NOTICE OF SUBSTITUTION

                             Dated January 27, 2003
                 Allianz Life Insurance Company of North America
                      Allianz Life Variable Account A and B

Effective approximately April 4, 2003, subject to regulatory approval, shares of
the Dreyfus Stock Index Fund will be substituted  for all shares of the Franklin
S&P 500 Index Fund owned through variable  insurance  products issued by Allianz
Life Insurance Company of North America.  Specifically,  Initial Class shares of
the  Dreyfus  Stock  Index  Fund will be  substituted  for Class 1 shares of the
Franklin S&P 500 Index Fund, and Service Class shares of the Dreyfus Stock Index
Fund will be substituted  for Class 2 shares of the Franklin S&P 500 Index Fund.
You will receive a confirmation in connection with any substitution of shares.

If you wish, from the date of this Notice to the date of the  Substitution,  you
can make one  transfer of Contract  value  attributable  to the Franklin S&P 500
Index Fund out of this fund and into any other  Investment  Option(s)  available
under your Contract, without any limitation or charge on transfers. In addition,
if you do not exercise this free transfer right prior to the  Substitution,  for
30 days after the Substitution,  you will be permitted a free transfer right out
of the Dreyfus Stock Index Fund. In exercising  your free transfer right, if you
choose,  you can divide the applicable  Account Value,  transferring part to one
Investment Option and part to other Investment Options,  subject to any Contract
limitations on minimum investment in a particular  Investment Option.  Your free
transfer will not count as one of the limited number of transfers permitted in a
year free of charge,  and Allianz Life  Insurance  Company of North America will
not impose any additional transfer restrictions on this transfer.

If you do not choose to transfer the Contract Value attributable to the Franklin
S&P 500 Index  Fund to  another  Investment  Option(s)  prior to the date of the
Substitution, that amount will be automatically transferred to the Dreyfus Stock
Index Fund.  This  automatic  transfer  will not count toward the number of free
transfers available under your Contract, and you will not be assessed a transfer
fee for this automatic transfer.

Allianz Life  Insurance  Company of North  America will send you a Notice within
five days after the Substitution has taken place. You will have an additional 30
days from the date of the Substitution in which to make a free transfer from the
Dreyfus Stock Index Fund, if you have not already  exercised  your right to make
one free  transfer.  After such  thirty  (30) day period any  transfers  will be
subject to any  applicable  limitations  or charges  described in the Contract's
prospectus.

For your convenience,  we enclose with this Notice summary information regarding
the  Investment  Options  available  under  your  contract.  You  can  obtain  a
prospectus for the Dreyfus Stock Index Fund, or for any of the other  Investment
Options  available under your Contract,  free of charge,  by calling our Service
Center toll-free at 800-624-0197.

Attached  to this  notice is a transfer  form.  Please  fill out the form if you
would like to make a transfer from the Franklin S&P 500 Index Fund,  and mail it
to the Company at the address on the form.

Should  you have any  questions,  please  feel free to call our  Service  Center
toll-free at 800-624-0197.