File Nos. 333-47886
811-05618
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ( )
Pre-Effective Amendment No. 1 (X)
Post-Effective Amendment No. ( )
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ( )
Amendment No. 86 (X)
(Check appropriate box or boxes.)
ALLIANZ LIFE VARIABLE ACCOUNT B
------------------------------------
(Exact Name of Registrant)
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
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(Name of Depositor)
1750 Hennepin Avenue, Minneapolis, MN 55403
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(Address of Depositor's Principal Executive Offices) (Zip Code)
<PAGE>
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
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this filing.
Title of Securities Registered:
Individual Deferred Variable Annuity Contracts
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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CROSS REFERENCE SHEET
(Required by Rule 495)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
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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. . . . . . . Not Applicable
Item 5. General Description of Registrant, Depositor,
and Portfolio Companies. . . . . . . . . . . . Other Information-
The Separate Account,
Allianz Life,
Investment Options
Item 6. Deductions. . . . . . . . .. . . . . . . . . . Expenses
Item 7. General Description of Variable
Annuity Contracts . . . . . . . . . . . . . . .The 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. . . . . . . . . . . . . . . None
Item 14. Table of Contents of the Statement of
Additional Information. . . . . . . . . . . Table of Contents
of the Statement of
Additional Information
</TABLE>
CROSS REFERENCE SHEET (cont'd)
(Required by Rule 495)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
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PART B
Item 15. Cover Page. . . . . . . . .. . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . . . Insurance 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 VARIABLE ANNUITY CONTRACT
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
This prospectus describes the variable annuity contract with a Fixed Account
offered by Allianz Life Insurance Company of North America (Allianz Life).
The annuity has 39 Variable Options, each of which invests in one of the
Portfolios listed below, and a Fixed Account of Allianz Life. You can select up
to 10 investment choices (which includes any of the Variable Options and the
Fixed Account). The Fixed Account may not be available in your state.
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
DAVIS VARIABLE ACCOUNT FUND, INC.:
Davis VA Financial Portfolio
Davis VA Real Estate Portfolio
Davis VA Value Portfolio
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST:
Franklin Growth and Income Securities Fund
(formerly known as the Franklin Growth and Income Fund)
Franklin Rising Dividends Securities Fund
Franklin Small Cap Fund
Franklin U.S. Government Fund
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Templeton Developing Markets Securities Fund
(formerly known as the Templeton Developing Markets Fund)
Templeton Growth Securities Fund
(formerly known as the Templeton Global Growth Fund)
Templeton Pacific Growth Securities Fund
(formerly known as the Templeton Pacific Growth Fund)
JP MORGAN SERIES TRUST II:
J.P. Morgan International Opportunities Portfolio
J.P. Morgan U.S. Disciplined Equity Portfolio
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Global Securities Fund/VA
Oppenheimer High Income Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
PIMCO VARIABLE INSURANCE TRUST:
<PAGE>
PIMCO VIT High Yield Bond Portfolio
PIMCO VIT StocksPLUS Growth and Income Portfolio
PIMCO VIT Total Return Bond Portfolio
THE PRUDENTIAL SERIES FUND, INC.
SP Jennison International Growth Portfolio
SP Strategic Partners Focused Growth Portfolio
SELIGMAN PORTFOLIOS, INC.:
Seligman Global Technology Portfolio
Seligman Small-Cap Value Portfolio
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST:
USAllianz VIP Diversified Assets Fund
USAllianz VIP Fixed Income Fund
USAllianz VIP Global Opportunities Fund
USAllianz VIP Growth Fund
USAllianz VIP Money Market Fund
VAN KAMPEN LIFE INVESTMENT TRUST:
Van Kampen LIT Enterprise Portfolio
Van Kampen LIT Growth and Income Portfolio
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.
Please read this prospectus before investing and keep it for future reference.
It contains important information about the Variable Annuity Contract with a
Fixed Account.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information (SAI) dated __________ __, 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
__ 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 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: _________ __, 2000.
TABLE OF CONTENTS
Index of Terms 4
Summary 5
Fee Table 7
1. The Variable Annuity Contract 16
Ownership 16
Contract Owner 16
Joint Owner 16
Annuitants 16
Beneficiary 16
Assignment 17
2. Annuity Payments (The Payout Phase) 17
Income Date 17
Annuity Payments 17
Annuity Options 17
3. Purchase 20
Purchase Payments 20
Allocation of Purchase Payments 20
Free Look 20
Accumulation Units 21
4. Investment Options 21
Transfers 23
Dollar Cost Averaging Program 24
Flexible Rebalancing 24
Financial Advisers - Asset
<PAGE>
Allocation Programs 24
Voting Privileges 25
Substitution 25
5. Expenses 25
Mortality and Expense Risk Charge 25
Guaranteed Value Protection (GVP)
Charge 25
Contract Maintenance Charge 25
Withdrawal Charge 26
Partial Withdrawal Privilege 26
Waiver of Withdrawal Charge Benefits 26
Reduction or Elimination of the
Withdrawal Charge 27
Commutation Fee 27
Transfer Fee 27
Premium Taxes 27
Income Taxes 27
Portfolio Expenses 27
6. Taxes 27
Annuity Contracts in General 27
Qualified and Non-Qualified Contracts 28
Multiple Contracts 28
Withdrawals-- Non-Qualified Contracts 28
Withdrawals-- Qualified Contracts 29
Withdrawals-- Tax-Sheltered Annuities 29
Death Benefits/Guaranteed Value Protection
Benefit 29
Diversification 29
7. Access to Your Money 30
Systematic Withdrawal Program 30
Minimum Distribution Program 30
Suspension of Payments or Transfers 30
8. Performance 31
9. Death Benefit 31
Upon Your Death 31
Guaranteed Minimum Death Benefits (GMDB)
Death Benefit Protection 31
The Return of Principal Guaranteed
Minimum Death Benefit 31
The Double Principal Guaranteed
Minimum Death Benefit 32
The Earnings Protection Guaranteed
Minimum Death Benefit 32
Death Benefit Options 32
Death of Annuitant 33
10. Guaranteed Value Protection Benefit (GVP) 33
<PAGE>
Guaranteed Principal Protector Benefit 33
Guaranteed Performance Accumulator
Benefit 33
11. Other Information 33
Allianz Life 33
The Separate Account 33
Distribution 33
Administration 34
Financial Statements 34
Table of Contents of the Statement of
Additional Information 34
Appendix - Variable Option Investment Objectives 35
INDEX OF TERMS
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This prospectus is written in plain English to make it as understandable as
possible. However, there are some technical words or 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
Accumulation Phase 16
Accumulation Unit 21
Annuitant 16
Annuity Options 17
Annuity Payments 17
Annuity Unit 21
Beneficiary 16
Contract 16
Contract Owner 16
Dimensions Asset Allocation Model 39
Fixed Account 16
Income Date 17
Investment Class
Joint Owner 16
Net Adjusted Purchase Payments
Non-Qualified 28
Payout Phase 17
Portfolios 21
Purchase Payment 20
Qualified 28
Target Value
Tax Deferral 28
Variable Option 21
<PAGE>
SUMMARY
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The sections in this summary correspond to sections in this prospectus which
discuss the topics in more detail.
THE VARIABLE ANNUITY CONTRACT: The annuity Contract offered by Allianz Life
provides a means for investing on a tax-deferred basis in 39 Variable Options
and the Allianz Life Fixed Account. The Contract is intended for retirement
savings or other long-term investment purposes.
The Contract provides a basic benefit which is a Return of Principal Guaranteed
Minimum Death Benefit (Return of Principal GMDB). Or if you prefer, you can
choose one of two enhanced death benefits:
o Double Principal Guaranteed Minimum Death Benefit (Double Principal GMDB)
o Earnings Protection Guaranteed Minimum Death Benefit (Earnings Protection
GMDB)
In addition, the Contract provides for Guaranteed Value Protection (GVP)
benefits. The basic benefit is the Guaranteed Principal Protector Benefit, or if
you prefer, you can elect the Guaranteed Performance Accumulator Benefit.
However, if the Contract is not owned by a natural person or a trust for the
benefit of a natural person, then the GVP benefits are not available.
The GMDB feature provides for a guaranteed death benefit. The GVP benefit
provides a minimum value guarantee at the end of every tenth Contract year. The
GVP benefit also guarantees a minimum amount that you can access after the fifth
Contract year, regardless of your actual Contract value.
ANNUITY PAYMENTS: If you want to receive regular income from your annuity, you
can choose an Annuity Option at any time after the 5th Contract anniversary. You
may elect to receive your Annuity Payments as: a variable payout, a fixed
payout, or a combination of both. If you choose to have any part of your
payments come from the Variable Options, the dollar amount of your payments may
go up or down based on the performance of the Portfolios. If you select a
lifetime income Annuity Option (Options 1 to 5), the amount available for
Annuity Payments is at least 105% of the Contract value, less any premium tax
and the pro-rata GVP charge.
PURCHASE: You can buy the Contract with $10,000 or more. Additional Purchase
Payments may be made at any time within the first 6 months from the date the
Contract is issued. The maximum total Purchase Payments you can put in your
Contract without our prior approval is $1,000,000 (including amounts you have
already invested in other Allianz Life variable annuities).
INVESTMENT OPTIONS: You can put your money in up to 10 of the Variable Options
and/or you can invest in the Allianz Life Fixed Account allocated as you choose.
<PAGE>
Or, if you prefer, you may choose to participate in the Dimensions Asset
Allocation Model which will be rebalanced quarterly. The investment returns on
the Portfolios are not guaranteed. You can lose money. You can make transfers
between investment options as permitted.
EXPENSES: The Contract has insurance features and investment features, and there
are costs related to each.
Each year, Allianz Life deducts a $40 contract maintenance charge from your
Contract. Allianz Life currently waives this charge if the value of your
Contract is at least $50,000.
Each year, Allianz Life also deducts a GVP charge during the Accumulation Phase
as a percentage of your Contract value at the end of the Contract year. The
current percentage will not be greater than 2% of the Contract value if you use
the Dimensions Asset Allocation Model. Otherwise, it will not be greater than 3%
of the Contract value.
Allianz Life deducts a mortality and expense risk charge which varies depending
upon the GMDB and GVP you choose.
The table below shows the combinations available to you and their charges during
the Accumulation Phase, as a percentage of the average daily value of the
Contract value invested in the Variable Options.
<TABLE>
<CAPTION>
------------------------------- ----------------------------- ----------------------------- --------------------------
Return of Principal GMDB Double Principal GMDB Earnings Protection GMDB
------------------------------- ----------------------------- ----------------------------- --------------------------
------------------------------- ----------------------------- ----------------------------- --------------------------
<S> <C> <C> <C>
Guaranteed Principal Protector 1.50% 1.80% 1.70%
------------------------------- ----------------------------- ----------------------------- --------------------------
------------------------------- ----------------------------- ----------------------------- --------------------------
Guaranteed Performance Accumulator 1.70% 2.00% 1.90%
------------------------------- ----------------------------- ----------------------------- --------------------------
</TABLE>
If you take money out of the Contract, Allianz Life may assess a withdrawal
charge. The withdrawal charge starts at 8% in the first Contract year and
declines to 0% after 7 complete Contract years. (A different withdrawal charge
applies to liquidations from Annuity Option 6 during the Payout Phase.)
You can currently make 12 free transfers each year. After that, Allianz Life
deducts a $25 transfer fee for each additional transfer.
There are also daily investment charges which range, on an annual basis, from
0.60% to 1.81% of the average daily value of the Portfolio, depending upon the
Portfolio.
TAXES: Your earnings are not taxed until you take them out. If you take money
out during the Accumulation Phase, earnings come out first and are taxed as
income. If you are younger than 59 1/2 when you take money out, you may be
charged a 10% federal tax penalty.
ACCESS TO YOUR MONEY: You can take money out of your Contract during the
Accumulation Phase. Withdrawals during the Accumulation Phase may be subject to
a withdrawal charge. You may also have to pay income tax and a tax penalty on
any money you take out. Under certain circumstances, you can also take money out
during the Payout Phase if you select Annuity Option 2, 4 or 6 on a variable
payout basis. Money you take out during the Payout Phase may be subject to a
commutation fee for Annuity Options 2 and 4 and a withdrawal charge for Annuity
Option 6.
DEATH BENEFIT: If you die before moving to the Payout Phase, the person you have
chosen as a Beneficiary will receive a death benefit. The amount of the death
benefit depends on whether you select the Return of Principal GMDB, the Double
Principal GMDB or The Earnings Protection GMDB.
FREE-LOOK: You can cancel the Contract within 10 days after receiving it (or
whatever period is required in your state). Allianz Life will refund the value
of your Contract on the day it receives your request to cancel the Contract.
This may be more or less than your original payment. In certain states, or if
you have purchased the Contract as an individual retirement annuity, Allianz
Life will refund the Purchase Payment.
INQUIRIES: If you have any questions about your Contract or need more
information, please contact us at:
USAllianz Service Center
300 Berwyn Park
P.O. Box 3031
Berwyn, PA 19312-0031
1-800-624-0197
FEE TABLE
The purpose of this Fee Table is to help you understand the costs of investing,
directly or indirectly, in the Contract. It reflects expenses of the Separate
Account as well as the Portfolios.
CONTRACT OWNER TRANSACTION FEES
<TABLE>
<CAPTION>
Withdrawal Charge* - During Accumulation Phase Withdrawal Charge - During Payout
(as a percentage of total Purchase Payments) Phase
(as a percentage of
amount liquidated
under Annuity
Option 6, which can
begin no earlier
than 5 complete
Contract years from
Contract issue)
NUMBER OF COMPLETE NUMBER OF COMPLETE
CONTRACT YEARS CONTRACT YEARS
SINCE ISSUE DATE CHARGE SINCE ISSUE DATE CHARGE
-------------------------- ------------------------------------
<S> <C> <C> <C> <C>
0 8.0% 5 4.0%
1 7.0% 6 3.0%
2 7.0% 7 years or more 0.0%
3 6.0%
4 5.0%
5 4.0%
6 3.0%
7 years or more 0.0%
</TABLE>
Commutation Fee - During Payout Phase
(as a percentage of amount liquidated
under Annuity Option 2 or 4: liquidations
can be made no earlier than 5 complete
years from the Income Date)
NUMBER OF COMPLETE
YEARS SINCE
INCOME DATE CHARGE
----------------------------
5 7%
6 6%
7 5%
8 4%
9 3%
10 2%
11 years or more 1%
Transfer Fee First 12 transfers in a Contract year are currently free.
Thereafter, the fee is $25. The maximum the fee can be at any
time is $25 for each transfer. Dollar Cost Averaging transfers,
Flexible Rebalancing transfers and quarterly rebalancing
transfers are not currently counted.
CONTRACT MAINTENANCE CHARGE** $40 per Contract per year
GUARANTEED VALUE PROTECTION BENEFIT (GVP) CHARGE (as a percentage of the end of
year Contract value charged annually during the Accumulation Phase on the last
day of each Contract year):
o If the Dimensions Asset Allocation Model requirements are met: Current
charge is not more than 2%.
o If not,: Current charge is not more than 3%.
o We reserve the right to increase this charge, but can only increase it up
to 5%.
SEPARATE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Charge***
(collected as a percentage of average daily account value in the Variable
Options)
<TABLE>
<CAPTION>
------------------------------- ----------------------------- ----------------------------- --------------------------
Return of Principal GMDB Double Principal GMDB Earnings Protection GMDB
------------------------------- ----------------------------- ----------------------------- --------------------------
------------------------------- ----------------------------- ----------------------------- --------------------------
<S> <C> <C> <C>
Guaranteed Principal Protector 1.50% 1.80% 1.70%
------------------------------- ----------------------------- ----------------------------- --------------------------
------------------------------- ----------------------------- ----------------------------- --------------------------
Guaranteed Performance Accumulator 1.70% 2.00% 1.90%
------------------------------- ----------------------------- ----------------------------- --------------------------
</TABLE>
* You may make partial withdrawals up to 10% of Purchase Payments in each of
the first 5 Contract years and 20% of Purchase Payments in any year after 5
Contract years and no withdrawal charge will be assessed. See "Access to
Your Money" for additional options.
** The charge is waived if the value of your Contract is at least $50,000. If
you own more than one Contract offered under this Prospectus (registered
with the same social security number), we will determine the total value of
all your Contracts. If the total value of all your Contracts is at least
$50,000, the charge is waived on all of your Contracts.
*** The mortality and expense risk charge during the Payout Phase is charged
daily at an annual rate of 1.50% of average daily account value in the
Variable Options, regardless of which benefits you selected.
<PAGE>
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES
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(as a percentage of a Portfolio's average daily net assets for the 1999
fiscal year). See the Portfolio prospectuses for more information.
TOTAL FUND
OTHER EXPENSES EXPENSES
(AFTER WAIVERS/ (AFTER WAIVERS/
MANAGEMENT 12B-1 REIMBURSEMENTS REIMBURSEMENTS
PORTFOLIO FEES FEES AS NOTED) AS NOTED)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund .62% -- .11% .73%
AIM V.I. Growth Fund .63% -- .10% .73%
AIM V.I. International Equity Fund .75% -- .22% .97%
AIM V.I. Value Fund .61% -- .15% .76%
Alger American Growth Portfolio .75% -- .04% .79%
Alger American Leveraged AllCap Portfolio1 .85% -- .08% .93%
Alger American MidCap Growth Portfolio .80% -- .05% .85%
Alger American Small Capitalization Portfolio .85% -- .05% .90%
Davis VA Financial Portfolio2 .75% -- .25% 1.00%
Davis VA Real Estate Portfolio2 .75% -- .25% 1.00%
Davis VA Value Portfolio2 .75% -- .25% 1.00%
Franklin Growth and Income Securities Fund, Class 2 3 .47% .25% .02% .74%
Franklin Rising Dividends Securities Fund, Class 2 3 .73% .25% .02% 1.00%
Franklin Small Cap Fund, Class 2 3/4/5 .55% .25% .27% 1.07%
Franklin U.S. Government Fund, Class 2 3 .49% .25% .02% .76%
J.P. Morgan International Opportunities Portfolio6 .60% -- .60% 1.20%
J.P. Morgan U.S. Disciplined Equity Portfolio6 .35% -- .50% .85%
Mutual Discovery Securities Fund, Class 2 3/5 .80% .25% .21% 1.26%
Mutual Shares Securities Fund, Class 2 3/5/7 .60% .25% .19% 1.04%
Oppenheimer Global Securities Fund/VA .67% -- .02% .69%
Oppenheimer High Income Fund/VA .74% -- .01% .75%
Oppenheimer Main Street Growth & Income Fund/VA .73% -- .05% .78%
PIMCO VIT High Yield Bond Portfolio8 .25% -- .50% .75%
PIMCO VIT StocksPLUS Growth and Income Portfolio8 .40% -- .25% .65%
PIMCO VIT Total Return Bond Portfolio8 .25% -- .40% .65%
Seligman Global Technology Portfolio9 1.00% -- .40% 1.40%
Seligman Small-Cap Value Portfolio9 1.00% -- .00% 1.00%
SP Jennison International Growth Portfolio10 .85% .25% .54% 1.64%
SP Strategic Partners Focused Growth Portfolio10 .90% .25% .26% 1.41%
Templeton Developing Markets Securities Fund, Class 2 3/5/11 1.25% .25% .31% 1.81%
Templeton Growth Securities Fund, Class 2 3/12 .83% .25% .05% 1.13%
Templeton Pacific Growth Securities Fund, Class 2 3 1.00% .25% .08% 1.33%
USAllianz VIP Diversified Assets Fund13 .55% .25% .20% 1.00%
USAllianz VIP Fixed Income Fund13 .50% .25% .00% .75%
USAllianz VIP Global Opportunities Fund13 .95% .25% .31% 1.51%
USAllianz VIP Growth Fund13 .65% .25% .00% .90%
<PAGE>
USAllianz VIP Money Market Fund13 .35% .25% .30% .90%
Van Kampen LIT Enterprise Portfolio14 .48% -- .12% .60%
Van Kampen LIT Growth & Income Portfolio14 .43% -- .32% .75%
</TABLE>
1. The Alger American Leveraged AllCap Portfolio's "Other Expenses" includes
.01% of interest expense.
2. Without reimbursement, other expenses and total operating expenses would have
been 3.51% and 4.26%, respectively for the Davis VA Financial Portfolio, 11.16%
and 11.91, respectively for the Davis VA Real Estate Portfolio, and 1.54% and
2.29%, respectively for the Davis VA Value Portfolio.
3. For the Portfolios of Franklin Templeton Variable Insurance Products Trust,
Class 2 shares have a distribution plan which is referred to as a rule 12b-1
plan. While the maximum amount payable under the fund's Class 2 rule 12b-1 plan
is 0.35% per year of the fund's average daily net assets, the Board of Trustees
of Franklin Templeton Variable Insurance Products Trust has set the current rate
at 0.25% per year. See "Fund Account Policies" in the Franklin Templeton
Variable Insurance Products Trust prospectus for more information about the rule
12b-1 plan.
4. On 2/8/00, a merger and reorganization was approved that combined the assets
of the fund with a similar fund of the Templeton Variable Products Series Fund,
effective 5/1/00. On 2/8/00, fund shareholders 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 expenses after 5/1/00 would be
estimated as: Management Fees 0.55%, Distribution and Service Fees 0.25%, Other
Expenses 0.27%, and Total Fund Operating Expenses 1.07%.
5. The Franklin Small Cap Fund, the Mutual Discovery Securities Fund, the Mutual
Shares Securities Fund, and the Templeton Developing Markets Securities Fund
incur a portfolio administration fee as a direct expense of the portfolio. Other
Portfolios of Franklin Templeton Variable Insurance Products Trust pay for
similar services indirectly through the Management Fee.
6. Without reimbursement, other expenses and total operating expenses would
have been 1.38% and 1.98%, respectively for the J.P. Morgan International
Opportunities Portfolio and 0.52% and 0.87%, respectively for the J.P.
Morgan U.S. Disciplined Equity Portfolio.
7. 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 expenses after 5/1/00 would be estimated
as: Management Fees 0.60%, Distribution and Service Fees 0.25%, Other Expenses
0.19%, and Total Fund Operating Expenses 1.04%.
<PAGE>
8. "Other Expenses" reflect a 0.35% administrative fee for the PIMCO High Yield
Bond Portfolio, a 0.10% administrative fee for the PIMCO StocksPLUS Growth and
Income Portfolio, and a 0.25% administrative fee and 0.04% representing
organizational expenses and pro rata Trustees' fees for the Total Return Bond
Portfolio. PIMCO has contractually agreed to reduce total annual portfolio
operating expenses to the extent they would exceed, due to the payment of
organizational expenses and Trustees' fees, 0.75%, 0.65% and 0.65%,
respectively, of average daily net assets for the PIMCO High Yield, StocksPLUS
Growth and Income and Total Return Portfolios. Without such reductions, Total
Annual Expenses for the fiscal year ended December 31, 1999 would have been
0.75%, 0.65% and 0.69%, respectively. Under the Expense Limitation Agreement,
PIMCO may recoup these waivers and reimbursements in future periods, not
exceeding three years, provided total expenses, including such recoupment, do
not exceed the annual expense limit.
9. J. & W. Seligman & Co. Incorporated ("Seligman") voluntarily agreed to
reimburse expenses of Seligman Global Technology Portfolio, other than the
management fee, which exceed 0.40%, and to reimburse all expenses of Seligman
Small-Cap Value Portfolio, other than management fees, which exceed 1.00%.
Without reimbursement, other expenses and total operating expenses would have
been 0.41% and 1.41%, respectively, for Seligman Global Technology Portfolio,
and 0.41% and 1.41% respectively, for Seligman Small-Cap Value Portfolio. There
is no assurance that Seligman will continue this policy in the future.
10. Because this is the first year of operation for all "SP" portfolios, other
expenses are estimated based on management's projection of non-advisory fee
expenses. Each "SP" portfolio has expense reimbursements in effect and the
charges with reimbursement are reflected in the table. These expense
reimbursements are voluntary and may be terminated at any time. Without
reimbursement, total operating expenses would have been 2.24% for the SP
Jennison International Growth Portfolio and 1.72% for the SP Strategic Partners
Focused Growth Portfolio.
11. On 2/8/00, shareholders approved a merger and reorganization that combined
the fund with the Templeton Developing Markets Equity Fund, effective 5/1/00.
The shareholders of that 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 the 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 expenses after 5/1/00 would be estimated as:
Management Fees 1.25%, Distribution and Service Fees 0.25%, Other Expenses
0.29%, and Total Fund Operating Expenses 1.79%.
12. 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 expenses after 5/1/00 would be estimated
as: Management Fees 0.80%, Distribution and Service Fees 0.25%, Other Expenses
0.05%, and Total Fund Operating Expenses 1.10%.
13. Certain expenses of the USAllianz VIP Funds have been assumed by the
Adviser. Had those expenses no 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, 2.59% for the Global Opportunities Fund
(estimated for 2000), 3.90% for the Growth Fund, and 1.91% for the Money Market
Fund (estimated for 2000). The USAllianz VIP Diversified Assets Fund, USAllianz
VIP Fixed Income Fund and the USAllianz VIP Growth Fund commenced operations on
November 12, 1999, and the USAllianz VIP Global Opportunities Fund and the
USAllianz VIP Money Market Fund commenced operations on January 13, 2000. The
expenses shown for these portfolios are therefore estimated for the current
fiscal year.
14. If certain expenses had not been assumed by the Adviser, total return would
have been lower and total fund expenses would have been 0.62% for the Van Kampen
LIT Enterprise Portfolio and 0.92% for the Van Kampen LIT Growth and Income
Portfolio.
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 $40 contract maintenance charge is included in the examples as a
prorated charge of $1. Since the average Contract size is greater than
$1,000, the contract maintenance charge is reduced accordingly.
o The GVP charges are not included in examples (a) and (b) below as they are
not assessed until your Contract value exceeds your Target Value,
accumulated at an annual rate of return of 10% less the mortality and
expense risk charge. In examples (a) and (b) below, the Contract value
never exceeded the Target Value. However, to show the effect of the maximum
GVP charge, example (c) reflects the full maximum charge of 5%, even though
such charge would not have been made because the Contract value never
exceeded the Target Value.
o Premium taxes are not reflected in the tables. Premium taxes may apply.
o For additional information, see "Expenses."
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if you make a complete withdrawal at the end of each
time period for Contracts with:
(a) the Return of Principal GMDB and Guaranteed Principal Protector
(based on the lowest mortality and expense risk charge of 1.50%)
(b) the Double Principal GMDB and the Guaranteed Performance Accumulator
(based on the highest mortality and expense risk charge of 2.00%)
(c) the Double Principal GMDB and the Guaranteed Performance Accumulator
(based on the highest mortality and expense risk charge of 2.00% and based
on assessing the maximum GVP charge of 5%)
<TABLE>
<CAPTION>
VARIABLE OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------------------------------------------------------------------
<S> <C>
AIM V.I. Capital Appreciation Fund (a)$104 (a)$143 (a)$174 (a)$266
(b) 109 (b) 158 (b) 199 (b) 316
(c) 160 (c) 300 (c) 427 (c) 704
---------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund (a) 104 (a) 143 (a) 174 (a) 266
(b) 109 (b) 158 (b) 199 (b) 316
(c) 160 (c) 303 (c) 427 (c) 704
---------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund (a) 106 (a) 150 (a) 187 (a) 291
(b) 111 (b) 165 (b) 211 (b) 339
(c) 162 (c) 309 (c) 436 (c) 717
---------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund (a) 104 (a) 144 (a) 176 (a) 270
(b) 109 (b) 159 (b) 201 (b) 319
(c) 160 (c) 303 (c) 428 (c) 706
---------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio (a) 104 (a) 145 (a) 178 (a) 273
(b) 109 (b) 160 (b) 202 (b) 322
(c) 160 (c) 304 (c) 429 (c) 707
---------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio (a) 106 (a) 149 (a) 185 (a) 287
(b) 111 (b) 164 (b) 209 (b) 335
(c) 162 (c) 308 (c) 434 (c) 715
---------------------------------------------------------------------------------------------------------------
Alger American MidCap Growth Portfolio (a) 105 (a) 146 (a) 181 (a) 279
(b) 110 (b) 161 (b) 205 (b) 328
(c) 161 (c) 306 (c) 431 (c) 710
---------------------------------------------------------------------------------------------------------------
Alger American Small Capitalization Portfolio (a) 105 (a) 148 (a) 183 (a) 284
(b) 110 (b) 163 (b) 208 (b) 332
(c) 161 (c) 307 (c) 433 (c) 713
---------------------------------------------------------------------------------------------------------------
Davis VA Financial Portfolio (a) 106 (a) 151 (a) 188 (a) 294
(b) 111 (b) 166 (b) 213 (b) 342
(c) 162 (c) 309 (c) 437 (c) 718
----------------------------------------------------------------------------------------------------------------
Davis VA Real Estate Portfolio (a) 106 (a) 151 (a) 188 (a) 294
(b) 111 (b) 166 (b) 213 (b) 342
(c) 162 (c) 309 (c) 437 (c) 718
--------------------------------------------------------------------------------------------------------------
Davis VA Value Portfolio (a) 106 (a) 151 (a) 181 (a) 294
(b) 111 (b) 166 (b) 213 (b) 342
(c) 162 (c) 309 (c) 437 (c) 718
--------------------------------------------------------------------------------------------------------------
Franklin Growth and Income Securities Fund (a) 104 (a) 143 (a) 175 (a) 267
(b) 109 (b) 158 (b) 200 (b) 317
(c) 160 (c) 303 (c) 427 (c) 705
--------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund (a) 106 (a) 151 (a) 188 (a) 294
(b) 111 (b) 166 (b) 213 (b) 342
(c) 162 (c) 309 (c) 437 (c) 718
--------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund (a) 107 (a) 153 (a) 192 (a) 300
(b) 112 (b) 168 (b) 216 (b) 348
(c) 163 (c) 311 (c) 440 (c) 722
--------------------------------------------------------------------------------------------------------------
Franklin U.S. Government Fund (a) 104 (a) 144 (a) 176 (a) 270
(b) 109 (b) 159 (b) 201 (b) 319
(c) 160 (c) 303 (c) 428 (c) 706
--------------------------------------------------------------------------------------------------------------
J.P. Morgan International Opportunities Portfolio (a) 108 (a) 157 (a) 198 (a) 313
(b) 113 (b) 172 (b) 222 (b) 360
(c) 164 (c) 314 (c) 444 (c) 729
--------------------------------------------------------------------------------------------------------------
J.P. Morgan U.S. Disciplined Equity Portfolio (a) 105 (a) 146 (a) 181 (a) 279
(b) 110 (b) 161 (b) 205 (b) 328
(c) 161 (c) 306 (c) 431 (c) 710
--------------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund (a) 109 (a) 159 (a) 201 (a) 319
(b) 114 (b) 173 (b) 225 (b) 366
(c) 165 (c) 316 (c) 447 (c) 732
--------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund (a) 107 (a) 152 (a) 190 (a) 298
(b) 112 (b) 167 (b) 215 (b) 346
(c) 163 (c) 310 (c) 439 (c) 721
--------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA (a) 103 (a) 142 (a) 172 (a) 262
(b) 108 (b) 157 (b) 197 (b) 312
(c) 159 (c) 302 (c) 425 (c) 702
--------------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund/VA (a) 104 (a) 143 (a) 175 (a) 268
(b) 109 (b) 158 (b) 200 (b) 318
(c) 160 (c) 303 (c) 428 (c) 705
--------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Growth & Income Fund/VA (a) 104 (a) 144 (a) 177 (a) 272
(b) 109 (b) 159 (b) 202 (b) 321
(c) 160 (c) 304 (c) 429 (c) 707
--------------------------------------------------------------------------------------------------------------
PIMCO VIT High Yield Bond Portfolio (a) 104 (a) 143 (a) 175 (a) 268
(b) 109 (b) 158 (b) 200 (b) 318
(c) 160 (c) 303 (c) 428 (c) 705
--------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth and Income Portfolio (a) 103 (a) 140 (a) 170 (a) 258
(b) 108 (b) 155 (b) 196 (b) 308
(c) 159 (c) 301 (c) 424 (c) 700
--------------------------------------------------------------------------------------------------------------
PIMCO VIT Total Return Bond Portfolio (a) 103 (a) 140 (a) 170 (a) 258
(b) 108 (b) 155 (b) 196 (b) 308
(c) 159 (c) 301 (c) 424 (c) 700
--------------------------------------------------------------------------------------------------------------
Seligman Global Technology Portfolio (a) 110 (a) 163 (a) 208 (a) 332
(b) 115 (b) 177 (b) 232 (b) 378
(c) 166 (c) 319 (c) 452 (c) 739
--------------------------------------------------------------------------------------------------------------
Seligman Small-Cap Value Portfolio (a) 106 (a) 151 (a) 188 (a) 294
(b) 111 (b) 166 (b) 213 (b) 342
(c) 162 (c) 309 (c) 437 (c) 718
--------------------------------------------------------------------------------------------------------------
SP Jennison International Growth Portfolio (a) 113 (a) 170 (a) 219 (a) 355
(b) 118 (b) 184 (b) 243 (b) 400
(c) 168 (c) 325 (c) 460 (c) 751
--------------------------------------------------------------------------------------------------------------
SP Strategic Partners Focused Growth Portfolio (a) 110 (a) 163 (a) 208 (a) 333
(b) 115 (b) 178 (b) 232 (b) 379
(c) 166 (c) 320 (c) 452 (c) 740
--------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Fund (a) 114 (a) 175 (a) 228 (a) 370
(b) 119 (b) 189 (b) 251 (b) 414
(c) 170 (c) 330 (c) 467 (c) 759
--------------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund (a) 108 (a) 155 (a) 195 (a) 306
(b) 113 (b) 170 (b) 219 (b) 354
(c) 164 (c) 313 (c) 442 (c) 725
--------------------------------------------------------------------------------------------------------------
Templeton Pacific Growth Securities Fund (a) 110 (a) 161 (a) 204 (a) 326
(b) 115 (b) 175 (b) 229 (b) 372
(c) 165 (c) 318 (c) 449 (c) 736
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Diversified Assets Fund (a) 106 (a) 151 (a) 188 (a) 294
(b) 111 (b) 166 (b) 213 (b) 342
(c) 162 (c) 309 (c) 437 (c) 718
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Fixed Income Fund (a) 104 (a) 143 (a) 175 (a) 268
(b) 109 (b) 158 (b) 200 (b) 318
(c) 160 (c) 303 (c) 428 (c) 705
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Global Opportunities Fund (a) 111 (a) 166 (a) 213 (a) 343
(b) 116 (b) 181 (b) 237 (b) 388
(c) 167 (c) 322 (c) 456 (c) 745
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Growth Fund (a) 105 (a) 148 (a) 183 (a) 284
(b) 110 (b) 163 (b) 208 (b) 332
(c) 161 (c) 307 (c) 433 (c) 713
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Money Market Fund (a) 105 (a) 148 (a) 183 (a) 284
<PAGE>
(b) 110 (b) 163 (b) 208 (b) 332
(c) 161 (c) 307 (c) 433 (c) 713
--------------------------------------------------------------------------------------------------------------
Van Kampen LIT Enterprise Portfolio (a) 102 (a) 139 (a) 168 (a) 253
(b) 107 (b) 154 (b) 193 (b) 303
(c) 159 (c) 299 (c) 422 (c) 697
--------------------------------------------------------------------------------------------------------------
Van Kampen LIT Growth & Income Portfolio (a) 104 (a) 143 (a) 175 (a) 268
(b) 109 (b) 158 (b) 200 (b) 318
(c) 160 (c) 303 (c) 428 (c) 705
--------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if you do not make a complete withdrawal or if you
apply your Contract value to an Annuity Option for Contracts with:
(a) the Return of Principal GMDB and Guaranteed Principal Protector
(based on the lowest mortality and expense risk charge of 1.50%)
(b) the Double Principal GMDB and the Guaranteed Performance Accumulator
(based on the highest mortality and expense risk charge of 2.00%)
(c) The Double Principal GMDB and the Guaranteed Performance Accumulator
(based on the highest mortality and expense risk charge of 2.00% and based
on assessing the maximum GVP charge of 5%)
<TABLE>
<CAPTION>
VARIABLE OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund (a)$24 (a)$73 (a)$124 (a)$266
(b) 29 (b) 88 (b) 149 (b) 316
(c) 80 (c)233 (c) 377 (c) 704
---------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund (a) 24 (a) 73 (a) 124 (a) 266
(b) 29 (b) 88 (b) 149 (b) 316
(c) 80 (c)233 (c) 377 (c) 704
---------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund (a) 26 (a) 80 (a) 137 (a) 291
(b) 31 (b) 95 (b) 161 (b) 339
(c) 82 (c)239 (c) 386 (c) 717
---------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund (a) 24 (a) 74 (a) 126 (a) 270
(b) 29 (b) 89 (b) 151 (b) 319
(c) 80 (c)233 (c) 378 (c) 706
---------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio (a) 24 (a) 75 (a) 128 (a) 273
<PAGE>
(b) 29 (b) 90 (b) 152 (b) 322
(c) 80 (c)234 (c) 379 (c) 707
---------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio (a) 26 (a) 79 (a) 135 (a) 287
(b) 31 (b) 94 (b) 159 (b) 335
(c) 82 (c)238 (c) 384 (c) 715
---------------------------------------------------------------------------------------------------------------
Alger American MidCap Growth Portfolio (a) 25 (a) 76 (a) 131 (a) 279
(b) 30 (b) 91 (b) 155 (b) 328
(c) 81 (c)236 (c) 381 (c) 710
---------------------------------------------------------------------------------------------------------------
Alger American Small Capitalization Portfolio (a) 25 (a) 78 (a) 133 (a) 284
(b) 30 (b) 93 (b) 158 (b) 332
(c) 81 (c)237 (c) 383 (c) 713
---------------------------------------------------------------------------------------------------------------
Davis VA Financial Portfolio (a) 26 (a) 81 (a) 138 (a) 294
(b) 31 (b) 96 (b) 163 (b) 342
(c) 82 (c)239 (c) 387 (c) 718
---------------------------------------------------------------------------------------------------------------
Davis VA Real Estate Portfolio (a) 26 (a) 81 (a) 138 (a) 294
(b) 31 (b) 96 (b) 163 (b) 342
(c) 82 (c)239 (c) 387 (c) 718
---------------------------------------------------------------------------------------------------------------
Davis VA Value Portfolio (a) 26 (a) 81 (a) 138 (a) 294
(b) 31 (b) 96 (b) 163 (b) 342
(c) 82 (c)239 (c) 387 (c) 718
---------------------------------------------------------------------------------------------------------------
Franklin Growth and Income Securities Fund (a) 24 (a) 73 (a) 125 (a) 267
(b) 29 (b) 88 (b) 150 (b) 317
(c) 80 (c)233 (c) 377 (c) 705
---------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund (a) 26 (a) 81 (a) 138 (a) 294
(b) 31 (b) 96 (b) 163 (b) 342
(c) 82 (c)239 (c) 387 (c) 718
---------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund (a) 27 (a) 83 (a) 142 (a) 300
(b) 32 (b) 98 (b) 166 (b) 348
(c) 83 (c)241 (c) 390 (c) 722
---------------------------------------------------------------------------------------------------------------
Franklin U.S. Government Fund (a) 24 (a) 74 (a) 126 (a) 270
(b) 29 (b) 89 (b) 151 (b) 319
(c) 80 (c)233 (c) 378 (c) 706
---------------------------------------------------------------------------------------------------------------
J.P. Morgan International Opportunities Portfolio (a) 28 (a) 87 (a) 148 (a) 313
(b) 33 (b)102 (b) 172 (b) 360
(c) 84 (c)244 (c) 394 (c) 729
---------------------------------------------------------------------------------------------------------------
J.P. Morgan U.S. Disciplined Equity Portfolio (a) 25 (a) 76 (a) 131 (a) 279
(b) 30 (b) 91 (b) 155 (b) 328
(c) 81 (c)236 (c) 381 (c) 710
---------------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund (a) 29 (a) 89 (a) 151 (a) 319
<PAGE>
(b) 34 (b)103 (b) 175 (b) 366
(c) 85 (c)246 (c) 397 (c) 732
---------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund (a) 27 (a) 82 (a) 140 (a) 298
(b) 32 (b) 97 (b) 165 (b) 346
(c) 83 (c)240 (c) 389 (c) 721
---------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA (a) 23 (a) 72 (a) 122 (a) 262
(b) 28 (b) 87 (b) 147 (b) 312
(c) 79 (c)232 (c) 375 (c) 702
--------------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund/VA (a) 24 (a) 73 (a) 125 (a) 268
(b) 29 (b) 88 (b) 150 (b) 318
(c) 80 (c)233 (c) 378 (c) 705
---------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Growth and Income Fund/VA (a) 24 (a) 74 (a) 127 (a) 272
(b) 29 (b) 89 (b) 152 (b) 321
(c) 80 (c)234 (c) 379 (c) 707
---------------------------------------------------------------------------------------------------------------
PIMCO VIT High Yield Bond Portfolio (a) 24 (a) 73 (a) 125 (a) 268
(b) 29 (b) 88 (b) 150 (b) 318
(c) 80 (c)233 (c) 378 (c) 705
---------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth & Income Portfolio (a) 23 (a) 70 (a) 120 (a) 258
(b) 28 (b) 85 (b) 146 (b) 308
(c) 79 (c)231 (c) 374 (c) 700
---------------------------------------------------------------------------------------------------------------
PIMCO VIT Total Return Bond Portfolio (a) 23 (a) 70 (a) 120 (a) 258
(b) 28 (b) 85 (b) 146 (b) 308
(c) 79 (c)231 (c) 374 (c) 700
---------------------------------------------------------------------------------------------------------------
Seligman Global Technology Portfolio (a) 30 (a) 93 (a) 158 (a) 332
(b) 35 (b)107 (b) 182 (b) 378
(c) 86 (c)249 (c) 402 (c) 739
---------------------------------------------------------------------------------------------------------------
Seligman Small-Cap Value Portfolio (a) 26 (a) 81 (a) 138 (a) 294
(b) 31 (b) 96 (b) 163 (b) 342
(c) 82 (c)239 (c) 387 (c) 718
--------------------------------------------------------------------------------------------------------------
SP Jennison International Growth Portfolio (a) 33 (a)100 (a) 169 (a) 355
(b) 38 (b)114 (b) 193 (b) 400
(c) 88 (c)255 (c) 410 (c) 751
--------------------------------------------------------------------------------------------------------------
SP Strategic Partners Focused Growth Portfolio (a) 30 (a) 93 (a) 158 (a) 333
(b) 35 (b)108 (b) 182 (b) 379
(c) 86 (c)250 (c) 402 (c) 740
---------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Fund (a) 34 (a)105 (a) 178 (a) 370
(b) 39 (b)119 (b) 201 (b) 414
(c) 90 (c)260 (c) 417 (c) 759
---------------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund (a) 28 (a) 85 (a) 145 (a) 306
(b) 33 (b)100 (b) 169 (b) 354
(c) 84 (c)243 (c) 392 (c) 725
---------------------------------------------------------------------------------------------------------------
Templeton Pacific Growth Securities Fund (a) 30 (a) 91 (a) 154 (a) 326
(b) 35 (b)105 (b) 179 (b) 372
(c) 85 (c)248 (c) 399 (c) 736
---------------------------------------------------------------------------------------------------------------
USAllianz VIP Diversified Assets Fund (a) 26 (a) 81 (a) 138 (a) 294
(b) 31 (b) 96 (b) 163 (b) 342
(c) 82 (c)239 (c) 387 (c) 718
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Fixed Income Fund (a) 24 (a) 73 (a) 125 (a) 268
(b) 29 (b) 88 (b) 150 (b) 318
(c) 80 (c)233 (c) 378 (c) 705
---------------------------------------------------------------------------------------------------------------
USAllianz VIP Global Opportunities Fund (a) 31 (a) 96 (a) 163 (a) 343
(b) 36 (b)111 (b) 187 (b) 388
(c) 87 (c)252 (c) 406 (c) 745
---------------------------------------------------------------------------------------------------------------
USAllianz VIP Growth Fund (a) 25 (a) 78 (a) 133 (a) 284
(b) 30 (b) 93 (b) 158 (b) 332
(c) 81 (c)237 (c) 383 (c) 713
---------------------------------------------------------------------------------------------------------------
USAllianz VIP Money Market Fund (a) 25 (a) 78 (a) 133 (a) 284
(b) 30 (b) 93 (b) 158 (b) 332
(c) 81 (c)237 (c) 383 (c) 713
---------------------------------------------------------------------------------------------------------------
Van Kampen LIT Enterprise Portfolio (a) 22 (a) 69 (a) 118 (a) 253
(b) 27 (b) 84 (b) 143 (b) 303
(c) 79 (c)229 (c) 372 (c) 697
---------------------------------------------------------------------------------------------------------------
Van Kampen LIT Growth & Income Portfolio (a) 24 (a) 73 (a) 125 (a) 268
(b) 29 (b) 88 (b) 150 (b) 318
(c) 80 (c)233 (c) 378 (c) 705
--------------------------------------------------------------------------------------------------------------
</TABLE>
1.THE VARIABLE ANNUITY CONTRACT
-------------------------------------------------------------------------------
This prospectus describes a variable deferred annuity Contract with a Fixed
Account offered by Allianz Life. All references in this prospectus to "we,"
"us," and "our" refer to Allianz Life.
o A deferred annuity Contract means that Annuity Payments do not begin until
a specified period of time in the future (usually when you retire) or until
you reach a certain age.
o A variable annuity is one in which Contract values and/or the Annuity
Payments vary depending on the performance of the underlying Portfolios.
<PAGE>
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 at least five years after you
buy the Contract. Until you decide to begin receiving Annuity Payments, your
Contract is in the Accumulation Phase. Once you begin receiving Annuity
Payments, your Contract switches to the Payout Phase.
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.
You have 40 investment choices -- the 39 Variable Options, each of which invests
in one Portfolio, and the Fixed Account of Allianz Life. Depending upon market
conditions, you can make or lose money in the Contract based on the investment
performance of the Portfolios. The Portfolios are designed to offer a better
return than the Fixed Account. However, this is not guaranteed.
The amount of money you are able to accumulate in your Contract during the
Accumulation Phase depends in large part upon the investment performance of the
Portfolio(s) you select. The amount of the Annuity Payments you receive during
the Payout Phase also depends in large part upon the investment performance of
the Portfolios you select for the Payout Phase.
The Contract also contains a Fixed Account. The Fixed Account offers an interest
rate that is guaranteed by Allianz Life for all deposits made within the twelve
month period. Your initial interest rate is set on the date when your money is
invested in the Fixed Account and remains effective for one year. Initial
interest rates are declared monthly. Allianz Life guarantees that the interest
credited to the Fixed Account will not be less than 3% per year. If you select
the Fixed Account, your money will be placed with the other general assets of
Allianz Life. Allianz Life may change the terms of the Fixed Account in the
future--please contact Allianz Life for the most current terms.
If you select the Fixed Account, the amount of money you are able to accumulate
in your Contract during the Accumulation Phase depends upon the total interest
credited to your Contract.
Allianz Life will not make any changes to your Contract without your permission
except as may be required by law.
OWNERSHIP
CONTRACT OWNER. You, as the Contract Owner, have all the rights under the
Contract. The Contract Owner is designated at the time the Contract is issued,
unless changed. You may change Contract Owners at any time unless you selected
the Double Principal GMDB or the Earnings Protection GMDB. If either of these
GMDB's are chosen, we have the right to accept the change subject to our
underwriting rules at that time. Any change will become effective as of the date
the request is signed. This may be a taxable event. You should consult with your
tax adviser before doing this.
<PAGE>
JOINT OWNER. The Contract can be owned by Joint Owners. Any Joint Owner must be
the spouse of the other Contract Owner (this requirement may not apply in
certain states). Upon the death of either Joint Owner, the surviving Joint Owner
will be the designated Beneficiary. Any other Beneficiary designation at the
time the Contract was issued or as may have been later changed will be treated
as a contingent Beneficiary unless otherwise indicated. Joint Owners can also be
changed under the same conditions as described for a Contract Owner.
ANNUITANT. The Annuitant is the natural person on whose life we base Annuity
Payments. You name the Annuitant. You may change the Annuitant at any time
before the Income Date unless the Contract is owned by a non-individual (for
example, a corporation).
BENEFICIARY. The Beneficiary is the person(s) or entity you name to receive any
death benefit. The Beneficiary is as 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. Allianz Life will not be bound by the assignment until it
records the assignment. Allianz Life will not be liable for any payment or other
action it takes in accordance with the Contract before it receives notice of the
assignment. Any assignment made after the death benefit has become payable can
only be done with our consent. An assignment may be a taxable event. If the
Contract is issued pursuant to a Qualified plan, you may be unable to assign the
Contract.
2.ANNUITY PAYMENTS
(THE PAYOUT PHASE)
-------------------------------------------------------------------------------
INCOME DATE
You can receive regular monthly income payments under your Contract. You can
choose the month and year in which those payments begin. We call that date the
Income Date. Your Income Date must be the first day of a calendar month and must
be at least 5 Contract years after you buy the Contract.
You can choose an Annuity Option and Income Date at any time after the 5th
Contract anniversary. Your Income Date must not be later than the Annuitant's
90th birthday or 10 years from the date the Contract was issued, or the maximum
date permitted under state law.
ANNUITY PAYMENTS
If you select a lifetime income Annuity Option (Options 1 to 5), the amount
available for Annuity Payments is 105% of the greater of the Contract value or
the GVP guarantee account on the Income Date, less any premium tax and pro-rata
GVP charge (See Section 10 - Guaranteed Value Protection Benefit).
The amount available for Annuity Payments on a fixed basis under Annuity Option
6 is the greater of the Contract value or the GVP guarantee account on the
Income Date, less any premium tax and pro-rata GVP charge. The amount available
for Annuity Payments on a variable basis under Annuity Option 6 is the Contract
value on the Income Date, less any premium tax and pro-rata GVP charge.
You may elect to receive your Annuity Payments as:
o a variable payout,
o a fixed payout, or
o a combination of both.
Under a fixed payout, 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 do not tell us otherwise, your Annuity
Payments will be based on the investment allocations that were in place on the
Income Date. After the Income Date, you will not be able to make a transfer from
a Fixed Annuity Option to a Variable Annuity Option (but can do the reverse).
If you choose to have any portion of your Annuity Payments based on the
investment performance of the Variable Option(s), the dollar amount of your
payments will depend upon three factors:
1. the amount available and the Annuity Option selected for Annuity Payments
in the Variable Option(s) on the Income Date;
2. the assumed investment rate used in the annuity table for the Contract; and
3. the performance of the Variable Option(s) you selected.
You can choose a 3%, 5% or 7% assumed investment rate (AIR). The 5% and 7% AIRs
are not available in all states. Using a higher AIR results in a higher initial
Annuity Payment but later payments will increase more slowly when investment
performance rises and decrease more rapidly when investment performance
declines. If the actual performance exceeds the AIR you selected, your Annuity
Payments will increase. Similarly, if the actual rate is less than the AIR you
selected, your Annuity Payments will decrease.
You (or someone you designate) will receive the Annuity Payments. You will
receive tax reporting on those payments.
ANNUITY OPTIONS
You can choose among income plans. We call those Annuity Options. You can choose
one of the Annuity Options described below or any other Annuity Option you want
and that Allianz Life agrees to provide. You can change your Annuity Option at
any time before the Income Date with 30 days notice to us. After Annuity
Payments begin, you cannot change the Annuity Option.
OPTION 1. LIFE ANNUITY. Under this option, we will make monthly Annuity Payments
so long as the Annuitant is alive. After the Annuitant dies, we stop making
Annuity Payments.
<PAGE>
OPTION 2. LIFE ANNUITY WITH MONTHLY PAYMENTS OVER 5, 10, 15 OR 20 YEARS
GUARANTEED. Under this option, we will make monthly 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 you or
any person you choose for the rest of the guaranteed period. Alternatively, if
you do not want to receive Annuity Payments after the Annuitant's death, you can
ask us for a single lump sum equal to the present value of the guaranteed
monthly Annuity Payments remaining, as of the date Allianz Life receives proof
of the Annuitant's death, commuted as set forth in the Contract.
During the lifetime of the Annuitant, and while the number of Annuity Payments
made is less than the guaranteed number of payments elected, and if you elected
to receive payments on a variable basis, you may request a withdrawal (partial
liquidation). You will be allowed to make a partial liquidation at least once
per Contract year starting 5 years after the Income Date. The liquidation value
is equal to the present value of the remaining guaranteed number of Annuity
Payments based on the Annuity Payment's current value, to the end of the period
certain, commuted at the selected AIR. The total of all partial liquidations,
measured as the sum of the percentages of the total liquidation value at the
time of each partial liquidation, cannot exceed 75%. A commutation fee will be
subtracted from the amount liquidated before the proceeds are paid out. Partial
liquidations will be processed within seven days after your written request is
received.
OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. Under this option, we will make
monthly Annuity Payments during the joint lifetime of the Annuitant and the
joint Annuitant. When the Annuitant dies, if the joint Annuitant is still alive,
we will continue to make Annuity Payments so long as the joint Annuitant
continues to live. The amount of the Annuity Payments we will make can be equal
to 100%, 75% or 50% of the amount that was being paid when both Annuitants were
alive. You select the percentage at the time of annuitization. The monthly
Annuity Payments will end when the last surviving Annuitant dies.
OPTION 4. JOINT AND LAST SURVIVOR ANNUITY WITH MONTHLY PAYMENTS OVER 5, 10, 15
OR 20 YEARS GUARANTEED. Under this option, we will make monthly Annuity Payments
during the joint lifetime of the Annuitant and the joint Annuitant. When the
Annuitant dies, if the joint Annuitant is still alive, we will continue to make
Annuity Payments, so long as the surviving Annuitant continues to live, at 100%
of the amount that was being paid when both were 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 you or any person you
choose for the rest of the guaranteed period. Alternatively, if you do not want
to receive Annuity Payments after the Annuitant's death, you can ask us for a
single lump sum equal to the present value of the guaranteed monthly Annuity
Payments remaining, as of the date Allianz Life receives proof of the
Annuitant's death, commuted as set forth in the Contract.
During the lifetime of the Annuitant or joint Annuitant, and while the number of
Annuity Payments made is less than the guaranteed number of payments elected,
and if you elected to receive payments on a variable basis, you may request a
withdrawal (partial liquidation). You will be allowed to make a partial
liquidation at least once per Contract year starting 5 years after the Income
<PAGE>
Date. The liquidation value is equal to the present value of the remaining
Guaranteed number of Annuity Payments based on the Annuity Payment's current
value, to the end of the period certain, commuted at the selected AIR. The total
of all partial liquidations, measured as the sum of the percentages of the total
liquidation value at the time of each partial liquidation, cannot exceed 75%. A
commutation fee will be subtracted from the amount liquidated before the
proceeds are paid out. Partial liquidations will be processed within seven days
after your written request is received.
OPTION 5. REFUND LIFE ANNUITY. Under this option, we will make monthly Annuity
Payments during the Annuitant's lifetime. If the value of the Annuity Payments
made at the time proof of the Annuitant's death is received is less than the
value applied to the Annuity Option, then you will receive a refund.
For a fixed Annuity Option, the amount of the refund will be any excess of the
amount applied to this Annuity Option over the total of all payments made under
this option. For a variable Annuity Option, the amount of the refund will be the
then value of the number of Annuity Units equal to (1) the value applied to this
Annuity Option divided by the value of Annuity Units used to determine the first
Annuity Payment, minus (2) the product of the number of Annuity Units of each
Annuity Payment and the number of payments made.
OPTION 6. SPECIFIED PERIOD CERTAIN ANNUITY. Under this option, we will make
monthly Annuity Payments for a specified period of time. You elect the specified
period which must be a whole number of years from 5 to 30. If at the time of the
death of the later of the Annuitant and any joint Annuitant, Annuity Payments
have been made for less than the specified period certain, then we will continue
to make Annuity Payments to you for the rest of the period certain. If you have
selected to receive payments on a variable basis, you may make a liquidation at
least once each Contract year of up to 100% of the total liquidation value in
the Contract. The liquidation will be processed within seven days after your
written request is received, reduced as set forth in the Contract.
3.PURCHASE
--------------------------------------------------------------------------------
PURCHASE PAYMENTS
A Purchase Payment is the money you invest in the Contract. The Purchase
Payment requirements are:
o the minimum initial payment Allianz Life will accept is $10,000.
o the maximum amount Allianz Life will accept without its prior approval is
$1 million (including amounts already invested in other Allianz Life
variable annuities).
o you can make additional Purchase Payments during the first 6 months after
your Contract is issued. After the first 6 months, you may no longer add
money to your Contract.
<PAGE>
Allianz Life may, at its sole discretion, waive the minimum payment
requirements. We reserve the right to decline any Purchase Payments. At the time
you buy the Contract, you cannot be older than 75 years old.
This product is not designed for professional market timing organizations, other
entities, or persons using programmed, large or frequent transfers.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a Contract, we will allocate your Purchase Payment to the
Fixed Account and/or one or more of the Variable Options you have selected. We
ask that you allocate your money in either whole percentages or round dollars.
The Fixed Account may not be available in your state (check with your registered
representative). Transfers do not change the allocation instructions for
payments.
You may elect to allocate your Purchase Payments according to the Dimensions
Asset Allocation Model requirements (see Section 10 - Guaranteed Value
Protection Benefit).
Allianz Life reserves the right to limit the number of Variable Options that you
may invest in at one time. Currently, you may invest in 10 Variable Options and
the Allianz Life Fixed Account. We may change this in the future. However, we
will always allow you to invest in at least five Variable Options.
Once we receive your Purchase Payment and the necessary information, we will
issue your Contract and allocate your first 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. If you make additional Purchase Payments, we will credit these
amounts to your Contract within one business day. Our business day closes when
the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern time.
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). When you cancel
the Contract within this time period, Allianz Life will not assess a withdrawal
charge. You will receive back whatever your Contract is worth on the day we
receive your request. 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 whatever
period is required in your state). If that is the case, we reserve the right to
allocate your initial Purchase Payment to the USAllianz VIP 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 Options
and/or the Fixed Account as you have selected.
<PAGE>
ACCUMULATION 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 charges of the
Contract. In order to keep track of the value of your Contract, we use a
measurement called an Accumulation Unit (which is like a share of a mutual
fund). During the Payout Phase of the Contract, we call it an Annuity Unit.
Every business day, we determine the value of an Accumulation Unit for each
Variable Option by multiplying the Accumulation 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 mortality and expense
risk charge and any charges for taxes.
The value of an Accumulation Unit may go up or down from business day to
business day.
When you make a Purchase Payment, we credit your Contract with Accumulation
Units for any portion of your Purchase Payment allocated to a Variable Option.
The number of Accumulation 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 Accumulation Unit.
We calculate the value of each Accumulation Unit after the New York Stock
Exchange closes each day and then credit your Contract.
EXAMPLE
On Wednesday we receive an additional Purchase Payment of $3,000 from you. You
have told us you want this to go to the Alger American Growth Portfolio. When
the New York Stock Exchange closes on that Wednesday, we determine that the
value of an Accumulation Unit based on an investment in the Alger American
Growth Portfolio is $13.25. We then divide $3,000 by $13.25 and credit your
Contract on Wednesday night with 226.41509 Accumulation Units.
4.INVESTMENT OPTIONS
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The Contract offers Variable Options. Each Variable Option invests in one of the
Portfolios listed below. Each Portfolio has its own investment objective. The
Contract also offers a Fixed Account of Allianz Life. Additional Portfolios may
be available in the future. You can allocate your investment selections under
the Dimensions Asset Allocation Model (See Section 10 - Guaranteed Value
Protection Benefit.)
YOU SHOULD READ THE FUND PROSPECTUSES CAREFULLY. Copies of these prospectuses
will be sent to you with your Contract. See the Appendix which contains a
summary of investment objectives for each Portfolio.
Investment advisers for each Portfolio are listed in the table below. 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 certain of the
same investment 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.
The following is a list of the Portfolios available under the Contract and the
investment advisers for each Portfolio:
<TABLE>
<CAPTION>
AVAILABLE PORTFOLIOS INVESTMENT ADVISERS
--------------------------------------------------------------------------------
<S> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Capital Appreciation Fund A I M Advisors, Inc.
AIM V.I. Growth Fund A I M Advisors, Inc.
AIM V.I. International Equity Fund A I M Advisors, Inc.
AIM V.I. Value 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.
Alger American MidCap Growth Portfolio Fred Alger Management, Inc.
Alger American Small Capitalization Portfolio Fred Alger Management, Inc.
DAVIS VARIABLE ACCOUNT FUND, 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 TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST:
Franklin Growth and Income Securities Fund Franklin Advisers, Inc.
Franklin Rising Dividends Securities Fund Franklin Advisory Services, LLC
Franklin Small Cap Fund Franklin Advisers, Inc.
Franklin U.S. Government Fund Franklin Advisers, Inc.
Mutual Discovery Securities Fund Franklin Mutual Advisers, LLC
Mutual Shares Securities Fund Franklin Mutual Advisers, LLC
Templeton Developing Markets Securities Fund Templeton Asset Management Ltd.
Templeton Growth Securities Fund Templeton Global Advisors Limited
Templeton Pacific Growth Securities Fund Franklin Advisers, Inc.
JP MORGAN SERIES TRUST II:
J.P. Morgan International Opportunities Portfolio J.P. Morgan Investment Management Inc.
J.P. Morgan U.S. Disciplined Equity Portfolio J.P. Morgan Investment Management Inc.
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Global Securities Fund/VA OppenheimerFunds, Inc.
Oppenheimer High Income Fund/VA OppenheimerFunds, Inc.
Oppenheimer Main Street Growth & Income Fund/VA OppenheimerFunds, Inc.
PIMCO VARIABLE INSURANCE TRUST:
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
THE PRUDENTIAL SERIES FUND, INC.
SP Jennison International Growth Portfolio Prudential Investments Fund Management LLC
SP Strategic Partners Focused Growth Portfolio Prudential Investments Fund Management LLC
SELIGMAN PORTFOLIOS, INC.:
Seligman Global Technology Portfolio J. & W. Seligman & Co. Incorporated
Seligman Small-Cap Value Portfolio J. & W. Seligman & Co. Incorporated
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 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 LIFE INVESTMENT TRUST:
Van Kampen LIT Enterprise Portfolio Van Kampen Asset Management Inc.
Van Kampen LIT Growth and Income Portfolio Van Kampen Asset Management Inc.
</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 Portfolios' advisers, distributors and/or affiliates for the administrative
services which it provides to the Portfolios.
TRANSFERS
You can transfer money among the Variable Options and/or the Fixed Account. If
you are following the Dimensions Asset Allocation Model requirements, transfers
are subject to additional restrictions (see Section 10 - Guaranteed Value
Protection Benefit). Transfers may be subject to a transfer fee. Allianz Life
currently allows you to make as many transfers as you want to each year. Allianz
Life may change this practice in the future. However, 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 reserve the right to reject any specific Purchase Payment
allocation or transfer request from any person, if in the Portfolio investment
adviser's judgment, a Portfolio would be unable to invest effectively in
accordance with its investment objectives and policies. Excessive trading
activity can disrupt fund management strategy and increase expenses, which are
borne by all Contract Owners who allocated Purchase Payments or made transfers
to the fund, regardless of their transfer activity.
The following applies to any transfer:
1. We may not allow you to make transfers during the free look period.
2. Your request for a transfer must clearly state:
o which Variable Option(s) and/or the Fixed Account is involved in
the transfer; and
o how much the transfer is for.
3. You cannot make any transfers within 7 calendar days prior to the date your
first Annuity Payment is due.
4. After the Income Date, you may not make a transfer from a fixed Annuity
Option to a variable Annuity Option.
5. After the Income Date, you can transfer from a variable Annuity Option to a
fixed Annuity Option.
6. Your right to make transfers is subject to modification if we determine in
<PAGE>
our sole opinion that the exercise of the right by one or more Contract
Owners is, or would be, to the disadvantage of other Contract Owners.
Restrictions may be applied in any manner reasonably designed to prevent
any use of the transfer right which we consider to be to the disadvantage
of other Contract Owners. A modification could be applied to transfers to
or from one or more of the Variable Options and could include, but is not
limited to:
o the requirement of a minimum time period between each transfer;
o not accepting a transfer request from an agent acting under a power of
attorney on behalf of more than one Contract Owner; or
o limiting the dollar amount that may be transferred between the Variable
Options by a Contract Owner at any one time.
If a transfer request is rejected, we will call your registered representative
to request alternate instructions. If we are unable to contact your registered
representative, we will contact you directly. If the transfer is rejected, you
will receive a written notification within 5 business days.
Allianz Life has reserved the right at any time without prior notice to any
party to modify the transfer provisions subject to the guarantees described
above and subject to applicable state law.
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, unless you instruct Allianz Life otherwise, we
will accept instructions from either one of you. Allianz Life 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. Allianz Life tape records all
telephone instructions.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging Program (available only if you do not use the
Dimensions Asset Allocation Model or the Flexible Rebalancing Program) allows
you to systematically transfer a set amount of money each month or quarter from
any one Variable Option or the Fixed Account to up to eight of the other
Variable Options. The Variable Option(s) you transfer from may not be the
Variable Option(s) you transfer to in this program. By allocating amounts on a
regularly scheduled basis, as opposed to allocating the total amount at one
particular time, you may be less susceptible to the impact of market
fluctuations. You may only participate in this program during the Accumulation
Phase.
All Dollar Cost Averaging transfers will be made on the 10th day of the month
unless that day is not a business day. If it is not, then the transfer will be
made the next business day. You may elect either program by properly completing
the Dollar Cost Averaging form provided by Allianz Life.
<PAGE>
Your participation in the program will end when any of the following occurs:
o the number of desired transfers have been made;
o you do not have enough money in the Variable Option(s) or the Fixed Account
to make the transfer (if less money is available, that amount will be
dollar cost averaged and the program will end);
o you request to terminate the program (your request must be received by us
by the first of the month to terminate that month); or
o the Contract is terminated.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not taken into account in determining any transfer fee.
You will not be charged additional fees for participating in this program. You
may not participate in the Dollar Cost Averaging Program and Flexible
Rebalancing at the same time.
FLEXIBLE REBALANCING
If you are not using the Dimensions Asset Allocation Model and you are not
participating in the Dollar Cost Averaging Program, you may choose to have us
rebalance your account. Once your money has been invested, the performance of
the Variable Options may cause your chosen allocation to shift. Flexible
Rebalancing is designed to help you maintain your specified allocation mix among
the different Variable Options. The Fixed Account is not part of Flexible
Rebalancing. You can direct us to readjust your Contract value on a quarterly,
semi-annual or annual basis to return to your original Variable Option
allocations. Flexible Rebalancing transfers will be made on the 20th day of the
month unless that day is not a business day. If it is not, then the transfer
will be made on the previous business day. If you participate in Flexible
Rebalancing, the transfers made under the program are currently not taken into
account in determining any transfer fee. You will not be charged additional fees
for participating in this program.
FINANCIAL ADVISERS - ASSET ALLOCATION PROGRAMS
Allianz Life understands the importance of advice from a financial adviser
regarding your investments in the Contract (asset allocation program). Certain
investment advisers have made arrangements with us to make their services
available to you. Allianz Life has not made any independent investigation of
these advisers and is not endorsing such programs. You may be required to enter
into an advisory agreement with your investment adviser to have the fees paid
out of your Contract during the Accumulation Phase. This is a different program
from the Dimensions Asset Allocation Model. You can not participate in both an
asset allocation program with your financial adviser and the Dimensions Asset
Allocation Model. However, you may participate in the Dimensions Asset
Allocation Model under the direction of your financial adviser.
Allianz Life will, pursuant to an agreement with you, make a partial withdrawal
<PAGE>
from the value of your Contract to pay for the services of the investment
adviser. If the Contract is Non-Qualified, the withdrawal will be treated like
any other distribution and may be included in gross income for federal tax
purposes and, if you are under age 59 1/2, may be subject to a tax penalty. If
the Contract is Qualified, the withdrawal for the payment of fees may not be
treated as a taxable distribution if certain conditions are met. You should
consult a tax adviser regarding the tax treatment of the payment of investment
adviser fees from your Contract.
VOTING PRIVILEGES
Allianz Life is the legal owner of the Portfolio shares. However, when a
Portfolio solicits proxies in conjunction with a shareholder vote which affects
your investment, Allianz Life will obtain from you and other affected 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 Allianz Life owns on its
own behalf. Should Allianz Life determine that it is no longer required to
comply with the above, it will vote the shares in its own right.
SUBSTITUTION
Allianz Life may substitute one of the Variable Options you have selected with
another Variable Option. We would 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.
5.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:
MORTALITY AND EXPENSE RISK CHARGE. Each day, Allianz Life makes a deduction for
its mortality and expense risk. Allianz Life does this as part of its
calculation of the value of the Accumulation Units and the Annuity Units. The
amount of the mortality and expense risk charge depends on whether you select
the Return of Principal GMDB, the Double Principal GMDB, the Earnings Protection
GMDB, the Guaranteed Principal Protector or the Guaranteed Performance
Accumulator benefits.
This charge is assessed as a percentage of the average daily value of the
Contract value invested in a Variable Option. The table below shows the annual
charge applicable to your Contract during the Accumulation Phase as determined
by the combination of benefits.
<TABLE>
<CAPTION>
------------------------------- ----------------------------- ----------------------------- -------------------
Return of Principal GMDB Double Principal GMDB Earnings Protection GMDB
------------------------------- ----------------------------- ----------------------------- -------------------
------------------------------- ----------------------------- ----------------------------- -------------------
<S> <C> <C> <C>
Guaranteed Principal Protector 1.50% 1.80% 1.70%
------------------------------- ----------------------------- ----------------------------- -------------------
------------------------------- ----------------------------- ----------------------------- -------------------
Guaranteed Performance Accumulator 1.70% 2.00% 1.90%
------------------------------- ----------------------------- ----------------------------- ------------------
---------------------------------------------------------------------------------------------------------------
</TABLE>
During the Payout Phase, the mortality and expense risk charge is equal to 1.50%
of the average daily value of the Contract invested in the Variable Options,
regardless of which benefits you selected.
This charge compensates us for the insurance benefits provided by your Contract
(for example, our contractual obligation to make Annuity Payments, the death
benefits, GVP benefits, certain expenses including sales 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).
GUARANTEED VALUE PROTECTION BENEFIT (GVP) CHARGE
The charge is a percentage of your Contract value, assessed on the last day of
each Contract year during the Accumulation Phase. We will deduct the charge,
adjusted for the number of calendar days the GVP coverage was in place (referred
to as pro-rata) if you surrender your Contract, when death benefits are paid,
when you begin to receive Annuity Payments or when your GVP guarantee account
drops to zero or less. If your GVP guarantee account is zero or less for the
entire Contract year, the GVP charge will be zero. This charge is deducted from
the Variable Options and the Fixed Account proportionally based on the total
Contract value.
This charge will differ, largely depending on your Target Value. Your Target
Value in the first Contract year is the accumulated value of your Purchase
Payments, less partial withdrawals, at an annual rate specified in the Contract.
In subsequent Contract years, the Target Value is the Contract value at the end
of the prior Contract year, less partial withdrawals made in the Contract Year,
accumulated at an annual rate specified in the Contract, to the end of the
Contract year.
The annual rate is currently set at 10%, less the mortality and expense risk
charge. We may set a higher rate than 10% for new Contracts issued prior to May
1, 2001. If we raise the annual rate, the Target Value will be higher and the
charge is assessed in fewer instances. This rate is guaranteed for the first 10
Contract years. We can change this rate for new Contracts and for Contract years
after the tenth year. This rate will never be less than 5%. We can also change
<PAGE>
the number of years for which the rate is guaranteed for new Contracts.
While the GVP benefit is in effect, the charge is as follows:
If the following situation occurs Then your percentage charge is...
------------------------------------ ---------------------------------
If your Contract value is equal to 0%
or less than your Target Value
If your Contract value is twice your minimum value 0%
guarantee after the fifth Contract year
If you selected the Dimensions Asset Allocation
Model and
your Contract value is 100% to 102% of the percentage result of the
your Target Value excess of your
Contract value over your
Target Value (0 to 2%)
your Contract value is greater than 102% 2%
of your Target Value
If you did not select the Dimensions Asset
Allocation Model and
your Contract value is 100% to 103% of the percentage result of the
your Target Value excess of your
Contract value over your
Target Value (0 to 3%)
your Contract value is greater than 103% 3%
of your Target Value
The minimum value guarantee for the Guaranteed Principal Protector is the GVP
Guarantee account. The minimum value guarantee in the first 10 year period for
the Guaranteed Performance Accumulator is the GVP guarantee account. In
subsequent ten year periods, the minimum value guarantee for the Guaranteed
Performance Accumulator is the greater of the GVP guarantee account or two times
the excess of your Purchase Payments over the GVP adjusted partial withdrawals
(See Section 10 - Guaranteed Value Protection Benefit).
This charge compensates us for the minimum value guarantee at the end of every
10 Contract years as well as the guarantee of a minimum amount available to you
after the fifth Contract year, regardless of your actual Contract value (see
Section 10 - Guaranteed Value Protection Benefit).
If you did not select the Dimensions Asset Allocation Model, we will determine
if your asset allocation at the beginning of each Calendar quarter nonetheless
meets the Dimensions Asset Allocation Model requirements (but not necessarily
<PAGE>
the quarterly rebalancing requirement). If so, the GVP charge for that quarter
is deemed to be capped currently at 2%. At the time of assessment of the charge,
the average for the Contract year is used for the percentage charge cap.
We can change the percentage charge cap of 2% (or 3% if you did not select the
Dimensions Asset Allocation Model). The maximum that the percentage charge cap
can be is 5%. We have the right to increase the GVP charge. If we do it will
never be greater than 5%. If we increase the percentage cap charge, it will be
effective on your next Contract anniversary. You will have 30 calendar days from
the effective date of the percentage cap increase to cancel the GVP benefit.
The following example is to help you understand how the GVP charge is
determined. The facts assumed in the example are purely hypothetical and are for
illustration purposes only.
Example
o You purchased a Contract with a $100,000 Purchase Payment on June 1, 2000
o Your Contract has the Guaranteed Principal Protection benefit and the
Return of Principal GMDB (which means the mortality and expense risk charge
is 1.50%)
o You are using the Dimensions Asset Allocation Model
o Your Contract value increases to $110,000 on your first anniversary, June
1, 2001
We calculate your GVP charge on June 1, 2001 as follows:
We first calculate your Target Value as
Purchase Payment accumulated at
the annual rate less the mortality and expense risk charge $108,500
The excess of your Contract value, of $110,000 over your
your Target Value of $108,500 is $1,500.
Your GVP percentage charge is less than 2% at $1500/$110,000 1.36%
Your GVP charge is $1,500.
CONTRACT MAINTENANCE CHARGE
On each Contract anniversary, Allianz Life deducts $40 from your Contract as a
contract maintenance charge. The charge is assessed on the last day of each
Contract year. The charge is deducted pro rata from the Variable Options and the
Fixed Account. In some states, this charge is not deducted from the Fixed
Account. The charge is for administrative expenses (see above).
If you make a complete withdrawal from your Contract other than on a Contract
anniversary, Allianz Life will deduct the contract maintenance charge. During
<PAGE>
the Payout Phase, in most states, the charge will be collected monthly out of
each Annuity Payment.
However, if the value of your Contract is at least $50,000 when the deduction
for the charge is to be made during the Accumulation Phase, Allianz Life will
not deduct this charge. If you own more than one Contract offered under this
prospectus, Allianz Life will determine the total value of all your Contracts.
If the total value of all Contracts registered under the same social security
number is at least $50,000, Allianz Life will not assess the contract
maintenance charge. Currently, the charge is also waived during the Payout Phase
if the value of your Contract at the Income Date is $50,000. If the Contract is
owned by a non-natural person (e.g., a corporation), Allianz Life will look to
the Annuitant to determine if it will assess the charge.
WITHDRAWAL CHARGE
Withdrawals may be subject to a withdrawal charge.
<TABLE>
<CAPTION>
During the Accumulation Phase, you can During the Payout Phase under Annuity
make withdrawals from your Contract. Option 6, if you choose to make a
The charge is: withdrawal from Annuity Option 6, (which
can begin no earlier than 5
complete Contract years from
Contract issue), your withdrawal
charge is as follows:
NUMBER OF COMPLETE NUMBER OF COMPLETE
CONTRACT YEARS CONTRACT YEARS
SINCE ISSUE DATE CHARGE SINCE ISSUE DATE CHARGE
-------------------------- ------------------------------------
<S> <C> <C> <C> <C>
0 8.0% 5 4.0%
1 7.0% 6 3.0%
2 7.0% 7 years or more 0.0%
3 6.0%
4 5.0%
5 4.0%
6 3.0%
7 years or more 0.0%
</TABLE>
For a partial withdrawal that is subject to a withdrawal charge, the amount
deducted for the withdrawal charge will be a percentage of the requested
withdrawal amount. Example: Assume you requested a withdrawal of $1,000 and
there is a 7% withdrawal charge. The withdrawal charge is $70.00 for a total
withdrawal amount of $1,070.00.
<PAGE>
However, there is no charge when you make a withdrawal from your Contract after
your 7th Contract anniversary. Allianz Life does not assess the withdrawal
charge on any payments paid out as Annuity Payments or as death benefits. The
withdrawal charge compensates Allianz Life for expenses associated with selling
the Contract.
NOTE: FOR TAX PURPOSES, WITHDRAWALS ARE CONSIDERED TO HAVE COME FROM THE
LAST MONEY YOU PUT INTO THE CONTRACT. THUS, FOR TAX PURPOSES, EARNINGS ARE
CONSIDERED TO COME OUT FIRST.
PARTIAL WITHDRAWAL PRIVILEGE. Each Contract year, you can make multiple
withdrawals up to 10% of Purchase Payments during the first five Contract years
and 20% of Purchase Payments after five complete Contract years and no
withdrawal charge will be deducted from this amount. If you make a withdrawal of
more than the amount described above, the excess amount will be subject to the
withdrawal charge. If you make a total withdrawal, Allianz Life will assess the
withdrawal charge with no reductions for the Partial Withdrawal Privilege.
You may also elect to participate in the Systematic Withdrawal Program or the
Minimum Distribution Program. These programs allow you to make withdrawals
without the deduction of the withdrawal charge under certain circumstances. See
"Access to Your Money" for a description of the Systematic Withdrawal Program
and the Minimum Distribution Program.
WAIVER OF WITHDRAWAL CHARGE BENEFITS. Under certain circumstances, after the
first Contract year, Allianz Life will permit you to take your money out of the
Contract without deducting a withdrawal charge if you or the Joint Owner become
confined to a nursing home or hospital for 90 consecutive days.
The waiver will not apply if you were confined to a nursing home or hospital on
the date your Contract was issued.
This benefit may not be available in your state. (Check with your registered
representative.)
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE. Allianz Life may reduce or
eliminate the amount of the withdrawal charge when the Contract is sold under
circumstances which reduce its sales expenses. Some examples are: if there is a
large group of individuals that will be purchasing the Contract or a prospective
purchaser already had a relationship with Allianz Life. Allianz Life may not
deduct a withdrawal charge under a Contract issued to an officer, director or
employee of Allianz Life or any of its affiliates. Also, Allianz Life may reduce
or not deduct a withdrawal charge when a Contract is sold by an agent of Allianz
Life to any members of his or her immediate family and the commission is waived.
We require our prior approval for any reduction or elimination of the withdrawal
charge.
COMMUTATION FEE
If you elect Annuity Option 2 or 4 and make a liquidation (allowed 5 years after
the Income Date), a commutation fee will be assessed. The fee is a percentage of
the amount liquidated and is equal to:
NUMBER OF COMPLETE
YEARS SINCE COMMUTATION
INCOME DATE FEE
----------------------------------------------
5 7%
6 6%
7 5%
8 4%
9 3%
10 2%
11 years or more 1%
TRANSFER FEE
You can currently make 12 free transfers every year. We measure a year from the
day we issue your Contract. If you make more than 12 transfers a year, we will
deduct a transfer fee of $25 for each additional transfer. The transfer fee will
be deducted from the account (Variable Option or Fixed Account) from which the
transfer is made. If the entire amount in the account is transferred, then the
transfer fee will be deducted from the amount transferred. If the transfer is
from multiple accounts, it will be treated as a single transfer. Any transfer
fee will be deducted proportionally from the source account if less than the
entire amount in the account is transferred. If the transfer is part of the
Dollar Cost Averaging Program, or Flexible Rebalancing or quarterly rebalancing
under the Dimensions Asset Allocation Model, it will not currently count in
determining the transfer fee.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. Allianz Life is 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. It is Allianz Life's current practice to not charge you
for these taxes until you die, Annuity Payments begin or you make a complete
withdrawal. Allianz Life may discontinue this practice in the future and assess
the charge when the tax is due. Premium taxes generally range from 0% to 3.5% of
the Purchase Payment or Contract value, depending on the state.
INCOME TAXES
Allianz Life reserves the right to deduct from the Contract for any income taxes
which it may incur because of the Contract. Currently, Allianz Life is 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 prospectuses for the Funds.
<PAGE>
6.TAXES
-------------------------------------------------------------------------------
NOTE: ALLIANZ LIFE HAS PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL
DISCUSSION OF THE SUBJECT. IT IS NOT INTENDED AS TAX ADVICE. YOU SHOULD CONSULT
YOUR OWN TAX ADVISER ABOUT YOUR OWN CIRCUMSTANCES. ALLIANZ LIFE HAS INCLUDED
ADDITIONAL INFORMATION REGARDING TAXES IN THE STATEMENT OF ADDITIONAL
INFORMATION.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Basically, these rules provide that you will not be taxed on any 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 regarding how you will be
taxed depending upon how you take the money out and the type of Contract --
Qualified or Non-Qualified (see following sections).
When a Non-Qualified Contract is owned by a non-natural person (e.g., a
corporation or certain other entities other than a trust holding the Contract as
an agent for a natural person), the Contract will generally not be treated as an
annuity for tax purposes. This means that the Contract may not receive the
benefits of Tax Deferral. Income may be taxed as ordinary income every year.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the Contract under a Qualified plan, your Contract is referred
to as a Qualified Contract. Examples of Qualified plans are: Individual
Retirement Annuities (IRAs), Tax-Sheltered Annuities (sometimes referred to as
403(b) contracts), and pension and profit-sharing plans, which include 401(k)
plans and H.R. 10 plans. If you do not purchase the Contract under a Qualified
plan, your Contract is referred to as a Non-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.
MULTIPLE CONTRACTS
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. You
should consult a tax adviser prior to purchasing more than one Non-Qualified
annuity contract in any calendar year period.
WITHDRAWALS--NON-QUALIFIED CONTRACTS
You, as the Contract Owner, will not be taxed on increases in the value of your
Contract until a distribution occurs either as a withdrawal or as Annuity
Payments. When you make a withdrawal from your Contract, the Code treats such a
withdrawal as first coming from earnings and then from your Purchase Payments.
You will be taxed on the amount of the withdrawal that is earnings. In most
cases, such withdrawn earnings are included in income. For Annuity Payments,
different rules apply. A portion of each Annuity Payment you receive will be
treated as a partial return of your Purchase Payments 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 Payments are
fully includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a tax penalty. The amount of the penalty
is equal to 10% of the amount that is includible in income. Some withdrawals
will be exempt from the penalty. They include any amounts:
1. paid on or after the taxpayer reaches age 59 1/2;
2. paid after you die;
3. paid if the taxpayer becomes totally disabled (as that term is defined in
the Code);
4. paid in a series of substantially equal payments made annually (or more
frequently) for life or a period not exceeding life expectancy;
5. paid under an immediate annuity; or
6. which come from Purchase Payments made prior to August 14, 1982.
With respect to (4) above, if the series of substantially equal periodic
payments is modified before the later of your 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 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 (withdrawal) during the Payout Phase 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 unless another exception to the
penalty tax applies. You should obtain competent tax advice before you make any
liquidations from your Contract.
WITHDRAWALS -- QUALIFIED CONTRACTS
If you make a withdrawal from your Qualified Contract, a portion of the
withdrawal is treated as taxable income. This portion depends on the ratio of
pre-tax Purchase Payments to the after-tax Purchase Payments in your Contract.
If all of your Purchase Payments were made with pre-tax money then the full
amount of any withdrawal is includible in taxable income. Special rules may
apply to withdrawals from certain types of Qualified Contracts.
The Code also provides that any amount received under a Qualified 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
withdrawals will be exempt from the penalty. They include any amounts:
1) paid on or after you reach age 59 1/2;
2) paid after you die;
3) paid if you become totally disabled (as that term is defined in the Code);
4) paid to you after leaving your employment in a series of substantially
equal periodic payments made annually (or more frequently) under a lifetime
annuity;
5) paid to you after you have attained age 55 and you have left your
employment;
6) paid for certain allowable medical expenses (as defined in the Code);
7) paid pursuant to a qualified domestic relations order;
8) paid on account of an IRS levy upon the Qualified Contract;
9) paid from an IRA for medical insurance (as defined in the Code);
10) paid from an IRA for qualified higher education expenses; or
11) paid from an IRA for up to $10,000 for qualified first-time homebuyer
expenses (as defined in the Code).
The exceptions in 5) and 7) above do not apply to IRAs. The exception in 4)
above applies to IRAs but without the requirement of leaving employment.
We have provided a more complete discussion in the Statement of Additional
Information.
WITHDRAWALS -- TAX-SHELTERED ANNUITIES
The Code limits the withdrawal of amounts attributable to Purchase Payments made
pursuant to a salary reduction agreement by Contract Owners from Tax-Sheltered
Annuities. Withdrawals can only be made when a Contract Owner:
1. reaches age 59 1/2;
2. leaves his/her job;
<PAGE>
3. dies;
4. becomes disabled (as that term is defined in the Code); or
5. in the case of hardship. However, in the case of hardship, the Contract
Owner can only withdraw the Purchase Payments and not any earnings.
DEATH BENEFITS/GUARANTEED VALUE PROTECTION BENEFIT
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.
Any amounts credited to the Contract value under a guaranteed value protection
benefit in an endorsement to the Contract will be treated for tax purposes as
earnings.
If the death benefit endorsements are to be used with a Qualified Contract, such
death benefits may be considered by the Internal Revenue Service as "incidental
death benefits." The Code imposes limits on the amount of incidental death
benefits allowable for qualified contracts, and if the death benefits selected
by you are considered to exceed such limits, the provisions of such benefits
could result in currently taxable income to the owners of the Qualified
Contracts. Furthermore, the Code provides that the assets of an IRA may be not
invested in life insurance, but may provide in the case of death during the
Accumulation Phase for a death benefit payment equal to the greater of purchase
payments or contract value. The Contract offers death benefits which may exceed
the greater of Purchase Payments or Contract Value. If these death benefits are
determined by the Internal Revenue Service as providing life insurance, the
Contract may not qualify as an IRA (including ROTH IRAs). You should consult
your tax adviser regarding these features and benefits prior to purchasing a
Contract.
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 under federal tax
law 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
<PAGE>
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.
7.ACCESS TO YOUR MONEY
------------------------------------------------------------------------------
You can have access to the money in your Contract:
o by making a partial or total withdrawal;
o by receiving Annuity Payments; or
o when a death benefit is paid to your Beneficiary.
In general, withdrawals can only be made during the Accumulation Phase. Under
certain circumstances, you can take money out of the Contract during the Payout
Phase if you select variable Annuity Option 2, 4 or 6 (See "Annuity Payments
(The Payout Phase)".
When you make a complete withdrawal, you will receive the value of the Contract
on the day the withdrawal request is received at the USAllianz Service Center:
o less any applicable withdrawal charge;
o less any premium tax;
o less any contract maintenance charge; and
o less any pro-rated GVP Charge.
(See "Expenses" for a discussion of the charges.)
Unless you instruct Allianz Life otherwise, the partial withdrawal will be made
pro-rata from all the Variable Options and the Fixed Account you selected.
We will pay the amount of any withdrawal from the Variable Options within seven
(7) days of when we receive your request in good order unless the Suspension of
Payments or Transfers provision is in effect (see below).
Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make.
There are limits to the amount you can withdraw from a Qualified plan referred
to as a 403(b) plan. For a more complete explanation see "Taxes" and the
discussion in the SAI.
SYSTEMATIC WITHDRAWAL PROGRAM
<PAGE>
If the value of your Contract is at least $25,000, Allianz Life offers a program
which provides automatic monthly or quarterly payments to you each year. The
Systematic Withdrawal Program is subject to the Partial Withdrawal Privilege
which means that the total systematic withdrawals which you can make each year
without Allianz Life deducting a withdrawal charge is limited to 10% of your
Purchase Payments during the first 5 Contract years and 20% of your Purchase
Payments after 5 complete Contract years. This is determined on the last
business day prior to the day your request is received. All systematic
withdrawals will be made on the 9th day of the month unless that day is not a
business day. If it is not, then the withdrawal will be made the previous
business day. You will not be charged additional fees for participating in this
program.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO SYSTEMATIC
WITHDRAWALS.
MINIMUM DISTRIBUTION PROGRAM
If you own a Contract that is an Individual Retirement Annuity (IRA), you may
select the Minimum Distribution Program. Under this program, Allianz Life will
make payments to you from your Contract that are designed to meet the applicable
minimum distribution requirements imposed by the Code for IRAs. Such withdrawals
will not be subject to a withdrawal charge. Payments may be made monthly,
quarterly, or annually unless your Contract is less than $25,000 in which case
the payments will only be made annually. If you have elected the Minimum
Distribution Program, any additional withdrawals in a Contract year which exceed
the Partial Withdrawal Privilege when combined with Minimum Distribution
withdrawals will be subject to any applicable withdrawal charge.
You cannot participate in the Systematic Withdrawal Program and the Minimum
Distribution Program at the same time.
SUSPENSION OF PAYMENTS OR TRANSFERS
Allianz Life may be required to suspend or postpone payments for withdrawals 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 Allianz Life 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.
Allianz Life has reserved the right to defer payment for a withdrawal or
transfer from the Fixed Account for the period permitted by law but not for more
than six months.
8.PERFORMANCE
-------------------------------------------------------------------------------
Allianz Life periodically advertises performance of the Variable Options.
Allianz Life will calculate performance by determining the percentage change in
the value of an Accumulation Unit by dividing the increase (decrease) for that
unit by the value of the Accumulation Unit at the beginning of the period. This
performance number reflects the deduction of the mortality and expense risk
charges and the Portfolio expenses. It does not reflect the deduction of any
applicable withdrawal charge, GVP charge and contract maintenance charge. The
deduction of any applicable contract maintenance charges, GVP charges and
withdrawal charges would reduce the percentage increase or make greater any
percentage decrease. Any advertisement will also include average annual total
return figures which reflect the deduction of the mortality and expense risk
charges, contract maintenance charges, GVP charges, withdrawal charges and the
expenses of the Portfolios.
Allianz Life 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 fund prospectuses for more information.
Certain Portfolios have been in existence for some time and have investment
performance history. However, the Contracts are new. In order to demonstrate how
the actual investment experience of the Portfolios may affect your Accumulation
Unit values, Allianz Life has prepared performance information which can be
found in the SAI.
Allianz Life may in the future also advertise yield information. If it does, it
will provide you with information regarding how yield is calculated. More
detailed information regarding how performance is calculated is found in the
SAI.
Any performance advertised will be based on historical data. It does not
guarantee future results of the Portfolios.
Allianz Life may advertise the GVP benefit with illustrations showing how the
GVP benefit works either with historical performance of specific Portfolios or
with a hypothetical return (which rate will not exceed 12%). These illustrations
may include hypothetical Contract values, full and partial withdrawal values,
death benefits, or GVP guarantee account values. These values will be calculated
reflecting the deduction of Portfolio expenses for specific Portfolios,
mortality and expense risk charges, contract maintenance charges, and GVP
charges. For withdrawal values, the withdrawal charges are also reflected.
9.DEATH BENEFIT
-------------------------------------------------------------------------------
<PAGE>
UPON YOUR DEATH
If you or your Joint Owner die during the Accumulation Phase, Allianz Life will
pay a death benefit to your Beneficiary (see below). If you die during the
Payout Phase, any benefit will be as provided for in the Annuity Option
selected.
GUARANTEED MINIMUM DEATH BENEFITS (GMDB) - DEATH BENEFIT PROTECTION
At time of application, you must select one of the following death benefits:
o Return of Principal GMDB
o Double Principal GMDB
o Earnings Protection GMDB.
If you don't make a selection, the Return of Principal GMDB is the death
benefit.
If the Contract is not owned by a natural person or a trust for the benefit of a
natural person, then the GMDB benefits are not available. In such case, the
death benefit will be the Contract value (less any taxes owed, less any
pro-rated GVP charge) as of the day all claim proofs and payment election forms
are received at the USAllianz Service Center.
Once the Contract is issued, this selection cannot be changed. The mortality and
expense risk charge is higher for the Double Principal GMDB or the Earnings
Protection GMDB. Please refer to the Contract and applicable endorsements in
your Contract for specific terms and conditions of the death benefits. THE
DOUBLE PRINCIPAL GMDB OR THE EARNINGS PROTECTION GMDB MAY NOT BE AVAILABLE IN
YOUR STATE. CHECK WITH YOUR REGISTERED REPRESENTATIVE REGARDING AVAILABILITY.
THE RETURN OF PRINCIPAL GUARANTEED MINIMUM DEATH BENEFIT
If you select the Return of Principal GMDB, we will pay your Beneficiary the
greater of the following amounts, less any applicable premium tax and pro-rata
GVP charge:
o The Contract value at the end of the business day when all claim proofs and
payment election forms are received by Allianz Life at the USAllianz
Service Center; or
o The Purchase Payments you made, reduced by "adjusted partial withdrawals".
In the first five Contract years, an "adjusted partial withdrawal" is the
partial withdrawal (including any withdrawal charges) multiplied by the ratio of
(a) to (b), where
(a) is the death benefit on the date of (but prior to) the partial withdrawal;
and
<PAGE>
(b) is the Contract value on the date of (but prior to) the partial
withdrawal.
After the first five Contract years, an "adjusted partial withdrawal" is equal
to (a) plus (b), where
(a) is the partial withdrawal amount (including any withdrawal charges) without
adjustment, if total partial withdrawals (including any withdrawal charges) in
the Contract year do not exceed 20% of Net Adjusted Purchase Payment; and
(b) is the partial withdrawal amount in excess of (a), adjusted in the same
manner as described above for partial withdrawals in the first five Contract
years.
Net Adjusted Purchase Payment is the sum of Purchase Payments less partial
withdrawals adjusted in the same manner as above except that the Net Adjusted
Purchase Payment is used in place of the death benefit in the calculation. The
Net Adjusted Purchase Payment does not change after the fifth Contract
anniversary.
The following examples are to help you understand how the Return of Principal
GMDB is determined. The facts assumed in the examples are purely hypothetical
and are for illustration purposes only.
Examples:
o You purchased a Contract with a payment of $100,000 on January 1, 2001
o On March 1, 2008, your Contract value increases to $160,000.
<TABLE>
<CAPTION>
We calculate the death benefit on March 1, 2008 as
<S> <C> <C>
The greater of the Purchase Payments paid of $100,000
or, the Contract value of $160,000 $160,000.
========
Example with partial withdrawal:
o You purchased a Contract with a payment of $100,000 on January 1, 2001
o On June 1, 2007, your Contract value grows to $150,000. Your death benefit
is $150,000. You take a partial withdrawal of $25,000 (including withdrawal
charges), leaving a Contract value of $125,000.
o On March 1, 2008, your Contract value increases to $130,000.
We calculate the death benefit on March 1, 2008 as follows:
We first calculate the Net Adjusted Purchase Payment on the fifth Contract anniversary as
<PAGE>
the Purchase Payments paid $100,000
minus any "adjusted partial withdrawal" 0
for the Net Adjusted Purchase Payment $100,000
========
We calculate the death benefit on March 1, 2008, as
the Purchase Payments $100,000
minus any "adjusted partial withdrawals" in the first five
Contract years $ 0
minus any "adjusted partial withdrawals" after the first five years
calculated as (a) + (b), where
(a) the lesser of the partial withdrawal of $25,000
or 20% of 100,000 = 20,000
(b) the adjusted excess of the partial withdrawal over (a)
(25,000-20,000) x death benefit/Contract value
= $ 5,000 $ 25,000
for a Return of Principal GMDB of $ 75,000
========
Your death benefit is the greater of the Contract value of $130,000
or the Return of Principal GMDB $130,000.
========
</TABLE>
THE DOUBLE PRINCIPAL GUARANTEED MINIMUM DEATH BENEFIT
If you select the Double Principal GMDB, we will pay your Beneficiary the
greatest of the following amounts, less any applicable premium tax and pro-rata
GVP charge:
o The Contract value at the end of the business day when all claim proofs and
payment election forms are received by Allianz Life at the USAllianz
Service Center; or
o The greatest Contract value at Contract issue and on each Contract
anniversary, until your 81st birthday or date of death, reduced by
subsequent
"adjusted partial withdrawals"; or
o After the first 5 Contract years, twice the excess of the total amount of
Purchase Payments over "adjusted partial withdrawals," on the date of
death.
<PAGE>
The following examples are to help you understand how the Double Principal GMDB
is determined. The facts assumed in the examples are purely hypothetical and are
for illustration purposes only.
Examples:
o You purchase a Contract with a payment of $100,000 on January 1, 2001.
o Your greatest Contract value on each Contract anniversary is $120,000.
o On March 1, 2008, your Contract value increases to $160,000.
We calculate your death benefit on March 1, 2008 as the greatest of:
<TABLE>
<CAPTION>
<S> <C> <C>
Your Contract value on March 1, 2008 or $160,000
Your greatest Contract value on each Contract anniversary or $120,000
2 x your Purchase Payments of $100,000 $200,000
For a death benefit of $200,000.
===========
</TABLE>
Example with partial withdrawal:
o You purchase a Contract with a payment of $100,000 on February 1, 2001.
o Your greatest Contract value on each Contract anniversary is $120,000.
o On June 1, 2007, your Contract value grows to $150,000. Your death benefit
is $200,000. You take a partial withdrawal (including withdrawal charges)
of $25,000, leaving a Contract value of $125,000.
o On March 1, 2008, your Contract value increases to $130,000.
We calculate your death benefit on March 1, 2008 as follows
<TABLE>
<S> <C> <C>
o Your Contract value on March 1, 2008 $130,000
o Your greatest Contract value on each Contract anniversary is $120,000
minus any "adjusted partial withdrawals" after the first five years
calculated as (a) + (b), where
(a) the lesser of the partial withdrawal of $25,000
or 20% of 100,000 = 20,000
(b) the adjusted excess of the partial withdrawal over (a)
<PAGE>
= ( 25,000 - 20,000) x 200,000/150,000
= $6,666.67 $ 26,666.67
for the adjusted value to be $ 93,333.33
===========
o Your Purchase Payments $100,000
minus "adjusted partial withdrawals" after the 5th year
calculated as above $ 26,666.67
results in $ 73,333.33
times 2 $146,666.66
============
Your death benefit is $146,666.66
============
</TABLE>
THE EARNINGS PROTECTION GUARANTEED MINIMUM DEATH BENEFIT
If you select the Earnings Protection GMDB, we will pay your Beneficiary the
greater of the following amounts, less any applicable premium tax and pro-rata
GVP charge:
o The Return of Principal GMDB
o The result of (a) plus (b), where
(a)is the value of your Contract value at the end of the business day when
all claim proofs and payment election forms are received by Allianz
Life at the USAllianz Service Center; and
(b)is 40% (or 25% if you are over age 70 at issue ) of the lesser of
(i) or (ii), where
(i) is the Contract value minus the total Purchase Payments, and;
(ii) is the total Purchase Payments less "adjusted partial withdrawals" as
calculated in the Return of Principal GMDB
The following examples are to help you understand how the Earnings Protection
GMDB is determined. The facts assumed in the examples are purely hypothetical
and are for illustration purposes only.
Examples:
--------
o You purchased a Contract with a payment of $100,000 on January 1, 2001
o On March 1, 2008, your Contract value increases to $160,000.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
We calculate your death benefit on March 1, 2008 as
The greater of your Purchase Payments $100,000
========
Or the result of the following calculation:
The Contract value of $160,000 $160,000.00
Minus total Purchase Payments of $100,000 $100,000.00
The result times 40% = 60,000 x .4 $ 24,000
Plus your Contract value of $160,000 $184,000
========
For a death benefit of $184,000.
========
</TABLE>
Example with partial withdrawal:
o You purchased a Contract with a payment of $100,000 on January 1, 2001.
o On June 1, 2007, your Contract value grows to $150,000. You take a partial
withdrawal (including any withdrawal charges) of $25,000, leaving a
Contract value of $125,000.
o On March 1, 2008, your Contract Value increases to $130,000.
We calculate the death benefit on March 1, 2008 as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
We calculate the total amount of Purchase Payments less "adjusted
partial withdrawals" in the same manner as indicated in
the Return of Principal GMDB Example on March 1, 2008 $ 75,000
========
We take the Contract value $130,000
minus Purchase Payments $100,000
the result times 40% = 30,000 x .4 $ 12,000
<PAGE>
We add this amount to the Contract Value of $130,000 $142,000.
========
Your death benefit is the Earnings Protection GMDB, calculated as
the greater of $75,000 or $142,000 $142,000
========
</TABLE>
Any part of the death benefit amount that had been invested in the Variable
Options remains in the Variable Options until distribution begins. From the time
the death benefit is determined until we make a complete distribution, any
amount in the Variable Options will be subject to investment risk which will be
borne by the Beneficiary.
If you have a Joint Owner, the age of the older Contract Owner will be used to
determine the guaranteed minimum death benefit. If the Contract is owned by a
non-natural person, then all references to you mean the Annuitant.
In the case of Joint Owners, if a Joint Owner dies, the surviving Joint Owner
will be considered the Beneficiary. Any other Beneficiary designation on record
at the time of death will be treated as a contingent Beneficiary. Joint Owners
must be spouses (this requirement may not apply in certain states).
A Beneficiary must request that the death benefit be paid under one of the death
benefit options described below. If the Beneficiary is the spouse of the
Contract Owner, he/she can choose to continue the Contract in his/her own name
at the then current Contract value, or if greater, the death benefit value. With
respect to the Earnings Protection GMDB, the Contract value is treated as the
total Purchase Payments in the calculation of the death benefit for the Contract
continued by the spouse. If a lump sum payment is elected and all the necessary
requirements, including any required tax consent from some states, are met, the
payment will be made within 7 days. Payment of the death benefit may be delayed
pending receipt of any applicable tax consents and/or forms from a state.
DEATH BENEFIT OPTIONS:
OPTION A: lump sum payment of the death benefit. Allianz Life will not deduct
the contract maintenance charge at the time of a complete withdrawal if the
distribution is due to death.
OPTION B: payment of the entire death benefit within 5 years of the date of the
Contract Owner's or any Joint Owner's death. Allianz Life will assess the
contract maintenance charge to each Beneficiary on each Contract anniversary.
OPTION C: payment of the death benefit under an Annuity Option over the lifetime
of the Beneficiary or over a period not extending beyond the life expectancy of
the Beneficiary. Distribution under this option must begin within one year of
the date of the Contract Owner's or any Joint Owner's death. The contract
maintenance charge will continue to be assessed to each Beneficiary's share pro
rata over the payments.
<PAGE>
Any portion of the death benefit not applied under an Annuity Option within one
year of the date of a Contract Owner's death must be distributed within five
years of the date of death.
If the Beneficiary wants to receive the payment other than in a lump sum, he/she
may only make such an election during the 60 day period after the day that the
lump sum first became payable by Allianz Life.
If you (or any Joint Owner) die during the Payout Phase and you are not the
Annuitant, any payments which are remaining under the Annuity Option selected
will continue at least as rapidly as they were being paid at your death. If you
die during the Payout Phase, the Beneficiary becomes the Contract Owner.
DEATH OF ANNUITANT
If the Annuitant, who is not a Contract Owner or Joint Owner, dies during the
Accumulation Phase, you will become the Annuitant, unless you designate another
Annuitant within 30 days of the death of the Annuitant. However, if the Contract
Owner is a non-natural person (e.g., a corporation), then the death of the
Annuitant will be treated as the death of the Contract Owner, and a new
Annuitant may not be named.
If the Annuitant dies after Annuity Payments have begun, the remaining amounts
payable, if any, will be as provided for in the Annuity Option selected. The
remaining amounts payable will be paid to the Contract Owner at least as rapidly
as they were being paid at the Annuitant's death.
10. GUARANTEED VALUE PROTECTION BENEFIT (GVP)
The Guaranteed Value Protection benefit provides a minimum value guarantee at
the end of every 10 Contract years as well as the guarantee of a minimum amount
available to you after the fifth Contract year, regardless of your Contract
value. At time of application, you must select one of the following:
o The Guaranteed Principal Protector benefit, or
o The Guaranteed Performance Accumulator benefit
If you don't make a selection, the Guaranteed Principal Protector benefit will
be the GVP benefit.
If the Contract is not owned by a natural person or a trust for the benefit of a
natural person, then the GVP benefits are not available. THE GVP BENEFIT MAY NOT
BE AVAILABLE IN YOUR STATE. IN SOME STATES, THE GUARANTEED PERFORMANCE
ACCUMULATOR BENEFIT MAY NOT BE AVAILABLE WITH ALL DEATH BENEFIT OPTIONS. CHECK
WITH YOUR REGISTERED REPRESENTATIVE REGARDING AVAILABILITY.
You cannot change this selection after the Contract is issued. You can terminate
your GVP within 30 days after the first Contract anniversary, the tenth Contract
anniversary and every ten years after that. You will also be able to terminate
your GVP benefit within 30 days of an increase in the GVP percentage charge cap
which would take place at the next Contract anniversary. If you do so, your GVP
<PAGE>
charge will no longer be assessed. If you had selected the Guaranteed
Performance Accumulator, and the benefit has terminated, your mortality and
expense risk charge will decrease to 1.50% with the Return of Principal GMDB or
1.80% with the Double Principal GMDB or 1.70% with the Earnings Protection GMDB.
Please refer to the endorsements to your Contract for the specific terms and
conditions of the Guaranteed Principal Protector benefit and the Guaranteed
Performance Accumulator benefit.
You can elect to be in the Dimensions Asset Allocation Model. The percentages
for each investment class can be found in the application. This can be built to
fit your investment profile. You can also choose the Portfolios within the same
Investment Class that best suit your needs. Quarterly rebalancing automatically
occurs on March 20, June 20, September 20 and December 20 to maintain your
allocations within the model. If these days do not fall on a business day, the
rebalancing will take place on the next business day.
We can change the percentages within the Dimensions Asset Allocation Model. You
will be notified of this change if your current model needs to be adjusted to
fit the new model.
Currently, there are six Investment Classes into one of which each Portfolio is
assigned. The number and description of these classes can be changed in the
future. These Investment Classes are as follows:
<TABLE>
<CAPTION>
Investment Class Portfolio
---------------- -----------
<S> <C>
Aggressive Growth AIM V.I. Capital Appreciation Fund
Alger American Leveraged AllCap Portfolio
Alger American Small Capitalization Portfolio
Franklin Small Cap Fund
Seligman Global Technology Portfolio
Seligman Small-Cap Value Portfolio
International Growth AIM V.I. International Equity Fund
J.P. Morgan International Opportunities Portfolio
Mutual Discovery Securities Fund
Oppenheimer Global Securities Fund/VA
SP Jennison International Growth Portfolio
Templeton Developing Markets Securities Fund
Templeton Growth Securities Fund
Templeton Pacific Growth Securities Fund
USAllianz VIP Global Opportunities Fund
Domestic Growth AIM V.I. Growth Fund
AIM V.I. Value Fund
Alger American Growth Portfolio
Alger American MidCap Growth Portfolio
Davis VA Financial Portfolio
<PAGE>
Davis VA Value Portfolio
SP Strategic Partners Focused Growth Portfolio
USAllianz VIP Growth Fund
Van Kampen LIT Enterprise Portfolio
Growth and Income Davis VA Real Estate Portfolio
Franklin Growth and Income Securities Fund
Franklin Rising Dividends Securities Fund
J.P. Morgan U.S. Disciplined Equity Portfolio
Mutual Shares Securities Fund
Oppenheimer Main Street Growth & Income Fund/VA
PIMCO VIT StocksPLUS Growth and Income Portfolio
USAllianz VIP Diversified Assets Fund
Van Kampen LIT Growth and Income Portfolio
Bonds Franklin U.S. Government Fund
Oppenheimer High Income Fund/VA
PIMCO VIT High Yield Bond Portfolio
PIMCO VIT Total Return Bond Portfolio
Conservative Fixed Income. USAllianz VIP Fixed Income Fund
USAllianz VIP Money Market Fund
Fixed Account
</TABLE>
You can change your percentages within the requirements of the Dimensions Asset
Allocation Model. You can also terminate your participation in the Dimensions
Asset Allocation Model. If you do not select the Dimensions Asset Allocation
Model at the time that the Contract is issued, you will not be able to change to
this model at a later date.
If you selected the Dimensions Asset Allocation Model, you can make transfers
among the Portfolios within each Investment Class. If you make a transfer,
Rebalancing will be done according to your original allocations unless you
request a change in asset allocation. If you transfer money from a Portfolio in
an Investment Class to a Portfolio in another Investment Class, you will have
moved out of the Dimensions Asset Allocation Model.
You have 60 calendar days to return to the Dimensions Asset Allocation Model.
After the 60 day period, you will not be able to get into the Dimensions Asset
Allocation Model again.
Your GVP charges are lower if you are using the Dimensions Asset Allocation
Model. If you move out of the Dimensions Asset Allocation Model, you will be
notified of the transaction and increase in the GVP charge. The increased charge
will be effective immediately, if applicable (see Section 5 - Guaranteed Value
Protection Benefit Charge).
If you selected the Dimensions Asset Allocation Model, you will not be able to
participate in the Dollar Cost Averaging Program or Flexible Rebalancing
Program.
<PAGE>
Guaranteed Principal Protector Benefit (GP Protection)
The Guaranteed Principal Protector provides the following benefits after the
fifth Contract year:
(1) Each year, you may take up to 20% of your Net Adjusted Purchase Payment in
partial withdrawals (without any withdrawal charges), until your GVP
guarantee account is exhausted;
(2) You can choose to start receiving income from any of the life income
Annuity Options (Options 1 to 5) or a period certain income under the
fixed Annuity Option 6, with the amount available to purchase the option
equal to at least your GVP guarantee account (or 105% of your GVP
Guarantee account, if a lifetime Annuity Option is selected), less
applicable premium taxes and pro-rata GVP charges;
(3) On the tenth anniversary and every ten years after that, your Contract
value will be increased to the GVP guarantee account amount, if greater.
Your GVP guarantee account is established on the fifth Contract anniversary with
an amount equal to the Net Adjusted Purchase Payment at that time. This account
is then reduced by "GVP adjusted partial withdrawals", calculated in the same
manner as the "adjusted partial withdrawals" except that the greater of the
Contract value and the GVP guarantee account is used in place of the death
benefit in the calculation (See Section 9 - Death Benefit).
The following example is to help you understand how the Guaranteed Principal
Protector benefit is determined. The facts assumed in the example are purely
hypothetical and are for illustration purposes only.
Example:
o You purchased a Contract with a payment of $100,000 on January 1, 2001
o On January 1, 2006, your Contract value increases to $150,000. You take a
partial withdrawal of $25,000, leaving a Contract value of $125,000.
o On January 1, 2011, your Contract value is $50,000.
On January 1, 2011, your GVP guarantee account is calculated as follows:
Your GVP guarantee account on the 5th Contract anniversary $100,000
Minus "GVP adjusted partial withdrawals"
As calculated in the Return of Principal GMDB Example: 25,000
Resulting in $ 75,000
=========
Because this value is greater than your Contract value, your Contract value is
increased to $75,000 on January 1, 2011.
<PAGE>
Guaranteed Performance Accumulator Benefit
The Guaranteed Performance Accumulator Benefit provides the following benefits
after the fifth Contract year:
(1) Each year, you may take up to 20% of your GVP value in partial withdrawals
without any withdrawal charges, until your GVP guarantee account is
exhausted. After the tenth Contract year, and after you have taken 20% of
your GVP value in partial withdrawals, you can also take up to 20% of the
earnings of the previous Contract year without reducing your GVP guarantee
account.
(2) You can choose to start receiving income from any of the life income
Annuity Options (Options 1 to 5) or a period certain income under the fixed
Annuity Option 6, with the amount available to purchase the option equal to
at least your GVP guarantee account (or 105% of your GVP guarantee account,
if a lifetime Annuity Option is selected), less applicable premium taxes
and pro-rata GVP charges.
(3) On the tenth anniversary and every 10 years after that, your Contract value
will be increased to the value of your GVP guarantee account, if greater.
(4) If, however, your Contract value on the tenth anniversary is greater than
the GVP guarantee account (prior to adjustment), your GVP guarantee account
and your GVP value will be increased to the Contract value.
(5) On the twentieth anniversary (and every 10 year anniversary after that),
your GVP guarantee account, your GVP value and your Contract value will be
increased to twice the excess of your total Purchase Payments over your
"GVP adjusted partial withdrawals", if this amount is greater.
Your GVP value and your GVP guarantee account are established on the fifth
Contract anniversary with an amount equal to the Net Adjusted Purchase Payments
at that time. This account is then reduced by "GVP adjusted partial withdrawals"
and increased as indicated in (4) and (5) above. The "GVP adjusted partial
withdrawals" are calculated in the same manner as the "adjusted partial
withdrawals" except that the greater of the Contract Value or the Guaranteed
Performance Accumulator benefit is used in place of the death benefit in the
calculation.
The following example is to help you understand how the Guaranteed Performance
Accumulator benefit is determined. The facts assumed in the example are purely
hypothetical and are for illustration purposes only.
Example:
o You purchased a Contract with a payment of $100,000 on January 1, 2001.
o On January 1, 2011, your Contract value is $150,000.
<PAGE>
o On January 1, 2012, January 1, 2013, and January 1, 2014, you take a partial
withdrawal of $30,000
o On January 1, 2021, your Contract value is $50,000.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Your GVP guarantee account and your GVP value on January 1, 2011 is
the greater of your Purchase Payment or your Contract value at that time $150,000
Your GVP guarantee account on January 1, 2021 is
Your GVP guarantee account on January 1, 2011 $150,000
Minus "GVP adjusted partial withdrawals" Calculated as 3 x 30,000
(unadjusted because each withdrawal
Is equal to 30,000 = 20% of the GVP value) $ 90,000
Resulting in $ 60,000.
On January 1, 2021, we determine if we should increase your Contract value.
Your Purchase Payments $100,000
Minus "GVP adjusted partial withdrawals" as above 90,000
Resulting in 10,000
Twice that result is 20,000
</TABLE>
Your Contract value on January 1, 2021 of $50,000 is increased to the greater of
$20,000 or the GVP guarantee account of $60,000, resulting in a Contract value
of $60,000.
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.
<PAGE>
THE SEPARATE ACCOUNT
Allianz Life established a separate account named Allianz Life Variable Account
B (Separate Account) to hold the assets that underlie the Contracts, except
assets allocated to the Fixed Account. 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 one
Portfolio. The obligations under the Contracts are obligations of Allianz Life.
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, Minnesota 55403, acts as the distributor of the
Contracts. 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 up to 7.75% of Purchase Payments.
Sometimes, Allianz Life enters into an agreement with the broker/dealer to pay
the broker/dealer commissions as a combination of a certain amount of the
commission at the time of sale and a trail commission (which when totaled could
exceed 7.75% of Purchase Payments). 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). Commissions may be recovered
from a broker/dealer if a withdrawal occurs within 12 months of a Purchase
Payment.
ADMINISTRATION
Allianz Life has hired Delaware Valley Financial Services, Inc. (DVFS), 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
<PAGE>
OF THE STATEMENT OF
ADDITIONAL INFORMATION
-------------------------------------------------------------------------------
Insurance Company 2
Experts 2
Legal Opinions 2
Distributor 2
Reduction or Elimination of the
Withdrawal Charge 2
Calculation of Performance Data 3
Federal Tax Status 9
Annuity Provisions 16
Mortality and Expense Risk Guarantee 17
Financial Statements 17
APPENDIX
VARIABLE OPTION INVESTMENT OBJECTIVES
The investment objectives for each Portfolio are listed below. Additional
important information about each Portfolio's investment policies, strategies and
risks can be found in the fund prospectuses. Copies of these prospectuses will
be sent to you with your Contract. You should read the fund prospectuses
carefully and keep them for future reference. The investment return and
principal value for each Portfolio will fluctuate with market conditions, and
you may have a gain or loss when units are sold.
AIM VARIABLE INSURANCE FUNDS:
The AIM Variable Insurance Funds that are available under the contract are
listed below. AIM Advisors, Inc., established in 1976, serves as the fund's
investment advisor and currently advises or manages over 120 investment
portfolios. The investment objective of each AIM fund listed below may be
changed by the Board of Trustees without shareholder approval.
AIM V.I. Capital Appreciation Fund
The fund's investment objective is growth of capital. The fund seeks to meet its
objective by investing principally in common stocks of companies the portfolio
managers believe are likely to benefit from new or innovative products, services
<PAGE>
or processes as well as those that have experienced above-average, long-term
growth in earnings and have excellent prospects for future growth.
AIM V.I. Growth Fund
The fund's investment objective is to seek growth of capital. The fund seeks to
meet its objective by investing principally in seasoned and better capitalized
companies considered to have strong earnings momentum.
AIM V.I. International Equity Fund
The fund's investment objective is to provide long-term growth of capital. The
fund seeks to meet its objective by investing in a diversified portfolio of
international equity securities whose issuers are considered to have strong
earnings momentum.
AIM V.I. Value Fund
The fund's investment objective is to achieve long-term growth of capital.
Income is a secondary objective. The fund seeks to achieve its objectives by
investing primarily in equity securities judged by the fund's investment advisor
to be undervalued relative to the investment advisor's appraisal of the current
or projected earnings of the companies issuing the securities, or relative to
current market values of assets owned by the companies issuing the securities or
relative to the equity market generally.
THE ALGER AMERICAN FUND:
The Alger American Funds that are available under the contract are listed below.
Fred Alger Management, Inc., established in 1964, serves as the fund's
investment advisor. As of 12/31/99 they manage investments totaling $10.69
billion in mutual fund assets as well as $6.75 billion in other assets.
Alger American Growth Portfolio
The fund seeks long-term capital appreciation. It invests primarily in equity
securities, such as common or preferred stocks, which are listed on U.S.
exchanges or in the over-the-counter market. The Portfolio invests primarily in
"growth" stocks which focus on growing companies that generally have broad
product lines, markets, financial resources and depth of management.
Alger American Leveraged AllCap Portfolio.
The fund seeks long-term capital appreciation. It invests primarily in equity
securities, such as common or preferred stocks, which are listed on U.S.
exchanges or in the over-the-counter market. The portfolio invests primarily in
"growth" stocks which, under normal circumstances, includes the equity
securities of companies of any size which demonstrate promising growth
potential.
Alger American MidCap Growth Portfolio
<PAGE>
The fund seeks long-term capital appreciation. It invests primarily in equity
securities, such as common or preferred stocks, which are listed on U.S.
exchanges or in the over-the-counter market. The portfolio invests primarily in
"growth" stocks which focus on midsize companies with promising growth
potential.
Alger American Small Capitalization Portfolio
The fund seeks long-term capital appreciation. It invests primarily in equity
securities, such as common or preferred stocks, which are listed on U.S.
exchanges or in the over-the-counter market. The portfolio invests primarily in
"growth" stocks which focus on small, fast-growing companies that offer
innovative products, services or technologies to a rapidly expanding
marketplace.
DAVIS VARIABLE ACCOUNT FUND, INC.:
Davis Selected Advisers, L.P. serves as the investment adviser for each of the
Davis Funds available under this contract. Each of the Davis Funds is managed
using the Davis investment philosophy, which stresses a back-to-basics approach
using extensive research to buy growing companies at value prices and holding on
to them for the long term. The three Davis funds listed below were first offered
to the public on July 1, 1999.
Davis VA Financial Portfolio
The Portfolio's investment objective is growth of capital. The fund invests
primarily in common stock of financial companies. During normal market
conditions, at least 65% of the fund's assets are invested in companies that are
"principally engaged" in financial services.
Davis VA Real Estate Portfolio
The Portfolio's investment objective is total return through a combination of
growth and income. During normal market conditions, at least 65% of the fund's
assets are invested in "real estate securities," which are securities issued by
companies that are "principally engaged" in the real estate industry. The fund
does not invest directly in real estate.
Davis VA Value Portfolio
The Portfolio's investment objective is growth of capital. The fund invests
primarily in common stock of U.S. companies with market capitalizations of at
least $5 billion, which Davis believes are of high quality and whose shares are
selling at attractive prices. Stocks are selected with the intention of holding
them for the long term.
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST:
Franklin Templeton Variable Insurance Products Trust, formerly Franklin
Valuemark Funds, currently consists of 29 separate funds, offering a wide
<PAGE>
variety of investment choices. Each fund generally has two classes of shares,
class 1 and class 2. The funds are generally only available as investment
options in variable annuity or variable life insurance contracts. The fund's
investment managers and their affiliates manage over $229 billion in assets. The
Franklin Templeton portfolios available under this contract are listed below.
Franklin Growth and Income Securities Fund
The fund's principal investment goal is capital appreciation. It's secondary
goal is to provide current income. Under normal market conditions, the fund will
invest at least 65% of its total assets in a broadly diversified portfolio of
equity securities that the fund's manager considers to be financially strong,
but undervalued by the market.
Franklin Rising Dividends Securities Fund
The fund's investment goal is long-term capital appreciation. The fund will
invest primarily in the commons stocks of financially sound companies that have
paid consistently rising dividends.
Franklin Small Cap Fund
The fund's investment goal is long-term capital growth. Under normal market
conditions, the fund will invest at least 65% of its total assets in the equity
securities of U.S. small capitalization (small cap) companies.
Franklin U.S. Government Fund
The fund's investment goal is income. Under normal market conditions, the fund
will invest in a portfolio limited to U.S. Government securities, primarily
fixed and variable rate mortgage-backed securities.
Mutual Discovery Securities Fund
The fund's investment goal is capital appreciation. Under normal market
conditions, the fund will invest at least 65% of its total assets in equity
securities of companies of any nation that the manager believes are available at
market prices less than their value based on certain recognized or objective
criteria (intrinsic value).
Mutual Shares Securities Fund
The fund's principal investment goal is capital appreciation with income as a
secondary goal. Under normal market conditions, the fund will invest at least
65% of its total assets in equity securities of companies that the manager
believes are available at market prices less than their value based on certain
recognized or objective criteria (intrinsic value).
Templeton Developing Markets Securities Fund
The fund's investment goal is long-term capital appreciation. Under normal
market conditions, the fund will invest at least 65% of its total assets in
<PAGE>
emerging market equity securities. Emerging market countries are typically
located in the Asia-Pacific region, Eastern Europe, Central and South America,
and Africa.
Templeton Growth Securities Fund
The fund's investment goal is long-term capital growth. Under normal market
conditions, the fund will invest at least 65% of its total assets in the equity
securities of companies located anywhere in the world, including those in the
U.S. and emerging markets.
Templeton Pacific Growth Securities Fund
The fund's investment goal is long-term capital growth. Under normal market
conditions, the fund will invest at least 65% of its total assets in equity
securities that trade in Pacific Rim markets, some of which may be considered
emerging markets, and are issued by companies that have their principal
activities in the Pacific Rim.
JP MORGAN SERIES TRUST II:
J.P. Morgan Investment Management Inc. serves as the investment adviser for
each of the J.P. Morgan Series Trust II funds available under this contract.
J.P. Morgan employs over 380 analysts and portfolio managers around the world
and has approximately $373 billion in assets under management, as of September
30, 2000, including assets managed by J.P. Morgan Investment Management, Inc.
J.P. Morgan International Opportunities Portfolio
The portfolio's goal is to provide high total return from a portfolio of equity
securities of foreign companies. This goal can be changed only with shareholder
approval. The portfolio's assets are invested primarily in companies from
developed markets other than the U.S.
J.P. Morgan U.S. Disciplined Equity Portfolio
The portfolio's goal is to provide high total return from a portfolio of
selected equity securities. This goal can be changed only with shareholder
approval. The portfolio invests primarily in large-and medium-capitalization
U.S. companies.
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Funds, Inc. has been an investment adviser since 1960 and serves as
the investment adviser for each of the Oppenheimer Variable Account Funds
available under this contract. They manage more than $120 billion in assets, as
of March 31, 2000, including other Oppenheimer funds with more than 5 million
shareholder accounts.
Oppenheimer Global Securities Fund/VA
<PAGE>
The fund seeks long-term capital appreciation by investing a substantial portion
of assets in securities of foreign issuers, "growth-type" companies, cyclical
industries and special situations that are considered to have appreciation
possibilities. The fund invests mainly in common stocks, and can also buy other
equity securities including preferred stocks and securities convertible into
common stock.
Oppenheimer High Income Fund/VA
The fund seeks a high level of current income from investment in high-yield
fixed income securities. The fund invests mainly in a variety of high-yield
fixed-income securities of domestic and foreign issuers.
Oppenheimer Main Street Growth & Income Fund/VA
The fund's objective is to seek high total return (which includes growth in the
value of its shares as well as current income) from equity and debt securities.
The fund invests mainly in common stocks of U.S. companies, and can also invest
in other equity securities such as preferred stocks and securities convertible
into common stocks.
PIMCO VARIABLE INSURANCE TRUST:
Pacific Investment Management Company LLC (PIMCO), a Delaware limited liability
company, serves as the investment adviser for the PIMCO Variable Insurance Trust
Portfolios listed below. PIMCO provides investment management and advisory
services to private accounts of institutional and individual clients and to
mutual funds. As of September 30, 2000, PIMCO had approximately $207 billion in
assets under management.
PIMCO VIT High Yield Bond Portfolio
The Portfolio seeks maximum total return, consistent with preservation of
capital and prudent investment management. The Portfolio seeks to achieve its
investment objective by investing under normal circumstances at least 65% or its
assets in a diversified portfolio of high yield securities ("junk bonds") rated
below investment grade but rated at least B by Moody's or S&P.
PIMCO VIT StocksPLUS Growth and Income Portfolio
The Portfolio seeks total return which exceeds that of the S&P 500. The
Portfolio seeks to achieve its objective by investing under normal circumstances
substantially all of its assets in S&P 500 derivatives, backed by a portfolio of
Fixed Income Instruments.
PIMCO VIT Total Return Bond Portfolio
The Portfolio seeks maximum total return, consistent with preservation of
capital and prudent investment management. The Portfolio seeks to achieve its
investment objective by investing under normal circumstances at least 65% or its
assets in a diversified portfolio of Fixed Income Instruments of varying
maturities.
THE PRUDENTIAL SERIES FUND, INC.
The Prudential Series Fund, Inc. currently consists of 37 separate portfolios.
The fund offer two classes of shares, class 1 and class 2. Class 2 shares of the
funds listed below are available under this contract and are managed by
Prudential Investments Fund Management LLC (PIFM). PIFM has served as the
manager and administrator to investment companies since 1987 and as of August
31, 2000, manages assets of approximately $76.4 billion.
SP Jennison International Growth Portfolio
The Portfolio's investment objective is long-term growth of capital. The
Portfolio seeks to achieve this objective by investing in equity-related
securities of foreign issuers.
SP Strategic Partners Focused Growth Portfolio
The Portfolio's investment objective is long-term growth of capital. This means
the Portfolio seeks investments whose price will increase over several years.
The Portfolio normally invests at least 65% of its total assets in
equity-related securities of U.S. companies that the adviser believes to have
strong capital appreciation potential.
SELIGMAN PORTFOLIOS, INC.:
Seligman Portfolios Inc. consists of 15 separate portfolios managed by J.& W.
Seligman & Co. Incorporated (Seligman). The Portfolios listed below are
available under this contract. Seligman was established in 1864 and currently
serves as manager to 20 U.S. registered investment companies, which offer more
than 50 investment portfolios with approximately $30 billion is assets as of
March 31, 2000.
Seligman Global Technology Portfolio
The Portfolio's objective is long-term capital appreciation. The Portfolio
generally invests at least 65% of its assets in equity securities of U.S.
and non-U.S. companies with business operations in technology and
technology-related industries.
Seligman Small-Cap Value Portfolio
The Portfolio's objective is long-term capital appreciation. The Portfolio
generally invests at least 65% of its total assets in the common stocks of
"value" companies with small market capitalization (up to $1 billion) at the
time of purchase by the Portfolio.
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST:
<PAGE>
Allianz of America, Inc., established in 1976, is the adviser for the funds
available under the USAllianz Variable Insurance Products Trust. As of December
31, 1999 they managed more than $21 billion in fixed income, equity and real
estate investment. Allianz of America, Inc. is a subsidiary of Allianz AG
Holding, one of the world's largest insurance and financial services companies.
The following Portfolios are available under this contract and their investment
objectives may not be changed without shareholder approval.
USAllianz VIP Diversified Assets Fund
The fund's investment objective is total return consistent with reduction of
long-term volatility. The fund normally invests approximately 65% of its total
assets in fixed income securities.
USAllianz VIP Fixed Income Fund
The fund's investment objective is to maximize total return with secondary
emphasis on income. In pursuit of its objective, the fund normally invests at
least 80% of its total assets in fixed income securities rated within the four
highest rating categories by a primary credit rating agency.
USAllianz VIP Global Opportunities Fund
The fund's investment objective is long-term growth of capital. In pursuit of
its objective, the fund normally invests at least 80% of its total assets in
equity securities, which include common stocks, preferred stocks, convertible
securities, warrants and rights of U.S. and foreign issuers.
USAllianz VIP Growth Fund
The fund's investment objective is long-term growth of capital. In pursuit of
its objective, the fund normally invests at least 80% of its total assets in
equity securities, which include common stocks, preferred stocks and convertible
securities of U.S. issuers and foreign issuers whose securities are U.S. dollar
denominated and are traded on a U.S. Securities market.
USAllianz VIP Money Market Fund
The fund's investment objective is current income consistent with stability of
principal. The fund invests substantially all (but not less than 80%) of its
total assets in a diversified and liquid portfolio of high quality, money market
investments.
VAN KAMPEN LIFE INVESTMENT TRUST:
Van Kampen Asset Management Inc. is the investment adviser for the Portfolios
listed below which are offered under the Van Kampen Life Investment Trust.
Van Kampen Asset Management Inc. is a wholly owned subsidiary of Van Kampen
Investment Inc., a diversified asset management company with more than $90
billion under management or supervision as of December 31, 1999.
<PAGE>
Van Kampen LIT Enterprise Portfolio
The Portfolio's investment objective is to seek capital appreciation through
investments in securities believed by the Portfolio's investment adviser to have
above average potential for capital appreciation. The portfolio seeks to achieve
its investment objective by investing primarily in common stocks of "growth"
companies focusing on those securities believed to offer a combination of strong
business fundamentals at an attractive valuation.
Van Kampen LIT Growth and Income Portfolio
The Portfolio's investment objective is to seek long-term growth of capital and
income. The portfolio seeks to achieve its investment objective by investing
primarily in income-producing equity securities, including common stocks and
convertible securities.
PART B
STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY CONTRACTS
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
_____________, 2000
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL 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
INSURANCE COMPANY AT: 1750 Hennepin Avenue, Minneapolis, MN 55403-2195, (800)
542-5427.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE DATED
___________, 2000, AND MAY BE AMENDED FROM TIME TO TIME.
Table of Contents
Page
Insurance Company ....................................2
Experts...............................................2
<PAGE>
Legal Opinions........................................2
Distributor ..........................................2
Reduction or Elimination of the
Withdrawal Charge ...................................2
Calculation of Performance Data ......................3
Federal Tax Status ...................................9
Annuity Provisions ..................................15
Mortality and Expense Risk Guarantee.................16
Financial Statements.................................16
Insurance Company
Allianz Life Insurance Company of North America (the "Insurance Company") is a
stock life insurance company organized under the laws of the state of Minnesota
in 1896. The Insurance Company is a wholly-owned subsidiary of Allianz
Versicherungs-AG Holding ("Allianz"). Allianz is headquartered in Munich,
Germany, and has sales outlets throughout the world. The Insurance Company
offers fixed and variable life insurance and annuities, and group life, accident
and health insurance.
The Insurance Company is rated A++g 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 Insurance 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
subsidiary of the Insurance Company, acts as the distributor. The offering is on
a continuous basis.
Reduction or Elimination of the Withdrawal Charge
The amount of the withdrawal charge on the Contracts may be reduced or
eliminated when sales of the Contracts are made to individuals or to a group of
<PAGE>
individuals in a manner that results in savings of sales expenses. The
entitlement to a reduction of the withdrawal charge will be determined by the
Insurance Company after examination of the following factors: 1) the size of the
group; 2) the total amount of purchase payments expected to be received from the
group; 3) the nature of the group for which the Contracts are purchased, and the
persistency expected in that group (i.e., the expectation that the Contract
owners will continue to hold the Contracts for a certain period of time); 4) the
purpose for which the Contracts are purchased and whether that purpose makes it
likely that expenses will be reduced; and 5) any other circumstances which the
Insurance Company believes to be relevant to determining whether reduced sales
or administrative expenses may be expected. None of the reductions in charges
for sales is contractually guaranteed.
The withdrawal charge may be eliminated when the Contracts are issued to an
officer, director or employee of the Insurance Company or any of its affiliates.
The withdrawal charge may be reduced or eliminated when the Contract is sold by
an agent of the Insurance Company to any members of his or her immediate family
and the commission is waived. In no event will any reduction or elimination of
the withdrawal charge be permitted where the reduction or elimination will be
unfairly discriminatory to any person.
Calculation of Performance Data
Total Return
From time to time, the Insurance 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 an Accumulation Unit based on the
performance of a Portfolio over a stated period of time which is determined by
dividing the increase (or decrease) in value for that unit by the Accumulation
Unit value at the beginning of the period.
Any such performance data will include total return figures for the one, five,
and ten year (or since inception) time periods indicated. Such total return
figures will reflect the deduction of the mortality and expense risk charge, the
operating expenses of the underlying Portfolios and any applicable withdrawal
charge, contract maintenance charge and GVP charge ("Standardized Total
Return"). The withdrawal charge, contract maintenance charge and GVP charge
deductions are calculated assuming a Contract is fully withdrawn at the end of
the reporting period.
The hypothetical value of a Contract purchased for the time periods described
will be determined by using the actual Accumulation Unit values for an initial
$1,000 purchase payment, and deducting any applicable contract maintenance
charges and any applicable GVP charge and withdrawal charge to arrive at the
ending hypothetical value. 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:
n
P(1+T) = 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 payment made
at the beginning of the time periods used at the end of such time
periods (or fractional portion thereof).
The Insurance Company may also advertise performance data which will be
calculated in the same manner as described above but which will not reflect the
deduction of the withdrawal charge, the contract maintenance charge and the MVPB
charge. The Insurance Company may also advertise cumulative and average total
return information over different periods of time. The Company may also present
performance information computed on a different basis ("Non-Standardized Total
Return").
Cumulative total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that no sales load is
deducted from the initial $1,000 payment at the time it is allocated to the
Portfolios and assumes that the income earned by the investment in the Portfolio
is reinvested.
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 Contract Owner's total
return may be in any future period.
Yield
The USAllianz VIP Money Market Fund - The Insurance Company may advertise yield
information for the USAllianz VIP Money Market Fund. The USAllianz VIP 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 GVP charge and the contract maintenance
charge and, in certain instances, the value of the underlying Portfolio's
investment securities. The fact that the Portfolio's current yield will
fluctuate and that the principal is not guaranteed should be taken into
consideration when using the Portfolio'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 USAllianz VIP Money Market Fund's current yield is computed on a base period
return of a hypothetical Contract having a beginning balance of one Accumulation
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
<PAGE>
Accumulation 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, the GVP charge and
contract maintenance 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 September 30, 2000, the USAllianz VIP Money
Market Fund had a current yield of 3.42% and an effective yield of 3.48% for
Contracts with a mortality and expense risk charge of 1.50% and a current yield
of 2.92% and an effective yield of 2.96% for Contracts with a mortality and
expense risk charge of 2.00%.
Other Variable Options. The Insurance 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 USAllianz VIP 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
Accumulation Unit earned during the period (minus the deduction for the
mortality and expense risk charge, GVP charge and contract maintenance charge)
by the Accumulation 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);
c = the average daily number of accumulation units outstanding
during the period;
d = the maximum offering price per accumulation 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. Yield calculations assume no sales load. The
Insurance Company does not currently advertise yield information for any
Variable Option (other than the USAllianz VIP Money Market Fund).
Performance Ranking
Total return may be compared to relevant indices, including U.S. domestic and
<PAGE>
international indices and data from Lipper Analytical Services, Inc., Standard &
Poor's Indices, or VARDS(R).
From time to time, evaluation of performance by independent sources may also be
used.
Performance Information
Certain Portfolios have been in existence for some time and have investment
performance history. In order to show how investment performance of the
Portfolios affects Accumulation Unit values, the following performance
information was developed.
Effective May 1, 2000, the Templeton Developing Markets Securities Fund
(formerly known as the Templeton Developing Markets Fund, a fund of Templeton
Variable 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.
The charts below shows Accumulation Unit performance which assumes that the
Accumulation Units were invested in each of the Portfolios for the same periods.
o Chart A is for Contracts with the Return of Premium GMDB and the
Guaranteed Principal Protector benefit (based on the lowest mortality
and expense risk charge of 1.50%) using the Dimensions Asset
Allocation Model (assuming a 2% GVP charge).
O Chart B is for Contracts with the Double Principal GMDB and the
Guaranteed Performance Accumulator benefit (based on the highest
mortality and expense risk charge of 2.00%) using a self-directed
asset allocation method (assuming a 3% GVP charge).
o Chart C is for contracts with the Double Principal GMDB and the
Guaranteed Performance Accumulator benefit (based on the highest
mortality and expense risk charge of 2.00%) and using the maximum
possible GVP charge of 5%.
The performance figures in Column I represent performance figures for the
Accumulation Units which reflects the deduction of the mortality and expense
risk charge and the operating expenses of the Portfolios. Column II represents
performance figures for the Accumulation Units which reflects the mortality and
expense risk charge, the GVP charge, the contract maintenance charge, the
operating expenses of the Portfolios and assumes that you make a withdrawal at
the end of the period (therefore the withdrawal charge is reflected). Past
performance does not guarantee future results.
<PAGE>
Chart A
<TABLE>
<CAPTION>
Total Return for the periods ended September 30, 2000: HYPOTHETICAL
Column I Column II
-------------------------------------------------------------------------------------------------------------------------
Inception One Three Five Ten Since One Three Five Ten Since
Variable Option Date Year Year Year Year Inception Year Year Year Year Inception
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AIM VI Capital Appreciation 5/5/1993 53.08% 20.09% 18.68% NA 20.24% 41.92% 16.69% 16.24% NA 18.41%
AIM VI Growth 5/5/1993 23.44% 20.45% 20.50% NA 18.94% 12.88% 17.07% 18.13% NA 16.94%
AIM VI International Equity 5/5/1993 15.91% 9.52% 12.71% NA 12.15% 5.50% 5.91% 10.15% NA 10.62%
AIM VI Value 5/5/1993 8.42% 14.80% 15.89% NA 17.63% 0.32% 12.11% 14.30% NA 15.34%
Alger American Growth 1/9/1989 19.72% 22.24% 20.02% 22.00% 19.65% 9.23% 18.06% 17.50% 20.24% 17.96%
Alger American Leveraged AllCap 1/25/1995 32.95% 34.62% 27.00% NA 36.27% 22.19% 30.49% 24.47% NA 33.94%
Alger American MidCap Growth 5/3/1993 50.45% 22.81% 18.75% NA 23.36% 19.45% 16.70% NA NA 21.16%
Alger American Small
Capitalization 9/21/1988 17.20% 10.47% 8.30% 16.25% 16.72% 6.76% 6.89% 6.12% 14.80% 15.31%
Davis VA Financial* 7/1/1999 28.90% NA NA NA 11.36% 18.22% NA NA NA 5.26%
Davis VA Real Estate * 7/1/1999 15.95% NA NA NA 2.88% 5.53% NA NA NA -2.88%
Davis VA Value * 7/1/1999 19.32% NA NA NA 7.04% 8.83% NA NA NA 1.34%
Franklin Growth and Income Securities
(formerly known as the Franklin
Growth and Income Fund) 1/24/1989 10.53% 6.40% 12.03% 11.99% 9.32% 0.50% 3.55% 9.97% 10.65% 8.17%
Franklin Rising Dividends
Securities 1/27/1992 2.39% -0.32% 10.54% NA 7.94% -5.71% -2.84% 8.88% NA 7.10%
Franklin Small Cap 11/1/1995 69.74% 22.44% NA NA 24.87% 58.25% 19.06% NA NA 22.34%
Franklin U.S. Government 3/14/1989 4.98% 3.58% 4.42% 6.09% 5.89% -3.12% 1.26% 3.47% 5.37% 5.44%
JP Morgan International
Opportunities 1/3/1995 3.15% 4.32% 8.05% NA 8.12% -4.95% 1.29% 5.96% NA 6.72%
JP Morgan US Disciplined Equity 1/3/1995 2.96% 8.97% 15.34% NA 17.93% -5.14% 6.12% 13.27% NA 15.46%
Mutual Discovery Securities 11/8/1996 22.12% 6.18% NA NA 10.19% 11.58% 2.48% NA NA 7.22%
Mutual Shares Securities 11/8/1996 14.56% 5.53% NA NA 9.12% 4.17% 1.81% NA NA 6.22%
Oppenheimer Global
Securities/VA 11/12/1990 46.89% 22.49% 20.46% NA 14.68% 35.86% 19.13% 18.42% NA 13.24%
Oppenheimer High Income/VA 4/30/1986 0.72% 0.73% 5.69% 10.54% 9.40% -7.38% -1.73% 3.91% 9.16% 8.37%
Oppenheimer Main Street
Growth & Income/VA 7/5/1995 11.43% 8.19% 19.38% NA 20.18% 1.11% 4.55% 16.87% NA 18.36%
PIMCO VIT High Yield Bond 4/30/1998 1.42% NA NA NA 0.89% -6.68% NA NA NA -2.15%
PIMCO VIT Stocks PLUS Growth &
Income 12/31/1997 9.15% NA NA NA 14.54% 0.50% NA NA NA 10.68%
PIMCO VIT Total Return Bond 12/31/1997 4.98% NA NA NA 3.52% -3.12% NA NA NA 0.96%
Seligman Global Technology 5/1/1996 47.64% 35.96% NA NA 31.29% 36.59% 32.74% NA NA 28.95%
Seligman Small-Cap Value 5/1/1998 25.61% NA NA NA 11.35% 15.00% NA NA NA 7.75%
Templeton Developing Markets Securities
(formerly known as the Templeton
Developing Markets Fund) 3/15/1994 -6.52% -12.84% -1.94% NA -1.69% -14.62% -16.81% -4.10% NA -3.25%
Templeton Growth Securities (formerly
known as the Templeton Global
<PAGE>
Growth Fund) 3/15/1994 5.67% 4.06% 10.07% NA 9.70% -2.43% 1.02% 8.07% NA 8.31%
Templeton Pacific Growth Securities
(formerly known as the Templeton
Pacific Growth Fund) 1/27/1992 13.47% -13.51% -8.77% NA -1.80% -21.57% -17.53% -10.97% NA -2.59%
USAllianz VIP Diversified
Assets 11/12/99 NA NA NA NA 3.85% NA NA NA NA -4.25%
USAllianz VIP Fixed Income 11/12/99 NA NA NA NA 2.84% NA NA NA NA -5.26%
USAllianz VIP Global
Opportunities 1/13/00 NA NA NA NA -8.71% NA NA NA NA -16.81%
USAllianz VIP Growth 11/12/99 NA NA NA NA 4.92% NA NA NA NA -3.18%
USAllianz VIP Money Market 1/13/00 3.48% **Seven Day Effective Yield** 3.48% **Seven Day Effective Yield**
Van Kampen LIT Enterprise 4/7/1986 13.91% 10.53% 17.49% 16.17% 10.96% 3.53% 6.96% 14.97% 14.26% 9.47%
Van Kampen LIT Growth & Income12/23/1996 17.36% 11.40% NA NA 15.20% 6.91% 7.85% NA NA 12.27%
<FN>
Class II shares of the SP Jennison International Growth Portfolio and the SP
Strategic Partners Focused Growth Portfolio commenced operations as of December
15, 2000, therefore no performance is shown for these Sub-Accounts.
</FN>
</TABLE>
Chart B
<TABLE>
<CAPTION>
Total Return for the periods ended September 30, 2000: HYPOTHETICAL
Column I Column II
------------------------------------------------------------------------------------------------------------------------
Inception One Three Five Ten Since One Three Five Ten Since
Variable Option Date Year Year Year Year Inception Year Year Year Year Inception
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AIM VI Capital Appreciation 5/5/1993 52.32% 19.49% 18.08% NA 19.64% 39.65% 15.25% 14.92% NA 17.22%
AIM VI Growth 5/5/1993 22.83% 19.85% 19.90% NA 18.35% 11.05% 15.63% 16.80% NA 15.44%
AIM VI International Equity 5/5/1993 15.34% 8.97% 12.15% NA 11.59% 3.78% 4.59% 8.66% NA 9.46%
AIM VI Value 5/5/1993 7.88% 14.23% 15.31% NA 17.04% -0.22% 11.12% 13.23% NA 13.65%
Alger American Growth 1/9/1989 19.13% 21.63% 19.42% 21.39% 19.05% 7.46% 16.24% 15.95% 18.79% 16.55%
Alger American Leveraged
AllCap 1/25/1995 32.28% 33.95% 26.35% NA 35.59% 20.22% 28.80% 23.00% NA 32.31%
Alger American MidCap Growth 5/3/1993 49.70% 22.20% 18.16% NA 22.74% 37.11% 17.99% 15.37% NA 19.49%
Alger American Small
Capitalization 9/21/1988 16.62% 9.92% 7.76% 15.67% 16.13% 5.02% 5.56% 4.90% 13.53% 14.05%
Davis VA Financial* 7/1/1999 28.26% NA NA NA 10.80% 16.31% NA NA NA 4.48%
Davis VA Real Estate* 7/1/1999 15.37% NA NA NA 2.37% 3.81% NA NA NA -3.40%
Davis VA Value* 7/1/1999 18.72% NA NA NA 6.50% 7.06% NA NA NA 0.80%
Franklin Growth and Income
Securities 1/24/1989 9.98% 5.87% 11.47% 11.43% 8.78% 0.00% 3.01% 8.95% 9.66% 7.10%
Franklin Rising Dividends
Securities 1/27/1992 1.88% -0.82% 9.99% NA 7.40% -6.22% -3.36% 7.85% NA 6.19%
Franklin Small Cap 11/1/1995 68.90% 21.83% NA NA 24.25% 55.73% 17.60% NA NA 20.71%
<PAGE>
Franklin U.S. Government 3/14/1989 4.45% 3.06% 3.89% 5.56% 5.36% -3.65% 0.72% 2.93% 4.60% 4.80%
JP Morgan International
Opportunities 1/3/1995 2.63% 3.80% 7.51% NA 7.58% -5.47% 0.38% 4.97% NA 5.84%
JP Morgan US Disciplined Equity 1/3/1995 2.45% 8.43% 14.76% NA 17.34% -5.65% 5.17% 11.98% NA 13.84%
Mutual Discovery Securities 11/8/1996 21.51% 5.65% NA NA 9.65% 9.77% 1.19% NA NA 5.81%
Mutual Shares Securities 11/8/1996 13.99% 5.00% NA NA 8.58% 2.47% 0.53% NA NA 5.36%
Oppenheimer Global
Securities/VA 11/12/1990 46.16% 21.88% 19.86% NA 14.11% 33.68% 17.67% 17.08% NA 12.06%
Oppenheimer High Income/VA 4/30/1986 0.22% 0.22% 5.16% 9.99% 8.86% -7.88% -2.26% 2.92% 8.06% 7.45%
Oppenheimer Main Street
Growth & Income/VA 7/5/1995 10.88% 7.65% 18.79% NA 19.58% 0.00% 3.43% 15.41% NA 17.06%
PIMCO VIT High Yield Bond 4/30/1998 0.91% NA NA NA 0.39% -7.19% NA NA NA -2.67%
PIMCO VIT Stocks PLUS Growth &
Income 12/31/1997 8.60% NA NA NA 13.97% 0.00% NA NA NA 9.24%
PIMCO VIT Total Return Bond 12/31/1997 4.45% NA NA NA 3.00% -3.65% NA NA NA 0.42%
Seligman Global Technology 5/1/1996 46.91% 35.28% NA NA 30.64% 34.40% 31.13% NA NA 27.39%
Seligman Small-Cap Value 5/1/1998 24.98% NA NA NA 10.80% 13.14% NA NA NA 6.70%
Templeton Developing Markets
Securities 3/15/1994 -6.93% -13.26% -2.42% NA -2.17% -15.03% -17.58% -5.01% NA -4.21%
Templeton Growth Securities 3/15/1994 5.14% 3.54% 9.52% NA 9.15% -2.96% 0.12% 7.07% NA 7.25%
Templeton Pacific Growth
Securities 1/27/1992 -14.10% -14.32% -9.47% NA -2.44% -22.20% -18.72% -11.91% NA -3.56%
USAllianz VIP Diversified
Assets 11/12/99 NA NA NA NA 3.40% NA NA NA NA -4.70%
USAllianz VIP Fixed Income 11/12/99 NA NA NA NA 2.39% NA NA NA NA -5.71%
USAllianz VIP Global
Opportunities 1/13/00 NA NA NA NA -9.01% NA NA NA NA -17.11%
USAllianz VIP Growth 11/12/99 NA NA NA NA 4.46% NA NA NA NA -3.64%
USAllianz VIP Money Market 1/13/00 2.96% **Seven Day Effective Yield** 2.96% **Seven Day Effective Yield**
Van Kampen LIT Enterprise 4/7/1986 13.34% 9.98% 16.91% 15.59% 10.41% 1.84% 5.62% 13.42% 12.88% 8.26%
Van Kampen LIT Growth & Income12/23/1996 16.77% 10.85% NA NA 14.62% 5.17% 6.50% NA NA 10.82%
<FN>
Class II shares of the SP Jennison International Growth Portfolio and the SP
Strategic Partners Focused Growth Portfolio commenced operations as of December
15, 2000, therefore no performance is shown for these Sub-Accounts.
</FN>
</TABLE>
Chart C
<TABLE>
<CAPTION>
Total Return for the periods ended September 30, 2000: HYPOTHETICAL
Column I Column II
-------------------------------------------------------------------------------------------------------------------------
Inception One Three Five Ten Since One Three Five Ten Since
Variable Option Date Year Year Year Year Inception Year Year Year Year Inception
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AIM VI Capital Appreciation 5/5/1993 52.32% 19.49% 18.08% NA 19.64% 36.61% 13.59% 13.46% NA 15.91%
AIM VI Growth 5/5/1993 22.83% 19.85% 19.90% NA 18.35% 8.59% 13.96% 15.32% NA 13.82%
AIM VI International Equity 5/5/1993 15.34% 8.97% 12.15% NA 11.59% 1.47% 3.06% 6.80% NA 8.24%
AIM VI Value 5/5/1993 7.88% 14.23% 15.31% NA 17.04% -0.22% 10.31% 12.26% NA 11.62%
Alger American Growth 1/9/1989 19.13% 21.63% 19.42% 21.39% 19.05% 5.08% 14.57% 14.47% 17.31% 14.90%
Alger American Leveraged
AllCap 1/25/1995 32.28% 33.95% 26.35% NA 35.59% 17.58% 26.96% 21.44% NA 30.37%
Alger American MidCap Growth 5/3/1993 49.70% 22.20% 18.16% NA 22.74% 34.12% 16.29% 13.90% NA 17.36%
Alger American Small
Capitalization 9/21/1988 16.62% 9.92% 7.76% 15.67% 16.13% 2.69% 4.01% 3.84% 12.26% 12.72%
Davis VA Financial* 7/1/1999 28.26% NA NA NA 10.80% 13.75% NA NA NA 4.03%
Davis VA Real Estate* 7/1/1999 15.37% NA NA NA 2.37% 1.51% NA NA NA -3.40%
Davis VA Value* 7/1/1999 18.72% NA NA NA 6.50% 4.69% NA NA NA 0.80%
Franklin Growth and Income
Securities 1/24/1989 9.98% 5.87% 11.47% 11.43% 8.78% 0.00% 3.01% 8.48% 8.97% 6.21%
Franklin Rising Dividends
Securities 1/27/1992 1.88% -0.82% 9.99% NA 7.40% -6.22% -3.36% 6.93% NA 5.43%
Franklin Small Cap 11/1/1995 68.90% 21.83% NA NA 24.25% 52.36% 15.91% NA NA 18.68%
Franklin U.S. Government 3/14/1989 4.45% 3.06% 3.89% 5.56% 5.36% -3.65% 0.72% 2.93% 4.28% 4.67%
JP Morgan International
Opportunities 1/3/1995 2.63% 3.80% 7.51% NA 7.58% -5.47% -0.36% 4.06% NA 5.44%
JP Morgan US Disciplined Equity 1/3/1995 2.45% 8.43% 14.76% NA 17.34% -5.65% 4.40% 10.54% NA 11.75%
Mutual Discovery Securities 11/8/1996 21.51% 5.65% NA NA 9.65% 7.34% -0.30% NA NA 4.48%
Mutual Shares Securities 11/8/1996 13.99% 5.00% NA NA 8.58% 0.19% -0.95% NA NA 4.77%
Oppenheimer Global
Securities/VA 11/12/1990 46.16% 21.88% 19.86% NA 14.11% 30.76% 15.98% 15.59% NA 10.93%
Oppenheimer High Income/VA 4/30/1986 0.22% 0.22% 5.16% 9.99% 8.86% -7.88% -2.26% 2.32% 7.07% 6.69%
Oppenheimer Main Street
Growth & Income/VA 7/5/1995 10.88% 7.65% 18.79% NA 19.58% 0.00% 2.66% 13.94% NA 15.64%
PIMCO VIT High Yield Bond 4/30/1998 0.91% NA NA NA 0.39% -7.19% NA NA NA -2.67%
PIMCO VIT Stocks PLUS Growth &
Income 12/31/1997 8.60% NA NA NA 13.97% 0.00% NA NA NA 7.50%
PIMCO VIT Total Return Bond 12/31/1997 4.45% NA NA NA 3.00% -3.65% NA NA NA 0.42%
Seligman Global Technology 5/1/1996 46.91% 35.28% NA NA 30.64% 31.47% 29.26% NA NA 25.56%
Seligman Small-Cap Value 5/1/1998 24.98% NA NA NA 10.80% 10.64% NA NA NA 6.64%
Templeton Developing Markets
Securities 3/15/1994 -6.93% -13.26% -2.42% NA -2.17% -15.03% -18.22% -5.85% NA -5.16%
Templeton Growth Securities 3/15/1994 5.14% 3.54% 9.52% NA 9.15% -2.96% -0.62% 6.14% NA 6.21%
Templeton Pacific Growth
Securities 1/27/1992 -14.10% -14.32% -9.47% NA -2.44% -22.20% -19.36% -12.31% NA -4.26%
USAllianz VIP Diversified
Assets 11/12/99 NA NA NA NA 3.40% NA NA NA NA -4.70%
USAllianz VIP Fixed Income 11/12/99 NA NA NA NA 2.39% NA NA NA NA -5.71%
USAllianz VIP Global
Opportunities 1/13/00 NA NA NA NA -9.01% NA NA NA NA -17.11%
USAllianz VIP Growth 11/12/99 NA NA NA NA 4.46% NA NA NA NA -3.64%
USAllianz VIP Money Market 1/13/00 2.96% **Seven Day Effective Yield** 2.96% **Seven Day Effective Yield**
Van Kampen LIT Enterprise 4/7/1986 13.34% 9.98% 16.91% 15.59% 10.41% 0.00% 4.22% 11.58% 11.32% 7.16%
Van Kampen LIT Growth & Income12/23/1996 16.77% 10.85% NA NA 14.62% 2.84% 4.95% NA NA 9.27%
<FN>
Class II shares of the SP Jennison International Growth Portfolio and the SP
Strategic Partners Focused Growth Portfolio commenced operations as of December
15, 2000, therefore no performance is shown for these Sub-Accounts.
</FN>
</TABLE>
Illustration of the Guaranteed Value Protection Benefit
--------------------------------------------------------------------------------
The Insurance Company may advertise the Guaranteed Value Protection Benefit
(GVP) through illustrations in sales literature, advertisements, personalized
illustrations, and Contract Owner communications. Such illustrations may show
the Contract value, full or partial withdrawal values, death benefits, or the
GVP guarantee accounts, assuming the historical performance data of specific
Portfolios or using a hypothetical return (which return will not exceed 12%).
Such values will include the deduction of mortality and expense risk charges,
the operating expenses of any specific Portfolio, and any applicable withdrawal
charges, GVP charges and contract maintenance charges. The withdrawal charges,
the GVP charges and contract maintenance charges are calculated assuming a
Contract is fully surrendered at the end of the Contract year.
The hypothetical values of a Contract purchased for time periods described will
be determined by using the Accumulation Unit values for a variable option
investing in a specific Portfolio for a stated purchase payment, and deducting
any applicable mortality and expense risk charge, contract maintenance charge,
GVP charge and withdrawal charge to arrive at the ending hypothetical value. If
a hypothetical return is used unrelated to any specific Portfolio, mortality and
expense risk charges, contract maintenance charges, and GVP charges will also be
deducted from the hypothetical return. Partial withdrawal charges, death
benefits, GVP benefits and GVP guarantee accounts are calculated as described in
the Contract and Prospectus.
Federal Tax Status
Note: The following description is based upon the Insurance Company's
understanding of current federal income tax law applicable to annuities in
general. The Insurance 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 Insurance 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 ("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
<PAGE>
sum payment or as annuity payments under the Annuity Option elected. For a lump
sum payment received as a total withdrawal (total redemption) or death benefit,
the recipient is taxed on the portion of the payment that exceeds the cost basis
of the Contract. For Non-Qualified Contracts, this cost basis is generally the
purchase payments, while for Qualified Contracts there may be no cost basis. The
taxable portion of the lump sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. 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
feature) bears to the expected return under the Contract. The exclusion amount
for payments based on a variable annuity option is determined by dividing the
cost basis of the Contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e. when the
total of the excludible amounts equal the investment in the Contract) are fully
taxable. The taxable portion 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 Insurance 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 Insurance Company, and its operations form a part of the Insurance 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 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
<PAGE>
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 Insurance Company intends that all Portfolios underlying the Contracts will
be managed by the investment managers 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 Insurance Company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
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.
Contract Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity contract in any calendar year period.
<PAGE>
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on purchase payments
for the Contracts will be taxed currently to the Contract Owner if the Owner is
a non-natural person, e.g., a corporation or certain other entities. Such
Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to Contracts held by a trust or
other entity as an agent for a natural person nor to Contracts held by qualified
plans. Purchasers should consult their own tax counsel or other tax adviser
before purchasing a Contract to be owned by a non-natural person.
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/Guaranteed Value Protection 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.
Any amounts credited to the Contract value under a guaranteed value protection
benefit in an endorsement to the Contract will be treated for tax purposes as
earnings.
If the death benefit endorsements are to be used with a Qualified Contract, such
death benefits may be considered by the Internal Revenue Service as "incidental
death benefits." The Code imposes limits on the amount of incidental death
benefits allowable for qualified contracts, and if the death benefits selected
by you are considered to exceed such limits, the provisions of such benefits
could result in currently taxable income to the owners of the Qualified
Contracts. Furthermore, the Code provides that the assets of an IRA may be not
invested in life insurance, but may provide in the case of death during the
Accumulation Phase for a death benefit payment equal to the greater of purchase
payments or contract value. The Contract offers death benefits which may exceed
the greater of Purchase Payments or Contract Value. If these death benefits are
determined by the Internal Revenue Service as providing life insurance, the
Contract may not qualify as an IRA (including ROTH IRAs). You should consult
your tax adviser regarding these features and benefits prior to purchasing a
Contract.
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
<PAGE>
cases, may elect not to have taxes withheld or to have withholding done at a
different rate.
Certain distributions from retirement plans qualified under Section 401 or
Section 403(b) of the Code, which are not directly rolled over to another
eligible retirement plan or individual retirement account or individual
retirement annuity, are subject to a mandatory 20% withholding for federal
income tax. The 20% withholding requirement generally does not apply to: (a) a
series of substantially equal payments made at least annually for the life or
life expectancy of the participant or joint and last survivor expectancy of the
participant and a designated beneficiary, or for a specified period of 10 years
or more; or (b) distributions which are required minimum distributions; or (c)
the portion of the distributions not includible in gross income (i.e. returns of
after-tax contributions); or (d) hardship withdrawals. Participants should
consult their own tax counsel or other tax adviser regarding withholding
requirements.
Tax Treatment of Withdrawals - 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 includable 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 or for the joint lives (or joint life
expectancies) of the taxpayer and his beneficiary; (e) under an immediate
annuity; or (f) which are allocable to purchase payments made prior to August
14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic 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 liquidation (withdrawal) during the Payout Phase 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 unless another exception to the penalty tax
applies. You should obtain competent tax advice before you make any liquidations
from your Contract.
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 Withdrawals - Qualified Contracts.") Qualified Plans
<PAGE>
Qualified Plans
The Contracts offered by the Prospectus are designed to be suitable for use
under various types of Qualified Plans. Because of the minimum purchase payment
requirements, these Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified Plan varies with
the type of plan and terms and conditions of each specific plan. Contract
Owners, Annuitants and beneficiaries are cautioned that benefits under a
Qualified Plan 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. Some
retirement plans are subject to distribution and other requirements that are not
incorporated into the Insurance Company's administrative procedures. The Company
is not bound by the terms and conditions of such plans to the extent such terms
conflict with the terms of a Contract, unless the Company specifically consents
to be bound. Contract Owners, participants and beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law.
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. Following are general descriptions
of the types of Qualified Plans with which the Contracts may be used. Such
descriptions are not exhaustive and are for general informational purposes only.
The tax rules regarding Qualified Plans are very complex and will have differing
applications, depending on individual facts and circumstances. Each purchaser
should obtain competent tax advice prior to purchasing a Contract issued under a
Qualified Plan.
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. The Contracts sold by the Insurance Company in
connection with Qualified Plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Statement of Additional Information. Generally, Contracts issued pursuant
to Qualified Plans are not transferable except upon withdrawal or annuitization.
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 withdrawals from Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts.")
a. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
<PAGE>
contributions to the Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employee until the
employee receives distributions from the Contract. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals - Qualified Contracts" and "Tax-Sheltered Annuities -
Withdrawal Limitations.") Employee loans are not allowed under these Contracts.
Any employee should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
b. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which may be deductible from the individual's taxable income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified 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. Sales of
Contracts for use with IRAs 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.
Roth IRAs
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall $2,000 annual limitation continues to apply to all
of a taxpayer's IRA contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
<PAGE>
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. However, for rollovers in 1998, the
individual may pay that tax ratably over the four taxable year periods beginning
with tax year 1998. Purchasers of Contracts to be qualified as a Roth IRA should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
c. Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit employers, including self-employed
individuals, to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the Contracts to provide benefits
under the Plan. Contributions to the Plan for the benefit of employees will not
be includible in the gross income of the employee until distributed from the
Plan. The tax consequences to participants may vary, depending upon the
particular Plan design. However, the Code places limitations and restrictions on
all Plans, including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions and withdrawals.
Participant loans are not allowed under the Contracts purchased in connection
with these Plans. (See "Tax Treatment of Withdrawals - Qualified Contracts.")
Purchasers of Contracts for use with Pension or Profit-Sharing Plans should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
Tax Treatment of Withdrawals - Qualified Contracts
In the case of a withdrawal under a Qualified 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 Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
403(b) (Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement
Annuities). To the extent amounts are not includible in gross income because
they have been properly 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 Contract Owner or Annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the Contract Owner or
Annuitant (as applicable) (for this purpose disability is as defined in Section
72(m)(7) of the Code); (c) after separation from service, distributions that are
part of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the Contract Owner or Annuitant
(as applicable) or the joint lives (or joint life expectancies) of such Contract
Owner or Annuitant (as applicable) and his or her designated beneficiary; (d)
<PAGE>
distributions to a Contract Owner or Annuitant (as applicable) who has separated
from service after he or she has attained age 55; (e) distributions made to the
Contract Owner or Annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
Contract Owner or Annuitant (as applicable) for amounts paid during the taxable
year for medical care; (f) distributions made to an alternate payee pursuant to
a qualified domestic relations order; (g) distributions made on account of an
IRS levy on the Qualified Contract; (h) distributions from an Individual
Retirement Annuity for the purchase of medical insurance (as described in
Section 213(d)(1)(D) of the Code) for the Contract Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Contract Owner or
Annuitant (as applicable) has received unemployment compensation for at least 12
weeks (this exception no longer applies after the Contract Owner or Annuitant
(as applicable) has been re-employed for at least 60 days); (i) distributions
from an Individual Retirement Annuity made to the Owner or Annuitant (as
applicable) 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 Owner or
Annuitant (as applicable) for the taxable year; and (j) distributions from an
Individual Retirement Annuity made to the Owner or Annuitant (as applicable)
which are qualified first-time home buyer distributions (as defined in Section
72(t)(8) of the Code). The exceptions stated in items (d) and (f) above do not
apply in the case of an Individual Retirement Annuity. The exception stated in
item (c) applies to an Individual Retirement Annuity without the requirement
that there be a separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic 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 liquidation (withdrawal) during the Payout Phase 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 unless another exception to the penalty tax
applies. You should obtain competent tax advice before you make any liquidations
from your Contract.
Generally, distributions from a Qualified Plan 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. Required distributions must be over a period not exceeding the 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-Sheltered Annuities - Withdrawal Limitations
The Code limits the withdrawal of amounts attributable to contributions made
<PAGE>
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Contract Owner: (1) attains age 59 1/2;
(2) separates from service; (3) dies; (4) becomes disabled (within the meaning
of Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Contract Owner's
Contract Value which represents contributions by the Contract Owner and does not
include any investment results. The limitations on withdrawals became effective
on January 1, 1989 and apply only to salary reduction contributions made after
December 31, 1988, and to income attributable to such contributions and to
income attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers and transfers between certain Qualified
Plans. Contract Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
Annuity Provisions
Fixed Annuity Payout
A fixed annuity is an annuity with payments which are guaranteed as to dollar
amount by the Insurance Company and do not vary with the investment experience
of a Portfolio. The Fixed Account value on the day immediately preceding the
Income Date will be used to determine the Fixed Annuity monthly payment. The
monthly Annuity Payment will be based upon the Contract Value at the time of
annuitization, the Annuity Option selected, the age of the Annuitant and any
joint Annuitant and the sex of the Annuitant and joint Annuitant where allowed.
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 Portfolio(s).
Annuity Unit Value
On the Income Date, a fixed number of Annuity Units will be purchased as
follows:
The first Annuity Payment is equal to the Adjusted Contract Value, 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 Variable Option the
fixed number of Annuity Units is determined by dividing the amount of the
initial Annuity Payment determined for each Variable Option by the Annuity Unit
value on the Income Date. Thereafter, the number of Annuity Units in each
Variable Option remains unchanged unless the Contract Owner elects to transfer
between Variable Options. 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 for each Variable Option. The Annuity Payment in each
Variable Option is determined by multiplying the number of Annuity Units then
allocated to such Variable Option by the Annuity Unit value for that Variable
<PAGE>
Option. On each subsequent valuation date, the value of an Annuity Unit is
determined in the following way:
First: The Net Investment Factor is determined as described in the Prospectus
under "Purchase - Accumulation Units."
Second: The value of an Annuity Unit for a valuation period is equal to:
a. the value of the Annuity Unit for the immediately preceding valuation
period.
b. multiplied by the Net Investment Factor for the current valuation period;
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. The Assumed Investment
Return that the Insurance Company will use is either 3%, 5% or 7%, based on the
Contract Owner's selection and any applicable state laws.
Mortality and Expense Risk Guarantee
The Insurance Company guarantees that the dollar amount of each Annuity Payment
after the first Annuity Payment will not be affected by variations in mortality
and expense experience.
Financial Statements
The audited consolidated financial statements of the Insurance Company as of and
for the year ended December 31, 1999, included herein should be considered only
as bearing upon the ability of the Insurance 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 September 30,
2000 are also included herein.
ALLIANZ LIFE VARIABLE ACCOUNT B
of
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements
September 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C>
Investments at net asset value $4,081 - 56,344 - 1,627 - 2,617 -
---------------------------------------------------------------------------------------------------------------------------
Total assets 4,081 - 56,344 - 1,627 - 2,617 -
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional 1 - 5 - 1 - (1) -
USAllianz Alterity Enhanced 1 - 1 - - - 1 -
USAllianz Alterity Optional 1 - 2 - 1 - 2 -
USAllianz Rewards Traditional 4 - 2 - - - 3 -
USAllianz Rewards Enhanced (2) - (2) - - - 1 -
Valuemark II & III - - 7 - - - - -
Valuemark IV - - 6 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 5 - 21 - 2 - 6 -
Net assets $4,076 - 56,323 - 1,625 - 2,611 -
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $578 - 1,137 - 326 - 358 -
USAllianz Alterity Enhanced (note 7) 132 - 273 - 29 - 179 -
USAllianz Alterity Optional (note 7) 503 - 460 - 218 - 430 -
USAllianz Rewards Traditional (note 8) 2,287 - 1,112 - 830 - 1,213 -
USAllianz Rewards Enhanced (note 8) 576 - 853 - 222 - 431 -
Valuemark II and III (note 5) - - 29,006 - - - - -
Valuemark IV (note 5) - - 23,311 - - - - -
Valuemark Charter Traditional (note 6) - - - - - - - -
Valuemark Charter Enhanced (note 6) - - - - - - - -
Contracts in annuity payment period (note 2) - - 171 - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $4,076 - 56,323 - 1,625 - 2,611 -
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 100 - 1,708 - 67 - 84 -
Investments at Cost $4,039 - 57,343 - 1,757 - 2,809 -
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
ALGER ALGER ALGER AMERICAN
ALGER AMERICAN AMERICAN SMALL CAPITALIZATION
AMERICAN GROWTH FUNDLEVERAGED ALLCAP FUNDMIDCAP GROWTH FUND PORTFOLIO
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C>
Investments at net asset value $40,836 - 26,156 - 2,609 - 506 -
---------------------------------------------------------------------------------------------------------------------------
Total assets 40,836 - 26,156 - 2,609 - 506 -
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - (1) - 2 - - -
USAllianz Alterity Enhanced 1 - 1 - 1 - - -
USAllianz Alterity Optional 1 - (1) - (2) - (2) -
USAllianz Rewards Traditional 4 - 2 - 2 - - -
USAllianz Rewards Enhanced (2) - 1 - 2 - (3) -
Valuemark II & III (3) - 6 - - - - -
Valuemark IV (6) - 6 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total liabilities (5) - 14 - 5 - (5) -
---------------------------------------------------------------------------------------------------------------------------
Net assets $40,841 - 26,142 - 2,604 - 511 -
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $397 - 508 - 531 - 70 -
USAllianz Alterity Enhanced (note 7) 151 - 295 - 243 - 36 -
USAllianz Alterity Optional (note 7) 282 - 343 - 330 - 167 -
USAllianz Rewards Traditional (note 8) 2,014 - 1,187 - 771 - 131 -
USAllianz Rewards Enhanced (note 8) 467 - 366 - 729 - 107 -
Valuemark II and III (note 5) 21,228 - 12,236 - - - - -
Valuemark IV (note 5) 16,164 - 11,169 - - - - -
Valuemark Charter Traditional (note 6) - - - - - - - -
Valuemark Charter Enhanced (note 6) - - - - - - - -
Contracts in annuity payment period (note 2) 138 - 38 - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $40,841 - 26,142 - 2,604 - 511 -
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 737 - 526 - 77 - 17 -
Investments at Cost $45,230 - 30,168 - 2,587 - 585 -
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
DAVIS VA DAVIS VA DAVIS VA FRANKLIN
FINANCIAL REAL ESTATE VALUE AGGRESSIVE GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C>
Investments at net asset value $729 - 1,248 - 1,493 - 9,897 -
---------------------------------------------------------------------------------------------------------------------------
Total assets 729 - 1,248 - 1,493 - 9,897 -
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - (1) - 1 - - -
USAllianz Alterity Enhanced (3) - - - 3 - - -
USAllianz Alterity Optional - - 2 - 2 - - -
USAllianz Rewards Traditional - - 1 - 1 - - -
USAllianz Rewards Enhanced 1 - - - 1 - - -
Valuemark II & III - - - - - - 6 -
Valuemark IV - - - - - - 6 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total liabilities (2) - 2 - 8 - 12 -
Net assets $731 - 1,246 - 1,485 - 9,885 -
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $223 - 119 - 151 - - -
USAllianz Alterity Enhanced (note 7) 4 - 14 - 58 - - -
USAllianz Alterity Optional (note 7) 2 - 524 - 488 - - -
USAllianz Rewards Traditional (note 8) 160 - 489 - 439 - - -
USAllianz Rewards Enhanced (note 8) 342 - 100 - 349 - - -
Valuemark II and III (note 5) - - - - - - 6,588 -
Valuemark IV (note 5) - - - - - - 3,263 -
Valuemark Charter Traditional (note 6) - - - - - - - -
Valuemark Charter Enhanced (note 6) - - - - - - - -
Contracts in annuity payment period (note 2) - - - - - - 34 -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $731 - 1,246 - 1,485 - 9,885 -
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 63 - 123 - 135 - 831 -
Investments at Cost $660 - 1,239 - 1,504 - 9,806 -
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN FRANKLIN
GLOBAL COMMUNICATIONSGLOBAL HEALTH CARE GROWTH AND INCOME HIGH INCOME
SECURITIES FUND SECURITIES FUND FUND FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value $669,578 686 37,998 385 734,877 1,351 195,042 447
---------------------------------------------------------------------------------------------------------------------------
Total assets 669,578 686 37,998 385 734,877 1,351 195,042 447
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - 1 - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 173 - 7 - 308 - 41 -
Valuemark IV 7 - 6 - 11 - 9 -
Valuemark Charter Traditional - 4 - 2 - 10 - 4
Valuemark Charter Enhanced - 4 - 1 - 6 - 1
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 180 8 13 3 319 17 50 5
Net assets $669,398 678 37,985 382 734,558 1,334 194,992 442
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - - - - - 107 - -
USAllianz Alterity Enhanced (note 7) - - - - - - - -
USAllianz Alterity Optional (note 7) - - - - - 119 - -
USAllianz Rewards Traditional (note 8) - - - - - 149 - -
USAllianz Rewards Enhanced (note 8) - - - - - 121 - -
Valuemark II and III (note 5) 611,351 - 22,938 - 588,806 - 130,094 -
Valuemark IV (note 5) 53,670 - 15,047 - 135,728 - 63,835 -
Valuemark Charter Traditional (note 6) - 402 - 241 - 388 - 373
Valuemark Charter Enhanced (note 6) - 276 - 141 - 450 - 69
Contracts in annuity payment period (note 2) 4,377 - - - 10,024 - 1,063 -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $669,398 678 37,985 382 734,558 1,334 194,992 442
Investment Shares 39,809 41 2,207 22 44,270 82 20,727 48
Investments at Cost $684,414 787 26,629 281 708,383 1,343 249,185 465
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN FRANKLIN
INCOME SECURITIES LARGE CAP GROWTH MONEY MARKET NATURAL RESOURCES
FUND SECURITIES FUND FUND SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value $621,361 1,505 446,421 1,413 251,281 12,613 43,280 84
---------------------------------------------------------------------------------------------------------------------------
Total assets 621,361 1,505 446,421 1,413 251,281 12,613 43,280 84
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 334 - 85 - 165 - 7 -
Valuemark IV 9 - 13 - 7 - 6 -
Valuemark Charter Traditional - 17 - 12 - 89 - 1
Valuemark Charter Enhanced - 3 - 6 - - - 1
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 343 20 98 18 172 89 13 2
Net assets $621,018 1,485 446,323 1,395 251,109 12,524 43,267 82
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period: $ - - - - - - - -
USAllianz Alterity Traditional (note 7) - - - - - - - -
USAllianz Alterity Enhanced (note 7) - - - - - - - -
USAllianz Alterity Optional (note 7) - - - - - - - -
USAllianz Rewards Traditional (note 8) - - - - - - - -
USAllianz Rewards Enhanced (note 8) - - - - - - - -
Valuemark II and III (note 5) 514,503 - 251,167 - 186,965 - 34,475 -
Valuemark IV (note 5) 100,150 - 186,223 - 62,209 - 8,754 -
Valuemark Charter Traditional (note 6) - 1,233 - 873 - 12,524 - 69
Valuemark Charter Enhanced (note 6) - 252 - 522 - - - 13
Contracts in annuity payment period (note 2) 6,365 - 8,933 - 1,935 - 38 -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $621,018 1,485 446,323 1,395 251,109 12,524 43,267 82
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 42,501 103 19,176 61 251,281 12,613 3,123 6
Investments at Cost $637,504 1,497 309,583 1,350 251,237 12,614 35,430 66
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN FRANKLIN
REAL ESTATE RISING DIVIDENDS SECURITIESS & P 500 INDEX SMALL CAP
FUND FUND FUND FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value $144,913 758 303,651 701 42,444 - 461,130 3,599
---------------------------------------------------------------------------------------------------------------------------
Total assets 144,913 758 303,651 701 42,444 - 461,130 3,599
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - 1
USAllianz Alterity Optional - - - - - - - 1
USAllianz Rewards Traditional - - - - - - - 3
USAllianz Rewards Enhanced - - - - - - - 1
Valuemark II & III 18 - 134 - 7 - 284 -
Valuemark IV 6 - 8 - 6 - 12 -
Valuemark Charter Traditional - 6 - 6 - - - 12
Valuemark Charter Enhanced - 2 - 2 - - - 2
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 24 8 142 8 13 - 296 20
Net assets $144,889 750 303,509 693 42,431 - 460,834 3,579
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - - - 1 - - - 635
USAllianz Alterity Enhanced (note 7) - - - - - - - 150
USAllianz Alterity Optional (note 7) - - - 7 - - - 347
USAllianz Rewards Traditional (note 8) - - - 152 - - - 1,367
USAllianz Rewards Enhanced (note 8) - - - 53 - - - 433
Valuemark II and III (note 5) 107,885 - 237,067 - 24,723 - 283,763 -
Valuemark IV (note 5) 36,125 - 62,914 - 17,659 - 170,183 -
Valuemark Charter Traditional (note 6) - 601 - 284 - - - 395
Valuemark Charter Enhanced (note 6) - 149 - 196 - - - 252
Contracts in annuity payment period (note 2) 879 - 3,528 - 49 - 6,888 -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $144,889 750 303,509 693 42,431 - 460,834 3,579
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 8,626 45 25,887 60 4,050 - 17,277 135
Investments at Cost $149,918 708 349,161 726 42,215 - 298,734 3,561
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN FRANKLIN
TECHNOLOGY SECURITIES U.S. GOVERNMENT VALUE SECURITIES ZERO COUPON
FUND FUND FUND FUND - 2000
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value $9,621 - 389,055 2,668 15,146 166 45,762 -
---------------------------------------------------------------------------------------------------------------------------
Total assets 9,621 - 389,055 2,668 15,146 166 45,762 -
---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - 1 - - - -
USAllianz Rewards Traditional - - - 1 - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 5 - 18 - 46 - 7 -
Valuemark IV 6 - 8 - 5 - 5 -
Valuemark Charter Traditional - - - 25 - 2 - -
Valuemark Charter Enhanced - - - 4 - - - -
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 11 - 26 31 51 2 12 -
Net assets $9,610 - 389,029 2,637 15,095 164 45,750 -
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - - - 53 - - - -
USAllianz Alterity Enhanced (note 7) - - - 13 - - - -
USAllianz Alterity Optional (note 7) - - - 388 - - - -
USAllianz Rewards Traditional (note 8) - - - 824 - - - -
USAllianz Rewards Enhanced (note 8) - - - 12 - - - -
Valuemark II and III (note 5) 4,987 - 320,545 - 7,694 - 41,246 -
Valuemark IV (note 5) 4,592 - 68,067 - 7,030 - 4,484 -
Valuemark Charter Traditional (note 6) - - - 935 - 140 - -
Valuemark Charter Enhanced (note 6) - - - 412 - 24 - -
Contracts in annuity payment period (note 2) 31 - 417 - 371 - 20 -
--------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $9,610 - 389,029 2,637 15,095 164 45,750 -
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 791 - 30,877 212 1,670 18 3,531 -
Investments at Cost $9,201 - 402,036 2,708 13,407 150 49,094 -
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN J.P. MORGAN J.P. MORGAN
ZERO COUPON ZERO COUPONINTERNATIONAL OPPORTUNITIESU.S. DISCIPLINED
FUND - 2005 FUND - 2010 PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C>
Investments at net asset value $51,445 - 50,874 - 307 - 536 -
---------------------------------------------------------------------------------------------------------------------------
Total assets 51,445 - 50,874 - 307 - 536 -
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 7 - 7 - - - - -
Valuemark IV 6 - 6 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 13 - 13 - - - - -
Net assets $51,432 - 50,861 - 307 - 536 -
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - - - - 191 - 25 -
USAllianz Alterity Enhanced (note 7) - - - - 5 - 63 -
USAllianz Alterity Optional (note 7) - - - - 11 - 43 -
USAllianz Rewards Traditional (note 8) - - - - 32 - 228 -
USAllianz Rewards Enhanced (note 8) - - - - 68 - 177 -
Valuemark II and III (note 5) 39,157 - 35,945 - - - - -
Valuemark IV (note 5) 12,272 - 14,905 - - - - -
Valuemark Charter Traditional (note 6) - - - - - - - -
Valuemark Charter Enhanced (note 6) - - - - - - - -
Contracts in annuity payment period (note 2) 3 - 11 - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $51,432 - 50,861 - 307 - 536 -
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 3,418 - 3,360 - 25 - 33 -
Investments at Cost $52,511 - 53,934 - 324 - 556 -
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
MUTUAL MUTUAL OPPENHEIMER OPPENHEIMER
DISCOVERY SECURITIES SHARES SECURITIES GLOBAL SECURITIES HIGH INCOME
FUND FUND FUND/VA FUND/VA
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value $182,151 784 367,080 2,026 2,599 - 906 -
---------------------------------------------------------------------------------------------------------------------------
Total assets 182,151 784 367,080 2,026 2,599 - 906 -
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - 1 - - 1 - 2 -
USAllianz Alterity Enhanced - - - 1 - - - -
USAllianz Alterity Optional - - - - 1 - - -
USAllianz Rewards Traditional - - - - 3 - 1 -
USAllianz Rewards Enhanced - - - - (3) - - -
Valuemark II & III 219 - 274 - - - - -
Valuemark IV 10 - 15 - - - - -
Valuemark Charter Traditional - 4 - 13 - - - -
Valuemark Charter Enhanced - 2 - 4 - - - -
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 229 7 289 18 2 - 3 -
Net assets $181,922 777 366,791 2,008 2,597 - 903 -
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - 139 - 285 354 - 301 -
USAllianz Alterity Enhanced (note 7) - 59 - 130 185 - 2 -
USAllianz Alterity Optional (note 7) - 23 - 69 335 - - -
USAllianz Rewards Traditional (note 8) - 64 - 13 1,489 - 588 -
USAllianz Rewards Enhanced (note 8) - 9 - 56 234 - 12 -
Valuemark II and III (note 5) 71,436 - 131,182 - - - - -
Valuemark IV (note 5) 105,672 - 229,102 - - - - -
Valuemark Charter Traditional (note 6) - 255 - 1,066 - - - -
Valuemark Charter Enhanced (note 6) - 228 - 389 - - - -
Contracts in annuity payment period (note 2) 4,814 - 6,507 - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $181,922 777 366,791 2,008 2,597 - 903 -
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 12,738 55 27,171 150 83 - 94 -
Investments at Cost $151,132 735 318,726 1,924 2,677 - 902 -
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
OPPENHEIMER PIMCO VIT PIMCO VIT PIMCO VIT
MAIN STREET GROWTH & HIGH YIELD BOND STOCKSPLUS GROWTH TOTAL RETURN BOND
INCOME FUND/VA PORTFOLIO AND INCOME PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C>
Investments at net asset value $3,881 - 419 - 530 - 1,236 -
---------------------------------------------------------------------------------------------------------------------------
Total assets 3,881 - 419 - 530 - 1,236 -
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional 5 - 2 - - - 2 -
USAllianz Alterity Enhanced - - - - - - 1 -
USAllianz Alterity Optional - - 5 - - - 1 -
USAllianz Rewards Traditional 5 - 2 - - - - -
USAllianz Rewards Enhanced (4) - - - - - - -
Valuemark II & III - - - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 6 - 9 - - - 4 -
Net assets $3,875 - 410 - 530 - 1,232 -
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $877 - 97 - 68 - 167 -
USAllianz Alterity Enhanced (note 7) 98 - 39 - 7 - 22 -
USAllianz Alterity Optional (note 7) 169 - 261 - 83 - 98 -
USAllianz Rewards Traditional (note 8) 2,270 - 13 - 203 - 917 -
USAllianz Rewards Enhanced (note 8) 461 - - - 169 - 28 -
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 $3,875 - 410 - 530 - 1,232 -
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 165 - 48 - 41 - 129 -
Investments at Cost $3,953 - 423 - 553 - 1,231 -
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
SELIGMAN SELIGMAN TEMPLETON TEMPLETON
GLOBAL TECHNOLOGY SMALL-CAP VALUE ASSET STRATEGY DEVELOPING MARKETS
FUND FUND FUND SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value $3,585 - 1,009 - 44,303 62 107,584 546
---------------------------------------------------------------------------------------------------------------------------
Total assets 3,585 - 1,009 - 44,303 62 107,584 546
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional 5 - (2) - - - - -
USAllianz Alterity Enhanced 1 - - - - - - -
USAllianz Alterity Optional 1 - - - - - - -
USAllianz Rewards Traditional 2 - 1 - - - - -
USAllianz Rewards Enhanced (1) - - - - - - -
Valuemark II & III - - - - 98 - 64 -
Valuemark IV - - - - 6 - 7 -
Valuemark Charter Traditional - - - - - - - 9
Valuemark Charter Enhanced - - - - - - - 1
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 8 - (1) - 104 - 71 10
Net assets $3,577 - 1,010 - 44,199 62 107,513 536
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $1,086 - 173 - - - - 48
USAllianz Alterity Enhanced (note 7) 332 - 6 - - - - 9
USAllianz Alterity Optional (note 7) 341 - 80 - - - - 67
USAllianz Rewards Traditional (note 8) 1,101 - 694 - - - - 55
USAllianz Rewards Enhanced (note 8) 717 - 57 - - - - -
Valuemark II and III (note 5) - - - - 26,973 - 77,752 -
Valuemark IV (note 5) - - - - 15,776 - 28,951 -
Valuemark Charter Traditional (note 6) - - - - - 33 - 243
Valuemark Charter Enhanced (note 6) - - - - - 29 - 114
Contracts in annuity payment period (note 2) - - - - 1,450 - 810 -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $3,577 - 1,010 - 44,199 62 107,513 536
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 137 - 104 - 2,349 3 18,941 97
Investments at Cost $3,993 - 1,000 - 47,016 66 130,907 591
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
TEMPLETON TEMPLETON TEMPLETON TEMPLETON
GLOBAL INCOME GROWTH SECURITIESINTERNATIONAL SECURITIESINTERNATIONAL SMALLER
SECURITIES FUND FUND FUND COMPANIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at net asset value $58,421 523 524,750 1,938 542,648 4,111 20,592 168
---------------------------------------------------------------------------------------------------------------------------
Total assets 58,421 523 524,750 1,938 542,648 4,111 20,592 168
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - 1 - - - -
USAllianz Alterity Enhanced - - - 1 - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 7 - 364 - 237 - 23 -
Valuemark IV 6 - 12 - 9 - 6 -
Valuemark Charter Traditional - 6 - 27 - 68 - 7
Valuemark Charter Enhanced - - - 6 - 6 - 1
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 13 6 376 35 246 74 29 8
Net assets $58,408 517 524,374 1,903 542,402 4,037 20,563 160
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - - - 133 - - - -
USAllianz Alterity Enhanced (note 7) - - - 124 - - - -
USAllianz Alterity Optional (note 7) - - - 145 - - - -
USAllianz Rewards Traditional (note 8) - - - 83 - - - -
USAllianz Rewards Enhanced (note 8) - - - 118 - - - -
Valuemark II and III (note 5) 49,716 - 360,195 - 452,283 - 10,166 -
Valuemark IV (note 5) 8,564 - 155,766 - 86,934 - 9,826 -
Valuemark Charter Traditional (note 6) - 512 - 917 - 3,592 - 12
Valuemark Charter Enhanced (note 6) - 5 - 383 - 445 - 148
Contracts in annuity payment period (note 2) 128 - 8,413 - 3,185 - 571 -
--------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $58,408 517 524,374 1,903 542,402 4,037 20,563 160
--------------------------------------------------------------------------------------------------------------------------
Investment Shares 5,419 49 40,303 149 29,380 224 1,875 15
Investments at Cost $67,927 559 518,663 2,004 610,337 4,231 20,482 168
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
TEMPLETON USALLIANZ USALLIANZ USALLIANZ
PACIFIC GROWTH VIP DIVERSIFIED ASSETSVIP FIXED INCOMEVIP GLOBAL OPPORTUNITIES
SECURITIES FUND FUND FUND FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C>
Investments at net asset value $53,967 152 - 1,904 - 1,044 - 82
---------------------------------------------------------------------------------------------------------------------------
Total assets 53,967 152 - 1,904 - 1,044 - 82
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - 1 - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 28 - - 6 - 2 - -
Valuemark IV 6 - - - - 6 - -
Valuemark Charter Traditional - 1 - - - - - -
Valuemark Charter Enhanced - 1 - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 34 2 - 7 - 8 - -
Net assets $53,933 150 - 1,897 - 1,036 - 82
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - 18 - 173 - 17 - 33
USAllianz Alterity Enhanced (note 7) - 7 - - - 5 - 1
USAllianz Alterity Optional (note 7) - 11 - 5 - - - 18
USAllianz Rewards Traditional (note 8) - - - 14 - 66 - 20
USAllianz Rewards Enhanced (note 8) - 13 - 3 - 12 - 10
Valuemark II and III (note 5) 45,591 - - 868 - 463 - -
Valuemark IV (note 5) 7,886 - - 834 - 473 - -
Valuemark Charter Traditional (note 6) - 6 - - - - - -
Valuemark Charter Enhanced (note 6) - 95 - - - - - -
Contracts in annuity payment period (note 2) 456 - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $53,933 150 - 1,897 - 1,036 - 82
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 6,638 19 - 186 - 105 - 9
Investments at Cost $58,679 174 - 1,981 - 1,055 - 89
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
USALLIANZ USALLIANZ VAN KAMPEN VAN KAMPEN
VIP GROWTH VIP MONEY MARKET LIT ENTERPRISE LIT GROWTH & INCOME
FUND FUND PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C>
Investments at net asset value $ - 1,381 - 6,782 773 - 979 -
---------------------------------------------------------------------------------------------------------------------------
Total assets - 1,381 - 6,782 773 - 979 -
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional - - - (2) - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - 98 - - - -
USAllianz Rewards Traditional - - - 8 1 - 1 -
USAllianz Rewards Enhanced - - - (105) (3) - (5) -
Valuemark II & III - 6 - - - - - -
Valuemark IV - 5 - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total liabilities - 11 - (1) (2) - (4) -
Net assets $ - 1,370 - 6,783 775 - 983 -
---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $ - 58 - 462 44 - 68 -
USAllianz Alterity Enhanced (note 7) - 2 - 92 35 - 31 -
USAllianz Alterity Optional (note 7) - 7 - 197 38 - 40 -
USAllianz Rewards Traditional (note 8) - 13 - 5,376 509 - 739 -
USAllianz Rewards Enhanced (note 8) - 80 - 656 149 - 105 -
Valuemark II and III (note 5) - 673 - - - - - -
Valuemark IV (note 5) - 537 - - - - - -
Valuemark Charter Traditional (note 6) - - - - - - - -
Valuemark Charter Enhanced (note 6) - - - - - - - -
Contracts in annuity payment period (note 2) - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $ - 1,370 - 6,783 775 - 983 -
---------------------------------------------------------------------------------------------------------------------------
Investment Shares - 128 - 6,783 32 - 56 -
Investments at Cost $ - 1,389 - 6,783 803 - 942 -
</TABLE>
See accompanying notes to unaudited financial statements.
<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.)
SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
TOTAL
ALL
FUNDS
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C>
Total investments at net asset value $6,580,278 47,879
---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk and administrative charges:
USAllianz Alterity Traditional 22 1
USAllianz Alterity Enhanced 8 3
USAllianz Alterity Optional 14 101
USAllianz Rewards Traditional 35 12
USAllianz Rewards Enhanced (19) (104)
Valuemark II & III 2,983 14
Valuemark IV 225 11
Valuemark Charter Traditional - 325
Valuemark Charter Enhanced (2) 53
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 3,266 416
Net assets $6,577,012 47,463
Contract owners' equity:
Contracts in accumulation period:
USAllianz Alterity Traditional (note 7) $7,849 2,162
USAllianz Alterity Enhanced (note 7) 2,239 592
USAllianz Alterity Optional (note 7) 5,246 1,403
USAllianz Rewards Traditional (note 8) 19,416 8,196
USAllianz Rewards Enhanced (note 8) 6,719 1,576
Valuemark II and III (note 5) 4,737,663 2,004
Valuemark IV (note 5) 1,726,231 1,844
Valuemark Charter Traditional (note 6) - 25,094
Valuemark Charter Enhanced (note 6) - 4,592
Contracts in annuity payment period (note 2) 71,649 -
---------------------------------------------------------------------------------------------------------------------------
Total contract owners' equity $6,577,012 47,463
---------------------------------------------------------------------------------------------------------------------------
Investment Shares 672,808 21,419
Investments at Cost $6,421,526 48,002
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
OF ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Financial Statements (CONTINUED)
STATEMENTS OF OPERATIONS
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Investment income:
Dividends reinvested in fund shares $ - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
<S> <C> <C> <C> <C>
USAllianz Alterity Traditional 1 - 4 - 1 - (1) -
USAllianz Alterity Enhanced 1 - 1 - - - - -
USAllianz Alterity Optional 1 - 2 - 1 - 2 -
USAllianz Rewards Traditional 4 - 2 - 2 - 3 -
USAllianz Rewards Enhanced (2) - (1) - - - 1 -
Valuemark II & III - - 215 - - - - -
Valuemark IV - - 182 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III - - 26 - - - - -
Valuemark IV - - 20 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 5 - 451 - 4 - 5 -
Investment income (loss), net (5) - (451) - (4) - (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(1) - 50 - (1) - (2) -
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net (1) - 50 - (1) - (2) -
Net change in unrealized appreciation
(depreciation) on investments 42 - (1,358) - (130) - (192) -
---------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 41 - (1,308) - (131) - (194) -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations$36 - (1,759) - (135) - (199) -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Investment income:
Dividends reinvested in fund shares $ - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
USAllianz Alterity Traditional - - (1) - 1 - - -
USAllianz Alterity Enhanced 1 - 1 - 1 - - -
USAllianz Alterity Optional 1 - (1) - (2) - (2) -
USAllianz Rewards Traditional 4 - 2 - 2 - - -
USAllianz Rewards Enhanced (2) - 1 - 2 - (3) -
Valuemark II & III 160 - 115 - - - - -
Valuemark IV 122 - 103 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 19 - 14 - - - - -
Valuemark IV 14 - 12 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 319 - 246 - 4 - (5) -
Investment income (loss), net (319) - (246) - (4) - 5 -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual
funds 4,483 - 2,503 - 36 - 57 -
Realized gains (losses) on sales of investments,
net (363) - (639) - - - (1) -
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 4,120 - 1,864 - 36 - 56 -
Net change in unrealized appreciation
(depreciation) on investments (4,878) - (4,668) - 21 - (79) -
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net(758) - (2,804) - 57 - (23) -
Net increase (decrease) in net assets from
operations $(1,077) - (3,050) - 53 - (18) -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
DAVIS VA DAVIS VA DAVIS VA FRANKLIN
FINANCIAL REAL ESTATE VALUE AGGRESSIVE GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Investment income:
Dividends reinvested in fund shares $ - - 2 - - - - -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortality and expense risk charges:
USAllianz Alterity Traditional - - (1) - 1 - - -
USAllianz Alterity Enhanced (3) - - - 3 - - -
USAllianz Alterity Optional - - 2 - 2 - - -
USAllianz Rewards Traditional - - 1 - 1 - - -
USAllianz Rewards Enhanced 1 - - - 1 - - -
Valuemark II & III - - - - - - 16 -
Valuemark IV - - - - - - 9 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III - - - - - - 2 -
Valuemark IV - - - - - - 1 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses (2) - 2 - 8 - 28 -
Investment income (loss), net 2 - - - (8) - (28) -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - - - - - - - -
Realized gains (losses) on sales of investments, net 2 - (1) - - - (3)
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 2 - (1) - - - (3) -
Net change in unrealized appreciation
(depreciation) on investments 68 - 9 - (11) - 91 -
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 70 - 8 - (11) - 88 -
Net increase (decrease) in net assets from
operations $ 72 - 8 - (19) - 60 -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN FRANKLIN
GLOBAL COMMUNICATIONSGLOBAL HEALTH CARE GROWTH AND INCOME HIGH INCOME
SECURITIES FUND SECURITIES FUND SECURITIES FUND FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ 13,808 10 8 - 31,400 35 1,032 2
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - 1 - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 7,539 - 136 - 5,996 - 1,500 -
Valuemark IV 620 - 94 - 1,332 - 734 -
Valuemark Charter Traditional - 2 - 1 - 5 - 3
Valuemark Charter Enhanced - 2 - 1 - 4 - 1
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 905 - 16 - 720 - 180 -
Valuemark IV 69 - 11 - 149 - 82 -
Valuemark Charter Traditional - - - - - 1 - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 9,133 4 257 2 8,198 10 2,496 4
---------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 4,675 6 (249) (2) 23,202 25 (1,464) (2)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual
funds 166,308 126 - - 92,228 108 - -
Realized gains (losses) on sales of
investments, net 25,343 (82) 1,309 39 4,861 (48) (32,925) (65)
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 191,651 44 1,309 39 97,089 60 (32,925) (65)
Net change in unrealized appreciation
(depreciation) on investments (308,504) (171) 10,974 96 (53,904) 65 22,880 40
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net (116,853) (127) 12,283 135 43,185 125 (10,045) (25)
Net increase (decrease) in net assets from
operations $(112,178) (121) 12,034 133 66,387 150 (11,509) (27)
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN FRANKLIN
INCOME SECURITIES LARGE CAP GROWTH MONEY MARKET NATURAL RESOURCES
FUND SECURITIES FUND FUND SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $62,222 126 1,940 4 11,805 279 283 -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 5,178 - 2,230 - 1,899 - 326 -
Valuemark IV 986 - 1,728 - 623 - 81 -
Valuemark Charter Traditional - 11 - 6 - 55 - 1
Valuemark Charter Enhanced - 2 - 4 - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 621 - 268 - 228 - 39 -
Valuemark IV 110 - 193 - 70 - 9 -
Valuemark Charter Traditional - 1 - 1 - 6 - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 6,895 14 4,419 11 2,820 61 455 1
Investment income (loss), net 55,327 112 (2,479) (7) 8,985 218 (172) (1)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual
funds 29,750 61 21,519 53 - - - -
Realized gains (losses) on sales of investments,
net (11,884) (61) 14,132 87 - - 1,288 2
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 17,866 - 35,651 140 - - 1,288 2
Net change in unrealized appreciation
(depreciation) on investments 14,290 93 28,107 (20) 44 (1) 8,427 18
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net 32,156 93 63,758 120 44 (1) 9,715 20
Net increase (decrease) in net assets from
operations $87,483 205 61,279 113 9,029 217 9,543 19
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN FRANKLIN
REAL ESTATE RISING DIVIDENDS S&P 500 INDEX SMALL CAP
FUND SECURITIES FUND FUND FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $9,785 39 7,199 8 18 - - -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - 1 -
USAllianz Rewards Traditional - - - - - - 3 -
USAllianz Rewards Enhanced - - - - - - 1 -
Valuemark II & III 1,026 - 2,593 - 188 - 2,978 -
Valuemark IV 328 - 667 - 154 - 1,704 -
Valuemark Charter Traditional - 4 - 2 - - - 9
Valuemark Charter Enhanced - 1 - 2 - - - 2
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 123 - 311 - 23 - 357 -
Valuemark IV 37 - 75 - 17 - 191 -
Valuemark Charter Traditional - - - - - - - 1
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 1,514 5 3,646 4 382 - 5,235 12
Investment income (loss), net 8,271 34 3,553 4 (364) - (5,235) (12)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual
funds 5,824 23 56,265 70 - - 32,851 57
Realized gains (losses) on sales of investments
net (6,209) 28 (12,659) (116) 34 - 55,715 310
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net (385) 51 43,606 (46) 34 - 88,566 367
Net change in unrealized appreciation
(depreciation) on investments 24,007 51 (34,965) 53 (157) - (56,780) (246)
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net 23,622 102 8,641 7 (123) - 31,786 121
Net increase (decrease) in net assets from
operations $31,893 136 12,194 11 (487) - 26,551 109
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN FRANKLIN
TECHNOLOGY U.S. GOVERNMENT VALUE SECURITIES ZERO COUPON
SECURITIES FUND FUND FUND FUND - 2000
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ - - 386 2 56 - 58 -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - 1 - - - - -
USAllianz Rewards Traditional - - 1 - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 12 - 3,237 - 55 - 446 -
Valuemark IV 11 - 693 - 59 - 50 -
Valuemark Charter Traditional - - - 11 - 1 - -
Valuemark Charter Enhanced - - - 3 - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 1 - 388 - 7 - 54 -
Valuemark IV 1 - 78 - 7 - 6 -
Valuemark Charter Traditional - - - 1 - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 25 - 4,398 15 128 1 556 -
Investment income (loss), net (25) - (4,012) (13) (72) (1) (498) -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - - - - - - 551 -
Realized gains (losses) on sales of investments, net42 - (8,992) (94) 287 (5) (1,457) -
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 42 - (8,992) (94) 287 (5) (906) -
Net change in unrealized appreciation
(depreciation) on investments 420 - 36,344 210 1,838 17 3,045 -
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 462 - 27,352 116 2,125 12 2,139 -
Net increase (decrease) in net assets from
operations $437 - 23,340 103 2,053 11 1,641 -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN J.P. MORGAN J.P. MORGAN
ZERO COUPON ZERO COUPONINTERNATIONAL OPPORTUNITIESU.S. DISCIPLINED EQUITY
FUND - 2005 FUND - 2010 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 $ 52 - 55 - - - - -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 392 - 359 - - - - -
Valuemark IV 122 - 151 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 47 - 43 - - - - -
Valuemark IV 14 - 17 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 575 - 570 - - - - -
Investment income (loss), net (523) - (515) - - - - -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual
funds 1,445 - 861 - - - 1 -
Realized gains (losses) on sales of investments,
net (688) - (3,632) - - - - -
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 757 - (2,771) - - - 1 -
Net change in unrealized appreciation
(depreciation) on investments 2,628 - 7,293 - (17) - (20) -
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net3,385 - 4,522 - (17) - (19) -
Net increase (decrease) in net assets from
operations $2,862 - 4,007 - (17) - (19) -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN FRANKLIN FRANKLIN
TECHNOLOGY U.S. GOVERNMENT VALUE SECURITIES ZERO COUPON
SECURITIES FUND FUND FUND FUND - 2000
---------------------------------------------------------------------------------------------------------------------------
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 $ - - 386 2 56 - 58 -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - 1 - - - - -
USAllianz Rewards Traditional - - 1 - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 12 - 3,237 - 55 - 446 -
Valuemark IV 11 - 693 - 59 - 50 -
Valuemark Charter Traditional - - - 11 - 1 - -
Valuemark Charter Enhanced - - - 3 - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 1 - 388 - 7 - 54 -
Valuemark IV 1 - 78 - 7 - 6 -
Valuemark Charter Traditional - - - 1 - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 25 - 4,398 15 128 1 556 -
Investment income (loss), net (25) - (4,012) (13) (72) (1) (498) -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - - - - - - 551 -
Realized gains (losses) on sales of investments,
net 42 - (8,992) (94) 287 (5) (1,457) -
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 42 - (8,992) (94) 287 (5) (906) -
Net change in unrealized appreciation
(depreciation) on investments 420 - 36,344 210 1,838 17 3,045 -
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 462 - 27,352 116 2,125 12 2,139 -
Net increase (decrease) in net assets from
operations $437 - 23,340 103 2,053 11 1,641 -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
FRANKLIN FRANKLIN J.P. MORGAN J.P. MORGAN
ZERO COUPON ZERO COUPONINTERNATIONAL OPPORTUNITIESU.S. DISCIPLINED EQUITY
FUND - 2005 FUND - 2010 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 $ 52 - 55 - - - - -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 392 - 359 - - - - -
Valuemark IV 122 - 151 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 47 - 43 - - - - -
Valuemark IV 14 - 17 - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 575 - 570 - - - - -
Investment income (loss), net (523) - (515) - - - - -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual
funds 1,445 - 861 - - - 1 -
Realized gains (losses) on sales of investments,
net (688) - (3,632) - - - - -
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 757 - (2,771) - - - 1 -
Net change in unrealized appreciation
(depreciation) on investments 2,628 - 7,293 - (17) - (20) -
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 3,385 - 4,522 - (17) - (19) -
Net increase (decrease) in net assets from
operations $2,862 - 4,007 - (17) - (19) -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
MUTUAL MUTUAL OPPENHEIMER OPPENHEIMER
DISCOVERY SECURITIES SHARES SECURITIES GLOBAL SECURITIES HIGH INCOME
FUND FUND FUND/VA FUND/VA
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $5,606 14 10,729 37 - - - -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional 1 - - - 1 - 2 -
USAllianz Alterity Enhanced - - 1 - - - - -
USAllianz Alterity Optional - - - - 1 - - -
USAllianz Rewards Traditional - - - - 3 - 1 -
USAllianz Rewards Enhanced - - - - (3) - - -
Valuemark II & III 825 - 1,433 - - - - -
Valuemark IV 1,085 - 2,327 - - - - -
Valuemark Charter Traditional - 2 - 8 - - - -
Valuemark Charter Enhanced - 2 - 3 - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 99 - 172 - - - - -
Valuemark IV 121 - 261 - - - - -
Valuemark Charter Traditional - - - 1 - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 2,131 4 4,194 12 2 - 3 -
Investment income (loss), net 3,475 10 6,535 25 (2) - (3) -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual
funds - - 9,289 33 - - - -
Realized gains (losses) on sales of investments,
net 5,113 22 8,825 4 (3) - - -
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 5,113 22 18,114 37 (3) - - -
Net change in unrealized appreciation
(depreciation) on investments 5,045 1 (1,872) 60 (78) - 4 -
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net 10,158 23 16,242 97 (81) - 4 -
Net increase (decrease) in net assets from
operations $13,633 33 22,777 122 (83) - 1 -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
OPPENHEIMER PIMCO VIT PIMCO VIT PIMCO VIT
MAIN STREET GROWTH & HIGH YIELD BOND STOCKS PLUS GROWTH & TOTAL RETURN BOND
INCOME FUND/VA PORTFOLIO INCOME 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 4 - 1 - - - 1 -
USAllianz Alterity Enhanced - - - - - - 1 -
USAllianz Alterity Optional - - 1 - - - 5 -
USAllianz Rewards Traditional 4 - 2 - - - - -
USAllianz Rewards Enhanced (3) - - - - - - -
Valuemark II & III - - - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:
USAllianz Alterity Traditional 1 - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - 1 -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III - - - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 6 - 4 - - - 8 -
Investment income (loss), net (6) - (4) - - - (8) -
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 - 1 - - -
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net - - 1 - 1 - - -
Net change in unrealized appreciation
(depreciation) on investments (72) - (5) - (23) - 5 -
---------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net (72) - (4) - (22) - 5 -
Net increase (decrease) in net assets from
operations $ (78) - (8) - (22) - (3) -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
SELIGMAN SELIGMAN TEMPLETON TEMPLETON
GLOBAL TECHNOLOGY SMALL-CAP VALUE ASSET STRATEGY DEVELOPING MARKETS
FUND FUND 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 $ - - - - 80 - 1,249 3
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional 4 - (2) - - - - -
USAllianz Alterity Enhanced 1 - - - - - - -
USAllianz Alterity Optional 1 - - - - - - -
USAllianz Rewards Traditional 2 - 1 - - - - -
USAllianz Rewards Enhanced (1) - - - - - - -
Valuemark II & III - - - - 307 - 1,013 -
Valuemark IV - - - - 176 - 362 -
Valuemark Charter Traditional - - - - - - - 4
Valuemark Charter Enhanced - - - - - - - 1
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III - - - - 37 - 122 -
Valuemark IV - - - - 20 - 41 -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 7 - (1) - 540 - 1,538 5
Investment income (loss), net (7) - 1 - (460) - (289) (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(4) - 1 - (590) (1) (4,718) 228
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net (4) - 1 - (590) (1) (4,718) 228
Net change in unrealized appreciation
(depreciation) on investments (408) - 10 - (1,099) (2) (34,509) (63)
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net(412) - 11 - (1,689) (3) (39,227) 165
Net increase (decrease) in net assets from
operations $(419) - 12 - (2,149) (3) (39,516) 163
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
TEMPLETON TEMPLETON TEMPLETON TEMPLETON
GLOBAL INCOME GROWTH SECURITIESINTERNATIONAL SECURITIESINTERNATIONAL SMALLER
SECURITIES FUND FUND FUND COMPANIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends reinvested in fund shares $ 105 1 10,493 23 397 2 406 3
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - 1 - - - - -
USAllianz Alterity Enhanced - - 1 - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 552 - 3,976 - 4,971 - 120 -
Valuemark IV 95 - 1,646 - 913 - 103 -
Valuemark Charter Traditional - 4 - 13 - 31 - 4
Valuemark Charter Enhanced - - - 3 - 4 - 1
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 66 - 477 - 596 - 14 -
Valuemark IV 11 - 184 - 102 - 12 -
Valuemark Charter Traditional - - - 1 - 4 - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 724 4 6,285 17 6,582 39 249 5
Investment income (loss), net (619) (3) 4,208 6 (6,185) (37) 157 (2)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual
funds - - 69,123 158 173,358 895 - -
Realized gains (losses) on sales of investments,
net (3,337) (1) 9,550 24 (2,381) (340) 229 235
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net (3,337) (1) 78,673 182 170,977 555 229 235
Net change in unrealized appreciation
(depreciation) on investments 1,489 (14) (113,471) (112) (215,681) (240) (396) (2)
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net (1,848) (15) (34,798) 70 (44,704) 315 (167) 233
Net increase (decrease) in net assets from
operations $(2,467) (18) (30,590) 76 (50,889) 278 (10) 231
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
TEMPLETON USALLIANZ USALLIANZ USALLIANZ
PACIFIC GROWTH VIP DIVERSIFIED ASSETSVIP FIXED INCOMEVIP GLOBAL OPPORTUNITIES
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 $ 86 - - 56 - 28 - -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - 1 - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 574 - - 13 - 2 - 6
Valuemark IV 104 - - - - 5 - 4
Valuemark Charter Traditional - 1 - - - - - -
Valuemark Charter Enhanced - 1 - - - - - -
Administrative charges:
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - - - - - -
USAllianz Rewards Traditional - - - - - - - -
USAllianz Rewards Enhanced - - - - - - - -
Valuemark II & III 69 - - 2 - - - 1
Valuemark IV 12 - - - - 1 - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 759 2 - 16 - 8 - 11
Investment income (loss), net (673) (2) - 40 - 20 - (11)
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual
funds - - - - - - - -
Realized gains (losses) on sales of investments,
net (5,441) 86 - (5) - 18 - -
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net (5,441) 86 - (5) - 18 - -
Net change in unrealized appreciation
(depreciation) on investments (9,213) (23) - (79) - (8) - (7)
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments,
net (14,654) 63 - (84) - 10 - (7)
Net increase (decrease) in net assets from
operations $(15,327) 61 - (44) - 30 - (18)
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
USALLIANZ USALLIANZ VAN KAMPEN VAN KAMPEN
VIP GROWTH VIP MONEY MARKET LIT ENTERPRISE LIT GROWTH & INCOME
FUND 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 $ - 4 - 4 - - - -
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional - - - (1) - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - 88 - - - -
USAllianz Rewards Traditional - - - 7 1 - 1 -
USAllianz Rewards Enhanced - - - (94) (3) - (4) -
Valuemark II & III - - - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
Administrative charges:-
USAllianz Alterity Traditional - - - - - - - -
USAllianz Alterity Enhanced - - - - - - - -
USAllianz Alterity Optional - - - 10 - - - -
USAllianz Rewards Traditional - - - 1 - - - -
USAllianz Rewards Enhanced - - - (11) - - - -
Valuemark II & III - - - - - - - -
Valuemark IV - - - - - - - -
Valuemark Charter Traditional - - - - - - - -
Valuemark Charter Enhanced - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses - - - - (2) - (3) -
Investment income (loss), net - 4 - 4 2 - 3 -
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - - - - 1 - - -
Realized gains (losses) on sales of investments, net- 7 - (1) - - - -
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net - 7 - (1) 1 - - -
Net change in unrealized appreciation
(depreciation) on investments - (22) - (1) (30) - 37 -
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net - (15) - (2) (29) - 37 -
Net increase (decrease) in net assets from
operations $ - (11) - 2 (27) - 40 29
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
(IN THOUSANDS)
TOTAL
ALL
FUNDS
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C> <C>
Dividends reinvested in fund shares $169,260 680
---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges:
USAllianz Alterity Traditional 18 -
USAllianz Alterity Enhanced 9 -
USAllianz Alterity Optional 17 88
USAllianz Rewards Traditional 40 7
USAllianz Rewards Enhanced (15) (94)
Valuemark II & III 50,367 21
Valuemark IV 17,364 9
Valuemark Charter Traditional - 178
Valuemark Charter Enhanced - 37
Administrative charges:
USAllianz Alterity Traditional 1 -
USAllianz Alterity Enhanced - -
USAllianz Alterity Optional 1 10
USAllianz Rewards Traditional - 1
USAllianz Rewards Enhanced - (11)
Valuemark II & III 6,044 3
Valuemark IV 1,947 1
Valuemark Charter Traditional - 17
Valuemark Charter Enhanced - -
---------------------------------------------------------------------------------------------------------------------------
Total expenses 75,793 267
Investment income (loss), net 93,467 413
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds 666,453 1,584
Realized gains (losses) on sales of investments, net 30,852 271
---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 697,305 1,855
Net change in unrealized appreciation
(depreciation) on investments (675,402) (307)
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 21,903 1,548
Net increase (decrease) in net assets from operations $115,370 1,961
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C>
Investment income (loss), net $ (5) - - - (451) 3 - -
Realized gains (losses) on investments, net (1) - - - 50 205 - -
Net change in unrealized appreciation
(depreciation) on investments 42 - - - (1,358) 359 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
operations 36 - - - (1,759) 567 - -
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 3,734 - - - 6,088 77 - -
Transfers between funds 190 - - - 46,673 9,294 - -
Surrenders and terminations (34) - - - (4,461) (79) - -
Rescissions (34) - - - (225) - - -
Bonus 177 - - - 105 - - -
Other transactions (note 2) 7 - - - 43 - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 4,040 - - - 48,223 9,292 - -
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 4,076 - - - 46,464 9,859 - -
Net assets at beginning of period - - - - 9,859 - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $4,076 - - - 56,323 9,859 - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (4) - - - (5) - - -
Realized gains (losses) on investments, net (1) - - - (2) - - -
Net change in unrealized appreciation
(depreciation) on investments (130) - - - (192) - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
operations (135) - - - (199) - - -
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 1,528 - - - 2,577 - - -
Transfers between funds 177 - - - 190 - - -
Surrenders and terminations (9) - - - (18) - - -
Rescissions (5) - - - (31) - - -
Bonus 65 - - - 92 - -
Other transactions (note 2) 4 - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 1,760 - - - 2,810 - - -
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 1,625 - - - 2,611 - - -
Net assets at beginning of period - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $1,625 - - - 2,611 - - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Investment income (loss), net $(319) (10) - - (246) (6) - -
Realized gains (losses) on investments,
net 4,120 - - - 1,864 17 - -
Net change in unrealized appreciation
(depreciation) on investments (4,878) 484 - - (4,668) 656 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
operations (1,077) 474 - - (3,050) 667 - -
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 4,298 221 - - 3,232 9 - -
Transfers between funds 30,433 9,751 - - 20,978 6,843 - -
Surrenders and terminations (3,355) (13) - - (2,574) (18) - -
Rescissions (72) - - - (57) - - -
Bonus 158 - - - 88 - - -
Other transactions (note 2) 23 - - - 24 - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 31,485 9,959 - - 21,691 6,834 - -
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 30,408 10,433 - - 18,641 7,501 - -
Net assets at beginning of period 10,433 - - - 7,501 - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $40,841 10,433 - - 26,142 7,501 - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C>
Investment income (loss), net $ (4) - - - 5 - - -
Realized gains (losses) on investments, net 36 - - - 56 - - -
Net change in unrealized appreciation
(depreciation) on investments 21 - - - (79) - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
operations 53 - - - (18) - - -
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 2,229 - - - 436 - - -
Transfers between funds 288 - - - 82 - - -
Surrenders and terminations (35) - - - (2) - - -
Rescissions (6) - - - - - - -
Bonus 73 - - - 13 - - -
Other transactions (note 2) 2 - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 2,551 - - - 529 - - -
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 2,604 - - - 511 - - -
Net assets at beginning of period - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $2,604 - - - 511 - - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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 $ 2 - - - - - - -
Realized gains (losses) on investments, net 2 - - - (1) - - -
Net change in unrealized appreciation
(depreciation) on investments 68 - - - 9 - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets fro
operations 72 - - - 8 - - -
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 573 - - - 1,407 - - -
Transfers between funds 81 - - - 51 - - -
Surrenders and terminations (17) - - - (18) - - -
Rescissions - - - - (242) - - -
Bonus 22 - - - 40 - - -
Other transactions (note 2) - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 659 - - - 1,238 - - -
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 731 - - - 1,246 - - -
Net assets at beginning of period - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $731 - - - 1,246 - - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
DAVIS VA FRANKLIN
VALUE PORTFOLIO AGGRESSIVE GROWTH SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C>
Investment income (loss), net $ (8) - - - (28) - - -
Realized gains (losses) on investments, net - - - - (3) - - -
Net change in unrealized appreciation
(depreciation) on investments (11) - - - 91 - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
operations (19) - - - 60 - - -
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 1,451 - - - 391 - - -
Transfers between funds 74 - - - 9,525 - - -
Surrenders and terminations (5) - - - (92) - - -
Rescissions (57) - - - - - - -
Bonus 41 - - - - - - -
Other transactions (note 2) - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 1,504 - - - 9,824 - - -
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 1,485 - - - 9,884 - - -
Net assets at beginning of period - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $1,485 - - - 9,884 - - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
FRANKLIN GLOBAL COMMUNICATIONS FRANKLIN GLOBAL HEALTH
SECURITIES FUND CARE SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $4,675 19,074 6 8 (249) (110) (2) -
Realized gains (losses) on investments,
net 191,651 130,766 44 23 1,309 (444) 39 -
Net change in unrealized appreciation
(depreciation) on investments (308,504) 108,627 (171) 70 10,974 (413) 96 8
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (112,178) 258,467 (121) 101 12,034 (967) 133 8
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 4,096 7,189 257 416 790 605 149 79
Transfers between funds 17,794 (11,957) 59 (27) 17,423 5,476 24 (4)
Surrenders and terminations (142,945)(254,941) (5) (2) (2,815) (3,102) (3) -
Rescissions (463) (402) - - (43) (4) (4) -
Bonus - - - - - - - -
Other transactions (note 2) 170 477 - - (4) (4) - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (121,347)(259,634) 311 387 15,351 2,971 166 75
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (233,525) (1,167) 190 488 27,385 2,004 299 83
Net assets at beginning of period 902,924 904,091 488 - 10,600 8,596 83 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $669,399 902,924 678 488 37,985 10,600 382 83
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
FRANKLIN FRANKLIN
GROWTH AND INCOME FUND HIGH INCOME FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $23,202 24,294 25 16 (1,464) 72,685 (2) 104
Realized gains (losses) on investments,
net 97,089 180,951 60 35 (32,925) (2,133) (65) (47)
Net change in unrealized appreciation
(depreciation) on investments (53,904)(203,466) 65 (57) 22,880 (74,035) 40 (58)
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 66,387 1,779 150 (6) (11,509) (3,483) (27) (1)
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 4,124 19,789 740 1,433 1,688 9,648 300 226
Transfers between funds (48,513) 2,508 (20) (6) (25,941) (15,589) (229) 274
Surrenders and terminations (164,230)(350,638) (311) (638) (53,888)(111,758) (49) (52)
Rescissions (187) (841) (22) - (204) (1,076) - -
Bonus - - 14 - - - - -
Other transactions (note 2) 658 663 - - 178 450 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (208,148)(328,519) 401 789 (78,166)(118,325) 22 448
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (141,761)(326,740) 551 783 (89,675)(121,808) (5) 447
Net assets at beginning of period 876,3201,203,060 783 - 284,668 406,476 447 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $734,559 876,320 1,334 783 194,993 284,668 442 447
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
FRANKLIN FRANKLIN
INCOME SECURITIES FUND LARGE CAP GROWTH SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $55,327 62,233 112 39 (2,479) (3,045) (7) (4)
Realized gains (losses) on investments
net 17,866 45,777 - 16 35,651 14,374 140 94
Net change in unrealized appreciation
(depreciation) on investments 14,290 (135,753) 93 (85) 28,107 74,106 (20) 84
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 87,483 (27,743) 205 (30) 61,279 85,435 113 174
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 2,780 13,764 288 1,302 4,772 13,426 579 1,518
Transfers between funds (47,325) (63,205) (25) 29 60,343 176,862 335 42
Surrenders and terminations (139,195)(306,495) (281) (3) (58,690)(101,959) (168) (924)
Rescissions (543) (1,138) - - (265) (311) - (274)
Bonus - - - - - - - -
Other transactions (note 2) 207 831 - - 543 409 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (184,076)(356,243) (18) 1,328 6,703 88,427 746 362
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (96,593)(383,986) 187 1,298 67,982 173,862 859 536
Net assets at beginning of period 717,6111,101,597 1,298 - 378,340 204,478 536 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $621,018 717,611 1,485 1,298 446,322 378,340 1,395 536
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
FRANKLIN FRANKLIN NATURAL RESOURCES
MONEY MARKET FUND SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $8,985 11,206 218 83 (172) 66 (1) 1
Realized gains (losses) on investments,
net - - - - 1,288 (9,180) 2 (11)
Net change in unrealized appreciation
(depreciation) on investments 44 - (1) - 8,427 20,689 18 1
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
operations 9,029 11,206 217 83 9,543 11,575 19 (9)
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 8,988 20,759 3,024 8,461 486 774 2 61
Transfers between funds 26,810 219,635 (1,872) 132 1,159 (4,496) (7) 16
Surrenders and terminations (135,128)(302,030) (187) (103) (7,308) (10,569) - -
Rescissions (1,046) (236) - - - (122) - -
Bonus - - - - - - - -
Other transactions (note 2) 5,163 7,023 2,769 - 5 9 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (95,212) (54,849) 3,734 8,490 (5,658) (14,404) (5) 77
Increase (decrease) in net assets (86,183) (43,643) 3,951 8,573 3,885 (2,829) 14 68
Net assets at beginning of period 337,292 380,935 8,573 - 39,382 42,211 68 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $251,109 337,292 12,524 8,573 43,267 39,382 82 68
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
FRANKLIN FRANKLIN
REAL ESTATE FUND RISING DIVIDENDS SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ 8,271 14,093 34 4 3,553 968 4 2
Realized gains (losses) on investments,
net (385) 22,522 51 7 43,606 121,634 (46) 52
Net change in unrealized appreciation
(depreciation) on investments 24,007 (51,341) 51 - (34,965)(184,821) 53 (77)
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 31,893 (14,726) 136 11 12,194 (62,219) 11 (23)
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 1,990 2,486 239 294 1,622 8,831 273 569
Transfers between funds (7,849) (33,804) (63) 138 (40,457) (38,314) 5 1
Surrenders and terminations (28,960) (71,155) (5) - (76,297)(185,182) (132) (1)
Rescissions (105) (290) - - (169) (427) (20) -
Bonus - - - - - - 10 -
Other transactions (note 2) 50 72 - - 192 336 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (34,874)(102,691) 171 432 (115,109)(214,756) 136 569
Increase (decrease) in net assets (2,981)(117,417) 307 443 (102,915)(276,975) 147 546
Net assets at beginning of period 147,870 265,287 443 - 406,424 683,399 546 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $144,889 147,870 750 443 303,509 406,424 693 546
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
FRANKLIN S&P 500 FRANKLIN
INDEX FUND SMALL CAP FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $(364) (14) - - (5,235) (2,935) (12) (2)
Realized gains (losses) on investments,
net 34 - - - 88,566 15,548 367 3
Net change in unrealized appreciation
(depreciation) on investments (157) 386 - - (56,780) 211,659 (246) 284
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (487) 372 - - 26,551 224,272 109 285
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 1,771 279 - - 6,160 6,050 2,719 238
Transfers between funds 31,841 13,708 - - 27,996 15,164 1,457 460
Surrenders and terminations (4,868) (191) - - (63,080) (82,185) (407) -
Rescissions (45) - - - (168) (195) (47) -
Bonus - - - - - - 101 -
Other transactions (note 2) 50 - - - 75 414 (1,336) -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 28,750 13,796 - - (29,017) (60,752) 2,487 698
Increase (decrease) in net assets 28,263 14,168 - - (2,466) 163,520 2,596 983
Net assets at beginning of period 14,168 - - - 463,300 299,780 983 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $42,431 14,168 - - 460,834 463,300 3,579 983
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
FRANKLIN TECHNOLOGY FRANKLIN U.S. GOVERNMENT
SECURITIES FUND FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $(25) - - - (4,012) 66,246 (13) 243
Realized gains (losses) on investments,
net 42 - - - (8,992) 3,396 (94) (20)
Net change in unrealized appreciation
(depreciation) on investments 420 - - - 36,344 (82,778) 210 (250)
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 437 - - - 23,340 (13,136) 103 (27)
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 290 - - - 2,175 10,213 1,280 1,811
Transfers between funds 9,226 - - - (14,885) (634) (651) 357
Surrenders and terminations (258) - - - (81,599)(173,064) (17) (277)
Rescissions (85) - - - (471) (1,184) - -
Bonus - - - - - - 58 -
Other transactions (note 2) - - - - 181 489 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 9,173 - - - (94,599)(164,180) 670 1,891
Increase (decrease) in net assets 9,610 - - - (71,259)(177,316) 773 1,864
Net assets at beginning of period - - - - 460,288 637,604 1,864 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $9,610 - - - 389,029 460,288 2,637 1,864
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $(72) (133) (1) (1) (498) 9,221 - -
Realized gains (losses) on investments,
net 287 (411) (5) (7) (906) 1,927 - -
Net change in unrealized appreciation
(depreciation) on investments 1,838 309 17 - 3,045 (10,114) - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 2,053 (235) 11 (8) 1,641 1,034 - -
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 327 1,041 4 396 150 523 - -
Transfers between funds 1,763 4,224 20 (1) (3,052) 486 - -
Surrenders and terminations (2,677) (3,083) - (258) (12,374) (20,950) - -
Rescissions (31) (2) - - - (12) - -
Bonus - - - - - - - -
Other transactions (note 2) 3,046 4 - - 16 120 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 2,428 2,184 24 137 (15,260) (19,833) - -
Increase (decrease) in net assets 4,481 1,949 35 129 (13,619) (18,799) - -
Net assets at beginning of period 10,614 8,665 129 - 59,369 78,168 - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $15,095 10,614 164 129 45,750 59,369 - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Investment income (loss), net $(523) 7,179 - - (515) 7,708 - -
Realized gains (losses) on investments,
net 757 1,779 - - (2,771) 2,444 - -
Net change in unrealized appreciation
(depreciation) on investments 2,628 (14,138) - - 7,293 (21,090) - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 2,862 (5,180) - - 4,007 (10,938) - -
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 95 1,800 - - 456 2,617 - -
Transfers between funds (2,306) 2,677 - - (3,992) 4,159 - -
Surrenders and terminations (8,639) (15,202) - - (10,330) (20,612) - -
Rescissions - (104) - - (2) (91) - -
Bonus - - - - - - - -
Other transactions (note 2) (9) 160 - - (5) 235 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (10,859) (10,669) - - (13,873) (13,692) - -
Increase (decrease) in net assets (7,997) (15,849) - - (9,866) (24,630) - -
Net assets at beginning of period 59,429 75,278 - - 60,727 85,357 - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $51,432 59,429 - - 50,861 60,727 - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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 - - - - 1 - - -
Net change in unrealized appreciation
(depreciation) on investments (17) - - - (20) - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (17) - - - (19) - - -
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 285 - - - 500 - - -
Transfers between funds 34 - - - 33 - - -
Surrenders and terminations - - - - (1) - - -
Rescissions - - - - - - - -
Bonus 5 - - - 23 - - -
Other transactions (note 2) - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 324 - - - 555 - - -
Increase (decrease) in net assets 307 - - - 536 - - -
Net assets at beginning of period - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $307 - - - 536 - - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $3,475 2,765 10 4 6,535 5,047 25 6
Realized gains (losses) on investments,
net 5,113 877 22 - 18,114 10,361 37 (2)
Net change in unrealized appreciation
(depreciation) on investments 5,045 33,265 1 48 (1,872) 32,828 60 41
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 13,633 36,907 33 52 22,777 48,236 122 45
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 1,094 4,740 407 385 3,108 12,231 955 989
Transfers between funds 2,258 (12,243) 77 2 (24,619) 6,540 23 (28)
Surrenders and terminations (25,737) (50,318) (139) (28) (53,083)(100,497) (70) (31)
Rescissions (19) (231) (14) - (1,869) (809) - -
Bonus - - 2 - - - 3 -
Other transactions (note 2) 199 210 - - 91 636 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (22,205) (57,842) 333 359 (76,373) (81,899) 911 930
Increase (decrease) in net assets (8,572) (20,935) 366 411 (53,596) (33,663) 1,033 975
Net assets at beginning of period 190,494 211,429 411 - 420,387 454,050 975 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $181,922 190,494 777 411 366,791 420,387 2,008 975
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (2) - - - (3) - - -
Realized gains (losses) on investments, net (3) - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments (78) - - - 4 - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (83) - - - 1 - - -
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 2,316 - - - 858 - - -
Transfers between funds 280 - - - 21 - - -
Surrenders and terminations (8) - - - (19) - - -
Rescissions (17) - - - - - - -
Bonus 107 - - - 42 - - -
Other transactions (note 2) 2 - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 2,680 - - - 902 - - -
Increase (decrease) in net assets 2,597 - - - 903 - - -
Net assets at beginning of period - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $2,597 - - - 903 - - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ (6) - - - (4) - - -
Realized gains (losses) on investments, net - - - - 1 - - -
Net change in unrealized appreciation
(depreciation) on investments (72) - - - (5) - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (78) - - - (8) - - -
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 3,339 - - - 378 - - -
Transfers between funds 493 - - - 39 - - -
Surrenders and terminations (13) - - - - - - -
Rescissions (36) - - - - - - -
Bonus 170 - - - 1 - - -
Other transactions (note 2) - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 3,953 - - - 418 - - -
Increase (decrease) in net assets 3,875 - - - 410 - - -
Net assets at beginning of period - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $3,875 - - - 410 - - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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 $ - - - - (8) - - -
Realized gains (losses) on investments, net 1 - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments (23) - - - 5 - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (22) - - - (3) - - -
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 523 - - - 1,030 - - -
Transfers between funds 28 - - - 147 - - -
Surrenders and terminations - - - - (5) - - -
Rescissions (18) - - - - - - -
Bonus 19 - - - 63 - - -
Other transactions (note 2) - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 552 - - - 1,235 - - -
Increase (decrease) in net assets 530 - - - 1,232 - - -
Net assets at beginning of period - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $530 - - - 1,232 - - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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 $ (7) - - - 1 - - -
Realized gains (losses) on investments, net (4) - - - 1 - - -
Net change in unrealized appreciation
(depreciation) on investments (408) - - - 10 - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (419) - - - 12 - - -
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 3,600 - - - 958 - - -
Transfers between funds 388 - - - (7) - - -
Surrenders and terminations (38) - - - (5) - - -
Rescissions (58) - - - (1) - - -
Bonus 97 - - - 53 - - -
Other transactions (note 2) 7 - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 3,996 - - - 998 - - -
Increase (decrease) in net assets 3,577 - - - 1,010 - - -
Net assets at beginning of period - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $3,577 - - - 1,010 - - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
TEMPLETON TEMPLETON DEVELOPING
ASSET STRATEGY FUND MARKETS SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $(460) 3,412 - 3 (289) 947 (2) (2)
Realized gains (losses) on investments,
net (590) 4,511 (1) 3 (4,718) (14,723) 228 263
Net change in unrealized appreciation
(depreciation) on investments (1,099) (4,595) (2) (2) (34,509) 81,897 (63) 18
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (2,149) 3,328 (3) 4 (39,516) 68,121 163 279
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 790 2,689 30 49 1,488 3,440 370 286
Transfers between funds (4,445) (9,378) (17) (1) (6,700) (9,648) (304) (223)
Surrenders and terminations (7,926) (15,871) - - (26,754) (38,588) (32) -
Rescissions (39) (18) - - (165) (160) (6) -
Bonus - - - - - - 3 -
Other transactions (note 2) 76 82 - - 63 144 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (11,544) (22,496) 13 48 (32,068) (44,812) 31 63
Increase (decrease) in net assets (13,693) (19,168) 10 52 (71,584) 23,309 194 342
Net assets at beginning of period 57,892 77,060 52 - 179,097 155,788 342 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $44,199 57,892 62 52 107,513 179,097 536 342
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
TEMPLETON GLOBAL TEMPLETON
INCOME SECURITIES FUND GROWTH SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $(619) 6,830 (3) 19 4,208 5,264 6 3
Realized gains (losses) on investments,
net (3,337) (2,393) (1) - 78,673 101,368 182 317
Net change in unrealized appreciation
(depreciation) on investments 1,489 (12,888) (14) (22) (113,471) 10,044 (112) 45
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (2,467) (8,451) (18) (3) (30,590) 116,676 76 365
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 336 1,398 108 458 4,528 16,744 842 2,020
Transfers between funds (4,848) (8,236) - (14) (8,011) (13,275) (146) (128)
Surrenders and terminations (15,751) (39,664) (14) - (108,840)(161,240) (175) (873)
Rescissions (140) (419) - - (116) (482) (27) (59)
Bonus - - - - - - 8 -
Other transactions (note 2) 54 42 - - 52 420 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (20,349) (46,879) 94 444 (112,387)(157,833) 502 960
Increase (decrease) in net assets (22,816) (55,330) 76 441 (142,977) (41,157) 578 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 $58,408 81,224 517 441 524,374 667,351 1,903 1,325
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
TEMPLETON TEMPLETON INTERNATIONAL
INTERNATIONAL SECURITIES FUND SMALLER COMPANIES FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $(6,185) 32,620 (37) 114 157 341 (2) (3)
Realized gains (losses) on investments,
net 170,977 79,885 555 926 229 (948) 235 137
Net change in unrealized appreciation
(depreciation) on investments (215,681) 51,890 (240) 120 (396) 4,893 (2) 2
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (50,889) 164,395 278 1,160 (10) 4,286 231 136
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 2,633 5,997 459 2,908 309 527 133 52
Transfers between funds (7,555) (63,759) 1,706 (870) 1,859 (1,842) (231) (133)
Surrenders and terminations (128,896)(277,851) (218) - (3,862) (4,601) (22) -
Rescissions (450) (2,015) (6) - (32) (6) (6) -
Bonus - - - - - - - -
Other transactions (note 2) 137 1,165 (1,380) - 20 39 - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (134,131)(336,463) 561 2,038 (1,706) (5,883) (126) (81)
Increase (decrease) in net assets (185,020)(172,068) 839 3,198 (1,716) (1,597) 105 55
Net assets at beginning of period 727,422 899,490 3,198 - 22,279 23,876 55 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $542,402 727,422 4,037 3,198 20,563 22,279 160 55
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
TEMPLETON USALLIANZ VIP
PACIFIC GROWTH SECURITIES FUND DIVERSIFIED ASSETS FUND
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2 CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Investment income (loss), net $(673) (393) (2) - - - 40 -
Realized gains (losses) on investments,
net (5,441) (3,508) 86 38 - - (5) -
Net change in unrealized appreciation
(depreciation) on investments (9,213) 33,561 (23) 1 - - (79) 1
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (15,327) 29,660 61 39 - - (44) 1
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 669 1,373 131 104 - - 302 -
Transfers between funds (4,676) (3,365) (111) (32) - - 1,662 102
Surrenders and terminations (15,698) (30,514) (37) - - - (127) -
Rescissions (26) (39) (6) - - - - -
Bonus - - 1 - - - 1 -
Other transactions (note 2) 46 32 - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (19,684) (32,513) (22) 72 - - 1,838 102
Increase (decrease) in net assets (35,011) (2,853) 39 111 - - 1,794 103
Net assets at beginning of period 88,945 91,798 111 - - - 103 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $53,934 88,945 150 111 - - 1,897 103
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ - - 20 - - - (11) -
Realized gains (losses) on investments, net - - 18 - - - - -
Net change in unrealized appreciation
(depreciation) on investments - - (8) (2) - - (7) -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations - - 30 (2) - - (18) -
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments - - 95 - - - 90 -
Transfers between funds - - 889 131 - - 8 -
Surrenders and terminations - - (112) - - - - -
Rescissions - - - - - - - -
Bonus - - 5 - - - 2 -
Other transactions (note 2) - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions - - 877 131 - - 100 -
Increase (decrease) in net assets - - 907 129 - - 82 -
Net assets at beginning of period - - 129 - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ - - 1,036 129 - - 82 -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss), net $ - - 4 - - - 4 -
Realized gains (losses) on investments, net - - 7 - - - (1) -
Net change in unrealized appreciation
(depreciation) on investments - - (22) 14 - - (1) -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations - - (11) 14 - - 2 -
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments - - 193 - - - 8,819 -
Transfers between funds - - 909 325 - - (2,190) -
Surrenders and terminations - - (73) (8) - - (4) -
Rescissions - - - - - - (242) -
Bonus - - 5 - - - 398 -
Other transactions (note 2) - - 16 - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions - - 1,050 317 - - 6,781 -
Increase (decrease) in net assets - - 1,039 331 - - 6,783 -
Net assets at beginning of period - - 331 - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ - - 1,370 331 - - 6,783 -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operations:
Investment income (loss), net $ 2 - - - 3 - - -
Realized gains (losses) on investments, net 1 - - - - - - -
Net change in unrealized appreciation
(depreciation) on investments (30) - - - 37 - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations (27) - - - 40 - - -
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by
product):
Purchase payments 671 - - - 823 - - -
Transfers between funds 101 - - - 88 - - -
Surrenders and terminations (6) - - - (2) - - -
Rescissions - - - - (11) - - -
Bonus 34 - - - 45 - - -
Other transactions (note 2) 2 - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions 802 - - - 943 - - -
Increase (decrease) in net assets 775 - - - 983 - - -
Net assets at beginning of period - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $775 - - - 983 - - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS)
TOTAL ALL FUNDS
---------------------------------------------------------------------------------------------------------------------------
CLASS 1 CLASS 2
---------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Investment income (loss), net $ 93,467 345,556 413 637
Realized gains (losses) on investments, net 697,305 704,602 1,855 1,827
Net change in unrealized appreciation
(depreciation) on investments (675,402)(129,779) (307) 184
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 115,370 920,379 1,961 2,648
Contract transactions - All Products (See Notes 5, 6, 7, & 8 for detail by product):
Purchase payments 100,940 169,240 22,788 24,055
Transfers between funds 53,686 187,582 1,308 542
Surrenders and terminations (1,390,545)(2,732,370) (2,588) (3,198)
Rescissions (7,553) (10,614) (400) (333)
Bonus 1,533 - 611 -
Other transactions (note 2) 11,371 14,458 69 -
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from contract transactions (1,230,569)(2,371,704) 21,788 21,066
Increase (decrease) in net assets (1,115,199)(1,451,325) 23,749 23,714
Net assets at beginning of period 7,692,2109,143,535 23,714 -
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $6,577,0117,692,210 47,463 23,714
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements
September 30, 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
-------------------------------------------------------------------
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 Aggressive Growth Securities Fund Franklin Advisory Services, LLC
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 Technology Securities 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.
Franklin Zero Coupon - 2005 Fund Franklin Advisers, Inc.
Franklin Zero Coupon - 2010 Fund Franklin Advisers, Inc.
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
<TABLE>
<CAPTION>
1. Organization (Continued)
Portfolio (Continued) Investment Adviser (Continued)
---------------------------------------------------------------------------------------
<S> <C>
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 Asset Strategy Fund Templeton Global Advisors Limited
Templeton Developing Markets Securities Fund Templeton Asset Management Ltd.
Templeton Global Income Securities Fund Franklin Advisers, Inc.
Templeton Growth Securities Fund Templeton Global Advisors Limited
Templeton International Securities Fund Franklin Advisers, Inc.
Templeton International Smaller Companies Fund Templeton Investment Counsel, Inc.
Templeton Pacific Growth Securities 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,
USAllianz Alterity and USAllianz Rewards 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 the investment advisers of the portfolios.
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 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 funds in the following table were added as available
investment options for USAllianz Alterity.
<TABLE>
<CAPTION>
<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>
On May 1, 2000, the Franklin Aggressive Growth Securities Fund and Franklin
Technology Securities Fund were added as available investment options for
Valuemark II, III and IV.
<PAGE>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 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.
Premium Bonus
A premium bonus is awarded to the contract owner of the USAllianz Rewards
product at the time of deposit. The bonus paid is based on the following
schedule.
Net Deposit Bonus Paid
------------------------------------
$15,000 to 24,999 4%
$25,000 to 99,999 5%
$100,000 to 999,999 6%
$1,000,000 to 4.999 million 7%
$5,000,000 or more 8%
The bonus is vested over three years, therefore if the contract owner surrenders
the policy before the full vesting period a portion of the bonus can be lost.
The accumulated gain/loss on the bonus is 100% vested as it is earned. The
vesting rates are presented in the following schedule.
Months following Deposit Amount Vested
--------------------------------------
0 to 12 0%
13 to 24 35%
25 to 36 70%
37+ 100%
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
--------------------------------------------------------------------
USAllianz Alterity - Traditional 1.25% 0.15%
USAllianz Alterity - Optional 1.55% 0.15%
USAllianz Alterity - Enhanced 1.75% 0.15%
USAllianz Rewards - Traditional 1.50% 0.15%
USAllianz Rewards - Enhanced 1.70% 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%
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
2. Significant Accounting Policies (Continued)
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, USAllianz Alterity and USAllianz Rewards contracts.
Contract maintenance charges paid by the contract owners during the nine-month
period ended September 30, 2000 (unaudited) and the year ended December 31, 1999
were $2,562,171 and $4,426,312, 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, Valuemark IV, USAllianz
Alterity and USAllianz Rewards deferred annuity contracts. The amount of the
contingent deferred sales charge is shown below.
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
_______________________________________________________________________________________
----------------------------------------------------------------------------------------------------
Years Since
Payment Valuemark II Valuemark III Valuemark IV USAllianz Alterity USAllianz Rewards
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
0-1 5% 6% 6% 7% 8.5%
1-2 5% 5% 6% 6% 8.5%
2-3 4% 4% 6% 5% 8.5%
3-4 3% 3% 5% 4% 8.5%
4-5 1.5% 1.5% 4% 3% 8%
5-6 0% 0% 3% 0% 7%
6-7 - - 2% - 5%
7-8 - - 0% - 4%
8-9 - - - - 3%
9-10 - - - - 0%
10+ - - - - -
</TABLE>
Total contingent deferred sales charges paid by the contract owners during the
nine-month period ended September 30, 2000 (unaudited) and the year ended
December 31, 1999 were $8,450,269 and $16,657,195, respectively.
A systematic withdrawal plan is available to Valuemark II, Valuemark III,
Valuemark IV, USAllianz Alterity, and USAllianz Rewards 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 nine-month period ended
September 30, 2000 (unaudited) and the year ended December 31, 1999 were
$111,910 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 nine-month period ended September 30, 2000
(unaudited) and the year ended December 31, 1999 were $54,994,115 and
$188,123,947, respectively.
<PAGE>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
2. Significant Accounting Policies (Continued)
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.
3. 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>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
4. Purchases and Sales of Investments (in thousands)
The cost of purchases and proceeds from sales of investment for the nine-month
period ended September 30, 2000 (unaudited) are as follows:.
<TABLE>
<CAPTION>
Cost of Proceeds from
Purchases Sales
______________ ______________
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Aim V.I. Capital Appreciation Fund $ 4,039 $ 60
Aim V.I. Growth Fund 57,343 3,728
Aim V.I. International Equity Fund 1,757 36
Aim V.I. Value Fund 2,809 59
Alger American Growth Portfolio 45,230 9,131
Alger American Leveraged AllCap Portfolio 30,168 9,985
Alger American MidCap Growth Portfolio 2,587 8
Alger American Small Capitalization Portfolio 585 4
Davis VA Financial Portfolio 660 23
Davis VA Real Estate Portfolio 1,239 262
Davis VA Value Portfolio 1,504 130
Franklin Aggressive Growth Securities Fund 9,806 916
Franklin Global Communications Securities Fund 685,201 145,690
Franklin Global Health Care Securities Fund 26,909 9,716
Franklin Growth and Income Securities Fund 709,726 226,012
Franklin High Income Fund 249,650 125,757
Franklin Income Securities Fund 639,000 195,357
Franklin Large Cap Growth Securities Fund 310,932 55,737
Franklin Money Market Fund 263,851 1,026,397
Franklin Natural Resources Securities Fund 35,496 23,489
Franklin Real Estate Fund 150,626 45,583
Franklin Rising Dividends Securities Fund 349,886 122,656
Franklin S&P 500 Index Fund 42,215 12,024
Franklin Small Cap Fund 302,295 192,503
Franklin Technology Securities Fund 9,201 788
Franklin U.S. Government Fund 404,744 107,618
</TABLE>
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
4. Purchases and Sales of Investments (in thousands) (continued)
<TABLE>
<CAPTION>
Cost of Proceeds from
Purchases Sales
______________ ______________
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Franklin Value Securities Fund $ 13,556 $ 8,976
Franklin Zero Coupon - 2000 49,094 15,877
Franklin Zero Coupon - 2005 52,511 13,027
Franklin Zero Coupon - 2010 53,934 29,902
J.P. Morgan International Opportunities Fund 324 3
J.P. Morgan U.S. Disciplined Equity Fund 556 1
Mutual Discovery Securities Fund 151,867 30,840
Mutual Shares Securities Fund 320,650 87,482
Oppenheimer Global Securities Fund/VA 2,677 52
Oppenheimer High Income Fund/VA 902 31
Oppenheimer Main Street Growth and Income Fund/VA 3,953 44
PIMCO VIT High Yield Bond Portfolio 423 9
PIMCO VIT StocksPLUS Growth and Income Portfolio 553 45
PIMCO VIT Total Return Bond Portfolio 1,231 15
Seligman Global Technology Fund 3,993 74
Seligman Small-Cap Value Fund 1,000 36
Templeton Asset Strategy Fund 47,081 13,274
Templeton Developing Markets Securities Fund 131,498 129,116
Templeton Global Income Securities Fund 68,486 22,241
Templeton Growth Securities Fund 520,668 205,624
Templeton International Securities Fund 614,568 447,941
Templeton International Smaller Companies Fund 20,650 62,899
Templeton Pacific Growth Securities Fund 58,853 292,710
USAllianz VIP Diversified Assets Fund 1,981 174
USAllianz VIP Fixed Fund 1,055 8,301
USAllianz VIP Global Opportunities Fund 89 4
USAllianz VIP Growth Fund 1,389 190
USAllianz VIP Money Market Fund 6,783 2,600
Van Kampen LIT Enterprise Portfolio 803 6
Van Kampen LIT Growth and Income Portfolio 942 12
______________ ______________
-----------------------------------------------------------------------------------------------
Total $ 6,469,528 $ 3,685,169
______________ ______________
-----------------------------------------------------------------------------------------------
______________ ______________
-----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
5. CONTRACT TRANSACTIONS - Valuemark II, III, and IV Accumulation DOLLAR AND
Unit Activity (In thousands)
Transactions in dollars and units for each fund for the nine-month period ended
September 30, 2000 (unaudited) and the year ended December 31, 1999 were as
follows:
<TABLE>
<CAPTION>
FRANKLIN
AIM V.I. ALGER AMERICAN ALGER AMERICAN AGGRESSIVE GROWTH
GROWTH FUND GROWTH FUND LEVERAGED ALLCAP FUNDSECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Valuemark II & III Contract transactions - 1999:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 27 3 $ 6 1 $ 1 - $ - -
Transfers between funds 5,530 529 5,632 539 3,765 341 - -
Surrenders and terminations (61) (6) (3) - (9) (1) - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $5,496 526 $ 5,635 540 $3,757 340 $ - -
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
PURCHASE PAYMENTS $ 785 67 $ 281 25 $ 192 15 $ 27 2
Transfers between funds 26,518 2,260 17,769 1,595 11,213 819 6,684 561
Surrenders and terminations (2,836) (253) (2,032) (192) (1,439) (119) (79) (7)
Rescissions (165) (14) (11) (1) - - - -
Bonus - - - - - - - -
Other transactions (3) - 2 - 4 - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $24,299 2,060 $16,009 1,427 $9,970 715 $6,632 556
---------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 50 5 $ 215 20 $ 8 1 $ - -
Transfers between funds 3,764 360 4,119 396 3,078 277 - -
Surrenders and terminations (18) (2) (10) (1) (9) (1) - -
RESCISSIONS - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $3,796 363 $ 4,324 415 $3,077 277 $ - -
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $1,568 136 $ 873 78 $ 576 45 $ 364 32
Transfers between funds 19,925 1,717 12,412 1,123 9,433 733 2,841 245
Surrenders and terminations (1,608) (140) (1,310) (118) (1,114) (92) (13) (1)
Rescissions (1) - - - - - - -
Bonus - - - - - - - -
OTHER TRANSACTIONS 41 4 14 1 15 1 - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $19,925 1,717 $11,989 1,084 $8,910 687 $3,192 276
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
5. CONTRACT TRANSACTIONS - Valuemark II, III, and IV Accumulation DOLLAR AND
Unit Activity (In thousands) (CONTINUED)
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
---------------------------------------------------------------------------------------------------------------------------
Valuemark II & III Contract transactions - 1999:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 3,272 96 $ 103 11 $ 8,279 191 $ 1,791 69
Transfers between funds (24,958) (870) 3,399 351 (16,044) (589) (18,484) (851)
SURRENDERS AND TERMINATIONS (250,550) (8,394) (2,835) (314) (331,869) (12,443) (100,108) (4,711)
Rescissions (386) (12) (2) - (714) (27) (186) (9)
Bonus - - - - - - - -
Other transactions 476 16 (3) - 585 22 173 8
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(272,146) (9,164) $662 48 $(339,763) (12,846) $(116,814) (5,494)
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 1,968 43 $ 144 11 $ 2,256 64 $ 644 25
Transfers between funds 6,981 126 11,530 892 (39,923) (1,547) (15,508) (747)
SURRENDERS AND TERMINATIONS (138,194) (3,608) (2,048) (159) (150,485) (5,707) (45,644) (2,211)
Rescissions (394) (10) (43) (3) (151) (6) (43) (2)
Bonus - - - - - - - -
Other transactions 168 5 (5) - 593 22 96 5
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(129,470) (3,444) $9,578 741 $(187,710) (7,174) $(60,454) (2,930)
---------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 3,917 118 $ 502 55 $11,510 390 $ 7,857 366
TRANSFERS BETWEEN FUNDS 13,001 433 2,077 220 18,552 696 2,895 140
Surrenders and terminations (4,391) (138) (267) (30) (18,769) (699) (11,650) (550)
Rescissions (16) (1) (2) - (127) (5) (890) (42)
Bonus - - - - - - - -
Other transactions 1 - - - 78 3 277 13
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $12,512 412 $ 2,310 245 $11,244 385 $(1,511) (73)
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 2,128 56 $ 646 48 $ 1,868 71 $ 1,044 51
TRANSFERS BETWEEN FUNDS 10,813 271 5,893 445 (8,590) (345) (10,433) (506)
Surrenders and terminations (4,751) (127) (767) (60) (13,745) (530) (8,244) (405)
Rescissions (69) (2) - - (36) (2) (161) (8)
Bonus - - - - - - - -
Other transactions 2 - 1 - 65 2 82 4
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $8,123 198 $5,773 433 $(20,438) (804) $(17,712) (864)
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION DOLLAR AND 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
---------------------------------------------------------------------------------------------------------------------------
VALUEMARK II & III Contract transactions - 1999:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 4,169 123 $ 3,422 149 $ 7,896 180 $ 315 33
Transfers between funds (69,103) (2,779) 117,374 7,093 194,558 13,480 (5,419) (549)
Surrenders and terminations (294,539) (11,825) (81,624) (4,823) (276,520) (18,739) (9,951) (992)
Rescissions (1,016) (41) (255) (15) (187) (13) (65) (6)
Bonus - - - - - - - -
Other transactions 767 31 151 9 6,553 448 11 1
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(359,722) (14,491) $39,068 2,413 $(67,700) (4,644) $(15,109) (1,513)
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
PURCHASE PAYMENTS $ 1,405 44 $ 2,088 67 $ 4,722 71 $ 104 8
Transfers between funds (36,899) (1,477) 38,566 1,773 32,572 1,970 663 52
Surrenders and terminations (129,589) (5,086) (44,201) (2,002) (119,263) (7,480) (6,693) (540)
Rescissions (320) (13) (34) (2) (865) (58) - -
Bonus - - - - - - - -
Other transactions 115 5 440 22 4,407 292 7 -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(165,288) (6,527) $(3,141) (142) $(78,426) (5,205)$ (5,919) (480)
---------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 9,595 367 $10,004 584 $12,863 690 $ 459 45
Transfers between funds 5,898 239 59,488 3,598 25,077 1,872 923 123
Surrenders and terminations (11,956) (463) (20,335) (1,175) (25,510) (1,698) (618) (61)
Rescissions (122) (5) (56) (4) (49) (3) (57) (5)
Bonus - - - - - - - -
Other transactions 64 3 258 16 470 33 (2) -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 3,479 141 $49,359 3,019 $12,851 894 $ 705 102
---------------------------------------------------------------------------------------------------------------------------
CONTRACT TRANSACTIONS - 2000 (UNAUDITED):
Purchase payments $ 1,375 54 $ 2,684 124 $ 4,266 286 $ 382 30
Transfers between funds (10,426) (428) 21,777 1,013 (5,762) (401) 496 35
Surrenders and terminations (9,606) (381) (14,489) (668) (15,865) (1,063) (615) (49)
Rescissions (223) (9) (231) (11) (181) (12) - -
Bonus - - - - - - - -
Other transactions 92 4 103 5 756 51 (2) -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(18,788) (760) $9,844 463 $(16,786) (1,139) $261 16
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION DOLLAR AND UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin Franklin Franklin
Real Estate Rising Dividends S&P 500 Small Cap
Fund Securities Fund Index Fund Fund
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
VALUEMARK II & III Contract transactions - 1999:
<S> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 790 29 $ 2,867 105 $ 5 - $ 1,798 96
Transfers between funds (29,234) (1,316) (38,032) (1,898) 7,594 745 8,311 38
Surrenders and terminations (66,788) (2,940) (174,156) (8,633) (181) (18) (72,615) (4,346)
Rescissions (283) (13) (316) (16) - - (139) (8)
Bonus - - - - - - - -
Other transactions 46 2 221 11 - - 302 18
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(95,469) (4,238) $(209,416) (10,431)$ 7,418 727 $(62,343) (4,202)
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 381 15 $ 928 38 $ 489 45 $ 2,037 56
Transfers between funds (6,051) (277) (29,717) (1,582) 20,812 2,001 14,220 441
Surrenders and terminations (26,413) (1,124) (69,484) (3,663) (3,790) (367) (52,185) (1,722)
Rescissions (85) (4) (140) (7) (43) (4) (66) (2)
Bonus - - - - - - - -
OTHER TRANSACTIONS 54 2 172 9 27 3 88 3
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(32,114) (1,388) $(98,241) (5,205) $17,496 1,678 $(35,906) (1,224)
---------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 1,696 73 $ 5,964 284 $ 274 26 $ 4,252 243
Transfers between funds (4,570) (216) (282) (31) 6,114 601 6,853 269
Surrenders and terminations (4,367) (191) (11,026) (544) (10) (1) (9,570) (546)
Rescissions (7) - (111) (6) - - (56) (4)
Bonus - - - - - - - -
Other transactions 26 1 115 6 - - 112 6
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(7,222) (333) $(5,340) (291) $6,378 626 $ 1,591 (32)
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 1,609 68 $ 694 37 $ 1,282 124 $ 4,123 141
Transfers between funds (1,798) (90) (10,740) (588) 11,029 1,070 13,776 446
Surrenders and terminations (2,547) (109) (6,813) (364) (1,078) (104) (10,895) (364)
Rescissions (20) (1) (29) (2) (2) - (102) (4)
Bonus - - - - - - - -
Other transactions (4) - 20 1 23 2 (13) (1)
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(2,760) (132) $(16,868) (916) $11,254 1,092 $6,889 218
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION DOLLAR AND UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Franklin Franklin Franklin Franklin
Technology U.S. Government Value Zero Coupon
Securities Fund Fund Securities Fund Fund - 2000
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
VALUEMARK II & III Contract transactions - 1999:
<S> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ - - $ 2,444 130 $ 326 12 $ 183 9
Transfers between funds - - (16,017) (857) 2,439 332 (1,531) (74)
Surrenders and terminations - - (165,246) (8,796) (2,562) (336) (20,544) (989)
Rescissions - - (1,028) (55) (1) - (4) -
Bonus - - - - - - - -
Other transactions - - 294 16 (2) - 117 6
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ - - $(179,553) (9,562) $ 200 8 $(21,779) (1,048)
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
PURCHASE PAYMENTS $ 33 3 $ 1,259 67 $ 71 4 $ 147 7
Transfers between funds 5,044 432 (13,577) (725) 45 17 (2,168) (102)
Surrenders and terminations (185) (15) (75,487) (3,991) (2,229) (275) (11,757) (551)
Rescissions (85) (8) (91) (5) (30) (4) - -
Bonus - - - - - - - -
Other transactions - - 124 7 3,038 403 16 1
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $4,807 412 $(87,772) (4,647) $ 895 145 $(13,762) (645)
---------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
PURCHASE PAYMENTS $ - - $ 7,769 407 $ 715 80 $ 340 16
Transfers between funds - - 15,383 826 1,785 221 2,017 98
Surrenders and terminations - - (7,818) (418) (521) (66) (406) (20)
Rescissions - - (156) (8) (1) - (8) -
Bonus - - - - - - - -
Other transactions - - 195 10 6 1 3 -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ - - $15,373 817 $1,984 236 $ 1,946 94
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
PURCHASE PAYMENTS $ 257 23 $ 916 49 $ 256 32 $ 3 -
Transfers between funds 4,182 364 (1,308) (69) 1,718 219 (884) (42)
Surrenders and terminations (73) (7) (6,112) (325) (448) (56) (617) (29)
Rescissions - - (380) (20) (1) - - -
Bonus - - - - - - - -
Other transactions - - 57 3 8 1 - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $4,366 380 $(6,827) (362) $1,533 196 $(1,498) (71)
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION DOLLAR AND UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
FRANKLIN FRANKLIN MUTUAL MUTUAL
ZERO COUPON ZERO COUPON DISCOVERY SHARES
FUND - 2005 FUND - 2010 SECURITIES FUND SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Valuemark II & III Contract transactions - 1999:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 215 9 $ 206 8 $ 889 56 $ 2,270 134
Transfers between funds (950) (40) 225 1 (9,239) (849) 261 (64)
Surrenders and terminations (14,198) (595) (19,296) (749) (37,626) (3,134) (73,031) (5,759)
Rescissions (15) (1) (7) - (62) (5) (653) (52)
Bonus - - - - - - - -
Other transactions 71 3 230 9 110 10 389 31
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(14,877) (624) $(18,642) (731) $(45,928) (3,922) $(70,764) (5,710)
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 59 2 $ 56 2 $ 410 23 $ 850 51
Transfers between funds (1,887) (81) (2,464) (106) 3,124 183 (8,504) (659)
Surrenders and terminations (7,900) (335) (9,213) (369) (16,924) (1,148) (32,285) (2,399)
Rescissions - - - - (2) - (1,665) (126)
Bonus - - - - - - - -
Other transactions (8) - (6) - 14 1 20 2
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(9,736) (414) $(11,627) (473) $(13,378) (941) $(41,585) (3,131)
---------------------------------------------------------------------------------------------------------------------------
Valuemark IV
CONTRACT TRANSACTIONS - 1999:
Purchase payments $ 1,585 66 $ 2,411 92 $ 3,851 317 $ 9,961 780
Transfers between funds 3,627 152 3,934 152 (3,004) (273) 6,279 461
Surrenders and terminations (1,004) (43) (1,316) (51) (12,692) (1,040) (27,466) (2,158)
Rescissions (89) (4) (84) (3) (169) (14) (156) (12)
Bonus - - - - - - - -
Other transactions 89 4 5 - 100 8 247 19
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 4,208 175 $ 4,950 190 $(11,914) (1,002) $(11,135) (910)
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
PURCHASE PAYMENTS $ 36 2 $ 400 16 $ 684 48 $ 2,258 169
Transfers between funds (419) (19) (1,528) (60) (866) (59) (16,115) (1,235)
Surrenders and terminations (739) (32) (1,117) (45) (8,813) (614) (20,798) (1,566)
Rescissions - - (2) - (17) (1) (204) (16)
Bonus - - - - - - - -
Other transactions (1) - 1 - 185 13 71 6
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(1,123) (49) $(2,246) (89) $(8,827) (613) $(34,788)(2,642)
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION DOLLAR AND UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Templeton Templeton Templeton Templeton
Asset Strategy Developing Markets Global Income Growth
Fund Securities Fund Securities Fund Securities Fund
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Valuemark II & III
CONTRACT TRANSACTIONS - 1999:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 577 21 $ 1,065 106 $ 372 22 $ 3,910 176
Transfers between funds (8,133) (601) (9,812) (1,139) (8,997) (528) (21,594) (1,329)
Surrenders and terminations (13,638) (974) (35,896) (3,728) (38,030) (2,221) (143,382) (8,200)
Rescissions (16) (1) (154) (15) (414) (25) (338) (19)
Bonus - - - - - - - -
Other transactions 43 3 131 13 37 2 309 18
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(21,167) (1,552) $(44,666) (4,763) $(47,032) (2,750) $(161,095) (9,354)
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 233 12 $ 448 34 $ 219 13 $ 1,804 87
TRANSFERS BETWEEN FUNDS (1,824) (126) (7,057) (646) (4,046) (270) (10,045) (551)
Surrenders and terminations (6,388) (439) (23,363) (2,157) (14,565) (870) (93,707) (4,981)
Rescissions (39) (3) (129) (11) (76) (5) (46) (3)
Bonus - - - - - - - -
Other transactions 47 3 49 4 46 3 26 1
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(7,971) (553) $(30,052) (2,776) $(18,422) (1,129) $ (101,968)(5,447)
---------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 2,112 146 $ 2,375 232 $ 1,026 58 $12,834 706
TRANSFERS BETWEEN FUNDS (1,245) (90) 164 1 761 44 8,319 454
Surrenders and terminations (2,233) (147) (2,692) (269) (1,634) (96) (17,858) (1,013)
Rescissions (2) - (6) (1) (5) - (144) (9)
Bonus - - - - - - - -
Other transactions 39 3 13 1 5 - 111 6
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(1,329) (88) $ (146) (36) $ 153 6 $ 3,262 144
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 557 40 $ 1,040 94 $ 117 7 $ 2,724 147
TRANSFERS BETWEEN FUNDS (2,621) (189) 357 4 (802) (49) 2,034 108
Surrenders and terminations (1,538) (110) (3,391) (320) (1,186) (74) (15,133) (811)
Rescissions - - (36) (4) (64) (4) (70) (4)
Bonus - - - - - - - -
Other transactions 29 2 14 1 8 1 26 1
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(3,573) (257) $(2,016) (225) $(1,927) (119) $(10,419) (559)
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION DOLLAR AND UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
Templeton Templeton Templeton USAllianz VIP
International International Smaller Pacific Growth Diversified Assets
Securities Fund Companies Fund Securities Fund Fund
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Valuemark II & III
CONTRACT TRANSACTIONS - 1999:
<S> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 2,621 122 $ 115 7 $ 738 69 $ - -
Transfers between funds (63,288) (3,285) (1,461) (163) (6,774) (499) 88 9
Surrenders and terminations (269,672) (13,737) (3,584) (347) (29,719) (3,171) - -
Rescissions (1,975) (99) (3) - (36) (4) - -
Bonus - - - - - - - -
Other transactions 1,097 56 35 4 11 2 - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(331,217) (16,943) $(4,898) (499) $(35,780) (3,603) $ 88 9
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 1,281 47 $ 115 7 $ 263 23 $ 43 4
TRANSFERS BETWEEN FUNDS (11,970) (511) 1,196 100 (3,776) (312) 883 77
Surrenders and terminations (122,038)(5,614) (3,008) (252) (14,496) (1,496) (70) (7)
Rescissions (222) (10) - - (26) (3) - -
Bonus - - - - - - - -
Other transactions 151 7 15 1 41 4 - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (
unaudited): $(132,798) (6,081) $(1,682) (144) $(17,994) (1,784) $856 74
---------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ 3,376 160 $ 412 41 $ 635 65 $ - -
TRANSFERS BETWEEN FUNDS (471) (18) (381) (46) 3,409 397 14 1
Surrenders and terminations (8,179) (407) (1,017) (97) (795) (78) - -
Rescissions (40) (2) (3) - (3) - - -
Bonus - - - - - - - -
Other transactions 68 4 4 - 21 2 - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $(5,246) (263) $ (985) (102) $3,267 386 $ 14 1
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 1,352 63 $ 194 17 $ 406 41 $ 80 8
TRANSFERS BETWEEN FUNDS 4,415 215 663 57 (900) (36) 768 76
Surrenders and terminations (6,858) (319) (854) (73) (1,202) (127) (57) (5)
Rescissions (228) (11) (32) (3) - - - -
Bonus - - - - - - - -
Other transactions (14) (1) 5 - 5 - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(1,333) (53) $ (24) (2) $(1,691) (122) $791 79
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
5. CONTRACT TRANSACTIONS: - VALUEMARK II, III, AND IV ACCUMULATION DOLLAR AND UNIT ACTIVITY (IN THOUSANDS) (CONTINUED)
USAllianz VIP USAllianz VIP Total
Fixed Income Growth All
Fund Fund Funds
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Valuemark II & III
CONTRACT TRANSACTIONS - 1999:
<S> <C> <C> <C> <C>
Purchase payments $ - - $ - - $ 50,672 1,967
Transfers between funds 126 13 224 22 456 5,213
Surrenders and terminations - - (8) (1)(2,528,241) (130,922)
Rescissions - - - - (8,255) (436)
Bonus - - - - - -
Other transactions - - - - 12,154 739
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 126 13 $ 216 21 $(2,473,214) (123,439)
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 1 -$ 25,743 982
Transfers between funds 394 39 502 48 3,301 3,667
Surrenders and terminations (64) (6) (63) (6)(1,228,117)(59,151)
Rescissions - - - - (4,771) (304)
Bonus - - - - - -
Other transactions - - - - 9,738 805
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000 (UNAUDITED): $ 330 33 $ 440 42$(1,194,106)(54,001)
---------------------------------------------------------------------------------------------------------------------------
Valuemark IV Contract transactions - 1999:
Purchase payments $ - - $ - - $ 118,568 6,433
Transfers between funds 5 1 101 10 187,684 11,368
Surrenders and terminations - - - - (204,137) (12,003)
Rescissions - - - - (2,359) (128)
Bonus - - - - - -
Other transactions - - - - 2,305 139
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 5 1 $ 101 10 $ 102,061 5,809
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
PURCHASE PAYMENTS $ 1 - $ 28 3$ 36,791 2,140
Transfers between funds 495 50 406 38 50,241 4,113
Surrenders and terminations (47) (5) (10) (1) (162,453) (9,094)
Rescissions - - - - (2,089) (114)
Bonus - - - - - -
Other transactions - - 16 2 1,605 103
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ 449 45 $ 440 42$ (75,905) (2,852)
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - Charter Traditional and Enhanced Accumulation Dollar and Unit Activity (In thousands)
Transactions in dollars and units for each fund for the nine-month period ended
September 30, 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
---------------------------------------------------------------------------------------------------------------------------
Charter Traditional
CONTRACT TRANSACTIONS - 1999:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 159 5 $ 30 3 $ 548 21 $ 430 20
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 210 6 $ 106 9 $ 148 5 $ 216 10
TRANSFERS BETWEEN FUNDS 55 1 20 2 (69) (2) (229) (11)
Surrenders and terminations (2) - - - (292) (11) (19) (1)
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 263 7 $ 126 11 $(213) (8) $(32) (2)
---------------------------------------------------------------------------------------------------------------------------
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) -
Bonus - - - - - - - -
Rescissions - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 228 7 $ 45 5 $ 241 9 $ 18 1
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 47 1 $ 43 4 $ 172 7 $ 84 4
TRANSFERS BETWEEN FUNDS 4 - 4 - (17) (1) - -
Surrenders and terminations (3) - (3) - (5) - (30) (1)
Rescissions - - (4) - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 48 1 $ 40 4 $ 150 6 $54 3
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - Charter Traditional and Enhanced Accumulation Dollar and 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
---------------------------------------------------------------------------------------------------------------------------
Charter Traditional
CONTRACT TRANSACTIONS - 1999:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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) - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 1,233 49 $ 241 19 $ 8,474 562 $ 71 5
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 159 6 $ 257 12 $ 3,024 195 $ 2 -
TRANSFERS BETWEEN FUNDS (22) (1) 332 13 (1,917) (130) (11) (1)
Surrenders and terminations (280) (11) (160) (7) (125) (8) - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - 2,769 178 - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(143) (6) $ 429 18 $3,751 235 $(9) (1)
---------------------------------------------------------------------------------------------------------------------------
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 - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 95 4 $ 121 7 $ 16 1 $ 6 -
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 129 5 $ 322 15 $ - - $ - -
TRANSFERS BETWEEN FUNDS (3) - 3 - 45 3 4 -
Surrenders and terminations (1) - (8) - (62) (4) - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 125 5 $ 317 15 $(17) (1) $4 -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - Charter Traditional and Enhanced Accumulation Dollar and 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
---------------------------------------------------------------------------------------------------------------------------
Charter Traditional
CONTRACT TRANSACTIONS - 1999:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 417 20 $ 357 18 $ 646 32 $ 1,671 87
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 129 5 $ 52 3 $ 59 2 $ 6 -
TRANSFERS BETWEEN FUNDS (67) (3) 21 - 1,090 37 (778) (40)
Surrenders and terminations - - (128) (7) (386) (11) (1) -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - (1,340) (47) - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 62 2 $ (55) (4) $(577) (19) $(773) (40)
---------------------------------------------------------------------------------------------------------------------------
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 - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 15 1 $ 212 11 $ 52 3 $ 220 12
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 110 5 $ - - $ 165 5 $ 193 10
TRANSFERS BETWEEN FUNDS 4 - (16) (1) 11 - (11) (1)
Surrenders and terminations (5) - (1) - (1) - (9) -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 109 5 $ (17) (1) $ 175 5 $173 9
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - Charter Traditional and Enhanced Accumulation Dollar and Unit Activity (In thousands)
(continued)
Franklin Mutual Mutual Templeton
Value Discovery Shares Asset Strategy
Securities Fund Securities Fund Securities Fund Fund
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Charter Traditional
CONTRACT TRANSACTIONS - 1999:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 115 14 $ 236 20 $ 835 65 $ 34 2
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 4 - $ 65 4 $ 143 11 $ - -
TRANSFERS BETWEEN FUNDS 20 1 24 2 17 1 (2) -
Surrenders and terminations - - (129) (9) (37) (3) - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 24 1 $ (40) (3) $ 123 9 $(2) -
---------------------------------------------------------------------------------------------------------------------------
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 - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 22 3 $ 123 10 $ 95 8 $ 14 1
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 89 6 $ 293 23 $ 30 2
TRANSFERS BETWEEN FUNDS - - 6 - (12) (1) (15) (1)
Surrenders and terminations - - (9) (1) (32) (2) - -
Rescissions - - (6) - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ 80 5 $ 249 20 $ 15 1
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - Charter Traditional and Enhanced Accumulation Dollar and Unit Activity (In thousands)
(continued)
Templeton Templeton Templeton Templeton
Developing Markets Global Income Growth International
Securities Fund Securities Fund Securities Fund Securities Fund
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Charter Traditional
CONTRACT TRANSACTIONS - 1999:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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) - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ (14) 21 $ 438 25 $ 678 51 $ 1,758 124
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 113 10 $ 108 6 $ 123 7 $ 278 13
TRANSFERS BETWEEN FUNDS (310) (2) - - (170) - 1,684 99
Surrenders and terminations (28) (3) (14) (1) (159) (9) (187) (8)
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - (1,380) (61)
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $(225) 5 $ 94 5 $(206) (2) $395 43
---------------------------------------------------------------------------------------------------------------------------
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 - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 77 7 $ 6 - $ 282 15 $ 280 14
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 64 6 $ - - $ 105 6 $ 181 8
TRANSFERS BETWEEN FUNDS 4 - - - 4 - 22 1
Surrenders and terminations (4) - - - (15) (1) (31) (1)
Rescissions (6) (1) - - (6) - (6) -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 58 5 $ - - $ 88 5 $166 8
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
6. CONTRACT TRANSACTIONS: - Charter Traditional and Enhanced Accumulation Dollar and Unit Activity (In thousands)
(continued)
Templeton Templeton Total
International Smaller Pacific Growth All
Companies Fund Securities Fund Funds
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Charter Traditional
CONTRACT TRANSACTIONS - 1999:
<S> <C> <C> <C> <C> <C>
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)
Bonus - - - - - -
Other transactions - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ (130) - $ 26 6 $ 18,253 1,169
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 27 2 $ 5 - $ 5,234 306
Transfers between funds (232) - (114) (2) (658) (36)
Surrenders and terminations (19) (2) (33) (3) (1,999) (94)
Rescissions - - - - - -
Bonus - - - - - -
OTHER TRANSACTIONS - - - - 49 70
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ (224) - $ (142) (5) $ 2,626 246
---------------------------------------------------------------------------------------------------------------------------
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 - - - - - -
Bonus - - - - - -
Other transactions - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 1999: $ 49 4 $ 46 4 $ 2,263 127
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
Purchase payments $ 106 9 $ 73 7 $ 2,206 123
Transfers between funds 1 - 3 - 41 (1)
Surrenders and terminations (3) - (4) - (226) (10)
Rescissions (6) (1) (6) (1) (40) (3)
Bonus - - - - - -
Other transactions - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ 98 8 $ 66 6 $ 1,981 109
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 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 nine-month period ended
September 30, 2000 (unaudited) 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
---------------------------------------------------------------------------------------------------------------------------
Alterity Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 541 49 $ 1,149 97 $ 330 34 $ 361 35
Transfers between funds 20 2 85 7 39 4 46 5
Surrenders and terminations (13) (1) (8) (1) (2) - (7) (1)
Rescissions (3) - (22) (2) (5) - (13) (1)
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000
(UNAUDITED): $ 545 50 $ 1,204 101 $ 362 38 $387 38
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 70 6 $ 245 21 $ 17 2 $ 145 14
Transfers between funds 56 5 34 3 14 2 45 5
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 126 11 $ 279 24 $ 31 4 $190 19
---------------------------------------------------------------------------------------------------------------------------
Alterity Optional
CONTRACT TRANSACTIONS - 2000 (UNAUDITED):
Purchase payments $ 376 33 $ 385 33 $ 105 11 $ 411 39
Transfers between funds 123 11 90 8 135 14 63 6
Surrenders and terminations (2) - - - (2) - (2) -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 497 44 $ 475 41 $ 238 25 $472 45
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 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 PORTFOLIOLEVERAGED ALLCAP PORTFOLIO GROWTH PORTFOLIO CAPITALIZATION PORTFOLIO
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Alterity Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 411 36 $ 365 31 $ 464 41 $ 40 4
Transfers between funds 11 1 225 16 56 5 27 3
Surrenders and terminations (1) - (18) (2) (13) (1) - -
Rescissions (3) - (16) (1) (3) - - -
Bonus - - - - - - - -
Other transactions - - 1 - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 418 37 $ 557 44 $ 504 45 $67 7
---------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 85 8 $ 259 21 $ 178 15 $ 22 2
Transfers between funds 72 6 47 4 60 5 18 2
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 157 14 $ 306 25 $ 238 20 $40 4
---------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
PURCHASE PAYMENTS $ 131 12 $ 308 26 $ 242 21 $ 148 16
---------------------------------------------------------------------------------------------------------------------------
Transfers between funds 164 15 44 4 82 7 31 3
Surrenders and terminations (3) - (1) - (1) - (2) -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 292 27 $ 351 30 $ 323 28 $177 19
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 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
---------------------------------------------------------------------------------------------------------------------------
ALTERITY TRADITIONAL
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 171 16 $ 75 7 $ 159 15 $ 130 5
Transfers between funds 14 1 39 3 9 - 3 -
Surrenders and terminations - - - - (2) - (10) -
Rescissions - - - - (12) (1) (22) (1)
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 185 17 $ 114 10 $ 154 14 $101 4
---------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
PURCHASE PAYMENTS $ 3 - $ 13 1 $ 82 8 $ - -
---------------------------------------------------------------------------------------------------------------------------
Transfers between funds 1 - 1 - (24) (2) - -
Surrenders and terminations - - - - (1) - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 4 - $ 14 1 $ 57 6 $ - -
---------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 758 64 $ 422 39 $ 33 1
Transfers between funds 2 - - - 70 6 72 3
Surrenders and terminations - - - - - - (3) -
Rescissions - - (241) (20) - - - -
Bonus - - - - - - - -
OTHER TRANSACTIONS - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 2 - $ 517 44 $ 492 45 $102 4
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 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
---------------------------------------------------------------------------------------------------------------------------
Alterity Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PURCHASE PAYMENTS $ 39 2 $ 564 19 $ 39 2 $ 191 19
---------------------------------------------------------------------------------------------------------------------------
Transfers between funds (15) (1) 105 3 10 1 9 1
Surrenders and terminations (2) - (12) - - - - -
Rescissions (20) (1) (35) (1) - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ 2 - $ 622 21 $ 49 3 $
200 20
---------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 115 4 $ 11 1 $ 5 -
Transfers between funds - - 33 1 2 - 1 -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
OTHER TRANSACTIONS - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ 148 5 $ 13 1 $6 -
---------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ 7 - $ 215 8 $ 257 14 $ - -
Transfers between funds - - 121 4 126 7 12 1
Surrenders and terminations - - (1) - (1) - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 7 - $ 335 12 $ 382 21 $12 1
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 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
---------------------------------------------------------------------------------------------------------------------------
Alterity Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 24 2 $ 105 7 $ 281 20 $ 239 25
Transfers between funds 1 - 40 3 - - 157 14
Surrenders and terminations - - - - - - - -
Rescissions - - (8) (1) - - (12) (1)
Bonus - - - - - - - -
OTHER TRANSACTIONS - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 25 2 $ 137 9 $ 281 20 $384 38
---------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 59 6 $ 56 4 $ 124 9 $ 202 21
Transfers between funds 6 1 3 - - - (11) (1)
Surrenders and terminations - - (1) - (1) - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 65 7 $ 58 4 $ 123 9 $191 20
---------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ 18 2 $ 19 1 $ 49 4 $ 283 30
Transfers between funds 26 3 4 - 18 1 57 6
Surrenders and terminations - - - - - - (1) -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 44 5 $ 23 1 $ 67 5 $339 36
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 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/VA Portfolio Income Portfolio
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Alterity Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 286 32 $ 643 64 $ 58 6 $ 69 7
Transfers between funds 31 3 235 24 48 4 1 -
Surrenders and terminations (15) (2) - - - - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000
(UNAUDITED): $ 302 33 $ 878 88 $ 106 10 $70 7
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 69 7 $ 38 4 $ 7 1
Transfers between funds 2 - 31 3 - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 2 - $ 100 10 $ 38 4 $ 7 1
---------------------------------------------------------------------------------------------------------------------------
Alterity Optional
CONTRACT TRANSACTIONS - 2000 (UNAUDITED):
Purchase payments $ - - $ 98 10 $ 269 28 $ 74 7
Transfers between funds - - 74 7 (9) (1) 13 1
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ - - $ 172 17 $ 260 27 $ 87 8
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 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 SECURITIES FUND
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Alterity Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 120 12 $ 1,211 106 $ 165 15 $ 53 5
Transfers between funds 60 4 97 9 (8) - (2) -
Surrenders and terminations - - (17) (2) - - - -
Rescissions - - (16) (1) (1) - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 180 16 $1,275 112 $ 156 15 $51 5
---------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 9 1 $ 282 27 $ 4 - $ 10 1
Transfers between funds 12 1 82 8 2 - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 21 2 $ 364 35 $ 6 - $10 1
---------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
PURCHASE PAYMENTS $ 11 1 $ 245 23 $ 79 7 $ 74 7
Transfers between funds 85 8 127 12 (4) - 2 -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 96 9 $ 372 35 $ 75 7 $76 7
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
7. Contract transactions: - Alterity Traditional, Enhanced and Optional Accumulation Dollar and Unit Activity (In
thousands) (CONTINUED)
Templeton Templeton USAllianz VIP USAllianz VIP
Growth Pacific Growth Diversified Assets Fixed Income
Securities Fund Securities Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
ALTERITY TRADITIONAL
---------------------------------------------------------------------------------------------------------------------------
Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 138 7 $ 20 2 $ 159 16 $ 16 2
Transfers between funds 19 1 - - 10 1 - -
Surrenders and terminations - - - - - - - -
Rescissions (21) (1) - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 136 7 $ 20 2 $ 169 17 $16 2
---------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
PURCHASE PAYMENTS $ 126 7 $ 8 1 $ - - $ 5 -
Transfers between funds - - - - - - - -
Surrenders and terminations (1) - - - - - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 125 7 $ 8 1 $ - - $5 -
---------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ 152 8 $ 12 1 $ 5 - $ - -
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
OTHER TRANSACTIONS - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 152 8 $ 12 1 $ 5 - $ - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 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
---------------------------------------------------------------------------------------------------------------------------
Alterity Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PURCHASE PAYMENTS $ 37 4 $ 61 5 $1,186 118 $ 44 4
---------------------------------------------------------------------------------------------------------------------------
Transfers between funds 11 - 1 - (692) (73) 1 -
Surrenders and terminations - - - - - - (5) -
Rescissions - - - - - - - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 48 4 $ 62 5 $ 494 45 $40 4
---------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ - - $ 2 - $ 133 13 $ 32 3
Transfers between funds 1 - - - (41) (4) 4 -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Bonus - - - - - - - -
OTHER TRANSACTIONS - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 1 - $ 2 - $ 92 9 $36 3
---------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ 19 2 $ 8 1 $ 1,053 105 $ 40 4
Transfers between funds - - - - (621) (62) - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - (242) (24) - -
Bonus - - - - - - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 19 2 $ 8 1 $ 190 19 $40 4
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 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
---------------------------------------------------------------------------------------------------------------------------
Alterity Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C>
Purchase payments $ 61 5 $10,005 876
Transfers between funds 1 - 694 41
Surrenders and terminations - - (125) (10)
Rescissions - - (212) (12)
Bonus - - - -
Other transactions - - 1 -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ 62 5 $10,363 895
---------------------------------------------------------------------------------------------------------------------------
Alterity Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ - - $2,416 208
Transfers between funds 29 3 480 42
Surrenders and terminations - - (4) -
Rescissions - - - -
Bonus - - - -
Other transactions - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ 29 3 $2,892 250
---------------------------------------------------------------------------------------------------------------------------
Alterity Optional Contract transactions - 2000 (unaudited):
Purchase payments $ 6 1 $6,312 559
Transfers between funds 33 3 940 67
Surrenders and terminations - - (19) -
Rescissions - - (483) (44)
Bonus - - - -
Other transactions - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ 39 4 $6,750 582
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
8. Contract transactions: - Rewards Traditional and Enhanced Accumulation Dollar and Unit Activity (In thousands)
Transactions in dollars and units for each fund for the nine-month period ended
September 30, 2000 (unaudited) 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
---------------------------------------------------------------------------------------------------------------------------
Rewards Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 2,198 190 $ 1,118 96 $ 852 90 $ 1,219 120
Transfers between funds (8) (1) 13 1 (11) (1) 36 4
Surrenders and terminations (13) (1) (2) - (5) (1) (7) (1)
Rescissions (31) (3) (37) (3) - - (18) (2)
Bonus 146 13 58 5 52 6 68 7
Other transactions 7 1 5 - 4 - - -
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000
(UNAUDITED): $2,299 199 $ 1,155 99 $ 892 94 $1,298 128
Rewards Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 549 48 $ 838 72 $ 224 24 $ 441 43
Transfers between funds (1) - 8 1 - - - -
Surrenders and terminations (6) (1) (7) (1) - - (2) -
Rescissions - - - - - - - -
Bonus 31 3 47 4 13 1 24 2
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 573 50 $ 886 76 $ 237 25 $463 45
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
8. Contract transactions: - Rewards Traditional and Enhanced Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
Alger American Alger American Alger American MidCapAlger American Small
Growth PortfolioLeveraged AllCap PortfolioGrowth PortfolioCapitalization Portfolio
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Rewards Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 2,048 180 $ 1,175 99 $ 638 53 $ 118 13
Transfers between funds 5 - 20 2 95 8 6 1
Surrenders and terminations (8) (1) (2) - (3) - - -
Rescissions (58) (5) (41) (4) (3) - - -
Bonus 131 12 67 6 34 3 7 1
Other transactions 7 1 4 - 2 - - -
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000
(UNAUDITED): $2,125 187 $ 1,223 103 $ 763 64 $131 15
Rewards Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 469 41 $ 357 30 $ 707 59 $ 108 11
Transfers between funds - - (4) - (5) - - -
Surrenders and terminations (1) - - - (18) (1) - -
Rescissions - - - - - - - -
Bonus 27 2 21 2 39 3 6 1
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 495 43 $ 374 32 $ 723 61 $114 12
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
8. Contract transactions: - Rewards Traditional and Enhanced Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
Franklin
Davis VA Davis VA Davis VA Growth and
Financial PortfolioReal Estate Portfolio Value Portfolio Income Fund
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Rewards Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 76 6 $ 451 38 $ 461 42 $ 143 5
Transfers between funds 69 6 11 1 10 1 (9) -
Surrenders and terminations - - (3) - - - - -
Rescissions - - (1) - (45) (4) - -
Bonus 5 - 35 3 22 2 7 -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000
(UNAUDITED): $ 150 12 $ 493 42 $ 448 41 $141 5
Rewards Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 323 27 $ 110 9 $ 327 30 $ 114 4
Transfers between funds (5) - - - 9 1 - -
Surrenders and terminations (17) (1) (15) (1) (2) - (1) -
Rescissions - - - - - - - -
Bonus 17 1 5 - 19 2 7 -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 318 27 $ 100 8 $ 353 33 $120 4
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
8. Contract transactions: - Rewards Traditional and Enhanced Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
Franklin Franklin Franklin J.P. Morgan
Rising Dividends Small Cap U.S. GovernmentInternational Opportunities
Securities Fund Fund Fund Portfolio
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Rewards Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 125 7 $ 1,197 40 $ 763 39 $ 21 2
Transfers between funds 15 1 93 3 - - 12 1
Surrenders and terminations - - (7) - (6) - - -
Rescissions - - (12) - - - - -
Bonus 7 - 77 3 57 3 1 -
Other transactions - - 4 - - - - -
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000
(UNAUDITED): $ 147 8 $ 1,352 46 $ 814 42 $34 3
Rewards Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 50 3 $ 404 14 $ 11 1 $ 68 7
Transfers between funds - - 4 - - - - -
Surrenders and terminations (1) - - - - - - -
Rescissions - - - - - - - -
Bonus 3 - 24 1 1 - 4 -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 52 3 $ 432 15 $ 12 1 $ 72 7
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
8. Contract transactions: - Rewards Traditional and Enhanced 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
---------------------------------------------------------------------------------------------------------------------------
Rewards Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 225 21 $ 64 4 $ 13 1 $ 1,368 143
Transfers between funds - - - - - - 77 8
Surrenders and terminations - - - - - - (7) (1)
Rescissions - - - - - - (5) (1)
Bonus 14 1 2 - - - 94 10
Other transactions - - - - - - 2 -
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000
(UNAUDITED): $ 239 22 $ 66 4 $ 13 1 $1,529 159
Rewards Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 174 17 $ 9 1 $ 52 4 $ 224 24
Transfers between funds - - - - - - - -
Surrenders and terminations (1) - - - - - - -
Rescissions - - - - - - - -
Bonus 9 1 - - 3 - 13 1
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 182 18 $ 9 1 $ 55 4 $237 25
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
8. Contract transactions: - Rewards Traditional and Enhanced 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/VA Portfolio Income Portfolio
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Rewards Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 561 63 $ 2,086 205 $ 13 1 $ 208 20
Transfers between funds (12) (1) 153 15 - - 14 1
Surrenders and terminations (4) - (12) (1) - - - -
Rescissions - - (36) (4) - - (18) (2)
Bonus 41 5 145 14 1 - 10 1
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000
(UNAUDITED): $ 586 67 $ 2,336 229 $ 14 1 $214 20
Rewards Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 11 1 $ 443 44 $ - - $ 165 16
Transfers between funds - - - - - - - -
Surrenders and terminations - - (1) - - - - -
Rescissions - - - - - - - -
Bonus 1 - 25 3 - - 9 1
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 12 1 $ 467 47 $ - - $174 17
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
8. Contract transactions: - Rewards Traditional and Enhanced 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 Securities Fund
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Rewards Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 864 85 $ 1,102 105 $ 657 52 $ 56 5
Transfers between funds (10) (1) 81 7 3 - 2 -
Surrenders and terminations (5) (1) (5) - (5) - - -
Rescissions - - (42) (4) - - - -
Bonus 62 6 56 5 50 4 3 -
Other transactions - - 7 1 - - - -
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000
(UNAUDITED): $ 911 89 $ 1,199 114 $ 705 56 $61 5
Rewards Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 26 3 $ 760 72 $ 53 4 $ - -
Transfers between funds - - 1 - - - - -
Surrenders and terminations - - (16) (1) - - - -
Rescissions - - - - - - - -
Bonus 1 - 41 4 3 - - -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 27 3 $ 786 75 $ 56 4 $ - -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
8. Contract transactions: - Rewards Traditional and Enhanced Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
Templeton Templeton USAllianz VIP USAllianz VIP
Growth Pacific Growth Diversified Assets Fixed Income
Securities Fund Securities Fund Fund Fund
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Rewards Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 83 4 $ - - $ 12 1 $ 62 6
Transfers between funds 1 - - - 1 - - -
Surrenders and terminations - - - - - - (1) -
Rescissions - - - - - - - -
Bonus 1 - - - 1 - 4 -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000
(UNAUDITED): $ 85 4 $ - - $ 14 1 $ 65 6
Rewards Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 115 6 $ 13 1 $ 3 - $ 11 1
Transfers between funds - - - - - - - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Bonus 7 - 1 - - - 1 -
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 122 6 $ 14 1 $ 3 - $ 12 1
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
8. Contract transactions: - Rewards Traditional and Enhanced 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
---------------------------------------------------------------------------------------------------------------------------
Rewards Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchase payments $ 24 2 $ 13 1 $ 5,820 572 $ 407 37
Transfers between funds (4) - - - (825) (82) 96 9
Surrenders and terminations - - - - (4) - (1) -
Rescissions - - - - - - - -
Bonus 1 - 1 - 361 36 25 2
Other transactions - - - - - - 2 -
---------------------------------------------------------------------------------------------------------------------------
TOTAL NET CONTRACT TRANSACTIONS - 2000
(UNAUDITED): $ 21 2 $ 14 1 $5,352 526 $ 529 48
Rewards Enhanced Contract transactions - 2000 (unaudited):
Purchase payments $ 10 1 $ 80 7 $ 627 62 $ 148 13
Transfers between funds - - - - (11) (1) - -
Surrenders and terminations - - - - - - - -
Rescissions - - - - - - - -
Bonus 1 - 4 - 37 4 9 1
Other transactions - - - - - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000
(unaudited): $ 11 1 $ 84 7 $ 653 65 $ 157 14
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
8. Contract transactions: - Rewards Traditional and Enhanced Accumulation Dollar and Unit Activity (In thousands)
(CONTINUED)
Van Kampen LIT Total
Growth & Income All
Portfolio Funds
---------------------------------------------------------------------------------------------------------------------------
Dollars Units Dollars Units
---------------------------------------------------------------------------------------------------------------------------
Rewards Traditional Contract transactions - 2000 (unaudited):
<S> <C> <C> <C> <C>
Purchase payments $ 662 58 $26,903 2,406
Transfers between funds 25 2 (41) (15)
Surrenders and terminations (1) - (101) (7)
Rescissions (11) (1) (358) (33)
Bonus 40 4 1,686 152
Other transactions - - 44 3
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ 715 63 $28,133 2,506
---------------------------------------------------------------------------------------------------------------------------
Rewards Enhanced Contract transactions - 2000 (unaudited):
PURCHASE PAYMENTS $ 94 9 $8,118 709
Transfers between funds - - (4) 1
Surrenders and terminations (1) - (89) (6)
Rescissions - - - -
Bonus 5 - 458 37
Other transactions - - - -
---------------------------------------------------------------------------------------------------------------------------
Total Net Contract Transactions - 2000 (unaudited): $ 98 9 $8,483 741
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
9. 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 nine-month period ended September 30, 2000 (unaudited)
and each of the four years in the period ended December 31, 1999 follows.
Valuemark II & III Valuemark IV
---------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of
Accumulation Expenses Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average Units OutstandingAccumulationNet Assets to Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands)Net Assets*
---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund
SEPTEMBER 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED) 2,586 $11.217 $ 29,006 2.13% 2,080 $11.208 $23,311 2.22%
December 31,
19991 526 11.084 5,866 2.13+ 363 11.083 4,026 2.22+
Alger American Growth Fund
September 30, 2000
(unaudited) 1,966 10.798 21,228 2.19 1,498 10.789 16,164 2.28
December 31,
19991 540 10.922 5,894 2.19+ 415 10.921 4,535 2.28+
Alger American Leveraged AllCap Fund
September 30, 2000
(unaudited) 1,056 11.587 12,236 2.33 965 11.578 11,169 2.42
December 31,
19991 340 12.160 4,137 2.33+ 277 12.159 3,364 2.42+
Franklin Aggressive Growth Securities Fund
SEPTEMBER 30, 20006
(UNAUDITED) 556 11.840 6,588 2.12+ 276 11.835 3,263 2.21+
Franklin Global Communications Securities Fund
September 30, 2000 (unaudited)18,241 33.514 611,351 1.91 1,617 33.195 53,670 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
September 30, 2000 (unaudited)1,374 16.692 22,938 2.22 903 16.656 15,047 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
September 30, 2000 (unaudited)20,462 28.776 588,806 1.89 4,767 28.475 135,728 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 - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
9. 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 Assets to Average
(in thousands)Unit Value(in thousands)Net Assets* (in thousands)Unit Value(in thousands Net Assets*
---------------------------------------------------------------------------------------------------------------------------
Franklin High Income Fund
September 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 6,562 $ 19.826$ 130,094 1.94% 3,254 $ 19.618 $ 63,835 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 - - - -
Franklin Income Securities Fund
September 30, 2000
(unaudited) 18,402 27.959 514,503 1.90 3,620 27.667 100,150 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 25.0651,248,520 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
September 30, 2000
(unaudited) 10,723 23.422 251,167 2.17 7,982 23.329 186,223 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
September 30, 2000
(unaudited) 12,183 15.346 186,965 1.93 4,096 15.188 62,209 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
September 30, 2000
(unaudited) 2,461 14.010 34,475 2.06 631 13.864 8,754 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
September 30, 2000
(unaudited) 4,015 26.868 107,885 1.98 1,359 26.587 36,125 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 - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
9. 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*
---------------------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund
September 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 12,049 $ 19.675 $ 237,067 2.15% 3,223 $ 19.523 $ 62,914 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 - - - -
Franklin S&P 500 Index Fund
SEPTEMBER 30, 2000
(UNAUDITED) 2,404 10.285 24,723 1.95 1,718 10.277 17,659 2.04
December 31,
19991 727 10.467 7,613 1.95+ 626 10.465 6,555 2.04+
Franklin Small Cap Fund
September 30, 2000
(unaudited) 9,429 30.095 283,763 2.17 5,680 29.962 170,183 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 Technology Securities Fund
September 30, 20006
(unaudited) 413 12.088 4,987 2.33+ 380 12.084 4,592 2.42+
Franklin U.S. Government Fund
September 30, 2000 (unaudited)16,289 19.678 320,545 1.91 3,495 19.474 68,067 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
September 30, 2000 (unaudited)872 8.819 7,694 2.21 799 8.799 7,030 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
September 30, 2000 (unaudited)1,901 21.694 41,246 2.05 209 21.469 4,484 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 - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
9. 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*
---------------------------------------------------------------------------------------------------------------------------
Franklin Zero Coupon Fund - 2005
September 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 1,598 $ 24.497 $ 39,157 2.05% 506 $ 24.246 $ 12,272 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 - - - -
Franklin Zero Coupon Fund - 2010
September 30, 2000
(unaudited) 1,380 26.048 35,945 2.05 578 25.777 14,905 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
September 30, 2000
(unaudited) 4,854 14.717 71,436 2.41 7,205 14.666 105,672 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
September 30, 2000
(unaudited) 9,291 14.120 131,182 2.19 16,283 14.070 229,102 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 Asset Strategy Fund
September 30, 2000
(unaudited) 1,951 13.825 26,973 2.22 1,147 13.757 15,776 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
September 30, 2000
(unaudited) 8,452 9.199 77,752 2.79 3,166 9.145 28,951 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 - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
9. 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*
---------------------------------------------------------------------------------------------------------------------------
Templeton Global Income Securities Fund
September 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 3,097 $ 16.055$ 49,716 2.05% 539 $ 15.887 $ 8,564 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 - - - -
Templeton Growth Securities Fund
September 30, 2000
(unaudited) 19,424 18.543 360,195 2.28 8,450 18.434 155,766 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 Securities Fund
September 30, 2000
(unaudited) 21,231 21.303 452,283 2.30 4,113 21.138 86,934 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
September 30, 2000
(unaudited) 889 11.434 10,166 2.51 863 11.389 9,826 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 Securities Fund
September 30, 2000
(unaudited) 5,284 8.628 45,591 2.48 921 8.561 7,886 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
September 30, 2000
(unaudited) 83 10.446 868 2.40 80 10.437 834 2.49
December 31,
19991 9 10.170 88 2.40+ 1 10.168 15 2.49+
USAllianz VIP Fixed Income Fund
September 30, 2000
(unaudited) 45 10.334 463 2.15 46 10.325 473 2.24
December 31,
19991 13 9.751 124 2.15+ 1 9.749 5 2.24+
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
9. 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*
---------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Growth Fund
September 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 63 $ 10.612 $ 673 2.30 51 $ 10.604 $ 537 2.39
December 31,
19991 21 10.733 226 2.30+ 10 10.731 105 2.39+
* For the nine-month period ended September 30, 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.
6 Period from May 1, 2000 (fundcommencement) to September 30, 2000.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
10. 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 nine-month period ended September 30, 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*
---------------------------------------------------------------------------------------------------------------------------
Franklin Global Communications Securities Fund
September 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 12 $ 34.358 $ 402 1.92% 8 $ 33.576 $ 276 2.12%
December 31, 1999 5 39.861 213 1.92 7 39.011 275 2.12
Franklin Global Health Care Securities Fund
September 30, 2000
(unaudited) 14 16.710 241 2.22 8 16.630 141 2.42
December 31, 1999 3 9.626 33 2.22 5 9.594 50 2.42
Franklin Growth and Income Fund
September 30, 2000
(unaudited) 13 29.501 388 1.89 16 28.829 450 2.09
December 31, 1999 21 26.792 545 1.90 9 26.22 238 2.10
Franklin High Income Fund
September 30, 2000
(unaudited) 18 20.319 373 1.94 3 19.856 69 2.14
December 31, 1999 20 21.405 429 1.94 1 20.949 18 2.14
Franklin Income Securities Fund
September 30, 2000
(unaudited) 43 28.648 1,233 1.90 9 27.995 252 2.10
December 31, 1999 49 24.923 1,206 1.90 4 24.391 92 2.10
Franklin Large Cap Growth Securities Fund
SEPTEMBER 30, 2000
(UNAUDITED) 37 23.561 873 2.17 22 23.354 522 2.37
December 31, 1999 19 20.337 392 2.17 7 20.188 144 2.37
Franklin Money Market Fund
September 30, 2000
(unaudited) 797 15.723 12,524 1.94 - 15.365 - 2.14
December 31, 1999 562 15.225 8,557 1.94 1 14.901 16 2.14
Franklin Natural Resources Securities Fund
September 30, 2000
(unaudited) 5 14.367 69 2.07 1 14.040 13 2.27
December 31, 1999 5 11.374 62 2.07 - 11.131 6 2.27
Franklin Real Estate Fund
September 30, 2000
(unaudited) 22 27.542 601 1.98 6 26.914 149 2.18
December 31, 1999 20 21.919 429 1.98 1 21.452 14 2.18
Franklin Rising Dividends Securities Fund
September 30, 2000
(unaudited) 14 20.001 284 2.15 10 19.660 196 2.35
December 31, 1999 18 19.156 340 2.16 11 18.857 206 2.36
Franklin Small Cap Fund
SEPTEMBER 30, 2000
(UNAUDITED) 13 30.328 395 2.22 8 30.031 252 2.42
December 31, 1999 32 28.565 904 2.17 3 28.328 79 2.37
Franklin U.S. Government Fund
September 30, 2000
(unaudited) 46 20.172 935 1.92 21 19.712 412 2.12
December 31, 1999 87 19.049 1,647 1.92 12 18.643 217 2.12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
10. 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*
---------------------------------------------------------------------------------------------------------------------------
Franklin Value Securities Fund
September 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 16 $ 8.831 $ 140 2.21% 3 $ 8.824 $ 24 2.41%
December 31, 1999 14 7.749 108 2.21 3 7.753 21 2.41
Mutual Discovery Securities Fund
SEPTEMBER 30, 2000
(UNAUDITED)17 14.796 255 2.41 16 14.681 228 2.61
December 31, 1999 20 13.779 275 2.42 10 13.692 136 2.62
Mutual Shares Securities Fund
September 30, 2000
(unaudited) 75 14.243 1,066 2.19 28 14.133 389 2.39
December 31, 1999 65 13.362 875 2.19 8 13.278 100 2.39
Templeton Asset Strategy Fund
September 30, 2000
(unaudited) 2 16.976 33 2.22 2 16.791 29 2.42
December 31, 1999 2 17.693 36 2.22 1 17.527 16 2.42
Templeton Developing Markets Securities Fund
September 30, 2000
(unaudited) 26 9.323 243 2.96 12 9.202 114 3.16
December 31, 1999 21 12.331 253 2.82 7 12.189 89 3.02
Templeton Global Income Securities Fund
September 30, 2000
(unaudited) 31 16.454 512 2.06 - 16.079 5 2.26
December 31, 1999 25 17.033 435 2.06 - 16.670 6 2.26
Templeton Growth Securities Fund
SEPTEMBER 30, 2000(UNAUDITED)49 18.764 917 2.28 21 18.520 383 2.48
December 31, 1999 51 19.717 1,012 2.29 15 19.490 313 2.49
Templeton International Securities Fund
September 30, 2000
(unaudited) 166 21.645 3,592 2.32 21 21.275 445 2.52
December 31, 1999 124 23.368 2,895 2.32 14 23.004 303 2.52
Templeton International Smaller Companies Fund
September 30, 2000
(unaudited) 1 11.549 12 2.53 13 11.447 148 2.73
December 31, 1999 - 11.547 4 2.53 4 11.462 51 2.73
Templeton Pacific Growth Securities Fund
September 30, 2000
(unaudited) 1 8.831 6 2.48 11 8.680 95 2.68
December 31, 1999 6 11.121 63 2.51 4 10.948 48 2.71
* For the nine-month period ended September 30, 2000 (unaudited) and the year
ended December 31, 1999, including the effect of the expenses of the
underlying funds.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
11. 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
September 30, 2000 (unaudited) follows.
USALLIANZ ALTERITY TRADITIONAL USALLIANZ ALTERITY 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*
---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund
September 30, 20001
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 50 $ 11.537 $ 578 2.13+% 11 $ 11.498 $ 132 2.63+%
AIM V.I. Growth Fund
September 30, 2000
(unaudited) 101 11.217 1,137 2.13 24 11.167 273 2.63
AIM V.I. International Equity Fund
September 30, 20001
(unaudited) 37 8.831 326 2.37+ 3 8.802 29 2.87+
AIM V.I. Value Fund
September 30, 20001
(unaudited) 38 9.492 358 2.16+ 19 9.461 179 2.66+
Alger American Growth Portfolio
September 30, 2000
(unaudited) 37 10.798 397 2.19 14 10.750 151 2.69
Alger American Leveraged AllCap Portfolio
SEPTEMBER 30, 2000
(UNAUDITED) 44 11.587 508 2.33 26 11.536 295 2.83
Alger American MidCap Growth Portfolio
September 30, 20001
(unaudited) 44 12.043 531 2.25+ 20 12.003 243 2.75+
Alger American Small Capitalization Portfolio
September 30, 20001
(unaudited) 8 9.150 70 2.30+ 4 9.120 36 2.80+
Davis VA Financial Portfolio
September 30, 20001
(unaudited) 17 12.817 223 2.40+ - 12.775 4 2.90+
Davis VA Real Estate Portfolio
September 30, 20001
(unaudited) 10 11.954 119 2.40+ 1 11.914 14 2.90+
Davis VA Value Portfolio
September 30, 20001
(unaudited) 14 10.837 151 2.40+ 5 10.801 58 2.90+
Franklin Growth and Income Securities Fund
September 30, 2000
(unaudited) 4 28.741 107 2.14 - 27.155 - 2.64
FRANKLIN RISING DIVIDENDS SECURITIES FUND
September 30, 2000
(unaudited) - 19.645 1 2.40 - 18.833 - 2.90
Franklin Small Cap Fund
September 30, 2000
(unaudited) 21 30.038 635 2.47 5 29.332 150 2.97
Franklin U.S. Government Fund
September 30, 2000
(unaudited) 3 19.648 53 2.17 1 18.556 13 2.67
J.P. Morgan International Opportunities Portfolio
September 30, 20001
(unaudited) 20 9.408 191 2.16+ 1 9.377 5 2.66+
J.P. Morgan U.S. Disciplined Portfolio
September 30, 20001
(unaudited) 3 10.110 25 2.60+ 6 10.076 63 3.10+
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
11. Unit Values - USAllianz Alterity (CONTINUED)
USAllianz Alterity Traditional USAllianz Alterity Enhanced
---------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF
ACCUMULATION EXPENSES ACCUMULATION EXPENSES
UNITS OUTSTANDINGACCUMULATIONNET ASSETSTO AVERAGE UNITS OUTSTANDINGACCUMULATIONNET ASSETS TO AVERAGE
(IN THOUSANDS)UNIT VALUE(IN THOUSANDS)NET ASSETS* (IN THOUSANDS)UNIT VALUE(IN THOUSANDS)NET ASSETS*
Mutual Discovery Securities Fund
September 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 9 $ 14.685 $ 139 2.66% 4 $ 14.414 $ 59 3.16%
Mutual Shares Securities Fund
September 30, 2000
(unaudited) 20 14.082 285 2.44 9 13.823 130 2.94
Oppenheimer Global Securities Fund/VA
September 30, 20001
(unaudited) 38 9.323 354 2.09+ 20 9.292 185 2.59+
Oppenheimer High Income Fund/VA
September 30, 20001
(unaudited) 34 8.981 301 2.15+ - 8.951 2 2.65+
Oppenheimer Main Street Growth & Income Fund/VA
September 30, 20001
(unaudited) 88 9.924 877 2.18+ 10 9.892 98 2.68+
PIMCO VIT High Yield Bond Portfolio
September 30, 20001
(unaudited) 10 9.695 97 2.15+ 4 9.663 39 2.65+
PIMCO VIT StocksPLUS Growth and Income Portfolio
SEPTEMBER 30, 20001
(UNAUDITED) 7 10.081 68 2.05+ - 10.047 7 2.55+
PIMCO VIT Total Return Bond Portfolio
September 30, 20001
(unaudited) 16 10.313 167 2.05+ 2 10.279 22 2.55+
Seligman Global Technology Fund
September 30, 20001
(unaudited) 112 9.661 1,086 2.80+ 34 9.629 332 3.30+
Seligman Small Cap Value Fund
September 30, 20001
(unaudited) 14 12.359 173 2.40+ 1 12.318 6 2.90+
Templeton Developing Markets Securities Fund
September 30, 2000
(unaudited) 5 9.199 48 3.21 1 8.910 9 3.71
Templeton Growth Securities Fund
September 30, 2000
(unaudited) 7 18.480 133 2.53 7 17.900 124 3.03
Templeton Pacific Growth Securities Fund
September 30, 2000
(unaudited) 2 8.633 18 2.73 1 8.272 7 3.23
USALLIANZ VIP DIVERSIFIED ASSETS FUND
September 30, 2000
(unaudited) 17 10.446 173 2.40 - 10.399 - 2.90
USAllianz VIP Fixed Income Fund
September 30, 2000
(unaudited) - 10.334 17 2.15 - 10.288 5 2.65
USAllianz VIP Global Opportunities Fund
September 30, 20001
(unaudited) 4 9.135 33 2.91+ - 9.105 1 3.41+
USAllianz VIP Growth Fund
September 30, 2000
(unaudited) 6 10.612 58 2.30 - 10.565 2 2.80
USAllianz VIP Money Market Fund
September 30, 20001
(unaudited) 45 10.260 462.086 2.30+ 9 10.226 92 2.80+
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
11. Unit Values - USAllianz Alterity (CONTINUED)
USAllianz Alterity Traditional USAllianz Alterity 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*
Van Kampen LIT Enterprise Portfolio
September 30, 20001
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 4 $ 10.544 $ 44 2.00+% 3 $ 10.510 $ 35 2.50+%
Van Kampen LIT Growth & Income Portfolio
September 30, 20001
(unaudited) 6 11.741 68 2.15+ 3 11.702 31 2.65+
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
11. Unit Values - USAllianz Alterity (CONTINUED)
USAllianz Alterity Optional
---------------------------------------------------------------------------------------------------------------------------
Ratio of
Accumulation Expenses
Units OutstandingAccumulationNet Assets to Average
(in thousands)Unit Value(in thousands)Net Assets*
---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund
<S> <C> <C> <C> <C>
September 30, 20001 (unaudited) 44 $ 11.514 $ 503 2.43+%
AIM V.I. Growth Fund
September 30, 2000 (unaudited) 41 11.187 460 2.43
AIM V.I. International Equity Fund
SEPTEMBER 30, 20001 (UNAUDITED) 25 8.814 218 2.67+
AIM V.I. Value Fund
September 30, 20001 (unaudited) 45 9.473 430 2.46+
Alger American Growth Portfolio
September 30, 2000 (unaudited) 26 10.769 282 2.49
Alger American Leveraged AllCap Portfolio
September 30, 2000 (unaudited) 30 11.556 343 2.63
Alger American MidCap Growth Portfolio
September 30, 20001 (unaudited) 27 12.019 330 2.55+
Alger American Small Capitalization Portfolio
September 30, 20001 (unaudited) 18 9.132 167 2.60+
Davis VA Financial Portfolio
September 30, 20001 (unaudited) - 12.792 2 2.70+
Davis VA Real Estate Portfolio
September 30, 20001 (unaudited) 44 11.930 524 2.70+
DAVIS VA VALUE PORTFOLIO
September 30, 20001 (unaudited) 45 10.815 488 2.70+
Franklin Growth and Income Securities Fund
September 30, 2000 (unaudited) 4 27.779 119 2.44
Franklin Rising Dividends Securities Fund
September 30, 2000 (unaudited) - 19.153 7 2.70
Franklin Small Cap Fund
September 30, 2000 (unaudited) 12 29.612 347 2.77
Franklin U.S. Government Fund
September 30, 2000 (unaudited) 20 18.985 388 2.47
J.P. Morgan International Opportunities Portfolio
September 30, 20001 (unaudited) 1 9.389 11 2.46+
J.P. Morgan U.S. Disciplined Portfolio
September 30, 20001 (unaudited) 4 10.090 43 2.90+
Mutual Discovery Securities Fund
SEPTEMBER 30, 2000 (UNAUDITED) 2 14.522 23 2.96
Mutual Shares Securities Fund
September 30, 2000 (unaudited) 5 13.926 69 2.74
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
11. Unit Values - USAllianz Alterity (CONTINUED)
USAllianz Alterity Optional
---------------------------------------------------------------------------------------------------------------------------
Ratio of
Accumulation Expenses
Units OutstandingAccumulationNet Assetsto Average
(in thousands)Unit Value(in thousands)Net Assets*
---------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA
<S> <C> <C> <C> <C>
September 30, 20001 (unaudited) 36 $ 9.305 $ 335 2.39+%
Oppenheimer High Income Fund/VA
September 30, 20001 (unaudited) - 8.963 - 2.45+
Oppenheimer Main Street Growth & Income Fund/VA
September 30, 20001 (unaudited) 17 9.905 169 2.48+
PIMCO VIT High Yield Bond Portfolio
SEPTEMBER 30, 20001 (UNAUDITED) 27 9.676 261 2.45+
PIMCO VIT StocksPLUS Growth and Income Portfolio
September 30, 20001 (unaudited) 8 10.061 83 2.35+
PIMCO VIT Total Return Bond Portfolio
September 30, 20001 (unaudited) 9 10.293 98 2.35+
Seligman Global Technology Fund
September 30, 20001 (unaudited) 35 9.641 341 3.10+
Seligman Small Cap Value Fund
September 30, 20001 (unaudited) 6 12.334 80 2.70+
Templeton Developing Markets Securities Fund
September 30, 2000 (unaudited) 7 9.024 67 3.51
Templeton Growth Securities Fund
September 30, 2000 (unaudited) 8 18.130 145 2.83
Templeton Pacific Growth Securities Fund
September 30, 2000 (unaudited) 1 8.415 11 3.03
USALLIANZ VIP DIVERSIFIED ASSETS FUND
September 30, 2000 (unaudited) - 10.418 5 2.70
USAllianz VIP Fixed Income Fund
September 30, 2000 (unaudited) - 10.306 - 2.45
USAllianz VIP Global Opportunities Fund
September 30, 20001 (unaudited) 2 9.117 18 3.21+
USAllianz VIP Growth Fund
September 30, 2000 (unaudited) 1 10.584 7 2.60
USAllianz VIP Money Market Fund
September 30, 20001 (unaudited) 19 10.239 197 2.60+
Van Kampen LIT Enterprise Portfolio
September 30, 20001 (unaudited) 4 10.524 38 2.30+
Van Kampen LIT Growth & Income Portfolio
September 30, 20001 (unaudited) - 11.718 40 2.45+
* For the nine-month period ended September 30, 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 September 30, 2000.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIANZ LIFE VARIABLE ACCOUNT B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
12. Unit Values - USAllianz Rewards
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 May 1, 2000 (product inception) to
September 30, 2000 (unaudited) follows.
USAllianz Rewards Traditional USAllianz Rewards 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*
---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund
September 30, 20001
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 199 $ 11.518 $ 2,287 2.13+% 50 $ 11.502 $ 576 2.63+%
AIM V.I. Growth Fund
September 30, 2000
(unaudited) 99 11.192 1,112 2.13 76 11.166 853 2.63
AIM V.I. International Equity Fund
September 30, 20001
(unaudited) 94 8.817 830 2.37+ - 8.805 222 2.87+
AIM V.I. Value Fund
September 30, 20001
(unaudited) 128 9.477 1,213 2.16+ 46 9.464 431 2.66+
ALGER AMERICAN GROWTH PORTFOLIO
September 30, 2000
(unaudited) 187 10.774 2,014 2.19 43 10.749 467 2.69
Alger American Leveraged AllCap Portfolio
September 30, 2000
(unaudited) 103 11.561 1,187 2.33 32 11.535 366 2.83
Alger American MidCap Growth Portfolio
September 30, 20001
(unaudited) 64 12.023 771 2.25+ 61 12.007 729 2.75+
Alger American Small Capitalization Portfolio
September 30, 20001
(unaudited) 14 9.135 131 2.30+ 12 9.123 107 2.80+
Davis VA Financial Portfolio
September 30, 20001
(unaudited) 12 12.796 160 2.40+ 27 12.779 342 2.90+
Davis VA Real Estate Portfolio
September 30, 20001
(unaudited) - 11.934 489 2.40+ 8 11.918 100 2.90+
Davis VA Value Portfolio
SEPTEMBER 30, 20001
(UNAUDITED) 41 10.819 439 2.40+ 32 10.804 349 2.90+
Franklin Growth and Income Securities Fund
September 30, 2000
(unaudited) 5 29.247 149 2.14 4 29.145 121 2.64
Franklin Rising Dividends Securities Fund
September 30, 2000
(unaudited) - 19.829 152 2.40 3 19.760 53 2.90
Franklin Small Cap Fund
September 30, 2000
(unaudited) 45 30.067 1,367 2.47 14 29.963 433 2.97
Franklin U.S. Government Fund
September 30, 2000
(unaudited) 41 19.998 824 2.17 1 19.929 12 2.67
J.P. Morgan International Opportunities Portfolio
September 30, 20001
(unaudited) 3 9.392 32 2.16+ 7 9.380 68 2.66+
J.P. Morgan U.S. Disciplined Portfolio
September 30, 20001 (unaudited) 23 10.093 228 2.60+ 18 10.080 177 3.10+
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
12. Unit Values - USAllianz Rewards (CONTINUED)
USAllianz Rewards Traditional USAllianz Rewards 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*
---------------------------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund
September 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 4 $ 14.668 $ 64 2.66% - $ 14.618 $ 9 3.16%
Mutual Shares Securities Fund
September 30, 2000
(unaudited) 1 14.120 13 2.44 4 14.071 56 2.94
Oppenheimer Global Securities Fund/VA
September 30, 20001
(unaudited) 160 9.308 $ 1,489 2.09+ 25 9.295 234 2.59+
Oppenheimer High Income Fund/VA
September 30, 20001
(unaudited) 66 8.966 588 2.15+ 1 8.954 12 2.65+
Oppenheimer Main Street Growth &
Income Fund/VA
SEPTEMBER 30, 20001
(UNAUDITED) 229 9.908 2,270 2.18+ 47 9.895 461 2.68+
PIMCO VIT High Yield Bond Portfolio
September 30, 20001
(unaudited) 1 9.679 13 2.15+ - 9.666 - 2.65+
PIMCO VIT StocksPLUS Growth
and Income Portfolio
September 30, 20001
(unaudited) 20 10.064 203 2.05+ 17 10.051 169 2.55+
PIMCO VIT Total Return Bond Portfolio
September 30, 20001
(unaudited) 89 10.296 917 2.05+ 3 10.283 28 2.55+
Seligman Global Technology Fund
September 30, 20001
(unaudited) 114 9.645 1,101 2.80+ 74 9.632 717 3.30+
Seligman Small Cap Value Fund
September 30, 20001
(unaudited) 56 12.338 694 2.40+ 5 12.322 57 2.90+
Templeton Developing Markets Securities Fund
September 30, 2000
(unaudited) 6 9.242 55 3.21 - 9.211 - 3.71
TEMPLETON GROWTH SECURITIES FUND
September 30, 2000
(unaudited) 4 18.603 83 2.53 6 18.538 118 3.03
Templeton Pacific Growth Securities Fund
September 30, 2000
(unaudited) - 8.755 - 2.73 1 8.725 13 3.23
USAllianz VIP Diversified Assets Fund
September 30, 2000
(unaudited) 1 10.423 14 2.40 - 10.404 3 2.90
USAllianz VIP Fixed Income Fund
September 30, 2000
(unaudited) - 10.311 66 2.15 1 10.293 12 2.65
USAllianz VIP Global Opportunities Fund
September 30, 20001
(unaudited) 2 9.120 20 2.91+ 1 9.108 10 3.41+
USAllianz VIP Growth Fund
September 30, 2000
(unaudited) 1 10.589 13 2.30 8 10.570 80 2.80
USAllianz VIP Money Market Fund
SEPTEMBER 30, 20001
(UNAUDITED) 525 10.243 5,376 2.30+ 64 10.229 656 2.80+
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allianz Life Variable Account B
of Allianz Life Insurance Company of North America
Notes to Financial Statements (continued)
September 30, 2000 (unaudited)
12. Unit Values - USAllianz Rewards (CONTINUED)
USAllianz Rewards Traditional USAllianz Rewards 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*
---------------------------------------------------------------------------------------------------------------------------
Van Kampen LIT Enterprise Portfolio
September 30, 20001
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(unaudited) 48 $ 10.527 $ 509 2.00+% 14 $ 10.513 $ 149 2.50+%
Van Kampen LIT Growth & Income Portfolio
September 30, 20001
(unaudited) 63 11.722 739 2.15+ - 11.706 - 2.65+
<FN>
* For the nine-month period ended September 30, 2000 (unaudited) and the year
ended December 31, 1999, including the effect of the expenses of the
underlying funds.
+ Annualized
1 Period from May 1, 2000 (product commencement) to September 30, 2000.
</FN>
</TABLE>
<PAGE>
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>
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,
1998 and 1997.
The following financial statements of the Variable Account are included in Part
B hereof.
1. Statements of Assets and Liabilities as of September 30, 2000
(unaudited).
2. Statements of Operations for the period ended September 30, 2000
(unaudited).
3. Statements of Changes in Net Assets for the period ended September 30,
2000 (unaudited).
4. Notes to Financial Statements - September 30, 2000 (unaudited).
1. Independent Auditors' Report.
2. Statements of Assets and Liabilities as of December 31, 1999.
3. Statements of Operations for the year ended December 31, 1999.
4. Statements of Changes in Net Assets for the years ended
December 31, 1999 and 1998.
5. Notes to Financial Statements - December 31, 1999.
<PAGE>
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's Agreement(2)
3.b. General Agency Agreement(5)
4.a. Individual Variable Annuity Contract
4.b. Waiver of Withdrawal Charge Endorsement
4.c. Guaranteed Principal Protector Benefit Endorsement
4.d. Guaranteed Performance Accumulator Benefit Endorsement
4.e. Return of Principal Guaranteed Minimum Death Benefit Endorsement
4.f. Double Principal Guaranteed Minimum Death Benefit Endorsement
4.g. Earnings Protection Guaranteed Minimum Death Benefit Endorsement
5. Application for Individual Variable Annuity Contract
6. (i) Copy of Articles of Incorporation of the Company(1)
(ii) Copy of the Bylaws of the Company(1)
7. Not Applicable
8.a. Form of Fund Participation Agreement between North American
Life and Casualty Company and Franklin Valuemark Funds(1)
8.b. Form of Fund Participation Agreement between AIM Variable
Insurance Funds, Inc., Allianz Life Insurance Company of North
America and NALAC Financial Plans LLC(3)
8.c. Form of Fund Participation Agreement between The Alger American
Fund, Allianz Life Insurance Company of North America and Fred
Alger & Company, Incorporated(3)
8.d. Form of Fund Participation Agreement between USAllianz Variable
Insurance Products Trust, Allianz Life Insurance Company of
North America and BISYS Fund Services Limited Partnership(3)
8.e. Form of Fund Participation Agreement between Davis Variable
Account Fund, Inc., Davis Distributors, LLC and Allianz Life
Insurance Company of North America(4)
8.f. Form of Fund Participation Agreement between Van Kampen Life
Investment Trust, Van Kampen Funds, Inc., Van Kampen Asset
Management Inc. and Allianz Life Insurance Company of North
America(4)
8.g. Form of Fund Participation Agreement between Allianz Life
Insurance Company of North America and J.P. Morgan Series Trust
II(4)
8.h. Form of Fund Participation Agreement between Oppenheimer Variable
Account Funds, Oppenheimer Funds Inc. and Allianz Life Insurance
Company of North America(4)
8.i. Form of Fund Participation Agreement between Allianz Life Insurance
Company of North America, PIMCO Variable Insurance Trust, and PIMCO
Fund Distributors, LLC(4)
8.j. Form of Fund Participation Agreement between Seligman Portfolios,
Inc. and Allianz Life Insurance Company of North America(4)
8.k. Form of Fund Participation Agreement between The Prudential Series
Fund, Inc., The Prudential Insurance Company of America, Prudential
Investment Management Services LLC and Allianz Life Insurance
Company of North America
9. Opinion and Consent of Counsel
<PAGE>
10. Independent Auditors' Consent
11. Not Applicable
12. Not Applicable
13. Calculation of Performance Data
14. Company Organizational Chart(5)
27. Not Applicable
(1) Incorporated by reference to Registrant's Form N-4 (File Nos. 333-06709
and 811-05618) electronically filed on June 24, 1996.
(2) Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
Form N-4 (File Nos. 333-06709 and 811-05618) electronically filed on
December 13, 1996.
(3) Incorporated by reference to Registrant's Form N-4 (File Nos. 333-06709 and
811-05618) electronically filed on November 12, 1999.
(4) Incorporated by reference to Registrant's Pre-Effective Amendment to Form
N-4 (File Nos. 333-82329 and 811-05618) electronically filed December 30,
1999.
(5) Incorporated by reference to Registrant's Post-Effective Amendment No. 8
to Form N-4 (File Nos. 333-06709 and 811-05618) electronically filed on
April 27, 2000.
Item 25. Directors and Officers of the Depositor
The following are the Officers and Directors of the Insurance Company:
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------------------- ---------------------------------
Robert W. MacDonald Director,
300 S. Hwy 169 Chief Executive Officer
Minneapolis, MN 55426
Margery G. Hughes President,
300 S. Hwy 169 Chief Administrative Officer
Minneapolis, MN 55426
Mark A. Zesbaugh Senior Vice President,
300 S. Hwy 169 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
<PAGE>
7505 Metro Boulevard
Minneapolis, MN 55439
Dr. Gerhard Rupprecht Director
Reinsburgstrasse 19
D-70178
Stuttgart, Germany
Edward J. Bonach President - Special
1750 Hennepin Avenue Markets Division
Minneapolis, MN 55403
Robert S. James Senior Vice President - Marketing
300 S. Hwy 169 Development
Minneapolis, MN 55426
Rev. Dennis Dease Director
c/o University of St. Thomas
215 Summit Avenue
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 -
300 S. Hwy 169 Financial Analysis/M&A
Minneapolis, MN 55426
Chuck Kavitsky Senior Vice President -
300 S. Hwy 169 Chief Marketing Officer
Minneapolis, MN 55426
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
The Insurance Company organizational chart was filed as Exhibit 14 (File
Nos. 333-06709 and 811-05618) in Post-Effective Amendment No. 8 filed
April 27, 2000 and is incorporated herein by reference.
Item 27. Number of Contract Owners
Not Applicable
Item 28. Indemnification
The Bylaws of the Insurance 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
Insurance Company pursuant to the foregoing, or otherwise, the Insurance 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 Insurance Company of expenses
incurred or paid by a director, officer or controlling person of the Insurance
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 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:
Positions and Offices
Business Address with Underwriter
- ---------------------- ----------------------
Christopher H. Pinkerton President 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
1750 Hennepin Avenue Officer & Treasurer
Minneapolis, MN 55403
Lawrance C. Skibo Executive Vice President
1750 Hennepin Avenue
Minneapolis, MN 55403
Catherine Q. Farley Senior Vice President & Chief Administrative
1750 Hennepin Avenue Officer
Minneapolis, MN 55403
Robert S. James Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Cindy Robeck Assistant Vice President
1750 Hennepin Avenue
Minneapolis, MN 55403
Carol Shaw Senior Vice President
1750 Hennepin Avenue
Minneapolis, MN 55403
Gigi Wagner Vice President
1750 Hennepin Avenue
Minneapolis, MN 55403
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
<PAGE>
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.
REPRESENTATIONS
The Insurance Company hereby represents that it is relying upon a No Action
Letter issued to the American Council of Life Insurance, dated November 28, 1988
(Commission ref. IP-6-88), and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, the Registrant has caused this Registration Statement to be
signed on its behalf in the City of Minneapolis and State of Minnesota, on this
18th day of December, 2000.
ALLIANZ LIFE VARIABLE ACCOUNT B
(Registrant)
By: ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By:/s/SUZANNE J. PEPIN
--------------------------------
Suzanne J. Pepin
ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By:/s/SUZANNE J. PEPIN
------------------------------
Suzanne J. Pepin
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.
<PAGE>
Signature and Title Date
Lowell C. Anderson* Chairman of the Board 12-18-00
Lowell C. Anderson
Robert W. MacDonald* Director and 12-18-00
Robert W. MacDonald Chief Executive Officer
Margery G. Hughes* President and 12-18-00
Margery G. Hughes Chief Administrative Officer
Mark A. Zesbaugh* Chief Financial Officer 12-18-00
Mark A. Zesbaugh Senior Vice President
Herbert F. Hansmeyer* Director 12-18-00
Herbert F. Hansmeyer
Michael P. Sullivan* Director 12-18-00
Michael P. Sullivan
Dr. Gerhard Rupprecht* Director 12-18-00
Dr. Gerhard Rupprecht
Rev. Dennis Dease* Director 12-18-00
Rev. Dennis Dease
James R. Campbell* Director 12-18-00
James R. Campbell
Robert M. Kimmitt* Director 12-18-00
Robert M. Kimmitt
*By Power of Attorney
By: /s/SUZANNE J. PEPIN
--------------------------------
Suzanne J. Pepin
Attorney-in-Fact
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
<PAGE>
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
<PAGE>
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.
<PAGE>
/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
<PAGE>
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 Rupprecht
(Dr. Gerhard Rupprecht)
Unterschriftsbeglaubigung
I hereby certify, that 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, Reverend 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.
<PAGE>
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
------------------
INDEX TO EXHIBITS
EX-99.B4.a. Individual Variable Annuity Contract
EX-99.B4.b. Waiver of Withdrawal Charge Endorsement
EX-99.B4.c. Guaranteed Principal Protector Benefit Endorsement
EX-99.B4.d. Guaranteed Performance Accumulator Benefit Endorsement
EX-99.B4.e. Return of Principal Guaranteed Minimum Death Benefit Endorsement
EX-99.B4.f. Double Principal Guaranteed Minimum Death Benefit Endorsement
EX-99.B4.g. Earnings Protection Guaranteed Minimum Death Benefit Endorsement
EX-99.B5. Application for Individual Variable Annuity Contract
EX-99.B8.k. Form of Fund Participation Agreement between The Prudential Series
Fund, Inc., The Prudential Insurance Company of America, Prudential
Investment Management Services LLC and Allianz Life Insurance
Company of North America
EX-99.B9 Opinion and Consent of Counsel
EX-99.B10 Independent Auditors' Consent
EX-99.B13. Calculation of Performance Data
