payments are expected to be made. Annuity Payments received after you have
received all of your Purchase Payment are fully includible in income.
If the value of your Contract exceeds your Purchase Payment, any surrenders will
be included in taxable income to the extent of earnings in your Contract.
The Code also provides that any amount received under an annuity contract, which
is included in income, may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some distributions will
be exempt from the penalty. They include any amounts:
1) paid on or after you reach age 591 1/42;
2) paid after you die;
3) paid if you become totally disabled (as that term is defined in the Code);
4) paid in a series of substantially equal payments made annually (or more
frequently) under a lifetime annuity;
5) paid as annuity payments under an immediate annuity; or
6) which come from purchase payments made prior to August 14, 1982.
The Code does not specifically address withdrawals (liquidations) from immediate
annuity contracts. A Private Letter Ruling issued by the Internal Revenue
Service concludes that the ability to make withdrawals does not prevent a
contract from qualifying as an immediate annuity. However, the Ruling does not
address the issue of whether a withdrawal would affect the favorable tax
treatment of the Annuity Payments made before and after the withdrawal under the
requirement that all immediate annuity payments must be substantially equal. The
loss of favorable tax treatment would mean that the income portion of each
Annuity Payment received prior to your attaining age 591 1/42 would be subject
to a 10% penalty tax unless another exception to the penalty tax applies. While
Allianz Life currently believes that such withdrawals will not adversely affect
the favorable tax treatment of Annuity Payments received before or after a
withdrawal and Allianz Life intends to perform its tax reporting functions
accordingly, there can be no assurance that the Internal Revenue Service will
not take a contrary position. You should obtain competent tax advice prior to
making a partial or total liquidation (withdrawal).
LIQUIDATIONS -- QUALIFIED CONTRACTS
If you make a withdrawal under an IRA Contract, a portion of the amount is
taxable, generally based on the ratio of your cost basis to the total accrued
benefit under the contract. Often in the case of IRA's, there is no cost basis
which results in the full amount of the withdrawal being included in taxable
income. The Code imposes a 10% penalty tax on the taxable portion of any
distributions from qualified retirement plans, including IRA Contracts. The
penalty tax will not apply to the following distributions:
(a)distributions made on or after the date you reach age 591 1/42;
(b)distributions following your death or disability (for this purpose
disability is as defined in Section 72(m)(7) of the Code);
(c)distributions that are part of a series of substantially equal periodic
payments made at least yearly for your
<PAGE>
life (or life expectancy) or the joint lives (or joint life expectancies) of
you and your designated Beneficiary;
(d)distributions made to you to the extent such distributions do not exceed the
amount allowable as a deduction under Code Section 213 for amounts paid
during the taxable year for medical care;
(e)distributions made on account of an IRS levy upon the Qualified Contract;
(f)distributions for the purchase of medical insurance (as described in Section
213(d)(1)(D) of the Code) for you and your spouse and dependents if you have
received unemployment compensation for at least 12 weeks (this exception will
no longer apply after you have been re-employed for at least 60 days);
(g)distributions made to you to the extent such distribu- tions do not exceed
your qualified higher education expenses (as defined in Section 72(t)(7) of
the Code) for the taxable year; and
(h)distributions which are qualified first time home buyer distributions (as
defined in Section 72(t)(8) of the Code).
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 591 1/42 or 5 years
from the date of the first Annuity Payment, then the tax for the year of the
modification is increased by the penalty tax that would have been imposed
without the exception, plus interest for the tax years in which the exception
was used. A partial liquidation may result in the modification of the series of
Annuity Payments made after such liquidation and therefore could result in the
imposition of the 10% penalty tax and interest for the period as described
above. You should obtain competent tax advice before you make any liquidations
from an IRA Contract. Any amounts distributed will only be paid to you, your
Annuitant or your Beneficiary. Allianz Life will not transfer or pay such
amounts to another IRA or tax qualified plan.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Allianz Life believes that the Portfolios are being managed so
as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Allianz Life
would be considered the owner of the shares of the Portfolios. If you are
considered the owner of the shares, it will result in the loss of the favorable
tax treatment for the Contract. It is unknown to what extent Contract Owners are
permitted to select Portfolios, to make transfers among the Portfolios or the
number and type of Portfolios Contract Owners may select from without being
considered the owner of the shares. If any guidance is provided which is
considered a new position, then the guidance would generally be applied
prospectively. However, if such guidance is considered not to be a new position,
it may be applied retroactively. This would mean that you, as the Owner of the
Contract, could be treated as the owner of the Portfolios.
Due to the uncertainty in this area, Allianz Life reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
8. ACCESS TO YOUR MONEY
--------------------------------------------------------------------------------
If you have chosen Annuity Options 2, 4 or 6 you may make liquidations
(withdrawals) from your Contract under the certain circumstances described
below.
Annuity Options 2 and 4: If you have selected Annuity Option 2 or 4 and a
portion of your payments come from the Variable Options, you may make partial
liquidations (withdrawals) from your Contract. You can only make liquidations
after the first Contract year. During the lifetime of the Annuitant(s) and while
the number of Annuity Payments made is less than the guaranteed number of
payments elected under the Annuity Option, you can request a liquidation once
each year. You can liquidate a portion of the Total Liquidation Value. (Total
Liquidation Value is referred to as "Total Withdrawal Value" in your Contract
and endorsement.) The Total Liquidation Value is equal to the present value of
the remaining guaranteed Annuity Payments (allocated to the Variable Options) to
the end of the period certain commuted at the AIR, less a commutation fee. The
total amount you can liquidate is guaranteed to not be less than 25% of the
Total Liquidation Value. Currently, you may liquidate up to 75% of the Total
Liquidation Value. Allianz Life may change this amount in the future. The
minimum amount you can liquidate is the lesser of $2,500 or the remaining
portion of the Total Liquidation Value available to be liquidated. Partial
liquidations may not be available in your state.
<PAGE>
Immediate Variable Annuity Prospectus 21
After a partial liquidation, the subsequent monthly Annuity Payment during the
guaranteed period certain will be reduced by the percentage of the Total
Liquidation Value liquidated, including the commutation fee.
Annuity Option 6: If you have selected Annuity Option 6, you can currently make
one liquidation each year. You may liquidate the Total Liquidation Value of your
Contract. The Total Liquidation Value is equal to the present value of the
remaining Annuity Payments to the end of the period certain commuted at the AIR
less a commutation fee. Allianz Life may restrict the amount of a partial
liquidation to a minimum of $2,500. We may require a complete liquidation of
your Contract if the remaining Total Liquidation Value after you request a
partial liquidation would be less than $35,000. Allianz Life will require you to
return your Contract before we pay the entire commuted value.
We will process partial liquidations on the next Annuity Calculation Date after
your written request for a liquidation.
INCOME TAXES AND TAX PENALTIES MAY APPLY TO ANY LIQUIDATION YOU MAKE.
SUSPENSION OF PAYMENTS OR TRANSFERS
We may be required to suspend or postpone payments for liquidations or transfers
for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of the Portfolio shares is
not reasonably practicable or we cannot reasonably value the Portfolio
shares;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Contract Owners.
9. PERFORMANCE
--------------------------------------------------------------------------------
We periodically advertise performance. We will calculate performance by
determining the percentage change in the value of a unit by dividing the
increase (decrease) for that unit by the value of the unit at the beginning of
the period. This performance number reflects the deduction of the insurance
charges and the expenses of the Portfolios. We may also advertise cumulative
total return information. Cumulative total return is determined the same way
except that the results are not annualized. Performance information for the
underlying Portfolios may also be advertised -- see the accompanying fund
prospectuses for more information.
We may in the future also advertise yield information. If we do, we will provide
you with information regarding how yield is calculated. More detailed
information regarding how performance is calculated is found in the SAI.
We base any performance advertised on historical data. This performance does not
guarantee future results of the Portfolios.
10. DEATH BENEFIT
--------------------------------------------------------------------------------
If you die before the Income Date and there is no Joint Annuitant, we will treat
your Contract as if we had never issued it. We will return the Purchase Payment
to your estate.
If you have chosen either Annuity Option 3, 4 or 6 with a Joint Annuitant and
either you or the Joint Annuitant dies before the Income Date, the Annuity
Option will be changed to Option 2 with 10 years of payments guaranteed. If the
survivor's life expectancy is less than 10 years, the period of guaranteed
payments will be 5 years instead.
If you or the Joint Annuitant dies on or after the Income Date, the death
benefit, if any, will be paid under the Annuity Option selected. We will require
proof of death. We may delay paying the death benefit until we receive any tax
consents and/or forms from a state.
DEATH OF BENEFICIARY
Unless you tell us otherwise, any amount payable after your death and that of
any Joint Annuitant will be payable:
1. in equal shares to the surviving Beneficiaries;
2. if no Beneficiary is living, payment will be made in equal shares to any
surviving contingent Beneficiaries;
3. if there is no surviving Beneficiary or contingent Beneficiary, payment will
be made to your estate.
<PAGE>
11. OTHER INFORMATION
--------------------------------------------------------------------------------
ALLIANZ LIFE
Allianz Life Insurance Company of North America (Allianz Life), 1750 Hennepin
Avenue, Minneapolis, Minnesota 55403, was organized under the laws of the state
of Minnesota in 1896. Allianz Life offers fixed and variable life insurance and
annuities and group life, accident and health insurance. Allianz Life is
licensed to do direct business in 49 states and the District of Columbia.
Allianz Life is a wholly-owned subsidiary of Allianz Versicherungs-AG Holding.
THE SEPARATE ACCOUNT
Allianz Life established a separate account named Allianz Life Variable Account
B (Separate Account). The Separate Account holds the assets that underlie the
Contracts (except assets allocated to the Fixed Payment Option). The Board of
Directors of Allianz Life adopted a resolution to establish the Separate Account
under Minnesota insurance law on May 31, 1985. Allianz Life has registered the
Separate Account with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940. The Separate Account
is divided into Variable Options (also known as sub-accounts). Each Variable
Option invests in a Portfolio.
The assets of the Separate Account are held in Allianz Life's name on behalf of
the Separate Account and legally belong to Allianz Life. However, those assets
that underlie the variable Contracts are not chargeable with liabilities arising
out of any other business Allianz Life may conduct. All the income, gains and
losses (realized or unrealized) resulting from these assets are credited to or
charged against the Contracts and not against any other contracts Allianz Life
may issue.
DISTRIBUTION
USAllianz Investor Services, LLC (formerly NALAC Financial Plans, LLC), 1750
Hennepin Avenue, Minneapolis, MN 55403, acts as the distributor of the Contract.
USAllianz Investor Services, LLC is a wholly-owned subsidiary of Allianz Life.
Commissions will be paid to broker-dealers who sell the Contracts.
Broker-dealers will be paid commissions at the time of purchase up to 4.0% of
the Purchase Payment. Broker-dealers are also paid a trail commission of up to
.40% of the remaining payout value that remains under your Annuity Option
invested in a Portfolio (trail commissions are not paid on amounts invested in
the Fixed Payment Option.). We (by agreement with the broker-dealer) pay
commissions as a combination of a certain percentage amount at the time of sale
and a trail commission (which when combined could be more than 4% of the
Purchase Payment). In addition, Allianz Life may pay certain sellers for other
services not directly related to the sale of the Contracts (such as special
marketing support allowances).
ADMINISTRATION
We have hired Delaware Valley Financial Services, Inc. (USAllianz Service
Center), 300 Berwyn Park, Berwyn, Pennsylvania, to perform certain
administrative services regarding the Contracts. The administrative services
include issuance of the Contracts and maintenance of Contract Owner's records.
FINANCIAL STATEMENTS
The consolidated financial statements of Allianz Life and the Separate Account
have been included in the Statement of Additional Information.
TABLE OF CONTENTS
OF THE STATEMENT OF
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
Company 2
Experts 2
Legal Opinions 2
Distributor 2
Calculation of Performance Data 2
Federal Tax Status 6
Annuity Provisions 11
Financial Statements 13
<PAGE>
<TABLE>
<CAPTION>
Immediate Variable Annuity Prospectus 23
APPENDIX A
-----------------------------------------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
The consolidated financial statements of Allianz Life Insurance Company of North America and the financial
statements of Allianz Life Variable Account B may be found in the Statement of Additional Information.
The table below gives per unit information for the periods indicated.
This information should be read in conjunction with the financial statements and related notes of the Separate
Account included in the Statement of Additional Information.
(NUMBER OF UNITS IN THOUSANDS) ALGER FRANKLIN FRANKLIN
AIM ALGER AMERICAN GLOBAL GROWTH & FRANKLIN FRANKLIN
V.I. AMERICAN LEVERAGED COMM INCOME HIGH INCOME
VARIABLE OPTIONS: GROWTH GROWTH ALLCAP SECURITIES SECURITIES INCOME SECURITIES
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PERIOD ENDED MAR. 31, 2000
Unit value at beginning of period $11.084 $10.922 $12.160 $38.917 $26.147 $20.900 $24.323
Unit value at end of period $12.473 $12.004 $13.867 $42.355 $25.766 $20.242 $24.126
Number of units outstanding
at end of period 1,169 448 467 34,950 43,611 24,736 43,097
YEAR ENDED DEC. 31, 1999
Unit value at beginning of period $10.000* $10.000* $10.000* $28.308 $26.226 $21.208 $25.122
Unit value at end of period $11.084 $10.922 $12.160 $38.917 $26.147 $20.900 $24.323
Number of units outstanding
at end of period 526 540 340 21,687 27,634 9,493 24,929
YEAR ENDED DEC. 31, 1998
Unit value at beginning of period NA NA NA $25.818 $24.551 $21.312 $25.065
Unit value at end of period NA NA NA $28.308 $26.226 $21.208 $25.122
Number of units outstanding
at end of period NA NA NA 30,851 40,480 14,987 39,420
YEAR ENDED DEC. 31, 1997
Unit value at beginning of period NA NA NA $20.654 $19.490 $19.375 $21.708
Unit value at end of period NA NA NA $25.818 $24.551 $21.312 $25.065
Number of units outstanding
at end of period NA NA NA 39,623 46,962 18,871 49,812
YEAR ENDED DEC. 31, 1996
Unit value at beginning of period NA NA NA $19.565 $17.310 $17.252 $19.785
Unit value at end of period NA NA NA $20.654 $19.490 $19.375 $21.708
Number of units outstanding
at end of period NA NA NA 53,086 50,027 20,736 57,504
YEAR ENDED DEC. 31, 1995
Unit value at beginning of period NA NA NA $15.104 $13.215 $14.608 $16.392
Unit value at end of period NA NA NA $19.565 $17.310 $17.252 $19.785
Number of units outstanding
at end of period NA NA NA 66,669 46,893 18,756 59,309
YEAR ENDED DEC. 31, 1994
Unit value at beginning of period NA NA NA $17.319 $13.677 $15.155 $17.734
Unit value at end of period NA NA NA $15.104 $13.215 $14.608 $16.392
Number of units outstanding
at end of period NA NA NA 70,082 35,695 15,679 56,569
YEAR ENDED DEC. 31, 1993
Unit value at beginning of period NA NA NA $15.889 $12.574 $13.278 $15.163
Unit value at end of period NA NA NA $17.319 $13.677 $15.155 $17.734
Number of units outstanding
at end of period NA NA NA 84,217 24,719 11,787 38,967
YEAR ENDED DEC. 31, 1992
Unit value at beginning of period NA NA NA $14.821 $11.949 $11.583 $13.580
Unit value at end of period NA NA NA $15.889 $12.574 $13.278 $15.163
Number of units outstanding
at end of period NA NA NA 39,387 17,144 4,780 11,397
YEAR ENDED DEC. 31, 1991
Unit value at beginning of period NA NA NA $12.062 $ 9.803 $9.026 $9.842
Unit value at end of period NA NA NA $14.821 $11.949 $11.583 $13.580
Number of units outstanding
at end of period NA NA NA 16,188 9,671 1,923 4,472
YEAR ENDED DEC. 31, 1990
Unit value at beginning of period NA NA NA $12.010 $10.180 $10.021 $10.783
Unit value at end of period NA NA NA $12.062 $9.803 $9.026 $9.842
Number of units outstanding
at end of period NA NA NA 6,300 5,356 1,056 3,011
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(NUMBER OF UNITS IN THOUSANDS) FRANKLIN FRANKLIN
LARGE CAP FRANKLIN RISING FRANKLIN FRANKLIN FRANKLIN
GROWTH MONEY FRANKLIN DIVIDENDS S&P 500 SMALL VALUE
VARIABLE OPTIONS: SECURITIES MARKET REAL ESTATE SECURITIES INDEX CAP SECURITIES
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PERIOD ENDED MAR. 31, 2000
Unit value at beginning of period $20.218 $14.860 $21.386 $18.846 $10.467 $28.353 $7.736
Unit value at end of period $22.182 $14.858 $21.692 $19.232 $10.749 $31.556 $7.949
Number of units outstanding
at end of period 18,375 290,604 8,647 25,557 3,194 17,151 1,582
YEAR ENDED DEC. 31, 1999
Unit value at beginning of period $15.574 $14.386 $23.107 $21.165 $10.000* $14.600 $7.717
Unit value at end of period $20.218 $14.860 $21.386 $18.846 $10.467 $28.353 $7.736
Number of units outstanding
at end of period 10,867 17,388 5,401 17,252 727 10,654 727
YEAR ENDED DEC. 31, 1998
Unit value at beginning of period $13.130 $13.865 $28.169 $20.074 NA $14.952 $10.000*
Unit value at end of period $15.574 $14.386 $23.107 $21.165 NA $14.600 $7.717
Number of units outstanding
at end of period 8,454 22,032 9,639 27,683 NA 14,856 719
YEAR ENDED DEC. 31, 1997
Unit value at beginning of period $11.254 $13.359 $23.668 $15.303 NA $12.913 NA
Unit value at end of period $13.130 $13.865 $28.169 $20.074 NA $14.952 NA
Number of units outstanding
at end of period 5,673 20,982 13,445 33,249 NA 16,925 NA
YEAR ENDED DEC. 31, 1996
Unit value at beginning of period $10.000* $12.883 $18.073 $12.498 NA $10.146 NA
Unit value at end of period $11.254 $13.359 $23.668 $15.303 NA $12.913 NA
Number of units outstanding
at end of period 3,722 28,060 12,757 35,569 NA 12,784 NA
YEAR ENDED DEC. 31, 1995
Unit value at beginning of period NA $12.354 $15.594 $ 9.769 NA $10.000* NA
Unit value at end of period NA $12.883 $18.073 $12.498 NA $10.146 NA
Number of units outstanding
at end of period NA 31,040 10,998 33,789 NA 1,302 NA
YEAR ENDED DEC. 31, 1994
Unit value at beginning of period NA $12.066 $15.369 $10.327 NA NA NA
Unit value at end of period NA $12.354 $15.594 $9.769 NA NA NA
Number of units outstanding
at end of period NA 39,437 11,645 28,778 NA NA NA
YEAR ENDED DEC. 31, 1993
Unit value at beginning of period NA $11.932 $13.095 $10.848 NA NA NA
Unit value at end of period NA $12.066 $15.369 $10.327 NA NA NA
Number of units outstanding
at end of period NA 10,247 5,589 26,256 NA NA NA
YEAR ENDED DEC. 31, 1992
Unit value at beginning of period NA $11.742 $11.848 $10.000* NA NA NA
Unit value at end of period NA $11.932 $13.095 $10.848 NA NA NA
Number of units outstanding
at end of period NA 6,951 1,052 8,388 NA NA NA
YEAR ENDED DEC. 31, 1991
Unit value at beginning of period NA $11.288 $9.000 NA NA NA NA
Unit value at end of period NA $11.742 $11.848 NA NA NA NA
Number of units outstanding
at end of period NA 5,682 394 NA NA NA NA
YEAR ENDED DEC. 31, 1990
Unit value at beginning of period NA $10.637 $10.368 NA NA NA NA
Unit value at end of period NA $11.288 $9.000 NA NA NA NA
Number of units outstanding
at end of period NA 5,768 200 NA NA NA NA
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Immediate Variable Annuity Prospectus 25
(NUMBER OF UNITS IN THOUSANDS)
TEMPLETON TEMPLETON
MUTUAL MUTUAL TEMPLETON DEVELOPING TEMPLETON TEMPLETON INT'L
DISCOVERY SHARES ASSET MARKETS GROWTH INT'L SMALLER
VARIABLE OPTIONS: SECURITIES SECURITIES STRATEGY SECURITIES SECURITIES SECURITIES COMPANIES
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PERIOD ENDED MAR. 31, 2000
Unit value at beginning of period $13.701 $13.237 $14.408 $12.188 $19.466 $23.022 $11.441
Unit value at end of period $14.604 $13.498 $14.016 $11.377 $18.589 $22.000 $11.946
Number of units outstanding
at end of period 13,546 28,901 4,583 16,352 40,065 37,741 2,045
YEAR ENDED DEC. 31, 1999
Unit value at beginning of period $11.226 $11.837 $13.589 $7.993 $16.309 $18.437 $ 9.364
Unit value at end of period $13.701 $13.237 $14.408 $12.188 $19.466 $23.022 $11.441
Number of units outstanding
at end of period 5,796 12,423 2,504 11,226 24,872 27,313 1,034
YEAR ENDED DEC. 31, 1998
Unit value at beginning of period $11.983 $11.993 $13.786 $10.340 $15.176 $17.711 $10.825
Unit value at end of period $11.226 $11.837 $13.589 $7.993 $16.309 $18.437 $ 9.364
Number of units outstanding
at end of period 9,718 18,133 4,056 15,989 34,226 44,256 1,533
YEAR ENDED DEC. 31, 1997
Unit value at beginning of period $10.180 $10.330 $12.514 $11.487 $13.560 $16.081 $11.145
Unit value at end of period $11.983 $11.993 $13.786 $10.340 $15.176 $17.711 $10.825
Number of units outstanding
at end of period 9,940 18,744 5,229 23,005 41,433 58,179 1,998
YEAR ENDED DEC. 31, 1996
Unit value at beginning of period $10.000* $10.000* $10.591 $9.582 $11.339 $13.263 $10.000*
Unit value at end of period $10.180 $10.330 $12.514 $11.487 $13.560 $16.081 $11.145
Number of units outstanding
at end of period 1,471 2,613 4,104 22,423 40,327 64,375 1,388
YEAR ENDED DEC. 31, 1995
Unit value at beginning of period NA NA $10.000* $9.454 $10.201 $12.161 NA
Unit value at end of period NA NA $10.591 $9.582 $11.339 $13.263 NA
Number of units outstanding
at end of period NA NA 1,338 15,618 28,309 59,883 NA
YEAR ENDED DEC. 31, 1994
Unit value at beginning of period NA NA NA $10.000* $10.000* $12.226 NA
Unit value at end of period NA NA NA $9.454 $10.201 $12.161 NA
Number of units outstanding
at end of period NA NA NA 9,774 14,637 60,464 NA
YEAR ENDED DEC. 31, 1993
Unit value at beginning of period NA NA NA NA NA $ 9.642 NA
Unit value at end of period NA NA NA NA NA $12.226 NA
Number of units outstanding
at end of period NA NA NA NA NA 24,026 NA
YEAR ENDED DEC. 31, 1992
Unit value at beginning of period NA NA NA NA NA $10.000* NA
Unit value at end of period NA NA NA NA NA $ 9.642 NA
Number of units outstanding
at end of period NA NA NA NA NA 1,329 NA
YEAR ENDED DEC. 31, 1991
Unit value at beginning of period NA NA NA NA NA NA NA
Unit value at end of period NA NA NA NA NA NA NA
Number of units outstanding
at end of period NA NA NA NA NA NA NA
YEAR ENDED DEC. 31, 1990
Unit value at beginning of period NA NA NA NA NA NA NA
Unit value at end of period NA NA NA NA NA NA NA
Number of units outstanding
at end of period NA NA NA NA NA NA NA
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(NUMBER OF UNITS IN THOUSANDS) TEMPLETON USALLIANZ USALLIANZ
PACIFIC VIP VIP USALLIANZ
GROWTH DIVERSIFIED FIXED VIP
VARIABLE OPTIONS: SECURITIES ASSETS INCOME GROWTH
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PERIOD ENDED MAR. 31, 2000
Unit value at beginning of period $10.915 $10.170 $9.751 $10.733
Unit value at end of period $10.141 $10.391 $9.923 $11.381
Number of units outstanding at end of period 7,984 0 0 0
YEAR ENDED DEC. 31, 1999
Unit value at beginning of period $ 8.078 $10.000* $10.000* $10.000*
Unit value at end of period $10.915 $10.170 $9.751 $10.733
Number of units outstanding at end of period 7,066 9 13 21
YEAR ENDED DEC. 31, 1998
Unit value at beginning of period $ 9.431 NA NA NA
Unit value at end of period $ 8.078 NA NA NA
Number of units outstanding at end of period 10,669 NA NA NA
YEAR ENDED DEC. 31, 1997
Unit value at beginning of period $14.932 NA NA NA
Unit value at end of period $ 9.431 NA NA NA
Number of units outstanding at end of period 15,833 NA NA NA
YEAR ENDED DEC. 31, 1996
Unit value at beginning of period $13.630 NA NA NA
Unit value at end of period $14.932 NA NA NA
Number of units outstanding at end of period 22,061 NA NA NA
YEAR ENDED DEC. 31, 1995
Unit value at beginning of period $12.802 NA NA NA
Unit value at end of period $13.630 NA NA NA
Number of units outstanding at end of period 22,483 NA NA NA
YEAR ENDED DEC. 31, 1994
Unit value at beginning of period $14.233 NA NA NA
Unit value at end of period $12.802 NA NA NA
Number of units outstanding at end of period 27,231 NA NA NA
YEAR ENDED DEC. 31, 1993
Unit value at beginning of period $ 9.761 NA NA NA
Unit value at end of period $14.233 NA NA NA
Number of units outstanding at end of period 14,240 NA NA NA
YEAR ENDED DEC. 31, 1992
Unit value at beginning of period $10.000* NA NA NA
Unit value at end of period $ 9.761 NA NA NA
Number of units outstanding at end of period 534 NA NA NA
YEAR ENDED DEC. 31, 1991
Unit value at beginning of period NA NA NA NA
Unit value at end of period NA NA NA NA
Number of units outstanding at end of period NA NA NA NA
YEAR ENDED DEC. 31, 1990
Unit value at beginning of period NA NA NA NA
Unit value at end of period NA NA NA NA
Number of units outstanding at end of period NA NA NA NA
<FN>
*Unit Value at inception was $10.00.
<PAGE>
Immediate Variable Annuity Prospectus 27
The Unit Value at inception was $10.00 for each Variable Option. Inception was 1/24/89 for the Franklin
Global Communications Securities, Franklin Growth and Income Securities, Franklin High Income, Franklin
Income Securities, Franklin Money Market and Franklin Real Estate Variable Options; 1/27/92 for the
Franklin Rising Dividends Securities, Templeton International Securities and Templeton Pacific Growth
Securities Variable Options; 3/15/94 for the Templeton Developing Markets Securities and Templeton Growth
Securities Variable Options; 5/1/95 for the Templeton Asset Strategy Variable Option; 11/1/95 for the
Franklin Small Cap Variable Option; 5/1/96 for the Franklin Large Cap Growth Securities and Templeton
International Smaller Companies Variable Options; 11/8/96 for the Mutual Discovery Securities and Mutual
Shares Securities Variable Options; and 5/1/98 for the Franklin Value Securities Variable Option. The AIM
V.I. Growth, Alger American Growth, Alger American Leveraged AllCap, Franklin S&P 500 Index, USAllianz VIP
Diversified Assets, USAllianz VIP Fixed Income, and USAllianz VIP Growth Variable Options commenced
operations with the Separate Account on November 12, 1999.
There are no accumulation units shown for the Franklin Aggressive Growth Securities Fund and the Franklin
Technology Securities Fund because they commenced operations as of May 1, 2000 and therefore had no assets
as of December 31, 1999.
</FN>
</TABLE>
<PAGE>
APPENDIX B
--------------------------------------------------------------------------------
ILLUSTRATION OF ANNUITY INCOME
We have prepared the following tables to show you how investment performance
affects variable annuity income over time. The variable annuity income amounts
reflect three different assumptions for a constant investment return before all
expenses of 0%, 6% and 12%. These are hypothetical rates of return. Allianz Life
does not guarantee that the Contract will earn these returns for any one year or
any sustained period of time. The tables are for illustrative purposes only.
They do not represent past or future investment returns.
Your variable annuity income may be more or less than the income shown if the
actual returns of the Portfolios you select are different than those shown
below. Since it is very likely that investment returns will fluctuate over time,
the amount of variable annuity income you will receive will also fluctuate. The
total amount of annuity income you actually receive will depend on the
cumulative investment returns of the Portfolios you choose, how long you live
and the Annuity Option you choose.
Another factor which will affect the amount of variable annuity income you will
receive is the Assumed Investment Return (AIR). Income will increase from one
Income Date to the next if the annualized net rate of return during that time is
greater than the AIR you choose. It will decrease if the annualized net rate of
return is less than the AIR.
There are three illustrations. The first is based on a 3% AIR, the second is
based on a 5% AIR, and the third is based on a 7% AIR. The 7% AIR may not be
available in your state. (Check with your registered representative regarding
availability).
The income amounts shown reflect the deduction of all fees and expenses. Actual
Portfolio fees and expenses will vary from year to year and from Portfolio to
Portfolio. Actual expenses may be higher or lower than the rate used in the
illustrations. The illustrations assume that each Portfolio will incur expenses
at an average annual rate of 0.80% of the average daily net assets of the
Portfolio. The insurance charges are calculated at an annual rate of 1.40% of
the average daily net assets of the Separate Account. After taking these
expenses and charges into consideration, the illustrated gross investment
returns of 0%, 6% and 12% are approximately equal to net rates (which means
after expenses have been deducted) of -2.18%, 3.69% and 9.56%, respectively.
<PAGE>
<TABLE>
<CAPTION>
Immediate Variable Annuity Prospectus 29
VALUEMARK INCOME PLUS ILLUSTRATION
ANNUITANT: John Doe ANNUITY PURCHASE AMOUNT: $100,000
DATE OF BIRTH: 1/1/1931 EFFECTIVE DATE: 12/1/2000
ANNUITY INCOME OPTION: Single Life Annuity FIRST ANNUITY INCOME DATE: 1/1/2001
PREMIUM TAX: 0% FREQUENCY OF ANNUITY INCOME: Monthly
ASSUMED INVESTMENT RETURN: 3%
The amount of monthly variable annuity income shown in the table below and the graph that follows assumes a
constant annual investment return. The amount of variable annuity income that you actually receive will
depend on the investment performance of the Portfolio(s) you choose. The variable annuity income can go up or
down. No minimum dollar amount of variable annuity income is guaranteed. The amounts shown are based on a 3%
AIR. Income will remain constant at $625 per month when the net rate of return after expenses is 3%
(annually).
MONTHLY ANNUITY PAYMENTS
ANNUAL RATE OF RETURN BEFORE EXPENSES: 0% 6% 12%
ANNUITY INCOME DATE AGE ANNUAL RATE OF RETURN AFTER EXPENSES: -2.18% 3.69% 9.56%
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
January 1, 2001 70 $622 $625 $628
January 1, 2002 71 591 629 668
January 1, 2003 72 561 633 711
January 1, 2004 73 533 638 756
January 1, 2005 74 506 642 804
January 1, 2010 79 391 664 1,095
January 1, 2015 84 302 686 1,491
January 1, 2020 89 233 710 2,030
January 1, 2025 94 180 734 2,765
</TABLE>
<PAGE>
THE INVESTMENT RATES OF RETURN SHOWN ARE HYPOTHETICAL ONLY. YOU SHOULD NOT
CONSIDER THEM TO REPRESENT PAST OR FUTURE INVESTMENT PERFORMANCE. ACTUAL RATES
OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS.
The following table summarizes Annuity Income with an Assumed Investment Return
of 3%. This table is presented graphically in the printed prospectus.
Monthly Payment Amount
------------------------------------------------------------
-2.18% 3.69% 9.56%
Annual Rate Annual Rate Annual Rate
of Return of Return of Return
Year After Expenses After Expenses After Expenses
---------------------------------------------------------------------
1 $ 622 $ 625 $ 628
2 591 629 668
3 561 633 711
4 533 638 756
5 506 642 804
6 480 646 855
7 456 651 910
8 433 655 968
9 412 659 1,029
10 391 664 1,095
11 371 668 1,165
12 353 673 1,239
13 335 677 1,318
14 318 682 1,402
15 302 686 1,491
16 287 691 1,586
17 272 696 1,687
18 259 700 1,794
19 246 705 1,909
20 233 710 2,030
21 222 714 2,160
22 210 719 2,297
23 200 724 2,443
24 190 729 2,599
25 180 734 2,765
<PAGE>
<TABLE>
<CAPTION>
Immediate Variable Annuity Prospectus 31
VALUEMARK INCOME PLUS ILLUSTRATION
ANNUITANT: John Doe ANNUITY PURCHASE AMOUNT: $100,000
DATE OF BIRTH: 1/1/1931 EFFECTIVE DATE: 12/1/2000
ANNUITY INCOME OPTION: Single Life Annuity FIRST ANNUITY INCOME DATE: 1/1/2001
PREMIUM TAX: 0% FREQUENCY OF ANNUITY INCOME: Monthly
ASSUMED INVESTMENT RETURN: 5%
The amount of monthly variable annuity income shown in the table below and the graph that follows assumes a
constant annual investment return. The amount of variable annuity income that you actually receive will
depend on the investment performance of the Portfolio(s) you choose. The variable annuity income can go up or
down. No minimum dollar amount of variable annuity income is guaranteed. The amounts shown are based on a 5%
AIR. Income will remain constant at $743 per month when the net rate of return after expenses is 5%
(annually).
MONTHLY ANNUITY PAYMENTS
ANNUAL RATE OF RETURN BEFORE EXPENSES: 0% 6% 12%
ANNUITY INCOME DATE AGE ANNUAL RATE OF RETURN AFTER EXPENSES: -2.18% 3.69% 9.56%
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
January 1, 2001 70 $739 $742 $746
January 1, 2002 71 688 733 778
January 1, 2003 72 641 724 812
January 1, 2004 73 597 715 848
January 1, 2005 74 556 706 884
January 1, 2010 79 391 663 1,094
January 1, 2015 84 274 623 1,353
January 1, 2020 89 192 585 1,673
January 1, 2025 94 135 549 2,070
</TABLE>
<PAGE>
THE INVESTMENT RATES OF RETURN SHOWN ARE HYPOTHETICAL ONLY. YOU SHOULD NOT
CONSIDER THEM TO REPRESENT PAST OR FUTURE INVESTMENT PERFORMANCE. ACTUAL RATES
OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS.
The following table summarizes Annuity Income with an Assumed Investment Return
of 5%. This table is presented graphically in the printed prospectus.
Monthly Payment Amount
------------------------------------------------------------
-2.18% 3.69% 9.56%
Annual Rate Annual Rate Annual Rate
of Return of Return of Return
Year After Expenses After Expenses After Expenses
---------------------------------------------------------------------
1 $ 739 $ 742 $ 746
2 688 733 778
3 641 724 812
4 597 715 848
5 556 706 884
6 518 697 923
7 483 688 963
8 450 680 1,005
9 419 671 1,048
10 391 663 1,094
11 364 655 1,141
12 339 647 1,191
13 316 639 1,243
14 294 631 1,297
15 274 623 1,353
16 255 615 1,412
17 238 607 1,473
18 222 600 1,537
19 206 592 1,604
20 192 585 1,673
21 179 578 1,746
22 167 570 1,822
23 156 563 1,901
24 145 556 1,984
25 135 549 2,070
<PAGE>
<TABLE>
<CAPTION>
Immediate Variable Annuity Prospectus 33
VALUEMARK INCOME PLUS ILLUSTRATION
ANNUITANT: John Doe ANNUITY PURCHASE AMOUNT: $100,000
DATE OF BIRTH: 1/1/1931 EFFECTIVE DATE: 12/1/2000
ANNUITY INCOME OPTION: Single Life Annuity FIRST ANNUITY INCOME DATE: 1/1/2001
PREMIUM TAX: 0% FREQUENCY OF ANNUITY INCOME: Monthly
ASSUMED INVESTMENT RETURN: 7%
The amount of monthly variable annuity income shown in the table below and the graph that follows assumes a
constant annual investment return. The amount of variable annuity income that you actually receive will
depend on the investment performance of the Portfolio(s) you choose. The variable annuity income can go up or
down. No minimum dollar amount of variable annuity income is guaranteed. The amounts shown are based on a 7%
AIR. Income will remain constant at $866 per month when the net rate of return after expenses is 7%
(annually). The 7% AIR may not be available in your state.
MONTHLY ANNUITY PAYMENTS
ANNUAL RATE OF RETURN BEFORE EXPENSES: 0% 6% 12%
ANNUITY INCOME DATE AGE ANNUAL RATE OF RETURN AFTER EXPENSES: -2.18% 3.69% 9.56%
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
January 1, 2001 70 $859 $864 $868
January 1, 2002 71 786 837 889
January 1, 2003 72 718 811 910
January 1, 2004 73 657 786 932
January 1, 2005 74 600 762 954
January 1, 2010 79 383 651 1,074
January 1, 2015 84 245 556 1,209
January 1, 2020 89 156 476 1,360
January 1, 2025 94 100 406 1,531
</TABLE>
<PAGE>
THE INVESTMENT RATES OF RETURN SHOWN ARE HYPOTHETICAL ONLY. YOU SHOULD NOT
CONSIDER THEM TO REPRESENT PAST OR FUTURE INVESTMENT PERFORMANCE. ACTUAL RATES
OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS.
The following table summarizes Annuity Income with an Assumed Investment Return
of 7%.
This table is presented graphically in the printed prospectus.
Monthly Payment Amount
------------------------------------------------------------
-2.18% 3.69% 9.56%
Annual Rate Annual Rate Annual Rate
of Return of Return of Return
Year After Expenses After Expenses After Expenses
---------------------------------------------------------------------
1 $ 859 $ 864 $ 868
2 786 837 889
3 718 811 910
4 657 786 932
5 600 762 954
6 549 738 977
7 502 715 1,000
8 459 693 1,024
9 419 672 1,049
10 383 651 1,074
11 351 631 1,100
12 320 611 1,126
13 293 592 1,153
14 268 574 1,180
15 245 556 1,209
16 224 539 1,238
17 205 522 1,267
18 187 506 1,298
19 171 491 1,329
20 156 476 1,360
21 143 461 1,393
22 131 447 1,426
23 119 433 1,460
24 109 419 1,495
25 100 406 1,531
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL IMMEDIATE
VARIABLE ANNUITY CONTRACTS
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
July 1, 2000
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL IMMEDIATE VARIABLE
ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, CALL OR WRITE THE
COMPANY AT: 1750 Hennepin Avenue, Minneapolis, MN 55403-2195, (800) 542-5427.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE DATED JULY 1,
2000, AND AS MAY BE AMENDED FROM TIME TO TIME.
Table of Contents
Contents Page
-------------------------------------------------------
Company ......................................... 2
Experts ......................................... 2
Legal Opinions .................................. 2
Distributor ..................................... 2
Calculation of Performance Data ................. 2
Federal Tax Status .............................. 6
Annuity Provisions .............................. 11
Financial Statements ............................ 13
VIP SAI 05/2000
<PAGE>
Company
--------------------------------------------------------------------------------
Information regarding Allianz Life Insurance Company of North America (the
"Company") and its ownership is contained in the Prospectus. The Company is
rated A++ by A.M. BEST, an independent analyst of the insurance industry. The
financial strength of an insurance company may be relevant in that it may be a
reflection as to the ability of a company to make fixed annuity payments from
its general account.
Experts
--------------------------------------------------------------------------------
The financial statements of Allianz Life Variable Account B and the consolidated
financial statements of the Company as of and for the year ended December
31,1999, included in this Statement of Additional Information have been audited
by KPMG LLP, independent auditors, as indicated in their reports included in
this Statement of Additional Information and are included herein in reliance
upon such reports and upon the authority of said firm as experts in accounting
and auditing.
Legal Opinions
--------------------------------------------------------------------------------
Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut has provided advice on
certain matters relating to the federal securities and income tax laws in
connection with the Contracts.
Distributor
--------------------------------------------------------------------------------
USAllianz Investor Services, LLC (formerly NALAC Financial Plans, LLC), a
wholly-owned subsidiary of the Company, acts as the distributor. The offering is
on a continuous basis.
Calculation of Performance Data
--------------------------------------------------------------------------------
Total Return
From time to time, the Company may advertise the performance data for the
Variable Options in sales literature, advertisements, personalized hypothetical
illustrations, and Contract Owner communications. Such data will show the
percentage change in the value of a unit based on the performance of a
Sub-Account over a stated period of time which is determined by dividing the
increase (or decrease) in value for that unit by the unit value at the beginning
of the period.
Any such performance data will include total return figures for the one, five,
and 10 year (or since inception) time periods indicated. Such total return
figures will reflect the deduction of a 1.25% Mortality and Expense Risk Charge,
a 0.15% Administrative Expense Charge and the operating expenses of the
underlying Portfolios.
The hypothetical value of a Contract purchased for the time periods described
will be determined by using the actual unit values for an initial $1,000
purchase payment. The average annual total return is then determined by
computing the fixed interest rate that a $1,000 purchase payment would have to
earn annually, compounded annually, to grow to the hypothetical value at the end
of the time periods described. The formula used in these calculations is:
P(1+T)n = ERV
where:
P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years;
ERV = ending redeemable value of a hypothetical $1,000 purchase payment made at
the beginning of the period at the end of the period.
The Company may also advertise cumulative and total return information over
different periods of time. Cumulative total return is calculated in a similar
manner as described above except that the results are not annualized.
Yield
The Franklin Money Market Fund. The Company may advertise yield information for
the Franklin Money Market Fund. The Franklin Money Market Fund's current yield
may vary each day, depending upon, among other things, the average maturity of
the underlying Portfolio's investment securities and changes in interest rates,
operating expenses, the deduction of the Mortality and Expense Risk Charge, the
Administrative Expense Charge and, in certain instances, the value of the
underlying Portfolio's investment securities. The fact that the Fund's current
yield will fluctuate and that the principal is not guaranteed should be taken
into consideration when using the Fund's current yield as a basis for comparison
with savings accounts or other fixed-yield investments. The yield at any
particular time is not indicative of what the yield may be at any other time.
The Franklin Money Market Fund's current yield is computed on a base period
return of a hypothetical Contract having a beginning balance of one unit for a
particular period of time (generally seven days). The return is determined by
dividing the net change (exclusive of any capital changes) in such unit by its
beginning value, and then multiplying it by 365/7 to get the annualized current
yield. The calculation of net change reflects the value of additional shares
purchased with the dividends paid by the Portfolio, and the deduction of the
Mortality and Expense Risk Charge and the Administrative Expense Charge.
The effective yield reflects the effects of compounding and represents an
annualization of the current return with all dividends reinvested. (Effective
yield = [(Base Period Return + 1)365/7]-1.)
For the seven-day period ending on 03/31/00, the Franklin Money Market Fund had
a current yield of 3.89% and an effective yield of 3.96%.
Other Variable Options. The Company may also quote yield in sales literature,
advertisements, personalized hypothetical illustrations, and Contract Owner
communications for the other Variable Options. Each Variable Option (other than
the Franklin Money Market Fund) will publish standardized total return
information with any quotation of current yield.
The yield computation is determined by dividing the net investment income per
unit earned during the period (minus the deduction for the Mortality and Expense
Risk Charge and Administrative Expense Charge) by the unit value on the last day
of the period and annualizing the resulting figure, according to the following
formula:
Yield = 2 [((a-b) + 1)6 - 1]
--------------------
cd
where:
a = net investment income earned during the period by the Variable Option
attributable to shares owned by the Portfolio;
b = expenses accrued for the period (net of reimbursements, if applicable);
c = the average daily number of units outstanding during the period;
d = the maximum offering price per unit on the last day of the period.
The above formula will be used in calculating quotations of yield, based on
specified 30-day periods (or one month) identified in the sales literature,
advertisement, or communication. The Company does not currently advertise yield
information for any Variable Option (other than the Franklin Money Market Fund).
Performance Ranking
The performance based on each or all of the Sub-Accounts of the Variable Account
may be compared in its advertising and sales literature to the performance of
other variable annuity issuers in general or to the performance of particular
types of variable annuities investing in mutual funds, or series of mutual funds
with investment objectives similar to each of the Sub-Accounts of the Variable
Account or indices. Lipper Analytical Services, Inc. ("Lipper") and the Variable
Annuity Research and Data Service ("VARDS") are independent services which
monitor and rank the performance of variable annuity issuers in each of the
major categories of investment objectives on an industry-wide basis.
Lipper's rankings include variable life issuers as well as variable annuity
issuers. VARDS rankings compare only variable annuity issuers. The performance
analyses prepared by Lipper and VARDS rank such issuers on the basis of total
return, assuming reinvestment of distributions, but do not take sales charges,
redemption fees or certain expense deductions at the variable account level into
consideration. In addition, VARDS prepares risk adjusted rankings, which
consider the effects of market risk on total return performance. This type of
ranking may address the question as to which portfolios provide the highest
total return with the least amount of risk. Other ranking services may be used
as sources of performance comparison, such as CDA/Weisenberger and Morningstar.
Performance Information
Total returns reflect all aspects of a Portfolio's return, including the
automatic reinvestment by Allianz Life Variable Account B of all distributions
and any change in a Portfolio's value over the period. The performance of the
Portfolios reflects results achieved prior to the date the Contracts first
invested in the Portfolios.
The returns reflect the deduction of the Mortality and Expense Risk Charge,
Administrative Expense Charge and the operating expenses of each Portfolio. Past
performance does not guarantee future results.
Effective May 1, 2000, the Templeton International Securities Fund (a fund of
Templeton Variable Products Series Fund) merged into the Templeton International
Equity Fund. The performance shown in the charts below reflects the historical
performance of the Templeton International Equity Fund. Effective May 1, 2000,
the Templeton Developing Markets Securities Fund (a fund of Templeton Variable
Products Series Fund) merged into the Templeton Developing Markets Equity Fund.
The performance shown in the charts below reflects the historical performance of
the Templeton Developing Markets Equity Fund. Effective May 1, 2000, the
Templeton Asset Strategy Fund (a fund of Templeton Variable Products Series
Fund) merged into the Templeton Global Asset Allocation Fund. The performance
shown in the charts below reflects the historical performance of the Templeton
Global Asset Allocation Fund.
<TABLE>
<CAPTION>
Standardized Total Return
Average Annual Total Return for the period ended March 31, 2000
Inception One Three Five Ten Since
Variable Option Date Year Year Year Year Inception
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Franklin Global Communications Securities* - Class 1 1/24/89 58.17%** 28.15% 22.08% 14.02% 13.86%
Franklin Growth and Income Securities* - Class 1 1/24/89 2.40% 9.18% 12.88% 10.02% 8.93%
Franklin High Income - Class 1 1/24/89 -4.41% 1.98% 5.67% 7.65% 6.60%
Franklin Income Securities - Class 1 1/24/89 0.74% 3.77% 7.46% 8.74% 8.29%
Franklin Large Cap Growth Securities* - Class 1 5/1/96 39.60% 27.53% NA NA 22.66%
Franklin Money Market - Class 1 1/24/89 3.96% + SEVEN DAY EFFECTIVE YIELD
Franklin Real Estate* - Class 1 1/24/89 -0.24% -3.03% 7.38% 8.05% 7.26%
Franklin Rising Dividends Securities* - Class 1 1/27/92 1.12% 7.72% 13.00% NA 8.42%
Franklin Small Cap - Class 1 11/1/95 116.65%** 39.58% NA NA 29.84%
Franklin Value Securities - Class 1 5/1/98 12.80% NA NA NA -11.20%
Mutual Discovery Securities - Class 1 11/8/96 28.33% 11.27% NA NA 11.90%
Mutual Shares Securities - Class 1 11/8/96 11.16% 9.32% NA NA 9.34%
Templeton Asset Strategy* - Class 1 5/1/95 6.92% 3.47% NA NA 7.20%
Templeton Developing Markets Securities* - Class 1 3/15/94 31.97% -2.69% 4.87% NA 2.25%
Templeton Growth Securities* - Class 1 3/15/94 14.30% 10.23% 12.91% NA 10.89%
Templeton International Securities* - Class 1 1/27/92 17.96% 9.66% 13.05% NA 10.22%
Templeton International Smaller Companies - Class 1 5/1/96 27.08% 1.86% NA NA 4.74%
Templeton Pacific Growth Securities* - Class 1 1/27/92 25.55% -10.30% -4.16% NA 0.26%
<FN>
*The fund's name changed as of the effective date listed below:
CURRENT NAME PREVIOUS NAME EFFECTIVE DATE
-------------------------------------------------------------------------------------------------------
Franklin Global Communications Securities FundFranklin Global Utilities Securities Fund 11-15-1999
Franklin Growth and Income Securities Fund Franklin Growth and Income Fund 05-01-2000
Franklin Large Cap Growth Securities Fund Franklin Capital Growth Fund 12-15-1999
Franklin Real Estate Fund Franklin Real Estate Securities Fund 11-15-1999
Franklin Rising Dividends Securities Fund Franklin Rising Dividends Fund 11-15-1999
Templeton Asset Strategy Fund Templeton Global Asset Allocation Fund 05-01-2000
Templeton Developing Markets Securities Fund Templeton Developing Markets Equity Fund 05-01-2000
Templeton Growth Securities Fund Templeton Global Growth Fund 05-01-2000
Templeton International Securities Fund Templeton International Equity Fund 05-01-2000
Templeton Pacific Growth Securities Fund Templeton Pacific Growth Fund 05-01-2000
**Recently, many individual stocks and sectors, such as technology, have significantly exceeded historical norms; investors
should generally not expect such outsized gains to continue.
+ For the seven-day period ending on 3/31/00, the Franklin Money Market Fund had a current yield of 3.89% and an effective
yield of 3.96%.
There is no performance shown for the AIM V.I. Growth, Alger American Growth, Alger American Leveraged AllCap, Franklin S&P
500 Index, USAllianz VIP Diversified Assets, USAllianz VIP Fixed Income, and USAllianz VIP Growth Sub-Accounts because they
were first offered under the Contract on July 1, 2000.
The Franklin Aggressive Growth Securities and Franklin Technology Securities Sub-Accounts commenced operations on May 1,
2000.
</FN>
</TABLE>
The Company may also present performance information computed on a different
basis.
Contract Owners should note that investment results will fluctuate over time,
and any presentation of total return for any period should not be considered as
a representation of what an investment may earn or what a Owner's total return
may be in any future period.
Annuity Income
Periodic annuity income amounts may be illustrated using the historical
performance of the Portfolios, the Standard & Poor's 500 Composite Stock Price
Index or other recognized investment benchmark portfolios. All illustrations
will reflect the 1.25% annual Mortality and Expense Risk Charge and the 0.15%
Administrative Expense Charge and actual or assumed Portfolio expenses.
Federal Tax Status
--------------------------------------------------------------------------------
NOTE: The following description is based upon the Company's understanding of
current federal income tax law applicable to annuities in general. The Company
cannot predict the probability that any changes in such laws will be made.
Purchasers are cautioned to seek competent tax advice regarding the possibility
of such changes. The Company does not guarantee the tax status of the Contracts.
Purchasers bear the complete risk that the Contracts may not be treated as
"annuity contracts" under federal income tax laws. It should be further
understood that the following discussion is not exhaustive and that special
rules not described herein may be applicable in certain situations. Moreover, no
attempt has been made to consider any applicable state or other tax laws.
General
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code") governs
taxation of annuities in general. A Contract Owner is not taxed on increases in
the value of a Contract until distribution occurs, either in the form of a lump
sum payment or as annuity payments under the Annuity Option elected. For annuity
payments, the portion of a payment includible in income equals the excess of the
payment over the exclusion amount. The exclusion amount for payments based on a
variable annuity option is determined by dividing the investment in the Contract
(adjusted for any period certain or refund guarantee) by the number of years
over which the annuity is expected to be paid (determined by Treasury
Regulations). The exclusion amount for payments based on a fixed annuity option
is determined by multiplying the payment by the ratio that the cost basis of the
Contract (adjusted for any period certain or refund guarantee) bears to the
expected return under the Contract. Payments received after the investment in
the Contract has been recovered (i.e. the total of the excludable amounts equal
the investment in the Contract) are fully taxable. The taxable portion of an
annuity payment is taxed at ordinary income rates. For certain types of
Qualified Plans there may be no cost basis in the Contract within the meaning of
Section 72 of the Code. Contract Owners, annuitants and beneficiaries under the
Contracts should seek competent financial advice about the tax consequences of
any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company, and its operations form a part of the Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in the imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all Portfolios of the Trust underlying the Contracts
will be managed by the investment advisers in such a manner as to comply with
these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Contract Owner control
of the investments of the Separate Account will cause the Contract Owner to be
treated as the owner of the assets of the Separate Account, thereby resulting in
the loss of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Contract Owner's ability to transfer
among investment choices or the number and type of investment choices available,
would cause the Contract Owner to be considered as the owner of the assets of
the Separate Account resulting in the imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to
receipt of payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Contract Owner being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
Section 72(e)(11) of the Code provides that multiple non-qualified annuity
contracts which are issued within a calendar year period to the same contract
owner by one company or its affiliates are treated as one annuity contract for
purposes of determining the tax consequences of any distribution. Such treatment
may result in adverse tax consequences, including more rapid taxation of the
distributed amounts from such combination of contracts. For purposes of this
rule, contracts received in a Section 1035 exchange will be considered issued in
the year of the exchange. The legislative history of Section 72(e)(11) indicates
that it was not intended to apply to immediate annuities. However, the
legislative history also states that no inference is intended as to whether the
Treasury Department, under its authority to prescribe rules to enforce the tax
laws, may treat the combination purchase of a deferred annuity contract with an
immediate annuity contract as a single contract for purposes of determining the
tax consequences of any distribution.
Partial 1035 Exchanges
Section 1035 of the Code provides that an annuity contract may be exchanged in a
tax-free transaction for another annuity contract. Historically, it was presumed
that only the exchange of an entire contract, as opposed to a partial exchange,
would be accorded tax-free status. In 1998 in Conway vs. Commissioner, the Tax
Court held that the direct transfer of a portion of a deferred annuity contract
into another deferred annuity contract qualified as a non-taxable exchange. On
November 22, 1999, the Internal Revenue Service filed an Action on Decision
which indicated that it acquiesced in the Tax Court decision in Conway. However,
in its acquiescence with the decision of the Tax Court, the Internal Revenue
Service stated that it will challenge transactions where taxpayers enter into a
series of partial exchanges and annuitizations as part of a design to avoid
application of the 10% premature distribution penalty or other limitations
imposed on annuity contracts under the Code. In the absence of further guidance
from the Internal Revenue Service it is unclear what specific types of partial
exchange designs and transactions will be challenged by the Internal Revenue
Service. Due to the uncertainty in this area owners should consult their own tax
advisers prior to entering into a partial exchange of an annuity contract.
Tax Treatment of Distributions -
Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any distribution. However, the penalty is not imposed on amounts received: (a)
after the taxpayer reaches age 59 1/2; (b) after the death of the Contract
Owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer and his Beneficiary; (e) as an annuity payment
under an immediate annuity; or (f) which are allocable to purchase payments made
prior to August 14, 1982.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Distributions - IRA Contracts.")
The availability of total or partial withdrawals from an immediate annuity is
not expressly provided for in the Code or Treasury Regulations. The only tax
guidance currently available for such issue is a Private Letter Ruling holding
that the right to make withdrawals does not prevent a contract from qualifying
as an immediate annuity. However, the Private Letter Ruling does not address the
issue of whether the making of a withdrawal would adversely affect the favorable
tax treatment of annuity payments made before or after such partial withdrawal
because of the requirement that all immediate annuity payments must be
"substantially equal." The loss of favorable tax treatment would mean that the
income portion of each annuity payment received prior to the taxpayer's
attaining age 59 1/2 would be subject to a 10% penalty tax unless another
exception to the penalty tax applies. While the Company currently believes that
such withdrawals will not adversely affect the favorable tax treatment of
annuity payments received before or after a withdrawal and the Company intends
to perform its tax reporting functions accordingly, there can be no assurance
that the Internal Revenue Service will not take a contrary position. Contract
Owners should obtain competent tax advice prior to making a partial or total
withdrawal.
Qualified Plans
The Contracts offered by the Prospectus may also be used with a plan qualified
under Section 408(b) of the Code ("IRA Contracts"). Contract Owners, annuitants
and beneficiaries are cautioned that benefits under an IRA Contract may be
subject to the terms and conditions of the plan regardless of the terms and
conditions of the Contracts issued pursuant to the plan. The following
discussion of IRA Contracts is not exhaustive and is for general informational
purposes only. The tax rules regarding IRA Contracts are very complex and will
have differing applications depending on individual facts and circumstances.
Each purchaser should obtain competent tax advice prior to purchasing IRA
Contracts. IRA Contracts include special provisions restricting Contract
provisions that may otherwise be available as described in this Prospectus.
Generally, IRA Contracts are not transferable except upon surrender or
annuitization.
A Qualified Contract will not provide any necessary or additional tax deferral
if it is used to fund a Qualified Plan that is tax deferred. However, the
Contract has features and benefits other than tax deferral that may make it an
appropriate investment for a Qualified Plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a Qualified Contract.
Various penalty and excise taxes may apply to contributions or distributions
made in violation of applicable limitations. Furthermore, certain withdrawal
penalties and restrictions may apply to distributions from IRA Contracts. (See
"Tax Treatment of Distributions - IRA Contracts.")
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. IRA Contracts will utilize annuity tables which do
not differentiate on the basis of sex because of the use of the IRA Contracts in
a Simplified Employee Pension. Such annuity tables will also be available for
use in connection with certain non-qualified deferred compensation plans.
Under applicable limitations, certain amounts may be contributed to an IRA
Contract which will be deductible from the individual's gross income. These IRAs
are subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Distributions - IRA Contracts.") Under
certain conditions, distributions from other IRAs and other qualified plans may
be rolled over or transferred on a tax-deferred basis into an IRA Contract.
Sales of Contracts for use as IRA Contracts are subject to special requirements
imposed by the Code, including the requirement that certain informational
disclosure be given to persons desiring to establish an IRA. Purchasers of
Contracts to be qualified as Individual Retirement Annuities should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
A Qualified Contract will not provide any necessary or additional Tax Deferral
if it is used to fund a Qualified Plan that is tax deferred. However, the
Contract has features and benefits other than Tax Deferral that may make it an
appropriate investment for a Qualified Plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a Qualified Contract.
Tax Treatment of Distributions - IRA Contracts
In the case of a withdrawal under an IRA Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract.
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion of
any distribution from qualified retirement plans, including IRA Contracts. To
the extent amounts are not includible in gross income because they have been
rolled over to an IRA or to another eligible qualified plan, no tax penalty will
be imposed. The tax penalty will not apply to the following distributions: (a)
if distribution is made on or after the date on which the Annuitant reaches age
59 1/2; (b) distributions following the death or disability of the Annuitant
(for this purpose disability is as defined in Section 72(m)(7) of the Code); (c)
distributions that are part of a series of substantially equal periodic payments
made not less frequently than annually for the life (or life expectancy) of the
Annuitant or the joint lives (or joint life expectancies) of the Annuitant and
his or her designated Beneficiary; (d) distributions made to the Annuitant to
the extent such distributions do not exceed the amount allowable as a deduction
under Code Section 213 to the Annuitant for amounts paid during the taxable year
for medical care; (e) distributions from an IRA Contract for the purchase of
medical insurance (as described in Section 213(d)(1)(D) of the Code) for the
Annuitant and his or her spouse and dependents if the Annuitant has received
unemployment compensation for at least 12 weeks (this exception will no longer
apply after the Annuitant has been re-employed for at least 60 days.); (f)
distributions from an Individual Retirement Annuity made to the Annuitant to the
extent such distributions do not exceed the qualified higher education expenses
(as defined in Section 72(t)(7) of the Code) of the Annuitant for the taxable
year; (g) distributions made on account of an IRS levy upon the Qualified
Contract; and (h) distributions from an Individual Retirement Annuity made to
the Annuitant which are qualified first-time home buyer distributions (as
defined in Section 72(t)(8) of the Code). With respect to (c) above, if the
series of substantially equal periodic payments is modified before the later of
the Annuitant attaining age 591/2 or 5 years from the date of the first annuity
payment, then the tax for the year of the modification is increased by an amount
equal to the tax which would have been imposed (the 10% penalty tax) but for the
exception, plus interest for the tax years in which the exception was used. A
partial withdrawal may result in the modification of the series of annuity
payments made after such withdrawal and therefore could result in the imposition
of the 10% penalty tax and interest for the period as described above. Competent
tax advice should be obtained prior to making any withdrawals from an IRA
Contract. Any amounts distributed will only be paid to the Annuitant, Joint
Annuitant or Beneficiary. The Company will not transfer or pay such amounts to
another IRA or tax qualified plan.
Generally, distributions from an IRA Contract must commence no later than April
1 of the calendar year, following the later of: (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Generally, required distributions must be over a period not exceeding
the life or life expectancy of the individual or the joint lives or life
expectancies of the individual and his or her designated beneficiary. If the
required minimum distributions are not made, a 50% penalty tax is imposed as to
the amount not distributed.
Tax Treatment of Assignments
An assignment or pledge of a Contract may be a taxable event. Contract Owners
should therefore consult competent tax advisers should they wish to assign or
pledge their Contracts.
Death Benefits
Any death benefits paid under the Contract are taxable to the beneficiary. The
rules governing the taxation of payments from an annuity contract, as discussed
above, generally apply to the payment of death benefits and depend on whether
the death benefits are paid as a lump sum or as annuity payments. Estate taxes
may also apply.
Income Tax Withholding
All distributions or the portion thereof which is includible in the gross income
of the Contract Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Contract Owner, in most
cases, may elect not to have taxes withheld or to have withholding done at a
different rate.
Annuity Provisions
--------------------------------------------------------------------------------
Variable Annuity Payout
A variable annuity is an annuity with payments which:
(1) are not predetermined as to dollar amount; and
(2) will vary in amount with the net investment results of the applicable
Sub-Account(s) of the Separate Account.
Annuity payments also depend upon the Age of the Annuitant and any Joint
Annuitant and the Assumed Net Investment Factor utilized. On the Annuity
Calculation Date, a fixed number of Annuity Units will be purchased, determined
as follows:
The first Annuity Payment is equal to the Contract Value allocated to the
Separate Account divided first by $1,000 and then multiplied by the appropriate
Annuity Payment amount for each $1,000 of value for the Annuity Option selected.
In each Sub-Account, the fixed number of Annuity Units is determined by dividing
the amount of the initial Annuity Payment determined for each Sub-Account by the
Annuity Unit value on the Annuity Calculation Date. Thereafter, the number of
Annuity Units in each Sub-Account remains unchanged unless the Contract Owner
elects to transfer between Sub-Accounts. All calculations will appropriately
reflect the annuity payment frequency selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum of
the Annuity Payments determined for each Sub-Account. The Annuity Payment in
each Sub-Account is determined by multiplying the number of Annuity Units then
allocated to such Sub-Account by the Annuity Unit value for that Sub-Account.
For each Sub-Account, the value of an Annuity Unit was initially established at
$1.00. On each subsequent Valuation Date the value of an Annuity Unit is
determined in the following way:
FIRST: The Net Investment Factor is determined by dividing (a) by (b) and adding
(c) to the result, where:
a. is the net increase or decrease in the Net Asset Value per share of the
Portfolio (or other Eligible Investment) plus the per share amount of any
dividend or capital gain distribution paid by the Portfolio (or Eligible
Investment) during the Valuation Period, plus or minus a per share charge or
credit for any taxes incurred by or reserved for in the Sub-Account as of the
end of the current Valuation Period which the Company determines to have
resulted from maintenance of the Sub-Account; and
b. is the Net Asset Value per share of the Portfolio (or other Eligible
Investment) at the beginning of the Valuation Period, plus or minus a per share
charge or credit for any taxes incurred by or reserved for in the Sub-Account as
of the end of the immediately preceding Valuation Period which the Company
determines to have resulted from maintenance of the Sub-Account; and
c. is the net result of 1.000 less the Valuation Period deduction for the
charges to the Sub-Account.
The Net Investment Factor may be more or less than one.
SECOND: The value of an Annuity Unit for a Valuation Date is equal to:
a. the value of the Annuity Unit on the immediately preceding Valuation Date;
b. multiplied by the Net Investment Factor for the Valuation Period ending on
the current Valuation Date;
c. divided by the Assumed Net Investment Factor (see below) for the Valuation
Period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. For example, with a 5%
Assumed Investment Return, the Assumed Net Investment Factor for a one-year
Valuation Period would be 1.05. For a one-day Valuation Period, the Assumed Net
Investment Factor would be 1.00013368062.
The Assumed Investment Return is the investment return upon which Annuity
Payments are based. Income will increase from one annuity Income Date to the
next if the annualized Net Rate of Return during that time is greater than the
Assumed Investment Return and will decrease if the annualized Net Rate of Return
is less than the Assumed Investment Return.
A Contract Owner may choose either a 7%, 5% or a 3% Assumed Investment Return.
If the Contract Owner does not choose one, the 5% Assumed Investment Return
automatically applies. Choosing a higher Assumed Investment Return will result
in a higher initial amount of income, but income will increase more slowly
during periods of good investment performance of the Trust and decrease more
rapidly during periods of poor investment performance. THE 7% ASSUMED INVESTMENT
RETURN IS NOT AVAILABLE IN ALL STATES UNTIL APPROVED BY THE STATE INSURANCE
DEPARTMENTS. (CHECK WITH YOUR REGISTERED REPRESENTATIVE REGARDING AVAILABILITY).
The variable annuity benefits provided for under the Contract are based upon:
(a) the 1983(a) Blended Unisex Mortality Table with 50% female content,
projected to the year 2000 with Projection Scale G; (b) the Assumed Investment
Return, and (c) any applicable taxes.
Fixed Annuity Payout
Annuity payments from the Fixed Payment Option will be equal payments unless
otherwise specified by the Annuity Option selected.
Financial Statements
--------------------------------------------------------------------------------
The audited consolidated financial statements of the Company as of and for the
year ended December 31, 1999, included herein should be considered only as
bearing upon the ability of the Company to meet its obligations under the
Contracts. The audited financial statements of the Separate Account as of and
for the year ended December 31, 1999 and the unaudited financial statements of
the Separate Account as of and for the period ended March 31, 2000 are also
included herein.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements
March 31, 2000
(Unaudited)
Variable Life Prospectus 1
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements
Statements of Assets and Liabilities
March 31, 2000 (unaudited)
(In thousands)
AIM V.I. AIM V.I.
Capital Appreciation AIM V.I. International Equity AIM V.I.
Fund Growth Fund Fund Value Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
AIM V.I. Capital Appreciation Fund
Class 1 - 3 shares, cost $119 $118 - - - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
AIM V.I. Growth Fund
Class 1 - 1,169 shares, cost $39,151 - - 42,602 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
AIM V.I. International Equity Fund
Class 1 - 3 shares, cost $91 - - - - 88 - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
AIM V.I. Value Fund
Class 1 - 4 shares, cost $140 - - - - - - 143 -
Class 2 - 0 shares, cost $0 - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total assets 118 - 42,602 - 88 - 143 -
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - 7 - - - - -
Valuemark IV - - 6 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities - - 13 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets $118 - 42,589 - 88 - 143 -
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $64 - 468 - 62 - 110 -
USAllianz Alterity Enhanced (note 7) 6 - 12 - 3 - 11 -
USAllianz Alterity Optional (note 7) 48 - - - 23 - 22 -
Valuemark II and III (note 5) - - 23,863 - - - - -
Valuemark IV (note 5) - - 18,126 - - - - -
Valuemark Charter Traditional (note 6) - - - - - - - -
Valuemark Charter Enhanced (note 6) - - - - - - - -
Contracts in annuity payment period (note 2) - - 120 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners equity $118 - 42,589 - 88 - 143 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements
March 31, 2000
(Unaudited)
2
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements
Statements of Assets and Liabilities
March 31, 2000 (unaudited)
(In thousands)
Alger Alger Alger American
Alger American American Small Capitalization
American Growth Fund Leveraged AllCap Fund MidCap Growth Fund Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Alger American Growth Fund
Class 1 - 448 shares, cost $28,558 $31,831 - - - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Alger American Leveraged AllCap Fund
Class 1 - 467 shares, cost $28,655 - - 31,005 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Alger American MidCap Growth Portfolio
Class 1 - 2 shares, cost $84 - - - - 84 - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Alger American Small Capitalization Portfolio
Class 1 - 1 shares, cost $45 - - - - - - 39 -
Class 2 - 0 shares, cost $0 - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total assets 31,831 - 31,005 - 84 - 39 -
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 6 - 7 - - - - -
Valuemark IV 6 - 6 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 12 - 13 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets $31,819 - 30,992 - 84 - 39 -
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $55 - 241 - 72 - 7 -
USAllianz Alterity Enhanced (note 7) 13 - 19 - 12 - 11 -
USAllianz Alterity Optional (note 7) 52 - 11 - - - 21 -
Valuemark II and III (note 5) 18,666 - 18,724 - - - - -
Valuemark IV (note 5) 12,893 - 11,997 - - - - -
Valuemark Charter Traditional (note 6) - - - - - - - -
Valuemark Charter Enhanced (note 6) - - - - - - - -
Contracts in annuity payment period (note 2) 140 - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $31,819 - 30,992 - 84 - 39 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 3
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
Davis VA Davis VA Davis VA Franklin
Financial Real Estate Value Global Communications
Portfolio Portfolio Portfolio Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Davis VA Financial Portfolio
Class 1 - 10 shares, cost $94 $97 - - - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Davis VA Real Estate Portfolio
Class 1 - 0 shares, cost $4 - - 2 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Davis VA Value Portfolio
Class 1 - 5 shares, cost $55 - - - - 57 - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Franklin Global Communications Securities Fund
Class 1 - 34,950 shares, cost $589,509 - - - - - - 957,633 -
Class 2 - 22 shares, cost $474 - - - - - - - 590
------------------------------------------------------------------------------------------------------------------------------------
Total assets 97 - 2 - 57 - 957,633 590
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk and
administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced (3) - - - 3 - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - - - - - 59 -
Valuemark IV - - - - - - 9 -
Valuemark Charter Traditional - - - - - - - 2
Valuemark Charter Enhanced - - - - - - - 2
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities (3) - - - 3 - 68 4
------------------------------------------------------------------------------------------------------------------------------------
Net assets $100 - 2 - 54 - 957,565 586
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $97 - 2 - 53 - - -
USAllianz Alterity Enhanced (note 7) 3 - - - - - - -
USAllianz Alterity Optional (note 7) - - - - 1 - - -
Valuemark II and III (note 5) - - - - - - 885,307 -
Valuemark IV (note 5) - - - - - - 67,188 -
Valuemark Charter Traditional (note 6) - - - - - - - 260
Valuemark Charter Enhanced (note 6) - - - - - - - 326
Contracts in annuity payment period (note 2) - - - - - - 5,070 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $100 - 2 - 54 - 957,565 586
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
Franklin Franklin Franklin Franklin
Global Health Care Growth and Income High Income Income Securities
Securities Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Global Health Care Securities Fund
Class 1 - 1,635 shares, cost $17,484 $19,802 - - - - - - -
Class 2 - 13 shares, cost $129 - 154 - - -- - - -
Franklin Growth and Income Fund
Class 1 - 43,612 shares, cost $704,532 - - 774,547 - - - - -
Class 2 - 61 shares, cost $1,112 - -- 1,086 - - - -
Franklin High Income Fund
Class 1 - 24,737 shares, cost $308,414 - - - - 239,454 - - -
Class 2 - 35 shares, cost $358 - - - - - 339 - -
Franklin Income Securities Fund
Class 1 - 43,097 shares, cost $659,907 - - - - - - 636,546 -
Class 2 - 97 shares, cost $1,509 - - - - - - - 1,433
------------------------------------------------------------------------------------------------------------------------------------
Total assets 19,802 154 774,547 1,086 239,454 339 636,546 1,433
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk
and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 6 - 164 - 37 - 226 -
Valuemark IV 5 - 11 - 9 - 9 -
Valuemark Charter Traditional - - - 7 - 2 - 8
Valuemark Charter Enhanced - - - 2 - - - 1
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 11 - 175 9 46 2 235 9
------------------------------------------------------------------------------------------------------------------------------------
Net assets $19,791 154 774,372 1,077 239,408 337 636,311 1,424
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - - - - - - - -
USAllianz Alterity Enhanced (note 7) - - - - - - - -
USAllianz Alterity Optional (note 7) - - - 98 - - - -
Valuemark II and III (note 5) 12,051 - 633,088 - 164,883 - 535,248 -
Valuemark IV (note 5) 7,740 - 131,853 - 73,466 - 95,351 -
Valuemark Charter Traditional (note 6) - 63 - 556 - 282 - 1,205
Valuemark Charter Enhanced (note 6) - 91 - 423 - 55 - 219
Contracts in annuity payment period (note 2) - - 9,431 - 1,059 - 5,712 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $19,791 154 774,372 1,077 239,408 337 636,311 1,424
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 5
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
Franklin Franklin Franklin Franklin
Large Cap Growth Money Market Natural Resources Real Estate
Securities Fund Fund Securities Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Large Cap Growth Securities Fund
Class 1 - 18,376 shares, cost $284,272 $427,970 - - - - - - -
Class 2 - 43 shares, cost $842 - 1,005 - - - - - -
Franklin Money Market Fund
Class 1 - 290,604 shares, cost $290,561 - - 290,605 - - - - -
Class 2 - 773 shares, cost $773 - - - 774 - - - -
Franklin Natural Resources Securities Fund
Class 1 - 3,386 shares, cost $37,377 - - - - 42,191 - - -
Class 2 - 6 shares, cost $69 - - - - - 80 - -
Franklin Real Estate Fund
Class 1 - 8,647 shares, cost $154,229 - - - - - - 132,647 -
Class 2 - 29 shares, cost $435 - - - - - - - 449
------------------------------------------------------------------------------------------------------------------------------------
Total assets 427,970 1,005 290,605 774 42,191 80 132,647 449
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 210 - 195 - 7 - 10 -
Valuemark IV 13 - 8 - 6 - 7 -
Valuemark Charter Traditional - 7 - 46 - 1 - 2
Valuemark Charter Enhanced - 2 - - - - - 1
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 223 9 203 46 13 1 17 3
------------------------------------------------------------------------------------------------------------------------------------
Net assets $427,747 996 290,402 728 42,178 79 132,630 446
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - - - - - - - -
USAllianz Alterity Enhanced (note 7) - - - - - - - -
USAllianz Alterity Optional (note 7) - - - - - - - -
Valuemark II and III (note 5) 246,773 - 225,644 - 34,626 - 102,177 -
Valuemark IV (note 5) 172,715 - 62,822 - 7,544 - 29,707 -
Valuemark Charter Traditional (note 6) - 509 - 725 - 70 - 394
Valuemark Charter Enhanced (note 6) - 487 - 3 - 9 - 52
Contracts in annuity payment period (note 2) 8,259 - 1,936 - 8 - 746 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $427,747 996 290,402 728 42,178 79 132,630 446
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
6
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
Franklin Franklin Franklin Franklin
Rising Dividends Securities S & P 500 Index Small Cap U.S. Government
Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Rising Dividends Securities Fund
Class 1 - 25,557 shares, cost $356,744 $358,817 - - - - - - -
Class 2 - 36 shares, cost $547 - 497 - - - - - -
Franklin S&P 500 Index Fund
Class 1 - 3,194 shares, cost $32,929 - - 34,753 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Franklin Small Cap Fund
Class 1 - 17,151 shares, cost $265,029 - - - - 516,760 - - -
Class 2 - 132 shares, cost $3,974 - - - - - 3,973 - -
Franklin U.S. Government Fund
Class 1 - 35,547 shares, cost $463,041 - - - - - - 427,276 -
Class 2 - 160 shares, cost $2,126 - - - - - - - 1,924
------------------------------------------------------------------------------------------------------------------------------------
Total assets 358,817 497 34,753 - 516,760 3,973 427,276 1,924
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 86 - 6 - 258 - 19 -
Valuemark IV 9 - 6 - 12 - 9 -
Valuemark Charter Traditional - 3 - - - 7 - 18
Valuemark Charter Enhanced - 1 - - 1 - 2
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 95 4 12 - 270 8 28 20
------------------------------------------------------------------------------------------------------------------------------------
Net assets $358,722 493 34,741 - 516,490 3,965 427,248 1,904
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - 1 - - - 136 - -
USAllianz Alterity Enhanced (note 7) - - - - - 13 - -
USAllianz Alterity Optional (note 7) - - - - - 10 - 34
Valuemark II and III (note 5) 286,209 - 19,114 - 328,080 - 356,306 -
Valuemark IV (note 5) 68,994 - 15,627 - 180,815 - 70,482 -
Valuemark Charter Traditional (note 6) - 292 - - - 3,584 - 1,598
Valuemark Charter Enhanced (note 6) - 200 - - - 222 - 272
Contracts in annuity payment period (note 2) 3,519 - - - 7,595 - 460 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $358,722 493 34,741 - 516,490 3,965 427,248 1,904
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 7
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
Franklin Franklin Franklin Franklin
Value Securities Zero Coupon Zero Coupon Zero Coupon
Fund Fund - 2000 Fund - 2005 Fund - 2010
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Value Securities Fund
Class 1 - 1,582 shares, cost $12,375 $12,907 - - - - - - -
Class 2 - 18 shares, cost $141 - 145 - - - - - -
Franklin Zero Coupon Fund- 2000
Class 1 - 4,304 shares, cost $59,908 - - 54,793 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Franklin Zero Coupon Fund- 2005
Class 1 - 3,700 shares, cost $56,992 - - - - 54,758 - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Franklin Zero Coupon Fund- 2010
Class 1 - 3,802 shares, cost $61,996 - - - - - - 56,648 -
Class 2 - 0 shares, cost $0 - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total assets 12,907 145 54,793 - 54,758 - 56,648 -
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk
and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 34 - 7 - 7 - 7 -
Valuemark IV 6 - 6 - 6 - 6 -
Valuemark Charter Traditional - 1 - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 40 1 13 - 13 - 13 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets $12,867 144 54,780 - 54,745 - 56,635 -
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - - - - - - - -
USAllianz Alterity Enhanced (note 7) - - - - - - - -
USAllianz Alterity Optional (note 7) - - - - - - - -
Valuemark II and III (note 5) 7,015 - 49,580 - 42,731 - 40,867 -
Valuemark IV (note 5) 5,522 - 5,173 - 12,011 - 15,758 -
Valuemark Charter Traditional (note 6) - 123 - - - - - -
Valuemark Charter Enhanced (note 6) - 21 - - - - - -
Contracts in annuity payment period (note 2) 330 - 27 - 3 - 10 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $12,867 144 54,780 - 54,745 - 56,635 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
8
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
J.P. Morgan J.P. Morgan Mutual Mutual
International OpportunitiesU.S. DisciplinedDiscovery Securities Shares Securities
Portfolio Portfolio Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
J.P. Morgan International Opportunities Portfolio
Class 1 - 1 shares, cost $17 $17 - - - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
J.P. Morgan U.S. Disciplined Equity Portfolio
Class 1 - 1 shares, cost $19 - - 20 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Mutual Discovery Securities Fund
Class 1 - 13,546 shares, cost $159,260 - - - - 197,224 - - -
Class 2 - 32 shares, cost $400 - - - - 464 - -
Mutual Shares Securities Fund
Class 1 - 28,901 shares, cost $337,052 - - - - - - 392,480 -
Class 2 - 98 shares, cost $1,236 - - - - - - 1,328
------------------------------------------------------------------------------------------------------------------------------------
Total assets 17 - 20 - 197,224 464 392,480 1,328
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - - - - -
USAllianz Alterity Enhanced - - - - - - -
USAllianz Alterity Optional - - - - - - -
Valuemark II & III - - - - 161 - 250 -
Valuemark IV - - - - 10 - 15 -
Valuemark Charter Traditional - - - - - 3 - 7
Valuemark Charter Enhanced - - - - - 1 - 1
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities - - - - 171 4 265 8
------------------------------------------------------------------------------------------------------------------------------------
Net assets $17 - 20 - 197,053 460 392,215 1,320
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $17 - 20 - - 40 - -
USAllianz Alterity Enhanced (note 7) - - - - - 1 - -
USAllianz Alterity Optional (note 7) - - - - - 19 - 8
Valuemark II and III (note 5) - - - - 81,109 - 148,636 -
Valuemark IV (note 5) - - - - 111,239 - 237,480 -
Valuemark Charter Traditional (note 6) - - - - - 209 - 957
Valuemark Charter Enhanced (note 6) - - - - - 191 - 355
Contracts in annuity payment period (note 2) - - - - 4,705 - 6,099 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $17 - 20 - 197,053 460 392,215 1,320
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 9
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
Oppenheimer Oppenheimer Oppenheimer PIMCO VIT
Global Securities High Income Main Street Growth & High Yield Bond
Fund/VA Fund/VA Income Fund/VA Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Oppenheimer Global Securities Fund/VA
Class 1 - 5 shares, cost $187 $163 - - - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Oppenheimer High Income Fund/VA
Class 1 - 18 shares, cost $176 - - 173 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Oppenheimer Main Street Growth & Income Fund/VA
Class 1 - 21 shares, cost $503 - - - - 514 - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
PIMCO VIT High Yield Bond Portfolio
Class 1 - 2 shares, cost $15 - - - - - - 14 -
Class 2 - 0 shares, cost $0 - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total assets 163 - 173 - 514 - 14 -
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk
and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets $163 - 173 - 514 - 14 -
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $151 - 173 - 513 - 14 -
USAllianz Alterity Enhanced (note 7) 11 - - - - - - -
USAllianz Alterity Optional (note 7) 1 - - - 1 - - -
Valuemark II and III (note 5) - - - - - - - -
Valuemark IV (note 5) - - - - - - - -
Valuemark Charter Traditional (note 6) - - - - - - - -
Valuemark Charter Enhanced (note 6) - - - - - - - -
Contracts in annuity payment period (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $163 - 173 - 514 - 14 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
10
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
PIMCO VIT PIMCO VIT Seligman Seligman
StocksPLUS Growth Total Return Bond Global Technology Small-Cap Value
and Income Portfolio Portfolio Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
PIMCO VIT StocksPLUS Growth & Income Portfolio
Class 1 - 1 shares, cost $10 $12 - - - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
PIMCO VIT Total Return Bond Portfolio
Class 1 - 2 shares, cost $19 - - 19 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Seligman Global Technology Fund
Class 1 - 20 shares, cost $667 - - - - 650 - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Seligman Small-Cap Value Fund
Class 1 - 2 shares, cost $16 - - - - - - 17 -
Class 2 - 0 shares, cost $0 - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total assets 12 - 19 - 650 - 17 -
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk
and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets $12 - 19 - 650 - 17 -
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $9 - 19 - 632 - 17 -
USAllianz Alterity Enhanced (note 7) 3 - - - 18 - - -
USAllianz Alterity Optional (note 7) - - - - - - - -
Valuemark II and III (note 5) - - - - - - - -
Valuemark IV (note 5) - - - - - - - -
Valuemark Charter Traditional (note 6) - - - - - - - -
Valuemark Charter Enhanced (note 6) - - - - - - - -
Contracts in annuity payment period (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $12 - 19 - 650 - 17 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 11
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
Templeton Templeton Templeton Templeton
Global Asset Allocation Developing Markets Global Income Global Growth
Fund Equity Fund Securities Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Templeton Global Asset Allocation Fund
Class 1 - 4,584 shares, cost $55,606 $53,081 - - - - - - -
Class 2 - 5 shares, cost $57 - 54 - - - - - -
Templeton Developing Markets Equity Fund
Class 1 - 16,352 shares, cost $161,146 - - 161,558 - - - - -
Class 2 - 175 shares, cost $1,727 - - - 1,726 - - - -
Templeton Global Income Securities Fund
Class 1 - 6,578 shares, cost $82,639 - - - - 72,950 - - -
Class 2 - 40 shares, cost $464 - - - - - 443 - -
Templeton Global Growth Fund
Class 1 - 40,065 shares, cost $514,744 - - - - - - 603,375 -
Class 2 - 216 shares, cost $3,208 - - - - - - - 3,246
------------------------------------------------------------------------------------------------------------------------------------
Total assets 53,081 54 161,558 1,726 72,950 443 603,375 3,246
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk
and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 82 - 59 - 8 - 475 -
Valuemark IV 6 - 7 - 6 - 13 -
Valuemark Charter Traditional - - - 6 - 2 - 17
Valuemark Charter Enhanced - - - 1 - - - 2
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 88 - 66 7 14 2 488 19
------------------------------------------------------------------------------------------------------------------------------------
Net assets $52,993 54 161,492 1,719 72,936 441 602,887 3,227
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - - - 6 - - - 17
USAllianz Alterity Enhanced (note 7) - - - - - - - -
USAllianz Alterity Optional (note 7) - - - - - - - -
Valuemark II and III (note 5) 32,750 - 120,925 - 62,882 - 428,531 -
Valuemark IV (note 5) 18,676 - 39,416 - 9,936 - 165,968 -
Valuemark Charter Traditional (note 6) - 33 - 1,583 - 435 - 2,848
Valuemark Charter Enhanced (note 6) - 21 - 130 - 6 - 362
Contracts in annuity payment period (note 2) 1,567 - 1,151 - 118 - 8,388 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $52,993 54 161,492 1,719 72,936 441 602,887 3,227
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
12
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
Templeton Templeton Templeton USAllianz
International EquityInternational Smaller Pacific Growth VIP Diversified Assets
Fund Companies Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Templeton International Equity Fund
Class 1 - 37,741 shares, cost $546,213 $654,432 - - - - - - -
Class 2 - 306 shares, cost $5,148 - 5,279 - - - - - -
Templeton International Smaller Companies Fund
Class 1 - 2,045 shares, cost $22,310 - - 23,801 - - - - -
Class 2 - 124 shares, cost $1,437 - - - 1,445 - - - -
Templeton Pacific Growth Fund
Class 1 - 7,984 shares, cost $75,868 - - - - 76,405 - - -
Class 2 - 16 shares, cost $155 - - - - - 156 - -
USAllianz VIP Diversified Assets Fund
Class 1 - 0 shares, cost $0 - - - - - - - -
Class 2 - 136 shares, cost $1,401 - - - - - - - 1,420
------------------------------------------------------------------------------------------------------------------------------------
Total assets 654,432 5,279 23,801 1,445 76,405 156 - 1,420
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk
and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 290 - 13 - 23 - - 2
Valuemark IV 9 - 6 - 6 - - (11)
Valuemark Charter Traditional - 43 - 4 - 1 - -
Valuemark Charter Enhanced - 2 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 299 45 19 4 29 1 - (9)
------------------------------------------------------------------------------------------------------------------------------------
Net assets $654,133 5,234 23,782 1,441 76,376 155 - 1,429
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - - - - - 7 - 6
USAllianz Alterity Enhanced (note 7) - - - - - - - -
USAllianz Alterity Optional (note 7) - - - - - - - -
Valuemark II and III (note 5) 557,857 - 12,447 - 65,285 - - 640
Valuemark IV (note 5) 92,927 - 10,678 - 10,569 - - 783
Valuemark Charter Traditional (note 6) - 4,805 - 1,293 - 43 - -
Valuemark Charter Enhanced (note 6) - 429 - 148 - 105 - -
Contracts in annuity payment period (note 2) 3,349 - 657 - 522 - - -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $654,133 5,234 23,782 1,441 76,376 155 - 1,429
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 13
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
USAllianz USAllianz USAllianz USAllianz
VIP Fixed Income VIP Global Opportunities VIP Growth VIP Money Market
Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
USAllianz VIP Fixed Income Fund
Class 1 - 0 shares, cost $0 $ - - - - - - - -
Class 2 - 47 shares, cost $465 - 459 - - - - - -
USAllianz VIP Global Opportunities Fund
Class 1 - 0 shares, cost $0 - - - - - - - -
Class 2 - 2 shares, cost $18 - - - 18 - - - -
USAllianz VIP Growth Fund
Class 1 - 0 shares, cost $0 - - - - - - - -
Class 2 - 91 shares, cost $977 - - - - - 1,050 - -
USAllianz VIP Money Market Fund
Class 1 - 0 shares, cost $0 - - - - - - - -
Class 2 - 90 shares, cost $90 - - - - - - - 89
------------------------------------------------------------------------------------------------------------------------------------
Total assets - 459 - 18 - 1,050 - 89
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - (5) - - - 2 - -
Valuemark IV - - - - - 1 - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities - (5) - - - 3 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets $ - 464 - 18 - 1,047 - 89
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - 1 - 18 - 14 - -
USAllianz Alterity Enhanced (note 7) - - - - - - - -
USAllianz Alterity Optional (note 7) - - - - - - - 89
Valuemark II and III (note 5) - 332 - - - 645 - -
Valuemark IV (note 5) - 131 - - - 388 - -
Valuemark Charter Traditional (note 6) - - - - - - - -
Valuemark Charter Enhanced (note 6) - - - - - - - -
Contracts in annuity payment period (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $ - 464 - 18 - 1,047 - 89
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
14
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
March 31, 2000 (unaudited)
(In thousands)
Van Kampen Van Kampen Total
LIT Enterprise LIT Growth & Income All
Portfolio Portfolio Funds
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Van Kampen LIT Enterprise Portfolio
Class 1 - 1 shares, cost $18 $17 - - - - -
Class 2 - 0 shares, cost $0 - - - - - -
Van Kampen LIT Growth & Income Portfolio
Class 1 - 0 shares, cost $1 - - 1 - - -
Class 2 - 0 shares, cost $0 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total assets 17 - 1 - 7,381,096 29,626
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - - - -
USAllianz Alterity Enhanced - - - - - -
USAllianz Alterity Optional - - - - - -
Valuemark II & III - - - - 2,719 (1)
Valuemark IV - - - - 233 (10)
Valuemark Charter Traditional - - - - - 187
Valuemark Charter Enhanced - - - - - 19
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities - - - - 2,952 195
------------------------------------------------------------------------------------------------------------------------------------
Net assets $17 - 1 - 7,378,144 29,431
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $6 - - - 2,802 246
USAllianz Alterity Enhanced (note 7) 11 - - - 133 14
USAllianz Alterity Optional (note 7) - - 1 - 181 258
Valuemark II and III (note 5) - - - - 5,541,374 1,617
Valuemark IV (note 5) - - - - 1,762,673 1,302
Valuemark Charter Traditional (note 6) - - - - - 21,867
Valuemark Charter Enhanced (note 6) - - - - - 4,127
Contracts in annuity payment period (note 2) - - - - 70,981 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $17 - 1 - 7,378,144 29,431
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 15
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
AIM V.I. AIM V.I. AIM V.I.
Capital Appreciation AIM International Equity Value
Fund V.I. Growth Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - 46 - - - - -
Valuemark IV - - 37 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - 6 - - - - -
Valuemark IV - - 4 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses - - 93 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net - - (93) - - - - -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net - - 37 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net - - 37 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments - - 3,091 - (4) - 3 -
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net - - 3,128 - (4) - 3 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $ - - 3,035 - (4) - 3 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
16
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
Alger Alger American Alger American
Alger American MidCap Growth Small Capitalization
American Growth FundLeveraged AllCap Fund Portfolio Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 39 - 35 - - - - -
Valuemark IV 30 - 27 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 5 - 4 - - - - -
Valuemark IV 3 - 3 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 77 - 69 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (77) - (69) - - - - -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net 23 - 62 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 23 - 62 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 2,789 - 1,692 - - - (6) -
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net 2,812 - 1,754 - - - (6) -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $2,735 - 1,685 - - - (6) -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 17
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
Davis VA Davis VA Davis VA Franklin
Financial Real Estate Value Global Communications
Portfolio Portfolio Portfolio Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced (3) - - - 2 - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - - - - - 3,008 -
Valuemark IV - - - - - - 227 -
Valuemark Charter Traditional - - - - - - - 1
Valuemark Charter Enhanced - - - - - - - 1
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - - - - - 361 -
Valuemark IV - - - - - - 25 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses (3) - - - 2 - 3,621 2
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 3 - - - (2) - (3,621) (2)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net - - - - - - 16,678 -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net - - - - - - 16,678 -
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 3 - (2) - 1 - 74,456 47
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 3 - (2) - 1 - 91,134 47
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $ 6 - (2) - (1) - 87,513 45
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
18
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
Franklin Franklin Franklin Franklin
Global Health Care Growth and Income High Income Income Securities
Securities Fund Securities Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 33 - 2,073 - 554 - 1,802 -
Valuemark IV 23 - 441 - 267 - 333 -
Valuemark Charter Traditional - - -- 1 - 1 - 3
Valuemark Charter Enhanced - - - 1 - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 4 - 249 - 66 - 216 -
Valuemark IV 3 - 49 - 30 - 37 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 63 - 2,812 2 917 1 2,388 3
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (63) - (2,812) (2) (917) (1) (2,388) (3)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net 630 - 4,333 (7) (12,478) (51) (3,528) (2)
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 630 - 4,333 (7) (12,478) (51) (3,528) (2)
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 1,923 18 (10,384) 30 8,062 39 7,072 9
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net 2,553 18 (6,051) 23 (4,416) (12) 3,544 7
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $2,490 18 (8,863) 21 (5,333) (13) 1,156 4
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 19
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
Franklin Franklin Franklin Franklin
Large Cap Growth Money Market Natural Resources Real Estate
Securities Fund Fund Securities Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - 4,117 72 - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 822 - 673 - 101 - 336 -
Valuemark IV 545 - 228 - 25 - 101 -
Valuemark Charter Traditional - 2 - 15 - - - 1
Valuemark Charter Enhanced - 1 - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 99 - 81 - 12 - 40 -
Valuemark IV 61 - 26 - 3 - 11 -
Valuemark Charter Traditional - - - 2 - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,527 3 1,008 17 141 - 488 1
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (1,527) (3) 3,109 55 (141) - (488) (1)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net 5,578 3 - - (195) - (3,805) 1
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 5,578 3 - - (195) - (3,805) 1
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 34,966 79 44 - 5,393 10 7,430 13
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net 40,544 82 44 - 5,198 10 3,625 14
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $39,017 79 3,153 55 5,057 10 3,137 13
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
20
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
Franklin Franklin Franklin Franklin
Rising Dividends S&P 500 Index Small Cap U.S. Government
Securities Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 18 - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 935 - 82 - 1,162 - 1,153 -
Valuemark IV 234 - 38 - 595 - 234 -
Valuemark Charter Traditional - 1 - - - 4 - 4
Valuemark Charter Enhanced - 1 - - - 1 - 1
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 112 - 10 - 139 - 138 -
Valuemark IV 26 - 4 - 67 - 26 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,307 2 134 - 1,963 5 1,551 5
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (1,289) (2) (134) - (1,963) (5) (1,551) (5)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net (3,626) (13) (82) - 23,031 777 (4,962) (12)
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net (3,626) (13) (82) - 23,031 777 (4,962) (12)
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 12,617 28 1,439 - 32,557 (286) 13,560 47
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net 8,991 15 1,357 - 55,588 491 8,598 35
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $7,702 13 1,223 - 53,625 486 7,047 30
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 21
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
Franklin Franklin Franklin Franklin
Value Securities Zero Coupon Zero Coupon Zero Coupon
Fund Fund - 2000 Fund - 2005 Fund - 2010
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 16 - 161 - 139 - 129 -
Valuemark IV 16 - 18 - 41 - 50 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 2 - 19 - 17 - 15 -
Valuemark IV 2 - 2 - 5 - 6 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 36 - 200 - 202 - 200 -
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (36) - (200) - (202) - (200) -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net (119) - (545) - (376) - (2,127) -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net (119) - (545) - (376) - (2,127) -
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 630 5 1,262 - 1,459 - 5,006 -
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net 511 5 717 - 1,083 - 2,879 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $475 5 517 - 881 - 2,679 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
22
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
J.P. Morgan J.P. Morgan Mutual Mutual
International Opportunities U.S. Disciplined Equity Discovery Securities Shares Securities
Portfolio Portfolio Fund Fund
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - - - 300 - 546 -
Valuemark IV - - - - 364 - 780 -
Valuemark Charter Traditional - - - - - 1 - 2
Valuemark Charter Enhanced - - - - - 1 - 1
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - - - 36 - 66 -
Valuemark IV - - - - 41 - 87 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses - - - - 741 2 1,479 3
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net - - - - (741) (2) (1,479) (3)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net - - - - 1,647 17 3,588 -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net - - - - 1,647 17 3,588 -
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments - - 2 - 11,990 15 5,203 52
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net - - 2 - 13,637 32 8,791 52
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $ - - 2 - 12,896 30 7,312 49
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 23
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
Oppenheimer Oppenheimer Oppenheimer PIMCO VIT
Global Securities High Income Main Street Growth & High Yield Bond
Fund/VA Fund/VA Income Fund/VA Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net - - - - - - - -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (24) - (3) - 10 - - -
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net (24) - (3) - 10 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $ (24) - (3) - 10 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
24
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
PIMCO VIT PIMCO VIT Seligman Seligman
StocksPLUS Growth & Total Return Bond Global Technology Small-Cap Value
Income Portfolio Portfolio Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - - - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net - - - - - - - -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 1 - - - (15) - 1 -
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 1 - - - (15) - 1 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $ 1 - - - (15) - 1 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 25
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
Templeton Templeton Templeton Templeton
Global Asset Allocation Developing Markets Global Income Global Growth
Fund Equity Fund Securities Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 105 - 408 - 207 - 1,568
Valuemark IV 64 - 137 - 34 - 546 -
Valuemark Charter Traditional - - - 2 - 1 - 4
Valuemark Charter Enhanced - - - - - - - 1
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 13 - 49 - 25 - 188 -
Valuemark IV 7 - 15 - 4 - 61 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 189 - 609 2 270 1 2,363 5
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (189) - (609) (2) (270) (1) (2,363) (5)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net (259) (1) 839 162 (1,215) - 5,402 36
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net (259) (1) 839 162 (1,215) - 5,402 36
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (911) - (10,773) (19) 1,307 - (30,926) (7)
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net (1,170) (1) (9,934) 143 92 - (25,524) 29
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $(1,359) (1) (10,543) 141 (178) (1) (27,887) 24
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
26
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
Templeton Templeton Templeton USAllianz
International Equity International Smaller Pacific Growth VIP Diversified Assets
Fund Companies Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - - - - - - 13
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 1,870 - 40 - 219 - - 1
Valuemark IV 306 - 34 - 38 - - (10)
Valuemark Charter Traditional - 10 - 1 - - - -
Valuemark Charter Enhanced - 1 - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III 224 - 5 - 26 - - -
Valuemark IV 34 - 4 - 4 - - (1)
Valuemark Charter Traditional - 1 - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 2,434 12 83 1 287 - - (10)
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (2,434) (12) (83) (1) (287) - - 23
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net 13,960 148 156 114 (1,084) 3 - -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 13,960 148 156 114 (1,084) 3 - -
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (39,771) 12 986 6 (3,963) - - 17
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net (25,811) 160 1,142 120 (5,047) 3 - 17
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $(28,245) 148 1,059 119 (5,334) 3 - 40
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 27
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
USAllianz USAllianz USAllianz USAllianz
VIP Fixed Income VIP Global Opportunities VIP Growth VIP Money Market
Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - 7 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - (4) - 1 - - - -
Valuemark IV - - - 1 - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
Valuemark II & III - (1) - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses - (5) - 2 - - - -
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net - 12 - (2) - - - -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments,
net - 27 - - - 3 - -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net - 27 - - - 3 - -
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments - (3) - - - 59 - -
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net - 24 - - - 62 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $ - 36 - (2) - 62 - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
28
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the three-month period ended March 31, 2000 (unaudited)
(In thousands)
Van Kampen Van Kampen Total
LIT Enterprise LIT Growth & Income All
Portfolio Portfolio Funds
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ - - - - 4,135 92
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - -
USAllianz Alterity Enhanced - - - - (1) -
USAllianz Alterity Optional - - - - - -
Valuemark II & III - - - - 18,562 (2)
Valuemark IV - - - - 5,813 (9)
Valuemark Charter Traditional - - - - - 54
Valuemark Charter Enhanced - - - - - 10
Administrative charges:
USAllianz Alterity Traditional - - - - - -
USAllianz Alterity Enhanced - - - - - -
USAllianz Alterity Optional - - - - - -
Valuemark II & III - - - - 2,227 (1)
Valuemark IV - - - - 650 (1)
Valuemark Charter Traditional - - - - - 3
Valuemark Charter Enhanced - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses - - - - 27,251 54
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net - - - - (23,116) 38
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds 1 - - - 1 -
Realized gains (losses) on sales of investments,
net - - - - 41,563 1,205
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 1 - - - 41,564 1,205
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (1) - - - 138,172 171
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net - - - - 179,736 1,376
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $ - - - - 156,620 1,414
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 29
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
AIM V.I. AIM V.I.
Capital Appreciation Fund Growth Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ - - - - (93) 3 - -
Realized gains (losses) on investments, net - - - - 37 205 - -
Net change in unrealized appreciation
(depreciation) on investments - - - - 3,091 359 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations - - - - 3,035 567 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 71 - - - 1,317 77 - -
Transfers between funds 47 - - - 29,208 9,294 - -
Surrenders and terminations - - - - (663) (79) - -
Rescissions - - - - (165) - - -
Other transactions (note 2) - - - - (2) - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 118 - - - 29,695 9,292 - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 118 - - - 32,730 9,859 - -
Net assets at beginning of period - - - - 9,859 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $118 - - - 42,589 9,859 - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
30
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
AIM V.I. AIM V.I.
International Equity Fund Value Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
nvestment income (loss), net $ - - - - - - - -
Realized gains (losses) on investments, net - - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments (4) - - - 3 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (4) - - - 3 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 67 - - - 109 - - -
Transfers between funds 25 - - - 31 - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 92 - - - 140 - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 88 - - - 143 - - -
Net assets at beginning of period - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $88 - - - 143 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 31
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Alger American Alger American
Growth Fund Leveraged AllCap Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ (77) (10) - - (69) (6) - -
Realized gains (losses) on investments,
net 23 - - - 62 17 - -
Net change in unrealized appreciation
(depreciation) on investments 2,789 484 - - 1,692 656 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 2,735 474 - - 1,685 667 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 495 221 - - 512 9 - -
Transfers between funds 18,885 9,751 - - 22,039 6,843 - -
Surrenders and terminations (728) (13) - - (743) (18) - -
Rescissions - - - - - - - -
Other transactions (note 2) (1) - - - (2) - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 18,651 9,959 - - 21,806 6,834 - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 21,386 10,433 - - 23,491 7,501 - -
Net assets at beginning of period 10,433 - - - 7,501 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $31,819 10,433 - - 30,992 7,501 - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
32
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Alger American Alger American
MidCap Growth Portfolio Small Capitalization Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ - - - - - - - -
Realized gains (losses) on investments, net - - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments - - - - (6) - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations - - - - (6) - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 84 - - - 20 - - -
Transfers between funds - - - - 25 - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 84 - - - 45 - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 84 - - - 39 - - -
Net assets at beginning of period - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $84 - - - 39 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 33
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Davis VA Davis VA
Financial Portfolio Real Estate Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $3 - - - - - - -
Realized gains (losses) on investments, net - - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments 3 - - - (2) - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 6 - - - (2) - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 97 - - - 2 - - -
Transfers between funds (3) - - - 2 - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 94 - - - 4 - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 100 - - - 2 - - -
Net assets at beginning of period - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $100 - - - 2 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
34
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Davis VA Franklin Global Communications
Value Portfolio Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(2) - - - (3,621) 19,074 (2) 8
Realized gains (losses) on investments, net - - - - 16,678 130,766 - 23
Net change in unrealized appreciation
(depreciation) on investments 1 - - - 74,456 108,627 47 70
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (1) - - - 87,513 258,467 45 101
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 53 - - - 1,656 7,189 38 416
Transfers between funds 2 - - - 19,745 (11,957) 16 (27)
Surrenders and terminations - - - - (54,073)(254,941) (1) (2)
Rescissions - - - - (190) (402) - -
Other transactions (note 2) - - - - (10) 477 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 55 - - - (32,872)(259,634) 53 387
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 54 - - - 54,641 (1,167) 98 488
Net assets at beginning of period - - - - 902,924 904,091 488 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $54 - - - 957,565 902,924 586 488
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 35
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Franklin Global Health Franklin
Care Securities Fund Growth and Income Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(63) (110) - - (2,812) 24,294 (2) 16
Realized gains (losses) on investments
net 630 (444) - - 4,333 180,951 (7) 35
Net change in unrealized appreciation
(depreciation) on investments 1,923 (413) 18 8 (10,384)(203,466) 30 (57)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 2,490 (967) 18 8 (8,863) 1,779 21 (6)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 187 605 34 79 1,583 19,789 217 1,433
Transfers between funds 7,330 5,476 24 (4) (34,855) 2,508 57 (6)
Surrenders and terminations (815) (3,102) (1) - (59,929)(350,638) (1) (638)
Rescissions - (4) (4) - (172) (841) - -
Other transactions (note 2) (1) (4) - - 288 663 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 6,701 2,971 53 75 (93,085)(328,519) 273 789
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 9,191 2,004 71 83 (101,948)(326,740) 294 783
Net assets at beginning of period 10,600 8,596 83 - 876,3201,203,060 783 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $19,791 10,600 154 83 774,372 876,320 1,077 783
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
36
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Franklin Franklin
High Income Fund Income Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(917) 72,685 (1) 104 (2,388) 62,233 (3) 39
Realized gains (losses) on investments,
net (12,478) (2,133) (51) (47) (3,528) 45,777 (2) 16
Net change in unrealized appreciation
(depreciation) on investments 8,062 (74,035) 39 (58) 7,072 (135,753) 9 (85)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (5,333) (3,483) (13) (1) 1,156 (27,743) 4 (30)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 619 9,648 166 226 965 13,764 145 1,302
Transfers between funds (18,893) (15,589) (261) 274 (31,959) (63,205) (21) 29
Surrenders and terminations (21,653)(111,758) (2) (52) (51,410)(306,495) (2) (3)
Rescissions (63) (1,076) - - (139) (1,138) - -
Other transactions (note 2) 63 450 - - 87 831 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (39,927)(118,325) (97) 448 (82,456)(356,243) 122 1,328
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (45,260)(121,808) (110) 447 (81,300)(383,986) 126 1,298
Net assets at beginning of period 284,668 406,476 447 - 717,6111,101,597 1,298 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $239,408 284,668 337 447 636,311 717,611 1,424 1,298
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 37
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Franklin Franklin
Large Cap Growth Securities Fund Money Market Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(1,527) (3,045) (3) (4) 3,109 11,206 55 83
Realized gains (losses) on investments,
net 5,578 14,374 3 94 - - - -
Net change in unrealized appreciation
(depreciation) on investments 34,966 74,106 79 84 44 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 39,017 85,435 79 174 3,153 11,206 55 83
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 1,952 13,426 351 1,518 3,261 20,759 114 8,461
Transfers between funds 30,846 176,862 34 42 (1,666) 219,635 (7,952) 132
Surrenders and terminations (22,739)(101,959) (4) (924) (52,858)(302,030) (62) (103)
Rescissions (38) (311) - (274) (865) (236) - -
Other transactions (note 2) 369 409 - - 2,085 7,023 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 10,390 88,427 381 362 (50,043) (54,849) (7,900) 8,490
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 49,407 173,862 460 536 (46,890) (43,643) (7,845) 8,573
Net assets at beginning of period 378,340 204,478 536 - 337,292 380,935 8,573 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $427,747 378,340 996 536 290,402 337,292 728 8,573
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
38
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Franklin Natural Resources Franklin
Securities Fund Real Estate Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(141) 66 - 1 (488) 14,093 (1) 4
Realized gains (losses) on investments,
net (195) (9,180) - (11) (3,805) 22,522 1 7
Net change in unrealized appreciation
(depreciation) on investments 5,393 20,689 10 1 7,430 (51,341) 13 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 5,057 11,575 10 (9) 3,137 (14,726) 13 11
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 121 774 - 61 586 2,486 57 294
Transfers between funds 4 (4,496) 1 16 (8,383) (33,804) (62) 138
Surrenders and terminations (2,380) (10,569) - - (10,601) (71,155) (5) -
Rescissions - (122) - - (26) (290) - -
Other transactions (note 2) (6) 9 - - 47 72 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (2,261) (14,404) 1 77 (18,377)(102,691) (10) 432
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 2,796 (2,829) 11 68 (15,240)(117,417) 3 443
Net assets at beginning of period 39,382 42,211 68 - 147,870 265,287 443 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $42,178 39,382 79 68 132,630 147,870 446 443
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 39
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Franklin Franklin S&P 500
Rising Dividends Securities Fund Index Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(1,289) 968 (2) 2 (134) (14) - -
Realized gains (losses) on investments,
net (3,626) 121,634 (13) 52 (82) - - -
Net change in unrealized appreciation
(depreciation) on investments 12,617 (184,821) 28 (77) 1,439 386 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 7,702 (62,219) 13 (23) 1,223 372 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 730 8,831 9 569 571 279 - -
Transfers between funds (27,052) (38,314) (8) 1 20,641 13,708 - -
Surrenders and terminations (29,084)(185,182) (67) (1) (1,860) (191) - -
Rescissions (47) (427) - - - - - -
Other transactions (note 2) 49 336 - - (2) - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (55,404)(214,756) (66) 569 19,350 13,796 - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (47,702)(276,975) (53) 546 20,573 14,168 - -
Net assets at beginning of period 406,424 683,399 546 - 14,168 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $358,722 406,424 493 546 34,741 14,168 - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
40
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Franklin Franklin U.S. Government
Small Cap Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(1,963) (2,935) (5) (2) (1,551) 66,246 (5) 243
Realized gains (losses) on investments,
net 23,031 15,548 777 3 (4,962) 3,396 (12) (20)
Net change in unrealized appreciation
(depreciation) on investments 32,557 211,659 (286) 284 13,560 (82,778) 47 (250)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 53,625 224,272 486 285 7,047 (13,136) 30 (27)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 2,465 6,050 299 238 929 10,213 77 1,811
Transfers between funds 21,474 15,164 2,543 460 (7,925) (634) (62) 357
Surrenders and terminations (24,311) (82,185) (346) - (33,153)(173,064) (5) (277)
Rescissions (72) (195) - - (89) (1,184) - -
Other transactions (note 2) 9 414 - - 151 489 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (435) (60,752) 2,496 698 (40,087)(164,180) 10 1,891
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 53,190 163,520 2,982 983 (33,040)(177,316) 40 1,864
Net assets at beginning of period 463,300 299,780 983 - 460,288 637,604 1,864 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $516,490 463,300 3,965 983 427,248 460,288 1,904 1,864
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 41
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Franklin Value Franklin
Securities Fund Zero Coupon Fund - 2000
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(36) (133) - (1) (200) 9,221 - -
Realized gains (losses) on investments,
net (119) (411) - (7) (545) 1,927 - -
Net change in unrealized appreciation
(depreciation) on investments 630 309 5 - 1,262 (10,114) - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 475 (235) 5 (8) 517 1,034 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 91 1,041 - 396 16 523 - -
Transfers between funds 2,783 4,224 10 (1) (1,657) 486 - -
Surrenders and terminations (1,102) (3,083) - (258) (3,464) (20,950) - -
Rescissions - (2) - - - (12) - -
Other transactions (note 2) 6 4 - - (1) 120 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 1,778 2,184 10 137 (5,106) (19,833) - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 2,253 1,949 15 129 (4,589) (18,799) - -
Net assets at beginning of period 10,614 8,665 129 - 59,369 78,168 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $12,867 10,614 144 129 54,780 59,369 - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
42
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Franklin Franklin
Zero Coupon Fund - 2005 Zero Coupon Fund - 2010
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(202) 7,179 - - (200) 7,708 - -
Realized gains (losses) on investments,
net (376) 1,779 - - (2,127) 2,444 - -
Net change in unrealized appreciation
(depreciation) on investments 1,459 (14,138) - - 5,006 (21,090) - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 881 (5,180) - - 2,679 (10,938) - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 27 1,800 - - 327 2,617 - -
Transfers between funds (2,394) 2,677 - - (2,841) 4,159 - -
Surrenders and terminations (3,198) (15,202) - - (4,252) (20,612) - -
Rescissions - (104) - - - (91) - -
Other transactions (note 2) - 160 - - (5) 235 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (5,565) (10,669) - - (6,771) (13,692) - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (4,684) (15,849) - - (4,092) (24,630) - -
Net assets at beginning of period 59,429 75,278 - - 60,727 85,357 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $54,745 59,429 - - 56,635 60,727 - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 43
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
J.P. Morgan J.P. Morgan
International Opportunities Portfolio U.S. Disciplined Equity Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ - - - - - - - -
Realized gains (losses) on investments, net - - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments - - - - 2 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations - - - - 2 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 17 - - - 19 - - -
Transfers between funds - - - - (1) - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 17 - - - 18 - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 17 - - - 20 - - -
Net assets at beginning of period - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $17 - - - 20 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
44
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Mutual Discovery Mutual Shares
Securities Fund Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(741) 2,765 (2) 4 (1,479) 5,047 (3) 6
Realized gains (losses) on investments,
net 1,647 877 17 - 3,588 10,361 - (2)
Net change in unrealized appreciation
(depreciation) on investments 11,990 33,265 15 48 5,203 32,828 52 41
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 12,896 36,907 30 52 7,312 48,236 49 45
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 440 4,740 112 385 1,075 12,231 307 989
Transfers between funds 2,611 (12,243) 7 2 (13,881) 6,540 (5) (28)
Surrenders and terminations (9,438) (50,318) (94) (28) (21,222)(100,497) (6) (31)
Rescissions (6) (231) (6) - (1,614) (809) - -
Other transactions (note 2) 56 210 - - 158 636 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (6,337) (57,842) 19 359 (35,484) (81,899) 296 930
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 6,559 (20,935) 49 411 (28,172) (33,663) 345 975
Net assets at beginning of period 190,494 211,429 411 - 420,387 454,050 975 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $197,053 190,494 460 411 392,215 420,387 1,320 975
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 45
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Oppenheimer Global Oppenheimer
Securities Fund/VA High Income Fund/VA
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ - - - - - - - -
Realized gains (losses) on investments, net - - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments (24) - - - (3) - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (24) - - - (3) - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 60 - - - 176 - - -
Transfers between funds 127 - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 187 - - - 176 - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 163 - - - 173 - - -
Net assets at beginning of period - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $163 - - - 173 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
46
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Oppenheimer PIMCO VIT
Main Street Growth & Income Fund/VA High Yield Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ - - - - - - - -
Realized gains (losses) on investments, net - - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments 10 - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 10 - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 316 - - - 14 - - -
Transfers between funds 188 - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 504 - - - 14 - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 514 - - - 14 - - -
Net assets at beginning of period - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $514 - - - 14 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 47
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
PIMCO VIT PIMCO VIT
StocksPLUS Growth and Income Portfolio Total Return Bond Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ - - - - - - - -
Realized gains (losses) on investments, net - - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments 1 - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 1 - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 11 - - - 19 - - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 11 - - - 19 - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 12 - - - 19 - - -
Net assets at beginning of period - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $12 - - - 19 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
48
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Seligman Seligman
Global Technology Fund Small-Cap Value Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ - - - - - - - -
Realized gains (losses) on investments, net - - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments (15) - - - 1 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (15) - - - 1 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 634 - - - 22 - - -
Transfers between funds 31 - - - (6) - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 665 - - - 16 - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 650 - - - 17 - - -
Net assets at beginning of period - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $650 - - - 17 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 49
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Templeton Global Templeton Developing
Asset Allocation Fund Markets Equity Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(189) 3,412 - 3 (609) 947 (2) (2)
Realized gains (losses) on investments,
net (259) 4,511 (1) 3 839 (14,723) 162 263
Net change in unrealized appreciation
(depreciation) on investments (911) (4,595) - (2) (10,773) 81,897 (19) 18
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (1,359) 3,328 (1) 4 (10,543) 68,121 141 279
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 484 2,689 21 49 766 3,440 116 286
Transfers between funds (1,247) (9,378) (18) (1) 2,210 (9,648) 1,127 (223)
Surrenders and terminations (2,751) (15,871) - - (9,978) (38,588) (1) -
Rescissions (39) (18) - - (98) (160) (6) -
Other transactions (note 2) 13 82 - - 38 144 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (3,540) (22,496) 3 48 (7,062) (44,812) 1,236 63
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (4,899) (19,168) 2 52 (17,605) 23,309 1,377 342
Net assets at beginning of period 57,892 77,060 52 - 179,097 155,788 342 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $52,993 57,892 54 52 161,492 179,097 1,719 342
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
50
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Templeton Global Templeton
Income Securities Fund Global Growth Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(270) 6,830 (1) 19 (2,363) 5,264 (5) 3
Realized gains (losses) on investments,
net (1,215) (2,393) - - 5,402 101,368 36 317
Net change in unrealized appreciation
(depreciation) on investments 1,307 (12,888) - (22) (30,926) 10,044 (7) 45
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (178) (8,451) (1) (3) (27,887) 116,676 24 365
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 170 1,398 - 458 1,736 16,744 136 2,020
Transfers between funds (2,503) (8,236) 1 (14) (335) (13,275) 1,867 (128)
Surrenders and terminations (5,820) (39,664) - - (37,899)(161,240) (119) (873)
Rescissions - (419) - - (111) (482) (6) (59)
Other transactions (note 2) 43 42 - - 32 420 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (8,110) (46,879) 1 444 (36,577)(157,833) 1,878 960
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (8,288) (55,330) - 441 (64,464) (41,157) 1,902 1,325
Net assets at beginning of period 81,224 136,554 441 - 667,351 708,508 1,325 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $72,936 81,224 441 441 602,887 667,351 3,227 1,325
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 51
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Templeton Templeton International
International Equity Fund Smaller Companies Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(2,434) 32,620 (12) 114 (83) 341 (1) (3)
Realized gains (losses) on investments,
net 13,960 79,885 148 926 156 (948) 114 137
Net change in unrealized appreciation
(depreciation) on investments (39,771) 51,890 12 120 986 4,893 6 2
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (28,245) 164,395 148 1,160 1,059 4,286 119 136
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 940 5,997 197 2,908 232 527 98 52
Transfers between funds 939 (63,759) 1,764 (870) 1,719 (1,842) 1,176 (133)
Surrenders and terminations (46,853)(277,851) (67) - (1,512) (4,601) (1) -
Rescissions (156) (2,015) (6) - - (6) (6) -
Other transactions (note 2) 86 1,165 - - 5 39 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (45,044)(336,463) 1,888 2,038 444 (5,883) 1,267 (81)
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (73,289)(172,068) 2,036 3,198 1,503 (1,597) 1,386 55
Net assets at beginning of period 727,422 899,490 3,198 - 22,279 23,876 55 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $654,133 727,422 5,234 3,198 23,782 22,279 1,441 55
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
52
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Templeton USAllianz VIP
Pacific Growth Fund Diversified Assets Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(287) (393) - - - - 23 -
Realized gains (losses) on investments,
net (1,084) (3,508) 3 38 - - - -
Net change in unrealized appreciation
(depreciation) on investments (3,963) 33,561 - 1 - - 17 1
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (5,334) 29,660 3 39 - - 40 1
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 373 1,373 77 104 - - 36 -
Transfers between funds (1,813) (3,365) (29) (32) - - 1,252 102
Surrenders and terminations (5,806) (30,514) (1) - - - (2) -
Rescissions (5) (39) (6) - - - - -
Other transactions (note 2) 16 32 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (7,235) (32,513) 41 72 - - 1,286 102
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (12,569) (2,853) 44 111 - - 1,326 103
Net assets at beginning of period 88,945 91,798 111 - - - 103 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $76,376 88,945 155 111 - - 1,429 103
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 53
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
USAllianz VIP USAllianz VIP
Fixed Income Fund Global Opportunities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ - - 12 - - - (2) -
Realized gains (losses) on investments, net - - 27 - - - - -
Net change in unrealized appreciation
(depreciation) on investments - - (3) (2) - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations - - 36 (2) - - (2) -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments - - 1 - - - 18 -
Transfers between funds - - 340 131 - - 2 -
Surrenders and terminations - - (42) - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions - - 299 131 - - 20 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets - - 335 129 - - 18 -
Net assets at beginning of period - - 129 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ - - 464 129 - - 18 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
54
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
USAllianz VIP USAllianz VIP
Growth Fund Money Market Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ - - - - - - - -
Realized gains (losses) on investments, net - - 3 - - - - -
Net change in unrealized appreciation
(depreciation) on investments - - 59 14 - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations - - 62 14 - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments - - 34 - - - 949 -
Transfers between funds - - 628 325 - - (860) -
Surrenders and terminations - - (8) (8) - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions - - 654 317 - - 89 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets - - 716 331 - - 89 -
Net assets at beginning of period - - 331 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ - - 1,047 331 - - 89 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 55
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Van Kampen LIT Van Kampen LIT
Enterprise Portfolio Growth & Income Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ - - - - - - - -
Realized gains (losses) on investments, net 1 - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments (1) - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products
(See Notes 5, 6, & 7 for detail by product):
Purchase payments 11 - - - 1 - - -
Transfers between funds 6 - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 17 - - - 1 - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 17 - - - 1 - - -
Net assets at beginning of period - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $17 - - - 1 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
56
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 (In thousands)
Total All Funds
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $(23,116) 345,556 38 637
Realized gains (losses) on investments, net 41,564 704,602 1,205 1,827
Net change in unrealized appreciation
(depreciation) on investments 138,172 (129,779) 171 184
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 156,620 920,379 1,414 2,648
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products (See Notes 5, 6, & 7 for detail by product):
Purchase payments 26,429 169,240 3,609 24,055
Transfers between funds 23,504 187,582 1,571 542
Surrenders and terminations (520,295)(2,732,370) (837) (3,198)
Rescissions (3,895) (10,614) (40) (333)
Other transactions (note 2) 3,571 14,458 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (470,686)(2,371,704) 4,303 21,066
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (314,066)(1,451,325) 5,717 23,714
Net assets at beginning of period 7,692,210 9,143,535 23,714 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $7,378,144 7,692,210 29,431 23,714
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
57
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements
March 31, 2000 (unaudited)
1. ORGANIZATION
Allianz Life Variable Account B (Variable Account) is a segregated investment
account of Allianz Life Insurance Company of North America (Allianz 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 on May 31, 1985 and commenced
operations January 24, 1989. Accordingly, it is an accounting entity wherein all
segregated account transactions are reflected.
The Variable Account's assets are the property of Allianz 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
Allianz 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 Allianz Life may conduct.
The Variable Account's sub-accounts may invest, at net asset values, in one or
more of select portfolios of AIM Variable Insurance Funds, Inc., The Alger
American Fund, Davis Variable Account Fund, Inc., Franklin Templeton Variable
Insurance Products Trust (formerly, Franklin Valuemark Funds), J.P. Morgan
Series Trust II, Oppenheimer Variable Account Funds, PIMCO Insurance Trust,
Seligman Portfolios, Inc., USAllianz Variable Insurance Products Trust, and Van
Kampen Life Investment Trust, in accordance with the selection made by the
contract owner. Not all portfolios are available as investment options for the
products which comprise the Variable Account. The investment advisers for each
portfolio are listed in the following table.
Portfolio Investment Adviser
--------- ------------------
<S> <C>
AIM VI Capital Appreciation Fund AIM Advisors, Inc.
AIM VI Growth Fund AIM Advisors, Inc.
AIM VI International Equity Fund AIM Advisors, Inc.
AIM VI Value Fund AIM Advisors, Inc.
Alger American Growth Portfolio Fred Alger Management, Inc.
Alger American Leveraged AllCap Portfolio Fred Alger Management, Inc.
Alger American MidCap Growth Portfolio Fred Alger Management, Inc.
Alger American Small Capitalization Portfolio Fred Alger Management, Inc.
Davis VA Financial Portfolio Davis Selected Advisers, LP
Davis VA Real Estate Portfolio Davis Selected Advisers, LP
Davis VA Value Portfolio Davis Selected Advisers, LP
Franklin Global Communications Securities Fund Franklin Advisers, Inc.
Franklin Global Health Care Securities Fund Franklin Advisers, Inc.
Franklin Growth and Income Fund Franklin Advisers, Inc.
Franklin High Income Fund Franklin Advisers, Inc.
Franklin Income Securities Fund Franklin Advisers, Inc.
Franklin Large Cap Growth Securities Fund Franklin Advisers, Inc.
Franklin Money Market Fund Franklin Advisers, Inc.
Franklin Natural Resources Securities Fund Franklin Advisers, Inc.
Franklin Real Estate Fund Franklin Advisers, Inc.
Franklin Rising Dividends Securities Fund Franklin Advisory Services, LLC.
Franklin S&P 500 Index Fund Franklin Advisers, Inc.
Franklin Small Cap Fund Franklin Advisers, Inc.
Franklin U.S. Government Fund Franklin Advisory Services, LLC
Franklin Value Securities Fund Franklin Advisory Services, LLC
Franklin Zero Coupon - 2000 Fund Franklin Advisers, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 58
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
1. ORGANIZATION (CONTINUED)
Portfolio (Continued) Investment Adviser (Continued)
--------------------- ------------------------------
<S> <C>
Franklin Zero Coupon - 2005 Fund Franklin Advisers, Inc.
Franklin Zero Coupon - 2010 Fund Franklin Advisers, Inc.
J.P. Morgan International Opportunities Portfolio J.P. Morgan Investment Management Inc.
J.P. Morgan US Disciplined Equity Portfolio J.P. Morgan Investment Management Inc.
Mutual Discovery Securities Fund Franklin Mutual Advisers, LLC
Mutual Shares Securities Fund Franklin Mutual Advisers, LLC
Oppenheimer Global Securities Fund/VA OppenheimerFunds, Inc.
Oppenheimer High Income Fund/VA OppenheimerFunds, Inc.
Oppenheimer Main Street Growth & Income Fund/VA OppenheimerFunds, Inc.
PIMCO VIT High Yield Bond Portfolio Pacific Investment Management Company
PIMCO VIT StocksPLUS Growth and Income Portfolio Pacific Investment Management Company
PIMCO VIT Total Return Bond Portfolio Pacific Investment Management Company
Seligman Global Technology Fund J & W Seligman & Co. Inc.
Seligman Small-Cap Value Fund J & W Seligman & Co. Inc.
Templeton Global Asset Allocation Fund Templeton Global Advisors Limited
Templeton Developing Markets Equity Fund Templeton Asset Management Ltd.
Templeton Global Income Securities Fund Franklin Advisers, Inc.
Templeton Global Growth Fund Templeton Global Advisors Limited
Templeton International Equity Fund Franklin Advisers, Inc.
Templeton International Smaller Companies Fund Templeton Investment Counsel, Inc.
Templeton Pacific Growth Equity Fund Franklin Advisers, Inc.
USAllianz VIP Diversified Assets Fund Allianz of America, Inc.
USAllianz VIP Fixed Income Fund Allianz of America, Inc.
USAllianz VIP Global Opportunities Fund Allianz of America, Inc.
USAllianz VIP Growth Fund Allianz of America, Inc.
USAllianz VIP Money Market Fund Allianz of America, Inc.
Van Kampen LIT Enterprise Portfolio Van Kampen Asset Management, Inc.
Van Kampen LIT Enterprise Portfolio Van Kampen Asset Management, Inc.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES
Certain of the Franklin Templeton and USAllianz Variable Insurance Products
Trust portfolios have class 2 shares which are available to Valuemark Charter
and USAllianz Alterity contract owners.
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 AIM Variable Insurance Funds, The Alger American Fund,
Davis Variable Account Fund, Inc., Franklin Templeton Group, J.P. Morgan Series
Trust II, Oppenheimer Variable Account Funds, PIMCO Variable Insurance Trust,
Seligman Portfolios, Inc., USAllianz Variable Insurance Products Trust and Van
Kampen Life Investment Trust. 59
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Realized investment gains include realized gain distributions received from the
respective portfolios and gains on the sale of portfolio shares as determined by
the average cost method. Realized gain distributions are reinvested in the
respective portfolios. Dividend distributions received from the portfolios are
reinvested in additional shares of the portfolios and are recorded as income to
the Variable Account on the ex-dividend date.
Two Fixed Account investment options are available to deferred annuity contract
owners. A Flexible Fixed Option is available to all deferred annuity contract
owners and a Dollar Cost Averaging Option is available to Valuemark II,
Valuemark III, Valuemark IV, and USAllianz Alterity deferred annuity contract
owners. These accounts are comprised of equity and fixed income investments
which are part of the general assets of Allianz Life. The liabilities of the
Fixed Accounts are part of the general obligations of Allianz Life and are not
included in the Variable Account. The guaranteed minimum rate of return on the
Fixed Accounts is 3%.
On November 12, 1999, the AIM VI Growth Fund, Alger American Growth Fund, Alger
American Leveraged AllCap Fund, Franklin S&P 500 Index Fund, USAllianz VIP
Diversified Assets Fund, USAllianz VIP Fixed Income Fund, and USAllianz VIP
Growth Fund were added as available investment options.
On February 1, 2000, the following funds were added as available investment
options for USAllianz Alterity.
<S> <C>
AIM VI Capital Appreciation Fund Oppenheimer High Income Fund/VA
AIM VI International Equity Fund Oppenheimer Main Street Growth and Income Fund/VA
AIM VI Value Fund PIMCO VIT High Yield Bond Portfolio
Alger American MidCap Growth Portfolio PIMCO VIT StocksPLUS Growth and Income Portfolio
Alger American Small Capitalization Portfolio PIMCO VIT Total Return Bond Portfolio
Davis VA Financial Portfolio Seligman Global Technology Fund
Davis VA Real Estate Portfolio Seligman Small-Cap Value Fund
Davis VA Value Portfolio USAllianz VIP Global Opportunities Fund
J.P. Morgan International Opportunities Portfolio USAllianz VIP Money Market Fund
J.P. Morgan US Disciplined Equity Portfolio Van Kampen LIT Enterprise Fund
Oppenheimer Global Securities Fund/VA Van Kampen LIT Growth and Income Fund
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 60
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONTRACTS IN ANNUITY PAYMENT PERIOD
Annuity reserves are computed for currently payable contracts according to the
1983 Individual Annuity Mortality Table, using an assumed investment return
(AIR) equal to the AIR of the specific contracts, either 3%, 5%, or 7%. Charges
to annuity reserves for mortality and risk expense are reimbursed to Allianz
Life if the reserves required are less than originally estimated. If additional
reserves are required, Allianz Life reimburses the account.
EXPENSES
ASSET BASED EXPENSES
A mortality and expense risk charge and an administrative charge are deducted
from the Variable Account on a daily basis. The charges, on an annual basis, are
summarized in the following table.
Mortality and Expense Administrative
Contract Risk Charge Charge
-------- ----------- ------
<S> <C> <C>
USAllianz Alterity - Traditional 1.25% 0.15%
USAllianz Alterity - Enhanced 1.55% 0.15%
USAllianz Alterity - Optional 1.75% 0.15%
Valuemark II 1.25% 0.15%
Valuemark III 1.25% 0.15%
Valuemark IV 1.34% 0.15%
Valuemark Charter - Traditional 1.00% 0.15%
Valuemark Charter - Enhanced 1.20% 0.15%
Valuemark Income Plus 1.25% 0.15%
</TABLE>
CONTRACT BASED EXPENSES
A contract maintenance charge is paid by the contract owner annually from each
deferred annuity 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 for Valuemark II, Valuemark III, and Valuemark IV contracts and $40
for Valuemark Charter and USAllianz Alterity contracts. Contract maintenance
charges paid by the contract owners during the three-month period ended March
31, 2000 (unaudited) and the year ended December 31, 1999 were $944,506 and
$4,426,312, respectively. These contract charges are reflected in the Statements
of Changes in Net Assets as other transactions.
<PAGE>
61
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A contingent deferred sales charge is deducted from the contract value at the
time of surrender on Valuemark II, Valuemark III, Valuemark IV, and USAllianz
Alterity deferred annuity contracts. This charge applies only to a surrender of
purchase payments received within five years of the date of surrender for
Valuemark II, Valuemark III, and USAllianz Alterity contracts and within seven
years of the date of surrender for Valuemark IV contracts. The amount of the
contingent deferred sales charge is shown below.
Years Since Contingent Deferred Sales Charge
USAllianz
Payment Valuemark II Valuemark III Valuemark IV Alterity
------- ------------ ------------- ------------ ---------
0-1 5% 6% 6% 7%
1-2 5% 5% 6% 6%
2-3 4% 4% 6% 5%
3-4 3% 3% 5% 4%
4-5 1.5% 1.5% 4% 3%
5-6 0% 0% 3% 0%
6-7 0% 0% 2% 0%
7+ 0% 0% 0% 0%
Total contingent deferred sales charges paid by the contract owners during the
three-month period ended March 31, 2000 (unaudited) and the year ended December
31, 1999 were $3,464,012 and $16,657,195, respectively.
A systematic withdrawal plan is available to Valuemark II, Valuemark III,
Valuemark IV, and USAllianz Alterity deferred annuity contract owners which
allows a portion of the contract value to be withdrawn without incurring a
contingent deferred sales charge. The exercise of the systematic withdrawal plan
in any contract year replaces the penalty free privilege for that year.
Currently, twelve transfers are permitted each contract year. Thereafter, the
fee is $25 per transfer for all products, or 2% of the amount transferred, if
less, for Valuemark II, Valuemark III, and Valuemark IV. Currently, transfers
associated with any dollar cost averaging program are not counted. Total
transfer charges paid by the contract owners during the three-month period ended
March 31, 2000 (unaudited) and the year ended December 31, 1999 were $43,661 and
$153,188, respectively. Transfer charges are reflected in the Statements of
Changes in Net Assets as other transactions. Net transfers from the Fixed
Accounts for the three-month period ended March 31, 2000 (unaudited) and the
year ended December 31, 1999 were $25,075,277 and $188,123,947, respectively.
Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the contract values. Allianz Life may, in 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 Allianz Life
may have to deduct such amounts at a later date.
A rescission is defined as a contract that is returned to the Company by the
Contract Owner and canceled within the free-look period, generally within 10
days.
<PAGE>
<TABLE>
<CAPTION>
Variable Life Prospectus 62
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
3. CAPITALIZATION
Allianz Life provides capital for the establishment of new portfolios as investment options of the Variable Account. There
were no capitalization transactions during the three-month period ended March 31, 2000 (unaudited). The capitalization
transactions were as follows during the year ended December 31, 1999.
Capitalization Date of Market Value Date of
Portfolio Amount Capitalization at Withdrawal Withdrawal
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Franklin Global Communications Securities Fund - class 2 $10,000 1/6/99 13,320 12/29/99
Franklin Global Health Care Securities Fund - class 2 10,000 1/6/99 9,092 12/29/99
Franklin Growth and Income Fund - class 2 10,000 1/6/99 9,852 12/29/99
Franklin High Income Fund - class 2 10,000 1/6/99 9,895 12/29/99
Franklin Income Securities Fund - class 2 10,000 1/6/99 9,674 12/29/99
Franklin Large Cap Growth Securities Fund - class 2 10,000 1/6/99 12,738 12/29/99
Franklin Money Market Fund - class 2 10,000 1/6/99 10,444 12/29/99
Franklin Natural Resources Securities Fund - class 2 10,000 1/6/99 12,625 12/29/99
Franklin Real Estate Fund - class 2 10,000 1/6/99 9,141 12/29/99
Franklin Rising Dividends Securities Fund - class 2 10,000 1/6/99 8,843 12/29/99
Franklin Small Cap Fund - class 2 10,000 1/6/99 18,630 12/29/99
Franklin U.S. Government Fund - class 2 10,000 1/6/99 9,897 12/29/99
Franklin Value Securities Fund - class 2 10,000 1/6/99 9,759 12/29/99
Mutual Discovery Securities Fund - class 2 10,000 1/6/99 11,844 12/29/99
Mutual Shares Securities Fund - class 2 10,000 1/6/99 10,866 12/29/99
Templeton Developing Markets Equity Fund - class 2 10,000 1/6/99 14,532 12/29/99
Templeton Global Asset Allocation Fund - class 2 10,000 1/6/99 10,353 12/29/99
Templeton Global Growth Fund - class 2 10,000 1/6/99 11,493 12/29/99
Templeton Global Income Securities Fund - class 2 10,000 1/6/99 9,355 12/29/99
Templeton International Equity Fund - class 2 10,000 1/6/99 11,841 12/29/99
Templeton International Smaller Companies Fund - class 2 10,000 1/6/99 11,922 12/29/99
Templeton Pacific Growth Fund - class 2 10,000 1/6/99 13,447 12/29/99
</TABLE>
4. FEDERAL INCOME TAXES
Operations of the Variable Account form a part of, and are taxed with,
operations of Allianz Life, which is taxed as a life insurance company under the
Internal Revenue Code.
Allianz Life does not expect to incur any federal income taxes in the operation
of the Variable Account. If, in the future, Allianz 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>
63
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
5. CONTRACT TRANSACTIONS - Valuemark II, III, and IV Accumulation Unit Activity (In thousands)
Transactions in dollars and units for each fund for the three-month period ended
March 31, 2000 (unaudited) and the year ended December 31, 1999 were as follows:
Franklin Global
AIM V.I. Alger American Alger American Communications
Growth Fund Growth Fund Leveraged AllCapFund Securities Fund
-----------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Valuemark II & III Contract transactions - 1999:
Purchase payments $ 27 3 $ 6 1 $ 1 - $ 3,272 96
Transfers between funds 5,530 529 5,632 539 3,765 341 (24,958) (870)
Surrenders and terminations (61) (6) (3) - (9) (1) (250,550) (8,394)
Rescissions - - - - - - (386) (12)
Other transactions - - - - - - 476 16
-----------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $5,496 526 $ 5,635 540 $3,757 340 $(272,146) (9,164)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 369 31 $ 88 8 $ 97 7 $ 952 18
Transfers between funds 16,594 1,409 11,560 1,049 14,002 1,030 12,067 276
Surrenders and terminations (378) (39) (361) (43) (369) (27) (52,667) (1,264)
Rescissions (165) (14) - - - - (155) (4)
Other transactions (1) - (1) - (2) - (7) -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $16,419 1,387 $11,286 1,014 $13,728 1,010 $ (39,810) (974)
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 50 5 $ 215 20 $ 8 1 $ 3,917 118
Transfers between funds 3,764 360 4,119 396 3,078 277 13,001 433
Surrenders and terminations (18) (2) (10) (1) (9) (1) (4,391) (138)
Rescissions - - - - - - (16) (1)
Other transactions - - - - - - 1 -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 3,796 363 $ 4,324 415 $3,077 277 $12,512 412
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 463 38 $ 340 30 $ 324 23 $ 704 17
Transfers between funds 12,614 1,076 7,277 662 7,848 594 7,678 186
Surrenders and terminations (285) (24) (367) (33) (374) (29) (1,406) (34)
Rescissions - - - - - - (35) (1)
Other transactions (1) - - - - - (3) -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $12,791 1,090 $ 7,250 659 $7,798 588 $ 6,938 168
</TABLE>
<PAGE>
Variable Life Prospectus 64
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
5. CONTRACT TRANSACTIONS - Valuemark II, III, and IV Accumulation Unit Activity (In thousands) (CONTINUED)
Franklin Global Franklin Franklin Franklin
Health Care Growth and High Income
Securities Fund Income Fund Income Fund Securities Fund
-----------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Valuemark II & III Contract transactions - 1999:
Purchase payments $ 103 11 $ 8,279 191 $ 1,791 69 $ 4,169 123
Transfers between funds 3,399 351 (16,044) (589) (18,484) (851) (69,103) (2,779)
Surrenders and terminations (2,835) (314) (331,869) (12,443) (100,108) (4,711) (294,539) (11,825)
Rescissions (2) - (714) (27) (186) (9) (1,016) (41)
Other transactions (3) - 585 22 173 8 767 31
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions
- 1999: $ 662 48 $(339,763) (12,846) $(116,814)(5,494)$(359,722)(14,491)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 32 3 $ 1,034 27 $ 298 12 $ 582 17
Transfers between funds 5,018 435 (28,886) (1,156) (11,651) (560) (24,311) (995)
Surrenders and terminations (584) (51) (54,339) (2,187) (18,461) (880) (48,351) (1,986)
Rescissions - - (147) (6) (43) (2) (125) (5)
Other transactions (1) - 278 11 12 1 50 2
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $4,465 387 $(82,060) (3,311) $(29,845) (1,429) $ (72,155)(2,967)
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 502 55 $11,510 390 $ 7,857 366 $ 9,595 367
Transfers between funds 2,077 220 18,552 696 2,895 140 5,898 239
Surrenders and terminations (267) (30) (18,769) (699) (11,650) (550) (11,956) (463)
Rescissions (2) - (127) (5) (890) (42) (122) (5)
Other transactions - - 78 3 277 13 64 3
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 2,310 245 $11,244 385 $(1,511) (73) $ 3,479 141
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 155 14 $ 549 22 $ 321 15 $ 383 16
Transfers between funds 2,312 194 (5,969) (247) (7,242) (351) (7,648) (317)
Surrenders and terminations (231) (21) (5,590) (228) (3,192) (154) (3,059) (127)
Rescissions - - (25) (1) (20) (1) (14) (1)
Other transactions - - 10 - 51 2 37 2
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $2,236 187 $(11,025) (454) $(10,082) (489) $(10,301) (427)
</TABLE>
<PAGE>
65
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Large Franklin Franklin Franklin
Cap Growth Money Market Natural Resources Real Estate
Securities Fund Fund Securities Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Valuemark II & III Contract transactions - 1999:
Purchase payments $ 3,422 149 $ 7,896 180 $ 315 33 $ 790 29
Transfers between funds 117,374 7,093 194,558 13,480 (5,419) (549) (29,234) (1,316)
Surrenders and terminations (81,624) (4,823) (276,520) (18,739) (9,951) (992) (66,788) (2,940)
Rescissions (255) (15) (187) (13) (65) (6) (283) (13)
Other transactions 151 9 6,553 448 11 1 46 2
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $39,068 2,413 $(67,700) (4,644) $(15,109) (1,513) $(95,469) (4,238)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 1,065 32 $ 1,784 38 $ 39 4 $ 143 6
Transfers between funds 21,196 1,004 9,064 643 25 4 (6,212) (288)
Surrenders and terminations (17,766) (832) (46,840) (3,086) (2,227) (199) (9,763) (458)
Rescissions (28) (1) (865) (58) - - (26) (1)
Other transactions 369 18 1,690 113 (6) (1) 48 2
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $4,836 221 $(35,167) (2,350) $(2,169) (192) $ (15,810)(739)
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $10,004 584 $12,863 690 $ 459 45 $ 1,696 73
Transfers between funds 59,488 3,598 25,077 1,872 923 123 (4,570) (216)
Surrenders and terminations (20,335) (1,175) (25,510) (1,698) (618) (61) (4,367) (191)
Rescissions (56) (4) (49) (3) (57) (5) (7) -
Other transactions 258 16 470 33 (2) - 26 1
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 49,359 3,019 $12,851 894 $ 705 102 $(7,222) (333)
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 887 42 $ 1,477 100 $ 82 8 $ 443 21
Transfers between funds 9,650 461 (10,730) (727) (21) (5) (2,171) (103)
Surrenders and terminations (4,973) (237) (6,018) (407) (153) (14) (838) (40)
Rescissions (10) - - - - - - -
Other transactions - - 395 27 - - (1) -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $5,554 266 $(14,876) (1,007) $(92) (11) $(2,567) (122)
</TABLE>
<PAGE>
Variable Life Prospectus 66
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin Franklin Franklin
Rising Dividends S&P 500 Small Cap U.S. Government
Securities Fund Index Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Valuemark II & III Contract transactions - 1999:
Purchase payments $ 2,867 105 $ 5 - $ 1,798 96 $ 2,444 130
Transfers between funds (38,032) (1,898) 7,594 745 8,311 38 (16,017) (857)
Surrenders and terminations (174,156) (8,633) (181) (18) (72,615) (4,346) (165,246) (8,796)
Rescissions (316) (16) - - (139) (8) (1,028) (55)
Other transactions 221 11 - - 302 18 294 16
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions -
1999: $(209,416) (10,431) $ 7,418 727 $ (62,343) (4,202) $(179,553)(9,562)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 387 17 $ 224 22 $ 893 23 $ 630 34
Transfers between funds (19,529) (1,061) 12,268 1,188 10,852 325 (8,092) (437)
Surrenders and terminations (26,388) (1,439) (1,601) (160) (20,526) (643) (31,041) (1,671)
Rescissions (28) (2) - - (65) (2) (80) (4)
Other transactions 45 2 (1) - 4 - 140 8
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(45,513) (2,483) $10,890 1,050 $(8,842) (297) $(38,443)(2,070)
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 5,964 284 $ 274 26 $ 4,252 243 $ 7,769 407
Transfers between funds (282) (31) 6,114 601 6,853 269 15,383 826
Surrenders and terminations (11,026) (544) (10) (1) (9,570) (546) (7,818) (418)
Rescissions (111) (6) - - (56) (4) (156) (8)
Other transactions 115 6 - - 112 6 195 10
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ (5,340) (291) $ 6,378 626 $1,591 (32) $15,373 817
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 343 19 $ 347 34 $ 1,572 50 $ 299 16
Transfers between funds (7,523) (419) 8,373 819 10,622 337 167 9
Surrenders and terminations (2,696) (150) (259) (26) (3,785) (119) (2,112) (115)
Rescissions (19) (1) - - (7) - (9) (1)
Other transactions 4 - (1) - 5 - 11 1
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(9,891) (551) $ 8,460 827 $ 8,407 268 $(1,644) (90)
</TABLE>
<PAGE>
67
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin Franklin Franklin
Value Zero Coupon Zero Coupon Zero Coupon
Securities Fund Fund - 2000 Fund - 2005 Fund - 2010
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Valuemark II & III Contract transactions - 1999:
Purchase payments $ 326 12 $ 183 9 $ 215 9 $ 206 8
Transfers between funds 2,439 332 (1,531) (74) (950) (40) 225 1
Surrenders and terminations (2,562) (336) (20,544) (989) (14,198) (595) (19,296) (749)
Rescissions (1) - (4) - (15) (1) (7) -
Other transactions (2) - 117 6 71 3 230 9
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions -
1999: $ 200 8 $ (21,779) (1,048)$ (14,877) (624) $(18,642) (731)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 21 3 $ 15 1 $ 9 - $ 14 1
Transfers between funds 2,056 281 (1,155) (55) (1,771) (76) (1,912) (80)
Surrenders and terminations (967) (128) (3,259) (155) (2,874) (124) (3,960) (161)
Rescissions - - - - - - - -
Other transactions (1) - (1) - - - (5) -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $1,109 156 $ (4,400) (209) $ (4,636) (200) $(5,863) (240)
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 715 80 $ 340 16 $ 1,585 66 $ 2,411 92
Transfers between funds 1,785 221 2,017 98 3,627 152 3,934 152
Surrenders and terminations (521) (66) (406) (20) (1,004) (43) (1,316) (51)
Rescissions (1) - (8) - (89) (4) (84) (3)
Other transactions 6 1 3 - 89 4 5 -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 1,984 236 $ 1,946 94 $4,208 175 $ 4,950 190
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 70 10 $ 1 - $ 18 1 $ 313 13
Transfers between funds 727 100 (502) (24) (623) (27) (929) (40)
Surrenders and terminations (135) (18) (205) (10) (324) (14) (292) (12)
Rescissions - - - - - - - -
Other transactions 7 1 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 669 93 $(706) (34) $(929) (40) $ (908) (39)
</TABLE>
<PAGE>
Variable Life Prospectus 68
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Mutual Mutual Templeton Templeton
Discovery Shares Global Asset Allocation Developing Markets
Securities Fund Securities Fund Fund Equity Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Valuemark II & III Contract transactions - 1999:
Purchase payments $ 889 56 $ 2,270 134 $ 577 21 $ 1,065 106
Transfers between funds (9,239) (849) 261 (64) (8,133) (601) (9,812) (1,139)
Surrenders and terminations (37,626) (3,134) (73,031) (5,759) (13,638) (974) (35,896) (3,728)
Rescissions (62) (5) (653) (52) (16) (1) (154) (15)
Other transactions 110 10 389 31 43 3 131 13
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions -
1999: $(45,928) (3,922) $ (70,764) (5,710) $ (21,167)(1,552) $ (44,666)(4,763)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 130 8 $ 385 22 $ 116 5 $ 226 16
Transfers between funds 2,566 167 (5,020) (384) (598) (42) 594 67
Surrenders and terminations (6,196) (434) (12,465) (972) (2,048) (138) (8,773) (734)
Rescissions (2) - (1,512) (115) (39) (3) (98) (8)
Other transactions 14 1 39 3 10 1 35 3
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(3,488) (258) $ (18,573) (1,446) $ (2,559) (177) $(2,559) (656)
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 3,851 317 $ 9,961 780 $ 2,112 146 $ 2,375 232
Transfers between funds (3,004) (273) 6,279 461 (1,245) (90) 164 1
Surrenders and terminations (12,692) (1,040) (27,466) (2,158) (2,233) (147) (2,692) (269)
Rescissions (169) (14) (156) (12) (2) - (6) (1)
Other transactions 100 8 247 19 39 3 13 1
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ (11,914) (1,002) $ (11,135) (910) $ (1,329) (88) $ (146) (36)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 310 2 $ 690 54 $ 368 26 $ 540 45
Transfers between funds 45 4 (8,861) (701) (649) (47) 1,616 132
Surrenders and terminations (3,242) (231) (8,757) (686) (703) (50) (1,205) (102)
Rescissions (4) - (102) (8) - - - -
Other transactions 42 3 119 9 3 - 3 -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(2,849) (202) $(16,911) 1,332) $(981) (71) $ 954 75
</TABLE>
<PAGE>
69
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Templeton Templeton Templeton Templeton
Global Income Global Growth International International Smaller
Securities Fund Fund Equity Fund Companies Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Valuemark II & III Contract transactions - 1999:
Purchase payments $ 372 22 $ 3,910 176 $ 2,621 122 $ 115 7
Transfers between funds (8,997) (528) (21,594) (1,329) (63,288) (3,285) (1,461) (163)
Surrenders and terminations (38,030) (2,221) (143,382) (8,200) (269,672) (13,737) (3,584) (347)
Rescissions (414) (25) (338) (19) (1,975) (99) (3) -
Other transactions 37 2 309 18 1,097 56 35 4
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(47,032) (2,750) $(161,095) (9,354) $(331,217) (16,943) $(4,898) (499)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 101 6 $ 821 40 $ 550 18 $ 97 6
Transfers between funds (1,995) (121) (2,801) (178) (2,253) (97) 1,152 95
Surrenders and terminations (5,375) (326) (33,183) (1,805) (44,545) (2,058) (1,141) (96)
Rescissions - - (41) (2) (140) (6) - -
Other transactions 38 2 33 2 76 3 (1) -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(7,231) (439) $(35,171) (1,943) $(46,312) (2,140) $ 107 5
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 1,026 58 $12,834 706 $ 3,376 160 $ 412 41
Transfers between funds 761 44 8,319 454 (471) (18) (381) (46)
Surrenders and terminations (1,634) (96) (17,858) (1,013) (8,179) (407) (1,017) (97)
Rescissions (5) - (144) (9) (40) (2) (3) -
Other transactions 5 - 111 6 68 4 4 -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 153 6 $ 3,262 144 $ (5,246) (263) $ (985) (102)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 69 4 $ 915 50 $ 390 18 $ 135 12
Transfers between funds (508) (31) 2,466 131 3,192 149 567 49
Surrenders and terminations (445) (27) (4,716) (258) (2,308) (107) (371) (32)
Rescissions - - (70) (4) (16) (1) - -
Other transactions 5 - (1) - 10 - 6 1
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(879) (54) $(1,406) (81) $1,268 59 $ 337 30
</TABLE>
<PAGE>
Variable Life Prospectus 70
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Templeton USAllianz VIP USAllianz VIP USAllianz VIP
Pacific Growth Diversified Assets Fixed Income Growth
Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Valuemark II & III Contract transactions - 1999:
Purchase payments $ 738 69 $ - - $ - - $ - -
Transfers between funds (6,774) (499) 88 9 126 13 224 22
Surrenders and terminations (29,719) (3,171) - - - - (8) (1)
Rescissions (36) (4) - - - - - -
Other transactions 11 2 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(35,780) (3,603) $ 88 9 $ 126 13 $ 216 21
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 150 11 $ 6 1 $ - - $ 1 -
Transfers between funds (1,795) (151) 530 52 216 25 389 36
Surrenders and terminations (5,478) (538) (1) - (41) (4) (7) (1)
Rescissions (5) - - - - - - -
Other transactions 15 1 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(7,113) (677) $ 535 53 $175 21 $ 383 35
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 635 65 $ - - $ - - $ - -
Transfers between funds 3,409 397 14 1 5 1 101 10
Surrenders and terminations (795) (78) - - - - - -
Rescissions (3) - - - - - - -
Other transactions 21 2 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 3,267 386 $ 14 1 $ 5 1 $ 101 10
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 223 22 $ 24 2 $ - - $ 20 2
Transfers between funds (18) 11 724 72 124 13 242 23
Surrenders and terminations (328) (32) (1) - (1) - (1) -
Rescissions - - - - - - - -
Other transactions 1 - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(122) 1 $ 747 74 $ 123 13 $ 261 25
</TABLE>
<PAGE>
71
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Total
All
Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Valuemark II & III Contract transactions - 1999:
Purchase payments $ 50,672 1,967
Transfers between funds 456 5,213
Surrenders and terminations (2,528,241) (130,922)
Rescissions (8,255) (436)
Other transactions 12,154 739
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(2,473,214) (123,439)
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 11,259 437
Transfers between funds 2,168 2,405
Surrenders and terminations (461,975) (22,639)
Rescissions (3,564) (233)
Other transactions 2,869 172
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $(449,243) (19,858)
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $118,568 6,433
Transfers between funds 187,684 11,368
Surrenders and terminations (204,137) (12,003)
Rescissions (2,359) (128)
Other transactions 2,305 139
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $102,061 5,809
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 12,775 746
Transfers between funds 22,850 1,983
Surrenders and terminations (58,372) (3,337)
Rescissions (331) (19)
Other transactions 702 46
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $(22,376) (581)
</TABLE>
<PAGE>
Variable Life Prospectus 72
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS)
Transactions in dollars and units for each fund for the three-month period ended
March 31, 2000 (unaudited) and the year ended December 31, 1999 were as follows:
Franklin Global Franklin Global Franklin Franklin
Communications Health Care Growth and High
Securities Fund Securities Fund Income Fund Income Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charter Traditional Contract transactions - 1999:
Purchase payments $ 179 6 $ 36 4 $ 1,195 44 $ 219 10
Transfers between funds (19) (1) (6) (1) (13) - 260 12
Surrenders and terminations (1) - - - (634) (23) (49) (2)
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 159 5 $ 30 3 $ 548 21 $ 430 20
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ - - $ 26 1 $ 125 6
Transfers between funds 29 1 23 2 (11) - (261) (12)
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 29 1 $ 23 2 $ 15 1 $ (136) (6)
------------------------------------------------------------------------------------------------------------------------------------
Charter Enhanced Contract transactions - 1999:
Purchase payments $ 237 7 $ 43 5 $ 238 9 $ 7 -
Transfers between funds (8) - 2 - 7 - 14 1
Surrenders and terminations (1) - - - (4) - (3) -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 228 7 $ 45 5 $ 241 9 $ 18 1
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 38 1 $ 34 3 $ 172 7 $ 41 2
Transfers between funds (13) - 1 - (4) - - -
Surrenders and terminations (1) - (1) - (1) - (2) -
Rescissions - - (4) - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 24 1 $ 30 3 $ 167 7 $ 39 2
</TABLE>
<PAGE>
73
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin Large Franklin Franklin
Income Cap Growth Money Market Natural Resources
Securities Fund Securities Fund Fund Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charter Traditional Contract transactions - 1999:
Purchase payments $ 1,223 48 $ 1,393 82 $ 8,404 562 $ 57 5
Transfers between funds 12 1 42 2 173 7 14 -
Surrenders and terminations (2) - (920) (48) (103) (7) - -
Rescissions - - (274) (17) - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 1,233 49 $ 241 19 $ 8,474 562 $ 71 5
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 16 1 $ 54 3 $ 114 7 $ - -
Transfers between funds (18) (1) 20 1 (8,000) (522) - -
Surrenders and terminations (2) - (2) - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ (4) - $ 72 4 $ (7,886) (515) $ - -
------------------------------------------------------------------------------------------------------------------------------------
Charter Enhanced Contract transactions - 1999:
Purchase payments $ 79 3 $ 125 7 $ 57 4 $ 4 -
Transfers between funds 17 1 - - (41) (3) 2 -
Surrenders and terminations (1) - (4) - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 95 4 $ 121 7 $ 16 1 $ 6 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 129 5 $ 297 14 $ - - $ - -
Transfers between funds (3) - 14 1 48 3 1 -
Surrenders and terminations - - (2) - (62) (4) - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 126 5 $ 309 15 $ (14) (1) $ 1 -
</TABLE>
<PAGE>
Variable Life Prospectus 74
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin Franklin Franklin
Real Estate Rising Dividends Small Cap U.S. Government
Fund Securities Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charter Traditional Contract transactions - 1999:
Purchase payments $ 281 13 $ 355 18 $ 190 11 $ 1,598 83
Transfers between funds 136 7 2 - 456 21 343 18
Surrenders and terminations - - - - - - (270) (14)
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 417 20 $ 357 18 $ 646 32 $ 1,671 87
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 17 1 $ 8 - $ 49 2 $ - -
Transfers between funds (63) (3) 2 - 2,483 88 (74) (4)
Surrenders and terminations - - (67) (3) (346) (9) - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ (46) (2) $ (57) (3) $ 2,186 81 $ (74) (4)
------------------------------------------------------------------------------------------------------------------------------------
Charter Enhanced Contract transactions - 1999:
Purchase payments $ 13 1 $ 214 11 $ 48 3 $ 213 11
Transfers between funds 2 - (1) - 4 - 14 1
Surrenders and terminations - - (1) - - - (7) -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 15 1 $ 212 11 $ 52 3 $ 220 12
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 40 2 $ - - $ 138 4 $ 67 4
Transfers between funds 1 - (10) (1) (3) - (12) (1)
Surrenders and terminations (5) - - - - - (5) -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 36 2 $ (10) (1) $ 135 4 $ 50 3
</TABLE>
<PAGE>
75
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Mutual Mutual Templeton
Value Discovery Shares Global Asset Allocation
Securities Fund Securities Fund Securities Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charter Traditional Contract transactions - 1999:
Purchase payments $ 374 48 $ 262 22 $ 895 70 $ 34 2
Transfers between funds (1) - (2) - (34) (3) - -
Surrenders and terminations (258) (34) (24) (2) (26) (2) - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 115 14 $ 236 20 $ 835 65 $ 34 2
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ - - $ 49 4 $ - -
Transfers between funds 10 1 5 - 11 1 (3) -
Surrenders and terminations - - (88) (6) (2) - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 10 1 $ (83) (6) $ 58 5 $ (3) -
------------------------------------------------------------------------------------------------------------------------------------
Charter Enhanced Contract transactions - 1999:
Purchase payments $ 22 3 $ 123 10 $ 94 7 $ 15 1
Transfers between funds - - 4 - 6 1 (1) -
Surrenders and terminations - - (4) - (5) - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 22 3 $ 123 10 $ 95 8 $ 14 1
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 54 4 $ 250 20 $ 21 1
Transfers between funds - - 2 - (16) (1) (15) (1)
Surrenders and terminations - - (6) - (4) - - -
Rescissions - - (6) - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ 44 4 $ 230 19 $ 6 -
</TABLE>
<PAGE>
Variable Life Prospectus 76
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Templeton Templeton Templeton Templeton
Developing Markets Global Income Global Growth International
Equity Fund Securities Fund Fund Equity Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charter Traditional Contract transactions - 1999:
Purchase payments $ 211 21 $ 437 25 $ 1,732 97 $ 2,640 130
Transfers between funds (225) - 1 - (132) 3 (882) (6)
Surrenders and terminations - - - - (863) (46) - -
Rescissions - - - - (59) (3) - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ (14) 21 $ 438 25 $ 678 51 $ 1,758 124
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 56 5 $ - - $ 50 3 $ 70 3
Transfers between funds 1,126 112 1 - 1,861 102 1,752 90
Surrenders and terminations - - - - (112) (6) (66) (3)
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $1,182 117 $ 1 - $ 1,799 99 $ 1,756 90
------------------------------------------------------------------------------------------------------------------------------------
Charter Enhanced Contract transactions - 1999:
Purchase payments $ 75 7 $ 21 1 $ 288 16 $ 268 13
Transfers between funds 2 - (15) (1) 4 - 12 1
Surrenders and terminations - - - - (10) (1) - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 77 7 $ 6 - $ 282 15 $ 280 14
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 54 5 $ - - $ 70 4 $ 127 6
Transfers between funds 1 - - - 6 - 12 1
Surrenders and terminations (1) - - - (7) - (1) -
Rescissions (6) (1) - - (6) - (6) -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 48 4 $ - - $ 63 4 $ 132 7
</TABLE>
<PAGE>
77
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Templeton Templeton Total
International Smaller Pacific Growth All
Companies Fund Fund Funds
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charter Traditional Contract transactions - 1999:
Purchase payments $ 3 - $ 58 6 $ 21,776 1,307
Transfers between funds (133) - (32) - (40) 60
Surrenders and terminations - - - - (3,150) (178)
Rescissions - - - - (333) (20)
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ (130) - $ 26 6 $ 18,253 1,169
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 5 - $ 639 36
Transfers between funds 1,175 106 (31) (2) 37 (40)
Surrenders and terminations - - - - (685) (27)
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ 1,175 106 $ (26) (2) $ (9) (31)
------------------------------------------------------------------------------------------------------------------------------------
Charter Enhanced Contract transactions - 1999:
Purchase payments $ 49 4 $ 46 4 $ 2,279 127
Transfers between funds - - - - 24 1
Surrenders and terminations - - - - (40) (1)
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 49 4 $ 46 4 $ 2,263 127
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 98 8 $ 65 6 $ 1,695 96
Transfers between funds 1 - 2 - 13 1
Surrenders and terminations (1) - (1) - (100) (4)
Rescissions (6) (1) (6) (1) (40) (3)
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ 92 7 $ 60 5 $ 1,568 90
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Life Prospectus 78
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
7. Contract transactions: - Alterity Traditional, Enhanced and Optional Accumulation Dollar and Unit Activity (In thousands)
Transactions in dollars and units for each fund for the three-month period ended
March 31, 2000 (unaudited) and the year ended December 31, 1999 were as follows:
AIM V.I. Capital AIM V.I. AIM V.I. International AIM V.I.
Appreciation Fund Growth Fund Equity Fund Value Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alterity Traditional Contract transactions - 2000 (unaudited):
Purchase payments $ 65 6 $ 473 38 $ 64 6 $ 76 7
Transfers between funds (1) - - - 1 - 31 3
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 64 6 $ 473 38 $ 65 6 $ 107 10
------------------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 6 1 $ 12 1 $ 3 - $ 11 1
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 6 1 $ 12 1 $ 3 - $ 11 1
------------------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ - - $ - - $ 22 2
Transfers between funds 48 4 - - 24 2 - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 48 4 $ - - $ 24 2 $ 22 2
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
79
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
7. Contract transactions: - Alterity Traditional, Enhanced and Optional Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
Alger American Alger American Alger American MidCap Alger American Small
Growth Portfolio Leveraged AllCap PortfolioGrowth Portfolio Capitalization Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alterity Traditional Contract transactions - 2000 (unaudited):
Purchase payments $ 53 5 $ 62 4 $ 72 6 $ 7 1
Transfers between funds - - 189 13 - - 1 -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 53 5 $ 251 17 $ 72 6 $ 8 1
------------------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 13 1 $ 19 1 $ 12 1 $ 13 1
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 13 1 $ 19 1 $ 12 1 $ 13 1
------------------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ 1 - $ 10 1 $ - - $ - -
Transfers between funds 48 4 - - - - 24 2
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 49 4 $ 10 1 $ - - $ 24 2
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Life Prospectus 80
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
7. Contract transactions: - Alterity Traditional, Enhanced and Optional Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
Franklin
Davis VA Davis VA Davis VA Growth and
Financial Portfolio Real Estate Portfolio Value Portfolio Income Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alterity Traditional Contract transactions - 2000 (unaudited):
Purchase payments $ 94 9 $ 2 - $ 52 5 $ - -
Transfers between funds (3) - 2 - 2 - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 91 9 $ 4 - $ 54 5 $ - -
------------------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 3 - $ - - $ - - $ - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 3 - $ - - $ - - $ - -
------------------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ - - $ 1 - $ 19 1
Transfers between funds - - - - - - 72 3
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ - - $ 1 - $ 91 4
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
81
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
7. Contract transactions: - Alterity Traditional, Enhanced and Optional Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
Franklin Franklin Franklin J.P. Morgan
Rising Dividends Small Cap U.S. Government International Opportunities
Securities Fund Fund Fund Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alterity Traditional Contract transactions - 2000 (unaudited):
Purchase payments $ 1 - $ 88 3 $ - - $ 17 2
Transfers between funds - - 63 2 - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 1 - $ 151 5 $ - - $ 17 2
------------------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 14 - $ - - $ - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ 14 - $ - - $ - -
------------------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 10 - $ 10 1 $ - -
Transfers between funds - - - - 24 1 - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ 10 - $ 34 2 $ - -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Life Prospectus 82
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
7. Contract transactions: - Alterity Traditional, Enhanced and Optional Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
J.P. Morgan Mutual Mutual Oppenheimer
U.S. Disciplined Discovery Shares Global Securities
Equity Portfolio Securities Fund Securities Fund Fund/VA
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alterity Traditional Contract transactions - 2000 (unaudited):
Purchase payments $ 19 2 $ 39 3 $ - - $ 47 5
Transfers between funds (1) - - - - - 127 11
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 18 2 $ 39 3 $ - - $ 174 16
------------------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 1 - $ - - $ 12 1
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ 1 - $ - - $ 12 1
------------------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 18 1 $ 8 1 $ 1 -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ 18 1 $ 8 1 $ 1 -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
83
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
7. Contract transactions: - Alterity Traditional, Enhanced and Optional Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
Oppenheimer Oppenheimer PIMCO VIT PIMCO VIT
High Income Main Street Growth & High Yield Bond StockPLUS Growth &
Fund/VA Income Portfolio Portfolio Income Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alterity Traditional Contract transactions - 2000 (unaudited):
Purchase payments $ 176 20 $ 315 32 $ 14 1 $ 8 1
Transfers between funds - - 188 19 - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 176 20 $ 503 51 $ 14 1 $ 8 1
------------------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ - - $ - - $ 3 -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ - - $ - - $ 3 -
------------------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 1 - $ - - $ - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ 1 - $ - - $ - -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Life Prospectus 84
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
7. Contract transactions: - Alterity Traditional, Enhanced and Optional Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
PIMCO VIT Seligman Seligman Templeton
Total Return Global Technology Small Cap Value Developing Markets
Bond Portfolio Fund Fund Equity Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alterity Traditional Contract transactions - 2000 (unaudited):
Purchase payments $ 19 2 $ 614 50 $ 22 2 $ 6 1
Transfers between funds - - 31 3 (6) (1) - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 19 2 $ 645 53 $ 16 1 $ 6 1
------------------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 19 2 $ - - $ - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ 19 2 $ - - $ - -
------------------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 1 - $ - - $ - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ 1 - $ - - $ - -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
85
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
7. Contract transactions: - Alterity Traditional, Enhanced and Optional Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
Templeton Templeton USAllianz VIP USAllianz VIP
Global Growth Pacific Growth Diversified Assets Fixed Income
Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alterity Traditional Contract transactions - 2000 (unaudited):
Purchase payments $ 16 1 $ 7 1 $ 6 1 $ 1 -
Transfers between funds - - - - (2) - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 16 1 $ 7 1 $ 4 1 $ 1 -
------------------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ - - $ - - $ - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ - - $ - - $ - -
------------------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ - - $ - - $ - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ - - $ - - $ - -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Life Prospectus 86
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
7. Contract transactions: - Alterity Traditional, Enhanced and Optional Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
USAllianz VIP USAllianz VIP USAllianz VIP Van Kampen LIT
Global Opportunities Growth Money Market Enterprise
Fund Fund Fund Portfolio
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alterity Traditional Contract transactions - 2000 (unaudited):
Purchase payments $ 18 2 $ 13 1 $ 623 62 $ - -
Transfers between funds 2 - (3) - (623) (62) 6 -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 20 2 $ 10 1 $ - - $ 6 -
------------------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ - - $ - - $ 11 1
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ - - $ - - $ 11 1
------------------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ - - $ 326 33 $ - -
Transfers between funds - - - - (237) (24) - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ - - $ 89 9 $ - -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
87
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
7. Contract transactions: - Alterity Traditional, Enhanced and Optional Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
Van Kampen LIT Total
Growth & Income All
Portfolio Funds
------------------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alterity Traditional Contract transactions - 2000 (unaudited):
Purchase payments $ - - $3,089 279
Transfers between funds - - 4 (12)
Surrenders and terminations - - - -
Rescissions - - - -
Other transactions - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ - - $3,093 267
------------------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ - $ 152 11
Transfers between funds - - -
Surrenders and terminations - - -
Rescissions - - - -
Other transactions - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ - - $ 152 11
------------------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ 1 - $ 429 40
Transfers between funds - - 3 (8)
Surrenders and terminations - - - -
Rescissions - - - -
Other transactions - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ 1 - $ 432 32
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Life Prospectus 88
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
8. Unit Values - Valuemark II, III, and IV
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 three-month period ended March 31, 2000 (unaudited)
and each of the four years i the period ended December 31, 1999 follows.
Valuemark II & III Valuemark IV
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average UnitsOutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands) Unit Value(in thousands) Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AIM V.I. Growth Fund
March 31, 2000 (unaudited) 1,913 $ 12.477$ 23,863 2.13% 1,453 $ 12.473 $ 18,126 2.22%
December 31,
19991 526 11.084 5,866 2.13+ 363 11.083 4,026 2.22+
Alger American Growth Fund
March 31, 2000 (unaudited)1,554 12.009 18,666 2.19 1,074 12.004 12,893 2.28
December 31,
19991 540 10.922 5,894 2.19+ 415 10.921 4,535 2.28+
Alger American Leveraged AllCap Fund
March 31, 2000 (unaudited) 1,350 13.872 18,724 2.33 865 13.867 11,997 2.42
December 31,
19991 340 12.160 4,137 2.33+ 277 12.159 3,364 2.42+
Franklin Global Communications Securities Fund
March 31, 2000 (unaudited)20,712 42.744 885,307 1.91 1,586 42.355 67,188 2.00
December 31,
1999 21,687 38.917 844,307 1.91 1,418 38.572 54,724 2.00
1998 30,851 28.308 873,319 1.90 1,006 28.082 28,248 1.99
1997 39,623 25.818 1,022,994 1.90 310 25.635 7,959 1.99
1996 53,086 20.654 1,097,873 1.90 - - - -
Franklin Global Health Care Securities Fund
March 31, 2000 (unaudited) 1,020 11.816 12,051 2.22 656 11.796 7,740 2.31
December 31,
1999 634 9.615 6,088 2.22 469 9.601 4,512 2.31
19982 586 10.610 6,215 2.24+ 224 11.000 2,381 2.33+
Franklin Growth and Income Fund
March 31, 2000 (unaudited)24,324 26.027 633,088 1.89 5,117 25.766 131,853 1.98
December 31,
1999 27,634 26.147 722,583 1.89 5,570 25.891 144,218 1.98
1998 40,480 26.226 1,061,658 1.89 5,185 25.993 134,775 1.98
1997 46,962 24.551 1,152,961 1.89 2,376 24.354 57,877 1.98
1996 50,027 19.490 977,110 1.90 - - - -
Franklin High Income Fund
March 31, 2000 (unaudited)8,064 20.447 164,883 1.94 3,629 20.242 73,466 2.03
December 31,
1999 9,493 20.900 198,407 1.94 4,118 20.695 85,209 2.03
1998 14,987 21.208 317,865 1.93 4,191 21.020 88,069 2.02
1997 18,871 21.312 402,167 1.93 2,202 21.141 46,545 2.02
1996 20,736 19.375 402,379 1.94 - - - -
</TABLE>
<PAGE>
89
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
8. Unit Values - Valuemark II, III, and IV (CONTINUED)
Valuemark II & III Valuemark IV
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Franklin Income Securities Fund
March 31, 2000 (unaudited21,963 $ 24.370$ 535,248 1.90% 3,952 $ 24.126 $ 95,351 1.99%
December 31,
1999 24,929 24.323 606,369 1.90 4,380 24.084 105,486 1.99
1998 39,420 25.122 990,325 1.89 4,239 24.898 105,543 1.98
1997 49,811 25.065 1,248,520 1.90 2,094 24.864 52,069 1.99
1996 57,504 21.708 1,251,844 1.90 - - - -
Franklin Large Cap Growth Securities Fund
March 31, 2000 (unaudited)11,086 22.260 246,773 2.17 7,786 22.182 172,715 2.26
December 31,
1999 10,867 20.218 219,679 2.17 7,521 20.152 151,537 2.26
1998 8,454 15.574 131,652 2.17 4,502 15.537 69,939 2.26
1997 5,673 13.130 74,473 2.17 1,967 13.110 25,654 2.26
19963 3,722 11.254 42,110 2.17+ - - - -
Franklin Money Market Fund
March 31, 2000 (unaudited)15,037 15.006 225,644 1.93 4,228 14.858 62,822 2.02
December 31,
1999 17,388 14.860 258,373 1.93 5,236 14.717 77,050 2.02
1998 22,032 14.386 316,921 1.85 4,342 14.260 61,911 1.94
1997 20,892 13.865 290,904 1.85 3,214 13.756 44,200 1.94
1996 28,060 13.359 375,629 1.83 - - - -
Franklin Natural Resources Securities Fund
March 31, 2000 (unaudited)2,748 12.600 34,626 2.06 605 12.474 7,544 2.15
December 31,
1999 2,940 11.092 32,615 2.06 616 10.983 6,761 2.15
1998 4,453 8.505 37,878 2.04 514 8.430 4,332 2.13
1997 5,709 11.559 65,992 2.09 304 11.466 3,482 2.18
1996 6,998 14.467 101,248 2.05 - - - -
Franklin Real Estate Fund
March 31, 2000 (unaudited)4,663 21.911 102,177 1.98 1,369 21.692 29,707 2.07
December 31,
1999 5,401 21.386 115,525 1.98 1,490 21.176 31,567 2.07
1998 9,639 23.107 222,740 1.94 1,823 22.901 41,773 2.03
1997 13,445 28.169 378,751 1.94 1,217 27.944 34,023 2.03
1996 12,757 23.668 301,974 1.97 - - - -
Franklin Rising Dividends Securities Fund
March 31, 2000 (unaudited)14,773 19.374 286,209 2.15 3,587 19.232 68,994 2.24
December 31,
1999 17,252 18.846 325,172 2.15 4,137 18.712 77,429 2.24
1998 27,683 21.165 585,952 2.12 4,428 21.034 93,151 2.21
1997 33,249 20.074 667,473 2.14 1,991 19.968 39,752 2.23
1996 35,569 15.303 545,127 2.16 - - - -
</TABLE>
<PAGE>
Variable Life Prospectus 90
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
8. Unit Values - Valuemark II, III, and IV (CONTINUED)
Valuemark II & III Valuemark IV
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Franklin S&P 500 Index Fund
March 31, 2000 (unaudited) 1,778 $ 10.753$ 19,114 1.95% 1,454 $ 10.749 $ 15,627 2.04 %
December 31,
19991 727 10.467 7,613 1.95+ 626 10.465 6,555 2.04+
Franklin Small Cap Fund
March 31, 2000 (unaudited)10,355 31.682 328,080 2.17 5,730 31.556 180,815 2.26
December 31,
1999 10,654 28.353 302,040 2.17 5,460 28.247 154,275 2.26
1998 14,856 14.600 216,872 2.17 5,492 14.558 79,977 2.26
1997 16,925 14.952 253,045 2.17 2,965 14.923 44,268 2.26
1996 12,784 12.913 165,578 2.17 - - - -
Franklin U.S. Government Fund
March 31, 2000 (unaudited)18,866 18.886 356,306 1.91 3,769 18.699 70,482 2.00
December 31,
1999 20,938 18.574 388,862 1.91 3,857 18.394 70,974 2.00
1998 30,500 19.014 579,909 1.90 3,040 18.847 57,334 1.99
1997 36,347 17.947 652,317 1.90 1,359 17.805 24,222 1.99
1996 44,598 16.650 742,973 1.91 - - - -
Franklin Value Securities Fund
March 31, 2000 (unaudited) 881 7.963 7,015 2.21 695 7.949 5,522 2.30
December 31,
1999 727 7.736 5,614 2.21 603 7.724 4,657 2.30
19982 719 7.717 5,542 2.52+ 367 7.713 2,834 2.61+
Franklin Zero Coupon Fund - 2000
March 31, 2000 (unaudited)2,337 21.216 49,580 2.05 246 21.005 5,173 2.14
December 31,
1999 2,547 21.023 53,526 2.05 282 20.819 5,831 2.14
1998 3,595 20.684 74,353 1.80 188 20.502 3,815 1.89
1997 4,523 19.512 88,260 1.80 94 19.358 1,801 1.89
1996 5,636 18.475 104,125 1.80 - - - -
Franklin Zero Coupon Fund - 2005
March 31, 2000 (unaudited)1,812 23.587 42,731 2.05 514 23.356 12,011 2.14
December 31,
1999 2,011 23.205 46,679 2.05 555 22.983 12,750 2.14
1998 2,635 25.003 65,876 1.80 380 24.786 9,402 1.89
1997 2,910 22.532 65,573 1.80 161 22.357 3,585 1.89
1996 3,579 20.517 73,434 1.80 - - - -
</TABLE>
<PAGE>
91
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
8. Unit Values - Valuemark II, III, and IV (CONTINUED)
Valuemark II & III Valuemark IV
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Franklin Zero Coupon Fund - 2010
March 31, 2000 (unaudited)1,612 $ 25.356$ 40,867 2.05% 628 $ 25.104 $ 15,758 2.14%
December 31,
1999 1,851 24.164 44,759 2.05 668 23.929 15,961 2.14
1998 2,582 27.920 72,114 1.80 478 27.674 13,233 1.89
1997 2,998 24.740 74,199 1.80 150 24.544 3,676 1.89
1996 3,297 21.522 70,969 1.80 - - - -
Mutual Discovery Securities Fund
March 31, 2000 (unaudited)5,537 14.649 81,109 2.41 7,617 14.604 111,239 2.50
December 31,
1999 5,796 13.701 79,396 2.41 7,820 13.662 106,824 2.50
1998 9,718 11.226 109,094 2.40 8,822 11.205 98,842 2.49
1997 9,940 11.983 119,104 2.46 5,461 11.971 65,375 2.55
19965 1,471 10.180 15,074 2.77+ - - - -
Mutual Shares Securities Fund
March 31, 2000 (unaudited)10,978 13.540 148,636 2.19 17,593 13.498 237,480 2.28
December 31,
1999 12,423 13.237 164,442 2.19 18,924 13.199 249,799 2.28
1998 18,133 11.837 214,642 2.17 19,834 11.814 234,337 2.26
1997 18,744 11.993 224,796 2.20 11,394 11.981 136,521 2.29
19965 2,613 10.330 27,141 2.40+ - - - -
Templeton Global Asset Allocation Fund
March 31, 2000 (unaudited)2,326 14.078 32,750 2.22 1,333 14.016 18,676 2.31
December 31,
1999 2,504 14.408 36,071 2.22 1,403 14.347 20,133 2.31
1998 4,056 13.589 55,102 2.24 1,491 13.543 20,200 2.33
1997 5,229 13.786 72,082 2.34 1,008 13.752 13,864 2.43
1996 4,104 12.514 52,117 2.26 - - - -
Templeton Developing Markets Equity Fund
March 31, 2000 (unaudited)10,571 11.439 120,925 2.79 3,465 11.377 39,416 2.88
December 31,
1999 11,226 12.188 136,842 2.79 3,389 12.125 41,093 2.88
1998 15,989 7.993 127,804 2.81 3,425 7.958 27,259 2.90
1997 23,005 10.340 237,895 2.82 2,663 10.305 27,448 2.91
1996 22,423 11.487 259,346 2.89 - - - -
Templeton Global Income Securities Fund
March 31, 2000 (unaudited)3,787 16.607 62,882 2.05 604 16.440 9,936 2.14
December 31,
1999 4,226 16.635 70,284 2.05 657 16.472 10,843 2.14
1998 6,976 17.905 124,899 2.03 651 17.746 11,582 2.12
1997 9,434 16.957 159,973 2.02 393 16.821 6,620 2.11
1996 11,857 16.781 198,968 2.01 - - - -
</TABLE>
<PAGE>
Variable Life Prospectus 92
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
8. Unit Values - Valuemark II, III, and IV (CONTINUED)
Valuemark II & III Valuemark IV
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Templeton Global Growth Fund
March 31, 2000 (unaudited)22,928 $ 18.690$ 428,531 2.28% 8,928 $ 18.589 $ 165,968 2.37%
December 31,
1999 24,872 19.466 484,117 2.28 9,008 19.364 174,453 2.37
1998 34,226 16.309 558,162 2.28 8,864 16.238 143,943 2.37
1997 41,433 15.176 628,785 2.28 5,525 15.124 83,558 2.37
1996 40,327 13.560 550,066 2.33 - - - -
Templeton International Equity Fund
March 31, 2000 (unaudited)25,172 22.162 557,857 2.30 4,224 22.000 92,927 2.39
December 31,
1999 27,313 23.022 628,777 2.30 4,164 22.858 95,194 2.39
1998 44,256 18.437 815,915 2.28 4,427 18.322 81,113 2.37
1997 58,179 17.711 1,030,420 2.29 3,122 17.617 55,008 2.38
1996 64,375 16.081 1,036,583 2.29 - - - -
Templeton International Smaller Companies Fund
March 31, 2000 (unaudited)1,038 11.988 12,447 2.51 894 11.946 10,678 2.60
December 31,
1999 1,034 11.441 11,825 2.51 865 11.403 9,864 2.60
1998 1,533 9.364 14,354 2.50 967 9.342 9,037 2.59
1997 1,998 10.825 21,626 2.46 792 10.809 8,557 2.55
19963 1,388 11.145 15,527 2.18+ - - - -
Templeton Pacific Growth Fund
March 31, 2000 (unaudited)6,391 10.215 65,285 2.48 1,042 10.141 10,569 2.57
December 31,
1999 7,066 10.915 77,144 2.48 1,041 10.838 11,295 2.57
1998 10,669 8.078 86,200 2.50 655 8.028 5,274 2.59
1997 15,833 9.431 149,327 2.43 379 9.381 3,566 2.52
1996 22,061 14.932 330,159 2.39 - - - -
USAllianz VIP Diversified Assets Fund
March 31, 2000 (unaudited) 62 10.395 640 2.40 75 10.391 783 2.49
December 31,
19991 9 10.170 88 2.40+ 1 10.168 15 2.49+
USAllianz VIP Fixed Income Fund
March 31, 2000 (unaudited) 33 9.927 332 2.15 13 9.923 131 2.24
December 31,
19991 13 9.751 124 2.15+ 1 9.749 5 2.24+
USAllianz VIP Growth Fund
March 31, 2000 (unaudited) 57 11.385 645 2.30 34 11.381 388 2.39
December 31,
19991 21 10.733 226 2.30+ 10 10.731 105 2.39+
<FN>
* For the three-month period ended March 31, 2000 (unaudited) and the year ended December 31, 1999, including the effect of the
expenses of the underlying funds.
+ Annualized.
1 Period from November 12, 1999 (fund commencement) to December 31, 1999. 2
Period from May 1, 1998 (fund commencement) to December 31, 1998. 3 Period from
May 1, 1996 (fund commencement) to December 31, 1996. 5 Period from November 8,
1996 (fund commencement) to December 31, 1996.
</FN>
</TABLE>
<PAGE>
93
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
9. Unit Values - Valuemark Charter
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 three-month period ended March 31, 2000 (unaudited)
and the year ended December 31, 1999 follows.
Valuemark Charter Traditional Valuemark Charter Enhanced
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Franklin Global Communications Securities Fund
March 31, 2000 (unaudited) 6 $ 43.789 $ 260 1.92% 8 $42.834 $326 2.12%
December 31, 5 39.861 213 1.92 7 39.011 275 2.12
Franklin Global Health Care Securities Fund
March 31, 2000 (unaudited) 5 11.824 63 2.22 8 11.779 91 2.42
December 31, 1999 3 9.626 33 2.22 5 9.594 50 2.42
Franklin Growth and Income Fund
March 31, 2000 (unaudited) 21 26.670 556 1.89 16 26.088 423 2.09
December 31, 1999 21 26.792 545 1.90 9 26.22 238 2.10
Franklin High Income Fund
March 31, 2000 (unaudited) 13 20.953 282 1.94 3 20.496 55 2.14
December 31, 1999 20 21.405 429 1.94 1 20.949 18 2.14
Franklin Income Securities Fund
March 31, 2000 (unaudited) 48 24.953 1,205 1.90 9 24.409 219 2.10
December 31, 1999 49 24.923 1,206 1.90 4 24.391 92 2.10
Franklin Large Cap Growth Securities Fund
March 31, 2000 (unaudited) 23 22.393 509 2.17 22 22.218 487 2.37
December 31, 1999 19 20.337 392 2.17 7 20.188 144 2.37
Franklin Money Market Fund
March 31, 2000 (unaudited) 47 15.374 725 1.94 - 15.039 3 2.14
December 31, 1999 562 15.225 8,557 1.94 1 14.901 16 2.14
Franklin Natural Resources Securities Fund
March 31, 2000 (unaudited) 5 12.921 70 2.07 1 12.640 9 2.27
December 31, 1999 5 11.374 62 2.07 - 11.131 6 2.27
Franklin Real Estate Fund
March 31, 2000 (unaudited) 18 22.444 394 1.98 2 21.955 52 2.18
December 31, 1999 20 21.919 429 1.98 1 21.452 14 2.18
Franklin Rising Dividends Securities Fund
March 31, 2000 (unaudited) 15 19.707 292 2.15 10 19.390 200 2.35
December 31, 1999 18 19.156 340 2.16 11 18.857 206 2.36
Franklin Small Cap Fund
March 31, 2000 (unaudited) 112 31.939 3,584 2.22 7 31.657 222 2.42
December 31, 1999 32 28.565 904 2.17 3 28.328 79 2.37
Franklin U.S. Government Fund
March 31, 2000 (unaudited) 83 19.350 1,598 1.92 14 18.928 272 2.12
December 31, 1999 87 19.049 1,647 1.92 12 18.643 217 2.12
</TABLE>
<PAGE>
Variable Life Prospectus 94
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
9. Unit Values - Valuemark Charter (CONTINUED)
Valuemark Charter Traditional Valuemark Charter Enhanced
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Franklin Value Securities Fund
March 31, 2000 (unaudited) 15 $ 7.971 $ 123 2.21% 3 $ 7.972 $ 21 2.41%
December 31, 1999 14 7.749 108 2.21 3 7.753 21 2.41
Mutual Discovery Securities Fund
March 31, 2000 (unaudited) 14 14.734 209 2.41 13 14.634 191 2.61
December 31, 1999 20 13.779 275 2.42 10 13.692 136 2.62
Mutual Shares Securities Fund
March 31, 2000 (unaudited) 70 13.656 957 2.19 26 13.563 355 2.39
December 31, 1999 65 13.362 875 2.19 8 13.278 100 2.39
Templeton Global Asset Allocation Fund
March 31, 2000 (unaudited) 2 17.298 33 2.22 1 17.128 21 2.42
December 31, 1999 2 17.693 36 2.22 1 17.527 16 2.42
Templeton Developing Markets Equity Fund
March 31, 2000 (unaudited) 137 11.579 1,583 2.96 11 11.439 130 3.16
December 31, 1999 21 12.331 253 2.82 7 12.189 89 3.02
Templeton Global Income Securities Fund
March 31, 2000 (unaudited) 26 17.000 435 2.06 - 16.629 6 2.26
December 31, 1999 25 17.033 435 2.06 - 16.670 6 2.26
Templeton Global Growth Fund
March 31, 2000 (unaudited) 150 18.930 2,848 2.28 19 18.702 362 2.48
December 31, 1999 51 19.717 1,012 2.29 15 19.490 313 2.49
Templeton International Equity Fund
March 31, 2000 (unaudited) 214 22.494 4,805 2.32 19 22.132 429 2.52
December 31, 1999 124 23.368 2,895 2.32 14 23.004 303 2.52
Templeton International Smaller Companies Fund
March 31, 2000 (unaudited) 107 12.107 1,293 2.53 12 12.012 148 2.73
December 31, 1999 - 11.547 4 2.53 4 11.462 51 2.73
Templeton Pacific Growth Fund
March 31, 2000 (unaudited) 4 10.426 43 2.48 10 10.259 105 2.68
December 31, 1999 6 11.121 63 2.51 4 10.948 48 2.71
<FN>
* For the three-month period ended March 31, 2000 (unaudited) and the year ended
December 31, 1999, including the effect of the expenses of the underlying
funds.
</FN>
</TABLE>
<PAGE>
95
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
10. Unit Values - USAllianz Alterity
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 period from February 1, 2000 (product inception) to
March 31, 2000 (unaudited) follows.
USAllianz Alterity Traditional USAllianz Alterity Enhanced
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulation Net Assetsto Average Units OutstandingAccumulation Net Assets toAverage
(in thousands) Unit Value (in thousands Net Assets (in thousands) Unit Value(in thousandsNetAssets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund
March 31, 20001 (unaudited) 6 $ 11.560 $ 64 2.13+% 1 $ 11.551 $ 6 2.63+%
AIM V.I. Growth Fund
March 31, 2000 (unaudited) 38 12.477 468 2.13 1 12.453 12 2.63
AIM V.I. International Equity Fund
March 31, 20001 (unaudited) 6 10.636 62 2.37+ - 10.627 3 2.87+
AIM V.I. Value Fund
March 31, 20001 (unaudited) 10 11.140 110 2.16+ 1 11.131 11 2.66+
Alger American Growth Portfolio
March 31, 2000 (unaudited) 5 12.009 55 2.19 1 11.985 13 2.69
Alger American Leveraged AllCap Portfolio
March 31, 2000 (unaudited) 17 13.872 241 2.33 1 13.845 19 2.83
Alger American MidCap Growth Portfolio
March 31, 20001 (unaudited) 6 11.995 72 2.25+ 1 11.985 12 2.75+
Alger American Small Capitalization
March 31, 20001 (unaudited) 1 11.000 7 2.30+ 1 10.991 11 2.80+
Davis VA Financial Portfolio
March 31, 20001 (unaudited) 9 10.643 97 2.40+ - 10.634 3 2.90+
Davis VA Real Estate Portfolio
March 31, 20001 (unaudited) - 10.425 2 2.40+ - 10.417 - 2.90+
Davis VA Value Portfolio
March 31, 20001 (unaudited) 5 11.060 53 2.40+ - 11.051 - 2.90+
Franklin Growth and Income Securities Fund
March 31, 2000 (unaudited) - 26.015 - 2.14 - 24.641 - 2.64
Franklin Rising Dividends Securities Fund
March 31, 2000 (unaudited) - 19.380 1 2.40 - 18.625 - 2.90
Franklin Small Cap Fund
March 31, 2000 (unaudited) 4 31.672 136 2.47 - 31.005 13 2.97
Franklin U.S. Government Fund
March 31, 2000 (unaudited) - 18.871 - 2.17 - 17.867 - 2.67
J.P. Morgan International Opportunities Portfolio
March 31, 20001 (unaudited) 2 10.384 17 2.16+ - 10.375 - 2.66+
J.P. Morgan U.S. Disciplined Portfolio
March 31, 20001 (unaudited) 2 10.748 20 2.60+ - 10.739 - 3.10+
</TABLE>
<PAGE>
Variable Life Prospectus 96
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
10. Unit Values - USAllianz Alterity (CONTINUED)
USAllianz Alterity Traditional USAllianz Alterity Enhanced
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units Outstandig Accumulation Net Assets to Average Units OutstandingAccumulation Net Assets to Average
(in thousands) Unit Value (in thousands) Net Assets* (in thousands) Unit Value in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mutual Discovery Securities Fund
March 31, 2000 (unaudited) 3 $ 14.641 $ 40 2.66% - $ 14.407 $ 1 3.16%
Mutual Shares Securities Fund
March 31, 2000 (unaudited) - 13.518 - 2.44 - 13.303 - 2.94
Oppenheimer Global Securities Fund/VA
March 31, 20001 (unaudited) 15 9.866 151 2.09+ 1 9.858 11 2.59+
Oppenheimer High Income Fund/VA
March 31, 20001 (unaudited) 20 8.866 173 2.15+ - 8.859 - 2.65+
Oppenheimer Main Street Growth & Income Fund/VA
March 31, 20001 (unaudited) 50 10.176 513 2.18+ - 10.168 - 2.68+
PIMCO VIT High Yield Bond Portfolio
March 31, 20001 (unaudited) 1 9.632 14 2.15+ - 9.624 - 2.65+
PIMCO VIT StocksPLUS Growth and Income Portfolio
March 31, 20001 (unaudited) 1 10.624 9 2.05+ - 10.615 3 2.55+
PIMCO VIT Total Return Bond Portfolio
March 31, 20001 (unaudited) 2 10.100 19 2.05+ - 10.092 - 2.55+
Seligman Global Technology Fund
March 31, 20001 (unaudited) 53 12.004 632 2.80+ 2 11.994 18 3.30+
Seligman Small Cap Value Fund
March 31, 20001 (unaudited) 2 11.044 17 2.40+ - 11.035 - 2.90+
Templeton Developing Markets Equity Fund
March 31, 2000 (unaudited) 1 11.439 6 3.21 - 11.107 - 3.71
Templeton Global Growth Fund
March 31, 2000 (unaudited) 1 18.666 17 2.53 - 18.125 - 3.03
Templeton Pacific Growth Fund
March 31, 2000 (unaudited) 1 10.205 7 2.73 - 9.803 - 3.23
USAllianz VIP Diversified Assets Fund
March 31, 2000 (unaudited) 1 10.395 6 2.40 - 10.375 - 2.90
USAllianz VIP Fixed Income Fund
March 31, 2000 (unaudited) - 9.927 1 2.15 - 9.908 - 2.65
USAllianz VIP Global Opportunities Fund
March 31, 20001 (unaudited) 2 10.496 18 2.91+ - 10.487 - 3.41+
USAllianz VIP Growth Fund
March 31, 2000 (unaudited) 1 11.385 14 2.30 - 11.363 - 2.80
USAllianz VIP Money Market Fund
March 31, 20001 (unaudited) - 9.974 - 2.30+ - 9.966 - 2.80+
</TABLE>
<PAGE>
97
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
10. Unit Values - USAllianz Alterity (CONTINUED)
USAllianz Alterity Traditional USAllianz Alterity Enhanced
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units Outstanding Accumulation Net Assets to Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Van Kampen LIT Enterprise Portfolio
March 31, 20001 (unaudited) - $ 11.464 $ 6 2.00+% 1 $ 11.454 $ 11 2.50+%
Van Kampen LIT Growth & Income Portfolio
March 31, 20001 (unaudited) - 10.914 - 2.15+ - 10.905 - 2.65+
</TABLE>
<PAGE>
Variable Life Prospectus 98
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
10. Unit Values - USAllianz Alterity (CONTINUED)
USAllianz Alterity Optional
------------------------------------------------------------------------------------------------------------------------------------
Ratio of
Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund
March 31, 20001 (unaudited) 4 $ 11.555 $ 48 2.43+%
AIM V.I. Growth Fund
March 31, 2000 (unaudited) - 12.463 - 2.43
AIM V.I. International Equity Fund
March 31, 20001 (unaudited) 2 10.631 23 2.67+
AIM V.I. Value Fund
March 31, 20001 (unaudited) 2 11.135 22 2.46+
Alger American Growth Portfolio
March 31, 2000 (unaudited) 4 11.995 52 2.49
Alger American Leveraged AllCap Portfolio
March 31, 2000 (unaudited) 1 13.856 11 2.63
Alger American MidCap Growth Portfolio
March 31, 20001 (unaudited) - 11.989 - 2.55+
Alger American Small Capitalization
March 31, 20001 (unaudited) 2 10.995 21 2.60+
Davis VA Financial Portfolio
March 31, 20001 (unaudited) - 10.638 - 2.70+
Davis VA Real Estate Portfolio
March 31, 20001 (unaudited) - 10.420 - 2.70+
Davis VA Value Portfolio
March 31, 20001 (unaudited) - 11.055 1 2.70+
Franklin Growth and Income Securities Fund
March 31, 2000 (unaudited) 4 25.182 98 2.44
Franklin Rising Dividends Securities Fund
March 31, 2000 (unaudited) - 18.923 - 2.70
Franklin Small Cap Fund
March 31, 2000 (unaudited) - 31.270 10 2.77
Franklin U.S. Government Fund
March 31, 2000 (unaudited) 2 18.262 34 2.47
J.P. Morgan International Opportunities Portfolio
March 31, 20001 (unaudited) - 10.379 - 2.46+
J.P. Morgan U.S. Disciplined Portfolio
March 31, 20001 (unaudited) - 10.743 - 2.90+
Mutual Discovery Securities Fund
March 31, 2000 (unaudited) 1 14.500 19 2.96
Mutual Shares Securities Fund
March 31, 2000 (unaudited) 1 13.389 8 2.74
</TABLE>
<PAGE>
99
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
March 31, 2000 (unaudited)
10. Unit Values - USAllianz Alterity (CONTINUED)
USAllianz Alterity Optional
------------------------------------------------------------------------------------------------------------------------------------
Ratio of
Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oppenheimer Global Securities Fund/VA
March 31, 20001 (unaudited) - $ 9.862 $ 1 2.39+%
Oppenheimer High Income Fund/VA
March 31, 20001 (unaudited) - 8.862 - 2.45+
Oppenheimer Main Street Growth & Income Fund/VA
March 31, 20001 (unaudited) - 10.171 1 2.48+
PIMCO VIT High Yield Bond Portfolio
March 31, 20001 (unaudited) - 9.627 - 2.45+
PIMCO VIT StocksPLUS Growth and Income Portfolio
March 31, 20001 (unaudited) - 10.619 - 2.35+
PIMCO VIT Total Return Bond Portfolio
March 31, 20001 (unaudited) - 10.095 - 2.35+
Seligman Global Technology Fund
March 31, 20001 (unaudited) - 11.998 - 3.10+
Seligman Small Cap Value Fund
March 31, 20001 (unaudited) - 11.039 - 2.70+
Templeton Developing Markets Equity Fund
March 31, 2000 (unaudited) - 11.238 - 3.51
Templeton Global Growth Fund
March 31, 2000 (unaudited) - 18.340 - 2.83
Templeton Pacific Growth Fund
March 31, 2000 (unaudited) - 9.962 - 3.03
USAllianz VIP Diversified Assets Fund
March 31, 2000 (unaudited) - 10.383 - 2.70
USAllianz VIP Fixed Income Fund
March 31, 2000 (unaudited) - 9.915 - 2.45
USAllianz VIP Global Opportunities Fund
March 31, 20001 (unaudited) - 10.491 - 3.21+
USAllianz VIP Growth Fund
March 31, 2000 (unaudited) - 11.372 - 2.60
USAllianz VIP Money Market Fund
March 31, 20001 (unaudited) 9 9.970 89 2.60+
Van Kampen LIT Enterprise Portfolio
March 31, 20001 (unaudited) - 11.458 - 2.30+
Van Kampen LIT Growth & Income Portfolio
March 31, 20001 (unaudited) - 10.909 - 2.45+
<FN>
* For the three-month period ended March 31, 2000 (unaudited) and the year ended
December 31, 1999, including the effect of the expenses of the underlying
funds.
+ Annualized
1 Period from February 1, 2000 (fund commencement) to March 31, 2000.
</FN>
</TABLE>
ALLIANZ LIFE VARIABLE ACCOUNT B
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements
December 31, 1999
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Independent Auditors' Report
The Board of Directors of Allianz Life Insurance Company of North America and
Contract Owners of Allianz Life Variable Account B:
We have audited the accompanying statements of assets and liabilities of the
sub-accounts of Allianz Life Variable Account B as of December 31, 1999, the
related statements of operations for the year then ended and the statements of
changes in net assets for each of the years in the two-years then ended. These
financial statements are the responsibility of the Variable Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Investment securities
held in custody for the benefit of the Variable Account were confirmed to us by
AIM Variable Insurance Funds, Inc., The Alger American Fund, Franklin Templeton
Variable Insurance Products Trust, and USAllianz Variable Insurance Products
Trust. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets and liabilities of the sub-accounts of Allianz
Life Variable Account B at December 31, 1999, the results of their operations
for the year then ended and the changes in their net assets for each of the
years in the two-years then ended, in conformity with generally accepted
accounting principles.
KPMG LLP
Minneapolis, Minnesota
February 4, 2000
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements
Statements of Assets and Liabilities
December 31, 1999
(In thousands)
AIM Alger Alger American Franklin Global
V.I. Growth American Growth Leveraged Communications
Fund Fund AllCap Fund Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
AIM V.I. Growth Fund,
Class 1 - 306 shares, cost $9,508 $9,867 - - - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Alger American Growth Fund,
Class 1 - 162 shares, cost $9,957 - - 10,442 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Alger American Leveraged AllCap Fund,
Class 1 - 129 shares, cost $6,851 - - - - 7,507 - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Franklin Global Communications Securities Fund,
Class 1 - 36,310 shares, cost $609,001 - - - - - - 902,669 -
Class 2 - 20 shares, cost $420 - - - - - - - 491
------------------------------------------------------------------------------------------------------------------------------------
Total assets 9,867 - 10,442 - 7,507 - 902,669 491
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges:
Valuemark II & III 4 - 4 - 3 - (215) -
Valuemark IV 3 - 4 - 3 - (13) -
Valuemark Charter Traditional - - - - - - - 2
Valuemark Charter Enhanced - - - - - - - 1
Accrued administrative charges:
Valuemark II & III 1 - 1 - - - (26) -
Valuemark IV - - - - - - (1) -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 8 - 9 - 6 - (255) 3
------------------------------------------------------------------------------------------------------------------------------------
Net assets $9,859 - 10,433 - 7,501 - 902,924 488
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
Valuemark II and III (note 5) $5,833 - 5,894 - 4,137 - 844,307 -
Valuemark IV (note 5) 4,026 - 4,535 - 3,364 - 54,724 -
Valuemark Charter Traditional (note 6) - - - - - - - 213
Valuemark Charter Enhanced (note 6) - - - - - - - 275
Contracts in annuity payment period (note 2) - - 4 - - - 3,893 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $9,859 - 10,433 - 7,501 - 902,924 488
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
December 31, 1999
(In thousands)
Franklin Global
Health Care Franklin Growth Franklin High Franklin Income
Securities Fund and Income Fund Income Fund Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Global Health Care Securities Fund,
Class 1 - 1,081 shares, cost $10,216 $10,611 - - - - - - -
Class 2 - 8 shares, cost $75 - 83 - - - - - -
Franklin Growth and Income Fund,
Class 1 - 49,294 shares, cost $796,041 - - 876,439 - - - - -
Class 2 - 45 shares, cost $846 - - - 789 - - - -
Franklin High Income Fund,
Class 1 - 28,876 shares, cost $361,738 - - - - 284,716 - - -
Class 2 - 46 shares, cost $506 - - - - - 448 - -
Franklin Income Securities Fund,
Class 1 - 48,865 shares, cost $748,259 - - - - - - 717,826 -
Class 2 - 89 shares, cost $1,388 - - - - - - - 1,303
------------------------------------------------------------------------------------------------------------------------------------
Total assets 10,611 83 876,439 789 284,716 448 717,826 1,303
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges:
Valuemark II & III 4 - 97 - 34 - 183 -
Valuemark IV 5 - 10 - 9 - 9 -
Valuemark Charter Traditional - - - 4 - 1 - 4
Valuemark Charter Enhanced - - - 1 - - - 1
Accrued administrative charges:
Valuemark II & III 1 - 11 - 4 - 22 -
Valuemark IV 1 - 1 - 1 - 1 -
Valuemark Charter Traditional - - - 1 - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 11 - 119 6 48 1 215 5
------------------------------------------------------------------------------------------------------------------------------------
Net assets $10,600 83 876,320 783 284,668 447 717,611 1,298
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
Valuemark II and III (note 5) $6,088 - 722,583 - 198,407 - 606,369 -
Valuemark IV (note 5) 4,512 - 144,218 - 85,209 - 105,486 -
Valuemark Charter Traditional (note 6) - 33 - 545 - 429 - 1,206
Valuemark Charter Enhanced (note 6) - 50 - 238 - 18 - 92
Contracts in annuity payment period (note 2) - - 9,519 - 1,052 - 5,756 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $10,600 83 876,320 783 284,668 447 717,611 1,298
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
December 31, 1999
(In thousands)
Franklin Franklin
Large Cap Growth Franklin Money Natural Resources Franklin Real
Securities Fund Market Fund Securities Fund Estate Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Large Cap Growth Securities Fund,
Class 1 - 17,954 shares, cost $269,731 $378,462 - - - - - - -
Class 2 - 26 shares, cost $458 - 542 - - - - - -
Franklin Money Market Fund,
Class 1 - 337,544 shares, cost $337,544 - - 337,544 - - - - -
Class 2 - 8,602 shares, cost $8,602 - - - 8,602 - - - -
Franklin Natural Resources Securities Fund,
Class 1 - 3,604 shares, cost $39,973 - - - - 39,395 - - -
Class 2 - 6 shares, cost $68 - - - - - 68 - -
Franklin Real Estate Fund,
Class 1 - 9,912 shares, cost $176,899 - - - - - - 147,887 -
Class 2 - 30 shares, cost $443 - - - - - - - 443
------------------------------------------------------------------------------------------------------------------------------------
Total assets 378,462 542 337,544 8,602 39,395 68 147,887 443
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges:
Valuemark II & III 98 - 217 - 6 - 9 -
Valuemark IV 11 - 8 - 5 - 6 -
Valuemark Charter Traditional - 5 - 26 - - - -
Valuemark Charter Enhanced - 1 - - - - - -
Accrued administrative charges:
Valuemark II & III 12 - 26 - 1 - 1 -
Valuemark IV 1 - 1 - 1 - 1 -
Valuemark Charter Traditional - - - 3 - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 122 6 252 29 13 - 17 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets $378,340 536 337,292 8,573 39,382 68 147,870 443
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
Valuemark II and III (note 5) $219,679 - 258,373 - 32,615 - 115,525 -
Valuemark IV (note 5) 151,537 - 77,050 - 6,761 - 31,567 -
Valuemark Charter Traditional (note 6) - 392 - 8,557 - 62 - 429
Valuemark Charter Enhanced (note 6) - 144 - 16 - 6 - 14
Contracts in annuity payment period (note 2 7,124 - 1,869 - 6 - 778 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $378,340 536 337,292 8,573 39,382 68 147,870 443
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
December 31, 1999
(In thousands)
Franklin Rising Franklin Franklin Franklin
Dividends S & P 500 Small Cap U.S. Government
Securities Fund Index Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Rising Dividends Securities Fund,
Class 1 - 29,867 shares, cost $417,038 $406,493 - - - - - - -
Class 2 - 40 shares, cost $626 - 549 - - - - - -
Franklin S&P 500 Index Fund
Class 1 - 1,343 shares, cost $13,794 - - 14,180 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Franklin Small Cap Fund,
Class 1 - 17,248 shares, cost $244,267 - - - - 463,443 - - -
Class 2 - 37 shares, cost $701 - - - - - 985 - -
Franklin U.S. Government Fund,
Class 1 - 39,076 shares, cost $509,643 - - - - - - 460,317 -
Class 2 - 159 shares, cost $2,127 - - - - - - - 1,878
------------------------------------------------------------------------------------------------------------------------------------
Total assets 406,493 549 14,180 - 463,443 985 460,317 1,878
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges:
Valuemark II & III 54 - 4 - 118 - 18 -
Valuemark IV 8 - 6 - 10 - 8 -
Valuemark Charter Traditional - 2 - - - 2 - 12
Valuemark Charter Enhanced - 1 - - - - - 1
Accrued administrative charges:
Valuemark II & III 6 - 1 - 14 - 2 -
Valuemark IV 1 - 1 - 1 - 1 -
Valuemark Charter Traditional - - - - - - - 1
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 69 3 12 - 143 2 29 14
------------------------------------------------------------------------------------------------------------------------------------
Net assets $406,424 546 14,168 - 463,300 983 460,288 1,864
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
Valuemark II and III (note 5) $325,172 - 7,613 - 302,040 - 388,862 -
Valuemark IV (note 5) 77,429 - 6,555 - 154,275 - 70,974 -
Valuemark Charter Traditional (note 6) - 340 - - - 904 - 1,647
Valuemark Charter Enhanced (note 6) - 206 - - - 79 - 217
Contracts in annuity payment period (note 2) 3,823 - - - 6,985 - 452 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $406,424 546 14,168 - 463,300 983 460,288 1,864
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
December 31, 1999
(In thousands)
Franklin Franklin Franklin Franklin
Value Securities Zero Coupon Zero Coupon Zero Coupon
Fund Fund - 2000 Fund - 2005 Fund - 2010
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Value Securities Fund
Class 1 - 1,349 shares, cost $10,759 $10,660 - - - - - - -
Class 2 - 17 shares, cost $131 - 130 - - - - - -
Franklin Zero Coupon Fund- 2000
Class 1 - 4,724 shares, cost $65,759 - - 59,382 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Franklin Zero Coupon Fund- 2005
Class 1 - 4,097 shares, cost $63,136 - - - - 59,443 - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
Franklin Zero Coupon Fund- 2010
Class 1 - 4,292 shares, cost $71,092 - - - - - - 60,739 -
Class 2 - 0 shares, cost $0 - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total assets 10,660 130 59,382 - 59,443 - 60,739 -
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges:
Valuemark II & III 37 - 6 - 6 - 5 -
Valuemark IV 5 - 5 - 6 - 5 -
Valuemark Charter Traditional - 1 - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Accrued administrative charges:
Valuemark II & III 4 - 1 - 1 - 1 -
Valuemark IV - - 1 - 1 - 1 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 46 1 13 - 14 - 12 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets $10,614 129 59,369 - 59,429 - 60,727 -
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
Valuemark II and III (note 5) $5,614 - 53,526 - 46,679 - 44,759 -
Valuemark IV (note 5) 4,657 - 5,831 - 12,750 - 15,961 -
Valuemark Charter Traditional (note 6) - 108 - - - - - -
Valuemark Charter Enhanced (note 6) - 21 - - - - - -
Contracts in annuity payment period (note 2) 343 - 12 - - - 7 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $10,614 129 59,369 - 59,429 - 60,727 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
December 31, 1999
(In thousands)
Mutual Mutual Templeton Templeton
Discovery Securities Shares Securities Developing Markets Global Asset
Fund Fund Equity Fund Allocation Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Mutual Discovery Securities Fund,
Class 1 - 14,046 shares, cost $164,635 $190,610 - - - - - - -
Class 2 - 30 shares, cost $365 - 413 - - - - - -
Mutual Shares Securities Fund,
Class 1 - 31,789 shares, cost $370,341 - - 420,567 - - - - -
Class 2 - 74 shares, cost $939 - - - 980 - - - -
Templeton Developing Markets Equity Fund,
Class 1 - 17,079 shares, cost $167,971 - - - - 179,157 - - -
Class 2 - 33 shares, cost $328 - - - - - 346 - -
Templeton Global Asset Allocation Fund,
Class 1 - 4,909 shares, cost $59,592 - - - - - - 57,979 -
Class 2 - 4 shares, cost $54 - - - - - - - 52
------------------------------------------------------------------------------------------------------------------------------------
Total assets 190,610 413 420,567 980 179,157 346 57,979 52
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges:
Valuemark II & III 95 - 146 - 46 - 71 -
Valuemark IV 9 - 14 - 7 - 6 -
Valuemark Charter Traditional - 2 - 4 - 4 - -
Valuemark Charter Enhanced - - - 1 - - - -
Accrued administrative charges:
Valuemark II & III 11 - 18 - 6 - 9 -
Valuemark IV 1 - 2 - 1 - 1 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 116 2 180 5 60 4 87 -
------------------------------------------------------------------------------------------------------------------------------------
Net assets $190,494 411 420,387 975 179,097 342 57,892 52
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
Valuemark II and III (note 5) $79,396 - 164,442 - 136,842 - 36,071 -
Valuemark IV (note 5) 106,824 - 249,799 - 41,093 - 20,133 -
Valuemark Charter Traditional (note 6) - 275 - 875 - 253 - 36
Valuemark Charter Enhanced (note 6) - 136 - 100 - 89 - 16
Contracts in annuity payment period (note 2) 4,274 - 6,146 - 1,162 - 1,688 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $190,494 411 420,387 975 179,097 342 57,892 52
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
December 31, 1999
(In thousands)
Templeton Templeton Templeton Templeton
Global Growth Global Income International International Smaller
Fund Securities Fund Equity Fund Companies Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Templeton Global Growth Fund,
Class 1 - 42,714 shares, cost $548,058 $667,615 - - - - - - -
Class 2 - 86 shares, cost $1,294 - 1,339 - - - - - -
Templeton Global Income Securities Fund,
Class 1 - 7,339 shares, cost $92,234 - - 81,239 - - - - -
Class 2 - 40 shares, cost $464 - - - 442 - - - -
Templeton International Equity Fund,
Class 1 - 40,536 shares, cost $579,632 - - - - 727,623 - - -
Class 2 - 181 shares, cost $3,112 - - - - - 3,232 - -
Templeton International Smaller Companies Fund,
Class 1 - 2,014 shares, cost $21,792 - - - - - - 22,297 -
Class 2 - 5 shares, cost $56 - - - - - - - 58
------------------------------------------------------------------------------------------------------------------------------------
Total assets 667,615 1,339 81,239 442 727,623 3,232 22,297 58
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges:
Valuemark II & III 225 - 8 - 170 - 11 -
Valuemark IV 11 - 5 - 9 - 5 -
Valuemark Charter Traditional - 12 - 1 - 30 - 3
Valuemark Charter Enhanced - 1 - - - 1 - -
Accrued administrative charges:
Valuemark II & III 27 - 1 - 21 - 1 -
Valuemark IV 1 - 1 - 1 - 1 -
Valuemark Charter Traditional - 1 - - - 3 - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 264 14 15 1 201 34 18 3
------------------------------------------------------------------------------------------------------------------------------------
Net assets $667,351 1,325 81,224 441 727,422 3,198 22,279 55
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
Valuemark II and III (note 5) $484,117 - 70,284 - 628,777 - 11,825 -
Valuemark IV (note 5) 174,453 - 10,843 - 95,194 - 9,864 -
Valuemark Charter Traditional (note 6) - 1,012 - 435 - 2,895 - 4
Valuemark Charter Enhanced (note 6) - 313 - 6 - 303 - 51
Contracts in annuity payment period (note 2) 8,781 - 97 - 3,451 - 590 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $667,351 1,325 81,224 441 727,422 3,198 22,279 55
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
December 31, 1999
(In thousands)
Templeton USAllianz USAllianz USAllianz
Pacific Growth VIP Diversified VIP Fixed Income VIP Growth
Fund Assets Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Templeton Pacific Growth Fund,
Class 1 - 8,732 shares, cost $84,474 $88,975 - - - - - - -
Class 2 - 11 shares, cost $111 - 112 - - - - - -
USAllianz VIP Diversified Assets Fund,
Class 1 - 10 shares, cost $102 - - 103 - - - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
USAllianz VIP Fixed Income Fund,
Class 1 - 13 shares, cost $131 - - - - 129 - - -
Class 2 - 0 shares, cost $0 - - - - - - - -
USAllianz VIP Growth Fund,
Class 1 - 31 shares, cost $317 - - - - - - 331 -
Class 2 - 0 shares, cost $0 - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total assets 88,975 112 103 - 129 - 331 -
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges:
Valuemark II & III 21 - - - - - - -
Valuemark IV 6 - - - - - - -
Valuemark Charter Traditional - 1 - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Accrued administrative charges:
Valuemark II & III 2 - - - - - - -
Valuemark IV 1 - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 30 1 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets $88,945 111 103 - 129 - 331 -
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
Valuemark II and III (note 5) $77,144 - 88 - 124 - 226 -
Valuemark IV (note 5) 11,295 - 15 - 5 - 105 -
Valuemark Charter Traditional (note 6) - 63 - - - - - -
Valuemark Charter Enhanced (note 6) - 48 - - - - - -
Contracts in annuity payment period (note 2) 506 - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $88,945 111 103 - 129 - 331 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
December 31, 1999
(In thousands)
Total
All
Funds
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
Investments at net asset value:
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total assets $7,694,647 23,285
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges:
Valuemark II & III 1,485 -
Valuemark IV 185 -
Valuemark Charter Traditional - 116
Valuemark Charter Enhanced - 9
Accrued administrative charges:
Valuemark II & III 180 -
Valuemark IV 24 -
Valuemark Charter Traditional - 9
Valuemark Charter Enhanced - -
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,874 134
------------------------------------------------------------------------------------------------------------------------------------
Net assets $7,692,773 23,151
------------------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
Valuemark II and III (note 5) $5,883,411 -
Valuemark IV (note 5) 1,741,044 -
Valuemark Charter Traditional (note 6) - 20,713
Valuemark Charter Enhanced (note 6) - 2,438
Contracts in annuity payment period (note 2) 68,318 -
------------------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $7,692,773 23,151
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations
For the year ended December 31, 1999
(In thousands)
Alger Alger Franklin
AIM American Growth American Leverage Global Communications
V.I. Growth Fund Fund AllCap Fund Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $11 - - - - - 30,155 10
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
Valuemark II & III 4 - 5 - 3 - 9,416 -
Valuemark IV 3 - 4 - 3 - 481 -
Valuemark Charter Traditional - - - - - - - 1
Valuemark Charter Enhanced - - - - - - - 1
Administrative charges:
Valuemark II & III 1 - 1 - - - 1,130 -
Valuemark IV - - - - - - 54 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 8 - 10 - 6 - 11,081 2
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 3 - (10) - (6) - 19,074 8
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds 201 - - - - - 73,027 25
Realized gains (losses) on sales of
investments, net 4 - - - 17 - 57,739 (2)
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 205 - - - 17 - 130,766 23
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 359 - 484 - 656 - 108,627 70
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on
investments, net 564 - 484 - 673 - 239,393 93
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $567 - 474 - 667 - 258,467 101
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the year ended December 31, 1999
(In thousands)
Franklin Franklin Franklin Franklin
Global Health Care Growth and Income High Income Income Securities
Securities Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $23 - 38,834 22 77,709 105 74,850 44
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
Valuemark II & III 74 - 11,011 - 3,263 - 9,791 -
Valuemark IV 45 - 1,986 - 1,231 - 1,485 -
Valuemark Charter Traditional - - - 4 - 1 - 4
Valuemark Charter Enhanced - - - 1 - - - 1
Administrative charges:
Valuemark II & III 9 - 1,321 - 392 - 1,175 -
Valuemark IV 5 - 222 - 138 - 166 -
Valuemark Charter Traditional - - - 1 - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 133 - 14,540 6 5,024 1 12,617 5
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (110) - 24,294 16 72,685 104 62,233 39
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - 108,254 62 11,372 13 26,820 16
Realized gains (losses) on sales of
investments, net (444) - 72,697 (27) (13,505) (60) 18,957 -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net (444) - 180,951 35 (2,133) (47) 45,777 16
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (413) 8 (203,466) (57) (74,035) (58) (135,753) (85)
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on
investments, net (857) 8 (22,515) (22) (76,168) (105) (89,976) (69)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations ($967) 8 1,779 (6) (3,483) (1) (27,743) (30)
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the year ended December 31, 1999
(In thousands)
Franklin Franklin Franklin Franklin
Large Cap Growth Money Market Natural Resources Real Estate
Securities Fund Fund Securities Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $1,404 1 16,250 111 684 1 16,917 5
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
Valuemark II & III 2,414 - 3,641 - 464 - 2,022 -
Valuemark IV 1,569 - 869 - 88 - 503 -
Valuemark Charter Traditional - 4 - 25 - - - 1
Valuemark Charter Enhanced - 1 - - - - - -
Administrative charges:
Valuemark II & III 290 - 437 - 56 - 243 -
Valuemark IV 176 - 97 - 10 - 56 -
Valuemark Charter Traditional - - - 3 - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 4,449 5 5,044 28 618 - 2,824 1
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (3,045) (4) 11,206 83 66 1 14,093 4
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - 23,442 7
Realized gains (losses) on sales of
investments, net 14,374 94 - - (9,180) (11) (920) -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 14,374 94 - - (9,180) (11) 22,522 7
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 74,106 84 - - 20,689 1 (51,341) -
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on
investments, net 88,480 178 - - 11,509 (10) (28,819) 7
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset
from operations $85,435 174 11,206 83 11,575 (9) (14,726) 11
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the year ended December 31, 1999
(In thousands)
Franklin Franklin Franklin Franklin
Rising Dividends S&P 500 Index Small Cap U.S. Government
Securities Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $8,456 5 - - 1,420 - 73,938 257
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
Valuemark II & III 5,510 - 6 - 2,642 - 5,965 -
Valuemark IV 1,184 - 6 - 1,255 - 909 -
Valuemark Charter Traditional - 2 - - - 2 - 12
Valuemark Charter Enhanced - 1 - - - - - 1
Administrative charges:
Valuemark II & III 661 - 1 - 317 - 716 -
Valuemark IV 133 - 1 - 141 - 102 -
Valuemark Charter Traditional - - - - - - - 1
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 7,488 3 14 - 4,355 2 7,692 14
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 968 2 (14) - (2,935) (2) 66,246 243
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds 84,717 53 - - 198 - - -
Realized gains (losses) on sales of
investments, net 36,917 (1) - - 15,350 3 3,396 (20)
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 121,634 52 - - 15,548 3 3,396 (20)
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (184,821) (77) 386 - 211,659 284 (82,778) (250)
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on
investments, net (63,187) (25) 386 - 227,207 287 (79,382) (270)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations ($62,219) (23) 372 - 224,272 285 (13,136) (27)
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the year ended December 31, 1999
(In thousands)
Franklin Franklin Franklin Franklin
Value Securities Zero Coupon Zero Coupon Zero Coupon
Fund Fund - 2000 Fund - 2005 Fund - 2010
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $27 - 10,170 - 8,132 - 8,748 -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
Valuemark II & III 91 - 784 - 693 - 719 -
Valuemark IV 52 - 64 - 159 - 211 -
Valuemark Charter Traditional - 1 - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
Valuemark II & III 11 - 94 - 83 - 86 -
Valuemark IV 6 - 7 - 18 - 24 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 160 1 949 - 953 - 1,040 -
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (133) (1) 9,221 - 7,179 - 7,708 -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - 1,456 - 407 - 2,122 -
Realized gains (losses) on sales
of investments, net (411) (7) 471 - 1,372 - 322 -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net (411) (7) 1,927 - 1,779 - 2,444 -
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 309 - (10,114) - (14,138) - (21,090) -
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on
investments, net (102) (7) (8,187) - (12,359) - (18,646) -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations ($235) (8) 1,034 - (5,180) - (10,938) -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the year ended December 31, 1999
(In thousands)
Mutual Mutual Templeton Templeton
Discovery Securities Shares Securities Developing Markets Global Asset
Fund Fund Equity Fund Allocation Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $5,527 6 11,481 11 3,258 2 4,363 3
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
Valuemark II & III 1,136 - 2,422 - 1,619 - 586 -
Valuemark IV 1,340 - 3,346 - 448 - 265 -
Valuemark Charter Traditional - 2 - 4 - 4 - -
Valuemark Charter Enhanced - - - 1 - - - -
Administrative charges:
Valuemark II & III 136 - 291 - 194 - 70 -
Valuemark IV 150 - 375 - 50 - 30 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 2,762 2 6,434 5 2,311 4 951 -
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 2,765 4 5,047 6 947 (2) 3,412 3
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds - - - - - - 4,294 3
Realized gains (losses) on sales
of investments, net 877 - 10,361 (2) (14,723) 263 217 -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 877 - 10,361 (2) (14,723) 263 4,511 3
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 33,265 48 32,828 41 81,897 18 (4,595) (2)
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on
investments, net 34,142 48 43,189 39 67,174 281 (84) 1
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $36,907 52 48,236 45 68,121 279 3,328 4
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the year ended December 31, 1999
(In thousands)
Templeton Templeton Templeton Templeton
Global Growth Global Income International International Smaller
Fund Securities Fund Equity Fund Companies Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $14,804 17 8,318 20 43,449 147 658 -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
Valuemark II & III 6,443 - 1,175 - 8,528 - 158 -
Valuemark IV 2,090 - 155 - 1,149 - 126 -
Valuemark Charter Traditional - 12 - 1 - 29 - 3
Valuemark Charter Enhanced - 1 - - - 1 - -
Administrative charges:
Valuemark II & III 773 - 141 - 1,023 - 19 -
Valuemark IV 234 - 17 - 129 - 14 -
Valuemark Charter Traditional - 1 - - - 3 - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 9,540 14 1,488 1 10,829 33 317 3
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 5,264 3 6,830 19 32,620 114 341 (3)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions
on mutual funds 71,620 82 - - 22,510 56 - -
Realized gains (losses) on sales
of investments, net 29,748 235 (2,393) - 57,375 870 (948) 137
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 101,368 317 (2,393) - 79,885 926 (948) 137
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 10,044 45 (12,888) (22) 51,890 120 4,893 2
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net 111,412 362 (15,281) (22) 131,775 1,046 3,945 139
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $116,676 365 (8,451) (3) 164,395 1,160 4,286 136
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the year ended December 31, 1999
(In thousands)
Templeton USAllianz USAllianz USAllianz
Pacific Growth VIP Diversified VIP Fixed Income VIP Growth
Fund Assets Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2 Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $907 1 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
Valuemark II & III 1,051 - - - - - - -
Valuemark IV 111 - - - - - - -
Valuemark Charter Traditional - 1 - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
Valuemark II & III 126 - - - - - - -
Valuemark IV 12 - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,300 1 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (393) - - - - - - -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distribution
on mutual funds - - - - - - - -
Realized gains (losses) on sales
of investments, net (3,508) 38 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net (3,508) 38 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments 33,561 1 1 - (2) - 14 -
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on
investments, net 30,053 39 1 - (2) - 14 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $29,660 39 1 - (2) - 14 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Operations (cont.)
For the year ended December 31, 1999
(In thousands)
Total
All
Funds
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment income:
Dividends reinvested in fund shares $460,493 768
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
Valuemark II & III 81,636 -
Valuemark IV 21,137 -
Valuemark Charter Traditional - 113
Valuemark Charter Enhanced - 9
Administrative charges:
Valuemark II & III 9,797 -
Valuemark IV 2,367 -
Valuemark Charter Traditional - 9
Valuemark Charter Enhanced - -
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 114,937 131
------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 345,556 637
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds 430,440 317
Realized gains (losses) on sales of investments, net 274,162 1,510
------------------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 704,602 1,827
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (129,766) 171
------------------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 574,836 1,998
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $920,392 2,635
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets For the years ended December 31, 1999 and
1998 (In thousands)
AIM V.I. Alger American
Growth Fund Growth Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $3 - - - (10) - - -
Realized gains (losses) on investments,net 205 - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments 359 - - - 484 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset
from operations 567 - - - 474 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 27 - - - 6 - - -
Transfers between funds 5,530 - - - 5,632 - - -
Surrenders and terminations (61) - - - (3) - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III 4,496 - - - 5,635 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 50 - - - 215 - - -
Transfers between funds 3,764 - - - 4,119 - - -
Surrenders and terminations (18) - - - (10) - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions - Valuemark IV 3,796 - - - 4,324 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - - - - - - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - - - - - - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 9,859 - - - 10,433 - - -
Net assets at beginning of year - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $9,859 - - - 10,433 - - -
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Alger American Franklin Global Communications
Leveraged AllCap Fund Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net ($6) - - - 19,074 25,465 8 -
Realized gains (losses) on investments, net 17 - - - 130,766 99,245 23 -
Net change in unrealized appreciation
(depreciation) on investments 656 - - - 108,627 (40,032) 70 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset
from operations 667 - - - 258,467 84,678 101 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 1 - - - 3,272 7,461 - -
Transfers between funds 3,765 - - - (24,958) (39,931) - -
Surrenders and terminations (9) - - - (250,550)(198,959) - -
Rescissions - - - - (386) (241) - -
Other transactions (note 2) - - - - 476 155 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III 3,757 - - - (272,146 (231,515) - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 8 - - - 3,917 12,583 - -
Transfers between funds 3,078 - - - 13,001 6,950 - -
Surrenders and terminations (9) - - - (4,391) (1,068) - -
Rescissions - - - - (16) (88) - -
Other transactions (note 2) - - - - 1 5 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark IV 3,077 - - - 12,512 18,382 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - - - - - 179 -
Transfers between funds - - - - - - (19) -
Surrenders and terminations - - - - - - (1) -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - - - - - 159 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - - - - - 237 -
Transfers between funds - - - - - - (8) -
Surrenders and terminations - - - - - - (1) -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - - - - - 228 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 7,501 - - - (1,167)(128,455) 488 -
Net assets at beginning of year - - - - 904,0911,032,546 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $7,501 - - - 902,924 904,091 488 -
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Franklin Global Health Franklin
Care Securities Fund Growth and Income Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net ($110) (42) - - 24,294 22,488 16 -
Realized gains (losses) on investments,
net (444) (205) - - 180,951 128,386 35 -
Net change in unrealized appreciation
(depreciation) on investments (413) 808 8 - (203,466) (73,442) (57) -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (967) 561 8 - 1,779 77,432 (6) -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 103 194 - - 8,279 16,130 - -
Transfers between funds 3,399 5,818 - - (16,044) 20,093 - -
Surrenders and terminations (2,835) (190) - - (331,869) (195,983) - -
Rescissions (2) - - - (714) (276) - -
Other transactions (note 2) (3) (1) - - 585 356 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III 662 5,821 - - (339,763) (159,680) - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 502 1,428 - - 11,510 51,280 - -
Transfers between funds 2,077 1,051 - - 18,552 25,926 - -
Surrenders and terminations (267) (7) - - (18,769) (5,388) - -
Rescissions (2) (258) - - (127) (943) - -
Other transactions (note 2) (1) - - - 78 46 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions - Valuemark IV 2,309 2,214 - - 11,244 70,921 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 36 - - - 1,195 -
Transfers between funds - - (6) - - - (13) -
Surrenders and terminations - - - - - - (634) -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - 30 - - - 548 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions -Valuemark Charter Enhanced (note 6):
Purchase payments - - 43 - - - 238 -
Transfers between funds - - 2 - - - 7 -
Surrenders and terminations - - - - - - (4) -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 45 - - - 241 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 2,004 8,596 83 - (326,740) (11,327) 783 -
Net assets at beginning of year 8,596 - - - 1,203,060 1,214,387 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $10,600 8,596 83 - 876,320 1,203,060 783 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Franklin Franklin
High Income Fund Income Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $72,685 33,766 104 - 62,233 77,877 39 -
Realized gains (losses) on investments,
net (2,133) 4,702 (47) - 45,777 48,389 16 -
Net change in unrealized appreciation
(depreciation) on investments (74,035) (38,630) (58) - (135,753) (126,374) (85) -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (3,483) (162) (1) - (27,743) (108) (30) -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 1,791 4,834 - - 4,169 13,275 - -
Transfers between funds (18,484) (19,142) - - (69,103) (51,375) - -
Surrenders and terminations (100,108) (71,048) - - (294,539 (219,332) - -
Rescissions (186) (154) - - (1,016) (278) - -
Other transactions (note 2) 173 455 - - 767 411 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III (116,814) (85,055) - - (359,722) (257,299) - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 7,857 39,346 - - 9,595 42,572 - -
Transfers between funds 2,895 8,234 - - 5,898 14,799 - -
Surrenders and terminations (11,650) (4,106) - - (11,956) (3,538) - -
Rescissions (890) (1,327) - - (122) (530) - -
Other transactions (note 2) 277 50 - - 64 (5) - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark IV (1,511) 42,197 - - 3,479 53,298 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 219 - - - 1,223 -
Transfers between funds - - 260 - - - 12 -
Surrenders and terminations - - (49) - - - (2) -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - 430 - - - 1,233 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions -Valuemark Charter Enhanced (note 6):
Purchase payments - - 7 - - - 79 -
Transfers between funds - - 14 - - - 17 -
Surrenders and terminations - - (3) - - - (1) -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 18 - - - 95 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (121,808) (43,020) 447 - (383,986) (204,109) 1,298 -
Net assets at beginning of year 406,476 449,496 - - 1,101,597 1,305,706 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $284,668 406,476 447 - 717,611 1,101,597 1,298 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Franklin Franklin
Large Cap Growth Securities Fund Money Market Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net ($3,045) (1,497) (4) - 11,206 12,915 83 -
Realized gains (losses) on investments,
net 14,374 3,101 94 - - - - -
Net change in unrealized appreciation
(depreciation) on investments 74,106 24,031 84 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 85,435 25,635 174 - 11,206 12,915 83 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 3,422 3,713 - - 7,896 11,342 - -
Transfers between funds 117,374 55,930 - - 194,558 207,647 - -
Surrenders and terminations (81,624) (17,886) - - (276,520)(204,171) - -
Rescissions (255) (8) - - (187) (341) - -
Other transactions (note 2) 151 (19) - - 6,553 824 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III 39,068 41,730 - - (67,700) 15,301 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 10,004 21,127 - - 12,863 44,229 - -
Transfers between funds 59,488 17,665 - - 25,077 (20,238) - -
Surrenders and terminations (20,335) (2,192) - - (25,510) (6,316) - -
Rescissions (56) (556) - - (49) (1,952) - -
Other transactions (note 2) 258 1 - - 470 199 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark IV 49,359 36,045 - - 12,851 15,922 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 1,393 - - - 8,404 -
Transfers between funds - - 42 - - - 173 -
Surrenders and terminations - - (920) - - - (103) -
Rescissions - - (274) - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - 241 - - - 8,474 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - 125 - - - 57 -
Transfers between funds - - - - - - (41) -
Surrenders and terminations - - (4) - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 121 - - - 16 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 173,862 103,410 536 - (43,643) 44,138 8,573 -
Net assets at beginning of year 204,478 101,068 - - 380,935 336,797 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $378,340 204,478 536 - 337,292 380,935 8,573 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Franklin Natural Resources Franklin
Securities Fund Real Estate Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $66 75 1 - 14,093 9,568 4 -
Realized gains (losses) on investments,
net (9,180) (13,600) (11) - 22,522 25,702 7 -
Net change in unrealized appreciation
(depreciation) on investments 20,689 (3,804) 1 - (51,341)(105,327) - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 11,575 (17,329) (9) - (14,726) (70,057) 11 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 315 899 - - 790 4,373 - -
Transfers between funds (5,419) (5,230) - - (29,234) (48,548) - -
Surrenders and terminations (9,951) (7,877) - - (66,788) (49,929) - -
Rescissions (65) (49) - - (283) (148) - -
Other transactions (note 2) 11 15 - - 46 161 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III (15,109) (12,242) - - (95,469) (94,091) - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 459 1,717 - - 1,696 16,008 - -
Transfers between funds 923 841 - - (4,570) 1,947 - -
Surrenders and terminations (618) (188) - - (4,367) (1,625) - -
Rescissions (57) (52) - - (7) (202) - -
Other transactions (note 2) (2) (15) - - 26 13 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark IV 705 2,303 - - (7,222) 16,141 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 57 - - - 281 -
Transfers between funds - - 14 - - - 136 -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - 71 - - - 417 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - 4 - - - 13 -
Transfers between funds - - 2 - - - 2 -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 6 - - - 15 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (2,829) (27,268) 68 - (117,417)(148,007) 443 -
Net assets at beginning of year 42,211 69,479 - - 265,287 413,294 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $39,382 42,211 68 - 147,870 265,287 443 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Franklin Franklin S&P 500
Rising Dividends Securities Fund Index Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $968 (2,149) 2 - (14) - - -
Realized gains (losses) on investments,
net 121,634 134,667 52 - - - - -
Net change in unrealized appreciation
(depreciation) on investments (184,821)(101,514) (77) - 386 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (62,219) 31,004 (23) - 372 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 2,867 10,801 - - 5 - - -
Transfers between funds (38,032) 17,226 - - 7,594 - - -
Surrenders and terminations (174,156)(135,412) - - (181) - - -
Rescissions (316) (207) - - - - - -
Other transactions (note 2) 221 239 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III (209,416 (107,353) - - 7,418 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 5,964 36,972 - - 274 - - -
Transfers between funds (282) 17,333 - - 6,114 - - -
Surrenders and terminations (11,026) (3,213) - - (10) - - -
Rescissions (111) (691) - - - - - -
Other transactions (note 2) 115 3 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark IV (5,340) 50,404 - - 6,378 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 355 - - - - -
Transfers between funds - - 2 - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - 357 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - 214 - - - - -
Transfers between funds - - (1) - - - - -
Surrenders and terminations - - (1) - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 212 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (276,975) (25,945) 546 - 14,168 - - -
Net assets at beginning of year 683,399 709,344 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $406,424 683,399 546 - 14,168 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Franklin Franklin U.S. Government
Small Cap Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net ($2,935) (4,034) (2) - 66,246 36,201 243 -
Realized gains (losses) on investments,
net 15,548 24,392 3 - 3,396 8,286 (20) -
Net change in unrealized appreciation
(depreciation) on investments 211,659 (31,057) 284 - (82,778) (7,222) (250) -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 224,272 (10,699) 285 - (13,136) (37,265) (27) -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 1,798 6,424 - - 2,444 5,708 - -
Transfers between funds 8,311 4,845 - - (16,017) 12,261 - -
Surrenders and terminations (72,615) (36,786) - - (165,246)(126,296) - -
Rescissions (139) (186) - - (1,028) (188) - -
Other transactions (note 2) 302 (15) - - 294 860 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III (62,343) (25,718) - - (179,553)(107,655) - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 4,252 26,375 - - 7,769 20,857 - -
Transfers between funds 6,853 13,910 - - 15,383 12,943 - -
Surrenders and terminations (9,570) (2,749) - - (7,818) (2,139) - -
Rescissions (56) (368) - - (156) (701) - -
Other transactions (note 2) 112 32 - - 195 4 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark IV 1,591 37,200 - - 15,373 30,964 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 190 - - - 1,598 -
Transfers between funds - - 456 - - - 343 -
Surrenders and terminations - - - - - - (270) -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - 646 - - - 1,671 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - 48 - - - 213 -
Transfers between funds - - 4 - - - 14 -
Surrenders and terminations - - - - - - (7) -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 52 - - - 220 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 163,520 783 983 - (177,316) (39,426) 1,864 -
Net assets at beginning of year 299,780 298,997 - - 637,604 677,030 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $463,300 299,780 983 - 460,288 637,604 1,864 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Franklin Value Franklin
Securities Fund Zero Coupon Fund - 2000
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net ($133) (47) (1) - 9,221 5,241 - -
Realized gains (losses) on investments,
net (411) (74) (7) - 1,927 2,396 - -
Net change in unrealized appreciation
(depreciation) on investments 309 (407) - - (10,114) (2,765) - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (235) (528) (8) - 1,034 4,872 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 326 190 - - 183 498 - -
Transfers between funds 2,439 6,072 - - (1,531) (4,978) - -
Surrenders and terminations (2,562) (129) - - (20,544) (14,347) - -
Rescissions (1) - - - (4) (4) - -
Other transactions (note 2) (2) (1) - - 117 165 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III 200 6,132 - - (21,779) (18,666) - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 715 916 - - 340 864 - -
Transfers between funds 1,785 2,211 - - 2,017 1,107 - -
Surrenders and terminations (521) (62) - - (406) (68) - -
Rescissions (1) (4) - - (8) (23) - -
Other transactions (note 2) 6 - - - 3 (6) - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark IV 1,984 3,061 - - 1,946 1,874 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 374 - - - - -
Transfers between funds - - (1) - - - - -
Surrenders and terminations - - (258) - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - 115 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - 22 - - - - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 22 - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 1,949 8,665 129 - (18,799) (11,920) - -
Net assets at beginning of year 8,665 - - - 78,168 90,088 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $10,614 8,665 129 - 59,369 78,168 - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Franklin Franklin
Zero Coupon Fund - 2005 Zero Coupon Fund - 2010
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $7,179 3,261 - - 7,708 3,294 - -
Realized gains (losses) on investments,
net 1,779 2,485 - - 2,444 5,443 - -
Net change in unrealized appreciation
(depreciation) on investments (14,138) 1,608 - - (21,090) 769 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (5,180) 7,354 - - (10,938) 9,506 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 215 759 - - 206 682 - -
Transfers between funds (950) 3,490 - - 225 4,057 - -
Surrenders and terminations (14,198) (10,720) - - (19,296) (15,533) - -
Rescissions (15) (11) - - (7) (2) - -
Other transactions (note 2) 71 105 - - 230 49 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions
Valuemark II & III (14,877 (6,377) - - (18,642) (10,747) - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 1,585 3,307 - - 2,411 5,944 - -
Transfers between funds 3,627 2,192 - - 3,934 3,245 - -
Surrenders and terminations (1,004) (284) - - (1,316) (458) - -
Rescissions (89) (68) - - (84) (20) - -
Other transactions (note 2) 89 (4) - - 5 (2) - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark IV 4,208 5,143 - - 4,950 8,709 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - - - - - - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - - - - - - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (15,849) 6,120 - - (24,630) 7,468 - -
Net assets at beginning of year 75,278 69,158 - - 85,357 77,889 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $59,429 75,278 - - 60,727 85,357 - -
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Mutual Discovery Mutual Shares
Securities Fund Securities Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $2,765 (64) 4 - 5,047 (1,566) 6 -
Realized gains (losses) on investments,
net 877 1,768 - - 10,361 4,339 (2) -
Net change in unrealized appreciation
(depreciation) on investments 33,265 (23,026) 48 - 32,828 (15,031) 41 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 36,907 (21,322) 52 - 48,236 (12,258) 45 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 889 6,337 - - 2,270 11,748 - -
Transfers between funds (9,239) 18,856 - - 261 28,224 - -
Surrenders and terminations (37,626) (22,824) - - (73,031) (42,653) - -
Rescissions (62) (132) - - (653) (194) - -
Other transactions (note 2) 110 5 - - 389 59 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III (45,928) 2,242 - - (70,764) (2,816) - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 3,851 35,649 - - 9,961 85,482 - -
Transfers between funds (3,004) 12,085 - - 6,279 28,604 - -
Surrenders and terminations (12,692) (3,935) - - (27,466) (8,498) - -
Rescissions (169) (577) - - (156) (1,549) - -
Other transactions (note 2) 100 59 - - 247 92 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark IV (11,914) 43,281 - - (11,135) 104,131 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 262 - - - 895 -
Transfers between funds - - (2) - - - (34) -
Surrenders and terminations - - (24) - - - (26) -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - 236 - - - 835 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - 123 - - - 94 -
Transfers between funds - - 4 - - - 6 -
Surrenders and terminations - - (4) - - - (5) -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 123 - - - 95 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (20,935) 24,201 411 - (33,663) 89,057 975 -
Net assets at beginning of year 211,429 187,228 - - 454,050 364,993 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $190,494 211,429 411 - 420,387 454,050 975 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Templeton Developing Templeton Global
Markets Equity Fund Asset Allocation Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $947 3,912 (2) - 3,412 1,887 3 -
Realized gains (losses) on
investments, net (14,723) (8,736) 263 - 4,511 4,396 3 -
Net change in unrealized appreciation
(depreciation) on investments 81,897 (51,993) 18 - (4,595) (8,198) (2) -
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from operations 68,121 (56,817) 279 - 3,328 (1,915) 4 -
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 1,065 4,084 - - 577 1,787 - -
Transfers between funds (9,812) (39,497) - - (8,133) (8,074) - -
Surrenders and terminations (35,896) (26,039) - - (13,638) (8,859) - -
Rescissions (154) (68) - - (16) (7) - -
Other transactions (note 2) 131 (56) - - 43 30 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions-Valuemark II & III(44,666) (61,576) - - (21,167) (15,123) - -
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 2,375 9,390 - - 2,112 6,881 - -
Transfers between funds 164 (1,057) - - (1,245) 525 - -
Surrenders and terminations (2,692) (1,050) - - (2,233) (519) - -
Rescissions (6) (129) - - (2) (14) - -
Other transactions (note 2) 13 (13) - - 39 11 - -
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions - Valuemark IV (146) 7,141 - - (1,329) 6,884 - -
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 211 - - - 34 -
Transfers between funds - - (225) - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - (14) - - - 34 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - 75 - - - 15 -
Transfers between funds - - 2 - - - (1) -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 77 - - - 14 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 23,309 (111,252) 342 - (19,168) (10,154) 52 -
Net assets at beginning of year 155,788 267,040 - - 77,060 87,214 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $179,097 155,788 342 - 57,892 77,060 52 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Templeton Templeton Global
Global Growth Fund Income Securities Fund
-----------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
-----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $5,264 8,781 3 - 6,830 9,058 19 -
Realized gains (losses) on
investments, net 101,368 82,495 317 - (2,393) 263 - -
Net change in unrealized appreciation
(depreciation) on investments 10,044 (44,136) 45 - (12,888) (1,320) (22) -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 116,676 47,140 365 - (8,451) 8,001 (3) -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 3,910 10,586 - - 372 983 - -
Transfers between funds (21,594) (41,415) - - (8,997) (13,288) - -
Surrenders and terminations (143,382) (79,015) - - (38,030) (30,382) - -
Rescissions (338) (300) - - (414) (42) - -
Other transactions (note 2) 309 78 - - 37 154 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transaction
- Valuemark II & III (161,095)(110,066) - - (47,032) (42,575) - -
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 12,834 47,491 - - 1,026 3,461 - -
Transfers between funds 8,319 11,653 - - 761 1,385 - -
Surrenders and terminations (17,858) (4,558) - - (1,634) (377) - -
Rescissions (144) (653) - - (5) (12) - -
Other transactions (note 2) 111 (12) - - 5 2 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions - Valuemark IV 3,262 53,921 - - 153 4,459 - -
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 1,732 - - - 437 -
Transfers between funds - - (132) - - - 1 -
Surrenders and terminations - - (863) - - - - -
Rescissions - - (59) - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - 678 - - - 438 -
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - 288 - - - 21 -
Transfers between funds - - 4 - - - (15) -
Surrenders and terminations - - (10) - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 282 - - - 6 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (41,157) (9,005) 1,325 - (55,330) (30,115) 441 -
Net assets at beginning of year 708,508 717,513 - - 136,554 166,669 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $667,351 708,508 1,325 - 81,224 136,554 441 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Templeton Templeton International
International Equity Fund Smaller Companies Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $32,620 18,022 114 - 341 290 (3) -
Realized gains (losses) on investments, net 79,885 112,100 926 - (948) (547) 137 -
Net change in unrealized appreciation
(depreciation) on investments 51,890 (88,725) 120 - 4,893 (3,830) 2 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from operations 164,395 41,397 1,160 - 4,286 (4,087) 136 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 2,621 8,884 - - 115 865 - -
Transfers between funds (63,288) (92,026) - - (1,461) (3,005) - -
Surrenders and terminations (269,672)(171,313) - - (3,584) (2,234) - -
Rescissions (1,975) (404) - - (3) (24) - -
Other transactions (note 2) 1,097 252 - - 35 10 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III (331,217)(254,607) - - (4,898) (4,388) - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 3,376 21,502 - - 412 2,980 - -
Transfers between funds (471) 6,064 - - (381) (467) - -
Surrenders and terminations (8,179) (2,654) - - (1,017) (365) - -
Rescissions (40) (95) - - (3) (85) - -
Other transactions (note 2) 68 45 - - 4 (15) - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions - Valuemark IV (5,246) 24,862 - - (985) 2,048 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 2,640 - - - 3 -
Transfers between funds - - (882) - - - (133) -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - 1,758 - - - (130) -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - 268 - - - 49 -
Transfers between funds - - 12 - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 280 - - - 49 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (172,068)(188,348) 3,198 - (1,597) (6,427) 55 -
Net assets at beginning of year 899,4901,087,838 - - 23,876 30,303 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $727,422 899,490 3,198 - 22,279 23,876 55 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Templeton USAllianz VIP
Pacific Growth Fund Diversified Assets Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net ($393) 3,442 - - - - - -
Realized gains(losses)on investments,net(3,508) (66,038) 38 - - - - -
Net change in unrealized appreciation
(depreciation) on investments 33,561 39,890 1 - 1 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 29,660 (22,706) 39 - 1 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 738 1,634 - - - - - -
Transfers between funds (6,774) (21,917) - - 88 - - -
Surrenders and terminations (29,719) (20,611) - - - - - -
Rescissions (36) (54) - - - - - -
Other transactions (note 2) 11 48 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III (35,780) (40,900) - - 88 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 635 2,042 - - - - - -
Transfers between funds 3,409 282 - - 14 - - -
Surrenders and terminations (795) (205) - - - - - -
Rescissions (3) (42) - - - - - -
Other transactions (note 2) 21 (1) - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions - Valuemark IV 3,267 2,076 - - 14 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 58 - - - - -
Transfers between funds - - (32) - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - 26 - - - - -
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - 46 - - - - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - 46 - - - - -
-----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (2,853) (61,530) 111 - 103 - - -
Net assets at beginning of year 91,798 153,328 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $88,945 91,798 111 - 103 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
USAllianz VIP USAllianz VIP
Fixed Income Fund Growth Fund
------------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2 Class 1 Class 2
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $- - - - - - - -
Realized gains (losses) on investments, ne - - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments (2) - - - 14 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (2) - - - 14 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments - - - - - - - -
Transfers between funds 126 - - - 224 - - -
Surrenders and terminations - - - - (8) - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark II & III 126 - - - 216 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments - - - - - - - -
Transfers between funds 5 - - - 101 - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions - Valuemark IV 5 - - - 101 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - - - - - - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Traditional - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - - - - - - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Other transactions (note 2) - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions -
Valuemark Charter Enhanced - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 129 - - - 331 - - -
Net assets at beginning of year - - - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $129 - - - 331 - - -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Financial Statements (continued)
Statements of Changes in Net Assets (cont.)
For the years ended December 31, 1999 and 1998
(In thousands)
Total All Funds
-----------------------------------------------------------------------------------------------------------------------------------
Class 1 Class 2
-----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $345,556 266,144 637 -
Realized gains (losses) on investments, net 704,602 603,355 1,827 -
Net change in unrealized appreciation
(depreciation) on investments (129,766)(699,727) 171 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 920,392 169,772 2,635 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark II & III (note 5):
Purchase payments 50,672 134,191 - -
Transfers between funds 456 (3,907) - -
Surrenders and terminations (2,528,241)(1,708,528) - -
Rescissions (8,255) (3,318) - -
Other transactions (note 2) 12,154 4,339 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions - Valuemark II & III (2,473,214)(1,577,223) - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark IV (note 5):
Purchase payments 118,568 540,403 - -
Transfers between funds 187,684 169,190 - -
Surrenders and terminations (204,137) (55,562) - -
Rescissions (2,359) (10,939) - -
Other transactions (note 2) 2,304 489 - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions - Valuemark IV 102,060 643,581 - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Traditional (note 6):
Purchase payments - - 21,776 -
Transfers between funds - - (40) -
Surrenders and terminations - - (3,150) -
Rescissions - - (333) -
Other transactions (note 2) - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions - Valuemark Charter Traditional - - 18,253 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions - Valuemark Charter Enhanced (note 6):
Purchase payments - - 2,279 -
Transfers between funds - - 24 -
Surrenders and terminations - - (40) -
Rescissions - - - -
Other transactions (note 2) - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
contract transactions - Valuemark Charter Enhanced - - 2,263 -
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (1,450,762)(763,870) 23,151 -
Net assets at beginning of year 9,143,5359,907,405 - -
------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $7,692,7739,143,535 23,151 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements
December 31, 1999
1. Organization
Allianz Life Variable Account B (Variable Account) is a segregated investment
account of Allianz Life Insurance Company of North America (Allianz 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 on May 31, 1985 and commenced
operations January 24, 1989. Accordingly, it is an accounting entity wherein all
segregated account transactions are reflected.
The Variable Account's assets are the property of Allianz 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
Allianz 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 Allianz Life may conduct.
The Variable Account's sub-accounts may invest, at net asset values, in one or
more of select portfolios of AIM Variable Insurance Funds, Inc., The Alger
American Fund, Franklin Templeton Variable Insurance Products Trust (formerly,
Franklin Valuemark Funds), and USAllianz Variable Insurance Products Trust, in
accordance with the selection made by the contract owner. Not all portfolios are
available as investment options for the products which comprise the Variable
Account. The investment advisers for each portfolio are listed in the following
table.
<TABLE>
<CAPTION>
Portfolio Investment Adviser
<S> <C>
AIM VI Growth Fund AIM Advisors, Inc.
Alger American Growth Fund Fred Alger Management, Inc.
Alger American Leveraged AllCap Fund Fred Alger Management, Inc.
Franklin Global Communications Securities
Fund Franklin Advisers, Inc.
Franklin Global Health Care Securities Fund Franklin Advisers, Inc.
Franklin Growth and Income Fund Franklin Advisers, Inc.
Franklin High Income Fund Franklin Advisers, Inc.
Franklin Income Securities Fund Franklin Advisers, Inc.
Franklin Large Cap Growth Securities Fund Franklin Advisers, Inc.
Franklin Money Market Fund Franklin Advisers, Inc.
Franklin Natural Resources Securities Fund Franklin Advisers, Inc.
Franklin Real Estate Fund Franklin Advisers, Inc.
Franklin Rising Dividends Securities Fund Franklin Advisory Services, LLC
S&P 500 Index Fund Franklin Advisers,Inc.
Franklin Small Cap Fund Franklin Advisers, Inc.
Franklin U.S. Government Fund Franklin Advisers, Inc.
Franklin Value Securities Fund Franklin Advisory Services, LLC
Franklin Zero Coupon - 2000 Fund Franklin Advisers, Inc.
Franklin Zero Coupon - 2005 Fund Franklin Advisers, Inc.
Franklin Zero Coupon - 2010 Fund Franklin Advisers, Inc.
Mutual Discovery Securities Fund Franklin Mutual Advisers, LLC
Mutual Shares Securities Fund Franklin Mutual Advisers, LLC
Templeton Developing Markets Equity Fund Templeton Asset Management Ltd.
Templeton Global Asset Allocation Fund Templeton Global Advisors Limited
Templeton Global Growth Fund Templeton Global Advisors Limited
Templeton Global Income Securities Fund Franklin Advisers, Inc.
Templeton International Equity Fund Franklin Advisers, Inc.
Templeton International Smaller Companies
Fund Templeton Investment Counsel, Inc.
Templeton Pacific Growth Fund Franklin Advisers, Inc.
USAllianz VIP Diversified Assets Fund Allianz of America, Inc.
USAllianz VIP Fixed Income Fund Allianz of America, Inc.
USAllianz VIP Growth Fund Allianz of America, Inc.
<FN>
Certain of the Franklin Templeton Variable Insurance Products Trust portfolios
also have class 2 shares which are available to Valuemark Charter contract
owners.
</FN>
</TABLE>
<PAGE>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
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 AIM Variable Insurance Funds, Inc., The Alger American
Fund, the Franklin Templeton Variable Insurance Products Trust, and the
USAllianz Variable Insurance Products Trust.
Realized investment gains include realized gain distributions received from the
respective portfolios and gains on the sale of portfolio shares as determined by
the average cost method. Realized gain distributions are reinvested in the
respective portfolios. Dividend distributions received from the portfolios are
reinvested in additional shares of the portfolios and are recorded as income to
the Variable Account on the ex-dividend date.
Two Fixed Account investment options are available to deferred annuity contract
owners. A Flexible Fixed Option is available to all deferred annuity contract
owners and a Dollar Cost Averaging Option is available to Valuemark II,
Valuemark III, and Valuemark IV deferred annuity contract owners. These accounts
are comprised of equity and fixed income investments which are part of the
general assets of Allianz Life. The liabilities of the Fixed Accounts are part
of the general obligations of Allianz Life and are not included in the Variable
Account. The guaranteed minimum rate of return on the Fixed Accounts is 3%.
The Franklin Global Health Care Securities Fund and Franklin Value Securities
Fund were added as available investment options on May 1, 1998. On November 12,
1999, the AIM VI Growth Fund, Alger American Growth Fund, Alger American
Leveraged AllCap Fund, Franklin S&P 500 Index Fund, USAllianz VIP Diversified
Assets Fund, USAllianz VIP Fixed Income Fund, and USAllianz VIP Growth Fund were
added as available investment options.
During the year ended December 31, 1999, several portfolios changed their name
as summarized, with the effective date of the change, in the following table.
<TABLE>
<CAPTION>
Current Portfolio Prior Portfolio Name Effective Date
<S> <C> <C>
Franklin Global Communications Securities Fund Franklin Global Utilities Securities FundNovember 15, 1999
Franklin Real Estate Fund Franklin Real Estate Securities Fund November 15, 1999
Franklin Rising Dividends Securities Fund Franklin Rising Dividends Fund November 15, 1999
Franklin U.S. Government Fund Franklin U.S. Government Securities Fund November 15, 1999
Franklin Large Cap Growth Securities Fund Franklin Capital Growth Fund December 15, 1999
</TABLE>
Contracts in Annuity Payment Period
Annuity reserves are computed for currently payable contracts according to the
1983 Individual Annuity Mortality Table, using an assumed investment return
(AIR) equal to the AIR of the specific contracts, either 3%, 5%, or 7%. Charges
to annuity reserves for mortality and risk expense are reimbursed to Allianz
Life if the reserves required are less than originally estimated. If additional
reserves are required, Allianz Life reimburses the account.
<PAGE>
38
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
2. Significant Accounting Policies (Continued)
Expenses
Asset Based Expenses
A mortality and expense risk charge and an administrative charge are deducted
from the Variable Account on a daily basis. The charges, on an annual basis, are
summarized in the following table.
Mortality and Expense Administrative
Contract Risk Charge Charge
Valuemark II 1.25% 0.15%
Valuemark III 1.25% 0.15%
Valuemark IV 1.34% 0.15%
Valuemark Charter - Traditional 1.00% 0.15%
Valuemark Charter - Enhanced 1.20% 0.15%
Valuemark Income Plus 1.25% 0.15%
Contract Based Expenses
A contract maintenance charge is paid by the contract owner annually from each
deferred annuity 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 for Valuemark II, Valuemark III, and Valuemark IV contracts and $40
for Valuemark Charter contracts. Contract maintenance charges paid by the
contract owners during the years ended December 31, 1999 and 1998 were
$4,426,312 and $4,716,335, 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 surrender on Valuemark II, Valuemark III, and Valuemark IV deferred
annuity contracts. This charge applies only to a surrender of purchase payments
received within five years of the date of surrender for Valuemark II and
Valuemark III contracts and within seven years of the date of surrender for
Valuemark IV contracts. The amount of the contingent deferred sales charge is
shown below.
Years Since Contingent Deferred Sales Charge
Payment Valuemark II Valuemark III Valuemark IV
0-1 5% 6% 6%
1-2 5% 5% 6%
2-3 4% 4% 6%
3-4 3% 3% 5%
4-5 1.5% 1.5% 4%
5-6 0% 0% 3%
6-7 0% 0% 2%
7+ 0% 0% 0%
Total contingent deferred sales charges paid by the contract owners during the
years ended December 31, 1999 and 1998 were $16,657,195 and $8,535,795,
respectively.
A systematic withdrawal plan is available to Valuemark II, Valuemark III, and
Valuemark IV deferred annuity contract owners which allows a portion of the
contract value to be withdrawn without incurring a contingent deferred sales
charge. The exercise of the systematic withdrawal plan in any contract year
replaces the penalty free privilege for that year.
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
2. Significant Accounting Policies (Continued)
Contract Based Expenses (Continued)
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 any dollar cost averaging program are not counted.
Total transfer charges paid by the contract owners during the years ended
December 31, 1999 and 1998 were $153,188 and $159,282, respectively. Transfer
charges are reflected in the Statements of Changes in Net Assets as other
transactions. Net transfers from the Fixed Accounts for the years ended December
31, 1999 and 1998 were $188,123,947 and $165,283,144, respectively.
Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the contract values. Allianz Life may, in 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 Allianz Life
may have to deduct such amounts at a later date.
A rescission is defined as a contract that is returned to the Company by the
Contract Owner and canceled within the free-look period, generally within 10
days.
<TABLE>
<CAPTION>
3. Capitalization
Allianz Life provides capital for the establishment of new portfolios as
investment options of the Variable Account. The capitalization transactions were
as follows during the years ended December 31, 1999 and 1998.
Capitalization Date of Market Value Date of
Portfolio Amount Capitalization at Withdrawal Withdrawal
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Franklin Global Health Care Securities Fund
- class 1 $250,000 5/1/98 $253,250 12/1/98
Franklin Value Securities Fund - class 1 250,000 5/1/98 192,000 12/1/98
Franklin Global Communications Securities
Fund - class 2 0,000 1/6/99 13,320 12/29/99
Franklin Global Health Care Securities
Fund - class 2 10,000 1/6/99 9,092 12/29/99
Franklin Growth and Income Fund - class 2 10,000 1/6/99 9,852 12/29/99
Franklin High Income Fund - class 2 10,000 1/6/99 9,895 12/29/99
Franklin Income Securities Fund - class 2 10,000 1/6/99 9,674 12/29/99
Franklin Large Cap Growth Securities Fund
- class 2 10,000 1/6/99 12,738 12/29/99
Franklin Money Market Fund - class 2 10,000 1/6/99 10,444 12/29/99
Franklin Natural Resources Securities Fund
- class 2 10,000 1/6/99 12,625 12/29/99
Franklin Real Estate Fund - class 2 10,000 1/6/99 9,141 12/29/99
Franklin Rising Dividends Securities Fund
- class 2 10,000 1/6/99 8,843 12/29/99
Franklin Small Cap Fund - class 2 10,000 1/6/99 18,630 12/29/99
Franklin U.S. Government Fund - class 2 10,000 1/6/99 9,897 12/29/99
Franklin Value Securities Fund - class 2 10,000 1/6/99 9,759 12/29/99
Mutual Discovery Securities Fund - class 2 10,000 1/6/99 11,844 12/29/99
Mutual Shares Securities Fund - class 2 10,000 1/6/99 10,866 12/29/99
Templeton Developing Markets Equity Fund
- class 2 10,000 1/6/99 14,532 12/29/99
Templeton Global Asset Allocation Fund -
class 2 10,000 1/6/99 10,353 12/29/99
Templeton Global Growth Fund - class 2 10,000 1/6/99 11,493 12/29/99
Templeton Global Income Securities Fund -
class 2 10,000 1/6/99 9,355 12/29/99
Templeton International Equity Fund - class 210,000 1/6/99 11,841 12/29/99
Templeton International Smaller Companies Fund -
class 2 10,000 1/6/99 11,922 12/29/99
Templeton Pacific Growth Fund - class 2 10,000 1/6/99 13,447 12/29/99
</TABLE>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
4. Federal Income Taxes
Operations of the Variable Account form a part of, and are taxed with,
operations of Allianz Life, which is taxed as a life insurance company under the
Internal Revenue Code.
Allianz Life does not expect to incur any federal income taxes in the operation
of the Variable Account. If, in the future, Allianz 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>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
5. CONTRACT TRANSACTIONS - Valuemark II, III, and IV Accumulation Unit Activity (In thousands)
Transactions in units for each fund for the years ended December 31, 1999 and
1998 were as follows:
Alger Alger Franklin GlobalFranklin GlobalFranklin
AIM V.I. American AmericanCommunicationsHealth Care Growth and
Growth Growth Leveraged Securities Securities Income
Fund Fund AllCap Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Valuemark II & III
Accumulation units outstanding at December 31, 1997 - - - 39,623 - 46,962
Contract transactions:
Purchase payments - - - 241 20 538
Transfers between funds - - - (1,529) 586 699
Surrenders and terminations - - - (7,481) (20) (7,722)
Rescissions - - - (9) - (11)
Other transactions - - - 6 - 14
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: - - - (8,772) 586 (6,482)
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 - - - 30,851 586 40,480
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 3 1 - 96 11 191
Transfers between funds 529 539 341 (870) 351 (589)
Surrenders and terminations (6) - (1) (8,394) (314) (12,443)
Rescissions - - - (12) - (27)
Other transactions - - - 16 - 22
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: 526 540 340 (9,164) 48 (12,846)
-----------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 526 540 340 21,687 634 27,634
-----------------------------------------------------------------------------------------------------------------------------------
Valuemark IV
Accumulation units outstanding at December 31, 1997 - - - 310 - 2,376
Contract transactions:
Purchase payments - - - 477 147 2,027
Transfers between funds - - - 262 106 1,031
Surrenders and terminations - - - (40) (1) (214)
Rescissions - - - (3) (28) (37)
Other transactions - - - - - 2
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: - - - 696 224 2,809
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 - - - 1,006 224 5,185
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 5 20 1 118 55 390
Transfers between funds 360 396 277 433 220 696
Surrenders and terminations (2) (1) (1) (138) (30) (699)
Rescissions - - - (1) - (5)
Other transactions - - - - - 3
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: 363 415 277 412 245 385
-----------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 363 415 277 1,418 469 5,570
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin
Franklin Franklin Large Cap Franklin Natural Franklin
High Income Growth Money Resources Real
Income Securities Securities Market Securities Estate
Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Valuemark II & III
<S> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at December 31, 1997 18,871 49,811 5,673 20,982 5,709 13,445
Contract transactions:
Purchase payments 223 459 160 566 86 147
Transfers between funds (811) (2,088) 3,882 14,858 (562) (1,976)
Surrenders and terminations (3,310) (8,767) (1,258) (14,408) (777) (1,978)
Rescissions (7) (11) (1) (24) (5) (6)
Other transactions 21 16 (2) 58 2 7
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: (3,884) (10,391) 2,781 1,050 (1,256) (3,806)
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 14,987 39,420 8,454 22,032 4,453 9,639
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 69 123 149 180 33 29
Transfers between funds (851) (2,779) 7,093 13,480 (549) (1,316)
Surrenders and terminations (4,711) (11,825) (4,823) (18,739) (992) (2,940)
Rescissions (9) (41) (15) (13) (6) (13)
Other transactions 8 31 9 448 1 2
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: (5,494) (14,491) 2,413 (4,644) (1,513) (4,238)
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 9,493 24,929 10,867 17,388 2,940 5,401
-----------------------------------------------------------------------------------------------------------------------------------
Valuemark IV
Accumulation units outstanding at December 31, 1997 2,202 2,094 1,957 3,214 304 1,217
Contract transactions:
Purchase payments 1,834 1,710 1,503 3,217 162 604
Transfers between funds 409 599 1,238 (1,515) 73 75
Surrenders and terminations (195) (143) (156) (448) (19) (66)
Rescissions (61) (21) (40) (140) (5) (8)
Other transactions 2 - - 14 (1) 1
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: 1,989 2,145 2,545 1,128 210 606
-----------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 4,191 4,239 4,502 4,342 514 1,823
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 366 367 584 690 45 73
Transfers between funds 140 239 3,598 1,872 123 (216)
Surrenders and terminations (550) (463) (1,175) (1,698) (61) (191)
Rescissions (42) (5) (4) (3) (5) -
Other transactions 13 3 16 33 - 1
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: (73) 141 3,019 894 102 (333)
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 4,118 4,380 7,521 5,236 616 1,490
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin
Rising Franklin Franklin Franklin Franklin Zero
Dividends S&P 500 Small U.S. Value Coupon
Securities Index Cap Government Securities Fund -
Fund Fund Fund Fund Fund 2000
------------------------------------------------------------------------------------------------------------------------------------
Valuemark II & III
<S> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at December 31, 1997 33,249 - 16,925 36,347 - 4,523
Contract transactions:
Purchase payments 415 - 348 310 17 25
Transfers between funds 670 - 173 617 718 (249)
Surrenders and terminations (6,653) - (2,575) (6,810) (16) (712)
Rescissions (10) - (13) (10) - -
Other transactions 12 - (2) 46 - 8
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: (5,566) - (2,069) (5,847) 719 (928)
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 27,683 - 14,856 30,500 719 3,595
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 105 - 96 130 12 9
Transfers between funds (1,898) 745 38 (857) 332 (74)
Surrenders and terminations (8,633) (18) (4,346) (8,796) (336) (989)
Rescissions (16) - (8) (55) - -
Other transactions 11 - 18 16 - 6
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: (10,431) 727 (4,202) (9,562) 8 (1,048)
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 17,252 727 10,654 20,938 727 2,547
-----------------------------------------------------------------------------------------------------------------------------------
Valuemark IV
Accumulation units outstanding at December 31, 1997 1,991 - 2,965 1,359 - 94
Contract transactions:
Purchase payments 1,788 - 1,762 1,142 109 43
Transfers between funds 843 - 988 693 267 55
Surrenders and terminations (159) - (199) (116) (8) (3)
Rescissions (35) - (27) (38) (1) (1)
Other transactions - - 3 - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: 2,437 - 2,527 1,681 367 94
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 4,428 - 5,492 3,040 367 188
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 284 26 243 407 80 16
Transfers between funds (31) 601 269 826 221 98
Surrenders and terminations (544) (1) (546) (418) (66) (20)
Rescissions (6) - (4) (8) - -
Other transactions 6 - 6 10 1 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: (291) 626 (32) 817 236 94
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 4,137 626 5,460 3,857 603 282
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin Templeton Templeton
Zero Zero Mutual Mutual Developing Global
Coupon Coupon Discovery Shares Markets Asset
Fund - Fund - Securities Securities Equity Allocation
2005 2010 Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Valuemark II & III
<S> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at December 31, 1997 2,910 2,998 9,940 18,744 23,005 5,229
Contract transactions:
Purchase payments 32 26 402 795 429 69
Transfers between funds 140 138 1,284 2,150 (4,481) (598)
Surrenders and terminations (451) (582) (1,897) (3,544) (2,951) (646)
Rescissions - - (11) (16) (7) -
Other transactions 4 2 - 4 (6) 2
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: (275) (416) (222) (611) (7,016) (1,173)
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 2,635 2,582 9,718 18,133 15,989 4,056
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 9 8 56 134 106 21
Transfers between funds (40) 1 (849) (64) (1,139) (601)
Surrenders and terminations (595) (749) (3,134) (5,759) (3,728) (974)
Rescissions (1) - (5) (52) (15) (1)
Other transactions 3 9 10 31 13 3
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: (624) (731) (3,922) (5,710) (4,763) (1,552)
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 2,011 1,851 5,796 12,423 11,226 2,504
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV
Accumulation units outstanding at December 31, 1997 161 150 5,461 11,394 2,663 1,008
Contract transactions:
Purchase payments 142 226 2,832 6,911 1,055 487
Transfers between funds 92 120 907 2,362 (154) 34
Surrenders and terminations (12) (17) (338) (718) (121) (38)
Rescissions (3) (1) (45) (123) (16) (1)
Other transactions - - 5 8 (2) 1
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: 219 328 3,361 8,440 762 483
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 380 478 8,822 19,834 3,425 1,491
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 66 92 317 780 232 146
Transfers between funds 152 152 (273) 461 1 (90)
Surrenders and terminations (43) (51) (1,040) (2,158) (269) (147)
Rescissions (4) (3) (14) (12) (1) -
Other transactions 4 - 8 19 1 3
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: 175 190 (1,002) (910) (36) (88)
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 555 668 7,820 18,924 3,389 1,403
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Templeton Templeton
Templeton Global TempletonInternational Templeton USAllianz
Global Income International Smaller Pacific VIP Diversified
Growth Securities Equity Companies Growth Assets
Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Valuemark II & III
<S> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at December 31, 1997 41,433 9,434 58,179 1,998 15,833 -
Contract transactions:
Purchase payments 569 57 449 35 204 -
Transfers between funds (2,789) (773) (5,188) (288) (2,708) -
Surrenders and terminations (4,973) (1,749) (9,177) (211) (2,662) -
Rescissions (19) (2) (21) (2) (7) -
Other transactions 5 9 14 1 9 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: (7,207) (2,458) (13,923) (465) (5,164) -
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 34,226 6,976 44,256 1,533 10,669 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 176 22 122 7 69 -
Transfers between funds (1,329) (528) (3,285) (163) (499) 9
Surrenders and terminations (8,200) (2,221) (13,737) (347) (3,171) -
Rescissions (19) (25) (99) - (4) -
Other transactions 18 2 56 4 2 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: (9,354) (2,750) (16,943) (499) (3,603) 9
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 24,872 4,226 27,313 1,034 7,066 9
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV
Accumulation units outstanding at December 31, 1997 5,525 393 3,122 792 379 -
Contract transactions:
Purchase payments 2,951 202 1,143 271 256 -
Transfers between funds 720 79 307 (52) 53 -
Surrenders and terminations (290) (22) (143) (34) (28) -
Rescissions (41) (1) (5) (8) (5) -
Other transactions (1) - 3 (2) - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: 3,339 258 1,305 175 276 -
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 8,864 651 4,427 967 655 -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 706 58 160 41 65 -
Transfers between funds 454 44 (18) (46) 397 1
Surrenders and terminations (1,013) (96) (407) (97) (78) -
Rescissions (9) - (2) - - -
Other transactions 6 - 4 - 2 -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: 144 6 (263) (102) 386 1
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 9,008 657 4,164 865 1,041 1
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
USAllianz USAllianz
VIP Fixed VIP Total
Income Growth All
Fund Fund Funds
------------------------------------------------------------------------------------------------------------------------------------
Valuemark II & III
<S> <C> <C> <C>
Accumulation units outstanding at December 31, 1997 - - 481,823
Contract transactions:
Purchase payments - - 6,622
Transfers between funds - - 1,875
Surrenders and terminations - - (91,330)
Rescissions - - (192)
Other transactions - - 230
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: - - (82,795)
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 - - 399,028
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments - - 1,967
Transfers between funds 13 22 5,213
Surrenders and terminations - (1) (130,922)
Rescissions - - (436)
Other transactions - - 739
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: 13 21 (123,439)
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 13 21 275,589
------------------------------------------------------------------------------------------------------------------------------------
Valuemark IV
Accumulation units outstanding at December 31, 1997 - - 51,131
Contract transactions:
Purchase payments - - 33,001
Transfers between funds - - 9,592
Surrenders and terminations - - (3,528)
Rescissions - - (694)
Other transactions - - 33
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: - - 38,404
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31, 1998 - - 89,535
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments - - 6,433
Transfers between funds 1 10 11,368
Surrenders and terminations - - (12,003)
Rescissions - - (128)
Other transactions - - 139
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions: 1 10 5,809
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 1 10 95,344
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS)
Transactions in units for each fund for the period from January 5, 1999 (product inception) to December 31, 1999 follows:
Alger Alger Franklin GlobalFranklin GlobalFranklin
AIM V.I. American AmericanCommunicationsHealth Care Growth and
Growth Growth Leveraged Securities Securities Income
Fund Fund AllCap Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Traditional
<S> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at December 31, 1998 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments - - - 6 4 44
Transfers between funds - - - (1) (1) -
Surrenders and terminations - - - - - (23)
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions - - - 5 3 21
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 - - - 5 3 21
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Enhanced
Accumulation units outstanding at December 31, 1998 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments - - - 7 5 9
Transfers between funds - - - - - -
Surrenders and terminations - - - - - -
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions - - - 7 5 9
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 - - - 7 5 9
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS)
Transactions in units for each fund for the period from January 5, 1999 (product inception) to December 31, 1999 follows:
Alger Alger FranklinGlobal FranklinGlobal Franklin
AIM V.I. American AmericanCommunicationsHealth Care Growth and
Growth Growth Leveraged Securities Securities Income
Fund Fund AllCap Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Traditional
<S> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at December 31, 1998 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments - - - 6 4 44
Transfers between funds - - - (1) (1) -
Surrenders and terminations - - - - - (23)
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions - - - 5 3 21
-----------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 - - - 5 3 21
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Enhanced
Accumulation units outstanding at December 31, 1998 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments - - - 7 5 9
Transfers between funds - - - - - -
Surrenders and terminations - - - - - -
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions - - - 7 5 9
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 - - - 7 5 9
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin
Franklin Franklin Large Cap Franklin Natural Franklin
High Income Growth Money Resources Real
Income Securities Securities Market Securities Estate
Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Traditional
<S> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at December 31, 1998 - - - - - -
-----------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 10 48 82 562 5 13
Transfers between funds 12 1 2 7 - 7
Surrenders and terminations (2) - (48) (7) - -
Rescissions - - (17) - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions 20 49 19 562 5 20
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 20 49 19 562 5 20
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Enhanced
Accumulation units outstanding at December 31, 1998 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments - 3 7 4 - 1
Transfers between funds 1 1 - (3) - -
Surrenders and terminations - - - - - -
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions 1 4 7 1 - 1
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 1 4 7 1 - 1
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin
Rising Franklin Franklin Franklin Franklin Zero
Dividends S&P 500 Small U.S. Value Coupon
Securities Index Cap Government Securities Fund -
Fund Fund Fund Fund Fund 2000
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Traditional
<S> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at December 31, 1998 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 18 - 11 83 48 -
Transfers between funds - - 21 18 - -
Surrenders and terminations - - - (14) (34) -
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions 18 - 32 87 14 -
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 18 - 32 87 14 -
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Enhanced
Accumulation units outstanding at December 31, 1998 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 11 - 3 11 3 -
Transfers between funds - - - 1 - -
Surrenders and terminations - - - - - -
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions 11 - 3 12 3 -
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 11 - 3 12 3 -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin Templeton Templeton
Zero Zero Mutual Mutual Developing Global
Coupon Coupon Discovery Shares Markets Asset
Fund - Fund - Securities Securities Equity Allocation
2005 2010 Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Traditional
<S> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at December 31, 1998 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments - - 22 70 21 2
Transfers between funds - - - (3) - -
Surrenders and terminations - - (2) (2) - -
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions - - 20 65 21 2
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 - - 20 65 21 2
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Enhanced
Accumulation units outstanding at December 31, 1998 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments - - 10 7 7 1
Transfers between funds - - - 1 - -
Surrenders and terminations - - - - - -
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions - - 10 8 7 1
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 - - 10 8 7 1
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Templeton Templeton
Templeton Global TempletonInternational Templeton USAllianz
Global Income International Smaller PacificVIP Diversified
Growth Securities Equity Companies Growth Assets
Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Traditional
<S> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at December 31, 1998 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 97 25 130 - 6 -
Transfers between funds 3 - (6) - - -
Surrenders and terminations (46) - - - - -
Rescissions (3) - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions 51 25 124 - 6 -
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 51 25 124 - 6 -
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Enhanced
Accumulation units outstanding at December 31, 1998 - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments 16 1 13 4 4 -
Transfers between funds - (1) 1 - - -
Surrenders and terminations (1) - - - - -
Rescissions - - - - - -
Other transactions - - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions 15 - 14 4 4 -
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 15 - 14 4 4 -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
6. CONTRACT TRANSACTIONS: - VALUEMARK CHARTER ACCUMULATION UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
USAllianz USAllianz
VIP Fixed VIP Total
Income Growth All
Fund Fund Funds
------------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Traditional
<S> <C> <C> <C>
Accumulation units outstanding at December 31, 1998 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments - - 1,307
Transfers between funds - - 60
Surrenders and terminations - - (178)
Rescissions - - (20)
Other transactions - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions - - 1,169
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 - - 1,169
-----------------------------------------------------------------------------------------------------------------------------------
Valuemark Charter Enhanced
Accumulation units outstanding at December 31, 1998 - - -
------------------------------------------------------------------------------------------------------------------------------------
Contract transactions:
Purchase payments - - 127
Transfers between funds - - 1
Surrenders and terminations - - (1)
Rescissions - - -
Other transactions - - -
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions - - 127
------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at December 31,1999 - - 127
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
7. UNIT VALUES - VALUEMARK II, III, AND IV
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 each of the five years in the period ended December 31,
1999 follows.
Valuemark II & III Valuemark IV
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units Outstanding AccumulationNet Assetsto Average Units OutstandingAccumulation Net Assets to Average
(in thousands) Unit Value(in thousands)Net Assets* (in thousands) Unit Value(in thousands) Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AIM V.I. Growth Fund
December 31,
19991 526 $11.084 $5,833 2.13+% 363 $11.083 $4,026 2.22+%
Alger American Growth Fund
December 31,
19991 540 10.922 5,894 2.19+ 415 10.921 4,535 2.28+
Alger American Leveraged AllCap Fund
December 31,
19991 340 12.160 4,137 2.33+ 277 12.159 3,364 2.42+
Franklin Global Communications Securities Fund
December 31,
1999 21,687 38.917 844,307 1.91 1,418 38.572 54,724 2.00
1998 30,851 28.308 873,319 1.90 1,006 28.082 28,248 1.99
1997 39,623 25.818 1,022,994 1.90 310 25.635 7,959 1.99
1996 53,086 20.654 1,097,873 1.90 - - - -
1995 66,669 19.565 1,305,495 1.90 - - - -
Franklin Global Health Care Securities Fund
December 31,
1999 634 9.615 6,088 2.22 469 9.601 4,512 2.31
19982 586 10.610 6,215 2.24+ 224 11 2,381 2.33+
Franklin Growth and Income Fund
December 31,
1999 27,634 26.147 722,583 1.89 5,570 25.891 144,218 1.98
1998 40,480 26.226 1,061,658 1.89 5,185 25.993 134,775 1.98
1997 46,962 24.551 1,152,961 1.89 2,376 24.354 57,877 1.98
1996 50,027 19.490 977,110 1.90 - - - -
1995 46,893 17.310 812,732 1.92 - - - -
Franklin High Income Fund
December 31,
1999 9,493 20.900 198,407 1.94 4,118 20.695 85,209 2.03
1998 14,987 21.208 317,865 1.93 4,191 21.020 88,069 2.02
1997 18,871 21.312 402,167 1.93 2,202 21.141 46,545 2.02
1996 20,736 19.375 402,379 1.94 - - - -
1995 18,756 17.252 323,580 1.96 - - - -
Franklin Income Securities Fund
December 31,
1999 24,929 24.323 606,369 1.90 4,380 24.084 105,486 1.99
1998 39,420 25.122 990,325 1.89 4,239 24.898 105,543 1.98
1997 49,811 25.065 1,248,520 1.90 2,094 24.864 52,069 1.99
1996 57,504 21.708 1,251,844 1.90 - - - -
1995 59,309 19.785 1,175,143 1.91 - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
7. UNIT VALUES - VALUEMARK II, III, AND IV (CONTINUED)
Valuemark II & III Valuemark IV
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units Outstanding AccumulationNet Assets to Average Units OutstandingAccumulation Net Assets to Average
(in thousands) Unit Value(in thousands)Net Assets* (in thousands)Unit Value (in thousands) NetAssets*
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Franklin Large Cap Growth Securities Fund
December 31,
1999 10,867 $20.218 $219,679 2.17% 7,521 $20.152 $151,537 2.26%
1998 8,454 15.574 131,652 2.17 4,502 15.537 69,939 2.26
1997 5,673 13.130 74,473 2.17 1,967 13.110 25,654 2.26
19963 3,722 11.254 42,110 2.17+ - - - -
Franklin Money Market Fund
December 31,
1999 17,388 14.860 258,373 1.93 5,236 14.717 77,050 2.02
1998 22,032 14.386 316,921 1.85 4,342 14.260 61,911 1.94
1997 20,892 13.865 290,904 1.85 3,214 13.756 44,200 1.94
1996 28,060 13.359 375,629 1.83 - - - -
1995 31,040 12.883 399,935 1.80 - - - -
Franklin Natural Resources Securities Fund
December 31,
1999 2,940 11.092 32,615 2.06 616 10.983 6,761 2.15
1998 4,453 8.505 37,878 2.04 514 8.430 4,332 2.13
1997 5,709 11.559 65,992 2.09 304 11.466 3,482 2.18
1996 6,998 14.467 101,248 2.05 - - - -
1995 6,919 14.109 97,630 2.06 - - - -
Franklin Real Estate Fund
December 31,
1999 5,401 21.386 115,525 1.98 1,490 21.176 31,567 2.07
1998 9,639 23.107 222,740 1.94 1,823 22.901 41,773 2.03
1997 13,445 28.169 378,751 1.94 1,217 27.944 34,023 2.03
1996 12,757 23.668 301,974 1.97 - - - -
1995 10,998 18.073 198,773 1.99 - - - -
Franklin Rising Dividends Securities Fund
December 31,
1999 17,252 18.846 325,172 2.15 4,137 18.712 77,429 2.24
1998 27,683 21.165 585,952 2.12 4,428 21.034 93,151 2.21
1997 33,249 20.074 667,473 2.14 1,991 19.968 39,752 2.23
1996 35,569 15.303 545,127 2.16 - - - -
1995 33,789 12.498 422,992 2.18 - - - -
Franklin S&P 500 Index Fund
December 31,
19991 727 10.467 7,613 1.95+ 626 10.465 6,555 2.04+
Franklin Small Cap Fund
December 31,
1999 10,654 28.353 302,040 2.17 5,460 28.247 154,275 2.26
1998 14,856 14.600 216,872 2.17 5,492 14.558 79,977 2.26
1997 16,925 14.952 253,045 2.17 2,965 14.923 44,268 2.26
1996 12,784 12.913 165,578 2.17 - - - -
19954 1,302 10.146 13,260 2.30+ - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
7. UNIT VALUES - VALUEMARK II, III, AND IV (CONTINUED)
Valuemark II & III Valuemark IV
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Franklin U.S. Government Fund
December 31,
1999 20,938 $18.574 $388,862 1.91% 3,857 $18.394 $70,974 2.00%
1998 30,500 19.014 579,909 1.90 3,040 18.847 57,334 1.99
1997 36,347 17.947 652,317 1.90 1,359 17.805 24,222 1.99
1996 44,598 16.650 742,973 1.91 - - - -
1995 34,313 16.298 559,234 1.92 - - - -
Franklin Value Securities Fund
December 31,
1999 727 7.736 5,614 2.21+ 603 7.724 4,657 2.30+
19982 719 7.717 5,542 2.52+ 367 7.713 2,834 2.61+
Franklin Zero Coupon Fund - 2000
December 31,
1999 2,547 21.023 53,526 2.05 282 20.819 5,831 2.14
1998 3,595 20.684 74,353 1.80 188 20.502 3,815 1.89
1997 4,523 19.512 88,260 1.80 94 19.358 1,801 1.89
1996 5,636 18.475 104,125 1.80 - - - -
1995 6,066 18.294 110,965 1.80 - - - -
Franklin Zero Coupon Fund - 2005
December 31,
1999 2,011 23.205 46,679 2.05 555 22.983 12,750 2.14
1998 2,635 25.003 65,876 1.80 380 24.786 9,402 1.89
1997 2,910 22.532 65,573 1.80 161 22.357 3,585 1.89
1996 3,579 20.517 73,434 1.80 - - - -
1995 3,504 20.914 73,292 1.80 - - - -
Franklin Zero Coupon Fund - 2010
December 31,
1999 1,851 24.164 44,759 2.05 668 23.929 15,961 2.14
1998 2,582 27.920 72,114 1.80 478 27.674 13,233 1.89
1997 2,998 24.740 74,199 1.80 150 24.544 3,676 1.89
1996 3,297 21.522 70,969 1.80 - - - -
1995 3,437 22.431 77,136 1.80 - - - -
Mutual Discovery Securities Fund
December 31,
1999 5,796 13.701 79,396 2.41 7,820 13.662 106,824 2.50
1998 9,718 11.226 109,094 2.40 8,822 11.205 98,842 2.49
1997 9,940 11.983 119,104 2.46 5,461 11.971 65,375 2.55
19965 1,471 10.180 15,074 2.77+ - - - -
Mutual Shares Securities Fund
December 31,
1999 12,423 13.237 164,442 2.19 18,924 13.199 249,799 2.28
1998 18,133 11.837 214,642 2.17 19,834 11.814 234,337 2.26
1997 18,744 11.993 224,796 2.20 11,394 11.981 136,521 2.29
19965 2,613 10.330 27,141 2.40+ - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
7. UNIT VALUES - VALUEMARK II, III, AND IV (CONTINUED)
Valuemark II & III Valuemark IV
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Templeton Developing Markets Equity Fund
December 31,
1999 11,226 $12.188 $136,842 2.79% 3,389 $12.125 $41,093 2.88%
1998 15,989 7.993 127,804 2.81 3,425 7.958 27,259 2.90
1997 23,005 10.340 237,895 2.82 2,663 10.305 27,448 2.91
1996 22,423 11.487 259,346 2.89 - - - -
1995 15,618 9.582 150,481 2.81 - - - -
Templeton Global Asset Allocation Fund
December 31,
1999 2,504 14.408 36,071 2.22 1,403 14.347 20,133 2.31
1998 4,056 13.589 55,102 2.24 1,491 13.543 20,200 2.33
1997 5,229 13.786 72,082 2.34 1,008 13.752 13,864 2.43
1996 4,104 12.514 52,117 2.26 - - - -
19956 1,338 10.591 14,234 2.30+ - - - -
Templeton Global Growth Fund
December 31,
1999 24,872 19.466 484,117 2.28 9,008 19.364 174,453 2.37
1998 34,226 16.309 558,162 2.28 8,864 16.238 143,943 2.37
1997 41,433 15.176 628,785 2.28 5,525 15.124 83,558 2.37
1996 40,327 13.560 550,066 2.33 - - - -
1995 28,309 11.339 322,284 2.37 - - - -
Templeton Global Income Securities Fund
December 31,
1999 4,226 16.635 70,284 2.05 657 16.472 10,843 2.14
1998 6,976 17.905 124,899 2.03 651 17.746 11,582 2.12
1997 9,434 16.957 159,973 2.02 393 16.821 6,620 2.11
1996 11,857 16.781 198,968 2.01 - - - -
1995 14,181 15.522 220,143 2.04 - - - -
Templeton International Equity Fund
December 31,
1999 27,313 23.022 628,777 2.30 4,164 22.858 95,194 2.39
1998 44,256 18.437 815,915 2.28 4,427 18.322 81,113 2.37
1997 58,179 17.711 1,030,420 2.29 3,122 17.617 55,008 2.38
1996 64,375 16.081 1,036,583 2.29 - - - -
1995 59,883 13.263 794,670 2.32 - - - -
Templeton International Smaller Companies Fund
December 31,
1999 1,034 11.441 11,825 2.51 865 11.403 9,864 2.60
1998 1,533 9.364 14,354 2.50 967 9.342 9,037 2.59
1997 1,998 10.825 21,626 2.46 792 10.809 8,557 2.55
19963 1,388 11.145 15,527 2.18+ - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
7. UNIT VALUES - VALUEMARK II, III, AND IV (CONTINUED)
Valuemark II & III Valuemark IV
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands) Net Assets*
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Templeton Pacific Growth Fund
December 31,
1999 7,066 $10.915 $77,144 2.48% 1,041 $10.838 $11,295 2.57%
1998 10,669 8.078 86,200 2.50 655 8.028 5,274 2.59
1997 15,833 9.431 149,327 2.43 379 9.381 3,566 2.52
1996 22,061 14.932 330,159 2.39 - - - -
1995 22,483 13.630 306,843 2.41 - - - -
USAllianz VIP Diversified Assets Fund
December 31,
19991 9 10.170 88 2.40+ 1 10.168 15 2.49+
USAllianz VIP Fixed Income Fund
December 31,
19991 13 9.751 124 2.15+ 1 9.749 5 2.24+
USAllianz VIP Growth Fund
December 31,
19991 21 10.733 226 2.30+ 10 10.731 105 2.39+
<FN>
* For the year ended December 31, including the effect of the expenses of the
underlying funds.
+ Annualized.
1 Period from November 12, 1999 (fund commencement) to December 31, 1999.
2 Period from May 1, 1998 (fund commencement) to December 31, 1998.
3 Period from May 1, 1996 (fund commencement) to December 31, 1996.
4 Period from November 1, 1995 (fund commencement) to December 31, 1995.
5 Period from November 8, 1996 (fund commencement) to December 31, 1996.
6 Period from May 1, 1995 (fund commencement) to December 31, 1995.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
8. UNIT VALUES - VALUEMARK CHARTER
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 period from January 5, 1999 (product inception) to
December 31, 1999 follows.
Valuemark Charter Traditional Valuemark Charter Enhanced
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands)Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Franklin Global Communications Securities Fund
December 31, 1999 5 $39.861 $213 1.92% 7 $39.011 $275 2.12%
Franklin Global Health Care Securities Fund
December 31, 1999 3 9.626 33 2.22 5 9.594 50 2.42
Franklin Growth and Income Fund
December 31, 1999 21 26.792 545 1.90 9 26.220 238 2.10
Franklin High Income Fund
December 31, 1999 20 21.405 429 1.94 1 20.949 18 2.14
Franklin Income Securities Fund
December 31, 1999 49 24.923 1,206 1.90 4 24.391 92 2.10
Franklin Large Cap Growth Securities Fund
December 31, 1999 19 20.337 392 2.17 7 20.188 144 2.37
Franklin Money Market Fund
December 31, 1999 562 15.225 8,557 1.94 1 14.901 16 2.14
Franklin Natural Resources Securities Fund
December 31, 1999 5 11.374 62 2.07 - 11.131 6 2.27
Franklin Real Estate Fund
December 31, 1999 20 21.919 429 1.98 1 21.452 14 2.18
Franklin Rising Dividends Securities Fund
December 31, 1999 18 19.156 340 2.16 11 18.857 206 2.36
Franklin Small Cap Fund
December 31, 1999 32 28.565 904 2.17 3 28.328 79 2.37
Franklin U.S. Government Fund
December 31, 1999 87 19.049 1,647 1.92 12 18.643 217 2.12
Franklin Value Securities Fund
December 31, 1999 14 7.749 108 2.21 3 7.753 21 2.41
Mutual Discovery Securities Fund
December 31, 1999 20 13.779 275 2.42 10 13.692 136 2.62
Mutual Shares Securities Fund
December 31, 1999 65 13.362 875 2.19 8 13.278 100 2.39
Templeton Developing Markets Equity Fund
December 31, 1999 21 12.331 253 2.82 7 12.189 89 3.02
Templeton Global Asset Allocation Fund
December 31, 1999 2 17.693 36 2.22 1 17.527 16 2.42
Templeton Global Growth Fund
December 31, 1999 51 19.717 1,012 2.29 15 19.490 313 2.49
Templeton Global Income Securities Fund
December 31, 1999 25 17.033 435 2.06 - 16.670 6 2.26
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
December 31, 1999
8. UNIT VALUES - VALUEMARK CHARTER (CONTINUED)
Valuemark Charter Traditional Valuemark Charter Enhanced
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands Net Assets*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Templeton International Equity Fund
December 31, 1999 124 $23.368 $2,895 2.32% 14 $23.004 $303 2.52%
Templeton International Smaller Companies Fund
December 31, 1999 - 11.547 4 2.53 4 11.462 51 2.73
Templeton Pacific Growth Fund
December 31, 1999 6 11.121 63 2.51 4 10.948 48 2.71
<FN>
* For the year ended December 31, including the effect of the expenses of the
underlying funds.
</FN>
</TABLE>
ALLIANZ LIFE INSURANCE
COMPANY OF NORTH AMERICA
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1999 and 1998
Allianz Life Insurance Company of North America
And Subsidiaries
Independent Auditors' Report
The Board of Directors
Allianz Life Insurance Company of North America and subsidiaries:
We have audited the accompanying consolidated balance sheets of Allianz Life
Insurance Company of North America and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of operations, comprehensive
(loss) income, stockholder's equity and cash flows for each of the years in the
three-year period ended December 31, 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Allianz
Life Insurance Company of North America and subsidiaries as of December 31, 1999
and 1998, and the results of their operations and cash flows for each of the
years in the three-year period ended December 31, 1999, in conformity with
generally accepted accounting principles.
As discussed in note 1 to the consolidated financial statements, the Company
changed its method of calculating deferred acquisition costs and future benefit
reserves for two-tiered annuities.
KPMG LLP
February 7, 2000
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Balance Sheets
December 31, 1999 and 1998 (in thousands)
Assets 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investments:
Fixed maturities, at fair value $ 4,582,350 2,538,291
Equity securities, at fair value 675,541 512,404
Mortgage loans on real estate 528,933 457,128
Certificates of deposit and short-term securities 139,571 166,366
Policy loans 46,573 7,118
Real estate 154,063 80,637
Options 68,217 15,109
Investment in equity investments 3,045 80,928
------------------------------------------------------------------------------------------------------------------------------------
Total investments 6,198,293 3,857,981
Cash 58,110 67,195
Accrued investment income 73,774 36,649
Receivables (net of allowance for uncollectible accounts of
$3,395 in 1999 and $3,254 in 1998) 310,866 323,971
Reinsurance recoverable:
Funds held on deposit 1,151,941 1,170,170
Recoverable on future policy benefit reserves 3,330,612 1,191,098
Recoverable on unpaid claims 405,086 293,179
Receivable on paid claims 74,483 24,986
Goodwill (net of accumulated amortization of $3,847 in 1999) 304,561 0
Value of business acquired 210,363 0
Deferred acquisition costs 801,763 930,059
Other assets 55,811 35,755
Federal income tax recoverable 10,484 4,060
------------------------------------------------------------------------------------------------------------------------------------
Assets, exclusive of separate account assets 12,986,147 7,935,103
Separate account assets 8,488,404 9,915,150
------------------------------------------------------------------------------------------------------------------------------------
Total assets $21,474,551 17,850,253
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Balance Sheets (continued)
December 31, 1999 and 1998 (in thousands)
1999 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities Future benefit reserves:
Life $ 1,874,904 1,445,844
Annuity 7,796,583 3,588,491
Policy and contract claims 927,915 770,846
Unearned premiums 49,013 53,778
Reinsurance payable 212,239 129,397
Deferred income on reinsurance 186,888 106,065
Deferred income taxes 51,356 257,903
Accrued expenses 108,232 91,631
Commissions due and accrued 55,904 41,000
Other policyholder funds 77,782 20,586
Other liabilities 98,251 89,038
------------------------------------------------------------------------------------------------------------------------------------
Liabilities, exclusive of separate account liabilities 11,439,067 6,594,579
Separate account liabilities 8,488,404 9,915,150
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 19,927,471 16,509,729
------------------------------------------------------------------------------------------------------------------------------------
Stockholder's equity:
Common stock, $1 par value, 20 million shares authorized, issued and outstanding 20,000 20,000
Additional paid-in capital 830,274 407,088
Retained earnings 632,320 673,857
Accumulated other comprehensive income 64,486 239,579
------------------------------------------------------------------------------------------------------------------------------------
Total stockholder's equity 1,547,080 1,340,524
Commitments and contingencies (notes 7 and 12)
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholder's equity $21,474,551 17,850,253
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Operations
Years ended December 31, 1999, 1998 and 1997 (in thousands)
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
Life insurance premiums $ 447,026 416,199 339,841
Other life policy considerations 31,786 52,668 83,816
Annuity considerations 239,070 222,632 219,262
Accident and health premiums 843,906 773,570 747,718
------------------------------------------------------------------------------------------------------------------------------------
Total premiums and considerations 1,561,788 1,465,069 1,390,637
Premiums and annuity considerations ceded 478,239 411,316 438,018
------------------------------------------------------------------------------------------------------------------------------------
Net premiums and considerations 1,083,549 1,053,753 952,619
Investment income, net 274,860 217,066 162,350
Realized investment gains 112,253 89,226 61,488
Other 72,301 78,174 53,760
------------------------------------------------------------------------------------------------------------------------------------
Total revenue 1,542,963 1,438,219 1,230,217
------------------------------------------------------------------------------------------------------------------------------------
Benefits and expenses:
Life insurance benefits 382,464 461,891 336,090
Annuity benefits 243,398 251,463 206,189
Accident and health insurance benefits 765,257 623,640 566,746
------------------------------------------------------------------------------------------------------------------------------------
Total benefits 1,391,119 1,336,994 1,109,025
Benefit recoveries 443,441 501,719 426,607
------------------------------------------------------------------------------------------------------------------------------------
Net benefits 947,678 835,275 682,418
Commissions and other agent compensation 304,816 322,697 310,665
General and administrative expenses 162,798 116,007 106,744
Taxes, licenses and fees 26,292 15,848 20,605
Amortization of goodwill 3,847 0 0
Amortization of value of business acquired, net of interest credited 4,161 0 0
Change in deferred acquisition costs, net 129,142 (2,979) (63,742)
------------------------------------------------------------------------------------------------------------------------------------
Total benefits and expenses 1,578,734 1,286,848 1,056,690
------------------------------------------------------------------------------------------------------------------------------------
(Loss) income from operations before income taxes (35,771) 151,371 173,527
------------------------------------------------------------------------------------------------------------------------------------
Income tax (benefit) expense: Current 63,371 48,410 31,571
Deferred (73,727) 2,822 28,283
------------------------------------------------------------------------------------------------------------------------------------
Total income tax (benefit) expense (10,356) 51,232 59,854
------------------------------------------------------------------------------------------------------------------------------------
(Loss) income before cumulative effect of change in accounting (25,415) 100,139 113,673
Cumulative effect of change in accounting, net of tax benefit of $8,682 (16,122) 0 0
------------------------------------------------------------------------------------------------------------------------------------
Net (loss) income $ (41,537) 100,139 113,673
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Comprehensive (Loss) Income
Years ended December 31, 1999, 1998 and 1997 (in thousands)
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net (loss) income $ (41,537) 100,139 113,673
------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive (loss) gain:
Foreign currency translation adjustments, net of tax 1,461 (1,761) (975)
------------------------------------------------------------------------------------------------------------------------------------
Unrealized (losses) gains on fixed maturities and equity securities: Unrealized
holding (losses) gains arising during the period net of tax (benefit) expense of
$(55,781), $57,703 and $71,594 in 1999, 1998,
and 1997, respectively (103,590) 107,162 132,961
Reclassification adjustment for gains included in net income, net of tax
expense of $39,289, $30,627, and $21,588 in 1999, 1998, and 1997,
respectively 72,964 56,879 40,093
------------------------------------------------------------------------------------------------------------------------------------
Total unrealized holding (losses) gains (176,554) 50,283 92,868
------------------------------------------------------------------------------------------------------------------------------------
Total other comprehensive (loss) income (175,093) 48,522 91,893
------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive (loss) income $ (216,630) 148,661 205,566
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Stockholder's Equity
Years ended December 31, 1999, 1998 and 1997 (in thousands)
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning and end of year $ 20,000 20,000 20,000
------------------------------------------------------------------------------------------------------------------------------------
Preferred stock:
Balance at beginning of year 0 25,000 25,000
Redemption of stock during the year 0 (25,000) 0
------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year 0 0 25,000
------------------------------------------------------------------------------------------------------------------------------------
Additional paid-in capital: Balance at beginning of year 407,088 407,088 407,088
Capital contribution 423,186 0 0
------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year 830,274 407,088 407,088
------------------------------------------------------------------------------------------------------------------------------------
Retained earnings:
Balance at beginning of year 673,857 574,447 462,925
Net income 41,537) 100,139 113,673
Cash dividend to stockholder 0 (729) (2,151)
------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year 632,320 673,857 574,447
------------------------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income: Accumulated unrealized holding gain:
Balance at beginning of year 245,788 195,505 102,637
Net unrealized gain (loss) on investments
during the year, net of deferred federal income taxes (176,554) 50,283 92,868
------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year 69,234 245,788 195,505
Accumulated unrealized foreign currency (loss):
Balance at beginning of year (6,209) (4,448) (3,473)
Net unrealized gain (loss) on foreign currency
translation during the year, net of deferred federal income taxes 1,461 (1,761) (975)
------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year (4,748) (6,209) (4,448)
------------------------------------------------------------------------------------------------------------------------------------
Total accumulated other comprehensive income 64,486 239,579 191,057
------------------------------------------------------------------------------------------------------------------------------------
Total stockholder's equity $1,547,080 1,340,524 1,217,592
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Cash Flows
December 31, 1999, 1998 and 1997 (in thousands)
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows provided by (used in) operating activities:
Net (loss) income $ (41,537) 100,139 113,673
------------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net (loss) income to net cash (used in) provided by
operating activities:
Realized investment gains (112,253) (89,226) (61,488)
Deferred federal income tax expense (82,409) 2,822 28,283
Charges to policy account balances (66,945) (104,681) (148,159)
Interest credited to policy account balances 251,303 262,956 251,182
Change in:
Accrued investment income (1,921) 1,696 (2,215)
Receivables 17,873 (61,295) (107,398)
Reinsurance recoverable (435,498) (162,959) (1,205,410)
Deferred acquisition costs 128,296 (2,979) (63,742)
Future benefit reserves (136,722) 25,183 138,370
Policy and contract claims and other policyholder funds 184,939 154,213 92,230
Unearned premiums (4,765) 3,610 17,992
Reinsurance payable 13,820 17,713 68,725
Current tax recoverable (6,424) 16,701 (8,306)
Accrued expenses and other liabilities (31,349) 14,797 12,113
Commissions due and accrued 5,627 1,483 2,414
Depreciation and amortization (5,917) (12,711) (13,312)
Equity in earnings of equity investments (690) (2,207) 0
Other, net (1,151) 94 18
------------------------------------------------------------------------------------------------------------------------------------
Total adjustments (284,186) 65,210 (998,703)
------------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities (325,723) 165,349 (885,030)
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Cash Flows (continued)
Years ended December 31, 1999, 1998 and 1997 (in thousands)
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows (used in) provided by operating activities $ (325,723) 165,349 (885,030)
Cash flows (used in) provided by investing activities:
Purchase of fixed maturities (1,171,682) (1,256,653) (1,748,950)
Purchase of equity securities (404,985) (1,518,096) (1,699,847)
Purchase of real estate (66,502) (36,367) (8,398)
Purchase of options (32,617) (11,503) (3,482)
Funding of mortgage loans (114,840) (168,870) (103,626)
Sale of fixed maturities 1,123,115 1,460,969 1,921,534
Matured fixed maturities 21,280 28,152 1,150
Sale of equity securities 385,559 1,560,695 1,691,789
Sale of real estate 0 7,103 551
Repayment of mortgage loans 41,355 29,105 29,520
Net change in certificates of deposit and short-term securities 38,121 (49,242) 87,848
Purchase of Life USA, net of cash acquired (370,881) (79,091) 0
Other (5,438) (5,489) 94,126
------------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities (557,515) (39,287) 262,215
------------------------------------------------------------------------------------------------------------------------------------
Cash flows provided by (used in) financing activities:
Policyholders' deposits to account balances 1,033,877 864,446 748,430
Policyholders' withdrawals from account balances (663,733) (562,667) (524,579)
Change in assets held under reinsurance agreements 80,823 7,876 150,526
Funds (repaid) borrowed on dollar reverse repurchase agreements, net 0 (369,664) 239,468
Capital contribution 423,186 0 0
Redemption of preferred stock 0 (25,000) 0
Cash dividends paid 0 (729) (2,151)
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 874,153 (85,738) 611,694
------------------------------------------------------------------------------------------------------------------------------------
Net change in cash (9,085) 40,324 (11,121)
Cash at beginning of year 67,195 26,871 37,992
------------------------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 58,110 67,195 26,871
------------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Consolidated Statements of Cash Flows (continued)
Years ended December 31, 1999, 1998 and 1997 (in thousands)
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Supplemental disclosures of noncash transactions:
Fair value of assets acquired in acquisition of LifeUSA:
Fixed maturities $ 2,283,214 0 0
Equity securities 21,358 0 0
Certificates of deposit and short-term securities 11,285 0 0
Policy loans 37,618 0 0
Options 20,491 0 0
Cash 62,767 0 0
Accrued investment income 35,204 0 0
Receivables (net of allowance for uncollectible accounts of $145) 4,768 0 0
Recoverable on future policy benefit reserves - annuity 3,023,377 0 0
Deferred tax asset 29,825 0 0
Other assets 21,291 0 0
Liabilities assumed in acquisition of LifeUSA:
Future policy benefit reserves - annuity 5,395,155 0 0
Reinsurance payable 69,022 0 0
Accrued expenses 14,611 0 0
Commissions due and accrued 9,277 0 0
Other policyholder funds 29,729 0 0
Other liabilities 42,552 0 0
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(1) Summary of Significant Accounting Policies
Allianz Life Insurance Company of North America (the Company) is a wholly owned
subsidiary of Allianz of America, Inc. (AZOA), a wholly owned subsidiary of
Allianz Aktiengesellschaft Holding (Allianz AG), a Federal Republic of Germany
company.
The Company is a life insurance company that is licensed to sell group and
individual life, annuity and accident and health policies in the United States,
Canada and several U.S. territories. Based on 1999 net revenues and
considerations, 36%, 18% and 46% of the Company's business is life, annuity and
accident and health, respectively. The Company's primary distribution channels
are through strategic alliances with other insurance companies, third party
marketing organizations and with independent agents. The Company has a
significant relationship with The Franklin Templeton Group and its broker/dealer
network related to sales of its variable life and variable annuity products.
Following is a summary of the significant accounting policies reflected in the
accompanying consolidated financial statements.
Basis of Presentation
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles (GAAP) which vary in certain respects
from accounting rules prescribed or permitted by state insurance regulatory
authorities. The accounts of the Company's major subsidiaries, Life USA Holding,
Inc. (Life USA) and Preferred Life Insurance Company of New York, and other less
significant subsidiaries have been consolidated. The consolidated financial
statements only include the results of Life USA's operations subsequent to
October 1, 1999, the date of its acquisition by the Company (see note 2). All
significant intercompany balances and transactions have been eliminated in
consolidation.
The preparation of financial statements in conformity with GAAP requires
management to make certain estimates and assumptions that affect reported assets
and liabilities including reporting or disclosure of contingent assets and
liabilities as of the balance sheet date and the reported amounts of revenues
and expenses during the reporting period. Actual results could vary
significantly from management's estimates.
Traditional Life, Group Life and Group Accident and Health Insurance
Traditional life products include products with guaranteed premiums and benefits
and consist principally of whole life and term insurance policies, limited
payment contracts and certain annuity products with life contingencies.
Premiums on traditional life and group life products are recognized as income
when due. Group accident and health premiums are recognized as earned on a pro
rata basis over the risk coverage periods. Benefits and expenses for traditional
and group products are matched with earned premiums so that profits are
recognized over the premium paying periods of the contracts. This matching is
accomplished by establishing provisions for future policy benefits and policy
and contract claims, and deferring and amortizing related policy acquisition
costs.
Nontraditional and Variable Life and Annuity Business
Nontraditional and variable life insurance and interest sensitive contracts that
have significant mortality or morbidity risk are accounted for in accordance
with the retrospective deposit method. Interest sensitive contracts that do not
have significant mortality or morbidity risk are accounted for in a manner
consistent with interest bearing financial instruments. For both types of
contracts, premium receipts are reported as deposits to the contractholder's
account while revenues consist of amounts assessed against contractholders
including surrender charges and earned administrative service fees. Mortality or
morbidity charges are also accounted for as revenue on those contracts
containing mortality or morbidity risk. Benefits consist of interest credited to
contractholder's accounts and claims or benefits incurred in excess of the
contractholder's balance.
<PAGE>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(1) Summary of Significant Accounting Policies (Continued)
Value of Business Acquired and Goodwill
The value of insurance in force purchased is recorded as the value of business
acquired (VOBA). The initial value was determined by an actuarial study using
the present value of future profits in calculating the value of the insurance
purchased. An accrual of interest is added to the unamortized balance using the
rates credited to the policyholder accounts. The balance is amortized in
relation to the present value of expected future gross profits in the same
manner as deferred acquisition costs. The amortization period is expected to be
approximately 20 years from the date the business was acquired. The activity in
the VOBA balance for 1999 is summarized below.
Balance, beginning of year$ 0
Additions 214,524
Interest 1,975
Amortization (6,136)
------
Balance, end of year 210,363
------
The amortization of the VOBA in each of the next five years is expected to be:
2000 - $21,491; 2001 - $20,123; 2002 - $18,329; 2003 - $18,105; and 2004 -
$16,958.
Goodwill is the excess of the amount paid to acquire a company over the fair
value of its net assets and VOBA, reduced by amortization and valuation
adjustments, if any. Goodwill is amortized on a straight-line basis over 20
years. The value of VOBA and goodwill will be monitored at least annually based
on estimates of future earnings. For VOBA, those earnings relate to the
insurance in force purchased. For goodwill, estimates will be based on
production subsequent to the purchase. If estimated future earnings are less
than the carrying amount of the related asset, the carrying value of the asset
may not be recoverable. If impairment is indicated, the carrying value will be
reduced to its fair value with a corresponding charge to earnings.
Deferred Acquisition Costs
Acquisition costs, consisting of commissions and other costs that vary with and
are primarily related to production of new business, are deferred. For
traditional life and group life products, such costs are amortized over the
revenue-producing period of the related policies using the same actuarial
assumptions used in computing future policy benefit reserves. Acquisition costs
for accident and health insurance policies are deferred and amortized over the
lives of the policies in the same manner as premiums are earned. For interest
sensitive products, acquisition costs are amortized in relation to the present
value of expected future gross profits from investment margins and mortality,
morbidity and expense charges. Deferred acquisition costs amortized during 1999,
1998 and 1997 were $312,036, $202,644, and $219,266, respectively.
Future Policy Benefit Reserves
Future policy benefit reserves on traditional life products are computed by the
net level premium method based upon estimated future investment yield, mortality
and withdrawal assumptions, commensurate with the Company's experience, modified
as necessary to reflect anticipated trends, including possible unfavorable
deviations. Most life reserve interest assumptions range from 6% to 3.5%.
Future policy benefit reserves for interest sensitive products are generally
carried at accumulated contract values. Reserves on some deferred annuity
contracts are computed based on contractholder cash value accumulations,
adjusted for mortality, withdrawal and interest margin assumptions.
Fair values of investment contracts, which include deferred annuities and other
annuities without significant mortality risk, were determined by testing amounts
payable on demand against discounted cash flows using interest rates
commensurate with the risks involved. Fair values are based on the amount
payable on demand at December 31.
Policy and Contract Claims
Policy and contract claims represent an estimate of claims and claim adjustment
expenses that have been reported but not yet paid and incurred but not yet
reported as of December 31.
<PAGE>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(1) Summary of Significant Accounting Policies (Continued)
Reinsurance
Insurance liabilities are reported before the effects of reinsurance. Amounts
paid or deemed to have been paid for claims covered by reinsurance contracts are
recorded as reinsurance receivable. Reinsurance receivables are recognized in a
manner consistent with the liabilities related to the underlying reinsured
contracts.
Investments
The Company has classified all of its fixed maturity and equity portfolio as
"available-for-sale" and, accordingly, the securities are carried at fair value.
Short-term investments are carried at amortized cost, which approximates market
value. Policy loans are reflected at their unpaid principal balances. Mortgage
loans are reflected at unpaid principal balances adjusted for premium and
discount amortization and an allowance for uncollectible balances. The Company
analyzes loan impairment at least once a year when assessing the adequacy of the
allowance for possible credit losses. The Company does not accrue interest on
impaired loans and accounts for interest income on such loans on a cash basis.
Realized gains and losses are computed based on the specific identification
method.
As of December 31, 1999 and 1998, investments with a carrying value of $164,045
and $116,197, respectively, were held on deposit with various insurance
departments and in other trusts as required by statutory regulations.
The fair values of invested assets, excluding investments in real estate, are
deemed by management to approximate their estimated market values. The fair
value of mortgage loans has been calculated using discounted cash flows and is
based on pertinent information available to management as of year-end. Policy
loan balances which are supported by the underlying cash value of the policies
approximate fair value. Changes in market conditions subsequent to year-end may
cause estimates of fair values to differ from the amounts presented herein.
Accounting for Option Contracts
Certain annuity products provide additional benefits to the policy annuitization
value based on the growth in the Standard & Poor's (S&P) 500 Index. The Company
has analyzed the characteristics of these benefits and has purchased option
contracts tied to the S&P 500 Index with similar characteristics to hedge these
risks. Management monitors correlation of in force amounts and option contract
values to ensure proper matching. If persistency assumptions were to deviate
significantly from anticipated rates, management would purchase or sell option
contracts as deemed appropriate. As of December 31, 1999, management believes a
proper hedge exists.
The option contracts are reported at fair value on the consolidated balance
sheet. The fair value of the options is deemed by management to approximate the
estimated market values. Unrealized gains and losses on the option contracts are
recorded in annuity benefits on the consolidated statement of operations to
offset increases in the future policy benefits liability recorded for the index
benefit.
The Company purchases "over-the-counter" European-Asian call option contracts
based upon the S&P 500 Index. Two types of options are purchased: five- and
seven-year options with daily averaging of the index during the last year of the
contract and five-year cliquet options which use monthly averaging of the index
during each year and resets at each anniversary date of the contract. The strike
price depends on the product, index period, cap and credited rate. The Company
only purchases option contracts from counterparties rated AA- or better and the
option contracts are not used for trading purposes.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
<PAGE>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(1) Summary of Significant Accounting Policies (Continued)
Separate Accounts
Separate accounts represent funds for which investment income and investment
gains and losses accrue directly to the policyholders and contractholders. Each
account has specific investment objectives and the assets are carried at fair
value. The assets of each account are legally segregated and are not subject to
claims that arise out of any other business of the Company.
Fair values of separate account assets were determined using the market value of
the underlying investments held in segregated fund accounts. Fair values of
separate account liabilities were determined using the cash surrender values of
the policyholder's and contractholder's account.
Receivables
Receivable balances approximate estimated fair values. This is based on
pertinent information available to management as of year-end including the
financial condition and credit worthiness of the parties underlying the
receivables. Changes in market conditions subsequent to year-end may cause
estimates of fair values to differ from the amounts presented herein.
Accounting Changes
Effective January 1, 1999, the Company changed its methodology for calculating
deferred acquisition costs and future benefit reserves for two tiered deferred
annuities. The revised calculation better reflects the income streams from this
product. Under the previous method of accounting, a disproportionate amount of
gains were recognized when contract annuitization or surrenders occurred. The
new methodology provides for profit emergence over the life of the block of
annuities. The cumulative effect of the change in accounting principle for the
years prior to 1999 in the amount of $16,122, net of taxes, is recorded in the
accompanying consolidated statement of operations. The effect of the change in
methodology does not have a significant impact on the financial statements for
prior years, therefore no proforma retroactive information is included.
In 1999, the Company adopted Statement of Position (SOP) 97-3, Accounting for
Insurance and Other Enterprises for Insurance-Related Assessment, and SOP 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use. No material adjustments were made to the consolidated financial statements
upon adoption of these statements.
In 1998, the Company adopted Statement of Financial Accounting Standard
(SFAS) No. 125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, and SFAS No. 132, Employers Disclosures about
Pensions and Other Postretirement Benefits. No adjustments were made to the
consolidated financial statements upon adoption of these pronouncements.
Accounting Pronouncements to be Adopted
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. The statement
establishes accounting and reporting standards for derivative financial
instruments and other similar financial instruments and for hedging activities.
In June 1999, SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities - Deferral of Effective Date of FASB Statement No. 133 was issued.
This statement defers the effective date to fiscal years beginning after June
15, 2000. The Company will adopt these statements on January 1, 2001. The impact
of adoption of SFAS No. 133 on the financial position of the Company has not
been determined.
Reclassifications
Certain prior year balances have been reclassified to conform to the current
year presentation.
<PAGE>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(2) Business Combination
On October 1, 1999, the Company acquired all of the outstanding capital stock
(including all outstanding options) of Life USA that it did not already own for
approximately $423 million in cash. The acquisition was financed by a capital
contribution from AZOA.
The acquisition was accounted for under the purchase method of accounting and,
accordingly, the consolidated financial statements include only the results of
Life USA's operations from the date of acquisition. The value of business
acquired was approximately $215 million and is being amortized in relation to
the present value of future gross profits, which will be approximately 20 years.
The remaining excess of the purchase price over the fair value of assets
acquired in the amount of $308 million has been recorded as goodwill and is
being amortized on a straight-line basis over 20 years.
During 1999, expenses of approximately $7 million were recorded related to the
acquisition of Life USA and its integration with the Company. These expenses
resulted primarily from the costs of the integration of the Company's and Life
USA's strategies, policies and practices. These charges include filing fees,
legal fees and other consulting fees related to the acquisition.
Following are the Company's unaudited pro forma results for the years ended
December 31, 1999 and 1998 assuming the acquisition occurred on January 1, 1998.
Unaudited
1999 1998
------------------------------------------------------------------------------
Total revenue $ 1,766,792 1,654,531
Net (loss) income (44,624) 103,236
------------------------------------------------------------------------------
These unaudited pro forma results have been prepared for comparative purposes
only and include additional amortization expenses as a result of goodwill and
certain other adjustments. They do not purport to be indicative of the results
of operations that actually would have resulted had the combination occurred on
January 1, 1998 or that may result in the future.
In 1998, the Company accounted for its investment in Life USA under the equity
method of accounting and carried its investment at cost, adjusted for its share
of Life USA's earnings, amortization of goodwill and dividends received. The
difference between the cost of the investment and underlying equity was to be
amortized on a straight-line basis over ten years. As of December 31, 1998, the
company held 21.41% of the outstanding common stock of Life USA with an
approximate market value of $68,290. The carrying value of the Life USA
investment at year-end 1998 was $80,928, which was $20,983 higher than the
equity in net assets of $59,945.
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(3) Investments
Investments at December 31, 1999 consist of:
Amount
shown on
Amortized Estimated consolidated
cost fair balance
or cost value sheet
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities:
U.S. government $ 294,587 291,996 291,996
States and political subdivisions 57,378 52,452 52,452
Foreign government 172,877 169,686 169,686
Public utilities 227,934 220,602 220,602
Corporate securities 2,981,913 2,873,327 2,873,327
Mortgage backed securities 345,794 347,235 347,235
Collateralized mortgage obligations 634,680 627,052 627,052
------------------------------------------------------------------------------------------------------------------------------------
Total fixed maturities $4,715,163 4,582,350 4,582,350
------------------------------------------------------------------------------------------------------------------------------------
Equity securities:
Common stocks:
Banks, trusts and insurance companies 22,935 23,831 23,831
Industrial and miscellaneous 413,279 651,710 651,710
------------------------------------------------------------------------------------------------------------------------------------
Total equity securities $ 436,214 675,541 675,541
------------------------------------------------------------------------------------------------------------------------------------
Other investments:
Mortgage loans on real estate 528,933 XXXXXX 528,933
Certificates of deposit and short-term securities 139,571 XXXXXX 139,571
Policy loans 46,573 XXXXXX 46,573
Real estate 154,063 XXXXXX 154,063
Options 51,131 XXXXXX 68,217
Investment in equity investments 3,045 XXXXXX 3,045
------------------------------------------------------------------------------------------------------------------------------------
Total other investments $ 923,316 XXXXXX 940,402
------------------------------------------------------------------------------------------------------------------------------------
Total investments $6,074,693 XXXXXX 6,198,293
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(3) Investments (CONTINUED)
At December 31, 1999 and 1998, the amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values
of securities are as follows:
Amortized Gross Gross Estimated
cost unrealized unrealized fair
or cost gains losses value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999:
U.S. Government $ 294,587 3,340 5,931 291,996
States and political subdivisions 57,378 0 4,926 52,452
Foreign government 172,877 334 3,525 169,686
Public utilities 227,934 20 7,352 220,602
Corporate securities 2,981,913 3,902 112,488 2,873,327
Mortgage backed securities 345,794 5,026 3,585 347,235
Collateralized mortgage obligations 634,680 2,126 9,754 627,052
------------------------------------------------------------------------------------------------------------------------------------
Total fixed maturities 4,715,163 14,748 147,561 4,582,350
Equity securities 436,214 289,441 50,114 675,541
------------------------------------------------------------------------------------------------------------------------------------
Total $5,151,377 304,189 197,675 5,257,891
------------------------------------------------------------------------------------------------------------------------------------
1998:
U.S. Government $ 274,813 36,717 234 311,296
States and political subdivisions 94,640 6,481 0 101,121
Foreign government 34,652 2,079 0 36,731
Public utilities 66,236 5,948 202 71,982
Corporate securities 1,441,359 67,234 9,891 1,498,702
Mortgage backed securities 401,505 26,799 0 428,304
Collateralized mortgage obligations 80,599 10,141 585 90,155
------------------------------------------------------------------------------------------------------------------------------------
Total fixed maturities 2,393,804 155,399 10,912 2,538,291
Equity securities 278,753 245,913 12,262 512,404
------------------------------------------------------------------------------------------------------------------------------------
Total $2,672,557 401,312 23,174 3,050,695
------------------------------------------------------------------------------------------------------------------------------------
<FN>
The changes in unrealized (losses) gains on fixed maturity securities were $(277,300), $22,170, and $58,422 in each of the years
ended December 31, 1999, 1998 and 1997, respectively.
The changes in unrealized gains in equity investments, which include common stocks and nonredeemable preferred stocks were $5,676,
$55,188, and $84,718 for the years ended December 31, 1999, 1998 and 1997, respectively.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(3) Investments (CONTINUED)
The amortized cost and estimated fair value of fixed maturities at December 31, 1999, by contractual maturity, are shown
below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
Amortized Estimated
cost fair value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Due in one year or less $ 102,823 102,554
Due after one year through five years 1,055,901 1,037,031
Due after five years through ten years 1,279,988 1,243,845
Due after ten years 1,295,977 1,224,633
Mortgage backed securities and collateralized mortgage obligations 980,474 974,287
------------------------------------------------------------------------------------------------------------------------------------
Totals $4,715,163 4,582,350
------------------------------------------------------------------------------------------------------------------------------------
Gross gains of $151,920, $105,723, and $70,335 and gross losses of $39,717, $18,217, and $8,654 were realized on sales of
securities in 1999, 1998 and 1997, respectively.
Net realized investment gains (losses) for the respective years ended December 31 are summarized as follows:
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Fixed maturities, at market $ (4,474) 30,299 40,268
Equity securities 116,677 57,207 21,413
Mortgage loans (1,680) ,320) (982)
Real estate 331 3,133 635
Other (601) 93) 154
------------------------------------------------------------------------------------------------------------------------------------
Net gains before taxes 112,253 89,226 61,488
Tax expense on net realized gains 39,257 31,229 21,521
------------------------------------------------------------------------------------------------------------------------------------
Net gains after taxes $ 72,996 7,997 39,967
------------------------------------------------------------------------------------------------------------------------------------
The valuation allowances on mortgage loans at December 31, 1999, 1998 and 1997 and the changes in the allowance for the years
then ended are summarized as follows:
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Beginning of Year $ 9,599 8,279 7,279
Charged to operations 1,680 1,320 1,000
Recoveries 0 0 0
------------------------------------------------------------------------------------------------------------------------------------
End of Year $ 11,279 9,599 8,279
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(3) Investments (CONTINUED)
Major categories of net investment income for the respective years ended December 31 are:
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest:
Fixed maturities $ 212,992 155,397 211,335
Mortgage loans 40,011 34,449 25,232
Policy loans 737 497 6,526
Short-term investments 1,823 15,022 12,804
Dividends:
Preferred stock 212 668 748
Common stock 5,259 5,190 4,603
Interest on assets held by reinsurers 8,097 8,272 8,858
Rental income on real estate 13,356 7,505 5,657
Other invested assets 6,405 1,132 3,781
------------------------------------------------------------------------------------------------------------------------------------
Total investment income 288,892 228,132 279,544
Investment expenses related to coinsurance agreements (note 8) 2,660 2,689 98,417
Investment expenses 11,372 8,377 18,777
------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 274,860 217,066 162,350
------------------------------------------------------------------------------------------------------------------------------------
<FN>
During the first two months of 1998, the Company entered into mortgage backed security reverse repurchase transactions
("dollar rolls") with certain securities dealers. Under this program, the Company sold certain securities for delivery in the
current month and simultaneously contracted with the same dealer to repurchase similar, but not identical, securities on a
specified future date. The Company gave up the right to receive principal and interest on the securities sold. As of December 31,
1999 and 1998 there were no outstanding amounts under the Company's dollar roll program. Average balances outstanding for the
first two months of 1998 were $120,525 and weighted average interest rates were 6.5%. The maximum balance outstanding during 1998
was $120,525. No dollar rolls were transacted in 1999.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(4) Summary Table of Fair Value Disclosures
1999 1998
------------------------------------------------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------- ----- ------- -----
Financial assets
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed maturities, at market:
U.S. Government $ 291,996 291,996 311,296 311,296
States and political subdivisions 52,452 52,452 101,121 101,121
Foreign governments 169,686 169,686 36,731 36,731
Public utilities 220,602 220,602 71,982 71,982
Corporate securities 2,873,327 2,873,327 1,546,342 1,546,342
Mortgage backed securities 347,235 347,235 380,664 380,664
Collateralized mortgage obligations 627,052 627,052 90,155 90,155
Equity securities 675,541 675,541 512,404 512,404
Mortgage loans 528,933 530,033 457,128 495,202
Short term investments 139,571 139,571 166,366 166,366
Policy loans 46,573 46,573 7,118 7,118
Options 68,217 68,217 15,109 15,109
Investment in equity investments 3,045 4,286 80,928 68,290
Receivables 310,866 310,866 323,971 323,971
Separate accounts assets 8,488,404 8,488,404 9,915,150 9,915,150
Financial liabilities
------------------------------------------------------------------------------------------------------------------------------------
Investment contracts 7,609,726 7,208,876 3,645,657 3,035,787
Separate account liabilities 8,488,404 8,361,112 9,915,150 9,765,791
------------------------------------------------------------------------------------------------------------------------------------
See Note 1 "Summary of Significant Accounting Policies" for description of the methods and significant assumptions used to
estimate fair values.
(5) Receivables
Receivables at December 31 consist of the following:
1999 1998
------------------------------------------------------------------------------------------------------------------------------------
Premiums due $ 264,685 270,657
Agents balances 4,809 10,088
Related party receivables 2,230 3,852
Reinsurance commission receivable 9,304 8,022
Scholarship enrollment fees 14,125 12,010
Due from administrators 4,550 13,271
Other 11,163 6,071
------------------------------------------------------------------------------------------------------------------------------------
Total receivables $ 310,866 323,971
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(6) Accident and Health Claims Reserves
Accident and health claims reserves are based on estimates that are subject to uncertainty. Uncertainty regarding reserves of
a given accident year is gradually reduced as new information emerges each succeeding year, thereby allowing more reliable
re-evaluations of such reserves. While management believes that reserves as of December 31, 1999 are adequate, uncertainties in
the reserving process could cause such reserves to develop favorably or unfavorably in the near term as new or additional
information emerges. Any adjustments to reserves are reflected in the operating results of the periods in which they are made.
Movements in reserves, which are small relative to the amount of such reserves, could significantly impact future reported
earnings of the Company.
Activity in the accident and health claims reserves, exclusive of long term care, hospital indemnity and AIDS reserves of
$19,542, $9,918, and $12,479 in 1999, 1998 and 1997, respectively, is summarized as follows:
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1, net of reinsurance
recoverables of $128,764, $141,033, and $124,320 $ 366,425 312,886 273,813
Adjustment primarily related to commutation of block of business (53,585) 0 0
Incurred related to:
Current year 431,279 417,042 346,901
Prior years 3,264 (12,217) (12,087)
------------------------------------------------------------------------------------------------------------------------------------
Total incurred 434,543 404,825 334,814
------------------------------------------------------------------------------------------------------------------------------------
Paid related to:
Current year 193,341 204,100 150,942
Prior years 185,696 147,186 144,798
------------------------------------------------------------------------------------------------------------------------------------
Total paid 379,037 351,286 295,740
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, net of reinsurance
recoverables of $175,142, $128,764, and $141,033 $ 368,346 366,425 312,887
------------------------------------------------------------------------------------------------------------------------------------
<FN>
The Company incurred additional losses in 1999 on prior year incurred claims primarily on its reinsurance assumed (non-HMO)
business. Due to lower than anticipated losses related to prior years, the provision for claims and claim adjustment expenses
decreased in 1998 and 1997.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(7) Reinsurance
In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a
portion of benefits paid by ceding risks under excess coverage and coinsurance contracts. The Company retains a maximum of $1
million coverage per individual life. Reinsurance contracts do not relieve the Company from its obligations to policyholders.
Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial
condition of its reinsurers and monitors concentrations of credit risk to minimize its exposure to significant losses from
reinsurer insolvencies.
Life insurance, annuities and accident and health business assumed from and ceded to other companies is as follows:
Percentage
Assumed Ceded of amount
Direct from other to other Net assumed
Year ended amount companies companies amount to net
------------------------------------------------------------------------------------------------------------------------------------
December 31, 1999:
<S> <C> <C> <C> <C> <C>
Life insurance in force $36,994,161 129,809,733 24,174,006 142,629,888 91.0%
------------------------------------------------------------------------------------------------------------------------------------
Premiums:
Life 205,208 273,604 67,069 411,743 66.5%
Annuities 199,341 39,729 95,232 143,838 27.6%
Accident and health 541,847 302,059 315,938 527,968 57.2%
------------------------------------------------------------------------------------------------------------------------------------
Total premiums $ 946,396 615,392 478,239 1,083,549 56.8%
------------------------------------------------------------------------------------------------------------------------------------
December 31, 1998:
Life insurance in force $34,118,554 98,832,792 19,483,581 113,467,765 87.1%
------------------------------------------------------------------------------------------------------------------------------------
Premiums:
Life 244,416 224,451 93,812 375,055 59.8%
Annuities 220,812 1,820 50,385 172,247 1.1%
Accident and health 479,237 294,333 267,119 506,451 58.1%
------------------------------------------------------------------------------------------------------------------------------------
Total premiums $ 944,465 520,604 411,316 1,053,753 49.4%
------------------------------------------------------------------------------------------------------------------------------------
December 31, 1997:
Life insurance in force $32,234,241 72,682,842 19,873,094 85,043,989 85.5%
------------------------------------------------------------------------------------------------------------------------------------
Premiums:
Life 252,859 170,798 110,579 313,078 54.6%
Annuities 217,353 1,910 30,789 188,474 1.0%
Accident and health 436,105 311,612 296,650 451,067 69.1%
------------------------------------------------------------------------------------------------------------------------------------
Total premiums $ 906,317 484,320 438,018 952,619 50.8%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
Included in reinsurance receivables at December 31, 1999 are $2,095,817 and $849,279 recoverable from two insurers who, as of
December 31, 1999, were both rated A+ by A.M. Best's Insurance Reports. A contingent liability exists to the extent that the
Company's reinsurers are unable to meet their contractual obligations. Management is of the opinion that no liability will accrue
to the Company with respect to this contingency.
Of the amounts ceded to others, the Company ceded life insurance inforce of $3,387,592, $2,067,664, and $1,163,533 in 1999,
1998 and 1997, respectively, and life insurance premiums earned of $6,008, $4,165, and $2,538 in 1999, 1998 and 1997,
respectively, to its ultimate parent Allianz AG. The Company also ceded accident and health premiums earned to Allianz AG of
$3,131, $2,817, and $2,467 in 1999, 1998 and 1997.
</FN>
</TABLE>
<PAGE>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(7) Reinsurance (Continued)
Effective January 1, 1999, the Company entered into a 100% coinsurance agreement
with an unrelated insurance company to coinsure a block of preneed life and
annuity business with 1999 premium of $10,300. In connection with this
agreement, the Company recognized a recoverable on future benefit reserves of
$95,000, received a ceding commission of $2,600 and transferred cash of $91,700.
The unearned ceding commission represents deferred revenue that will be
amortized over the revenue-producing period of the related reinsured policies.
During 1999, $1,200 was amortized and included in other revenue in the
consolidated statements of operations. The servicing of the coinsured business
was also transferred to a third party administrator.
Effective December 31, 1999, the Company entered into a 100% coinsurance
agreement with an unrelated insurance company to coinsure the remaining block of
preneed life and annuity business with 1999 premium of $97,100. In connection
with this agreement, the Company recognized a recoverable on future benefit
reserves of $245,000, received a ceding commission of $73,900 and transferred
cash of $154,000. The unearned ceding commission represents deferred revenue
that will be amortized over the revenue-producing period of the related
reinsured policies. The servicing of the coinsured business was also transferred
to a third party administrator. Because the agreement was effective December 31,
1999, no revenue was recognized on this transaction in 1999.
Effective January 1, 1997, the Company entered into a 100% coinsurance agreement
with an unrelated insurance company to coinsure a block of business with life
insurance inforce of $13,200,000 and 1997 premium of $90,000. The coinsured
block included certain universal life and traditional life insurance policies
and annuity contracts. In connection with this agreement, the Company recognized
a recoverable on future benefit reserves of $1,102,000, received a ceding
commission of $138,500 and transferred assets of $881,000, which support the
business. The unearned ceding commission represents deferred revenue that will
be amortized over the revenue-producing period of the related reinsured
policies. During 1999, 1998 and 1997 $14,996, $15,965 and $22,647, respectively,
was amortized and included in other revenue in the consolidated statements of
operations. The servicing of the coinsured business was also transferred to a
third party insurer who is also the retrocessionaire of the block. Effective
January 1, 1998, the coinsurance agreement was amended to include another block
of business with future benefit reserves of $66,000, capitalized deferred
acquisition costs of $1,935 and deferred income of $750.
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(8) Income Taxes
Income Tax (Benefit) Expense
Total income tax expense (benefit) for the years ended December 31 are as follows:
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Income tax expense attributable to operations:
<S> <C> <C> <C>
Current tax expense $ 63,371 48,410 31,571
Deferred tax (benefit) expense (73,727) 2,822 28,283
------------------------------------------------------------------------------------------------------------------------------------
Total income tax (benefit) expense attributable to operations (10,356) 51,232 59,854
Tax benefit due to cumulative effect of change in accounting (8,682) 0 0
------------------------------------------------------------------------------------------------------------------------------------
Total income tax (benefit) expense attributable to net income (19,038) 51,232 59,854
Income tax effect on equity:
Income tax allocated to stockholder's equity:
Attributable to unrealized gains and losses for the year (94,283) 26,127 49,748
------------------------------------------------------------------------------------------------------------------------------------
Total income tax effect on equity $ (113,321) 77,359 109,602
------------------------------------------------------------------------------------------------------------------------------------
Components of Income Tax (Benefit) Expense
Income tax expense computed at the statutory rate of 35% varies from tax expense reported in the consolidated statements of
operations for the respective years ended December 31 as follows:
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Income tax (benefit) expense computed at the statutory rate $ (12,520) 52,980 60,735
Dividends received deductions and tax-exempt interest (2,605) (3,294) (2,792)
Foreign tax (1,014) (133) 916
Interest on tax deficiency 800 900 1,100
Goodwill amortization 1,365 0 0
Other 3,618 779 (105)
------------------------------------------------------------------------------------------------------------------------------------
Income tax (benefit) expense as reported $ (10,356) 51,232 59,854
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(8) Income Taxes (Continued)
Components of Deferred Tax Assets and Liabilities on the Balance Sheet Tax effects of temporary differences giving rise to
the significant components of the net deferred tax liability at December 31 are as follows:
1999 1998
------------------------------------------------------------------------------------------------------------------------------------
Deferred tax assets:
<S> <C> <C>
Provision for post retirement benefits $ 2,286 2,223
Allowance for uncollectible accounts 929 929
Policy reserves 282,573 173,414
------------------------------------------------------------------------------------------------------------------------------------
Total deferred tax assets 285,788 176,566
------------------------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Deferred acquisition costs 219,869 272,815
Net unrealized gain 25,701 128,883
Value of business acquired 73,627 0
Other 17,947 32,771
------------------------------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities 337,144 434,469
------------------------------------------------------------------------------------------------------------------------------------
Net deferred tax liability $ 51,356 257,903
------------------------------------------------------------------------------------------------------------------------------------
<FN>
Although realization is not assured, the Company believes it is not necessary to establish a valuation allowance for the
deferred tax asset as it is more likely than not the deferred tax asset will be realized principally through future reversals of
existing taxable temporary differences and future taxable income. The amount of the deferred tax asset considered realizable,
however, could be reduced in the near term if estimates of future reversals of existing taxable temporary differences and future
taxable income are reduced.
The Company and its subsidiaries, with the exception of Life USA Insurance Company, files a consolidated federal income tax
return with AZOA and all of its wholly owned subsidiaries. The consolidated tax allocation agreement stipulates that each company
participating in the return will bear its share of the tax liability pursuant to United States Treasury Department regulations.
The Company and each of its insurance subsidiaries generally will be paid for the tax benefit on their losses, and any other tax
attributes, to the extent they could have obtained a benefit against their post-1990 separate return taxable income or tax. Income
taxes paid by the Company were $57,121, $30,808, and $39,914 in 1999, 1998 and 1997, respectively. At December 31, 1999 and 1998
the Company had a tax recoverable from AZOA of $3,251 and $3,030, respectively.
At December 31, 1999 and 1998, the Company had a tax recoverable separate from the agreement with AZOA in the amount of
$7,233 and $1,030, respectively. These amounts are for foreign taxes and Life USA taxes recoverable prior to the purchase by the
Company.
</FN>
</TABLE>
<PAGE>
24
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(9) Related Party Transactions
In conjunction with the purchase of LifeUSA on October 1, 1999, the Company
received a capital contribution from AZOA in the amount of $423,186.
The Company reimbursed AZOA $3,582, $2,495, and $2,519 in 1999, 1998 and 1997,
respectively, for certain administrative and investment management services
performed. The Company's liability to AZOA for such services was $581 and $490
at December 31, 1999 and 1998, respectively.
The Company shares a data center with and receives other system support from
affiliated insurance companies. Usage and other system support charges paid by
the Company were $902, $1,291 and $2,826 in 1999, 1998 and 1997, respectively.
The Company's liability for data center and other system support charges was
$157 and $345 at December 31, 1999 and 1998, respectively.
The Company has 200 million authorized shares of preferred stock with a par
value of $1 per share. This preferred stock is issuable in series with the
number of shares, redemption rights and dividend rate designated by the Board of
Directors for each series. Dividends are cumulative at a rate reflective of
prevailing market conditions at time of issue and are payable semiannually.
Dividend payments are restricted by provisions in State of Minnesota statutes.
The Company had 25 million shares of Series A preferred stock outstanding until
March 1998, which was held by AZOA with a dividend rate of 6.4% and a book value
of $25,000. In March 1998, the Company redeemed and canceled the 25 million
shares of Series A preferred stock.
(10) Employee Benefit Plans
The Company participates in the Allianz Primary Retirement Plan (Primary
Retirement Plan), a defined contribution plan. The Company makes contributions
to a money purchase pension plan on behalf of eligible participants. All
employees, excluding agents, are eligible to participate in the Primary
Retirement Plan after two years of service. The contributions are based on a
percentage of the participant's salary with the participants being 100% vested
upon eligibility. It is the Company's policy to fund the plan costs as accrued.
Total pension contributions were $2,025, $756, and $810 in 1999, 1998 and 1997,
respectively.
The Company participates in the Allianz Asset Accumulation Plan (Allianz Plan),
a defined contribution plan sponsored by AZOA. Under the Allianz Plan
provisions, the Company will match 75% of eligible employees' contributions up
to a maximum of 6% of a participant's compensation. The plan can also declare a
profit sharing allocation of up to 5.0% of base pay at year-end based upon the
profitability of AZOA. All employees are eligible to participate after one year
of service and are fully vested in the Company's matching contribution after
three years of service. The Allianz Plan will accept participants' pretax or
after tax contributions up to 15% of the participant's compensation. It is the
Company's policy to fund the Allianz Plan costs as accrued. The Company has
accrued $980, $868, and $1,057 in 1999, 1998 and 1997, respectively, toward
planned contributions.
Employees of Life USA also participated in a defined contribution plan, which
will be merged with the Allianz Plan effective January 1, 2000. Total Company
contributions made subsequent to October 1, 1999 were $329.
The Company provides certain postretirement benefits to employees who retired on
or before December 31, 1988 or who were hired before December 31, 1988 and who
have at least ten years of service when they reach age 55. The Company's plan
obligation at December 31, 1999 and 1998 was $6,532 and $6,352, respectively.
This liability is included in "Other liabilities" in the accompanying balance
sheet.
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(11) Statutory Financial Data and Dividend Restrictions
Statutory accounting is directed toward insurer solvency and protection of policyholders. Accordingly, certain items recorded
in financial statements prepared under GAAP are excluded or vary in determining statutory policyholders' surplus and net gain from
operations. Currently, these items include, among others, deferred acquisition costs, furniture and fixtures, accident and health
premiums receivable which are more than 90 days past due, deferred taxes and undeclared dividends to policyholders. Additionally,
future life and annuity benefit reserves calculated for statutory accounting do not include provisions for withdrawals. The NAIC
has completed a project to codify statutory accounting practices, the result of which will constitute the primary source of
"prescribed" statutory accounting practices. Accordingly, that project, which is currently in the process of state adoption and
expected to be effective January 1, 2001, will change the definition of what comprises prescribed versus permitted statutory
accounting practices, and may result in changes to existing accounting policies insurance enterprises use to prepare their
statutory financial statements. The Company has not quantified the effects of adopting the NAIC codification on their statutory
financial statements.
The differences between stockholder's equity and net income reported in accordance with statutory accounting practices and
the accompanying consolidated financial statements as of and for the year ended December 31 are as follows:
Stockholder's equity Net income
------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Statutory basis $ 873,617 654,371 97,768 35,188 72,343
Adjustments:
Change in reserve basis (289,261) (226,145) (80,952) 2,036 (99,981)
Deferred acquisition costs 801,763 930,059 (128,296) 2,979 63,742
Difference in accounting for
purchase of Life USA 340,675 0 (6,373) 0 0
Net deferred taxes (51,356) (257,903) 82,409 (2,822) (28,283)
Statutory asset valuation reserve 236,210 178,011 0 0 0
Statutory interest maintenance reserve 43,786 48,697 (4,912) 14,361 7,994
Modified coinsurance reinsurance 0 (2,358) 0 29,595 81,790
Unrealized (losses) gains
on investments (136,719) 158,391 0 0 0
Nonadmitted assets 7,411 14,946 0 0 0
Deferred income on reinsurance (186,888) (106,065) 0 0 0
Other liabilities related
to reinsurance (32,998) (52,337) 0 0 0
Valuation allowance on mortgage loans (11,279) (9,599) (1,680) (1,320) (1,000)
Loss from non-insurance subsidiaries 0 0 (11,714) (618) (1,260)
Other (47,881) 10,456 11,613 20,740 18,327
------------------------------------------------------------------------------------------------------------------------------------
As reported in the accompanying
consolidated financial statements $1,547,080 1,340,524 (42,137) 100,139 113,672
------------------------------------------------------------------------------------------------------------------------------------
<FN>
The Company is required to meet minimum statutory capital and surplus requirements. The Company's statutory capital and
surplus as of December 31, 1999 and 1998 were in compliance with these requirements. The maximum amount of dividends that can be
paid by Minnesota insurance companies to stockholders without prior approval of the Commissioner of Commerce is subject to
restrictions relating to statutory earned surplus, also known as unassigned funds. Unassigned funds are determined in accordance
with the accounting procedures and practices governing preparation of the statutory annual statement, minus 25% of earned surplus
attributable to unrealized capital gains. In accordance with Minnesota Statutes, the Company may declare and pay from its surplus,
cash dividends of not more than the greater of 10% of its beginning of the year statutory surplus in any year, or the net gain
from operations of the insurer, not including realized gains, for the 12-month period ending the 31st day of the next preceding
year. In 1998, the Company paid AZOA dividends on preferred stock in the amount $729. A common stock dividend of $551 was paid in
1997. Dividends of $49,391 could be paid in 2000 without prior approval of the Commissioner of Commerce.
</FN>
</TABLE>
<PAGE>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(11) Statutory Financial Data and Dividend Restrictions (Continued)
Regulatory Risk Based Capital
An insurance enterprise's state of domicile imposes minimum risk-based capital
requirements that were developed by the National Association of Insurance
Commissioners (NAIC). The formulas for determining the amount of risk-based
capital specify various weighting factors that are applied to financial balances
or various levels of activity based on the perceived degree of risk. Regulatory
compliance is determined by a ratio of an enterprise's regulatory total adjusted
capital to its authorized control level risk-based capital, as defined by the
NAIC. Enterprises below specific triggerpoints or ratios are classified within
certain levels, each of which requires specified corrective action. The levels
and ratios are as follows:
Ratio of total adjusted capital to
authorized control level risk-based
Regulatory Event capital (less than or equal to)
------------- ---------------------
Company action level 2 (or 2.5 with negative trends)
Regulatory action level 1.5
Authorized control level 1
Mandatory control level 0.7
The Company's adjusted capital is in excess of the Company action level as of
December 31, 1999 and 1998.
Permitted Statutory Accounting Practices
The Company is required to file annual statements with insurance regulatory
authorities, which are prepared on an accounting basis prescribed or permitted
by such authorities. Currently, prescribed statutory accounting practices
include state laws, regulations, and general administrative rules, as well as a
variety of publications of the NAIC. Permitted statutory accounting practices
encompass all accounting practices that are not prescribed; such practices
differ from state to state, may differ from company to company within a state,
and may change in the future. The Company does not currently use permitted
statutory accounting practices that have a significant impact on its statutory
financial statements.
(12) Commitments and Contingencies
The Company and its subsidiaries are involved in various pending or threatened
legal proceedings arising from the conduct of their business. In the opinion of
management, the ultimate resolution of such litigation will not have a material
effect on the consolidated financial position of the Company.
The Company is contingently liable for possible future assessments under
regulatory requirements pertaining to insolvencies and impairments of
unaffiliated insurance companies. Provision has been made for assessments
currently received and assessments anticipated for known insolvencies.
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(13) Foreign Currency Translation
The net assets of the Company's foreign operations are translated into U.S. dollars using exchange rates in effect at each
year-end. Translation adjustments arising from differences in exchange rates from period to period are included in the accumulated
foreign currency translation adjustment reported as a separate component of comprehensive income. An analysis of this account for
the respective years ended December 31 follows:
1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Beginning amount of cumulative translation adjustments $ (6,209) (4,448) (3,473)
------------------------------------------------------------------------------------------------------------------------------------
Aggregate adjustment for the period resulting from
translation adjustments 2,248 (2,710) (1,500)
Amount of income tax (expense) benefit for period
related to aggregate adjustment (787) 949 525
------------------------------------------------------------------------------------------------------------------------------------
Net aggregate translation included in equity 1,461 (1,761) (975)
------------------------------------------------------------------------------------------------------------------------------------
Ending amount of cumulative translation adjustments $ (4,748) (6,209) (4,448)
------------------------------------------------------------------------------------------------------------------------------------
Canadian foreign exchange rate at end of year 0.6924 0.6535 0.6992
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(14) Supplementary Insurance Information
The following table summarizes certain financial information by line of business for 1999, 1998 and 1997:
As of December 31
------------------------------------------------------------------------------------------------------------------------------------
Future policy Other
Deferred benefits, policy
policy losses, claims and
acquisition claims and Unearned benefits
costs loss expense premiums payable
------------------------------------------------------------------------------------------------------------------------------------
1999:
<S> <C> <C> <C> <C>
Life $ 231,927 1,874,904 3,049 116,569
Annuities 561,966 7,728,072 0 1,771
Accident and health 7,870 0 45,964 809,575
------------------------------------------------------------------------------------------------------------------------------------
$ 801,763 9,602,976 49,013 927,915
------------------------------------------------------------------------------------------------------------------------------------
1998:
Life $ 217,262 1,445,844 3,859 97,647
Annuities 694,388 3,588,491 0 1,727
Accident and health 18,409 0 49,919 671,472
------------------------------------------------------------------------------------------------------------------------------------
$ 930,059 5,034,335 53,778 770,846
------------------------------------------------------------------------------------------------------------------------------------
1997:
Life $ 189,971 1,297,269 5,215 63,572
Annuities 717,721 3,251,829 0 1,881
Accident and health 19,388 0 44,953 487,660
------------------------------------------------------------------------------------------------------------------------------------
$ 927,080 4,549,098 50,168 553,113
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Insurance Company of North America
And Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1999, 1998 and 1997 (in thousands, except share data)
(14) Supplementary Insurance Information (Continued)
For the year ended December 31
------------------------------------------------------------------------------------------------------------------------------------
Premium Benefits, Net change
revenue claims in
and other Net losses, and policy Other
contract investment settlement acquisition operating
considerations income expenses costs (a) expenses
------------------------------------------------------------------------------------------------------------------------------------
1999:
<S> <C> <C> <C> <C> <C>
Life $ 411,743 36,171 319,210 (14,665) 153,281
Annuities 143,838 211,432 163,329 133,268 166,715
Accident and health 527,968 27,257 465,139 10,539 173,910
------------------------------------------------------------------------------------------------------------------------------------
$1,083,549 274,860 947,678 129,142 493,906
------------------------------------------------------------------------------------------------------------------------------------
1998:
Life $ 375,055 34,731 306,318 (27,291) 141,705
Annuities 172,247 158,458 135,356 23,333 151,719
Accident and health 506,451 23,877 393,601 979 161,128
------------------------------------------------------------------------------------------------------------------------------------
$1,053,753 217,066 835,275 (2,979) 454,552
------------------------------------------------------------------------------------------------------------------------------------
1997:
Life $ 313,078 24,352 230,357 (14,363) 99,913
Annuities 188,474 118,028 124,535 (44,924) 186,789
Accident and health 451,067 19,970 327,526 (4,455) 151,312
------------------------------------------------------------------------------------------------------------------------------------
$ 952,619 162,350 682,418 (63,742) 438,014
------------------------------------------------------------------------------------------------------------------------------------
(a) See note 1 for total gross amortization.
</TABLE>
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
The following financial statements of the Company are included in
Part B hereof.
1. Independent Auditors' Report.
2. Consolidated Balance Sheets as of December 31, 1999 and 1998.
3. Consolidated Statements of Income for the years ended December 31,
1999, 1998 and 1997.
4. Consolidated Statements of Stockholder's Equity for the years
ended December 31, 1999, 1998 and 1997.
5. Consolidated Statements of Cash Flows for the years ended December
31, 1999, 1998 and 1997.
6. Notes to Consolidated Financial Statements - December 31, 1999,
1988 and 1997.
The following financial statements of the Variable Account are
included in Part B hereof.
1. Statements of Assets and Liabilities as of March 31, 2000
(unaudited).
2. Statements of Operations for the period ended March 31, 2000
(unaudited).
3. Statements of Changes in Net Assets for the period ended March 31,
2000 (unaudited).
4. Notes to Financial Statements - March 31, 2000 (unaudited).
5. Independent Auditors' Report.
6. Statements of Assets and Liabilities as of December 31, 1999.
7. Statements of Operations for the year ended December 31, 1999.
8. Statements of Changes in Net Assets for the years ended December
31, 1999 and 1998.
9. Notes to Financial Statements - December 31, 1999.
b. Exhibits
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account(1)
2. Not Applicable
3. a. Principal Underwriter Agreement(3)
b. Selling Agreement(5)
4. Individual Immediate Variable Annuity Contract(3)
4. (i) Individual Immediate Variable Annuity Contract
Endorsements(3)
5. Application for Individual Immediate Variable Annuity(2)
6. (i) Copy of Articles of Incorporation of the Company(1)
(ii) Copy of the Bylaws of the Company(1)
7. Not Applicable
8. Form of Fund Participation Agreement(4)
9. Opinion and Consent of Counsel
10. Independent Auditors' Consent
11. Not Applicable
12. Not Applicable
13. Calculation of Performance Information
14. Company Organizational Chart(5)
27. Not Applicable
(1) Incorporated by reference to Registrant's Post-Effective Amendment No.
2 to Form N-4 which was electronically filed on November 1, 1995.
(2) Incorporated by reference to Registrant's Post-Effective Amendment No.
3 to Form N-4 which was electronically filed on April 24, 1996.
(3) Incorporated by reference to Registrant's Post-Effective Amendment No.
5 to Form N-4 which was electronically filed on April 29, 1997.
(4) Incorporated by reference to Registrant's Post-Effective Amendment No.
12 to Form N-4, File Nos. 33-72046 and 811-05618 which was electronically
filed on November 12, 1999.
(5) Incorporated by reference to Registrant's Post-Effective Amendment No.
11 to Form N-4 which was electronically filed on April 28, 2000.
<PAGE>
Item 25. Directors and Officers of the Depositor
The following are the Officers and Directors of the Company:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
--------------------------- ----------------------------------------------
<S> <C>
Robert W. MacDonald Chief Executive Officer
300 S. Hwy 169 and Director
Minneapolis, MN 55426
Margery G. Hughes President and
300 S. Hwy 169 Chief Administrative Officer
Minneapolis, MN 55426
Mark A. Zesbaugh Senior Vice President
300 S. Hwy 169 and Chief Financial Officer
Minneapolis, MN 55426
Lowell C. Anderson Chairman of the Board
1750 Hennepin Avenue
Minneapolis, MN 55403
Herbert F. Hansmeyer Director
777 San Marin Drive
Novato, CA 94998
Michael P. Sullivan Director
7505 Metro Blvd.
Minneapolis, MN 55439
Dr. Gerhard G. Rupprecht Director
Reinsburgstrasse 17
D - 70178
Stuttgart, Germany
Edward J. Bonach President - Special Markets
1750 Hennepin Avenue
Minneapolis, MN 55403
Suzanne J. Pepin Vice President, Assistant Secretary
1750 Hennepin Avenue and General Counsel
Minneapolis, MN 55403
Robert S. James Senior Vice President - Marketing Development
300 S. Hwy 169
Minneapolis, MN 55426
Paul M. Howman Vice President - Underwriting
1750 Hennepin Avenue
Minneapolis, MN 55403
Rev. Dennis J. Dease Director
c/o University of St.Thomas
2115 Summit Avenue
Box AQU100
St. Paul, MN 55105-1096
James R. Campbell Director
c/o Norwest Corp.
Norwest Center
Sixth & Marquette
Minneapolis, MN 55479-0116
Robert M. Kimmitt Director
Wilmer, Cutler & Pickering
2445 M Street NW
Washington, DC 20037-1420
Brad Barks Senior Vice President - Financial Analysis/M&A
300 S. Hwy 169
Minneapolis, MN 55426
Chuck Kavitsky Senior Vice President
300 S. Hwy 169 and Chief Marketing Officer
Minneapolis, MN 55426
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
The Company organizational chart is included herein.
Item 27. Number of Contract Owners
As of June 6, 2000, there were 353 qualified Contract Owners and 263
non-qualified Contract Owners with Contracts in the Separate Account.
Item 28. Indemnification
The Bylaws of the Company provide that:
Each person (and the heirs, executors, and administrators of such person) made
or threatened to be made a party to any action, civil or criminal, by reason of
being or having been a Director, officer, or employee of the corporation (or by
reason of serving any other organization at the request of the corporation)
shall be indemnified to the extent permitted by the laws of the State of
Minnesota, and in the manner prescribed therein.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted for directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 29. Principal Underwriters
a. USAllianz Investor Services, LLC (formerly NALAC Financial Plans, LLC)
is the principal underwriter for the Contracts. It also is the principal
underwriter for:
Allianz Life Variable Account A
Preferred Life Variable Account C
b. The following are the officers (managers) and directors (Board of
Governors) of USAllianz Investor Services, LLC:
<TABLE>
<CAPTION>
Name & Principal Positions and Offices
Business Address with Underwriter
----------------------- -----------------------------------------------
<S> <C>
Christopher H. Pinkerton President, Secretary and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Thomas B. Clifford Vice President and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Catherine L. Mielke Compliance Officer
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael M. Ahles Senior Vice President, Chief Financial Officer
1750 Hennepin Avenue and Treasurer
Minneapolis, MN 55403
Lawrance C. Skibo Executive Vice President
1750 Hennepin Avenue
Minneapolis, MN 55403
Catherine Q. Farley Senior Vice President and Chief Administrative
1750 Hennepin Avenue Officer
Minneapolis, MN 55403
Robert S. James Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Cynthia Robeck Assistant Vice President
1750 Hennepin Avenue
Minneapolis, MN 55403
</TABLE>
c. Not Applicable
Item 30. Location of Accounts and Records
Thomas Clifford, whose address is 1750 Hennepin Avenue, Minneapolis, Minnesota,
55403 and Delaware Valley Financial Services, USAllianz Service Center, 300
Berwyn Park, Berwyn, Pennsylvania 19312, maintain physical possession of the
accounts, books or documents of the Variable Account required to be maintained
by Section 31(a) of the Investment Company Act of 1940, as amended, and the
rules promulgated thereunder.
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
d. Allianz Life Insurance Company of North America ("Company") hereby
represents that the fees and charges deducted under the Contract described in
the Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, the Registrant certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of this Registration Statement and
has caused this Registration Statement to be signed on its behalf in the City of
Minneapolis and State of Minnesota, on this 22nd day of June, 2000.
ALLIANZ LIFE
VARIABLE ACCOUNT B
(Registrant)
By: ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /s/ SUZANNE J. PEPIN
---------------------
ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
By: /s/ SUZANNE J. PEPIN
---------------------
<TABLE>
<CAPTION>
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature and Title
<S> <C> <C>
Lowell C. Anderson* Chairman of the Board 06/22/2000
Lowell C. Anderson Date
Robert W. MacDonald* Director and 06/22/2000
Robert W. MacDonald Chief Executive Officer Date
Margery G. Hughes* President and 06/22/2000
Margery G. Hughes Chief Adminstrative Officer Date
Mark A. Zesbaugh* Chief Financial OFficer and 06/22/2000
Mark A. Zesbaugh Senior Vice President Date
Herbert F. Hansmeyer* Director 06/22/2000
Herbert F. Hansmeyer Date
Michael P. Sullivan* Director 06/22/2000
Michael P. Sullivan Date
Dr. Gerhard Rupprecht* Director 06/22/2000
Dr. Gerhard Rupprecht Date
Rev. Dennis J. Dease* Director 06/22/2000
Rev. Dennis J. Dease Date
James R. Campbell* Director 06/22/2000
James R. Campbell Date
Robert M. Kimmitt* Director 06/22/2000
Robert M. Kimmitt Date
*By Power of Attorney
By: /s/ SUZANNE J. PEPIN
---------------------
Suzanne J. Pepin
Attorney-in-Fact
</TABLE>
<PAGE>
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Lowell C. Anderson, Chairman of
the Board of Allianz Life Insurance Company of North America (Allianz Life), a
corporation duly organized under the laws of Minnesota, do hereby appoint Robert
W. MacDonald and Suzanne J. Pepin, each individually as my attorney and agent,
for me, and in my name as Chairman of the Board of Allianz Life on behalf of
Allianz Life, with full power to execute, deliver and file with the Securities
and Exchange Commission all documents required for registration of a security
under the Securities Act of 1933, as amended, and the Investment Company Act of
1940, as amended, and to do and perform each and every act that said attorney
may deem necessary or advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 3rd day of April 2000.
WITNESS:
/s/ Lowell C. Anderson
-----------------------------
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Robert W. MacDonald, Chief
Executive Officer and a Director of Allianz Life Insurance Company of North
America (Allianz Life), a corporation duly organized under the laws of
Minnesota, do hereby appoint Suzanne J. Pepin as my attorney and agent, for me,
and in my name as Chief Executive Officer and Director of Allianz Life on behalf
of Allianz Life, with full power to execute, deliver and file with the
Securities and Exchange Commission all documents required for registration of a
security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of
aforesaid Acts.
/s/ Robert W. MacDonald
-----------------------
Robert W. MacDonald
WITNESS my hand and seal this 26th day of April 2000.
WITNESS:
/s/ Mary Ann Lemke
-----------------------------
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Margery G. Hughes, President of
Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald and Suzanne J. Pepin, each individually as my attorney and agent, for
me, and in my name as President of Allianz Life on behalf of Allianz Life, with
full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 5th day of April 2000.
WITNESS: /s/ Mary Ann Lemke
/s/ Margery G. Hughes
-----------------------
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Mark A. Zesbaugh, Senior Vice
President, Chief Financial Officer and Assistant Secretary of Allianz Life
Insurance Company of North America (Allianz Life), a corporation duly organized
under the laws of Minnesota, do hereby appoint Robert W. MacDonald and Suzanne
J. Pepin, each individually as my attorney and agent, for me, and in my name as
Senior Vice President, Chief Financial Officer and Assistant Secretary of
Allianz Life on behalf of Allianz Life, with full power to execute, deliver and
file with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and to do and perform each and every
act that said attorney may deem necessary or advisable to comply with the intent
of aforesaid Acts.
WITNESS my hand and seal this 3rd day of April 2000.
WITNESS: /s/ Mark A. Zesbaugh
/s/ Stacey R. Thiele
-----------------------
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Herbert F. Hansmeyer, Director of
Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald and Suzanne J. Pepin, each individually as my attorney and agent, for
me, and in my name as Director of Allianz Life on behalf of Allianz Life, with
full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of aforesaid Acts.
/s/ Herbert F. Hansmeyer
------------------------
Herbert F. Hansmeyer
WITNESS my hand and seal this 4th day of April 2000.
WITNESS:
/s/ David C Marks
------------------
ACKNOWLEDGEMENT
State of Connecticut
County of Fairfield
The foregoing instrument was acknowledged before me Tracy Stroh this 5th day of
April, 2000, by Herbert F. Hansmeyer.
/s/ Tracey Stroh
-----------------
Notary Public
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Michael P. Sullivan, Director of
Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald and Suzanne J. Pepin, each individually as my attorney and agent, for
me, and in my name as Director of Allianz Life on behalf of Allianz Life, with
full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 5th day of April 2000.
WITNESS:
/s/ Michael P. Sullivan
------------------------
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Dr. Gerhard G. Rupprecht, Director
of Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald and Suzanne J. Pepin, each individually as my attorney and agent, for
me, and in my name as Director of Allianz Life on behalf of Allianz Life, with
full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 18th day of April 2000.
WITNESS:
/s/ Gerhard Rupprech
(Dr. Gerhard Rupprecht)
Unterschriftsbeglaubigung
I hereby certify, the the above is the true signature, acknowledged in my
presence of
Dr. Gerhard Rupprecht
Chairman of the Board of Management
Reinsburgstrabe 19,70178 Stuttgart, Germany,
Personally know to me.
Stuttgart, den 18.April 2000
/s/ Dr. Kubler
Dr. Kubler
Notarvetreter
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Reverand Dennis J. Dease, Director
of Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald and Suzanne J. Pepin, each individually as my attorney and agent, for
me, and in my name as Director of Allianz Life on behalf of Allianz Life, with
full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of aforesaid Acts.
/s/ Dennis J. Dease
WITNESS my hand and seal this 4th day of April 2000.
WITNESS:
/s/ Donna L Baisden
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, James R. Campbell, Director of
Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald and Suzanne J. Pepin, each individually as my attorney and agent, for
me, and in my name as Director of Allianz Life on behalf of Allianz Life, with
full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of aforesaid Acts.
/s/ James R. Campbell
WITNESS my hand and seal this 5th day of April 2000.
WITNESS:
/s/ Vicki L. Plymate
--------------------
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Robert M. Kimmitt, Director of
Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Robert W.
MacDonald and Suzanne J. Pepin, each individually as my attorney and agent, for
me, and in my name as Director of Allianz Life on behalf of Allianz Life, with
full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 5th day of April 2000.
/s/ Robert M. Kimmitt
----------------------
Robert M. Kimmitt, Esq.
WITNESS:
/s/ illegible
------------------
<PAGE>
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 12
TO
FORM N-4
ALLIANZ LIFE VARIABLE ACCOUNT B
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
INDEX TO EXHIBITS
Exhibit Page
EX-99.B9 Opinion and Consent of Counsel
EX-99.B10 Independent Auditors' Consent
EX-99.B13 Calculation of Performance Information
