0001091439-09-000017.txt : 20110811
0001091439-09-000017.hdr.sgml : 20110811
20090630171726
ACCESSION NUMBER: 0001091439-09-000017
CONFORMED SUBMISSION TYPE: N-14
PUBLIC DOCUMENT COUNT: 12
FILED AS OF DATE: 20090630
DATE AS OF CHANGE: 20090817
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
CENTRAL INDEX KEY: 0001091439
IRS NUMBER: 000000000
STATE OF INCORPORATION: MN
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: N-14
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-160351
FILM NUMBER: 09919920
BUSINESS ADDRESS:
STREET 1: 5701 GOLDEN HILLS DRIVE
CITY: MINNEAPOLIS
STATE: MN
ZIP: 55416
BUSINESS PHONE: 763-765-6551
MAIL ADDRESS:
STREET 1: 5701 GOLDEN HILLS DRIVE
CITY: MINNEAPOLIS
STATE: MN
ZIP: 55416
FORMER COMPANY:
FORMER CONFORMED NAME: USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
DATE OF NAME CHANGE: 19990721
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Allianz Variable Insurance Products Fund of Funds Trust
CENTRAL INDEX KEY: 0001301708
IRS NUMBER: 411366075
STATE OF INCORPORATION: MN
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: N-14
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-160352
FILM NUMBER: 09919921
BUSINESS ADDRESS:
STREET 1: 5701 GOLDEN HILLS DRIVE
CITY: MINNEAPOLIS
STATE: MN
ZIP: 55416
BUSINESS PHONE: 763-765-6551
MAIL ADDRESS:
STREET 1: 5701 GOLDEN HILLS DRIVE
CITY: MINNEAPOLIS
STATE: MN
ZIP: 55416
FORMER COMPANY:
FORMER CONFORMED NAME: USAllianz Variable Insurance Products Fund of Funds Trust
DATE OF NAME CHANGE: 20040827
CENTRAL INDEX KEY: 0001091439
S000009950
AZL JPMorgan U.S. Equity Fund
C000027532
AZL JPMorgan U.S. Equity Fund Class 2
CENTRAL INDEX KEY: 0001091439
S000009942
AZL JPMorgan Large Cap Equity Fund
C000027522
AZL JPMorgan Large Cap Equity Fund
CENTRAL INDEX KEY: 0001091439
S000009952
AZL AIM International Equity Fund
C000027534
AZL AIM International Equity Fund
CENTRAL INDEX KEY: 0001091439
S000009949
AZL Oppenheimer International Growth Fund
C000027530
AZL Oppenheimer International Growth Fund
CENTRAL INDEX KEY: 0001091439
S000009961
AZL Van Kampen Global Franchise Fund
C000027543
AZL Van Kampen Global Franchise Fund
CENTRAL INDEX KEY: 0001091439
S000009948
AZL Oppenheimer Global Fund
C000027528
AZL Oppenheimer Global Fund Class 1
C000027529
AZL Oppenheimer Global Fund Class 2
CENTRAL INDEX KEY: 0001091439
S000009970
AZL BlackRock Capital Appreciation Fund
C000027554
AZL BlackRock Capital Appreciation Fund
CENTRAL INDEX KEY: 0001091439
S000009947
AZL Columbia Technology Fund
C000027527
AZL Columbia Technology Fund
S000009971
AZL BlackRock Growth Fund
C000027555
AZL BlackRock Growth Fund
CENTRAL INDEX KEY: 0001091439
S000017470
AZL S&P 500 Index Fund
C000048320
AZL S&P 500 Index Fund Class 2
CENTRAL INDEX KEY: 0001091439
S000009954
AZL PIMCO Fundamental IndexPLUS Total Return Fund
C000027536
AZL PIMCO Fundamental IndexPLUS Total Return Fund
S000014964
AZL TargetPLUS Equity Fund
C000040649
AZL TargetPLUS Equity Fund
S000014965
AZL First Trust Target Double Play Fund
C000040650
AZL First Trust Target Double Play Fund
CENTRAL INDEX KEY: 0001091439
S000025366
AZL International Index Fund
C000075766
AZL International Index Fund
CENTRAL INDEX KEY: 0001091439
S000017468
AZL NACM International Fund
C000048317
AZL NACM International Fund
S000017469
AZL Schroder International Small Cap Fund
C000048318
AZL Schroder International Small Cap Fund
CENTRAL INDEX KEY: 0001301708
S000025338
AZL Balanced Index Strategy Fund
C000075564
AZL Balanced Index Strategy Fund
CENTRAL INDEX KEY: 0001091439
S000017465
AZL TargetPLUS Balanced Fund
C000048314
AZL TargetPLUS Balanced Fund
CENTRAL INDEX KEY: 0001301708
S000025339
AZL Moderate Index Strategy Fund
C000075565
AZL Moderate Index Strategy Fund
CENTRAL INDEX KEY: 0001091439
S000017466
AZL TargetPLUS Growth Fund
C000048315
AZL TargetPLUS Growth Fund
S000017467
AZL TargetPLUS Moderate Fund
C000048316
AZL TargetPLUS Moderate Fund
N-14
1
file001.txt
ALLIANZ VIP & FOF TRUST N-14 JUNE09
FILE NOS.
333-
811-9491
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.___ [ ] Post-Effective Amendment No. ___
(Check appropriate box or boxes)
----------------------------------------------------------------- -----------------------------------------------------
Exact Name of Registrant as Specified in Charter: Area Code and Telephone Number:
Allianz Variable Insurance Products Trust 763-765-6500
Allianz Variable Insurance Products Fund of Funds Trust 763-765-6500
--------------------------------------------------------------------------------------------------------------------------
Address of Principal Executive Offices: (Number, Street, City, State, Zip Code)
5701 Golden Hills Drive, Minneapolis, MN 55416-1297
----------------------------------------------------------------- ------------------------------------------------------
Name and Address of Agent for Service: Approximate Date of Proposed Public Offering:
H. Bernt von Ohlen, Esq. As soon as practicable after the effective date of
5701 Golden Hills Drive, Minneapolis, MN 55416-1297 the Registration Statement.
With a copy to:
Michael J. Radmer, Esq.
Dorsey & Whitney LLP
50 South Sixth Street
Minneapolis, MN 55402
--------------------------------------------------------------------------------------------------------------------------
(Number and Street) (City) (State) (Zip Code)
--------------------------------------------------------------------------------------------------------------------------
Calculation of Registration Fee under the Securities Act of 1933:
--------------------------------------------------------------------------------------------------------------------------
Title of Proposed Proposed
Securities Maximum Maximum Amount of
Being Amount Being Offering Price Aggregate Registration
Registered Registered per Unit Offering Price Fee
-------------------------------------------------------------------------------------------------------------------------
No filing fee is due because
of reliance on Section 24(f)
Shares of Beneficial of the Investment Company
Interest Act of 1940
--------------------------------------------------------------------------------------------------------------------------
It is proposed that this filing will become effective on July 30, 2009 pursuant to Rule 488.
The Registrant hereby amends this Registration Statement
--------------------------------------------------------------------------------------------------------------------------
PART A - PROSPECTUS
_____________________
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
AZL[{R}] BlackRock Growth Fund
AZL[{R}] Columbia Technology Fund
5701 Golden Hills Drive
Minneapolis, MN 55416-1297
Dear Allianz Life and Allianz Life of New York Variable Annuity or Variable Life
Insurance Contract Owner:
The Board of Trustees of the AZL BlackRock Growth Fund and the AZL Columbia
Technology Fund (the "Acquired Funds"), each a series of the Allianz Variable
Insurance Products Trust (the "VIP Trust"), is pleased to submit a proposal to
reorganize the Acquired Funds into the AZL BlackRock Capital Appreciation Fund
(the "Acquiring Fund"), which is another series of the VIP Trust.
As the owner of a variable annuity or variable life insurance contract issued by
Allianz Life Insurance Company of North America or Allianz Life Insurance
Company of New York, you beneficially own shares of one or both of the Acquired
Funds. Accordingly, we ask that you indicate whether you approve or disapprove
of the proposed reorganization affecting your Fund by submitting instructions on
how to vote your beneficial shares by phone, internet, or mail.
The proposed reorganization is being undertaken for several reasons, including:
o Reducing contractual management fees and overall expenses for
shareholders of the Acquired Funds; and
o Providing further economies of scale.
THE BOARD OF TRUSTEES OF THE VIP TRUST BELIEVES THAT THE TRANSACTION IS IN THE
BEST INTERESTS OF THE ACQUIRED FUNDS AND THEIR SHAREHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL.
The Board considered various factors in reviewing the proposed reorganization
on behalf of the Acquired Funds' shareholders, including, but not limited to,
the following:
o The continuity of investments between the Acquired Funds and the Acquiring
Fund.
o The expectation that the reorganization will reduce expense ratios for the
Funds and achieve other economies of scale.
o Historical performance of the Funds.
o The expectation that the reorganization will be tax-free.
If the proposal is approved, the Acquiring Fund will acquire all of the assets
of the Acquired Funds in exchange for newly issued shares of the Acquiring Fund.
These Acquiring Fund shares in turn will be distributed proportionately to the
shareholders of each Acquired Fund in complete liquidation of the Acquired
Funds. In order to accomplish the proposed reorganization, the Board of Trustees
of the Acquired Funds submits for your approval an Agreement and Plan of
Reorganization with respect to each Acquired Fund.
Whether or not you plan to attend the meeting, please review the enclosed voting
instruction form. You may submit your instructions on voting the shares that you
beneficially own by phone, internet, or mail. Following this letter is a Q&A
summarizing the reorganization and information on how to vote your shares.
Please read the entire proxy statement/prospectus carefully before you vote.
Thank you for your prompt attention to this important matter.
Sincerely,
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
PROXY STATEMENT/PROSPECTUS Q&A
HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR THE AZL BLACKROCK
GROWTH FUND AND THE AZL COLUMBIA TECHNOLOGY FUND. WE ENCOURAGE YOU TO READ THE
FULL TEXT OF THE ENCLOSED PROXY STATEMENT/PROSPECTUS.
Q: WHY IS THE REORGANIZATION BEING PROPOSED?
The reorganization is being proposed in an effort to reduce operating
expenses for funds available to owners of variable annuity and variable life
insurance contracts issued by Allianz Life Insurance Company of North America
or Allianz Life Insurance Company of New York and to provide further
economies of scale.
Your Board of Trustees has determined that the reorganization is in the best
interests of the Acquired Funds' shareholders and recommends that you vote
FOR the reorganization.
Q: WILL THE EXPENSES OF THE FUND IN WHICH I PARTICIPATE INCREASE AS A RESULT OF
THE REORGANIZATION?
No. The total expense ratio for the Acquiring Fund following the
reorganization is expected to be lower than the total expense ratio for each
of the Acquired Funds prior to the reorganization.
Q: WHO IS PAYING THE COSTS OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
Contract owners who were beneficial owners of shares of the Acquired Funds on
the record date will bear these costs.
Q: WILL I INCUR TAXES AS A RESULT OF THE REORGANIZATION?
No. The reorganization is not expected to be a taxable event for contract
owners. Please see the Tax Consequences discussion in the enclosed proxy
statement/prospectus for additional information.
Q: IF APPROVED, WHEN WILL THE REORGANIZATION HAPPEN?
If shareholders approve the reorganization, it will take place shortly after
the shareholder meeting.
Q: IS THERE ANYTHING I NEED TO DO TO CONVERT MY SHARES?
No. Upon shareholder approval of the reorganization, the Acquired Fund shares
that serve as a funding vehicle for benefits under your variable annuity or
variable life contract automatically will be exchanged for shares of the
Acquiring Fund. The total value of the Acquiring Fund shares that a
shareholder receives in the reorganization will be the same as the total
value of the Acquired Fund shares held by the shareholder immediately before
the reorganization.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE?
After careful consideration, the Board recommends that you vote FOR the
reorganization.
Q: HOW AND WHEN DO I VOTE?
You can vote in one of four ways:
- By mail with the enclosed voting instruction form
- By telephone
- By web site
- In person at the meeting
Please refer to the enclosed voting instruction form for the telephone number
and internet address. Please vote as soon as possible by following the
instructions on the voting instruction form.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
If you have questions about any of the proposals described in the proxy
statement or about voting procedures, please call toll free at 1-800-950-5872
ext. 37952.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
5701 GOLDEN HILLS DRIVE
MINNEAPOLIS, MINNESOTA 55416-1297
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 2009
AZL[{R}] BLACKROCK GROWTH FUND
AZL[{R}] COLUMBIA TECHNOLOGY FUND
A special meeting of the shareholders of the AZL BlackRock Growth Fund and the
AZL Columbia Technology Fund (each an "Acquired Fund" and, together, the
"Acquired Funds") will be held at 10:00 a.m. on October 21, 2009, at the offices
of Allianz Life Insurance Company of North America, 5701 Golden Hills Drive,
Golden Valley, Minnesota. At the meeting, shareholders of the respective
Acquired Funds will consider the following proposals:
- To approve an Agreement and Plan of Reorganization (the "Plan") between the
AZL BlackRock Growth Fund, which is a series of the Allianz Variable Insurance
Products Trust (the "VIP Trust"), and the AZL BlackRock Capital Appreciation
Fund (the "Acquiring Fund"), which is another series of the VIP Trust;
- To approve an Agreement and Plan of Reorganization (the "Plan") between the
AZL Columbia Technology Fund, also a series of the VIP Trust, and the
Acquiring Fund; and
- Such other business as may properly come before the meeting, or any
adjournment of the meeting.
Under both Plans, the Acquiring Fund would acquire all of the assets and assume
all of the liabilities of the Acquired Fund in exchange for shares of the
Acquiring Fund, which would be distributed proportionately to the shareholders
of the Acquired Fund in complete liquidation of the Acquired Fund, and the
assumption of the Acquired Fund's liabilities. Each Plan will be voted upon by
the shareholders of the respective Acquired Fund voting separately.
The Acquired Funds issue and sell shares to certain accounts of Allianz Life
Insurance Company of North America ("Allianz Life") and Allianz Life Insurance
Company of New York ("Allianz Life of NY"). The separate accounts hold shares of
mutual funds, including the Acquired Funds, which serve as a funding vehicle for
benefits under variable annuity and variable life insurance contracts issued by
Allianz Life and Allianz Life of NY. As the owners of the assets held in the
separate accounts, Allianz Life and Allianz Life of NY are the sole shareholders
of the Acquired Funds and are entitled to vote all of the shares of the Acquired
Funds. However, Allianz Life and Allianz Life of NY will vote outstanding shares
of the Acquired Funds in accordance with instructions given by the owners of
variable annuity and variable life insurance contracts for which the Funds serve
as a funding vehicle. This Notice is being delivered to owners of variable
annuity and variable life insurance contracts who, by virtue of their ownership
of the contracts, beneficially owned shares of the Acquired Funds on the record
date, so that they may instruct Allianz Life and Allianz Life of NY how to vote
the shares of the Acquired Funds underlying their contracts.
Shareholders of record at the close of business on July 20, 2009, are entitled
to vote at the meeting.
By order of the Board of Directors
Michael J. Radmer, Secretary
August 7, 2009
YOU CAN VOTE QUICKLY AND EASILY.
PLEASE FOLLOW THE INSTRUCTIONS ON THE ENCLOSED VOTING INSTRUCTION FORM.
PROXY STATEMENT/PROSPECTUS - AUGUST 7, 2009
ACQUIRED FUNDS ACQUIRING FUND
AZL[{R}] BlackRock Growth Fund AZL[{R}] BlackRock Capital Appreciation Fund
("BlackRock Growth Fund") ("BlackRock Capital Appreciation Fund")
AZL[{R}] Columbia Technology Fund
("Columbia Technology Fund")
This proxy statement/prospectus describes proposed Agreements and Plans of
Reorganization (the "Plans") pursuant to which the outstanding shares of the
BlackRock Growth Fund and the Columbia Technology Fund, one or both of which
currently serves as a funding vehicle for your variable annuity or variable life
insurance contract, (each an "Acquired Fund" and, together, the "Acquired
Funds") would be exchanged for shares of the BlackRock Capital Appreciation Fund
(the "Acquiring Fund"). Both the Acquiring Fund and the Acquired Funds (each a
"Fund" and together the "Funds") are series of the Allianz Variable Insurance
Products Trust (the "VIP Trust"). The address of the Funds is 5701 Golden Hills
Drive, Minneapolis, MN 55416-1297. The phone number of the Funds is 877-833-
7113.
THE BOARD OF TRUSTEES OF THE VIP TRUST UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLANS.
THESE SECURITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK
OR AN AFFILIATE OF ANY BANK, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), OR ANY OTHER AGENCY OF THE UNITED STATES, OR ANY
BANK OR AN AFFILIATE OF ANY BANK; AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF VALUE.
As with all mutual funds, the Securities and Exchange Commission (the "SEC") has
not approved or disapproved these securities or passed on the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Each of the Funds is subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and
files reports, proxy materials, and other information with the SEC (Investment
Company Act file no. 811-09491). These reports, proxy materials, and other
information can be inspected and copied at the Public Reference Room maintained
by the SEC. Copies may be obtained, after paying a duplicating fee, by
electronic request e-mailed to publicinfo@sec.gov, or by writing to the Public
Reference Section of the SEC, Washington, D.C. 20549-0102. In addition, copies
of these documents may be viewed on-line or downloaded from the SEC's Web site
at http://www.sec.gov.
You should retain this proxy statement/prospectus for future reference. It sets
forth concisely the information about the Acquiring Fund that a prospective
investor should know before investing. Additional information is set forth in
the Statement of Additional Information, dated the same date as this proxy
statement/prospectus, relating to this proxy statement/prospectus. A current
prospectus for the Acquiring Fund, which gives a detailed description of the
Acquiring Fund's policies, strategies, and restrictions, accompanies this proxy
statement/prospectus.
This proxy statement/prospectus was first mailed to contract owners on or about
August 7, 2009.
WHERE TO GET MORE INFORMATION
FUND REPORTS: THE ACQUIRING FUND: THE ACQUIRED FUND:
Prospectus dated April 27, 2009. Accompanying, and incorporated by reference Incorporated by reference into this
into, this proxy statement/prospectus. proxy statement/prospectus. For a copy
at no charge, call toll free
Annual report for the period ended December 31, For a complete copy at no charge, call toll- 877-833-7113 or write to the address
2008; and semi-annual report for the period free 877-833-7113 or write to the address given below this table.
ended June 30, 2008. given below this table.
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
THIS PROXY STATEMENT/PROSPECTUS:
Statement of Additional Information Incorporated by reference into this proxy statement/prospectus. For a copy at no charge, call
dated the same date as this proxy toll-free 1-800-624-0197 or write to Allianz VIP Trust, Advisory Management,
statement/prospectus. This document A 3-825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
contains information about both the
Acquired Fund and the Acquiring
Fund.
To ask questions about this proxy Call toll free 1-800-950-5872 ext. 37952 or write to: Allianz VIP Trust, Advisory Management,
statement/prospectus. A3-825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
ADDRESS: Allianz Variable Insurance Products Trust, 5701 Golden Hills Drive,
Minneapolis, MN 55416.
ABOUT THE ACQUIRED AND ACQUIRING FUNDS
The Acquired Funds issue and sell shares to separate accounts of Allianz Life
Insurance Company of North America ("Allianz Life") and Allianz Life Insurance
Company of New York ("Allianz Life of NY"). These separate accounts hold shares
of mutual funds, including the Acquired Funds, which serve as funding vehicles
for benefits under variable annuity and variable life insurance contracts issued
by Allianz Life and Allianz Life of NY (the "Contracts"). Each separate account
has subaccounts that invest in the Acquired Funds and certain other mutual
funds. Owners of the Contracts ("Contract Owners") allocate the value of their
Contracts among these subaccounts. As the owners of the assets held in the
separate accounts, Allianz Life and Allianz Life of NY are the sole shareholders
of the Acquired Funds and are entitled to vote all of the shares of each
Acquired Fund. However, Allianz Life and Allianz Life of NY will vote
outstanding shares of the Acquired Funds in accordance with instructions given
by the Contract Owners who are eligible to vote at the meeting.
The Funds all are open-end management investment companies. If the Plans are
approved, the shares of the Acquiring Fund will be distributed proportionately
by each Acquired Fund to the holders of its shares in complete liquidation of
the Acquired Funds. Each Acquired Fund shareholder would become the owner of
Acquiring Fund shares having a total net asset value equal to the total net
asset value of that shareholder's holdings in the Acquired Fund.
The following information summarizes the proposed reorganization of each of the
Acquired Funds into the Acquiring Fund (the "Reorganization"). The
Reorganization of each Acquired Fund into the Acquiring Fund is separate and
distinct, and the shareholders of each Acquired Fund will vote separately on the
Plan applicable to the Fund in which they are invested. The Reorganization will
proceed with respect to any Acquired Fund approving it. Although they are
separate, for ease of reference, the Reorganizations are discussed collectively
in this proxy statement/prospectus.
2
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
HOW THE REORGANIZATION WILL WORK
o Each Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Funds' liabilities.
o The Acquiring Fund will issue shares of beneficial interest to each Acquired
Fund in an amount equal to the value of the assets that it receives from each
Acquired Fund, less the liabilities it assumes. These shares will be
distributed to the Acquired Funds' shareholders (the separate accounts) in
proportion to their holdings in the Acquired Funds. The value of your interest
in the subaccount investing in the Acquiring Fund received in connection with
the Reorganization will equal the value of your interest in the subaccounts
that were invested in the Acquired Funds immediately before the
Reorganization. You will not pay any sales charge in connection with this
distribution of shares. If you already have an Acquiring Fund account, shares
distributed in the Reorganization will be added to that account. As a result,
when average cost is calculated for income tax purposes, the cost of the
shares in the accounts you owned will be combined.
FUND INVESTMENT OBJECTIVES
The following table presents the investment objective for each of the Funds.
ACQUIRED FUND INVESTMENT OBJECTIVE ACQUIRING FUND INVESTMENT OBJECTIVE
BLACKROCK GROWTH FUND Long-term growth of capital BLACKROCK CAPITAL APPRECIATION FUND Long-term growth of capital
COLUMBIA TECHNOLOGY FUND Capital appreciation
3
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
TABLE OF CONTENTS
SECTION A -- Proposal.......................................................5
PROPOSAL: Approve or Reject the Agreement and Plan of Reorganization......5
SUMMARY.................................................................5
How the Reorganization Will Work......................................5
Comparison of the Acquired Funds and the Acquiring Fund...............6
Comparison of Investment Objectives...................................6
Comparison of Investment Strategies...................................6
Comparison of Investment Policies.....................................7
Risk Factors..........................................................8
Performance...........................................................12
Tax Consequences......................................................15
FEES AND EXPENSES.........................................................16
THE REORGANIZATION........................................................17
Terms of the Reorganization.............................................17
Conditions to Closing the Reorganization................................17
Termination of the Plan.................................................18
Tax Status of the Reorganization........................................18
Reasons for the Proposed Reorganization and Board Deliberations.........18
Boards' Determinations..................................................20
Recommendation and Vote Required........................................20
SECTION B - Proxy Voting and Shareholder Meeting Information................21
SECTION C - Capitalization, Ownership of Fund Shares and Other
Fund Information................................................22
EXHIBIT A - Agreement and Plan of Reorganization.........................A-1
EXHIBIT B - Agreement and Plan of Reorganization.........................B-1
The prospectus for the Acquiring Fund accompanies this proxy
statement/prospectus.
4
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
SECTION A -- PROPOSAL
PROPOSAL: APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
This proxy statement/prospectus is being used by the Acquired Funds to solicit
voting instructions for the proposals to approve the Plans providing for the
Reorganization of the Acquired Funds into the Acquiring Fund. A form of each
Plan is included as Exhibit A and Exhibit B.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire proxy
statement/prospectus, exhibits and accompanying materials because they contain
details that are not in this summary.
HOW THE REORGANIZATION WILL WORK
The following table shows the names of the Acquired Fund and the Acquiring Fund
into which it will be merged.
--------------------------------------------------------------
| ACQUIRED FUNDS | ACQUIRING FUND |
--------------------------------------------------------------
| BlackRock Growth Fund |BlackRock Capital Appreciation Fund|
--------------------------
|Columbia Technology Fund| |
--------------------------------------------------------------
o Each Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Funds' liabilities.
o The Acquiring Fund will issue shares of beneficial interest in an amount equal
to the value of the assets that it receives from the Acquired Funds, less the
liabilities it assumes. These shares will be distributed to the Acquired
Funds' shareholders (the separate accounts) in proportion to their holdings in
each Acquired Fund. The value of your interest in the subaccount investing in
the Acquiring Fund received in connection with the Reorganization will equal
the value of your interest in the subaccounts that were invested in the
Acquired Funds immediately before the Reorganization.
o As part of the Reorganization, systematic transactions (such as bank
authorizations and systematic payouts) currently set up for your Acquired Fund
accounts will be transferred to your new Acquiring Fund account. If you do not
want your systematic transactions to continue, please contact your financial
representative to make changes.
o Neither the Acquired Funds nor the Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Funds will pay any sales
charge in connection with the Reorganization.
o After the Reorganization has been completed, contract values that were
allocated to subaccounts investing in the Acquired Funds will be allocated to
subaccounts investing in the Acquiring Fund. The Acquired Funds will be
terminated.
5
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
COMPARISON OF THE ACQUIRED FUNDS AND THE ACQUIRING FUND
The Acquired Funds and the Acquiring Fund:
o Are outstanding series of an open-end management investment company organized
as a Delaware statutory trust.
o Have Allianz Investment Management LLC (the "Manager") as their investment
adviser.
o Have the same policies for buying and selling shares and the same exchange
rights.
o Have the same distribution policies.
o Are available only to Contract Owners who allocate contract value to a
subaccount that invests in the Funds.
COMPARISON OF INVESTMENT OBJECTIVES
The following table presents the investment objectives for the Funds.
ACQUIRED FUND INVESTMENT OBJECTIVE ACQUIRING FUND INVESTMENT OBJECTIVE
BLACKROCK GROWTH FUND Long-term growth of capital BLACKROCK CAPITAL APPRECIATION FUND Long-term growth of capital
COLUMBIA TECHNOLOGY FUND Capital appreciation
COMPARISON OF INVESTMENT STRATEGIES
The principal investment strategies of the Acquiring Fund and the BlackRock
Growth Fund are the same. Both Funds invest primarily in equity securities of
mid- and large-size companies and may invest up to 20% of assets in other
securities, such as bonds and small-size company stocks. Both Funds are
subadvised by BlackRock Capital Management, Inc.
Columbia Technology Fund also invests primarily in equity securities, but
focuses on stocks of technology companies; the Fund may invest in companies of
all sizes and expects to invest a significant percentage of its assets in small-
and mid-size companies. Columbia Technology Fund is subadvised by Columbia
Management Advisors, LLC.
Detailed strategies for the Acquired Funds and the Acquiring Fund are set forth
below:
PRINCIPAL INVESTMENT STRATEGIES FOR BLACKROCK CAPITAL APPRECIATION FUND AND FOR
BLACKROCK GROWTH FUND:
Under normal market conditions, the Fund invests at least 80% of total assets in
common and preferred stock and securities convertible into common and preferred
stock. The Fund generally invests in mid- and large-size companies.
The Fund seeks to invest in fundamentally sound companies that, in the
subadviser's opinion, have strong management, superior earnings growth
prospects, and attractive relative valuations. The disciplined investment
process uses bottom-up stock selection as the primary driver of returns. The
Fund emphasizes large companies that exhibit stable growth and accelerated
earnings.
While the Fund generally invests across a broad range of industries, the
subadviser may favor companies in those industries that appear to offer higher
potential for long-term growth.
Although the subadviser does not expect to make such investments as a matter of
course, the Fund is permitted to invest up to 20% of total assets in other
securities, such as bonds and small-size company stocks.
The Fund generally will sell a stock when, in the subadviser's opinion, the
stock reaches its price target, or when the company's future growth prospects
deteriorate, the company becomes unable to sustain earnings momentum, the
stock's valuation becomes less attractive, a significant price change occurs, or
when the subadviser identifies more compelling investment opportunities
elsewhere.
The Fund may, but is not required to, use derivatives by buying or selling
options or futures on a security or an index of securities. The primary purpose
of using derivatives is to attempt to reduce risk to the Fund as a whole by
hedging, but the subadviser may also use derivatives to maintain liquidity and
commit cash pending investment. The subadviser also may use derivatives for
speculation to increase returns, but under normal market conditions generally
does not expect to do so.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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For temporary defensive purposes or when cash is temporarily available, the Fund
may invest in investment grade, short-term debt instruments, including
government, corporate, and money market securities. If the Fund invests
substantially in such instruments, it may not be pursuing its principal
investment strategies and may not achieve its investment objective.
PRINCIPAL INVESTMENT STRATEGIES FOR COLUMBIA TECHNOLOGY FUND:
Under normal market conditions, the Fund invests at least 80% of its total net
assets, plus any borrowings for investment purposes, in stocks of technology
companies that may benefit from technological improvements, advancements or
developments, as well as those expected to benefit from their extensive reliance
on technology in connection with their operations and services.
The Fund invests mainly in common stocks of U.S. and foreign companies that the
subadviser believes have, or will develop, products, processes or services that
will provide significant technological improvements, advances or developments,
as well as those expected to benefit from their extensive reliance on technology
in connection with their operations and services. The Fund may invest in
companies in all stages of corporate development, ranging from new companies
developing a promising technology or scientific advancement to established
companies with a record of producing breakthrough products and technologies from
research and development efforts. The Fund will invest in companies of all
sizes, and expects to invest a significant percentage of its assets in small-
and mid-cap companies.
The Fund's current focus includes companies from the following industries:
o biotechnology,
o cable and network broadcasting,
o communications,
o computer hardware,
o computer services and software,
o consumer electronics,
o defense,
o medical devices,
o pharmaceutical, and
o semiconductors.
The Fund may also invest in securities convertible into or exercisable for
stock, including preferred stock, warrants and debentures, and certain options,
forwards, swap contracts and financial futures contracts ("derivatives"). The
Fund may also invest in foreign securities, including American Depositary
Receipts ("ADRs"), Global Depositary Receipts ("GDRs"), and NASDAQ-listed
foreign securities.
The Fund may engage in frequent trading in order to achieve its investment
objectives.
For temporary defensive purposes, or when cash is temporarily available, the
Fund may invest in investment grade, short term debt instruments, including
government, corporate, and money market securities. If the Fund invests
substantially in such instruments, it may not be pursuing its principal
investment strategies and may not achieve its investment objective.
COMPARISON OF INVESTMENT POLICIES
If shareholders of the Acquired Funds approve the Reorganization, they will be
subject to the investment policies of the Acquiring Fund. Other than as
described herein, the Manager does not believe that the differences between the
investment policies result in any material difference in the way the Funds are
managed.
There are no differences between the investment policies of BlackRock Growth
Fund and BlackRock Capital Appreciation Fund that result in any material
difference in the way the Funds are managed.
Columbia Technology Fund and BlackRock Capital Appreciation Fund have similar
investment policies. The primary difference between these Funds is the fact that
Columbia Technology Fund concentrates in technology industries and is required,
under normal circumstances, to invest at least 80% of its assets in investments
of the type suggested by its name. BlackRock Capital Appreciation Fund, on the
other hand, generally is not permitted to concentrate more than 25% its assets
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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in any one industry. Columbia Technology Fund may also invest to a greater
extent (up to 33 1/3%) in foreign equities in developed markets, whereas
BlackRock Capital Appreciation Fund does not currently invest significantly in
foreign equities.
RISK FACTORS
The principal investment strategies of the Acquiring Fund are comparable to the
principal investment strategies of the Acquired Funds. Consequently, the
Acquiring Fund has principal investment risks that are generally comparable to
those of the Acquired Funds. For BlackRock Capital Appreciation Fund and
BlackRock Growth Fund, the principal investment strategies and principal
investment risks are the same. Depending upon its assessment of changing market
conditions, the subadviser of each Fund may emphasize particular asset classes
or particular investments at any given time, which may change the risks
associated with a Fund. The fact that a risk is not identified as a principal
risk for a particular Fund does not mean that the Fund may not be subject to
that risk. The Statement of Additional Information for the Acquiring Fund, which
is incorporated by reference in this proxy statement/prospectus, contains
detailed information on the Acquiring Fund's permitted investments and
investment restrictions.
The principal risks of investing in the Acquired Funds and the Acquiring Fund
are comparable and are shown in the table below. A discussion of each of the
various principal risks follows the table.
RISK BLACKROCK GROWTH FUND COLUMBIA TECHNOLOGY FUND BLACKROCK CAPITAL APPRECIATION FUND
(ACQUIRED FUND) (ACQUIRED FUND) (ACQUIRING FUND)
Market Risk X X X
Issuer Risk X X X
Selection Risk X X X
Growth Stocks Risk X X X
Leveraging Risk X X
Capitalization Risk X X X
Credit Risk X X
Convertible Securities Risk X X X
Interest Rate Risk X X
Derivatives Risk X X X
Industry Sector Risk X
Foreign Risk X
Initial Public Offerings Risk X
Liquidity Risk X
Currency Risk X
Portfolio Turnover X
o MARKET RISK: The market price of securities owned by the Fund may go up or
down, sometimes rapidly and unpredictably. Securities may decline in value
due to factors affecting securities markets generally or particular
industries represented in the securities markets. The value of a security may
decline due to general market conditions that are not specifically related to
a particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates, or adverse investor sentiment. They may also decline due to
factors that affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an
industry. During a general downturn in the securities markets, multiple asset
classes may decline in value simultaneously. The value of the Fund's
portfolio may fluctuate to a greater or lesser degree than fluctuations of
the general stock market. For those Funds that invest in stocks of foreign
companies, the value of the Fund's portfolio will be affected by changes in
foreign stock markets and the special economic and other factors that might
primarily affect stock markets in particular foreign countries and regions.
Equity securities generally have greater price volatility than fixed income
securities.
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o ISSUER RISK: The value of a security may decline for a number of reasons that
directly relate to the issuer, such as management performance, financial
leverage, and reduced demand for the issuer's products or services.
o SELECTION RISK: The Fund is an actively managed investment portfolio. The
portfolio manager(s) make investment decisions for the Fund's assets. The
investment approach of some Funds emphasizes buying and holding securities,
even through adverse markets, while the investment approach of other Funds
emphasizes frequent trading in order to take advantage of short-term market
movements. However, there can be no guarantee they will produce the desired
results and poor security selection may cause the Fund to underperform its
benchmark index or other funds with similar investment objectives.
o GROWTH STOCKS RISK: The returns on growth stocks may or may not move in
tandem with the returns on other categories of stocks, or the stock market as
a whole. Growth stocks may be particularly susceptible to rapid price swings
during periods of economic uncertainty or in the event of earnings
disappointments. Further, growth stocks typically have little or no dividend
income to cushion the effect of adverse market conditions. To the extent a
growth style of investing emphasizes certain sectors of the market, such
investments will be more sensitive to market, political, regulatory and
economic factors affecting those sectors.
o LEVERAGING RISK: Certain transactions may give rise to a form of leverage.
Such transactions may include, among others, reverse repurchase agreements,
loans of portfolio securities, and the use of when-issued, delayed delivery,
or forward commitment transaction. The use of derivatives may also create
leveraging risk. To mitigate leveraging risk, the Fund will segregate or
"earmark" liquid assets or otherwise cover transactions that may give rise to
such risk. The use of leverage may cause a Fund to liquidate portfolio
positions when it may not be advantageous to do so to satisfy its obligations
or to meet segregation requirements. In addition, leverage, including
borrowing, may exaggerate the effect of any increase or decrease in the value
of a Fund's portfolio securities.
o CAPITALIZATION RISK: To the extent the Fund invests significantly in small
and/or mid-capitalization companies, it may have capitalization risk. These
companies may present additional risk because they have less predictable
earnings or no earnings, more volatile share prices and less liquid
securities than large capitalization companies. These securities may
fluctuate in value more than those of larger, more established companies and,
as a group, may suffer more severe price declines during periods of generally
declining stock prices. The shares of smaller companies tend to trade less
frequently than those of larger, more established companies, which can
adversely affect the price of smaller companies' securities and the Fund's
ability to sell them when the portfolio manager deems it appropriate. These
companies may have limited product lines, markets, or financial resources, or
may depend on a limited management group. The value of some of the Fund's
investments will rise and fall based on investor perception rather than
economic factors.
o CREDIT RISK: Credit risk is the chance that the issuer of a debt security
will fail to repay interest and principal in a timely manner, reducing the
Fund's return. Also, an issuer may suffer adverse changes in financial
condition that could lower the credit quality and liquidity of a security,
leading to greater volatility in the price of the security and the Fund's
shares.
o CONVERTIBLE SECURITIES RISK: The values of the convertible securities in
which the Fund may invest also will be affected by market interest rates, the
risk that the issuer may default on interest or principal payments and the
value of the underlying common stock into which these securities may be
converted. Specifically, since these types of convertible securities pay
fixed interest and dividends, their values may fall if market interest rates
rise, and rise if market interest rates fall. Additionally, an issuer may
have the right to buy back certain of the convertible securities at a time
and at a price that is unfavorable to the Fund.
o INTEREST RATE RISK: Interest rate risk is the chance that the value of the
bonds the Fund holds will decline due to rising interest rates. When interest
rates rise, the price of most bonds goes down. The price of a bond is also
affected by its maturity. Bonds with longer maturities generally have greater
sensitivity to changes in interest rates.
o DERIVATIVES RISK: The Fund may invest in derivatives. A derivative is a
financial contract whose value depends on, or is derived from, the value of
an underlying asset, reference rate, or risk. Funds typically use derivatives
as a substitute for taking a position in the underlying asset and/or as part
of a strategy designed to reduce exposure to other risks, such as interest
rate or currency risk. Funds may also use derivatives for leverage, in which
case their use would involve leveraging risk. Use of derivative instruments
involves risks different from, or possibly greater than, the risks associated
with investing directly in securities and other traditional investments.
Derivatives are subject to a number of other risks, such as liquidity risk,
interest rate risk, market risk, credit risk, and management risk.
Derivatives also involve the risk of mispricing or improper valuation and the
risk that changes in the value may not correlate perfectly with the
underlying asset, rate, or index. Using derivatives may result in losses,
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
possibly in excess of the principal amount invested. Also, suitable
derivative transactions may not be available in all circumstances. The
counterparty to a derivatives contract could default. As required by
applicable law, any Fund that invests derivatives segregates cash or liquid
securities, or both, to the extent that its obligations under the instrument
(for example, forward contracts and futures that are required to "cash
settle") are not covered through ownership of the underlying security,
financial instrument, or currency.
o INDUSTRY SECTOR RISK: The value of the Fund's shares is particularly
vulnerable to risks affecting technology companies and/or companies having
investments in technology. The technology sector historically has had greater
stock price fluctuation as compared to the general market. By focusing on the
technology sector of the stock market rather than a broad spectrum of
companies, the Fund's share price will be particularly sensitive to market
and economic events that affect those technology companies. The stock prices
of technology companies during the past few years have been highly volatile,
largely due to the rapid pace of product change and development within this
sector. This phenomenon may also result in future stock price volatility. In
addition, technologies that are dependent on consumer demand may be more
sensitive to changes in consumer spending patterns. Technology companies
focusing on the information and telecommunications sectors may also be
subject to international, federal and state regulations and may be adversely
affected by changes in those regulations.
o FOREIGN RISK: Because the Fund invests in securities of foreign issuers, it
may be subject to risks not usually associated with owning securities of U.S.
issuers. These risks include, among others, adverse fluctuations in foreign
currency values as well as adverse political, social and economic
developments affecting a foreign country, including the risk of
nationalization, expropriation or confiscatory taxation. In addition, foreign
investing involves less publicly available information, and more volatile or
less liquid securities markets. Investments in foreign countries could be
affected by factors not present in the U.S., such as restrictions on
receiving the investment proceeds from a foreign country, confiscatory
foreign tax laws, and potential difficulties in enforcing contractual
obligations. Transactions in foreign securities may be subject to less
efficient settlement practices, including extended clearance and settlement
periods. Foreign accounting may be less revealing than U.S. accounting
practices. Foreign regulation may be inadequate or irregular. Owning foreign
securities could cause the Fund's performance to fluctuate more than if it
held only U.S. securities.
o INITIAL PUBLIC OFFERINGS RISK: The Fund may invest in initial public
offerings (IPOs). By definition, securities issued in IPOs have not traded
publicly until the time of their offerings. There may be only a limited
number of shares available for trading, the market for those securities may
be unseasoned, and the issuer may have a limited operating history. These
factors may contribute to price volatility. The limited number of shares
available for trading in some IPOs may also make it more difficult for the
Fund to buy or sell significant amounts of shares without an unfavorable
impact on prevailing prices. In addition, some companies initially offering
their shares publicly are involved in relatively new industries or lines of
business, which may not be widely understood by investors. Some of the
companies involved in new industries may be regarded as developmental stage
companies, without revenues or operating income, or the near-term prospects
of them. Many IPOs are by small- or micro-cap companies that are
undercapitalized.
o LIQUIDITY RISK: Liquidity risk exists when particular investments are
difficult to purchase or sell. Investments in illiquid securities may reduce
the returns of the Fund because it may be unable to sell the illiquid
securities at an advantageous time or price. Restricted securities may be
subject to liquidity risk because they may have terms that limit their resale
to other investors or may require registration under applicable securities
laws before they may be sold publicly. Funds with principal investment
strategies that involve restricted securities, foreign securities,
derivatives, companies with small market capitalization or securities with
substantial market and/or credit risk tend to have the greatest exposure to
liquidity risk.
o CURRENCY RISK: Funds that invest in securities that trade in, and receive
revenues in, foreign currencies are subject to the risk that those currencies
will decline in value relative to the U.S. dollar, or, in the case of hedging
positions, that the U.S. dollar will decline in value relative to the
currency being hedged. Currency rates in foreign countries may fluctuate
significantly over short periods of time for a number of reasons, including
changes in interest rates, intervention (or failure to intervene) by the U.S.
or foreign governments, central banks, or supranational authorities, such as
the International Monetary Fund, or by the imposition of currency controls or
other political developments in the U.S. or abroad. As a result, the Fund's
investments with exposure to foreign currency fluctuations may decline in
value (in terms of the U.S. dollar) and reduce the returns of the Fund.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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o PORTFOLIO TURNOVER: The Fund may actively and frequently trade its portfolio
securities or may turn over a significant portion of its portfolio securities
in a single year. High portfolio turnover (100% or more) results in higher
transaction costs and can adversely affect the Fund's performance.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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PERFORMANCE
Performance information for the Funds is shown below.
The following bar charts and tables provide an indication of the risks of an
investment in the Funds by showing changes in their performance from year to
year and by showing how the Funds' average annual returns for one year, five
years and since inception (as applicable) compare with those of a broad measure
of market performance.
Both the bar charts and the tables assume reinvestment of dividends and
distributions, and reflect fee waivers. Without fee waivers, the Funds'
performance would have been lower.
The performance of the Funds will vary from year to year. The Funds' performance
does not reflect the cost of insurance and separate account charges which are
imposed under your Contract. If they were included, performance would be
reduced. Past performance does not indicate how the Funds will perform in the
future.
BLACKROCK GROWTH FUND (ACQUIRED FUND)
[BAR CHART GRAPHIC 2003: 36.48%, 2004: 8.08%, 2005: 11.06%, 2006: 0.70%,
2007: 15.02%, 2008: -60.70%]
* PRIOR TO JANUARY 26, 2009, THE FUND WAS SUBADVISED BY LEGG MASON CAPITAL
MANAGEMENT, INC. AND WAS KNOWN AS THE AZL LEGG MASON GROWTH FUND.
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q2, 2003) 19.45%
Lowest (Q4, 2008) -32.98%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 FIVE YEARS ENDED DECEMBER 31, 2008 SINCE INCEPTION
AZL BlackRock Growth Fund 5/1/2002 -60.70% -11.39% -8.13%
Russell 1000 Growth Index -38.44% -3.42% -2.01%
The Fund's performance is compared to the Russell 1000 Growth Index, an
unmanaged index that measures the performance of individual securities found in
the Russell universe with higher price-to-book ratios and higher forecasted
growth values. The index does not reflect the deduction of fees associated with
a mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for these services provided to
the Fund. Investors cannot invest directly in an index, although they can invest
in the underlying securities.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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COLUMBIA TECHNOLOGY FUND (ACQUIRED FUND)
[BAR CHART GRAPHIC 2002: -41.13%, 2003: 41.96%, 2004: -4.33%, 2005: 0.70%,
2006: 2.56%, 2007: 22.75%, 2008: -50.63%]
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q2, 2003) 18.56%
Lowest (Q4, 2008) -28.34%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 FIVE YEARS ENDED DECEMBER 31, 2008 SINCE INCEPTION
AZL Columbia Technology Fund 11/5/2001 -50.63% -9.75% -8.28%
S&P 500{R} Index -37.00% -2.19% -0.91%
The Fund's performance is compared to the Standard & Poor's 500 Composite Stock
Price Index ("S&P 500{R} Index") The S&P 500{R} Index
is an unmanaged index that consists of 500 selected common stocks, most of which
are listed on the New York Stock Exchange, and is a measure of the U.S. stock
market as a whole. The index does not reflect the deduction of fees associated
with a mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for services provided to the
Fund. Investors cannot invest directly in an index, although they can invest in
the underlying securities.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
BLACKROCK CAPITAL APPRECIATION FUND (ACQUIRING FUND)
[BAR CHART GRAPHIC 2006: 1.57%, 2007: 10.92%, 2008: -36.37%]
* PRIOR TO NOVEMBER 24, 2008, THE FUND WAS SUBADVISED BY JENNISON ASSOCIATES
LLC AND WAS KNOWN AS THE AZL JENNISON GROWTH FUND.
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q3, 2007) 5.85%
Lowest (Q4, 2008) -19.81%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION
AZL BlackRock Capital Appreciation Fund 4/29/2005 -36.37% -3.84%
Russell 1000 Growth Index -38.44% -4.64%
The Fund's performance is compared to the Russell 1000 Growth Index, an
unmanaged index that measures performance of individual securities found in the
Russell universe with higher price-to-book ratios and higher forecasted growth
values. The index does not reflect the deduction of fees associated with a
mutual fund, such as investment management and fund accounting fees. The Fund's
performance reflects the deduction of fees for services provided to the Fund.
Investors cannot invest directly in an index, although they can invest in the
underlying securities.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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TABLE A-1
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2008
FUND (inception date) LAST 1 YEAR LAST 2 YEARS LAST 3 YEARS LAST 5 YEARS SINCE INCEPTION
AZL BlackRock Growth Fund -60.70% -32.77% -23.08% -11.39% -8.13%
(5/1/2002)
AZL Columbia Technology Fund -50.63% -22.16% -14.66% -9.75% -8.28%
(11/5/2001)
AZL BlackRock Capital Appreciation Fund -36.37% -15.99% -10.50% N/A -3.84%
(4/29/2005)
TAX CONSEQUENCES
If the separate accounts investing in the Funds and the Contracts are properly
structured under the insurance company provisions of the federal tax law (as the
Manager believes is the case), the Reorganization will not be a taxable event
for Contract Owners who have a portion of their variable annuity contract
allocated to the Funds, regardless of the tax status of the Reorganization.
As a condition to the closing of each Reorganization, the Acquired Funds and the
Acquiring Fund will receive an opinion from Dorsey & Whitney LLP to the effect
that each Reorganization will qualify as a tax-free reorganization for federal
income tax purposes. Accordingly, shareholders (the separate accounts of Allianz
Life and Allianz Life of New York) will not recognize taxable gain or loss as a
result of the Reorganization.
For more information about the federal income tax consequences of the
Reorganization, see the section entitled "Tax Status of the Reorganization."
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
FEES AND EXPENSES
The following table describes the fees and expenses as of the end of the most
recent fiscal year that you pay if you buy and hold shares of the Acquired Funds
or shares of the Acquiring Fund. The table also shows estimated pro forma
expenses of the Acquiring Fund assuming the proposed Reorganization had been
effective during the most recent fiscal year, adjusted to reflect current fees.
The table does not reflect the expenses that apply to the subaccounts or the
Contracts. Inclusion of these charges would increase expenses for all periods
shown. The fees and expenses below exclude the costs of the Reorganization. See
"Reasons for the Proposed Reorganization and Board Deliberations" for additional
information concerning the allocation of the costs of the Reorganization.
TABLE A-2
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
The following table is based on fund assets as of December 31, 2008.
BLACKROCK GROWTH FUND COLUMBIA TECHNOLOGY FUND BLACKROCK CAPITAL BLACKROCK CAPITAL APPRECIATION FUND - PRO
(ACQUIRED FUND) (ACQUIRED FUND) APPRECIATION FUND FORMA WITH ACQUIRED FUNDS
(ACQUIRING FUND)
Management 0.85% (a)(b) 0.81% (a) 0.80% (a)(b) 0.80% (b)(c)
Fee
Distribution 0.25% 0.25% 0.25% 0.25%
(12b-1) Fees
(d)
Other 0.13% 0.16% 0.15% 0.11%
Expenses
Total Annual 1.23% 1.22% 1.20% 1.16%
Operating
Expenses
Fee Waiver 0.00% 0.00% 0.00% 0.00%
(e)
Net Annual 1.23% (b) 1.22% 1.20% (b) 1.16% (b)
Fund
Operating
Expenses (e)
(a)The management fee rate is the contractual rate charged for the Fund's most
recent fiscal year, which ended December 31, 2008.
(b)As of the date of this proxy statement/prospectus, the Manager is voluntarily
reducing the management fee for BlackRock Growth Fund to 0.70% on the first
$200 million of assets and 0.65% on assets over $200 million and for BlackRock
Capital Appreciation Fund to 0.75%. In connection with the Reorganization, the
Manager will voluntarily reduce the management fee for the combined Fund to
0.70% on the first $200 million of assets and 0.65% on assets over $200
million. The Manager reserves the right to increase the management fees to the
amounts shown in the table above at any time. If the voluntary management fee
reductions were reflected in the table, the Net Annual Fund Operating Expenses
would be lower.
(c)The management fee rate shown reflects what the rate would be under the
current management fee schedule for the Acquiring Fund based on the combined
assets of the Funds for the fiscal year ended December 31, 2008.
(d)The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of
1940. The Fund pays Allianz Life Financial Services, LLC, the Fund's
distributor, an annual fee of up to 0.25% of average daily net assets as
payment for distributing its shares and providing shareholder services.
(e)The Manager and the Fund have entered into a written contract limiting
operating expenses, excluding certain expenses (such as interest expense), to
1.30% for AZL BlackRock Growth Fund, 1.35% for AZL Columbia Technology Fund,
and 1.20% for BlackRock Capital Appreciation Fund through April 30, 2010. The
Fund is authorized to reimburse the Manager for management fees previously
waived and/or for the cost of Other Expenses paid by the Manager provided that
such reimbursement will not cause the Fund to exceed any limits in effect at
the time of such reimbursement. The Fund's ability to reimburse the Manager in
this manner only applies to fees paid or reimbursements made by the Manager
within the three fiscal years prior to the date of such reimbursement. To the
extent that such reimbursements to the Manager are expected in the upcoming
year, the amount of the reimbursements, if any, is included in the financial
statements in the Fund's shareholder reports and is reflected in Other
Expenses in the table above.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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EXAMPLE: Use the following tables to compare fees and expenses of the Funds to
other investment companies. The tables illustrate the amount of fees and
expenses an investor would pay, assuming (1) a $10,000 investment, (2) 5% annual
return, (3) redemption at the end of each time period, and (4) no changes in the
Fund's total operating expenses. The tables also show pro forma expenses of the
Acquiring Fund assuming the proposed Reorganization had been in effect for the
periods shown. The tables do not reflect the effect of any fee or expense
waivers. The tables also do not reflect separate account or insurance contract
fees and charges. An investor's actual costs may be different.
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
BlackRock Growth Fund (Acquired Fund) $125 $390 $676 $1,489
Columbia Technology Fund (Acquired Fund) $124 $387 $670 $1,477
BlackRock Capital Appreciation Fund (Acquiring Fund) $122 $381 $660 $1,455
BlackRock Capital Appreciation Fund - Pro Forma with Acquired Funds $118 $368 $638 $1,409
THIS EXAMPLE DOES NOT REPRESENT ACTUAL EXPENSES, PAST OR FUTURE. ACTUAL EXPENSES
MAY BE HIGHER OR LOWER THAN THOSE SHOWN. THIS EXAMPLE DOES NOT REFLECT THE
EXPENSES THAT APPLY TO THE SUBACCOUNTS OR THE CONTRACTS. INCLUSION OF THSE
CHARGES WOULD INCREASE EXPENSES FOR ALL PERIODS SHOWN.
THE REORGANIZATION
TERMS OF THE REORGANIZATION
The Board has approved the Plans, a copy of each of which is attached as Exhibit
A and Exhibit B. The Plans provide for the Reorganization on the following
terms:
o The Reorganization is scheduled to occur on the first day that the New York
Stock Exchange is open for business following shareholder approval and receipt
of any necessary regulatory approvals, but may occur on any later date agreed
to by an Acquired Fund and the Acquiring Fund.
o The Acquired Funds will transfer all of their assets to the Acquiring Fund
and, in exchange, the Acquiring Fund will assume the Acquired Funds'
liabilities.
o The Acquiring Fund will issue shares to each Acquired Fund in an amount equal
to the value of the assets that it receives from each Acquired Fund, less the
liabilities assumed by the Acquiring Fund in the transaction. These shares
will immediately be distributed by the Acquired Funds to their shareholders
(the separate accounts) in proportion to their holdings in the Acquired Fund.
As a result, shareholders (the separate accounts) of the Acquired Funds will
become shareholders of the Acquiring Fund. Contract values that were allocated
to subaccounts invested in the Acquired Funds will be allocated to subaccounts
investing in the Acquiring Fund.
o Neither the Acquired Funds nor any Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Funds will pay any sales
charge in connection with the Reorganization.
o The net asset value of the Acquired Funds and the Acquiring Fund will be
computed as of 3:00 p.m. Central time, on the closing date.
o After the Reorganization, the Acquired Funds will be terminated.
CONDITIONS TO CLOSING THE REORGANIZATION
The completion of the Reorganization is subject to certain conditions described
in the Plans, including:
o Each Acquired Fund will have declared and paid a dividend that will distribute
all of the Fund's taxable income, if any, to the shareholders (the separate
accounts) of the Fund for the taxable years ending at or prior to the closing.
o The Funds will have received any approvals, consents, or exemptions from the
SEC or any regulatory body necessary to carry out the Reorganization.
o An effective registration statement on Form N-14 will be on file with the SEC.
o The Contract Owners of each Acquired Fund who are eligible to provide voting
instructions for the meeting will have approved the respective Plans.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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o The Acquired Funds will receive an opinion of tax counsel that the proposed
Reorganization will be tax-free for the Acquired Funds and the Acquiring Fund
and for the separate accounts that are the shareholders of the Acquired Funds.
TERMINATION OF THE PLAN
The Plans and the transactions contemplated by them may be terminated and
abandoned by resolutions of the Board of Trustees of the Acquired Funds or the
Acquiring Fund at any time prior to closing. In the event of a termination,
there will be no liability for damages on the part of either the Acquired Funds
or the Acquiring Fund, or the trustees, officers, or shareholders of the
Acquired Funds or the Acquiring Fund.
TAX STATUS OF THE REORGANIZATION
For federal income tax purposes, the transfer of the assets of each Acquired
Fund to the Acquiring Fund in exchange for shares of the Acquiring Fund and the
distribution of the Acquiring Fund shares to shareholders of each Acquired Fund
is treated as a separate Reorganization. However, for ease of reference, the
Reorganizations are discussed collectively.
The exchange of the Acquired Funds' assets for shares of the Acquiring Fund, and
the subsequent distribution of those shares to shareholders of the Acquired
Funds and the liquidation of the Acquired Funds, are intended to qualify for
federal income tax purposes as a tax-free reorganization under Section 368(a)(1)
of the Code. The Acquired Funds and the Acquiring Fund will receive an opinion
of Dorsey & Whitney LLP, based in part on certain representations by the VIP
Trust on behalf of the Acquired Funds and the Acquiring Fund, substantially to
the effect that:
o The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and each of the
Acquired Funds will qualify as a party to the reorganization within the
meaning of Section 368(b) of the Code.
o Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of each Acquired
Fund which are distributed by Acquired Fund prior to the Closing.
o The tax basis of the Acquiring Fund Shares received by each Acquired Fund
shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund shares exchanged therefor.
o The holding period of the Acquiring Fund shares received by each Acquired
Fund shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund shareholder held the Acquired Fund shares
exchanged therefor, provided that the Acquired Fund shares were held as a
capital asset at the Effective Time.
o The Acquired Funds will recognize no income, gain, or loss by reason of
the Reorganization.
o The Acquiring Fund will recognize no income, gain, or loss by reason of
the Reorganization.
o The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Funds as of the Effective Time.
o The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Funds.
o The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Funds as of
the Effective Time.
REASONS FOR THE PROPOSED REORGANIZATION AND BOARD DELIBERATIONS
The Board believes that the proposed Reorganization will be advantageous to
shareholders of the Acquired Funds based on its consideration of the following
matters:
o TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms and
conditions of the Reorganization as described in the previous paragraphs.
o TAX CONSEQUENCES. The Board considered the tax-free nature of the
Reorganization.
o CONTINUITY OF INVESTMENT. The Board considered the compatibility of the Funds
and the degree of similarity between the investment objectives and the
principal investment strategies for the Acquired Funds and the Acquiring Fund.
The Board considered the fact that the Acquired Funds and the Acquiring Fund
have comparable investment objectives and, except as described in this proxy
statement, investment strategies and policies that are substantially similar.
In the case of BlackRock Growth Fund, the Board noted that the Acquired Fund
and the Acquiring Fund have the same investment objectives, principal
investment strategies and principal investment risks. The Board also took note
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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of the fact that following the Reorganization, shareholders of the Acquired
Funds will be invested in a Fund holding a portfolio whose characteristics are
similar to those of the portfolio currently held by the Acquired Funds, except
as described in this proxy statement.
o EXPENSE RATIOS. The Board considered the relative expenses of the Funds. At
December 31, 2008, the end of each Fund's most recent fiscal year, the total
operating expense ratio for the Acquiring Fund was lower than the total
operating expense ratio for each of the Acquired Funds. The contractual
management fee for the Acquiring Fund is lower than that for each the Acquired
Funds, and the contractual management fees for the Colombia Technology Fund
includes breakpoints. The Funds have the same Distribution (12b-1) Fees, and
the Other Expenses for the Acquiring Fund following the Reorganization are
expected to be lower than for any of the Funds prior to the Reorganization.
The Board considered the Manager's voluntary waiver of fees for the BlackRock
Growth Fund and for the Acquiring Fund, including the fact that the Manager
had agreed voluntarily to further reduce its fees for the Acquiring Fund in
connection with the Reorganization and that the Manager may revoke its
voluntary waiver of fees at any time. The Board considered that, in sum,
shareholders of the Acquired Funds could expect lower total operating expenses
following the Reorganization.
The Board also considered the possibility that both higher aggregate net
assets resulting from the Reorganization and the opportunity for net cash
inflows, or reduced outflows, may reduce the risk that, if net assets of the
Acquired Funds fail to grow, or even diminish, the Acquired Funds' total
expense ratios could rise from current levels as fixed expenses become a
larger percentage of net assets. The Board noted that all of the Funds are
subject to expense limitation agreements that will remain in place through at
least April 30, 2010. The Board considered the fact that all of the Funds
currently are operating with expenses below the caps contained in their
respective expense limitation agreement and that the Acquiring Fund is not
subject currently to reimbursements to the Manager for expenses previously
waived by the Manager.
o ECONOMIES OF SCALE. The Board considered the advantage of combining Funds with
similar investment objectives and investment strategies. The Board believes
that the combined Fund may have the opportunity to take advantage of the
economies of scale associated with a larger fund. The combined Fund may have
better prospects for growth than any of the Funds separately. For example, a
larger fund should have an enhanced ability to effect portfolio transactions
on more favorable terms and should have greater investment flexibility.
Furthermore, as indicated above, fixed expenses, such as audit expenses and
accounting expenses that are charged on a per fund basis, may be reduced.
o COSTS. The Board noted that the Acquired Funds each will bear the expenses of
printing and mailing communications to the Contract Owners who beneficially
owned its shares and that all other expenses of the Reorganization, including
accounting, legal, and custodial expenses, and any costs related to
repositioning of the Acquiring Funds' portfolios after the Reorganization,
will be allocated equally among the Acquired Funds and the Acquiring Fund. The
Board also noted that the estimated total reorganization costs, including
repositioning costs, would be less than $0.01 per share of the combined Fund.
The Board considered the Manager's analysis showing that the reduction in
annual operating expenses for the Acquired Funds and the Acquiring Fund
resulting from the Reorganization is likely to be greater than the expenses of
the Reorganization to be borne by the Acquired Funds or Acquiring Fund, as the
case may be.
o DILUTION. The Board considered the fact that the Reorganization will not
dilute the interests of the current Contract Owners with contract values
allocated to subaccounts investing in the Acquired Funds because it would be
effected on the basis of the relative net asset value per share of the
Acquired Funds and the Acquiring Fund, respectively. Thus, subaccounts holding
shares of the Acquired Funds will receive shares of the Acquiring Fund equal
in value to their shares in the Acquired Funds.
o PERFORMANCE AND OTHER FACTORS. The Board considered the relative performance
records of the Funds. The Board took into account the better overall track
record of the Acquiring Fund, when compared to the Acquired Funds, over the
four years since the inception of the Acquiring Fund. While the Board was
cognizant of the fact that an Acquiring Fund's past performance is no
guarantee of its future results, and that returns for the Acquiring Fund prior
to November 24, 2008, and for BlackRock Growth Fund prior to January 26, 2009,
were the result of investment choices by different subadvisors, it did
recognize that the better overall track record of the Acquiring Fund could
help attract more assets into the combined Funds and therefore could increase
shareholder confidence in the combined Fund. The Board concluded that
increased inflows, or reduced outflows, could lead to further economies of
scale (see "Economies of Scale" above).
The Board also considered the fact that the Funds have similar investment
objectives and strategies. The Reorganization should allow for a concentrated
selling effort, thereby potentially benefiting shareholders of the combined
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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Funds. The Board further took into account the Manager's belief that each
Acquired Fund, as a stand-alone Fund, was unlikely to experience significant
growth in assets as a result of inflows.
o POTENTIAL EFFECTS ON THE MANAGER. The Board considered the potential benefits
from the Reorganization that could be realized by the Manager. The Board
recognized that the potential benefits to the Manager consist principally of
economies of scale and the elimination of expenses incurred in duplicative
efforts to administer separate funds. The Board noted, however, that
shareholders of the Acquired Funds will benefit over time from any long-term
decrease in overall operating expense ratios resulting from the proposed
Reorganization. The Board noted that the proposed Reorganization would affect
the amount of management fees that the Manager retains after payment of the
subadvisory fees. The table below assumes that the Reorganization has taken
place and gives effect to the additional temporary reduction in management
fees payable to Manager. See Table A-2 above for information concerning
current management fees for both Funds and the voluntary reductions in
management fees that are currently in effect.
FUND MANAGEMENT FEE RETAINED AFTER PAYMENT OF SUBADVISORY FEE (1)
BlackRock Growth Fund (Acquired Fund) 0.30%
Columbia Technology Fund (Acquired Fund) 0.27%
BlackRock Capital Appreciation Fund (Acquiring Fund) 0.35%
Weighted Average Before Reorganization 0.32%
BLACKROCK CAPITAL APPRECIATION FUND - PRO FORMA WITH ACQUIRED FUNDS 0.29% (2)
(1)Calculations are as of May 31, 2009, using monthly average assets under
management for May 2009.
(2)Calculated using management fee rates and subadvisory fee rates effective
October 26, 2009.
The Board did not assign relative weights to the foregoing factors or deem any
one or group of them to be controlling in and of themselves.
BOARDS' DETERMINATIONS
After considering the factors described above and other relevant information at
an in-person meeting held on June 10, 2009, the Board of Trustees of each of the
Acquired Funds, including a majority of the independent Board members, found
that participation in the Reorganization is in the best interests of the
Acquired Funds and that the interests of existing Contract Owners with contract
values allocated to subaccounts investing in the Acquired Funds would not be
diluted as a result of the Reorganization.
The Board of Trustees of the Acquiring Fund approved the Plans at the meeting
held on June 10, 2009. Among other factors, the Board members considered the
terms of the Plans, the provisions intended to avoid the dilution of Contract
Owners' interests, and the anticipated tax consequences of the Reorganization.
The Board found that participation in the Reorganization is in the best
interests of the Acquiring Fund and that the interests of existing Contract
Owners with contract values allocated to subaccounts investing in the Acquiring
Fund will not be diluted as a result of the Reorganization.
RECOMMENDATION AND VOTE REQUIRED
The Board recommends that Contract Owners who are entitled to vote at the
meeting approve the proposed Plans. Approval of each Plan requires the
affirmative vote, in person or by proxy, of a majority of the voting power of
the outstanding shares of the respective Acquired Fund as the record date, July
20, 2009. Shareholders of each Acquired Fund will vote separately on the Plan
applicable the Acquired Fund in which they are invested. Each share is entitled
to one vote for each dollar, and a fractional vote for each fraction of a
dollar, of net asset value per share held by a shareholder on the record date.
If the Plan is not approved by the Acquired Fund, the Board will consider what
further action should be taken. The Reorganization will proceed with respect to
any Acquired Fund approving it, even if the other Acquired Fund does not.
If shareholder approval is obtained, the Reorganization is scheduled to be
effective on or about October 23, 2009.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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SECTION B - PROXY VOTING AND SHAREHOLDER MEETING INFORMATION
REFERENCE TO THE "FUND" IN THIS SECTION IS A REFERENCE TO THE ACQUIRED FUND.
A special meeting of shareholders of the Acquired Funds will be held as
specified in the Notice of Special Meeting that accompanies this proxy
statement/prospectus. At the meeting, shareholders (the separate accounts) will
vote their shares of the Acquired Funds.
You have the right to instruct Allianz Life and Allianz Life of NY (together,
"Allianz") on how to vote the shares of the Acquired Funds held under your
Contract. The number of Fund shares for which you may provide instructions will
be based on the dollar amount of Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date. Each accumulation unit or annuity unit represents a specified
dollar value and a specified number of Fund shares. For each dollar of value,
the Contract Owner is permitted to vote one Fund share. We count fractional
votes. If you execute and return your voting instruction form, but do not
provide voting instructions, Allianz will vote the shares underlying your
Contract in favor of the proposal described above. Allianz will vote any shares
for which it does not receive a voting instruction form, and any shares which it
or its affiliates hold for their own account, in proportionately the same manner
as shares for which it has received voting instructions. Allianz will not
require voting instructions for a minimum number of shares, and therefore a
small number of shareholders could determine the outcome of any proposal.
For the Meeting to proceed, there must be a quorum. This means that at least 25%
of a Fund's shares must be represented at the Meeting either in person or by
proxy. Because Allianz is the only shareholder of the Funds, its presence at the
Meeting in person or by proxy will meet the quorum requirement.
You may revoke your voting instructions up until voting results are announced at
the Meeting or at any adjournment of the Meeting by giving written notice to
Allianz prior to the Meeting by mail to Allianz Variable Insurance Products
Trust, c/o Advisory Management, A 3-825, 5701 Golden Hills Drive, Minneapolis,
Minnesota 55416, by executing and returning to Allianz a voting instruction form
with a later date, or by attending the Meeting and voting in person. If you need
a new voting instruction form, please call the Fund at 1-800-950-5872 ext.
35857, and a new voting instruction form will be sent to you. If you return an
executed form without voting instructions, your shares will be voted "FOR" the
proposal.
The Acquired Funds will pay all costs of solicitation, including the cost of
preparing and mailing the Notice of a Special Meeting of shareholders and this
proxy statement/prospectus to Contract Owners. Representatives of the Manager,
without cost to the Fund, also may solicit voting instructions from Contract
Owners by means of mail, telephone, or personal calls.
DISSENTERS' RIGHTS OF APPRAISAL. There are no appraisal or dissenters' rights
for shareholders of the Acquired Funds. Delaware law does not grant
beneficiaries of statutory trusts who dissent from approval of the
Reorganization the right to demand an appraisal for their interests and payment
of their fair cash value. As a result, shareholders who object to the
Reorganization do not have a right to demand a different payment for their
shares of beneficial interest.
OTHER MATTERS. Management of the Funds anticipates that an election of Trustees
and ratification of the auditors also will be conducted at the Meeting. You will
receive a separate proxy statement containing information regarding these other
matters if you are eligible to vote on them. Otherwise, management of the Funds
knows of no other matters that may properly be, or that are likely to be,
brought before the Meeting. However, if any other business shall properly come
before the Meeting, the persons named on the voting instruction form intend to
vote thereon in accordance with their best judgment.
ADJOURNMENT. In the event that voting instructions received by the time
scheduled for the meeting are not sufficient to approve the Reorganization,
representatives of Allianz may move for one or more adjournments of the meeting
for a period of not more than 120 days in the aggregate to allow further
solicitation of voting instructions on the proposals. Any adjournment requires
the affirmative vote of a majority of the voting power of the shares present at
the meeting. Representatives of Allianz will vote in favor of adjournment. The
Acquired Funds will pay the costs of any additional solicitation and of any
adjourned meeting. A shareholder vote may be taken on one or more of the items
in this proxy statement prior to adjournment if sufficient voting instructions
have been received.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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SECTION C - CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER FUND INFORMATION
IN THIS SECTION REFERENCE TO THE "FUND" IS A REFERENCE TO THE ACQUIRING FUND AND
THE ACQUIRED FUNDS.
This section contains the following information about the Funds:
TABLE CONTENT
(all information is shown for the fiscal year ended December 31, 2008,
unless noted otherwise)
C-1 Actual and pro forma capitalization of the Acquired Fund and the
Acquiring Fund
C-2 Actual and pro forma ownership of Fund shares
CAPITALIZATION
The following table shows the capitalization of the Funds at December 31, 2008,
and on a pro forma basis, assuming the proposed Reorganization had taken place.
TABLE C-1. ACTUAL AND PRO FORMA CAPITALIZATION OF THE ACQUIRED FUNDS AND THE
ACQUIRING FUNDS
FUND NET ASSETS NET ASSET VALUE SHARES OUTSTANDING
PER SHARE
BlackRock Growth Fund (Acquired Fund)o $136,580,172 $5.06 26,976,834
Columbia Technology Fund (Acquired Fund)o $39,790,405 $4.78 8,328,533
BlackRock Capital Appreciation Fund (Acquiring Fund) $99,344,439 $8.66 11,474,707
Adjustments* -$134,800 -- -14,949,424
BlackRock Capital Appreciation Fund - Pro Forma with the Acquired Funds $275,580,216 $8.66 31,830,650
* The number of Fund shares for which you may provide instructions will be based
on the dollar amount of Acquired Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date.
**The adjustment to net assets represents the impact as a result of the
estimated Reorganization fees and expenses that will be paid by the Funds, and
the adjustment to shares outstanding represents the impact as a result of the
shares being issued by the Acquiring Fund to the Acquired Fund shareholders.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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OWNERSHIP OF FUND SHARES
The following table provides information on shareholders who owned more than 5%
of each Fund's outstanding shares at the record date. At the record date,
officers and directors of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.
TABLE C-2. ACTUAL AND PRO FORMA OWNERSHIP OF FUND SHARES [ADD UPON AMENDMENT]
FUND 5% OWNERS PERCENT OF SHARES PERCENT OF SHARES HELD FOLLOWING THE
HELD REORGANIZATION
BlackRock Growth Fund Allianz Life Variable [00.00]% N/A
Account B
Columbia Technology Fund Allianz Life Variable N/A
Account B
BlackRock Capital Appreciation Allianz Life Variable [00.00]% [00.00]%
Fund Account B
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
EXHIBIT A -AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of June 10, 2009, (the
"Agreement") is by and among the Allianz Variable Insurance Products Trust (the
"VIP Trust" or the "Selling Trust"), a Delaware statutory trust, on behalf of
its series, the AZL BlackRock Growth Fund (the "Acquired Fund"), and the same
statutory trust (in this role, the "Buying Trust") on behalf of its series, the
AZL BlackRock Capital Appreciation Fund (the "Acquiring Fund").
The following table shows the name of the Acquired Fund and the Acquiring Fund
that will be parties to the reorganization.
-------------------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
-------------------------------------------------------------------
|AZL BlackRock Growth Fund|AZL BlackRock Capital Appreciation Fund|
-------------------------------------------------------------------
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Acquired Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the transactions
it contemplates. The reorganization between the Acquiring Fund and the
Acquired Fund is referred to hereinafter as the "Reorganization." The
Acquiring Fund agrees to furnish data and information, as reasonably
requested, for the proxy statement to be furnished to shareholders of the
Acquired Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization is intended to qualify as a
reorganization within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"). At the Closing (as defined
below), the Selling Trust will convey all of the assets of the Acquired
Fund to the Acquiring Fund. The Acquiring Fund will assume all liabilities
of the Acquired Fund. At the Closing, the Buying Trust will deliver shares
of the Acquiring Fund, including fractional shares, to the Selling Trust.
The number of shares will be determined by dividing the aggregate net
asset value of the shares of the Acquired Fund, computed as described in
Section 3(a), by the net asset value of one share of the Acquiring Fund,
computed as described in Section 3(b). The Acquired Fund will not pay a
sales charge on the receipt of Acquiring Fund shares in exchange for the
assets of the Acquired Fund. In addition, the separate account
shareholders of the Acquired Fund will not pay a sales charge on
distribution to them of shares of the Acquiring Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the "Closing")
will occur on the first day on which the New York Stock Exchange (the
"NYSE") is open for business following approval of contract owners of the
Acquired Fund and receipt of all necessary regulatory approvals, or such
later date as the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business
on the date of the Closing or at such other time as an authorized officer
of the VIP Trust shall determine (the "Effective Time").
3. VALUATION.
a. The aggregate net asset value of the shares of the Acquired Fund will be
computed as of the close of regular trading on the NYSE on the day of
Closing (the "Valuation Date") using the valuation procedures in the
Acquired Fund's prospectus.
b. The net asset value per share of shares of the Acquiring Fund will be
determined as of the close of regular trading on the NYSE on the Valuation
Date, using the valuation procedures in the Acquiring Fund's prospectus.
c. At the Closing, the Acquired Fund will provide the Acquiring Fund with a
copy of the computation showing the valuation of the aggregate net asset
value of the shares of the Acquired Fund on the Valuation Date. The
Acquiring Fund will provide the Acquired Fund with a copy of the
computation showing the determination of the net asset value per share of
shares of the Acquiring Fund on the Valuation Date.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
4. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUND.
a. As soon as practicable after the Valuation Date, the Selling Trust will
liquidate the Acquired Fund and distribute shares of the Acquiring Fund to
the Acquired Fund's shareholders of record. The Acquiring Fund will
establish shareholder accounts in the names of each Acquired Fund
shareholder, representing the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each shareholder. All
issued and outstanding shares of the Acquired Fund will simultaneously be
canceled on the books of the Selling Trust. The Acquiring Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the Selling Trust.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Trust relating to the Acquired Fund will be closed and no further
transfer of shares will be made.
c. Promptly after the distribution, the Acquiring Fund or its transfer agent
will notify each shareholder of the Acquired Fund of the number of shares
distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Acquired Fund, and
in no event later than twelve months from the date of the Closing, the
Acquired Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE BUYING TRUST. The Buying
Trust represents and warrants to the Acquired Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Buying
Trust is a statutory trust duly organized, validly existing, and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, management
investment company. The Acquiring Fund is a series of the Buying Trust.
b. Capitalization. The Buying Trust has authorized capital of an unlimited
number of shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquiring Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquiring
Fund as of the end of the last fiscal year and the subsequent unaudited
semi-annual financial statements, if any (the "Acquiring Fund Financial
Statements"), fairly present the financial position of the Acquiring Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Shares to Be Issued upon Reorganization. The shares of beneficial interest
to be issued in connection with the Reorganization will be duly authorized
and, at the time of the Closing, will be validly issued, fully paid, and
non-assessable.
e. Authority Relative to the Agreement. The Buying Trust has the power to
enter into and carry out the obligations described in this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Trustees of the Buying Trust, and no other
proceedings by the Buying Trust or the Acquiring Fund are necessary under
the Buying Trust's Agreement and Declaration of Trust or By-Laws (the
"Governing Documents").
f. No Violation. The Buying Trust is not in violation of its Governing
Documents or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion of
the transactions contemplated by it will not conflict with, or constitute
a breach of, any material contract or other instrument to which the
Acquiring Fund is subject. The transactions will not result in any
violation of the provisions of the Governing Documents or any law,
administrative regulation, or administrative or court decree applicable to
the Acquiring Fund.
g. Liabilities. There are no liabilities of the Acquiring Fund other than:
(1)liabilities disclosed in the Acquiring Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquired Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquiring Fund.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
h. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquiring Fund, threatened, that would materially
and adversely affect the Acquiring Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquiring Fund knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation, and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to the
Selling Trust, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
j. Taxes. The Acquiring Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquiring Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and such returns
and reports have been true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquired Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquired Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
k. Registration Statement. The Acquiring Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933 (the "1933 Act")
relating to the shares of beneficial interest to be issued in the
Reorganization. At the time that the Registration Statement becomes
effective, at the time of the Acquired Fund's shareholders' meetings, and
at the Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading. However, none of the
representations and warranties in this subsection applies to statements
in, or omissions from, the Registration Statement made in reliance on
information furnished by the Acquired Fund for use in the Registration
Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING TRUST.
The Selling Trust represents and warrants to the Acquiring Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Selling
Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
1940 Act as an open-end, management investment company. The Acquired Fund
is a series of the Selling Trust.
b. Capitalization. The Selling Trust has authorized capital of an unlimited
number shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquired Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquired
Fund as of the end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Acquired Fund Financial
Statements"), fairly present the financial position of the Acquired Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Authority Relative to the Agreement. The Selling Trust has the power to
enter into and to carry out its obligations under this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Directors of the Selling Trust, the
shareholders meetings referred to in Section 6(k) will be called and held,
and no other proceedings by the Selling Trust or the Acquired Fund are
necessary under the Selling Trust's Governing Documents.
e. No Violation. The Selling Trust is not in violation of its Agreement and
Declaration of Trust or By-Laws (the "Governing Documents") or in default
in the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of, any
material contract or other instrument to which the Acquired Fund is
subject. The transactions will not result in any violation of the
provisions of the Governing Documents or any law, administrative
regulation, or administrative or court decree applicable to the Acquired
Fund.
f. Liabilities. There are no liabilities of the Acquired Fund other than:
(1)liabilities disclosed in the Acquired Fund Financial Statements,
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(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquiring Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquired Fund.
g. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquired Fund, threatened, that would materially
and adversely affect the Acquired Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquired Fund knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and the Acquired Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
h. Contracts. Except for contracts and agreements previously disclosed to the
Buying Trust, the Acquired Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
i. Taxes. The Acquired Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquired Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and all such
returns and reports are true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquiring Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquiring Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
j. Fund Securities. All securities listed in the schedules of investments of
the Acquired Fund as of the Closing will be owned by the Acquired Fund
free and clear of any encumbrances, except as indicated in the schedule.
k. Shareholders' Meetings; Registration Statement. The Acquired Fund will
call and hold a shareholders' meeting at which its shareholders will
consider and act upon the transactions contemplated by this Agreement. The
Acquired Fund will cooperate with the Acquiring Fund and will furnish
information relating to the Selling Trust and the Acquired Fund required
in the Registration Statement. At the time that the Registration Statement
becomes effective, at the time of the shareholders' meeting, and at the
Closing, the Registration Statement, as it relates to the Selling Trust or
the Acquired Fund, will not contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading. However, the representations and warranties in this
subsection apply only to statements in or omissions from the Registration
Statement made in reliance upon information furnished by the Selling Trust
or the Acquired Fund for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING TRUST. The obligations of the Buying
Trust with respect to the Reorganization are subject to the satisfaction of
the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of the
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Selling Trust and the
Acquired Fund will have complied with this Agreement, and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling Trust will
provide a certificate to the Acquiring Fund confirming that, as of the
Closing, the representations and warranties set forth in Section 6 are
true and correct and that there have been no material adverse changes in
the financial condition, results of operations, business, properties, or
assets of the Acquired Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Selling Trust, and delivered to the
Acquiring Fund on or prior to the last business day before the Closing. A
decline in the value of the securities owned by the Acquired Fund will not
constitute a "material adverse change" for purposes of the foregoing
sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective, and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
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d. Opinion of Counsel. The Buying Trust will have received an opinion of
counsel for the Selling Trust, dated as of the Closing, to the effect that
(i) the Selling Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquired Fund
is a series of the Selling Trust; (iii) this Agreement and the
Reorganization have been duly authorized and approved by all requisite
action of the Selling Trust and the Acquired Fund, and this Agreement has
been duly executed by, and is a valid and binding obligation of, the
Selling Trust.
e. Declaration of Dividend. The Acquired Fund, prior to the Closing, will
have declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the shareholders
of the Acquired Fund (i) all of the excess of (x) the Acquired Fund's
investment income excludable from gross income under Section 103 of the
Code over (y) the Acquired Fund's deductions disallowed under Sections 265
and 171 of the Code, (ii) all of the Acquired Fund's investment company
taxable income as defined in Section 852 of the Code (in each case
computed without regard to any deduction for dividends paid) and (iii) all
of the Acquired Fund's net capital gain realized (after reduction for any
capital loss carryover), in each case for the current taxable year (which
will end on the Closing date) and any preceding taxable years for which
such a dividend is eligible to be made under Section 855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING TRUST. The obligations of the
Selling Trust with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of all
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Acquiring Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the Closing. An officer of the Buying Trust will provide a certificate to
the Acquired Fund confirming that, as of the Closing, the representations
and warranties set forth in Section 5 are true and correct and that there
have been no material adverse changes in the financial condition, results
of operations, business, properties, or assets of the Acquiring Fund since
the date of its last financial statement, except as otherwise indicated in
any financial statements, certified by an officer of the Buying Trust, and
delivered to the Acquired Fund on or prior to the last business day before
the Closing. A decline in the value of the securities owned by the
Acquiring Fund will not constitute a "material adverse change" for
purposes of the foregoing sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Trust will have received the opinion of
counsel for the Buying Trust, dated as of the Closing, to the effect that
(i) the Buying Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquiring Fund
is a series of the Buying Trust; (iii) this Agreement and the
Reorganization have been authorized and approved by all requisite action
of the Buying Trust and the Acquiring Fund, and this Agreement has been
duly executed by, and is a valid and binding obligation of, the Buying
Trust; and (iv) the shares to be issued in the Reorganization are duly
authorized and upon issuance in accordance with this Agreement will be
validly issued, fully paid, and non-assessable shares of the Acquiring
Fund.
9. FURTHER CONDITIONS TO THE OBLIGATIONS OF THE BUYING TRUST AND THE SELLING
TRUST. As a further condition to the obligations of the VIP Trust on behalf
of both the Acquired Fund and the Acquiring Fund hereunder, the VIP Trust, on
behalf of both the Acquired Fund and the Acquiring Fund, shall have received
the opinion of Dorsey & Whitney LLP addressed to the VIP Trust on behalf of
both the Acquired Fund and the Acquiring Fund, dated as of the date of the
Closing, and based in part on representations to be furnished by the VIP
Trust on behalf of the Acquired Fund and the Acquiring Fund, substantially to
the effect that:
a. The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
b. Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of the Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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receipt of any net investment income or net capital gains of the Acquired
Fund which are distributed by the Acquired Fund prior to the Closing.
c. The tax basis of the Acquiring Fund Shares received by each Acquired Fund
Shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund Shares exchanged therefor.
d. The holding period of the Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund Shareholder held the Acquired Fund Shares
exchanged therefor, provided that the Acquired Fund Shares were held as a
capital asset at the Effective Time.
e. The Acquired Fund will recognize no income, gain or loss by reason of the
Reorganization.
f. The Acquiring Fund will recognize no income, gain or loss by reason of the
Reorganization.
g. The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
h. The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
i. The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
10.AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the Board of
Trustees. The Agreement may be amended at any time before or after
approval by the shareholders of the Acquired Fund, but after shareholder
approval, no amendment shall be made that substantially changes the terms
of Sections 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and
(ii) compliance with any of the covenants or conditions made for its
benefit. However, neither party may waive the requirement to obtain
shareholder approval or the requirement to obtain a tax opinion.
c. The Selling Trust may terminate this Agreement at any time prior to the
Closing by notice to the Buying Trust if a material condition to its
performance or a material covenant of the Buying Trust on behalf of the
Acquiring Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Buying
Trust on behalf of the Acquiring Fund and is not cured.
d. The Buying Trust may terminate this Agreement at any time prior to the
Closing by notice to the Selling Trust if a material condition to its
performance or a material covenant of the Selling Trust on behalf of the
Acquired Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Selling
Trust on behalf of the Acquired Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Acquired Fund, without any liability on the part of either party or its
respective trustees, officers, or shareholders, on written notice to the
other party, and shall be terminated without liability as of the close of
business on December 31, 2009, or a later date agreed upon by the parties,
if the Closing has not taken place on or prior to that date.
f. The representations, warranties, and covenants contained in this
Agreement, or in any document delivered in connection with this Agreement,
will survive the Reorganization.
11.EXPENSES. All fees paid to governmental authorities for the registration or
qualification of the Acquiring Fund Shares and all transfer agency costs
related to the shares of the Acquiring Fund Shares shall be allocated to the
Acquiring Fund. All fees and expenses related to printing and mailing
communications to shareholders and beneficial owners of shares of the
Acquired Fund shall be allocated to the Acquired Fund. All of the other
expenses of the transactions required for the Reorganization, including
without limitation, accounting, legal, and custodial expenses, shall be
allocated equally between the Acquired Fund and the Acquiring Fund. The
expenses specified in this Section shall be borne by the Fund to which they
are allocated.
12. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state of
Minnesota.
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13. INDEMNIFICATION. Each party will indemnify and hold the other and its
officers and trustees (each an "Indemnitee") harmless from and against any
liability or other cost and expense, in connection with the defense or
disposition of any action, suit, or other proceeding, before any court or
administrative or investigative body in which the Indemnitee may be involved
as a party, with respect to actions taken under this Agreement. However, no
Indemnitee will be indemnified against any liability or expense arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the Indemnitee's position.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL BlackRock Growth Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL BlackRock Capital Appreciation Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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EXHIBIT B -AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of June 10, 2009, (the
"Agreement") is by and among the Allianz Variable Insurance Products Trust (the
"VIP Trust" or the "Selling Trust"), a Delaware statutory trust, on behalf of
its series, the AZL Columbia Technology Fund (the "Acquired Fund"), and the same
statutory trust (in this role, the "Buying Trust") on behalf of its series, the
AZL BlackRock Capital Appreciation Fund (the "Acquiring Fund").
The following table shows the name of the Acquired Fund and the Acquiring Fund
that will be parties to the reorganization.
----------------------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
----------------------------------------------------------------------
|AZL Columbia Technology Fund|AZL BlackRock Capital Appreciation Fund|
----------------------------------------------------------------------
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Acquired Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the transactions
it contemplates. The reorganization between the Acquiring Fund and the
Acquired Fund is referred to hereinafter as the "Reorganization." The
Acquiring Fund agrees to furnish data and information, as reasonably
requested, for the proxy statement to be furnished to shareholders of the
Acquired Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization is intended to qualify as a
reorganization within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"). At the Closing (as defined
below), the Selling Trust will convey all of the assets of the Acquired
Fund to the Acquiring Fund. The Acquiring Fund will assume all liabilities
of the Acquired Fund. At the Closing, the Buying Trust will deliver shares
of the Acquiring Fund, including fractional shares, to the Selling Trust.
The number of shares will be determined by dividing the aggregate net
asset value of the shares of the Acquired Fund, computed as described in
Section 3(a), by the net asset value of one share of the Acquiring Fund,
computed as described in Section 3(b). The Acquired Fund will not pay a
sales charge on the receipt of Acquiring Fund shares in exchange for the
assets of the Acquired Fund. In addition, the separate account
shareholders of the Acquired Fund will not pay a sales charge on
distribution to them of shares of the Acquiring Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the "Closing")
will occur on the first day on which the New York Stock Exchange (the
"NYSE") is open for business following approval of contract owners of the
Acquired Fund and receipt of all necessary regulatory approvals, or such
later date as the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business
on the date of the Closing or at such other time as an authorized officer
of the VIP Trust shall determine (the "Effective Time").
3. VALUATION.
a. The aggregate net asset value of the shares of the Acquired Fund will be
computed as of the close of regular trading on the NYSE on the day of
Closing (the "Valuation Date") using the valuation procedures in the
Acquired Fund's prospectus.
b. The net asset value per share of shares of the Acquiring Fund will be
determined as of the close of regular trading on the NYSE on the Valuation
Date, using the valuation procedures in the Acquiring Fund's prospectus.
c. At the Closing, the Acquired Fund will provide the Acquiring Fund with a
copy of the computation showing the valuation of the aggregate net asset
value of the shares of the Acquired Fund on the Valuation Date. The
Acquiring Fund will provide the Acquired Fund with a copy of the
computation showing the determination of the net asset value per share of
shares of the Acquiring Fund on the Valuation Date.
4. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUND.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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a. As soon as practicable after the Valuation Date, the Selling Trust will
liquidate the Acquired Fund and distribute shares of the Acquiring Fund to
the Acquired Fund's shareholders of record. The Acquiring Fund will
establish shareholder accounts in the names of each Acquired Fund
shareholder, representing the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each shareholder. All
issued and outstanding shares of the Acquired Fund will simultaneously be
canceled on the books of the Selling Trust. The Acquiring Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the Selling Trust.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Trust relating to the Acquired Fund will be closed and no further
transfer of shares will be made.
c. Promptly after the distribution, the Acquiring Fund or its transfer agent
will notify each shareholder of the Acquired Fund of the number of shares
distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Acquired Fund, and
in no event later than twelve months from the date of the Closing, the
Acquired Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE BUYING TRUST. The Buying
Trust represents and warrants to the Acquired Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Buying
Trust is a statutory trust duly organized, validly existing, and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, management
investment company. The Acquiring Fund is a series of the Buying Trust.
b. Capitalization. The Buying Trust has authorized capital of an unlimited
number of shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquiring Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquiring
Fund as of the end of the last fiscal year and the subsequent unaudited
semi-annual financial statements, if any (the "Acquiring Fund Financial
Statements"), fairly present the financial position of the Acquiring Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Shares to Be Issued upon Reorganization. The shares of beneficial interest
to be issued in connection with the Reorganization will be duly authorized
and, at the time of the Closing, will be validly issued, fully paid, and
non-assessable.
e. Authority Relative to the Agreement. The Buying Trust has the power to
enter into and carry out the obligations described in this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Trustees of the Buying Trust, and no other
proceedings by the Buying Trust or the Acquiring Fund are necessary under
the Buying Trust's Agreement and Declaration of Trust or By-Laws (the
"Governing Documents").
f. No Violation. The Buying Trust is not in violation of its Governing
Documents or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion of
the transactions contemplated by it will not conflict with, or constitute
a breach of, any material contract or other instrument to which the
Acquiring Fund is subject. The transactions will not result in any
violation of the provisions of the Governing Documents or any law,
administrative regulation, or administrative or court decree applicable to
the Acquiring Fund.
g. Liabilities. There are no liabilities of the Acquiring Fund other than:
(1)liabilities disclosed in the Acquiring Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquired Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquiring Fund.
h. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquiring Fund, threatened, that would materially
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and adversely affect the Acquiring Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquiring Fund knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation, and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to the
Selling Trust, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
j. Taxes. The Acquiring Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquiring Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and such returns
and reports have been true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquired Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquired Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
k. Registration Statement. The Acquiring Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933 (the "1933 Act")
relating to the shares of beneficial interest to be issued in the
Reorganization. At the time that the Registration Statement becomes
effective, at the time of the Acquired Fund's shareholders' meetings, and
at the Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading. However, none of the
representations and warranties in this subsection applies to statements
in, or omissions from, the Registration Statement made in reliance on
information furnished by the Acquired Fund for use in the Registration
Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING TRUST.
The Selling Trust represents and warrants to the Acquiring Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Selling
Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
1940 Act as an open-end, management investment company. The Acquired Fund
is a series of the Selling Trust.
b. Capitalization. The Selling Trust has authorized capital of an unlimited
number shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquired Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquired
Fund as of the end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Acquired Fund Financial
Statements"), fairly present the financial position of the Acquired Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Authority Relative to the Agreement. The Selling Trust has the power to
enter into and to carry out its obligations under this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Directors of the Selling Trust, the
shareholders meetings referred to in Section 6(k) will be called and held,
and no other proceedings by the Selling Trust or the Acquired Fund are
necessary under the Selling Trust's Governing Documents.
e. No Violation. The Selling Trust is not in violation of its Agreement and
Declaration of Trust or By-Laws (the "Governing Documents") or in default
in the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of, any
material contract or other instrument to which the Acquired Fund is
subject. The transactions will not result in any violation of the
provisions of the Governing Documents or any law, administrative
regulation, or administrative or court decree applicable to the Acquired
Fund.
f. Liabilities. There are no liabilities of the Acquired Fund other than:
(1)liabilities disclosed in the Acquired Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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(3)liabilities previously disclosed to the Acquiring Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquired Fund.
g. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquired Fund, threatened, that would materially
and adversely affect the Acquired Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquired Fund knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and the Acquired Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
h. Contracts. Except for contracts and agreements previously disclosed to the
Buying Trust, the Acquired Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
i. Taxes. The Acquired Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquired Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and all such
returns and reports are true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquiring Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquiring Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
j. Fund Securities. All securities listed in the schedules of investments of
the Acquired Fund as of the Closing will be owned by the Acquired Fund
free and clear of any encumbrances, except as indicated in the schedule.
k. Shareholders' Meetings; Registration Statement. The Acquired Fund will
call and hold a shareholders' meeting at which its shareholders will
consider and act upon the transactions contemplated by this Agreement. The
Acquired Fund will cooperate with the Acquiring Fund and will furnish
information relating to the Selling Trust and the Acquired Fund required
in the Registration Statement. At the time that the Registration Statement
becomes effective, at the time of the shareholders' meeting, and at the
Closing, the Registration Statement, as it relates to the Selling Trust or
the Acquired Fund, will not contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading. However, the representations and warranties in this
subsection apply only to statements in or omissions from the Registration
Statement made in reliance upon information furnished by the Selling Trust
or the Acquired Fund for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING TRUST. The obligations of the Buying
Trust with respect to the Reorganization are subject to the satisfaction of
the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of the
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Selling Trust and the
Acquired Fund will have complied with this Agreement, and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling Trust will
provide a certificate to the Acquiring Fund confirming that, as of the
Closing, the representations and warranties set forth in Section 6 are
true and correct and that there have been no material adverse changes in
the financial condition, results of operations, business, properties, or
assets of the Acquired Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Selling Trust, and delivered to the
Acquiring Fund on or prior to the last business day before the Closing. A
decline in the value of the securities owned by the Acquired Fund will not
constitute a "material adverse change" for purposes of the foregoing
sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective, and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Buying Trust will have received an opinion of
counsel for the Selling Trust, dated as of the Closing, to the effect that
(i) the Selling Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquired Fund
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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is a series of the Selling Trust; (iii) this Agreement and the
Reorganization have been duly authorized and approved by all requisite
action of the Selling Trust and the Acquired Fund, and this Agreement has
been duly executed by, and is a valid and binding obligation of, the
Selling Trust.
e. Declaration of Dividend. The Acquired Fund, prior to the Closing, will
have declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the shareholders
of the Acquired Fund (i) all of the excess of (x) the Acquired Fund's
investment income excludable from gross income under Section 103 of the
Code over (y) the Acquired Fund's deductions disallowed under Sections 265
and 171 of the Code, (ii) all of the Acquired Fund's investment company
taxable income as defined in Section 852 of the Code (in each case
computed without regard to any deduction for dividends paid) and (iii) all
of the Acquired Fund's net capital gain realized (after reduction for any
capital loss carryover), in each case for the current taxable year (which
will end on the Closing date) and any preceding taxable years for which
such a dividend is eligible to be made under Section 855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING TRUST. The obligations of the
Selling Trust with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of all
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Acquiring Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the Closing. An officer of the Buying Trust will provide a certificate to
the Acquired Fund confirming that, as of the Closing, the representations
and warranties set forth in Section 5 are true and correct and that there
have been no material adverse changes in the financial condition, results
of operations, business, properties, or assets of the Acquiring Fund since
the date of its last financial statement, except as otherwise indicated in
any financial statements, certified by an officer of the Buying Trust, and
delivered to the Acquired Fund on or prior to the last business day before
the Closing. A decline in the value of the securities owned by the
Acquiring Fund will not constitute a "material adverse change" for
purposes of the foregoing sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Trust will have received the opinion of
counsel for the Buying Trust, dated as of the Closing, to the effect that
(i) the Buying Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquiring Fund
is a series of the Buying Trust; (iii) this Agreement and the
Reorganization have been authorized and approved by all requisite action
of the Buying Trust and the Acquiring Fund, and this Agreement has been
duly executed by, and is a valid and binding obligation of, the Buying
Trust; and (iv) the shares to be issued in the Reorganization are duly
authorized and upon issuance in accordance with this Agreement will be
validly issued, fully paid, and non-assessable shares of the Acquiring
Fund.
9. FURTHER CONDITIONS TO THE OBLIGATIONS OF THE BUYING TRUST AND THE SELLING
TRUST. As a further condition to the obligations of the VIP Trust on behalf
of both the Acquired Fund and the Acquiring Fund hereunder, the VIP Trust, on
behalf of both the Acquired Fund and the Acquiring Fund, shall have received
the opinion of Dorsey & Whitney LLP addressed to the VIP Trust on behalf of
both the Acquired Fund and the Acquiring Fund, dated as of the date of the
Closing, and based in part on representations to be furnished by the VIP
Trust on behalf of the Acquired Fund and the Acquiring Fund, substantially to
the effect that:
a. The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
b. Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of the Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of the Acquired
Fund which are distributed by the Acquired Fund prior to the Closing.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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c. The tax basis of the Acquiring Fund Shares received by each Acquired Fund
Shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund Shares exchanged therefor.
d. The holding period of the Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund Shareholder held the Acquired Fund Shares
exchanged therefor, provided that the Acquired Fund Shares were held as a
capital asset at the Effective Time.
e. The Acquired Fund will recognize no income, gain or loss by reason of the
Reorganization.
f. The Acquiring Fund will recognize no income, gain or loss by reason of the
Reorganization.
g. The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
h. The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
i. The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
10.AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the Board of
Trustees. The Agreement may be amended at any time before or after
approval by the shareholders of the Acquired Fund, but after shareholder
approval, no amendment shall be made that substantially changes the terms
of Sections 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and
(ii) compliance with any of the covenants or conditions made for its
benefit. However, neither party may waive the requirement to obtain
shareholder approval or the requirement to obtain a tax opinion.
c. The Selling Trust may terminate this Agreement at any time prior to the
Closing by notice to the Buying Trust if a material condition to its
performance or a material covenant of the Buying Trust on behalf of the
Acquiring Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Buying
Trust on behalf of the Acquiring Fund and is not cured.
d. The Buying Trust may terminate this Agreement at any time prior to the
Closing by notice to the Selling Trust if a material condition to its
performance or a material covenant of the Selling Trust on behalf of the
Acquired Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Selling
Trust on behalf of the Acquired Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Acquired Fund, without any liability on the part of either party or its
respective trustees, officers, or shareholders, on written notice to the
other party, and shall be terminated without liability as of the close of
business on December 31, 2009, or a later date agreed upon by the parties,
if the Closing has not taken place on or prior to that date.
f. The representations, warranties, and covenants contained in this
Agreement, or in any document delivered in connection with this Agreement,
will survive the Reorganization.
11.EXPENSES. All fees paid to governmental authorities for the registration or
qualification of the Acquiring Fund Shares and all transfer agency costs
related to the shares of the Acquiring Fund Shares shall be allocated to the
Acquiring Fund. All fees and expenses related to printing and mailing
communications to shareholders and beneficial owners of shares of the
Acquired Fund shall be allocated to the Acquired Fund. All of the other
expenses of the transactions required for the Reorganization, including
without limitation, accounting, legal, and custodial expenses, shall be
allocated equally between the Acquired Fund and the Acquiring Fund. The
expenses specified in this Section shall be borne by the Fund to which they
are allocated.
12. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state of
Minnesota.
13. INDEMNIFICATION. Each party will indemnify and hold the other and its
officers and trustees (each an "Indemnitee") harmless from and against any
liability or other cost and expense, in connection with the defense or
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
disposition of any action, suit, or other proceeding, before any court or
administrative or investigative body in which the Indemnitee may be involved
as a party, with respect to actions taken under this Agreement. However, no
Indemnitee will be indemnified against any liability or expense arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the Indemnitee's position.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL Columbia Technology Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL BlackRock Capital Appreciation Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
AZL[{R}] First Trust Target Double Play Fund
AZL[{R}] PIMCO Fundamental IndexPLUS Total Return Fund
AZL TargetPLUS[SM] Equity Fund
5701 Golden Hills Drive
Minneapolis, MN 55416-1297
Dear Allianz Life and Allianz Life of New York Variable Annuity Contract Owner:
The Board of Trustees of the AZL First Trust Target Double Play Fund, the AZL
PIMCO Fundamental IndexPLUS Total Return Fund, and the AZL TargetPLUS Equity
Fund (the "Acquired Funds"), each a series of the Allianz Variable Insurance
Products Trust (the "VIP Trust"), is pleased to submit a proposal to reorganize
the Acquired Funds into the AZL S&P 500 Index Fund (the "Acquiring Fund"), which
is another series of the VIP Trust.
As the owner of a variable annuity contract issued by Allianz Life Insurance
Company of North America or Allianz Life Insurance Company of New York, you
beneficially own shares of one or more of the Acquired Funds. Accordingly, we
ask that you indicate whether you approve or disapprove of the proposed
reorganization affecting your Fund(s) by submitting instructions on how to vote
your beneficial shares by phone, internet, or mail.
The proposed reorganization is being undertaken for several reasons, including:
o Reducing contractual management fees and overall expenses for
shareholders of the Acquired Funds; and
o Providing further economies of scale.
THE BOARD OF TRUSTEES OF THE VIP TRUST BELIEVES THAT THE TRANSACTION IS IN THE
BEST INTERESTS OF THE ACQUIRED FUNDS AND THEIR SHAREHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL.
The Board considered various factors in reviewing the proposed reorganization
on behalf of the Acquired Funds' shareholders, including, but not limited to,
the following:
* The continuity of investments between the Acquired Funds and the Acquiring
Fund.
* The expectation that the reorganization will reduce expense ratios for the
Funds and achieve other economies of scale.
* Historical performance of the Funds.
* The expectation that the reorganization will have no tax consequences for
contract owners.
If the proposal is approved, the Acquiring Fund will acquire all of the assets
of the Acquired Funds in exchange for newly issued shares of the Acquiring Fund.
These Acquiring Fund shares in turn will be distributed proportionately to the
shareholders of each Acquired Fund in complete liquidation of the Acquired
Funds. In order to accomplish the proposed reorganization, the Board of Trustees
of the Acquired Funds submits for your approval an Agreement and Plan of
Reorganization with respect to each of the Acquired Funds.
Whether or not you plan to attend the meeting, please review the enclosed voting
instruction form. You may submit your instructions on voting the shares that you
beneficially own by phone, internet, or mail. Following this letter is a Q&A
summarizing the reorganization and information on how to vote your shares.
Please read the entire proxy statement/prospectus carefully before you vote.
Thank you for your prompt attention to this important matter.
Sincerely,
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
PROXY STATEMENT/PROSPECTUS Q&A
HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR THE AZL FIRST
TRUST TARGET DOUBLE PLAY FUND, THE AZL PIMCO FUNDAMENTAL INDEXPLUS TOTAL RETURN
FUND, AND THE AZL TARGETPLUS EQUITY FUND. WE ENCOURAGE YOU TO READ THE FULL TEXT
OF THE ENCLOSED PROXY STATEMENT/PROSPECTUS.
Q: WHY IS THE REORGANIZATION BEING PROPOSED?
The reorganization is being proposed in an effort to reduce operating
expenses for funds available to owners of variable annuity and variable life
insurance contracts issued by Allianz Life Insurance Company of North America
or Allianz Life Insurance Company of New York and to provide further
economies of scale.
Your Board of Trustees has determined that the reorganization is in the best
interests of the Acquired Funds' shareholders and recommends that you vote
FOR the reorganization.
Q: WILL THE EXPENSES OF THE FUND IN WHICH I PARTICIPATE INCREASE AS A RESULT OF
THE REORGANIZATION?
No. The total expense ratio for the Acquiring Fund following the
reorganization is expected to be lower than the total expense ratio for each
of the Acquired Funds prior to the reorganization.
Q: WHO IS PAYING THE COSTS OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
Contract owners who were beneficial owners of shares of the Acquired Funds on
the record date will bear these costs.
Q: WILL I INCUR TAXES AS A RESULT OF THE REORGANIZATION?
No. The reorganization is not expected to be a taxable event for contract
owners. Please see the Tax Consequences discussion in the enclosed proxy
statement/prospectus for additional information.
Q: IF APPROVED, WHEN WILL THE REORGANIZATION HAPPEN?
If shareholders approve the reorganization, it will take place shortly after
the shareholder meeting.
Q: IS THERE ANYTHING I NEED TO DO TO CONVERT MY SHARES?
No. Upon shareholder approval of the reorganization, the Acquired Fund shares
that serve as a funding vehicle for benefits under your variable annuity
contract automatically will be exchanged for shares of the Acquiring Fund.
The total value of the Acquiring Fund shares that a shareholder receives in
the reorganization will be the same as the total value of the Acquired Fund
shares held by the shareholder immediately before the reorganization.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE?
After careful consideration, the Board recommends that you vote FOR the
reorganization.
Q: HOW AND WHEN DO I VOTE?
You can vote in one of four ways:
- By mail with the enclosed voting instruction form
- By telephone
- By web site
- In person at the meeting
Please refer to the enclosed voting instruction form for the telephone number
and internet address. Please vote as soon as possible by following the
instructions on the voting instruction form.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
If you have questions about any of the proposals described in the proxy
statement or about voting procedures, please call toll free at 1-800-950-5872
ext. 37952.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
5701 GOLDEN HILLS DRIVE
MINNEAPOLIS, MINNESOTA 55416-1297
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 2009
AZL[{R}] FIRST TRUST TARGET DOUBLE PLAY FUND
AZL[{R}] PIMCO FUNDAMENTAL INDEXPLUS TOTAL RETURN FUND
AZL TARGETPLUS[SM] EQUITY FUND
A special meeting of the shareholders of the AZL First Trust Target Double Play
Fund, the AZL PIMCO Fundamental IndexPLUS Total Return Fund, and the AZL
TargetPLUS Equity Fund (each an "Acquired Fund" and, together, the "Acquired
Funds") will be held at 10:00 a.m. on October 21, 2009, at the offices of
Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Golden
Valley, Minnesota. At the meeting, shareholders of the respective Acquired Funds
will consider the following proposals:
- To approve an Agreement and Plan of Reorganization (the "Plan") between the
AZL First Trust Target Double Play Fund, which is a series of the Allianz
Variable Insurance Products Trust (the "VIP Trust"), and the AZL S&P 500 Index
Fund (the "Acquiring Fund"), which is another series of the VIP Trust;
- To approve an Agreement and Plan of Reorganization (the "Plan") between the
AZL PIMCO Fundamental IndexPLUS Total Return Fund, also a series of the VIP
Trust, and the Acquiring Fund; and
- To approve an Agreement and Plan of Reorganization (the "Plan") between the
AZL TargetPLUS Equity Fund, also a series of the VIP Trust, and the Acquiring
Fund; and
- Such other business as may properly come before the meeting, or any
adjournment of the meeting.
Under all of the Plans, the Acquiring Fund would acquire all of the assets and
assume all of the liabilities of each Acquired Fund in exchange for shares of
the Acquiring Fund, which would be distributed proportionately to the
shareholders of the Acquired Funds in complete liquidation of the Acquired
Funds, and the assumption of the Acquired Funds' liabilities. Each Plan will be
voted upon by the shareholders of the respective Acquired Fund voting
separately.
The Acquired Funds issue and sell shares to certain accounts of Allianz Life
Insurance Company of North America ("Allianz Life") and Allianz Life Insurance
Company of New York ("Allianz Life of NY"). The separate accounts hold shares of
mutual funds, including the Acquired Funds, which serve as a funding vehicle for
benefits under variable annuity contracts issued by Allianz Life and Allianz
Life of NY. As the owners of the assets held in the separate accounts, Allianz
Life and Allianz Life of NY are the sole shareholders of the Acquired Funds and
are entitled to vote all of the shares of the Acquired Funds. However, Allianz
Life and Allianz Life of NY will vote outstanding shares of the Acquired Funds
in accordance with instructions given by the owners of variable annuity
contracts for which the Funds serve as a funding vehicle. This Notice is being
delivered to owners of variable annuity contracts who, by virtue of their
ownership of the contracts, beneficially owned shares of the Acquired Funds on
the record date, so that they may instruct Allianz Life and Allianz Life of NY
how to vote the shares of the Acquired Funds underlying their contracts.
Shareholders of record at the close of business on July 20, 2009, are entitled
to vote at the meeting.
By order of the Board of Directors
Michael J. Radmer, Secretary
August 7, 2009
YOU CAN VOTE QUICKLY AND EASILY.
PLEASE FOLLOW THE INSTRUCTIONS ON THE ENCLOSED VOTING INSTRUCTION FORM.
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
PROXY STATEMENT/PROSPECTUS - AUGUST 7, 2009
ACQUIRED FUNDS ACQUIRING FUND
AZL[{R}] First Trust Target Double Play Fund AZL[{R}] S&P 500 Index Fund
("Target Double Play Fund") ("S&P 500 Index Fund")
AZL[{R}] PIMCO Fundamental IndexPLUS Total Return Fund
("PIMCO Fundamental IndexPLUS Total Return Fund")
AZL TargetPLUS[SM] Equity Fund
("TargetPLUS Equity Fund")
This proxy statement/prospectus describes proposed Agreements and Plans of
Reorganization (the "Plans") pursuant to which the outstanding shares of the
Target Double Play Fund, the PIMCO Fundamental IndexPLUS Total Return Fund, and
the TargetPLUS Equity Fund, one or more of which currently serves as a funding
vehicle for your variable annuity contract, (each an "Acquired Fund" and,
together, the "Acquired Funds") would be exchanged for shares of the S&P 500
Index Fund (the "Acquiring Fund"). The Acquiring Fund and the Acquired Funds
(each a "Fund" and together the "Funds") are named above. The Funds are series
of the Allianz Variable Insurance Products Trust (the "VIP Trust"). The address
of the Funds is 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. The phone
number of the Funds is 877-833-7113.
THE BOARD OF TRUSTEES OF THE VIP TRUST UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLANS.
THESE SECURITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK
OR AN AFFILIATE OF ANY BANK, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), OR ANY OTHER AGENCY OF THE UNITED STATES, OR ANY
BANK OR AN AFFILIATE OF ANY BANK; AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF VALUE.
As with all mutual funds, the Securities and Exchange Commission (the "SEC") has
not approved or disapproved these securities or passed on the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Each of the Funds is subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and
files reports, proxy materials, and other information with the SEC (Investment
Company Act file no. 811-09491). These reports, proxy materials, and other
information can be inspected and copied at the Public Reference Room maintained
by the SEC. Copies may be obtained, after paying a duplicating fee, by
electronic request e-mailed to publicinfo@sec.gov, or by writing to the Public
Reference Section of the SEC, Washington, D.C. 20549-0102. In addition, copies
of these documents may be viewed on-line or downloaded from the SEC's Web site
at http://www.sec.gov.
You should retain this proxy statement/prospectus for future reference. It sets
forth concisely the information about the Acquiring Fund that a prospective
investor should know before investing. Additional information is set forth in
the Statement of Additional Information, dated the same date as this proxy
statement/prospectus, relating to this proxy statement/prospectus. A current
prospectus for the Acquiring Fund, which gives a detailed description of the
Acquiring Fund's policies, strategies, and restrictions, accompanies this proxy
statement/prospectus.
This proxy statement/prospectus was first mailed to Contract Owners on or about
August 7, 2009.
WHERE TO GET MORE INFORMATION
FUND REPORTS: THE ACQUIRING FUND: THE ACQUIRED FUND:
Prospectus dated April 27, 2009. Accompanying, and incorporated by reference Incorporated by reference into this
into, this proxy statement/prospectus. proxy statement/prospectus. For a
Annual report for the period ended December 31, For a complete copy at no charge, call toll- copy at no charge, call toll free
2008; and semi-annual report for the period free 877-833-7113 or write to the address 877-833-7113 or write to the address
ended June 30, 2008. given below this table. given below this table.
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
THIS PROXY STATEMENT/PROSPECTUS:
Statement of Additional Information dated Incorporated by reference into this proxy statement/prospectus. For a copy at no charge,
the same date as this proxy call toll-free 1-800-624-0197 or write to Allianz VIP Trust, Advisory Management, A 3-
statement/prospectus. This document 825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
contains information about both the
Acquired Fund and the Acquiring Fund.
To ask questions about this proxy Call toll free 1-800-950-5872 ext. 37952 or write to: Allianz VIP Trust, Advisory
statement/prospectus. Management, A3-825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
ADDRESS: Allianz Variable Insurance Products Trust, 5701 Golden Hills Drive,
Minneapolis, MN 55416.
ABOUT THE ACQUIRED AND ACQUIRING FUNDS
The Acquired Funds issue and sell shares to separate accounts of Allianz Life
Insurance Company of North America ("Allianz Life") and Allianz Life Insurance
Company of New York ("Allianz Life of NY"). These separate accounts hold shares
of mutual funds, including the Acquired Funds, which serve as funding vehicles
for benefits under variable annuity contracts issued by Allianz Life and Allianz
Life of NY (the "Contracts"). Each separate account has subaccounts that invest
in the Acquired Funds and certain other mutual funds. Owners of the Contracts
("Contract Owners") allocate the value of their Contracts among these
subaccounts. As the owners of the assets held in the separate accounts, Allianz
Life and Allianz Life of NY are the sole shareholders of the Acquired Funds and
are entitled to vote all of the shares of each Acquired Fund. However, Allianz
Life and Allianz Life of NY will vote outstanding shares of the Acquired Funds
in accordance with instructions given by the Contract Owners who are eligible to
vote at the meeting.
The Funds all are open-end management investment companies. If the Plans are
approved, the shares of the Acquiring Fund will be distributed proportionately
by each Acquired Fund to the owners of its shares in complete liquidation of the
Acquired Funds. Each Acquired Fund shareholder would become the owner of
Acquiring Fund shares having a total net asset value equal to the total net
asset value of that shareholder's holdings in the Acquired Fund.
The following information summarizes the proposed reorganization of each of the
Acquired Funds into the Acquiring Fund (the "Reorganization"). The
Reorganization of each Acquired Fund into the Acquiring Fund is separate and
distinct, and the shareholders of each Acquired Fund will vote separately on the
Plan applicable to the Fund in which they are invested. The Reorganization will
proceed with respect to any Acquired Fund approving it. Although they are
separate, for ease of reference, the Reorganizations are discussed collectively
in this proxy statement/prospectus.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
HOW THE REORGANIZATION WILL WORK
* Each Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Funds' liabilities.
* The Acquiring Fund will issue shares of beneficial interest to each Acquired
Fund in an amount equal to the value of the assets that it receives from each
Acquired Fund, less the liabilities it assumes. These shares will be
distributed to the Acquired Funds' shareholders (the separate accounts) in
proportion to their holdings in the Acquired Funds. The value of your interest
in the subaccount investing in the Acquiring Fund received in connection with
the Reorganization will equal the value of your interest in the subaccounts
that were invested in the Acquired Funds immediately before the
Reorganization. You will not pay any sales charge in connection with this
distribution of shares. If you already have an Acquiring Fund account, shares
distributed in the Reorganization will be added to that account. As a result,
when average cost is calculated for income tax purposes, the cost of the
shares in the accounts you owned will be combined.
FUND INVESTMENT OBJECTIVES
The following table presents the investment objective for each of the Funds.
ACQUIRED FUND INVESTMENT OBJECTIVE ACQUIRING INVESTMENT OBJECTIVE
FUND
TARGET DOUBLE PLAY FUND Total return S&P 500 Match the total return of the Standard & Poor's 500
INDEX FUND Composite Stock Price Index
PIMCO FUNDAMENTAL Exceed the total return of the FTSE
INDEXPLUS TOTAL RETURN RAFI[TM] 1000 Index
FUND
TARGETPLUS EQUITY FUND Total return
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
TABLE OF CONTENTS
SECTION A -- Proposal.......................................................5
PROPOSAL: Approve or Reject the Agreement and Plan of Reorganization......5
SUMMARY.................................................................5
How the Reorganization Will Work......................................5
Comparison of the Acquired Funds and the Acquiring Fund...............6
Comparison of Investment Objectives...................................6
Comparison of Investment Strategies...................................6
Comparison of Investment Policies.....................................13
Risk Factors..........................................................13
Performance...........................................................19
Tax Consequences......................................................23
FEES AND EXPENSES.........................................................24
THE REORGANIZATION........................................................25
Terms of the Reorganization.............................................25
Conditions to Closing the Reorganization................................25
Termination of the Plan.................................................26
Tax Status of the Reorganization........................................26
Reasons for the Proposed Reorganization and Board Deliberations.........27
Boards' Determinations..................................................29
Recommendation and Vote Required........................................29
SECTION B - Proxy Voting and Shareholder Meeting Information................30
SECTION C - Capitalization, Ownership of Fund Shares and Other
Fund Information................................................31
EXHIBIT A - Agreement and Plan of Reorganization.........................A-1
EXHIBIT B - Agreement and Plan of Reorganization.........................B-1
EXHIBIT C - Agreement and Plan of Reorganization.........................C-1
The prospectus for the Acquiring Fund accompanies this proxy
statement/prospectus.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
SECTION A -- PROPOSAL
PROPOSAL: APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
This proxy statement/prospectus is being used by the Acquired Funds to solicit
voting instructions for the proposals to approve the Plans providing for the
Reorganization of the Acquired Funds into the Acquiring Fund. A form of each
Plan is included as Exhibit A, Exhibit B, and Exhibit C.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire proxy
statement/prospectus, exhibits and accompanying materials because they contain
details that are not in this summary.
HOW THE REORGANIZATION WILL WORK
The following table shows the names of each Acquired Fund and the Acquiring Fund
into which it will be merged.
------------------------------------------------------------------
| ACQUIRED FUNDS | ACQUIRING FUND |
------------------------------------------------------------------
| Target Double Play Fund |S&P 500 Index Fund|
-----------------------------------------------
|PIMCO Fundamental IndexPLUS Total Return Fund| |
-----------------------------------------------
| TargetPLUS Equity Fund | |
------------------------------------------------------------------
* Each Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Funds' liabilities.
* The Acquiring Fund will issue shares of beneficial interest in an amount equal
to the value of the assets that it receives from the Acquired Funds, less the
liabilities it assumes. These shares will be distributed to the Acquired
Funds' shareholders (the separate accounts) in proportion to their holdings in
each Acquired Fund. Only Class 2 shares of the Acquiring Fund will be issued
in connection with the Reorganization. The value of your interest in the
subaccount investing in the Acquiring Fund received in connection with the
Reorganization will equal the value of your interest in the subaccounts that
were invested in the Acquired Funds immediately before the Reorganization.
* As part of the Reorganization, systematic transactions (such as bank
authorizations and systematic payouts) currently set up for your Acquired Fund
accounts will be transferred to your new Acquiring Fund account. If you do not
want your systematic transactions to continue, please contact your financial
representative to make changes.
* Neither the Acquired Funds nor the Contract owners whose contract values are
allocated to subaccounts investing in the Acquired Funds will pay any sales
charge in connection with the Reorganization.
* After the Reorganization has been completed, contract values that were
allocated to subaccounts investing in the Acquired Funds will be allocated to
subaccounts investing in the Acquiring Fund. The Acquired Funds will be
terminated.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
COMPARISON OF THE ACQUIRED FUNDS AND THE ACQUIRING FUND
The Acquired Funds and the Acquiring Fund:
* Are outstanding series of an open-end management investment company organized
as a Delaware statutory trust.
* Have Allianz Investment Management LLC (the "Manager") as their investment
adviser.
* Have the same policies for buying and selling shares and the same exchange
rights.
* Have the same distribution policies.
* Are available only to Contract Owners who allocate contract value to a
subaccount that invests in the Funds.
COMPARISON OF INVESTMENT OBJECTIVES
The following table presents the investment objectives for each of the Funds.
ACQUIRED FUND INVESTMENT OBJECTIVE ACQUIRING INVESTMENT OBJECTIVE
FUND
TARGET DOUBLE Total return S&P 500 Match the total return of the Standard & Poor's 500 Composite Stock Price
PLAY FUND INDEX FUND Index (the "S&P 500 Index")
PIMCO FUNDAMENTAL Exceed the total return of
INDEXPLUS TOTAL the FTSE RAFI[TM] 1000
RETURN FUND Index
TARGETPLUS EQUITY Total return
FUND
COMPARISON OF INVESTMENT STRATEGIES
Each of the Funds maintains a similar investment objective, seeking some measure
of total return. Each of the Funds focus on larger-capitalization companies and
include the S&P 500 Index as an appropriate benchmark for measuring investment
performance. However, the Funds have different subadvisers and employ somewhat
different investment strategies in pursuit of their investment objectives.
The Target Double Play Fund and the TargetPLUS Equity Fund are subadvised by
First Trust Advisors L.P. ("First Trust") and invest in the common stocks of
companies selected by the subadviser only once each year from companies
identified by various strategies described below. The PIMCO Fundamental
IndexPLUS Total Return Fund is subadvised by Pacific Investment Management
Company LLC ("PIMCO"), which is affiliated with the Manager, and invests
substantially all of its assets in derivative instruments based on an enhanced,
performance recalibrated version of the RAFI Index backed by a portfolio of
short and intermediate term fixed income instruments.
The Acquiring Fund currently is subadvised by The Dreyfus Corporation and
employs a passive investment strategy to invest, normally, in all 500 stocks in
the S&P 500 Index in proportion to their weighting in the index.
The Manager expects that on or about the date of the Reorganization The Dreyfus
Corporation will be replaced as subadvisor to the S&P 500 Index Fund by
BlackRock Investment Management, LLC. The Manager does not expect that any of
the investment objectives, strategies or polices of the S&P 500 Index Fund will
change. Information regarding BlackRock Investment Management, LLC may be found
in the prospectus for the Acquiring Fund which accompanies this proxy
statement/prospectus.
Detailed strategies for the Acquired Funds and the Acquiring Fund are set forth
below.
PRINCIPAL INVESTMENT STRATEGIES FOR THE TARGET DOUBLE PLAY FUND (ACQUIRED FUND):
The Fund seeks to achieve its objective by investing in the common stocks of
companies that are identified by a model based on two separate strategies.
Approximately one-half of the common stocks in the Fund's portfolio are selected
using The Dow{R} Target Dividend Strategy, and the other one-half
are selected using the Value Line{R} Target 25 Strategy. While both
of these strategies seek to provide above-average total return, each strategy
follows a different principal investment strategy. Because different investments
often react differently to economic and market changes, diversifying among
investments that have a low correlation to each other has the potential to
enhance returns and help reduce overall investment risk. The Fund's investment
model has been developed to achieve this kind of diversification.
The securities for each strategy are selected only once annually on or about the
last business day before each Stock Selection Date. The "Stock Selection Date"
will be on or about December 1 of each year. First Trust serves as the Fund's
subadviser for both strategies and generally follows a buy and hold strategy,
trading as soon as practicable to the Stock
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
Selection Date and/or when required by cash flow activity in the Fund. First
Trust may also trade because of mergers and acquisitions if the original stock
is not the surviving company and to reinvest dividends.
Between Stock Selection Dates, when cash inflows and outflows require, the Fund
purchases and sells common stocks for each of the two strategies according to
the approximate current percentage relationship among the shares of the stocks.
Certain provisions of the 1940 Act, as amended, limit the ability of the Fund to
invest more than 5% of the Fund's total assets in the stock of any company that
derives more than 15% of its gross revenues from securities related activities
("Securities Related Companies"). If a Securities Related Company is selected
through application of the investment strategy described above, First Trust will
depart from the Fund's investment strategy in order to comply with this
limitation. Any amount that cannot be allocated to a Securities Related Company
because of the 5% limit will be allocated among the remaining portfolio
securities in proportion to the percentage relationships determined by the
investment strategy.
The performance of the Fund will depend on First Trust's ability to effectively
implement the investment strategies of the Fund and also on the performance of
the stocks selected that meet the stock selection criteria.
The Fund is non-diversified. This means that the percentage of its assets
invested in any single issuer is not limited by the 1940 Act. When the Fund's
assets are invested in the securities of a limited number of issuers or it holds
a large portion of its assets in a few issuers, the value of its shares will be
more susceptible to any single economic, political or regulatory event affecting
those issuers or their securities than shares of a diversified fund.
The SAI has more information about the Fund's authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE DOW{R} TARGET DIVIDEND STRATEGY
This investment strategy looks for common stocks issued by companies that are
expected to provide income and have the potential for capital appreciation. The
Dow{R} Target Dividend Strategy seeks to achieve its objective by
investing approximately equal amounts in the common stock of the 20 companies
included in the Dow Jones U.S. Select Dividend Index[SM] that have the best
overall ranking on both the change in return on assets over the last 12 months
and price-to-book ratio.
First Trust selects the common stocks of the 20 companies in the following
manner:
o Starting with the 100 stocks in the Dow Jones U.S. Select Dividend
Index[SM], First Trust ranks the stocks from best (1) to worst (100) based
on two factors:
o Change in return on assets over the last 12 months. An increase in
return on assets generally indicates improving business fundamentals.
o Price-to-book ratio. A lower, but positive, price-to-book ratio is
generally used as an indication of value.
o First Trust then selects an approximately equally-weighted portfolio
of the 20 stocks with the best overall ranking on the two factors.
VALUE LINE{R} TARGET 25 STRATEGY
The Value Line{R} Target 25 Strategy seeks to achieve its objective
by investing in 25 of the 100 stocks to which Value Line{R} gives a
#1 ranking for "Timeliness[TM]" based on the Value Line Investment
Survey{R}. The 25 stocks are selected on the basis of certain
positive financial attributes. Value Line{R} ranks approximately
1,700 stocks of which only 100 are given their #1 ranking for Timeliness[TM],
which reflects Value Line's view of their probable price performance during the
next six to 12 months relative to the others. Value Line{R} bases
its rankings on a long-term trend of earnings, prices, recent earnings, price
momentum, and earnings surprise. The 25 stocks are selected annually from the
100 stocks with the #1 ranking on or about the last business day before each
Stock Selection Date.
Companies that, as of the Stock Selection Date, Value Line{R} has
announced will be removed from Value Line's #1 ranking for Timeliness[TM] will
be removed from the universe of securities from which stocks are selected for
the Fund.
First Trust selects the common stocks of the 25 companies in the following
manner:
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
o Starting with the 100 stocks to which Value Line{R}
gives the #1 ranking for Timeliness[TM], First Trust removes from
consideration the stocks of companies considered to be financial companies
and the stocks of companies whose shares are not listed on a U.S.
securities exchange.
o First Trust then ranks the remaining stocks from best (1) to worst
(100) on the following four factors:
o 6-month price appreciation, and
o 12-month price appreciation, and
o Return on assets, and
o Price to cash flow.
o First Trust adds up the numerical ranks achieved by each company in
the above steps and selects the 25 stocks with the lowest sums.
The selected stocks are weighted by market capitalization subject to the
restriction that no stock will comprise less than approximately 1% or more than
7.5% of the Value Line{R} Target 25 Strategy portion of the
portfolio on or about the Stock Selection Date. The securities will be adjusted
on a proportional basis to accommodate this constraint.
The Fund may engage in frequent trading in order to achieve its investment
objectives. Under unusual circumstances, the Fund may allocate cash flows to
cash or cash equivalents, or, pro rata, to the remaining common stocks in the
strategy, or may sell an existing position. Unusual circumstances may include
material adverse developments concerning the issuer of the stock, such as
potential insolvency or fraud.
PRINCIPAL INVESTMENT STRATEGIES FOR THE PIMCO FUNDAMENTAL INDEXPLUS TOTAL RETURN
FUND (ACQUIRED FUND):
PIMCO, subadviser to the Fund, seeks to achieve the Fund's investment objective
by investing, under normal circumstances, substantially all of its assets in
derivative instruments based on Enhanced RAFI{trademark} 1000, an enhanced,
performance recalibrated version of the RAFI Index, backed by a portfolio of
short and intermediate term Fixed Income Instruments (as defined below). The
RAFI Index and the Enhanced RAFI{trademark} 1000, which were developed by
Research Affiliates, LLC, are described below. The Fund may invest in common
stocks, options, futures, options on futures, and swaps, including derivatives
based on the RAFI Index. The Fund may also invest up to 10% of its total assets
in preferred stocks. The Fund uses Enhanced RAFI{trademark} 1000 derivatives in
addition to, or in place of, the stocks included in the Enhanced RAFI{trademark}
1000 to attempt to equal or exceed the performance of the RAFI Index. The values
of Enhanced RAFI{trademark} 1000 derivatives closely track changes in the value
of the Enhanced RAFI{trademark} 1000. However, Enhanced RAFI{trademark} 1000
derivatives may be purchased with a fraction of the assets that would be needed
to purchase the equity securities directly; consequently, the remainder of the
assets may be invested in Fixed Income Instruments. Research Affiliates, LLC,
acting as a sub-subadviser to the Fund, provides investment advisory services in
connection with the Fund's use of the Enhanced RAFI{trademark} 1000 by, among
other things, providing PIMCO, or counterparties designated by PIMCO, with a
model portfolio reflecting the composition of the Enhanced RAFI{trademark} 1000
for purposes of developing Enhanced RAFI{trademark} 1000 derivatives. PIMCO
actively manages the Fixed Income Instruments held by the Fund with a view
toward enhancing the Fund's total return, subject to an overall portfolio
duration which normally varies from one year minimum duration to a maximum of
two years above the duration of the Barclays Capital Aggregate Bond Index. As of
December 31, 2008, the duration of the Barclays Capital Aggregate Bond Index was
approximately 3.6 years. The Barclays Capital Aggregate Bond Index covers the
U.S. investment grade fixed rate bond market, with index components for
government and corporate securities, mortgage pass-through securities, and
asset-backed securities.
The RAFI Index is composed of the 1000 largest publicly traded U.S. companies by
fundamental accounting value, which includes accounting data found in a
company's annual report, selected from the constituents of the FTSE US All Cap
Index. Unlike other indexes, which are frequently comprised of stocks weighted
according to their market capitalization, the RAFI Index is weighted by a
combination of fundamental factors, including sales, cash flow, book values,
and, if applicable, dividends. Sales, cash flow, and dividends are averaged over
the prior five years. Indexes based on market capitalization, such as the S&P
500{R} Index, generally overweight stocks that are overvalued, and
underweight stocks that are undervalued. Indexes based on fundamental factors,
such as the RAFI Index, seek to avoid this problem by weighting stocks based on
variables that do not depend on the fluctuations of market valuation. The
Enhanced RAFI{trademark} 1000 is a performance recalibrated version of the RAFI
Index that incorporates additional factors, such as the quality of corporate
earnings and the risk of financial distress, and recalibrates existing factors
utilized in the RAFI Index that affect a company's fundamental drivers of value.
The Enhanced RAFI{trademark} 1000 may also be rebalanced more frequently than
8
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
the RAFI Index. The Fund seeks to remain invested in Enhanced RAFI{TM}
1000 derivatives or stocks included in the Enhanced RAFI{trademark} 1000 even
when the Enhanced RAFI{trademark} 1000 is declining.
For purposes of the Fund, "Fixed Income Instruments" includes:
o Securities issued or guaranteed by the U.S. government, and by its
agencies or government-sponsored enterprises, some of which may not be
guaranteed by the U.S. Treasury;
o Corporate debt securities of U.S. and non-U.S. issuers, including
convertible securities and corporate commercial paper;
o Mortgage-backed and other asset-backed securities;
o Inflation-indexed bonds issued both by governments and corporations;
o Structured notes, including hybrid or "indexed" securities, and
event-linked bonds;
o Loan participations and assignments;
o Delayed funding loans and revolving credit facilities;
o Bank certificates of deposit, fixed time deposits, and bankers'
acceptances;
o Repurchase agreements and reverse repurchase agreements;
o Debt securities issued by states or local governments and their
agencies, authorities, and other government-sponsored enterprises;
o Obligations of non-U.S. governments or their subdivisions, agencies,
and government-sponsored enterprises;
o Obligations of international agencies or supranational entities; and
o Derivatives.
The Fund typically seeks to gain exposure to the Enhanced RAFI{trademark} 1000
by investing in total return index swap agreements. In a typical swap agreement,
the Fund receives the price appreciation (or depreciation) on the Enhanced
RAFI{trademark} 1000 from the counterparty to the swap agreement in exchange for
paying the counterparty an agreed upon fee. Research Affiliates facilitates the
Fund's use of the Enhanced RAFI{trademark} 1000 by providing model portfolios of
the constituent securities of the Enhanced RAFI{trademark} 1000 to the Fund's
swap counterparties in order that the counterparties can provide total return
swaps based on the Enhanced RAFI{trademark} 1000 to the Fund. Because the
Enhanced RAFI{trademark} 1000 is a proprietary index, there may be a limited
number of counterparties willing or able to serve as counterparties to a swap
agreement. If such swap agreements are not available, the Fund may invest in
other derivative instruments, "baskets" of stocks, or individual securities to
replicate the performance of the Enhanced RAFI{trademark} 1000.
Though the Fund does not normally invest directly in the Enhanced
RAFI{trademark} 1000's constituent securities, when Enhanced RAFI{trademark}
1000 derivatives appear to be overvalued relative to the Enhanced
RAFI{trademark} 1000, the Fund may invest all of its assets in a "basket" of
Enhanced RAFI{trademark} 1000 stocks. Individual stocks are selected based on an
analysis of the historical correlation between the return of every Enhanced
RAFI{trademark} 1000 stock and the return on the Enhanced RAFI{trademark} 1000
itself. In such cases, PIMCO employs fundamental analysis of factors such as
earnings and earnings growth, price to earnings ratio, dividend growth, and cash
flows to choose among stocks that satisfy the correlation tests. The Fund also
may invest in exchange traded funds.
Assets not invested in equity securities or derivatives may be invested in Fixed
Income Instruments. The Fund may invest up to 10% of its total assets in high
yield securities ("junk bonds") rated B or higher by Moody's or equivalently
rated by S&P{R}, or Fitch, or, if unrated, determined by PIMCO to
be of comparable quality. The Fund may invest up to 30% of its total assets in
securities denominated in foreign currencies and may invest beyond this limit in
U.S. dollar denominated securities of foreign issuers. The Fund may invest up to
15% of its total assets in securities of issuers based in countries with
developing (or "emerging market") economies. The Fund will normally limit its
exposure to foreign currency, from non-U.S. dollar-denominated securities or
currencies, to 20% of its total assets.
The Fund may engage in frequent trading in order to achieve its investment
objective.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
For temporary defensive purposes, or when cash is temporarily available, the
Fund may invest in investment grade, short-term debt instruments, including
government, corporate, and money market securities. If the Fund invests
substantially in such instruments, it may not be pursuing its principal
investment strategies and may not achieve its investment objective.
PRINCIPAL INVESTMENT STRATEGIES FOR THE TARGETPLUS EQUITY FUND (ACQUIRED FUND):
The Fund seeks to achieve its objective by investing at least 80% of its net
assets, plus any borrowings for investment purposes, in the common stocks of
companies that are identified by a model based on five separate strategies.
o Approximately 20% in The Dow{R} Target Dividend
Strategy,
o Approximately 20% in the Value Line{R} Target 25
Strategy,
o Approximately 20% in the Target Small-Cap 15 Strategy,
o Approximately 20% in the Global Dividend Target 15 Strategy, and
o Approximately 20% in the NYSE{R} International Target 25
Strategy.
The securities for each strategy are selected annually on or about the last
business day before each Stock Selection Date. The "Stock Selection Date" will
be on or about December 1 of each year. First Trust serves as the Fund's
subadviser and generally follows a buy and hold strategy for each of the five
investment strategies, trading as soon as practicable to the Stock Selection
Date and/or when required by cash flow activity in the Fund. First Trust may
also trade because of mergers and acquisitions if the original stock is not the
surviving company and to reinvest dividends.
Between Stock Selection Dates, when cash inflows and outflows require, the Fund
purchases and sells common stocks for each of the strategies according to the
approximate current percentage relationship among the shares of the stocks.
Certain provisions of the 1940 Act, as amended, limit the ability of the Fund to
invest more than 5% of the Fund's total assets in the stock of any company that
derives more than 15% of its gross revenues from securities related activities
("Securities Related Companies"). If a Securities Related Company is selected by
the strategy described above, First Trust may depart from the Fund's investment
strategy only to the extent necessary to maintain compliance with these
provisions. Any amount that cannot be allocated to a Securities Related Company
because of the 5% limit will be allocated among the remaining portfolio
securities in proportion to the percentage relationships determined by the
strategy.
The performance of the Fund will depend on First Trust's ability to effectively
implement the investment strategies of the Fund and also on the performance of
the stocks selected that meet the stock selection criteria.
The SAI has more information about the Fund's authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE DOW{R} TARGET DIVIDEND STRATEGY
This investment strategy looks for common stocks issued by companies that are
expected to provide income and have the potential for capital appreciation. The
Dow{R} Target Dividend Strategy seeks to achieve its objective by
investing approximately equal amounts in the common stock of the 20 companies
included in the Dow Jones U.S. Select Dividend Index[SM] that have the best
overall ranking on both the change in return on assets over the last 12 months
and price-to-book ratio.
First Trust selects the common stocks of the 20 companies in the following
manner:
o Starting with the 100 stocks in the Dow Jones U.S. Select Dividend
Index[SM], First Trust ranks the stocks from best (1) to worst (100) based
on two factors:
o Change in return on assets over the last 12 months. An increase in
return on assets generally indicates improving business fundamentals.
o Price-to-book ratio. A lower, but positive, price-to-book ratio is
generally used as an indication of value.
o First Trust then selects an approximately equally-weighted portfolio
of the 20 stocks with the best overall ranking on the two factors.
10
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
VALUE LINE{R} TARGET 25 STRATEGY
The Value Line{R} Target 25 Strategy seeks to achieve its objective
by investing in 25 of the 100 stocks to which Value Line{R} gives a
#1 ranking for "Timeliness{trademark}" based on the Value Line Investment
Survey{R}. The 25 stocks are selected on the basis of certain
positive financial attributes. Value Line{R} ranks approximately
1,700 stocks, of which only 100 are given their #1 ranking for Timeliness[TM],
which reflects Value Line's view of their probable price performance during the
next six to 12 months relative to the others. Value Line{R} bases
its rankings on a long-term trend of earnings, prices, recent earnings, price
momentum, and earnings surprise. The 25 stocks are selected annually from the
100 stocks with the #1 ranking on or about the last business day before each
Stock Selection Date.
Companies that, as of the Stock Selection Date, Value Line{R} has
announced will be removed from Value Line's #1 ranking for Timeliness[TM] will
be removed from the universe of securities from which stocks are selected for
the Fund.
First Trust selects the common stocks of the 25 companies in the following
manner:
o Starting with the 100 stocks to which Value Line{R}
gives the #1 ranking for Timeliness[TM], First Trust removes from
consideration the stocks of companies considered to be financial companies
and the stocks of companies whose shares are not listed on a U.S.
securities exchange.
o First Trust then ranks the remaining stocks from the best (1) to
worst (100) on the following four factors:
o 6-month price appreciation, and
o 12-month price appreciation, and
o Return on assets, and
o Price to cash flow.
o First Trust adds up the numerical ranks achieved by each company in
the above steps and selects the 25 stocks with the lowest sums.
The selected stocks are weighted by market capitalization subject to the
restriction that no stock will comprise less than approximately 1% or more than
7.5% of the Value Line{R} Target 25 Strategy portion of the
portfolio on or about the Stock Selection Date. The securities will be adjusted
on a proportional basis to accommodate this constraint.
TARGET SMALL-CAP 15 STRATEGY
The Target Small-Cap Strategy seeks to achieve its objective by investing in the
stocks of 15 small-capitalization companies that have recently exhibited certain
positive financial attributes.
First Trust selects the stocks of the 15 companies for this strategy in the
following manner:
o First Trust begins with the stocks of all U.S. corporations that
trade on the New York Stock Exchange (NYSE{R}), the NYSE
Amex, or the Nasdaq Stock market (Nasdaq) (excluding limited partnerships,
American Depositary Receipts, and mineral and oil royalty trusts) on or
about the Stock Selection Date.
o First Trust then selects companies that have a market capitalization
between $500 million and $2.5 billion and whose stock has an average daily
trading volume of at least $1 million.
o First Trust then selects those stocks with positive three-year sales
growth.
o From those stocks, First Trust selects the stocks whose most recent
12 month's earnings are positive.
o First Trust eliminates any stock whose price has appreciated by more
than 75% in the preceding 12 months.
o Finally, First Trust selects the 15 stocks with the greatest price
appreciation in the previous 12 months. Each of the stock's weighting in
the portfolio is based on its relative market capitalization (highest to
lowest).
GLOBAL DIVIDEND TARGET 15 STRATEGY
The Global Dividend Target 15 Strategy seeks to achieve its objective by
investing in the common stocks of certain companies included in the Dow Jones
Industrial Average[SM] (DJIA[SM]), the Financial Times Ordinary Index (FT30
Index or Financial Times 30 Index), and the Hang Seng Index[SM]. This strategy
invests in the common stocks of the five companies with the lowest per share
stock price of the ten companies in each of the DJIA[SM], the FT30 Index and the
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The Allianz Variable Insurance Products Trust - Proxy
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Hang Seng Index, respectively, which have the highest indicated annual dividend
yields ("Dividend Yields") in their respective index. First Trust selects the
common stocks for this strategy in the following manner:
o First Trust determines the Dividend Yield on each common stock in the
DJIA[SM], the FT30 Index and the Hang Seng Index;
o First Trust determines the ten companies in each of the DJIA[SM], the
FT30 Index, and the Hang Seng Index that have the highest Dividend Yield
in the respective index; and
o From those companies, First Trust then selects an approximately
equally weighted portfolio of the common stocks of the 5 companies in each
index with the lowest price per share.
NYSE{R} INTERNATIONAL TARGET 25 STRATEGY
This strategy invests in the common stocks of 25 companies selected from the
stocks included in the NYSE International 100 Index{R}. The NYSE
International 100 Index{R} consists of the 100 largest non-U.S.
stocks trading on the New York Stock Exchange.
First Trust selects the stocks of the 25 companies for this strategy in the
following manner:
o First Trust begins with the stocks included in the NYSE International
100 Index{R} on or about the Stock Selection Date.
o First Trust then screens for liquidity by eliminating companies with
average daily trading volume for the prior three months below $300,000.
o First Trust then ranks the remaining stocks based on two factors:
price-to-book ratio and price-to-cash flow ratio. Lower, but positive
price-to-book ratios and price-to-cash flow ratios are generally used as
an indication of value.
o From those companies, First Trust then selects an approximately
equally weighted portfolio of the 25 stocks with the best overall ranking
based on the two factors.
The Fund may engage in frequent trading in order to achieve its investment
objective. Under unusual circumstances, the Fund may allocate cash flows to cash
or cash equivalents, or, pro rata, to the remaining common stocks in the
strategy, or may sell an existing position. Unusual circumstances may include
material adverse developments concerning the issuer of the stock, such as
potential insolvency or fraud.
PRINCIPAL INVESTMENT STRATEGIES FOR THE S&P 500 INDEX FUND (ACQUIRING FUND):
The subadviser normally invests in all 500 stocks in the S&P 500{R}
in proportion to their weighting in the index.
The subadviser attempts to have a correlation between the Fund's performance and
that of the S&P 500{R} Index of at least 0.95 before expenses. A
correlation of 1.00 would mean that the Fund and the index were perfectly
correlated.
The S&P 500{R} is an unmanaged index of 500 common stocks chosen to
reflect the industries of the U.S. economy and is often considered a proxy for
the stock market in general. S&P{R} adjusts each company's stock
weighting in the index by the number of available float shares (those shares
available to public investors) divided by the company's total shares
outstanding, which means larger companies with more available float shares have
greater representation in the index than smaller ones.
In seeking to match the performance of the index, the subadviser uses a passive
management approach and purchases all or a representative sample of the stocks
comprising the benchmark index. The subadviser also may use stock index futures
as a substitute for the sale or purchase of securities. Because the Fund has
expenses, performance will tend to be slightly lower than that of the target
benchmark.
"Standard & Poor's{R}," "S&P{R}," "S&P
500{R}," "Standard & Poor's 500{R}," and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed by the
Manager for use by the Fund. The Fund is not sponsored, endorsed, sold, or
promoted by Standard & Poor's, and Standard & Poor's makes no representation
regarding the advisability of investing in the Fund.
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COMPARISON OF INVESTMENT POLICIES
If shareholders of the Acquired Funds approve the Reorganization, they will be
subject to the investment policies of the Acquiring Fund. The Funds have
substantially similar investment policies. Other than as described herein, the
Manager does not believe that the differences among the investment policies
result in any material difference in the way the Funds are managed.
The Target Double Play Fund is a non-diversified fund and is therefore not
restricted by the 1940 Act with respect to purchasing securities of any one
issuer. The other Funds are diversified, which means that they must comply with
the 1940 Act diversification requirements.
The PIMCO Fundamental IndexPLUS Total Return Fund and the S&P 500 Index Fund
generally are not permitted to concentrate 25% or more of assets in the same
industry. The Target Double Play Fund and TargetPLUS Equity Fund are not subject
to this limitation.
The PIMCO Fundamental IndexPLUS Total Return Fund is expressly permitted, as a
fundamental policy, to pursue its investment objective by investing in one or
more underlying investment companies or vehicles that have substantially similar
investment objectives, policies and limitations as the Fund.
The S&P 500 Index Fund is not permitted to: (i) engage in arbitrage
transactions, (ii) purchase warrants (other than those acquired by the Fund in
units or attached to securities), (iii) sell securities short, but may sell
securities short against the box, or (iv) invest more than 10% of its total
assets in the securities of any single issuer or hold more than 20% of the
voting securities of any single issuer.
RISK FACTORS
As noted above, the Acquired Funds and the Acquiring Fund employ fundamentally
different investment strategies in pursuit of their respective investment
objectives. Consequently, the Funds also have different principal investment
risks. The principal risks of investing in the Acquired Funds and the Acquiring
Fund are shown in the table below. A discussion of each of the various principal
risks follows the table.
Depending upon its assessment of changing market conditions, the subadviser of
each Fund may emphasize particular asset classes or particular investments at
any given time, which may change the risks associated with a Fund. The fact that
a risk is not identified as a principal risk for a particular Fund does not mean
that the Fund may not be subject to that risk. The Statement of Additional
Information for the Acquiring Fund, which is incorporated by reference in this
proxy statement/prospectus, contains detailed information on the Acquiring
Fund's permitted investments and investment restrictions.
RISK TARGET DOUBLE PLAY FUND PIMCO FUNDAMENTAL INDEXPLUS TOTAL RETURN FUND TARGETPLUS S&P 500 INDEX FUND
(ACQUIRED FUND) (ACQUIRED FUND) EQUITY FUND (ACQUIRING FUND)
(ACQUIRED
FUND)
Market Risk X X X X
Issuer Risk X X X X
Selection Risk X
Index Fund Risk X
Capitalization Risk X X
Real Estate Investments Risk X
Derivatives Risk X X
Foreign Risk X X X
Emerging Markets Risk X X
Liquidity Risk X
Currency Risk X X X
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Portfolio Turnover X X X
Limited Management Risk X X
Investment Strategy Risk X X
Focused Investment Risk X X
Non-Diversification Risk X
Dividend Risk X X
License Termination Risk X X X
Interest Rate Risk X
Credit Risk X
Mortgage-Related and Other X
Asset-Backed Risk
Leveraging Risk X
Security Quality Risk X
Short Sale Risk X
* MARKET RISK: The market price of securities owned by the Fund may go up or
down, sometimes rapidly and unpredictably. Securities may decline in value
due to factors affecting securities markets generally or particular
industries represented in the securities markets. The value of a security may
decline due to general market conditions that are not specifically related to
a particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates, or adverse investor sentiment. They may also decline due to
factors that affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an
industry. During a general downturn in the securities markets, multiple asset
classes may decline in value simultaneously. The value of the Fund's
portfolio may fluctuate to a greater or lesser degree than fluctuations of
the general stock market. For those Funds that invest in stocks of foreign
companies, the value of the Fund's portfolio will be affected by changes in
foreign stock markets and the special economic and other factors that might
primarily affect stock markets in particular foreign countries and regions.
Equity securities generally have greater price volatility than fixed income
securities.
* ISSUER RISK: The value of a security may decline for a number of reasons that
directly relate to the issuer, such as management performance, financial
leverage, and reduced demand for the issuer's products or services.
* SELECTION RISK: The Fund is an actively managed investment portfolio. The
portfolio manager(s) make investment decisions for the Fund's assets. The
investment approach of some Funds emphasizes buying and holding securities,
even through adverse markets, while the investment approach of other Funds
emphasizes frequent trading in order to take advantage of short-term market
movements. However, there can be no guarantee they will produce the desired
results and poor security selection may cause the Fund to underperform its
benchmark index or other funds with similar investment objectives.
* INDEX FUND RISK: The Fund uses an indexing strategy. It does not attempt to
manage market volatility, use defensive strategies, or reduce the effects of
any long-term periods of poor stock performance. The correlation between the
performance of the Fund and the performance of the index may be affected by
the Fund's expenses, changes in securities markets, selection of certain
securities for the portfolio to represent the index, changes in the
composition of the index, and the timing of purchases and redemptions of Fund
shares.
* CAPITALIZATION RISK: To the extent the Fund invests significantly in small
and/or mid-capitalization companies, it may have capitalization risk. These
companies may present additional risk because they have less predictable
earnings or no earnings, more volatile share prices and less liquid
securities than large capitalization companies. These securities may
fluctuate in value more than those of larger, more established companies and,
as a group, may suffer more severe price declines during periods of generally
declining stock prices. The shares of smaller companies tend to trade less
frequently than those of larger, more established companies, which can
adversely affect the price of smaller companies' securities and the Fund's
ability to sell them when the portfolio manager deems it appropriate. These
companies may have limited product lines, markets, or financial resources, or
may depend on a limited management group. The value of some of the Fund's
investments will rise and fall based on investor perception rather than
economic factors.
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* REAL ESTATE INVESTMENTS RISK: The performance of real estate investments
(REITs) depends on the strength of real estate markets, REIT management and
property management which can be affected by many factors, including national
and regional economic conditions.
* DERIVATIVES RISK: The Fund may invest in derivatives. A derivative is a
financial contract whose value depends on, or is derived from, the value of
an underlying asset, reference rate, or risk. Funds typically use derivatives
as a substitute for taking a position in the underlying asset and/or as part
of a strategy designed to reduce exposure to other risks, such as interest
rate or currency risk. Funds may also use derivatives for leverage, in which
case their use would involve leveraging risk. Use of derivative instruments
involves risks different from, or possibly greater than, the risks associated
with investing directly in securities and other traditional investments.
Derivatives are subject to a number of other risks, such as liquidity risk,
interest rate risk, market risk, credit risk, and management risk.
Derivatives also involve the risk of mispricing or improper valuation and the
risk that changes in the value may not correlate perfectly with the
underlying asset, rate, or index. Using derivatives may result in losses,
possibly in excess of the principal amount invested. Also, suitable
derivative transactions may not be available in all circumstances. The
counterparty to a derivatives contract could default. As required by
applicable law, any Fund that invests derivatives segregates cash or liquid
securities, or both, to the extent that its obligations under the instrument
(for example, forward contracts and futures that are required to "cash
settle") are not covered through ownership of the underlying security,
financial instrument, or currency.
* FOREIGN RISK: Because the Fund invests in securities of foreign issuers, it
may be subject to risks not usually associated with owning securities of U.S.
issuers. These risks include, among others, adverse fluctuations in foreign
currency values as well as adverse political, social and economic
developments affecting a foreign country, including the risk of
nationalization, expropriation or confiscatory taxation. In addition, foreign
investing involves less publicly available information, and more volatile or
less liquid securities markets. Investments in foreign countries could be
affected by factors not present in the U.S., such as restrictions on
receiving the investment proceeds from a foreign country, confiscatory
foreign tax laws, and potential difficulties in enforcing contractual
obligations. Transactions in foreign securities may be subject to less
efficient settlement practices, including extended clearance and settlement
periods. Foreign accounting may be less revealing than U.S. accounting
practices. Foreign regulation may be inadequate or irregular. Owning foreign
securities could cause the Fund's performance to fluctuate more than if it
held only U.S. securities.
* EMERGING MARKETS RISK (TARGETPLUS EQUITY FUND): In addition to the risks
described under "Foreign Risk", issuers in emerging markets may present
greater risk than investing in foreign issuers generally. Emerging markets
may have less developed trading markets and exchanges which may make it more
difficult to sell securities at an acceptable price and their prices may be
more volatile than securities of companies in more developed markets.
Settlements of trades may be subject to greater delays so that the Fund may
not receive the proceeds of a sale of a security on a timely basis. Emerging
countries may also have less developed legal and accounting systems and
investments may be subject to greater risks of government restrictions,
nationalization, or confiscation.
* EMERGING MARKETS RISK (PIMCO FUNDAMENTAL INDEXPLUS TOTAL RETURN FUND):
Foreign investment risk may be particularly high to the extent that the Fund
invests in emerging market securities of issuers based in countries with
developing economies. These securities may present market, credit, currency,
liquidity, legal, political, and other risks different from, or greater than,
the risks of investing in developed foreign countries.
* LIQUIDITY RISK: Liquidity risk exists when particular investments are
difficult to purchase or sell. Investments in illiquid securities may reduce
the returns of the Fund because it may be unable to sell the illiquid
securities at an advantageous time or price. Restricted securities may be
subject to liquidity risk because they may have terms that limit their resale
to other investors or may require registration under applicable securities
laws before they may be sold publicly. Funds with principal investment
strategies that involve restricted securities, foreign securities,
derivatives, companies with small market capitalization or securities with
substantial market and/or credit risk tend to have the greatest exposure to
liquidity risk.
* CURRENCY RISK: Funds that invest in securities that trade in, and receive
revenues in, foreign currencies are subject to the risk that those currencies
will decline in value relative to the U.S. dollar, or, in the case of hedging
positions, that the U.S. dollar will decline in value relative to the
currency being hedged. Currency rates in foreign countries may fluctuate
significantly over short periods of time for a number of reasons, including
changes in interest rates, intervention (or failure to intervene) by the U.S.
or foreign governments, central banks, or supranational authorities, such as
the International Monetary Fund, or by the imposition of currency controls or
other political developments in
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the U.S. or abroad. As a result, the Fund's investments with exposure to
foreign currency fluctuations may decline in value (in terms of the U.S.
dollar) and reduce the returns of the Fund.
* PORTFOLIO TURNOVER: The Fund may actively and frequently trade its portfolio
securities or may turn over a significant portion of its portfolio securities
in a single year. High portfolio turnover (100% or more) results in higher
transaction costs and can adversely affect the Fund's performance.
* LIMITED MANAGEMENT RISK: The Fund's strategy of investing in companies
according to criteria determined on or about the last business day before
each Stock Selection Date prevents the Fund from responding to market
fluctuations, or changes in the financial condition or business prospects of
the selected companies, between Stock Selection Dates. As compared to other
funds, this could subject the Fund to more risk if one of the selected stocks
declines in price or if certain sectors of the market, or the United States
economy, experience downturns. The investment strategy may also prevent the
Fund from taking advantage of opportunities available to other funds.
* INVESTMENT STRATEGY RISK (FOR TARGET DOUBLE PLAY FUND): Investment strategy
risk is the chance that the subadviser's strategies for selecting securities
for the Fund's portfolio will cause the Fund to underperform other funds with
similar investment objectives. One of the Fund's principal investment
strategies involves selecting common stocks of companies that have
experienced certain rate of growth in return on assets and a lower, but
positive price-to-book ratio. There can be no assurance that the companies
whose stocks are selected for the Fund's portfolio using this strategy will
continue to experience continued growth in return on assets. The other
principal investment strategy involves ranking and selecting stocks based on
their prospective price performance. There can be no assurance that the
companies whose stocks are selected for the Fund's portfolio using this
strategy will actually perform better than other stocks.
* INVESTMENT STRATEGY RISK (FOR TARGETPLUS EQUITY FUND): Certain strategies
involve selecting common stocks that have high dividend yields relative to
other common stocks comprising an index. The dividend yields of such stocks
may be high relative to such other stocks because the share price of the
stock has declined relative to such other stocks. The stocks selected may be
out of favor with investors because the issuer is experiencing financial
difficulty, has had or forecasts weak earnings performance, has been subject
to negative publicity, or has experienced other unfavorable developments
relating to its business. There can be no assurance that the negative factors
that have caused the issuer's stock price to have declined relative to other
stocks will not cause further decreases in the issuer's stock price, or that
the dividend paid on the stock will be maintained.
Certain strategies involve selecting common stocks of issuers that have
experienced certain rates of growth in sales and stocks that have experienced
recent price appreciation. There can be no assurance that the issuers whose
stocks are selected will continue to experience growth in sales, or that the
issuer's operations will result in positive earnings even if sales continue
to grow. There further can be no assurance that the prices of such issuers'
stocks will not decline.
Value Line's Timeliness[TM] rankings reflect Value Line's views as to the
prospective price performance of the #1 ranked stocks relative to other
stocks ranked by Value Line{R}. There is no assurance that the
#1 ranked stocks will actually perform better than other stocks and, as a
result, the Fund may underperform other similar investments.
* FOCUSED INVESTMENT RISK: The Fund invests in a limited number of securities,
and the securities selected for the strategies used to manage this Fund may
be issued by companies concentrated in particular industries, including
consumer products and technology. Companies within an industry are often
faced with the same obstacles, issues or regulatory burdens, and their common
stock may react similarly and move in unison to these and other market
conditions. As a result of these factors, stocks in which the Fund invests
may be more volatile and subject to greater risk of adverse developments that
may affect many of the companies in which the Fund invests, than a mixture of
stocks of companies from a wide variety of industries. Generally, in the
context of the total portfolio, these holdings may not be large enough to
consider the Fund as a whole as concentrated.
* NON-DIVERSIFICATION RISK: The Fund is non-diversified. This means that the
percentage of its assets invested in any single issuer is not limited by the
1940 Act. When the Fund's assets are invested in the securities of a limited
number of issuers or it holds a large portion of its assets in a few issuers,
the value of its shares will be more susceptible to any single economic,
political or regulatory event affecting those issuers or their securities
than shares of a diversified fund.
* DIVIDEND RISK: There is no guarantee that the issuers of the stocks held by
the Fund will declare dividends in the future or that if declared, they will
either remain at current levels or increase over time.
* LICENSE TERMINATION RISK: The Fund relies on third party license(s) that
permit the use of the intellectual property of such parties in connection
with the name of the Fund and/or the investment strategies of the Fund. Such
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
license(s) may be terminated by the licensors, and as a result, the Fund may
lose its ability to use the licensed name as a part of the name of the Fund
or to receive data from the third party as it relates to the investment
strategy. Accordingly, in the event a license is terminated, the Fund may
have to change its name or investment strategy(ies).
* INTEREST RATE RISK: As nominal interest rates rise, the value of fixed income
securities held by a Fund is likely to decrease. Securities with longer
durations tend to be more sensitive to changes in interest rates, usually
making them more volatile than securities with shorter durations. A nominal
interest rate can be described as the sum of a real interest rate and an
expected inflation rate. Inflation-indexed securities, including Treasury
Inflation-Protected Securities ("TIPS"), decline in value when real interest
rates rise. In certain interest rate environments, such as when real interest
rates are rising faster than nominal interest rates, inflation-indexed
securities may experience greater losses than other fixed income securities
with similar durations.
* CREDIT RISK: The Fund could lose money if the issuer or the guarantor of a
fixed income security, or the counterparty to a derivatives contract,
repurchase agreement, or a loan of portfolio securities, is unwilling or
unable to make payments of principal and/or interest in a timely manner, or
to otherwise honor its obligations. Securities are subject to varying degrees
of credit risk, which are often reflected in their credit ratings. Those
Funds that are permitted to invest in municipal bonds are subject to the risk
that litigation, legislation, or other political events, local business or
economic conditions, or the bankruptcy of the issuer could have a significant
effect on an issuer's ability to make payments of principal and/or interest.
* MORTGAGE-RELATED AND OTHER ASSET-BACKED RISK: The Fund may invest in a
variety of mortgage-related and other asset-backed securities, which are
subject to certain additional risks. Generally, rising interest rates tend to
extend the duration of fixed rate mortgage-related securities, making them
more sensitive to changes in interest rates. As a result, in a period of
rising interest rates, a Fund that holds mortgage-related securities may
exhibit additional volatility. This is known as extension risk. In addition,
adjustable and fixed rate mortgage-related securities are subject to call
risk. When interest rates decline, borrowers may pay off their mortgages
sooner than expected. This can reduce the returns of a Fund because the Fund
will have to reinvest that money at the lower prevailing interest rates. If a
Fund purchases mortgage-backed or asset-backed securities that are
subordinated to other interests in the same mortgage pool, the Fund may
receive payments only after the pool's obligations to other investors have
been satisfied. An unexpectedly high rate of defaults on the mortgages held
by a mortgage pool may limit substantially the pool's ability to make
payments of principal or interest to the Fund as a holder of such
subordinated securities, reducing the values of those securities or in some
cases rendering them worthless. The risk of such defaults is generally higher
in the case of mortgage pools that include so-called "subprime" mortgages. An
unexpectedly high or low rate of prepayments on a pool's underlying mortgages
may have a similar effect on subordinated securities. A mortgage pool may
issue securities subject to various levels of subordination. The risk of non-
payment affects securities at each level, although the risk is greater in the
case of more highly subordinated securities. A Fund's investments in other
asset-backed securities are subject to risks similar to those associated with
mortgage-related securities, as well as additional risks associated with the
nature of the assets and the servicing of those assets.
* LEVERAGING RISK: Certain transactions may give rise to a form of leverage.
Such transactions may include, among others, reverse repurchase agreements,
loans of portfolio securities, and the use of when-issued, delayed delivery,
or forward commitment transaction. The use of derivatives may also create
leveraging risk. To mitigate leveraging risk, the Fund will segregate or
"earmark" liquid assets or otherwise cover transactions that may give rise to
such risk. The use of leverage may cause a Fund to liquidate portfolio
positions when it may not be advantageous to do so to satisfy its obligations
or to meet segregation requirements. In addition, leverage, including
borrowing, may exaggerate the effect of any increase or decrease in the value
of a Fund's portfolio securities.
* SECURITY QUALITY RISK: The Fund may invest in high yield, high risk debt
securities and unrated securities of similar credit quality (commonly known
as "junk bonds") may be subject to greater levels of credit and liquidity
risk than funds that do not invest in such securities. These securities are
considered predominately speculative with respect to the issuer's continuing
ability to make principal and interest payments. An economic downturn or
period of rising interest rates could adversely affect the market for these
securities and reduce the Fund's ability to sell these securities (liquidity
risk). If the issuer of a security is in default with respect to interest or
principal payments, the Fund may lose the value of its entire investment.
* SHORT SALE RISK: Short sales are subject to special risks. A short sale
involves the sale by the Fund of a security that it does not own with the
hope of purchasing the same security at a later date at a lower price.
Certain of the Funds may also enter into short derivatives positions through
futures contracts or swap agreements. If the price of the security or
derivative has increased during this time, then the Fund will incur a loss
equal to the increase in price from the time that the short sale was entered
into plus any premiums and interest paid to the third party. Therefore, short
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The Allianz Variable Insurance Products Trust - Proxy
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sales involve the risk that losses may be exaggerated, potentially resulting
in the loss of more money than the actual cost of the investment. Short sales
"against the box" give up the opportunity for capital appreciation in the
security. Also, there is the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund.
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The Allianz Variable Insurance Products Trust - Proxy
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PERFORMANCE
Performance information for the Funds is shown below.
The following bar charts and tables provide an indication of the risks of an
investment in the Funds by showing changes in their performance from year to
year and by showing how the Funds' average annual returns for one year, five
years and since inception (as applicable) compare with those of a broad measure
of market performance.
Both the bar charts and the tables assume reinvestment of dividends and
distributions, and reflect fee waivers. Without fee waivers, the Funds'
performance would have been lower.
The performance of the Funds will vary from year to year. The Funds' performance
does not reflect the cost of insurance and separate account charges which are
imposed under your Contract. If they were included, performance would be
reduced. Past performance does not indicate how the Funds will perform in the
future.
TARGET DOUBLE PLAY FUND (ACQUIRED FUND)
[BAR CHART GRAPHIC 2007: 8.47%, 2008: -53.66%]
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q1, 2007) 4.23%
Lowest (Q4, 2008) -35.38%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION
Target Double Play Fund 12/27/2006 -53.66% -29.25%
Russell 3000 Index -37.31% -18.98%
S&P 500 Index -37.00% -18.63%
The Fund's performance is compared to the Russell 3000 Index and the S&P 500
Index. The S&P 500 Index is an unmanaged index that consists of 500 selected
common stocks, most of which are listed on the New York Stock Exchange, and is a
measure of the U.S. stock market as a whole. The Russell 3000 Index measures the
performance of the largest 3000 U.S. companies representing approximately 98% of
the investable U.S. equity markets. The indices do not reflect the deduction of
fees associated with a mutual fund, such as investment management and fund
accounting fees. The Fund's performance reflects the deduction of fees for
services provided to the Fund. Investors cannot invest directly in an index.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
PIMCO FUNDAMENTAL INDEXPLUS TOTAL RETURN FUND (ACQUIRED FUND)
[BAR CHART GRAPHIC 2007: 6.66%, 2008: -40.86%]
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q2, 2007) 3.02%
Lowest (Q4, 2008) -24.19%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION
PIMCO Fundamental IndexPLUS Total Return Fund 5/1/2006 -40.86% -12.25%
FTSE RAFI[TM] U.S. 1000 Index -39.99% -12.88%
S&P 500 Index -37.00% -11.06%
The Fund's performance is compared to FTSE RAFI{trademark} U.S. 1000 Index and
the Standard & Poor's 500 Composite Stock Price Index ("S&P 500{R}
Index") The FTSE RAFI U.S. 1000 Index is part of the FTSE RFI Index Series,
launched in association with Research Affiliates. As part of FTSE Group's range
of nonmarket cap weighted indices, the FTSE RAFI Index Series weights index
constituents using four fundamental factors, rather than market capitalization.
These factors include dividends, cash flow, sales and book value. The FTSE RAFI
U.S. 1000 Index comprises the largest 1000 U.S.-listed companies by fundamental
value, selected from the constituents of the FTSE USA All Cap Index, part of the
FTSE Global Equity Index Series (GEIS). The S&P 500{R} Index is an
unmanaged index that consists of 500 selected common stocks, most of which are
listed on the New York Stock Exchange, and is a measure of the U.S. stock market
as a whole. The index does not reflect the deduction of fees associated with a
mutual fund, such as investment management and fund accounting fees. The Fund's
performance reflects the deduction of fees for services provided to the Fund.
Investors cannot invest directly in an index, although they can invest in the
underlying securities.
20
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
TARGETPLUS EQUITY FUND (ACQUIRED FUND)
[BAR CHART GRAPHIC 2007: 7.60%, 2008: -48.53%]
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q2, 2007) 6.96%
Lowest (Q4, 2008) -29.17%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION
TargetPLUS Equity Fund 12/27/2006 -48.53% -25.75%
Russell 3000{R} Index -37.31% -18.98%
S&P 500 Index -37.00% -18.63%
The Fund's performance is compared to the Russell 3000{R} Index and
the S&P 500 Index. The Russell 3000{R} Index, an unmanaged index
that measures the performance of the 3,000 largest U.S. companies based on total
market capitalization, which represents approximately 98% of the investable U.S.
equity market. The S&P 500{R} Index is an unmanaged index that
consists of 500 selected common stocks, most of which are listed on the New York
Stock Exchange, and is a measure of the U.S. stock market as a whole. The index
does not reflect the deduction of fees associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance reflects
the deduction of fees for services provided to the Fund. Investors cannot invest
directly in an index.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
S&P 500 INDEX (ACQUIRING FUND) CLASS 2 SHARES
Performance information is presented for Class 2 shares only because only Class
2 shares will be issued in connection with the Reorganization. Information
regarding performance for Class 1 shares may be found in the current prospectus
for the Acquiring Fund, which accompanies this proxy statement/prospectus.
[BAR CHART GRAPHIC 2008: -37.62%]
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q2, 2008) -2.81%
Lowest (Q4, 2008) -22.32%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION
AZL S&P 500 Index Fund 5/1/2007 -37.62% -24.71%
S&P 500 Index -37.00% -24.19%
The Fund's performance is compared to the S&P 500 Index, an unmanaged index that
consists of 500 selected common stocks, most of which are listed on the New York
Stock Exchange, and is a measure of the U.S. stock market as a whole. The index
does not reflect the deduction of fees associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance reflects
the deduction of fees for services provided to the Fund. Investors cannot invest
directly in an index.
22
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
TABLE A-1
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2008
FUND (inception date) LAST 1 YEAR LAST 2 YEARS SINCE INCEPTION
Target Double Play Fund -53.66% -29.10% -29.25%
(12/27/2006)
PIMCO Fundamental IndexPLUS Total Return Fund -40.86% -20.58% -12.25%
(5/1/2006)
TargetPLUS Equity Fund -48.53% -25.58% -25.75%
(12/27/2006)
S&P 500 Index Fund, Class 2 -37.62% NA -24.71%
(5/1/2007)
TAX CONSEQUENCES
For Target Double Play Fund and TargetPLUS Equity Fund, as a condition to the
closing of the Reorganization, the Acquired Funds and the Acquiring Fund will
receive an opinion from Dorsey & Whitney LLP to the effect that the
Reorganization will qualify as a tax-free reorganization for federal income tax
purposes. Accordingly, shareholders will not recognize taxable gain or loss as a
direct result of the Reorganization. As long as Contracts funded through the
separate accounts of the insurance company qualify as annuity contracts or life
insurance contracts under Section 72 or Section 7702(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), respectively, the Reorganization will not
create any tax liability for the separate accounts as shareholders or for the
Contract Owners.
For PIMCO Fundamental IndexPLUS Total Return Fund, if the separate accounts
investing in this Fund and the Contracts are properly structured under the
insurance company provisions of federal tax law (as the Manager believes is the
case), the Reorganization will not be a taxable event for Contract Owners who
have a portion of their variable annuity contract allocated to this Fund. The
Reorganization is not expected to qualify as a tax-free reorganization for
United States federal income tax purposes. The Manager has agreed to indemnify
Contract Owners against any taxes imposed on them as a result of the treatment
of the Reorganization as taxable or as a result of a judicial or administrative
determination that the Reorganization, although treated by the parties as not
tax-free, in fact was tax-free. CONTRACT OWNERS SHOULD CONSULT THEIR OWN TAX
ADVISERS CONCERNING ANY POSSIBLE STATE INCOME TAX CONSEQUENCES OF THE
REORGANIZATION.
For more information about the federal income tax consequences of the
Reorganization, see the section entitled "Tax Status of the Reorganization."
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
FEES AND EXPENSES
The following table describes the fees and expenses as of the end of the most
recent fiscal year that you pay if you buy and hold shares of the Acquired Funds
or shares of the Acquiring Fund. The table also shows estimated pro forma
expenses of the Acquiring Fund assuming the proposed Reorganization had been
effective during the most recent fiscal year, adjusted to reflect current fees.
The table does not reflect the expenses that apply to the subaccounts or the
Contracts. Inclusion of these charges would increase expenses for all periods
shown. The fees and expenses below exclude the costs of the Reorganization. See
"Reasons for the Proposed Reorganization and Board Deliberations" for additional
information concerning the allocation of the costs of the Reorganization.
TABLE A-2
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
The following table is based on fund assets as of December 31, 2008.
TARGET DOUBLE PLAY PIMCO FUNDAMENTAL INDEXPLUS TOTAL RETURN TARGETPLUS EQUITY S&P 500 INDEX FUND, S&P 500
FUND FUND FUND CLASS 2 INDEX
(ACQUIRED FUND) (ACQUIRED FUND) (ACQUIRED FUND) (ACQUIRING FUND) FUND,
CLASS 2 -
PRO FORMA
WITH
ACQUIRED
FUNDS
Management 0.60% (a)(b) 0.75% (a) 0.60% (a)(b) 0.17% (a) 0.17%
Fee (c)
Distribution 0.25% 0.25% 0.25% 0.25% 0.25%
(12b-1) Fees(d)
Other 0.14% 0.23% 0.25% 0.23% 0.13%
Expenses
Total Annual 0.99% (b) 1.23% 1.10% (b) 0.65% 0.55%
Fund
Operating
Expenses
Fee Waiver(e) -0.19% -0.02% -0.30% -0.14% -0.06%
Net Annual 0.80% 1.21% 0.80% 0.51% 0.49%
Fund Operating
Expenses(e)
(a)The management fee rate is the contractual rate charged for the Fund's most
recent fiscal year, which ended December 31, 2008.
(b)As of the date of this proxy statement/prospectus, the manager is voluntarily
reducing the management fee to 0.45%. The Manager reserves the right to
increase the management fee to the amount shown in the table above at any
time. If the voluntary management fee reduction were reflected in the table,
the Total Annual Fund Operating expenses would be lower.
(c)The management fee rate shown reflects what the rate would be under the
current management fee schedule for the Acquiring Fund based on the combined
assets of the Funds for the fiscal year ended December 31, 2008.
(d)The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of
1940. The Fund pays Allianz Life Financial Services, LLC, the Fund's
distributor, an annual fee of up to 0.25% of average daily net assets as
payment for distributing its shares and providing shareholder services.
(e)The Manager and the Fund have entered into a written contract limiting
operating expenses, excluding certain expenses (such as interest expense), to
0.79% for Target Double Play Fund and TargetPLUS Equity Fund, 1.20% for PIMCO
Fundamental IndexPLUS Total Return Fund, and 0.49% for S&P 500 Index Fund,
Class 2 shares through April 30, 2010. The Fund is authorized to reimburse the
Manager for management fees previously waived and/or for the cost of Other
Expenses paid by the Manager provided that such reimbursement will not cause
the Fund to exceed any limits in effect at the time of such reimbursement. The
Fund's ability to reimburse the Manager in this manner only applies to fees
paid or reimbursements made by the Manager within the three fiscal years prior
to the date of such reimbursement. To the extent that such reimbursements to
the Manager are expected in the upcoming year, the amount of the
reimbursements, if any, is included in the financial statements in the Fund's
shareholder reports and is reflected in Other Expenses in the table above.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
EXAMPLE: Use the following tables to compare fees and expenses of the Funds to
other investment companies. The tables illustrate the amount of fees and
expenses an investor would pay, assuming (1) a $10,000 investment, (2) 5% annual
return, (3) redemption at the end of each time period, and (4) no changes in the
Fund's total operating expenses. The tables also show pro forma expenses of the
Acquiring Fund assuming the proposed Reorganization had been in effect for the
periods shown. The tables do not reflect the effect of any fee or expense
waivers. The tables also do not reflect separate account or insurance contract
fees and charges. An investor's actual costs may be different.
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Target Double Play Fund (Acquired Fund) $82 $296 $529 $1,196
PIMCO Fundamental IndexPLUS Total Return Fund (Acquired Fund) $123 $388 $674 $1,487
TargetPLUS Equity Fund (Acquired Fund) $82 $320 $577 $1,313
S&P 500 Index Fund, Class 2 (Acquiring Fund) $52 $194 $348 $797
S&P 500 Index Fund, Class 2 - Pro Forma with Acquired Funds $50 $170 $301 $684
THIS EXAMPLE DOES NOT REPRESENT ACTUAL EXPENSES, PAST OR FUTURE. ACTUAL EXPENSES
MAY BE HIGHER OR LOWER THAN THOSE SHOWN. THIS EXAMPLE DOES NOT REFLECT THE
EXPENSES THAT APPLY TO THE SUBACCOUNTS OR THE CONTRACTS. INCLUSION OF THSE
CHARGES WOULD INCREASE EXPENSES FOR ALL PERIODS SHOWN.
THE REORGANIZATION
TERMS OF THE REORGANIZATION
The Board has approved the Plans, a copy of each of which is attached as Exhibit
A, Exhibit B and Exhibit C. The Plans provide for the Reorganization on the
following terms:
* The Reorganization is scheduled to occur on the first day that the New York
Stock Exchange is open for business following shareholder approval and receipt
of any necessary regulatory approvals, but may occur on any later date agreed
to by an Acquired Fund and the Acquiring Fund.
* The Acquired Funds will transfer all of their assets to the Acquiring Fund
and, in exchange, the Acquiring Fund will assume the Acquired Funds'
liabilities.
* The Acquiring Fund will issue Class 2 shares to each Acquired Fund in an
amount equal to the value of the assets that it receives from each Acquired
Fund, less the liabilities assumed by the Acquiring Fund in the transaction.
These shares will immediately be distributed by the Acquired Funds to their
shareholders (the separate accounts) in proportion to their holdings in the
Acquired Fund. As a result, shareholders (the separate accounts) of the
Acquired Funds will become shareholders of the Acquiring Fund. Contract values
that were allocated to subaccounts invested in the Acquired Funds will be
allocated to subaccounts investing in the Acquiring Fund.
* Neither the Acquired Funds nor any Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Funds will pay any sales
charge in connection with the Reorganization.
* The net asset value of the Acquired Funds and the Acquiring Fund will be
computed as of 3:00 p.m. Central time, on the closing date.
* After the Reorganization, the Acquired Funds will be terminated.
CONDITIONS TO CLOSING THE REORGANIZATION
The completion of the Reorganization for each Acquired Fund is subject to
certain conditions described in the Plans, including:
* Each Acquired Fund will have declared and paid a dividend that will distribute
all of the Fund's taxable income, if any, to the shareholders (the separate
accounts) of the Fund for the taxable years ending at or prior to the closing.
* The Funds will have received any approvals, consents, or exemptions from the
SEC or any regulatory body necessary to carry out the Reorganization.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
* An effective registration statement on Form N-14 will be on file with the SEC.
* The Contract Owners of each Acquired Fund who are eligible to provide voting
instructions for the meeting will have approved the respective Plans.
* Target Double Play Fund and TargetPLUS Equity Fund will receive an opinion of
tax counsel that the proposed Reorganization will be tax-free for those
Acquired Funds and the Acquiring Fund and for the separate accounts that are
the shareholders of those Acquired Funds.
TERMINATION OF THE PLAN
The Plans and the transactions contemplated by them may be terminated and
abandoned by resolutions of the Board of Trustees of the Acquired Funds or the
Acquiring Fund at any time prior to closing. In the event of a termination,
there will be no liability for damages on the part of either the Acquired Funds
or the Acquiring Fund, or the trustees, officers, or shareholders of the
Acquired Funds or the Acquiring Fund.
TAX STATUS OF THE REORGANIZATION
For federal income tax purposes, the transfer of the assets of each Acquired
Fund to the Acquiring Fund in exchange for shares of the Acquiring Fund and the
distribution of the Acquiring Fund shares to shareholders of each Acquired Fund
is treated as a separate Reorganization. However, for ease of reference, the
Reorganizations are discussed collectively.
For Target Double Play Fund and TargetPLUS Equity Fund
The exchange of the Acquired Funds' assets for shares of the Acquiring Fund, and
the subsequent distribution of those shares to shareholders of the Acquired
Funds and the liquidation of the Acquired Funds, are intended to qualify for
federal income tax purposes as a tax-free reorganization under Section 368(a)(1)
of the Code. The Acquired Funds and the Acquiring Fund will receive an opinion
of Dorsey & Whitney LLP, based in part on certain representations by the VIP
Trust on behalf of the Acquired Funds and the Acquiring Fund, substantially to
the effect that:
* The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and each of the
Acquired Funds will qualify as a party to the Reorganization within the
meaning of Section 368(b) of the Code.
* Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of each Acquired
Fund which are distributed by Acquired Fund prior to the Closing.
* The tax basis of the Acquiring Fund Shares received by each Acquired Fund
shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund shares exchanged therefor.
* The holding period of the Acquiring Fund shares received by each Acquired
Fund shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund shareholder held the Acquired Fund shares
exchanged therefor, provided that the Acquired Fund shares were held as a
capital asset at the Effective Time.
* The Acquired Funds will recognize no income, gain, or loss by reason of
the Reorganization.
* The Acquiring Fund will recognize no income, gain, or loss by reason of
the Reorganization.
* The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Funds as of the Effective Time.
* The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Funds.
* The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Funds as of
the Effective Time.
For PIMCO Fundamental IndexPLUS Total Return Fund
If the separate accounts investing in the Fund and the Contracts are properly
structured under the insurance company provisions of federal tax law (as the
Manager believes is the case), the Reorganization will not be a taxable event
for Contract Owners who have a portion of their variable annuity contract
allocated to the Acquire Fund. The Reorganization is not expected to qualify as
a tax-free reorganization for United States federal income tax purposes. Thus,
the Acquired Fund generally will recognize gain or loss equal to the difference
between the fair market value of its assets and its tax basis in such assets.
Any unused excess capital loss carry forwards of the Acquired Fund will cease to
exist after the Reorganization. The Acquired Fund expects that the amount of
such unused capital loss carry forwards lost as a
26
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
consequence of the Reorganization will not be material (and such lost attributes
would have been significantly limited for federal income tax purposes even if
the Reorganization qualified for tax-free treatment).
The exchange of Acquired Fund shares for Acquiring Fund shares pursuant to the
Reorganization will be a taxable event for federal income tax purposes (as well
as for state and local income tax purposes). If the separate accounts investing
in the Acquired Fund and the related Contracts are properly structured under the
insurance company provisions of federal tax law (the Manager believes is the
case), then the separate accounts would be treated as the direct holder of the
Acquired Fund shares. As such, the separate accounts will recognize gain or loss
equal to the difference between the fair market value of the Acquiring Fund
shares received pursuant to the Reorganization and the separate accounts' tax
basis in the Acquired Fund shares surrendered therefore. Such gain or loss will
be long-term capital gain or loss if the separate accounts' holding period for
such Acquired Fund is more than one year at the Closing.
The Manager has agreed to indemnify Contract Owners against any taxes imposed on
them as a result of the Reorganization being taxable or as a result of a
judicial or administrative determination that the Reorganization, although
treated by the parties as not tax-free, in fact was tax-free. CONTRACT OWNERS
SHOULD CONSULT THEIR OWN TAX ADVISERS CONCERNING ANY POSSIBLE STATE INCOME TAX
CONSEQUENCES OF THE REORGANIZATION.
REASONS FOR THE PROPOSED REORGANIZATION AND BOARD DELIBERATIONS
The Board believes that the proposed Reorganization will be advantageous to
shareholders of the Acquired Funds based on its consideration of the following
matters:
* TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms and
conditions of the Reorganization as described in the previous paragraphs.
* TAX CONSEQUENCES. The Board considered the tax consequences of the
Reorganization for Contract Owners and for the Funds, as set forth in the
section "Tax Status of the Reorganization," above.
* CONTINUITY OF INVESTMENT. The Board considered the compatibility of the Funds
and the degree of similarity between the investment objectives and the
principal investment strategies for the Acquired Funds and the Acquiring Fund.
The Board considered the fact that the Acquired Funds and the Acquiring Fund
have comparable investment objectives and policies, but different investment
strategies. With respect to Target Double Play Fund and TargetPLUS Equity
Fund, the Board took note of the fact that following the Reorganization
shareholders of the Acquired Funds will be invested in a Fund holding a
portfolio the characteristics of which are generally similar to those of the
portfolio currently held by the Acquired Funds, except as described in this
proxy statement. The Board also took note of the fact that the PIMCO
Fundamental IndexPLUS Total Return Fund invests in a significantly different
portfolio (consisting principally of derivatives) than the Acquiring Fund
(which invests principally in common stocks), although both Funds are focused
on larger-capitalization companies.
* EXPENSE RATIOS. The Board considered the relative expenses of the Funds. The
total operating expense ratio for the Acquiring Fund is lower than the total
operating expense ratio for each of the Acquired Funds as of the end of the
Acquired Funds' most recent fiscal year. The contractual management fee for
the Acquiring Fund is lower than for the Acquired Funds, and the contractual
management fees for all of the Funds do not include any breakpoints. The Funds
have the same Distribution (12b-1) Fees. The Acquiring Fund's Other Expenses
are lower than those for the Acquired Funds. In sum, shareholders of the
Acquired Funds may expect to incur lower overall fund expenses following the
Reorganization.
The Board also considered the possibility that both higher aggregate net
assets resulting from the Reorganization and the opportunity for net cash
inflows, or reduced outflows, may reduce the risk that, if net assets of the
Acquired Funds fail to grow, or even diminish, the Acquired Funds' total
expense ratios could rise from current levels as fixed expenses become a
larger percentage of net assets. The Board noted that all of the Funds are
subject to expense limitation agreements that will remain in place through at
least April 30, 2010. The Board considered the fact that all of the Funds
currently are operating with expenses above the respective caps and are
receiving fee waivers from the Manager. The Board also considered the fact
that following the Reorganization total fund operating expenses for the
combined Fund are expected to exceed the caps contained in the Acquiring
Fund's expense limitation agreement and that the Acquiring Fund will be
subject to reimbursements to the Manager for expenses previously waived by the
Manager.
* ECONOMIES OF SCALE. The Board considered the advantage of combining Funds with
comparable investment objectives. The Board believes that the combined Fund
may have the opportunity to take advantage of the economies of scale
associated with a larger fund. The combined Fund may have better prospects for
growth than any of the Funds separately. For example, a larger fund should
have an enhanced ability to effect portfolio transactions on more favorable
27
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
terms and should have greater investment flexibility. Furthermore, as
indicated above, fixed expenses, such as audit expenses and accounting
expenses that are charged on a per fund basis, may be reduced.
* COSTS. The Board noted that the Acquired Funds each will bear the expenses of
printing and mailing communications to the Contract Owners who beneficially
owned its shares and that all other expenses of the Reorganization, including
accounting, legal, and custodial expenses, and any costs related to
repositioning of the Acquiring Funds' portfolios after the Reorganization,
will be allocated equally among the Acquired Funds and the Acquiring Fund. The
Board also noted that the estimated total reorganization costs, including
repositioning costs, would be less than $0.01 per share of the combined Fund.
The Board considered the Manager's analysis showing that the reduction in
annual operating expenses for the Acquired Funds and the Acquiring Fund
resulting from the Reorganization is likely to be greater than or equal to the
expenses of the Reorganization to be borne by the Acquired Funds or Acquiring
Fund, as the case may be.
* DILUTION. The Board considered the fact that the Reorganization will not
dilute the interests of the current Contract Owners with contract values
allocated to subaccounts investing in the Acquired Funds because it would be
effected on the basis of the relative net asset value per share of the
Acquired Funds and the Acquiring Fund, respectively. Thus, subaccounts holding
shares of the Acquired Funds will receive shares of the Acquiring Fund equal
in value to their shares in the Acquired Funds.
* PERFORMANCE AND OTHER FACTORS. The Board considered the relative performance
records of the Funds. The Board noted that none of the Funds have accumulated
any significant track record; the Acquiring Fund commenced operations on May
1, 2007, and the Acquired Funds commenced operations on May 1, 2006 (PIMCO
Fundamental IndexPLUS Total Return Fund) and December 27, 2006 (Target Double
Play Fund and TargetPLUS Equity Fund). While the Board was cognizant of the
fact that an Acquiring Fund's past performance is no guarantee of its future
results, it did recognize that the better overall track record of the
Acquiring Fund, although brief, could help attract more assets into the
combined Funds and therefore could increase shareholder confidence in the
combined Fund. The Board concluded that increased inflows, or reduced
outflows, could lead to further economies of scale (see "Economies of Scale"
above).
The Board also considered the fact that the Funds have generally similar
investment objectives. The Reorganization should allow for a concentrated
selling effort, thereby potentially benefiting shareholders of the combined
Funds. The Board further took into account the Manager's belief that the
Acquired Funds, as stand-alone Funds, were unlikely to experience significant
growth in assets as a result of inflows, particularly in light of the recent
negative performance of the Acquired Funds as compared to the Acquiring Fund.
* POTENTIAL EFFECTS ON THE MANAGER. The Board considered the potential benefits
from the Reorganization that could be realized by the Manager. The Board
recognized that the potential benefits to the Manager consist principally of
economies of scale and the elimination of expenses incurred in duplicative
efforts to administer separate funds. The Board noted, however, that
shareholders of the Acquired Funds will benefit over time from any long-term
decrease in overall operating expense ratios resulting from the proposed
Reorganization. The Board also noted that the proposed Reorganization would
affect the amount of management fees that the Manager retains after payment of
the subadvisory fees. The table below assumes that the Reorganization has
taken place and gives effect to the additional temporary reduction in
management fees payable to the Manager. See Table A-2 above for information
concerning current management fees for both Funds and the voluntary reductions
in management fees that are currently in effect.
FUND MANAGEMENT FEE RETAINED AFTER PAYMENT OF SUBADVISORY FEE (1)
Target Double Play Fund (Acquired Fund) 0.10%
PIMCO Fundamental IndexPLUS Total Return Fund (Acquired Fund) 0.21%
TargetPLUS Equity Fund (Acquired Fund) 0.10%
S&P 500 Index Fund (Acquiring Fund) 0.14%
Weighted Average Before Reorganization 0.13%
S&P 500 INDEX FUND - PRO FORMA WITH ACQUIRED FUNDS 0.14% (2)
(1)Calculations are as of May 31, 2009, using monthly average assets under
management for May 2009.
(2)Calculated using new subadvisory fee rates effective October 26, 2009.
The Board did not assign relative weights to the foregoing factors or deem any
one or group of them to be controlling in and of themselves.
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The Allianz Variable Insurance Products Trust - Proxy
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BOARD DETERMINATIONS
After considering the factors described above and other relevant information at
an in-person meeting held on June 10, 2009, the Board of Trustees of each of the
Acquired Funds, including a majority of the independent Board members found that
participation in the Reorganization is in the best interests of the Acquired
Funds and that the interests of existing Contract Owners with contract values
allocated to subaccounts investing in the Acquired Funds would not be diluted as
a result of the Reorganization.
The Board of Trustees of the Acquiring Fund approved the Plans at the meeting
held on June 10, 2009. Among other factors, the Board members considered the
terms of the Plans, the provisions intended to avoid the dilution of Contract
Owners' interests, and the anticipated tax consequences of the Reorganization.
The Board found that participation in the Reorganization is in the best
interests of the Acquiring Fund and that the interests of existing Contract
Owners with contract values allocated to subaccounts investing in the Acquiring
Fund will not be diluted as a result of the Reorganization.
RECOMMENDATION AND VOTE REQUIRED
The Board recommends that Contract Owners who are entitled to vote at the
meeting approve the proposed Plans. Approval of each Plan requires the
affirmative vote, in person or by proxy, of a majority of the voting power of
the outstanding shares of the respective Acquired Fund as the record date, July
20, 2009. Shareholders of each Acquired Fund will vote separately on the Plan
applicable to the Acquired Fund in which they are invested. Each share is
entitled to one vote for each dollar, and a fractional vote for each fraction of
a dollar, of net asset value per share held by a shareholder on the record date.
If the Plan is not approved by an Acquired Fund, the Board will consider what
further action should be taken. The Reorganization will proceed with respect to
any Acquired Fund approving it, even if other Acquired Funds do not.
If shareholder approval is obtained, the Reorganization is scheduled to be
effective on or about October 23, 2009.
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SECTION B - PROXY VOTING AND SHAREHOLDER MEETING INFORMATION
REFERENCE TO THE "FUND" IN THIS SECTION IS A REFERENCE TO THE ACQUIRED FUND.
A special meeting of shareholders of the Acquired Funds will be held as
specified in the Notice of Special Meeting that accompanies this proxy
statement/prospectus. At the meeting, shareholders (the separate accounts) will
vote their shares of the Acquired Funds.
You have the right to instruct Allianz Life and Allianz Life of NY (together,
"Allianz") on how to vote the shares of the Acquired Funds held under your
Contract. The number of Fund shares for which you may provide instructions will
be based on the dollar amount of Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date. Each accumulation unit or annuity unit represents a specified
dollar value and a specified number of Fund shares. For each dollar of value,
the Contract Owner is permitted to vote one Fund share. We count fractional
votes. If you execute and return your voting instruction form, but do not
provide voting instructions, Allianz will vote the shares underlying your
Contract in favor of the proposal described above. Allianz will vote any shares
for which it does not receive a voting instruction form, and any shares which it
or its affiliates hold for their own account, in proportionately the same manner
as shares for which it has received voting instructions. Allianz will not
require voting instructions for a minimum number of shares, and therefore a
small number of shareholders could determine the outcome of any proposal.
For the Meeting to proceed, there must be a quorum. This means that at least 25%
of a Fund's shares must be represented at the Meeting either in person or by
proxy. Because Allianz is the only shareholder of the Funds, its presence at the
Meeting in person or by proxy will meet the quorum requirement.
You may revoke your voting instructions up until voting results are announced at
the Meeting or at any adjournment of the Meeting by giving written notice to
Allianz prior to the Meeting by mail to Allianz Variable Insurance Products
Trust, c/o Advisory Management, A 3-825, 5701 Golden Hills Drive, Minneapolis,
Minnesota 55416, by executing and returning to Allianz a voting instruction form
with a later date, or by attending the Meeting and voting in person. If you need
a new voting instruction form, please call the Fund at 1-800-950-5872 ext.
35857, and a new voting instruction form will be sent to you. If you return an
executed form without voting instructions, your shares will be voted "FOR" the
proposal.
The Acquired Funds will pay all costs of solicitation, including the cost of
preparing and mailing the Notice of a Special Meeting of shareholders and this
proxy statement/prospectus to Contract Owners. Representatives of the Manager,
without cost to the Fund, also may solicit voting instructions from Contract
Owners by means of mail, telephone, or personal calls.
DISSENTERS' RIGHTS OF APPRAISAL. There are no appraisal or dissenters' rights
for shareholders of the Acquired Funds. Delaware law does not grant
beneficiaries of statutory trusts who dissent from approval of the
Reorganization the right to demand an appraisal for their interests and payment
of their fair cash value. As a result, shareholders who object to the
Reorganization do not have a right to demand a different payment for their
shares of beneficial interest.
OTHER MATTERS. Management of the Funds anticipates that an election of Trustees
and ratification of the auditors also will be conducted at the Meeting. You will
receive a separate proxy statement containing information regarding these other
matters if you are eligible to vote on them. Otherwise, management of the Funds
knows of no other matters that may properly be, or that are likely to be,
brought before the Meeting. However, if any other business shall properly come
before the Meeting, the persons named on the voting instruction form intend to
vote thereon in accordance with their best judgment.
ADJOURNMENT. In the event that voting instructions received by the time
scheduled for the meeting are not sufficient to approve the Reorganization,
representatives of Allianz may move for one or more adjournments of the meeting
for a period of not more than 120 days in the aggregate to allow further
solicitation of voting instructions on the proposals. Any adjournment requires
the affirmative vote of a majority of the voting power of the shares present at
the meeting. Representatives of Allianz will vote in favor of adjournment. The
Acquired Funds will pay the costs of any additional solicitation and of any
adjourned meeting. A shareholder vote may be taken on one or more of the items
in this proxy statement prior to adjournment if sufficient voting instructions
have been received.
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The Allianz Variable Insurance Products Trust - Proxy
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SECTION C - CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER FUND INFORMATION
IN THIS SECTION REFERENCE TO THE "FUND" IS A REFERENCE TO THE ACQUIRING FUND AND
THE ACQUIRED FUNDS.
This section contains the following information about the Funds:
TABLE CONTENT
(all information is shown for the fiscal year ended December 31, 2008,
unless noted otherwise)
C-1 Actual and pro forma capitalization of the Acquired Fund and the
Acquiring Fund
C-2 Actual and pro forma ownership of Fund shares
CAPITALIZATION
The following table shows the capitalization of the Funds at December 31, 2008,
and on a pro forma basis, assuming the proposed Reorganization had taken place.
TABLE C-1. ACTUAL AND PRO FORMA CAPITALIZATION OF THE ACQUIRED FUNDS AND THE
ACQUIRING FUNDS
FUND NET ASSETS NET ASSET VALUE SHARES OUTSTANDING
PER SHARE
Target Double Play Fund (Acquired Fund)* $56,372,222 $4.95 11,379,331
PIMCO Fundamental IndexPLUS Total Return Fund (Acquired Fund)* $65,901,461 $6.04 10,903,208
TargetPLUS Equity Fund (Acquired Fund)* $56,745,351 $5.44 10,425,605
S&P 500 Index Fund, Class 2 (Acquiring Fund)** $245,652,404 $6.15 39,954,337
Adjustments -$179,000 -- -3,620,236
S&P 500 Index Fund - Pro Forma with the Acquired Funds $424,492,438 $6.15 69,042,245
* The number of Fund shares for which you may provide instructions will be based
on the dollar amount of Acquired Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date.
**The adjustment to net assets represents the impact as a result of the
estimated Reorganization fees and expenses that will be paid by the Funds, and
the adjustment to shares outstanding represents the impact as a result of the
shares being issued by the Acquiring Fund to the Acquired Fund shareholders.
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OWNERSHIP OF FUND SHARES
The following table provides information on shareholders who owned more than 5%
of each Fund's outstanding shares at the record date. At the record date,
officers and directors of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.
TABLE C-2. ACTUAL AND PRO FORMA OWNERSHIP OF FUND SHARES [ADD UPON AMENDMENT]
FUND 5% OWNERS PERCENT OF SHARES PERCENT OF SHARES HELD FOLLOWING THE
HELD REORGANIZATION
Target Double Play Fund Allianz Life Variable [00.00]% N/A
Account B
PIMCO Fundamental IndexPLUS Total Return Allianz Life Variable [00.00]% N/A
Fund Account B
TargetPLUS Equity Fund Allianz Life Variable [00.00]% N/A
Account B
S&P 500 Index Fund Allianz Life Variable [00.00]% [00.00]%
Account B
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The Allianz Variable Insurance Products Trust - Proxy
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EXHIBIT A -AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of June 10, 2009, (the
"Agreement") is by and among the Allianz Variable Insurance Products Trust (the
"VIP Trust" or the "Selling Trust"), a Delaware statutory trust, on behalf of
its series, the AZL First Trust Target Double Play Fund (the "Acquired Fund"),
and the same statutory trust (in this role, the "Buying Trust") on behalf of its
series, the AZL S&P 500 Index Fund (the "Acquiring Fund").
The following table shows the name of the Acquired Fund and the Acquiring Fund
that will be parties to the reorganization.
----------------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
----------------------------------------------------------------
|AZL First Trust Target Double Play Fund|AZL S&P 500 Index Fund|
----------------------------------------------------------------
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Acquired Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the transactions
it contemplates. The reorganization between the Acquiring Fund and the
Acquired Fund is referred to hereinafter as the "Reorganization." The
Acquiring Fund agrees to furnish data and information, as reasonably
requested, for the proxy statement to be furnished to shareholders of the
Acquired Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization is intended to qualify as a
reorganization within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"). At the Closing (as defined
below), the Selling Trust will convey all of the assets of the Acquired
Fund to the Acquiring Fund. The Acquiring Fund will assume all liabilities
of the Acquired Fund. At the Closing, the Buying Trust will deliver shares
of the Acquiring Fund, including fractional shares, to the Selling Trust.
The number of shares will be determined by dividing the aggregate net
asset value of the shares of the Acquired Fund, computed as described in
Section 3(a), by the net asset value of one share of the Acquiring Fund,
computed as described in Section 3(b). The Acquired Fund will not pay a
sales charge on the receipt of Acquiring Fund shares in exchange for the
assets of the Acquired Fund. In addition, the separate account
shareholders of the Acquired Fund will not pay a sales charge on
distribution to them of shares of the Acquiring Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the "Closing")
will occur on the first day on which the New York Stock Exchange (the
"NYSE") is open for business following approval of contract owners of the
Acquired Fund and receipt of all necessary regulatory approvals, or such
later date as the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business
on the date of the Closing or at such other time as an authorized officer
of the VIP Trust shall determine (the "Effective Time").
3. VALUATION.
a. The aggregate net asset value of the shares of the Acquired Fund will be
computed as of the close of regular trading on the NYSE on the day of
Closing (the "Valuation Date") using the valuation procedures in the
Acquired Fund's prospectus.
b. The net asset value per share of shares of the Acquiring Fund will be
determined as of the close of regular trading on the NYSE on the Valuation
Date, using the valuation procedures in the Acquiring Fund's prospectus.
c. At the Closing, the Acquired Fund will provide the Acquiring Fund with a
copy of the computation showing the valuation of the aggregate net asset
value of the shares of the Acquired Fund on the Valuation Date. The
Acquiring Fund will provide the Acquired Fund with a copy of the
computation showing the determination of the net asset value per share of
shares of the Acquiring Fund on the Valuation Date.
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4. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUND.
a. As soon as practicable after the Valuation Date, the Selling Trust will
liquidate the Acquired Fund and distribute shares of the Acquiring Fund to
the Acquired Fund's shareholders of record. The Acquiring Fund will
establish shareholder accounts in the names of each Acquired Fund
shareholder, representing the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each shareholder. All
issued and outstanding shares of the Acquired Fund will simultaneously be
canceled on the books of the Selling Trust. The Acquiring Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the Selling Trust.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Trust relating to the Acquired Fund will be closed and no further
transfer of shares will be made.
c. Promptly after the distribution, the Acquiring Fund or its transfer agent
will notify each shareholder of the Acquired Fund of the number of shares
distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Acquired Fund, and
in no event later than twelve months from the date of the Closing, the
Acquired Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE BUYING TRUST. The Buying
Trust represents and warrants to the Acquired Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Buying
Trust is a statutory trust duly organized, validly existing, and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, management
investment company. The Acquiring Fund is a series of the Buying Trust.
b. Capitalization. The Buying Trust has authorized capital of an unlimited
number of shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquiring Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquiring
Fund as of the end of the last fiscal year and the subsequent unaudited
semi-annual financial statements, if any (the "Acquiring Fund Financial
Statements"), fairly present the financial position of the Acquiring Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Shares to Be Issued upon Reorganization. The shares of beneficial interest
to be issued in connection with the Reorganization will be duly authorized
and, at the time of the Closing, will be validly issued, fully paid, and
non-assessable.
e. Authority Relative to the Agreement. The Buying Trust has the power to
enter into and carry out the obligations described in this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Trustees of the Buying Trust, and no other
proceedings by the Buying Trust or the Acquiring Fund are necessary under
the Buying Trust's Agreement and Declaration of Trust or By-Laws (the
"Governing Documents").
f. No Violation. The Buying Trust is not in violation of its Governing
Documents or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion of
the transactions contemplated by it will not conflict with, or constitute
a breach of, any material contract or other instrument to which the
Acquiring Fund is subject. The transactions will not result in any
violation of the provisions of the Governing Documents or any law,
administrative regulation, or administrative or court decree applicable to
the Acquiring Fund.
g. Liabilities. There are no liabilities of the Acquiring Fund other than:
(1)liabilities disclosed in the Acquiring Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquired Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquiring Fund.
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h. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquiring Fund, threatened, that would materially
and adversely affect the Acquiring Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquiring Fund knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation, and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to the
Selling Trust, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
j. Taxes. The Acquiring Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquiring Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and such returns
and reports have been true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquired Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquired Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
k. Registration Statement. The Acquiring Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933 (the "1933 Act")
relating to the shares of beneficial interest to be issued in the
Reorganization. At the time that the Registration Statement becomes
effective, at the time of the Acquired Fund's shareholders' meetings, and
at the Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading. However, none of the
representations and warranties in this subsection applies to statements
in, or omissions from, the Registration Statement made in reliance on
information furnished by the Acquired Fund for use in the Registration
Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING TRUST.
The Selling Trust represents and warrants to the Acquiring Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Selling
Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
1940 Act as an open-end, management investment company. The Acquired Fund
is a series of the Selling Trust.
b. Capitalization. The Selling Trust has authorized capital of an unlimited
number shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquired Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquired
Fund as of the end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Acquired Fund Financial
Statements"), fairly present the financial position of the Acquired Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Authority Relative to the Agreement. The Selling Trust has the power to
enter into and to carry out its obligations under this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Directors of the Selling Trust, the
shareholders meetings referred to in Section 6(k) will be called and held,
and no other proceedings by the Selling Trust or the Acquired Fund are
necessary under the Selling Trust's Governing Documents.
e. No Violation. The Selling Trust is not in violation of its Agreement and
Declaration of Trust or By-Laws (the "Governing Documents") or in default
in the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of, any
material contract or other instrument to which the Acquired Fund is
subject. The transactions will not result in any violation of the
provisions of the Governing Documents or any law, administrative
regulation, or administrative or court decree applicable to the Acquired
Fund.
f. Liabilities. There are no liabilities of the Acquired Fund other than:
(1)liabilities disclosed in the Acquired Fund Financial Statements,
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(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquiring Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquired Fund.
g. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquired Fund, threatened, that would materially
and adversely affect the Acquired Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquired Fund knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and the Acquired Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
h. Contracts. Except for contracts and agreements previously disclosed to the
Buying Trust, the Acquired Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
i. Taxes. The Acquired Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquired Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and all such
returns and reports are true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquiring Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquiring Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
j. Fund Securities. All securities listed in the schedules of investments of
the Acquired Fund as of the Closing will be owned by the Acquired Fund
free and clear of any encumbrances, except as indicated in the schedule.
k. Shareholders' Meetings; Registration Statement. The Acquired Fund will
call and hold a shareholders' meeting at which its shareholders will
consider and act upon the transactions contemplated by this Agreement. The
Acquired Fund will cooperate with the Acquiring Fund and will furnish
information relating to the Selling Trust and the Acquired Fund required
in the Registration Statement. At the time that the Registration Statement
becomes effective, at the time of the shareholders' meeting, and at the
Closing, the Registration Statement, as it relates to the Selling Trust or
the Acquired Fund, will not contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading. However, the representations and warranties in this
subsection apply only to statements in or omissions from the Registration
Statement made in reliance upon information furnished by the Selling Trust
or the Acquired Fund for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING TRUST. The obligations of the Buying
Trust with respect to the Reorganization are subject to the satisfaction of
the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of the
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Selling Trust and the
Acquired Fund will have complied with this Agreement, and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling Trust will
provide a certificate to the Acquiring Fund confirming that, as of the
Closing, the representations and warranties set forth in Section 6 are
true and correct and that there have been no material adverse changes in
the financial condition, results of operations, business, properties, or
assets of the Acquired Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Selling Trust, and delivered to the
Acquiring Fund on or prior to the last business day before the Closing. A
decline in the value of the securities owned by the Acquired Fund will not
constitute a "material adverse change" for purposes of the foregoing
sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective, and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
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d. Opinion of Counsel. The Buying Trust will have received an opinion of
counsel for the Selling Trust, dated as of the Closing, to the effect that
(i) the Selling Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquired Fund
is a series of the Selling Trust; (iii) this Agreement and the
Reorganization have been duly authorized and approved by all requisite
action of the Selling Trust and the Acquired Fund, and this Agreement has
been duly executed by, and is a valid and binding obligation of, the
Selling Trust.
e. Declaration of Dividend. The Acquired Fund, prior to the Closing, will
have declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the shareholders
of the Acquired Fund (i) all of the excess of (x) the Acquired Fund's
investment income excludable from gross income under Section 103 of the
Code over (y) the Acquired Fund's deductions disallowed under Sections 265
and 171 of the Code, (ii) all of the Acquired Fund's investment company
taxable income as defined in Section 852 of the Code (in each case
computed without regard to any deduction for dividends paid) and (iii) all
of the Acquired Fund's net capital gain realized (after reduction for any
capital loss carryover), in each case for the current taxable year (which
will end on the Closing date) and any preceding taxable years for which
such a dividend is eligible to be made under Section 855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING TRUST. The obligations of the
Selling Trust with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of all
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Acquiring Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the Closing. An officer of the Buying Trust will provide a certificate to
the Acquired Fund confirming that, as of the Closing, the representations
and warranties set forth in Section 5 are true and correct and that there
have been no material adverse changes in the financial condition, results
of operations, business, properties, or assets of the Acquiring Fund since
the date of its last financial statement, except as otherwise indicated in
any financial statements, certified by an officer of the Buying Trust, and
delivered to the Acquired Fund on or prior to the last business day before
the Closing. A decline in the value of the securities owned by the
Acquiring Fund will not constitute a "material adverse change" for
purposes of the foregoing sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Trust will have received the opinion of
counsel for the Buying Trust, dated as of the Closing, to the effect that
(i) the Buying Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquiring Fund
is a series of the Buying Trust; (iii) this Agreement and the
Reorganization have been authorized and approved by all requisite action
of the Buying Trust and the Acquiring Fund, and this Agreement has been
duly executed by, and is a valid and binding obligation of, the Buying
Trust; and (iv) the shares to be issued in the Reorganization are duly
authorized and upon issuance in accordance with this Agreement will be
validly issued, fully paid, and non-assessable shares of the Acquiring
Fund.
9. FURTHER CONDITIONS TO THE OBLIGATIONS OF THE BUYING TRUST AND THE SELLING
TRUST. As a further condition to the obligations of the VIP Trust on behalf
of both the Acquired Fund and the Acquiring Fund hereunder, the VIP Trust, on
behalf of both the Acquired Fund and the Acquiring Fund, shall have received
the opinion of Dorsey & Whitney LLP addressed to the VIP Trust on behalf of
both the Acquired Fund and the Acquiring Fund, dated as of the date of the
Closing, and based in part on representations to be furnished by the VIP
Trust on behalf of the Acquired Fund and the Acquiring Fund, substantially to
the effect that:
a. The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
b. Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of the Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
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The Allianz Variable Insurance Products Trust - Proxy
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receipt of any net investment income or net capital gains of the Acquired
Fund which are distributed by the Acquired Fund prior to the Closing.
c. The tax basis of the Acquiring Fund Shares received by each Acquired Fund
Shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund Shares exchanged therefor.
d. The holding period of the Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund Shareholder held the Acquired Fund Shares
exchanged therefor, provided that the Acquired Fund Shares were held as a
capital asset at the Effective Time.
e. The Acquired Fund will recognize no income, gain or loss by reason of the
Reorganization.
f. The Acquiring Fund will recognize no income, gain or loss by reason of the
Reorganization.
g. The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
h. The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
i. The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
10.AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the Board of
Trustees. The Agreement may be amended at any time before or after
approval by the shareholders of the Acquired Fund, but after shareholder
approval, no amendment shall be made that substantially changes the terms
of Sections 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and
(ii) compliance with any of the covenants or conditions made for its
benefit. However, neither party may waive the requirement to obtain
shareholder approval or the requirement to obtain a tax opinion.
c. The Selling Trust may terminate this Agreement at any time prior to the
Closing by notice to the Buying Trust if a material condition to its
performance or a material covenant of the Buying Trust on behalf of the
Acquiring Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Buying
Trust on behalf of the Acquiring Fund and is not cured.
d. The Buying Trust may terminate this Agreement at any time prior to the
Closing by notice to the Selling Trust if a material condition to its
performance or a material covenant of the Selling Trust on behalf of the
Acquired Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Selling
Trust on behalf of the Acquired Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Acquired Fund, without any liability on the part of either party or its
respective trustees, officers, or shareholders, on written notice to the
other party, and shall be terminated without liability as of the close of
business on December 31, 2009, or a later date agreed upon by the parties,
if the Closing has not taken place on or prior to that date.
f. The representations, warranties, and covenants contained in this
Agreement, or in any document delivered in connection with this Agreement,
will survive the Reorganization.
11.EXPENSES. All fees paid to governmental authorities for the registration or
qualification of the Acquiring Fund Shares and all transfer agency costs
related to the shares of the Acquiring Fund Shares shall be allocated to the
Acquiring Fund. All fees and expenses related to printing and mailing
communications to shareholders and beneficial owners of shares of the
Acquired Fund shall be allocated to the Acquired Fund. All of the other
expenses of the transactions required for the Reorganization, including
without limitation, accounting, legal, and custodial expenses, shall be
allocated equally between the Acquired Fund and the Acquiring Fund. The
expenses specified in this Section shall be borne by the Fund to which they
are allocated.
12. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state of
Minnesota.
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13. INDEMNIFICATION. Each party will indemnify and hold the other and its
officers and trustees (each an "Indemnitee") harmless from and against any
liability or other cost and expense, in connection with the defense or
disposition of any action, suit, or other proceeding, before any court or
administrative or investigative body in which the Indemnitee may be involved
as a party, with respect to actions taken under this Agreement. However, no
Indemnitee will be indemnified against any liability or expense arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the Indemnitee's position.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL First Trust Target Double Play Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL S&P 500 Index Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
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The Allianz Variable Insurance Products Trust - Proxy
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EXHIBIT B -AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of June 10, 2009, (the
"Agreement") is by and among the Allianz Variable Insurance Products Trust (the
"VIP Trust" or the "Selling Trust"), a Delaware statutory trust, on behalf of
its series, the AZL PIMCO Fundamental IndexPLUS Total Return Fund (the "Acquired
Fund"), and the same statutory trust (in this role, the "Buying Trust") on
behalf of its series, the AZL S&P 500 Index Fund (the "Acquiring Fund"), and
Allianz Investment Management LLC (solely for the purposes of Section 13 of the
Agreement).
The following table shows the name of the Acquired Fund and the Acquiring Fund
that will be parties to the reorganization.
--------------------------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
--------------------------------------------------------------------------
|AZL PIMCO Fundamental IndexPLUS Total Return Fund|AZL S&P 500 Index Fund|
--------------------------------------------------------------------------
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Acquired Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the transactions
it contemplates. The reorganization between the Acquiring Fund and the
Acquired Fund is referred to hereinafter as the "Reorganization." The
Acquiring Fund agrees to furnish data and information, as reasonably
requested, for the proxy statement to be furnished to shareholders of the
Acquired Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization is not intended to qualify as a
"reorganization" within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"). At the Closing (as defined
below), the Selling Trust will convey all of the assets of the Acquired
Fund to the Acquiring Fund. The Acquiring Fund will assume all liabilities
of the Acquired Fund. At the Closing, the Buying Trust will deliver Class
2 shares of the Acquiring Fund, including fractional shares, to the
Selling Trust. The number of shares will be determined by dividing the
aggregate net asset value of the shares of the Acquired Fund, computed as
described in Section 3(a), by the net asset value of one share of the
Acquiring Fund, computed as described in Section 3(b). The Acquired Fund
will not pay a sales charge on the receipt of Acquiring Fund shares in
exchange for the assets of the Acquired Fund. In addition, the separate
account shareholders of the Acquired Fund will not pay a sales charge on
distribution to them of shares of the Acquiring Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the "Closing")
will occur on the first day on which the New York Stock Exchange (the
"NYSE") is open for business following approval of contract owners of the
Acquired Fund and receipt of all necessary regulatory approvals, or such
later date as the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business
on the date of the Closing or at such other time as an authorized officer
of the VIP Trust shall determine (the "Effective Time").
3. VALUATION.
a. The aggregate net asset value of the shares of the Acquired Fund will be
computed as of the close of regular trading on the NYSE on the day of
Closing (the "Valuation Date") using the valuation procedures in the
Acquired Fund's prospectus.
b. The net asset value per share of shares of the Acquiring Fund will be
determined as of the close of regular trading on the NYSE on the Valuation
Date, using the valuation procedures in the Acquiring Fund's prospectus.
c. At the Closing, the Acquired Fund will provide the Acquiring Fund with a
copy of the computation showing the valuation of the aggregate net asset
value of the shares of the Acquired Fund on the Valuation Date. The
Acquiring Fund will provide the Acquired Fund with a copy of the
computation showing the determination of the net asset value per share of
shares of the Acquiring Fund on the Valuation Date.
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4. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUND.
a. As soon as practicable after the Valuation Date, the Selling Trust will
liquidate the Acquired Fund and distribute shares of the Acquiring Fund to
the Acquired Fund's shareholders of record. The Acquiring Fund will
establish shareholder accounts in the names of each Acquired Fund
shareholder, representing the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each shareholder. All
issued and outstanding shares of the Acquired Fund will simultaneously be
canceled on the books of the Selling Trust. The Acquiring Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the Selling Trust.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Trust relating to the Acquired Fund will be closed and no further
transfer of shares will be made.
c. Promptly after the distribution, the Acquiring Fund or its transfer agent
will notify each shareholder of the Acquired Fund of the number of shares
distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Acquired Fund, and
in no event later than twelve months from the date of the Closing, the
Acquired Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE BUYING TRUST. The Buying
Trust represents and warrants to the Acquired Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Buying
Trust is a statutory trust duly organized, validly existing, and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, management
investment company. The Acquiring Fund is a series of the Buying Trust.
b. Capitalization. The Buying Trust has authorized capital of an unlimited
number of shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquiring Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquiring
Fund as of the end of the last fiscal year and the subsequent unaudited
semi-annual financial statements, if any (the "Acquiring Fund Financial
Statements"), fairly present the financial position of the Acquiring Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Shares to Be Issued upon Reorganization. The shares of beneficial interest
to be issued in connection with the Reorganization will be duly authorized
and, at the time of the Closing, will be validly issued, fully paid, and
non-assessable.
e. Authority Relative to the Agreement. The Buying Trust has the power to
enter into and carry out the obligations described in this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Trustees of the Buying Trust, and no other
proceedings by the Buying Trust or the Acquiring Fund are necessary under
the Buying Trust's Agreement and Declaration of Trust or By-Laws (the
"Governing Documents").
f. No Violation. The Buying Trust is not in violation of its Governing
Documents or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion of
the transactions contemplated by it will not conflict with, or constitute
a breach of, any material contract or other instrument to which the
Acquiring Fund is subject. The transactions will not result in any
violation of the provisions of the Governing Documents or any law,
administrative regulation, or administrative or court decree applicable to
the Acquiring Fund.
g. Liabilities. There are no liabilities of the Acquiring Fund other than:
(1)liabilities disclosed in the Acquiring Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquired Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquiring Fund.
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h. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquiring Fund, threatened, that would materially
and adversely affect the Acquiring Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquiring Fund knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation, and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to the
Selling Trust, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
j. Taxes. The Acquiring Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquiring Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and such returns
and reports have been true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquired Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquired Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
k. Registration Statement. The Acquiring Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933 (the "1933 Act")
relating to the shares of beneficial interest to be issued in the
Reorganization. At the time that the Registration Statement becomes
effective, at the time of the Acquired Fund's shareholders' meetings, and
at the Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading. However, none of the
representations and warranties in this subsection applies to statements
in, or omissions from, the Registration Statement made in reliance on
information furnished by the Acquired Fund for use in the Registration
Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING TRUST.
The Selling Trust represents and warrants to the Acquiring Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Selling
Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
1940 Act as an open-end, management investment company. The Acquired Fund
is a series of the Selling Trust.
b. Capitalization. The Selling Trust has authorized capital of an unlimited
number shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquired Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquired
Fund as of the end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Acquired Fund Financial
Statements"), fairly present the financial position of the Acquired Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Authority Relative to the Agreement. The Selling Trust has the power to
enter into and to carry out its obligations under this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Directors of the Selling Trust, the
shareholders meetings referred to in Section 6(k) will be called and held,
and no other proceedings by the Selling Trust or the Acquired Fund are
necessary under the Selling Trust's Governing Documents.
e. No Violation. The Selling Trust is not in violation of its Agreement and
Declaration of Trust or By-Laws (the "Governing Documents") or in default
in the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of, any
material contract or other instrument to which the Acquired Fund is
subject. The transactions will not result in any violation of the
provisions of the Governing Documents or any law, administrative
regulation, or administrative or court decree applicable to the Acquired
Fund.
f. Liabilities. There are no liabilities of the Acquired Fund other than:
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(1)liabilities disclosed in the Acquired Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquiring Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquired Fund.
g. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquired Fund, threatened, that would materially
and adversely affect the Acquired Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquired Fund knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and the Acquired Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
h. Contracts. Except for contracts and agreements previously disclosed to the
Buying Trust, the Acquired Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
i. Taxes. The Acquired Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquired Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and all such
returns and reports are true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquiring Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquiring Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
j. Fund Securities. All securities listed in the schedules of investments of
the Acquired Fund as of the Closing will be owned by the Acquired Fund
free and clear of any encumbrances, except as indicated in the schedule.
k. Shareholders' Meetings; Registration Statement. The Acquired Fund will
call and hold a shareholders' meeting at which its shareholders will
consider and act upon the transactions contemplated by this Agreement. The
Acquired Fund will cooperate with the Acquiring Fund and will furnish
information relating to the Selling Trust and the Acquired Fund required
in the Registration Statement. At the time that the Registration Statement
becomes effective, at the time of the shareholders' meeting, and at the
Closing, the Registration Statement, as it relates to the Selling Trust or
the Acquired Fund, will not contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading. However, the representations and warranties in this
subsection apply only to statements in or omissions from the Registration
Statement made in reliance upon information furnished by the Selling Trust
or the Acquired Fund for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING TRUST. The obligations of the Buying
Trust with respect to the Reorganization are subject to the satisfaction of
the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of the
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Selling Trust and the
Acquired Fund will have complied with this Agreement, and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling Trust will
provide a certificate to the Acquiring Fund confirming that, as of the
Closing, the representations and warranties set forth in Section 6 are
true and correct and that there have been no material adverse changes in
the financial condition, results of operations, business, properties, or
assets of the Acquired Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Selling Trust, and delivered to the
Acquiring Fund on or prior to the last business day before the Closing. A
decline in the value of the securities owned by the Acquired Fund will not
constitute a "material adverse change" for purposes of the foregoing
sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective, and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
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d. Opinion of Counsel. The Buying Trust will have received an opinion of
counsel for the Selling Trust, dated as of the Closing, to the effect that
(i) the Selling Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquired Fund
is a series of the Selling Trust; (iii) this Agreement and the
Reorganization have been duly authorized and approved by all requisite
action of the Selling Trust and the Acquired Fund, and this Agreement has
been duly executed by, and is a valid and binding obligation of, the
Selling Trust.
e. Declaration of Dividend. The Acquired Fund, prior to the Closing, will
have declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the shareholders
of the Acquired Fund (i) all of the excess of (x) the Acquired Fund's
investment income excludable from gross income under Section 103 of the
Code over (y) the Acquired Fund's deductions disallowed under Sections 265
and 171 of the Code, (ii) all of the Acquired Fund's investment company
taxable income as defined in Section 852 of the Code (in each case
computed without regard to any deduction for dividends paid) and (iii) all
of the Acquired Fund's net capital gain realized (after reduction for any
capital loss carryover), in each case for the current taxable year (which
will end on the Closing date) and any preceding taxable years for which
such a dividend is eligible to be made under Section 855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING TRUST. The obligations of the
Selling Trust with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of all
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Acquiring Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the Closing. An officer of the Buying Trust will provide a certificate to
the Acquired Fund confirming that, as of the Closing, the representations
and warranties set forth in Section 5 are true and correct and that there
have been no material adverse changes in the financial condition, results
of operations, business, properties, or assets of the Acquiring Fund since
the date of its last financial statement, except as otherwise indicated in
any financial statements, certified by an officer of the Buying Trust, and
delivered to the Acquired Fund on or prior to the last business day before
the Closing. A decline in the value of the securities owned by the
Acquiring Fund will not constitute a "material adverse change" for
purposes of the foregoing sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Trust will have received the opinion of
counsel for the Buying Trust, dated as of the Closing, to the effect that
(i) the Buying Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquiring Fund
is a series of the Buying Trust; (iii) this Agreement and the
Reorganization have been authorized and approved by all requisite action
of the Buying Trust and the Acquiring Fund, and this Agreement has been
duly executed by, and is a valid and binding obligation of, the Buying
Trust; and (iv) the shares to be issued in the Reorganization are duly
authorized and upon issuance in accordance with this Agreement will be
validly issued, fully paid, and non-assessable shares of the Acquiring
Fund.
9. [RESERVED].
10.AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the Board of
Trustees. The Agreement may be amended at any time before or after
approval by the shareholders of the Acquired Fund, but after shareholder
approval, no amendment shall be made that substantially changes the terms
of Sections 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and
(ii) compliance with any of the covenants or conditions made for its
benefit. However, neither party may waive the requirement to obtain
shareholder approval.
c. The Selling Trust may terminate this Agreement at any time prior to the
Closing by notice to the Buying Trust if a material condition to its
performance or a material covenant of the Buying Trust on behalf of the
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The Allianz Variable Insurance Products Trust - Proxy
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Acquiring Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Buying
Trust on behalf of the Acquiring Fund and is not cured.
d. The Buying Trust may terminate this Agreement at any time prior to the
Closing by notice to the Selling Trust if a material condition to its
performance or a material covenant of the Selling Trust on behalf of the
Acquired Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Selling
Trust on behalf of the Acquired Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Acquired Fund, without any liability on the part of either party or its
respective trustees, officers, or shareholders, on written notice to the
other party, and shall be terminated without liability as of the close of
business on December 31, 2009, or a later date agreed upon by the parties,
if the Closing has not taken place on or prior to that date.
f. The representations, warranties, and covenants contained in this
Agreement, or in any document delivered in connection with this Agreement,
will survive the Reorganization.
11.EXPENSES. All fees paid to governmental authorities for the registration or
qualification of the Acquiring Fund Shares and all transfer agency costs
related to the shares of the Acquiring Fund Shares shall be allocated to the
Acquiring Fund. All fees and expenses related to printing and mailing
communications to shareholders and beneficial owners of shares of the
Acquired Fund shall be allocated to the Acquired Fund. All of the other
expenses of the transactions required for the Reorganization, including
without limitation, accounting, legal, and custodial expenses, shall be
allocated equally between the Acquired Fund and the Acquiring Fund. The
expenses specified in this Section shall be borne by the Fund to which they
are allocated.
12. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state of
Minnesota.
13. INDEMNIFICATION. Each party will indemnify and hold the other and its
officers and trustees (each an "Indemnitee") harmless from and against any
liability or other cost and expense, in connection with the defense or
disposition of any action, suit, or other proceeding, before any court or
administrative or investigative body in which the Indemnitee may be involved
as a party, with respect to actions taken under this Agreement. However, no
Indemnitee will be indemnified against any liability or expense arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the Indemnitee's position.
In addition, Allianz Investment Management LLC hereby agrees to indemnify and
hold harmless each shareholder and each beneficial owner of Acquired Fund
shares, each shareholder of record and each beneficial owner of Acquiring
Fund shares, the Acquired Fund, and the Acquiring Fund, from and against any
taxes, penalties and interest imposed upon them as a result of (a) the
treatment of the Reorganization as not qualifying as a "reorganization" under
section 368(a)(1) of the Code or (b) any final determination by a court of
competent jurisdiction or administrative determination that the
Reorganization, although treated by the parties for Federal income tax
purposes as not qualifying as a "reorganization" under section 368(a)(1) of
the Code, in fact was such a "reorganization."
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL PIMCO Fundamental IndexPLUS Total Return Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL S&P 500 Index Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
The undersigned is a party to this Agreement for purposes of Section 13 only.
ALLIANZ INVESTMENT MANAGEMENT LLC
By /s/ Brian Muench
Brian Muench
Vice President
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
EXHIBIT C -AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of June 10, 2009, (the
"Agreement") is by and among the Allianz Variable Insurance Products Trust (the
"VIP Trust" or the "Selling Trust"), a Delaware statutory trust, on behalf of
its series, the AZL TargetPLUS Equity Fund (the "Acquired Fund"), and the same
statutory trust (in this role, the "Buying Trust") on behalf of its series, the
AZL S&P 500 Index Fund (the "Acquiring Fund").
The following table shows the name of the Acquired Fund and the Acquiring Fund
that will be parties to the reorganization.
---------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
---------------------------------------------------
|AZL TargetPLUS Equity Fund|AZL S&P 500 Index Fund|
---------------------------------------------------
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Acquired Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the transactions
it contemplates. The reorganization between the Acquiring Fund and the
Acquired Fund is referred to hereinafter as the "Reorganization." The
Acquiring Fund agrees to furnish data and information, as reasonably
requested, for the proxy statement to be furnished to shareholders of the
Acquired Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization is intended to qualify as a
reorganization within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"). At the Closing (as defined
below), the Selling Trust will convey all of the assets of the Acquired
Fund to the Acquiring Fund. The Acquiring Fund will assume all liabilities
of the Acquired Fund. At the Closing, the Buying Trust will deliver shares
of the Acquiring Fund, including fractional shares, to the Selling Trust.
The number of shares will be determined by dividing the aggregate net
asset value of the shares of the Acquired Fund, computed as described in
Section 3(a), by the net asset value of one share of the Acquiring Fund,
computed as described in Section 3(b). The Acquired Fund will not pay a
sales charge on the receipt of Acquiring Fund shares in exchange for the
assets of the Acquired Fund. In addition, the separate account
shareholders of the Acquired Fund will not pay a sales charge on
distribution to them of shares of the Acquiring Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the "Closing")
will occur on the first day on which the New York Stock Exchange (the
"NYSE") is open for business following approval of contract owners of the
Acquired Fund and receipt of all necessary regulatory approvals, or such
later date as the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business
on the date of the Closing or at such other time as an authorized officer
of the VIP Trust shall determine (the "Effective Time").
3. VALUATION.
a. The aggregate net asset value of the shares of the Acquired Fund will be
computed as of the close of regular trading on the NYSE on the day of
Closing (the "Valuation Date") using the valuation procedures in the
Acquired Fund's prospectus.
b. The net asset value per share of shares of the Acquiring Fund will be
determined as of the close of regular trading on the NYSE on the Valuation
Date, using the valuation procedures in the Acquiring Fund's prospectus.
c. At the Closing, the Acquired Fund will provide the Acquiring Fund with a
copy of the computation showing the valuation of the aggregate net asset
value of the shares of the Acquired Fund on the Valuation Date. The
Acquiring Fund will provide the Acquired Fund with a copy of the
computation showing the determination of the net asset value per share of
shares of the Acquiring Fund on the Valuation Date.
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4. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUND.
a. As soon as practicable after the Valuation Date, the Selling Trust will
liquidate the Acquired Fund and distribute shares of the Acquiring Fund to
the Acquired Fund's shareholders of record. The Acquiring Fund will
establish shareholder accounts in the names of each Acquired Fund
shareholder, representing the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each shareholder. All
issued and outstanding shares of the Acquired Fund will simultaneously be
canceled on the books of the Selling Trust. The Acquiring Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the Selling Trust.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Trust relating to the Acquired Fund will be closed and no further
transfer of shares will be made.
c. Promptly after the distribution, the Acquiring Fund or its transfer agent
will notify each shareholder of the Acquired Fund of the number of shares
distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Acquired Fund, and
in no event later than twelve months from the date of the Closing, the
Acquired Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE BUYING TRUST. The Buying
Trust represents and warrants to the Acquired Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Buying
Trust is a statutory trust duly organized, validly existing, and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, management
investment company. The Acquiring Fund is a series of the Buying Trust.
b. Capitalization. The Buying Trust has authorized capital of an unlimited
number of shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquiring Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquiring
Fund as of the end of the last fiscal year and the subsequent unaudited
semi-annual financial statements, if any (the "Acquiring Fund Financial
Statements"), fairly present the financial position of the Acquiring Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Shares to Be Issued upon Reorganization. The shares of beneficial interest
to be issued in connection with the Reorganization will be duly authorized
and, at the time of the Closing, will be validly issued, fully paid, and
non-assessable.
e. Authority Relative to the Agreement. The Buying Trust has the power to
enter into and carry out the obligations described in this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Trustees of the Buying Trust, and no other
proceedings by the Buying Trust or the Acquiring Fund are necessary under
the Buying Trust's Agreement and Declaration of Trust or By-Laws (the
"Governing Documents").
f. No Violation. The Buying Trust is not in violation of its Governing
Documents or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion of
the transactions contemplated by it will not conflict with, or constitute
a breach of, any material contract or other instrument to which the
Acquiring Fund is subject. The transactions will not result in any
violation of the provisions of the Governing Documents or any law,
administrative regulation, or administrative or court decree applicable to
the Acquiring Fund.
g. Liabilities. There are no liabilities of the Acquiring Fund other than:
(1)liabilities disclosed in the Acquiring Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquired Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquiring Fund.
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h. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquiring Fund, threatened, that would materially
and adversely affect the Acquiring Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquiring Fund knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation, and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to the
Selling Trust, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
j. Taxes. The Acquiring Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquiring Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and such returns
and reports have been true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquired Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquired Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
k. Registration Statement. The Acquiring Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933 (the "1933 Act")
relating to the shares of beneficial interest to be issued in the
Reorganization. At the time that the Registration Statement becomes
effective, at the time of the Acquired Fund's shareholders' meetings, and
at the Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading. However, none of the
representations and warranties in this subsection applies to statements
in, or omissions from, the Registration Statement made in reliance on
information furnished by the Acquired Fund for use in the Registration
Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING TRUST.
The Selling Trust represents and warrants to the Acquiring Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Selling
Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
1940 Act as an open-end, management investment company. The Acquired Fund
is a series of the Selling Trust.
b. Capitalization. The Selling Trust has authorized capital of an unlimited
number shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquired Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquired
Fund as of the end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Acquired Fund Financial
Statements"), fairly present the financial position of the Acquired Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Authority Relative to the Agreement. The Selling Trust has the power to
enter into and to carry out its obligations under this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Directors of the Selling Trust, the
shareholders meetings referred to in Section 6(k) will be called and held,
and no other proceedings by the Selling Trust or the Acquired Fund are
necessary under the Selling Trust's Governing Documents.
e. No Violation. The Selling Trust is not in violation of its Agreement and
Declaration of Trust or By-Laws (the "Governing Documents") or in default
in the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of, any
material contract or other instrument to which the Acquired Fund is
subject. The transactions will not result in any violation of the
provisions of the Governing Documents or any law, administrative
regulation, or administrative or court decree applicable to the Acquired
Fund.
f. Liabilities. There are no liabilities of the Acquired Fund other than:
(1)liabilities disclosed in the Acquired Fund Financial Statements,
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(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquiring Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquired Fund.
g. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquired Fund, threatened, that would materially
and adversely affect the Acquired Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquired Fund knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and the Acquired Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
h. Contracts. Except for contracts and agreements previously disclosed to the
Buying Trust, the Acquired Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
i. Taxes. The Acquired Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquired Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and all such
returns and reports are true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquiring Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquiring Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
j. Fund Securities. All securities listed in the schedules of investments of
the Acquired Fund as of the Closing will be owned by the Acquired Fund
free and clear of any encumbrances, except as indicated in the schedule.
k. Shareholders' Meetings; Registration Statement. The Acquired Fund will
call and hold a shareholders' meeting at which its shareholders will
consider and act upon the transactions contemplated by this Agreement. The
Acquired Fund will cooperate with the Acquiring Fund and will furnish
information relating to the Selling Trust and the Acquired Fund required
in the Registration Statement. At the time that the Registration Statement
becomes effective, at the time of the shareholders' meeting, and at the
Closing, the Registration Statement, as it relates to the Selling Trust or
the Acquired Fund, will not contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading. However, the representations and warranties in this
subsection apply only to statements in or omissions from the Registration
Statement made in reliance upon information furnished by the Selling Trust
or the Acquired Fund for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING TRUST. The obligations of the Buying
Trust with respect to the Reorganization are subject to the satisfaction of
the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of the
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Selling Trust and the
Acquired Fund will have complied with this Agreement, and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling Trust will
provide a certificate to the Acquiring Fund confirming that, as of the
Closing, the representations and warranties set forth in Section 6 are
true and correct and that there have been no material adverse changes in
the financial condition, results of operations, business, properties, or
assets of the Acquired Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Selling Trust, and delivered to the
Acquiring Fund on or prior to the last business day before the Closing. A
decline in the value of the securities owned by the Acquired Fund will not
constitute a "material adverse change" for purposes of the foregoing
sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective, and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
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d. Opinion of Counsel. The Buying Trust will have received an opinion of
counsel for the Selling Trust, dated as of the Closing, to the effect that
(i) the Selling Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquired Fund
is a series of the Selling Trust; (iii) this Agreement and the
Reorganization have been duly authorized and approved by all requisite
action of the Selling Trust and the Acquired Fund, and this Agreement has
been duly executed by, and is a valid and binding obligation of, the
Selling Trust.
e. Declaration of Dividend. The Acquired Fund, prior to the Closing, will
have declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the shareholders
of the Acquired Fund (i) all of the excess of (x) the Acquired Fund's
investment income excludable from gross income under Section 103 of the
Code over (y) the Acquired Fund's deductions disallowed under Sections 265
and 171 of the Code, (ii) all of the Acquired Fund's investment company
taxable income as defined in Section 852 of the Code (in each case
computed without regard to any deduction for dividends paid) and (iii) all
of the Acquired Fund's net capital gain realized (after reduction for any
capital loss carryover), in each case for the current taxable year (which
will end on the Closing date) and any preceding taxable years for which
such a dividend is eligible to be made under Section 855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING TRUST. The obligations of the
Selling Trust with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of all
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Acquiring Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the Closing. An officer of the Buying Trust will provide a certificate to
the Acquired Fund confirming that, as of the Closing, the representations
and warranties set forth in Section 5 are true and correct and that there
have been no material adverse changes in the financial condition, results
of operations, business, properties, or assets of the Acquiring Fund since
the date of its last financial statement, except as otherwise indicated in
any financial statements, certified by an officer of the Buying Trust, and
delivered to the Acquired Fund on or prior to the last business day before
the Closing. A decline in the value of the securities owned by the
Acquiring Fund will not constitute a "material adverse change" for
purposes of the foregoing sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Trust will have received the opinion of
counsel for the Buying Trust, dated as of the Closing, to the effect that
(i) the Buying Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquiring Fund
is a series of the Buying Trust; (iii) this Agreement and the
Reorganization have been authorized and approved by all requisite action
of the Buying Trust and the Acquiring Fund, and this Agreement has been
duly executed by, and is a valid and binding obligation of, the Buying
Trust; and (iv) the shares to be issued in the Reorganization are duly
authorized and upon issuance in accordance with this Agreement will be
validly issued, fully paid, and non-assessable shares of the Acquiring
Fund.
9. FURTHER CONDITIONS TO THE OBLIGATIONS OF THE BUYING TRUST AND THE SELLING
TRUST. As a further condition to the obligations of the VIP Trust on behalf
of both the Acquired Fund and the Acquiring Fund hereunder, the VIP Trust, on
behalf of both the Acquired Fund and the Acquiring Fund, shall have received
the opinion of Dorsey & Whitney LLP addressed to the VIP Trust on behalf of
both the Acquired Fund and the Acquiring Fund, dated as of the date of the
Closing, and based in part on representations to be furnished by the VIP
Trust on behalf of the Acquired Fund and the Acquiring Fund, substantially to
the effect that:
a. The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
b. Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of the Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
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The Allianz Variable Insurance Products Trust - Proxy
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receipt of any net investment income or net capital gains of the Acquired
Fund which are distributed by the Acquired Fund prior to the Closing.
c. The tax basis of the Acquiring Fund Shares received by each Acquired Fund
Shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund Shares exchanged therefor.
d. The holding period of the Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund Shareholder held the Acquired Fund Shares
exchanged therefor, provided that the Acquired Fund Shares were held as a
capital asset at the Effective Time.
e. The Acquired Fund will recognize no income, gain or loss by reason of the
Reorganization.
f. The Acquiring Fund will recognize no income, gain or loss by reason of the
Reorganization.
g. The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
h. The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
i. The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
10.AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the Board of
Trustees. The Agreement may be amended at any time before or after
approval by the shareholders of the Acquired Fund, but after shareholder
approval, no amendment shall be made that substantially changes the terms
of Sections 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and
(ii) compliance with any of the covenants or conditions made for its
benefit. However, neither party may waive the requirement to obtain
shareholder approval or the requirement to obtain a tax opinion.
c. The Selling Trust may terminate this Agreement at any time prior to the
Closing by notice to the Buying Trust if a material condition to its
performance or a material covenant of the Buying Trust on behalf of the
Acquiring Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Buying
Trust on behalf of the Acquiring Fund and is not cured.
d. The Buying Trust may terminate this Agreement at any time prior to the
Closing by notice to the Selling Trust if a material condition to its
performance or a material covenant of the Selling Trust on behalf of the
Acquired Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Selling
Trust on behalf of the Acquired Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Acquired Fund, without any liability on the part of either party or its
respective trustees, officers, or shareholders, on written notice to the
other party, and shall be terminated without liability as of the close of
business on December 31, 2009, or a later date agreed upon by the parties,
if the Closing has not taken place on or prior to that date.
f. The representations, warranties, and covenants contained in this
Agreement, or in any document delivered in connection with this Agreement,
will survive the Reorganization.
11.EXPENSES. All fees paid to governmental authorities for the registration or
qualification of the Acquiring Fund Shares and all transfer agency costs
related to the shares of the Acquiring Fund Shares shall be allocated to the
Acquiring Fund. All fees and expenses related to printing and mailing
communications to shareholders and beneficial owners of shares of the
Acquired Fund shall be allocated to the Acquired Fund. All of the other
expenses of the transactions required for the Reorganization, including
without limitation, accounting, legal, and custodial expenses, shall be
allocated equally between the Acquired Fund and the Acquiring Fund. The
expenses specified in this Section shall be borne by the Fund to which they
are allocated.
12. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state of
Minnesota.
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13. INDEMNIFICATION. Each party will indemnify and hold the other and its
officers and trustees (each an "Indemnitee") harmless from and against any
liability or other cost and expense, in connection with the defense or
disposition of any action, suit, or other proceeding, before any court or
administrative or investigative body in which the Indemnitee may be involved
as a party, with respect to actions taken under this Agreement. However, no
Indemnitee will be indemnified against any liability or expense arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the Indemnitee's position.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL TargetPLUS Equity Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL S&P 500 Index Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
AZL[R] JPMorgan Large Cap Equity Fund
5701 Golden Hills Drive
Minneapolis, MN 55416-1297
Dear Allianz Life and Allianz Life of New York Variable Annuity or Variable Life
Insurance Contract Owner:
The Board of Trustees of the AZL JPMorgan Large Cap Equity Fund (the "Acquired
Fund"), which is a series of the Allianz Variable Insurance Products Trust (the
"VIP Trust"), is pleased to submit a proposal to reorganize the Acquired Fund
into the AZL JPMorgan U.S. Equity Fund (the "Acquiring Fund"), which is another
series of the VIP Trust.
As the owner of a variable annuity or variable life insurance contract issued by
Allianz Life Insurance Company of North America or Allianz Life Insurance
Company of New York, you beneficially own shares of the Acquired Fund.
Accordingly, we ask that you indicate whether you approve or disapprove of the
proposed reorganization by submitting instructions on how to vote your
beneficial shares by phone, internet, or mail.
The proposed reorganization is being undertaken for several reasons, including
providing further economies of scale.
THE BOARD OF TRUSTEES OF THE VIP TRUST BELIEVES THAT THE TRANSACTION IS IN THE
BEST INTERESTS OF THE ACQUIRED FUND AND ITS SHAREHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL.
The Board considered various factors in reviewing the proposed reorganization
on behalf of the Acquired Fund's shareholders, including, but not limited to,
the following:
* The continuity of investments between the Acquired Fund and the Acquiring
Fund.
* The expectation that the reorganization will achieve greater economies of
scale.
* Historical performance of the Funds.
* The expectation that the reorganization will be tax-free.
If the proposal is approved, the Acquiring Fund will acquire all of the assets
of the Acquired Fund in exchange for newly issued shares of the Acquiring Fund.
These Acquiring Fund shares in turn will be distributed proportionately to the
Acquired Fund's shareholders in complete liquidation of the Acquired Fund. In
order to accomplish the proposed reorganization, the Board of Trustees of the
Acquired Fund submits for your approval an Agreement and Plan of Reorganization.
Whether or not you plan to attend the meeting, please review the enclosed voting
instruction form. You may submit your instructions on voting the shares that you
beneficially own by phone, internet, or mail. Following this letter is a Q&A
summarizing the reorganization and information on how to vote your shares.
Please read the entire proxy statement/prospectus carefully before you vote.
Thank you for your prompt attention to this important matter.
Sincerely,
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
PROXY STATEMENT/PROSPECTUS Q&A
HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR THE AZL JPMORGAN
LARGE CAP EQUITY FUND. WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED
PROXY STATEMENT/PROSPECTUS.
Q: WHY IS THE REORGANIZATION BEING PROPOSED?
The reorganization is being proposed in an effort to reduce operating
expenses through greater economies of scale for funds available to owners of
variable annuity and variable life insurance contracts issued by Allianz Life
Insurance Company of North America or Allianz Life Insurance Company of New
York.
Your Board of Trustees has determined that the reorganization is in the best
interests of the Acquired Fund's shareholders and recommends that you vote
FOR the reorganization.
Q: WILL THE EXPENSES OF THE FUND IN WHICH I PARTICIPATE INCREASE AS A RESULT OF
THE REORGANIZATION?
Taking into account the investment manager's voluntary reduction of its
management fee to 0.75%, as well as economies of scale expected to be
realized by the combined fund, the total expense ratio for the Acquiring Fund
following the reorganization is expected to be roughly the same as, or
possibly even slightly less than, the total expense ratio of the Acquired
Fund. Because the manager reserves the right to end its voluntary fee
reduction at any time, and because expected economies of scale might not
materialize, there is no guarantee that actual total operating expenses of
the Acquiring Fund will decline following the reorganization.
Q: WHO IS PAYING THE COSTS OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
Contract owners who were beneficial owners of shares of the Acquired Fund on
the record date will bear these costs.
Q: WILL I INCUR TAXES AS A RESULT OF THE REORGANIZATION?
No. The reorganization is not expected to be a taxable event for contract
owners. Please see the Tax Consequences discussion in the enclosed proxy
statement/prospectus for additional information.
Q: IF APPROVED, WHEN WILL THE REORGANIZATION HAPPEN?
If shareholders approve the reorganization, it will take place shortly after
the shareholder meeting.
Q: IS THERE ANYTHING I NEED TO DO TO CONVERT MY SHARES?
No. Upon shareholder approval of the reorganization, the Acquired Fund shares
that serve as a funding vehicle for benefits under your variable annuity or
variable life contract automatically will be exchanged for shares of the
Acquiring Fund. The total value of the Acquiring Fund shares that a
shareholder receives in the reorganization will be the same as the total
value of the Acquired Fund shares held by the shareholder immediately before
the reorganization.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE?
After careful consideration, the Board recommends that you vote FOR the
reorganization.
Q: HOW AND WHEN DO I VOTE?
You can vote in one of four ways:
- By mail with the enclosed voting instruction form
- By telephone
- By web site
- In person at the meeting
Please refer to the enclosed voting instruction form for the telephone number
and internet address. Please vote as soon as possible by following the
instructions on the voting instruction form.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
If you have questions about any of the proposals described in the proxy
statement or about voting procedures, please call toll free at 1-800-950-5872
ext. 37952.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
5701 GOLDEN HILLS DRIVE
MINNEAPOLIS, MINNESOTA 55416-1297
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 2009
AZL[{R}] JPMORGAN LARGE CAP EQUITY FUND
A special meeting of the shareholders of the AZL JPMorgan Large Cap Equity Fund
(the "Acquired Fund") will be held at 10:00 a.m. on October 21, 2009, at the
offices of Allianz Life Insurance Company of North America, 5701 Golden Hills
Drive, Golden Valley, Minnesota. At the meeting, shareholders will consider the
following proposals:
- To approve an Agreement and Plan of Reorganization (the "Plan") between the
AZL JPMorgan Large Cap Equity Fund, which is a series of the Allianz Variable
Insurance Products Trust (the "VIP Trust"), and the AZL JPMorgan U.S. Equity
Fund (the "Acquiring Fund"), which is another series of the VIP Trust. Under
the Plan, the Acquiring Fund would acquire all of the assets and assume all of
the liabilities of the Acquired Fund in exchange for shares of the Acquiring
Fund, which would be distributed proportionately to the shareholders of the
Acquired Fund in complete liquidation of the Acquired Fund, and the assumption
of the Acquired Fund's liabilities; and
- Such other business as may properly come before the meeting, or any
adjournment of the meeting.
The Acquired Fund issues and sells its shares to certain separate accounts of
Allianz Life Insurance Company of North America ("Allianz Life") and Allianz
Life Insurance Company of New York ("Allianz Life of NY"). The separate accounts
hold shares of mutual funds, including the Acquired Fund, which serve as a
funding vehicle for benefits under variable annuity and variable life insurance
contracts issued by Allianz Life and Allianz Life of NY. As the owners of the
assets held in the separate accounts, Allianz Life and Allianz Life of NY are
the sole shareholders of the Acquired Fund and are entitled to vote all of the
shares of the Acquired Fund. However, Allianz Life and Allianz Life of NY will
vote outstanding shares of the Acquired Fund in accordance with instructions
given by the owners of variable annuity and variable life insurance contracts
for which the Fund serves as a funding vehicle. This Notice is being delivered
to owners of variable annuity and variable life insurance contracts who, by
virtue of their ownership of the contracts, beneficially owned shares of the
Acquired Fund on the record date, so that they may instruct Allianz Life and
Allianz Life of NY how to vote the shares of the Acquired Fund underlying their
contracts.
Shareholders of record at the close of business on July 20, 2009, are entitled
to vote at the meeting.
By order of the Board of Directors
Michael J. Radmer, Secretary
August 7, 2009
YOU CAN VOTE QUICKLY AND EASILY.
PLEASE FOLLOW THE INSTRUCTIONS ON THE ENCLOSED VOTING INSTRUCTION FORM.
PROXY STATEMENT/PROSPECTUS - AUGUST 7, 2009
ACQUIRED FUND ACQUIRING FUND
AZL[{R}] JPMorgan Large Cap Equity Fund AZL[{R}] JPMorgan U.S. Equity Fund
("JPMorgan Large Cap Equity Fund") ("JPMorgan U.S. Equity Fund")
This proxy statement/prospectus describes a proposed Agreement and Plan of
Reorganization (the "Plan") pursuant to which the outstanding shares of the
JPMorgan Large Cap Equity Fund, which currently serves as a funding vehicle for
your variable annuity or variable life insurance contract, (the "Acquired Fund")
would be exchanged for shares of the JPMorgan U.S. Equity Fund (the "Acquiring
Fund"). Both the Acquiring Fund and the Acquired Fund (each a "Fund" and
together the "Funds") are series of the Allianz Variable Insurance Products
Trust (the "VIP Trust"). The address of the Funds is 5701 Golden Hills Drive,
Minneapolis, MN 55416-1297. The phone number of the Funds is 877-833-7113.
THE BOARD OF TRUSTEES OF THE VIP TRUST UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLAN.
THESE SECURITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK
OR AN AFFILIATE OF ANY BANK, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), OR ANY OTHER AGENCY OF THE UNITED STATES, OR ANY
BANK OR AN AFFILIATE OF ANY BANK; AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF VALUE.
As with all mutual funds, the Securities and Exchange Commission (the "SEC") has
not approved or disapproved these securities or passed on the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Each of the Funds is subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and
files reports, proxy materials, and other information with the SEC (Investment
Company Act file no. 811-09491). These reports, proxy materials, and other
information can be inspected and copied at the Public Reference Room maintained
by the SEC. Copies may be obtained, after paying a duplicating fee, by
electronic request e-mailed to publicinfo@sec.gov, or by writing to the Public
Reference Section of the SEC, Washington, D.C. 20549-0102. In addition, copies
of these documents may be viewed on-line or downloaded from the SEC's Web site
at http://www.sec.gov.
You should retain this proxy statement/prospectus for future reference. It sets
forth concisely the information about the Acquiring Fund that a prospective
investor should know before investing. Additional information is set forth in
the Statement of Additional Information, dated the same date as this proxy
statement/prospectus, relating to this proxy statement/prospectus. A current
prospectus for the Acquiring Fund, which gives a detailed description of the
Acquiring Fund's policies, strategies, and restrictions, accompanies this proxy
statement/prospectus.
This proxy statement/prospectus was first mailed to Contract Owners on or about
August 7, 2009.
WHERE TO GET MORE INFORMATION
FUND REPORTS: THE ACQUIRING FUND: THE ACQUIRED FUND:
Prospectus dated April 27, 2009. Accompanying, and incorporated by reference Incorporated by reference into this
into, this proxy statement/prospectus. proxy statement/prospectus. For a
Annual report for the period ended December 31, For a complete copy at no charge, call toll- copy at no charge, call toll free
2008; and semi-annual report for the period free 877-833-7113 or write to the address 877-833-7113 or write to the address
ended June 30, 2008. given below this table. given below this table.
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
THIS PROXY STATEMENT/PROSPECTUS:
Statement of Additional Information dated Incorporated by reference into this proxy statement/prospectus. For a copy at no charge,
the same date as this proxy call toll-free 1-800-624-0197 or write to Allianz VIP Trust, Advisory Management, A 3-
statement/prospectus. This document 825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
contains information about both the
Acquired Fund and the Acquiring Fund.
To ask questions about this proxy Call toll free 1-800-950-5872 ext. 37952 or write to: Allianz VIP Trust, Advisory
statement/prospectus. Management, A3-825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
ADDRESS: Allianz Variable Insurance Products Trust, 5701 Golden Hills Drive,
Minneapolis, MN 55416.
ABOUT THE ACQUIRED AND ACQUIRING FUNDS
The Acquired Fund issues and sells its shares to separate accounts of Allianz
Life Insurance Company of North America ("Allianz Life") and Allianz Life
Insurance Company of New York ("Allianz Life of NY"). These separate accounts
hold shares of mutual funds, including the Acquired Fund, which serve as funding
vehicles for benefits under variable annuity and variable life insurance
contracts issued by Allianz Life and Allianz Life of NY (the "Contracts"). Each
separate account has subaccounts that invest in the Acquired Fund and certain
other mutual funds. Owners of the Contracts ("Contract Owners") allocate the
value of their Contracts among these subaccounts. As the owners of the assets
held in the separate accounts, Allianz Life and Allianz Life of NY are the sole
shareholders of the Acquired Fund and are entitled to vote all of the shares of
the Acquired Fund. However, Allianz Life and Allianz Life of NY will vote
outstanding shares of the Acquired Fund in accordance with instructions given by
the Contract Owners who are eligible to vote at the meeting.
Both the Acquired Fund and the Acquiring Fund are open-end management investment
companies. If the Plan is approved, the shares of the Acquiring Fund will be
distributed proportionately by the Acquired Fund to the holders of its shares in
complete liquidation of the Acquired Fund. As a result of the Plan, each
Acquired Fund shareholder would become the owner of Acquiring Fund shares having
a total net asset value equal to the total net asset value of that shareholder's
holdings in the Acquired Fund.
The following information summarizes the proposed reorganization of the Acquired
Fund into the Acquiring Fund (the "Reorganization").
HOW THE REORGANIZATION WILL WORK
* The Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Fund's liabilities.
* The Acquiring Fund will issue shares of beneficial interest to the Acquired
Fund in an amount equal to the value of the assets that it receives from the
Acquired Fund, less the liabilities it assumes. These shares will be
distributed to the Acquired Fund's shareholders (the separate accounts) in
proportion to their holdings in the Acquired Fund. The value of your interest
in the subaccount investing in the Acquiring Fund received in connection with
the Reorganization will equal the value of your interest in the subaccount
that was invested in the Acquired Fund immediately before the Reorganization.
You will not pay any sales charge in connection with this distribution of
shares. If you already have an Acquiring Fund account, shares distributed in
the Reorganization will be added to that account. As a result, when average
cost is calculated for income tax purposes, the cost of the shares in the two
accounts you owned will be combined.
FUND INVESTMENT OBJECTIVES
The following table presents the investment objective, which is the same for
both Funds.
ACQUIRED FUND INVESTMENT OBJECTIVE ACQUIRING INVESTMENT OBJECTIVE
FUND
JPMORGAN LARGE High total return from a portfolio of selected JPMORGAN High total return from a portfolio of selected
CAP EQUITY FUND equity securities U.S. EQUITY equity securities
FUND
2
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
TABLE OF CONTENTS
SECTION A -- Proposal.......................................................4
PROPOSAL: Approve or Reject the Agreement and Plan of Reorganization......4
SUMMARY.................................................................4
How the Reorganization Will Work......................................4
Comparison of the Acquired Fund and the Acquiring Fund................5
Comparison of Investment Objectives...................................5
Comparison of Investment Strategies...................................5
Comparison of investment Policies.....................................6
Risk Factors..........................................................6
Performance...........................................................9
Tax Consequences......................................................11
FEES AND EXPENSES.........................................................12
THE REORGANIZATION........................................................13
Terms of the Reorganization.............................................13
Conditions to Closing the Reorganization................................13
Termination of the Plan.................................................14
Tax Status of the Reorganization........................................14
Reasons for the Proposed Reorganization and Board Deliberations.........14
Boards' Determinations..................................................16
Recommendation and Vote Required........................................16
SECTION B - Proxy Voting and Shareholder Meeting Information................17
SECTION C - Capitalization, Ownership of Fund Shares and Other
Fund Information................................................18
EXHIBIT A - Agreement and Plan of Reorganization...........................A-1
The prospectus for the Acquiring Fund accompanies this proxy
statement/prospectus.
3
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
SECTION A -- PROPOSAL
PROPOSAL: APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
This proxy statement/prospectus is being used by the Acquired Fund to solicit
voting instructions for a proposal to approve the Plan providing for the
Reorganization of the Acquired Fund into the Acquiring Fund. A form of the Plan
is included as Exhibit A.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire proxy
statement/prospectus, exhibits and accompanying materials because they contain
details that are not in this summary.
HOW THE REORGANIZATION WILL WORK
The following table shows the names of the Acquired Fund and the Acquiring Fund
into which it will be merged.
----------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
----------------------------------------------------------
|JPMorgan Large Cap Equity Fund|JPMorgan U.S. Equity Fund|
----------------------------------------------------------
* The Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Fund's liabilities.
* The Acquiring Fund will issue shares of beneficial interest in an amount equal
to the value of the assets that it receives from the Acquired Fund, less the
liabilities it assumes. These shares will be distributed to the Acquired
Fund's shareholders (the separate accounts) in proportion to their holdings in
the Acquired Fund. Only Class 2 shares of the Acquiring Fund will be issued in
connection with the Reorganization. The value of your interest in the
subaccount investing in the Acquiring Fund received in connection with the
Reorganization will equal the value of your interest in the subaccount that
was invested in the Acquired Fund immediately before the Reorganization.
* As part of the Reorganization, systematic transactions (such as bank
authorizations and systematic payouts) currently set up for your Acquired Fund
account will be transferred to your new Acquiring Fund account. If you do not
want your systematic transactions to continue, please contact your financial
representative to make changes.
* Neither the Acquired Fund nor the Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Fund will pay any sales
charge in connection with the Reorganization.
* After the Reorganization has been completed, contract values that were
allocated to subaccounts investing in the Acquired Fund will be allocated to
subaccounts investing in the Acquiring Fund. The Acquired Fund will be
terminated.
4
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
COMPARISON OF THE ACQUIRED FUND AND THE ACQUIRING FUND
Both the Acquired Fund and the Acquiring Fund:
* Are outstanding series of an open-end management investment company organized
as a Delaware statutory trust.
* Have Allianz Investment Management LLC (the "Manager") as their investment
adviser.
* Are subadvised by J.P. Morgan Investment Management Inc. (the "Subadviser").
* Have the same investment objective, principal investment strategies and
principal investment risks.
* Have the same policies for buying and selling shares and the same exchange
rights.
* Have the same distribution policies.
* Are available only to Contract Owners who allocate contract value to a
subaccount that invests in the Funds.
COMPARISON OF INVESTMENT OBJECTIVES
The following table presents the investment objective, which is the same for
both Funds.
ACQUIRED FUND INVESTMENT OBJECTIVE ACQUIRING INVESTMENT OBJECTIVE
FUND
JPMORGAN LARGE High total return from a portfolio of selected JPMORGAN High total return from a portfolio of selected
CAP EQUITY FUND equity securities U.S. EQUITY equity securities
FUND
COMPARISON OF INVESTMENT STRATEGIES
Both Funds invest primarily in equity securities of large- and medium-
capitalization U.S. companies. Both Funds are subadvised by J.P. Morgan
Investment Management Inc. and share the same principal investment strategies.
PRINCIPAL INVESTMENT STRATEGIES OF BOTH FUNDS:
Under normal market conditions, the Fund invests at least 80% of its net assets,
plus any borrowings for investment purposes, in equity securities of U.S.
companies. The Fund primarily invests in large- and medium-capitalization U.S.
companies. Market capitalization is the total market value of a company's
shares. Sector by sector, the Fund's weightings are similar to those of the S&P
500 Index. The Fund's Subadviser may moderately underweight or overweight
sectors when it believes doing so will benefit performance.
Within each sector, the Fund focuses on those equity securities that the
Subadviser considers most undervalued and seeks to outperform the S&P 500
through superior stock selection. By emphasizing undervalued equity securities,
the Subadviser seeks to produce returns that exceed those of the S&P 500 Index.
At the same time, by controlling the sector weightings of the S&P 500 Index, the
Subadviser seeks to limit the Fund's volatility to that of the overall market,
as represented by this index.
Equity securities in which the Fund primarily invests include common stocks,
depositary receipts, exchange-traded funds (ETFs), and real estate investment
trusts (REITs). An ETF is a registered investment company that seeks to track
the performance of a particular market index. These indexes include not only
broad market indexes, but also more specific indexes as well, including those
relating to particular sectors, markets, regions, and industries. REITs are
pooled investment vehicles which invest primarily in income-producing real
estate or loans relate to real estate.
Derivatives, which are instruments that have a value based on another
instrument, exchange rate, or index, may be used as substitutes for securities
in which the Fund can invest. The Subadviser may use futures contracts, options,
swaps, and other derivatives as tools in the management of portfolio assets. The
Subadviser may use derivatives to hedge various investments and for risk
management.
In managing the Fund, the Subadviser employs a three-step process that combines
research, valuation, and stock selection.
The Subadviser takes an in-depth look at company prospects over a relatively
long period - often as much as five years - rather than focusing on near-term
expectations. This approach is designed to provide insight into a company's real
growth potential.
5
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
The research findings allow the Subadviser to rank the companies in each sector
group according to their relative value. The greater a company's estimated worth
compared to the current market price of its stock, the more undervalued the
company. The valuation rankings are produced using a variety of models that
quantify the research team's findings.
The Subadviser then buys and sells equity securities for the Fund according to
its own policies, using the research and valuation rankings as a basis. In
general, the Subadviser buys equity securities that are identified as
undervalued and considers selling them when they appear to be overvalued. Along
with attractive valuation, the subadviser often considers a number of other
criteria:
* Catalysts that could trigger a rise in a stock's price;
* High potential reward compared to potential risk; and
* Temporary mispricings cause by apparent market overreactions.
The frequency with which the Fund buys and sells securities will vary from year
to year, depending on market conditions.
For temporary defensive purposes or when cash is temporarily available, the Fund
may invest in investment grade, short-term debt instruments, including
government, corporate, and money market securities. If the Fund invests
substantially in such instruments, it may not be pursuing its principal
investment strategies and may not achieve its investment objective.
COMPARISON OF INVESTMENT POLICIES
If shareholders of the Acquired Fund approve the Reorganization, they will be
subject to the investment policies of the Acquiring Fund. Because the principal
investment strategies of the Acquired Fund and the Acquiring Fund are the same,
the Manager does not believe that the investment policies of the Funds will
result in any material difference in the way the Funds are managed.
RISK FACTORS
Because the principal investment strategies of both Funds are the same, the
principal investment risks of the Funds also are the same. Depending upon its
assessment of changing market conditions, the Subadviser may emphasize
particular asset classes or particular investments at any given time, which may
change the risks associated with the Fund. The fact that a risk is not
identified as a principal risk for a particular Fund does not mean that the Fund
may not be subject to that risk. The Statement of Additional Information for the
Acquiring Fund, which is incorporated by reference in this proxy
statement/prospectus, contains detailed information on the Acquiring Fund's
permitted investments and investment restrictions.
The principal risks of investing in the Acquired Fund and the Acquiring Fund are
the same, as shown in the table below. A discussion of each of the various
principal risks follows the table.
RISK JPMORGAN LARGE CAP EQUITY FUND JPMORGAN U.S. EQUITY FUND
(ACQUIRED FUND) (ACQUIRING FUND)
Issuer Risk X X
Market Risk X X
Selection Risk X X
Capitalization Risk X X
Value Stocks Risk X X
Foreign Risk X X
Derivatives Risk X X
Real Estate Investment Risk X X
ETF and Investment Company Risk X X
Portfolio Turnover X X
* ISSUER RISK: The value of a security may decline for a number of reasons that
directly relate to the issuer, such as management performance, financial
leverage, and reduced demand for the issuer's products or services.
6
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
* MARKET RISK: The market price of securities owned by the Fund may go up or
down, sometimes rapidly and unpredictably. Securities may decline in value
due to factors affecting securities markets generally or particular
industries represented in the securities markets. The value of a security may
decline due to general market conditions that are not specifically related to
a particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates, or adverse investor sentiment. They may also decline due to
factors that affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an
industry. During a general downturn in the securities markets, multiple asset
classes may decline in value simultaneously. The value of the Fund's
portfolio may fluctuate to a greater or lesser degree than fluctuations of
the general stock market. For those Funds that invest in stocks of foreign
companies, the value of the Fund's portfolio will be affected by changes in
foreign stock markets and the special economic and other factors that might
primarily affect stock markets in particular foreign countries and regions.
Equity securities generally have greater price volatility than fixed income
securities.
* SELECTION RISK: The Fund is an actively managed investment portfolio. The
portfolio manager(s) make investment decisions for the Fund's assets. The
investment approach of some Funds emphasizes buying and holding securities,
even through adverse markets, while the investment approach of other Funds
emphasizes frequent trading in order to take advantage of short-term market
movements. However, there can be no guarantee they will produce the desired
results and poor security selection may cause the Fund to underperform its
benchmark index or other funds with similar investment objectives.
* CAPITALIZATION RISK: To the extent the Fund invests significantly in small
and/or mid-capitalization companies, it may have capitalization risk. These
companies may present additional risk because they have less predictable
earnings or no earnings, more volatile share prices and less liquid
securities than large capitalization companies. These securities may
fluctuate in value more than those of larger, more established companies and,
as a group, may suffer more severe price declines during periods of generally
declining stock prices. The shares of smaller companies tend to trade less
frequently than those of larger, more established companies, which can
adversely affect the price of smaller companies' securities and the Fund's
ability to sell them when the portfolio manager deems it appropriate. These
companies may have limited product lines, markets, or financial resources, or
may depend on a limited management group. The value of some of the Fund's
investments will rise and fall based on investor perception rather than
economic factors.
* VALUE STOCKS RISK: The value style of investing emphasizes stocks of
undervalued companies whose characteristics may lead to improved valuations.
These stocks may remain undervalued because value stocks, as a category, may
lose favor with investors compared to other categories of stocks or because
the valuations of these stocks do not improve in response to changing market
or economic conditions.
* FOREIGN RISK: Because the Fund invests in securities of foreign issuers, it
may be subject to risks not usually associated with owning securities of U.S.
issuers. These risks include, among others, adverse fluctuations in foreign
currency values as well as adverse political, social and economic
developments affecting a foreign country, including the risk of
nationalization, expropriation or confiscatory taxation. In addition, foreign
investing involves less publicly available information, and more volatile or
less liquid securities markets. Investments in foreign countries could be
affected by factors not present in the U.S., such as restrictions on
receiving the investment proceeds from a foreign country, confiscatory
foreign tax laws, and potential difficulties in enforcing contractual
obligations. Transactions in foreign securities may be subject to less
efficient settlement practices, including extended clearance and settlement
periods. Foreign accounting may be less revealing than U.S. accounting
practices. Foreign regulation may be inadequate or irregular. Owning foreign
securities could cause the Fund's performance to fluctuate more than if it
held only U.S. securities.
* DERIVATIVES RISK: The Acquired Fund may invest in derivatives. A derivative
is a financial contract whose value depends on, or is derived from, the value
of an underlying asset, reference rate, or risk. Funds typically use
derivatives as a substitute for taking a position in the underlying asset
and/or as part of a strategy designed to reduce exposure to other risks, such
as interest rate or currency risk. Funds may also use derivatives for
leverage, in which case their use would involve leveraging risk. Use of
derivative instruments involves risks different from, or possibly greater
than, the risks associated with investing directly in securities and other
traditional investments. Derivatives are subject to a number of other risks,
such as liquidity risk, interest rate risk, market risk, credit risk, and
management risk. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in the value may not correlate perfectly
with the underlying asset, rate, or index. Using derivatives may result in
losses, possibly in excess of the principal amount invested. Also, suitable
derivative transactions may not be available in all
7
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
circumstances. The counterparty to a derivatives contract could default. As
required by applicable law, any Fund that invests derivatives segregates
cash or liquid securities, or both, to the extent that its obligations under
the instrument (for example, forward contracts and futures that are required
to "cash settle") are not covered through ownership of the underlying
security, financial instrument, or currency.
* REAL ESTATE INVESTMENTS RISK: The performance of real estate investments
(REITs) depends on the strength of real estate markets, REIT management and
property management which can be affected by many factors, including national
and regional economic conditions.
* ETF AND INVESTMENT COMPANY RISK: The Fund may invest in ETFs or shares of
open-end or closed-end investment companies, including single country funds.
Investing in another investment company exposes the Fund to all the risks of
that investment company and, in general, subjects it to a pro rata portion of
the other investment company's fees and expenses.
* PORTFOLIO TURNOVER: The Fund may actively and frequently trade its portfolio
securities or may turn over a significant portion of its portfolio securities
in a single year. High portfolio turnover (100% or more) results in higher
transaction costs and can adversely affect the Fund's performance.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
PERFORMANCE
Performance information for the Funds is shown below.
The following bar charts and tables provide an indication of the risks of an
investment in the Funds by showing changes in their performance from year to
year and by showing how the Funds' average annual returns for one year, five
years and since inception (as applicable) compare with those of a broad measure
of market performance.
Both the bar charts and the tables assume reinvestment of dividends and
distributions, and reflect fee waivers. Without fee waivers, the Funds'
performance would have been lower.
The performance of the Funds will vary from year to year. The Funds' performance
does not reflect the cost of insurance and separate account charges which are
imposed under your Contract. If they were included, performance would be
reduced. Past performance does not indicate how the Funds will perform in the
future.
JPMORGAN LARGE CAP EQUITY FUND (ACQUIRED FUND)
[BAR CHART GRAPHIC 2002: -18.88%, 2003: 25.89%, 2004: 15.15%, 2005: 6.27%,
2006: 6.71%, 2007: -6.19%, 2008: -54.89%]
* PRIOR TO JANUARY 26, 2009, THE FUND WAS SUBADVISED BY LEGG MASON CAPITAL
MANAGEMENT, INC. AND WAS KNOWN AS THE AZL LEGG MASON VALUE FUND.
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q4, 2004) 15.90%
Lowest (Q4, 2008) -29.72%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 FIVE YEARS ENDED DECEMBER 31, 2008 SINCE INCEPTION
AZL JPMorgan Large Cap Equity Fund 11/5/2001 -54.89% -11.19% -7.48%
S&P 500{R} Index -37.00% -2.19% -0.91%
Russell 1000 Index -37.60% -2.04% -0.54%
The Fund's performance is compared to the Standard & Poor's 500 Composite Stock
Price Index ("S&P 500{R} Index") and the Russell 1000 Index. The
S&P 500{R} Index consists of 500 selected common stocks, most of
which are listed on the New York Stock Exchange, and is a measure of the U.S.
stock market as a whole. The Russell 1000 Index measures the performance of 1000
largest companies found in the Russell universe, which represents approximately
92% of the
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
total market capitalization of the Russell 3000 Index. The indices are unmanaged
and do not reflect the deduction of fees associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance reflects
the deduction of fees for services provided to the Fund. Investors cannot invest
directly in an index, although they can invest in the underlying securities.
JPMORGAN U.S. EQUITY FUND (ACQUIRING FUND) CLASS 2 SHARES
Performance information is presented for Class 2 shares only because there were
no Class 1 shares outstanding during any of the periods shown.
[BAR CHART GRAPHIC 2005: 5.45%, 2006: 14.59%, 2007: 3.80%, 2008: -38.68%]
* PRIOR TO JANUARY 26, 2009, THE FUND WAS SUBADVISED BY OPPENHEIMERFUNDS, INC.
AND WAS KNOWN AS THE AZL OPPENHEIMER MAIN STREET FUND.
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q4, 2006) 6.47%
Lowest (Q4, 2008) -22.09%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION
AZL JPMorgan U.S. Equity Fund 5/3/2004 -38.68% -3.79%
S&P 500{R} Index -37.00% -2.56%
The Fund's performance for Class 2 shares is compared to the Standard & Poor's
500 Composite Stock Price Index ("S&P 500{R} Index"). The S&P
500{R} Index consists of 500 selected common stocks, most of which
are listed on the New York Stock Exchange, and is a measure of the U.S. stock
market as a whole. The index is unmanaged and does not reflect the deduction of
fees associated with a mutual fund, such as investment management and fund
accounting fees. The Fund's performance reflects the deduction of fees for
services provided to the Fund. Investors cannot invest directly in the index,
although they can invest in the underlying securities.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
TABLE A-1
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2008
FUND (inception date) LAST 1 YEAR LAST 2 YEARS LAST 3 YEARS LAST 5 YEARS SINCE INCEPTION
AZL JPMorgan U.S. Equity Fund -38.68% -20.22% -9.99% N/A -3.79%
(5/3/2004)
AZL JPMorgan Large Cap Equity Fund -54.89% -34.95% -23.28% -11.19% -7.48%
(11/5/2001)
TAX CONSEQUENCES
If the separate accounts investing in the Funds and the Contracts are properly
structured under the insurance company provisions of the federal tax law (as the
Manager believes is the case), the Reorganization will not be a taxable event
for Contract Owners who have a portion of their variable annuity contract
allocated to the Funds, regardless of the tax status of the Reorganization.
As a condition to the closing of the Reorganization, the Acquired Fund and the
Acquiring Fund will receive an opinion from Dorsey & Whitney LLP to the effect
that the Reorganization will qualify as a tax-free reorganization for federal
income tax purposes. Accordingly, shareholders (the separate accounts of Allianz
Life and Allianz Life of New York) will not recognize taxable gain or loss as a
result of the Reorganization.
For more information about the federal income tax consequences of the
Reorganization, see the section entitled "Tax Status of the Reorganization."
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
FEES AND EXPENSES
The following table describes the fees and expenses as of the end of the most
recent fiscal year that you pay if you buy and hold shares of the Acquired Fund
or shares of the Acquiring Fund. The table also shows estimated pro forma
expenses of the Acquiring Fund assuming the proposed Reorganization had been
effective during the most recent fiscal year, adjusted to reflect current fees.
The table does not reflect the expenses that apply to the subaccounts or the
Contracts. Inclusion of these charges would increase expenses for all periods
shown. The fees and expenses below exclude the costs of the Reorganization. See
"Reasons for the Proposed Reorganization and Board Deliberations" for additional
information concerning the allocation of the costs of the Reorganization.
TABLE A-2
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
The following table is based on fund assets as of December 31, 2008.
JPMORGAN LARGE CAP EQUITY FUND JPMORGAN U.S. EQUITY JPMORGAN U.S. EQUITY FUND - PRO FORMA WITH JPMORGAN
(ACQUIRED FUND) FUND (ACQUIRING FUND) LARGE CAP EQUITY FUND
Management Fee 0.75% (a) 0.80% (a)(b) 0.80% (b)(c)
Distribution (12b-1) 0.25% 0.25% 0.25%
Fees (d)
Other Expenses 0.11% 0.25% 0.13%
Total Annual 1.11% 1.30% (b) 1.18% (b)
Operating Expenses
Fee Waiver (e) 0.00% -0.08% 0.00%
Net Annual Fund 1.11% 1.22% 1.18%
Operating Expenses
(e)
(a)The management fee rate is the contractual rate charged for the Fund's most
recent fiscal year, which ended December 31, 2008.
(b)As of the date of this proxy statement/prospectus, the Manager is voluntarily
reducing the management fee to 0.75%. The Manager reserves the right to
increase the management fee to the amount shown in the table above at any
time. If the voluntary management fee reduction were reflected in the table,
the Total Annual Fund Operating Expenses would be lower.
(c)The management fee rate shown reflects what the rate would be under the
current management fee schedule for the Acquiring Fund based on the combined
assets of the Funds for the fiscal year ended December 31, 2008.
(d)The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of
1940. The Fund pays Allianz Life Financial Services, LLC, the Fund's
distributor, an annual fee of up to 0.25% of average daily net assets as
payment for distributing its shares and providing shareholder services.
(e)The Manager and the Funds have entered into written contracts limiting
operating expenses, excluding certain expenses (such as interest expense), to
1.20% through April 30, 2010. Each Fund is authorized to reimburse the Manager
for management fees previously waived and/or for the cost of Other Expenses
paid by the Manager provided that such reimbursement will not cause the Fund
to exceed any limits in effect at the time of such reimbursement. A Fund's
ability to reimburse the Manager in this manner only applies to fees paid or
reimbursements made by the Manager within the three fiscal years prior to the
date of such reimbursement. To the extent that such reimbursements to the
Manager are expected in the upcoming year, the amount of the reimbursements,
if any, is included in the financial statements in the Fund's shareholder
reports and is reflected in Other Expenses in the table above.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
EXAMPLE: Use the following tables to compare fees and expenses of the Funds to
other investment companies. The tables illustrate the amount of fees and
expenses an investor would pay, assuming (1) a $10,000 investment, (2) 5% annual
return, (3) redemption at the end of each time period, and (4) no changes in the
Fund's total operating expenses. The tables also show pro forma expenses of the
Acquiring Fund assuming the proposed Reorganization had been in effect for the
periods shown. The tables do not reflect the effect of any fee or expense
waivers. The tables also do not reflect separate account or insurance contract
fees and charges. An investor's actual costs may be different.
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
JPMorgan Large Cap Equity Fund (Acquired Fund) $113 $353 $612 $1,352
JPMorgan U.S. Equity Fund Class 2 (Acquiring Fund) $124 $404 $705 $1,561
JPMorgan U.S. Equity Fund - Pro Forma with JPMorgan Large Cap Equity Fund $120 $375 $649 $1,432
THIS EXAMPLE DOES NOT REPRESENT ACTUAL EXPENSES, PAST OR FUTURE. ACTUAL EXPENSES
MAY BE HIGHER OR LOWER THAN THOSE SHOWN. THIS EXAMPLE DOES NOT REFLECT THE
EXPENSES THAT APPLY TO THE SUBACCOUNTS OR THE CONTRACTS. INCLUSION OF THSE
CHARGES WOULD INCREASE EXPENSES FOR ALL PERIODS SHOWN.
THE REORGANIZATION
TERMS OF THE REORGANIZATION
The Board has approved the Plan, a copy of which is attached as Exhibit A. The
Plan provides for the Reorganization on the following terms:
* The Reorganization is scheduled to occur on the first day that the New York
Stock Exchange is open for business following shareholder approval and receipt
of any necessary regulatory approvals, but may occur on any later date agreed
to by the Acquired Fund and the Acquiring Fund.
* The Acquired Fund will transfer all of its assets to the Acquiring Fund and,
in exchange, the Acquiring Fund will assume the Acquired Fund's liabilities.
* The Acquiring Fund will issue shares to the Acquired Fund in an amount equal
to the value of the assets that it receives from the Acquired Fund, less the
liabilities assumed by the Acquiring Fund in the transaction. These shares
will immediately be distributed by the Acquired Fund to its shareholders (the
separate accounts) in proportion to their holdings in the Acquired Fund. As a
result, shareholders (the separate accounts) of the Acquired Fund will become
shareholders of the Acquiring Fund. Contract values that were allocated to
subaccounts invested in the Acquired Fund will be allocated to subaccounts
investing in the Acquiring Fund.
* Neither the Acquired Fund nor any Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Fund will pay any sales
charge in connection with the Reorganization.
* The net asset value of the Acquired Fund and the Acquiring Fund will be
computed as of 3:00 p.m. Central time, on the closing date.
* After the Reorganization, the Acquired Fund will be terminated.
CONDITIONS TO CLOSING THE REORGANIZATION
The completion of the Reorganization is subject to certain conditions described
in the Plan, including:
* The Acquired Fund will have declared and paid a dividend that will distribute
all of the Fund's taxable income, if any, to the shareholders (the separate
accounts) of the Fund for the taxable years ending at or prior to the closing.
* The Funds will have received any approvals, consents, or exemptions from the
SEC or any regulatory body necessary to carry out the Reorganization.
* An effective registration statement on Form N-14 will be on file with the SEC.
* The Contract Owners who are eligible to provide voting instructions for the
meeting will have approved the Plan.
* The Acquired Fund will receive an opinion of tax counsel that the proposed
Reorganization will be tax-free for the Acquired Fund and the Acquiring Fund
and for the separate accounts that are the shareholders of the Acquired Fund.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
TERMINATION OF THE PLAN
The Plan and the transactions contemplated by it may be terminated and abandoned
by resolutions of the Board of Trustees of the Acquired Fund or the Acquiring
Fund at any time prior to closing. In the event of a termination, there will be
no liability for damages on the part of either the Acquired Fund or the
Acquiring Fund, or the trustees, officers, or shareholders of the Acquired Fund
or the Acquiring Fund.
TAX STATUS OF THE REORGANIZATION
The exchange of the Acquired Fund's assets for shares of the Acquiring Fund, and
the subsequent distribution of those shares to the Acquired Fund shareholders
and the liquidation of the Acquired Fund, are intended to qualify for federal
income tax purposes as a tax-free reorganization under Section 368(a)(1) of the
Code. The Acquired Fund and the Acquiring Fund will receive an opinion of Dorsey
& Whitney LLP, based in part on certain representations by the VIP Trust on
behalf of both the Acquired Fund and the Acquiring Fund, substantially to the
effect that:
* The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
* Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of Acquired Fund
which are distributed by Acquired Fund prior to the Closing.
* The tax basis of the Acquiring Fund Shares received by each Acquired Fund
shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund shares exchanged therefor.
* The holding period of the Acquiring Fund shares received by each Acquired
Fund shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund shareholder held the Acquired Fund shares
exchanged therefor, provided that the Acquired Fund shares were held as a
capital asset at the Effective Time.
* The Acquired Fund will recognize no income, gain, or loss by reason of the
Reorganization.
* The Acquiring Fund will recognize no income, gain, or loss by reason of
the Reorganization.
* The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
* The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
* The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
REASONS FOR THE PROPOSED REORGANIZATION AND BOARD DELIBERATIONS
The Board believes that the proposed Reorganization will be advantageous to
Acquired Fund shareholders based on its consideration of the following matters:
* TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms and
conditions of the Reorganization as described in the previous paragraphs.
* TAX CONSEQUENCES. The Board considered the tax-free nature of the
Reorganization.
* CONTINUITY OF INVESTMENT. The Board considered the compatibility of the Funds
and the fact that the Acquired Fund and the Acquiring Fund have the same
investment objectives, principal investment strategies and principal
investment risks. The Board also took note of the fact that following the
Reorganization, shareholders of the Acquired Fund will be invested in a Fund
holding a portfolio whose characteristics are similar to those of the
portfolio currently held by the Acquired Fund.
* EXPENSE RATIOS. The Board considered the relative expenses of the Funds. At
December 31, 2008, the end of each Fund's most recent fiscal year, the total
operating expense ratio for the Acquiring Fund was higher than the total
operating expense ratio for the Acquired Fund. The Board noted that the
contractual management fee of the Acquiring Fund for fiscal year 2008 was
higher than the management fee of the Acquired Fund for fiscal year 2008. The
Board also noted that both the Funds have the same Distribution (12b-1) Fees.
The Board also noted that the Acquiring Fund's Other Expenses are higher than
those of the Acquired Fund. The Board considered the effect of the Manager's
voluntary management fee waiver, which reduces the Acquiring Fund's management
fee by 0.05%, including the fact
14
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
that the Manager reserves the right to revoke
the fee waiver at any time. The Board considered that, taking into account the
Manager's voluntary fee waiver, the total operating expenses of the Acquiring
Fund after the Reorganization are expected to be approximately the same as the
expenses of the Acquired Fund before the Reorganization. In addition, the
shareholders of the Acquired Fund are expected to see other benefits, such as
economies of scale, which make the Reorganization desirable for Acquired Fund
shareholders and are expected to decrease expenses over time.
The Board also considered the possibility that both higher aggregate net
assets resulting from the Reorganization and the opportunity for net cash
inflows, or reduced outflows, may reduce the risk that, if net assets of the
Acquired Fund fail to grow, or even diminish, the Acquired Fund's total
expense ratio could rise from current levels as fixed expenses become a larger
percentage of net assets. The Board noted that both the Acquired Fund and the
Acquiring Fund are subject to expense limitation agreements that will remain
in place through at least April 30, 2010. The Board considered the fact that
the Acquired Fund is currently operating with expenses below the cap contained
in its expense limitation agreement, but that the Acquiring Fund is currently
operating with expenses above the cap and receiving a fee waiver from the
Manager and that the Acquiring Fund will be subject to reimbursements to the
Manager for expenses previously waived by the Manager.
* ECONOMIES OF SCALE. The Board considered the advantage of combining Funds with
the same investment objective and investment strategies. The Board believes
that the combined Fund may have the opportunity to take advantage of the
economies of scale associated with a larger fund. The combined Fund may have
better prospects for growth than either Fund separately. For example, a larger
fund should have an enhanced ability to effect portfolio transactions on more
favorable terms and should have greater investment flexibility. Furthermore,
as indicated above, fixed expenses, such as audit expenses and accounting
expenses that are charged on a per fund basis, may be reduced.
* COSTS. The Board noted that the Acquired Fund will bear the expenses of
printing and mailing communications to the Contract Owners who beneficially
owned its shares and that all other expenses of the Reorganization, including
accounting, legal, and custodial expenses, and any costs related to
repositioning of the Acquiring Fund's portfolio after the Reorganization, will
be allocated equally between the Acquired Fund and the Acquiring Fund. The
Board also noted that the estimated total reorganization costs, including
repositioning costs, would be less than $0.01 per share of the combined Funds.
The Board considered the Manager's analysis showing that the reduction in
annual operating expenses for the Acquired Fund and the Acquiring Fund
resulting from the Reorganization is likely to be greater than or equal to the
expenses of the Reorganization to be borne by the Acquired Fund or Acquiring
Fund, as the case may be.
* DILUTION. The Board considered the fact that the Reorganization will not
dilute the interests of the current Contract Owners with contract values
allocated to subaccounts investing in the Acquired Fund because it would be
effected on the basis of the relative net asset value per share of the
Acquired Fund and the Acquiring Fund, respectively. Thus, subaccounts holding
shares of the Acquired Fund will receive shares of the Acquiring Fund equal in
value to their shares in the Acquired Fund.
* PERFORMANCE AND OTHER FACTORS. The Board considered the relative performance
records of the Funds. The Board took into account the better overall track
record of the Acquiring Fund, when compared to the Acquired Fund, over the
five years since the inception of the Acquiring Fund. While the Board was
cognizant of the fact that an Acquiring Fund's past performance is no
guarantee of its future results, and that returns for both Funds prior to
January 26, 2009, were the result of investment choices by different
subadvisors, it did recognize that the better overall track record of an
Acquiring Fund could help attract more assets into the combined Funds and
therefore could increase shareholder confidence in the combined Fund. The
Board concluded that increased inflows, or reduced outflows, could lead to
further economies of scale (see "Economies of Scale" above).
The Board also considered the fact that the Funds have similar investment
objectives and similar investment strategies. The Reorganization should allow
for a concentrated selling effort, thereby potentially benefiting shareholders
of the combined Funds. The Board further took into account the Manager's
belief that the Acquired Fund, as a stand-alone Fund, was unlikely to
experience significant growth in assets as a result of inflows.
* POTENTIAL EFFECTS ON THE MANAGER. The Board also considered the potential
benefits from the Reorganization that could be realized by the Manager. The
Board recognized that the potential benefits to the Manager consist
principally of higher management fees, economies of scale and the elimination
of expenses incurred in duplicative efforts to administer separate funds. The
Board also noted, however, that shareholders of the Acquired Fund will benefit
over time from any long-term decrease in overall operating expense ratios
resulting from the proposed Reorganization. The Board noted that the proposed
Reorganization would affect the amount of management fees that the Manager
15
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
retains after payment of the subadvisory fees. The table below assumes that
the Reorganization has taken place and gives effect to the additional
temporary reduction in management fees payable to Manager. See Table A-2 above
for information concerning current management fees for both Funds and the
voluntary reductions in management fees that are currently in effect.
FUND MANAGEMENT FEE RETAINED AFTER PAYMENT OF SUBADVISORY FEE
(1)
JPMorgan Large Cap Equity Fund (Acquired Fund) 0.30%
JPMorgan U.S. Equity Fund (Acquiring Fund) 0.31%
Weighted Average Before Reorganization 0.31%
JPMORGAN U.S. EQUITY FUND - PRO FORMA WITH JPMORGAN LARGE CAP EQUITY 0.33%
FUND
(1)Calculations are as of May 31, 2009, using monthly average assets under
management for May 2009.
The Board did not assign relative weights to the foregoing factors or deem any
one or group of them to be controlling in and of themselves.
BOARD DETERMINATIONS
After considering the factors described above and other relevant information at
an in-person meeting held on June 10, 2009, the Board of Trustees of the
Acquired Fund, including a majority of the independent Board members found that
participation in the Reorganization is in the best interests of the Acquired
Fund and that the interests of existing Contract Owners with contract values
allocated to subaccounts investing in the Acquired Fund would not be diluted as
a result of the Reorganization.
The Board of Trustees of the Acquiring Fund approved the Plan at the meeting
held on June 10, 2009. Among other factors, the Board members considered the
terms of the Plan, the provisions intended to avoid the dilution of Contract
Owners' interests, and the anticipated tax consequences of the Reorganization.
The Board found that participation in the Reorganization is in the best
interests of the Acquiring Fund and that the interests of existing Contract
Owners with contract values allocated to subaccounts investing in the Acquiring
Fund will not be diluted as a result of the Reorganization.
RECOMMENDATION AND VOTE REQUIRED
The Board recommends that Contract Owners who are entitled to vote at the
meeting approve the proposed Plan. Approval of the Plan requires the affirmative
vote, in person or by proxy, of a majority of the voting power of the
outstanding shares of the Fund on the record date, July 20, 2009. Each share is
entitled to one vote for each dollar, and a fractional vote for each fraction of
a dollar, of net asset value per share held by a shareholder on the record date.
If the Plan is not approved by the Acquired Fund, the Board will consider what
further action should be taken.
If shareholder approval is obtained, the Reorganization is scheduled to be
effective on or about October 23, 2009.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
SECTION B - PROXY VOTING AND SHAREHOLDER MEETING INFORMATION
REFERENCE TO THE "FUND" IN THIS SECTION IS A REFERENCE TO THE ACQUIRED FUND.
A special meeting of shareholders of the Acquired Fund will be held as specified
in the Notice of Special Meeting that accompanies this proxy
statement/prospectus. At the meeting, shareholders (the separate accounts) will
vote their shares of the Acquired Fund.
You have the right to instruct Allianz Life and Allianz Life of NY (together,
"Allianz") on how to vote the shares of the Acquired Fund held under your
Contract. The number of Fund shares for which you may provide instructions will
be based on the dollar amount of Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date. Each accumulation unit or annuity unit represents a specified
dollar value and a specified number of Fund shares. For each dollar of value,
the Contract Owner is permitted to vote one Fund share. We count fractional
votes. If you execute and return your voting instruction form, but do not
provide voting instructions, Allianz will vote the shares underlying your
Contract in favor of the proposal described above. Allianz will vote any shares
for which it does not receive a voting instruction form, and any shares which it
or its affiliates hold for their own account, in proportionately the same manner
as shares for which it has received voting instructions. Allianz will not
require voting instructions for a minimum number of shares, and therefore a
small number of shareholders could determine the outcome of any proposal.
For the Meeting to proceed, there must be a quorum. This means that at least 25%
of the Fund's shares must be represented at the Meeting either in person or by
proxy. Because Allianz is the only shareholder of the Fund, its presence at the
Meeting in person or by proxy will meet the quorum requirement.
You may revoke your voting instructions up until voting results are announced at
the Meeting or at any adjournment of the Meeting by giving written notice to
Allianz prior to the Meeting by mail to Allianz Variable Insurance Products
Trust, c/o Advisory Management, A 3-825, 5701 Golden Hills Drive, Minneapolis,
Minnesota 55416, by executing and returning to Allianz a voting instruction form
with a later date, or by attending the Meeting and voting in person. If you need
a new voting instruction form, please call the Fund at 1-800-950-5872 ext.
35857, and a new voting instruction form will be sent to you. If you return an
executed form without voting instructions, your shares will be voted "FOR" the
proposal.
The Acquired Fund will pay all costs of solicitation, including the cost of
preparing and mailing the Notice of a Special Meeting of shareholders and this
proxy statement/prospectus to Contract Owners. Representatives of the Manager,
without cost to the Fund, also may solicit voting instructions from Contract
Owners by means of mail, telephone, or personal calls.
DISSENTERS' RIGHTS OF APPRAISAL. There are no appraisal or dissenters' rights
for shareholders of the Acquired Fund. Delaware law does not grant beneficiaries
of statutory trusts who dissent from approval of the Reorganization the right to
demand an appraisal for their interests and payment of their fair cash value. As
a result, shareholders who object to the Reorganization do not have a right to
demand a different payment for their shares of beneficial interest.
OTHER MATTERS. Management of the Fund anticipates that an election of Trustees
and ratification of the auditors also will be conducted at the Meeting. You will
receive a separate proxy statement containing information regarding these other
matters if you are eligible to vote on them. Otherwise, management of the Fund
knows of no other matters that may properly be, or that are likely to be,
brought before the Meeting. However, if any other business shall properly come
before the Meeting, the persons named on the voting instruction form intend to
vote thereon in accordance with their best judgment.
ADJOURNMENT. In the event that voting instructions received by the time
scheduled for the meeting are not sufficient to approve the Reorganization,
representatives of Allianz may move for one or more adjournments of the meeting
for a period of not more than 120 days in the aggregate to allow further
solicitation of voting instructions on the proposals. Any adjournment requires
the affirmative vote of a majority of the voting power of the shares present at
the meeting. Representatives of Allianz will vote in favor of adjournment. The
Acquired Fund will pay the costs of any additional solicitation and of any
adjourned meeting. A shareholder vote may be taken on one or more of the items
in this proxy statement prior to adjournment if sufficient voting instructions
have been received.
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SECTION C - CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER FUND INFORMATION
IN THIS SECTION REFERENCE TO THE "FUND" IS A REFERENCE TO THE ACQUIRING FUND AND
THE ACQUIRED FUND.
This section contains the following information about the Funds:
TABLE CONTENT
(all information is shown for the fiscal year ended December 31, 2008,
unless noted otherwise)
C-1 Actual and pro forma capitalization of the Acquired Fund and the
Acquiring Fund
C-2 Actual and pro forma ownership of Fund shares
CAPITALIZATION
The following table shows the capitalization of the Funds at December 31, 2008,
and on a pro forma basis, assuming the proposed Reorganization had taken place.
TABLE C-1. ACTUAL AND PRO FORMA CAPITALIZATION OF THE ACQUIRED FUNDS AND THE
ACQUIRING FUNDS
FUND NET ASSETS NET ASSET VALUE SHARES OUTSTANDING
PER SHARE
JPMorgan Large Cap Equity Fund (Acquired Fund)* $59,494,856 $4.99 11,925,015
JPMorgan U.S. Equity Fund (Acquiring Fund) $63,202,876 $6.35 9,959,766
Adjustments** -$48,500 -- -2,557,158
JPMorgan U.S. Equity Fund - Pro Forma with JPMorgan Large Cap Equity Fund $122,649,232 $6.35 19,327,623
* The number of Fund shares for which you may provide instructions will be based
on the dollar amount of Acquired Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date.
**The adjustment to net assets represents the impact as a result of the
estimated Reorganization fees and expenses that will be paid by the Funds, and
the adjustment to shares outstanding represents the impact as a result of the
shares being issued by the Acquiring Fund to the Acquired Fund shareholders.
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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OWNERSHIP OF FUND SHARES
The following table provides information on shareholders who owned more than 5%
of each Fund's outstanding shares at the record date. At the record date,
officers and directors of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.
TABLE C-2. ACTUAL AND PRO FORMA OWNERSHIP OF FUND SHARES [ADD UPON AMENDMENT]
FUND 5% OWNERS PERCENT OF SHARES PERCENT OF SHARES HELD FOLLOWING THE
HELD REORGANIZATION
JPMorgan Large Cap Equity Allianz Life Variable Account [00.00]% N/A
Fund B
JPMorgan U.S. Equity Fund Allianz Life Variable Account [00.00]% [00.00]%
B
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
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EXHIBIT A -AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of June 10, 2009, (the
"Agreement") is by and among the Allianz Variable Insurance Products Trust (the
"VIP Trust" or the "Selling Trust"), a Delaware statutory trust, on behalf of
its series, the AZL JPMorgan Large Cap Equity Fund (the "Acquired Fund"), and
the same statutory trust (in this role, the "Buying Trust") on behalf of its
series, the AZL JPMorgan U.S. Equity Fund (the "Acquiring Fund").
The following table shows the name of the Acquired Fund and the Acquiring Fund
that will be parties to the reorganization.
------------------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
------------------------------------------------------------------
|AZL JPMorgan Large Cap Equity Fund|AZL JPMorgan U.S. Equity Fund|
------------------------------------------------------------------
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Acquired Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the transactions
it contemplates. The reorganization between the Acquiring Fund and the
Acquired Fund is referred to hereinafter as the "Reorganization." The
Acquiring Fund agrees to furnish data and information, as reasonably
requested, for the proxy statement to be furnished to shareholders of the
Acquired Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization is intended to qualify as a
reorganization within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"). At the Closing (as defined
below), the Selling Trust will convey all of the assets of the Acquired
Fund to the Acquiring Fund. The Acquiring Fund will assume all liabilities
of the Acquired Fund. At the Closing, the Buying Trust will deliver shares
of the Acquiring Fund, including fractional shares, to the Selling Trust.
The number of shares will be determined by dividing the aggregate net
asset value of the shares of the Acquired Fund, computed as described in
Section 3(a), by the net asset value of one share of the Acquiring Fund,
computed as described in Section 3(b). The Acquired Fund will not pay a
sales charge on the receipt of Acquiring Fund shares in exchange for the
assets of the Acquired Fund. In addition, the separate account
shareholders of the Acquired Fund will not pay a sales charge on
distribution to them of shares of the Acquiring Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the "Closing")
will occur on the first day on which the New York Stock Exchange (the
"NYSE") is open for business following approval of contract owners of the
Acquired Fund and receipt of all necessary regulatory approvals, or such
later date as the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business
on the date of the Closing or at such other time as an authorized officer
of the VIP Trust shall determine (the "Effective Time").
3. VALUATION.
a. The aggregate net asset value of the shares of the Acquired Fund will be
computed as of the close of regular trading on the NYSE on the day of
Closing (the "Valuation Date") using the valuation procedures in the
Acquired Fund's prospectus.
b. The net asset value per share of shares of the Acquiring Fund will be
determined as of the close of regular trading on the NYSE on the Valuation
Date, using the valuation procedures in the Acquiring Fund's prospectus.
c. At the Closing, the Acquired Fund will provide the Acquiring Fund with a
copy of the computation showing the valuation of the aggregate net asset
value of the shares of the Acquired Fund on the Valuation Date. The
Acquiring Fund will provide the Acquired Fund with a copy of the
computation showing the determination of the net asset value per share of
shares of the Acquiring Fund on the Valuation Date.
4. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUND.
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a. As soon as practicable after the Valuation Date, the Selling Trust will
liquidate the Acquired Fund and distribute shares of the Acquiring Fund to
the Acquired Fund's shareholders of record. The Acquiring Fund will
establish shareholder accounts in the names of each Acquired Fund
shareholder, representing the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each shareholder. All
issued and outstanding shares of the Acquired Fund will simultaneously be
canceled on the books of the Selling Trust. The Acquiring Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the Selling Trust.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Trust relating to the Acquired Fund will be closed and no further
transfer of shares will be made.
c. Promptly after the distribution, the Acquiring Fund or its transfer agent
will notify each shareholder of the Acquired Fund of the number of shares
distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Acquired Fund, and
in no event later than twelve months from the date of the Closing, the
Acquired Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE BUYING TRUST. The Buying
Trust represents and warrants to the Acquired Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Buying
Trust is a statutory trust duly organized, validly existing, and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, management
investment company. The Acquiring Fund is a series of the Buying Trust.
b. Capitalization. The Buying Trust has authorized capital of an unlimited
number of shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquiring Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquiring
Fund as of the end of the last fiscal year and the subsequent unaudited
semi-annual financial statements, if any (the "Acquiring Fund Financial
Statements"), fairly present the financial position of the Acquiring Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Shares to Be Issued upon Reorganization. The shares of beneficial interest
to be issued in connection with the Reorganization will be duly authorized
and, at the time of the Closing, will be validly issued, fully paid, and
non-assessable.
e. Authority Relative to the Agreement. The Buying Trust has the power to
enter into and carry out the obligations described in this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Trustees of the Buying Trust, and no other
proceedings by the Buying Trust or the Acquiring Fund are necessary under
the Buying Trust's Agreement and Declaration of Trust or By-Laws (the
"Governing Documents").
f. No Violation. The Buying Trust is not in violation of its Governing
Documents or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion of
the transactions contemplated by it will not conflict with, or constitute
a breach of, any material contract or other instrument to which the
Acquiring Fund is subject. The transactions will not result in any
violation of the provisions of the Governing Documents or any law,
administrative regulation, or administrative or court decree applicable to
the Acquiring Fund.
g. Liabilities. There are no liabilities of the Acquiring Fund other than:
(1)liabilities disclosed in the Acquiring Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquired Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquiring Fund.
h. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquiring Fund, threatened, that would materially
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and adversely affect the Acquiring Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquiring Fund knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation, and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to the
Selling Trust, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
j. Taxes. The Acquiring Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquiring Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and such returns
and reports have been true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquired Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquired Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
k. Registration Statement. The Acquiring Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933 (the "1933 Act")
relating to the shares of beneficial interest to be issued in the
Reorganization. At the time that the Registration Statement becomes
effective, at the time of the Acquired Fund's shareholders' meetings, and
at the Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading. However, none of the
representations and warranties in this subsection applies to statements
in, or omissions from, the Registration Statement made in reliance on
information furnished by the Acquired Fund for use in the Registration
Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING TRUST.
The Selling Trust represents and warrants to the Acquiring Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Selling
Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
1940 Act as an open-end, management investment company. The Acquired Fund
is a series of the Selling Trust.
b. Capitalization. The Selling Trust has authorized capital of an unlimited
number shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquired Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquired
Fund as of the end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Acquired Fund Financial
Statements"), fairly present the financial position of the Acquired Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Authority Relative to the Agreement. The Selling Trust has the power to
enter into and to carry out its obligations under this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Directors of the Selling Trust, the
shareholders meetings referred to in Section 6(k) will be called and held,
and no other proceedings by the Selling Trust or the Acquired Fund are
necessary under the Selling Trust's Governing Documents.
e. No Violation. The Selling Trust is not in violation of its Agreement and
Declaration of Trust or By-Laws (the "Governing Documents") or in default
in the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of, any
material contract or other instrument to which the Acquired Fund is
subject. The transactions will not result in any violation of the
provisions of the Governing Documents or any law, administrative
regulation, or administrative or court decree applicable to the Acquired
Fund.
f. Liabilities. There are no liabilities of the Acquired Fund other than:
(1)liabilities disclosed in the Acquired Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
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(3)liabilities previously disclosed to the Acquiring Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquired Fund.
g. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquired Fund, threatened, that would materially
and adversely affect the Acquired Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquired Fund knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and the Acquired Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
h. Contracts. Except for contracts and agreements previously disclosed to the
Buying Trust, the Acquired Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
i. Taxes. The Acquired Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquired Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and all such
returns and reports are true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquiring Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquiring Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
j. Fund Securities. All securities listed in the schedules of investments of
the Acquired Fund as of the Closing will be owned by the Acquired Fund
free and clear of any encumbrances, except as indicated in the schedule.
k. Shareholders' Meetings; Registration Statement. The Acquired Fund will
call and hold a shareholders' meeting at which its shareholders will
consider and act upon the transactions contemplated by this Agreement. The
Acquired Fund will cooperate with the Acquiring Fund and will furnish
information relating to the Selling Trust and the Acquired Fund required
in the Registration Statement. At the time that the Registration Statement
becomes effective, at the time of the shareholders' meeting, and at the
Closing, the Registration Statement, as it relates to the Selling Trust or
the Acquired Fund, will not contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading. However, the representations and warranties in this
subsection apply only to statements in or omissions from the Registration
Statement made in reliance upon information furnished by the Selling Trust
or the Acquired Fund for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING TRUST. The obligations of the Buying
Trust with respect to the Reorganization are subject to the satisfaction of
the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of the
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Selling Trust and the
Acquired Fund will have complied with this Agreement, and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling Trust will
provide a certificate to the Acquiring Fund confirming that, as of the
Closing, the representations and warranties set forth in Section 6 are
true and correct and that there have been no material adverse changes in
the financial condition, results of operations, business, properties, or
assets of the Acquired Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Selling Trust, and delivered to the
Acquiring Fund on or prior to the last business day before the Closing. A
decline in the value of the securities owned by the Acquired Fund will not
constitute a "material adverse change" for purposes of the foregoing
sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective, and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Buying Trust will have received an opinion of
counsel for the Selling Trust, dated as of the Closing, to the effect that
(i) the Selling Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquired Fund
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is a series of the Selling Trust; (iii) this Agreement and the
Reorganization have been duly authorized and approved by all requisite
action of the Selling Trust and the Acquired Fund, and this Agreement has
been duly executed by, and is a valid and binding obligation of, the
Selling Trust.
e. Declaration of Dividend. The Acquired Fund, prior to the Closing, will
have declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the shareholders
of the Acquired Fund (i) all of the excess of (x) the Acquired Fund's
investment income excludable from gross income under Section 103 of the
Code over (y) the Acquired Fund's deductions disallowed under Sections 265
and 171 of the Code, (ii) all of the Acquired Fund's investment company
taxable income as defined in Section 852 of the Code (in each case
computed without regard to any deduction for dividends paid) and (iii) all
of the Acquired Fund's net capital gain realized (after reduction for any
capital loss carryover), in each case for the current taxable year (which
will end on the Closing date) and any preceding taxable years for which
such a dividend is eligible to be made under Section 855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING TRUST. The obligations of the
Selling Trust with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of all
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Acquiring Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the Closing. An officer of the Buying Trust will provide a certificate to
the Acquired Fund confirming that, as of the Closing, the representations
and warranties set forth in Section 5 are true and correct and that there
have been no material adverse changes in the financial condition, results
of operations, business, properties, or assets of the Acquiring Fund since
the date of its last financial statement, except as otherwise indicated in
any financial statements, certified by an officer of the Buying Trust, and
delivered to the Acquired Fund on or prior to the last business day before
the Closing. A decline in the value of the securities owned by the
Acquiring Fund will not constitute a "material adverse change" for
purposes of the foregoing sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Trust will have received the opinion of
counsel for the Buying Trust, dated as of the Closing, to the effect that
(i) the Buying Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquiring Fund
is a series of the Buying Trust; (iii) this Agreement and the
Reorganization have been authorized and approved by all requisite action
of the Buying Trust and the Acquiring Fund, and this Agreement has been
duly executed by, and is a valid and binding obligation of, the Buying
Trust; and (iv) the shares to be issued in the Reorganization are duly
authorized and upon issuance in accordance with this Agreement will be
validly issued, fully paid, and non-assessable shares of the Acquiring
Fund.
9. FURTHER CONDITIONS TO THE OBLIGATIONS OF THE BUYING TRUST AND THE SELLING
TRUST. As a further condition to the obligations of the VIP Trust on behalf
of both the Acquired Fund and the Acquiring Fund hereunder, the VIP Trust, on
behalf of both the Acquired Fund and the Acquiring Fund, shall have received
the opinion of Dorsey & Whitney LLP addressed to the VIP Trust on behalf of
both the Acquired Fund and the Acquiring Fund, dated as of the date of the
Closing, and based in part on representations to be furnished by the VIP
Trust on behalf of the Acquired Fund and the Acquiring Fund, substantially to
the effect that:
a. The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
b. Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of the Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of the Acquired
Fund which are distributed by the Acquired Fund prior to the Closing.
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c. The tax basis of the Acquiring Fund Shares received by each Acquired Fund
Shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund Shares exchanged therefor.
d. The holding period of the Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund Shareholder held the Acquired Fund Shares
exchanged therefor, provided that the Acquired Fund Shares were held as a
capital asset at the Effective Time.
e. The Acquired Fund will recognize no income, gain or loss by reason of the
Reorganization.
f. The Acquiring Fund will recognize no income, gain or loss by reason of the
Reorganization.
g. The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
h. The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
i. The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
10.AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the Board of
Trustees. The Agreement may be amended at any time before or after
approval by the shareholders of the Acquired Fund, but after shareholder
approval, no amendment shall be made that substantially changes the terms
of Sections 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and
(ii) compliance with any of the covenants or conditions made for its
benefit. However, neither party may waive the requirement to obtain
shareholder approval or the requirement to obtain a tax opinion.
c. The Selling Trust may terminate this Agreement at any time prior to the
Closing by notice to the Buying Trust if a material condition to its
performance or a material covenant of the Buying Trust on behalf of the
Acquiring Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Buying
Trust on behalf of the Acquiring Fund and is not cured.
d. The Buying Trust may terminate this Agreement at any time prior to the
Closing by notice to the Selling Trust if a material condition to its
performance or a material covenant of the Selling Trust on behalf of the
Acquired Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Selling
Trust on behalf of the Acquired Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Acquired Fund, without any liability on the part of either party or its
respective trustees, officers, or shareholders, on written notice to the
other party, and shall be terminated without liability as of the close of
business on December 31, 2009, or a later date agreed upon by the parties,
if the Closing has not taken place on or prior to that date.
f. The representations, warranties, and covenants contained in this
Agreement, or in any document delivered in connection with this Agreement,
will survive the Reorganization.
11.EXPENSES. All fees paid to governmental authorities for the registration or
qualification of the Acquiring Fund Shares and all transfer agency costs
related to the shares of the Acquiring Fund Shares shall be allocated to the
Acquiring Fund. All fees and expenses related to printing and mailing
communications to shareholders and beneficial owners of shares of the
Acquired Fund shall be allocated to the Acquired Fund. All of the other
expenses of the transactions required for the Reorganization, including
without limitation, accounting, legal, and custodial expenses, shall be
allocated equally between the Acquired Fund and the Acquiring Fund. The
expenses specified in this Section shall be borne by the Fund to which they
are allocated.
12. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state of
Minnesota.
13. INDEMNIFICATION. Each party will indemnify and hold the other and its
officers and trustees (each an "Indemnitee") harmless from and against any
liability or other cost and expense, in connection with the defense or
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The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
disposition of any action, suit, or other proceeding, before any court or
administrative or investigative body in which the Indemnitee may be involved
as a party, with respect to actions taken under this Agreement. However, no
Indemnitee will be indemnified against any liability or expense arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the Indemnitee's position.
A-7
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL JPMorgan Large Cap Equity Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL JPMorgan U.S. Equity Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
A-8
The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus -
August 7, 2009
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
AZL[R] NACM International Fund
AZL[R] Schroder International Small Cap Fund
5701 Golden Hills Drive
Minneapolis, MN 55416-1297
Dear Allianz Life and Allianz Life of New York Variable Annuity Contract Owner:
The Board of Trustees of the AZL NACM International Fund and the AZL Schroder
International Small Cap Fund (the "Acquired Funds"), each a series of the
Allianz Variable Insurance Products Trust (the "VIP Trust"), is pleased to
submit a proposal to reorganize the Acquired Funds into the AZL International
Index Fund (the "Acquiring Fund"), which is another series of the VIP Trust.
As the owner of a variable annuity contract issued by Allianz Life Insurance
Company of North America or Allianz Life Insurance Company of New York, you
beneficially own shares of one or both of the Acquired Funds. Accordingly, we
ask that you indicate whether you approve or disapprove of the proposed
reorganization affecting your Fund(s) by submitting instructions on how to vote
your beneficial shares by phone, internet, or mail.
The proposed reorganization is being undertaken for several reasons, including:
o Reducing contractual management fees and overall expenses for
shareholders of the Acquired Funds; and
o Providing further economies of scale.
THE BOARD OF TRUSTEES OF THE VIP TRUST BELIEVES THAT THE TRANSACTION IS IN THE
BEST INTERESTS OF THE ACQUIRED FUNDS AND THEIR SHAREHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL.
The Board considered various factors in reviewing the proposed reorganization
on behalf of the Acquired Funds' shareholders, including, but not limited to,
the following:
* The continuity of investments between the Acquired Funds and the Acquiring
Fund.
* The expectation that the reorganization will reduce expense ratios for the
Funds and achieve other economies of scale.
* The expectation that the reorganization will be tax-free.
If the proposal is approved, the Acquiring Fund will acquire all of the assets
of the Acquired Funds in exchange for newly issued shares of the Acquiring Fund.
These Acquiring Fund shares in turn will be distributed proportionately to the
shareholders of each Acquired Fund in complete liquidation of the Acquired
Funds. In order to accomplish the proposed reorganization, the Board of Trustees
of the Acquired Funds submits for your approval an Agreement and Plan of
Reorganization with respect to each of the Acquired Funds.
Whether or not you plan to attend the meeting, please review the enclosed voting
instruction form. You may submit your instructions on voting the shares that you
beneficially own by phone, internet, or mail. Following this letter is a Q&A
summarizing the reorganization and information on how to vote your shares.
Please read the entire proxy statement/prospectus carefully before you vote.
Thank you for your prompt attention to this important matter.
Sincerely,
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
PROXY STATEMENT/PROSPECTUS Q&A
HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR THE AZL NACM
INTERNATIONAL FUND AND THE AZL SCHRODER INTERNATIONAL SMALL CAP FUND. WE
ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT/PROSPECTUS.
Q: WHY IS THE REORGANIZATION BEING PROPOSED?
The reorganization is being proposed in an effort to reduce operating
expenses for funds available to owners of variable annuity contracts issued
by Allianz Life Insurance Company of North America or Allianz Life Insurance
Company of New York and to provide further economies of scale.
Your Board of Trustees has determined that the reorganization is in the best
interests of the Acquired Funds' shareholders and recommends that you vote
FOR the reorganization.
Q: WILL THE EXPENSES OF THE FUND IN WHICH I PARTICIPATE INCREASE AS A RESULT OF
THE REORGANIZATION?
No. The total expense ratio for the Acquiring Fund following the
reorganization is expected to be lower than the total expense ratio for each
of the Acquired Funds prior to the reorganization.
Q: WHO IS PAYING THE COSTS OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
Contract owners who were beneficial owners of shares of the Acquired Funds on
the record date will bear these costs.
Q: WILL I INCUR TAXES AS A RESULT OF THE REORGANIZATION?
No. The reorganization is not expected to be a taxable event for contract
owners. Please see the Tax Consequences discussion in the enclosed proxy
statement/prospectus for additional information.
Q: IF APPROVED, WHEN WILL THE REORGANIZATION HAPPEN?
If shareholders approve the reorganization, it will take place shortly after
the shareholder meeting.
Q: IS THERE ANYTHING I NEED TO DO TO CONVERT MY SHARES?
No. Upon shareholder approval of the reorganization, the Acquired Fund shares
that serve as a funding vehicle for benefits under your variable annuity
contract automatically will be exchanged for shares of the Acquiring Fund.
The total value of the Acquiring Fund shares that a shareholder receives in
the reorganization will be the same as the total value of the Acquired Fund
shares held by the shareholder immediately before the reorganization.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE?
After careful consideration, the Board recommends that you vote FOR the
reorganization.
Q: HOW AND WHEN DO I VOTE?
You can vote in one of four ways:
- By mail with the enclosed voting instruction form
- By telephone
- By web site
- In person at the meeting
Please refer to the enclosed voting instruction form for the telephone number
and internet address. Please vote as soon as possible by following the
instructions on the voting instruction form.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
If you have questions about any of the proposals described in the proxy
statement or about voting procedures, please call toll free at 1-800-950-5872
ext. 37952.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
5701 GOLDEN HILLS DRIVE
MINNEAPOLIS, MINNESOTA 55416-1297
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 2009
AZL[R] NACM INTERNATIONAL FUND
AZL[R] SCHRODER INTERNATIONAL SMALL CAP FUND
A special meeting of the shareholders of the AZL NACM International Fund and the
AZL Schroder International Small Cap Fund (each an "Acquired Fund" and,
together, the "Acquired Funds") will be held at 10:00 a.m. on October 21, 2009,
at the offices of Allianz Life Insurance Company of North America, 5701 Golden
Hills Drive, Golden Valley, Minnesota. At the meeting, shareholders of the
respective Acquired Funds will consider the following proposals:
- To approve an Agreement and Plan of Reorganization (the "Plan") between the
AZL NACM International Fund, which is a series of the Allianz Variable
Insurance Products Trust (the "VIP Trust"), and the AZL International Index
Fund (the "Acquiring Fund"), which is another series of the VIP Trust;
- To approve an Agreement and Plan of Reorganization (the "Plan") between the
AZL Schroder International Small Cap Fund, also a series of the VIP Trust, and
the Acquiring Fund; and
- Such other business as may properly come before the meeting, or any
adjournment of the meeting.
Under both Plans, the Acquiring Fund would acquire all of the assets and assume
all of the liabilities of each Acquired Fund in exchange for shares of the
Acquiring Fund, which would be distributed proportionately to the shareholders
of the Acquired Funds in complete liquidation of the Acquired Funds, and the
assumption of the Acquired Funds' liabilities. Each Plan will be voted upon by
the shareholders of the respective Acquired Fund voting separately.
The Acquired Funds issue and sell its shares to certain separate accounts of
Allianz Life Insurance Company of North America ("Allianz Life") and Allianz
Life Insurance Company of New York ("Allianz Life of NY"). The separate accounts
hold shares of mutual funds, including the Acquired Funds, which serve as a
funding vehicle for benefits under variable annuity contracts issued by Allianz
Life and Allianz Life of NY. As the owners of the assets held in the separate
accounts, Allianz Life and Allianz Life of NY are the sole shareholders of the
Acquired Funds and are entitled to vote all of the shares of the Acquired Funds.
However, Allianz Life and Allianz Life of NY will vote outstanding shares of the
Acquired Funds in accordance with instructions given by the owners of variable
annuity contracts for which the Funds serve as a funding vehicle. This Notice is
being delivered to owners of variable annuity contracts who, by virtue of their
ownership of the contracts, beneficially owned shares of the Acquired Funds on
the record date, so that they may instruct Allianz Life and Allianz Life of NY
how to vote the shares of the Acquired Funds underlying their contracts.
Shareholders of record at the close of business on July 20, 2009, are entitled
to vote at the meeting.
By order of the Board of Directors
Michael J. Radmer, Secretary
August 7, 2009
YOU CAN VOTE QUICKLY AND EASILY.
PLEASE FOLLOW THE INSTRUCTIONS ON THE ENCLOSED VOTING INSTRUCTION FORM.
PROXY STATEMENT/PROSPECTUS - AUGUST 7, 2009
ACQUIRED FUNDS ACQUIRING FUND
AZL[R] NACM International Fund AZL[R] International Index Fund
("NACM International Fund") ("International Index Fund")
AZL[[R]] Schroder International Small Cap Fund
("Schroder International Small Cap Fund")
This proxy statement/prospectus describes proposed Agreements and Plans of
Reorganization (the "Plans") pursuant to which the outstanding shares of the
NACM International Fund and the Schroder International Small Cap Fund, one or
both of which currently serves as a funding vehicle for your variable annuity
contract, (each an "Acquired Fund" and, together, the "Acquired Funds") would be
exchanged for shares of the International Index Fund (the "Acquiring Fund").
Both the Acquiring Fund and the Acquired Funds (each a "Fund" and together the
"Funds") are series of the Allianz Variable Insurance Products Trust (the "VIP
Trust"). The address of the Funds is 5701 Golden Hills Drive, Minneapolis, MN
55416-1297. The phone number of the Funds is 877-833-7113.
THE BOARD OF TRUSTEES OF THE VIP TRUST UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLANS.
THESE SECURITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK
OR AN AFFILIATE OF ANY BANK, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), OR ANY OTHER AGENCY OF THE UNITED STATES, OR ANY
BANK OR AN AFFILIATE OF ANY BANK; AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF VALUE.
As with all mutual funds, the Securities and Exchange Commission (the "SEC") has
not approved or disapproved these securities or passed on the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Each of the Funds is subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and
files reports, proxy materials, and other information with the SEC (Investment
Company Act file no. 811-09491). These reports, proxy materials, and other
information can be inspected and copied at the Public Reference Room maintained
by the SEC. Copies may be obtained, after paying a duplicating fee, by
electronic request e-mailed to publicinfo@sec.gov, or by writing to the Public
Reference Section of the SEC, Washington, D.C. 20549-0102. In addition, copies
of these documents may be viewed on-line or downloaded from the SEC's Web site
at http://www.sec.gov.
You should retain this proxy statement/prospectus for future reference. It sets
forth concisely the information about the Acquiring Fund that a prospective
investor should know before investing. Additional information is set forth in
the Statement of Additional Information, dated the same date as this proxy
statement/prospectus, relating to this proxy statement/prospectus. A current
prospectus for the Acquiring Fund, which gives a detailed description of the
Acquiring Fund's policies, strategies, and restrictions, accompanies this proxy
statement/prospectus.
This proxy statement/prospectus was first mailed to contract owners on or about
August 7, 2009.
WHERE TO GET MORE INFORMATION
FUND REPORTS: THE ACQUIRING FUND: THE ACQUIRED FUND:
---------------------------------------------------------------------------------------------
Prospectus dated April 27, Accompanying, and Incorporated by reference into this
2009. incorporated by proxy statement/prospectus. for a
reference into, this Copy at no charge, call toll free
proxy 877-833-7113 or write to the address
statement/prospectus. given below this table.
Annual report for the For a complete copy at
period ended December 31, no charge, call toll-
2008; and semi-annual free 877-833-7113 or
report for the period ended write to the address
June 30, 2008. given below this table.
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
THIS PROXY STATEMENT/PROSPECTUS:
Statement of Additional Information dated Incorporated by reference into this proxy statement/prospectus. For a copy at no charge,
the same date as this proxy call toll-free 1-800-624-0197 or write to Allianz VIP Trust, Advisory Management, A3-825,
statement/prospectus. This document 5701 Golden Hills Drive, Minneapolis, MN 55416.
contains information about both the
Acquired Fund and the Acquiring Fund.
To ask questions about this proxy Call toll free 1-800-950-5972 ext. 37952 or write to: Allianz VIP Trust, Advisory
statement/prospectus. Management, A 3-825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
ADDRESS: Allianz Variable Insurance Products Trust, 5701 Golden Hills Drive,
Minneapolis, MN 55416.
ABOUT THE ACQUIRED AND ACQUIRING FUNDS
The Acquired Funds issue and sell shares to separate accounts of Allianz Life
Insurance Company of North America ("Allianz Life") and Allianz Life Insurance
Company of New York ("Allianz Life of NY"). These separate accounts hold shares
of mutual funds, including the Acquired Funds, which serve as funding vehicles
for benefits under variable annuity contracts issued by Allianz Life and Allianz
Life of NY (the "Contracts"). Each separate account has subaccounts that invest
in the Acquired Funds and certain other mutual funds. Owners of the Contracts
("Contract Owners") allocate the value of their Contracts among these
subaccounts. As the owners of the assets held in the separate accounts, Allianz
Life and Allianz Life of NY are the sole shareholders of the Acquired Funds and
are entitled to vote all of the shares of each Acquired Fund. However, Allianz
Life and Allianz Life of NY will vote outstanding shares of the Acquired Funds
in accordance with instructions given by the Contract Owners who are eligible to
vote at the meeting.
The Funds all are open-end management investment companies. If the Plans are
approved, the shares of the Acquiring Fund will be distributed proportionately
by each Acquired Fund to the holders of its shares in complete liquidation of
the Acquired Funds. Each Acquired Fund shareholder would become the owner of
Acquiring Fund shares having a total net asset value equal to the total net
asset value of that shareholder's holdings in the Acquired Fund.
The following information summarizes the proposed reorganization of each of the
Acquired Funds into the Acquiring Fund (the "Reorganization"). The
Reorganization of each Acquired Fund into the Acquiring Fund is separate and
distinct, and the shareholders of each Acquired Fund will vote separately on the
Plan applicable to the Fund in which they are invested. The Reorganization will
proceed with respect to any Acquired Fund approving it. Although they are
separate, for ease of reference, the Reorganizations are discussed collectively
in this proxy statement/prospectus.
2
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
HOW THE REORGANIZATION WILL WORK
* Each Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Funds' liabilities.
* The Acquiring Fund will issue shares of beneficial interest to each Acquired
Fund in an amount equal to the value of the assets that it receives from each
Acquired Fund, less the liabilities it assumes. These shares will be
distributed to the Acquired Funds' shareholders (the separate accounts) in
proportion to their holdings in the Acquired Funds. The value of your interest
in the subaccount investing in the Acquiring Fund received in connection with
the Reorganization will equal the value of your interest in the subaccounts
that were invested in the Acquired Funds immediately before the
Reorganization. You will not pay any sales charge in connection with this
distribution of shares. If you already have an Acquiring Fund account, shares
distributed in the Reorganization will be added to that account. As a result,
when average cost is calculated for income tax purposes, the cost of the
shares in the accounts you owned will be combined.
FUND INVESTMENT OBJECTIVES
The following table presents the investment objective for each of the Funds.
ACQUIRED FUND INVESTMENT ACQUIRING FUND INVESTMENT OBJECTIVE
OBJECTIVE
NACM Maximum INTERNATIONAL Match the performance of the Morgan Stanley Capital International Europe, Australasia and
INTERNATIONAL long-term INDEX FUND Far East Index as closely as possible
FUND capital
appreciation
SCHRODER Long-term
INTERNATIONAL capital
SMALL CAP FUND appreciation
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
TABLE OF CONTENTS
SECTION A -- Proposal.......................................................5
PROPOSAL: Approve or Reject the Agreement and Plan of Reorganization......5
SUMMARY.................................................................5
How the Reorganization Will Work......................................5
Comparison of the Acquired FundS and the Acquiring Fund...............6
Comparison of Investment Objectives...................................6
Comparison of Investment Strategies...................................6
Comparison of Investment Policies.....................................8
Risk Factors..........................................................8
Performance...........................................................12
Tax Consequences......................................................14
FEES AND EXPENSES.........................................................15
THE REORGANIZATION........................................................16
Terms of the Reorganization.............................................16
Conditions to Closing the Reorganization................................16
Termination of the Plan.................................................17
Tax Status of the Reorganization........................................17
Reasons for the Proposed Reorganization and Board Deliberations.........17
Boards' Determinations..................................................19
Recommendation and Vote Required........................................19
SECTION B - Proxy Voting and Shareholder Meeting Information................20
SECTION C - Capitalization, Ownership of Fund Shares and Other Fund
Information.............................................................21
EXHIBIT A - Agreement and Plan of Reorganization...........................A-1
EXHIBIT B - Agreement and Plan of Reorganization...........................B-1
The prospectus for the Acquiring Fund accompanies this proxy
statement/prospectus.
4
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
SECTION A -- PROPOSAL
PROPOSAL: APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
This proxy statement/prospectus is being used by the Acquired Funds to solicit
voting instructions for the proposals to approve the Plans providing for the
Reorganization of the Acquired Funds into the Acquiring Fund. A form of each
Plan is included as Exhibit A and Exhibit B.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire proxy
statement/prospectus, exhibits and accompanying materials because they contain
details that are not in this summary.
HOW THE REORGANIZATION WILL WORK
The following table shows the names of the Acquired Fund and the Acquiring Fund
into which it will be merged.
----------------------------------------------------------------
| ACQUIRED FUNDS | ACQUIRING FUND |
----------------------------------------------------------------
| NACM International Fund |International Index Fund|
---------------------------------------
|Schroder International Small Cap Fund| |
----------------------------------------------------------------
* Each Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Funds' liabilities.
* The Acquiring Fund will issue shares of beneficial interest in an amount equal
to the value of the assets that it receives from the Acquired Funds, less the
liabilities it assumes. These shares will be distributed to the Acquired
Funds' shareholders (the separate accounts) in proportion to their holdings in
each Acquired Fund. The value of your interest in the subaccount investing in
the Acquiring Fund received in connection with the Reorganization will equal
the value of your interest in the subaccounts that were invested in the
Acquired Funds immediately before the Reorganization.
* As part of the Reorganization, systematic transactions (such as bank
authorizations and systematic payouts) currently set up for your Acquired Fund
accounts will be transferred to your new Acquiring Fund account. If you do not
want your systematic transactions to continue, please contact your financial
representative to make changes.
* Neither the Acquired Funds nor the Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Funds will pay any sales
charge in connection with the Reorganization.
* After the Reorganization has been completed, contract values that were
allocated to subaccounts investing in the Acquired Funds will be allocated to
subaccounts investing in the Acquiring Fund. The Acquired Funds will be
terminated.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
COMPARISON OF THE ACQUIRED FUNDS AND THE ACQUIRING FUND
The Acquired Funds and the Acquiring Fund:
* Are outstanding series of an open-end management investment company organized
as a Delaware statutory trust.
* Have Allianz Investment Management LLC (the "Manager") as their investment
adviser.
* Have the same policies for buying and selling shares and the same exchange
rights.
* Have the same distribution policies.
* Are available only to Contract Owners who allocate contract value to a
subaccount that invests in the Funds.
COMPARISON OF INVESTMENT OBJECTIVES
The following table presents the investment objectives for the Funds.
ACQUIRED FUND INVESTMENT ACQUIRING FUND INVESTMENT OBJECTIVE
OBJECTIVE
NACM Maximum INTERNATIONAL Match the performance of the Morgan Stanley Capital International Europe, Australasia and
INTERNATIONAL long-term INDEX FUND Far East Index as closely as possible
FUND capital
appreciation
SCHRODER Long-term
INTERNATIONAL capital
SMALL CAP FUND appreciation
COMPARISON OF INVESTMENT STRATEGIES
All of the Funds invest primarily in equity securities of companies located
outside of the United States, emphasizing developed markets in Europe and the
Pacific. The NACM International Fund invests primarily in companies located in
the developed countries represented by the Morgan Stanley Capital International
Europe Australasia Far East ("MSCI EAFE") Index, which is the same index that
the International Index Fund seeks to match. Companies included in the MSCI EAFE
Index are selected from among the larger-capitalization companies in these
markets. Schroder International Small Cap Fund invests primarily in smaller-
capitalization companies and also has a limited allocation to emerging markets.
The NACM International Fund is subadvised by Nicholas-Applegate Capital
Management LLC, which is an affiliate of the Manager. Schroder International
Small Cap Fund is subadvised by Schroder Investment Management North America
Inc. The Acquiring Fund is subadvised by BlackRock Investment Management, LLC.
Detailed strategies for the Acquired Funds and the Acquiring Fund are set forth
below:
PRINCIPAL INVESTMENT STRATEGIES FOR THE NACM INTERNATIONAL FUND (ACQUIRED FUND):
The Fund seeks to achieve its investment objective by investing primarily in
companies located in the developed countries represented in the Fund's
benchmark, the Morgan Stanley Capital International Europe Australasia Far East
("MSCI EAFE") Index.
In pursuit of the Fund's goal, the subadviser normally invests at least 75% of
the Fund's net assets in equity securities. The Fund spreads its investments
among countries, with at least 80% of its net assets invested in the securities
of companies that are located outside the U.S. The Fund may invest up to 20% of
its assets in U.S. companies.
The subadviser's "international systematic" investment approach uses a
quantitative process to make individual security, industry sector, country, and
currency selection decisions, and to integrate those decisions. The Fund's
portfolio managers aim to exceed the returns of the benchmark through a strategy
that combines dynamic quantitative factors with an actively managed stock
selection process. The portfolio managers believe that their investment process
results in a clearly defined buy and sell discipline that will continually drive
the Fund's portfolio toward new excess return opportunities.
The Fund may engage in frequent trading in order to achieve its investment
objectives.
The Fund may utilize foreign currency exchange contracts, option, stock index
futures contracts, and other derivative instruments.
For temporary defensive purposes, or when cash is temporarily available, the
Fund may invest in investment grade, short-term debt instruments, including
government, corporate, and money market securities. If the Fund invests
substantially in such instruments, it may not be pursuing its principal
investment strategies and may not achieve its investment objective.
6
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
PRINCIPAL INVESTMENT STRATEGIES FOR THE SCHRODER INTERNATIONAL SMALL CAP FUND
(ACQUIRED FUND):
The Fund invests primarily in the equity securities of smaller companies located
outside the United States.
The subadviser normally invests at least 80% of its net assets, plus any
borrowings for investment purposes, in small-capitalization companies (generally
those with market capitalizations, based on the number of shares readily
available in the market, of $3.5 billion or less at the time of investment) that
it believes offer the potential for capital appreciation.
The subadviser employs a fundamental investment approach that considers
macroeconomic factors while focusing primarily on company-specific factors.
These company-specific factors include the company's potential for long-term
growth, financial condition, quality of management, and sensitivity to cyclical
factors, as well as the relative value of the company's securities compared with
those of other companies and the market as a whole. In selecting investments for
the Fund, the subadviser considers, among other things, whether a company is
likely to have above-average earnings growth, whether its securities are
attractively valued, and whether the company has any proprietary advantages. The
subadviser generally sells a security when its market price approaches the
subadviser's estimate of fair value or when the subadviser identifies a
significantly more attractive investment candidate.
The Fund generally emphasizes developed markets in Europe and the Pacific, with
a limited allocation to emerging markets. Stocks of emerging-markets countries
can be substantially more volatile and substantially less liquid than those of
both U.S. and more developed foreign markets.
The Fund invests in companies that are smaller and less well-known than larger,
more widely held companies. Small companies tend to be more vulnerable to
adverse developments than larger companies. Small companies may have limited
product lines, markets, or financial resources, or they may depend on a limited
management group. Their securities may trade infrequently and in limited
volumes. As a result, the prices of these securities may fluctuate more than the
prices of securities of larger, more widely traded companies. Also, there may be
less publicly available information about small companies or less market
interest in their securities as compared with larger companies, and it may take
longer for the prices of these securities to reflect the full value of their
issuers' earnings potential or assets.
It is important to note that market capitalization ranges change over time, and
interpretations of size vary. Therefore, there is no standard definition of
"small-cap" and definitions may change over time and differ among different fund
offerings.
Besides investing in stocks of foreign companies, the Fund may make other kinds
of investments to achieve its objective.
The Fund may invest in preferred stocks and closed-end investment companies that
invest primarily in foreign securities. With preferred stocks, holders receive
set dividends from the issuer; their claim on the issuer's income and assets
ranks before that of common-stock holders, but after that of bondholders. The
Fund may also invest in convertible securities and warrants. Convertible
securities are corporate debt securities that may be converted at either a
stated price or a stated rate into underlying shares of common stock. Warrants
are securities that permit their owners to purchase a specific number of stock
shares at a predetermined price in the future.
The Fund may invest, to a limited extent, in derivatives. Generally speaking, a
derivative is a financial contract whose value is based on the value of a
traditional security (such as a stock or bond), an asset (such as a commodity
like gold), or a market index (such as the S&P 500[R] Index).
Investments in derivatives may subject the Fund to risks different from, and
possibly greater than, those of the underlying securities, assets, or market
indexes. The Fund will not use derivatives for speculation or for the purpose of
leveraging, or magnifying, investment returns.
The Fund may enter into forward foreign currency exchange contracts, which are a
type of derivative contracts. A forward foreign currency exchange contract is an
agreement to buy or sell a country's currency at a specific price on a specific
date, usually 30, 60, or 90 days in the future. In other words, the contract
guarantees an exchange rate on a given date. Managers of funds that invest in
foreign securities use these contracts to guard against sudden, unfavorable
changes in the U.S. dollar/foreign currency exchange rates. These contracts,
however, will not prevent the Fund's securities from falling in value during
foreign market downswings.
The Fund may temporarily depart from its normal investment policies, for
instance, by allocating substantial assets to cash investments in response to
extraordinary market, economic, political, or other conditions. In doing so, the
Fund may succeed in avoiding losses, but may otherwise fail to achieve its
investment objective.
7
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
PRINCIPAL INVESTMENT STRATEGIES FOR THE INTERNATIONAL INDEX FUND (ACQUIRING
FUND):
The Fund employs a passive management approach, investing in a portfolio of
assets whose performance is expected to match approximately the performance of
the MSCI EAFE Index before the deduction of Fund expenses. Under normal
circumstances, the Fund invests at least 80% of the value of its net assets in a
statistically selected sampling of equity securities of companies included in
the MSCI EAFE Index and in derivative instruments linked to the MSCI EAFE Index,
primarily futures contracts.
The MSCI EAFE Index is a market-weighted index composed of common stocks of
companies from various industrial sectors whose primary trading markets are
located outside the United States. Companies included in the MSCI EAFE Index are
selected from among the larger-capitalization companies in these markets. The
weighting of the MSCI EAFE Index is based on the relative market capitalization
of each of the countries in the MSCI EAFE Index.
The Fund does not necessarily invest in all of the securities in the MSCI EAFE
Index, or in the same weightings as the securities have in the index. The Fund's
subadviser chooses investments so that the market capitalizations, industry
weightings, and other fundamental characteristics of the securities chosen are
similar to those of the MSCI EAFE Index as a whole.
For temporary defensive purposes, or when cash is temporarily available, the
Fund may invest in investment grade, short-term debt instruments, including
government, corporate and money market securities. If the Fund invests
substantially in such instruments, it may not be pursuing its principal
investment strategies and may not achieve its investment objective.
COMPARISON OF INVESTMENT POLICIES
If shareholders of the Acquired Funds approve the Reorganization, they will be
subject to the investment policies of the Acquiring Fund. Other than as
described herein, the Manager does not believe that the differences between the
investment policies will result in any material difference in the way the Funds
are managed.
NACM INTERNATIONAL FUND (ACQUIRED FUND) AND INTERNATIONAL INDEX FUND (ACQUIRING
FUND):
The Funds both invest primarily in companies located in the developed countries
represented by the MSCI EAFE Index. However, the NACM International Fund aims to
exceed the returns of the MSCI EAFE Index through a strategy that combines
dynamic quantitative factors with an actively managed stock selection process.
The International Index Fund, on the other hand, seeks not to exceed but to
match the returns of the MSCI EAFE Index through a passive management approach,
which generally will result in lower portfolio turnover and lower expenses
related to portfolio transactions.
SCHRODER INTERNATIONAL SMALL CAP FUND (ACQUIRED FUND) AND INTERNATIONAL INDEX
FUND (ACQUIRING FUND):
Schroder International Small Cap Fund and International Index Fund both invest
primarily in equity securities of companies located outside of the United
States, emphasizing developed markets in Europe and the Pacific. However, the
Schroder International Small Cap Fund utilizes an actively managed stock
selection process, invests primarily in smaller-capitalization companies, and
maintains a limited allocation to emerging markets. The International Index Fund
utilizes a passive management approach, invests primarily in larger-
capitalization companies, and does not maintain a material allocation in
emerging markets.
RISK FACTORS
The principal investment strategies of the Acquiring Fund are generally similar
to the principal investment strategies of the Acquired Funds. Consequently, the
Acquiring Fund has principal investment risks that are generally comparable to
those of the Acquired Funds. Depending upon its assessment of changing market
conditions, the subadviser of each Fund may emphasize particular asset classes
or particular investments at any given time, which may change the risks
associated with a Fund. The fact that a risk is not identified as a principal
risk for a particular Fund does not mean that the Fund may not be subject to
that risk. The Statement of Additional Information for the Acquiring Fund, which
is incorporated by reference in this proxy statement/prospectus, contains
detailed information on the Acquiring Fund's permitted investments and
investment restrictions.
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The Allianz Variable Insurance Products Trust - Proxy
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The principal risks of investing in the Acquired Funds and the Acquiring Fund
are shown in the table below. A discussion of each of the various principal
risks follows the table.
RISK NACM INTERNATIONAL FUND SCHRODER INTERNATIONAL SMALL CAP FUND INTERNATIONAL INDEX
(ACQUIRED FUND) (ACQUIRED FUND) FUND(ACQUIRING FUND)
Market Risk X X X
Issuer Risk X X X
Selection Risk X X
Index Fund Risk X
Capitalization Risk X X
Convertible X
Securities Risk
Derivatives Risk X X X
Foreign Risk X X X
Emerging Markets X
Risk
Liquidity Risk X X
Currency Risk X X X
Portfolio Turnover X
Country/Regional X
Risk
* MARKET RISK: The market price of securities owned by the Fund may go up or
down, sometimes rapidly and unpredictably. Securities may decline in value
due to factors affecting securities markets generally or particular
industries represented in the securities markets. The value of a security may
decline due to general market conditions that are not specifically related to
a particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates, or adverse investor sentiment. They may also decline due to
factors that affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an
industry. During a general downturn in the securities markets, multiple asset
classes may decline in value simultaneously. The value of the Fund's
portfolio may fluctuate to a greater or lesser degree than fluctuations of
the general stock market. For those Funds that invest in stocks of foreign
companies, the value of the Fund's portfolio will be affected by changes in
foreign stock markets and the special economic and other factors that might
primarily affect stock markets in particular foreign countries and regions.
Equity securities generally have greater price volatility than fixed income
securities.
* ISSUER RISK: The value of a security may decline for a number of reasons that
directly relate to the issuer, such as management performance, financial
leverage, and reduced demand for the issuer's products or services.
* SELECTION RISK: The Fund is an actively managed investment portfolio. The
portfolio manager(s) make investment decisions for the Fund's assets. The
investment approach of some Funds emphasizes buying and holding securities,
even through adverse markets, while the investment approach of other Funds
emphasizes frequent trading in order to take advantage of short-term market
movements. However, there can be no guarantee they will produce the desired
results and poor security selection may cause the Fund to underperform its
benchmark index or other funds with similar investment objectives.
* INDEX FUND RISK: The Fund uses an indexing strategy. It does not attempt to
manage market volatility, use defensive strategies, or reduce the effects of
any long-term periods of poor stock performance. The correlation between the
performance of the Fund and the performance of the index may be affected by
the Fund's expenses, changes in securities markets, selection of certain
securities for the portfolio to represent the index, changes in the
composition of the index, and the timing of purchases and redemptions of Fund
shares.
* CAPITALIZATION RISK: To the extent the Fund invests significantly in small
and/or mid-capitalization companies, it may have capitalization risk. These
companies may present additional risk because they have less predictable
earnings or no earnings, more volatile share prices and less liquid
securities than large capitalization companies. These securities may
fluctuate in value more than those of larger, more established companies and,
as a group, may suffer more severe price declines during periods of generally
declining stock prices. The shares of smaller companies tend to trade less
9
The Allianz Variable Insurance Products Trust - Proxy
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frequently than those of larger, more established companies, which can
adversely affect the price of smaller companies' securities and the Fund's
ability to sell them when the portfolio manager deems it appropriate. These
companies may have limited product lines, markets, or financial resources, or
may depend on a limited management group. The value of some of the Fund's
investments will rise and fall based on investor perception rather than
economic factors.
* CONVERTIBLE SECURITIES RISK: The values of the convertible securities in
which the Fund may invest also will be affected by market interest rates, the
risk that the issuer may default on interest or principal payments and the
value of the underlying common stock into which these securities may be
converted. Specifically, since these types of convertible securities pay
fixed interest and dividends, their values may fall if market interest rates
rise, and rise if market interest rates fall. Additionally, an issuer may
have the right to buy back certain of the convertible securities at a time
and at a price that is unfavorable to the Fund.
* DERIVATIVES RISK: The Fund may invest in derivatives. A derivative is a
financial contract whose value depends on, or is derived from, the value of
an underlying asset, reference rate, or risk. Funds typically use derivatives
as a substitute for taking a position in the underlying asset and/or as part
of a strategy designed to reduce exposure to other risks, such as interest
rate or currency risk. Funds may also use derivatives for leverage, in which
case their use would involve leveraging risk. Use of derivative instruments
involves risks different from, or possibly greater than, the risks associated
with investing directly in securities and other traditional investments.
Derivatives are subject to a number of other risks, such as liquidity risk,
interest rate risk, market risk, credit risk, and management risk.
Derivatives also involve the risk of mispricing or improper valuation and the
risk that changes in the value may not correlate perfectly with the
underlying asset, rate, or index. Using derivatives may result in losses,
possibly in excess of the principal amount invested. Also, suitable
derivative transactions may not be available in all circumstances. The
counterparty to a derivatives contract could default. As required by
applicable law, any Fund that invests derivatives segregates cash or liquid
securities, or both, to the extent that its obligations under the instrument
(for example, forward contracts and futures that are required to "cash
settle") are not covered through ownership of the underlying security,
financial instrument, or currency.
* FOREIGN RISK: Because the Fund invests in securities of foreign issuers, it
may be subject to risks not usually associated with owning securities of U.S.
issuers. These risks include, among others, adverse fluctuations in foreign
currency values as well as adverse political, social and economic
developments affecting a foreign country, including the risk of
nationalization, expropriation or confiscatory taxation. In addition, foreign
investing involves less publicly available information, and more volatile or
less liquid securities markets. Investments in foreign countries could be
affected by factors not present in the U.S., such as restrictions on
receiving the investment proceeds from a foreign country, confiscatory
foreign tax laws, and potential difficulties in enforcing contractual
obligations. Transactions in foreign securities may be subject to less
efficient settlement practices, including extended clearance and settlement
periods. Foreign accounting may be less revealing than U.S. accounting
practices. Foreign regulation may be inadequate or irregular. Owning foreign
securities could cause the Fund's performance to fluctuate more than if it
held only U.S. securities.
* EMERGING MARKETS RISK: In addition to the risks described under "Foreign
Risk", issuers in emerging markets may present greater risk than investing in
foreign issuers generally. Emerging markets may have less developed trading
markets and exchanges which may make it more difficult to sell securities at
an acceptable price and their prices may be more volatile than securities of
companies in more developed markets. Settlements of trades may be subject to
greater delays so that the Fund may not receive the proceeds of a sale of a
security on a timely basis. Emerging countries may also have less developed
legal and accounting systems and investments may be subject to greater risks
of government restrictions, nationalization, or confiscation.
* LIQUIDITY RISK: Liquidity risk exists when particular investments are
difficult to purchase or sell. Investments in illiquid securities may reduce
the returns of the Fund because it may be unable to sell the illiquid
securities at an advantageous time or price. Restricted securities may be
subject to liquidity risk because they may have terms that limit their resale
to other investors or may require registration under applicable securities
laws before they may be sold publicly. Funds with principal investment
strategies that involve restricted securities, foreign securities,
derivatives, companies with small market capitalization or securities with
substantial market and/or credit risk tend to have the greatest exposure to
liquidity risk.
* CURRENCY RISK: Funds that invest in securities that trade in, and receive
revenues in, foreign currencies are subject to the risk that those currencies
will decline in value relative to the U.S. dollar, or, in the case of hedging
positions, that the U.S. dollar will decline in value relative to the
currency being hedged. Currency rates in foreign countries may fluctuate
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The Allianz Variable Insurance Products Trust - Proxy
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significantly over short periods of time for a number of reasons, including
changes in interest rates, intervention (or failure to intervene) by the U.S.
or foreign governments, central banks, or supranational authorities, such as
the International Monetary Fund, or by the imposition of currency controls or
other political developments in the U.S. or abroad. As a result, the Fund's
investments with exposure to foreign currency fluctuations may decline in
value (in terms of the U.S. dollar) and reduce the returns of the Fund.
* PORTFOLIO TURNOVER: The Fund may actively and frequently trade its portfolio
securities or may turn over a significant portion of its portfolio securities
in a single year. High portfolio turnover (100% or more) results in higher
transaction costs and can adversely affect the Fund's performance.
* COUNTRY/REGIONAL RISK: Local events, such as political upheaval, financial
troubles, or natural disasters, may weaken a country's or a region's
securities markets. Because the Fund may invest a large portion of its assets
in securities of companies located in any one country or region, its
performance may be hurt disproportionately by the poor performance of its
investments in that area. Country/regional risk is especially high in
emerging markets.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
PERFORMANCE
Performance information for the Funds is shown below.
The following bar charts and tables provide an indication of the risks of an
investment in the Funds by showing changes in their performance from year to
year and by showing how the Funds' average annual returns for one year, five
years and since inception (as applicable) compare with those of a broad measure
of market performance.
Both the bar charts and the tables assume reinvestment of dividends and
distributions, and reflect fee waivers. Without fee waivers, the Funds'
performance would have been lower.
The performance of the Funds will vary from year to year. The Funds' performance
does not reflect the cost of insurance and separate account charges which are
imposed under your Contract. If they were included, performance would be
reduced. Past performance does not indicate how the Funds will perform in the
future.
NACM INTERNATIONAL FUND (ACQUIRED FUND)
[BAR CHART GRAPHIC - 2008: -44.91%]
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q2, 2008) -0.70%
Lowest (Q3, 2008) -23.06%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION
AZL NACM International Fund 5/1/2007 -44.91% -31.86%
MSCI EAFE Index -43.38% -27.77%
The Fund's performance is compared to the Morgan Stanley Capital International,
Europe, Australasia and Far East ("MSCI EAFE") Index, an unmanaged market
capitalization-weighted equity index comprising 20 of the 48 countries in the
MSCI universe and representing the developed world outside of North America. The
index does not reflect the deduction of fees associated with a mutual fund, such
as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees services provided to the Fund. Investors cannot
invest directly in an index, although they can invest in the underlying
securities.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
SCHRODER INTERNATIONAL SMALL CAP FUND (ACQUIRED FUND)
[Bar Chart Graphic - 2008: -45.58%]
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q2, 2008) -3.27%
Lowest (Q4, 2008) -21.64%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION
AZL Schroder International Small Cap Fund 5/1/2007 -45.58% -33.34%
S&P/Citigroup Extended Markets EuroPacific Index -46.86% -33.63%
The Fund's performance is compared to the S&P/Citigroup Extended Market Euro-
Pacific ("EMIEPAC") Index, an unmanaged global equity index comprised of the
smallest 20% of each country's market capitalization in the S&P/Citigroup Broad
Market Global Index. (The S&P/Citigroup Broad Market Global Index captures all
companies in developed and emerging markets with free float market
capitalization of at least $100 million as of the annual index reconstitution.)
All developed countries are included except the U.S. and Canada. The index is
unmanaged and does not reflect the deduction of fees associated with a mutual
fund such as investment management and fund accounting fees. The Fund's
performance reflects the deduction of fees for services provided to the Fund.
Investors cannot invest directly in an index.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
INTERNATIONAL INDEX FUND (ACQUIRING FUND)
The International Index Fund commenced operations April 27, 2009. Therefore, the
performance bar chart and table are not presented because the Fund has not had a
full calendar year of operations.
TABLE A-1
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2008
-------------------------------------------------------------------------------
FUND (inception date) |LAST 1 YEAR|SINCE INCEPTION
-------------------------------------------------------------------------------
AZL NACM International Fund (5/1/2007) | -44.91% | -31.86%
-------------------------------------------------------------------------------
AZL Schroder International Small Cap Fund(5/1/2007)| -45.58% | -33.34%
-------------------------------------------------------------------------------
AZL International Index Fund(4/272009) | N/A | N/A
-------------------------------------------------------------------------------
TAX CONSEQUENCES
If the separate accounts investing in the Funds and the Contracts are properly
structured under the insurance company provisions of the federal tax law (as the
Manager believes is the case), the Reorganization will not be a taxable event
for Contract Owners who have a portion of their variable annuity contract
allocated to the Funds, regardless of the tax status of the Reorganization.
As a condition to the closing of each Reorganization, the Acquired Funds and the
Acquiring Fund will receive an opinion from Dorsey & Whitney LLP to the effect
that each Reorganization will qualify as a tax-free reorganization for federal
income tax purposes. Accordingly, shareholders (the separate accounts of Allianz
Life and Allianz Life of New York) will not recognize taxable gain or loss as a
result of the Reorganization.
For more information about the federal income tax consequences of the
Reorganization, see the section entitled "Tax Status of the Reorganization."
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
FEES AND EXPENSES
The following table describes the fees and expenses as of the end of the most
recent fiscal year that you pay if you buy and hold shares of the Acquired Funds
or shares of the Acquiring Fund. The table also shows estimated pro forma
expenses of the Acquiring Fund assuming the proposed Reorganization had been
effective during the most recent fiscal year, adjusted to reflect current fees.
The table does not reflect the expenses that apply to the subaccounts or the
Contracts. Inclusion of these charges would increase expenses for all periods
shown. The fees and expenses below exclude the costs of the Reorganization. See
"Reasons for the Proposed Reorganization and Board Deliberations" for additional
information concerning the allocation of the costs of the Reorganization.
TABLE A-2
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
The following table is based on fund assets as of December 31, 2008.
NACM INTERNATIONAL SCHRODER INTERNATIONAL SMALL CAP INTERNATIONAL INDEX INTERNATIONAL INDEX FUND - PRO FORMA
FUND(ACQUIRED FUND(ACQUIRED FUND) FUND (ACQUIRING FUND) WITH ACQUIRED FUNDS
FUND)
Management Fee 0.85% (a) 1.00% (a) 0.35% (b) 0.35% (c)
Distribution (12b- 0.25% 0.25% 0.25% 0.25%
1) Fees (d)
Other Expenses 0.41% 0.30% 0.10% 0.24%
Total Annual 1.51% 1.55% 0.70% 0.84%
Operating Expenses
Fee Waiver (e) 0.00% 0.00% 0.00% -0.10%
Net Annual Fund 1.51% 1.55% 0.70% 0.74%
Operating Expenses
(e)
(a)The management fee rate is the contractual rate charged for the Fund's most
recent fiscal year, which ended December 31, 2008.
(b)The International Index Fund commenced operations on April 27, 2009, and did
not have any net assets or shares outstanding at December 31, 2008. The
management fee rate shown therefore reflects what the rate would be under the
current management fee schedule for the Acquiring Fund.
(c)The management fee rate shown reflects what the rate would be under the
current management fee schedule for the Acquiring Fund based on the combined
assets of the Funds for the fiscal year ended December 31, 2008.
(d)The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of
1940. The Fund pays Allianz Life Financial Services, LLC, the Fund's
distributor, an annual fee of up to 0.25% of average daily net assets as
payment for distributing its shares and providing shareholder services.
(e)The Manager and the Fund have entered into a written contract limiting
operating expenses, excluding certain expenses (such as interest expense), to
1.45% NACM International Fund, 1.65% for Schroder International Small Cap
Fund, and 0.70% for International Index Fund through April 30, 2010. The Fund
is authorized to reimburse the Manager for management fees previously waived
and/or for the cost of Other Expenses paid by the Manager provided that such
reimbursement will not cause the Fund to exceed any limits in effect at the
time of such reimbursement. The Fund's ability to reimburse the Manager in
this manner only applies to fees paid or reimbursements made by the Manager
within the three fiscal years prior to the date of such reimbursement. To the
extent that such reimbursements to the Manager are expected in the upcoming
year, the amount of the reimbursements, if any, is included in the financial
statements in the Fund's shareholder reports and is reflected in Other
Expenses in the table above.
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The Allianz Variable Insurance Products Trust - Proxy
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EXAMPLE: Use the following tables to compare fees and expenses of the Funds to
other investment companies. The tables illustrate the amount of fees and
expenses an investor would pay, assuming (1) a $10,000 investment, (2) 5% annual
return, (3) redemption at the end of each time period, and (4) no changes in the
Fund's total operating expenses. The tables also show pro forma expenses of the
Acquiring Fund assuming the proposed Reorganization had been in effect for the
periods shown. The tables do not reflect the effect of any fee or expense
waivers. The tables also do not reflect separate account or insurance contract
fees and charges. An investor's actual costs may be different.
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
NACM International Fund (Acquired Fund) $154 $477 $824 $1,802
Schroder International Small Cap Fund (Acquired Fund) $158 $490 $845 $1,845
International Index Fund (Acquiring Fund) $72 $224 $390 $871
International Index Fund - Pro Forma with Acquired Funds $76 $258 $456 $1,028
THIS EXAMPLE DOES NOT REPRESENT ACTUAL EXPENSES, PAST OR FUTURE. ACTUAL EXPENSES
MAY BE HIGHER OR LOWER THAN THOSE SHOWN. THIS EXAMPLE DOES NOT REFLECT THE
EXPENSES THAT APPLY TO THE SUBACCOUNTS OR THE CONTRACTS. INCLUSION OF THSE
CHARGES WOULD INCREASE EXPENSES FOR ALL PERIODS SHOWN.
THE REORGANIZATION
TERMS OF THE REORGANIZATION
The Board has approved the Plans, a copy of each of which is attached as Exhibit
A and Exhibit B. The Plans provide for the Reorganization on the following
terms:
* The Reorganization is scheduled to occur on the first day that the New York
Stock Exchange is open for business following shareholder approval and receipt
of any necessary regulatory approvals, but may occur on any later date agreed
to by an Acquired Fund and the Acquiring Fund.
* The Acquired Funds will transfer all of their assets to the Acquiring Fund
and, in exchange, the Acquiring Fund will assume the Acquired Funds'
liabilities.
* The Acquiring Fund will issue shares to each Acquired Fund in an amount equal
to the value of the assets that it receives from each Acquired Fund, less the
liabilities assumed by the Acquiring Fund in the transaction. These shares
will immediately be distributed by the Acquired Funds to their shareholders
(the separate accounts) in proportion to their holdings in the Acquired Fund.
As a result, shareholders (the separate accounts) of the Acquired Funds will
become shareholders of the Acquiring Fund. Contract values that were allocated
to subaccounts invested in the Acquired Funds will be allocated to subaccounts
investing in the Acquiring Fund.
* Neither the Acquired Funds nor any Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Funds will pay any sales
charge in connection with the Reorganization.
* The net asset value of the Acquired Funds and the Acquiring Fund will be
computed as of 3:00 p.m. Central time, on the closing date.
* After the Reorganization, the Acquired Funds will be terminated.
CONDITIONS TO CLOSING THE REORGANIZATION
The completion of the Reorganization for each Acquired Fund is subject to
certain conditions described in the Plans, including:
* Each Acquired Fund will have declared and paid a dividend that will distribute
all of the Fund's taxable income, if any, to the shareholders (the separate
accounts) of the Fund for the taxable years ending at or prior to the closing.
* The Funds will have received any approvals, consents, or exemptions from the
SEC or any regulatory body necessary to carry out the Reorganization.
* An effective registration statement on Form N-14 will be on file with the SEC.
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The Allianz Variable Insurance Products Trust - Proxy
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* The Contract Owners of each Acquired Fund who are eligible to provide voting
instructions for the meeting will have approved the respective Plans.
* The Acquired Funds will receive an opinion of tax counsel that the proposed
Reorganization will be tax-free for the Acquired Funds and the Acquiring Fund
and for the separate accounts that are the shareholders of the Acquired Funds.
TERMINATION OF THE PLAN
The Plans and the transactions contemplated by them may be terminated and
abandoned by resolutions of the Board of Trustees of the Acquired Funds or the
Acquiring Fund at any time prior to closing. In the event of a termination,
there will be no liability for damages on the part of either the Acquired Funds
or the Acquiring Fund, or the trustees, officers, or shareholders of the
Acquired Funds or the Acquiring Fund.
TAX STATUS OF THE REORGANIZATION
For federal income tax purposes, the transfer of the assets of each Acquired
Fund to the Acquiring Fund in exchange for shares of the Acquiring Fund and the
distribution of the Acquiring Fund shares to shareholders of each Acquired Fund
is treated as a separate Reorganization. However, for ease of reference, the
Reorganizations are discussed collectively.
The exchange of the Acquired Funds' assets for shares of the Acquiring Fund, and
the subsequent distribution of those shares to shareholders of the Acquired
Funds and the liquidation of the Acquired Funds, are intended to qualify for
federal income tax purposes as a tax-free reorganization under Section 368(a)(1)
of the Code. The Acquired Funds and the Acquiring Fund will receive an opinion
of Dorsey & Whitney LLP, based in part on certain representations by the VIP
Trust on behalf of the Acquired Funds and the Acquiring Fund, substantially to
the effect that:
* The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and each of the
Acquired Funds will qualify as a party to the reorganization within the
meaning of Section 368(b) of the Code.
* Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of each Acquired
Fund which are distributed by Acquired Fund prior to the Closing.
* The tax basis of the Acquiring Fund Shares received by each Acquired Fund
shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund shares exchanged therefor.
* The holding period of the Acquiring Fund shares received by each Acquired
Fund shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund shareholder held the Acquired Fund shares
exchanged therefor, provided that the Acquired Fund shares were held as a
capital asset at the Effective Time.
* The Acquired Funds will recognize no income, gain, or loss by reason of
the Reorganization.
* The Acquiring Fund will recognize no income, gain, or loss by reason of
the Reorganization.
* The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Funds as of the Effective Time.
* The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Funds.
* The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Funds as of
the Effective Time.
REASONS FOR THE PROPOSED REORGANIZATION AND BOARD DELIBERATIONS
The Board believes that the proposed Reorganization will be advantageous to
shareholders of the Acquired Funds based on its consideration of the following
matters:
* TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms and
conditions of the Reorganization as described in the previous paragraphs.
* TAX CONSEQUENCES. The Board considered the tax-free nature of the
Reorganization.
* CONTINUITY OF INVESTMENT. The Board considered the compatibility of the Funds
and the degree of similarity between the investment objectives and the
principal investment strategies for the Acquired Funds and the Acquiring Fund.
The Board considered the fact that the Acquired Funds and the Acquiring Fund
have generally similar investment objectives and, except as described in this
proxy statement, investment strategies and policies that also are generally
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The Allianz Variable Insurance Products Trust - Proxy
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similar. The Board also took note of the fact that following the
Reorganization, shareholders of the Acquired Funds will be invested in a Fund
holding a portfolio whose characteristics are similar to those of the
portfolio currently held by the Acquired Funds, except as described in this
proxy statement.
* EXPENSE RATIOS. The Board considered the relative expenses of the Funds. The
total operating expense ratio for the Acquiring Fund is lower than the total
operating expense ratio for each of the Acquired Funds as of the end of the
Acquired Funds' most recent fiscal year. The contractual management fee for
the Acquiring Fund is lower than for the Acquired Funds, and the contractual
management fees for all of the Funds do not include any breakpoints. The Funds
all have the same Distribution (12b-1) Fees. The Acquiring Fund's Other
Expenses are lower than those for the Acquired Funds. In sum, shareholders of
the Acquired Funds may expect to incur lower overall fund expenses following
the Reorganization.
The Board also considered the possibility that both higher aggregate net
assets resulting from the Reorganization and the opportunity for net cash
inflows, or reduced outflows, may reduce the risk that, if net assets of the
Acquired Funds fail to grow, or even diminish, the Acquired Funds' total
expense ratios could rise from current levels as fixed expenses become a
larger percentage of net assets. The Board noted that all of the Funds are
subject to expense limitation agreements that will remain in place through at
least April 30, 2010. The Board considered the fact that all of the Funds
currently are operating with expenses below the caps contained in their
respective expense limitation agreement and that the Acquiring Fund is not
subject currently to reimbursements to the Manager for expenses previously
waived by the Manager. The Board also considered the fact that following the
Reorganization total fund operating expenses for the combined Fund are
expected to exceed the caps contained in the Acquiring Fund's expense
limitation agreement.
* ECONOMIES OF SCALE. The Board considered the advantage of combining Funds with
similar investment objectives and investment strategies. The Board believes
that the combined Fund may have the opportunity to take advantage of the
economies of scale associated with a larger fund. The combined Fund may have
better prospects for growth than any of the Funds separately. For example, a
larger fund should have an enhanced ability to effect portfolio transactions
on more favorable terms and should have greater investment flexibility.
Furthermore, as indicated above, fixed expenses, such as audit expenses and
accounting expenses that are charged on a per fund basis, may be reduced.
* COSTS. The Board noted that the Acquired Funds each will bear the expenses of
printing and mailing communications to the Contract Owners who beneficially
owned its shares and that all other expenses of the Reorganization, including
accounting, legal, and custodial expenses, and any costs related to
repositioning of the Acquiring Funds' portfolios after the Reorganization,
will be allocated equally among the Acquired Funds and the Acquiring Fund. The
Board also noted that the estimated total reorganization costs, including
repositioning costs, would be less than $0.01 per share of the combined Fund.
The Board considered the Manager's analysis showing that the reduction in
annual operating expenses for the Acquired Funds and the Acquiring Fund
resulting from the Reorganization is likely to be greater than or equal to the
expenses of the Reorganization to be borne by the Acquired Funds or Acquiring
Fund, as the case may be.
* DILUTION. The Board considered the fact that the Reorganization will not
dilute the interests of the current Contract Owners with contract values
allocated to subaccounts investing in the Acquired Funds because it would be
effected on the basis of the relative net asset value per share of the
Acquired Funds and the Acquiring Fund, respectively. Thus, subaccounts holding
shares of the Acquired Funds will receive shares of the Acquiring Fund equal
in value to their shares in the Acquired Funds.
* PERFORMANCE AND OTHER FACTORS. The Board considered the relative performance
records of the Funds. The Board noted that none of the Funds have accumulated
any significant track record. The Acquiring Fund commenced operations only
this year, and both of the Acquired Funds have been in existence only since
May 1, 2007. Therefore, the Board also considered the overall track record of
the Acquiring Fund's subadviser, BlackRock Investment Management, LLC, in
managing other funds with similar investment objectives and strategies.
Although the Board was cognizant of the fact that an investment subadviser's
past performance is no guarantee of its future results, the Board did
recognize that the overall track record of the Acquiring Fund's subadviser
could help attract more assets and increase shareholder confidence in the
combined Fund. The Board concluded that increased inflows, or reduced
outflows, could lead to further economies of scale (see "Economies of Scale"
above).
The Board also considered the fact that the Funds have generally similar
investment objectives and investment strategies. The Reorganization should
allow for a concentrated selling effort, thereby potentially benefiting
shareholders of the combined Funds. The Board further took into account the
Manager's belief that the Acquired Funds, as stand-alone Funds, were unlikely
to experience significant growth in assets as a result of inflows.
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* POTENTIAL EFFECTS ON THE MANAGER. The Board considered the potential benefits
from the Reorganization that could be realized by the Manager. The Board
recognized that the potential benefits to the Manager consist principally of
economies of scale and the elimination of expenses incurred in duplicative
efforts to administer separate funds. The Board noted, however, that
shareholders of the Acquired Funds will benefit over time from any long-term
decrease in overall operating expense ratios resulting from the proposed
Reorganization. The Board noted that the proposed Reorganization would affect
the amount of management fees that the Manager retains after payment of the
subadvisory fees. The table below assumes that the Reorganization has taken
place. See Table A-2 above for information concerning current management fees
for Funds.
FUND MANAGEMENT FEE RETAINED AFTER PAYMENT OF SUBADVISORY FEE (1)
NACM International Fund (Acquired Fund) 0.30%
Schroder International Small Cap Fund (Acquired Fund) 0.25%
International Index Fund (Acquiring Fund) 0.27%
Weighted Average Before Reorganization 0.27%
INTERNATIONAL INDEX FUND - PRO FORMA WITH ACQUIRED FUNDS 0.27%
(1)Calculations are as of May 31, 2009, using monthly average assets under
management for May 2009.
The Board did not assign relative weights to the foregoing factors or deem any
one or group of them to be controlling in and of themselves.
BOARD DETERMINATIONS
After considering the factors described above and other relevant information at
an in-person meeting held on June 10, 2009, the Board of Trustees of each of the
Acquired Funds, including a majority of the independent Board members found that
participation in the Reorganization is in the best interests of the Acquired
Funds and that the interests of existing Contract Owners with contract values
allocated to subaccounts investing in the Acquired Funds would not be diluted as
a result of the Reorganization.
The Board of Trustees of the Acquiring Fund approved the Plans at the meeting
held on June 10, 2009. Among other factors, the Board members considered the
terms of the Plans, the provisions intended to avoid the dilution of Contract
Owners' interests, and the anticipated tax consequences of the Reorganization.
The Board found that participation in the Reorganization is in the best
interests of the Acquiring Fund and that the interests of existing Contract
Owners with contract values allocated to subaccounts investing in the Acquiring
Fund will not be diluted as a result of the Reorganization.
RECOMMENDATION AND VOTE REQUIRED
The Board recommends that Contract Owners who are entitled to vote at the
meeting approve the proposed Plans. Approval of each Plan requires the
affirmative vote, in person or by proxy, of a majority of the voting power of
the outstanding shares of the respective Acquired Fund as the record date, July
20, 2009. Shareholders of each Acquired Fund will vote separately on the Plan
applicable the Acquired Fund in which they are invested. Each share is entitled
to one vote for each dollar, and a fractional vote for each fraction of a
dollar, of net asset value per share held by a shareholder on the record date.
If the Plan is not approved by an Acquired Fund, the Board will consider what
further action should be taken. The Reorganization will proceed with respect to
any Acquired Fund approving it, even if the other Acquired Fund does not.
If shareholder approval is obtained, the Reorganization is scheduled to be
effective on or about October 21, 2009.
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The Allianz Variable Insurance Products Trust - Proxy
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SECTION B - PROXY VOTING AND SHAREHOLDER MEETING INFORMATION
REFERENCE TO THE "FUND" IN THIS SECTION IS A REFERENCE TO THE ACQUIRED FUND.
A special meeting of shareholders of the Acquired Funds will be held as
specified in the Notice of Special Meeting that accompanies this proxy
statement/prospectus. At the meeting, shareholders (the separate accounts) will
vote their shares of the Acquired Funds.
You have the right to instruct Allianz Life and Allianz Life of NY (together,
"Allianz") on how to vote the shares of the Acquired Funds held under your
Contract. The number of Fund shares for which you may provide instructions will
be based on the dollar amount of Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date. Each accumulation unit or annuity unit represents a specified
dollar value and a specified number of Fund shares. For each dollar of value,
the Contract Owner is permitted to vote one Fund share. We count fractional
votes. If you execute and return your voting instruction form, but do not
provide voting instructions, Allianz will vote the shares underlying your
Contract in favor of the proposal described above. Allianz will vote any shares
for which it does not receive a voting instruction form, and any shares which it
or its affiliates hold for their own account, in proportionately the same manner
as shares for which it has received voting instructions. Allianz will not
require voting instructions for a minimum number of shares, and therefore a
small number of shareholders could determine the outcome of any proposal.
For the Meeting to proceed, there must be a quorum. This means that at least 25%
of a Fund's shares must be represented at the Meeting either in person or by
proxy. Because Allianz is the only shareholder of the Funds, its presence at the
Meeting in person or by proxy will meet the quorum requirement.
You may revoke your voting instructions up until voting results are announced at
the Meeting or at any adjournment of the Meeting by giving written notice to
Allianz prior to the Meeting by mail to Allianz Variable Insurance Products
Trust, c/o Advisory Management, A 3-825, 5701 Golden Hills Drive, Minneapolis,
Minnesota 55416, by executing and returning to Allianz a voting instruction form
with a later date, or by attending the Meeting and voting in person. If you need
a new voting instruction form, please call the Fund at 1-800-950-5872 ext.
35857, and a new voting instruction form will be sent to you. If you return an
executed form without voting instructions, your shares will be voted "FOR" the
proposal.
The Acquired Funds will pay all costs of solicitation, including the cost of
preparing and mailing the Notice of a Special Meeting of shareholders and this
proxy statement/prospectus to Contract Owners. Representatives of the Manager,
without cost to the Fund, also may solicit voting instructions from Contract
Owners by means of mail, telephone, or personal calls.
DISSENTERS' RIGHTS OF APPRAISAL. There are no appraisal or dissenters' rights
for shareholders of the Acquired Funds. Delaware law does not grant
beneficiaries of statutory trusts who dissent from approval of the
Reorganization the right to demand an appraisal for their interests and payment
of their fair cash value. As a result, shareholders who object to the
Reorganization do not have a right to demand a different payment for their
shares of beneficial interest.
OTHER MATTERS. Management of the Funds anticipates that an election of Trustees
and ratification of the auditors also will be conducted at the Meeting. You will
receive a separate proxy statement containing information regarding these other
matters if you are eligible to vote on them. Otherwise, management of the Funds
knows of no other matters that may properly be, or that are likely to be,
brought before the Meeting. However, if any other business shall properly come
before the Meeting, the persons named on the voting instruction form intend to
vote thereon in accordance with their best judgment.
ADJOURNMENT. In the event that voting instructions received by the time
scheduled for the meeting are not sufficient to approve the Reorganization,
representatives of Allianz may move for one or more adjournments of the meeting
for a period of not more than 120 days in the aggregate to allow further
solicitation of voting instructions on the proposals. Any adjournment requires
the affirmative vote of a majority of the voting power of the shares present at
the meeting. Representatives of Allianz will vote in favor of adjournment. The
Acquired Funds will pay the costs of any additional solicitation and of any
adjourned meeting. A shareholder vote may be taken on one or more of the items
in this proxy statement prior to adjournment if sufficient voting instructions
have been received.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
SECTION C - CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER FUND INFORMATION
IN THIS SECTION REFERENCE TO THE "FUND" IS A REFERENCE TO THE ACQUIRING FUND AND
THE ACQUIRED FUNDS.
This section contains the following information about the Funds:
TABLE CONTENT
(all information is shown for the fiscal year ended December 31, 2008,
unless noted otherwise)
C-1 Actual and pro forma capitalization of the Acquired Fund and the
Acquiring Fund
C-2 Actual and pro forma ownership of Fund shares
CAPITALIZATION
The following table shows the capitalization of the Funds at December 31, 2008,
and on a pro forma basis, assuming the proposed Reorganization had taken place.
TABLE C-1. ACTUAL AND PRO FORMA CAPITALIZATION OF THE ACQUIRED FUNDS AND THE
ACQUIRING FUNDS
FUND NET ASSETS NET ASSET VALUE PER SHARE SHARES OUTSTANDING
NACM International Fund (Acquired Fund)* $55,950,463 $5.12 10,925, 213
Schroder International Small Cap Fund (Acquired Fund)* $58,270,402 $4.97 11,719,903
International Index Fund (Acquiring Fund)** N/A $10.00 N/A
Adjustments *** -$85,000 -- -11,231,529
International Index Fund - Pro Forma with the Acquired Funds $114,135,865 $10.00 11,413,587
* The number of Fund shares for which you may provide instructions will be based
on the dollar amount of Acquired Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date.
**The International Index Fund commenced operations April 27, 2009, and did not
have any net assets at December 31, 2008.
***The adjustment to net assets represents the impact as a result of the
estimated Reorganization fees and expenses that will be paid by the Funds, and
the adjustment to shares outstanding represents the impact as a result of the
shares being issued by the Acquiring Fund to the Acquired Fund shareholders.
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The Allianz Variable Insurance Products Trust - Proxy
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OWNERSHIP OF FUND SHARES
The following table provides information on shareholders who owned more than 5%
of each Fund's outstanding shares at the record date. At the record date,
officers and directors of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.
TABLE C-2. ACTUAL AND PRO FORMA OWNERSHIP OF FUND SHARES [ADD UPON AMENDMENT]
FUND 5% OWNERS PERCENT OF SHARES PERCENT OF SHARES HELD FOLLOWING THE
HELD REORGANIZATION
------------------------------------------------------------------------------------------------------------------------------------
NACM International Fund Allianz Life Variable [00.00]% N/A
Account B
Schroder International Small Cap Allianz Life Variable [00.00]% N/A
Fund Account B
International Index Fund Allianz Life Variable [00.00]% [00.00]%
Account B
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
EXHIBIT A -AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of June 10, 2009, (the
"Agreement") is by and among the Allianz Variable Insurance Products Trust (the
"VIP Trust" or the "Selling Trust"), a Delaware statutory trust, on behalf of
its series, the AZL NACM International Fund (the "Acquired Fund"), and the same
statutory trust (in this role, the "Buying Trust") on behalf of its series, the
AZL International Index Fund (the "Acquiring Fund").
The following table shows the name of the Acquired Fund and the Acquiring Fund
that will be parties to the reorganization.
----------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
----------------------------------------------------------
|AZL NACM International Fund|AZL International Index Fund|
----------------------------------------------------------
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Acquired Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the transactions
it contemplates. The reorganization between the Acquiring Fund and the
Acquired Fund is referred to hereinafter as the "Reorganization." The
Acquiring Fund agrees to furnish data and information, as reasonably
requested, for the proxy statement to be furnished to shareholders of the
Acquired Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization is intended to qualify as a
reorganization within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"). At the Closing (as defined
below), the Selling Trust will convey all of the assets of the Acquired
Fund to the Acquiring Fund. The Acquiring Fund will assume all liabilities
of the Acquired Fund. At the Closing, the Buying Trust will deliver shares
of the Acquiring Fund, including fractional shares, to the Selling Trust.
The number of shares will be determined by dividing the aggregate net
asset value of the shares of the Acquired Fund, computed as described in
Section 3(a), by the net asset value of one share of the Acquiring Fund,
computed as described in Section 3(b). The Acquired Fund will not pay a
sales charge on the receipt of Acquiring Fund shares in exchange for the
assets of the Acquired Fund. In addition, the separate account
shareholders of the Acquired Fund will not pay a sales charge on
distribution to them of shares of the Acquiring Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the "Closing")
will occur on the first day on which the New York Stock Exchange (the
"NYSE") is open for business following approval of contract owners of the
Acquired Fund and receipt of all necessary regulatory approvals, or such
later date as the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business
on the date of the Closing or at such other time as an authorized officer
of the VIP Trust shall determine (the "Effective Time").
3. VALUATION.
a. The aggregate net asset value of the shares of the Acquired Fund will be
computed as of the close of regular trading on the NYSE on the day of
Closing (the "Valuation Date") using the valuation procedures in the
Acquired Fund's prospectus.
b. The net asset value per share of shares of the Acquiring Fund will be
determined as of the close of regular trading on the NYSE on the Valuation
Date, using the valuation procedures in the Acquiring Fund's prospectus.
c. At the Closing, the Acquired Fund will provide the Acquiring Fund with a
copy of the computation showing the valuation of the aggregate net asset
value of the shares of the Acquired Fund on the Valuation Date. The
Acquiring Fund will provide the Acquired Fund with a copy of the
computation showing the determination of the net asset value per share of
shares of the Acquiring Fund on the Valuation Date.
4. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUND.
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The Allianz Variable Insurance Products Trust - Proxy
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a. As soon as practicable after the Valuation Date, the Selling Trust will
liquidate the Acquired Fund and distribute shares of the Acquiring Fund to
the Acquired Fund's shareholders of record. The Acquiring Fund will
establish shareholder accounts in the names of each Acquired Fund
shareholder, representing the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each shareholder. All
issued and outstanding shares of the Acquired Fund will simultaneously be
canceled on the books of the Selling Trust. The Acquiring Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the Selling Trust.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Trust relating to the Acquired Fund will be closed and no further
transfer of shares will be made.
c. Promptly after the distribution, the Acquiring Fund or its transfer agent
will notify each shareholder of the Acquired Fund of the number of shares
distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Acquired Fund, and
in no event later than twelve months from the date of the Closing, the
Acquired Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE BUYING TRUST. The Buying
Trust represents and warrants to the Acquired Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Buying
Trust is a statutory trust duly organized, validly existing, and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, management
investment company. The Acquiring Fund is a series of the Buying Trust.
b. Capitalization. The Buying Trust has authorized capital of an unlimited
number of shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquiring Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquiring
Fund as of the end of the last fiscal year and the subsequent unaudited
semi-annual financial statements, if any (the "Acquiring Fund Financial
Statements"), fairly present the financial position of the Acquiring Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Shares to Be Issued upon Reorganization. The shares of beneficial interest
to be issued in connection with the Reorganization will be duly authorized
and, at the time of the Closing, will be validly issued, fully paid, and
non-assessable.
e. Authority Relative to the Agreement. The Buying Trust has the power to
enter into and carry out the obligations described in this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Trustees of the Buying Trust, and no other
proceedings by the Buying Trust or the Acquiring Fund are necessary under
the Buying Trust's Agreement and Declaration of Trust or By-Laws (the
"Governing Documents").
f. No Violation. The Buying Trust is not in violation of its Governing
Documents or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion of
the transactions contemplated by it will not conflict with, or constitute
a breach of, any material contract or other instrument to which the
Acquiring Fund is subject. The transactions will not result in any
violation of the provisions of the Governing Documents or any law,
administrative regulation, or administrative or court decree applicable to
the Acquiring Fund.
g. Liabilities. There are no liabilities of the Acquiring Fund other than:
(1)liabilities disclosed in the Acquiring Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquired Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquiring Fund.
h. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquiring Fund, threatened, that would materially
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The Allianz Variable Insurance Products Trust - Proxy
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and adversely affect the Acquiring Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquiring Fund knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation, and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to the
Selling Trust, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
j. Taxes. The Acquiring Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquiring Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and such returns
and reports have been true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquired Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquired Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
k. Registration Statement. The Acquiring Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933 (the "1933 Act")
relating to the shares of beneficial interest to be issued in the
Reorganization. At the time that the Registration Statement becomes
effective, at the time of the Acquired Fund's shareholders' meetings, and
at the Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading. However, none of the
representations and warranties in this subsection applies to statements
in, or omissions from, the Registration Statement made in reliance on
information furnished by the Acquired Fund for use in the Registration
Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING TRUST.
The Selling Trust represents and warrants to the Acquiring Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Selling
Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
1940 Act as an open-end, management investment company. The Acquired Fund
is a series of the Selling Trust.
b. Capitalization. The Selling Trust has authorized capital of an unlimited
number shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquired Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquired
Fund as of the end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Acquired Fund Financial
Statements"), fairly present the financial position of the Acquired Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Authority Relative to the Agreement. The Selling Trust has the power to
enter into and to carry out its obligations under this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Directors of the Selling Trust, the
shareholders meetings referred to in Section 6(k) will be called and held,
and no other proceedings by the Selling Trust or the Acquired Fund are
necessary under the Selling Trust's Governing Documents.
e. No Violation. The Selling Trust is not in violation of its Agreement and
Declaration of Trust or By-Laws (the "Governing Documents") or in default
in the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of, any
material contract or other instrument to which the Acquired Fund is
subject. The transactions will not result in any violation of the
provisions of the Governing Documents or any law, administrative
regulation, or administrative or court decree applicable to the Acquired
Fund.
f. Liabilities. There are no liabilities of the Acquired Fund other than:
(1)liabilities disclosed in the Acquired Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
(3)liabilities previously disclosed to the Acquiring Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquired Fund.
g. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquired Fund, threatened, that would materially
and adversely affect the Acquired Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquired Fund knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and the Acquired Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
h. Contracts. Except for contracts and agreements previously disclosed to the
Buying Trust, the Acquired Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
i. Taxes. The Acquired Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquired Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and all such
returns and reports are true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquiring Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquiring Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
j. Fund Securities. All securities listed in the schedules of investments of
the Acquired Fund as of the Closing will be owned by the Acquired Fund
free and clear of any encumbrances, except as indicated in the schedule.
k. Shareholders' Meetings; Registration Statement. The Acquired Fund will
call and hold a shareholders' meeting at which its shareholders will
consider and act upon the transactions contemplated by this Agreement. The
Acquired Fund will cooperate with the Acquiring Fund and will furnish
information relating to the Selling Trust and the Acquired Fund required
in the Registration Statement. At the time that the Registration Statement
becomes effective, at the time of the shareholders' meeting, and at the
Closing, the Registration Statement, as it relates to the Selling Trust or
the Acquired Fund, will not contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading. However, the representations and warranties in this
subsection apply only to statements in or omissions from the Registration
Statement made in reliance upon information furnished by the Selling Trust
or the Acquired Fund for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING TRUST. The obligations of the Buying
Trust with respect to the Reorganization are subject to the satisfaction of
the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of the
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Selling Trust and the
Acquired Fund will have complied with this Agreement, and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling Trust will
provide a certificate to the Acquiring Fund confirming that, as of the
Closing, the representations and warranties set forth in Section 6 are
true and correct and that there have been no material adverse changes in
the financial condition, results of operations, business, properties, or
assets of the Acquired Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Selling Trust, and delivered to the
Acquiring Fund on or prior to the last business day before the Closing. A
decline in the value of the securities owned by the Acquired Fund will not
constitute a "material adverse change" for purposes of the foregoing
sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective, and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Buying Trust will have received an opinion of
counsel for the Selling Trust, dated as of the Closing, to the effect that
(i) the Selling Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquired Fund
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is a series of the Selling Trust; (iii) this Agreement and the
Reorganization have been duly authorized and approved by all requisite
action of the Selling Trust and the Acquired Fund, and this Agreement has
been duly executed by, and is a valid and binding obligation of, the
Selling Trust.
e. Declaration of Dividend. The Acquired Fund, prior to the Closing, will
have declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the shareholders
of the Acquired Fund (i) all of the excess of (x) the Acquired Fund's
investment income excludable from gross income under Section 103 of the
Code over (y) the Acquired Fund's deductions disallowed under Sections 265
and 171 of the Code, (ii) all of the Acquired Fund's investment company
taxable income as defined in Section 852 of the Code (in each case
computed without regard to any deduction for dividends paid) and (iii) all
of the Acquired Fund's net capital gain realized (after reduction for any
capital loss carryover), in each case for the current taxable year (which
will end on the Closing date) and any preceding taxable years for which
such a dividend is eligible to be made under Section 855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING TRUST. The obligations of the
Selling Trust with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of all
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Acquiring Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the Closing. An officer of the Buying Trust will provide a certificate to
the Acquired Fund confirming that, as of the Closing, the representations
and warranties set forth in Section 5 are true and correct and that there
have been no material adverse changes in the financial condition, results
of operations, business, properties, or assets of the Acquiring Fund since
the date of its last financial statement, except as otherwise indicated in
any financial statements, certified by an officer of the Buying Trust, and
delivered to the Acquired Fund on or prior to the last business day before
the Closing. A decline in the value of the securities owned by the
Acquiring Fund will not constitute a "material adverse change" for
purposes of the foregoing sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Trust will have received the opinion of
counsel for the Buying Trust, dated as of the Closing, to the effect that
(i) the Buying Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquiring Fund
is a series of the Buying Trust; (iii) this Agreement and the
Reorganization have been authorized and approved by all requisite action
of the Buying Trust and the Acquiring Fund, and this Agreement has been
duly executed by, and is a valid and binding obligation of, the Buying
Trust; and (iv) the shares to be issued in the Reorganization are duly
authorized and upon issuance in accordance with this Agreement will be
validly issued, fully paid, and non-assessable shares of the Acquiring
Fund.
9. FURTHER CONDITIONS TO THE OBLIGATIONS OF THE BUYING TRUST AND THE SELLING
TRUST. As a further condition to the obligations of the VIP Trust on behalf
of both the Acquired Fund and the Acquiring Fund hereunder, the VIP Trust, on
behalf of both the Acquired Fund and the Acquiring Fund, shall have received
the opinion of Dorsey & Whitney LLP addressed to the VIP Trust on behalf of
both the Acquired Fund and the Acquiring Fund, dated as of the date of the
Closing, and based in part on representations to be furnished by the VIP
Trust on behalf of the Acquired Fund and the Acquiring Fund, substantially to
the effect that:
a. The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
b. Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of the Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of the Acquired
Fund which are distributed by the Acquired Fund prior to the Closing.
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c. The tax basis of the Acquiring Fund Shares received by each Acquired Fund
Shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund Shares exchanged therefor.
d. The holding period of the Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund Shareholder held the Acquired Fund Shares
exchanged therefor, provided that the Acquired Fund Shares were held as a
capital asset at the Effective Time.
e. The Acquired Fund will recognize no income, gain or loss by reason of the
Reorganization.
f. The Acquiring Fund will recognize no income, gain or loss by reason of the
Reorganization.
g. The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
h. The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
i. The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
10.AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the Board of
Trustees. The Agreement may be amended at any time before or after
approval by the shareholders of the Acquired Fund, but after shareholder
approval, no amendment shall be made that substantially changes the terms
of Sections 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and
(ii) compliance with any of the covenants or conditions made for its
benefit. However, neither party may waive the requirement to obtain
shareholder approval or the requirement to obtain a tax opinion.
c. The Selling Trust may terminate this Agreement at any time prior to the
Closing by notice to the Buying Trust if a material condition to its
performance or a material covenant of the Buying Trust on behalf of the
Acquiring Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Buying
Trust on behalf of the Acquiring Fund and is not cured.
d. The Buying Trust may terminate this Agreement at any time prior to the
Closing by notice to the Selling Trust if a material condition to its
performance or a material covenant of the Selling Trust on behalf of the
Acquired Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Selling
Trust on behalf of the Acquired Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Acquired Fund, without any liability on the part of either party or its
respective trustees, officers, or shareholders, on written notice to the
other party, and shall be terminated without liability as of the close of
business on December 31, 2009, or a later date agreed upon by the parties,
if the Closing has not taken place on or prior to that date.
f. The representations, warranties, and covenants contained in this
Agreement, or in any document delivered in connection with this Agreement,
will survive the Reorganization.
11.EXPENSES. All fees paid to governmental authorities for the registration or
qualification of the Acquiring Fund Shares and all transfer agency costs
related to the shares of the Acquiring Fund Shares shall be allocated to the
Acquiring Fund. All fees and expenses related to printing and mailing
communications to shareholders and beneficial owners of shares of the
Acquired Fund shall be allocated to the Acquired Fund. All of the other
expenses of the transactions required for the Reorganization, including
without limitation, accounting, legal, and custodial expenses, shall be
allocated equally between the Acquired Fund and the Acquiring Fund. The
expenses specified in this Section shall be borne by the Fund to which they
are allocated.
12. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state of
Minnesota.
13. INDEMNIFICATION. Each party will indemnify and hold the other and its
officers and trustees (each an "Indemnitee") harmless from and against any
liability or other cost and expense, in connection with the defense or
disposition of any action, suit, or other proceeding, before any court or
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administrative or investigative body in which the Indemnitee may be involved
as a party, with respect to actions taken under this Agreement. However, no
Indemnitee will be indemnified against any liability or expense arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the Indemnitee's position.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL NACM International Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL International Index Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
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EXHIBIT B -AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of June 10, 2009, (the
"Agreement") is by and among the Allianz Variable Insurance Products Trust (the
"VIP Trust" or the "Selling Trust"), a Delaware statutory trust, on behalf of
its series, the AZL Schroder International Small Cap Fund (the "Acquired Fund"),
and the same statutory trust (in this role, the "Buying Trust") on behalf of its
series, the AZL International Index Fund (the "Acquiring Fund").
The following table shows the name of the Acquired Fund and the Acquiring Fund
that will be parties to the reorganization.
------------------------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
------------------------------------------------------------------------
|AZL Schroder International Small Cap Fund|AZL International Index Fund|
------------------------------------------------------------------------
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Acquired Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the transactions
it contemplates. The reorganization between the Acquiring Fund and the
Acquired Fund is referred to hereinafter as the "Reorganization." The
Acquiring Fund agrees to furnish data and information, as reasonably
requested, for the proxy statement to be furnished to shareholders of the
Acquired Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization is intended to qualify as a
reorganization within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"). At the Closing (as defined
below), the Selling Trust will convey all of the assets of the Acquired
Fund to the Acquiring Fund. The Acquiring Fund will assume all liabilities
of the Acquired Fund. At the Closing, the Buying Trust will deliver shares
of the Acquiring Fund, including fractional shares, to the Selling Trust.
The number of shares will be determined by dividing the aggregate net
asset value of the shares of the Acquired Fund, computed as described in
Section 3(a), by the net asset value of one share of the Acquiring Fund,
computed as described in Section 3(b). The Acquired Fund will not pay a
sales charge on the receipt of Acquiring Fund shares in exchange for the
assets of the Acquired Fund. In addition, the separate account
shareholders of the Acquired Fund will not pay a sales charge on
distribution to them of shares of the Acquiring Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the "Closing")
will occur on the first day on which the New York Stock Exchange (the
"NYSE") is open for business following approval of contract owners of the
Acquired Fund and receipt of all necessary regulatory approvals, or such
later date as the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business
on the date of the Closing or at such other time as an authorized officer
of the VIP Trust shall determine (the "Effective Time").
3. VALUATION.
a. The aggregate net asset value of the shares of the Acquired Fund will be
computed as of the close of regular trading on the NYSE on the day of
Closing (the "Valuation Date") using the valuation procedures in the
Acquired Fund's prospectus.
b. The net asset value per share of shares of the Acquiring Fund will be
determined as of the close of regular trading on the NYSE on the Valuation
Date, using the valuation procedures in the Acquiring Fund's prospectus.
c. At the Closing, the Acquired Fund will provide the Acquiring Fund with a
copy of the computation showing the valuation of the aggregate net asset
value of the shares of the Acquired Fund on the Valuation Date. The
Acquiring Fund will provide the Acquired Fund with a copy of the
computation showing the determination of the net asset value per share of
shares of the Acquiring Fund on the Valuation Date.
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4. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUND.
a. As soon as practicable after the Valuation Date, the Selling Trust will
liquidate the Acquired Fund and distribute shares of the Acquiring Fund to
the Acquired Fund's shareholders of record. The Acquiring Fund will
establish shareholder accounts in the names of each Acquired Fund
shareholder, representing the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each shareholder. All
issued and outstanding shares of the Acquired Fund will simultaneously be
canceled on the books of the Selling Trust. The Acquiring Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the Selling Trust.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Trust relating to the Acquired Fund will be closed and no further
transfer of shares will be made.
c. Promptly after the distribution, the Acquiring Fund or its transfer agent
will notify each shareholder of the Acquired Fund of the number of shares
distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Acquired Fund, and
in no event later than twelve months from the date of the Closing, the
Acquired Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE BUYING TRUST. The Buying
Trust represents and warrants to the Acquired Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Buying
Trust is a statutory trust duly organized, validly existing, and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, management
investment company. The Acquiring Fund is a series of the Buying Trust.
b. Capitalization. The Buying Trust has authorized capital of an unlimited
number of shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquiring Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquiring
Fund as of the end of the last fiscal year and the subsequent unaudited
semi-annual financial statements, if any (the "Acquiring Fund Financial
Statements"), fairly present the financial position of the Acquiring Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Shares to Be Issued upon Reorganization. The shares of beneficial interest
to be issued in connection with the Reorganization will be duly authorized
and, at the time of the Closing, will be validly issued, fully paid, and
non-assessable.
e. Authority Relative to the Agreement. The Buying Trust has the power to
enter into and carry out the obligations described in this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Trustees of the Buying Trust, and no other
proceedings by the Buying Trust or the Acquiring Fund are necessary under
the Buying Trust's Agreement and Declaration of Trust or By-Laws (the
"Governing Documents").
f. No Violation. The Buying Trust is not in violation of its Governing
Documents or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion of
the transactions contemplated by it will not conflict with, or constitute
a breach of, any material contract or other instrument to which the
Acquiring Fund is subject. The transactions will not result in any
violation of the provisions of the Governing Documents or any law,
administrative regulation, or administrative or court decree applicable to
the Acquiring Fund.
g. Liabilities. There are no liabilities of the Acquiring Fund other than:
(1)liabilities disclosed in the Acquiring Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquired Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquiring Fund.
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h. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquiring Fund, threatened, that would materially
and adversely affect the Acquiring Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquiring Fund knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation, and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to the
Selling Trust, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
j. Taxes. The Acquiring Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquiring Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and such returns
and reports have been true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquired Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquired Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
k. Registration Statement. The Acquiring Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933 (the "1933 Act")
relating to the shares of beneficial interest to be issued in the
Reorganization. At the time that the Registration Statement becomes
effective, at the time of the Acquired Fund's shareholders' meetings, and
at the Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading. However, none of the
representations and warranties in this subsection applies to statements
in, or omissions from, the Registration Statement made in reliance on
information furnished by the Acquired Fund for use in the Registration
Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING TRUST.
The Selling Trust represents and warrants to the Acquiring Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Selling
Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
1940 Act as an open-end, management investment company. The Acquired Fund
is a series of the Selling Trust.
b. Capitalization. The Selling Trust has authorized capital of an unlimited
number shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquired Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquired
Fund as of the end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Acquired Fund Financial
Statements"), fairly present the financial position of the Acquired Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Authority Relative to the Agreement. The Selling Trust has the power to
enter into and to carry out its obligations under this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Directors of the Selling Trust, the
shareholders meetings referred to in Section 6(k) will be called and held,
and no other proceedings by the Selling Trust or the Acquired Fund are
necessary under the Selling Trust's Governing Documents.
e. No Violation. The Selling Trust is not in violation of its Agreement and
Declaration of Trust or By-Laws (the "Governing Documents") or in default
in the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of, any
material contract or other instrument to which the Acquired Fund is
subject. The transactions will not result in any violation of the
provisions of the Governing Documents or any law, administrative
regulation, or administrative or court decree applicable to the Acquired
Fund.
f. Liabilities. There are no liabilities of the Acquired Fund other than:
(1)liabilities disclosed in the Acquired Fund Financial Statements,
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(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquiring Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquired Fund.
g. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquired Fund, threatened, that would materially
and adversely affect the Acquired Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquired Fund knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and the Acquired Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
h. Contracts. Except for contracts and agreements previously disclosed to the
Buying Trust, the Acquired Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
i. Taxes. The Acquired Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquired Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and all such
returns and reports are true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquiring Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquiring Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
j. Fund Securities. All securities listed in the schedules of investments of
the Acquired Fund as of the Closing will be owned by the Acquired Fund
free and clear of any encumbrances, except as indicated in the schedule.
k. Shareholders' Meetings; Registration Statement. The Acquired Fund will
call and hold a shareholders' meeting at which its shareholders will
consider and act upon the transactions contemplated by this Agreement. The
Acquired Fund will cooperate with the Acquiring Fund and will furnish
information relating to the Selling Trust and the Acquired Fund required
in the Registration Statement. At the time that the Registration Statement
becomes effective, at the time of the shareholders' meeting, and at the
Closing, the Registration Statement, as it relates to the Selling Trust or
the Acquired Fund, will not contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading. However, the representations and warranties in this
subsection apply only to statements in or omissions from the Registration
Statement made in reliance upon information furnished by the Selling Trust
or the Acquired Fund for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING TRUST. The obligations of the Buying
Trust with respect to the Reorganization are subject to the satisfaction of
the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of the
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Selling Trust and the
Acquired Fund will have complied with this Agreement, and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling Trust will
provide a certificate to the Acquiring Fund confirming that, as of the
Closing, the representations and warranties set forth in Section 6 are
true and correct and that there have been no material adverse changes in
the financial condition, results of operations, business, properties, or
assets of the Acquired Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Selling Trust, and delivered to the
Acquiring Fund on or prior to the last business day before the Closing. A
decline in the value of the securities owned by the Acquired Fund will not
constitute a "material adverse change" for purposes of the foregoing
sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective, and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
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d. Opinion of Counsel. The Buying Trust will have received an opinion of
counsel for the Selling Trust, dated as of the Closing, to the effect that
(i) the Selling Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquired Fund
is a series of the Selling Trust; (iii) this Agreement and the
Reorganization have been duly authorized and approved by all requisite
action of the Selling Trust and the Acquired Fund, and this Agreement has
been duly executed by, and is a valid and binding obligation of, the
Selling Trust.
e. Declaration of Dividend. The Acquired Fund, prior to the Closing, will
have declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the shareholders
of the Acquired Fund (i) all of the excess of (x) the Acquired Fund's
investment income excludable from gross income under Section 103 of the
Code over (y) the Acquired Fund's deductions disallowed under Sections 265
and 171 of the Code, (ii) all of the Acquired Fund's investment company
taxable income as defined in Section 852 of the Code (in each case
computed without regard to any deduction for dividends paid) and (iii) all
of the Acquired Fund's net capital gain realized (after reduction for any
capital loss carryover), in each case for the current taxable year (which
will end on the Closing date) and any preceding taxable years for which
such a dividend is eligible to be made under Section 855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING TRUST. The obligations of the
Selling Trust with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of all
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Acquiring Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the Closing. An officer of the Buying Trust will provide a certificate to
the Acquired Fund confirming that, as of the Closing, the representations
and warranties set forth in Section 5 are true and correct and that there
have been no material adverse changes in the financial condition, results
of operations, business, properties, or assets of the Acquiring Fund since
the date of its last financial statement, except as otherwise indicated in
any financial statements, certified by an officer of the Buying Trust, and
delivered to the Acquired Fund on or prior to the last business day before
the Closing. A decline in the value of the securities owned by the
Acquiring Fund will not constitute a "material adverse change" for
purposes of the foregoing sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Trust will have received the opinion of
counsel for the Buying Trust, dated as of the Closing, to the effect that
(i) the Buying Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquiring Fund
is a series of the Buying Trust; (iii) this Agreement and the
Reorganization have been authorized and approved by all requisite action
of the Buying Trust and the Acquiring Fund, and this Agreement has been
duly executed by, and is a valid and binding obligation of, the Buying
Trust; and (iv) the shares to be issued in the Reorganization are duly
authorized and upon issuance in accordance with this Agreement will be
validly issued, fully paid, and non-assessable shares of the Acquiring
Fund.
9. FURTHER CONDITIONS TO THE OBLIGATIONS OF THE BUYING TRUST AND THE SELLING
TRUST. As a further condition to the obligations of the VIP Trust on behalf
of both the Acquired Fund and the Acquiring Fund hereunder, the VIP Trust, on
behalf of both the Acquired Fund and the Acquiring Fund, shall have received
the opinion of Dorsey & Whitney LLP addressed to the VIP Trust on behalf of
both the Acquired Fund and the Acquiring Fund, dated as of the date of the
Closing, and based in part on representations to be furnished by the VIP
Trust on behalf of the Acquired Fund and the Acquiring Fund, substantially to
the effect that:
a. The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
b. Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of the Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of the Acquired
Fund which are distributed by the Acquired Fund prior to the Closing.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
c. The tax basis of the Acquiring Fund Shares received by each Acquired Fund
Shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund Shares exchanged therefor.
d. The holding period of the Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund Shareholder held the Acquired Fund Shares
exchanged therefor, provided that the Acquired Fund Shares were held as a
capital asset at the Effective Time.
e. The Acquired Fund will recognize no income, gain or loss by reason of the
Reorganization.
f. The Acquiring Fund will recognize no income, gain or loss by reason of the
Reorganization.
g. The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
h. The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
i. The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
10.AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the Board of
Trustees. The Agreement may be amended at any time before or after
approval by the shareholders of the Acquired Fund, but after shareholder
approval, no amendment shall be made that substantially changes the terms
of Sections 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and
(ii) compliance with any of the covenants or conditions made for its
benefit. However, neither party may waive the requirement to obtain
shareholder approval or the requirement to obtain a tax opinion.
c. The Selling Trust may terminate this Agreement at any time prior to the
Closing by notice to the Buying Trust if a material condition to its
performance or a material covenant of the Buying Trust on behalf of the
Acquiring Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Buying
Trust on behalf of the Acquiring Fund and is not cured.
d. The Buying Trust may terminate this Agreement at any time prior to the
Closing by notice to the Selling Trust if a material condition to its
performance or a material covenant of the Selling Trust on behalf of the
Acquired Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Selling
Trust on behalf of the Acquired Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Acquired Fund, without any liability on the part of either party or its
respective trustees, officers, or shareholders, on written notice to the
other party, and shall be terminated without liability as of the close of
business on December 31, 2009, or a later date agreed upon by the parties,
if the Closing has not taken place on or prior to that date.
f. The representations, warranties, and covenants contained in this
Agreement, or in any document delivered in connection with this Agreement,
will survive the Reorganization.
11.EXPENSES. All fees paid to governmental authorities for the registration or
qualification of the Acquiring Fund Shares and all transfer agency costs
related to the shares of the Acquiring Fund Shares shall be allocated to the
Acquiring Fund. All fees and expenses related to printing and mailing
communications to shareholders and beneficial owners of shares of the
Acquired Fund shall be allocated to the Acquired Fund. All of the other
expenses of the transactions required for the Reorganization, including
without limitation, accounting, legal, and custodial expenses, shall be
allocated equally between the Acquired Fund and the Acquiring Fund. The
expenses specified in this Section shall be borne by the Fund to which they
are allocated.
12. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state of
Minnesota.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
13. INDEMNIFICATION. Each party will indemnify and hold the other and its
officers and trustees (each an "Indemnitee") harmless from and against any
liability or other cost and expense, in connection with the defense or
disposition of any action, suit, or other proceeding, before any court or
administrative or investigative body in which the Indemnitee may be involved
as a party, with respect to actions taken under this Agreement. However, no
Indemnitee will be indemnified against any liability or expense arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the Indemnitee's position.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL Schroder International Small Cap Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL International Index Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
AZL[R] Oppenheimer Global Fund
5701 Golden Hills Drive
Minneapolis, MN 55416-1297
Dear Allianz Life and Allianz Life of New York Variable Annuity Contract Owner:
The Board of Trustees of the AZL Oppenheimer Global Fund (the "Acquired Fund"),
which is a series of the Allianz Variable Insurance Products Trust (the "VIP
Trust"), is pleased to submit a proposal to reorganize the Acquired Fund into
the AZL Van Kampen Global Franchise Fund (the "Acquiring Fund"), which is
another series of the VIP Trust. Contemporaneously with the reorganization, the
Acquiring Fund will become the AZL Van Kampen International Equity Fund.
As the owner of a variable annuity contract issued by Allianz Life Insurance
Company of North America or Allianz Life Insurance Company of New York, you
beneficially own shares of the Acquired Fund. Accordingly, we ask you to
indicate whether you approve or disapprove of the proposed reorganization by
submitting instructions on how to vote your beneficial shares by phone,
internet, or mail.
The proposed reorganization is being undertaken for several reasons, including
reducing overall expense ratios for contract owners and providing further
economies of scale.
THE BOARD OF TRUSTEES OF THE VIP TRUST BELIEVES THAT THE TRANSACTION IS IN THE
BEST INTERESTS OF THE ACQUIRED FUND AND ITS SHAREHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL.
The Board considered various factors in reviewing the proposed reorganization
on behalf of the Acquired Fund's shareholders, including, but not limited to,
the following:
* The continuity of investments between the Acquired Fund and the Acquiring
Fund.
* The expectation that the reorganization will reduce expense ratios for the
Funds and achieve other economies of scale.
* Historical performance of the Funds.
* The expectation that the reorganization will be tax-free.
If the proposal is approved, the Acquiring Fund will acquire all of the assets
of the Acquired Fund in exchange for newly issued shares of the Acquiring Fund.
These Acquiring Fund shares in turn will be distributed proportionately to the
Acquired Fund's shareholders in complete liquidation of the Acquired Fund. In
order to accomplish the proposed reorganization, the Board of Trustees of the
Acquired Fund submits for your approval an Agreement and Plan of Reorganization.
Whether or not you plan to attend the meeting, please review the enclosed voting
instruction form. You may submit your instructions on voting the shares that you
beneficially own by phone, internet, or mail. Following this letter is a Q&A
summarizing the reorganization and information on how to vote your shares.
Please read the entire proxy statement/prospectus carefully before you vote.
Thank you for your prompt attention to this important matter.
Sincerely,
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
PROXY STATEMENT/PROSPECTUS Q&A
HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR THE AZL
OPPENHEIMER GLOBAL FUND. WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED
PROXY STATEMENT/PROSPECTUS.
Q: WHY IS THE REORGANIZATION BEING PROPOSED?
The reorganization is being proposed in an effort to reduce overall expense
ratios and provide further economies of scale for one of the funds available
to owners of variable annuity contracts issued by Allianz Life Insurance
Company of North America or Allianz Life Insurance Company of New York.
Your Board of Trustees has determined that the reorganization is in the best
interests of the Acquired Fund's shareholders and recommends that you vote
FOR the reorganization.
Q: WILL THE EXPENSES OF THE FUND IN WHICH I PARTICIPATE INCREASE AS A RESULT OF
THE REORGANIZATION?
No. The total expense ratio for the Acquiring Fund following the
reorganization is expected to be lower than the total expense ratio for the
Acquired Fund prior to the reorganization.
Q: WHO IS PAYING THE COSTS OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
Contract owners who were beneficial owners of shares of the Acquired Fund on
the record date will bear these costs.
Q: WILL I INCUR TAXES AS A RESULT OF THE REORGANIZATION?
No. The reorganization is not expected to be a taxable event for contract
owners. Please see the Tax Consequences discussion in the enclosed proxy
statement/prospectus for additional information.
Q: IF APPROVED, WHEN WILL THE REORGANIZATION HAPPEN?
If shareholders approve the reorganization, it will take place shortly after
the shareholder meeting.
Q: IS THERE ANYTHING I NEED TO DO TO CONVERT MY SHARES?
No. Upon shareholder approval of the reorganization, the Acquired Fund shares
that serve as a funding vehicle for benefits under your variable annuity
contract automatically will be exchanged for shares of the Acquiring Fund.
The total value of the Acquiring Fund shares that a shareholder receives in
the reorganization will be the same as the total value of the Acquired Fund
shares held by the shareholder immediately before the reorganization.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE?
After careful consideration, the Board recommends that you vote FOR the
reorganization.
Q: HOW AND WHEN DO I VOTE?
You can vote in one of four ways:
- By mail with the enclosed voting instruction form
- By telephone
- By web site
- In person at the meeting
Please refer to the enclosed voting instruction form for the telephone number
and internet address. Please vote as soon as possible by following the
instructions on the voting instruction form.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
If you have questions about any of the proposals described in the proxy
statement or about voting procedures, please call toll free at 1-800-950-5872
ext. 37952.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
5701 GOLDEN HILLS DRIVE
MINNEAPOLIS, MINNESOTA 55416-1297
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 2009
AZL[R] OPPENHEIMER GLOBAL FUND
A special meeting of the shareholders of the AZL Oppenheimer Global Fund (the
"Acquired Fund") will be held at 10:00 a.m. on October 21, 2009, at the offices
of Allianz Life Insurance Company of North America, 5701 Golden Hills Drive,
Golden Valley, Minnesota. At the meeting, shareholders will consider the
following proposals:
- To approve an Agreement and Plan of Reorganization (the "Plan") between the
AZL Oppenheimer Global Fund, which is a series of the Allianz Variable
Insurance Products Trust (the "VIP Trust"), and the AZL Van Kampen Global
Franchise Fund (the "Acquiring Fund"), which is another series of the VIP
Trust. Under the Plan, the Acquiring Fund would acquire all of the assets and
assume all of the liabilities of the Acquired Fund in exchange for shares of
the Acquiring Fund, which would be distributed proportionately to the
shareholders of the Acquired Fund in complete liquidation of the Acquired
Fund, and the assumption of the Acquired Fund's liabilities; and
- Such other business as may properly come before the meeting, or any
adjournment of the meeting.
The Acquired Fund issues and sells its shares to certain separate accounts of
Allianz Life Insurance Company of North America ("Allianz Life") and Allianz
Life Insurance Company of New York ("Allianz Life of NY"). The separate accounts
hold shares of mutual funds, including the Acquired Fund, which serve as a
funding vehicle for benefits under variable annuity contracts issued by Allianz
Life and Allianz Life of NY. As the owners of the assets held in the separate
accounts, Allianz Life and Allianz Life of NY are the sole shareholders of the
Acquired Fund and are entitled to vote all of the shares of the Acquired Fund.
However, Allianz Life and Allianz Life of NY will vote outstanding shares of the
Acquired Fund in accordance with instructions given by the owners of variable
annuity insurance contracts for which the Fund serves as a funding vehicle. This
Notice is being delivered to owners of variable annuity contracts who, by virtue
of their ownership of the contracts, beneficially owned shares of the Acquired
Fund on the record date, so that they may instruct Allianz Life and Allianz Life
of NY how to vote the shares of the Acquired Fund underlying their contracts.
Shareholders of record at the close of business on July 20, 2009, are entitled
to vote at the meeting.
By order of the Board of Directors
Michael J. Radmer, Secretary
August 7, 2009
YOU CAN VOTE QUICKLY AND EASILY.
PLEASE FOLLOW THE INSTRUCTIONS ON THE ENCLOSED VOTING INSTRUCTION FORM.
PROXY STATEMENT/PROSPECTUS - AUGUST 7, 2009
ACQUIRED FUND ACQUIRING FUND
AZL[R] Oppenheimer Global Fund AZL[R] Van Kampen Global Franchise Fund
("Oppenheimer Global Fund") ("Van Kampen Global Franchise Fund")
This proxy statement/prospectus describes a proposed Agreement and Plan of
Reorganization (the "Plan") pursuant to which the outstanding shares of the
Oppenheimer Global Fund, which currently serves as a funding vehicle for your
variable annuity contract, (the "Acquired Fund") would be exchanged for shares
of the Van Kampen Global Franchise Fund (the "Acquiring Fund").
Contemporaneously with the reorganization, the Acquiring Fund will become the
AZL Van Kampen International Equity Fund. Both the Acquiring Fund and the
Acquired Fund (each a "Fund" and together the "Funds") are series of the Allianz
Variable Insurance Products Trust (the "VIP Trust"). The address of the Funds is
5701 Golden Hills Drive, Minneapolis, MN 55416-1297. The phone number of the
Funds is 877-833-7113.
THE BOARD OF TRUSTEES OF THE VIP TRUST UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLAN.
THESE SECURITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK
OR AN AFFILIATE OF ANY BANK, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), OR ANY OTHER AGENCY OF THE UNITED STATES, OR ANY
BANK OR AN AFFILIATE OF ANY BANK; AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF VALUE.
As with all mutual funds, the Securities and Exchange Commission (the "SEC") has
not approved or disapproved these securities or passed on the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Each of the Funds is subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and
files reports, proxy materials, and other information with the SEC (Investment
Company Act file no. 811-09491). These reports, proxy materials, and other
information can be inspected and copied at the Public Reference Room maintained
by the SEC. Copies may be obtained, after paying a duplicating fee, by
electronic request e-mailed to publicinfo@sec.gov, or by writing to the Public
Reference Section of the SEC, Washington, D.C. 20549-0102. In addition, copies
of these documents may be viewed on-line or downloaded from the SEC's Web site
at http://www.sec.gov.
You should retain this proxy statement/prospectus for future reference. It sets
forth concisely the information about the Acquiring Fund that a prospective
investor should know before investing. Additional information is set forth in
the Statement of Additional Information, dated the same date as this proxy
statement/prospectus, relating to this proxy statement/prospectus. A current
prospectus for the Acquiring Fund, which gives a detailed description of the
Acquiring Fund's policies, strategies, and restrictions, accompanies this proxy
statement/prospectus.
This proxy statement/prospectus was first mailed to contract owners on or about
August 7, 2009.
WHERE TO GET MORE INFORMATION
FUND REPORTS: THE ACQUIRING FUND: THE ACQUIRED FUND:
Prospectus dated April 27, Accompanying, and Incorporated by reference into this
2009. incorporated by proxy statement/prospectus. for a
reference into, this Copy at no charge, call toll free
proxy 877-833-7113 or write to the address
statement/prospectus. given below this table.
Annual report for the For a complete copy at
period ended December 31, no charge, call toll-
2008; and semi-annual free 877-833-7113 or
report for the period ended write to the address
June 30, 2008. given below this table.
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
THIS PROXY STATEMENT/PROSPECTUS:
Statement of Additional Information dated Incorporated by reference into this proxy statement/prospectus. For a copy at no charge,
the same date as this proxy call toll-free 1-800-624-0197 or write to Allianz VIP Trust, Advisory Management, A 3-
statement/prospectus. This document 825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
contains information about both the
Acquired Fund and the Acquiring Fund.
To ask questions about this proxy Call toll free 1-800-950-5872 ext. 37952 or write to: Allianz VIP Trust, Advisory
statement/prospectus. Management, A 3-825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
ADDRESS: Allianz Variable Insurance Products Trust, 5701 Golden Hills Drive,
Minneapolis, MN 55416.
ABOUT THE ACQUIRED AND ACQUIRING FUNDS
The Acquired Fund issues and sells its shares to separate accounts of Allianz
Life Insurance Company of North America ("Allianz Life") and Allianz Life
Insurance Company of New York ("Allianz Life of NY"). These separate accounts
hold shares of mutual funds, including the Acquired Fund, which serve as funding
vehicles for benefits under variable annuity contracts issued by Allianz Life
and Allianz Life of NY (the "Contracts"). Each separate account has subaccounts
that invest in the Acquired Fund and certain other mutual funds. Owners of the
Contracts ("Contract Owners") allocate the value of their Contracts among these
subaccounts. As the owners of the assets held in the separate accounts, Allianz
Life and Allianz Life of NY are the sole shareholders of the Acquired Fund and
are entitled to vote all of the shares of the Acquired Fund. However, Allianz
Life and Allianz Life of NY will vote outstanding shares of the Acquired Fund in
accordance with instructions given by the Contract Owners who are eligible to
vote at the meeting.
Both the Acquired Fund and the Acquiring Fund are open-end management investment
companies. If the Plan is approved, the shares of the Acquiring Fund will be
distributed proportionately by the Acquired Fund to the holders of its shares in
complete liquidation of the Acquired Fund. As a result of the Plan, each
Acquired Fund shareholder would become the owner of Acquiring Fund shares having
a total net asset value equal to the total net asset value of that shareholder's
holdings in the Acquired Fund.
The following information summarizes the proposed reorganization of the Acquired
Fund into the Acquiring Fund (the "Reorganization").
HOW THE REORGANIZATION WILL WORK
* The Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Fund's liabilities.
* The Acquiring Fund will issue shares of beneficial interest to the Acquired
Fund in an amount equal to the value of the assets that it receives from the
Acquired Fund, less the liabilities it assumes. These shares will be
distributed to the Acquired Fund's shareholders (the separate accounts) in
proportion to their holdings in the Acquired Fund. The value of your interest
in the subaccount investing in the Acquiring Fund received in connection with
the Reorganization will equal the value of your interest in the subaccount
that was invested in the Acquired Fund immediately before the Reorganization.
You will not pay any sales charge in connection with this distribution of
shares. If you already have an Acquiring Fund account, shares distributed in
the Reorganization will be added to that account. As a result, when average
cost is calculated for income tax purposes, the cost of the shares in the two
accounts you owned will be combined.
FUND INVESTMENT OBJECTIVES
The following table presents the investment objectives for each of the Funds.
ACQUIRED FUND INVESTMENT OBJECTIVE ACQUIRING FUND INVESTMENT OBJECTIVE
OPPENHEIMER GLOBAL FUND Capital appreciation VAN KAMPEN GLOBAL FRANCHISE FUND* Long-term capital appreciation
* Contemporaneously with the Reorganization, the Acquiring Fund will be renamed
the AZL Van Kampen International Equity Fund, but the investment objective
will remain the same. See the Comparison of Investment Strategies section,
below, for additional information.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
TABLE OF CONTENTS
SECTION A -- Proposal.......................................................4
PROPOSAL: Approve or Reject the Agreement and Plan of Reorganization......4
SUMMARY.................................................................4
How the Reorganization Will Work......................................4
Comparison of the Acquired Fund and the Acquiring Fund................5
Comparison of Investment Objectives...................................5
Comparison of Investment Strategies...................................5
Comparison of Investment Policies.....................................6
Risk Factors..........................................................7
Performance...........................................................10
Tax Consequences......................................................12
FEES AND EXPENSES.........................................................13
THE REORGANIZATION........................................................14
Terms of the Reorganization.............................................14
Conditions to Closing the Reorganization................................14
Termination of the Plan.................................................15
Tax Status of the Reorganization........................................15
Reasons for the Proposed Reorganization and Board Deliberations.........15
Boards' Determinations..................................................17
Recommendation and Vote Required........................................17
SECTION B - Proxy Voting and Shareholder Meeting Information................18
SECTION C - Capitalization, Ownership of Fund Shares and Other Fund
Information ...........................................................19
EXHIBIT A - Agreement and Plan of Reorganization...........................A-1
The prospectus for the Acquiring Fund accompanies this proxy
statement/prospectus.
3
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
SECTION A -- PROPOSAL
PROPOSAL: APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
This proxy statement/prospectus is being used by the Acquired Fund to solicit
voting instructions for a proposal to approve the Plan providing for the
Reorganization of the Acquired Fund into the Acquiring Fund. A form of the Plan
is included as Exhibit A.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire proxy
statement/prospectus, exhibits and accompanying materials because they contain
details that are not in this summary.
HOW THE REORGANIZATION WILL WORK
The following table shows the names of the Acquired Fund and the Acquiring Fund
into which it will be merged.
----------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
----------------------------------------------------------
|Oppenheimer Global Fund|Van Kampen Global Franchise Fund|
----------------------------------------------------------
* The Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Fund's liabilities.
* The Acquiring Fund will issue shares of beneficial interest in an amount equal
to the value of the assets that it receives from the Acquired Fund, less the
liabilities it assumes. These shares will be distributed to the Acquired
Fund's shareholders (the separate accounts) in proportion to their holdings in
the Acquired Fund. The value of your interest in the subaccount investing in
the Acquiring Fund received in connection with the Reorganization will equal
the value of your interest in the subaccount that was invested in the Acquired
Fund immediately before the Reorganization.
* As part of the Reorganization, systematic transactions (such as bank
authorizations and systematic payouts) currently set up for your Acquired Fund
account will be transferred to your new Acquiring Fund account. If you do not
want your systematic transactions to continue, please contact your financial
representative to make changes.
* Neither the Acquired Fund nor the Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Fund will pay any sales
charge in connection with the Reorganization.
* After the Reorganization has been completed, contract values that were
allocated to subaccounts investing in the Acquired Fund will be allocated to
subaccounts investing in the Acquiring Fund. The Acquired Fund will be
terminated.
4
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
COMPARISON OF THE ACQUIRED FUND AND THE ACQUIRING FUND
Both the Acquired Fund and the Acquiring Fund:
* Are outstanding series of an open-end management investment company organized
as a Delaware statutory trust.
* Have Allianz Investment Management LLC (the "Manager") as their investment
adviser.
* Have the same policies for buying and selling shares and the same exchange
rights.
* Have the same distribution policies.
* Are available only to Contract Owners who allocate contract value to a
subaccount that invests in the Funds.
COMPARISON OF INVESTMENT OBJECTIVES
The following table presents the investment objectives for the Funds.
ACQUIRED FUND INVESTMENT OBJECTIVE ACQUIRING FUND INVESTMENT OBJECTIVE
OPPENHEIMER GLOBAL FUND Capital appreciation VAN KAMPEN GLOBAL FRANCHISE FUND* Long-term capital appreciation
* Contemporaneously with the Reorganization, the Acquiring Fund will be renamed
the AZL Van Kampen International Equity Fund, but the investment objective
will remain the same. See the Comparison of Investment Strategies section,
next, for additional information.
COMPARISON OF INVESTMENT STRATEGIES
Contemporaneously with the Reorganization, the Acquiring Fund will retain a new
subadviser and sub-subadvisers and will be renamed the AZL Van Kampen
International Equity Fund. The Acquiring Fund's investment objective will remain
the same (long-term capital appreciation); however, the Fund's principal
investment strategies, policies and risks will change. Information provided in
this proxy statement/prospectus regarding the Acquiring Fund's investment
strategies, policies and risks is for the AZL Van Kampen International Equity
Fund because those strategies, policies and risks will apply to shareholders of
the combined Fund. Information regarding the existing investment strategies,
policies and risks for the AZL Van Kampen Global Franchise Fund, as well as
additional information regarding the changes to the Acquiring Fund, may be found
in the accompanying prospectus. For ease of reference, the terms Acquiring Fund
and AZL Van Kampen Global Franchise Fund generally are used in this prospectus
to refer to the Fund as it exists prior to the Reorganization, and the terms
combined Fund and AZL Van Kampen International Equity Fund refer to the Fund as
it will exist following the Reorganization.
The Acquired Fund invests primarily in common stocks of companies in the U.S.
and foreign countries. It may invest without limit in foreign securities and can
invest in any country. Although the Fund focuses its investments in mid- and
large-capitalization companies, it may invest in companies of any size. The
Fund's subadviser is OppenheimerFunds, Inc.
The AZL Van Kampen International Equity Fund will maintain a diversified
portfolio of equity securities of non-U.S. issuers. Unlike the Acquired Fund,
the combined Fund will not invest in U.S. companies as part of its principal
investment strategy. Rather, the combined Fund will invest primarily in non-U.S.
companies only and will focus its investments in mid- and large-capitalization
companies. The combined Fund will be subadvised by Morgan Stanley Investment
Management Inc. and sub-subadvised by Morgan Stanley Investment Management
Limited and Morgan Stanley Investment Management Company, which are affiliated
with the Fund's current subadviser, Van Kampen Asset Management.
Detailed strategies for the Acquired Fund and the combined Fund are set forth
below:
OPPENHEIMER GLOBAL FUND (ACQUIRED FUND)
The Fund invests mainly in common stocks of companies in the U.S. and foreign
countries. The Fund can invest without limit in foreign securities and can
invest in any country, including countries with developed or emerging markets.
However, the Fund currently emphasizes investments in developed markets such as
the United States, Western European countries and Japan. The Fund does not limit
its investments to companies in a particular capitalization range, but currently
focuses its investments in mid- and large-cap companies.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
The Fund is not required to allocate its investments in any set percentages in
any particular countries. As a fundamental policy, the Fund normally will invest
in at least three countries (one of which may be the United States). Typically
the Fund invests in a number of different countries.
In selecting securities for the Fund, the subadviser looks primarily for foreign
and U.S. companies with high growth potential. The subadviser uses fundamental
analysis of a company's financial statements, management structure, operations
and product development, and considers factors affecting the industry of which
the issuer is part. The subadviser considers overall and relative economic
conditions in the U.S. and foreign markets, and seeks broad portfolio
diversification in different countries to help moderate the special risks of
foreign investing. The subadviser currently focuses on the factors below (which
may vary in particular cases and may change over time), looking for:
o Stocks of small, medium and large-cap growth-oriented companies
worldwide;
o Companies that stand to benefit from global growth trends;
o Businesses with strong competitive positions and high demand for
their products or services; and
o Cyclical opportunities in the business cycle and sectors or
industries that may benefit from those opportunities.
In applying these and other selection criteria, the subadviser considers the
effect of worldwide trends on the growth of various business sectors. The trends
currently considered include development of new technologies, corporate
restructuring, the growth of mass affluence and demographic changes. Depending
upon market conditions, the Fund may invest more heavily in certain sectors.
The Fund may invest in derivative instruments.
For temporary defensive purposes, or when cash is temporarily available, the
Fund may invest in investment grade, short-term debt instruments, including
government, corporate and money market securities. If the Fund invests
substantially in such instruments, it may not be pursuing its principal
investment strategies and may not achieve its investment objective.
VAN KAMPEN INTERNATIONAL EQUITY FUND (COMBINED FUND)
The Fund will invest primarily in equity securities of non-U.S. issuers. The
Fund's new sub-subadvisers seek to maintain a diversified portfolio of equity
securities of non-U.S. issuers based on individual stock selection. The sub-
subadvisers emphasize a bottom-up approach to investing that seeks to identify
securities of issuers they believe are undervalued. The sub-subadvisers focus on
developed markets, but they may invest in emerging markets.
The sub-subadvisers select issuers from a universe comprised of approximately
1,200 companies in non-U.S. markets. The investment process is value driven and
based on individual stock selection. In assessing investment opportunities, the
sub-subadvisers consider value criteria with an emphasis on cash flow and the
intrinsic value of company assets. Securities which appear undervalued according
to these criteria are then subjected to in-depth fundamental analysis. The sub-
subadvisers conduct a thorough investigation of the issuer's balance sheet, cash
flow and income statement and assess the company's business franchise, including
product competitiveness, market positioning and industry structure. Meetings
with senior company management are integral to the investment process. The sub-
subadvisers generally consider selling a portfolio holding when they determine
that the holding has reached its fair value target.
Under normal circumstances, at least 80% of the Fund's assets will be invested
in equity securities. Derivative instruments used by the Fund will be counted
toward the 80% policy discussed above to the extent they have economic
characteristics similar to the securities included within that policy.
For temporary defensive purposes, or when cash is temporarily available, the
Fund may invest in investment grade, short-term debt instruments, including
government, corporate and money market securities. If the Fund invests
substantially in such instruments, it may not be pursuing its principal
investment strategies and may not achieve its investment objective.
COMPARISON OF INVESTMENT POLICIES
If shareholders of the Acquired Fund approve the Reorganization, they will be
subject to the investment policies of the combined Fund. Other than as described
herein, the Manager does not believe that the differences between the investment
policies result in any material difference in the way the Funds are managed.
The Acquired Fund, as a fundamental policy, normally will invest in at least
three countries (one of which may be the United States). The combined Fund will
have no such fundamental policy.
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RISK FACTORS
The principal investment strategies of both Funds are generally comparable.
Accordingly, both Funds also have principal investment risks that are generally
comparable. Depending upon its assessment of changing market conditions, the
subadviser of each Fund may emphasize particular asset classes or particular
investments at any given time, which may change the risks associated with the
Fund. The fact that a risk is not identified as a principal risk for a
particular Fund does not mean that the Fund may not be subject to that risk. The
Statement of Additional Information for the Acquiring Fund, which is
incorporated by reference in this proxy statement/prospectus, contains detailed
information on the Acquiring Fund's permitted investments and investment
restrictions.
The principal risks of investing in the Acquired Fund and the combined Fund are
shown in the tables below. A discussion of each of the various principal risks
follows the tables.
RISK OPPENHEIMER GLOBAL FUND (ACQUIRED FUND) VAN KAMPEN INTERNATIONAL EQUITY FUND(COMBINED FUND)
Market Risk X X
Selection Risk X X
Issuer Risk X X
Growth Stocks Risk X
Capitalization Risk X
Cyclical Opportunities Risk X
Foreign Risk X X
Emerging Markets Risk X X
Currency Risk X X
Special Situations Risk X
Derivatives Risk X X
Liquidity Risk X
Portfolio Turnover X
Industry Sector Risk X
Country/Regional Risk X
Value Stocks Risk X
* MARKET RISK: The market price of securities owned by the Fund may go up or
down, sometimes rapidly and unpredictably. Securities may decline in value
due to factors affecting securities markets generally or particular
industries represented in the securities markets. The value of a security may
decline due to general market conditions that are not specifically related to
a particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates, or adverse investor sentiment. They may also decline due to
factors that affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an
industry. During a general downturn in the securities markets, multiple asset
classes may decline in value simultaneously. The value of the Fund's
portfolio may fluctuate to a greater or lesser degree than fluctuations of
the general stock market. For those Funds that invest in stocks of foreign
companies, the value of the Fund's portfolio will be affected by changes in
foreign stock markets and the special economic and other factors that might
primarily affect stock markets in particular foreign countries and regions.
Equity securities generally have greater price volatility than fixed income
securities.
* SELECTION RISK: The Fund is an actively managed investment portfolio. The
portfolio manager(s) make investment decisions for the Fund's assets. The
investment approach of some Funds emphasizes buying and holding securities,
even through adverse markets, while the investment approach of other Funds
emphasizes frequent trading in order to take advantage of short-term market
movements. However, there can be no guarantee they will produce the desired
results and poor security selection may cause the Fund to underperform its
benchmark index or other funds with similar investment objectives.
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* ISSUER RISK: The value of a security may decline for a number of reasons that
directly relate to the issuer, such as management performance, financial
leverage, and reduced demand for the issuer's products or services.
* GROWTH STOCKS RISK: The returns on growth stocks may or may not move in
tandem with the returns on other categories of stocks, or the stock market as
a whole. Growth stocks may be particularly susceptible to rapid price swings
during periods of economic uncertainty or in the event of earnings
disappointments. Further, growth stocks typically have little or no dividend
income to cushion the effect of adverse market conditions. To the extent a
growth style of investing emphasizes certain sectors of the market, such
investments will be more sensitive to market, political, regulatory and
economic factors affecting those sectors.
* CAPITALIZATION RISK: To the extent the Fund invests significantly in small
and/or mid-capitalization companies, it may have capitalization risk. These
companies may present additional risk because they have less predictable
earnings or no earnings, more volatile share prices and less liquid
securities than large capitalization companies. These securities may
fluctuate in value more than those of larger, more established companies and,
as a group, may suffer more severe price declines during periods of generally
declining stock prices. The shares of smaller companies tend to trade less
frequently than those of larger, more established companies, which can
adversely affect the price of smaller companies' securities and the Fund's
ability to sell them when the portfolio manager deems it appropriate. These
companies may have limited product lines, markets, or financial resources, or
may depend on a limited management group. The value of some of the Fund's
investments will rise and fall based on investor perception rather than
economic factors.
* CYCLICAL OPPORTUNITIES RISK: The Fund may seek to take advantage of changes
in the business cycle by investing in companies that are sensitive to those
changes if the subadviser believes they have growth potential. The Fund might
sometimes seek to take tactical advantage of short-term market movements or
events affecting particular issuers or industries. There is a risk that if
the event does not occur as expected, the value of the stock could fall,
which in turn could depress the Fund's share prices.
* FOREIGN RISK: Because the Fund invests in securities of foreign issuers, it
may be subject to risks not usually associated with owning securities of U.S.
issuers. These risks include, among others, adverse fluctuations in foreign
currency values as well as adverse political, social and economic
developments affecting a foreign country, including the risk of
nationalization, expropriation or confiscatory taxation. In addition, foreign
investing involves less publicly available information, and more volatile or
less liquid securities markets. Investments in foreign countries could be
affected by factors not present in the U.S., such as restrictions on
receiving the investment proceeds from a foreign country, confiscatory
foreign tax laws, and potential difficulties in enforcing contractual
obligations. Transactions in foreign securities may be subject to less
efficient settlement practices, including extended clearance and settlement
periods. Foreign accounting may be less revealing than U.S. accounting
practices. Foreign regulation may be inadequate or irregular. Owning foreign
securities could cause the Fund's performance to fluctuate more than if it
held only U.S. securities.
* EMERGING MARKETS RISK: In addition to the risks described under "Foreign
Risk", issuers in emerging markets may present greater risk than investing in
foreign issuers generally. Emerging markets may have less developed trading
markets and exchanges which may make it more difficult to sell securities at
an acceptable price and their prices may be more volatile than securities of
companies in more developed markets. Settlements of trades may be subject to
greater delays so that the Fund may not receive the proceeds of a sale of a
security on a timely basis. Emerging countries may also have less developed
legal and accounting systems and investments may be subject to greater risks
of government restrictions, nationalization, or confiscation.
* CURRENCY RISK: Funds that invest in securities that trade in, and receive
revenues in, foreign currencies are subject to the risk that those currencies
will decline in value relative to the U.S. dollar, or, in the case of hedging
positions, that the U.S. dollar will decline in value relative to the
currency being hedged. Currency rates in foreign countries may fluctuate
significantly over short periods of time for a number of reasons, including
changes in interest rates, intervention (or failure to intervene) by the U.S.
or foreign governments, central banks, or supranational authorities, such as
the International Monetary Fund, or by the imposition of currency controls or
other political developments in the U.S. or abroad. As a result, the Fund's
investments with exposure to foreign currency fluctuations may decline in
value (in terms of the U.S. dollar) and reduce the returns of the Fund.
* SPECIAL SITUATIONS RISK: Periodically, the Fund might use aggressive
investment techniques. These might include seeking to benefit from what the
subadviser perceives to be "special situations", such as mergers,
reorganizations, restructurings or other unusual events expected to affect a
particular issuer. However, there is a risk that the change or event might
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The Allianz Variable Insurance Products Trust - Proxy
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not occur, which could have a negative impact on the price of the issuer's
securities. The Fund's investment might not produce the expected gains or
could incur a loss for the portfolio.
* DERIVATIVES RISK: The Fund may invest in derivatives. A derivative is a
financial contract whose value depends on, or is derived from, the value of
an underlying asset, reference rate, or risk. Funds typically use derivatives
as a substitute for taking a position in the underlying asset and/or as part
of a strategy designed to reduce exposure to other risks, such as interest
rate or currency risk. Funds may also use derivatives for leverage, in which
case their use would involve leveraging risk. Use of derivative instruments
involves risks different from, or possibly greater than, the risks associated
with investing directly in securities and other traditional investments.
Derivatives are subject to a number of other risks, such as liquidity risk,
interest rate risk, market risk, credit risk, and management risk.
Derivatives also involve the risk of mispricing or improper valuation and the
risk that changes in the value may not correlate perfectly with the
underlying asset, rate, or index. Using derivatives may result in losses,
possibly in excess of the principal amount invested. Also, suitable
derivative transactions may not be available in all circumstances. The
counterparty to a derivatives contract could default. As required by
applicable law, any Fund that invests derivatives segregates cash or liquid
securities, or both, to the extent that its obligations under the instrument
(for example, forward contracts and futures that are required to "cash
settle") are not covered through ownership of the underlying security,
financial instrument, or currency.
* LIQUIDITY RISK: Liquidity risk exists when particular investments are
difficult to purchase or sell. Investments in illiquid securities may reduce
the returns of the Fund because it may be unable to sell the illiquid
securities at an advantageous time or price. Restricted securities may be
subject to liquidity risk because they may have terms that limit their resale
to other investors or may require registration under applicable securities
laws before they may be sold publicly. Funds with principal investment
strategies that involve restricted securities, foreign securities,
derivatives, companies with small market capitalization or securities with
substantial market and/or credit risk tend to have the greatest exposure to
liquidity risk.
* PORTFOLIO TURNOVER: The Fund may actively and frequently trade its portfolio
securities or may turn over a significant portion of its portfolio securities
in a single year. High portfolio turnover (100% or more) results in higher
transaction costs and can adversely affect the Fund's performance.
* INDUSTRY SECTOR RISK: At times, the Fund may increase the relative emphasis
of its investments in a particular industry. Stocks of issuers in a
particular industry are subject to changes in economic conditions, government
regulations, availability of basic resources or supplies, or other events
that affect that industry more than others. To the extent that the Fund has
greater emphasis on investments in a particular industry, its share values
may fluctuate in response to events affecting that industry.
* COUNTRY/REGIONAL RISK: Local events, such as political upheaval, financial
troubles, or natural disasters, may weaken a country's or a region's
securities markets. Because the Fund may invest a large portion of its assets
in securities of companies located in any one country or region, its
performance may be hurt disproportionately by the poor performance of its
investments in that area. Country/regional risk is especially high in
emerging markets.
* VALUE STOCKS RISK: The value style of investing emphasizes stocks of
undervalued companies whose characteristics may lead to improved valuations.
These stocks may remain undervalued because value stocks, as a category, may
lose favor with investors compared to other categories of stocks or because
the valuations of these stocks do not improve in response to changing market
or economic conditions.
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The Allianz Variable Insurance Products Trust - Proxy
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PERFORMANCE
Performance information for the Funds is shown below.
The following bar charts and tables provide an indication of the risks of an
investment in the Funds by showing changes in their performance from year to
year and by showing how the Funds' average annual returns for one year, five
years and since inception (as applicable) compare with those of a broad measure
of market performance.
Both the bar charts and the tables assume reinvestment of dividends and
distributions, and reflect fee waivers. Without fee waivers, the Funds'
performance would have been lower.
The performance of the Funds will vary from year to year. The Funds' performance
does not reflect the cost of insurance and separate account charges which are
imposed under your Contract. If they were included, performance would be
reduced. Past performance does not indicate how the Funds will perform in the
future.
OPPENHEIMER GLOBAL FUND (ACQUIRED FUND)
Performance information is presented for Class 2 shares only because Class 1
shares had not commenced operations as of December 31, 2008.
[BAR CHART GRAPHIC - 2005: 12.62%, 2006: 16.29%, 2007: 5.76%, 2008: -41.05%]
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q3, 2005) 9.07%
Lowest (Q4, 2008) -22.27%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION
AZL Oppenheimer Global Fund 5/3/2004 -41.05% -1.20%
MSCI World Index -40.71% -0.78%
The performance of the Fund is compared to the Morgan Stanley Capital
International (MSCI) World Index, an unmanaged market capitalization-weighted
equity index which monitors the performance of stocks from around the world. The
index does not reflect the deduction of fees associated with a mutual fund, such
as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for services provided to the Fund. Investors
cannot invest directly in an index, although they can invest in the underlying
securities.
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Statement/Prospectus - August 7, 2009
VAN KAMPEN GLOBAL FRANCHISE FUND (ACQUIRING FUND)
[BAR CHART GRAPHIC - 2004: 12.21%, 2005: 11.64%, 2006: 21.25%, 2007: 9.82%,
2008: -28.56%]
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q4, 2004) 12.03%
Lowest (Q4, 2008) -13.07%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 FIVE YEARS ENDED DECEMBER 31, 2008 SINCE INCEPTION
AZL Van Kampen Global Franchise Fund 5/1/2003 -28.56% 3.57% 7.12%
MSCI World Index -40.71% -0.51% 4.59%
The performance of the Fund is compared to the Morgan Stanley Capital
International (MSCI) World Index, an unmanaged market capitalization-weighted
equity index which monitors the performance of stocks from around the world. The
index does not reflect the deduction of fees associated with a mutual fund, such
as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for services provided to the Fund. Investors
cannot invest directly in an index, although they can invest in the underlying
securities.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
TABLE A-1
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2008
FUND (inception date) LAST 1 YEAR LAST 2 YEARS LAST 3 YEARS LAST 5 YEARS SINCE INCEPTION
AZL Oppenheimer Global Fund(5/3/2004) -41.05% -21.04% -10.17% N/A -1.20%
AZL Van Kampen Global Franchise Fund (5/1/2003) -28.56% -11.43% -1.65% 3.57% 7.12%
TAX CONSEQUENCES
If the separate accounts investing in the Funds and the Contracts are properly
structured under the insurance company provisions of the federal tax law (as the
Manager believes is the case), the Reorganization will not be a taxable event
for Contract Owners who have a portion of their variable annuity contract
allocated to the Funds, regardless of the tax status of the Reorganization.
As a condition to the closing of the Reorganization, the Acquired Fund and the
Acquiring Fund will receive an opinion from Dorsey & Whitney LLP to the effect
that the Reorganization will qualify as a tax-free reorganization for federal
income tax purposes. Accordingly, shareholders (the separate accounts of Allianz
Life and Allianz Life of New York) will not recognize taxable gain or loss as a
result of the Reorganization.
For more information about the federal income tax consequences of the
Reorganization, see the section entitled "Tax Status of the Reorganization."
FEES AND EXPENSES
The following table describes the fees and expenses as of the end of the most
recent fiscal year that you pay if you buy and hold shares of the Acquired Fund
or shares of the Acquiring Fund. The table also shows estimated pro forma
expenses of the Acquiring Fund assuming the proposed Reorganization had been
effective during the most recent fiscal year, adjusted to reflect current fees.
The table does not reflect the expenses that apply to the subaccounts or the
Contracts. Inclusion of these charges would increase expenses for all periods
shown. The fees and expenses below exclude the costs of the Reorganization. See
"Reasons for the Proposed Reorganization and Board Deliberations" for additional
information concerning the allocation of the costs of the Reorganization.
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The Allianz Variable Insurance Products Trust - Proxy
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TABLE A-2
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
The following table is based on fund assets as of December 31, 2008.
OPPENHEIMER GLOBAL VAN KAMPEN GLOBAL FRANCHISE FUND VAN KAMPEN INTERNATIONAL EQUITY FUND - PRO FORMA
FUND(ACQUIRED FUND) (ACQUIRING FUND) WITH ACQUIRED FUND
Management Fee 0.90% (a)(b) 0.95% (a)(c) 0.95% (c)(d)
Distribution (12b- 0.25% 0.25% 0.25%
1) Fees (e)
Other Expenses 0.23% 0.15% 0.13%
Total Annual 1.38% 1.35% 1.33%
Operating Expenses
Fee Waiver (f) 0.00% 0.00% 0.00%
Net Annual Fund 1.38% (b) 1.35% (c) 1.33% (c)
Operating Expenses
(a)The management fee rate is the contractual rate charged for the Fund's most
recent fiscal year, which ended December 31, 2008.
(b)As of the date of this proxy statement/prospectus, the Manager is voluntarily
reducing the management fee to 0.80%. The Manager reserves the right to
increase the management fee to the amount shown in the table above at any
time. If the voluntary management fee reduction were reflected in the table,
the Net Annual Fund Operating Expenses would be lower.
(c)As of the date of this proxy statement/prospectus, the Manager is
voluntarily reducing the management fee to 0.95% on the first $100 million in
net assets, 0.90% on the next $100 million, and 0.85% thereafter. In
connection with the Reorganization, the Manager will voluntarily reduce the
management fee for the combined Fund to 0.80% on all net assets. The Manager
reserves the right to increase the management fee to the amount shown in the
table above at any time after April 30, 2010. If the voluntary management fee
reduction were reflected in the table, the Net Annual Fund Operating Expenses
would be lower.
(d)The management fee rate shown reflects what the rate would be under the
current management fee schedule for the Acquiring Fund based on the combined
assets of the Funds for the fiscal year ended December 31, 2008.
(e)The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of
1940. The Fund pays Allianz Life Financial Services, LLC, the Fund's
distributor, an annual fee of up to 0.25% of average daily net assets as
payment for distributing its shares and providing shareholder services.
(f)The Manager and the Fund have entered into a written contract limiting
operating expenses, excluding certain expenses (such as interest expense), to
1.39% through April 30, 2010. The Fund is authorized to reimburse the Manager
for management fees previously waived and/or for the cost of Other Expenses
paid by the Manager provided that such reimbursement will not cause the Fund
to exceed any limits in effect at the time of such reimbursement. The Fund's
ability to reimburse the Manager in this manner only applies to fees paid or
reimbursements made by the Manager within the three fiscal years prior to the
date of such reimbursement. To the extent that such reimbursements to the
Manager are expected in the upcoming year, the amount of the reimbursements,
if any, is included in the financial statements in the Fund's shareholder
reports and is reflected in Other Expenses in the table above.
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EXAMPLE: Use the following tables to compare fees and expenses of the Acquired
Fund to other investment companies. The tables illustrate the amount of fees and
expenses an investor would pay, assuming (1) a $10,000 investment, (2) 5% annual
return, (3) redemption at the end of each time period, and (4) no changes in the
Fund's total operating expenses. The tables also show pro forma expenses of the
combined Fund assuming the proposed Reorganization had been in effect for the
periods shown. The tables do not reflect the effect of any fee or expense
waivers. The tables also do not reflect separate account or insurance contract
fees and charges. An investor's actual costs may be different.
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Oppenheimer Global Fund (Acquired Fund) $140 $437 $755 $1,657
Van Kampen Global Franchise Fund (Acquiring Fund) $137 $428 $739 $1,624
Van Kampen International Equity Fund - Pro Forma with Acquired Fund $135 $421 $729 $1,601
THIS EXAMPLE DOES NOT REPRESENT ACTUAL EXPENSES, PAST OR FUTURE. ACTUAL EXPENSES
MAY BE HIGHER OR LOWER THAN THOSE SHOWN. THIS EXAMPLE DOES NOR REFLECT THE
EXPENSES THAT APPLY TO THE SUBACCOUNTS OR THE CONTRACTS. INCLUSION OF THSE
CHARGES WOULD INCREASE EXPENSES FOR ALL PERIODS SHOWN.
THE REORGANIZATION
TERMS OF THE REORGANIZATION
The Board has approved the Plan, a copy of which is attached as Exhibit A. The
Plan provides for the Reorganization on the following terms:
* The Reorganization is scheduled to occur on the first day that the New York
Stock Exchange is open for business following shareholder approval and receipt
of any necessary regulatory approvals, but may occur on any later date agreed
to by the Acquired Fund and the Acquiring Fund.
* The Acquired Fund will transfer all of its assets to the Acquiring Fund and,
in exchange, the Acquiring Fund will assume the Acquired Fund's liabilities.
* The Acquiring Fund will issue shares to the Acquired Fund in an amount equal
to the value of the assets that it receives from the Acquired Fund, less the
liabilities assumed by the Acquiring Fund in the transaction. These shares
will immediately be distributed by the Acquired Fund to its shareholders (the
separate accounts) in proportion to their holdings in the Acquired Fund. As a
result, shareholders (the separate accounts) of the Acquired Fund will become
shareholders of the Acquiring Fund. Contract values that were allocated to
subaccounts invested in the Acquired Fund will be allocated to subaccounts
investing in the Acquiring Fund.
* Neither the Acquired Fund nor any Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Fund will pay any sales
charge in connection with the Reorganization.
* The net asset value of the Acquired Fund and the Acquiring Fund will be
computed as of 3:00 p.m. Central time, on the closing date.
* After the Reorganization, the Acquired Fund will be terminated.
CONDITIONS TO CLOSING THE REORGANIZATION
The completion of the Reorganization is subject to certain conditions described
in the Plan, including:
* The Acquired Fund will have declared and paid a dividend that will distribute
all of the Fund's taxable income, if any, to the shareholders (the separate
accounts) of the Fund for the taxable years ending at or prior to the closing.
* The Funds will have received any approvals, consents, or exemptions from the
SEC or any regulatory body necessary to carry out the Reorganization.
* An effective registration statement on Form N-14 will be on file with the SEC.
* The Contract Owners who are eligible to provide voting instructions for the
meeting will have approved the Plan.
* The Acquired Fund will receive an opinion of tax counsel that the proposed
Reorganization will be tax-free for the Acquired Fund and the Acquiring Fund
and for the separate accounts that are the shareholders of the Acquired Fund.
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The Allianz Variable Insurance Products Trust - Proxy
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TERMINATION OF THE PLAN
The Plan and the transactions contemplated by it may be terminated and abandoned
by resolutions of the Board of Trustees of the Acquired Fund or the Acquiring
Fund at any time prior to closing. In the event of a termination, there will be
no liability for damages on the part of either the Acquired Fund or the
Acquiring Fund, or the trustees, officers, or shareholders of the Acquired Fund
or the Acquiring Fund.
TAX STATUS OF THE REORGANIZATION
The exchange of the Acquired Fund's assets for shares of the Acquiring Fund, and
the subsequent distribution of those shares to the Acquired Fund shareholders
and the liquidation of the Acquired Fund, are intended to qualify for federal
income tax purposes as a tax-free reorganization under Section 368(a)(1) of the
Code. The Acquired Fund and the Acquiring Fund will receive an opinion of Dorsey
& Whitney LLP, based in part on certain representations by the VIP Trust on
behalf of both the Acquired Fund and the Acquiring Fund, substantially to the
effect that:
* The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
* Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of Acquired Fund
which are distributed by Acquired Fund prior to the Closing.
* The tax basis of the Acquiring Fund Shares received by each Acquired Fund
shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund shares exchanged therefor.
* The holding period of the Acquiring Fund shares received by each Acquired
Fund shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund shareholder held the Acquired Fund shares
exchanged therefor, provided that the Acquired Fund shares were held as a
capital asset at the Effective Time.
* The Acquired Fund will recognize no income, gain, or loss by reason of the
Reorganization.
* The Acquiring Fund will recognize no income, gain, or loss by reason of
the Reorganization.
* The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
* The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
* The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
REASONS FOR THE PROPOSED REORGANIZATION AND BOARD DELIBERATIONS
The Board believes that the proposed Reorganization will be advantageous to
Acquired Fund shareholders based on its consideration of the following matters:
* TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms and
conditions of the Reorganization as described in the previous paragraphs.
* TAX CONSEQUENCES. The Board considered the tax-free nature of the
Reorganization.
* CONTINUITY OF INVESTMENT. The Board considered the compatibility of the Funds
and the degree of similarity between the investment objectives and the
principal investment strategies for the Acquired Fund and the combined Fund,
taking into account the proposed subadvisory and other changes. The Board
considered the fact that the Acquired Fund and the combined Fund have
comparable investment objectives and, except as described in this proxy
statement, investment strategies and policies that are generally similar. The
Board also took note of the fact that following the Reorganization,
shareholders of the Acquired Fund will be invested in a Fund holding a
portfolio whose characteristics are generally similar to those of the
portfolio currently held by the Acquired Fund, except as described in this
proxy statement.
* EXPENSE RATIOS. The Board considered the relative expenses of the Funds. At
December 31, 2008, the end of each Fund's most recent fiscal year, the total
operating expense ratio for the Acquiring Fund was lower than the total
operating expense ratio for the Acquired Fund. The contractual management fee
for the Acquiring Fund for fiscal year 2008 was higher than for the Acquired
Fund. Both Funds have the same Distribution (12b-1) Fees, and the Acquiring
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The Allianz Variable Insurance Products Trust - Proxy
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Fund's Other Expenses are lower than those of the Acquired Fund. The Board
considered the effect of the Manager's voluntary management fee waiver in
connection with the Reorganization, which would reduce the management fee for
the combined Fund to 0.80%, which is the same as for the Acquired Fund after
management fee waivers. The Board noted that the total operating expenses of
the combined Fund after the Reorganization are expected to be lower than the
expenses of the Acquired Fund before the Reorganization. In addition, the
shareholders of the Acquired Fund are expected to see other benefits, such as
economies of scale, which make the Reorganization desirable for Acquired Fund
shareholders and are expected to further decrease expenses over time.
The Board also considered the possibility that both higher aggregate net
assets resulting from the Reorganization and the opportunity for net cash
inflows, or reduced outflows, may reduce the risk that, if net assets of the
Acquired Fund fail to grow, or even diminish, the Acquired Fund's total
expense ratio could rise from current levels as fixed expenses become a larger
percentage of net assets. The Board noted that both the Acquired Fund and the
Acquiring/combined Fund are subject to expense limitation agreements that will
remain in place through at least April 30, 2010, and are currently operating
with expenses below the cap contained in the respective expense limitation
agreements. Also, the Board noted that the Acquiring Fund is not currently
subject to reimbursements to the Manager for expenses previously waived by the
Manager.
* ECONOMIES OF SCALE. The Board considered the advantage of combining Funds with
generally similar investment objectives and strategies. The Board believes
that the combined Fund may have the opportunity to take advantage of the
economies of scale associated with a larger fund. The combined Fund may have
better prospects for growth than either Fund separately. For example, a larger
fund should have an enhanced ability to effect portfolio transactions on more
favorable terms and should have greater investment flexibility. Furthermore,
as indicated above, fixed expenses, such as audit expenses and accounting
expenses that are charged on a per fund basis, may be reduced.
* COSTS. The Board noted that the Acquired Fund will bear the expenses of
printing and mailing communications to the Contract Owners who beneficially
owned its shares and that all other expenses of the Reorganization, including
accounting, legal, and custodial expenses, and any costs related to
repositioning of the Acquiring Fund's portfolio after the Reorganization, will
be allocated equally between the Acquired Fund and the Acquiring Fund. The
Board also noted that the estimated total reorganization costs, including
repositioning costs, would be less than $0.01 per share of the combined Funds.
The Board considered the Manager's analysis showing that the reduction in
annual operating expenses for the Acquired Fund and the Acquiring Fund
resulting from the Reorganization is likely to be greater than the expenses of
the Reorganization to be borne by the Acquired Fund or Acquiring Fund, as the
case may be.
* DILUTION. The Board considered the fact that the Reorganization will not
dilute the interests of the current Contract Owners with contract values
allocated to subaccounts investing in the Acquired Fund because it would be
effected on the basis of the relative net asset value per share of the
Acquired Fund and the Acquiring Fund, respectively. Thus, subaccounts holding
shares of the Acquired Fund will receive shares of the Acquiring Fund equal in
value to their shares in the Acquired Fund.
* PERFORMANCE AND OTHER FACTORS. The Board considered the relative performance
records of the Funds. The Board took into account the better overall track
record of the Acquiring Fund, when compared to the Acquired Fund, over the
past five years, and the greater consistency of the Acquiring Fund's returns
compared to those of the Acquired Fund. The Board was aware of the fact that
the Acquiring Fund's past performance is no guarantee of its future results
and that the Acquiring Fund's past performance under the investment strategies
of its current subadviser are not indicative of its future performance under
the new investment strategies of its new subadvisers. However, the Board did
recognize that the better overall track record of an Acquiring Fund could help
attract more assets into the combined Funds and therefore could increase
shareholder confidence in the combined Fund. The Board concluded that
increased inflows, or reduced outflows, could lead to further economies of
scale (see "Economies of Scale" above).
The Board also considered the fact that the Funds have similar investment
objectives and investment strategies. The Reorganization should allow for a
concentrated selling effort, thereby potentially benefiting shareholders of
the combined Funds. The Board further took into account the Manager's belief
that the Acquired Fund, as a stand-alone Fund, was unlikely to experience
significant growth in assets as a result of inflows.
* POTENTIAL EFFECTS ON THE MANAGER. The Board also considered the potential
benefits from the Reorganization that could be realized by the Manager. The
Board recognized that the potential benefits to the Manager consist
principally of economies of scale and the elimination of expenses incurred in
duplicative efforts to administer separate funds. The Board also noted,
however, that shareholders of the Acquired Fund will benefit over time from
any decrease in overall operating expense ratios resulting from the proposed
Reorganization. The Board noted that the proposed Reorganization would affect
the amount of management fees that the Manager retains after payment of the
subadvisory fees. The table below assumes that the Reorganization has taken
place and gives effect to the additional temporary reduction in management
fees payable to Manager. See Table A-2 above for information concerning
current management fees for both Funds and the voluntary reductions in
management fees that are currently in effect.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
FUND MANAGEMENT FEE RETAINED AFTER PAYMENT OF SUBADVISORY FEE (1)
Oppenheimer Global Fund (Acquired Fund) 0.28%
Van Kampen Global Franchise Fund (Acquiring Fund) 0.22%
Weighted Average Before Reorganization 0.24%
VAN KAMPEN INTERNATIONAL EQUITY FUND - PRO FORMA WITH ACQUIRED FUND 0.34% (2)
(1)Calculations are as of May 31, 2009, using monthly average assets under
management for May 2009.
(2)Calculated using management fee rates and subadvisory fee rates effective
October 26, 2009.
The Board did not assign relative weights to the foregoing factors or deem any
one or group of them to be controlling in and of themselves.
BOARD DETERMINATIONS
After considering the factors described above and other relevant information at
an in-person meeting held on June 10, 2009, the Board of Trustees of the
Acquired Fund, including a majority of the independent Board members found that
participation in the Reorganization is in the best interests of the Acquired
Fund and that the interests of existing Contract Owners with contract values
allocated to subaccounts investing in the Acquired Fund would not be diluted as
a result of the Reorganization.
The Board of Trustees of the Acquiring Fund approved the Plan at the meeting
held on June 10, 2009. Among other factors, the Board members considered the
terms of the Plan, the provisions intended to avoid the dilution of Contract
Owners' interests, and the anticipated tax consequences of the Reorganization.
The Board found that participation in the Reorganization is in the best
interests of the Acquiring Fund and that the interests of existing Contract
Owners with contract values allocated to subaccounts investing in the Acquiring
Fund will not be diluted as a result of the Reorganization.
RECOMMENDATION AND VOTE REQUIRED
The Board recommends that Contract Owners who are entitled to vote at the
meeting approve the proposed Plan. Approval of the Plan requires the affirmative
vote, in person or by proxy, of a majority of the voting power of the
outstanding shares of the Fund on the record date, July 20, 2009. Each share is
entitled to one vote for each dollar, and a fractional vote for each fraction of
a dollar, of net asset value per share held by a shareholder on the record date.
If the Plan is not approved by the Acquired Fund, the Board will consider what
further action should be taken.
If shareholder approval is obtained, the Reorganization is scheduled to be
effective on or about October 23, 2009.
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The Allianz Variable Insurance Products Trust - Proxy
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SECTION B - PROXY VOTING AND SHAREHOLDER MEETING INFORMATION
REFERENCE TO THE "FUND" IN THIS SECTION IS A REFERENCE TO THE ACQUIRED FUND.
A special meeting of shareholders of the Acquired Fund will be held as specified
in the Notice of Special Meeting that accompanies this proxy
statement/prospectus. At the meeting, shareholders (the separate accounts) will
vote their shares of the Acquired Fund.
You have the right to instruct Allianz Life and Allianz Life of NY (together,
"Allianz") on how to vote the shares of the Acquired Fund held under your
Contract. The number of Fund shares for which you may provide instructions will
be based on the dollar amount of Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date. Each accumulation unit or annuity unit represents a specified
dollar value and a specified number of Fund shares. For each dollar of value,
the Contract Owner is permitted to vote one Fund share. We count fractional
votes. If you execute and return your voting instruction form, but do not
provide voting instructions, Allianz will vote the shares underlying your
Contract in favor of the proposal described above. Allianz will vote any shares
for which it does not receive a voting instruction form, and any shares which it
or its affiliates hold for their own account, in proportionately the same manner
as shares for which it has received voting instructions. Allianz will not
require voting instructions for a minimum number of shares, and therefore a
small number of shareholders could determine the outcome of any proposal.
For the Meeting to proceed, there must be a quorum. This means that at least 25%
of the Fund's shares must be represented at the Meeting either in person or by
proxy. Because Allianz is the only shareholder of the Fund, its presence at the
Meeting in person or by proxy will meet the quorum requirement.
You may revoke your voting instructions up until voting results are announced at
the Meeting or at any adjournment of the Meeting by giving written notice to
Allianz prior to the Meeting by mail to Allianz Variable Insurance Products
Trust, c/o Advisory Management, A3-825, 5701 Golden Hills Drive, Minneapolis,
Minnesota 55416, by executing and returning to Allianz a voting instruction form
with a later date, or by attending the Meeting and voting in person. If you need
a new voting instruction form, please call the Fund at 1-800-950-5872 ext.
35857, and a new voting instruction form will be sent to you. If you return an
executed form without voting instructions, your shares will be voted "FOR" the
proposal.
The Acquired Fund will pay all costs of solicitation, including the cost of
preparing and mailing the Notice of a Special Meeting of shareholders and this
proxy statement/prospectus to Contract Owners. Representatives of the Manager,
without cost to the Fund, also may solicit voting instructions from Contract
Owners by means of mail, telephone, or personal calls.
DISSENTERS' RIGHTS OF APPRAISAL. There are no appraisal or dissenters' rights
for shareholders of the Acquired Fund. Delaware law does not grant beneficiaries
of statutory trusts who dissent from approval of the Reorganization the right to
demand an appraisal for their interests and payment of their fair cash value. As
a result, shareholders who object to the Reorganization do not have a right to
demand a different payment for their shares of beneficial interest.
OTHER MATTERS. Management of the Fund anticipates that an election of Trustees
and ratification of the auditors also will be conducted at the Meeting. You will
receive a separate proxy statement containing information regarding these other
matters if you are eligible to vote on them. Otherwise, management of the Fund
knows of no other matters that may properly be, or that are likely to be,
brought before the Meeting. However, if any other business shall properly come
before the Meeting, the persons named on the voting instruction form intend to
vote thereon in accordance with their best judgment.
ADJOURNMENT. In the event that voting instructions received by the time
scheduled for the meeting are not sufficient to approve the Reorganization,
representatives of Allianz may move for one or more adjournments of the meeting
for a period of not more than 120 days in the aggregate to allow further
solicitation of voting instructions on the proposals. Any adjournment requires
the affirmative vote of a majority of the voting power of the shares present at
the meeting. Representatives of Allianz will vote in favor of adjournment. The
Acquired Fund will pay the costs of any additional solicitation and of any
adjourned meeting. A shareholder vote may be taken on one or more of the items
in this proxy statement prior to adjournment if sufficient voting instructions
have been received.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
SECTION C - CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER FUND INFORMATION
IN THIS SECTION REFERENCE TO THE "FUND" IS A REFERENCE TO THE ACQUIRING FUND AND
THE ACQUIRED FUND.
This section contains the following information about the Funds:
TABLE CONTENT
(all information is shown for the fiscal year ended December 31, 2008,
unless noted otherwise)
C-1 Actual and pro forma capitalization of the Acquired Fund and the
Acquiring Fund
C-2 Actual and pro forma ownership of Fund shares
CAPITALIZATION
The following table shows the capitalization of the Funds at December 31, 2008,
and on a pro forma basis, assuming the proposed Reorganization had taken place.
TABLE C-1. ACTUAL AND PRO FORMA CAPITALIZATION OF THE ACQUIRED FUNDS AND THE
ACQUIRING FUNDS
FUND NET ASSETS NET ASSET VALUE PER SHARE SHARES OUTSTANDING
Oppenheimer Global Fund (Acquired Fund)* $97,692,321 $8.20 11,910,120
Van Kampen Global Franchise Fund (Acquiring Fund) $207,351,009 $12.77 16,239,080
Adjustments** -$146,500 -- -4,270,558
Van Kampen International Equity Fund - Pro Forma with Acquired Fund $304,896,830 $12.77 23,878,642
* The number of Fund shares for which you may provide instructions will be based
on the dollar amount of Acquired Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date.
**The adjustment to net assets represents the impact as a result of the
estimated Reorganization fees and expenses that will be paid by the Funds, and
the adjustment to shares outstanding represents the impact as a result of the
shares being issued by the Acquiring Fund to the Acquired Fund shareholders.
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The Allianz Variable Insurance Products Trust - Proxy
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OWNERSHIP OF FUND SHARES
The following table provides information on shareholders who owned more than 5%
of each Fund's outstanding shares at the record date. At the record date,
officers and directors of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.
TABLE C-2. ACTUAL AND PRO FORMA OWNERSHIP OF FUND SHARES [ADD UPON AMENDMENT]
FUND 5% OWNERS PERCENT OF SHARES PERCENT OF SHARES HELD FOLLOWING THE
HELD REORGANIZATION
Oppenheimer Global Fund Allianz Life Variable Account [00.00]% N/A
B
Van Kampen Global Franchise Allianz Life Variable Account [00.00]% [00.00]%
Fund B
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
EXHIBIT A -AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of June 10, 2009 (the
"Agreement") is by and among the Allianz Variable Insurance Products Trust (the
"VIP Trust" or the "Selling Trust"), a Delaware statutory trust, on behalf of
its series, the AZL Oppenheimer Global Fund (the "Acquired Fund"), and the same
statutory trust (in this role, the "Buying Trust") on behalf of its series, the
AZL Van Kampen Global Franchise Fund (the "Acquiring Fund").
The following table shows the name of the Acquired Fund and the Acquiring Fund
that will be parties to the reorganization.
------------------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
------------------------------------------------------------------
|AZL Oppenheimer Global Fund|AZL Van Kampen Global Franchise Fund|
------------------------------------------------------------------
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Acquired Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the transactions
it contemplates. The reorganization between the Acquiring Fund and the
Acquired Fund is referred to hereinafter as the "Reorganization." The
Acquiring Fund agrees to furnish data and information, as reasonably
requested, for the proxy statement to be furnished to shareholders of the
Acquired Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization is intended to qualify as a
reorganization within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"). At the Closing (as defined
below), the Selling Trust will convey all of the assets of the Acquired
Fund to the Acquiring Fund. The Acquiring Fund will assume all liabilities
of the Acquired Fund. At the Closing, the Buying Trust will deliver shares
of the Acquiring Fund, including fractional shares, to the Selling Trust.
The number of shares will be determined by dividing the aggregate net
asset value of the shares of the Acquired Fund, computed as described in
Section 3(a), by the net asset value of one share of the Acquiring Fund,
computed as described in Section 3(b). The Acquired Fund will not pay a
sales charge on the receipt of Acquiring Fund shares in exchange for the
assets of the Acquired Fund. In addition, the separate account
shareholders of the Acquired Fund will not pay a sales charge on
distribution to them of shares of the Acquiring Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the "Closing")
will occur on the first day on which the New York Stock Exchange (the
"NYSE") is open for business following approval of Contract Owners of the
Acquired Fund and receipt of all necessary regulatory approvals, or such
later date as the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business
on the date of the Closing or at such other time as an authorized officer
of the VIP Trust shall determine (the "Effective Time").
3. VALUATION.
a. The aggregate net asset value of the shares of the Acquired Fund will be
computed as of the close of regular trading on the NYSE on the day of
Closing (the "Valuation Date") using the valuation procedures in the
Acquired Fund's prospectus.
b. The net asset value per share of shares of the Acquiring Fund will be
determined as of the close of regular trading on the NYSE on the Valuation
Date, using the valuation procedures in the Acquiring Fund's prospectus.
c. At the Closing, the Acquired Fund will provide the Acquiring Fund with a
copy of the computation showing the valuation of the aggregate net asset
value of the shares of the Acquired Fund on the Valuation Date. The
Acquiring Fund will provide the Acquired Fund with a copy of the
computation showing the determination of the net asset value per share of
shares of the Acquiring Fund on the Valuation Date.
4. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUND.
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The Allianz Variable Insurance Products Trust - Proxy
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a. As soon as practicable after the Valuation Date, the Selling Trust will
liquidate the Acquired Fund and distribute shares of the Acquiring Fund to
the Acquired Fund's shareholders of record. The Acquiring Fund will
establish shareholder accounts in the names of each Acquired Fund
shareholder, representing the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each shareholder. All
issued and outstanding shares of the Acquired Fund will simultaneously be
canceled on the books of the Selling Trust. The Acquiring Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the Selling Trust.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Trust relating to the Acquired Fund will be closed and no further
transfer of shares will be made.
c. Promptly after the distribution, the Acquiring Fund or its transfer agent
will notify each shareholder of the Acquired Fund of the number of shares
distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Acquired Fund, and
in no event later than twelve months from the date of the Closing, the
Acquired Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE BUYING TRUST. The Buying
Trust represents and warrants to the Acquired Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Buying
Trust is a statutory trust duly organized, validly existing, and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, management
investment company. The Acquiring Fund is a series of the Buying Trust.
b. Capitalization. The Buying Trust has authorized capital of an unlimited
number of shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquiring Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquiring
Fund as of the end of the last fiscal year and the subsequent unaudited
semi-annual financial statements, if any (the "Acquiring Fund Financial
Statements"), fairly present the financial position of the Acquiring Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Shares to Be Issued upon Reorganization. The shares of beneficial interest
to be issued in connection with the Reorganization will be duly authorized
and, at the time of the Closing, will be validly issued, fully paid, and
non-assessable.
e. Authority Relative to the Agreement. The Buying Trust has the power to
enter into and carry out the obligations described in this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Trustees of the Buying Trust, and no other
proceedings by the Buying Trust or the Acquiring Fund are necessary under
the Buying Trust's Agreement and Declaration of Trust or By-Laws (the
"Governing Documents").
f. No Violation. The Buying Trust is not in violation of its Governing
Documents or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion of
the transactions contemplated by it will not conflict with, or constitute
a breach of, any material contract or other instrument to which the
Acquiring Fund is subject. The transactions will not result in any
violation of the provisions of the Governing Documents or any law,
administrative regulation, or administrative or court decree applicable to
the Acquiring Fund.
g. Liabilities. There are no liabilities of the Acquiring Fund other than:
(1)liabilities disclosed in the Acquiring Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquired Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquiring Fund.
h. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquiring Fund, threatened, that would materially
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The Allianz Variable Insurance Products Trust - Proxy
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and adversely affect the Acquiring Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquiring Fund knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation, and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to the
Selling Trust, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
j. Taxes. The Acquiring Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquiring Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and such returns
and reports have been true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquired Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquired Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
k. Registration Statement. The Acquiring Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933 (the "1933 Act")
relating to the shares of beneficial interest to be issued in the
Reorganization. At the time that the Registration Statement becomes
effective, at the time of the Acquired Fund's shareholders' meetings, and
at the Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading. However, none of the
representations and warranties in this subsection applies to statements
in, or omissions from, the Registration Statement made in reliance on
information furnished by the Acquired Fund for use in the Registration
Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING TRUST.
The Selling Trust represents and warrants to the Acquiring Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Selling
Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
1940 Act as an open-end, management investment company. The Acquired Fund
is a series of the Selling Trust.
b. Capitalization. The Selling Trust has authorized capital of an unlimited
number shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquired Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquired
Fund as of the end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Acquired Fund Financial
Statements"), fairly present the financial position of the Acquired Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Authority Relative to the Agreement. The Selling Trust has the power to
enter into and to carry out its obligations under this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Directors of the Selling Trust, the
shareholders meetings referred to in Section 6(k) will be called and held,
and no other proceedings by the Selling Trust or the Acquired Fund are
necessary under the Selling Trust's Governing Documents.
e. No Violation. The Selling Trust is not in violation of its Agreement and
Declaration of Trust or By-Laws (the "Governing Documents") or in default
in the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of, any
material contract or other instrument to which the Acquired Fund is
subject. The transactions will not result in any violation of the
provisions of the Governing Documents or any law, administrative
regulation, or administrative or court decree applicable to the Acquired
Fund.
f. Liabilities. There are no liabilities of the Acquired Fund other than:
(1)liabilities disclosed in the Acquired Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
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The Allianz Variable Insurance Products Trust - Proxy
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(3)liabilities previously disclosed to the Acquiring Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquired Fund.
g. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquired Fund, threatened, that would materially
and adversely affect the Acquired Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquired Fund knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and the Acquired Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
h. Contracts. Except for contracts and agreements previously disclosed to the
Buying Trust, the Acquired Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
i. Taxes. The Acquired Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquired Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and all such
returns and reports are true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquiring Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquiring Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
j. Fund Securities. All securities listed in the schedules of investments of
the Acquired Fund as of the Closing will be owned by the Acquired Fund
free and clear of any encumbrances, except as indicated in the schedule.
k. Shareholders' Meetings; Registration Statement. The Acquired Fund will
call and hold a shareholders' meeting at which its shareholders will
consider and act upon the transactions contemplated by this Agreement. The
Acquired Fund will cooperate with the Acquiring Fund and will furnish
information relating to the Selling Trust and the Acquired Fund required
in the Registration Statement. At the time that the Registration Statement
becomes effective, at the time of the shareholders' meeting, and at the
Closing, the Registration Statement, as it relates to the Selling Trust or
the Acquired Fund, will not contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading. However, the representations and warranties in this
subsection apply only to statements in or omissions from the Registration
Statement made in reliance upon information furnished by the Selling Trust
or the Acquired Fund for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING TRUST. The obligations of the Buying
Trust with respect to the Reorganization are subject to the satisfaction of
the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of the
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Selling Trust and the
Acquired Fund will have complied with this Agreement, and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling Trust will
provide a certificate to the Acquiring Fund confirming that, as of the
Closing, the representations and warranties set forth in Section 6 are
true and correct and that there have been no material adverse changes in
the financial condition, results of operations, business, properties, or
assets of the Acquired Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Selling Trust, and delivered to the
Acquiring Fund on or prior to the last business day before the Closing. A
decline in the value of the securities owned by the Acquired Fund will not
constitute a "material adverse change" for purposes of the foregoing
sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective, and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Buying Trust will have received an opinion of
counsel for the Selling Trust, dated as of the Closing, to the effect that
(i) the Selling Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquired Fund
is a series of the Selling Trust; (iii) this Agreement and the
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The Allianz Variable Insurance Products Trust - Proxy
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Reorganization have been duly authorized and approved by all requisite
action of the Selling Trust and the Acquired Fund, and this Agreement has
been duly executed by, and is a valid and binding obligation of, the
Selling Trust.
e. Declaration of Dividend. The Acquired Fund, prior to the Closing, will
have declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the shareholders
of the Acquired Fund (i) all of the excess of (x) the Acquired Fund's
investment income excludable from gross income under Section 103 of the
Code over (y) the Acquired Fund's deductions disallowed under Sections 265
and 171 of the Code, (ii) all of the Acquired Fund's investment company
taxable income as defined in Section 852 of the Code (in each case
computed without regard to any deduction for dividends paid) and (iii) all
of the Acquired Fund's net capital gain realized (after reduction for any
capital loss carryover), in each case for the current taxable year (which
will end on the Closing date) and any preceding taxable years for which
such a dividend is eligible to be made under Section 855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING TRUST. The obligations of the
Selling Trust with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of all
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Acquiring Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the Closing. An officer of the Buying Trust will provide a certificate to
the Acquired Fund confirming that, as of the Closing, the representations
and warranties set forth in Section 5 are true and correct and that there
have been no material adverse changes in the financial condition, results
of operations, business, properties, or assets of the Acquiring Fund since
the date of its last financial statement, except as otherwise indicated in
any financial statements, certified by an officer of the Buying Trust, and
delivered to the Acquired Fund on or prior to the last business day before
the Closing. A decline in the value of the securities owned by the
Acquiring Fund will not constitute a "material adverse change" for
purposes of the foregoing sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Trust will have received the opinion of
counsel for the Buying Trust, dated as of the Closing, to the effect that
(i) the Buying Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquiring Fund
is a series of the Buying Trust; (iii) this Agreement and the
Reorganization have been authorized and approved by all requisite action
of the Buying Trust and the Acquiring Fund, and this Agreement has been
duly executed by, and is a valid and binding obligation of, the Buying
Trust; and (iv) the shares to be issued in the Reorganization are duly
authorized and upon issuance in accordance with this Agreement will be
validly issued, fully paid, and non-assessable shares of the Acquiring
Fund.
9. FURTHER CONDITIONS TO THE OBLIGATIONS OF THE BUYING TRUST AND THE SELLING
TRUST. As a further condition to the obligations of the VIP Trust on behalf of
both the Acquired Fund and the Acquiring Fund hereunder, the VIP Trust, on
behalf of both the Acquired Fund and the Acquiring Fund, shall have received the
opinion of Dorsey & Whitney LLP addressed to the VIP Trust on behalf of both the
Acquired Fund and the Acquiring Fund, dated as of the date of the Closing, and
based in part on representations to be furnished by the VIP Trust on behalf of
the Acquired Fund and the Acquiring Fund, substantially to the effect that:
a. The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
b. Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of the Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of the Acquired
Fund which are distributed by the Acquired Fund prior to the Closing.
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The Allianz Variable Insurance Products Trust - Proxy
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c. The tax basis of the Acquiring Fund Shares received by each Acquired Fund
Shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund Shares exchanged therefor.
d. The holding period of the Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund Shareholder held the Acquired Fund Shares
exchanged therefor, provided that the Acquired Fund Shares were held as a
capital asset at the Effective Time.
e. The Acquired Fund will recognize no income, gain or loss by reason of the
Reorganization.
f. The Acquiring Fund will recognize no income, gain or loss by reason of the
Reorganization.
g. The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
h. The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
i. The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
10.AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the Board of
Trustees. The Agreement may be amended at any time before or after
approval by the shareholders of the Acquired Fund, but after shareholder
approval, no amendment shall be made that substantially changes the terms
of Sections 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and
(ii) compliance with any of the covenants or conditions made for its
benefit. However, neither party may waive the requirement to obtain
shareholder approval or the requirement to obtain a tax opinion.
c. The Selling Trust may terminate this Agreement at any time prior to the
Closing by notice to the Buying Trust if a material condition to its
performance or a material covenant of the Buying Trust on behalf of the
Acquiring Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Buying
Trust on behalf of the Acquiring Fund and is not cured.
d. The Buying Trust may terminate this Agreement at any time prior to the
Closing by notice to the Selling Trust if a material condition to its
performance or a material covenant of the Selling Trust on behalf of the
Acquired Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Selling
Trust on behalf of the Acquired Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Acquired Fund, without any liability on the part of either party or its
respective trustees, officers, or shareholders, on written notice to the
other party, and shall be terminated without liability as of the close of
business on December 31, 2009, or a later date agreed upon by the parties,
if the Closing has not taken place on or prior to that date.
f. The representations, warranties, and covenants contained in this
Agreement, or in any document delivered in connection with this Agreement,
will survive the Reorganization.
11.EXPENSES. All fees paid to governmental authorities for the registration or
qualification of the Acquiring Fund Shares and all transfer agency costs
related to the shares of the Acquiring Fund Shares shall be allocated to the
Acquiring Fund. All fees and expenses related to printing and mailing
communications to shareholders and beneficial owners of shares of the
Acquired Fund shall be allocated to the Acquired Fund. All of the other
expenses of the transactions required for the Reorganization, including
without limitation, accounting, legal, and custodial expenses, shall be
allocated equally between the Acquired Fund and the Acquiring Fund. The
expenses specified in this Section shall be borne by the Fund to which they
are allocated.
12. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state of
Minnesota.
13. INDEMNIFICATION. Each party will indemnify and hold the other and its
officers and trustees (each an "Indemnitee") harmless from and against any
liability or other cost and expense, in connection with the defense or
disposition of any action, suit, or other proceeding, before any court or
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
administrative or investigative body in which the Indemnitee may be involved
as a party, with respect to actions taken under this Agreement. However, no
Indemnitee will be indemnified against any liability or expense arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the Indemnitee's position.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL Oppenheimer Global Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL Van Kampen Global Franchise Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
AZL[R] Oppenheimer International Growth Fund
5701 Golden Hills Drive
Minneapolis, MN 55416-1297
Dear Allianz Life and Allianz Life of New York Variable Annuity or Variable Life
Insurance Contract Owner:
The Board of Trustees of the AZL Oppenheimer International Growth Fund (the
"Acquired Fund"), which is a series of the Allianz Variable Insurance Products
Trust (the "VIP Trust"), is pleased to submit a proposal to reorganize the
Acquired Fund into the AZL AIM International Equity Fund (the "Acquiring Fund"),
which is another series of the VIP Trust.
As the owner of a variable annuity or variable life insurance contract issued by
Allianz Life Insurance Company of North America or Allianz Life Insurance
Company of New York, you beneficially own shares of the Acquired Fund.
Accordingly, we ask that you indicate whether you approve or disapprove of the
proposed reorganization by submitting instructions on how to vote your
beneficial shares by phone, internet, or mail.
The proposed reorganization is being undertaken for several reasons, including
providing further economies of scale.
THE BOARD OF TRUSTEES OF THE VIP TRUST BELIEVES THAT THE TRANSACTION IS IN THE
BEST INTERESTS OF THE ACQUIRED FUND AND ITS SHAREHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL.
The Board considered various factors in reviewing the proposed reorganization
on behalf of the Acquired Fund's shareholders, including, but not limited to,
the following:
* The continuity of investments between the Acquired Fund and the Acquiring
Fund.
* The expectation that the reorganization will achieve greater economies of
scale.
* Historical performance of the Funds.
* The expectation that the reorganization will be tax-free.
If the proposal is approved, the Acquiring Fund will acquire all of the assets
of the Acquired Fund in exchange for newly issued shares of the Acquiring Fund.
These Acquiring Fund shares in turn will be distributed proportionately to the
Acquired Fund's shareholders in complete liquidation of the Acquired Fund. In
order to accomplish the proposed reorganization, the Board of Trustees of the
Acquired Fund submits for your approval an Agreement and Plan of Reorganization.
Whether or not you plan to attend the meeting, please review the enclosed voting
instruction form. You may submit your instructions on voting the shares that you
beneficially own by phone, internet, or mail. Following this letter is a Q&A
summarizing the reorganization and information on how to vote your shares.
Please read the entire proxy statement/prospectus carefully before you vote.
Thank you for your prompt attention to this important matter.
Sincerely,
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
PROXY STATEMENT/PROSPECTUS Q&A
HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR THE AZL
OPPENHEIMER INTERNATIONAL GROWTH FUND. WE ENCOURAGE YOU TO READ THE FULL TEXT OF
THE ENCLOSED PROXY STATEMENT/PROSPECTUS.
Q: WHY IS THE REORGANIZATION BEING PROPOSED?
The reorganization is being proposed in an effort to provide economies of
scale for one of the funds available to owners of variable annuity and
variable life insurance contracts issued by Allianz Life Insurance Company of
North America or Allianz Life Insurance Company of New York.
Your Board of Trustees has determined that the reorganization is in the best
interests of the Acquired Fund's shareholders and recommends that you vote
FOR the reorganization.
Q: WILL THE EXPENSES OF THE FUND IN WHICH I PARTICIPATE INCREASE AS A RESULT OF
THE REORGANIZATION?
Taking into account the investment adviser's voluntary reduction of the
management fee in connection with this reorganization, as discussed in the
enclosed proxy statement/prospectus, as well as economies of scale expected
to be realized by the combined fund, the total expense ratio for the
Acquiring Fund following the reorganization is expected to be roughly the
same as, or slightly less than, the total expense ratio of the Acquired Fund.
Because the investment adviser reserves the right to end the voluntary fee
reduction at any time, and because expected economies of scale might not
materialize, there is no guarantee that actual total operating expenses of
the Acquiring Fund will decline following the reorganization.
Q: WHO IS PAYING THE COSTS OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
Contract owners who were beneficial owners of shares of the Acquired Fund on
the record date will bear these costs.
Q: WILL I INCUR TAXES AS A RESULT OF THE REORGANIZATION?
No. The reorganization is not expected to be a taxable event for contract
owners. Please see the Tax Consequences discussion in the enclosed proxy
statement/prospectus for additional information.
Q: IF APPROVED, WHEN WILL THE REORGANIZATION HAPPEN?
If shareholders approve the reorganization, it will take place shortly after
the shareholder meeting.
Q: IS THERE ANYTHING I NEED TO DO TO CONVERT MY SHARES?
No. Upon shareholder approval of the reorganization, the Acquired Fund shares
that serve as a funding vehicle for benefits under your variable annuity or
variable life contract automatically will be exchanged for shares of the
Acquiring Fund. The total value of the Acquiring Fund shares that a
shareholder receives in the reorganization will be the same as the total
value of the Acquired Fund shares held by the shareholder immediately before
the reorganization.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE?
After careful consideration, the Board recommends that you vote FOR the
reorganization.
Q: HOW AND WHEN DO I VOTE?
You can vote in one of four ways:
- By mail with the enclosed voting instruction form
- By telephone
- By web site
- In person at the meeting
Please refer to the enclosed voting instruction form for the telephone number
and internet address. Please vote as soon as possible by following the
instructions on the voting instruction form.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
If you have questions about any of the proposals described in the proxy
statement or about voting procedures, please call toll free at 1-800-950-5872
ext. 37952.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
5701 GOLDEN HILLS DRIVE
MINNEAPOLIS, MINNESOTA 55416-1297
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 2009
AZL[R] OPPENHEIMER INTERNATIONAL GROWTH FUND
A special meeting of the shareholders of the AZL Oppenheimer International
Growth Fund (the "Acquired Fund") will be held at 10:00 a.m. on October 21,
2009, at the offices of Allianz Life Insurance Company of North America, 5701
Golden Hills Drive, Golden Valley, Minnesota. At the meeting, shareholders will
consider the following proposals:
- To approve an Agreement and Plan of Reorganization (the "Plan") between the
AZL Oppenheimer International Growth Fund, which is a series of the Allianz
Variable Insurance Products Trust (the "VIP Trust"), and the AZL AIM
International Equity Fund (the "Acquiring Fund"), which is another series of
the VIP Trust. Under the Plan, the Acquiring Fund would acquire all of the
assets and assume all of the liabilities of the Acquired Fund in exchange for
shares of the Acquiring Fund, which would be distributed proportionately to
the shareholders of the Acquired Fund in complete liquidation of the Acquired
Fund, and the assumption of the Acquired Fund's liabilities; and
- Such other business as may properly come before the meeting, or any
adjournment of the meeting.
The Acquired Fund issues and sells its shares to certain separate accounts of
Allianz Life Insurance Company of North America ("Allianz Life") and Allianz
Life Insurance Company of New York ("Allianz Life of NY"). The separate accounts
hold shares of mutual funds, including the Acquired Fund, which serve as a
funding vehicle for benefits under variable annuity and variable life insurance
contracts issued by Allianz Life and Allianz Life of NY. As the owners of the
assets held in the separate accounts, Allianz Life and Allianz Life of NY are
the sole shareholders of the Acquired Fund and are entitled to vote all of the
shares of the Acquired Fund. However, Allianz Life and Allianz Life of NY will
vote outstanding shares of the Acquired Fund in accordance with instructions
given by the owners of variable annuity and variable life insurance contracts
for which the Fund serves as a funding vehicle. This Notice is being delivered
to owners of variable annuity and variable life insurance contracts who, by
virtue of their ownership of the contracts, beneficially owned shares of the
Acquired Fund on the record date, so that they may instruct Allianz Life and
Allianz Life of NY how to vote the shares of the Acquired Fund underlying their
contracts.
Shareholders of record at the close of business on July 20, 2009, are entitled
to vote at the meeting.
By order of the Board of Directors
Michael J. Radmer, Secretary
August 7, 2009
YOU CAN VOTE QUICKLY AND EASILY.
PLEASE FOLLOW THE INSTRUCTIONS ON THE ENCLOSED VOTING INSTRUCTION FORM.
PROXY STATEMENT/PROSPECTUS - AUGUST 7, 2009
ACQUIRED FUND ACQUIRING FUND
AZL[R] Oppenheimer International Growth Fund AZL[R] AIM International Equity Fund
("Oppenheimer International Growth Fund") ("AIM International Equity Fund")
This proxy statement/prospectus describes a proposed Agreement and Plan of
Reorganization (the "Plan") pursuant to which the outstanding shares of the
Oppenheimer International Growth Fund, which currently serves as a funding
vehicle for your variable annuity or variable life insurance contract, (the
"Acquired Fund") would be exchanged for shares of the AIM International Equity
Fund (the "Acquiring Fund"). Both the Acquiring Fund and the Acquired Fund (each
a "Fund" and together the "Funds") are series of the Allianz Variable Insurance
Products Trust (the "VIP Trust"). The address of the Funds is 5701 Golden Hills
Drive, Minneapolis, MN 55416-1297. The phone number of the Funds is 877-833-
7113.
THE BOARD OF TRUSTEES OF THE VIP TRUST UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLAN.
THESE SECURITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK
OR AN AFFILIATE OF ANY BANK, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), OR ANY OTHER AGENCY OF THE UNITED STATES, OR ANY
BANK OR AN AFFILIATE OF ANY BANK; AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF VALUE.
As with all mutual funds, the Securities and Exchange Commission (the "SEC") has
not approved or disapproved these securities or passed on the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Each of the Funds is subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and
files reports, proxy materials, and other information with the SEC (Investment
Company Act file no. 811-09491). These reports, proxy materials, and other
information can be inspected and copied at the Public Reference Room maintained
by the SEC. Copies may be obtained, after paying a duplicating fee, by
electronic request e-mailed to publicinfo@sec.gov, or by writing to the Public
Reference Section of the SEC, Washington, D.C. 20549-0102. In addition, copies
of these documents may be viewed on-line or downloaded from the SEC's Web site
at http://www.sec.gov.
You should retain this proxy statement/prospectus for future reference. It sets
forth concisely the information about the Acquiring Fund that a prospective
investor should know before investing. Additional information is set forth in
the Statement of Additional Information, dated the same date as this proxy
statement/prospectus, relating to this proxy statement/prospectus. A current
prospectus for the Acquiring Fund, which gives a detailed description of the
Acquiring Fund's policies, strategies, and restrictions, accompanies this proxy
statement/prospectus.
This proxy statement/prospectus was first mailed to Contract Owners on or about
August 7, 2009.
WHERE TO GET MORE INFORMATION
FUND REPORTS: THE ACQUIRING FUND: THE ACQUIRED FUND:
Prospectus dated April 27, Accompanying, and Incorporated by reference
2009. incorporated by into this proxy statement
reference into, this /prospectus. For a copy
proxy at no charge, call toll
statement/prospectus. free 877-833-7113 or
Annual report for the For a complete copy at write to the address
period ended December 31, no charge, call toll- given below this table.
2008; and semi-annual free 877-833-7113 or
report for the period ended write to the address
June 30, 2008. given below this table.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
THIS PROXY STATEMENT/PROSPECTUS:
Statement of Additional Information Incorporated by reference into this proxy statement/prospectus. For a copy at no charge, call
dated the same date as this proxy toll-free 1-800-624-0197 or write to Allianz VIP Trust, Advisory Management, A 3-
statement/prospectus. This document 825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
contains information about both the
Acquired Fund and the Acquiring
Fund.
To ask questions about this proxy Call toll free 1-800-950-5872 ext. 37952 or write to: Allianz VIP Trust, Advisory Management,
statement/prospectus. A3-825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
ADDRESS: Allianz Variable Insurance Products Trust, 5701 Golden Hills Drive,
Minneapolis, MN 55416.
ABOUT THE ACQUIRED AND ACQUIRING FUNDS
The Acquired Fund issues and sells its shares to separate accounts of Allianz
Life Insurance Company of North America ("Allianz Life") and Allianz Life
Insurance Company of New York ("Allianz Life of NY"). These separate accounts
hold shares of mutual funds, including the Acquired Fund, which serve as funding
vehicles for benefits under variable annuity and variable life insurance
contracts issued by Allianz Life and Allianz Life of NY (the "Contracts"). Each
separate account has subaccounts that invest in the Acquired Fund and certain
other mutual funds. Owners of the Contracts ("Contract Owners") allocate the
value of their Contracts among these subaccounts. As the owners of the assets
held in the separate accounts, Allianz Life and Allianz Life of NY are the sole
shareholders of the Acquired Fund and are entitled to vote all of the shares of
each Acquired Fund. However, Allianz Life and Allianz Life of NY will vote
outstanding shares of the Acquired Fund in accordance with instructions given by
the Contract Owners who are eligible to vote at the meeting.
Both the Acquired Fund and the Acquiring Fund are open-end management investment
companies. If the Plan is approved, the shares of the Acquiring Fund will be
distributed proportionately by the Acquired Fund to the holders of its shares in
complete liquidation of the Acquired Fund. As a result of the Plan, each
Acquired Fund shareholder would become the owner of Acquiring Fund shares having
a total net asset value equal to the total net asset value of that shareholder's
holdings in the Acquired Fund.
The following information summarizes the proposed reorganization of the Acquired
Fund into the Acquiring Fund (the "Reorganization").
HOW THE REORGANIZATION WILL WORK
* The Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Fund's liabilities.
* The Acquiring Fund will issue shares of beneficial interest to the Acquired
Fund in an amount equal to the value of the assets that it receives from the
Acquired Fund, less the liabilities it assumes. These shares will be
distributed to the Acquired Fund's shareholders (the separate accounts) in
proportion to their holdings in the Acquired Fund. The value of your interest
in the subaccount investing in the Acquiring Fund received in connection with
the Reorganization will equal the value of your interest in the subaccount
that was invested in the Acquired Fund immediately before the Reorganization.
You will not pay any sales charge in connection with this distribution of
shares. If you already have an Acquiring Fund account, shares distributed in
the Reorganization will be added to that account. As a result, when average
cost is calculated for income tax purposes, the cost of the shares in the two
accounts you owned will be combined.
FUND INVESTMENT OBJECTIVES
The following table presents the investment objectives for each of the Funds.
ACQUIRED FUND INVESTMENT OBJECTIVE ACQUIRING FUND INVESTMENT OBJECTIVE
OPPENHEIMER INTERNATIONAL GROWTH FUND Long-term capital appreciation AIM INTERNATIONAL EQUITY FUND Long-term growth of capital
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TABLE OF CONTENTS
SECTION A -- Proposal.......................................................4
PROPOSAL: Approve or Reject the Agreement and Plan of Reorganization......4
SUMMARY.................................................................4
How the Reorganization Will Work......................................4
Comparison of the Acquired Fund and the Acquiring Fund................5
Comparison of Investment Objectives...................................5
Comparison of Investment Strategies...................................5
Comparison of Investment Policies.....................................7
Risk Factors..........................................................7
Performance...........................................................10
Tax Consequences......................................................12
FEES AND EXPENSES.........................................................13
THE REORGANIZATION........................................................14
Terms of the Reorganization.............................................14
Conditions to Closing the Reorganization................................14
Termination of the Plan.................................................15
Tax Status of the Reorganization........................................15
Reasons for the Proposed Reorganization and Board Deliberations.........15
Boards' Determinations..................................................17
Recommendation and Vote Required........................................17
SECTION B - Proxy Voting and Shareholder Meeting Information................18
SECTION C - Capitalization, Ownership of Fund Shares and Other Fund
Information.............................................................19
EXHIBIT A - Agreement and Plan of Reorganization...........................A-1
The prospectus for the Acquiring Fund accompanies this proxy
statement/prospectus.
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SECTION A -- PROPOSAL
PROPOSAL: APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
This proxy statement/prospectus is being used by the Acquired Fund to solicit
voting instructions for a proposal to approve the Plan providing for the
Reorganization of the Acquired Fund into the Acquiring Fund. A form of the Plan
is included as Exhibit A.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire proxy
statement/prospectus, exhibits and accompanying materials because they contain
details that are not in this summary.
HOW THE REORGANIZATION WILL WORK
The following table shows the names of the Acquired Fund and the Acquiring Fund
into which it will be merged.
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| ACQUIRED FUND | ACQUIRING FUND |
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|Oppenheimer International Growth Fund|AIM International Equity Fund|
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* The Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Fund's liabilities.
* The Acquiring Fund will issue shares of beneficial interest in an amount equal
to the value of the assets that it receives from the Acquired Fund, less the
liabilities it assumes. These shares will be distributed to the Acquired
Fund's shareholders (the separate accounts) in proportion to their holdings in
the Acquired Fund. The value of your interest in the subaccount investing in
the Acquiring Fund received in connection with the Reorganization will equal
the value of your interest in the subaccount that was invested in the Acquired
Fund immediately before the Reorganization.
* As part of the Reorganization, systematic transactions (such as bank
authorizations and systematic payouts) currently set up for your Acquired Fund
account will be transferred to your new Acquiring Fund account. If you do not
want your systematic transactions to continue, please contact your financial
representative to make changes.
* Neither the Acquired Fund nor the Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Fund will pay any sales
charge in connection with the Reorganization.
* After the Reorganization has been completed, contract values that were
allocated to subaccounts investing in the Acquired Fund will be allocated to
subaccounts investing in the Acquiring Fund. The Acquired Fund will be
terminated.
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COMPARISON OF THE ACQUIRED FUND AND THE ACQUIRING FUND
Both the Acquired Fund and the Acquiring Fund:
* Are outstanding series of an open-end management investment company organized
as a Delaware statutory trust.
* Have Allianz Investment Management LLC (the "Manager") as their investment
adviser.
* Have the same policies for buying and selling shares and the same exchange
rights.
* Have the same distribution policies.
* Are available only to Contract Owners who allocate contract value to a
subaccount that invests in the Funds.
COMPARISON OF INVESTMENT OBJECTIVES
The following table presents the investment objectives for the Funds.
ACQUIRED FUND INVESTMENT OBJECTIVE ACQUIRING FUND INVESTMENT OBJECTIVE
OPPENHEIMER INTERNATIONAL GROWTH FUND Long-term capital appreciation AIM INTERNATIONAL EQUITY FUND Long-term growth of capital
COMPARISON OF INVESTMENT STRATEGIES
Both Funds are international equity funds with a focus on growth, although both
Funds may invest a portion of their assets in other securities. The Acquired
Fund is subadvised by OppenheimerFunds, Inc., and the Acquiring Fund is
subadvised by Invesco Aim Capital Management, Inc.
Detailed strategies for the Acquired Fund and the Acquiring Fund are set forth
below:
OPPENHEIMER INTERNATIONAL GROWTH FUND (ACQUIRED FUND)
The Fund emphasizes investments in common stocks of foreign companies. It
currently invests mainly in common stocks of growth companies that are domiciled
outside the U.S. or have their primary operations outside the U.S. The Fund does
not limit its investments to issuers within a specific market capitalization
range. At times the Fund may invest a substantial portion of its assets in a
particular capitalization range. For example, the Fund currently invests a
substantial portion of its assets in stocks issued by small- to mid-sized
companies.
The Fund can invest in emerging markets as well as developed markets throughout
the world, although it may place greater emphasis on investing in one or more
particular regions from time to time, such as Asia, Europe or Latin America. It
can invest 100% of its assets in foreign securities. Under normal market
conditions:
o As a fundamental policy, the Fund will invest at least 65% of its
total assets in foreign common and preferred stock of issuers in at least
three different countries outside the U.S.
o The Fund will emphasize investments in common stocks of issuers that
the Manager considers to be "growth" companies.
The Fund may buy securities convertible into common stock and other securities
having equity features. The Fund also can use hedging instruments and certain
derivative investments to seek capital appreciation or to try to manage
investment risks.
In selecting securities for the Fund, the subadviser (OppenheimerFunds, Inc.)
evaluates investment opportunities on a company-by-company basis. The subadviser
looks primarily for foreign companies with high growth potential using a "bottom
up" investment approach that is, looking at the investment performance of
individual stocks before considering the impact of general or industry economic
trends. This approach includes fundamental analysis of a company's financial
statements and management structure and analysis of the company's operations and
product development, as well as the industry of which the issuer is part.
In seeking diversification of the Fund's portfolio, the subadviser currently
focuses on the factors below, which may vary in particular cases and may change
over time. The subadviser currently searches for:
o Companies that enjoy a strong competitive position and high demand
for their products or services.
o Companies with accelerating earnings growth and cash flow.
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o Diversification to help reduce risks of foreign investing, such as
currency fluctuations and stock market volatility.
In applying these and other selection criteria, the subadviser considers the
effect of worldwide trends on the growth of particular business sectors and
looks for companies that may benefit from global trends. The trends currently
considered include telecommunications/media expansion, emerging consumer
markets, infrastructure development, natural resources, corporate restructuring,
capital market development, health care and biotechnology, and efficiency
enhancing technologies and services. The subadviser does not invest a fixed
amount of the Fund's assets according to these trends and this strategy and the
trends that are considered may change over time. The subadviser monitors
individual issuers for changes in the factors above and these changes may
trigger a decision to sell a security.
For temporary defensive purposes, or when cash is temporarily available, the
Fund may invest in investment grade, short-term debt instruments, including
government, corporate and money market securities. If the Fund invests
substantially in such instruments, it may not be pursuing its principal
investment strategies and may not achieve its investment objective.
AIM INTERNATIONAL EQUITY FUND (ACQUIRING FUND)
The Fund normally invests at least 80% of its net assets, plus any borrowings
for investment purposes, in a diversified portfolio of international equity
securities whose issuers are considered by the Fund's subadviser (Invesco Aim
Capital Management, Inc.) to have strong earnings momentum. The Fund invests in
marketable equity securities of foreign companies that are listed on a
recognized foreign or U.S. securities exchange or traded in a foreign or U.S.
over-the-counter market. The Fund will normally invest in companies located in
at least four countries outside of the United States, emphasizing investment in
companies in the developed countries of Western Europe and the Pacific Basin.
At the present time, the Fund's subadviser intends to invest no more than 20% of
the Fund's total assets in foreign companies located in developing countries,
i.e., those that are in the initial stages of their industrial cycles. The Fund
may invest up to 20% of its total assets in securities exchangeable for or
convertible into marketable equity securities of foreign issuers. The Fund may
also invest up to 20% of its total assets in high-grade short-term securities
and debt securities, including U.S. Government obligations, investment grade
corporate bonds, or taxable municipal securities, whether denominated in U.S.
dollars or foreign currencies.
The subadviser employs a disciplined investment strategy that emphasizes
fundamental research, supported by quantitative analysis and portfolio
construction techniques. The strategy primarily focuses on identifying quality
companies that have experienced, or exhibit the potential for, accelerating or
above average earnings growth but whose prices do not fully reflect these
attributes. Investments for the portfolio are selected "bottom-up" on a stock-
by-stock basis. The focus is on the strengths of individual companies, rather
than sector or country trends. The subadviser may consider selling a security
for several reasons, including when (1) its fundamentals deteriorate or it posts
disappointing earnings, (2) its stock price appears to be overvalued, or (3) a
more attractive opportunity is identified.
For temporary defensive purposes, or when cash is temporarily available, the
Fund may invest in investment grade, short-term debt instruments, including
government, corporate and money market securities. If the Fund invests
substantially in such instruments, it may not be pursuing its principal
investment strategies and may not achieve its investment objective.
COMPARISON OF INVESTMENT POLICIES
If shareholders of the Acquired Fund approve the Reorganization, they will be
subject to the investment policies of the Acquiring Fund. Other than as
described herein, the Manager does not believe that the differences between the
investment policies result in any material difference in the way the Funds are
managed.
Both of the Funds are international equity funds with a focus on growth and have
substantially similar investment policies. Both Funds seek as an investment
objective to provide long-term capital growth, and both Funds invest primarily
in foreign equity securities but may invest in other securities. The Acquired
Fund, as a fundamental policy, will invest at least 65% of its total assets in
foreign common and preferred stock of issuers in at least three different
countries outside the U.S. The Acquiring Fund will normally invest in companies
located in at least four countries outside of the United States, but this is not
a fundamental policy and it may be changed at any time. Both Funds may invest in
both developed and developing (or emerging) markets; however, while the
Acquiring Fund's subadviser intends to invest no more than 20% of the Fund's
total assets in developing markets, the Acquired Fund has no such policy.
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RISK FACTORS
The principal investment strategies of both Funds are generally comparable.
Accordingly, both Funds also have principal investment risks that are generally
comparable. Depending upon its assessment of changing market conditions, the
subadviser of each Fund may emphasize particular asset classes or particular
investments at any given time, which may change the risks associated with the
Fund. The fact that a risk is not identified as a principal risk for a
particular Fund does not mean that the Fund may not be subject to that risk. For
example, a Fund may be permitted to invest in derivatives, but may do so
infrequently or ordinarily to such a limited extent that the risk associated
with investing in derivatives may not be a principal risk of that Fund. The
Statement of Additional Information for the Acquiring Fund, which is
incorporated by reference in this proxy statement/prospectus, contains detailed
information on the Acquiring Fund's permitted investments and investment
restrictions.
The principal risks of investing in the Acquired Fund and the Acquiring Fund are
comparable and are shown in the tables below. A discussion of each of the
various principal risks follows the tables.
RISK OPPENHEIMER INTERNATIONAL GROWTH FUND (ACQUIRED FUND) AIM INTERNATIONAL EQUITY FUND(ACQUIRING FUND)
Market Risk X X
Issuer Risk X X
Selection Risk X X
Growth Stocks Risk X X
Capitalization Risk X
Foreign Risk X X
Currency Risk X X
Emerging Markets Risk X X
Interest Rate Risk X
Derivatives Risk X
Convertible Securities Risk X X
Liquidity Risk X
* MARKET RISK: The market price of securities owned by the Fund may go up or
down, sometimes rapidly and unpredictably. Securities may decline in value
due to factors affecting securities markets generally or particular
industries represented in the securities markets. The value of a security may
decline due to general market conditions that are not specifically related to
a particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates, or adverse investor sentiment. They may also decline due to
factors that affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an
industry. During a general downturn in the securities markets, multiple asset
classes may decline in value simultaneously. The value of the Fund's
portfolio may fluctuate to a greater or lesser degree than fluctuations of
the general stock market. For those Funds that invest in stocks of foreign
companies, the value of the Fund's portfolio will be affected by changes in
foreign stock markets and the special economic and other factors that might
primarily affect stock markets in particular foreign countries and regions.
Equity securities generally have greater price volatility than fixed income
securities.
* ISSUER RISK: The value of a security may decline for a number of reasons that
directly relate to the issuer, such as management performance, financial
leverage, and reduced demand for the issuer's products or services.
* SELECTION RISK: The Fund is an actively managed investment portfolio. The
portfolio manager(s) make investment decisions for the Fund's assets. The
investment approach of some Funds emphasizes buying and holding securities,
even through adverse markets, while the investment approach of other Funds
emphasizes frequent trading in order to take advantage of short-term market
movements. However, there can be no guarantee they will produce the desired
results and poor security selection may cause the Fund to underperform its
benchmark index or other funds with similar investment objectives.
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* GROWTH STOCKS RISK: The returns on growth stocks may or may not move in
tandem with the returns on other categories of stocks, or the stock market as
a whole. Growth stocks may be particularly susceptible to rapid price swings
during periods of economic uncertainty or in the event of earnings
disappointments. Further, growth stocks typically have little or no dividend
income to cushion the effect of adverse market conditions. To the extent a
growth style of investing emphasizes certain sectors of the market, such
investments will be more sensitive to market, political, regulatory and
economic factors affecting those sectors.
* CAPITALIZATION RISK: To the extent the Fund invests significantly in small
and/or mid-capitalization companies, it may have capitalization risk. These
companies may present additional risk because they have less predictable
earnings or no earnings, more volatile share prices and less liquid
securities than large capitalization companies. These securities may
fluctuate in value more than those of larger, more established companies and,
as a group, may suffer more severe price declines during periods of generally
declining stock prices. The shares of smaller companies tend to trade less
frequently than those of larger, more established companies, which can
adversely affect the price of smaller companies' securities and the Fund's
ability to sell them when the portfolio manager deems it appropriate. These
companies may have limited product lines, markets, or financial resources, or
may depend on a limited management group. The value of some of the Fund's
investments will rise and fall based on investor perception rather than
economic factors.
* FOREIGN RISK: Because the Fund invests in securities of foreign issuers, it
may be subject to risks not usually associated with owning securities of U.S.
issuers. These risks include, among others, adverse fluctuations in foreign
currency values as well as adverse political, social and economic
developments affecting a foreign country, including the risk of
nationalization, expropriation or confiscatory taxation. In addition, foreign
investing involves less publicly available information, and more volatile or
less liquid securities markets. Investments in foreign countries could be
affected by factors not present in the U.S., such as restrictions on
receiving the investment proceeds from a foreign country, confiscatory
foreign tax laws, and potential difficulties in enforcing contractual
obligations. Transactions in foreign securities may be subject to less
efficient settlement practices, including extended clearance and settlement
periods. Foreign accounting may be less revealing than U.S. accounting
practices. Foreign regulation may be inadequate or irregular. Owning foreign
securities could cause the Fund's performance to fluctuate more than if it
held only U.S. securities.
* CURRENCY RISK: Funds that invest in securities that trade in, and receive
revenues in, foreign currencies are subject to the risk that those currencies
will decline in value relative to the U.S. dollar, or, in the case of hedging
positions, that the U.S. dollar will decline in value relative to the
currency being hedged. Currency rates in foreign countries may fluctuate
significantly over short periods of time for a number of reasons, including
changes in interest rates, intervention (or failure to intervene) by the U.S.
or foreign governments, central banks, or supranational authorities, such as
the International Monetary Fund, or by the imposition of currency controls or
other political developments in the U.S. or abroad. As a result, the Fund's
investments with exposure to foreign currency fluctuations may decline in
value (in terms of the U.S. dollar) and reduce the returns of the Fund.
* EMERGING MARKETS RISK: In addition to the risks described under "Foreign
Risk", issuers in emerging markets may present greater risk than investing in
foreign issuers generally. Emerging markets may have less developed trading
markets and exchanges which may make it more difficult to sell securities at
an acceptable price and their prices may be more volatile than securities of
companies in more developed markets. Settlements of trades may be subject to
greater delays so that the Fund may not receive the proceeds of a sale of a
security on a timely basis. Emerging countries may also have less developed
legal and accounting systems and investments may be subject to greater risks
of government restrictions, nationalization, or confiscation.
* INTEREST RATE RISK: Interest rate risk is the chance that the value of the
bonds the Fund holds will decline due to rising interest rates. When interest
rates rise, the price of most bonds goes down. The price of a bond is also
affected by its maturity. Bonds with longer maturities generally have greater
sensitivity to changes in interest rates.
* DERIVATIVES RISK: The Acquired Fund may invest in derivatives. A derivative
is a financial contract whose value depends on, or is derived from, the value
of an underlying asset, reference rate, or risk. Funds typically use
derivatives as a substitute for taking a position in the underlying asset
and/or as part of a strategy designed to reduce exposure to other risks, such
as interest rate or currency risk. Funds may also use derivatives for
leverage, in which case their use would involve leveraging risk. Use of
derivative instruments involves risks different from, or possibly greater
than, the risks associated with investing directly in securities and other
traditional investments. Derivatives are subject to a number of other risks,
such as liquidity risk, interest rate risk, market risk, credit risk, and
management risk. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in the value may not correlate perfectly
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
with the underlying asset, rate, or index. Using derivatives may result in
losses, possibly in excess of the principal amount invested. Also, suitable
derivative transactions may not be available in all circumstances. The
counterparty to a derivatives contract could default. As required by
applicable law, any Fund that invests derivatives segregates cash or liquid
securities, or both, to the extent that its obligations under the instrument
(for example, forward contracts and futures that are required to "cash
settle") are not covered through ownership of the underlying security,
financial instrument, or currency.
* CONVERTIBLE SECURITIES RISK: The values of the convertible securities in
which the Fund may invest also will be affected by market interest rates, the
risk that the issuer may default on interest or principal payments and the
value of the underlying common stock into which these securities may be
converted. Specifically, since these types of convertible securities pay
fixed interest and dividends, their values may fall if market interest rates
rise, and rise if market interest rates fall. Additionally, an issuer may
have the right to buy back certain of the convertible securities at a time
and at a price that is unfavorable to the Fund.
* LIQUIDITY RISK: Liquidity risk exists when particular investments are
difficult to purchase or sell. Investments in illiquid securities may reduce
the returns of the Fund because it may be unable to sell the illiquid
securities at an advantageous time or price. Restricted securities may be
subject to liquidity risk because they may have terms that limit their resale
to other investors or may require registration under applicable securities
laws before they may be sold publicly. Funds with principal investment
strategies that involve restricted securities, foreign securities,
derivatives, companies with small market capitalization or securities with
substantial market and/or credit risk tend to have the greatest exposure to
liquidity risk.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
PERFORMANCE
Performance information for the Funds is shown below.
The following bar charts and tables provide an indication of the risks of an
investment in the Funds by showing changes in their performance from year to
year and by showing how the Funds' average annual returns for one year, five
years and since inception (as applicable) compare with those of a broad measure
of market performance.
Both the bar charts and the tables assume reinvestment of dividends and
distributions, and reflect fee waivers. Without fee waivers, the Funds'
performance would have been lower.
The performance of the Funds will vary from year to year. The Funds' performance
does not reflect the cost of insurance and separate account charges which are
imposed under your Contract. If they were included, performance would be
reduced. Past performance does not indicate how the Funds will perform in the
future.
OPPENHEIMER INTERNATIONAL GROWTH FUND (ACQUIRED FUND)
[BAR CHART GRAPHIC - 2002: -13.90%, 2003: 33.77%, 2004: 14.48%, 2005: 14.18%,
2006: 28.98%, 2007: 12.29%, 2008: -44.14%]
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q2, 2003) 18.39%
Lowest (Q4, 2008) -21.86%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, FIVE YEARS ENDED DECEMBER 31, SINCE INCEPTION
2008 2008
AZL Oppenheimer International Growth 11/5/2001 -44.14% 1.12% 3.15%
Fund
MSCI EAFE Index -43.38% 1.66% 3.61%
The Fund's performance is compared to the Morgan Stanley Capital International,
Europe, Australasia and Far East (MSCI EAFE) Index, an unmanaged market
capitalization-weighted equity index comprising 20 of the 48 countries in the
MSCI universe and representing the developed world outside of North America. The
index does not reflect the deduction of fees associated with a mutual fund, such
as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees services provided to the Fund. Investors cannot
invest directly in an index, although they can invest in the underlying
securities.
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AIM INTERNATIONAL EQUITY FUND (ACQUIRING FUND)
[BAR CHART GRAPHIC - 2003: 27.14%, 2004: 22.13%, 2005: 16.36%, 2006: 27.04%,
2007: 14.62%, 2008: -41.51%]
HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART)
Highest (Q4, 2003) 14.51%
Lowest (Q4, 2008) -20.57%
AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 FIVE YEARS ENDED DECEMBER 31, 2008 SINCE INCEPTION
AZL AIM International Equity Fund 5/1/2002 -41.51% 3.89% 3.47%
MSCI EAFE Index -43.38% 1.66% 3.41%
The Fund's performance is compared to the Morgan Stanley Capital International,
Europe, Australasia and Far East (MSCI EAFE) Index, an unmanaged market
capitalization-weighted equity index comprising 20 of the 48 countries in the
MSCI universe and representing the developed world outside of North America. The
index does not reflect the deduction of fees associated with a mutual fund, such
as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for services provided to the Fund. Investors
cannot invest directly in an index, although they can invest in the underlying
securities.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
TABLE A-1
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2008
FUND (inception date) LAST 1 YEAR LAST 2 YEARS LAST 3 YEARS LAST 5 YEARS SINCE INCEPTION
AZL Oppenheimer International Growth Fund (11/5/2001) -44.14% -20.80% -6.82% 1.12% 3.15%
AZL AIM International Equity Fund(5/1/2002) -41.51% -18.12% -5.21% 3.89% 3.47%
TAX CONSEQUENCES
If the separate accounts investing in the Funds and the Contracts are properly
structured under the insurance company provisions of the federal tax law (as the
Manager believes is the case), the Reorganization will not be a taxable event
for Contract Owners who have a portion of their variable annuity contract
allocated to the Funds, regardless of the tax status of the Reorganization.
As a condition to the closing of the Reorganization, the Acquired Fund and the
Acquiring Fund will receive an opinion from Dorsey & Whitney LLP to the effect
that the Reorganization will qualify as a tax-free reorganization for federal
income tax purposes. Accordingly, shareholders (the separate accounts of Allianz
Life and Allianz Life of New York) will not recognize taxable gain or loss as a
result of the Reorganization.
For more information about the federal income tax consequences of the
Reorganization, see the section entitled "Tax Status of the Reorganization."
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FEES AND EXPENSES
The following table describes the fees and expenses as of the end of the most
recent fiscal year that you pay if you buy and hold shares of the Acquired Fund
or shares of the Acquiring Fund. The table also shows estimated pro forma
expenses of the Acquiring Fund assuming the proposed Reorganization had been
effective during the most recent fiscal year, adjusted to reflect current fees.
The table does not reflect the expenses that apply to the subaccounts or the
Contracts. Inclusion of these charges would increase expenses for all periods
shown. The fees and expenses below exclude the costs of the Reorganization. See
"Reasons for the Proposed Reorganization and Board Deliberations" for additional
information concerning the allocation of the costs of the Reorganization.
TABLE A-2
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
The following table is based on fund assets as of December 31, 2008.
OPPENHEIMER INTERNATIONAL AIM INTERNATIONAL AIM INTERNATIONAL EQUITY FUND - PRO FORMA WITH OPPENHEIMER
GROWTH FUND (ACQUIRED FUND) EQUITY FUND (ACQUIRING INTERNATIONAL GROWTH FUND
FUND)
Management 0.75% (a) 0.90% (a)(b) 0.90% (b)(c)
Fee
Distribution 0.25% 0.25% 0.25%
(12b-1) Fees
(d)
Other 0.20% 0.22% 0.14%
Expenses
Total Annual 1.20% 1.37% 1.29%
Operating
Expenses
Fee Waiver 0.00% 0.00% 0.00%
(e)
Net Annual 1.20% 1.37% (b) 1.29% (b)
Fund
Operating
Expenses
(a)The management fee rate is the contractual rate charged for the Fund's most
recent fiscal year, which ended December 31, 2008. The International Index
Fund commenced operations April 27, 2009, and did not have any net assets at
December 31, 2008.
(b)As of the date of this proxy statement/prospectus, the Manager is voluntarily
reducing the management fee to 0.85% on net assets over $250 million. In
connection with the Reorganization, the Manager will voluntarily reduce the
management fee for the combined Fund to 0.80% on the first $200 million of net
assets and to 0.75% on net assets over $200 million. The Manager reserves the
right to increase the management fee to the amount shown in the table above at
any time. If the voluntary management fee reduction were reflected in the
table, the Net Annual Fund Operating Expenses would be lower.
(c)The management fee rate shown reflects what the rate would be under the
current management fee schedule for the Acquiring Fund based on the combined
assets of the Funds for the fiscal year ended December 31, 2008.
(d)The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of
1940. The Fund pays Allianz Life Financial Services, LLC, the Fund's
distributor, an annual fee of up to 0.25% of average daily net assets as
payment for distributing its shares and providing shareholder services.
(e)The Manager and the Fund have entered into a written contract limiting
operating expenses, excluding certain expenses (such as interest expense), to
1.45% through April 30, 2010. The Fund is authorized to reimburse the Manager
for management fees previously waived and/or for the cost of Other Expenses
paid by the Manager provided that such reimbursement will not cause the Fund
to exceed any limits in effect at the time of such reimbursement. The Fund's
ability to reimburse the Manager in this manner only applies to fees paid or
reimbursements made by the Manager within the three fiscal years prior to the
date of such reimbursement. To the extent that such reimbursements to the
Manager are expected in the upcoming year, the amount of the reimbursements,
if any, is included in the financial statements in the Fund's shareholder
reports and is reflected in Other Expenses in the table above.
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The Allianz Variable Insurance Products Trust - Proxy
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EXAMPLE: Use the following tables to compare fees and expenses of the Acquired
Fund to other investment companies. The tables illustrate the amount of fees and
expenses an investor would pay, assuming (1) a $10,000 investment, (2) 5% annual
return, (3) redemption at the end of each time period, and (4) no changes in the
Fund's total operating expenses. The tables also show pro forma expenses of the
Acquiring Fund assuming the proposed Reorganization had been in effect for the
periods shown. The tables do not reflect the effect of any fee or expense
waivers. The tables also do not reflect separate account or insurance contract
fees and charges. An investor's actual costs may be different.
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Oppenheimer International Growth Fund (Acquired Fund) $122 $381 $660 $1,455
AIM International Equity Fund (Acquiring Fund) $139 $434 $750 $1,646
AIM International Equity Fund - Pro Forma with Oppenheimer International Growth Fund $131 $409 $708 $1,556
THIS EXAMPLE DOES NOT REPRESENT ACTUAL EXPENSES, PAST OR FUTURE. ACTUAL EXPENSES
MAY BE HIGHER OR LOWER THAN THOSE SHOWN. THIS EXAMPLE DOES NOR REFLECT THE
EXPENSES THAT APPLY TO THE SUBACCOUNTS OR THE CONTRACTS. INCLUSION OF THSE
CHARGES WOULD INCREASE EXPENSES FOR ALL PERIODS SHOWN.
THE REORGANIZATION
TERMS OF THE REORGANIZATION
The Board has approved the Plan, a copy of which is attached as Exhibit A. The
Plan provides for the Reorganization on the following terms:
* The Reorganization is scheduled to occur on the first day that the New York
Stock Exchange is open for business following shareholder approval and receipt
of any necessary regulatory approvals, but may occur on any later date agreed
to by the Acquired Fund and the Acquiring Fund.
* The Acquired Fund will transfer all of its assets to the Acquiring Fund and,
in exchange, the Acquiring Fund will assume the Acquired Fund's liabilities.
* The Acquiring Fund will issue shares to the Acquired Fund in an amount equal
to the value of the assets that it receives from the Acquired Fund, less the
liabilities assumed by the Acquiring Fund in the transaction. These shares
will immediately be distributed by the Acquired Fund to its shareholders (the
separate accounts) in proportion to their holdings in the Acquired Fund. As a
result, shareholders (the separate accounts) of the Acquired Fund will become
shareholders of the Acquiring Fund. Contract values that were allocated to
subaccounts invested in the Acquired Fund will be allocated to subaccounts
investing in the Acquiring Fund.
* Neither the Acquired Fund nor any Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Fund will pay any sales
charge in connection with the Reorganization.
* The net asset value of the Acquired Fund and the Acquiring Fund will be
computed as of 3:00 p.m. Central time, on the closing date.
* After the Reorganization, the Acquired Fund will be terminated.
CONDITIONS TO CLOSING THE REORGANIZATION
The completion of the Reorganization is subject to certain conditions described
in the Plan, including:
* The Acquired Fund will have declared and paid a dividend that will distribute
all of the Fund's taxable income, if any, to the shareholders (the separate
accounts) of the Fund for the taxable years ending at or prior to the closing.
* The Funds will have received any approvals, consents, or exemptions from the
SEC or any regulatory body necessary to carry out the Reorganization.
* An effective registration statement on Form N-14 will be on file with the SEC.
* The Contract Owners who are eligible to provide voting instructions for the
meeting will have approved the Plan.
* The Acquired Fund will receive an opinion of tax counsel that the proposed
Reorganization will be tax-free for the Acquired Fund and the Acquiring Fund
and for the separate accounts that are the shareholders of the Acquired Fund.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
TERMINATION OF THE PLAN
The Plan and the transactions contemplated by it may be terminated and abandoned
by resolutions of the Board of Trustees of the Acquired Fund or the Acquiring
Fund at any time prior to closing. In the event of a termination, there will be
no liability for damages on the part of either the Acquired Fund or the
Acquiring Fund, or the trustees, officers, or shareholders of the Acquired Fund
or the Acquiring Fund.
TAX STATUS OF THE REORGANIZATION
The exchange of the Acquired Fund's assets for shares of the Acquiring Fund, and
the subsequent distribution of those shares to the Acquired Fund shareholders
and the liquidation of the Acquired Fund, are intended to qualify for federal
income tax purposes as a tax-free reorganization under Section 368(a)(1) of the
Code. The Acquired Fund and the Acquiring Fund will receive an opinion of Dorsey
& Whitney LLP, based in part on certain representations by the VIP Trust on
behalf of both the Acquired Fund and the Acquiring Fund, substantially to the
effect that:
* The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
* Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of Acquired Fund
which are distributed by Acquired Fund prior to the Closing.
* The tax basis of the Acquiring Fund Shares received by each Acquired Fund
shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund shares exchanged therefor.
* The holding period of the Acquiring Fund shares received by each Acquired
Fund shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund shareholder held the Acquired Fund shares
exchanged therefor, provided that the Acquired Fund shares were held as a
capital asset at the Effective Time.
* The Acquired Fund will recognize no income, gain, or loss by reason of the
Reorganization.
* The Acquiring Fund will recognize no income, gain, or loss by reason of
the Reorganization.
* The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
* The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
* The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
REASONS FOR THE PROPOSED REORGANIZATION AND BOARD DELIBERATIONS
The Board believes that the proposed Reorganization will be advantageous to
Acquired Fund shareholders based on its consideration of the following matters:
* TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms and
conditions of the Reorganization as described in the previous paragraphs.
* TAX CONSEQUENCES. The Board considered the tax-free nature of the
Reorganization.
* CONTINUITY OF INVESTMENT. The Board considered the compatibility of the Funds
and the degree of similarity between the investment objectives and the
principal investment strategies for the Funds. The Board considered the fact
that the Acquired Fund and the Acquiring Fund have comparable investment
objectives and, except as described in this proxy statement, investment
strategies and policies that are substantially similar. The Board also took
note of the fact that following the Reorganization, shareholders of the
Acquired Fund will be invested in a Fund holding a portfolio whose
characteristics are similar to those of the portfolio currently held by the
Acquired Fund, except as described in this proxy statement.
* EXPENSE RATIOS. The Board considered the relative expenses of the Funds. At
December 31, 2008, the end of the Funds' most recent fiscal year, the total
operating expense ratio for the Acquiring Fund was higher than the total
operating expense ratio for the Acquired Fund. The Board noted that the
management fee of the Acquiring Fund for fiscal year 2008 was higher than the
management fee of the Acquired Fund for fiscal year 2008. The Board also noted
that both Funds have the same Distribution (12b-1) Fees and that the Acquiring
Fund's Other Expenses are slightly higher than those of the Acquired Fund. The
15
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
Board considered the Manager's proposed voluntary management fee waiver in
connection with the Reorganization, which includes a breakpoint and reduces
the Acquiring Fund's management fee by 0.10% on the first $200 million in net
assets and by 0.15% on net assets over $200 million. The Board considered
that, taking into account the Manager's voluntary management fee waiver, the
net operating expenses of the Acquiring Fund after the Reorganization are
expected to be approximately the same as, or slightly less than, the expenses
of the Acquired Fund before the Reorganization. In addition, the shareholders
of the Acquired Fund are expected to see other benefits, such as economies of
scale, which make the Reorganization desirable for Acquired Fund shareholders
and are expected to decrease expenses over time.
The Board also considered the possibility that both higher aggregate net
assets resulting from the Reorganization and the opportunity for net cash
inflows, or reduced outflows, may reduce the risk that, if net assets of the
Acquired Fund fail to grow, or even diminish, the Acquired Fund's total
expense ratio could rise from current levels as fixed expenses become a larger
percentage of net assets. The Board noted that both the Acquired Fund and the
Acquiring Fund are subject to expense limitation agreements that will remain
in place through at least April 30, 2010, and are currently operating with
expenses below the cap contained in the respective expense limitation
agreements. Also, the Board noted that the Acquiring Fund is not currently
subject to reimbursements to the Manager for expenses previously waived by the
Manager.
* ECONOMIES OF SCALE. The Board considered the advantage of combining Funds with
similar investment objectives and strategies. The Board believes that the
combined Fund may have the opportunity to take advantage of the economies of
scale associated with a larger fund. The combined Fund may have better
prospects for growth than either Fund separately. For example, a larger fund
should have an enhanced ability to effect portfolio transactions on more
favorable terms and should have greater investment flexibility. Furthermore,
as indicated above, fixed expenses, such as audit expenses and accounting
expenses that are charged on a per fund basis, may be reduced.
* COSTS. The Board noted that the Acquired Fund will bear the expenses of
printing and mailing communications to the Contract Owners who beneficially
owned its shares and that all other expenses of the Reorganization, including
accounting, legal, and custodial expenses, and any costs related to
repositioning of the Acquiring Fund's portfolio after the Reorganization, will
be allocated equally between the Acquired Fund and the Acquiring Fund. The
Board also noted that the estimated total reorganization costs, including
repositioning costs, would be less than $0.01 per share of the combined Funds.
The Board considered the Manager's analysis showing that the reduction in
annual operating expenses for the Acquired Fund and the Acquiring Fund
resulting from the Reorganization is likely to be greater than the expenses of
the Reorganization to be borne by the Acquired Fund or Acquiring Fund, as the
case may be.
* DILUTION. The Board considered the fact that the Reorganization will not
dilute the interests of the current Contract Owners with contract values
allocated to subaccounts investing in the Acquired Fund because it would be
effected on the basis of the relative net asset value per share of the
Acquired Fund and the Acquiring Fund, respectively. Thus, subaccounts holding
shares of the Acquired Fund will receive shares of the Acquiring Fund equal in
value to their shares in the Acquired Fund.
* PERFORMANCE AND OTHER FACTORS. The Board considered the relative performance
records of the Funds. The Board took into account the better overall track
record of the Acquiring Fund, when compared to the Acquired Fund, over the
past five years, and the greater consistency of the Acquiring Fund's returns
compared to those of the Acquired Fund. While the Board was cognizant of the
fact that an Acquiring Fund's past performance is no guarantee of its future
results, it did recognize that the better overall track record of an Acquiring
Fund could help attract more assets into the combined Funds and therefore
could increase shareholder confidence in the combined Fund. The Board
concluded that increased inflows, or reduced outflows, could lead to further
economies of scale (see "Economies of Scale" above).
The Board also considered the fact that the Funds have similar investment
objectives and similar investment strategies. The Reorganization should allow
for a concentrated selling effort, thereby potentially benefiting shareholders
of the combined Funds. The Board further took into account the Manager's
belief that the Acquired Fund, as a stand-alone Fund, was unlikely to
experience significant growth in assets as a result of inflows.
* POTENTIAL EFFECTS ON THE MANAGER. The Board considered the potential benefits
from the Reorganization that could be realized by the Manager. The Board
recognized that the potential benefits to the Manager consist principally of
higher management fees, economies of scale and the elimination of expenses
incurred in duplicative efforts to administer separate funds. The Board noted,
however, that shareholders of the Acquired Fund will benefit over time from
any decrease in overall operating expense ratios resulting from the proposed
Reorganization. The Board also noted that the proposed Reorganization would
affect the amount of management fees that the Manager retains after payment of
the subadvisory fees. The table below assumes that the Reorganization has
taken place and gives effect to the additional temporary reduction in
management fees payable to Manager. See Table A-2 above for information
concerning current management fees for both Funds and the voluntary reductions
in management fees that are currently in effect and have been proposed for the
Funds.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
FUND MANAGEMENT FEE RETAINED AFTER PAYMENT OF SUBADVISORY
FEE (1)
Oppenheimer International Growth Fund (Acquired Fund) 0.18%
AIM International Equity Fund (Acquiring Fund) 0.25%
Weighted Average Before Reorganization 0.22%
AIM INTERNATIONAL EQUITY FUND - PRO FORMA WITH OPPENHEIMER INTERNATIONAL 0.33% (2)
GROWTH FUND
(1)Calculations are as of May 31, 2009, using monthly average assets under
management for May 2009.
(2)Calculated using management fee rates and subadvisory fee rates effective
October 26, 2009.
The Board did not assign relative weights to the foregoing factors or deem any
one or group of them to be controlling in and of themselves.
BOARD DETERMINATIONS
After considering the factors described above and other relevant information at
an in-person meeting held on June 10, 2009, the Board of Trustees of the
Acquired Fund, including a majority of the independent Board members found that
participation in the Reorganization is in the best interests of the Acquired
Fund and that the interests of existing Contract Owners with contract values
allocated to subaccounts investing in the Acquired Fund would not be diluted as
a result of the Reorganization.
The Board of Trustees of the Acquiring Fund approved the Plan at the meeting
held on June 10, 2009. Among other factors, the Board members considered the
terms of the Plan, the provisions intended to avoid the dilution of Contract
Owners' interests, and the anticipated tax consequences of the Reorganization.
The Board found that participation in the Reorganization is in the best
interests of the Acquiring Fund and that the interests of existing Contract
Owners with contract values allocated to subaccounts investing in the Acquiring
Fund will not be diluted as a result of the Reorganization.
RECOMMENDATION AND VOTE REQUIRED
The Board recommends that Contract Owners who are entitled to vote at the
meeting approve the proposed Plan. Approval of the Plan requires the affirmative
vote, in person or by proxy, of a majority of the voting power of the
outstanding shares of the Fund on the record date, July 20, 2009. Each share is
entitled to one vote for each dollar, and a fractional vote for each fraction of
a dollar, of net asset value per share held by a shareholder on the record date.
If the Plan is not approved by the Acquired Fund, the Board will consider what
further action should be taken.
If shareholder approval is obtained, the Reorganization is scheduled to be
effective on or about October 23, 2009.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
SECTION B - PROXY VOTING AND SHAREHOLDER MEETING INFORMATION
REFERENCE TO THE "FUND" IN THIS SECTION IS A REFERENCE TO THE ACQUIRED FUND.
A special meeting of shareholders of the Acquired Fund will be held as specified
in the Notice of Special Meeting that accompanies this proxy
statement/prospectus. At the meeting, shareholders (the separate accounts) will
vote their shares of the Acquired Fund.
You have the right to instruct Allianz Life and Allianz Life of NY (together,
"Allianz") on how to vote the shares of the Acquired Fund held under your
Contract. The number of Fund shares for which you may provide instructions will
be based on the dollar amount of Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date. Each accumulation unit or annuity unit represents a specified
dollar value and a specified number of Fund shares. For each dollar of value,
the Contract Owner is permitted to vote one Fund share. We count fractional
votes. If you execute and return your voting instruction form, but do not
provide voting instructions, Allianz will vote the shares underlying your
Contract in favor of the proposal described above. Allianz will vote any shares
for which it does not receive a voting instruction form, and any shares which it
or its affiliates hold for their own account, in proportionately the same manner
as shares for which it has received voting instructions. Allianz will not
require voting instructions for a minimum number of shares, and therefore a
small number of shareholders could determine the outcome of any proposal.
For the Meeting to proceed, there must be a quorum. This means that at least 25%
of the Fund's shares must be represented at the Meeting either in person or by
proxy. Because Allianz is the only shareholder of the Fund, its presence at the
Meeting in person or by proxy will meet the quorum requirement.
You may revoke your voting instructions up until voting results are announced at
the Meeting or at any adjournment of the Meeting by giving written notice to
Allianz prior to the Meeting by mail to Allianz Variable Insurance Products
Trust, c/o Advisory Management, A3-825, 5701 Golden Hills Drive, Minneapolis,
Minnesota 55416, by executing and returning to Allianz a voting instruction form
with a later date, or by attending the Meeting and voting in person. If you need
a new voting instruction form, please call the Fund at 1-800-950-5872 ext.
35857, and a new voting instruction form will be sent to you. If you return an
executed form without voting instructions, your shares will be voted "FOR" the
proposal.
The Acquired Fund will pay all costs of solicitation, including the cost of
preparing and mailing the Notice of a Special Meeting of shareholders and this
proxy statement/prospectus to Contract Owners. Representatives of the Manager,
without cost to the Fund, also may solicit voting instructions from Contract
Owners by means of mail, telephone, or personal calls.
DISSENTERS' RIGHTS OF APPRAISAL. There are no appraisal or dissenters' rights
for shareholders of the Acquired Fund. Delaware law does not grant beneficiaries
of statutory trusts who dissent from approval of the Reorganization the right to
demand an appraisal for their interests and payment of their fair cash value. As
a result, shareholders who object to the Reorganization do not have a right to
demand a different payment for their shares of beneficial interest.
OTHER MATTERS. Management of the Fund anticipates that an election of Trustees
and ratification of the auditors also will be conducted at the Meeting. You will
receive a separate proxy statement containing information regarding these other
matters if you are eligible to vote on them. Otherwise, management of the Fund
knows of no other matters that may properly be, or that are likely to be,
brought before the Meeting. However, if any other business shall properly come
before the Meeting, the persons named on the voting instruction form intend to
vote thereon in accordance with their best judgment.
ADJOURNMENT. In the event that voting instructions received by the time
scheduled for the meeting are not sufficient to approve the Reorganization,
representatives of Allianz may move for one or more adjournments of the meeting
for a period of not more than 120 days in the aggregate to allow further
solicitation of voting instructions on the proposals. Any adjournment requires
the affirmative vote of a majority of the voting power of the shares present at
the meeting. Representatives of Allianz will vote in favor of adjournment. The
Acquired Fund will pay the costs of any additional solicitation and of any
adjourned meeting. A shareholder vote may be taken on one or more of the items
in this proxy statement prior to adjournment if sufficient voting instructions
have been received.
18
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
SECTION C - CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER FUND INFORMATION
IN THIS SECTION REFERENCE TO THE "FUND" IS A REFERENCE TO THE ACQUIRING FUND AND
THE ACQUIRED FUND.
This section contains the following information about the Funds:
TABLE CONTENT
(all information is shown for the fiscal year ended December 31, 2008,
unless noted otherwise)
C-1 Actual and pro forma capitalization of the Acquired Fund and the
Acquiring Fund
C-2 Actual and pro forma ownership of Fund shares
CAPITALIZATION
The following table shows the capitalization of the Funds at December 31, 2008,
and on a pro forma basis, assuming the proposed Reorganization had taken place.
TABLE C-1. ACTUAL AND PRO FORMA CAPITALIZATION OF THE ACQUIRED FUNDS AND THE
ACQUIRING FUNDS
FUND NET ASSETS NET ASSET VALUE PER SHARES OUTSTANDING
SHARE
Oppenheimer International Growth Fund (Acquired Fund)* $114,648,574 $10.40 11,026,155
AIM International Equity Fund (Acquiring Fund) $176,746,490 $10.31 17,138,394
Adjustments** -$147,500 -- 76,544
AIM International Equity Fund - Pro Forma with Oppenheimer International Growth $291,247,564 $10.31 28,241,093
Fund
* The number of Fund shares for which you may provide instructions will be based
on the dollar amount of Acquired Fund shares that you own beneficially through
the subaccount accumulation units and/or annuity units in your Contract on the
record date.
**The adjustment to net assets represents the impact as a result of the
estimated Reorganization fees and expenses that will be paid by the Funds, and
the adjustment to shares outstanding represents the impact as a result of the
shares being issued by the Acquiring Fund to the Acquired Fund shareholders.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
OWNERSHIP OF FUND SHARES
The following table provides information on shareholders who owned more than 5%
of each Fund's outstanding shares at the record date. At the record date,
officers and directors of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.
TABLE C-2. ACTUAL AND PRO FORMA OWNERSHIP OF FUND SHARES [ADD UPON AMENDMENT]
FUND 5% OWNERS PERCENT OF SHARES PERCENT OF SHARES HELD FOLLOWING THE
HELD REORGANIZATION
Oppenheimer International Growth Allianz Life Variable [00.00]% N/A
Fund Account B
AIM International Equity Fund Allianz Life Variable [00.00]% [00.00]%
Account B
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
EXHIBIT A -AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of June 10, 2009, (the
"Agreement") is by and among the Allianz Variable Insurance Products Trust (the
"VIP Trust" or the "Selling Trust"), a Delaware statutory trust, on behalf of
its series, the AZL Oppenheimer International Growth Fund (the "Acquired Fund"),
and the same statutory trust (in this role, the "Buying Trust") on behalf of its
series, the AZL AIM International Equity Fund (the "Acquiring Fund").
The following table shows the name of the Acquired Fund and the Acquiring Fund
that will be parties to the reorganization.
-----------------------------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
-----------------------------------------------------------------------------
|AZL Oppenheimer International Growth Fund|AZL AIM International Equity Fund|
-----------------------------------------------------------------------------
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Acquired Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the transactions
it contemplates. The reorganization between the Acquiring Fund and the
Acquired Fund is referred to hereinafter as the "Reorganization." The
Acquiring Fund agrees to furnish data and information, as reasonably
requested, for the proxy statement to be furnished to shareholders of the
Acquired Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization is intended to qualify as a
reorganization within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"). At the Closing (as defined
below), the Selling Trust will convey all of the assets of the Acquired
Fund to the Acquiring Fund. The Acquiring Fund will assume all liabilities
of the Acquired Fund. At the Closing, the Buying Trust will deliver shares
of the Acquiring Fund, including fractional shares, to the Selling Trust.
The number of shares will be determined by dividing the aggregate net
asset value of the shares of the Acquired Fund, computed as described in
Section 3(a), by the net asset value of one share of the Acquiring Fund,
computed as described in Section 3(b). The Acquired Fund will not pay a
sales charge on the receipt of Acquiring Fund shares in exchange for the
assets of the Acquired Fund. In addition, the separate account
shareholders of the Acquired Fund will not pay a sales charge on
distribution to them of shares of the Acquiring Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the "Closing")
will occur on the first day on which the New York Stock Exchange (the
"NYSE") is open for business following approval of contract owners of the
Acquired Fund and receipt of all necessary regulatory approvals, or such
later date as the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business
on the date of the Closing or at such other time as an authorized officer
of the VIP Trust shall determine (the "Effective Time").
3. VALUATION.
a. The aggregate net asset value of the shares of the Acquired Fund will be
computed as of the close of regular trading on the NYSE on the day of
Closing (the "Valuation Date") using the valuation procedures in the
Acquired Fund's prospectus.
b. The net asset value per share of shares of the Acquiring Fund will be
determined as of the close of regular trading on the NYSE on the Valuation
Date, using the valuation procedures in the Acquiring Fund's prospectus.
c. At the Closing, the Acquired Fund will provide the Acquiring Fund with a
copy of the computation showing the valuation of the aggregate net asset
value of the shares of the Acquired Fund on the Valuation Date. The
Acquiring Fund will provide the Acquired Fund with a copy of the
computation showing the determination of the net asset value per share of
shares of the Acquiring Fund on the Valuation Date.
A-1
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
4. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUND.
a. As soon as practicable after the Valuation Date, the Selling Trust will
liquidate the Acquired Fund and distribute shares of the Acquiring Fund to
the Acquired Fund's shareholders of record. The Acquiring Fund will
establish shareholder accounts in the names of each Acquired Fund
shareholder, representing the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each shareholder. All
issued and outstanding shares of the Acquired Fund will simultaneously be
canceled on the books of the Selling Trust. The Acquiring Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the Selling Trust.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Trust relating to the Acquired Fund will be closed and no further
transfer of shares will be made.
c. Promptly after the distribution, the Acquiring Fund or its transfer agent
will notify each shareholder of the Acquired Fund of the number of shares
distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Acquired Fund, and
in no event later than twelve months from the date of the Closing, the
Acquired Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE BUYING TRUST. The Buying
Trust represents and warrants to the Acquired Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Buying
Trust is a statutory trust duly organized, validly existing, and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, management
investment company. The Acquiring Fund is a series of the Buying Trust.
b. Capitalization. The Buying Trust has authorized capital of an unlimited
number of shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquiring Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquiring
Fund as of the end of the last fiscal year and the subsequent unaudited
semi-annual financial statements, if any (the "Acquiring Fund Financial
Statements"), fairly present the financial position of the Acquiring Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Shares to Be Issued upon Reorganization. The shares of beneficial interest
to be issued in connection with the Reorganization will be duly authorized
and, at the time of the Closing, will be validly issued, fully paid, and
non-assessable.
e. Authority Relative to the Agreement. The Buying Trust has the power to
enter into and carry out the obligations described in this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Trustees of the Buying Trust, and no other
proceedings by the Buying Trust or the Acquiring Fund are necessary under
the Buying Trust's Agreement and Declaration of Trust or By-Laws (the
"Governing Documents").
f. No Violation. The Buying Trust is not in violation of its Governing
Documents or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion of
the transactions contemplated by it will not conflict with, or constitute
a breach of, any material contract or other instrument to which the
Acquiring Fund is subject. The transactions will not result in any
violation of the provisions of the Governing Documents or any law,
administrative regulation, or administrative or court decree applicable to
the Acquiring Fund.
g. Liabilities. There are no liabilities of the Acquiring Fund other than:
(1)liabilities disclosed in the Acquiring Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquired Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquiring Fund.
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h. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquiring Fund, threatened, that would materially
and adversely affect the Acquiring Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquiring Fund knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation, and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to the
Selling Trust, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
j. Taxes. The Acquiring Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquiring Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and such returns
and reports have been true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquired Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquired Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
k. Registration Statement. The Acquiring Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933 (the "1933 Act")
relating to the shares of beneficial interest to be issued in the
Reorganization. At the time that the Registration Statement becomes
effective, at the time of the Acquired Fund's shareholders' meetings, and
at the Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading. However, none of the
representations and warranties in this subsection applies to statements
in, or omissions from, the Registration Statement made in reliance on
information furnished by the Acquired Fund for use in the Registration
Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING TRUST.
The Selling Trust represents and warrants to the Acquiring Fund as follows:
a. Organization, Existence, Registration as Investment Company. The Selling
Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the state of Delaware; has the power to carry
on its business as it is now being conducted; and is registered under the
1940 Act as an open-end, management investment company. The Acquired Fund
is a series of the Selling Trust.
b. Capitalization. The Selling Trust has authorized capital of an unlimited
number shares of beneficial interest. All of the outstanding shares of
beneficial interest have been duly authorized and are validly issued,
fully paid, and non-assessable. Since the Acquired Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
c. Financial Statements. The audited financial statements of the Acquired
Fund as of the end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Acquired Fund Financial
Statements"), fairly present the financial position of the Acquired Fund,
and the results of its operations and changes in its net assets for the
periods shown.
d. Authority Relative to the Agreement. The Selling Trust has the power to
enter into and to carry out its obligations under this Agreement. This
Agreement and the transactions contemplated by it have been duly
authorized by the Board of Directors of the Selling Trust, the
shareholders meetings referred to in Section 6(k) will be called and held,
and no other proceedings by the Selling Trust or the Acquired Fund are
necessary under the Selling Trust's Governing Documents.
e. No Violation. The Selling Trust is not in violation of its Agreement and
Declaration of Trust or By-Laws (the "Governing Documents") or in default
in the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of, any
material contract or other instrument to which the Acquired Fund is
subject. The transactions will not result in any violation of the
provisions of the Governing Documents or any law, administrative
regulation, or administrative or court decree applicable to the Acquired
Fund.
f. Liabilities. There are no liabilities of the Acquired Fund other than:
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(1)liabilities disclosed in the Acquired Fund Financial Statements,
(2)liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
(3)liabilities previously disclosed to the Acquiring Fund, none of which
has been materially adverse to the business, assets, or results of
operation of the Acquired Fund.
g. Litigation. There is no litigation, administrative proceeding, or
investigation before any court or governmental body currently pending or,
to the knowledge of the Acquired Fund, threatened, that would materially
and adversely affect the Acquired Fund, its financial condition, or the
conduct of its business, or that would prevent or hinder completion of the
transactions contemplated by this Agreement. The Acquired Fund knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and the Acquired Fund is not a
party to or subject to the provisions of any order, decree, or judgment.
h. Contracts. Except for contracts and agreements previously disclosed to the
Buying Trust, the Acquired Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit.
i. Taxes. The Acquired Fund has qualified as a regulated investment company
as defined in Subchapter M of the Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Acquired Fund will (i) have timely filed all federal and other tax
returns and reports that have been required to be filed and all such
returns and reports are true, accurate, and complete, (ii) have paid or
provided for payment of all federal and other taxes required to be shown
as due on such returns or on any assessments received, (iii) except as
disclosed to the Acquiring Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised, and
(iv) except as disclosed to the Acquiring Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.
j. Fund Securities. All securities listed in the schedules of investments of
the Acquired Fund as of the Closing will be owned by the Acquired Fund
free and clear of any encumbrances, except as indicated in the schedule.
k. Shareholders' Meetings; Registration Statement. The Acquired Fund will
call and hold a shareholders' meeting at which its shareholders will
consider and act upon the transactions contemplated by this Agreement. The
Acquired Fund will cooperate with the Acquiring Fund and will furnish
information relating to the Selling Trust and the Acquired Fund required
in the Registration Statement. At the time that the Registration Statement
becomes effective, at the time of the shareholders' meeting, and at the
Closing, the Registration Statement, as it relates to the Selling Trust or
the Acquired Fund, will not contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading. However, the representations and warranties in this
subsection apply only to statements in or omissions from the Registration
Statement made in reliance upon information furnished by the Selling Trust
or the Acquired Fund for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING TRUST. The obligations of the Buying
Trust with respect to the Reorganization are subject to the satisfaction of
the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of the
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Selling Trust and the
Acquired Fund will have complied with this Agreement, and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling Trust will
provide a certificate to the Acquiring Fund confirming that, as of the
Closing, the representations and warranties set forth in Section 6 are
true and correct and that there have been no material adverse changes in
the financial condition, results of operations, business, properties, or
assets of the Acquired Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Selling Trust, and delivered to the
Acquiring Fund on or prior to the last business day before the Closing. A
decline in the value of the securities owned by the Acquired Fund will not
constitute a "material adverse change" for purposes of the foregoing
sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective, and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
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d. Opinion of Counsel. The Buying Trust will have received an opinion of
counsel for the Selling Trust, dated as of the Closing, to the effect that
(i) the Selling Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquired Fund
is a series of the Selling Trust; (iii) this Agreement and the
Reorganization have been duly authorized and approved by all requisite
action of the Selling Trust and the Acquired Fund, and this Agreement has
been duly executed by, and is a valid and binding obligation of, the
Selling Trust.
e. Declaration of Dividend. The Acquired Fund, prior to the Closing, will
have declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the shareholders
of the Acquired Fund (i) all of the excess of (x) the Acquired Fund's
investment income excludable from gross income under Section 103 of the
Code over (y) the Acquired Fund's deductions disallowed under Sections 265
and 171 of the Code, (ii) all of the Acquired Fund's investment company
taxable income as defined in Section 852 of the Code (in each case
computed without regard to any deduction for dividends paid) and (iii) all
of the Acquired Fund's net capital gain realized (after reduction for any
capital loss carryover), in each case for the current taxable year (which
will end on the Closing date) and any preceding taxable years for which
such a dividend is eligible to be made under Section 855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING TRUST. The obligations of the
Selling Trust with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Contract Owner Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of all
Acquired Fund shares entitled to vote.
b. Representations, Warranties, and Agreements. The Acquiring Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the Closing. An officer of the Buying Trust will provide a certificate to
the Acquired Fund confirming that, as of the Closing, the representations
and warranties set forth in Section 5 are true and correct and that there
have been no material adverse changes in the financial condition, results
of operations, business, properties, or assets of the Acquiring Fund since
the date of its last financial statement, except as otherwise indicated in
any financial statements, certified by an officer of the Buying Trust, and
delivered to the Acquired Fund on or prior to the last business day before
the Closing. A decline in the value of the securities owned by the
Acquiring Fund will not constitute a "material adverse change" for
purposes of the foregoing sentence.
c. Regulatory Approvals.
(1)The Registration Statement referred to in Section 5(k) will be
effective and no stop orders under the 1933 Act will have been issued.
(2)All necessary approvals, consents, and exemptions from federal and
state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Trust will have received the opinion of
counsel for the Buying Trust, dated as of the Closing, to the effect that
(i) the Buying Trust is a statutory trust duly organized and validly
existing under the laws of the state of Delaware and is an open-end
investment company registered under the 1940 Act; (ii) the Acquiring Fund
is a series of the Buying Trust; (iii) this Agreement and the
Reorganization have been authorized and approved by all requisite action
of the Buying Trust and the Acquiring Fund, and this Agreement has been
duly executed by, and is a valid and binding obligation of, the Buying
Trust; and (iv) the shares to be issued in the Reorganization are duly
authorized and upon issuance in accordance with this Agreement will be
validly issued, fully paid, and non-assessable shares of the Acquiring
Fund.
9. FURTHER CONDITIONS TO THE OBLIGATIONS OF THE BUYING TRUST AND THE SELLING
TRUST. As a further condition to the obligations of the VIP Trust on behalf
of both the Acquired Fund and the Acquiring Fund hereunder, the VIP Trust, on
behalf of both the Acquired Fund and the Acquiring Fund, shall have received
the opinion of Dorsey & Whitney LLP addressed to the VIP Trust on behalf of
both the Acquired Fund and the Acquiring Fund, dated as of the date of the
Closing, and based in part on representations to be furnished by the VIP
Trust on behalf of the Acquired Fund and the Acquiring Fund, substantially to
the effect that:
a. The Reorganization will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund each will qualify as a party to the reorganization within the meaning
of Section 368(b) of the Code.
b. Acquired Fund shareholders will recognize no income, gain, or loss upon
receipt, pursuant to the Reorganization, of the Acquiring Fund Shares.
Acquired Fund shareholders subject to taxation will recognize income upon
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The Allianz Variable Insurance Products Trust - Proxy
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receipt of any net investment income or net capital gains of the Acquired
Fund which are distributed by the Acquired Fund prior to the Closing.
c. The tax basis of the Acquiring Fund Shares received by each Acquired Fund
Shareholder pursuant to the Reorganization will be equal to the tax basis
of the Acquired Fund Shares exchanged therefor.
d. The holding period of the Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to the Reorganization will include the period
during which the Acquired Fund Shareholder held the Acquired Fund Shares
exchanged therefor, provided that the Acquired Fund Shares were held as a
capital asset at the Effective Time.
e. The Acquired Fund will recognize no income, gain or loss by reason of the
Reorganization.
f. The Acquiring Fund will recognize no income, gain or loss by reason of the
Reorganization.
g. The tax basis of the assets received by the Acquiring Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands
of the Acquired Fund as of the Effective Time.
h. The holding period of the assets received by the Acquiring Fund pursuant
to the Reorganization will include the period during which such assets
were held by the Acquired Fund.
i. The Acquiring Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the Acquired Fund as of
the Effective Time.
10.AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the Board of
Trustees. The Agreement may be amended at any time before or after
approval by the shareholders of the Acquired Fund, but after shareholder
approval, no amendment shall be made that substantially changes the terms
of Sections 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and
(ii) compliance with any of the covenants or conditions made for its
benefit. However, neither party may waive the requirement to obtain
shareholder approval or the requirement to obtain a tax opinion.
c. The Selling Trust may terminate this Agreement at any time prior to the
Closing by notice to the Buying Trust if a material condition to its
performance or a material covenant of the Buying Trust on behalf of the
Acquiring Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Buying
Trust on behalf of the Acquiring Fund and is not cured.
d. The Buying Trust may terminate this Agreement at any time prior to the
Closing by notice to the Selling Trust if a material condition to its
performance or a material covenant of the Selling Trust on behalf of the
Acquired Fund is not fulfilled on or before the date specified for its
fulfillment or a material breach of this Agreement is made by the Selling
Trust on behalf of the Acquired Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Acquired Fund, without any liability on the part of either party or its
respective trustees, officers, or shareholders, on written notice to the
other party, and shall be terminated without liability as of the close of
business on December 31, 2009, or a later date agreed upon by the parties,
if the Closing has not taken place on or prior to that date.
f. The representations, warranties, and covenants contained in this
Agreement, or in any document delivered in connection with this Agreement,
will survive the Reorganization.
11.EXPENSES. All fees paid to governmental authorities for the registration or
qualification of the Acquiring Fund Shares and all transfer agency costs
related to the shares of the Acquiring Fund Shares shall be allocated to the
Acquiring Fund. All fees and expenses related to printing and mailing
communications to shareholders and beneficial owners of shares of the
Acquired Fund shall be allocated to the Acquired Fund. All of the other
expenses of the transactions required for the Reorganization, including
without limitation, accounting, legal, and custodial expenses, shall be
allocated equally between the Acquired Fund and the Acquiring Fund. The
expenses specified in this Section shall be borne by the Fund to which they
are allocated.
12. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state of
Minnesota.
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13. INDEMNIFICATION. Each party will indemnify and hold the other and its
officers and trustees (each an "Indemnitee") harmless from and against any
liability or other cost and expense, in connection with the defense or
disposition of any action, suit, or other proceeding, before any court or
administrative or investigative body in which the Indemnitee may be involved
as a party, with respect to actions taken under this Agreement. However, no
Indemnitee will be indemnified against any liability or expense arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the Indemnitee's position.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL Oppenheimer International Growth Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
on behalf of AZL AIM International Equity Fund
By /s/ Jeffrey W. Kletti
Jeffrey W. Kletti
President
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
AZL TargetPLUS[SM] Balanced Fund
5701 Golden Hills Drive
Minneapolis, MN 55416-1297
Dear Allianz Life and Allianz Life of New York Variable Annuity Contract Owner:
The Board of Trustees of the AZL TargetPLUS Balanced Fund (the "Acquired Fund"),
a series of the Allianz Variable Insurance Products Trust (the "VIP Trust"), is
pleased to submit a proposal to reorganize the Acquired Fund into the AZL
Balanced Index Strategy Fund (the "Acquiring Fund"), which is a series of the
Allianz Variable Insurance Products Fund of Funds Trust.
As the owner of a variable annuity contract issued by Allianz Life Insurance
Company of North America or Allianz Life Insurance Company of New York, you
beneficially own shares of the Acquired Fund. Accordingly, we ask that you
indicate whether you approve or disapprove of the proposed reorganization
affecting your Fund by submitting instructions on how to vote your beneficial
shares by phone, internet, or mail.
The proposed reorganization is being undertaken for several reasons, including:
o Reducing contractual management fees and overall expenses for
shareholders of the Acquired Fund; and
o Providing further economies of scale.
THE BOARD OF TRUSTEES OF THE VIP TRUST BELIEVES THAT THE TRANSACTION IS IN THE
BEST INTERESTS OF THE ACQUIRED FUND AND ITS SHAREHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL.
The Board considered various factors in reviewing the proposed reorganization
on behalf of the Acquired Fund's shareholders, including, but not limited to,
the following:
* The similarity in investment objective and investment allocation between
the Acquired Fund and the Acquiring Fund.
* The expectation that the reorganization will reduce expense ratios for the
Funds and achieve other economies of scale.
* The expectation that the reorganization will have no tax consequences for
contract owners.
If the proposal is approved, the Acquiring Fund will acquire all of the assets
of the Acquired Fund in exchange for newly issued shares of the Acquiring Fund.
These Acquiring Fund shares in turn will be distributed proportionately to the
shareholders of the Acquired Fund in complete liquidation of the Acquired Fund.
In order to accomplish the proposed reorganization, the Board of Trustees of the
Acquired Fund submits for your approval an Agreement and Plan of Reorganization
with respect to the Acquired Fund.
Whether or not you plan to attend the meeting, please review the enclosed voting
instruction form. You may submit your instructions on voting the shares that you
beneficially own by phone, internet, or mail. Following this letter is a Q&A
summarizing the reorganization and information on how to vote your shares.
Please read the entire proxy statement/prospectus carefully before you vote.
Thank you for your prompt attention to this important matter.
Sincerely,
Jeffrey W. Kletti
President
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
PROXY STATEMENT/PROSPECTUS Q&A
HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR THE AZL TARGETPLUS
BALANCED FUND. WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY
STATEMENT/PROSPECTUS.
Q: WHY IS THE REORGANIZATION BEING PROPOSED?
The reorganization is being proposed in an effort to reduce operating
expenses for funds available to owners of variable annuity contracts issued
by Allianz Life Insurance Company of North America or Allianz Life Insurance
Company of New York and to provide further economies of scale.
Your Board of Trustees has determined that the reorganization is in the best
interests of the Acquired Fund's shareholders and recommends that you vote
FOR the reorganization.
Q: WILL THE EXPENSES OF THE FUND IN WHICH I PARTICIPATE INCREASE AS A RESULT OF
THE REORGANIZATION?
No. The total expense ratio for the Acquiring Fund following the
reorganization is expected to be lower than the total expense ratio for the
Acquired Fund prior to the reorganization.
Q: WHO IS PAYING THE COSTS OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
Contract owners who were beneficial owners of shares of the Acquired Fund on
the record date will bear these costs.
Q: WILL I INCUR TAXES AS A RESULT OF THE REORGANIZATION?
No. The reorganization is not expected to be a taxable event for contract
owners. Please see the Tax Consequences discussion in the enclosed proxy
statement/prospectus for additional information.
Q: IF APPROVED, WHEN WILL THE REORGANIZATION HAPPEN?
If shareholders approve the reorganization, it will take place shortly after
the shareholder meeting.
Q: IS THERE ANYTHING I NEED TO DO TO CONVERT MY SHARES?
No. Upon shareholder approval of the reorganization, the Acquired Fund shares
that serve as a funding vehicle for benefits under your variable annuity
contract automatically will be exchanged for shares of the Acquiring Fund.
The total value of the Acquiring Fund shares that a shareholder receives in
the reorganization will be the same as the total value of the Acquired Fund
shares held by the shareholder immediately before the reorganization.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE?
After careful consideration, the Board recommends that you vote FOR the
reorganization.
Q: HOW AND WHEN DO I VOTE?
You can vote in one of four ways:
- By mail with the enclosed voting instruction form
- By telephone
- By web site
- In person at the meeting
Please refer to the enclosed voting instruction form for the telephone number
and internet address. Please vote as soon as possible by following the
instructions on the voting instruction form.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
If you have questions about any of the proposals described in the proxy
statement or about voting procedures, please call toll free at 1-800-950-5872
ext. 37952.
ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
5701 GOLDEN HILLS DRIVE
MINNEAPOLIS, MINNESOTA 55416-1297
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 2009
AZL TARGETPLUS[SM] BALANCED FUND
A special meeting of the shareholders of the AZL TargetPlus Balanced Fund (the
"Acquired Fund") will be held at 10:00 a.m. on October 21, 2009, at the offices
of Allianz Life Insurance Company of North America, 5701 Golden Hills Drive,
Golden Valley, Minnesota. At the meeting, shareholders of the Acquired Fund will
consider the following proposals:
- To approve an Agreement and Plan of Reorganization (the "Plan") between the
AZL TargetPlus Balanced Fund, which is a series of the Allianz Variable
Insurance Products Trust (the "VIP Trust"), and the AZL Balanced Index
Strategy Fund (the "Acquiring Fund"), which is a series of the Allianz
Variable Insurance Products Fund of Funds Trust. Under the Plan, the Acquiring
Fund would acquire all of the assets and assume all of the liabilities of the
Acquired Fund in exchange for shares of the Acquiring Fund, which would be
distributed proportionately to the shareholders of the Acquired Fund in
complete liquidation of the Acquired Fund, and the assumption of the Acquired
Fund's liabilities; and
- Such other business as may properly come before the meeting, or any
adjournment of the meeting.
The Acquired Fund issues and sells shares to certain separate accounts of
Allianz Life Insurance Company of North America ("Allianz Life") and Allianz
Life Insurance Company of New York ("Allianz Life of NY"). The separate accounts
hold shares of mutual funds, including the Acquired Fund, which serve as a
funding vehicle for benefits under variable annuity contracts issued by Allianz
Life and Allianz Life of NY. As the owners of the assets held in the separate
accounts, Allianz Life and Allianz Life of NY are the sole shareholders of the
Acquired Fund and are entitled to vote all of the shares of the Acquired Fund.
However, Allianz Life and Allianz Life of NY will vote outstanding shares of the
Acquired Fund in accordance with instructions given by the owners of variable
annuity contracts for which the Fund serves as a funding vehicle. This Notice is
being delivered to owners of variable annuity contracts who, by virtue of their
ownership of the contracts, beneficially owned shares of the Acquired Fund on
the record date, so that they may instruct Allianz Life and Allianz Life of NY
how to vote the shares of the Acquired Fund underlying their contracts.
Shareholders of record at the close of business on July 20, 2009, are entitled
to vote at the meeting.
By order of the Board of Directors
Michael J. Radmer, Secretary
August 7, 2009
YOU CAN VOTE QUICKLY AND EASILY.
PLEASE FOLLOW THE INSTRUCTIONS ON THE ENCLOSED VOTING INSTRUCTION FORM.
PROXY STATEMENT/PROSPECTUS - AUGUST 7, 2009
ACQUIRED FUND ACQUIRING FUND
AZL TargetPlus[SM] Balanced Fund AZL[R] Balanced Index Strategy Fund
("TargetPlus Balanced Fund") ("Balanced Index Strategy Fund")
This proxy statement/prospectus describes a proposed Agreement and Plan of
Reorganization (the "Plan") pursuant to which the outstanding shares of the
TargetPlus Balanced Fund, which serves as a funding vehicle for your variable
annuity contract, (the "Acquired Fund") would be exchanged for shares of the
Balanced Index Strategy Fund (the "Acquiring Fund"). Both the Acquiring Fund and
the Acquired Fund (each a "Fund" and together the "Funds") are named above. The
Acquired Fund is a series of the Allianz Variable Insurance Products Trust (the
"VIP Trust"); the Acquiring Fund is a series of the Allianz Variable Insurance
Products Fund of Funds Trust (the "FOF Trust"). The address of the Funds is 5701
Golden Hills Drive, Minneapolis, MN 55416-1297. The phone number of the Funds is
877-833-7113.
THE BOARD OF TRUSTEES OF THE VIP TRUST UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLAN.
THESE SECURITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK
OR AN AFFILIATE OF ANY BANK, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), OR ANY OTHER AGENCY OF THE UNITED STATES, OR ANY
BANK OR AN AFFILIATE OF ANY BANK; AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF VALUE.
As with all mutual funds, the Securities and Exchange Commission (the "SEC") has
not approved or disapproved these securities or passed on the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Each of the Funds is subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and
files reports, proxy materials, and other information with the SEC (Investment
Company Act file no. 811-09491). These reports, proxy materials, and other
information can be inspected and copied at the Public Reference Room maintained
by the SEC. Copies may be obtained, after paying a duplicating fee, by
electronic request e-mailed to publicinfo@sec.gov, or by writing to the Public
Reference Section of the SEC, Washington, D.C. 20549-0102. In addition, copies
of these documents may be viewed on-line or downloaded from the SEC's Web site
at http://www.sec.gov.
You should retain this proxy statement/prospectus for future reference. It sets
forth concisely the information about the Acquiring Fund that a prospective
investor should know before investing. Additional information is set forth in
the Statement of Additional Information, dated the same date as this proxy
statement/prospectus, relating to this proxy statement/prospectus. A current
prospectus for the Acquiring Fund, which gives a detailed description of the
Acquiring Fund's policies, strategies, and restrictions, accompanies this proxy
statement/prospectus.
This proxy statement/prospectus was first mailed to contract owners on or about
August 7, 2009.
WHERE TO GET MORE INFORMATION
FUND REPORTS: THE ACQUIRING FUND: THE ACQUIRED FUND:
Prospectus dated April 27, Accompanying, and Incorporated by reference into this
2009. incorporated by proxy statement/prospectus. for a
reference into, this Copy at no charge, call toll free
proxy 877-833-7113 or write to the address
statement/prospectus. given below this table.
Annual report for the For a complete copy at
period ended December 31, no charge, call toll-
2008; and semi-annual free 877-833-7113 or
report for the period ended write to the address
June 30, 2008. given below this table.
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
THIS PROXY STATEMENT/PROSPECTUS:
Statement of Additional Information dated Incorporated by reference into this proxy statement/prospectus. For a copy at no charge,
the same date as this proxy call toll-free 1-800-624-0197 or write to Allianz VIP Trust, Advisory Management, A3-825,
statement/prospectus. This document 5701 Golden Hills Drive, Minneapolis, MN 55416.
contains information about both the
Acquired Fund and the Acquiring Fund.
To ask questions about this proxy Call toll free 1-800-950-5972 ext. 37952 or write to: Allianz VIP Trust, Advisory
statement/prospectus. Management, A 3-825, 5701 Golden Hills Drive, Minneapolis, MN 55416.
ADDRESS:Allianz Variable Insurance Products Trust, 5701 Golden Hills Drive,
Minneapolis, MN 55416.
Allianz Variable Insurance Products Fund of Funds Trust, 5701 Golden
Hills Drive, Minneapolis, MN 55416.
ABOUT THE ACQUIRED AND ACQUIRING FUNDS
The Acquired Fund issues and sells shares to separate accounts of Allianz Life
Insurance Company of North America ("Allianz Life") and Allianz Life Insurance
Company of New York ("Allianz Life of NY"). These separate accounts hold shares
of mutual funds, including the Acquired Fund, which serve as funding vehicles
for benefits under variable annuity contracts issued by Allianz Life and Allianz
Life of NY (the "Contracts"). Each separate account has subaccounts that invest
in the Acquired Fund and certain other mutual funds. Owners of the Contracts
("Contract Owners") allocate the value of their Contracts among these
subaccounts. As the owners of the assets held in the separate accounts, Allianz
Life and Allianz Life of NY are the sole shareholders of the Acquired Fund and
are entitled to vote all of the shares of the Acquired Fund. However, Allianz
Life and Allianz Life of NY will vote outstanding shares of the Acquired Fund in
accordance with instructions given by the Contract Owners who are eligible to
vote at the meeting.
The Funds all are open-end management investment companies. If the Plan is
approved, the shares of the Acquiring Fund will be distributed proportionately
by the Acquired Fund to the holders of its shares in complete liquidation of the
Acquired Fund. Each Acquired Fund shareholder would become the owner of
Acquiring Fund shares having a total net asset value equal to the total net
asset value of that shareholder's holdings in the Acquired Fund.
The following information summarizes the proposed reorganization of the Acquired
Fund into the Acquiring Fund (the "Reorganization").
HOW THE REORGANIZATION WILL WORK
* The Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Fund's liabilities.
* The Acquiring Fund will issue shares of beneficial interest to the Acquired
Fund in an amount equal to the value of the assets that it receives from the
Acquired Fund, less the liabilities it assumes. These shares will be
distributed to the Acquired Fund's shareholders (the separate accounts) in
proportion to their holdings in the Acquired Fund. The value of your interest
in the subaccount investing in the Acquiring Fund received in connection with
the Reorganization will equal the value of your interest in the subaccount
that were invested in the Acquired Fund immediately before the Reorganization.
You will not pay any sales charge in connection with this distribution of
shares. If you already have an Acquiring Fund account, shares distributed in
the Reorganization will be added to that account. As a result, when average
cost is calculated for income tax purposes, the cost of the shares in the
accounts you owned will be combined.
FUND INVESTMENT OBJECTIVES
The following table presents the investment objective for each of the Funds.
ACQUIRED INVESTMENT OBJECTIVE ACQUIRING INVESTMENT OBJECTIVE
FUND FUND
TARGETPLUS Long-term capital appreciation with preservation of BALANCED Long-term capital appreciation with preservation of
BALANCED capital as an important consideration INDEX capital as an important consideration
FUND STRATEGY
FUND
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
TABLE OF CONTENTS
SECTION A -- Proposal.......................................................4
PROPOSAL: Approve or Reject the Agreement and Plan of Reorganization......4
SUMMARY.................................................................4
How the Reorganization Will Work......................................4
Comparison of the Acquired Fund and the Acquiring Fund................5
Comparison of Investment Objectives...................................5
Comparison of Investment Strategies...................................5
Comparison of Investment Policies.....................................10
Risk Factors..........................................................10
Performance...........................................................16
Tax Consequences......................................................17
FEES AND EXPENSES.........................................................18
THE REORGANIZATION........................................................19
Terms of the Reorganization.............................................19
Conditions to Closing the Reorganization................................19
Termination of the Plan.................................................20
Tax Status of the Reorganization........................................20
Reasons for the Proposed Reorganization and Board Deliberations.........20
Boards' Determinations..................................................22
Recommendation and Vote Required........................................22
SECTION B - Proxy Voting and Shareholder Meeting Information................23
SECTION C - Capitalization, Ownership of Fund Shares and Other Fund
Information ...........................................................24
EXHIBIT A - Agreement and Plan of Reorganization...........................A-1
The prospectus for the Acquiring Fund accompanies this proxy
statement/prospectus.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
SECTION A -- PROPOSAL
PROPOSAL: APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
This proxy statement/prospectus is being used by the Acquired Fund to solicit
voting instructions for the proposal to approve a Plan providing for the
Reorganization of the Acquired Fund into the Acquiring Fund. A form of the Plan
is included as Exhibit A.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire proxy
statement/prospectus, exhibits and accompanying materials because they contain
details that are not in this summary.
HOW THE REORGANIZATION WILL WORK
The following table shows the names of the Acquired Fund and the Acquiring Fund
into which it will be merged.
-------------------------------------------------------
| ACQUIRED FUND | ACQUIRING FUND |
-------------------------------------------------------
|TargetPlus Balanced Fund|Balanced Index Strategy Fund|
-------------------------------------------------------
* The Acquired Fund will transfer all of its assets to the Acquiring Fund. The
Acquiring Fund will assume all of the Acquired Fund's liabilities.
* The Acquiring Fund will issue shares of beneficial interest in an amount equal
to the value of the assets that it receives from the Acquired Fund, less the
liabilities it assumes. These shares will be distributed to the Acquired
Fund's shareholders (the separate accounts) in proportion to their holdings in
the Acquired Fund. The value of your interest in the subaccount investing in
the Acquiring Fund received in connection with the Reorganization will equal
the value of your interest in the subaccounts that were invested in the
Acquired Fund immediately before the Reorganization.
* As part of the Reorganization, systematic transactions (such as bank
authorizations and systematic payouts) currently set up for your Acquired Fund
accounts will be transferred to your new Acquiring Fund account. If you do not
want your systematic transactions to continue, please contact your financial
representative to make changes.
* Neither the Acquired Fund nor the Contract Owners whose contract values are
allocated to subaccounts investing in the Acquired Fund will pay any sales
charge in connection with the Reorganization.
* After the Reorganization has been completed, contract values that were
allocated to subaccounts investing in the Acquired Fund will be allocated to
subaccounts investing in the Acquiring Fund. The Acquired Fund will be
terminated.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
COMPARISON OF THE ACQUIRED FUND AND THE ACQUIRING FUND
The Acquired Fund and the Acquiring Fund:
* Are outstanding series of an open-end management investment company organized
as a Delaware statutory trust.
* Have Allianz Investment Management LLC (the "Manager") as their investment
adviser.
* Have the same policies for buying and selling shares and the same exchange
rights.
* Have the same distribution policies.
* Are available only to Contract Owners who allocate contract value to a
subaccount that invests in the Funds.
COMPARISON OF INVESTMENT OBJECTIVES
The following table presents the investment objectives for the Funds.
ACQUIRED INVESTMENT OBJECTIVE ACQUIRING INVESTMENT OBJECTIVE
FUND FUND
------------------------------------------------------------------------------------------------------------------------------------
TARGETPLUS Long-term capital appreciation with preservation of BALANCED Long-term capital appreciation with preservation of
BALANCED capital as an important consideration INDEX capital as an important consideration
FUND STRATEGY
FUND
COMPARISON OF INVESTMENT STRATEGIES
Both Funds maintain a similar investment objective, seeking to provide long-term
capital appreciation with preservation of capital as an important consideration.
The Acquired Fund seeks to achieve this objective by investing primarily in a
diversified portfolio of equity and fixed income securities; the Acquiring Fund
invests primarily in a combination of underlying index funds, including a bond
index fund. Under normal conditions, both Funds target the same equity to fixed
income allocation: 40-60% of total assets in equities and 40-60% in fixed
income. Both Funds include investments in larger-, mid- and smaller-
capitalization companies; however, the Acquiring Fund has relatively greater
exposure to larger-capitalization companies and relatively less exposure to mid-
and smaller-capitalization companies than the Acquired Fund. Both Funds include
investments in non-U.S. investments; the non-U.S. exposure for the Acquiring
Fund is relatively less than the Acquired Fund.
The TargetPlus Balanced Fund is subadvised by First Trust Advisors L.P. ("First
Trust") for the equity portions of its portfolio and by Pacific Investment
Management Company LLC ("PIMCO") for the fixed income portions of its portfolio.
The Acquiring Fund is not subadvised.
Detailed strategies for the Acquired Fund and the Acquiring Fund are set forth
below.
PRINCIPAL INVESTMENT STRATEGIES FOR THE TARGETPLUS BALANCED FUND (ACQUIRED
FUND):
The Fund seeks to achieve its goal by investing primarily in a diversified
portfolio of equity and fixed income securities. The Fund may invest a
significant portion of its total assets in securities of non-U.S. companies.
In seeking to achieve the Fund's investment objective, the Manager allocates the
Fund's assets between the Fund's equity portfolio (the "Equity Portfolio") and
the Fund's fixed income portfolio (the "Fixed Income Portfolio") in pursuit of a
balanced investment program. Under normal market conditions, the Manager will
allocate 40% to 60% of the Fund's assets to the Equity Portfolio and the
remaining balance of the Fund's assets to the Fixed Income Portfolio. This does
not, however, restrict the Manager's ability to go above or below this range
where the Manager considers it appropriate. First Trust serves as subadviser
for the Equity Portfolio and PIMCO serves as subadviser for the Fixed Income
Portfolio.
In the short term, allocations may vary from the Fund's target asset allocation.
The Manager may change the asset allocation between the Fund's two portfolios
from time to time if it believes that doing so will increase the Fund's ability
to achieve its investment objective.
The Fund may also allocate up to 5% of its respective net assets to (a) index
futures, other futures contracts, options, and other similar securities and (b)
cash, money market equivalents, short-term debt instruments, money market funds,
and short-term debt funds to satisfy all applicable margin requirements and to
provide additional portfolio liquidity to satisfy large redemptions and any
margin calls. The Fund may also invest in exchange-traded funds (ETFs) for
additional exposure to relevant markets. This strategy is intended to reduce
the potential volatility of the Fund's investment performance and may limit the
Fund's ability to benefit from rising markets while protecting the Fund in
declining markets. The Fund may pursue this strategy by investing directly or
5
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
indirectly through unregistered investment pools that are not Permitted
Underlying Funds and that are managed by either the Manager, affiliates of the
Manager, or unaffiliated investment managers.
EQUITY PORTFOLIO
The Fund's Equity Portfolio invests in the common stocks of companies that are
identified by a model based on five separate strategies.
o Approximately 20% in The Dow[R] Target Dividend
Strategy,
o Approximately 20% in the Value Line[R] Target 25
Strategy,
o Approximately 20% in the Target Small-Cap 15 Strategy,
o Approximately 20% in the Global Dividend Target 15 Strategy, and
o Approximately 20% in the NYSE[R] International Target 25
Strategy
The securities for each strategy are selected annually on or about the last
business day before each Stock Selection Date. The "Stock Selection Date" will
be on or about December 1 of each year. For all of the strategies, First Trust
generally follows a buy and hold strategy, trading as soon as practicable to the
Stock Selection Date and/or when required by cash flow activity in the Equity
Portfolio. First Trust may also trade because of mergers and acquisitions if the
original stock is not the surviving company and to reinvest dividends.
Between Stock Selection Dates, when cash inflows and outflows require, First
Trust purchases and sells common stocks for each of the strategies according to
the approximate current percentage relationship among the shares of the stocks.
Certain provisions of the 1940 Act, as amended, limit the ability of the Fund to
invest more than 5% of the Fund's total assets in the stock of any company that
derives more than 15% of its gross revenues from securities related activities
("Securities Related Companies"). If a Securities Related Company is selected by
the strategy described above, First Trust may depart from the investment
strategy for the Fund's Equity Portfolio only to the extent necessary to
maintain compliance with these provisions. Any amount that cannot be allocated
to a Securities Related Company because of the 5% limit will be allocated among
the remaining portfolio securities in proportion to the percentage relationships
determined by the strategy.
THE DOW[R] TARGET DIVIDEND STRATEGY
This investment strategy looks for common stocks issued by companies that are
expected to provide income and have the potential for capital appreciation. The
Dow[R] Target Dividend Strategy seeks to achieve its objective by
investing approximately equal amounts in the common stock of the 20 companies
included in the Dow Jones U.S. Select Dividend Index[SM] that have the best
overall ranking on both the change in return on assets over the last 12 months
and price-to-book ratio.
First Trust selects the common stocks of the 20 companies in the following
manner:
o Starting with the 100 stocks in the Dow Jones U.S. Select Dividend
Index[SM], First Trust ranks the stocks from best (1) to worst (100) based
on two factors:
o Change in return on assets over the last 12 months. An increase in
return on assets generally indicates improving business fundamentals.
o Price-to-book ratio. A lower, but positive, price-to-book ratio is
generally used as an indication of value.
o First Trust then selects an approximately equally-weighted portfolio
of the 20 stocks with the best overall ranking on the two factors.
VALUE LINE[R] TARGET 25 STRATEGY
The Value Line[R] Target 25 Strategy seeks to achieve its objective
by investing in 25 of the 100 stocks to which Value Line[R] gives a
#1 ranking for "Timeliness{trademark}" based on the Value Line Investment
Survey[R]. The 25 stocks are selected on the basis of certain
positive financial attributes. Value Line[R] ranks approximately
1,700 stocks, of which only 100 are given their #1 ranking for Timeliness[TM],
which reflects Value Line's view of their probable price performance during the
6
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
next six to 12 months relative to the others. Value Line[R] bases
its rankings on a long-term trend of earnings, prices, recent earnings, price
momentum, and earnings surprise. The 25 stocks are selected annually from the
100 stocks with the #1 ranking on or about the last business day before each
Stock Selection Date.
Companies that, as of the Stock Selection Date, Value Line[R] has
announced will be removed from Value Line's #1 ranking for Timeliness[TM] will
be removed from the universe of securities from which stocks are selected for
the Fund.
First Trust selects the common stocks of the 25 companies in the following
manner:
o Starting with the 100 stocks to which Value Line[R]
gives the #1 ranking for Timeliness[TM], First Trust removes from
consideration the stocks of companies considered to be financial companies
and the stocks of companies whose shares are not listed on a U.S.
securities exchange.
o First Trust then ranks the remaining stocks from the best (1) to
worst (100) on the following four factors:
o 6-month price appreciation, and
o 12-month price appreciation, and
o Return on assets, and
o Price to cash flow.
o First Trust adds up the numerical ranks achieved by each company in
the above steps and selects the 25 stocks with the lowest sums.
The selected stocks are weighted by market capitalization subject to the
restriction that no stock will comprise less than approximately 1% or more than
7.5% of the Value Line[R] Target 25 Strategy portion of the
portfolio on or about the Stock Selection Date. The securities will be adjusted
on a proportional basis to accommodate this constraint.
TARGET SMALL-CAP 15 STRATEGY
The Target Small-Cap Strategy seeks to achieve its objective by investing in the
stocks of 15 small-capitalization companies that have recently exhibited certain
positive financial attributes.
First Trust selects the stocks of the 15 companies for this strategy in the
following manner:
o First Trust begins with the stocks of all U.S. corporations that
trade on the New York Stock Exchange (NYSE[R]), the NYSE
Amex, or the Nasdaq Stock market (Nasdaq) (excluding limited partnerships,
American Depositary Receipts, and mineral and oil royalty trusts) on or
about the Stock Selection Date.
o First Trust then selects companies that have a market capitalization
between $500 million and $2.5 billion and whose stock has an average daily
trading volume of at least $1 million.
o First Trust then selects those stocks with positive three-year sales
growth.
o From those stocks, First Trust selects the stocks whose most recent
12 month's earnings are positive.
o First Trust eliminates any stock whose price has appreciated by more
than 75% in the preceding 12 months.
o Finally, First Trust selects the 15 stocks with the greatest price
appreciation in the previous 12 months. Each of the stock's weighting in
the portfolio is based on its relative market capitalization (highest to
lowest).
GLOBAL DIVIDEND TARGET 15 STRATEGY
The Global Dividend Target 15 Strategy seeks to achieve its objective by
investing in the common stocks of certain companies included in the Dow Jones
Industrial Average[SM] (DJIA[SM]), the Financial Times Ordinary Index (FT30
Index or Financial Times 30 Index), and the Hang Seng Index[SM]. This strategy
invests in the common stocks of the five companies with the lowest per share
stock price of the ten companies in each of the DJIA[SM], the FT30 Index and the
Hang Seng Index, respectively, which have the highest indicated annual dividend
yields ("Dividend Yields") in their respective index. First Trust selects the
common stocks for this strategy in the following manner:
o First Trust determines the Dividend Yield on each common stock in the
DJIA[SM], the FT30 Index and the Hang Seng Index;
7
The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
o First Trust determines the ten companies in each of the DJIA[SM], the
FT30 Index, and the Hang Seng Index that have the highest Dividend Yield
in the respective index; and
o From those companies, First Trust then selects an approximately
equally weighted portfolio of the common stocks of the 5 companies in each
index with the lowest price per share.
NYSE[R] INTERNATIONAL TARGET 25 STRATEGY
This strategy invests in the common stocks of 25 companies selected from the
stocks included in the NYSE International 100 Index[R]. The NYSE
International 100 Index[R] consists of the 100 largest non-U.S.
stocks trading on the New York Stock Exchange.
First Trust selects the stocks of the 25 companies for this strategy in the
following manner:
o First Trust begins with the stocks included in the NYSE International
100 Index[R] on or about the Stock Selection Date.
o First Trust then screens for liquidity by eliminating companies with
average daily trading volume for the prior three months below $300,000.
o First Trust then ranks the remaining stocks based on two factors:
price-to-book ratio, and price-to-cash flow ratio. Lower, but positive
price-to-book ratios and price-to-cash flow ratios are generally used as
an indication of value.
o *From those companies, First Trust then selects an approximately
equally weighted portfolio of the 25 stocks with the best overall ranking
based on the two factors.
Under unusual circumstances, the Fund's Equity Portfolio may allocate cash flows
to cash or cash equivalents, or, pro rata, to the remaining common stocks in the
strategy, or may sell an existing position. Unusual circumstances may include
material adverse developments concerning the issuer of the stock, such as
potential insolvency or fraud.
FIXED INCOME PORTFOLIO
For the Fund's Fixed Income Portfolio, the Manager may allocate from 0% to 100%
of the Fund's assets allocated to the Fixed Income Portfolio to either of two
separate strategies: the Total Return Strategy and the Diversified Income
Strategy. The Manager may change the allocation between the two Fixed Income
strategies at any time if it believes that doing so will increase the Fund's
ability to achieve its investment objective.
For Fixed Income Portfolio, "Fixed Income Instruments" include:
o Securities issued or guaranteed by the U.S. government, and by its
agencies or government-sponsored enterprises, some of which may not be
guaranteed by the U.S. Treasury;
o Corporate debt securities of U.S. and non-U.S. issuers, including
convertible securities and corporate commercial paper;
o Mortgage-backed and other asset-backed securities;
o Inflation-indexed bonds issued both by governments and corporations;
o Structured notes, including hybrid or "indexed" securities, and
event-linked bonds;
o Loan participations and assignments;
o Delayed funding loans and revolving credit facilities;
o Bank certificates of deposit, fixed time deposits, and bankers'
acceptances;
o Repurchase agreements and reverse repurchase agreements;
o Debt securities issued by states or local governments and their
agencies, authorities, and other government-sponsored enterprises;
o Obligations of non-U.S. governments or their subdivisions, agencies,
and government-sponsored enterprises; and
o Obligations of international agencies or supranational entities.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
TOTAL RETURN STRATEGY
The Total Return Strategy seeks to achieve its investment objective by investing
under normal circumstances at least 80% of its net assets in a diversified pool
of Fixed Income Instruments (as defined above) of varying maturities, which may
be represented by forwards or derivatives such as options, futures contracts, or
swap agreements. The average portfolio duration of this strategy normally varies
within two years (plus or minus) of the duration of the Barclays Capital
Aggregate Bond Index, which as of March 31, 2009 was 3.73 years.
The Total Return Strategy invests primarily in investment grade debt securities,
but may invest up to 10% of the total assets allocated to the strategy in high
yield securities ("junk bonds") rated B or higher by Moody's or equivalently
rated by S&P[R] or Fitch, or, if unrated, determined by PIMCO to be
of comparable quality. The Total Return Strategy may invest up to 30% of the
total assets allocated to it in securities denominated in foreign currencies and
may invest beyond this limit in U.S. dollar-denominated securities of foreign
issuers. The Total Return Strategy may invest up to 15% of its total assets in
securities of issuers based in countries with developing (or "emerging market")
economies. The Total Return Strategy will normally limit its foreign currency
exposure (from non-U.S. dollar-denominated securities or currencies) to 20% of
the total assets allocated to it. The Fund may also invest up to 10% of its
total assets in preferred stocks.
The Total Return Strategy may invest all of the assets allocated to it in
derivative instruments, such as options, futures contracts or swap agreements,
or in mortgage- or asset-backed securities. The Total Return Strategy may,
without limitation, seek to obtain market exposure to the securities in which it
primarily invests by entering into a series of purchase and sale contracts or by
using other investment techniques, such as buy backs or dollar rolls. The "total
return" sought by the strategy consists of income earned on the strategy's
investments, plus capital appreciation, if any, which generally arises from
decreases in interest rates or improving credit fundamentals for a particular
sector or security.
DIVERSIFIED INCOME STRATEGY
The Diversified Income Strategy seeks to achieve its investment objective by
investing under normal circumstances at least 80% of its net assets in a
diversified pool of Fixed Income Instruments (as defined above) of varying
maturities, which may be represented by forwards or derivatives such as options,
futures contracts, or swap agreements. The average portfolio duration of the
Diversified Income Strategy normally varies within a three- to eight-year time
frame based on PIMCO's forecast for interest rates.
The Diversified Income Strategy may invest in a diversified pool of corporate
fixed income securities of varying maturities. The Diversified Income Strategy
may invest all of its assets in high yield securities ("junk bonds") subject to
a maximum of 10% of its total assets in securities rated below B by Moody's or
equivalently rated by S&P[R] or Fitch, or, if unrated, determined
by PIMCO to be of comparable quality.
The Diversified Income Strategy may invest in securities denominated in foreign
currencies and U.S.-dollar-denominated securities of foreign issuers. The
Diversified Income Strategy may have foreign currency exposure (from non-U.S.
dollar denominated securities or currencies) up to 100% of its total assets. In
addition, the Diversified Income Strategy may invest without limit in fixed
income securities of issuers that are economically tied to emerging securities
markets. The Fund may also invest up to 10% of its total assets in preferred
stocks.
The Diversified Income Strategy may invest all of its assets in derivative
instruments, such as options, futures contracts or swap agreements, or in
mortgage- or asset-backed securities. The Diversified Income Strategy may,
without limitation, seek to obtain market exposure to the securities in which it
primarily invests by entering into a series of purchase and sale contracts or by
using other investment techniques (such as buy backs or dollar rolls). The total
return sought by the Diversified Income Strategy consists of income earned on
the Strategy's investments, plus capital appreciation, if any, which generally
arises from decreases in interest rates or improving credit fundamentals for a
particular sector or security.
The Fund may engage in frequent trading in order to achieve its investment
objective.
PRINCIPAL INVESTMENT STRATEGIES FOR THE BALANCED INDEX STRATEGY FUND (ACQUIRING
FUND):
The Fund seeks to achieve its goal by investing primarily in a combination of
five underlying index funds (the "Index Strategy Underlying Funds"). The AZL
Enhanced Bond Index Fund is a bond index fund; the other four Index Strategy
Underlying Funds are equity index funds.
o AZL Enhanced Bond Index Fund
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
o AZL S&P 500 Index Fund
o AZL Mid Cap Index Fund
o AZL Small Cap Stock Index Fund
o AZL International Index Fund
Information regarding the investment policies of the Index Strategy Underlying
Funds is located in the prospectus for the Acquiring Fund, which accompanies and
is incorporated by reference into this proxy statement/prospectus, in the
section called "Information About the Index Strategy Underlying Funds."
Generally, the Fund will allocate its assets as follows: 40-60% in the
underlying equity index funds and 40-60% in the underlying bond index fund.
The investment results of the Index Strategy Underlying Funds will vary. As a
result, the portfolio management team monitors the allocations to the Index
Strategy Underlying Funds daily and periodically adjusts the allocations. The
performance and income distributions of each of the Index Strategy Underlying
Funds will differ from the performance and income distributions of the
underlying funds as a result of small variations in the Fund's allocations and
any cash held in its portfolio.
The Fund may also allocate up to 5% of its respective net assets to (a) index
futures, other futures contracts, options, and other similar securities and (b)
cash, money market equivalents, short-term debt instruments, money market funds,
and short-term debt funds to satisfy all applicable margin requirements and to
provide additional portfolio liquidity to satisfy large redemptions and any
margin calls. The Fund may also invest, either directly or through the Index
Strategy Underlying Funds, in exchange-traded funds (ETFs) for additional
exposure to relevant markets. This strategy is intended to reduce the potential
volatility of the Fund's investment performance and may limit the Fund's ability
to benefit from rising markets while protecting the Fund in declining markets.
The Fund may pursue this strategy by investing directly or indirectly through
unregistered investment pools that are managed by either the Manager, affiliates
of the Manager, or unaffiliated investment managers.
For temporary defensive purposes, the Fund may invest up to 100% of its assets
in short-term U.S. Government securities, bank certificates of deposit, prime
commercial paper, money market funds, and other high quality short-term fixed-
income securities and repurchase agreements with respect to those securities. If
the Fund invests substantially in such instruments, it may not be pursuing its
principal investment strategies and may not achieve its investment objective.
COMPARISON OF INVESTMENT POLICIES
If shareholders of the Acquired Fund approve the Reorganization, they will be
subject to the investment policies of the Acquiring Fund. The Funds have
substantially similar investment policies. Other than as described herein, the
Manager does not believe that the differences between the investment policies
results in any material difference in the way the Funds are managed.
The Acquiring Fund is a "fund of funds" and diversifies its assets by investing
primarily in the shares of other affiliated underlying mutual funds. The Fund
may also invest in unaffiliated mutual funds and in other securities, including
interests in both affiliated and unaffiliated unregistered investment pools. The
Acquired Fund invests primarily in a diversified portfolio of equity and fixed
income securities.
RISK FACTORS
As noted above, the investment objective and the principal investment strategies
of the Acquired Fund and the Acquiring Fund are comparable. Consequently, the
principal investment risks of the Funds also are comparable. The principal risks
of investing in the Acquired Fund and the Acquiring Fund are shown in the table
below. A discussion of each of the various principal risks follows the table.
Depending upon its assessment of changing market conditions, the subadviser of a
Fund may emphasize particular asset classes or particular investments at any
given time, which may change the risks associated with a Fund. The fact that a
risk is not identified as a principal risk for a particular Fund does not mean
that the Fund may not be subject to that risk. The Statement of Additional
Information for the Acquiring Fund, which is incorporated by reference in this
proxy statement/prospectus, contains detailed information on the Acquiring
Fund's permitted investments and investment restrictions.
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The Allianz Variable Insurance Products Trust - Proxy
Statement/Prospectus - August 7, 2009
RISK TARGETPLUS BALANCED FUND (ACQUIRED FUND) BALANCED INDEX STRATEGY FUND(ACQUIRING FUND)