File Nos.   333-
                                                                811-05618
==============================================================================

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                                 Initial Filing
                                   FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                   (X)
            Pre-Effective Amendment No.                                   ( )
            Post-Effective Amendment No.                                  ( )

REGISTRATION  STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940          ( )
            Amendment  No. 130                                            (X)

                      (Check appropriate box or boxes.)

     ALLIANZ  LIFE  VARIABLE  ACCOUNT  B
     ------------------------------------
        (Exact  Name  of  Registrant)

     ALLIANZ  LIFE  INSURANCE  COMPANY  OF  NORTH  AMERICA
     -----------------------------------------------
        (Name  of  Depositor)

     5701 Golden Hills Drive, Minneapolis, MN                            55416
     -------------------------------------------                         -----
     (Address  of  Depositor's  Principal  Executive  Offices)      (Zip Code)


Depositor's  Telephone  Number,  including  Area  Code    (763)  765-2913

     Name  and  Address  of  Agent  for  Service
     -------------------------------------
          Stewart D. Gregg
          Allianz  Life  Insurance  Company  of  North  America
          5701 Golden Hills Drive
          Minneapolis,  MN    55416


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


================================================================================
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.
================================================================================



<PAGE>







                               PART A Prospectus



                       Supplement dated _____, 2003 to the
     USAllianz(R) CharterTM II Variable Annuity prospectus dated _____, 2003
                                    Issued by
                 Allianz Life Insurance Company of North America
                         Allianz Life Variable Account B

This  supplement  should be attached to the  prospectus  and retained for future
reference.

Effective ____,  2003, two new Investment  Choices are available under the Fixed
Account:  Fixed  Period  Accounts  (FPAs) and an Equity  Indexed  Fixed  Account
(EIFA).

FIXED PERIOD ACCOUNTS (FPAS)

FPAs are a type of Investment Choice available under the Fixed Account. When you
allocate  money  to a FPA we will  credit  your  money  with  interest.  We will
periodically  reset the interest  rates that apply to the FPAs.  FPAs may not be
available in all states and are available  only during the  Accumulation  Phase.
FPAs are part of the Fixed Account, which is part of our general account. If you
select  the FPAs,  your money will be placed  with the other  general  assets of
Allianz Life.

We may offer FPAs with  account  periods of anywhere  from one to ten years.  An
account  period is the amount of time we expect  money to remain in a FPA.  Only
one FPA of a specific  account  period is  available  for  Purchase  Payments or
transfers  on any  Business  Day.  The minimum  amount that may be  allocated or
transferred to a FPA is $1,000.

Withdrawals  or  transfers  from the FPAs that you make more than 30 days before
the end of an  account  period  are  generally  subject  to a FPA  Market  Value
Adjustment  or FPA MVA (see  below).  A FPA MVA may  increase or  decrease  your
Contract Value and the amount transferred or withdrawn. The increase or decrease
will depend upon current interest rates in effect at the time of the transfer or
withdrawal.  If you completely transfer or fully withdraw your Contract Value in
the FPAs, the minimum value of the amount transferred or withdrawn after any FPA
MVA will be at least  equal to the FPA  Guaranteed  Minimum  Value (see  below).
However,  the FPA  Guaranteed  Minimum  Value  will not  apply in the event of a
partial withdrawal or partial transfer from the FPAs.

Unless you instruct us  otherwise,  we will first take partial  withdrawals  pro
rata  from the  Investment  Options.  If the  Contract  Value in the  Investment
Options is  insufficient  for the partial  withdrawal we will take the remaining
amount of the withdrawal from the FPAs.

We make  distributions  from a FPA for  transfers  or partial  withdrawals  on a
first-in-first-out  (FIFO) basis. That is, a transfer or a withdrawal from a FPA
will first  reduce the Contract  Value in the oldest FPA,  then the next oldest,
and so on.

The  FPAs  are not  available  under  the  dollar  cost  averaging  or  flexible
rebalancing  programs.  The FPAs are not available  during the Payout Phase.  An
election to begin  receiving  Annuity  Payments  may involve a FPA MVA if any of
your Contract  Value is in a FPA on the Income Date because we will transfer any
Contract Value out of the FPAs.


FPA MARKET VALUE ADJUSTMENT (FPA MVA)

If you make a transfer or withdrawal from a FPA more than 30 days before the end
of an account  period,  we will adjust the value of the  withdrawal  or transfer
based on a formula called a FPA MVA. The FPA MVA formula compares:

|X|           the U.S Treasury Constant Maturity Interest Rate (the "index
              interest rate") with a maturity equal to the account period for a
              specific FPA at the time money went into a FPA, to

|X|           the index interest rate with maturity equal to the remaining term
              of the account period on the date we calculate the FPA MVA.

A FPA MVA can be  either  positive  or  negative  and is shown in the  following
table:

If the index interest rate with maturity equal
to the account period for a specific FPA
at the time money went into the FPA is....          then the MVA is:
---------------------------------------------       ----------------
less than the index interest rate with a            negative
maturity equal to the remaining term
of the account period on the FPA MVA date

equal to the index interest rate with a             zero
maturity equal to the remaining term
of the account period on the FPA MVA date

greater than the index interest rate with a         positive
maturity equal to the remaining term
of the account period on the FPA MVA date

The FPA MVA Formula is equal to [(1+I)/(1+J)]N where:

I    = the U.S Treasury  Constant  Maturity Interest Rate with maturity equal to
     the account period for a specific FPA at the time money went into the FPA.

J    = the U.S Treasury  Constant  Maturity  Interest Rate with  maturity  years
     equal to the remaining  term of the account period on the date we calculate
     the FPA MVA (rounded up).

N    = number  of years  remaining  in the  current  account  period  (including
     fraction).

If the  publication  of the U.S.  Treasury  Constant  Maturity  Interest Rate is
discontinued,  upon receiving regulatory approval, we will substitute a suitable
interest rate and notify you of the change.

We will not apply FPA MVAs to amounts  withdrawn  for the  contract  maintenance
charge, death claims or for amounts you receive if you return the Contract under
the free look/right to examine provision. In some states, the FPA MVA is limited
or revised.

We will not apply FPA MVAs within 30 days  before the end of an account  period.
You will  receive a notice  mailed at least 30 days in  advance of the period in
which we will not apply a FPA MVA.  We will  allocate  any  amounts for which we
have not received  instructions  at the end of the account period to another FPA
with the shortest available account period.

FPA MVA Examples

The following examples show the effect of the FPA MVA on your Contract Value.

o    You purchase a Contract on Jan. 1, 2003 with a Purchase Payment of $100,000
     and  allocate  $10,000 to a FPA with a five-year  account  period.  The U.S
     Treasury Constant Maturity Interest Rate with a five-year maturity is 6%.

o    You make no additional  Purchase  Payments,  transfers or withdrawals until
     July 1, 2006. o On July 1, 2006,  you transfer the entire amount out of the
     FPA into the  Investment  Options.  o The Fixed Account Value in the FPA is
     $12,262.26.

Example of a positive FPA MVA:

Assume that the U.S Treasury  Constant  Maturity  Interest Rate with an 18-month
maturity is 5%, then the FPA MVA is 1.014320 = (1.06/1.05)1.5. The amount of the
transfer plus the MVA is  $12,262.26 x 1. 014320 =  $12,437.85.  In other words,
the value  transferred  out of the FPA is $12,262.26  and the value  transferred
into the Investment Options is $12,437.85.

Example of a negative FPA MVA:

Assume that the U.S Treasury  Constant  Maturity  Interest Rate with an 18-month
maturity is 7%, then the FPA MVA is 0.986014 = (1.06/1.07)1.5. The amount of the
transfer plus the MVA is  $12,262.26 x 0. 986014 =  $12,090.76.  In other words,
the value  transferred  out of the FPA is $12,262.26  and the value  transferred
into the Investment Options is $12,090.76.

FPA GUARANTEED MINIMUM VALUE

If you  completely  transfer or fully  withdraw your Contract Value in the FPAs,
the minimum value of the amount  transferred or withdrawn  after any FPA MVA, is
guaranteed to be at least equal to the greater of (a) or (b) where:

(a)  equals all allocations to the FPAs less partial withdrawals  (including any
     withdrawal charges) and transfers from the FPAs, or

(b)  equals the sum of:

|X|  87.5%  of  all  allocations  to  the  FPAs  less  all  partial  withdrawals
     (including any withdrawal charges) and transfers from the FPAs, accumulated
     at the guaranteed rate specified in the endorsement to your Contract (which
     is currently 3%) and;

|X|  any pro rata  portion  of the  withdrawal  charges  that  would  have  been
     assessed against the FPA on a full withdrawal.


<PAGE>


EQUITY INDEXED FIXED ACCOUNT (EIFA)

The EIFA is a type of Investment  Choice available under the Fixed Account.  Any
money you  allocate to the EIFA will earn  "index  benefit  credits,"  which are
described below. It is possible that your index benefit credit will be zero, but
it cannot be negative.  You might not gain value by  selecting  the EIFA and you
may lose value if you make a withdrawal or transfer more than 30 days before the
end of the account period. The EIFA may not be available in all states and it is
available  only  during the  Accumulation  Phase.  The EIFA is part of the Fixed
Account,  which is part of our  general  account.  If you select the EIFA,  your
money will be placed with the other general assets of Allianz Life.


The EIFA offers ten-year  account period buckets.  Each account period bucket is
made up of ten terms of twelve  consecutive  months each. A term covers the same
time  period as a  Contract  Year.  An  account  period is the amount of time we
expect  money to  remain in the  EIFA.  Allocations  of  Purchase  Payments  and
transfers  to  the  EIFA  may  only  occur  on  the  Issue  Date  or a  Contract
Anniversary.  The minimum initial amount you may allocate to the EIFA is $5,000.
The  minimum  subsequent  amount you may  allocate  to the EIFA is $1,000.  Each
allocation to the EIFA goes into it's own ten-year account period bucket. If you
make  more  than  one  allocation  to the EIFA in a day we will  count  all your
allocations  on that day as one  allocation  and put  them in the same  ten-year
account  period  bucket.  These  buckets  are how we track how long each of your
allocations has been in the EIFA.

Withdrawals  or  transfers  from the EIFA that you make more than 30 days before
the end of an account  period are  generally  subject  to an EIFA  Market  Value
Adjustment  or EIFA MVA (see below).  An EIFA MVA may increase or decrease  your
Contract Value and the amount transferred or withdrawn. The increase or decrease
will depend upon current interest rates in effect at the time of the transfer or
withdrawal. Any amount that is withdrawn or transferred from the EIFA before the
end of a term will not receive any index  benefit  credit for that term.  If you
completely  transfer or fully  withdraw  your  Contract  Value in the EIFA,  the
minimum value of the amount  transferred or withdrawn after any EIFA MVA will be
at least equal to the EIFA Guaranteed  Minimum Value (see below).  However,  the
EIFA  Guaranteed  Minimum  Value  will  not  apply  in the  event  of a  partial
withdrawal or partial transfer from the EIFA.


Unless you instruct us  otherwise,  we will first take partial  withdrawals  pro
rata  from the  Investment  Options.  If the  Contract  Value in the  Investment
Options is  insufficient  for the partial  withdrawal we will take the remaining
amount of the  withdrawal  from any other  available  Fixed  Account  Investment
Choice before taking it out of the EIFA.

We make  distributions  from the EIFA for transfers or partial  withdrawals on a
first-in-first-out  (FIFO) basis.  That is, a transfer or a withdrawal  from the
EIFA will first  reduce the Contract  Value in the EIFA with the oldest  account
period bucket, then the next oldest bucket, and so on.

The  EIFA  is  not  available  under  the  dollar  cost  averaging  or  flexible
rebalancing  programs.  The EIFA is not available  during the Payout  Phase.  An
election to begin receiving  Annuity  Payments may involve an EIFA MVA if any of
your  Contract  Value is in the EIFA on the Income Date because we will transfer
any Contract Value out of the EIFA.

index benefit credits

We calculate index benefit credits as follows.

The initial index value equals the index value at the close of the last Business
Day before the start of the EIFA term.

The monthly index value is the index value at the close of the last Business Day
before each monthly anniversary date. The monthly anniversary date is the day of
each month that  corresponds to your Contract  Anniversary  date. If the monthly
anniversary  date  falls on a date  that does not  exist in a given  month  (for
example,  the 31st),  the monthly  anniversary  date will be the last day of the
month.

The index increase amount is equal to the greater of:
|X|    zero, or
|X|    the average of the monthly index values during the EIFA term minus the
       initial index value.

The index rate is the lesser of:
|X|      the cap, or
|X|      the index increase amount divided by the initial index value.

The index benefit credit equals:

|X|           the Fixed Account Value in the EIFA at the end of the term
              (immediately prior to the application of the index benefit
              credit), multiplied by

|X|      the index rate.


We will calculate index benefit credits for each index we use. Currently we only
use the ____ index.  ____ are  trademarks of ____ and have been licensed for use
by us. The  Contract is not  endorsed,  sponsored,  sold or promoted by ____ and
____  make no  representation  regarding  the  advisability  of  purchasing  the
Contract. We may add, substitute or remove indexes in the future.

You cannot invest in an index. Allocations you make to the EIFA are not invested
in the index or the securities that underlie the index. Instead your allocations
become part of our general  account.  Index  benefit  credits do not reflect the
actual  investment  performance of the index.  Only the calculation of the index
benefit credits are based on the index returns.  The amount of the index benefit
credit will never be less than zero.

We generally will not apply an index benefit credit to any money taken out of an
EIFA  before  the end of the term.  This  includes  any  amounts  withdrawn  for
charges, amounts withdrawn for payment of death benefits, partial withdrawals or
transfers from the EIFA. However, we will apply partial index benefit credits at
the end of the term for any withdrawals  from the EIFA that are not subject to a
withdrawal charge during the withdrawal charge period. The partial index benefit
credit  reflects credit for the portion of the term the amount of the withdrawal
was in the EIFA.


The cap will vary by index and the  initial cap for the first  Contract  Year is
shown in your  Contract.  We guarantee  each cap for one Contract  Year. We will
declare a new cap on each Contract  Anniversary.  We consider  investor  demand,
investment opportunities and option costs when setting a cap. The cap will never
be less than 4% and will never  decrease more than 2% per year from the from the
previous year's cap.

Index Benefit Credit Examples:

o    You purchase the Contract with an initial  Purchase  Payment of $100,000 on
     Jan. 1, 2003.  You allocate  $10,000 to the EIFA and you make no additional
     Purchase Payments until Jan. 1, 2006.
o    You take a partial  withdrawal  of $1,000  (this  includes  the  withdrawal
     charge) in the second Contract Year. You take no other partial withdrawals.
o    You make an  additional  Purchase  Payment of  $10,000 on Jan.  1, 2006 and
     allocate it to the EIFA.
o    The cap is 8% in all years.
<TABLE>
<CAPTION>

The example below  demonstrates  the  calculation of the index benefit credit as
well as the impact of the cap, a negative index return, a partial withdrawal and
an additional Purchase Payment.  For purposes of this example, the index rate is
rounded to one decimal  place and the index  benefit  credit is rounded to whole
dollars.
<S>       <C>        <C>                  <C>           <C>            <C>          <C>

           Initial    Average Monthly       Index                        Index       End of Term EIFA
           Index        Index Value        Increase      Index Rate     Benefit     Fixed Account Value
                        -----------                            ----                       -------------
  Term       Value                          Amount                       Credit
  ----       -----                          ------                       ------
    0        10.00                                                                        $10,000
    1        10.35         10.40             0.40          4.00%          $400            $10,400
    2        11.25         11.49             1.14          8.00%          $752            $10,152
    3        11.15         11.09              0              0             0              $10,152
    4        11.32         11.43             0.28          2.50%          $254            $20,406
    5        11.06         10.98              0              0             0              $20,406
    6        11.47         11.39             0.33          3.00%          $612            $21,018
    7        12.11         12.16             0.69          6.00%         $1,261           $22,279
    8        12.42         12.35             0.24          2.00%          $446            $22,725
    9        12.51         12.61             0.19          1.50%          $341            $23,066
   10                      12.95             0.44          3.50%          $807            $23,873
</TABLE>


The  index  increase  amount  is  shown  in the  table  above  for  each  of the
corresponding years. Note that it is never less than zero. Below are the details
of the calculations of the values for the first four Contract Years.

Calculations as of Jan. 1, 2004:

         The index increase amount is the greater of:
              Zero                                                        0
              The average of the monthly index values
                 during the first Contract Year minus
                 the initial index value = 10.40 - 10.00 =             0.40
         The index increase amount is 0.40.


         The index rate equals the lesser of:
              The cap                                                     8%
              The index increase amount divided by the

                 initial index value = 0.40/10.00 =                       4%
          The index rate is 4%.

          The index benefit credit equals:
              The Fixed Account Value in the EIFA as
                 as of Dec. 31, 2003                                   $10,000
              multiplied by the index rate                             x    0.04
                                                                       ---------
                                                                       $     400

         The Fixed Account Value in the EIFA as of Jan. 1, 2004 is $10,400.

Calculations as of Jan. 1, 2005:
         The partial withdrawal in the second Contract Year reduces the Fixed
Account Value in the EIFA to $9,400.

         The index increase amount is the greater of:
              Zero                                                        0
              The average of the monthly index values
                 during the second Contract Year minus
                 the initial index value = 11.49 - 10.35 =             1.14
         The index increase amount is 1.14.

         The index rate equals the lesser of:
              The cap                                                     8%
              The index increase amount divided by the
                 initial index value = 1.14/10.00 =                    11.4%
          The index rate is 8%.

          The index benefit credit equals:
              The Fixed Account Value in the EIFA as
                 as of Dec. 31, 2004                                   $ 9,400
              multiplied by the index rate                             x  0.08
                                                                       ---------
                                                                       $     752

     The Fixed  Account  Value in the EIFA as of Jan. 1, 2005 is  $10,152.  Note
     that any  withdrawal or transfer from an EIFA before the end of a term does
     not receive the index benefit credit for that term.

Calculations as of Jan. 1, 2006:
         The index increase amount is the greater of:
              Zero                                                         0
              The average of the monthly index values
                 during the third Contract Year minus
                 the initial index value = 11.09 - 11.26 =             -0.17
         The index increase amount is 0.

         The index rate equals the lesser of:
              The cap                                                    8%
              The index increase amount divided by the
                 initial index value = 0/11.26 =                         0%
          The index rate is 0%.

          The index benefit credit equals:
              The Fixed Account Value in the EIFA as
                 as of Dec. 31, 2005                           $10,152
              multiplied by the index rate                     x         0
                                                               -----------
                                                               $         0

          The  Fixed  Account  Value  in the  EIFA as of  Jan.  1,  2006  before
          application of the second Purchase Payment is $10,152,  the same as it
          was on Jan. 1, 2005.

Calculations as of Jan. 1, 2007:
         The allocation on Jan. 1, 2006 of the second Purchase Payment increases
         the Fixed Account Value to $20,152.

         The index increase amount is the greater of:
              Zero                                                        0
              The average of the monthly index values
                 during the first Contract Year minus
                 the initial index value = 11.43 - 11.15 =             0.28
         The index increase amount is 0.28.

         The index rate equals the lesser of:
              The cap                                                     8%
              The index increase amount divided by the
                 initial index value = 0.28/11.15 =                     2.5%
          The index rate is 10%.

          The index benefit credit equals:
              The Fixed Account Value in the EIFA as
                 as of Dec. 31, 2006                                   $20,152
              multiplied by the index rate                             x  0.025
                                                                       --------
                                                                       $   254

         The Fixed Account Value in the EIFA as of Jan. 1, 2005 is $20,406.

The remaining values in the table are calculated in a similar manner.

eifa mARKET VALUE aDJUSTMENT (EIFA mva)

If you make a transfer or withdrawal  from the EIFA more than 30 days before the
end of an account period, we will adjust the value of the withdrawal or transfer
based on a formula called an EIFA MVA. The EIFA MVA formula compares:

|X|  the U.S  Treasury  Constant  Maturity  Interest  Rate (the "index  interest
     rate") with a ten-year maturity at the time money went into an EIFA, to

|X|  the index interest rate with a maturity equal to the remaining term of EIFA
     account period on the date we calculate the EIFA MVA.

An EIFA MVA can be either  positive  or negative  and is shown in the  following
table:

If the index interest rate with a ten-year maturity
at the time money went into the EIFA is....                 then the MVA is:
----------------------------------------------------        ----------------
less than the index interest rate with a                     negative
maturity equal to the remaining term of the EIFA
account period on the EIFA MVA date

equal to the index interest rate with a                      zero
maturity equal to the remaining term of the EIFA
account period on the EIFA MVA date

greater  than the index  interest  rate with a  positive  maturity  equal to the
remaining term of the EIFA account period on the EIFA MVA date

The EIFA MVA Formula is equal to [(1+I)/(1+J+K)]N where:

I    = the U.S Treasury Constant Maturity Interest Rate with a ten-year maturity
     at the time money went into the EIFA.

J    = the U.S Treasury Constant Maturity Interest Rate with a maturity equal to
     the remaining  term of the EIFA account period on the date we calculate the
     EIFA MVA (rounded up).

K    = a percentage, currently equal to 0.5%.

N    =  number  of  years  remaining  in  the  EIFA  account  period  (including
     fraction).

If the  publication  of the U.S.  Treasury  Constant  Maturity  Interest Rate is
discontinued,  upon receiving regulatory approval, we will substitute a suitable
interest rate and notify you of the change.

We will not apply EIFA MVAs to amounts  withdrawn  for the contract  maintenance
charge, death claims or for amounts you receive if you return the Contract under
the free look/right to examine provision. We determine any applicable withdrawal
charges based on the market value adjusted withdrawal value. In some states, the
EIFA MVA is limited or revised.

We will not apply EIFA MVAs within 30 days before the end of an account  period.
You will  receive a notice  mailed at least 30 days in  advance of the period in
which we will not apply a EIFA MVA.  We will  allocate  any amounts for which we
have not received  instructions  at the end of the account  period to a new EIFA
with a ten-year account period.

EIFA MVA Examples

The following examples show the effect of the EIFA MVA on your Contract Value.

o    You purchase a Contract on Jan. 1, 2003 with a Purchase Payment of $100,000
     and  allocate  $10,000  to an  EIFA.  The U.S  Treasury  Constant  Maturity
     Interest Rate with a ten-year maturity is 6%.
o    You make no additional  Purchase  Payments,  transfers or withdrawals until
     July 1, 2008.
o    On July 1, 2008,  you transfer  the entire  amount out of the EIFA into the
     Investment Options. o The Fixed Account Value in the EIFA is $15,000.

Example of a positive EIFA MVA:

Assume that the U.S Treasury  Constant Maturity Interest Rate with a maturity of
four years and six months on July 1, 2008 is 5%, then the EIFA MVA is 1.021505 =
(1.06/1.05+0.005)4.5.  The amount of the transfer plus the EIFA MVA is $15,000 x
1.021505 = $15,322.57.  In other words, the value transferred out of the EIFA is
$15,000 and the value transferred into the Investment Options is $15,322.57.

Example of a negative MVA:
-------------------------

Assume that the U.S Treasury  Constant Maturity Interest Rate with a maturity of
four years and six months on July 1, 2008 is 7%, then the EIFA MVA is 0.938725 =
(1.06/1.07+0.005)4.5.  The amount of the transfer plus the EIFA MVA is $15,000 x
0.938725 = $14,080.87.  In other words, the value transferred out of the EIFA is
$15,000 and the value transferred into the Investment Options is $14,080.87.

EIFA GUARANTEED MINIMUM VALUE

If you  completely  transfer or fully withdraw your Contract Value in the EIFAs,
the minimum value of the amount  transferred or withdrawn after any EIFA MVA, is
guaranteed to be at least equal to the greater of (a) or (b) where:

(c)      equals all allocations to the EIFAs less partial withdrawals
         (including any withdrawal charges) and transfers from the EIFAs,
         or

(d)      equals the sum of:

|X|      87.5% of all allocations to the EIFAs less all partial
         withdrawals (including any withdrawal charges) and transfers
         from the EIFAs, accumulated at the guaranteed rate specified
         in the endorsement to your Contract (which is currently 3%)
         and;

|X|      any pro rata portion of the withdrawal charges that would have
         been assessed against the EIFA on a full withdrawal.

ABOUT THE INDEXES

Neither Allianz Life nor ___ make any  representation or implications  regarding
the  advisability of investing in securities  represented by the index or in the
Contract  or the  ability  of the  ____  Index  to track  general  stock  market
performance.  ____'s only  relationship  to the Allianz Life is the licensing of
certain  trademarks  and trade  names of the ____ and of the ____ Index which is
determined,  composed,  and  calculated by ____ without  regard to the us or the
Contract.  ____ has no obligation to take our needs or the needs of the Contract
Owners into  consideration  in determining,  composing,  or calculating the ____
Index.   ____  is  not  responsible  for,  and  has  not  participated  in,  the
determination  of the  prices and  amount of the  Contract  or the timing of the
issuance or sale of the Contract or in the  determination  or calculation of the
equation  by which  the  Contract  is to be  converted  into  cash.  ____ has no
obligation or liability in connection  with the  administration,  marketing,  or
trading of the Contract.

____ DOES NOT GUARANTEE THE ACCURACY  AND/OR THE  COMPLETENESS OF THE ____ INDEX
OR ANY DATA  INCLUDED  IN THE INDEX AND ____  SHALL  HAVE NO  LIABILITY  FOR ANY
ERRORS,  OMISSIONS,  OR  INTERRUPTIONS  IN THE INDEX.  ____  MAKES NO  WARRANTY,
EXPRESS OR IMPLIED,  AS TO RESULTS TO BE OBTAINED BY US, CONTRACT OWNERS, OR ANY
OTHER PERSON OR ENTITY FOR THE USE OF THE ____ INDEX OR ANY DATA INCLUDED IN THE
INDEX. ____ MAKES NO EXPRESS OR IMPLIED WARRANTIES,  AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF  MERCHANTABILITY  OR FITNESS FOR A PARTICULAR  PURPOSE OR USE WITH
RESPECT TO THE ____ INDEX OR ANY DATA  INCLUDED IN THE INDEX.  WITHOUT  LIMITING
ANY OF THE FOREGOING, IN NO EVENT SHALL ____ HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE,  INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),  EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

<PAGE>

                                                                  PRO-0001-__/03


             THE USALLIANZ(R) CHARTER II TM VARIABLE ANNUITY CONTRACT

                                    issued by

                         ALLIANZ LIFE VARIABLE ACCOUNT B

                                       and

                 ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA


This  prospectus  describes an individual  flexible  purchase  payment  variable
deferred annuity contract  ("Contract") issued by Allianz Life Insurance Company
of North America (Allianz Life, we, us, our).

As you read this prospectus, you can refer to the Index of Terms for the meaning
of terms  that are  capitalized.  The  Contract  is  called  "flexible  purchase
payment"  because you may generally  make Purchase  Payments at any time and for
any amount  (subject to certain  restrictions)  during the  Accumulation  Phase,
which is the  first of the  Contract's  two  phases.  The  Contract  is called a
"deferred"  annuity  contract  because Annuity Payments to you from the Contract
are deferred until the Payout Phase, the second of the Contract's two phases.

The Contract is a "variable"  contract  because your Contract Values and/or your
Annuity  Payments will increase or decrease  depending on the performance of the
underlying  Investment  Options you select.  The  Investment  Options  invest in
different  types  of  securities  and  follow  varying  investment   strategies.
Depending on market  conditions,  you can gain or lose value by investing in the
Investment Options.

You can allocate  your Purchase  Payments to the  Investment  Choices  available
under this  Contract.  The  Investment  Choices  currently  include the variable
Investment  Options listed below. One or more of the Investment  Options may not
be available in your state. You can select up to20 Investment Choices. Currently
we do not offer any Fixed Account Investment  Choices. We may add, substitute or
remove Investment Choices in the future.

AIM
USAZ AIM Basic Value Fund
USAZ AIM Blue Chip Fund
USAZ AIM Dent Demographic Trends Fund
USAZ AIM International Equity Fund

ALLIANCE CAPITAL
USAZ Alliance Capital Growth and Income Fund
USAZ Alliance Capital Large Cap Growth Fund
USAZ Alliance Capital Technology Fund

DAVIS
Davis VA Financial Portfolio
Davis VA Value Portfolio

DREYFUS
Dreyfus Small Cap Stock Index Fund
Dreyfus Stock Index Fund

FRANKLIN TEMPLETON
Franklin  Global  Communications  Securities  Fund
Franklin  Growth  and Income Securities  Fund
Franklin  High Income Fund
Franklin  Income  Securities  Fund
Franklin  Large Cap Growth  Securities  Fund
Franklin Real Estate Fund
Franklin Rising  Dividends  Securities  Fund
Franklin  Small Cap Fund
Franklin  Small Cap Value  Securities  Fund
Franklin U.S.  Government Fund
Franklin Zero Coupon Fund 2005
Franklin  Zero Coupon Fund 2010
Mutual  Discovery  Securities  Fund
Mutual Shares Securities Fund
Templeton  Developing  Markets  Securities Fund
Templeton Foreign   Securities  Fund
Templeton  Growth  Securities  Fund
USAZ  Templeton Developed Markets Fund

JENNISON
Jennison 20/20 Focus Portfolio
SP Jennison International Growth Portfolio
SP Strategic Partners Focused Growth Portfolio

OPPENHEIMER
Oppenheimer Global Securities Fund/VA
Oppenheimer High Income Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
USAZ Oppenheimer Emerging Growth Fund

PIMCO
PIMCO VIT High Yield Portfolio
PIMCO VIT StocksPLUS Growth and Income Portfolio
PIMCO VIT Total Return Portfolio
USAZ PIMCO Growth and Income Fund
USAZ PIMCO Renaissance Fund
USAZ PIMCO Value Fund

SELIGMAN
Seligman Small-Cap Value Portfolio

USAZ
USAZ Money Market Fund

VAN KAMPEN
USAZ Van Kampen Aggressive Growth Fund
USAZ Van Kampen Comstock Fund
USAZ Van Kampen Emerging Growth Fund
USAZ Van Kampen Growth and Income Fund
USAZ Van Kampen Growth Fund

Please read this prospectus  before investing and keep it for future  reference.
It contains important  information about your annuity. 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.


The  Securities  and Exchange  Commission  (SEC) 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.


An  investment  in  this  Contract  is  not a  deposit  of a bank  or  financial
institution  and is not federally  insured or guaranteed by the Federal  Deposit
Insurance  Corporation  or any other  government  agency.  An investment in this
Contract involves investment risk including the possible loss of principal.

Variable annuity contracts are complex insurance and investment vehicles. Before
you invest, be sure to ask your registered representative about the Contract's
features, benefits, risks and fees, and whether the Contract is appropriate for
you based upon your financial situation and objectives.

Dated: _________, 2003



<PAGE>



TABLE OF CONTENTS
--------------------------------------------------------------------------------



Index of Terms

Summary

Fee Tables

1.The Variable Annuity Contract

    Ownership
         Contract Owner
         Joint Owner
         Annuitant
         Beneficiary
         Assignment

2. Annuity Payments (The Payout Phase)

     Income Date
     Annuity Payments
     Partial Annuitization
     Annuity Options
     Guaranteed Minimum Income
         Benefit (GMIB) - Annuity Income Protection

3. Purchase

     Purchase Payments
     Automatic Investment Plan
     Allocation of Purchase Payments
     Tax-Free Section 1035 Exchanges
     Free Look / Right to Examine
     Accumulation Units

4. Investment Options

     Substitution and Limitation on
         Further Investments
     Transfers
         Telephone Transfers
         Excessive Trading
     Dollar Cost Averaging (DCA) Program
     Flexible Rebalancing
     Financial Advisers -
         Asset Allocation Programs
     Voting Privileges

5. The Fixed Account


6. Expenses

     Mortality and Expense Risk (M&E) Charge
     Contract Maintenance Charge
     Withdrawal Charge
         Reduction or Elimination of the
           Withdrawal Charge
     Commutation Fee
     Transfer Fee
     Premium Taxes
     Income Taxes
     Investment Option Expenses

7. Taxes

    Annuity Contracts in General
    Qualified Contracts
    Multiple Contracts
    Partial 1035 Exchanges
    Distributions -- Non-Qualified Contracts
    Distributions -- Qualified Contracts
    Death Benefits
    Diversification

8. Access to Your Money

    Systematic Withdrawal Program
    Minimum Distribution Program
    Suspension of Payments or Transfers

9 Performance and Illustrations

10 Death Benefit
     Upon Your Death
     Traditional Guaranteed Minimum
       Death Benefit (Traditional GMDB)
     Enhanced Guaranteed Minimum
       Death Benefit (Enhanced GMDB)
     Earnings Protection Guaranteed
       Minimum Death Benefit (EP GMDB)
     Death Benefit Examples
     Death Benefit Payment Options
     Death of the Annuitant

12 Other Information
     Allianz Life
     The Separate Account
     Distribution
     Additional Credits for Certain Groups
     Administration
     Financial Statements

Table of Contents of the Statement of
 Additional Information

Privacy Notice



<PAGE>



INDEX OF TERMS
--------------------------------------------------------------------------------


This  prospectus  is written in plain  English to make it as  understandable  as
possible.  However,  there are some  technical  words or terms that are  defined
below and are capitalized in the prospectus.

Accumulation  Phase - the  period of time  before  you elect to begin  receiving
Annuity Payments. You can make additional Purchase Payments during this time.

Accumulation  Unit - the  units  into  which  we  convert  amounts  invested  in
Investment Options during the Accumulation Phase.

Annuitant - the natural  person upon whose life the Annuity  Payments are based.
The  Annuitant  must  be the  Contract  Owner  if the  Contract  is a  Qualified
Contract. The Contract Owner names the Annuitant at Contract issue.

Annuity Options - the income or payout options available under this Contract.

Annuity  Payments - payments  made by us to the Payee  pursuant  to the  Annuity
Option chosen. Annuity Payments may be variable,  fixed or a combination of both
variable and fixed.

Annuity  Unit  - the  units  into  which  we  convert  amounts  invested  in the
Investment Options during the Payout Phase.

Beneficiary  - the  person(s) or entity the Contract  Owner names to receive any
death  benefit.  The  Beneficiary  is as  named at  Contract  issue.  Unless  an
irrevocable  Beneficiary  has been  named,  the  Contract  Owner can  change the
Beneficiary or contingent  Beneficiary.  If no Beneficiary is named, the owner's
estate becomes the Beneficiary.

Business  Day - each  day on  which  the New  York  Stock  Exchange  is open for
trading,  except when an  Investment  Option does not value its shares.  Allianz
Life is open for business on each day that the New York Stock  Exchange is open.
Our  Business  Day closes when  regular  trading on the New York Stock  Exchange
closes, which is usually at 4:00 p.m. Eastern time.

Contract - a deferred  annuity  contract that allows you to accumulate money tax
deferred by making one or more  Purchase  Payments.  It provides for lifetime or
other forms of Annuity Payments beginning on the Income Date.

Contract Anniversary - An anniversary of the Issue Date of this Contract.

Contract  Owner - "you",  "your" and "yours".  The person or entity named in the
Contract who may exercise all rights granted by the Contract. The Contract Owner
is designated at Contract issue, unless changed. A Non-Qualified Contract can be
owned by up to two Joint Owners. Any Joint Owner must be the spouse of the other
Contract Owner (this requirement may not apply in certain states).

Contract  Value - on any  Business  Day it is  equal  to the  sum of your  Fixed
Account Value plus your Separate Account Value .

Contract Year - any period of twelve (12) months commencing with the Issue Date
and each Contract Anniversary thereafter.

Fixed Account - part of our general account. The general account consists of all
of our assets  other  than  those in our  variable  separate  accounts.  We have
complete ownership and control of all of these assets.

Fixed Account  Value - the portion of your  Contract  Value that is in the Fixed
Account during the Accumulation Phase.

Income  Date - the date  that you begin  receiving  Annuity  Payments  under the
Contract.  This date must be the  first day of a  calendar  month and must be at
least two years after the Issue Date. Some states may require us to allow you to
elect an earlier Income Date.

Investment  Choices - the  variable  Investment  Options  and any Fixed  Account
options available under the Contract for Purchase Payments or transfers. You may
not invest in more than 20 Investment  Choices at any one time.  Currently we do
not offer any Fixed Account Investment Choices. We may add, substitute or remove
Investment Choices in the future.

Investment  Options  - the  variable  Investment  Choices  available  under  the
Separate Account.

Issue Date - the date as shown on the  Contract  that starts the first  Contract
Year.  Contract  Anniversaries  and Contract  Years are measured  from the Issue
Date.

Liquidations - withdrawals  made after the Income Date.  Liquidations  are first
available  five  years  after the  Income  Date and only if you  elect  variable
payouts under Annuity Option 2 or 4.

Market Value  Adjustment  (MVA) - a positive or negative  adjustment  to amounts
withdrawn or  transferred  more than 30 days before the end of an account period
from certain types of Fixed Account Investment Choices.

Non-Qualified  Contract - a Contract  that is not  purchased  under a pension or
retirement plan qualified under sections of the Internal Revenue Code.

Payout Phase - the phase your Contract is in once Annuity Payments begin.

Purchase Payment - the money you put in the Contract.

Qualified  Contract - a Contract  purchased  under a pension or retirement  plan
qualified  under  sections  of  the  Internal  Revenue   Code--e.g.   Individual
Retirement  Annuities  (IRAs),  Tax-Sheltered  Annuities  (referred to as TSA or
403(b)  contracts),  pension and profit sharing plans (including 401(k) and H.R.
10 plans).  Currently we issue Qualified  Contracts which include but may not be
limited to Roth IRAs,  Traditional IRAs,  Simplified Employee Pension (SEP) IRAs
and TSA or 403(b) rollover Contracts.

Separate  Account - Allianz Life Variable Account B is the Separate Account that
issues this Contract.  It is a separate  investment account of Allianz Life. The
Separate  Account  holds the assets  invested  in the  Investment  Options  that
underlie the Contracts.  The Separate Account is divided into subaccounts,  each
of which invests exclusively in a single Investment Option.

Separate  Account  Value - the  portion  of your  Contract  Value that is in the
subaccounts  of the  Separate  Account  during  the  Accumulation  Phase.  It is
measured by the number of Accumulation  Units in each  subaccount  multiplied by
the corresponding Accumulation Unit Value.

Service Center - The USAllianz  Service  Center.  Our Service Center address and
phone number are at the back of this prospectus.



<PAGE>


SUMMARY

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 the  Investment
Choices.  The Contract is intended  for  retirement  savings or other  long-term
investment purposes.  You can purchase the contract as a Non-Qualified  Contract
or as a Qualified  Contract.  The Contract  provides several  different  Annuity
Payment  options that you can choose from and a Traditional  Guaranteed  Minimum
Death Benefit  (Traditional  GMDB).  The  Traditional  GMDB guarantees a minimum
death benefit of total Purchase Payments adjusted for partial withdrawals.

If you and any Joint Owner are 79 or younger you may instead select the Enhanced
Guaranteed Minimum Death Benefit (Enhanced GMDB). The Enhanced GMDB guarantees a
minimum death benefit of the greater of: (a) the 5% Annual Increase Amount prior
to any owner's 81st birthday, or (b) the Maximum Anniversary Value (MAV) on each
Contract Anniversary prior to any owner's 81st birthday, adjusted for subsequent
partial withdrawals and subsequent Purchase Payments.

If you and any Joint Owner are 75 or younger, you may instead elect the Earnings
Protection  Guaranteed  Minimum Death Benefit (EP GMDB). The EP GMDB provides an
additional  death benefit amount based on your Contract  performance or Purchase
Payments.

If you and any Joint Owner are 79 or younger  you may also elect the  Guaranteed
Minimum Income  Benefit  (GMIB).  The GMIB  guarantees a minimum level of income
through  Annuity  Payments  after  the tenth  Contract  Year.  The GMIB  Annuity
Payments are based on the greater of: (a) the 5% Annual Increase Amount prior to
any owner's 81st birthday,  or (b) the MAV on each Contract Anniversary prior to
any owner's 81st  birthday,  adjusted for  subsequent  partial  withdrawals  and
subsequent Purchase Payments.

The Enhanced  GMDB, EP GMDB and the GMIB carry  additional  charges and they may
not be available in all states.  Once you elect one of these benefit options you
cannot  change  it.  Check with your  registered  representative  regarding  the
availability of these features in your state.

The Contract may be used as a funding vehicle for  asset-based fee  arrangements
offered by brokerage firms or their associated  investment advisery firms. There
may be fees and charges assessed by these firms for their asset-based  programs.
These fees and charges would be in addition to the charges and other  deductions
we describe elsewhere in this prospectus. Any withdrawals made to pay these fees
and charges are  considered  withdrawals  under this Contract.  Your  registered
representative will be able to describe the fees assessed in connection with any
such asset-based programs. Allianz Life does not sponsor these programs, set the
fees for the programs, or assume any responsibility for the programs.

We currently do not permit Contract Owners to borrow money from us using the
Contract as security for the loan.

Some contract features may not be available in all states.

ANNUITY  PAYMENTS:  The  Income  Date is the date you  begin  receiving  Annuity
Payments. You generally can elect to receive your Annuity Payments as a variable
payout,  a fixed  payout,  or a  combination  of both under a variety of Annuity
Options.  If you  choose  to  receive  any part of your  Annuity  Payments  as a
variable payout,  the dollar amount of your payments will go up or down based on
the performance of the Investment Options.

PURCHASE: You can buy the Contract with $25,000 or more if you and the Annuitant
are both  under  age 81 on the  Issue  Date.  You can make  additional  Purchase
Payments of $250 or more (or $100 or more if you select our automatic investment
plan) any time during the Accumulation  Phase. The maximum  cumulative  Purchase
Payments we will accept without prior approval is $1 million  (including amounts
already  invested in other Allianz Life  variable  annuities).  Your  registered
representative   can  help  you  complete  the  appropriate   forms.   For  more
information, see section 3. Purchase.

INVESTMENT CHOICES: You can allocate Purchase Payments to the Investment Choices
available under the Contract.  The principal value and investment returns on the
variable  Investment  Options  fluctuate and are not guaranteed and you can lose
money.  You can  make  transfers  between  the  Investment  Options  and the any
available  Fixed  Account  option as permitted  (for more details see section 4.
Investment Options - Transfers).

EXPENSES: The Contract has insurance features and investment features, and there
are costs related to each.  For more  information  please see the fee tables and
section 6. Expenses.

Each year, we deduct a $50 contract maintenance charge from your Contract Value.
We currently waive this charge if the Contract Value is at least $75,000.

We deduct a mortality  and expense  risk charge (M&E  charge) from the assets in
the Separate  Account.  The M&E charge varies depending upon the benefit options
that apply (see  below).  We  calculate  the M&E charge as a  percentage  of the
average daily assets invested in a subaccount on an annual basis. The annual M&E
charges during the Accumulation Phase are as follows:

                             Total M&E Charge            Total M&E Charge
                             Without the GMIB              With the GMIB
Traditional GMDB                   1.75%                       2.20%
EP GMDB                            2.05%                       2.40%
Enhanced GMDB                      2.05%                       2.40%


During the Payout  Phase,  the M&E charge is 1.75% of the average  daily  assets
invested in a subaccount on an annual basis.

If you take  money out of the  Contract  during  the  Accumulation  Phase we may
assess  a  withdrawal  charge  against  each  Purchase  Payment  withdrawn.  The
withdrawal  charge  starts at 8% in the first year and  declines to 0% after two
complete years from the date each Purchase Payment was received.

You can make 12 free transfers  each Contract Year.  After that, we deduct a fee
of $25 for each additional transfer. We reserve the right to restrict the number
of transfers to 12 transfers per Contract Year.

Each Investment Option deducts management fees and expenses from the amounts you
have in the Investment  Option.  Some Investment  Options also deduct 12b-1 fees
from Investment  Option assets.  For 2002, these expenses and fees ranged, on an
annual  basis,  from ___% to ___% of the  average  daily  value  invested in the
Investment Option after expense  reimbursements and fee waivers. [WE WILL UPDATE
THESE FIGURES WITH 2002 INFORMATION UPON AMENDMENT.]

TAXES:  Your  earnings are  generally not taxed until you take them out. For tax
purposes,  if you make a withdrawal 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.  Other tax rules and
limitations may apply to Qualified Contracts, see section 7. Taxes.

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. The IRS may apply limits on  withdrawals  under  certain
Qualifed  Contracts.  Under certain  circumstances,  you can also take money out
during the Payout  Phase  (Liquidations)  if you select a variable  payout under
Annuity  Option 2 or 4.  Liquidations  during the Payout  Phase are subject to a
commutation fee.

DEATH BENEFIT:  If you die during the  Accumulation  Phase,  the person you have
chosen as a Beneficiary  will receive a death  benefit.  The amount of the death
benefit proceeds  depends on which death benefit option applies.  There may be a
death benefit during the Payout Phase depending on the selected Annuity Option.

FREE LOOK / RIGHT TO EXAMINE:  You can cancel the Contract within ten days after
receiving it (or whatever period is required in your state). We will pay you the
Contract  Value on the day we receive your request to cancel the Contract at our
Service Center. This may be more or less than your original Purchase Payment. In
certain states,  or if you have purchased the Contract as an IRA, we will refund
the Purchase Payment.  The free look provision under the Contract is also called
the right to examine.

PRIVACY  POLICY:  We  place  a high  priority  on  maintaining  your  trust  and
confidence.  A notice of the privacy  policy  followed  by Allianz  Life and its
affiliated   companies   is  provided  in  this   prospectus   to  enhance  your
understanding of how we protect your privacy when we collect and use information
about you, and the steps we take to safeguard that information.  See the Privacy
Notice that appears at the back of this prospectus.

INQUIRIES:  If  you  have  any  questions  about  your  Contract  or  need  more
information,  please  contact our Service  Center at the phone number or address
listed at the back of this prospectus.




<PAGE>



FEE TABLES
--------------------------------------------------------------------------------


CONTRACT OWNER TRANSACTION EXPENSES*

The  following  tables  describe  the fees and  expenses  that you will pay when
purchasing,  owning and making a full  withdrawal  from the Contract.  The first
tables  describe  the fees and  expenses  that you will pay at the time that you
purchase  the  Contract,  make a full  withdrawal  from  the  Contract,  or make
transfers.  Taxes,  including premium tax charges, also may apply, although they
do not appear in these tables.

Withdrawal charge - during the Accumulation Phase (as a percentage of each
Purchase Payment withdrawn).

                           Number of Complete Years
                      Since Receipt of Purchase Payment         Charge
                      ---------------------------------         ------
                                     0                            8%
                                     1                            7%
                                   2 or more                      0%


Commutation  fee - during the Payout  Phase  under  Annuity  Option 2 or 4 (as a
percentage of the amount liquidated).  Liquidations are first allowed five years
after the Income Date if you elect a variable payout.

                           Number of Complete Years
                               Since Income Date                Charge
                               -----------------                ------
                                     5                            4%
                                     6                            3%
                                     7                            2%
                                   8 or more                      1%

Transfer fee  ..... First12  transfers in a Contract Year are free.  Thereafter,
                    the fee is currently $25. Allianz Life reserves the right to
                    restrict  the  number  of  transfers  to  12  transfers  per
                    Contract  Year and to charge a fee for any transfer over 12.
                    Dollar cost  averaging  transfers  and flexible  rebalancing
                    transfers do not count against the free transfers we allow.



*    If you  invest in a Fixed  Account  Investment  Choice,  a MVA may apply to
     certain  transactions.  This MVA may  increase or decrease the value of the
     amount transferred or withdrawn.

CONTRACT OWNER PERIODIC EXPENSES

The next tables  describe the fees and expenses  that you will pay  periodically
during the time that you own the Contract,  not including the Investment  Option
fees and expenses.

Contract maintenance charge**........................ $50 per Contract per year.

Separate  Account  annual  expenses  during  the  Accumulation  Phase***  (as  a
percentage of average daily assets invested in a subaccount on an annual basis)

                        Total M&E Charge            Total M&E Charge
                        Without the GMIB              With the GMIB
Traditional GMDB              1.75%                       2.20%
EP GMDB                       2.05%                       2.40%
Enhanced GMDB                 2.05%                       2.40%

**   We waive the charge if the Contract Value is at least  $75,000.  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 $75,000, we
     waive the charge on all your Contracts.

***  The M&E charge during the Payout Phase is 1.75% of the average daily assets
     invested in a subaccount on an annual basis.


ANNUAL OPERATING EXPENSES OF THE INVESTMENT OPTIONS

This table  describes the total annual  operating  expenses  associated with the
Investment  Options and shows the minimum and maximum expenses charged by any of
the Investment  Options both before the effect of any expense  reimbursement  or
fee waiver and after.  These expenses are deducted from the Investment  Option's
assets.  These expenses will reduce the  performance  of the Investment  Options
and,  therefore,  will  negatively  affect your  Contract  Value and the amounts
available for withdrawals and Annuity Payments.  They may also negatively impact
the  death  benefits  proceeds.  We show  the  expenses  as a  percentage  of an
Investment  Option's  average  daily net assets for the most recent fiscal year.
The investment advisers for the Investment Options provided this fee and expense
information and we did not independently verify it.

[THIS  INFORMATION  IS AS OF  12/31/01.  WE WILL  UPDATE THIS  INFORMATION  WITH
12/31/02 DATA UPON AMENDMENT.]

                                                        Minimum Maximum
Total annual Investment Option operating
expenses* (including management fees,
distribution or 12b-1 fees, and other expenses)...
before fee waivers and expense reimbursements          0.57%            7.59%
after fee waivers or expense reimbursements            0.57%            1.82%

* Some of the Investment  Options or their  affiliates may also pay service fees
to us or our  affiliates.  The  amount of these fees may be  different  for each
Investment Option.

<TABLE>
<CAPTION>

This table  describes in detail the annual  expenses for each of the  Investment
Options after any fee waivers or expense reimbursements. We show the expenses as
a percentage  of an  Investment  Option's  average daily net assets for the most
recent  fiscal  year.  Except for the USAZ  Funds and the PIMCO VIT  portfolios,
neither the Investment  Options nor their  advisers are affiliated  with Allianz
Life.


[THIS  INFORMATION  IS AS OF  12/31/01.  WE WILL  UPDATE THIS  INFORMATION  WITH
12/31/02 DATA UPON AMENDMENT.]

<S>                                              <C>                  <C>               <C>              <C>
                                                                                                          Total Annual
                                                  Management           12b-1               Other        Investment Option
Investment Option                                    Fees               Fees*            Expenses      Operating Expenses
------------------------------------------------------------------------------------------------------------------------------------
USAZ AIM Basic Value Fund1                             .75%            .25%                .10%               1.10%
------------------------------------------------------------------------------------------------------------------------------------
USAZ AIM Blue Chip Fund1                               .80%            .25%                .10%               1.15%
------------------------------------------------------------------------------------------------------------------------------------
USAZ AIM Dent Demographic Trends Fund1                 .85%            .25%                .10%               1.20%
USAZ AIM International Equity Fund1                    .90%            .25%                .10%               1.25%
USAZ Alliance Capital Growth and Income Fund1          .85%            .25%                 --                1.10%
------------------------------------------------------------------------------------------------------------------------------------
USAZ Alliance Capital Large Cap Growth Fund1           .85%            .25%                 --                1.10%
USAZ Alliance Capital Technology Fund1                1.00%            .25%                 --                1.25%
Davis VA Financial Portfolio2                          .75%             --                 .25%               1.00%
------------------------------------------------------------------------------------------------------------------------------------
Davis VA Value Portfolio                               .75%             --                 .12%                .87%
Dreyfus Small Cap Stock Index Fund- Service Shares1    .35%            .25%                 --                 .60%
------------------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund-Service Shares                .25%            .25%                .07%                .57%
------------------------------------------------------------------------------------------------------------------------------------
Franklin Global Communications Securities Fund - Class 23/4            .52%                .25%                .03%        .80%
Franklin Growth and Income Securities Fund - Class 23/4.48%            .25%                .03%                .76%
Franklin High Income Fund - Class 23/4                 .57%            .25%                .05%                .87%
Franklin Income Securities Fund - Class 23/4           .49%            .25%                .04%                .78%
Franklin Large Cap Growth Securities Fund - Class 23/4 .75%            .25%                .03%               1.03%
Franklin Real Estate Fund - Class 23/4                 .56%            .25%                .03%                .84%
Franklin Rising Dividends Securities Fund - Class 23/4/5.74%           .25%                .02%               1.01%
Franklin Small Cap Fund - Class 23/5                   .45%            .25%                .31%               1.01%
Franklin Small Cap Value Securities Fund - Class 23/5  .57%            .25%                .20%               1.02%
Franklin U.S. Government Fund - Class 23/4             .51%            .25%                .02%                .78%
Franklin Zero Coupon Fund 2005 - Class 14              .63%             --                 .05%                .68%
------------------------------------------------------------------------------------------------------------------------------------
Franklin Zero Coupon Fund 2010 - Class 14              .63%             --                 .05%                .68%
Mutual Discovery Securities Fund - Class 23            .80%            .25%                .22%               1.27%
------------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund - Class 23               .60%            .25%                .19%               1.04%
Templeton Developing Markets Securities Fund - Class 231.25%           .25%                .32%               1.82%
Templeton Foreign Securities Fund - Class 23/5         .68%            .25%                .22%               1.15%
Templeton Growth Securities Fund - Class 23/4          .80%            .25%                .05%               1.10%
USAZ Templeton Developed Markets Fund1                 .88%            .25%                .12%               1.25%
Jennison 20/20 Focus Portfolio - Class 21              .75%            .25%                .33%               1.33%
SP Jennison International Growth Portfolio - Class 26  .85%            .25%                .54%               1.64%
SP Strategic Partners Focused Growth Portfolio - Class 26 .90%         .25%                .26%               1.41%
Oppenheimer Global Securities Fund/VA                  .64%             --                 .06%                .70%
------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund/VA                        .74%             --                 .05%                .79%
Oppenheimer Main Street Growth & Income Fund/VA        .68%             --                 .05%                .73%
USAZ Oppenheimer Emerging Growth Fund1                 .85%            .25%                .15%               1.25%
------------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT High Yield Portfolio - Admin. Class7         .25%             --                 .50%                .75%
------------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth and Income Portfolio - Admin. Class 7     .40%                   --                .27%        .67%
PIMCO VIT Total Return Portfolio- Admin. Class 7       .25%             --                 .40%                .65%
USAZ PIMCO Growth and Income Fund1                     .75%            .25%                .10%               1.10%
------------------------------------------------------------------------------------------------------------------------------------
USAZ PIMCO Renaissance Fund1                           .75%            .25%                .10%               1.10%
USAZ PIMCO Value Fund1                                 .75%            .25%                .10%               1.10%
Seligman Small-Cap Value Portfolio - Class 18         1.00%             --                 .19%               1.19%
------------------------------------------------------------------------------------------------------------------------------------
USAZ Money Market Fund1                                .35%            .25%                .30%                .90%
------------------------------------------------------------------------------------------------------------------------------------
USAZ Van Kampen Aggressive Growth Fund1                .80%            .25%                .20%               1.25%
USAZ Van Kampen Comstock Fund1                         .68%            .25%                .27%               1.20%
USAZ Van Kampen Emerging Growth Fund1                  .75%            .25%               .10%                1.10%
USAZ Van Kampen Growth and Income Fund1                .68%            .25%                .17%               1.10%
USAZ Van Kampen Growth Fund1                           .75%            .25%                .20%               1.20%
</TABLE>


*The 12b-1 fees cover certain  distribution  and  shareholder  support  services
provided  by  the  companies  selling  Contracts.   Our  principal  underwriter,
USAllianz Investor Services, LLC will receive 12b-1 fees.

1.   The USAZ AIM  Basic  Value  Fund,  USAZ AIM Blue Chip  Fund,  USAZ AIM Dent
     Demographic Trends Fund, USAZ AIM International  Equity Fund, Dreyfus Small
     Cap  Stock  Index  Fund,  Jennison  20/20  Focus  Portfolio  and  the  USAZ
     Oppenheimer  Emerging  Growth Fund commenced  operations as of May 1, 2002.
     The  expenses  shown  above  for these  Investment  Options  are  therefore
     estimated for the Investment  Option's  current  fiscal year.  Certain USAZ
     Fund  expenses  will be assumed by the Adviser and an annual  expense limit
     has been  designated  by the Adviser for each  Investment  Option  which is
     reflected in the total expense  amount  listed in the table above.  Without
     reimbursement,  total  Investment  Option  expenses  would be  estimated as
     follows: USAZ Alliance Capital Growth and Income Fund, 3.28%, USAZ Alliance
     Capital  Large Cap Growth Fund,  3.36%,  USAZ Alliance  Capital  Technology
     Fund,  3.19%,  USAZ Templeton  Developed  Markets Fund,  3.56%,  USAZ PIMCO
     Growth and Income Fund,  3.70%,  USAZ PIMCO  Renaissance  Fund, 2.96%, USAZ
     PIMCO Value Fund,  3.43%,  USAZ Money Market Fund,  1.21%,  USAZ Van Kampen
     Aggressive  Growth Fund,  7.59%, USAZ Van Kampen Comstock Fund, 3.01%, USAZ
     Van Kampen Emerging Growth Fund,  3.81%,  USAZ Van Kampen Growth and Income
     Fund, 2.71%, and the USAZ Van Kampen Growth Fund, 4.46%.

2.   Without  reimbursement,  other expenses and total operating  expenses would
     have  been  0.29%  and  1.04%,  respectively  for the  Davis  VA  Financial
     Portfolio.

3.   For  the  Investment  Options  of  Franklin  Templeton  Variable  Insurance
     Products Trust,  Class 2 shares have a distribution  plan which is referred
     to as a rule  12b-1  plan.  See "Fund  Account  Policies"  in the  Franklin
     Templeton Variable Insurance Products Trust prospectus for more information
     about the rule 12b-1 plan.

4.   The Investment  Option  administration  fee is paid indirectly  through the
     management fee.

5.   For the Franklin Rising  Dividends,  Franklin Small Cap, Franklin Small Cap
     Value Securities and Templeton Foreign  Securities Funds, the managers have
     agreed in advance to make estimated  reductions of 0.01%,  0.08%, 0.03% and
     0.01%,  respectively,  in their fees to reflect reduced services  resulting
     from the Investment Options' investment in a Franklin Templeton money fund.
     The managers are required by the Investment  Options' Board of Trustees and
     an order of the Securities and Exchange  Commission to reduce their fees if
     the Investment  Options invest in a Franklin  Templeton money fund. Without
     these reductions,  the total annual Investment  Options' operating expenses
     are estimated to be 1.02%, 1.09%, 1.05% and 1.16%, respectively.

6.   Without  reimbursement,  total operating expenses would have been 2.26% and
     3.01%,  respectively  for  the  SP  Jennison  International  Growth  and SP
     Strategic  Partners Focused Growth  Portfolios.  These  reimbursements  are
     voluntary and may be terminated at any time.

7.   "Other Expenses" without reduction  reflect a 0.35%  administrative  fee, a
     0.15% service fee and 0.01%  representing  pro rata  Trustees' Fees for the
     PIMCO VIT High Yield Portfolio; a 0.10% administrative fee, a 0.15% service
     fee and 0.02%  interest  expense  for the PIMCO VIT  StocksPLUS  Growth and
     Income Portfolio;  and a 0.25%  administrative fee, a 0.15% service fee and
     0.01%  representing  pro rata Trustees' fees for the PIMCO VIT Total Return
     Portfolio. PIMCO has contractually agreed to reduce total annual Investment
     Option  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 VIT High
     Yield,  StocksPLUS Growth and Income and Total Return  Portfolios.  Without
     such  reductions,  Total Annual Expenses for the fiscal year ended December
     31, 2001 would have been 0.76%,  0.67% and 0.66%,  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.  Ratio of net  expenses  to average  net assets  excluding  interest
     expense is 0.65% for the StocksPLUS Growth and Income Portfolio.

8.   Effective  March 1, 2001, J & W. Seligman & Co.  Incorporated  ("Seligman")
     voluntarily  agreed to  reimburse  expenses  of  Seligman  Small-Cap  Value
     Portfolio,  other than management and 12b-1 fees, that exceed 0.20%.  Prior
     to that date, Seligman  reimbursed all expenses,  other than management and
     12b-1 fees.  Without  reimbursement,  other  expenses and total  Investment
     Option expenses would have been 0.22% and 1.22%, respectively.  There is no
     assurance that Seligman will continue this policy in the future.



<PAGE>


EXAMPLES
--------------------------------------------------------------------------------

These  examples  are  intended to help you compare the cost of  investing in the
Contract with the cost of investing in other variable annuity  contracts.  These
costs include  Contract  Owner  transaction  expenses,  Contract  Owner periodic
expenses, and the annual operating expenses of the Investment Options.

You should not consider the examples below as a representation of past or future
expenses.  Actual  expenses  may be  greater  or less than  those  shown.  These
examples assume that any applicable fee waivers and expense  reimbursements will
continue for the periods shown. Premium taxes are not reflected.

The $50  contract  maintenance  charge is included in the examples as a prorated
charge of $1.  Since the  minimum  required  Purchase  Payment is  greater  than
$10,000, the contract maintenance charge is reduced accordingly.

For additional information, see section 6. Expenses.

If you make a full  withdrawal  at the end of each time  period,  and assuming a
$10,000  investment  and a 5%  annual  return  on  your  money  you  may pay the
following expenses for Contracts with:

a)  selection  of the GMIB and either the EP GMDB or the  Enhanced  GMDB  (which
    carries the highest M&E charge of 2.40%).

b) selection of the  Traditional  GMDB and no GMIB (which carries the lowest M&E
   charge of 1.75%).

<TABLE>
<CAPTION>
<S>                                                          <C>                <C>           <C>          <C>

Total annual Investment Option operating expenses* of...      1 Year             3 Years       5 Years      10 Years
1.82% (the maximum)                                           a)                 a)            a)           a)
                                                              b)                 b)            b)           b)
0.57% (the minimum)                                           a)                 a)            a)           a)
                                                              b)                 b)            b)           b)
</TABLE>


If you do not make a full  withdrawal or if you  annuitize** the Contract at the
end of each time period and assuming a $10,000 investment and a 5% annual return
on your money you may pay the following expenses for Contracts with:

a)  selection  of the GMIB and either the EP GMDB or the  Enhanced  GMDB  (which
carries the highest M&E charge of 2.40%).

b) selection of the  Traditional  GMDB and no GMIB (which carries the lowest M&E
charge of 1.75%).
<TABLE>
<CAPTION>
<S>     <C>                                                    <C>                <C>            <C>          <C>

Total annual Investment Option operating expenses* of...        1 Year             3 Years       5 Years      10 Years
1.82% (the maximum)                                             a)                 a)            a)           a)
                                                                b)                 b)            b)           b)
0.57% (the minimum)                                             a)                 a)            a)           a)
                                                                b)                 b)            b)           b)
</TABLE>
* Total annual  operating  expenses are shown after the effect of any fee waiver
  or expense reimbursement.

** Your Income Date generally must be at least two years after your Issue Date.

As of  December  31, 2002 no  Contracts  had been sold.  Therefore,  we have not
provided condensed financial information.

<PAGE>



1.THE VARIABLE ANNUITY CONTRACT
--------------------------------------------------------------------------------


This  prospectus  describes an individual  flexible  purchase  payment  variable
deferred annuity Contract.

o    "Flexible  Purchase  Payments"  means that you can choose to make  Purchase
     Payments at any time during the Accumulation  Phase, in whatever amount you
     choose, subject to certain minimum and maximum requirements.

o    "Deferred  annuity contract" means that Annuity Payments do not begin for 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  Investment
     Options.

An annuity is a contract  between  you,  the  Contract  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 (the  Income  Date) that is
generally  at least two years after your Issue  Date.  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.  For Qualified  Contracts,  the tax deferral is
provided through compliance with specialized tax-qualification rules.

Your Investment  Choices include the Investment  Options and any available Fixed
Account option. You may not invest in more than 20 Investment Choices at any one
time.  Depending  upon  market  conditions,  you can  gain or lose  value in the
Contract based on the investment  performance  of the  Investment  Options.  The
Investment  Options  are  designed to offer a better  return than any  available
Fixed Account Investment Choice, however, this is not guaranteed.

The amount of Contract Value you are able to accumulate in your Contract  during
the Accumulation Phase depends in large part upon the investment  performance of
the Investment Option(s) you select. The amount of the variable Annuity Payments
you  receive  during  the  Payout  Phase  also  depends  in large  part upon the
investment  performance  of any  Investment  Options  you  select for the Payout
Phase.

We 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 Contract  issue.  You may change
Contract  Owners at any time subject to our  underwriting  rules then in effect.
However,  there may be IRS restrictions on changing the ownership of a Qualified
Contract.  Any change will become effective as of the date you sign the request.
Changing  ownership  may be a taxable  event.  You should  consult with your tax
adviser before doing this.

Joint Owner. A Non-Qualified  Contract can be owned by Joint Owners.  Generally,
any Joint Owner must be the spouse of the other  Contract  Owner  although  this
restriction  may not apply in all states.  Upon the death of either Joint Owner,
the  surviving  Joint Owner will become the  primary  Beneficiary.  We will then
treat  any  other  Beneficiary  designation  on record at the time of death as a
contingent Beneficiary. You can change Joint Owners under the same conditions as
described for a Contract Owner.

Annuitant.  The  Annuitant  is the  individual  on  whose  life we base  Annuity
Payments.  You name an Annuitant subject to our underwriting  rules and approval
then in effect.  You may change the Annuitant at any time before the Income Date
unless  the  Contract  is  owned by a  non-individual.  You may not  change  the
Annuitant  if  the  Contract  is  owned  by a  non-individual.  For a  Qualified
Contract,  there may be a  requirement  that the Owner and the  Annuitant be the
same person.

Beneficiary.  The Beneficiary is the person(s) or entity you name to receive any
death benefit.  You name the Beneficiary at Contract  issue.  You can change the
Beneficiary  or contingent  Beneficiary at any time before your death unless you
name an irrevocable  Beneficiary.  If you do not name a  Beneficiary,  any death
benefit will be paid to your estate.

Assignment.  You can  transfer  ownership  of (assign)  the Contract at any time
during your  lifetime.  We will not be liable for any payment or other action we
take in accordance with the Contract before we receive notice of the assignment.
You can only make an assignment  after the death benefit has become payable with
our consent. An assignment may be a taxable event. You may be unable to assign a
Qualified Contract.  If you assign the Contract,  you can only take actions with
regards to the Contract with the consent of the assignee.


2.ANNUITY PAYMENTS
--------------------------------------------------------------------------------
(THE PAYOUT PHASE)
--------------------------------------------------------------------------------


Income Date

You can annuitize  your Contract and receive  regular  monthly  income  payments
(Annuity  Payments)  under  your  Contract.  Your  Income  Date is the date your
Annuity  Payments  will  begin.  Your  Income  Date  must be the  first day of a
calendar  month.  If you do not select an Income Date at Contract  issue we will
select an Income Date for you.  Your Income Date is specified in your  Contract.
You may make an authorized  request for a different  Income Date after  Contract
issue; however, any such request is subject to our approval. The earliest Income
Date you can select must be at least two years  after the Issue  Date.  However,
some states may require us to allow you to elect an earlier  Income  Date.  Your
Income  Date must not be after the  calendar  month  following  the later of the
Annuitant's  90th birthday or ten years from the Issue Date,  unless approved by
us. This  limitation  may not apply if the  Contract  is issued to a  charitable
remainder  trust.  However,  the  Income  Date will  never be later than what is
permitted under state and federal law.

Annuity Payments

You may elect to receive your Annuity Payments under Annuity Options 1-5 as:

o    a variable payout,
o    a fixed payout, or
o    a combination of both.

You may only elect to receive fixed payouts under Annuity Option 6.

Under a fixed payout, all of the Annuity Payments will be the same dollar amount
(or equal  installments)  except as provided for under Annuity  Option 3. If you
choose a variable  payout,  you can select up to 20 of the available  Investment
Options. If you do not tell us otherwise,  we will base your Annuity Payments on
the Investment  Option  allocations that were in place on the Income Date. There
is no minimum required  Annuity Payment.  After the Income Date, you will not be
able to make a transfer from a fixed payout to a variable payout, but you can do
the reverse.  Guaranteed fixed Annuity Payments are based on an interest rate of
2.5% per year and the mortality table specified in your Contract.

If you  choose  to have  any  portion  of your  Annuity  Payments  based  on the
investment  performance of the Investment  Option(s),  the dollar amount of your
Annuity Payments will depend upon three factors:

1) your Contract Value adjusted for any applicable MVA (less any premium tax) on
   the Income Date,

2) the assumed investment rate (AIR) used in the annuity table for the Contract,
   and

3) the future performance of the Investment Option(s) you selected.

You can choose a 3%, 5% or 7% AIR.  The 5% and 7% AIRs are not  available in all
states.  Using a higher AIR will result 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
investment  performance  exceeds the AIR, your Annuity  Payments will  increase.
Similarly,  if the actual rate is less than the AIR, your Annuity  Payments will
decrease.

You (or someone you  designate)  will  receive  the Annuity  Payments.  You will
receive tax reporting on those payments.

Partial Annuitization

You are  currently  allowed to  annuitize  a portion of your  Contract,  without
annuitizing  the entire value according to the applicable  annuitization  rules.
This is referred to as a partial  annuitization.  A partial  annuitization  will
decrease the amounts available for withdrawal, payment of death benefits and any
additional Annuity Payments.

The tax treatment of a partial annuitization is unclear. A partial annuitization
may be treated as a partial  withdrawal  for tax purposes.  You should consult a
tax adviser  before  requesting a partial  annuitization.  We may deduct premium
taxes from partially annuitized amounts. We do not currently restrict the number
of partial annuitizations for a Contract, but we reserve the right to do so.

Annuity Options

You can choose one of the income plans (Annuity Options)  described below or any
other payment option to which we agree. You may select and/or change the Annuity
Option with at least 30 days written notice to us. After Annuity Payments begin,
you cannot  change the Annuity  Option.  If you do not choose an Annuity  Option
prior to the Income  Date,  we will make  payments  to you as a variable  payout
under Annuity Option 2 with ten years of guaranteed monthly payments.

Option 1. Life Annuity. We will make monthly Annuity Payments during the life of
the  Annuitant,  ceasing  with  the  last  Annuity  Payment  due  prior  to  the
Annuitant's death.

Option  2.  Life  Annuity  with  Monthly  Payments  Over 5,  10,  15 or 20 Years
Guaranteed.  We will  make  monthly  Annuity  Payments  during  the  life of the
Annuitant.  However,  if the  Annuitant  dies  before  the  end of the  selected
guarantee  period, we will continue to make Annuity Payment for the remainder of
the guarantee period. Alternatively, you may elect to receive a lump-sum payment
equal to the present value of the remaining guaranteed monthly Annuity Payments,
as of the date we receive proof of the Annuitant's  death at our Service Center,
commuted as set forth in the Contract. Proof of the Annuitant's death and return
of the Contract are required prior to the payment of any commuted values.

While the Annuitant is alive and the number of variable Annuity Payments we have
made is less than the guaranteed number of payments  elected,  you may request a
withdrawal  (partial  Liquidation).   We  will  allow  you  to  make  a  partial
Liquidation at least once per Contract Year starting five 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  Payments'  current
value,  to the end of the guaranteed  period,  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%. We will subtract a commutation fee from the amount liquidated before we pay
you the proceeds.  We will process partial  Liquidations within seven days after
your written  request is received in good order at our Service  Center.  After a
partial  Liquidation,  we will reduce the subsequent  monthly  Annuity  Payments
during the remaining  guaranteed  period by the percentage of Liquidation  value
liquidated,  including the  commutation  fee.  After we have made the guaranteed
number of Annuity Payments,  we will restore the number of Annuity Units used in
calculating  the  monthly  Annuity  Payments to their  original  values as if no
Liquidations had taken place.

Option 3. Joint and Last Survivor Annuity. We will make monthly Annuity Payments
during the joint  lifetime of the  Annuitant and the joint  Annuitant.  Upon the
death of one Annuitant,  Annuity  Payments will continue  during the lifetime of
the  surviving  joint  Annuitant at a level of 100%,  75% or 50% of the previous
level,  as  selected.  Monthly  Annuity  Payments  cease with the final  Annuity
Payment due prior to the last survivor's death.

Option 4. Joint and Last Survivor  Annuity with Monthly  Payments Over 5, 10, 15
or 20 Years  Guaranteed.  We will make monthly Annuity Payments during the joint
lifetime  of the  Annuitant  and the  Joint  Annuitant.  Upon  the  death of one
Annuitant,  Annuity  Payments will continue during the lifetime of the surviving
joint  Annuitant at 100% of the amount that was paid when both  Annuitants  were
alive.  However, if the last joint Annuitant dies before the end of the selected
guarantee  period, we will continue to make Annuity Payment for the remainder of
the guarantee period. Alternatively, you may elect to receive a lump-sum payment
equal to the present value of the remaining guaranteed monthly Annuity Payments,
as of the date we  receive  proof of the last  survivor's  death at our  Service
Center,  commuted  as set forth in the  Contract.  Proof of death of both  joint
Annuitants  and return of the Contract are required  prior to the payment of any
commuted values.

While the Annuitant is alive and the number of variable Annuity Payments we have
made is less than the guaranteed number of payments  elected,  you may request a
withdrawal  (partial  Liquidation).   We  will  allow  you  to  make  a  partial
Liquidation at least once per Contract Year starting five 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  Payments'  current
value,  to the end of the guaranteed  period,  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%. We will subtract a commutation fee from the amount liquidated before we pay
you the proceeds.  We will process partial  Liquidations within seven days after
your written  request is received in good order at our Service  Center.  After a
partial  Liquidation,  we will reduce the subsequent  monthly  Annuity  Payments
during the remaining  guaranteed  period by the percentage of Liquidation  value
liquidated,  including the  commutation  fee.  After we have made the guaranteed
number of Annuity Payments,  we will restore the number of Annuity Units used in
calculating  the  monthly  Annuity  Payments to their  original  values as if no
Liquidations had taken place.

Option 5. Refund Life Annuity.  We will make monthly Annuity Payments during the
lifetime of the Annuitant ceasing with the last Annuity Payment due prior to the
Annuitant's  death. After the Annuitant's death, you may receive a refund. For a
fixed  payout,  the amount of the refund  will equal the amount  applied to this
Annuity Option minus the total of all Annuity Payments made under this option.

For a  variable  payout,  the amount of the refund  will  depend on the  current
Investment Option allocation and will be the sum of refund amounts  attributable
to each Investment Option. We calculate the refund amount for a given Investment
Option using the following formula:

(1) x {[(2) x (3) x (4)/(5)] - [(4) x (6)]}

where: (1) = Annuity Unit value of that given  Investment  Option when due proof
             of the Annuitant's death is received at the Service Center.

(2) = The amount available for Annuity Payments on the Income Date.

(3)  = Allocation  percentage in that given Investment  Option (in decimal form)
     when due proof of the Annuitant's death is received at the Service Center.

(4)  = The number of Annuity  Units used in  determining  each  Annuity  Payment
     attributable  to  that  given  Investment  Option  when  due  proof  of the
     Annuitant's death is received at the Service Center.

(5)  = Dollar value of first Annuity  Payment.  (6) = Number of Annuity Payments
     made since the Income Date.

We will base this  calculation  upon the  allocation of Annuity  Units  actually
in-force  at the time due  proof of the  Annuitant's  death is  received  at the
Service Center.  We will not pay a refund if the total refund  determined  using
the above calculation is less than or equal to zero.

Option 6.  Specified  Period  Certain  Annuity - fixed payout only. We will make
monthly  Annuity  Payments for a specified  period of time.  The Contract  Owner
selects the specified  period certain and it must be specified as a whole number
of  years  from ten to 30.  If the last  Annuitant  dies  before  the end of the
specified  period  certain,  we will  continue to make  Annuity  Payment for the
remainder of the specified period.

GUARANTEED MINIMUM INCOME BENEFIT (GMIB) -- ANNUITY INCOME PROTECTION

At the time you  purchase  the  Contract  you can  elect the GMIB if you and any
Joint  Owner are 79 or younger.  Once  selected,  you cannot  change it. The M&E
charge is higher for Contracts  with the GMIB.  The GMIB may not be  appropriate
for  owners  who are age 75 to 79 on the Issue  Date  because  the GMIB value is
limited after age 81. The GMIB is only  available on a Contract that is owned by
a  non-individual  if the  Contract is owned for the  benefit of an  individual.
Currently,  this benefit is available  independently  of the Enhanced  GMDB.  We
reserve the right,  for new issues only, to require the election of the Enhanced
GMDB with the GMIB. We also reserve the right,  for new issues only, to restrict
the selection of Annuity  Options.  The GMIB does not create  Contract  Value or
guarantee  the  performance  of any  Investment  Option.  The  GMIB  may  not be
available in your state.  Check with your  registered  representative  regarding
availability  and be sure to discuss  whether or not the GMIB is appropriate for
your situation.

The annuity  income  protection  provided by the GMIB is described  below and is
used in  determining  the amount of each Annuity  Payment you receive during the
Payout Phase.  You can use the GMIB with fixed Annuity Options 1 through 6 only.
The GMIB provides  guaranteed  minimum Annuity Payments during the Payout Phase.
The GMIB protection will apply only under the following circumstances:

1.   Your  Income Date must be within 30 days  following a Contract  Anniversary
     beginning with the tenth Contract Anniversary;

2.   Annuity  Payments  can only be made as a fixed  payout,  regardless  of the
     Annuity Option you select; and

3.   If you  choose  Annuity  Option 6,  which is a period  certain,  the period
     certain must be for at least ten years.

The GMIB guarantees  that your Annuity  Payments will be equal to the guaranteed
fixed  payout  rates  applied to the GMIB value.  The GMIB value is equal to the
greater of A or B which are  described  below.  We will use current fixed payout
rates applied to the Contract  Value  adjusted for any  applicable MVA (less any
applicable  premium tax) to calculate  your Annuity  Payments if that produces a
greater  payment.  However,  if we use the Contract  Value and the current fixed
payout rates to calculate  your Annuity  Payments you will have incurred  higher
Contract expenses without receiving any explicit benefit from the GMIB option.

You can always  annuitize  your Contract Value two years or more after the Issue
Date* under a fixed and/or  variable  Annuity  Option.  However,  if you do, you
cannot use the GMIB value.

If Joint Owners are named, Allianz Life will use the age of the older Joint
Owner to determine the GMIB value.

* Some states may require a shorter period of time.

A. 5% ANNUAL INCREASE AMOUNT

The 5% Annual Increase Amount is initially equal to your Purchase Payment.

On each Business Day other than a Contract  Anniversary,  the 5% Annual Increase
Amount is equal to:
|X| its value on the immediately preceding Business Day,
|X| plus any  additional  Purchase  Payments  received  that day,  and
|X| minus the percentage of any Contract Value withdrawn
   (prior to any MVA, but including any withdrawal charge) for each
   withdrawal you make that day.

On  every  Contract  Anniversary  prior to your  81st  birthday,  the 5%  Annual
Increase Amount is equal to:
|X| its value on the immediately preceding Business Day increased by 5%
|X| plus any additional Purchase Payments received that day,and
|X| minus the percentage of any Contract Value withdrawn  (prior to any MVA,
    but including any withdrawal charge) for each withdrawal you make that day.

Beginning  with the  Contract  Anniversary  that  occurs  on or after  your 81st
birthday,  we calculate the 5% Annual Increase Amount in the same way that we do
on any Business Day other than a Contract Anniversary.

We limit the 5% Annual  Increase  Amount to a maximum  of two times  your  total
Purchase Payments minus the percentage of any Contract Value withdrawn (prior to
any MVA, but including any withdrawal charge) for each withdrawal you made.

B. MAXIMUM ANNIVERSARY VALUE (MAV)

The MAV is initially equal to your Purchase Payment.

On each Business Day other than a Contract Anniversary, the MAV is equal to:
|X|its value on the immediately preceding Business Day,
|X|plus any additional Purchase Payments received that day, and
|X|minus the percentage of any Contract Value withdrawn (prior to any
   MVA, but including any withdrawal charge) for each withdrawal you
   make that day.

On every Contract Anniversary prior to your 81st birthday, the MAV is equal to:
|X| the highest Contract Value that occurred on any Contract Anniversary,
|X| plus subsequent additional Purchase Payments you made since that Contract
    Anniversary, and minus the percentage of any Contract Value withdrawn (prior
    to any MVA, but including any withdrawal charge) for each withdrawal you
    made since that Contract Anniversary.

Beginning  with the  Contract  Anniversary  that  occurs  on or after  your 81st
birthday,  we  calculate  the MAV in the same way that we do on any Business Day
other than a Contract Anniversary.

Example:

o    You purchase the Contract with an initial  Purchase  Payment of $100,000 on
     Jan. 1, 2003. You allocate your entire  Purchase  Payment to the Investment
     Options and you make no additional Purchase Payments.
o    The MAV on the ninth Contract Anniversary is $180,000.
o    You take a partial  withdrawal  of $20,000  (this  includes the  withdrawal
     charge) in the tenth  Contract  Year when the Contract  Value (prior to the
     partial withdrawal) is $160,000. You take no other partial withdrawals.
o    The Contract  Value on the tenth Contract  Anniversary  is $140,000.  o You
     have  not  yet  reached  your  81st  birthday  as  of  the  tenth  Contract
     Anniversary.

On the tenth Contract Anniversary, the GMIB value is equal to the greater of:

 1) The 5% Annual Increase Amount:
    Purchase Payment made on Jan. 1, 2003                       $100,000.00
    Increased by 5% on the first Contract Anniversary             x   1.05
                                                                 ---------------
                                                                $105,000.00
   Increased by 5% on the second Contract Anniversary             x   1.05
                                                                 ---------------
                                                                $110,250.00
   Increased by 5% on the third Contract Anniversary              x     1.05
                                                                 ---------------
                                                                 $115,762.50

  On the ninth Contract Anniversary the
  5% Annual Increase Amount is                                   $155,132.82
  Minus the percentage of Contract Value
  withdrawn:   ($20,000 / $160,000) = 0.125 x $155,132.82 =     -  19,391.60
                                                                  ------------
                                                                  $135,741.22
  Increased by 5% on the tenth Contract Anniversary               x       1.05
                                                                  --------------
                                                                  $142,528.28
  Verifying that the 5% Annual Increase Amount is within the
  maximum limit:
      Two times Purchase Payments:    2 x $100,000 =              $200,000
      Minus the percentage of Contract Value
        withdrawn:   ($20,000 / $160,000) = 0.125 x $200,000 =    -   25,000
                                                                  ----------
                                                                   $175,000
2) The MAV:
      The MAV on the ninth Contract Anniversary                    $180,000
      Minus the percentage of Contract Value
        withdrawn:   ($20,000 / $160,000) = 0.125 x $180,000 =      -  22,500
                                                                       ---------
                                                                   $157,500

Therefore,  the  GMIB  value  on the  tenth  Contract  Anniversary  is  equal to
$157,500.

If the GMIB value is greater than your  Contract  Value on the Income Date,  you
might receive a higher  Annuity  Payment by using the GMIB value.  However,  the
guaranteed  fixed  payout  rates  available  with the GMIB  value  might be more
conservative  than the current fixed payout rates that are otherwise  available.
Therefore,  the Annuity  Payment you would receive by using the GMIB value might
be less than the payment  you would get using the  Contract  Value,  even if the
GMIB value is greater  than the Contract  Value.  We will use  whichever  amount
produces the greater Annuity Payment to calculate your payments.

3.PURCHASE
--------------------------------------------------------------------------------


Purchase Payments

A  Purchase  Payment  is  the  money  you  put  into  the  Contract  during  the
Accumulation Phase. The Purchase Payment requirements for this Contract are:

o    the minimum initial payment we will accept is $25,000.

o    the maximum  cumulative  amount we will accept without prior approval is $1
     million  (including amounts already invested in other Allianz Life variable
     annuities).

o    you can make  additional  Purchase  Payments  of $250 or more (or as low as
     $100 if you have selected the automatic investment plan).

We may, at our sole discretion, waive the minimum Purchase Payment requirements.
We reserve the right to decline any Purchase Payment. Both you and the Annuitant
must be under age 81 on the Issue Date to purchase this Contract.

This  Contract is not designed for  professional  market  timing  organizations,
other entities, or persons using programmed, large or frequent transfers.

When  available,  the  Contract  may be  used in  connection  with  certain  tax
qualified  retirement  plans.  The  Contract  includes  attributes  such  as tax
deferral on accumulated  earnings.  Qualified retirement plans provide their own
tax deferral benefit;  the purchase of this Contract does not provide additional
tax deferral benefits beyond those provided in the qualified plan.  Accordingly,
if you are purchasing the Contract through a qualified plan, you should consider
purchasing  this  Contract for its death  benefit and annuity  benefits.  Please
consult  a tax  adviser  for  information  specific  to  your  circumstances  to
determine whether the Contract is an appropriate investment for you.

Automatic Investment Plan

The  automatic  investment  plan  (AIP) is a  program  that  allows  you to make
additional Purchase Payments to your Contract on a monthly or quarterly basis by
electronic transfer of monies from your savings,  checking or brokerage account.
You may  participate  in this program by completing  the  appropriate  form. The
Service Center must receive your form by the first of the month in order for AIP
to begin that same month.  Investments will take place on the 20th of the month,
or the next  Business  Day.  The minimum  investment  that can be made by AIP is
$100.  You may stop or change  AIP at any time.  We need to be  notified  by the
first of the month in order to stop or change AIP that month. If AIP is used for
a Qualified  Contract,  you should consult your tax adviser for advice regarding
maximum contributions.

Allocation of Purchase Payments

When you purchase a Contract,  we will  allocate  your  Purchase  Payment to the
Investment Choices as you have selected.  We ask that you allocate your money in
either  whole  percentages  or  round  dollars.  Transfers  do  not  change  the
allocation  instructions  for  Purchase  Payments.  You can  instruct  us how to
allocate additional amounts. If you do not instruct us, we will allocate them in
the  same  way as your  most  recent  instructions  to us.  You may  change  the
allocation of future Purchase Payments without fee, penalty or other charge upon
written notice or telephone instructions to our Service Center. A change will be
effective for Purchase  Payments  received on or after we receive your notice or
instructions.

We reserve  the right to limit the  number of  Investment  Options  that you may
invest in at one time.  Currently  you may not invest in more than 20 Investment
Choices at any one time.  We may change  this in the  future.  However,  we will
always allow you to invest in at least five Investment Options.

Once we receive your initial Purchase Payment and the necessary information,  we
will issue your Contract and allocate  your first  Purchase  Payment  within two
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 five  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 regular trading on the New York Stock Exchange closes,  which is usually at
4:00 p.m. Eastern time.

TAX-FREE SECTION 1035 EXCHANGES

You  generally  can  exchange  one annuity  contract for another in a "tax-free"
exchange under Section 1035 of the Internal Revenue Code. You also can generally
exchange a life  insurance  product for an annuity  contract.  Before  making an
exchange,  you should  compare both  contracts  carefully.  Remember that if you
exchange a life insurance policy or annuity contract for the Contract  described
in this  prospectus:  you  might  have to pay a  withdrawal  charge  on your old
contract;  there will be a new  withdrawal  charge  period for the new contract;
other charges under the new Contract may be higher (or lower);  and the benefits
may be different.  If the exchange does not qualify for Section 1035  treatment,
you also may have to pay  federal  income  tax on the  exchange.  You should not
exchange an existing life insurance product or another annuity contract for this
one unless you determine that the exchange is in your best interest.

Free Look / right to examine

If you change your mind about owning the Contract,  you can cancel it within ten
days after receiving it (or the period required in your state).  When you cancel
the Contract  within this time period,  we will not assess a withdrawal  charge.
You will receive your Contract  Value as of 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 ten days after  receiving  it (or the period  required  in your
state).  If that is the case,  we reserve  the right to  allocate  your  initial
Purchase  Payment to the USAZ Money Market Fund for 15 days after we receive it.
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  Investment
Choices as you have selected on your application.  The free look provision under
the Contract is also called the right to examine.

Accumulation Units

Your Contract Value in the  subaccounts  (Separate  Account Value) will go up or
down based upon the  investment  performance  of the  Investment  Option(s)  you
choose. Your Contract Value will also depend on the charges of the Contract.  In
order to keep track of your Separate Account Value, we use a measurement  called
an  Accumulation  Unit (which is like a share of a mutual  fund).  If you select
variable  payouts during the Payout Phase of the Contract,  we call this measure
an Annuity Unit.

When you make a Purchase  Payment,  we credit your  Contract  with  Accumulation
Units for any  portion  of your  Purchase  Payment  allocated  to an  Investment
Option.  The  Purchase  Payments  you  allocate  to the  Investment  Options are
actually placed into  subaccounts.  Each subaccount  invests  exclusively in one
Investment  Option. We determine the number of Accumulation Units we credit your
Contract  with by dividing  the amount of the  Purchase  Payment  allocated to a
subaccount by the value of the corresponding Accumulation Unit.

Every  Business  Day, we determine  the value of an  Accumulation  Unit for each
subaccount by multiplying the Accumulation Unit value for the previous period by
the  net  investment  factor  for  the  current  period.  We  determine  the net
investment factor by:

o    dividing the value of a subaccount at the end of the current  period by the
     value of the subaccount for the previous period; and

o    multiplying it by one minus the amount of the M&E charge for the period and
     any charges for taxes.

We calculate the Separate Account Value by summing the value of the Accumulation
Units multiplied by the Accumulation  Unit value in each subaccount.  Therefore,
the  Separate  Account  Value will go up and down from  Business Day to Business
Day.

We calculate the value of each  Accumulation  Unit after regular  trading on the
New York Stock Exchange closes each Business Day.

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  Franklin  Growth and Income  Securities
Fund. 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 Franklin
Growth and Income Securities Fund 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
--------------------------------------------------------------------------------


The Contract offers the Investment  Options listed in the following table.  Each
Investment  Option has its own investment  objective.  In the future we may add,
eliminate or substitute Investment Options.

You should read the Investment  Option  prospectuses  carefully.  The Investment
Options invest in different  types of securities  and follow varying  investment
strategies.  There are potential  risks  associated  with each of these types of
securities  and  investment  strategies.  For example,  an  Investment  Option'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 an Investment Option with a small asset base. An
Investment Option may not experience similar performance as its assets grow. The
operation of the Investment  Options and the various risks  associated  with the
Investment  Options are  described in the  Investment  Option  prospectuses.  To
obtain  a  current  prospectus  for  any of the  Investment  Options  call  your
registered representative or us at the toll free phone number listed at the back
of this prospectus. We will send copies of the Investment Option prospectuses to
you with your Contract.

Certain Investment Options issue two or more classes of shares and certain share
classes may have Rule 12b-1 expenses. The classes of shares currently offered by
this  Contract  are  listed in fee table  section  of the  prospectus.  For more
information about share classes, see the Investment Option prospectuses.

The investment objectives and policies of certain Investment Options are similar
to the  investment  objectives  and policies of other  portfolios  that the same
investment advisers manage. Although the objectives and policies may be similar,
the investment results of the Investment Options may be higher or lower than the
results of such portfolios.  The investment advisers cannot guarantee,  and make
no  representation,  that  the  investment  results  of  similar  funds  will be
comparable even though the Investment Options have the same investment  advisers
and objectives.

We offer other variable annuity Contracts that may invest in the same Investment
Options.  These  Contracts may have  different  charges and may offer  different
benefits  more  suitable  to  your  needs.  For  more  information  about  these
contracts, please contact our Service Center.

The following is a list of the Investment  Options available under the Contract,
the  investment  advisers  and  sub-advisers  for each  Investment  Option,  the
investment  objectives for each Investment Option and the primary investments of
each Investment Option:










 <TABLE>
<CAPTION>
                                                     INVESTMENT OPTIONS
------------------------------------------------------------------------------------------------------------------------------------
                                                      ASSET CATEGORIES
                                             -----------------------------------
<S>                        <C>                <C> <C><C> <C> <C> <C>  <C><C><C><C>  <C>                   <C>

Investment Management      Investment         SB  S  CE  IT  HB  IE   L  L  S  M    Objective(s)          Primary Investments
Company                    Option             ho  p  aq  ne  io  nq   a  a  m  i
----------------------                        on  e  su  tr  gn  tu   r  r  a  d
                                              rd  c  hi  em  hd  ei   g  g  l
   Adviser/Sub-Adviser                        ts  i   v  r    s  rt   e  e  l  C
                                              -   a   a  mB  Y   ny            a
                                              T   l   l  eo  i   a    V  G  C  p
                                              e   t   e  dn  e   t    a  r  a
                                              r   y   n  id  l   i    l  o  p
                                              m       t  as  d   o    u  w
                                                         t       n    e  t
                                                         e       a       h
                                                                 l
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
AIM                     USAZ AIM Basic Value                         X            Long-term growth of   At least 65% of total assets
o  managed by           Fund                                                      capital               in equity securities of U.S.
   USAllianz Advisers,                                                                                  issuers that have market
   LLC/ A I M Advisors,                                                                                 capitalizations of greater
   Inc.                                                                                                 than $500 million and that
                                                                                                        the portfolio managers
                                                                                                        believe to be undervalued
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        USAZ AIM Blue Chip                           X            Long-term growth of   At least 65% of total assets
                        Fund                                                      capital with a        in the common stocks of blue
                                                                                  secondary objective   chip companies
                                                                                  of current income
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------


                        USAZ AIM Dent                                   X         Long-term growth of   Investment in securities of
                        Demographic Trends                                        capital               companies that are likely to
                        Fund                                                                            benefit from changing
                                                                                                        demographic, economic and
                                                                                                        lifestyle trends. May invest
                                                                                                        up to 25% of total assets in
                                                                                                        foreign securities of which
                                                                                                        no more than 15% of its
                                                                                                        total assets may be invested
                                                                                                        in securities of companies
                                                                                                        domiciled in developing
                                                                                                        countries.

                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        USAZ AIM                                  X               Long-term growth of   At least 70% of net assets
                        International Equity                                      capital               in marketable equity
                        Fund                                                                            securities of foreign
                                                                                                        companies that are listed on
                                                                                                        a recognized foreign
                                                                                                        securities exchange or
                                                                                                        traded in a foreign
                                                                                                        over-the-counter market


----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
ALLIANCE CAPITAL        USAZ Alliance Capital                        X            Income and long-term  At least 65% in dividend
o  managed by USAllianz Growth and Income                                         growth of capital     paying stocks of large
   Advisers, LLC/       Fund                                                                            well-established "blue
   Alliance Capital                                                                                     chip" companies
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        USAZ Alliance  Capital                          X         Long-term growth of   At least 80% of net assets
                        Large Cap Growth Fund                                     capital               in equity securities of U.S.
                                                                                                        companies judged by adviser
                                                                                                        likely to achieve superior
                                                                                                        earnings growth.
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        USAZ Alliance Capital     X                               Superior long-term    At least 80% of assets in
                        Technology Fund                                           growth of capital     securities of companies
                                                                                                        involved with innovative
                                                                                                        technologies
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
DAVIS                   Davis VA Financial        X                               Growth of capital     At least 65% in common stock
o  managed by Davis     Portfolio                                                                       of companies "principally
   Advisors                                                                                             engaged" in financial
                                                                                                        services
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Davis VA  Value                              X            Growth of capital     Common stock of U.S.
                        Portfolio                                                                       companies with market
                                                                                                        capitalizations of at
                                                                                                        least $5 billion, which
                                                                                                        adviser 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
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
DREYFUS                 Dreyfus Small Cap                                  X      Match performance     Invests in a representative
o  managed by The       Stock Index Fund                                          of the Standard &     sample of stocks included in
   Dreyfus Corporation                                                            Poor's Small Cap      the S&P Small Cap 600 Index,
                                                                                  600 Index             and in futures whose
                                                                                                        performance is related to
                                                                                                        the index, rather than
                                                                                                        attempt to replicate the
                                                                                                        index
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Dreyfus Stock Index                             X         Match total return    Invests in all 500 stocks in
                        Fund                                                      of the S&P 500        the S&P 500 in proportion to
                                                                                  Composite Stock       their weighting in the index
                                                                                  Price Index
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
FRANKLIN TEMPLETON      Franklin Global           X                               Capital               At least 80% of net assets
o  managed by           Communications                                            appreciation and      in investments of
   Franklin             Securities Fund                                           current income        communications companies
   Advisers, Inc.
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Franklin Growth and                          X            Capital               At least 65% of total assets
                        Income Securities Fund                                    appreciation, with    in broadly diversified
                                                                                  current income as a   portfolio of equity
                                                                                  secondary goal        securities the adviser
                                                                                                        considers financially
                                                                                                        strong, but undervalued by
                                                                                                        the market
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Franklin High Income                  X                   High level of         At least 65% of total assets
                        Fund                                                      current income;       in debt securities offering
                                                                                  secondary goal is     high yield and expected
                                                                                  capital appreciation  total return
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Franklin Income                       X                   Maximize income       Investment in debt and
                        Securities Fund                                           while maintaining     equity securities, including
                                                                                  prospects for         high yield, lower-rated
                                                                                  capital appreciation  bonds
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Franklin Large Cap                              X         Capital appreciation  At least 80% of net assets
                        Growth Securities Fund                                                          in investments of large
                                                                                                        capitalization companies.
                                                                                                        For this Fund, large
                                                                                                        capitalization companies are
                                                                                                        those with market
                                                                                                        capitalization values within
                                                                                                        the top 50% of market
                                                                                                        capitalization values in the
                                                                                                        Russell 1000 Index at the
                                                                                                        time of purchase
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Franklin Real Estate      X                               Capital               At least 80% of net assets
                        Fund                                                      appreciation;         in investment of companies
                                                                                  secondary emphasis    operating in the real estate
                                                                                  on current income     sector
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by Franklin  Franklin Rising                                        X  Long-term capital     At least 80% of net assets
   Advisory             Dividends Securities                                      appreciation; while   in investments of companies
   Services, LLC        Fund                                                      not a goal, capital   that have paid rising
                                                                                  preservation is a     dividends
                                                                                  secondary
                                                                                  consideration
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by           Franklin Small Cap                                 X      Long-term capital     At least 80% of net assets
   Franklin             Fund                                                      growth                in investments of small
   Advisers, Inc.                                                                                       capitalization companies.
                                                                                                        For this Fund, small
                                                                                                        capitalization companies are
                                                                                                        those with market
                                                                                                        capitalization values not
                                                                                                        exceeding (i) $1.5 billion;
                                                                                                        or (ii) the highest market
                                                                                                        capitalization values in the
                                                                                                        Russell 2000 Index;
                                                                                                        whichever is greater at the
                                                                                                        time of purchase
----------------------  --------------------  --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by Franklin  Franklin Small Cap                                 X      Long term total       At least 80% of net assets
   Advisory             Value Securities Fund                                     return                in investments of small
   Services, LLC                                                                                        capitalization companies.
                                                                                                        For this Fund, small
                                                                                                        capitalization companies are
                                                                                                        those with market
                                                                                                        capitalization values not
                                                                                                        exceeding $2.5 billion in
                                                                                                        assets. The Fund invests in
                                                                                                        equity securities of
                                                                                                        companies the adviser
                                                                                                        believes are undervalued
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by Franklin  Franklin U.S.          X                                  Income                At least 80% of its net
       Advisers, Inc.   Government Fund                                                                 assets in U.S. government
                                                                                                        securities. The Fund
                                                                                                        currently invests primarily
                                                                                                        in fixed and variable rate
                                                                                                        mortgage-backed securities
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Franklin Zero Coupon              X                       As high an            At least 80% of net assets
                        Fund 2005                                                 investment return     in zero coupon debt
                                                                                  as is consistent      securities. The Fund invests
                                                                                  with capital          primarily in U.S. Treasury
                                                                                  preservation          issued stripped securities
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Franklin Zero Coupon              X                       As high an            At least 80% of net assets
                        Fund 2010                                                 investment return     in zero coupon debt
                                                                                  as is consistent      securities. The Fund invests
                                                                                  with capital          primarily in U.S. Treasury
                                                                                  preservation          issued stripped securities
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by Franklin  Mutual Discovery                          X               Capital appreciation  At least 65% of total assets
   Mutual               Securities Fund                                                                 in equity securities of
   Advisers, LLC                                                                                        companies of any nation the
                                                                                                        adviser believes are
                                                                                                        available at market prices
                                                                                                        less than their value, based
                                                                                                        on certain recognized or
                                                                                                        objective criteria
                                                                                                        (intrinsic value)
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Mutual Shares                                          X  Capital               At least 65% of total assets
                        Securities Fund                                           appreciation, with    in equity securities of
                                                                                  income as a           companies the adviser
                                                                                  secondary goal        believes are available at
                                                                                                        market prices less than
                                                                                                        their value, based on
                                                                                                        certain recognized or
                                                                                                        objective criteria
                                                                                                        (intrinsic value)
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by           Templeton Developing      X                               Long-term capital     At least 80% of net assets
   Templeton  Asset     Markets Securities                                        appreciation          in emerging market
   Management, Ltd.     Fund                                                                            investments, typically
                                                                                                        located in the Asia-Pacific
                                                                                                        region, Eastern Europe,
                                                                                                        Central and South America,
                                                                                                        and Africa
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by Templeton  Templeton Foreign                        X               Long-term capital     At least 80% of net asets in
   Investment            Securities Fund                                          growth                investments of issuers
   Counsel, LLC                                                                                         outside the U.S., including
                                                                                                        emerging markets
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by           Templeton Growth                          X               Long-term capital     At least 65% of total assets
   Templeton            Securities Fund                                           growth                in the equity securities of
   Global  Advisors                                                                                     companies located anywhere
   Limited                                                                                              in the world, including
                                                                                                        those in the U.S. and
                                                                                                        emerging markets
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by           USAZ Templeton                            X               Long-term capital     At least 80% of net assets
   USAllianz            Developed Markets Fund                                    appreciation          in equity securities of
   Advisers, LLC/                                                                                       companies located in any
   Templeton                                                                                            developed country outside
   Investment                                                                                           the U.S., with particular
   Counsel, LLC                                                                                         areas of interest in Western
                                                                                                        Europe, Australia, Canada
                                                                                                        New Zealand, Hong Kong,
                                                                                                        Japan, Bermuda and Singapore
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
JENNISON                Jennison 20/20 Focus                            X         Long-term growth of   Invests in up to 20 value
o  managed by           Portfolio                                                 capital               stocks and 20 growth stocks
   Prudential                                                                                           of mid-to-large size U.S.
   Investments Fund                                                                                     companies
   Management
   LLC/Jennison
   Associates, LLC
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        SP Jennison                               X               Long-term growth of   Equity-related securities of
                        International Growth                                      capital               foreign issuers
                        Portfolio
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        SP Strategic Partners                           X         Long-term growth of   At least 65% of total assets
                        Focused Growth                                            capital               in equity-related securities
                        Portfolio                                                                       of U.S. companies that the
                                                                                                        adviser believes to have
                                                                                                        strong capital appreciation
                                                                                                        potential
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
OPPENHEIMER             Oppenheimer Global                       X                Long-term capital     Securities - mainly common
o  managed by           Securities Fund/VA                                        appreciation          stocks, but also other
   Oppenheimer Funds,                                                                                   equity securities including
   Inc.                                                                                                 preferred stocks and
                                                                                                        securities convertible
                                                                                                        into common stock-of
                                                                                                        foreign issuers,
                                                                                                        "growth-type" companies,
                                                                                                        cyclical industries and
                                                                                                        special situations the
                                                                                                        adviser believes offer
                                                                                                        appreciation possibilities
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Oppenheimer High                     X                   High level of         High-yield fixed-income
                        Income Fund/VA                                            current income        securities of domestic and
                                                                                                        foreign issuers
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        Oppenheimer Main                            X            High total return     Common stocks of U.S.
                        Street Growth &                                           (which includes       companies; other equity
                        Income Fund/VA                                            growth in the value   securities -- such as
                                                                                  of its shares as      preferred stocks and
                                                                                  well as current       securities convertible into
                                                                                  income)               common stocks; debt
                                                                                                        securities
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by           USAZ Oppenheimer                                   X      Capital appreciation  Invests in companies that
   USAllianz Advisers,  Emerging Growth Fund                                                            have the potential to become
   LLC/Oppenheimer                                                                                      leaders in new emerging
   Funds, Inc.                                                                                          markets
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
PIMCO                   PIMCO VIT High Yield                  X                   Maximum total         At least 80% of assets in
o  managed by Pacific   Portfolio                                                 return, consistent    high-yield securities ("junk
   Investment                                                                     with preservation     bonds") rated below
   Management Company                                                             of capital and        investment grade, but at
   LLC                                                                            prudent investment    least "B" by Moody's or S&P
                                                                                  management
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        PIMCO VIT StocksPLUS                            X         Total return          Substantially in S&P 500
                        Growth and Income                                         exceeding that of     derivatives, backed by a
                        Portfolio                                                 the S&P 500           portfolio of fixed income
                                                                                                        instruments
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        PIMCO VIT Total                   X                       Maximum total         At least 65% of assets in
                        Return Portfolio                                          return, consistent    fixed income instruments of
                                                                                  with preservation     varying maturities
                                                                                  of capital and
                                                                                  prudent investment
                                                                                  management
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by           USAZ PIMCO Growth &                          X            Long-term growth of   At least 65% of its total
   USAllianz Advisers,  Income Fund                                               capital ; secondary   assets in common stocks of
   LLC/ Allianz                                                                   emphasis on income    companies with market
   Dresdner Asset                                                                                       capitalizations of more than
   Management of                                                                                        $1 billion at the time of
   America L.P.                                                                                         investment
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        USAZ PIMCO                                             X  Long-term growth of   At least 65% of total assets
                        Renaissance Fund                                          capital and income    in common stocks of
                                                                                                        companies with below-average
                                                                                                        valuations whose business
                                                                                                        fundamentals are expected to
                                                                                                        improve
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        USAZ PIMCO Value Fund                        X            Long-term growth of   At least 65% of its total
                                                                                  capital and income    assets in common stocks of
                                                                                                        companies with market
                                                                                                        capitalizations of more than
                                                                                                        $5 billion at the time of
                                                                                                        investment
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------


SELIGMAN                Seligman Small-Cap                                 X      Long-term capital     At least 80% of net assets
o  managed by J. & W.   Value Portfolio                                           appreciation          in common stocks of "value"
   Seligman & Co.                                                                                       companies with small market
   Incorporated                                                                                         capitalization (up to $2
                                                                                                        billion) at the time of
                                                                                                        purchase by the portfolio
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
USAZ                    USAZ Money Market Fund        X                           Current income        At least 80% of total assets
o  managed by USAllianz                                                           consistent with       in portfolio of high
   Advisers, LLC/                                                                  stability of         quality, money market
   Allianz of America,                                                             principal            investments
   Inc.
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
VAN KAMPEN              USAZ Van Kampen                                        X  Capital growth        At least 65% of total assets
o  managed by USAllianz Aggressive Growth Fund                                                          in common stocks and other
   Advisers, LLC/Van                                                                                    equity securities the
   Kampen Investment                                                                                    adviser believes have an
   Advisory Corp.                                                                                       above-average potential for
                                                                                                        capital growth
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by USAllianz USAZ Van Kampen                              X            Capital growth and    Invests primarily
   Advisers, LLC/Van    Comstock Fund                                             income                in common stocks
   Kampen Asset
   Management Inc.
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        USAZ Van Kampen                                 X         Capital               Invests primarily
                        Emerging Growth Fund                                      appreciation          in portfolios of common
                                                                                                        stocks of emerging growth
                                                                                                        companies
                        --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
                        USAZ Van Kampen                              X            Income and            Invests primarily
                        Growth and Income Fund                                    long-term growth of   in income-producing
                                                                                  capital               equity securities, including
                                                                                                        common stocks and
                                                                                                        convertible securities; also
                                                                                                        in non-convertible preferred
                                                                                                        stocks and debt securities
                                                                                                        rated "investment grade"
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
o  managed by USAllianz USAZ Van Kampen                                        X  Capital growth        Invests primarily
   Advisers, LLC/Van    Growth Fund                                                                     in common stocks and other
   Kampen Investment                                                                                    equity securities of growth
   Advisory Corp.                                                                                       companies; also in preferred
                                                                                                        stocks and securities
                                                                                                        convertible into common
                                                                                                        stocks or other equity
                                                                                                        securities
----------------------  --------------------- --- -- --- --- --- --- -- -- -- --  ------------------- ------------------------------
</TABLE>


<PAGE>


Shares of the  Investment  Options  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  Investment  Options may also be sold directly to pension and retirement
plans that qualify under Section 401 of the Internal  Revenue Code. As a result,
a material conflict of interest may arise between insurance companies, owners of
different types of contracts and retirement  plans or their  participants.  Each
Investment  Option's  Board of Directors  will monitor for the  existence of any
material conflicts, and determine what action, if any, should be taken.

We may  enter  into  certain  arrangements  under  which  we,  or our  affiliate
USAllianz Investor Services,  LLC, the principal  underwriter for the Contracts,
is  compensated  by  the  Investment  Options'  advisers,   distributors  and/or
affiliates for the administrative services and benefits which it provides to the
Investment  Options.  The  amount of the  compensation  usually  is based on the
aggregate assets of the Investment  Options or other investment  portfolios from
Contracts  that we issue or  administer.  Some  advisers may pay us more or less
than others. The amounts we receive under these arrangements may be significant.
In addition,  our affiliate USAllianz Investor Services,  LLC, may receive 12b-1
fees deducted from certain Investment Option assets attributable to the Contract
for providing  distribution  and support  services to some  Investment  Options.
Because 12b-1 fees are paid out of an Investment  Option's  assets on an ongoing
basis,  over time they will increase the cost of an investment in the Investment
Option.

substitution and limitation on further investments

We may substitute  another  Investment Option for one of the Investment  Options
you  have  selected.   Substitutions  may  be  made  with  respect  to  existing
investments,  the  investment  of  future  Purchase  Payments,  or both.  New or
substitute  Investment  Options may have different fees and expenses,  and their
availability may be limited to certain classes of purchasers.  We also may close
Investment  Options to allocations of Purchase  Payments or Contract  Value,  or
both, at any time and at our sole discretion. The Investment Options, which sell
shares of the Investment Options to us pursuant to participation agreements, may
terminate those  agreements and discontinue  offering their shares to us. We may
not  substitute  any shares without notice to you and prior approval of the SEC,
to the extent required by the Investment Company Act of 1940 or other applicable
law.

Transfers

You  can  make  transfers  among  the  Investment  Choices  subject  to  certain
restrictions.  Transfers may be subject to a transfer fee. This fee is currently
$25 for each transfer in excess of 12 in a Contract Year. We currently allow you
to make as many  transfers as you want to each Contract Year. We 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 an Investment Option. We
reserve the right to reject any specific Purchase Payment allocation or transfer
request  from any  person,  if in the  investment  adviser's  or Allianz  Life's
judgment,  an  Investment  Option  would be  unable  to  invest  effectively  in
accordance with its investment objectives and policies.  Excess trading activity
can disrupt management  strategy and increase  expenses,  which are borne by all
Contract  Owners  who  allocated  Purchase  Payments  or made  transfers  to the
Investment  Option,  regardless of their activity.  There is no minimum required
transfer amount.

The following applies to any transfer:

1.   We may choose not to allow you to make transfers during the free look/right
     to examine period.

2.   Your request for a transfer must clearly state:

|X|      which Investment Choices are involved in the transfer; and

|X|      how much the transfer is for.

3.   Transfers from a Fixed Account Investment Choice may be subject to a MVA.

4.   We require a minimum  time period  between  transfers  involving  the _____
     Investment Option. If you make a transfer out of this Investment Option you
     must wait ____ days to transfer back in.

[WE WILL UPDATE THIS INFORMATION UPON AMENDMENT.]

5.   You cannot make any  transfers  within  seven  calendar  days prior to your
     Income Date.

6.   After the  Income  Date,  you may not make a transfer  from a fixed  payout
     Annuity Option to a variable payout Annuity Option.

7.   After the Income Date, you can make transfers from a variable payout
     Annuity Option to a fixed payout Annuity Option.

8.   Your right to make transfers is subject to modification if we determine, in
     our sole  discretion,  that  exercising  the right by one or more  Contract
     Owners is, or would be, to the  disadvantage of other Contract  Owners.  We
     may apply restrictions 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.  The  modifications  that we could apply to transfers may
     include, but is not limited to:

o    requiring a minimum time period between each transfer;

o    not accepting a transfer  request from a registered  representative  acting
     under telephone authorization on behalf of more than one Contract Owner; or

o    limiting the dollar amount that you may transfer at any one time.

If we reject a transfer request, 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 we reject the transfer, we will
send you a written notification within five Business Days.

We reserve the right to modify the transfer provisions subject to the guarantees
described  above and subject to  applicable  state law at any time without prior
notice to any party.

Telephone Transfers. You can make transfers by telephone or by fax. We may allow
you to  authorize  someone  else to make  transfers  by telephone or fax on your
behalf.  We will accept  instructions from either you or a Joint Owner unless we
are  instructed  otherwise.  We will use  reasonable  procedures to confirm that
instructions  given  us  by  telephone  are  genuine.  If  we do  not  use  such
procedures,  we may be liable for any losses due to  unauthorized  or fraudulent
instructions. We tape record all telephone instructions. We reserve the right to
discontinue or modify the telephone/fax  transfer  privilege at any time and for
any reason.

We do not currently accept transfer  instructions via e-mail, web site, or other
electronic communications. This service may be available in the future.

Please note that telephone, fax and/or electronic  communications may not always
be available.  Any telephone,  fax and/or computer  system,  whether it is ours,
yours,  your  service  provider's,  or  your  registered  representative's,  can
experience  outages or  slowdowns  for a variety of  reasons.  These  outages or
slowdowns may delay or prevent our processing of your request.  Although we have
taken  precautions  to help our  systems  handle  heavy use,  we cannot  promise
complete reliability under all circumstances.  If you are experiencing problems,
you should make your transfer by writing to our Service Center.

Excessive  Trading.  We may allow you to give third  parties the right to effect
transfers on your behalf. However, when the same third party makes transfers for
multiple  Contract Owners,  the result can be simultaneous  transfers  involving
large  amounts of  Contract  Value.  Such  transfers  can  disrupt  the  orderly
management  of the  Investment  Options,  can result in higher costs to Contract
Owners,  and generally are not compatible with the long-range  goals of Contract
Owners.  We believe  that such  simultaneous  transfers  effected  by such third
parties  may  not be in the  best  interests  of all  Contract  holders  and the
management of the  Investment  Options share this  position.  Therefore,  we may
place  restrictions  designed  to prevent  any use of a transfer  right which we
consider to be to the disadvantage of the Contract Owners.

Dollar Cost Averaging (DCA) Program

The DCA program allows you to systematically transfer a set amount of money each
month or quarter from any one Investment Option to other Investment Options. The
Investment  Option(s) you transfer from may not be the Investment  Option(s) you
transfer to in this  program.  You cannot DCA to or from the Fixed  Account.  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.

Generally,  the DCA  program  requires a minimum  participation  of at least six
months. You must have a $1,500 minimum allocation to participate in the program.

All DCA transfers will be made on the tenth 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 can elect this program by properly completing the DCA form
provided by us. Your participation in the program will end when any of the
following occurs:

o    the number of desired transfers has been made;

o    you do not  have  enough  money  in the  Investment  Option(s)  to make the
     transfer (if less money is available,  that amount will be transferred  and
     the program will end);

o    you request to terminate  the program (your request must be received at the
     Service Center by the first of the month to terminate that month); or

o   the Contract is terminated.

If you participate in the DCA program,  the transfers made under the program are
not currently  taken into account in determining  any transfer fee, and you will
not be charged additional fees for participating in this program. We reserve the
right to discontinue or modify the DCA program at any time and for any reason.

Flexible Rebalancing

You may  choose to have us  rebalance  you  account.  Once  your  money has been
invested,  the  performance  of the  Investment  Options  may cause your  chosen
allocation to shift.  Flexible rebalancing is designed to help you maintain your
specified  allocation  mix among the  different  Investment  Options.  The Fixed
Account is not part of the flexible  rebalancing  program.  You can direct us to
automatically  readjust  your  Contract  Value in the  Investment  Options  on a
quarterly,  semi-annual  or annual basis to return to your  selected  Investment
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 the
flexible  rebalancing  program,  the  transfers  made under the  program are not
currently  taken into account in determining  any transfer fee, and you will not
be charged  additional fees for  participation  in this program.  We reserve the
right to discontinue or modify the flexible  rebalancing program at any time and
for any reason.  To terminate your  participation in this program,  your request
must be received at the Service  Center by the eighth of the month to  terminate
that month.

Financial Advisers - Asset Allocation Programs

If you have or establish a relationship  with a personal  financial  adviser and
the  advisory  agreement  provides  that you will pay all or a  portion  of your
adviser's fees out of your Contract,  we will, pursuant to written  instructions
from you in a form acceptable to us, make a partial withdrawal from the value of
your Contract to pay for the services of the financial adviser.  Any fee that is
withdrawn will be treated as a withdrawal  under the terms of this Contract.  If
the Contract is  Non-Qualified,  the  withdrawal  will be treated like any other
distribution  and may be included in your 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 financial adviser fees
from your Contract.

We do not set the amount of the fees  charged or receive any portion of the fees
from the adviser.  We do not review or approve the actions of any  adviser,  and
does not assume any responsibility for these actions.



Voting Privileges

We are the  legal  owner  of the  Investment  Option  shares.  However,  when an
Investment  Option solicits proxies in conjunction with a shareholder vote which
affects your  investment,  we 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 we own on our own behalf.
Should we determine that it is no longer  required to comply with the above,  we
will vote the shares in our own right.


5.THE FIXED ACCOUNT
--------------------------------------------------------------------------------


We do not  currently  offer any  Investment  Choices  under  the Fixed  Account.
However,  we may change the terms of the Fixed  Account  in the  future-  please
contact us for the most current terms.

Any amounts that you allocate to an available Fixed Account Investment Choice or
a fixed Annuity  Payment become part of the Fixed Account,  which is part of our
general  account.  All assets in our general  account are subject to the general
liabilities of our business  operations.  Interests in the general  account have
not been  registered  under the  Securities  Act of 1933 (1933 Act),  nor is the
general account registered as an investment company under the Investment Company
Act of 1940, as amended (1940 Act). Accordingly, neither the general account nor
any interests in the general  account are subject to the  provisions of the 1933
Act or the 1940  Act.  We have  been  advised  that the staff of the SEC has not
reviewed the disclosure in this prospectus that relates to the Fixed Account.


6.EXPENSES
--------------------------------------------------------------------------------


There are charges and other  expenses  associated  with the  Contract  that will
reduce your investment return. These charges and expenses are listed below.

Mortality and Expense Risk (M&E) Charge.

Each Business Day during the  Accumulation  Phase, we make a deduction from your
Separate  Account assets for M&E charges.  We do this as part of our calculation
of the value of the Accumulation  Units and the Annuity Units. The amount of the
M&E charge  depends on the benefit  options  that apply.  We  calculate  the M&E
charges as a percentage of the average daily assets  invested in a subaccount on
an annual basis.

                          Total M&E Charge            Total M&E Charge
                          Without the GMIB              With the GMIB
Traditional GMDB                1.75%                       2.20%
EP GMDB                         2.05%                       2.40%
Enhanced GMDB                   2.05%                       2.40%


During the Payout Phase, the M&E charge is 1.75% of the average daily assets
invested in a subaccount on an annual basis.

This charge compensates us for all the insurance benefits provided by your
Contract, for example:
|X| our contractual obligation to make Annuity Payments,
|X| the death benefits,
|X| certain expenses related to the Contract, and
|X|for assuming the risk (expense risk) that the current charges will be
   insufficient in the future to cover the cost of administering the Contract.
|X|
If the M&E charges are sufficient to cover such costs and risks, any excess will
be profit  to us.  We  anticipate  making  such a profit,  and using it to cover
distribution  expenses as well as the cost of providing  certain  features under
the Contract.

Contract Maintenance Charge

On each  Contract  Anniversary,  we  deduct  $50  from the  Contract  Value 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 Investment  Options* in
which  you are  invested,  assuming  there  is at  least  $50 in the  Investment
Options.  The  charge  is  for  administrative  expenses.  If  you  make  a full
withdrawal from your Contract on a date other than on a Contract Anniversary, we
will deduct the full contract  maintenance  charge.  During the Payout Phase, we
will collect the charge monthly out of each Annuity Payment.

We will not deduct the charge if your Contract  Value is at least $75,000 at the
time we are to deduct  the  charge.  If you own more than one  Contract  offered
under this prospectus,  we 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 $75,000, we will not assess the contract maintenance charge.

*  If  the  Separate  Account  Value  is  insufficient  to  cover  the  contract
maintenance  charge we will deduct the remaining charge from any available Fixed
Account Value.

Withdrawal charge

During the Accumulation  Phase,  you can make withdrawals from your Contract.  A
withdrawal  charge  applies  if all or  part  of the  amount  withdrawn  is from
Purchase Payments we received within two years before the withdrawal.

For purposes of calculating any withdrawal charge, we withdraw Purchase Payments
on a  "first-in-first-out"  (FIFO) basis.  We treat amounts  withdrawn from your
Contract in the following order:

1.   First,  we withdraw any Purchase  Payments  that are beyond the  withdrawal
     charge period shown in your Contract (i.e.  Purchase  Payments that are two
     or more years old). We do not assess a withdrawal  charge on these Purchase
     Payments.

2.   Next, we withdraw  Purchase  Payments that are within the withdrawal charge
     period shown in your  Contract.  We do assess a withdrawal  charge on these
     payments. However, withdrawing payments on a FIFO basis may help reduce the
     amount of the total  withdrawal  charge you will pay because the withdrawal
     charge  declines over time. We determine  your total  withdrawal  charge by
     multiplying  each of these  payments by the  applicable  withdrawal  charge
     percentage and then totaling the charges.

3.   Finally,  we withdraw any Contract earnings.  We do not assess a withdrawal
     charge on Contract earnings.

We keep track of each Purchase Payment you make and the amount of the withdrawal
charge depends upon the length of time since you made your Purchase Payment. The
charge as a percentage of each Purchase Payment withdrawn is:

                           Number of Complete Years
                       Since Receipt of Purchase Payment        Charge
                       ---------------------------------        ------
                                     0                            8%
                                     1                            7%
                                   2 or more                      0%

This  means  that on the  first  anniversary  of the date  you  make a  Purchase
Payment,  your  withdrawal  charge for that  Purchase  Payment  would be 7%. The
amount we actually deduct from your Contract will be the amount you request plus
any applicable  withdrawal  charge. We apply the withdrawal charge to this total
amount and we pay you the amount you requested.

Example:  Assume  you  purchase  a  Contract  on Jan.  01,  2003 and you make no
additional  Purchase Payments.  You request to take $1,000 from your Contract on
Jan.  01,  2004 of $1,000  and  there is a  withdrawal  charge of 7%.  The total
partial withdrawal amount we actually deduct from your Contract is $1,075.27. We
determine this amount as follows:

   amount requested             or      $1,000         =      $1,075.27
------------------------                ------
1  -  withdrawal charge                  0.93

After we have had a Purchase Payment for two full years,  there is no withdrawal
charge if you withdraw that Purchase Payment. We calculate the withdrawal charge
at the time of withdrawal.  For partial  withdrawals,  we deduct the charge from
the  remaining  Contract  Value and we  deduct  it pro rata from the  Investment
Option(s).  We do not  assess the  withdrawal  charge  for  amounts  paid out as
Annuity  Payments or death benefits.  The withdrawal  charge  compensates us 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.

Reduction or Elimination of the  Withdrawal  Charge.  We may reduce or eliminate
the  amount  of  the   withdrawal   charge  when  the  Contract  is  sold  under
circumstances  that reduce its sales expenses.  Some examples are: if there is a
large  group  of  individuals  that  will be  purchasing  the  Contract  or if a
prospective  purchaser  already had a relationship with us. We may choose not to
deduct a withdrawal  charge under a Contract  issued to an officer,  director or
employee of Allianz Life or any of its affiliates.  Also, we may reduce or waive
the  withdrawal  charge when a Contract is sold by a  registered  representative
appointed  with 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 variable payouts under Annuity Option 2 or 4 and make a Liquidation
(which  is  allowed  five  years  after  the  Income  Date),  we will  assess  a
commutation  fee. The fee is a percentage of the amount  liquidated and is equal
to:

                           Number of Complete Years
                               Since Income Date                Charge
                               -----------------                ------
                                     5                            4%
                                     6                            3%
                                     7                            2%
                                   8 or more                      1%

In some states,  the  commutation fee during the Payout Phase is replaced with a
charge equal to the  difference of the present  value of the  remaining  Annuity
Payments in the guaranteed period at the AIR and the AIR plus 1%.

Transfer Fee

You can currently make 12 free  transfers  every Contract Year. If you make more
than 12 transfers in a Contract  Year,  we will deduct a transfer fee of $25 for
each additional transfer. Allianz Life reserves the right to restrict the number
of transfers to 12 transfers  per Contract Year and reserves the right to charge
for any  transfer.  We will deduct the transfer fee from the  Investment  Choice
from which the  transfer  is made.  If you  transfer  the  entire  amount in the
Investment  Choice,  then we will  deduct  the  transfer  fee  from  the  amount
transferred.  If you are transferring from multiple  Investment Choices, we will
treat the  transfer as a single  transfer  and we will deduct any  transfer  fee
proportionally  from the source  accounts if you  transfer  less than the entire
amount in the accounts.  If the transfer is part of the dollar cost averaging or
flexible rebalancing programs, it will not currently count toward the limitation
on transfers in determining the transfer fee.

Premium taxes

Some  states  and other  governmental  entities  (e.g.,  municipalities)  charge
premium  taxes or similar  taxes.  We are  responsible  for the payment of these
taxes. We will make a deduction from your Contract Value for them. Some of these
taxes are due on the Issue Date,  others are due on the Income  Date.  It is our
current practice to not charge you for these taxes until Annuity Payments begin,
you make a full withdrawal or you die. We 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, depending on the state.

Income Taxes

We reserve the right to deduct from the  Contract  any income  taxes that it may
incur because of the Contract. Currently, we are not making any such deductions.

Investment Option Expenses

There are  deductions  from the assets of the  various  Investment  Options  for
operating  expenses  (including  management fees) which are described in the fee
tables in this prospectus and the prospectuses for the Investment Options.


7.TAXES
--------------------------------------------------------------------------------


NOTE:  We  have  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.  We have 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).

Qualified Contracts

If you purchase the Contract under a Qualified  plan,  your Contract is referred
to as a Qualified  Contract.  The Contract is available as one of the  following
types of individual retirement annuities:

o    Traditional Individual Retirement Annuity.  Section 408 of the Code permits
     eligible  individuals to maintain Individual  Retirement  Annuities (IRAs).
     IRA  contributions  are limited each year to the lesser of a dollar  amount
     specified in the Code or 100% of the amount of compensation included in the
     Contract Owner's income. The limit on the amount contributed to an IRA does
     not apply to distributions from certain other types of qualified plans that
     are "rolled  over" on a  tax-deferred  basis into an IRA.  Purchasers  of a
     Contract  for use with IRAs will  have the right to revoke  their  purchase
     within  7 days of the  earlier  of the  establishment  of the IRA or  their
     purchase.

o    Simplified  Employee Pension (SEP) IRA. Employers may establish  Simplified
     Employee  Pension  (SEP)  IRAs  under Code  section  408(k) to provide  IRA
     contributions  on  behalf of their  employees.  In  addition  to all of the
     general  rules  governing  IRAs,  such  plans  are  subject  to  additional
     requirements and different contribution limits.

o    Roth IRA. Section 408A of the Code permits certain eligible  individuals to
     contribute to a Roth IRA. Contributions to a Roth IRA are limited each year
     to the  lesser  of a  dollar  amount  specified  in the Code or 100% of the
     amount of compensation  included in the Contract Owner's income and must be
     made in cash or as a rollover or transfer  from  another  Roth IRA or other
     IRA.  Distributions from a Roth IRA generally are not taxed until after the
     total amount  distributed from the Roth IRA exceeds the amount  contributed
     to the Roth IRA. After that,  income tax and a 10% penalty tax may apply to
     distributions made (1) before age 59 1/2 (subject to certain exceptions) or
     (2) during the five taxable years starting with the year in which the first
     contribution is made to any Roth IRA.

o    TSAs or 403(b)  contracts.  Section 403(b) of the Code allows  employees of
     certain section 501(c)(3)  organizations and public schools to exclude from
     their gross income the premium payments made,  within certain limits,  on a
     contract  that will  provide  an  annuity  for the  employee's  retirement.
     Rollovers  from  existing TSA or 403(b)  Contracts  are the only  currently
     accepted contributions under a TSA or 403(b) Contract.

Qualified  Contracts are subject to special rules.  Adverse tax consequences may
result if contributions,  distributions, and transactions in connection with the
Qualified  Contract  do not  comply  with the law.  If you do not  purchase  the
Contract under a tax qualified retirement 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  deferred annuity  Contracts that
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.

Partial 1035 Exchanges

Section 1035 of the Code provides that an annuity contract may be exchanged in a
tax-free transaction for another annuity contract. Historically, it was presumed
that only the exchange of an entire contract,  as opposed to a partial exchange,
would be accorded tax-free status. In 1998 in Conway vs.  Commissioner,  the Tax
Court held that the direct  transfer  of a portion of an annuity  contract  into
another annuity contract  qualified as a non-taxable  exchange.  On November 22,
1999, the Internal  Revenue  Service filed an Action on Decision which indicated
that  it  acquiesced  in the Tax  Court  decision  in  Conway.  However,  in its
acquiescence  with the decision of the Tax Court,  the Internal  Revenue Service
stated that it will challenge  transactions  where taxpayers enter into a series
of partial exchanges and annuitizations as part of a design to avoid application
of the 10%  premature  distribution  penalty  or other  limitations  imposed  on
annuity  contracts  under the Code. In the absence of further  guidance from the
Internal  Revenue Service it is unclear what specific types of partial  exchange
designs and transactions will be challenged by the Internal Revenue Service. Due
to the  uncertainty  in this area owners  should  consult their own tax advisers
prior to entering into a partial exchange of an annuity contract.

Distributions - Non-Qualified Contracts

You, as the Owner, generally 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,  you are generally taxed on the amount of
the  withdrawal  from your  Contract  that is  earnings.  For Annuity  Payments,
different  rules apply.  A portion of each  Annuity  Payment may be treated as a
partial  return of your  Purchase  Payment and will not be taxed.  The remaining
portion of the  Annuity  Payment  will be treated as  ordinary  income.  How the
Annuity Payment is divided between taxable and non-taxable portions depends upon
the period over which we expect to make the Annuity  Payments.  Annuity Payments
received  after the payee has  received  all of the  Purchase  Payment are fully
included in income.

If the value of your Contract  exceeds your  Purchase  Payment,  any  withdrawal
generally  will be included in taxable  income to the extent of earnings in your
Contract.  The  Contract  may  offer  Fixed  Account  Investment  Choices  where
withdrawals  or transfers may be subject to a MVA.  Although we believe that the
Contract  Value  after a MVA is treated as the cash  value  under the  Contract,
there is no definitive  guidance on the proper tax treatment of MVAs and you may
want to discuss  potential tax consequences of a MVA with your tax adviser.  The
Code also provides that any amount received under an annuity Contract,  which is
included  in income,  may be subject to a penalty.  The amount of the penalty is
equal to 10% of the amount that is included in income.  Some  distributions will
be exempt from the  penalty.  There is an  exception to this 10% penalty tax for
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 in a series of substantially equal payments made annually (or more
   frequently) under a lifetime annuity;

5) paid as Annuity Payments under an immediate annuity; or

6) that 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 59 1/2 or five years
from the Income Date, 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.

DISTRIBUTIONS -- QUALIFIED CONTRACTS

The  Internal  Revenue  Service  has issued new final and  proposed  regulations
regarding required distributions from tax qualified retirement plans. You should
consult with your  qualified plan sponsor and tax adviser to determine how these
new rules affect the distribution of your benefits.

If you make a partial  withdrawal under a Qualified  Contract,  a portion of the
amount is taxable.  This portion  generally depends on the ratio of your 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  included  in your  taxable  income.  Special  rules may apply to
withdrawals from certain types of Qualified Contracts, including Roth IRAs.

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  included  in  income.  Some
distributions will be exempt from the penalty. There is an exception to this 10%
penalty tax for:

1)   distributions made on or after the date you reach age 59 1/2;

2)   distributions   following  your  death  or  disability  (for  this  purpose
     disability is as defined in Section 72(m)(7) of the Code);

3)   distributions  that are part of a series of  substantially  equal  periodic
     payments  made at least  yearly for your life (or life  expectancy)  or the
     joint  lives  (or  joint  life  expectancies)  of you and  your  designated
     Beneficiary;

4)   distributions  made to you to the extent such  distributions  do not exceed
     the amount allowable as a deduction under Code Section 213 for amounts paid
     during the taxable year for medical care;

5)   distributions made on account of an IRS levy upon the Qualified Contract;

6)   distributions  from  an IRA for  the  purchase  of  medical  insurance  (as
     described in Section  213(d)(1)(D) of the Code) for you and your spouse and
     dependents if you have received  unemployment  compensation for at least 12
     weeks (this exception will no longer apply after you have been  re-employed
     for at least 60 days);

7)   distributions  from an IRA made to you to the extent such  distributions do
     not exceed your qualified higher education  expenses (as defined in Section
     72(t)(7) of the Code) for the taxable year;

8)   distributions  from  an  IRA  which  are  qualified   first-time  homebuyer
     distributions (as defined in Section 72(t)(8) of the Code); and

9)   for  TSA or  403(b)  Contracts,  distributions  made to an  employee  after
     separation from service after age 55.

With  respect  to (3)  above,  if the  series of  substantially  equal  periodic
payments is modified  before the later of the Annuitant  attaining age 59 1/2 or
five years from the Income Date,  then the tax for the year of the  modification
is  increased  by an amount  equal to the tax which would have been imposed (the
10% penalty tax) but for the exception, plus interest for the tax years in which
the exception was used. A partial  withdrawal may result in the  modification of
the series of Annuity  Payments made after the partial  withdrawal and therefore
could  result in the  imposition  of the 10%  penalty tax and  interest  for the
period as described above.

Generally,  distributions  from a Qualified Contract must commence no later than
the required beginning date. For IRAs, the required beginning date is April 1 of
the calendar year, following the year in which you attain age 70 1/2. For TSA or
403(b)  Contracts,  the required  beginning date is April 1 of the calendar year
following  the  later of the  calendar  year in which  you  reach  age 70 1/2 or
retire.  Generally,  required  distributions  must be  made  over a  period  not
exceeding the life or life  expectancy  of the  individual or the joint lives or
life  expectancies of the individual and his or her designated  beneficiary.  If
the required minimum distributions are not made, a 50% penalty tax is imposed as
to the amount not distributed.  It is unclear whether a partial  withdrawal will
have an adverse impact on the  determination of required minimum  distributions.
If you are  receiving  Annuity  Payments or are age 70 1/2 or older,  you should
consult with a tax adviser before taking a partial withdrawal.

Distributions  of (1) salary  reduction  contributions  made in years  beginning
after December 31, 1988; (2) earnings on those  contributions;  and (3) earnings
on amounts held as of the last year  beginning  before  January 1, 1989, are not
allowed  prior to age 59 1/2,  separation  from  service,  death or  disability.
Salary reduction  contributions may also be distributed upon hardship, but would
generally be subject to penalties.

DEATH BENEFTIS

If you select the enhanced death benefit for a Qualified Contract,  the Internal
Revenue Service may consider the death benefits 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 these limits,  the provisions of these benefits could result in currently
taxable income to the owners of the Qualified Contracts.  Furthermore,  the Code
provides that the assets of an IRA (including  Roth IRAs) may not be 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
account value. The Contract offers death benefits that may exceed the greater of
Purchase  Payments or account  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), resulting in the individual taxation of
amounts held in the Contract and the  imposition  of penalty  taxes.  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 Non-Qualified  variable
annuity must satisfy certain diversification requirements in order to be treated
as an annuity Contract. We believe that the Investment Options 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 Investment  Options.  If you
are  considered  the  owner of the  shares,  it will  result  in the loss of the
favorable tax treatment for the Contract.  It is unknown to what extent Contract
Owners are permitted to select Investment  Options,  to make transfers among the
Investment  Options or the number and type of Investment Options Contract Owners
may  select  from  without  being  considered  the owner of the  shares.  If any
guidance is provided, it may be applied retroactively. This would mean that you,
as the Owner of the  Contract,  could be treated as the owner of the  Investment
Options.

Due to the uncertainty in this area, we reserve the right to modify the Contract
in an attempt to maintain favorable tax treatment.


8.ACCESS TO YOUR MONEY
--------------------------------------------------------------------------------


You can have access to the money in your Contract:

o by making a partial or full withdrawal;

o by receiving Annuity Payments; or

o when a death benefit is paid to your Beneficiary.

Withdrawals can only be made during the Accumulation Phase.

When you make a full  withdrawal,  you will receive the Contract Value (adjusted
for any  MVA) on the day the  withdrawal  request  is  received  at the  Service
Center:

o less any applicable withdrawal charge,

o less any premium tax, and

o less any contract maintenance charge.

(See section 6. Expenses for a discussion of the charges.)

Unless you instruct us otherwise,  we will make any partial  withdrawal pro rata
from the Investment Options if there is sufficient value for the withdrawal.  If
the amount in the Investment Options is insufficient,  then the remaining amount
will  come  from  any  available  Fixed  Account  Investment   Choice.   Partial
withdrawals from a Fixed Account  Investment Choice may involve a MVA, which may
increase or decrease the proceeds you receive.

We will pay the amount of any  withdrawal  from the  Investment  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.  Withdrawals  from TSAs or 403(b)  Contracts may be  restricted.  (See
section 7. Taxes.)

Systematic Withdrawal Program

If your  Contract  Value is at least  $25,000,  we offer a program that provides
automatic  monthly or  quarterly  payments to you.  The  minimum  amount you can
withdraw under the program is $500. All systematic  withdrawals  will be made on
the ninth day of the month unless that day is not a Business  Day. If it is not,
then we will make the withdrawal on the previous Business Day.

Income taxes, tax penalties and certain restrictions may apply to systematic
withdrawals.

Minimum Distribution Program

If you own a Qualified  Contract,  you may select to  participate in the minimum
distribution program. Under this program, we will make payments to you from your
Contract  that  are  designed  to  meet  the  applicable  minimum   distribution
requirements  imposed by the Code for Qualified  Contracts.  These distributions
may be subject to a withdrawal charge. We can make payments to you on a monthly,
quarterly,  or annual basis. If your Contract Value is less than $25,000 we will
only make payments annually.

You cannot  participate  in the  systematic  withdrawal  program and the minimum
distribution program at the same time.

Suspension of Payments or Transfers

We 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 Investment  Option
     shares is not  reasonably  practicable  or Allianz  Life cannot  reasonably
     value the Investment Option shares;

4.   during any other period when the  Securities  and Exchange  Commission,  by
     order, so permits for the protection of Contract Owners.

We reserve 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.

9.PERFORMANCE AND ILLUSTRATIONS
--------------------------------------------------------------------------------


We periodically  advertise  performance of the divisions of the Separate Account
(also known as  subaccounts).  We 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 M&E charges
and the  Investment  Option  expenses.  It does not reflect the deduction of any
applicable  withdrawal charge and contract  maintenance charge. The deduction of
any applicable  contract  maintenance  charge and withdrawal charge 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 M&E charges,  the contract  maintenance charge, the
withdrawal charge and the expenses of the Investment Options.

Certain  Investment  Options  have  been in  existence  for  some  time and have
investment   performance  history.  In  order  to  demonstrate  how  the  actual
investment  experience of the  Investment  Options may affect your  Accumulation
Unit values, we have prepared  performance  information that can be found in the
SAI.  This  performance  information  may date  from the  inception  date of the
Investment  Options,  which generally will pre-date the initial offering date of
the  Contracts.  Performance  has been  adjusted  to  reflect  certain  Contract
expenses.  Performance  information for the Investment  Options without Contract
charges  and  expenses  may  also  be  advertised;  see  the  Investment  Option
prospectuses for more information.

In the  future we may also  advertise  yield  information.  If it does,  it will
provide you with  information  regarding how yield is calculated.  More detailed
information regarding how we calculate performance can be found in the SAI.

Any  performance  advertised is based on historical  data. It does not guarantee
future results of the Investment Options.

We may also provide illustrations to customers.  These illustrations may provide
hypothetical  depictions of either the "pay-in" or  Accumulation  Phase,  or the
Annuity Payment or "pay-out" phase.  Illustrations  may be based upon historical
performance of the Investment  Options,  as adjusted for certain expenses.  (Any
adjusted   historical   performance   information   will   be   accompanied   by
"standardized"   performance   information.)   In   the   alternative,   certain
illustrations  may be based upon  assumed  rates of return not to exceed 12%. As
another illustration alternative, we may use the Standard & Poor's 500 Composite
Price  Index or other  recognized  investment  benchmark  to show how values may
vary. "Pay-in" and "pay-out" illustration may have various features as follows:

o    Pay-in  illustrations  assume an initial lump sum Purchase  Payment and are
     designed to show how adjusted  historical  performance  or assumed rates of
     return would have affected Contract values, withdrawal values, or the death
     benefit.  Pay-in  illustrations  may also be designed to show the effect of
     periodic additional Purchase Payments and withdrawals. Pay-in illustrations
     based upon  adjusted  historical  performance  may assume  that  monies are
     allocated to a single Investment Option or to multiple  Investment Options.
     In  the  event  that  monies  are  hypothetically   allocated  to  multiple
     Investment Options, performance may be shown on a weighted aggregate basis.
     Transfers out of a Fixed Account  Investment Choice may be subject to a MVA
     that may increase or decrease the value of such  transfers.  These MVAs are
     not reflected in the illustration.  If the transfers were subject to a MVA,
     the projected  values shown in the illustration may be higher or lower than
     shown. Dollar cost averaging  illustrations,  which are based upon adjusted
     historical performance, would compare the hypothetical effect of a lump sum
     Purchase Payment into the specified  Investment Options, as contrasted with
     dollar cost averaging into the Investment Options over some period.

o    Pay-out  illustrations  are  designed  to show the  hypothetical  effect of
     annuitizing a Contract,  or receiving a stream of periodic payments.  These
     illustrations  may  depict  either  a  variable  annuitization  or a  fixed
     annuitization  or a combination  of a fixed and variable  annuitization.  A
     variable pay-out illustration would be based upon a combination of adjusted
     historical  performance  or on  the  historical  returns  of an  investment
     benchmark,  an assumed  investment  return (AIR),  and the  Annuitant's age
     whereas a fixed pay-out  illustration  would be based upon the  annuitant's
     age, the pay-out option selected, and the pay-out factor rates currently in
     effect on the date of the illustration.  Variable pay-out illustrations may
     also show the portion of each pay-out that is subject to income tax and the
     portion  that is  non-taxable.  In addition to variable  and fixed  pay-out
     illustrations,  an illustration  may also be prepared showing the effect of
     required minimum distribution payments from Qualified Contracts.

We will calculate the values illustrated  reflecting the deduction of Investment
Option  expenses  for  the  specific  Investment  Options  selected  and the M&E
charges.  Contract  maintenance charges may or may not be deducted.  For assumed
rate or investment benchmark pay-in  illustrations,  where no Investment Options
are  selected,  an  arithmetic  average of  Investment  Option  expenses will be
reflected.  The amount of the M&E charges will vary,  depending upon the benefit
options  you  select.  For  withdrawal  values,  the  withdrawal  charge is also
reflected.  Illustrations will not reflect the deduction of any Federal or state
income tax or penalties.

The illustrations  that we give to customers are designed to assist customers in
understanding how a Contract may function in different  scenarios.  They are not
guarantees or  representations  as to future performance or any specific rate of
return.  More detailed  information  about  customer  illustrations  is found in
Appendix A to the SAI.


10.DEATH BENEFIT
--------------------------------------------------------------------------------


At the time you purchase the Contract, you may be able to select a death benefit
option. If you do not make a selection,  the Traditional GMDB will apply to your
Contract.  If you own the  Contract  jointly,  we will use the age of the  older
Contract Owner to determine the death benefit.

If desired,  you may elect one of two optional  GMDBs.  Both involve  additional
charges.  The Enhanced  GMDB is available if all owners are age 79 or younger on
the Issue Date. The Enhanced GMDB does not provide any additional benefit before
the first Contract Anniversary and it may not be appropriate if any owner is age
75 to 79 on the Issue Date because the benefit  values may be limited  after age
81.  The EP GMDB is  available  if all owners are age 75 or younger on the Issue
Date.  The EP GMDB benefit values are limited if any owner is age 70 or older on
the Issue Date.

Once you select a death  benefit you cannot  change it. The Enhanced GMDB and/or
the EP GMDB may not be  available  in your  state.  Check  with your  registered
representative  regarding  availability  and be sure  to  discuss  whether  your
selected death benefit is appropriate for your situation.

If the  Contract is owned by a  non-individual,  the death  benefit  will be the
Contract Value (less any premium taxes) determined as of the end of the Business
Day during  which we  receive  both due proof of death and an  election  for the
death benefit payment option at our Service Center.

Please refer to the  applicable  endorsements  to your Contract for the specific
terms and conditions of the death benefits.

Upon Your Death

If you or any Joint Owner die during the Accumulation Phase, we will pay a death
benefit to your  Beneficiary  (see below).  If you or any Joint Owner die during
the Payout Phase,  the  Beneficiary  becomes the Contract  Owner and any benefit
will be as provided for in the Annuity Option selected. If the Contract is owned
by a non-individual, then all references to you mean the Annuitant.

Any part of the death benefit  amount that had been  invested in the  Investment
Options remains in the Investment  Options until distribution  begins.  From the
time the death benefit is determined until we make a complete distribution,  any
amount in the Investment Options will be subject to investment risk that will be
borne by the Beneficiary.

In the case of Joint Owners,  if one Joint Owner dies, the surviving Joint Owner
will  be  considered  the  Beneficiary.  We will  treat  any  other  Beneficiary
designation  on record at the time of death as a contingent  Beneficiary.  Joint
Owners  generally must be spouses  (although this  requirement  may not apply in
certain states).

Traditional guaranteed minimum death benefit (Traditional GMDB)

If the Traditional GMDB applies, the amount of the death benefit will be the
greater of 1 or 2, less any applicable premium tax.

1.   The  Contract  Value  determined  as of the end of the  Business Day during
     which both due proof of death and an election of the death benefit  payment
     option have been received at our Service Center;

2.   The guaranteed  minimum death  benefit,  which is the total of all Purchase
     Payments you have made minus the percentage of the Contract Value withdrawn
     (prior to any MVA, but including any withdrawal charge).


ENHANCED GUARANTEED MIMIUM DEATH BENEFIT (enhanced GMDB)

If the  Enhanced  GMDB  applies,  the  amount of the death  benefit  will be the
greater of 1 or 2, less any applicable premium tax.

1.   The  Contract  Value  determined  as of the end of the  Business Day during
     which both due proof of death and an election of the death benefit  payment
     option have been received at our Service Center;


2.   The guaranteed  minimum death benefit,  as defined below,  determined as of
     the end of the  Business  Day  during  which  both due  proof of death  and
     election of the death  benefit  payment  option  have been  received at our
     Service Center.

The guaranteed minimum death benefit is equal to the greater of A or B:

A. 5% ANNUAL INCREASE AMOUNT

The 5% Annual Increase Amount is initially equal to your Purchase Payment.

On each Business Day other than a Contract Anniversary and before the date of
your death, the 5% Annual Increase Amount is equal to:
|X| its value on the immediately preceding Business Day,
|X| plus any additional Purchase Payments received that day, and
|X| minus the percentage of any Contract Value withdrawn (prior to any
    MVA, but including any withdrawal charge) for each withdrawal
    you make that day.

On every Contract Anniversary prior to your 81st birthday and before the date of
your death, the 5% Annual Increase Amount is equal to:
|X|  its value on the immediately preceding Business Day increased by 5%
|X|  plus any additional Purchase Payments received that day, and
|X|  minus the percentage of any Contract Value withdrawn (prior to any
     MVA, but including any withdrawal charge) for each withdrawal you
     make that day.

Beginning  with the  Contract  Anniversary  that  occurs  on or after  your 81st
birthday and before the date of your death,  we calculate the 5% Annual Increase
Amount  in the same way that we do on any  Business  Day other  than a  Contract
Anniversary.

B. MAXIMUM ANNIVERSARY VALUE (MAV)

The MAV is initially equal to your Purchase Payment.

On each Business Day other than a Contract Anniversary and before the date of
your death, the MAV is equal to:
|X| its value on the immediately preceding Business Day,
|X| plus any additional Purchase Payments received that day, and
|X| minus the percentage of any Contract Value withdrawn (prior to any MVA, but
    including any withdrawal charge) for each withdrawal you make that day.

On every Contract Anniversary prior to your 81st birthday and before the date of
your death, the MAV is equal to:
|X|  highest Contract Value that occurred on any Contract Anniversary,
|X|  plus subsequent additional Purchase Payments you made since that Contract
     Anniversary, and
|X|  minus the percentage of any Contract Value withdrawn(prior to any MVA, but
     including any withdrawal charge)for each withdrawal you made since that
     Contract Anniversary.

Beginning  with the  Contract  Anniversary  that  occurs  on or after  your 81st
birthday and before the date of your death, we calculate the MAV in the same way
that we do on any Business Day other than a Contract Anniversary.

EARNINGS PROTECTION GURANTEED MINIMUM DEATH BENEFIT (ep GMDB)

If the EP GMDB  applies,  the amount of the death benefit will be the greater of
1, 2 or 3 (described below) less any applicable premium tax.

1.   The  Contract  Value  determined  as of the end of the  Business Day during
     which both due proof of death and an election of the death benefit  payment
     option have been received at our Service Center;

2.   Total Purchase Payments less adjusted partial withdrawals.

An adjusted partial withdrawal   =  PW  x  DB
                                       CV

         PW = the partial withdrawal prior to any MVA, but including any
              withdrawal charge.
         DB = the greater of (a) Contract Value, or (b) total Purchase
              Payments minus prior adjusted partial withdrawals, on the date
              of (but prior to) the current partial withdrawal.
         CV = the Contract Value on the date of (but prior to) the partial
withdrawal.

3.   The  Contract  Value at the end of the  Business  Day during which both due
     proof of death and an election  of the death  benefit  payment  option have
     been received at our Service  Center,  PLUS
    |X| If you are 69 or younger on
        the Issue  Date,  50% of the lesser of (a) or (b),  or
    |X| If you are 70 or
        older on the Issue Date, 30% of the lesser of (a) or (b).

(a) Is the Contract Value as determined in number 1 above minus total Purchase
    Payments*.
(b) Is three times your total Purchase Payments*.

* We reserve the right to limit the inclusion of Purchase Payments that you make
in the 12 months preceding your death.


Death Benefit Examples

o    You purchase the Contract with an initial Purchase Payment of $100,000 on
     Jan. 1, 2003 allocated only to the Investment Options. You are the only
     owner and are 69 or younger on the Issue Date.
o    You make no additional Purchase Payments.
o    The MAV on the ninth Contract Anniversary is $180,000.
o    You take a partial withdrawal of $20,000 (this includes the withdrawal
     charge) in the tenth Contract Year when the Contract Value on the date of
     (but prior to the partial withdrawal) is $160,000. You take no other
     partial withdrawals.
o    The Contract Value on the tenth Contract Anniversary is $140,000.
o    You have not yet reached your 81st birthday as of the tenth Contract
     Anniversary.

Traditional GMDB:

We calculate the death benefit on the tenth Contract  Anniversary as the greater
of:

1) Contract Value:                                                     $140,000
                                                                       ========

2) The guaranteed minimum death benefit:
      Total Purchase Payments                                          $100,000
      Minus the percentage of Contract Value
      withdrawn:   ($20,000 / $160,000) = 0.125 x $100,000 =         -  12,500
                                                                       ---------
                                                                        $ 87,500

Therefore,  the death benefit under the  Traditional  GMDB on the tenth Contract
Anniversary is $140,000.

Enhanced GMDB:
<TABLE>
<CAPTION>

We calculate the death benefit on the tenth Contract  Anniversary as the greater
of:
<S>                                                                             <C>

 1) Contract Value:                                                             $140,000.00
                                                                                ===========

 2) The 5% Annual Increase Amount:
       Purchase Payment made on Jan. 1, 2003                                    $100,000.00
       Increased by 5% on the first Contract Anniversary                        x      1.05
                                                                                ----------------
                                                                                   $105,000.00
               Increased by 5% on the second Contract Anniversary                x      1.05
                                                                                ----------------
                                                                                   $110,250.00
               Increased by 5% on the third Contract Anniversary                 x        1.05
                                                                                 ----------------

                                                                                  $115,762.50

               On the ninth Contract Anniversary the
                 5% Increase Amount is                                            $155,132.82
               Minus the percentage of Contract Value
                 withdrawn: ($20,000 / $160,000) = 0.125 x $155,132.82 =          -  19,391.60
                                                                                  ------------
                                                                                  $135,741.22
               Increased by 5% on the tenth Contract Anniversary                  x           1.05
                                                                                  ----------------
                                                                                  $142,528.28

         3) The MAV:
               The MAV on the ninth Contract Anniversary                          $180,000.00
               Minus the percentage of Contract Value
                 withdrawn:   ($20,000 / $160,000) = 0.125 x $180,000 =           -  22,500.00
                                                                                  ------------
                                                                                  $157,500.00

Therefore, the death benefit for the Enhanced GMDB is $157,500.

EP GMDB:

We calculate the death benefit on the tenth Contract Anniversary as the greater
of:

         1) Contract Value:                                                      $140,000
                                                                                 ========

         2) Total Purchase Payments                                              $100,000
               Less adjusted partial withdrawals calculated
                 as PW  x  DB/CV:
                 ($20,000 x $160,000 / $160,000) = $20,000  x  1  =               -  20,000
                                                                                    ---------
                                                                                  $ 80,000

         3) Contract Value                                                        $140,000
               Plus 50% of the lesser of (a) or (b).
(a)      Contract Value minus total Purchase
                     Payments: $140,000  -  $100,000  =                $  40,000
(b)      Three times your total Purchase Payments:                     $300,000

                 (a) is less than (b), so 50% of (a) =  0.50  x  $40,000  =         $ 20,000
                                                                                    --------

                                                                                    $160,000
</TABLE>
Therefore, the death benefit under the EP GMDB on the tenth Contract Anniversary
is $160,000.

Death Benefit Payment options

If you  have  not  previously  designated  a death  benefit  payment  option,  a
Beneficiary  must  request  the  death  benefit  be paid  under one of the death
benefit  payment options 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. If a lump
sum payment is  requested,  the amount will be paid within seven days of receipt
of proof of death and the valid  election,  including any required  governmental
forms,  unless the  suspension of payments or transfers  provision is in effect.
Payment of the death benefit may be delayed  pending  receipt of any  applicable
tax consents and/or forms from a state.

Option A: lump sum payment of the death  benefit.  Allianz  Life will not deduct
the  contract  maintenance  charge  at  the  time  of a full  withdrawal  if the
distribution is due to death.

Option B: payment of the entire death  benefit  within five years of the date of
the Contract  Owner's or any Joint Owner's  death.  Allianz Life will assess the
full  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. We will continue to
assess the full contract maintenance charge to each Beneficiary's share pro rata
over the Annuity Payments.

We must distribute any portion of the death benefit not applied under an Annuity
Option  within one year of the date of the  Contract  Owner's  death 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.

If you (or any Joint  Owner) die  during  the  Payout  Phase and you are not the
Annuitant, any remaining Annuity Payments 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 the 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.  If there  are Joint
Owners,  you and the Joint Owner become the Joint  Annuitants.  However,  if the
Contract  is owned by a  non-individual,  then we will  treat  the  death of the
Annuitant 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.


11.OTHER INFORMATION
--------------------------------------------------------------------------------


Allianz Life

Allianz Life was organized  under the laws of the state of Minnesota in 1896. We
offer fixed and variable life  insurance and annuities and group life,  accident
and health insurance. We are licensed to do direct business in 49 states and the
District   of   Columbia.   We  are  a   wholly-owned   subsidiary   of  Allianz
Versicherungs-AG Holding.

The Separate Account

We  established  Allianz Life Variable  Account B (the Separate  Account)  under
Minnesota insurance law on May 31, 1985. The Separate Account is registered with
the  Securities  and Exchange  Commission as a unit  investment  trust under the
Investment Company Act of 1940. The SEC does not supervise our management of the
Separate Account.

The Separate Account holds the assets that underlie the Contracts, except assets
allocated to the Fixed Account.  We keep the Separate  Account  assets  separate
from the assets of our general account and other separate accounts. The Separate
Account is divided into  subaccounts,  each of which  invests  exclusively  in a
single Investment Option.

We own the assets of the Separate  Account.  We credit gains to or charge losses
against  the  Separate  Account  without  regard  to the  performance  of  other
investment accounts. The Separate Account's assets may not be used to pay any of
our  liabilities  other than those arising from the  Contracts.  If the Separate
Account's  assets  exceed the required  reserves and other  liabilities,  we may
transfer the excess to our general account.

Distribution

Our wholly-owned subsidiary, USAllianz Investor Services, LLC (USAllianz) serves
as principal  underwriter  for the  Contracts.  USAllianz,  a limited  liability
company  organized in Minnesota,  is located at 5701 Golden Hills Drive,  Golden
Valley, MN 55416. USAllianz is registered as a broker/dealer with the Securities
and Exchange  Commission  under the  Securities  Exchange Act of 1934 (the "1934
Act"),  as well as with the  securities  commissions  in the  states in which it
operates,  and is a member of the National  Association  of Securities  Dealers,
Inc.  (the  "NASD").   More   information   about   USAllianz  is  available  at
http://www.nasdr.com  or by  calling  1-800-289-9999.  You  also can  obtain  an
investor brochure from NASD Regulation describing its Public Disclosure Program.

Commissions   will  be  paid  to   broker/dealers   who  sell   the   Contracts.
Broker/dealers  will  be  paid  commissions  up  to  5%  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 5% of Purchase Payments).

Other compensation options also may be made available.  USAllianz may enter into
selling  agreements  with other  broker/dealers  registered  under the 1934 Act.
Under the  agreements  with those  broker/dealers,  the  commission  paid to the
broker/dealer on behalf of the registered  representative  will not exceed those
described above;  selling firms may retain a portion of commissions.  We may pay
additional expenses.

In addition,  we may pay certain sellers for other services not directly related
to the sale of the Contracts  (such as special  marketing  support  allowances).
Allianz Life may also  periodically  pay certain  sellers a commission  bonus on
aggregate sales for special promotional programs.

We intend to  recoup  commissions  and other  sales  expenses  through  fees and
charges imposed under the Contract.  Commissions paid on the Contract, including
other incentives or payments, are not charged directly to the Contract owners or
the Separate Account.

We offer the  Contracts  to the  public on a  continuous  basis.  We  anticipate
continuing  to offer the  Contracts,  but reserve the right to  discontinue  the
offering.

ADDITIONAL CREDITS FOR CERTAIN GROUPS

We may credit  additional  amounts to a Contract  instead of  modifying  charges
because of special  circumstances  that result in lower sales or  administrative
expenses or better than expected mortality or persistency experience.

Administration

The USAllianz  Service Center (operated by Delaware Valley  Financial  Services,
Inc.) performs  certain  administrative  services  regarding the Contracts.  The
administrative  services  include  issuance of the Contracts and  maintenance of
Contract Owner records.

To reduce expenses,  only one copy of most financial  reports and  prospectuses,
including reports and prospectuses for the Investment Options, will be mailed to
your  household,  even if you or other persons in your  household have more than
one contract issued by Allianz or an affiliate.  Call us at the toll-free number
listed at the back of this prospectus if you need additional copies of financial
reports, prospectuses, or annual and semiannual reports, or if you would like to
receive one copy for each contract in future mailings.

financial statements

The consolidated  financial  statements of Allianz Life and the Separate Account
have been included in the Statement of Additional Information.



<PAGE>




TABLE OF CONTENTS
OF THE STATEMENT OF
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------

Allianz Life.....................................
Ratings Agencies.................................
Experts..........................................
Legal Opinions...................................
Distributor......................................
Reduction or Elimination of the
    Withdrawal charge............................
Calculation of Performance Data..................
       Total Return..............................
       Yield.....................................
       Performance Ranking.......................
       Performance Information...................
Illustrations....................................
Federal Tax Status...............................
       General...................................
       Diversification...........................
Multiple Contracts........................
 Contracts Owned by Non-Individuals..............
Required  Distributions....................
Tax Treatment of Distributions -
Non-Qualified Contracts....
       Qualified Contracts.......................
       Tax Treatment of Distributions -
           Qualified Contracts...................
       Assignments, Pledges and
           Gratuitous Transfers..................
       Death Benefits............................
       Income Tax Withholding....................
Annuity Provisions...............................
       Annuity Unit Value........................
Financial Statements.............................
Appendix A - Illustrations.......................


<PAGE>


                                       52
--------------------------------------------------------------------------------

PRIVACY NOTICE
--------------------------------------------------------------------------------

We Care About Your Privacy!

In compliance with  Gramm-Leach-Bliley  (GLB), this notice describes the privacy
policy  and  practices  followed  by  Allianz  Life  Insurance  Company of North
America, and their affiliated companies (herein referred to as "Allianz Life").

Your  privacy is a high  priority for us and it will be treated with the highest
degree of confidentiality. In order for us to be able to provide these insurance
products and services, we need to collect certain information from you. However,
we want to emphasize  that we are committed to  maintaining  the privacy of this
information  in  accordance  with law. All  individuals  with access to personal
information about our customers are required to follow this policy.

Non-public Information Collected.

o    Information  we receive  from you on  insurance  and annuity  applications,
     claim forms or other forms such as your name, address, date and location of
     birth,  marital status, sex, social security number,  medical  information,
     beneficiary information, etc.

o    Information  about your transactions with us, our affiliates or others such
     as purchase payment history, tax information,  investment information,  and
     accounting information; and

o    Information  we receive  from  consumer  reporting  agencies,  such as your
     credit history.

Non-public Information Disclosed.

o    We may provide the non-public  information that we collect to affiliated or
     nonaffiliated persons or entities involved in the underwriting, processing,
     servicing and marketing of your Allianz Life  insurance  products.  We will
     not provide this information to a nonaffiliated  third party unless we have
     a  written   agreement  that  requires  the  third  party  to  protect  the
     confidentiality of this information.

o    We may have to provide the above described  non-public  information that we
     collect to  authorized  persons or  entities  to comply  with a subpoena or
     summons by federal,  state or local  authorities and to respond to judicial
     process or regulatory  authorities having jurisdiction over our company for
     examination, compliance or other purposes as required by law.

o    We do not disclose any non-public personal  information about our customers
     to anyone except as permitted or required by law.

Confidentiality and Security of Your Non-public Personal Information.

o    We restrict  access of non-public  personal  information  about you to only
     those  persons  who need to know  about  that  information  to  underwrite,
     process, service or market Allianz Life insurance products and services.

o    We maintain  physical,  electronic,  and procedural  safeguards that comply
     with  state  and  federal  standards  to  guard  your  non-public  personal
     information.

o    If we become aware that an item of personal information may be materially
     inaccurate, we will make reasonable effort to re-verify its accuracy and
     correct any error as appropriate.

Information about Former Customers.

Non-public  information about our former customers is maintained by Allianz Life
on a confidential  and secure basis. If any such disclosure is made, it would be
for  reasons  and under  the  conditions  described  in this  notice.  We do not
disclose  any  non-public  personal  information  about our former  customers to
anyone except as permitted or required by law.

Further Information.

o    You  have a right  to  access  and  request  correction  of  your  personal
     information that is recorded with Allianz Life.

o    Information  obtained  from  a  report  prepared  by an  insurance  support
     organization  may be retained by the  insurance  support  organization  and
     disclosed to other persons.

If you have any  questions  about our privacy  policy,  please  write,  call, or
email:

Allianz Life Insurance Company of North America
PO Box 1344
Minneapolis, MN 55440-1344
(800) 328-5600
www.allianzlife.com


<PAGE>


A  Statement  of  Additional  Information  (SAI)  dated  the  same  date as this
prospectus  includes  additional  information  about the annuity offered by this
prospectus.  The SAI is in incorporated by reference into this  prospectus.  The
table of contents for the SAI appears on page __ of this prospectus.  The SAI is
filed with the SEC and is available without charge by contacting us at the phone
number or address listed below.

You can also review and copy  information  about us, the Separate  Account,  the
prospectus and the SAI at the SEC's Public  Reference  Room in Washington,  D.C.
You may obtain  information  about the operation of the Public Reference Room by
calling 1-202-942-8090.

The SEC also maintains a web site (http://www.sec.gov).  The prospectus, the SAI
and other  information about the Contract are available on the EDGAR database on
the SEC's web site. If you do not have access to the web site you can get copies
of  information  from the web site upon payment of a duplication  fee by writing
to: Public  Reference  Section of the Commission 450 Fifth Street NW Washington,
DC 20549-0102


You can contact us at:
     Allianz Life Insurance Company of North America
     5701 Golden Hills Drive
     Golden Valley, MN  55416
     1-800-542-5427

If you need  service  (such as changes in  Contract  information,  inquiry  into
Contract  Values,  to request a withdrawal,  etc.),  please  contact our service
center:
     USAllianz Service Center
     300 Berwyn Park
     P.O. Box 3031 Berwyn, PA 19312-0031 1-800-792-7198





<PAGE>


                                     PART B



                       STATEMENT OF ADDITIONAL INFORMATION

               USALLIANZ(R) CHARTER TM II VARIABLE ANNUITY CONTRACT

                      INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
                       VARIABLE DEFERRED ANNUITY CONTRACT

                                    issued by
             ALLIANZ LIFE VARIABLE ACCOUNT B (the Separate Account)
                                       and
   ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA (Allianz Life, we, us, our)

                                   ____, 2003


This is not a prospectus.  This Statement of Additional Information (SAI) should
be read in conjunction with the prospectus for the Contract,  which is dated the
same  date as this SAI.  Definitions  of  capitalized  terms can be found in the
Index of Terms in the prospectus.  The prospectus is incorporated in this SAI by
reference.

The  prospectus  for  the  Contract  concisely  sets  forth  information  that a
prospective  investor  ought  to  know  before  investing.  For a  copy  of  the
Contract's prospectus, call or write us at:

Allianz Life Insurance Company of North America
5701 Golden Hills Drive
Golden Valley, MN 55416
(800) 542-5427.




Table of Contents
---------------------------------------------------------------------------

                                                 Page
Allianz Life.....................................
Ratings Agencies.................................
Experts..........................................
Legal Opinions...................................
Distributor......................................
Reduction or Elimination of the
    Withdrawal charge............................
Calculation of Performance Data..................
       Total Return..............................
       Yield.....................................
       Performance Ranking.......................
       Performance Information...................
Illustrations....................................
Federal Tax Status...............................
       General...................................
       Diversification...........................
       Multiple Contracts........................
       Contracts Owned by
           Non-Natural Individuals...............
       Required Distributions....................
       Tax Treatment of Distributions -
           Non-Qualified Contracts...............
       Qualified Contracts.......................
       Tax Treatment of Distributions -
           Qualified Contracts...................
       Assignments, Pledges and
           Gratuitous Transfers..................
       Death Benefits............................
       Income Tax Withholding....................
Annuity Provisions...............................
       Annuity Unit Value........................
Financial Statements.............................
Appendix A - Illustrations.......................
                                                             CHARTERIIVASAI-0902


<PAGE>



 ALLIANZ LIFE
--------------------------------------------------------------------------------

Allianz Life is a stock life insurance  company  organized under the laws of the
state  of  Minnesota  in  1896.  We are a  wholly-owned  subsidiary  of  Allianz
Versicherungs-AG  Holding ("Allianz AG"). Allianz AG is headquartered in Munich,
Germany, and has sales outlets throughout the world. We offer fixed and variable
life insurance and annuities, and group life, accident and health insurance.

 RATINGS AGENCIES
--------------------------------------------------------------------------------

We  receive  ratings  from the  independent  rating  agencies  of A.M.  Best and
Moody's.  A.M. Best and Moody's rate  insurance  companies  for their  financial
strength.  These  agencies  evaluate the financial  soundness and  claims-paying
ability of  insurance  companies  based on a number of different  factors.  This
information  does not relate to the management or performance of the subaccounts
of the Separate  Account.  This information  relates only to our general account
and reflects our ability to make Annuity  Payments and to pay death benefits and
other distributions from the Contract.  For detailed  information on the current
agency ratings given to Allianz Life and on the rating categories that have been
established by the agencies, contact your registered representative.

 EXPERTS
--------------------------------------------------------------------------------

The financial  statements  of Allianz Life Variable  Account B as of and for the
year ended  December  31,  2002 and the  consolidated  financial  statements  of
Allianz  Life as of December  31, 2002 and 2001 and for each of the years in the
three years ended  December  31, 2002 have been  included in this  Statement  of
Additional  Information  in reliance  upon the reports of KPMG LLP,  independent
accountants,  included in this Statement of Additional  Information and upon the
authority of said firm as experts in accounting and auditing.

 LEGAL OPINIONS
--------------------------------------------------------------------------------


Stewart D. Gregg,  Senior  Counsel of Allianz Life, has provided legal advice on
certain matters in connection with the issuance of the Contracts.

 DISTRIBUTOR
--------------------------------------------------------------------------------

USAllianz  Investor  Services,  LLC, a subsidiary of Allianz  Life,  acts as the
distributor. The offering is on a continuous basis.

 REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE
--------------------------------------------------------------------------------

We may reduce or eliminate the amount of the withdrawal  charge on the Contracts
when Contract  sales are made to  individuals  or to a group of individuals in a
manner  that  results  in  savings  of sales  expenses.  We will  determine  the
entitlement  to a reduction of the  withdrawal  charge after  examination of the
following factors:

*    the size of the group;

*    the total  amount of Purchase  Payments  expected  to be received  from the
     group;

*    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);

*    the purpose for which the  Contracts are purchased and whether that purpose
     makes it likely that expenses will be reduced; and

*    any other  circumstances  which we believe 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.

We may  eliminate  the  withdrawal  charge when the  Contracts  are issued to an
officer,  director or employee of Allianz Life or any of its affiliates.  We may
reduce  or  eliminate  the  withdrawal  charge  when the  Contract  is sold by a
registered  representative  appointed with Allianz Life 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, we may advertise  the  performance  data for the divisions of
the  Separate   Account  (also  known  as  subaccounts)  in  sales   literature,
advertisements,  personalized  hypothetical  illustrations,  and Contract  Owner
communications. Performance data will show the percentage change in the value of
an  Accumulation  Unit based on the  performance  of a subaccount  over a stated
period of time. We determine the change in the value of an Accumulation  Unit by
dividing the increase (or  decrease) in value for that unit by the  Accumulation
Unit value at the beginning of the period.

Any  performance  data will include total return  figures for the one, five, and
ten year (or since inception) time periods indicated.  Total return figures will
reflect the  deduction of the maximum  mortality  and expense risk (M&E) charge,
the total operating expenses of the Investment Options (after any fee waivers or
expense   reimbursements),   any  applicable   withdrawal  charge  and  contract
maintenance  charge  ("Standardized  Total Return").  The withdrawal  charge and
contract  maintenance  charge  deductions are  calculated  assuming the Contract
Value is fully withdrawn at the end of the reporting period.

We will determine the  hypothetical  value of a Contract  purchased for the time
periods  described by using the actual  Accumulation  Unit values for an initial
$1,000  Purchase  Payment,  and deducting any  applicable  contract  maintenance
charges  and  any  applicable   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:

                           P(1+T)n = ERV

where:

           P      =     a hypothetical initial Purchase Payment of $1,000;
           T      =     average annual total return;
           n      =     number of years;
           ERV          = ending redeemable value of a hypothetical $1,000
                        Purchase Payment made at the beginning of the time
                        periods used at the end of such time periods (or
                        fractional portion thereof).

We may  also  advertise  performance  data  calculated  in the  same  manner  as
described  above but which will not  reflect  the  deduction  of the  withdrawal
charge and the contract  maintenance charge and/or will reflect the deduction of
the minimum M&E charges.  We may also  advertise  cumulative  and average  total
return  information  over  different  periods  of  time.  We  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 the Contract's  carry no
sales load and that the income earned by the investment in the Investment Option
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 USAZ Money  Market  Fund  ("Money  Market  Fund").  We may  advertise  yield
information for the Money Market Fund. The Money Market Fund's current yield may
vary each day,  depending upon, among other things,  the average maturity of the
Investment  Option's  investment  securities  and  changes  in  interest  rates,
operating  expenses,  the deduction of the M&E charge, the contract  maintenance
charge  and,  in  certain  instances,  the  value  of  the  Investment  Option's
investment  securities.  The  fact  that the  subaccount's  current  yield  will
fluctuate  and  that the  principal  is not  guaranteed  should  be  taken  into
consideration  when  using  the  subaccount'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 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 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 Investment  Option,
the  deduction  of the  maximum  M&E charge and the  deduction  of the  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 on December 31, 2002, the USAZ Money Market Fund
had a current yield of ______% and an effective yield of ______%.

[WE WILL UPDATE THIS INFORMATION UPON AMENDMENT.]

Other  Investment  Options.  We  may  also  quote  yield  in  sales  literature,
advertisements,  personalized  hypothetical  illustrations,  and Contract  Owner
communications for the other Investment  Options.  Each Investment Option (other
than  the USAZ  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 maximum
M&E 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  Investment
            Option attributable to shares owned by the subaccount;

     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.

We will used the above  formula 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 the Contract's carry
no  sales  load.  We do  not  currently  advertise  yield  information  for  any
subaccount (other than the Money Market Fund).

Performance Ranking

Total return may be compared to relevant  indices,  including U.S.  domestic and
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  Investment  Options  have  been in  existence  for  some  time and have
investment  performance history. In order to show how investment  performance of
the  Investment   Options  affects   Accumulation  Unit  values,  the  following
performance information was developed.  This information is for periods prior to
when the Contracts were first offered, and has been adjusted to reflect Contract
expenses.

Certain Investment Options issue two or more classes of shares and certain share
classes may have Rule 12b-1 expenses. The classes of shares currently offered by
this  Contract are listed in the "Annual  Operating  Expenses of the  Investment
Options" section of the Fee Table in the prospectus.  For more information about
share classes, see the Investment Option prospectuses.

The Investment  Options of Franklin  Templeton Variable Insurance Products Trust
available under this Contract issue Class 2 shares and have a distribution  plan
which is referred  to as a Rule 12b-1 plan.  Class 2 shares have Rule 12b-1 plan
expenses   currently  equal  to  0.25%  per  year,   which  will  affect  future
performance. Prior to July 1, 1999, the Rule 12b-1 plan fees were equal to 0.30%
per year.  Investment Option performance for Class 2 shares reflects a "blended"
figure  combining  (a) for periods prior to Class 2's inception on Jan. 6, 1999,
historical  results of Class 1 shares and (b) for  periods  after Jan.  6, 1999,
class 2's results  reflecting  an  additional  Rule 12b-1 fee expense which also
affects future performance.

Because  class 2 shares were not offered  until Jan. 6, 1999 (or May 1, 1997 for
Templeton  Developing  Markets  Securities Fund and Templeton Foreign Securities
Fund),  standardized  class 2 share  performance  for prior  periods  represents
historical results of class 1 shares. For periods beginning Jan. 6, 1999 (or May
1, 1997), class 2's results reflect an additional Rule 12b-1 fee expense,  which
also affects future performance.

For  Templeton   Developing   Markets  Securities  Fund  and  Templeton  Foreign
Securities  Fund,  performance  prior to the May 1,  2000  merger  reflects  the
historical  performance of the Templeton  Developing  Markets Fund and Templeton
International Fund, respectively.

Ongoing stock market volatility can dramatically  change the Investment Options'
short-term performance; current results may differ.

Charts A, B and C on the following pages reflect  Accumulation  Unit performance
which  assumes that the  Accumulation  Units were fully  invested in each of the
Investment  Options from the  Investment  Option  inception  dates listed on the
table.

o    Chart A is for  Contracts  with the  Traditional  GMDB  (which  carries the
     lowest M&E charge of 1.75%);

o    Chart B is for Contracts  with the GMIB and either the Enhanced GMDB or the
     EP GMDB (which carries the highest M&E charge of 2.40%); and

o    Chart C  illustrates  performance  of the  Investment  Options and does not
     include any Contract expenses.

The  performance  figures  in Column I  represent  performance  figures  for the
Accumulation  Units which  reflect  deduction  of the M&E charge,  the  contract
maintenance  charge,  the total  operating  expenses of the  Investment  Options
(after waivers or reimbursements), and assumes that you make a withdrawal at the
end of the period  (therefore  the withdrawal  charge is  reflected).  Column II
represents   performance  figures  for  the  Accumulation  Units  which  reflect
deduction of the M&E charge and the total  operating  expenses of the Investment
Options (after waivers or  reimbursements).  Past performance does not guarantee
future results.

[WE WILL UPDATE THE PERFORMANCE INFORMATION TO REFLECT 12/31/02 INFORMATION UPON
AMENDMENT.]


<PAGE>

<TABLE>
<CAPTION>
Chart A - Contracts with the Traditional GMDB (1.75% M&E Charge)

Total Return for the periods ended December 31, 2002

                                                                                               Column II (without contract
                                                  Column I (with all charges)              maintenance and withdrawal charges)

                                            ------------------------------------------- ------------------------------------------
                                 Investment
                                  Option
                                 Inception      One  Three   Five     Ten    Since      One     Three   Five   Ten      Since
Investment Option                   Date        Year Years   Years   Years  Inception   Year    Years  Years   Years   Inception
--------------------------------------------------------------------------------------- ------------------------------------------
<S>                              <C>            <C>  <C>     <C>     <C>    <C>         <C>    <C>     <C>     <C>     <C>
USAZ Alliance Capital Growth     11/5/2001
and Income*
USAZ Alliance Capital Large Cap  11/5/2001
Growth*
USAZ Alliance Capital            11/5/2001
Technology*
Davis VA Financial                7/1/1999
Davis VA Value                    7/1/1999
Franklin Global Communications   1/24/1989
Securities - Class 21,2
Franklin Growth and Income       1/24/1989
Securities - Class 21,2
Franklin High Income - Class     1/24/1989
21,2
Franklin Income Securities -     1/24/1989
Class 21,2
Franklin Large Cap Growth         5/1/1996
Securities - Class 21,2
Franklin Real Estate - Class     1/24/1989
21,2
Franklin Rising Dividends        1/27/1992
Securities - Class 21,2
Franklin Small Cap - Class 21,2  11/1/1995
Franklin Small Cap Value          5/1/1998
Securities - Class 21,2
Franklin U.S. Government -       3/14/1989
Class 22
Franklin Zero Coupon 2005 -      3/14/1989
Class 12
Franklin Zero Coupon 2010 -      3/14/1989
Class 12
Mutual Discovery Securities -    11/8/1996
Class 21,2
Mutual Shares Securities -       11/8/1996
Class 21,2
Templeton Developing Markets     3/15/1994
Securities - Class 21,2,3
Templeton Foreign Securities -   1/27/1992
Class 21,2,4
Templeton Growth Securities -    3/15/1994
Class 21,2
USAZ Templeton Developed         11/5/2001
Markets*
SP Jennison International Growth 12/15/2000
SP Strategic Partners Focused    12/15/2000
Growth
Oppenheimer Global Securities/VA 11/12/1990
Oppenheimer High Income/VA       4/30/1986
Oppenheimer Main Street Growth    7/5/1995
& Income/VA
PIMCO VIT High Yield - Admin.    4/30/1998
Class
PIMCO VIT StocksPLUS Growth &    12/31/1997
Income - Admin. Class
PIMCO VIT Total Return - Admin.  12/31/1997
Class
USAZ PIMCO Growth and Income*    11/5/2001
USAZ PIMCO Renaissance*          11/5/2001
USAZ PIMCO Value*                11/5/2001
Seligman Small-Cap Value -        5/1/1998
Class 1
USAZ Money Market                 2/1/2000
USAZ Van Kampen Aggressive        5/1/2001
Growth*
USAZ Van Kampen Comstock*         5/1/2001
USAZ Van Kampen Emerging Growth*  5/1/2001
USAZ Van Kampen Growth and        5/1/2001
Income*
USAZ Van Kampen Growth*           5/1/2001
----------------------------------------------------------------------------------------------------------------------------------

*    For  Investment  Options  which have existed  less than one year,  standard
     cumulative total returns since inception are shown.

1.   Ongoing stock market  volatility  can  dramatically  change the  Investment
     Options' short-term performance; current results may differ.

2.   Because  Class 2 shares  were not  offered  until  1/6/99  (or  5/1/97  for
     Templeton   Developing   Markets  Securities  Fund  and  Templeton  Foreign
     Securities Fund),  standardized  Class 2 Investment Option  performance for
     prior periods represents  historical results of Class 1 shares. For periods
     beginning 1/6/99 (or 5/1/97), Class 2's results reflect an additional 12b-1
     fee expense, which also affects future performance.

3.   For Templeton Developing Markets Securities Fund,  performance prior to the
     5/1/00  merger  reflects  the  historical   performance  of  the  Templeton
     Developing Markets Fund.

4.   For Templeton  Foreign  Securities  Fund,  performance  prior to the 5/1/00
     merger reflects the historical performance of Templeton International Fund.

There is no performance  shown for the USAZ AIM Basic Value, USAZ AIM Blue Chip,
USAZ AIM Dent Demographic Trends, USAZ AIM International  Equity,  Dreyfus Small
Cap  Stock  Index,  Dreyfus  Stock  Index,  Jennison  20/20  Focus  and the USAZ
Oppenheimer  Emerging Growth Investment  Options because they were first offered
in the Separate Account as of May 1, 2002.
</TABLE>



<PAGE>



<TABLE>
<CAPTION>
Chart B - Contracts  with the GMIB and either the  Enhanced  GMDB or the EP GMDB
(2.40% M&E Charge)

Total Return for the periods ended December 31, 2002

                                                                                               Column II (without contract
                                                     Column I (with all charges)            Maintenance and withdrawal charges)
                                  Investment
                                    Option
                                  Inception   One     Three    Five    Ten     Since      One    Three   Five    Ten     Since
Investment Option                    Date     Year    Years    Years   Years  Inception   Year   Years   Years   Years  Inception
--------------------------------- ------------------------------------------------------  ------------------------------------------
<S>                              <C>            <C>  <C>     <C>     <C>    <C>         <C>    <C>     <C>     <C>     <C>
USAZ Alliance Capital Growth and  11/5/2001
Income*
USAZ Alliance Capital Large Cap   11/5/2001
Growth*
USAZ Alliance Capital Technology* 11/5/2001
Davis VA Financial                 7/1/1999
Davis VA Value                     7/1/1999
Franklin Global Communications    1/24/1989
Securities - Class 21,2
Franklin Growth and Income        1/24/1989
Securities - Class 21,2
Franklin High Income - Class 21,2 1/24/1989
Franklin Income Securities -      1/24/1989
Class 21,2
Franklin Large Cap Growth          5/1/1996
Securities - Class 21,2
Franklin Real Estate - Class 21,2 1/24/1989
Franklin Rising Dividends         1/27/1992
Securities - Class 21,2
Franklin Small Cap - Class 21,2   11/1/1995
Franklin Small Cap Value           5/1/1998
Securities - Class 21,2
Franklin U.S. Government - Class  3/14/1989
22
Franklin Zero Coupon 2005 -       3/14/1989
Class 12
Franklin Zero Coupon 2010 -       3/14/1989
Class 12
Mutual Discovery Securities -     11/8/1996
Class 21,2
Mutual Shares Securities - Class  11/8/1996
21,2
Templeton Developing Markets      3/15/1994
Securities - Class 21,2,3
Templeton Foreign Securities -    1/27/1992
Class 21,2,4
Templeton Growth Securities -     3/15/1994
Class 21,2
USAZ Templeton Developed Markets* 11/5/2001
SP Jennison International Growth  12/15/2000
SP Strategic Partners Focused     12/15/2000
Growth
Oppenheimer Global Securities/VA  11/12/1990
Oppenheimer High Income/VA        4/30/1986
Oppenheimer Main Street Growth &   7/5/1995
Income/VA
PIMCO VIT High Yield - Admin.     4/30/1998
Class
PIMCO VIT StocksPLUS Growth &     12/31/1997
Income - Admin. Class
PIMCO VIT Total Return - Admin.   12/31/1997
Class
USAZ PIMCO Growth and Income*     11/5/2001
USAZ PIMCO Renaissance* 11/5/2001
USAZ PIMCO Value* 11/5/2001
Seligman Small-Cap Value - Class   5/1/1998
1
USAZ Money Market                  2/1/2000
USAZ Van Kampen Aggressive         5/1/2001
Growth*
USAZ Van Kampen Comstock*          5/1/2001
USAZ Van Kampen Emerging Growth*   5/1/2001
USAZ Van Kampen Growth and         5/1/2001
Income*
USAZ Van Kampen Growth*            5/1/2001
----------------------------------------------------------------------------------------------------------------------------------

*    For  Investment  Options  which have existed  less than one year,  standard
     cumulative total returns since inception are shown.

1.   Ongoing stock market  volatility  can  dramatically  change the  Investment
     Options' short-term performance; current results may differ.

2.   Because  Class 2 shares  were not  offered  until  1/6/99  (or  5/1/97  for
     Templeton   Developing   Markets  Securities  Fund  and  Templeton  Foreign
     Securities Fund),  standardized  Class 2 Investment Option  performance for
     prior periods represents  historical results of Class 1 shares. For periods
     beginning 1/6/99 (or 5/1/97), Class 2's results reflect an additional 12b-1
     fee expense, which also affects future performance.

3.   For Templeton Developing Markets Securities Fund,  performance prior to the
     5/1/00  merger  reflects  the  historical   performance  of  the  Templeton
     Developing Markets Fund.

4.   For Templeton  Foreign  Securities  Fund,  performance  prior to the 5/1/00
     merger reflects the historical performance of Templeton International Fund.

There is no performance  shown for the USAZ AIM Basic Value, USAZ AIM Blue Chip,
USAZ AIM Dent Demographic Trends, USAZ AIM International  Equity,  Dreyfus Small
Cap  Stock  Index,  Dreyfus  Stock  Index,  Jennison  20/20  Focus  and the USAZ
Oppenheimer  Emerging Growth Investment  Options because they were first offered
in the Separate Account as of May 1, 2002.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
Chart C - Investment Option Performance (No Contract Charges)

Total Return for the periods ended December 31, 2001


                                                                                     Since
Investment Option                                   One Year  Five Years  Ten Years  Inception

----------------------------------------------------------------------------------------------
<S>                                                    <C>       <C>         <C>        <C>
USAZ Alliance Capital Growth and Income                   N/A       N/A       N/A        4.67
USAZ Alliance Capital Large Cap Growth                    N/A       N/A       N/A        5.50
USAZ Alliance Capital Technology                          N/A       N/A       N/A        7.70
Davis VA Financial                                     -10.37       N/A       N/A        3.48
Davis VA Value                                         -10.39       N/A       N/A        0.21
Franklin Global Communications Securities - Class      -29.40     -1.50      3.40        6.03
21,2
Franklin Growth and Income Securities - Class 21,2      -2.28      9.94     11.22       10.15
Franklin High Income - Class 21,2                        4.18      0.30      6.20        6.25
Franklin Income Securities - Class 21,2                  0.76      7.00      9.26        9.91
Franklin Large Cap Growth Securities - Class 21,2      -11.43     11.77       N/A       12.82
Franklin Real Estate - Class 21,2                        7.88      5.94     11.45       10.22
Franklin Rising Dividends Securities - Class 21,2       13.57     11.90       N/A       11.22
Franklin Small Cap - Class 21,2                        -15.25     10.53       N/A       13.45
Franklin Small Cap Value Securities - Class 21,2        13.79       N/A       N/A        3.23
Franklin U.S. Government - Class 22                      7.37      6.79      6.91        7.69
Franklin Zero Coupon 2005 - Class 12                     8.93      7.66      8.93        9.80
Franklin Zero Coupon 2010 - Class 12                     5.62      7.98      9.87       10.34
Mutual Discovery Securities - Class 21,2                 0.24      9.12       N/A        9.27
Mutual Shares Securities - Class 21,2                    7.04     10.16       N/A       10.60
Templeton Developing Markets Securities - Class         -8.08    -11.78       N/A      -11.10
21,2,3
Templeton Foreign Securities-Class 21,2,4              -15.99      4.63       N/A        9.64
Templeton Growth Securities-Class 21,2                  -1.31      8.40       N/A       10.05
USAZ Templeton Developed Markets                          N/A       N/A       N/A        2.50
SP Jennison International Growth                       -35.92       N/A       N/A      -37.67
SP Strategic Partners Focused Growth                   -20.80       N/A       N/A      -19.93
Oppenheimer Global Securities/VA                       -12.04     15.40     13.91          NA
Oppenheimer High Income/VA                               1.97      2.87      8.71          NA
Oppenheimer Main Street Growth & Income/VA             -10.16      6.71       N/A       13.67
PIMCO VIT High Yield - Admin. Class                      2.35       N/A       N/A        1.70
PIMCO VIT StocksPLUS Growth & Income - Admin. Class    -11.43       N/A       N/A        5.73
PIMCO VIT Total Return - Admin. Class                    8.37       N/A       N/A        6.55
USAZ PIMCO Growth and Income                              N/A       N/A       N/A        1.63
USAZ PIMCO Renaissance                                    N/A       N/A       N/A       10.20
USAZ PIMCO Value                                          N/A       N/A       N/A        9.63
Seligman Small-Cap Value - Class 1                      23.52       N/A       N/A       18.14
USAZ Money Market                                        3.27       N/A       N/A        4.24
USAZ Van Kampen Aggressive Growth                         N/A       N/A       N/A      -19.00
USAZ Van Kampen Comstock                                  N/A       N/A       N/A       -5.63
USAZ Van Kampen Emerging Growth                           N/A       N/A       N/A       -7.80
USAZ Van Kampen Growth and Income                         N/A       N/A       N/A       -2.41
USAZ Van Kampen Growth                                    N/A       N/A       N/A       -3.90

*    For  Investment  Options  which have existed  less than one year,  standard
     cumulative total returns since inception are shown.

1.   Ongoing stock market  volatility  can  dramatically  change the  Investment
     Options' short-term performance; current results may differ.

2.   Because  Class 2 shares  were not  offered  until  1/6/99  (or  5/1/97  for
     Templeton   Developing   Markets  Securities  Fund  and  Templeton  Foreign
     Securities Fund),  standardized  Class 2 Investment Option  performance for
     prior periods represents  historical results of Class 1 shares. For periods
     beginning 1/6/99 (or 5/1/97), Class 2's results reflect an additional 12b-1
     fee expense, which also affects future performance.

3.   For Templeton Developing Markets Securities Fund,  performance prior to the
     5/1/00  merger  reflects  the  historical   performance  of  the  Templeton
     Developing Markets Fund.

4.   For Templeton  Foreign  Securities  Fund,  performance  prior to the 5/1/00
     merger reflects the historical performance of Templeton International Fund.

There is no performance  shown for the USAZ AIM Basic Value, USAZ AIM Blue Chip,
USAZ AIM Dent Demographic Trends, USAZ AIM International  Equity,  Dreyfus Small
Cap  Stock  Index,  Dreyfus  Stock  Index,  Jennison  20/20  Focus  and the USAZ
Oppenheimer  Emerging Growth Investment  Options because they were first offered
in the Separate Account as of May 1, 2002.
</TABLE>



<PAGE>


 ILLUSTRATIONS
--------------------------------------------------------------------------------

We provide details  regarding the types of illustrations  available to customers
in  section  9  (Performance   and   Illustrations)   in  the  prospectus.   The
illustrations  are designed to assist customers in understanding  how a Contract
may function in different scenarios.  They are not guarantees or representations
as to future  performance  or any  specific  rate of return.  You can request an
illustration at any time by contacting your registered  representative.  Samples
of the types of  illustrations  we provide for this  Contract  are  contained in
Appendix A of this SAI.

 FEDERAL TAX STATUS
--------------------------------------------------------------------------------

NOTE:  The  following  description  is based upon our  understanding  of current
federal income tax law applicable to annuities in general. We 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.  We do
not guarantee the tax status of the Contracts. Purchasers bear the complete risk
that the  Contracts  may not be treated as  "annuity  contracts"  under  federal
income tax laws. It should be further  understood that the following  discussion
is not exhaustive and that special rules not described  herein may be applicable
in certain  situations.  Moreover,  no  attempt  has been made to  consider  any
applicable state or other tax laws.

General

Section 72 of the Internal Revenue Code of 1986, as amended (the "Code") governs
taxation of annuities  in general.  A Contract  Owner is generally  not taxed on
increases in the value of a Contract until  distribution  occurs,  either in the
form of a lump sum  payment  or as Annuity  Payments  under the  Annuity  Option
elected.  For  Annuity  Payments,  the  portion of a payment  included in income
equals the excess of the payment over the exclusion amount. The exclusion amount
for  Annuity  Payments  based on a  variable  Annuity  Option is  determined  by
dividing the  investment  in the Contract  (adjusted  for any period  certain or
refund  guarantee)  by the number of years over which the annuity is expected to
be paid (determined by Treasury  Regulations).  The exclusion amount for Annuity
Payments  based on a fixed  Annuity  Option is  determined  by  multiplying  the
payment  by the ratio  that the cost  basis of the  Contract  (adjusted  for any
period  certain or refund  guarantee)  bears to the  expected  return  under the
Contract.  Annuity  Payments  received  after the investment in the Contract has
been recovered (i.e. the total of the excludable amounts equal the investment in
the Contract) are fully taxable.  The taxable  portion of an Annuity  Payment is
taxed at ordinary  income tax rates.  For certain  types of  Qualified  Contract
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.

We are taxed as a life insurance  company under the Code. For federal income tax
purposes,  the  Separate  Account  is not a  separate  entity  from us,  and its
operations form a part of Allianz Life.

Diversification

Section  817(h) of the Code  imposes  certain  diversification  standards on the
underlying  assets of  variable  annuity  contracts.  The Code  provides  that a
variable  annuity  contract  will not be treated as an annuity  contract for any
period (and any subsequent  period) for which the investments are not adequately
diversified  in  accordance  with  regulations  prescribed  by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity  contract would result in the imposition of federal income tax to the
Contract  Owner with respect to earnings  allocable to the Contract prior to the
receipt of Annuity Payments under the Contract.  The Code contains a safe harbor
provision which provides that annuity  contracts such as this Contract meets 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
Options  underlying  variable  contracts such as this Contract.  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  these  regulations,  an  Investment  Option  will  be  deemed  adequately
diversified if:

(1)  no more than 55% of the value of the total assets of the Investment  Option
     is represented by any one investment;

(2)  no more than 70% of the value of the total assets of the Investment  Option
     is represented by any two investments;

(3)  no more than 80% of the value of the total assets of the Investment  Option
     is represented by any three investments; and

(4)  no more than 90% of the value of the total assets of the Investment  Option
     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."

We intend that all Investment  Options  underlying the Contracts will be managed
by  the  investment   advisers  in  such  a  manner  as  to  comply  with  these
diversification requirements.

The Treasury  Department has indicated that the  diversification  regulations do
not provide guidance regarding the circumstances in which Contract Owner control
of the  investments of the separate  Account will cause the Contract Owner to be
treated as the owner of the assets of the Separate Account, thereby resulting in
the loss of favorable tax treatment for the Contract.  At this time it cannot be
determined whether  additional  guidance will be provided and what standards may
be contained in such guidance.

The amount of Contract  Owner control which may be exercised  under the Contract
is different in some respects from the situations addressed in published rulings
issued by the  Internal  Revenue  Service in which it was held that the Contract
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 Annuity 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  is 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, we reserve the right to modify the Contract
in an attempt to maintain favorable tax treatment.

Multiple Contracts

Section  72(e)(11) of the Code provides that  multiple  Non-Qualified  Contracts
which are issued within a calendar year period to the same Contract Owner by one
Insurance  company or its  affiliates  are treated as one annuity  contract  for
purposes of determining the tax consequences of any distribution. Such treatment
may result in adverse tax  consequences,  including  more rapid  taxation of the
distributed  amounts from such  combination  of contracts.  For purposes of this
rule, Contracts received in a Section 1035 Exchange will be considered issued in
the year of the exchange. The legislative history of Section 72(e)(11) indicates
that  it was  not  intended  to  apply  to  immediate  annuities.  However,  the
legislative  history also states that no inference is intended as to whether the
Treasury  Department,  under its authority to prescribe rules to enforce the tax
laws, may treat the combination  purchase of a deferred annuity contract with an
immediate  annuity contract as a single contract for purposes of determining the
tax consequences of any distribution.

Contracts Owned by Non-Individuals

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 an  individual  nor to Contracts  held by qualified
retirement  plans.  Purchasers should consult their own tax counsel or other tax
adviser before purchasing a Contract to be owned by a non-individual.

Required Distributions

In order to be treated as an annuity  contract for Federal  income tax purposes,
Section 72(s) of the Code requires any Non-Qualified Contract to contain certain
provisions  specifying  how your interest in the Contract will be distributed in
the event of the death of a Contract Owner. Specifically, section 72(s) requires
that (a) if any owner  dies on or after the Income  Date,  but prior to the time
the entire interest in the Contract has been distributed, the entire interest in
the  Contract  will be  distributed  at least as  rapidly as under the method of
distribution  being used as of the date of such  owner's  death;  and (b) if any
owner dies prior to the Income Date, the entire interest in the contract will be
distributed  within  five  years  after the date of such  owner's  death.  These
requirements  will be  considered  satisfied  as to any  portion  of an  owner's
interest which is payable to or for the benefit of a designated  Beneficiary and
which is  distributed  over the life of such  designated  Beneficiary  or over a
period not extending  beyond the life expectancy of that  Beneficiary,  provided
that  such  distributions  begin  within  one  year of the  owner's  death.  The
designated  Beneficiary  refers to a natural person designated by the owner as a
Beneficiary  and to whom  ownership of the  contract  passes by reason of death.
However,  if the designated  Beneficiary is the surviving spouse of the deceased
owner, the Contract may be continued with the surviving spouse as the new owner.
If the owner of the contract is a non-natural  person,  then the death or change
of an Annuitant is treated as the death of the owner.

Non-Qualified  Contracts  contain  provisions  that are  intended to comply with
these Code requirements, although no regulations interpreting these requirements
have yet been  issued.  We intend to review such  provisions  and modify them if
necessary to assure that they comply with the applicable  requirements when such
requirements are clarified by regulation or otherwise.

Other rules may apply to Qualified Contracts.

Tax Treatment of Distributions - Non-Qualified Contracts


Section  72  of  the  Code  governs  treatment  of  distributions  from  annuity
contracts.  It  generally  provides  that  if the  Contract  Value  exceeds  the
aggregate  Purchase  Payments made, any amount  withdrawn before the Income Date
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 included in gross income.

In a recent  ruling,  the  Internal  Revenue  Service  indicated  that part of a
partial withdrawal from an annuity contract on or after the Income Date might be
excludable from income.  In prior rulings,  however,  the IRS had concluded that
the entire amount of such a partial withdrawal from a Non-Qualified Contract was
taxable as ordinary  income.  Allianz Life  currently  intends to report partial
withdrawals from the Contract on or after the Income Date in accordance with its
interpretation  of the IRS's most recent ruling.  Given the  uncertainty in this
area,  however,  you should consult a tax adviser regarding the tax consequences
to you of a  partial  withdrawal.  If you  make  a  full  withdrawal  from  your
Contract,  the amount that is taxable is the excess of the amount distributed to
you over your  unrecovered  investment in the Contract (i.e.,  your  unrecovered
Purchase  Payments).  You should  consult a tax advisor  before you partially or
fully withdraw your Contract.

Section 72 further  provides  that a ten percent (10%) penalty will apply to the
income  portion of any  distribution.  There is an exception to this 10% penalty
tax for Annuity Payments made under an immediate annuity contract.  An immediate
annuity is defined as a contract to which all of the following apply:

o    Is purchased with a single premium;

o    Has an annuity starting date (Income Date), as defined by the Tax Code, not
     later than one year from date of purchase; and

o    Provides for a series of substantially  equal periodic  payments to be made
     no less frequently than annually.

For  purposes  of  determining  whether  an  annuity  contract  qualifies  as an
immediate annuity, the IRS has ruled that where an immediate annuity is received
in exchange for a deferred annuity contract in a Tax Code Section 1035 Exchange,
the  purchase  date of the  contract  will be deemed to be the date the deferred
annuity was  purchased.  This might cause the  contract to fail to qualify as an
immediate  annuity,  and the  contract  will be subject to the 10%  penalty  tax
unless one of the other exceptions to the penalty applies.

There is also a separate exception to the 10% penalty tax where the distribution
is made in substantially  equal periodic  payments (al least annually) over your
life or life expectancy or the joint lives or joint life expectancies of you and
your  beneficiary (the "life expectancy  exception").  However,  modification to
such a series of  payments  prior to the  later of age 59 1/2 or five  years may
result in an  additional  tax in the year of  modification  equal to the penalty
which would have been imposed, plus interest, if the exception had not applied.

Separate  tax  withdrawal  penalties  and  restrictions  may apply to  Qualified
Contracts. (See "Tax Treatment of Distributions - IRA Contracts.")

If you are not a natural  person,  a  Non-Qualified  Contract  generally  is not
treated as an annuity for income tax purposes and the income on the Contract for
the taxable year is  currently  taxable as ordinary  income.  This rule does not
apply to an immediate  annuity  contract  that is defined in the same way as for
penalty tax purposes,  or to contracts  held by a trust or other entity as agent
for a natural person.  Therefore,  if you are a non-natural  person,  you should
consult with your tax advisor  regarding the treatment of income on the contract
for tax purposes.

Qualified Contracts

The Contracts  offered by the prospectus may also be used with a retirement plan
qualified under Sections 408(b)  (Traditional IRA), 408(k) (SEP IRA), 408A (Roth
IRA) of the Code (collectively "IRA Contracts") as well as Section 403(b) (TSAs)
of the Code (only for rollovers).  Contract Owners, Annuitants and Beneficiaries
are  cautioned  that benefits  under a Qualified  Contract may be subject to the
terms and  conditions of the plan  regardless of the terms and conditions of the
Contracts  issued  pursuant to the plan.  The following  discussion of Qualified
Contracts is not exhaustive and is for general informational  purposes only. The
tax rules regarding Qualified Contracts are very complex and will have differing
applications  depending on individual  facts and  circumstances.  Each purchaser
should  obtain  competent tax advice prior to  purchasing  Qualified  Contracts.
Qualified Contracts include special provisions  restricting  Contract provisions
that may  otherwise be available  as  described  in the  prospectus.  Generally,
ownership  of  a  Qualified  Contract  is  not  transferable  except  upon  full
withdrawal or annuitization.

A Qualified  Contract will not provide any necessary or additional  tax deferral
if it is used to fund a tax  qualified  retirement  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 tax qualified  retirement  plan.  You
should consult your tax adviser  regarding  these features and benefits prior to
purchasing a Qualified Contract.

Various  penalty and excise taxes may apply to  contributions  or  distributions
made in violation of applicable  limitations.  Furthermore,  certain  withdrawal
penalties and restrictions may apply to distributions from Qualified  Contracts.
(See "Tax Treatment of Distributions - Qualified Contracts.")

On July 6, 1983,  the Supreme  Court decided in Arizona  Governing  Committee v.
Norris that optional  annuity  benefits  provided  under an employer's  deferred
compensation  plan could not,  under Title VII of the Civil  Rights Act of 1964,
vary between men and women.  Qualified  Contracts  will utilize  annuity  tables
which do not  differentiate  on the basis of sex. These annuity tables will also
be  available  for  use  in  connection  with  certain  non-qualified   deferred
compensation plans.

Under applicable limitations,  certain amounts may be contributed to a Qualified
Contract  that will be deductible  from the  individual's  gross  income.  These
Qualified  Contracts are subject to limitations on  eligibility,  contributions,
transferability  and  distributions.  (See "Tax  Treatment  of  Distributions  -
Qualified  Contracts.") Under certain conditions,  distributions from other IRAs
and  other  Qualified   Contracts  may  be  rolled  over  or  transferred  on  a
tax-deferred  basis  into an IRA  Contract.  Sales of  Contracts  for use as IRA
Contracts are subject to special requirements imposed by the Code, including the
requirement that certain  informational  disclosure be given to persons desiring
to  establish  an IRA.  Purchasers  of  Contracts to be qualified as IRAs should
obtain  competent tax advice as to the tax treatment and  suitability of such an
investment.

Tax Treatment of Distributions - 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  Qualified
Contract.  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  Contracts,  including IRA  Contracts.  To the
extent  amounts are not included in gross  income  because they have been rolled
over to an IRA or to another eligible Qualified Contract, no tax penalty will be
imposed.  For  details on when the 10% tax  penalty  will not apply,  please see
section 7 Taxes -  Distributions - Qualified  Contracts of the prospectus.  Many
withdrawals from Qualified  Contracts can be rolled over to an IRA, 403(b) plan,
qualified  retirement  plan,  or a  457(b)  plan  sponsored  by  a  governmental
employer.  If you  receive a  withdrawal  from a 403(b)  Contract  that could be
rolled over and you do not elect to make a direct  rollover of that amount to an
IRA or other  qualified  plan, 20% of the taxable amount must by law be withheld
by us for taxes.  In situations  where this mandatory tax  withholding  does not
apply,  other  tax  amounts  may  be  withheld  unless  you  elect  out  of  the
withholding.  You  may  request  more  detailed  information  about  income  tax
withholding at the time of a withdrawal.

Assignments, Pledges and Gratuitous Transfers

Other  than in the  case of  Qualified  Contracts  (which  generally  cannot  be
assigned or pledged),  any  assignment  or pledge of (or  agreement to assign or
pledge) any  portion of the  Contract  Value is treated  for federal  income tax
purposes  as a  surrender  of such  amount or  portion.  The  investment  in the
Contract is  increased  by the amount  included  as income with  respect to such
amount  or  portion,  though  it is not  affected  by any  other  aspect  of the
assignment or pledge  (including its release).  If a Contract Owner  transfers a
Contract without adequate  consideration to a person other than their spouse (or
to a former spouse incident to divorce), the Contract Owner will be taxed on the
difference  between his or her Contract Value and the investment in the Contract
at the time of  transfer.  In such  case,  the  transferee's  investment  in the
Contract will be increased to reflect the increase in the transferor's income.


The transfer or assignment of ownership of the Contract,  the  designation of an
Annuitant,  the  selection  of certain  Income  Dates,  or the  exchange  of the
Contract may result in certain  other tax  consequences  that are not  discussed
here. A Contract Owner contemplating any such transfer,  assignment, or exchange
should consult a tax advisor as to the tax consequences.

Death Benefits

Any death benefits paid under the Contract are taxable to the  Beneficiary.  The
rules governing the taxation of payments from an annuity contract,  as discussed
above,  generally  apply to the payment of death  benefits and depend on whether
the death benefits are paid as a lump sum or as Annuity  Payments.  Estate taxes
may also apply.

Income Tax Withholding

All  distributions  or the portion thereof which is included in the gross income
of the Contract Owner are subject to federal income tax withholding.  Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from  non-periodic  payments.  However,  the Contract Owner, in most
cases,  may elect not to have taxes  withheld or to have  withholding  done at a
different rate.

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.

Although the likelihood of legislative changes is uncertain, there is always the
possibility  that the tax treatment of the Contract  could change by legislation
or otherwise. Consult a tax adviser with respect to legislative developments and
their effect on the Contract.

We have the right to modify the Contract in response to legislative changes that
could  otherwise  diminish the  favorable tax  treatment  that annuity  Contract
Owners currently receive.  We make no guarantee  regarding the tax status of any
Contract and do not intend the above discussion as tax advice.


<PAGE>


 ANNUITY PROVISIONS
--------------------------------------------------------------------------------

We base your monthly Annuity Payment upon:

*    Whether you select a fixed payout,  variable  payout,  or a combination  of
     both fixed and variable payouts;

*    the adjusted  Contract Value  (Contract Value adjusted for any MVA and less
     any premium tax on the Income Date);

*    the Annuity Option you select;

*    the age of the Annuitant and any joint Annuitant; and

*    the sex of the Annuitant and joint Annuitant where allowed.

We guarantee fixed payouts as to dollar amount and the amount does not vary with
the investment  experience of an Investment  Option. If you elect to receive any
portion of your  Annuity  Payments  as a fixed  payout,  the amount of  adjusted
Contract Value that you elect to apply to fixed Annuity  Payments will be placed
in our general account and it will not participate in the investment  experience
of the Investment Options.

Variable  payouts  are not  predetermined  as to dollar  amount and will vary in
amount with the investment experience of the Investment Option(s) you select. We
use Annuity Units to determine the amount of any variable  Annuity  Payments you
elect to receive.

Annuity Unit Value

We will purchase a fixed number of Annuity Units on the Income Date as follows:

The first Annuity Payment is equal to the amount of adjusted Contract Value that
you elect to apply to variable  Annuity  Payments,  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.

We determine  the fixed number of Annuity  Units in each  subaccount by dividing
the amount of the first Annuity  Payment for each subaccount by the Annuity Unit
value on the  Income  Date.  Thereafter,  the  number of  Annuity  Units in each
subaccount  remains unchanged unless you make a transfer.  The number of Annuity
Units will also change if Annuity Option 3 is in effect, one Annuitant dies, and
the surviving joint Annuitant  elects to receive Annuity  Payments at 75% or 50%
of the previous payment amount. All calculations will appropriately  reflect the
Annuity Payment frequency selected.

The total Annuity Payment on each subsequent  Annuity Payment date is the sum of
the Annuity Payments for each subaccount. The Annuity Payment in each subaccount
is  determined  by  multiplying  the number of Annuity  Units  allocated  to the
subaccount  by the Annuity  Unit value for that  subaccount.  We  determine  the
Annuity Unit value on each subsequent valuation date as follows:

1.   The net investment factor is determined as described in prospectus  section
     3. Purchase - Accumulation Units.

2.   The Annuity Unit value for a valuation  period is equal to:

     *    the Annuity Unit value for the immediately preceding valuation period.

     *    multiplied  by the net  investment  factor for the  current  valuation
          period;

     *    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
rate  which we use in  determining  the basis for the  purchase  of an  Annuity,
adjusted to reflect the particular valuation period. The assumed investment rate
that Allianz Life will use is 5%. However,  we may agree to use a different rate
(which will never exceed 7%).

FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

The audited consolidated  financial statements of Allianz Life as of and for the
year ended  December  31, 2002  should be  considered  only as bearing  upon the
ability of Allianz Life to meet its obligations under the Contracts. The audited
financial  statements  of the  Separate  Account  as of and for the  year  ended
December 31, 2002 are also included.

[WE WILL ADD AUDITED FINANCIAL STATEMENTS UPON AMENDMENT.]


<PAGE>


                         APPENDIX A - ILLUSTRATIONS                          A-1
                              IMPORTANT DISCLOSURES
                        Adjusted Historical Illustration

This is an illustration not a contract.  The purpose of this  illustration is to
demonstrate  how the  performance of the underlying  Investment  Options offered
through the Contract may affect  Contract  Values,  death  benefits,  and income
benefits  over an  extended  period  of  time.  This  illustration  is  based on
historical  rates of return  and is not  intended  to serve as a  projection  or
prediction of future  investment  returns.  It illustrates how much the Contract
would  hypothetically  be worth,  and how much the guaranteed  death benefit and
guaranteed minimum income benefit would be, at the end of each year if:

(1)  the product were offered and the customer purchased the variable annuity on
     the hypothetical Issue Date;

(2)  the customer had made the Purchase Payments shown; and

(3)  the customer had allocated the Purchase Payments to the Investment  Options
     indicated.

To assist you in understanding  this  illustration,  mathematical  depictions of
hypothetical performance may be accompanied by visual depictions,  including pie
charts, graphs, and other types of charts.

The  value of a  variable  annuity  will  fluctuate  up and  down,  based on the
performance of the  underlying  Investment  Options,  and the Contract Owner may
experience a gain or loss.  Actual  investment  results may be more or less than
those  shown on this  illustration  and will  depend  on a  number  of  factors,
including the choice and investment experience of the Investment Options.

This illustration may illustrate adjusted historical performance for one or more
Investment Options.  If more than one option is illustrated,  performance may be
shown as aggregate performance for all Investment Options selected. In addition,
if you elect to illustrate more than one Investment Option and to hypothetically
allocate more money to one option than to other options (for example, 50% to one
option, 30% to a second option,  and 20% to a third option),  performance may be
shown as weighted aggregate performance.

Performance  data for the Investment  Options  illustrated in this  illustration
reflects the  deduction  of the  mortality  and expense  risk (M&E)  charges and
contract maintenance charge. The fees and expenses of the underlying  Investment
Options  (which serve as funding  vehicles) are also  reflected.  The withdrawal
charge may or may not be reflected,  depending  upon what is being  illustrated.
For example,  the withdrawal  charge would be deducted from cash surrender value
figures that are  illustrated,  but not Contract Value figures.  Please refer to
the prospectus for full details on charges, expenses and fees.

Standardized   Average  Annual  Return:  Any  adjusted  historical   performance
illustration  is  accompanied  by  Standardized  Average  Annual Return for each
Investment  Option  depicted  in  the  illustration.   Standardized   return  is
calculated  using uniform  guidelines as mandated by the Securities and Exchange
Commission.  Standardized  return figures assume a one-time lump sum investment,
and do not reflect the effect of taxation.  Standardized return is shown for the
most  recent  1, 5,  and 10 year  periods,  or from  the  inception  date of the
subaccount,  if later.  In contrast,  illustration  materials may depict returns
from the inception date of the applicable Investment Option, if earlier than the
inception date of the subaccount. Standardized return includes the effect of all
Investment Option expenses and all Contract expenses.  If Contract expenses vary
depending upon which features are selected, standardized return will reflect the
highest  potential  expenses.  In  contrast,  an  illustration  may reflect only
certain  expenses.   Standardized  return  also  assumes  the  assessment  of  a
withdrawal charge at the end of each applicable period.  Standardized  return is
computed as of the most recent calendar quarter end.


--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; are not deposits or obligations of, or guarantees by,
any bank or  deposit  or  institution;  and are  subject  to  investment  risks,
including the possible loss of principal.


USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

 xx/xx/2002                                                   Page x of y


<PAGE>


                                                                             A-2

The  adjusted  historical  average  annual  return  is based  upon the  weighted
aggregate  historical  rate  of  return  on  the  Investment  Options  selected,
commencing on the hypothetical Issue Date, and calculates the change in Contract
Value from the  beginning of the  hypothetical  period to the end of the period,
adjusted for  additional  Purchase  Payments and any  withdrawals.  The adjusted
historical  average  annual  return  commences  on  the  inception  date  of the
Investment Option and includes M&E charges and Investment  Option expenses,  but
does not include the withdrawal charge.

Weighted  aggregate  return for the  Investment  Options  selected for the total
period  shown is:  xx.xx%.  Average  annual  returns for each of the  Investment
Options  selected for the most recent 1, 5, and 10 year periods  (computed as of
the  most  recent   calendar   quarter)  are  shown  on  another  page  of  this
illustration.

Taxes:  The effect of income taxes,  penalty  taxes,  and premium taxes have not
been  reflected  in  this  illustration.  While  withdrawals  may or may  not be
depicted within this illustration, withdrawals from the Contract will be subject
to ordinary income tax to the extent that the Contract Value immediately  before
the  withdrawal  exceeds  the total  amount  of  after-tax  money  paid into the
Contract.  A  withdrawal  in excess of the  taxable  amount  will  constitute  a
nontaxable  return of principal.  If the taxpayer has not attained age 59 1/2 at
the time of the  distribution,  the portion of the withdrawal that is subject to
income tax may also be subject to a 10% premature  distribution penalty.  Please
read the prospectus for further information.

For any  Qualified  Contract,  e.g.,  IRA,  the tax deferred  growth  feature is
already  provided  by the tax  qualified  retirement  plan.  Therefore,  product
features and benefits other than tax deferral should be reasons for acquiring an
annuity in a  qualified  retirement  plan.  If the  Contract  is an IRA or other
Qualified  Contract,  the Contract  Owner will generally be taxed on all amounts
withdrawn,  or received on withdrawal.  The tax consequences  will be different,
however, if the Contract is a Roth IRA, or a traditional non-deductible IRA. See
your tax advisor and read the  prospectus for  additional  information.  The tax
treatment of death benefit proceeds of a Contract differs from the tax treatment
of a life insurance policy.  See your tax advisor and the prospectus for further
details.

Costs and Expenses: The Contract has insurance features and investment features,
and there are costs related to each.

Contract  maintenance  charge.  Each year,  Allianz  Life deducts a $50 contract
maintenance charge from your Contract. Allianz Life currently waives this charge
if the value of your Contract is at least $75,000.

Mortality and expense risk (M&E) charge. Allianz Life deducts a M&E charge which
varies depending upon the benefit options you choose.  The table below shows the
combinations  available to you and their charges during the Accumulation  Phase.
The M&E charges are  calculated as a percentage  of the average  daily  Separate
Account  Value  invested  in an  Investment  Option  on an  annual  basis.  This
illustration  reflects the M&E charge  associated  with the benefit  options you
have chosen.

                                       Total M&E Charge         Total M&E Charge
                                       Without the GMIB           With the GMIB
Traditional GMDB                             1.75%                    2.20%
EP GMDB                                      1.95%                    2.40%
Enhanced GMDB                                2.05%                    2.40%

The selection of the Traditional  GMDB, EP GMDB,  Enhanced GMDB, or GMIB must be
made at the time of initial  Purchase  Payment.  Once  selected,  they cannot be
changed.

--------------------------------------------------------------------------------

This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.


USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

 xx/xx/2002                                                   Page x of y


<PAGE>


                                                                             A-3
The GMIB value and the guaranteed minimum death benefit available through the
Enhanced GMDB are the greater of:

*    total Purchase Payments adjusted for partial withdrawals increased by 5% on
     each Contract Anniversary prior to age 81; or

*    the maximum  Contract  Value on any Contract  Anniversary  plus  subsequent
     additional   Purchase  Payments  and  minus  subsequent   adjusted  partial
     withdrawals prior to age 81.

The GMIB guarantees  that your Annuity  Payments will be equal to the guaranteed
fixed payout rates  applied to the GMIB value.  We will use current fixed payout
rates applied to the Contract  Value  adjusted for any  applicable MVA (less any
applicable  premium tax) to calculate  your Annuity  Payments if that produces a
greater  payment.  However,  if we do not use the GMIB value to  calculate  your
Annuity Payments you will incur higher Contract  expenses without  receiving any
explicit benefit from the GMIB option.

The GMIB is  subject  to a 10-year  waiting  period  and your  Contract  must be
annuitized  under one of the fixed  Annuity  Options  1-6.  If a period  certain
Annuity Option is chosen,  the period must be a minimum of ten years.  If you do
not hold your  Contract for ten years  before the Income  Date,  you cannot take
advantage of the GMIB benefit.

You can always  annuitize  your Contract Value two years or more after the Issue
Date under a fixed and/or  variable  Annuity  Option.  Some states may require a
shorter period of time.

The  Traditional  GMDB  guarantees  the  greater  of  the  following,  less  any
applicable  premium  tax:

*    Contract Value or
*    total Purchase Payments adjusted for partial withdrawals.

The Enhanced GMDB  guarantees the greater of the following,  less any applicable
premium tax:

*    Contract Value or
*    the guaranteed minimum death benefit (see above).

The EP GMDB guarantees the greater of 1, 2 or 3, less any applicable premium
tax:

1)   Contract Value;

2)   total Purchase Payments less adjusted partial withdrawals;

3)   Contract Value PLUS

     *    If you are 69 or younger on the Issue  Date,  50% of the lesser of (a)
          or (b), or

     *    If you are 70 or older on the Issue Date,  35% of the lesser of (a) or
          (b).

     (a)  Is the Contract Value minus total Purchase Payments.

     (b)  Is three times the total Purchase Payments.

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 the second Contract Year.

There are also daily  Investment  Option expenses which  currently  range, on an
annual basis,  from 0.57% to 1.82% of the average daily value of the  Investment
Option  after  expense  reimbursements  or  fee  waivers,   depending  upon  the
Investment Option.

This illustration reflects the costs of all optional features you have selected.
It does not reflect costs associated with features you have not selected. If you
choose to add optional  features,  it will  increase  costs and reduce  returns.
--------------------------------------------------------------------------------


This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.


 xx/xx/2002                                                   Page x of y


<PAGE>


                                                                             A-4


The  "Contract  Value" for any point in time is an amount equal to the sum of a)
the Fixed Account  Value,  and b) the Separate  Account  Value.  This value will
fluctuate  due  to  the  investment   performance  of  the  selected  Investment
Option(s).  The Contract Value reflects all Investment  Option  expenses and all
charges for the Contract features selected,  but does not include the withdrawal
charge.  It also does not reflect the impact of premium  taxes,  income taxes or
the 10% federal penalty tax for distributions prior to age 59 1/2.

The "Cash  Surrender  Value"  reflects all of the expenses and charges  assessed
against Contract Value, and also reflects any withdrawal charge (if applicable).
It does not reflect the impact of premium taxes, income taxes or the 10% federal
penalty tax for distributions prior to age 59 1/2.

Important  Considerations:  Past  performance is not  necessarily  indicative of
future results. Values will fluctuate, so that the value of a Contract purchased
by you may be worth more or less than your original cost.

International  investing involves some risks not present with U.S.  investments,
such as currency fluctuation and political volatility.

An investment in the Money Market fund is neither  insured nor guaranteed by the
FDIC or any other governmental agency.  Although the fund seeks to preserve your
$1.00 per share, it is possible to lose money in the fund.


--------------------------------------------------------------------------------




This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.


xx/xx/2002                                                    Page x of y


<PAGE>


                                                                             A-5
                            USAllianz(R) CharterTM II


Prepared For:   Contract Information for Features Selected
John Doe
                Contract Type: Non-Qualified
                Guaranteed Minimum Income Benefit (GMIB):
                Traditional Guaranteed Minimum Death Benefit (Traditional GMDB):
Period Beginning:

                     Standardized Average Annual Return and
                        Adjusted Investment Option Return

As of  [12/31/2000],  a one-time  investment  of $1,000 if withdrawn  would have
generated the following  Standardized  Average Annual Return,  without regard to
taxes:
<TABLE>
<CAPTION>

                                                    Investment Option Performance           Subaccount Performance
                                                    -----------------------------           ----------------------
                                                                               Since        Date of          Since     Date of
Investment Option                         1 Year    5 Years     10 Years     Inception     Inception       Inception   Inception
-----------------                         ------    -------     --------     ---------     ---------       ---------   ------------
<S>                                      <C>         <C>         <C>          <C>            <C>             <C>         <C>
USAZ Money Market Fund
Davis VA Financial Portfolio
Davis VA Value Portfolio
</TABLE>


Standardized  average annual return  figures are  calculated  from the inception
date of the applicable Allianz Life subaccount. Figures reflect the deduction of
all Contract and Investment  Option  expenses.  Where there is a varying expense
depending upon the feature selected,  the highest potential charge is shown. The
effect of the  withdrawal  charge is reflected at the end of each period  shown.
Non-standardized  performance  reflecting  Investment  Option  returns  prior to
subaccount inception have been adjusted for Contract expenses.



Past performance is not necessarily indicative of future results.


             [This page must accompany any accumulation illustration
                  containing adjusted historical performance.]












--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.


xx/xx/2002                                                    Page x of y


<PAGE>


                                                                             A-6
                            USAllianz(R) CharterTM II


Prepared For:   Contract Information for Features Selected
John Doe
                Contract Type: Non-Qualified
                Guaranteed Minimum Income Benefit (GMIB):
                Traditional Guaranteed Minimum Death Benefit (Traditional GMDB):
Period Beginning:

Investment Options and Allocations:

____ Portfolio (___%)
____ Portfolio (___%)

      Effect of Adjusted Historical Returns on Illustrated Contract Values

<TABLE>
<CAPTION>

------------------ --------- ------------------------ ------------------ ------------ ---------------- ----------- ------------
                               Adjusted Historical        Purchase                    Cash Surrender
                              Average Annual Return     Payments Less     Contract         Value         Death     GMIB Value
                     Age                                 Withdrawals        Value                       Benefit
   End of Year
------------------
<S>                   <C>           <C>                   <C>             <C>            <C>           <C>          <C>
   Mm/dd/yyyy         45             Xx.xx%               $x,xxx.00      $x,xxxx.00     $x,xxxx.00     $x,xxx.00    $x,xxx.00
------------------

------------------ --------- ------------------------ ------------------ ------------ ---------------- ----------- ------------
</TABLE>



This  illustration is based upon adjusted  historical  returns during the period
indicated.  However,  past returns are not  indicative of future  results.  This
illustration  is not intended to serve as a projection  or  prediction of future
returns and is presented as of the most recent calendar [year/quarter].







--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.


xx/xx/2002                                                    Page x of y



<PAGE>


                                                                             A-7
                              IMPORTANT DISCLOSURES
                  S&P 500 Hypothetical Historical Illustration


This is an illustration not a contract.  The purpose of this  illustration is to
demonstrate  how  Contract  Values,  death  benefits,  and income  benefits  are
affected by the investment  performance of the  Investment  Options.  The actual
investment  performance  fo te Investent  Options you select will likely be both
positive  and  negative  over an extended  period of time.  To  demonstrate  the
effects of the avrying rates of return over an extended period, the illustration
uses  historical  rates of return of the Standard & Poor's 500  Composite  Price
Index (S&P 500). These rate are used for illustration  purposes only and are not
intended to serve as a projection or prediction of future investment income. The
S&P 500 is not indicative of the performance of any Investment Option and is not
necessarily  indicative of future results.  No  representation is made as to the
future performance of any Investment Option. The illustration shows how much the
Contract would  hypothetically  be worth,  and how much the enhanced  guaranteed
death benefit and guaranteed minimum income benefit would be, at the end of each
year if:

*    the product were offered and the customer purchased the variable annuity on
     the hypothetical Issue Date; and

*    the customer had made the Purchase Payments shown; and

To assist you in understanding  this  illustration,  mathematical  depictions of
hypothetical performance may be accompanied by visual depictions,  including pie
charts, graphs, and other types of charts.

The  value of a  variable  annuity  will  fluctuate  up and  down,  based on the
performance of the  underlying  Investment  Options,  and the Contract Owner may
experience a gain or loss.  Actual  investment  results may be more or less than
those  shown on this  illustration  and will  depend  on a  number  of  factors,
including the choice and investment experience of the Investment Options.

 Rates of return reflect the deduction of the mortality and expense risk (M&E)
 charge and contract maintenance charge The withdrawal charge may or may not be
 reflected, depending upon wFdeducted from cash surrender value figures that are
 illustrated, but not Contract Value figures. Please refer to the prospectus for
 full details on charges, expenses and fees.

Taxes:  The effect of income taxes,  penalty  taxes,  and premium taxes have not
been  reflected  in  this  illustration.  While  withdrawals  may or may  not be
depicted within this illustration, withdrawals from the Contract will be subject
to ordinary income tax to the extent that the Contract Value immediately  before
the  withdrawal  exceeds  the total  amount  of  after-tax  money  paid into the
Contract.  A  withdrawal  in excess of the  taxable  amount  will  constitute  a
nontaxable  return of principal.  If the taxpayer has not attained age 59 1/2 at
the time of the  distribution,  the portion of the withdrawal that is subject to
income tax may also be subject to a 10% premature  distribution penalty.  Please
read the prospectus for further information.

For any  Qualified  Contract,  e.g.,  IRA,  the tax deferred  growth  feature is
already  provided  by the tax  qualified  retirement  plan.  Therefore,  product
features and benefits other than tax deferral should be reasons for acquiring an
annuity in a  qualified  retirement  plan.  If the  Contract  is an IRA or other
Qualified  Contract,  the Contract  Owner will generally be taxed on all amounts
withdrawn,  or received on withdrawal.  The tax consequences  will be different,
however, if the Contract is a Roth IRA, or a traditional non-deductible IRA. See
your tax advisor and read the prospectus for additional information.



--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

 xx/xx/2002                                                   Page x of y


<PAGE>


                                                                             A-8

The tax treatment of death benefit  proceeds of a Contract  differs from the tax
treatment of a life  insurance  policy.  See your tax advisor and the prospectus
for further details.

Costs and Expenses: The Contract has insurance features and investment features,
and there are costs related to each.

Contract  maintenance  charge.  Each year,  Allianz  Life deducts a $50 contract
maintenance charge from your Contract. Allianz Life currently waives this charge
if the value of your Contract is at least $75,000.

Mortality and expense risk (M&E) charge. Allianz Life deducts a M&E charge which
varies depending upon the benefit options you choose.  The table below shows the
combinations  available to you and their charges during the Accumulation  Phase.
The M&E charges are  calculated as a percentage  of the average  daily  Separate
Account  Value  invested  in an  Investment  Option  on an  annual  basis.  This
illustration  reflects the M&E charge  associated  with the benefit  options you
have chosen.

                                       Total M&E Charge         Total M&E Charge
                                       Without the GMIB           With the GMIB
Traditional GMDB                             1.75%                    2.20%
EP GMDB                                      1.95%                    2.40%
Enhanced GMDB                                2.05%                    2.40%

The selection of the Traditional  GMDB, EP GMDB,  Enhanced GMDB, or GMIB must be
made at the time of initial  Purchase  Payment.  Once  selected,  they cannot be
changed.


The GMIB value and the guaranteed minimum death benefit available through the
Enhanced GMDB are the greater of:

*    total Purchase Payments adjusted for partial withdrawals increased by 5% on
     each Contract Anniversary prior to age 81; or

*    the maximum  Contract  Value on any Contract  Anniversary  plus  subsequent
     additional   Purchase  Payments  and  minus  subsequent   adjusted  partial
     withdrawals prior to age 81.

The GMIB guarantees  that your Annuity  Payments will be equal to the guaranteed
fixed payout rates  applied to the GMIB value.  We will use current fixed payout
rates applied to the Contract  Value  adjusted for any  applicable MVA (less any
applicable  premium tax) to calculate  your Annuity  Payments if that produces a
greater  payment.  However,  if we do not use the GMIB value to  calculate  your
Annuity Payments you will incur higher Contract  expenses without  receiving any
explicit benefit from the GMIB option.

The GMIB is  subject  to a 10-year  waiting  period  and your  Contract  must be
annuitized  under one of the fixed  Annuity  Options  1-6.  If a period  certain
Annuity Option is chosen,  the period must be a minimum of ten years.  If you do
not hold your  Contract for ten years  before the Income  Date,  you cannot take
advantage of the GMIB benefit.

You can always  annuitize  your Contract Value two years or more after the Issue
Date under a fixed and/or  variable  Annuity  Option.  Some states may require a
shorter period of time.

The  Traditional  GMDB  guarantees  the  greater  of  the  following,  less  any
applicable  premium  tax:  |X|  Contract  Value or |X| total  Purchase  Payments
adjusted for partial withdrawals.




--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

 xx/xx/2002                                                   Page x of y


<PAGE>


                                                                             A-9

The Enhanced GMDB guarantees the greater of the following, less any applicable
premium tax:

*    Contract Value or

*    the guaranteed minimum death benefit (see above).

The EP GMDB guarantees the greater of 1, 2 or 3, less any applicable premium
tax:

1)   Contract Value;

2)   total Purchase Payments less adjusted partial withdrawals;

3)   Contract Value PLUS

     *    If you are 69 or younger on the Issue  Date,  50% of the lesser of (a)
          or (b), or

     *    If you are 70 or older on the Issue Date,  30% of the lesser of (a) or
          (b).

     (a)  Is the Contract Value minus total Purchase Payments.

     (b)  Is three times the total Purchase Payments.

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 the second Contract Year.

There are also daily  Investment  Option expenses which  currently  range, on an
annual basis,  from 0.57% to 1.82% of the average daily value of the  Investment
Option  after  expense  reimbursements  or  fee  waivers,   depending  upon  the
Investment Option.

This illustration reflects the costs of all optional features you have selected.
It does not reflect costs associated with features you have not selected. If you
choose to add optional features, it will increase costs and reduce returns.


The  "Contract  Value" for any point in time is an amount equal to the sum of a)
the Fixed Account  Value,  and b) the Separate  Account  Value.  This value will
fluctuate  due  to  the  investment   performance  of  the  selected  Investment
Option(s).  The Contract Value reflects all Investment  Option  expenses and all
charges for the Contract features selected,  but does not include the withdrawal
charge.  It also does not reflect the impact of premium  taxes,  income taxes or
the 10% federal penalty tax for distributions prior to age 59 1/2.

The "Cash  Surrender  Value"  reflects all of the expenses and charges  assessed
against Contract Value, and also reflects any withdrawal charge (if applicable).
It does not reflect the impact of premium taxes, income taxes or the 10% federal
penalty tax for  distributions  prior to age 59 1/2.  Important  Considerations:
Past  performance is not necessarily  indicative of future results.  Values will
fluctuate, so that the value of a Contract purchased by you may be worth more or
less than your original cost.







--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.


xx/xx/2002                                                    Page x of y

<PAGE>


                                                                            A-10
                            USAllianz(R) CharterTM II



Prepared For:   Contract Information for Features Selected
John Doe
                Contract Type: Non-Qualified
                Guaranteed Minimum Income Benefit (GMIB):
                Traditional Guaranteed Minimum Death Benefit (Traditional GMDB):
Period Beginning:


                  S&P 500 Hypothetical Historical Illustrations

<TABLE>
<CAPTION>

------------------ --------- ------------------------ ------------------ ------------ ---------------- ----------- ------------
                               Adjusted Historical        Purchase                    Cash Surrender
                              S&P 500 Annual Return     Payments Less     Contract         Value         Death     GMIB Value
                     Age                                 Withdrawals        Value                       Benefit
   End of Year
------------------
<S>                   <C>           <C>                   <C>             <C>            <C>           <C>          <C>
   Mm/dd/yyyy         45             Xx.xx%               $x,xxx.00      $x,xxxx.00     $x,xxxx.00     $x,xxx.00    $x,xxx.00
------------------

------------------ --------- ------------------------ ------------------ ------------ ---------------- ----------- ------------
</TABLE>

This  illustration is based upon adjusted  historical S&P 500 returns during the
period indicated. These S&P 500 returns are not indicative of the performance of
any Investment Option.  Past returns are not indicative of future results.  This
illustration  is not intended to serve as a projection  or  prediction of future
returns and is presented as of the most recent calendar [year/quarter].





--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.



xx/xx/2002                                                    Page x of y


<PAGE>


                                                                            A-11
                              IMPORTANT DISCLOSURES
                 Hypothetical Fixed Rate of Return Illustration

This is an illustration not a contract.  The purpose of this  illustration is to
demonstrate  how a varying  rate of return may  affect  Contract  Values,  death
benefits, and income benefits over an extended period of time. This illustration
is based upon  hypothetical  fixed  returns  during the period  indicated.  This
illustration  is not intended to serve as a projection  or  prediction of future
returns. It illustrates how much the Contract would hypothetically be worth, and
how much the  guaranteed  death benefit and  guaranteed  minimum  income benefit
would  be,  based  on  the   hypothetical   rate  of  return   illustrated.   No
representations are made that these hypothetical rates of return can be achieved
for any one year or sustained over any period of time.

The  value of a  variable  annuity  will  fluctuate  up and  down,  based on the
performance of the  underlying  Investment  Options,  and the Contract Owner may
experience a gain or loss.  Actual  investment  results may be more or less than
those reflected in the hypothetical  rates of return and will depend on a number
of factors,  including the choice and  investment  experience of the  Investment
Options.

Taxes:  The  effects of income,  penalty and state  premium  taxes have not been
reflected  in the  illustration.  While  surrenders  may or may not be  depicted
within  this  illustration,  surrenders  from the  Contract  will be  subject to
ordinary income tax to the extent that the Contract Value immediately before the
surrender exceeds the total amount of after-tax money paid into the Contract.  A
withdrawal in excess of the taxable amount will  constitute a nontaxable  return
of  principal.  If the  taxpayer  has not attained age 59 1/2 at the time of the
distribution,  the portion of the  withdrawal  that is subject to income tax may
also be  subject  to a 10%  premature  distribution  penalty.  Please  read  the
prospectus for further information.

For any  Qualified  Contract,  e.g.,  IRA,  the tax deferred  growth  feature is
already  provided  by the tax  qualified  retirement  plan.  Therefore,  product
features and benefits other than tax deferral should be reasons for acquiring an
annuity in a  qualified  retirement  plan.  If the  Contract  is an IRA or other
Qualified  Contract,  the Contract  Owner will generally be taxed on all amounts
withdrawn,  or received on withdrawal.  The tax consequences  will be different,
however, if the Contract is a Roth IRA, or a traditional non-deductible IRA. See
your tax advisor and read the prospectus for additional information.

The tax treatment of death benefit  proceeds of a Contract  differs from the tax
treatment of a life  insurance  policy.  See your tax advisor and the prospectus
for further details.

Costs and Expenses: The Contract has insurance features and investment features,
and there are costs related to each.

Contract  maintenance  charge.  Each year,  Allianz  Life deducts a $50 contract
maintenance charge from your Contract. Allianz Life currently waives this charge
if the value of your Contract is at least $75,000.

--------------------------------------------------------------------------------






This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.


xx/xx/2002                                                    Page x of y


<PAGE>


                                                                            A-12

Mortality and expense risk (M&E) charge. Allianz Life deducts a M&E charge which
varies depending upon the benefit options you choose.  The table below shows the
combinations  available to you and their charges during the Accumulation  Phase.
The M&E charges are  calculated as a percentage  of the average  daily  Separate
Account  Value  invested  in an  Investment  Option  on an  annual  basis.  This
illustration  reflects the M&E charge  associated  with the benefit  options you
have chosen.

                                       Total M&E Charge         Total M&E Charge
                                       Without the GMIB           With the GMIB
Traditional GMDB                             1.75%                    2.20%
EP GMDB                                      1.95%                    2.40%
Enhanced GMDB                                2.05%                    2.40%

The selection of the Traditional  GMDB, EP GMDB,  Enhanced GMDB, or GMIB must be
made at the time of initial  Purchase  Payment.  Once  selected,  they cannot be
changed.

The GMIB value and the guaranteed minimum death benefit available through the
Enhanced GMDB are the greater of:

*    total Purchase Payments adjusted for partial withdrawals increased by 5% on
     each Contract Anniversary prior to age 81; or

*    the maximum  Contract  Value on any Contract  Anniversary  plus  subsequent
     additional   Purchase  Payments  and  minus  subsequent   adjusted  partial
     withdrawals prior to age 81.


The GMIB guarantees  that your Annuity  Payments will be equal to the guaranteed
fixed payout rates  applied to the GMIB value.  We will use current fixed payout
rates applied to the Contract  Value  adjusted for any  applicable MVA (less any
applicable  premium tax) to calculate  your Annuity  Payments if that produces a
greater  payment.  However,  if we do not use the GMIB value to  calculate  your
Annuity Payments you will incur higher Contract  expenses without  receiving any
explicit benefit from the GMIB option.

The GMIB is  subject  to a 10-year  waiting  period  and your  Contract  must be
annuitized  under one of the fixed  Annuity  Options  1-6.  If a period  certain
Annuity Option is chosen,  the period must be a minimum of ten years.  If you do
not hold your  Contract for ten years  before the Income  Date,  you cannot take
advantage of the GMIB benefit.

You can always  annuitize  your Contract Value two years or more after the Issue
Date under a fixed and/or  variable  Annuity  Option.  Some states may require a
shorter period of time.

The  Traditional  GMDB  guarantees  the  greater  of  the  following,  less  any
applicable  premium  tax:

*    Contract Value or

*    total Purchase Payments adjusted for partial withdrawals.

The Enhanced GMDB  guarantees the greater of the following,  less any applicable
premium tax:

*    Contract Value or

*    the guaranteed minimum death benefit (see above).




--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.


USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y


<PAGE>


                                                                            A-13

The EP GMDB guarantees the greater of 1, 2 or 3, less any applicable premium
tax:

1)   Contract Value;

2)   total Purchase Payments less adjusted partial withdrawals;

3)   Contract Value PLUS

     *    If you are 69 or younger on the Issue  Date,  50% of the lesser of (a)
          or (b), or

     *    If you are 70 or older on the Issue Date,  30% of the lesser of (a) or
          (b).

     (a)  Is the Contract Value minus total Purchase Payments.

     (b)  Is three times the total Purchase Payments.

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 the second Contract Year.

There are also daily  Investment  Option expenses which  currently  range, on an
annual basis,  from 0.57% to 1.82% of the average daily value of the  Investment
Option  after  expense  reimbursements  or  fee  waivers,   depending  upon  the
Investment Option.

This illustration reflects the costs of all optional features you have selected.
It does not reflect costs associated with features you have not selected. If you
choose to add optional features, it will increase costs and reduce returns.

The  "Contract  Value" for any point in time is an amount equal to the sum of a)
the Fixed Account  Value,  and b) the Separate  Account  Value.  This value will
fluctuate  due  to  the  investment   performance  of  the  selected  Investment
Option(s).  The Contract Value reflects all Investment  Option  expenses and all
charges for the Contract features selected,  but does not include the withdrawal
charge.  It also does not reflect the impact of premium  taxes,  income taxes or
the 10% federal penalty tax for distributions prior to age 59 1/2.

The "Cash  Surrender  Value"  reflects all of the expenses and charges  assessed
against Contract Value, and also reflects any withdrawal charge (if applicable).
It does not reflect the impact of premium taxes, income taxes or the 10% federal
penalty tax for distributions prior to age 59 1/2.

Important  Considerations:  Past  performance is not  necessarily  indicative of
future results. Values will fluctuate, so that the value of a Contract purchased
by you may be worth more or less than your original cost.

International  investing involves some risks not present with U.S.  investments,
such as currency fluctuation and political volatility.

An investment in the Money Market fund is neither  insured nor guaranteed by the
FDIC or any other governmental agency.  Although the fund seeks to preserve your
$1.00 per share, it is possible to lose money in the fund.







--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.


USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y


<PAGE>


                                                                            A-14
                            USAllianz(R) Charter TM II

Prepared For:   Contract Information for Features Selected
John Doe
                Contract Type: Non-Qualified
                Guaranteed Minimum Income Benefit (GMIB):
                Traditional Guaranteed Minimum Death Benefit (Traditional GMDB):
Period Beginning:

                 Hypothetical Fixed Rate of Return Illustration
                           Gross Rate of Return x.xx%
<TABLE>
<CAPTION>

------------------ --------- ------------------------ ------------------ ------------ ---------------- ----------- ------------
                              Hypothetical Gross
                                 Rate of Return           Purchase                    Cash Surrender
                                                        Payments Less     Contract         Value         Death     GMIB Value
                     Age       (not to exceed 12%)       Withdrawals        Value                       Benefit
   End of Year
------------------
<S>                   <C>            <C>                 <C>             <C>            <C>           <C>          <C>
   Mm/dd/yyyy         45             Xx.xx%               $x,xxx.00      $x,xxxx.00     $x,xxxx.00     $x,xxx.00    $x,xxx.00
------------------

------------------ --------- ------------------------ ------------------ ------------ ---------------- ----------- ------------
</TABLE>


This  illustration  is based on the selected gross rate of return and calculates
the change in Contract  Value from the  beginning  period to the ending  period,
adjusted for subsequent Purchase Payments and any withdrawals.  The hypothetical
gross rate of return does not include any  expenses and  charges.  However,  all
values  reflect the  contract  maintenance  charge,  and the net rate of return,
which takes into  consideration  the  applicable  M&E charge and  average  total
annual Investment Option operating expenses of .xxxx%.

This  illustration  is not intended to serve as a projection  or  prediction  of
future returns.

         An illustration showing a hypothetical 0% gross rate of return
                      is contained on the following page.




--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.


USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y


<PAGE>


                                                                            A-15
                            USAllianz(R) CharterTM II

Prepared For:   Contract Information for Features Selected
John Doe
                Contract Type: Non-Qualified
                Guaranteed Minimum Income Benefit (GMIB):
                Traditional Guaranteed Minimum Death Benefit (Traditional GMDB):
Period Beginning:

                 Hypothetical Fixed Rate of Return Illustration
                           Gross Rate of Return 0.00%

<TABLE>
<CAPTION>
<S>                   <C>             <C>                 <C>             <C>            <C>           <C>          <C>
------------------ --------- ------------------------ ------------------ ------------ ---------------- ----------- ------------
                                                          Purchase                    Cash Surrender
-----------------              Hypothetical Gross       Payments Less     Contract         Value         Death     GMIB Value
                     Age         Rate of Return          Withdrawals        Value                       Benefit
   End of Year
------------------

   Mm/dd/yyyy         45              0.00%               $x,xxx.00      $x,xxxx.00     $x,xxxx.00     $x,xxx.00    $x,xxx.00
------------------

------------------ --------- ------------------------ ------------------ ------------ ---------------- ----------- ------------
</TABLE>



This  illustration  is based on the selected gross rate of return and calculates
the change in Contract  Value from the  beginning  period to the ending  period,
adjusted for subsequent Purchase Payments and any withdrawals.  The hypothetical
gross rate of return does not include any  expenses and  charges.  However,  all
values  reflect the  contract  maintenance  charge,  and the net rate of return,
which takes into  consideration  the  applicable  M&E charge and  average  total
annual Investment Option operating expenses of .xxxx%.







--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.


USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y


<PAGE>


                                                                            A-16

                              IMPORTANT DISCLOSURES
             Hypothetical Variable and/or Fixed Payout Illustration

This illustration depicts how payments under an Annuity Option may work when you
annuitize your Contract.  This  illustration is not a contract,  and it is not a
representation or guarantee of future returns or of any specific payout amount.

If you want to receive  regular  income  from your  Contract,  you can choose an
Annuity Option at any time after the second 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  Annuity  Payments
come from the Investment Options, the dollar amount of your Annuity Payments may
go up or down based on the performance of the Investment Options.

The Contract cannot be annuitized prior to the second Contract Anniversary.  For
this  reason,  illustrations  that you receive will be based upon an Income Date
that is at least 24 months after the Issue Date.

You can elect  illustrations  of either a "variable"  payout option or a "fixed"
payout option, or, you may elect to receive both a variable payout  illustration
and a fixed payout illustration.

We do not  base  the  "fixed"  payout  option  illustration  upon  any  sort  of
historical performance, but rather we base it upon fixed payout factors that are
in effect on the date of the illustration. These factors can change up until the
Income Date.

We base  the  "variable"  payout  option  illustration  upon  actual  historical
performance of one or more Investment Options over the annuity payout period, as
adjusted for all applicable  Investment Option operating expenses and applicable
Contract expenses.  The principal purpose of the variable payout illustration is
to demonstrate  how the performance of the underlying  Investment  Options could
affect  Contract  Values and Annuity  Payment  amounts  when you  annuitize  the
Contract.   Of  course,  past  performance  of  any  Investment  Option  is  not
necessarily  indicative of future results,  and no  representation is made as to
the future performance of any Investment Option.

This illustration may illustrate adjusted historical performance for one or more
Investment Options.  If more than one option is illustrated,  performance may be
shown as aggregate performance for all Investment Options selected. In addition,
if you elect to illustrate more than one Investment Option and to hypothetically
allocate more money to one option than to other options (for example, 50% to one
option, 30% to a second option,  and 20% to a third option),  performance may be
shown as weighted aggregate performance.

Performance  data for the Investment  Options  illustrated in this  illustration
reflects the  deduction  of the  mortality  and expense  risk (M&E)  charges and
contract maintenance charge. The fees and expenses of the underlying  Investment
Options  (which serve as funding  vehicles) are also  reflected.  The withdrawal
charge may or may not be reflected,  depending  upon what is being  illustrated.
For example,  the withdrawal  charge would be deducted from cash surrender value
figures that are  illustrated,  but not Contract Value figures.  Please refer to
the prospectus for full details on charges, expenses and fees.

--------------------------------------------------------------------------------




This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y
<PAGE>

                                                                            A-17

As an  alternative  variable  payout  illustration,  the  Standard  & Poor's 500
Composite Price Index (S&P 500) or other recognized  investment benchmark may be
used to  show  how  values  may  vary.  The  S&P  500 is not  indicative  of the
performance of any Investment Option and is not necessarily indicative of future
results.  No  representation  is  made  as to  the  future  performance  of  any
Investment  Option.  The  hypothetical  assumed rates of return are illustrative
only and are not a representation of past or future investment returns.

The  illustration  has not  been  adjusted  for  state  or  federal  income  tax
liability,  10% federal  penalty tax for surrenders  prior to age 59 1/2, or any
applicable  state premium taxes;  values would be lower if such  adjustments had
been made.

Variable  Payout  Annuity-  Variable  annuity  payouts  depend on a  variety  of
factors,  including the amount  annuitized,  the annuity payout option selected,
and the assumed investment rate (AIR).  Variable Annuity Payments will vary with
the investment  performance of the Investment Option(s) selected.  This variable
income can increase or decrease from the initial  monthly Annuity Payment and no
minimum  dollar  amount of  variable  income is  guaranteed.  Actual  investment
results may be more or less than those  reflected in the  hypothetical  rates of
return  and will  depend  on a number  of  factors,  including  the  choice  and
investment experience of the eligible variable Investment Options.

The AIR in the illustration was selected by your registered representative.  The
3% AIR Annuity  Payments start at a lower level than Annuity  Payments with a 5%
AIR,  with the  potential  for more rapid  increase in Annuity  Payment  amounts
during later years.  Conversely if a 5% AIR is chosen there is a potential for a
more rapid decrease in Annuity Payment amounts during the later years.

The  value of a  variable  annuity  will  fluctuate  up and  down,  based on the
performance of the  underlying  Investment  Options,  and the Contract Owner may
experience a gain or loss.  Actual  investment  results may be more or less than
those  shown on this  illustration  and will  depend  on a  number  of  factors,
including the choice and investment experience of the Investment Options.

Standardized   Average  Annual  Return:  Any  adjusted  historical   performance
illustration  is  accompanied  by  Standardized  Average  Annual Return for each
Investment  Option  depicted  in  the  illustration.   Standardized   return  is
calculated  using uniform  guidelines as mandated by the Securities and Exchange
Commission.  Standardized  return figures assume a one-time lump sum investment,
and do not reflect the effect of taxation.  Standardized return is shown for the
most  recent  1, 5,  and 10 year  periods,  or from  the  inception  date of the
subaccount,  if later.  In contrast,  illustration  materials may depict returns
from the inception date of the applicable Investment Option, if earlier than the
inception date of the subaccount. Standardized return includes the effect of all
Investment Option expenses and all Contract expenses.  If Contract expenses vary
depending upon which features are selected, standardized return will reflect the
highest  potential  expenses.  In  contrast,  an  illustration  may reflect only
certain  expenses.   Standardized  return  also  assumes  the  assessment  of  a
withdrawal charge at the end of each applicable period.  Standardized  return is
computed as of the most recent calendar quarter end.

The  adjusted  historical  average  annual  return  is based  upon the  weighted
aggregate  historical  rate  of  return  on  the  Investment  Options  selected,
commencing on the hypothetical Issue Date, and calculates the change in Contract
Value from the  beginning of the  hypothetical  period to the end of the period,
adjusted for  additional  Purchase  Payments and any  withdrawals.  The adjusted
historical  average  annual  return  commences  on  the  inception  date  of the
Investment Option and includes M&E charges and Investment  Option expenses,  but
does not include the withdrawal charge.


--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y


<PAGE>


                                                                            A-18

Weighted  aggregate  return for the  Investment  Options  selected for the total
period  shown is:  xx.xx%.  Average  annual  returns for each of the  Investment
Options  selected for the most recent 1, 5, and 10 year periods  (computed as of
the  most  recent   calendar   quarter)  are  shown  on  another  page  of  this
illustration.

Fixed  Payout  Annuity-  Fixed  payments  will  depend on a variety of  factors,
including  the amount  annuitized,  payout  factor  rates when the  Contract  is
annuitized,  date of birth,  and annuity payout option  selected.  Fixed Annuity
payouts,  once  commenced,  will not vary  (except as  indicated  by the Annuity
Option on the death of one of the joint Annuitants).

Annuity  Value - We base  Annuity  Payments  on the  Annuity  Value shown in the
illustration.  If you select the GMIB, your Annuity Value is described below. If
you do not select the GMIB,  your Annuity Value is the Contract  Value  adjusted
for any applicable Market Value Adjustment and less any premium taxes.

Costs and Expenses: The Contract has insurance features and investment features,
and there are costs related to each.

Contract  maintenance  charge.  Each year,  Allianz  Life deducts a $50 contract
maintenance charge from your Contract. Allianz Life currently waives this charge
if the value of your Contract is at least $75,000.

Mortality and expense risk (M&E) charge. Allianz Life deducts a M&E charge which
varies depending upon the benefit options you choose.  The table below shows the
combinations  available to you and their charges during the Accumulation  Phase.
The M&E charges are  calculated as a percentage  of the average  daily  Separate
Account  Value  invested  in an  Investment  Option  on an  annual  basis.  This
illustration  reflects the M&E charge  associated  with the benefit  options you
have chosen.

                                       Total M&E Charge         Total M&E Charge
                                       Without the GMIB           With the GMIB
Traditional GMDB                             1.75%                    2.20%
EP GMDB                                      1.95%                    2.40%
Enhanced GMDB                                2.05%                    2.40%

--------------------------------------------------------------------------------





This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y

<PAGE>


                                                                            A-19

The selection of the Traditional  GMDB, EP GMDB,  Enhanced GMDB, or GMIB must be
made at the time of initial  Purchase  Payment.  Once  selected,  they cannot be
changed.

During the Payout  Phase,  the M&E charge is 1.75% of the  average  daily  value
invested in an Investment  Option on an annual basis,  regardless of the benefit
options you selected.

The GMIB value is the greater of:

*    total Purchase Payments adjusted for partial withdrawals increased by 5% on
     each Contract Anniversary prior to age 81; or

*    the maximum  Contract  Value on any Contract  Anniversary  plus  subsequent
     additional   Purchase  Payments  and  minus  subsequent   adjusted  partial
     withdrawals prior to age 81.

The GMIB guarantees  that your Annuity  Payments will be equal to the guaranteed
fixed payout rates  applied to the GMIB value.  We will use current fixed payout
rates applied to the Contract  Value  adjusted for any  applicable MVA (less any
applicable  premium tax) to calculate  your Annuity  Payments if that produces a
greater  payment.  However,  if we do not use the GMIB value to  calculate  your
Annuity Payments you will incur higher Contract  expenses without  receiving any
explicit benefit from the GMIB option.

The GMIB is  subject  to a 10-year  waiting  period  and your  Contract  must be
annuitized  under one of the fixed  Annuity  Options  1-6.  If a period  certain
Annuity Option is chosen,  the period must be a minimum of ten years.  If you do
not hold your  Contract for ten years  before the Income  Date,  you cannot take
advantage of the GMIB benefit.

You can always  annuitize  your Contract Value two years or more after the Issue
Date under a fixed and/or  variable  Annuity  Option.  Some states may require a
shorter period of time.

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 the second Contract Year.

There are also daily  Investment  Option expenses which  currently  range, on an
annual basis,  from 0.57% to 1.82% of the average daily value of the  Investment
Option  after  expense  reimbursements  or  fee  waivers,   depending  upon  the
Investment Option.

This illustration reflects the costs of all optional features you have selected.
It does not reflect costs associated with features you have not selected. If you
choose to add optional features, it will increase costs and reduce returns.

Important  Considerations:  Past  performance is not  necessarily  indicative of
future results. No representation is made as to future performance. The value of
an annuity  contract will  fluctuate,  so that it may be worth more or less than
amounts paid in.

International  investing involves some risks not present with U.S.  investments,
such as currency fluctuation and political volatility.

An investment in the Money Market fund is neither  insured nor guaranteed by the
FDIC or any other governmental agency.  Although the fund seeks to preserve your
$1.00 per share, it is possible to lose money in the fund.

--------------------------------------------------------------------------------


This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y


<PAGE>


                                                                            A-20
                            USAllianz(R) CharterTM II


Prepared For:   Contract Information for Features Selected
John Doe
                Contract Type: Non-Qualified
                Guaranteed Minimum Income Benefit (GMIB):
                Traditional Guaranteed Minimum Death Benefit (Traditional GMDB):
Period Beginning:

                     Standardized Average Annual Return and
                        Adjusted Investment Option Return

As of  [12/31/2000],  a one-time  investment  of $1,000 if withdrawn  would have
generated the following  Standardized  Average Annual Return,  without regard to
taxes:
<TABLE>
<CAPTION>

                                                         Investment Option Performance                    Subaccount Performance
                                                                               Since        Date of          Since     Date of
Investment Option                         1 Year    5 Years     10 Years     Inception     Inception       Inception   Inception
-----------------                         ------    -------     --------     ---------     ---------       ---------   -----------
<S>                                       <C>        <C>        <C>          <C>           <C>             <C>         <C>
USAZ Money Market Fund
Davis VA Financial Portfolio
Davis VA Value Portfolio
</TABLE>


Standardized  average annual return  figures are  calculated  from the inception
date of the applicable Allianz Life subaccount. Figures reflect the deduction of
all Contract and Investment  Option  expenses.  Where there is a varying expense
depending upon the feature selected,  the highest potential charge is shown. The
effect of the  withdrawal  charge is reflected at the end of each period  shown.
Non-standardized  performance  reflecting  Investment  Option  returns  prior to
subaccount inception have been adjusted for Contract expenses.



Past performance is not necessarily indicative of future results.


             [This page must accompany any accumulation illustration
                  containing adjusted historical performance.]



--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y


<PAGE>



                                                                            A-21
                            USAllianz(R) CharterTM II



Prepared For:   Contract Information for Features Selected
John Doe
                Contract Type: Non-Qualified
                Guaranteed Minimum Income Benefit (GMIB):
                Traditional Guaranteed Minimum Death Benefit (Traditional GMDB):
Period Beginning:



                    HYPOTHETICAL VARIABLE PAYOUT ILLUSTRATION
                     BASED UPON ADJUSTED HISTORICAL RETURNS

Annuity Option:_______
Annuitization Age:      65, Male                    Annuity Value:    520,097.92
Federal Tax Rate:       28%
Assumed Investment Rate (AIR):        3.5%
Income Date:______________                         Cost Basis:        500,000.00
Issue Date:______________

  Investment Option                                  Allocation
  USAZ Van Kampen Aggressive Growth Fund                    90%
  USAZ Van Kampen Growth Fund                               10%


<TABLE>
<CAPTION>
   -------------------- ----------------------- ---------------------- ---------------------- ----------------------- --------------
   Period Ending Date         Payout Age           Monthly Payout        Exclusion Amount         Taxable Amount        Cumulative
                                                                                                                          Payout
   -------------------- ----------------------- ---------------------- ---------------------- ----------------------- --------------
<S>                         <C>                       <C>                   <C>                    <C>                   <C>


------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

This illustration is based upon weighted aggregate historical returns during the
period  indicated.  However,  past returns are not indicative of future results.
This  illustration  is not intended to serve as a projection  or  prediction  of
future returns.

Average annual returns for each of the Investment  Options selected for the most
recent  1, 5,  and 10 year  periods  (computed  as of the most  recent  calendar
quarter) are shown on another page of this illustration.



--------------------------------------------------------------------------------

This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y


<PAGE>



                                                                            A-22
                            USAllianz(R) CharterTM II



Prepared For:   Contract Information for Features Selected
John Doe
                Contract Type: Non-Qualified
                Guaranteed Minimum Income Benefit (GMIB):
                Traditional Guaranteed Minimum Death Benefit (Traditional GMDB):
Period Beginning:



                    HYPOTHETICAL VARIABLE PAYOUT ILLUSTRATION
                      BASED UPON S&P 500 HISTORICAL RETURNS


Annuity Option:_______
Annuitization Age:      65, Male                    Annuity Value:    520,097.92
Federal Tax Rate:       28%
Assumed Investment Rate (AIR):        3.5%
Income Date:______________                          Cost Basis:       500,000.00
Issue Date:______________

<TABLE>
<CAPTION>

   -------------------- ----------------------- ---------------------- ---------------------- ----------------------- --------------
   Period Ending Date         Payout Age           Monthly Payout        Exclusion Amount         Taxable Amount        Cumulative
                                                                                                                          Payout
   -------------------- ----------------------- ---------------------- ---------------------- ----------------------- --------------
<S>                          <C>                    <C>                    <C>                      <C>                  <C>
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This  illustration  is based upon S&P 500  historical  returns during the period
indicated.  These S&P 500 returns are not  indicative of the  performance of any
Investment  Options.  Past returns are not  indicative of future  results.  This
illustration  is not intended to serve as a projection  or  prediction of future
returns and is presented as of the most recent calendar [year/quarter]..





--------------------------------------------------------------------------------


This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y


<PAGE>


                                                                            A-23
                            USAllianz(R) CharterTM II



Prepared For:   Contract Information for Features Selected
John Doe
                Contract Type: Non-Qualified
                Guaranteed Minimum Income Benefit (GMIB):
                Traditional Guaranteed Minimum Death Benefit (Traditional GMDB):
Period Beginning:




                     HYPOTHETICAL FIXED PAYOUT ILLUSTRATION


Annuity Option:_______
Annuitization Age:      65, Male              Annuity Value:          520,097.92
Federal Tax Rate:       28%
Income Date:______________                    Cost Basis:             500,000.00
Issue Date:______________




      Monthly Payout              Exclusion Amount          Taxable Amount


This  hypothetical  illustration  is based upon payout factor rates currently in
effect.  These are  subject  to  change,  and may be  higher  or lower  when you
annuitize your Contract.

This  illustration  is not intended to serve as a projection  or  prediction  of
future returns.


--------------------------------------------------------------------------------
This is a hypothetical variable annuity illustration, not a contract, and is not
complete  without all pages.  The illustration can only be used when accompanied
or preceded by the Contract  prospectus  for the  USAllianz(R)  CharterTM II, an
individual  flexible purchase payment variable  deferred annuity  contract.  The
prospectus  contains  more  information,  including  fees,  expenses,  and  risk
factors,  and  should  be read  carefully  before  sending  money.  All  product
guarantees  are based on the claims  paying  ability of Allianz  Life  Insurance
Company of North America. Variable annuities are: not insured by the FDIC or any
other governmental agency; not deposits or obligations of, or guarantees by, any
bank or deposit or institution;  and subject to investment risks,  including the
possible loss of principal.

USAllianz products are issued by Allianz Life Insurance Company of North America
and distributed by its affiliate,  USAllianz Investor Services, LLC, 5701 Golden
Hills Drive, Minneapolis, MN 55416-1297. Member NASD.

xx/xx/2002                                                    Page x of y






                                     PART C
                                OTHER INFORMATION

Item 24.  Financial Statements and Exhibits

       a.  Financial Statements

           The financial statements of the Company and the Separate Account will
           be filed by amendment.


       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 (to be filed by amendment)
      4.b. Rider #1 (to be filed by amendment)
      4.c. Rider #2 (to be filed by amendment)
      4.d. Rider #3 (to be filed by amendment)
      5.   Application for Indiv Var Annuity Contract(to be filed by amendment)
      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 AIM Variable
           Insurance Funds, Inc., Allianz Life Insurance Company of North
           America and NALAC Financial Plans LLC(3)
        b. 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)
        c. Form of Fund Participation Agreement between Davis Variable
           Account Fund, Inc., Davis Distributors, LLC and Allianz Life
           Insurance Company of North America(4)
        d. Form of Fund Participation Agreement between Oppenheimer Variable
           Account Funds, Oppenheimer Funds Inc. and Allianz Life Insurance
           Company of North America(4)
        e. Form of Fund Participation Agreement between Allianz Life Insurance
           Company of North America, PIMCO Variable Insurance Trust, and PIMCO
           Fund Distributors, LLC(4)
        f. Form of Fund Participation Agreement between Seligman Portfolios,
           Inc. and Allianz Life Insurance Company of North America(4)
        g. 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 (6)
        h. Form of Fund Participation Agreement between Franklin Templeton
           Variable Insurance Products Trust, Templeton Variable Products Series
           Fund, Franklin Templeton Distributors, Inc., and Allianz Life
           Insurance Company of North America (8)
        i. Form of Fund Participation Agreement between Van Kampen
           Life Investment Trust, Van Kampen Funds Inc,
           Van Kampen Asset Management and Allianz Life of North
           America (9)
        j. Form of Fund Participation Agreement between Van Kampen
           Funds, Inc., and USAllianz Investor Services, LLC (9)
        k. Portfolio Management Agreement between USAllianz
           Advisers, LLC, USAllianz Variable Insurance Products Trust,
           and Van Kampen Asset Management, Inc. (9)
        l. Portfolio Management Agreement between USAllianz
           Advisers, LLC,USAllianz Variable Insurance Products Trust,
           and Van Kampen Investment Advisory Corporation. (9)
        m. Portfolio Management Agreement between USAllianz
           Advisers, LLC,USAllianz Variable Insurance Products Trust
           and Van Kampen Asset Management, Inc. (9)
        n. Portfolio Management Agreement between USAllianz
           Advisers, LLC, USAllianz Variable Insurance Products Trust,
           and Alliance Capital Management L.P. (9)
        o. Portfolio Management Agreement between USAllianz
           Advisers, LLC, USAllianz Variable Insurance Products Trust,
           and PIMCO Advisers L.P. (9)
        p. Portfolio Management Agreement between USAllianz
           Advisers, LLC,USAllianz Variable Insurance Products Trust
           and Templeton Investment Counsel,LLC. (9)
        q. Form of Fund Participation Agreement between Dreyfus
           Investment Portfolios and Allianz Life Insurance Company
           of North America (10)
      9.   Opinion and Consent of Counsel (to be filed by amendment)
     10.   Consent of Independent Auditor (to be filed by amendment)
     11.   Not Applicable
     12.   Not Applicable
     13.   Calculation of Performance Data (to be filed by amendment)
     14.   Company  Organizational Chart(5)
     15.   Powers of Attorney (11)

(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.
(6)  Incorporated by reference to Registrant's Pre-Effective Amendment to Form
     N-4 (File Nos. 333-47886 and 811-05618) electronically filed on December
     21, 2000.
(7)  Incorporated by reference to Registrant's Post-Effective Amendment to Form
     N-4 (File Nos. 333-47886 and 811-05618) electronically filed on February
     28, 2001.
(8)  Incorporated by reference to Registrant's Post-Effective Amendment No. 2 to
     Form N-4 (File Nos. 333-47886 and 811-05618) electronically filed on
     April 30, 2001.
(9)  Incorporated by reference to Registrant's Post-Effective Amendment No. 6 to
     Form N-4 (File Nos. 333-47886 and 811-05618) electronically filed on
     November 1, 2001.
(10) Incorporated by reference to Registrant's Post-Effective Amendment No. 5 to
     Form N-4 (File Nos. 333-82329 and 811-05618) electronically filed on
     April 23, 2002.
(11) Incorporated by reference to Registrant's Form N4 (File Nos. 333-90260 &
     811-05618 electronically Filed on June 11, 2002




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           Chairman of the Board
5701 Golden Hills Drive
Minneapolis, MN 55416

Mark A. Zesbaugh              Chief Executive Officer and
5701 Golden Hills Drive       Director
Minneapolis, MN  55416

Michael P. Sullivan           Director
7505 Metro Boulevard
Minneapolis, MN 55439

Dr. Gerhard Rupprecht         Director
Reinsburgstrasse 19
D-70178
Stuttgart, Germany

Gabrielle Matzdorff           Senior Vice President and
5701 Golden Hills Drive       Chief Financial Officer
Minneapolis, MN 55416

Denise Blizil                 Senior Vice President and
5701 Golden Hills Drive       Chief Administrative Officer
Minneapolis, MN 55416

Rev. Dennis Dease             Director
c/o University of St. Thomas
215 Summit Avenue
St. Paul, MN 55105-1096

James R. Campbell             Director
c/o Wells Fargo and Co.
Wells Fargo Center
Sixth & Marquette
Minneapolis, MN 55479-0116

Robert M. Kimmitt             Director
Commerce One, Inc.
4440 Rosewood Drive
Pleasonton, CA 94588-3050

Suzanne Pepin                 Senior Vice President and
5701 Golden Hills Drive       Chief Legal Officer
Minneapolis, MN 55416

Charles Kavitsky              President and
5701 Golden Hills Drive       Chief Marketing Officer
Minneapolis, MN 55416

Neil McKay                    Senior Vice President and
5701 Golden Hills Drive       Chief Actuary
Minneapolis, MN 55416

Michael Diekmann              Director
Allianz AG
Koeniginstrausse 28
D-80802
Munich Germany

Paul M. Saffert               Director
Allianz of America Corp
777 San Marin Drive
Novato, CA  94998


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 variable
        insurance products issued by:

                          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    Chairman, Chief Executive Officer, President,
5701 Golden Hills Drive    Chief Manager & Director
Minneapolis, MN 55416

Tracy H. Gardner           Chief Administrative Officer &
5701 Golden Hills Drive    Sr. Vice President
Minneapolis, MN 55416

Michael M. Ahles           Chief Financial Officer & Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN  55416

Catherine Q. Farley        Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN  55416

Cynthia M. Robeck          Vice President
5701 Golden Hills Drive
Minneapolis, MN  55416

Jennifer J. Wagner         Vice President
5701 Golden Hills Drive
Minneapolis, MN  55416

Keith L. Johnson           Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN  55416

Carol B.Shaw               Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN  55416

Corey J. Walther           Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN  55416

Dave Schliesman            Sr. Vice President
5701 Golden Hills Drive
Minneapolis, MN  55416

Jeffrey W. Kletti          Vice President
5701 Golden Hills Drive
Minneapolis, MN  55416

Myron Rothstein            Vice President
5701 Golden Hills Drive
Minneapolis, MN  55416

Patrick Allen              Divisional VP - NE
5701 Golden Hills Drive
Minneapolis, MN  55416

Edward Barrett             Divisional VP - SE
5701 Golden Hills Drive
Minneapolis, MN  55416

Kevin Rooney               Divisional VP - MID
5701 Golden Hills Drive
Minneapolis, MN  55416

Gerald Boucher             Divisional VP - W
5701 Golden Hills Drive
Minneapolis, MN  55416

Wayne Peterson             Compliance Officer
5701 Golden Hills Drive
Minneapolis, MN  55416

Stewart Gregg              Secretary
5701 Golden Hills Drive
Minneapolis, MN  55416

Jan Witort                 Assistant Secretary
5701 Golden Hills Drive
Minneapolis, MN  55416




     c. Not Applicable

Item  30.        Location  of  Accounts  and  Records


Michael Ahles, whose address is 5701 Golden Hills Drive,  Minneapolis,  MN 55416
and Delaware Valley Financial  Services,  USAllianz  Service Center,  300 Berwyn
Park, Berwyn,  Pennsylvania 19312, maintain physical possession of the accounts,
books or documents of the Variable  Account required to be maintained by Section
31(a)  of the  Investment  Company  Act of  1940,  as  amended,  and  the  rules
promulgated thereunder.


Item  31.        Management  Services

Not  Applicable

Item  32.        Undertakings

   a. Registrant  hereby  undertakes to file a post-effective  amendment to this
registration  statement as frequently as is necessary to ensure that the audited
financial  statements in the registration  statement are never more than sixteen
(16) months old for so long as payment under the variable annuity  contracts may
be accepted.

   b.  Registrant  hereby  undertakes  to  include  either  (1) as  part  of any
application to purchase a contract  offered by the  Prospectus,  a space that an
applicant can check to request a Statement of Additional  Information,  or (2) a
postcard  or  similar  written  communication  affixed  to or  included  in  the
Prospectus  that the  applicant can remove to send for a Statement of Additional
Information.

   c.  Registrant  hereby  undertakes  to deliver any  Statement  of  Additional
Information  and any financial  statements  required to be made available  under
this Form promptly upon written or oral request.


                             REPRESENTATIONS

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.

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 certifies that it has caused this Registration
Statement  to be signed on its  behalf in the City of  Minneapolis  and State of
Minnesota, on this 11th day of June, 2002.



                                         ALLIANZ  LIFE VARIABLE  ACCOUNT  B
                                         (Registrant)


                                         By:  ALLIANZ  LIFE  INSURANCE COMPANY
                                             OF  NORTH  AMERICA
                                                 (Depositor)


                                         By:/s/Stewart Gregg
                                            --------------------------------
                                            Stewart Gregg
                                            Senior Counsel



                                         ALLIANZ  LIFE  INSURANCE  COMPANY
                                         OF  NORTH  AMERICA
                                          (Depositor)



                                          By:/s/Stewart Gregg
                                             ------------------------------
                                             Stewart Gregg
                                             Senior Counsel



Pursuant to the  requirements of the Securities Act of 1933,  this  registration
statement has been signed by the following  persons in the capacities and on the
dates indicated.


Signature  and  Title                                                Date


Robert W. MacDonald*     Chairman of the Board                     06/11/2002
Robert W. MacDonald

Mark A. Zesbaugh*        Chief Executive Officer                   06/11/2002
Mark A. Zesbaugh         and Director

Michael P. Sullivan*     Director                                  06/11/2002
Michael P. Sullivan

Dr. Gerhard Rupprecht*   Director                                  06/11/2002
Dr. Gerhard Rupprecht

Rev. Dennis Dease*       Director                                  06/11/2002
Rev. Dennis Dease

James R. Campbell*       Director                                  06/11/2002
James R. Campbell

Robert M. Kimmitt*       Director                                  06/11/2002
Robert M. Kimmitt

Michael Diekmann*        Director                                  06/11/2002
Michael Diekmann

Paul M. Saffert*          Director                                 06/11/2002
Paul M. Saffert

Gabby Matzdorff*          Director                                  06/11/2002
Gabby Matzdorff

Charles Kavitsky*         President and                             06/11/2002
Charles Kavitsky          Chief Marketing Officer

Denise Blizil*            Senior Vice President and                 06/11/2002
Denise Blizil             Chief Administrative Officer




                                         *By    Power  of  Attorney


                                          By: /s/Stewart Gregg
                                              --------------------------------
                                               Stewart Gregg
                                               Senior Counsel




                                    EXHIBITS

                                   TO FORM N4

                         ALLIANZ LIFE VARIABLE ACCOUNT B

                 ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA

                                INDEX TO EXHIBITS
                                -----------------


EX-99.B4.a   New Variable Annuity Contract (to be filed by amendment)
EX-99.B4.b   Rider #1 (to be filed by amendment)
EX-99.B4.c   Rider #2 (to be filed by amendment)
EX-99.B4.d   Rider #3 (to be filed by amendment)
EX-99.B5     Application for Indiv. Var Ann. Contract (to be filed by amendment)
EX-99.B9     Opinion and Consent of Counsel (to be filed by amendment)
EX-99.B10.b  Consent of Independent Auditor (to be filed by amendment)
EX-99.B13    Calculation of Performance Data (to be filed by amendment)