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. 6 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 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 7 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 8 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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, 9 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. 10 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 11 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. 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. 12 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 13 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. 14 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 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." 15 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. 16 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 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. 17 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 18 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 19 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 20 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 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. 21 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 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. 22 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 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
23 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. 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. A-2 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, A-3 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 (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. A-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 A-5 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. A-6 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. 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 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 A-8 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. B-1 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 B-2 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 B-3 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 B-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. B-5 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. 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 B-6 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. B-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 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 B-8 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. 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 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
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.....................................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. 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, 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. 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: * 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 6 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: 7 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. 9 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 11 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 12 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 13 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 14 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 * 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 15 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 16 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 17 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 18 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. 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. 19 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. 21 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." 23 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. 24 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. 25 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. 28 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 29 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 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. 30 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 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. 31 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 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
32 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 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. 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. A-2 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, A-3 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 (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. A-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 A-5 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. A-6 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. 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 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 A-8 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. B-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. B-2 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: B-3 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 (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. B-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 B-5 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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." B-6 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 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 B-7 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. C-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. C-2 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, C-3 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 (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. C-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 C-5 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. C-6 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. C-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 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 C-8 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. 8 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 9 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. 10 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." 11 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. 12 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. 13 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. 16 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. 17 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 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. 18 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 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
19 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 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. A-1 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 A-2 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 A-3 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 A-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. A-5 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. 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 A-6 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
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.....................................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. 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: * 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. 8 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 Statement/Prospectus - August 7, 2009 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 10 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 11 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. 12 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. 13 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." 14 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. 15 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 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. 16 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 * 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 17 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 18 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 * 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. 19 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 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. 20 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. 21 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 ------------------------------------------------------------------------------------------------------------------------------------ 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
22 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. A-1 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 A-2 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 A-3 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 A-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. A-5 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. 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 A-6 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. 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 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 A-8 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. B-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. B-2 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, B-3 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 (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. B-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. B-5 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. B-6 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. B-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 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 B-8 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. 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..........................................................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. 5 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. 6 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 7 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 * 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 8 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 9 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 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. 10 The Allianz Variable Insurance Products Trust - Proxy 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. 11 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. 12 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 13 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 14 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 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 15 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 16 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. 17 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 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. 19 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 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
20 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. A-1 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 A-2 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 A-3 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 is a series of the Selling Trust; (iii) this Agreement and the A-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. A-5 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. 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 A-6 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 A-7 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.
1 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
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.....................................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. 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 International Growth Fund|AIM International 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. 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 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. 5 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 6 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 7 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 * 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 8 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. 9 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. 10 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 11 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." 12 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.
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. 13 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 14 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. 16 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. 17 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. 19 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
20 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. A-2 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: A-3 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 (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. A-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 A-5 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. A-6 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. 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 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 A-8 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
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.....................................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. 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 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. 4 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. 8 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 9 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. 10 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009
RISK TARGETPLUS BALANCED FUND (ACQUIRED FUND) BALANCED INDEX STRATEGY FUND(ACQUIRING FUND) Market Risk X X Issuer Risk X X Selection Risk X Allocation Risk X X Strategy Selection Risk X Investment Strategy Risk X Limited Management Risk X Capitalization Risk X X Focused Investment Risk X Foreign Risk X X Emerging Markets Risk X Currency Risk X Dividend Risk X Interest Rate Risk X X Credit Risk X X Security Quality Risk X Liquidity Risk X Derivatives Risk X X Mortgage-Related and Other Asset-Backed Risk X X Leveraging Risk X License Termination Risk X X Short Sale Risk X Portfolio Turnover X X Index Fund Risk X Prepayment Risk X Extension 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 11 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 results and poor security selection may cause the Fund to underperform its benchmark index or other funds with similar investment objectives. * ALLOCATION RISK: The risk that the Manager allocates assets in a manner which results in the Fund underperforming other funds with similar investment objectives. For those Funds where the Manager has limited discretion to allocate Fund assets among various underlying investments, the Fund's allocation structure may cause the Fund to underperform other funds of funds with similar investment objectives. For those Funds where the Manager has discretion to allocate Fund assets among various underlying investments which represent different asset classes, each underlying investment is subject to different levels and combinations of risk, depending on the Fund's exact asset allocation. * STRATEGY SELECTION RISK: The risk that the Manager could allocate assets in a manner that will cause the Funds to underperform other funds with similar investment objectives. The Manager may have a potential conflict of interest in allocating Fixed Income Portfolio assets between the Diversified Income Strategy and the Total Return Strategy because the subadvisory fee rate it pays to the subadviser are different for the two strategies. However, the Manager is a fiduciary to the Funds and is legally obligated to act in their best interests when selecting strategies, without taking fees into consideration. * INVESTMENT STRATEGY RISK: 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. * 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. * 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. * 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 12 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. * 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. * 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. * 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. * 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. * 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 13 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. * 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. * 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. * 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 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). * 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 14 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. * 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. * 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. * PREPAYMENT RISK: If interest rates fall, issuers of callable debt securities are more likely to prepay prior to the maturity date. The Underlying Fund may not be able to reinvest the proceeds from the prepayment in investments that will generate the same level of income. * EXTENSION RISK: When interest rates rise, certain bond obligations will be paid in full by the issuer more slowly than anticipated, cause the value of the securities to fall. 15 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. TARGETPLUS BALANCED FUND (ACQUIRED FUND) [Bar Chart Graphic - 2008: -24.20%] HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART) Highest (Q2, 2008) -2.71% Lowest (Q4, 2008) -12.36% AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION TargetPlus Balanced Fund 5/1/2007 -24.40% -14.34% Russell 3000 Index -37.31% -24.66% S&P 500 Index -37.00% -24.19% Barclays Capital U.S. Aggregate Bond Index 5.24% 6.06%
The Fund's performance is measured against the Russell 3000[R] Index, the Standard & Poor's 500 Index ("S&P 500 Index"), and Barclays Capital U.S. Aggregate Bond Index. The Russell 3000[R] Index 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 Index is representative of 500 selected common stocks, most of which are listed on the New York Stock Exchange, that is a measure of the U.S. stock market as a whole. The Barclays Capital U.S. Aggregate Bond Index is a market value weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of at least one year. These 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 16 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 the deduction of fees for services provided to the Fund. Investors cannot invest directly in an index. BALANCED INDEX STRATEGY FUND (ACQUIRING FUND) The performance bar charts and tables are not presented because the Fund has not had a full calendar year of operations. The Fund commenced operations July 10, 2009, and has no performance history prior to that date. TABLE A-1 AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2008 --------------------------------------------------------------------- |FUND (inception date) |LAST 1 YEAR|SINCE INCEPTION| --------------------------------------------------------------------- |TargetPlus Balanced Fund (5/1/2007) | -24.40% | -14.34% | --------------------------------------------------------------------- |Balanced Index Strategy Fund(7/10/2009)| 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 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. 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." 17 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 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.
TARGETPLUS BALANCED BALANCED INDEX STRATEGY BALANCED INDEX STRATEGY FUND - PRO FORMA WITH FUND(ACQUIRED FUND) FUND(ACQUIRING FUND) ACQUIRED FUND ------------------------------------------------------------------------------------------------------------------------------------ Management Fee 0.52% (a) 0.05% (b) 0.05% (c) Distribution (12b-1) Fees 0.25% (d) -- -- Underlying Fund Fees and -- 0.63% (e) 0.63% (e) Expenses Other Expenses 0.64% 0.15% 0.26% Total Annual Fund 1.41% 0.83% 0.94% Operating Expenses Fee Waiver (f) -0.41% -- -- Net Annual Fund Operating 1.00% 0.83% 0.94% Expenses (f)
(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 Balanced Index Strategy Fund commenced operations on July 10, 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)Underlying Fund Fees and Expenses are incurred indirectly by the Acquiring Fund through the Fund's investment in the Index Strategy Underlying Funds and unregistered investment pools. Accordingly, Underlying Fund Fees and Expenses affect the Fund's total returns. Because these fees and expenses are not included in the Fund's Financial Highlights in the accompanying prospectus for the Acquiring Fund, the Fund's Total Annual Fund Operating Expenses do not correlate to the ratios of expenses to average net assets shown in the Financial Highlights table. (f)The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense or, for the Acquiring Fund, Underlying Fees and Expenses), to 0.89% for TargetPlus Balanced Fund and to 0.20% for Balanced Index Strategy 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. 18 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 TargetPlus Balanced Fund (Acquired Fund) $102 $406 $732 $1,655 Balanced Index Strategy Fund (Acquiring Fund) $85 $265 $460 $1,025 Balanced Index Strategy Fund - Pro Forma with Acquired Fund $96 $300 $520 $1,155
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 for the Acquired Fund 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 of the Acquired Fund who are eligible to provide voting instructions for the meeting will have approved the Plan. 19 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 TERMINATION OF THE PLAN The Plan and the transaction contemplated by it may be terminated and abandoned by resolutions of the Boards 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 If the separate accounts investing in the Acquired 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 Acquired 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 their assets and their 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 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 determination 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 Fund 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 Fund and the Acquiring Fund. The Board considered the fact that the Acquired Fund and the Acquiring Fund have comparable investment objectives and policies, but principal investment strategies which differ insofar as the Acquiring Fund is a "fund of funds", while the Acquired Fund invests in a diversified portfolio of equity and fixed income securities. The Board took note of the fact that following the Reorganization shareholders of the Acquired Fund 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 Fund, 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 the Acquired Fund as of the end of the Acquired Fund's most recent fiscal year. The contractual management fee for the Acquiring Fund is lower than for the Acquired Fund, and the contractual management fees for both Funds do not include any breakpoints. The Acquired Fund is subject to Distribution (12b-1) Fees but not Acquired Fund Fees and Expenses; the Acquiring Fund, on the other hand, is subject to Acquired Fund Fees and Expenses but not Distribution (12b-1) Fees. The Acquiring Fund's Other Expenses are lower than those for the Acquired Fund. The Board considered the fact that, in sum, shareholders of the Acquired Fund may expect to incur lower overall fund expenses following the Reorganization. 20 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 ratios could rise from current levels as fixed expenses become a larger percentage of net assets. The Board noted that both Funds 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 currently operates with expenses above the respective caps and receives fee waivers from the Manager, but that the Acquiring Fund does not. The Board also considered the fact that following the Reorganization total fund operating expenses for the combined Fund, including expenses related to the Reorganization, are expected to reach the cap contained in the Acquiring Fund's expense limitation agreement and that the Manager is expected to absorb expenses related to the merger through fee waivers. Net Annual Fund Operating Expenses nevertheless are expected to be less for the Acquiring Fund after the Reorganization than for the Acquired Fund. * 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 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 Fund will bear the expenses of printing and mailing communications to 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 portfolios after the Reorganization, will be allocated equally among 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 Fund. 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 noted that neither Fund has accumulated any significant track record; the Acquired Fund commenced operations on May 1, 2007, and the Acquiring Fund commenced operations on July 10, 2009. Therefore, the Board also considered the overall track record of the Manager in managing other funds with similar investment objectives and allocation strategies. Although the Board was cognizant of the fact that an investment adviser's past performance is no guarantee of its future results, the Board did recognize that the overall track record of the Manager 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 similar investment objectives. The Reorganization should allow for a concentrated selling effort, thereby potentially benefiting shareholders of the combined Funds. * 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 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 both Funds. 21 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009
FUND MANAGEMENT FEE RETAINED AFTER PAYMENT OF SUBADVISORY FEE (1) ---------------------------------------------------------------------------------------------------------------------------- TargetPlus Balanced Fund (Acquired Fund) 0.17% Balanced Index Strategy Fund (Acquiring Fund) 0.05%(2)(3) Weighted Average Before Reorganization 0.17% BALANCED INDEX STRATEGY FUND - PRO FORMA WITH ACQUIRED FUND 0.05%(3)
(1)Calculations are as of May 31, 2009, based on assets under management at May 31, 2009. (2)The Acquiring Fund had no net assets under management at May 31, 2009. The rate shown is the current management fee for the Acquiring Fund. (3)The Manager does not pay subadvisory fees out if its management fee for the Acquiring Fund. Underlying Fund Fees and Expenses are not factored into this table. 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 Acquired Fund as 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, 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. 22 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 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, 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 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 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. 23 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 FUND AND THE ACQUIRING FUND
FUND NET ASSETS NET ASSET VALUE PER SHARE SHARES OUTSTANDING TargetPlus Balanced Fund (Acquired Fund)* $49,349,752 $7.59 6,503,800 Balanced Index Strategy Fund (Acquiring Fund)** N/A N/A N/A Adjustments*** -$73,500 -- -1,576,175 Balanced Index Strategy Fund - Pro Forma with the Acquired Fund $49,276,252 $10.00 4,927,625
* 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 Balanced Index Strategy Fund commenced operations on July 10, 2009, and did not have any net assets or shares outstanding 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. 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 ---------------------------------------------------------------------------------------------------------------------------------- TargetPlus Balanced Fund Allianz Life Variable Account [00.00]% N/A B Balanced Index Strategy Allianz Life Variable Account [00.00]% [00.00]% Fund B
25 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 TargetPlus Balanced Fund (the "Acquired Fund"), and the Allianz Variable Insurance Products Fund of Funds Trust (the "FOF Trust" or the "Buying Trust") on behalf of its series, the AZL Balanced Index Strategy Fund (the "Acquiring Fund"), and Allianz Investment Management LLC (solely for the purposes of Section 11 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 TargetPlus Balanced Fund|AZL Balanced Index Strategy 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 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 FOF 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. A-2 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: A-3 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 (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. A-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 Boards 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 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. A-5 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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." IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed. ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST on behalf of AZL TargetPlus Balanced Fund By /s/ Jeffrey W. Kletti Jeffrey W. Kletti President A-6 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 ALLIANZ VARIABLE INSURANCE PRODUCTS FUND OF FUNDS TRUST on behalf of AZL Balanced Index Strategy Fund By /s/ Jeffrey W. Kletti Jeffrey W. Kletti President The undersigned is a party to this Agreement for purposes of Sections 11 and 13 only. ALLIANZ INVESTMENT MANAGEMENT LLC By /s/ Brian Muench Brian Muench Vice President A-7 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST AZL TargetPLUS[SM] Growth Fund AZL TargetPLUS[SM] Moderate 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 Growth Fund and the AZL TargetPLUS Moderate 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 Moderate 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 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 similarity in investment objective and investment allocation 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 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 TARGETPLUS GROWTH FUND AND THE AZL TARGETPLUS MODERATE 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 TARGETPLUS[SM] GROWTH FUND AZL TARGETPLUS[SM] MODERATE FUND A special meeting of the shareholders of the AZL TargetPLUS Growth Fund and the AZL TargetPLUS Moderate 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 TargetPLUS Growth Fund, which is a series of the Allianz Variable Insurance Products Trust (the "VIP Trust"), and the AZL Moderate Index Strategy Fund (the "Acquiring Fund"), which is a series of the Allianz Variable Insurance Products Fund of Funds Trust; - To approve an Agreement and Plan of Reorganization (the "Plan") between the AZL TargetPLUS Moderate 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 each 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 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]] TargetPLUS Growth Fund AZL[[R]] Moderate Index Strategy Fund ("TargetPLUS Growth Fund") ("Moderate Index Strategy Fund") AZL TargetPLUS[SM] Moderate Fund ("TargetPLUS Moderate Fund")
This proxy statement/prospectus describes proposed Agreements and Plans of Reorganization (the "Plans") pursuant to which the outstanding shares of the TargetPLUS Growth Fund and the TargetPLUS Moderate 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 Moderate Index Strategy Fund (the "Acquiring Fund"). Both the Acquiring Fund and the Acquired Funds (each a "Fund" and together the "Funds") are named above. The Acquired Funds are 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 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 1-800-950-5872 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. Allianz Variable Insurance Products Fund of Funds 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 OBJECTIVE ACQUIRING FUND INVESTMENT OBJECTIVE ----------------------------------------------------------------------------------------------------------------- TARGETPLUS GROWTH FUND Long-term capital MODERATE INDEX STRATEGY Long-term capital TARGETPLUS MODERATE FUND appreciation FUND 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.....................................13 Risk Factors..........................................................13 Performance...........................................................18 Tax Consequences......................................................20 FEES AND EXPENSES.........................................................21 THE REORGANIZATION........................................................22 Terms of the Reorganization.............................................22 Conditions to Closing the Reorganization................................22 Termination of the Plan.................................................23 Tax Status of the Reorganization........................................23 Reasons for the Proposed Reorganization and Board Deliberations.........23 Boards' Determinations..................................................23 Recommendation and Vote Required........................................25 SECTION B - Proxy Voting and Shareholder Meeting Information................26 SECTION C - Capitalization, Ownership of Fund Shares and Other Fund Information.............................................................27 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 each Acquired Fund and the Acquiring Fund into which it will be merged. ------------------------------------------------------- | ACQUIRED FUNDS | ACQUIRING FUND | ------------------------------------------------------- | TargetPLUS Growth Fund |Moderate Index Strategy Fund| -------------------------- |TargetPLUS Moderate 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. 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: * 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 ----------------------------------------------------------------------------------------------------------------- TARGETPLUS GROWTH FUND Long-term capital MODERATE INDEX STRATEGY Long-term capital TARGETPLUS MODERATE FUND appreciation FUND appreciation
COMPARISON OF INVESTMENT STRATEGIES Each of the Funds maintains a similar investment objective, seeking to provide long-term capital appreciation. The Acquired Funds seek 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, the TargetPLUS Growth Fund targets a somewhat heavier equity allocation (70-90%) than the TargetPLUS Moderate Fund and the Acquiring Fund (both 55-75%). All of the Funds include investments in larger-, mid- and smaller- capitalization companies in comparable allocations, and all of the Funds include investments in non-U.S. investments, although the non-U.S. exposure for the Acquiring Fund is lower than for either of Acquired Funds. The TargetPLUS Growth Fund and the TargetPLUS Moderate Fund are subadvised by First Trust Advisors L.P. ("First Trust") for the equity portions of their portfolios and by Pacific Investment Management Company LLC ("PIMCO") for the fixed income portions of their portfolios. The Acquiring Fund is not subadvised. Detailed strategies for the Acquired Funds and the Acquiring Fund are set forth below. PRINCIPAL INVESTMENT STRATEGIES FOR THE TARGETPLUS GROWTH 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 70% to 90% 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 indirectly through unregistered investment pools that are not Permitted 6 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 next six to 12 months relative to the others. Value Line[R] bases 7 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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; 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 8 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. 9 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 TARGETPLUS MODERATE 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 55% to 75% of the Fund's assets to the Equity Portfolio and the 10 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 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 Each of these strategies is described in detail above under Principal Investment Strategies for the TargetPLUS Growth Fund. 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. 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. Each of these strategies is described in detail above under Principal Investment Strategies for the TargetPLUS Growth Fund. 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. 11 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 For purposes of the 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. The Fund may engage in frequent trading in order to achieve its investment objective. PRINCIPAL INVESTMENT STRATEGIES FOR THE MODERATE 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 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: 55% - 75% in the underlying equity index funds and 25% - 45% 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 12 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 unregistered investment pools that are managed by either the Manager, affiliates of the Manager, or unaffiliated investment managers. For temporary defensive purposes, any of 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 a 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. 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 Funds invest 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 Funds 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 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 TARGETPLUS GROWTH FUND TARGETPLUS MODERATE MODERATE INDEX STRATEGY (ACQUIRED FUND) FUND(ACQUIRED FUND) FUND(ACQUIRING FUND) Market Risk X X X Issuer Risk X X X Selection Risk X X Allocation Risk X X X Strategy Selection Risk X X Investment Strategy Risk X X Limited Management Risk X X Capitalization Risk X X X Focused Investment Risk X X Foreign Risk X X X Emerging Markets Risk X X Currency Risk X X Dividend Risk X X Interest Rate Risk X X X Credit Risk X X X Security Quality Risk X X Liquidity Risk X X 13 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 Derivatives Risk X X X Mortgage-Related and Other Asset- X X X Backed Risk Leveraging Risk X X License Termination Risk X X X Short Sale Risk X X Portfolio Turnover X X X Index Fund Risk X Prepayment Risk X Extension 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. * ALLOCATION RISK: The risk that the Manager allocates assets in a manner which results in the Fund underperforming other funds with similar investment objectives. For those Funds where the Manager has limited discretion to allocate Fund assets among various underlying investments, the Fund's allocation structure may cause the Fund to underperform other funds of funds with similar investment objectives. For those Funds where the Manager has discretion to allocate Fund assets among various underlying investments which represent different asset classes, each underlying investment is subject to different levels and combinations of risk, depending on the Fund's exact asset allocation. * STRATEGY SELECTION RISK: The risk that the Manager could allocate assets in a manner that will cause the Funds to underperform other funds with similar investment objectives. The Manager may have a potential conflict of interest in allocating Fixed Income Portfolio assets between the Diversified Income Strategy and the Total Return Strategy because the subadvisory fee rate it pays to the subadviser are different for the two strategies. However, the Manager is a fiduciary to the Funds and is legally obligated to act in their best interests when selecting strategies, without taking fees into consideration. * INVESTMENT STRATEGY RISK: 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 14 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. * 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. * 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. * 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. * 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 15 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. * 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. * 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. * 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. * 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. * 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. * 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 16 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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. * 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 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). * 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 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. * 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. * 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. * PREPAYMENT RISK: If interest rates fall, issuers of callable debt securities are more likely to prepay prior to the maturity date. The Underlying Fund may not be able to reinvest the proceeds from the prepayment in investments that will generate the same level of income. * EXTENSION RISK: When interest rates rise, certain bond obligations will be paid in full by the issuer more slowly than anticipated, cause the value of the securities to fall. 17 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. TARGETPLUS GROWTH FUND (ACQUIRED FUND) [Bar Chart Graphic - 2008: -39.38%] HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART) Highest (Q2, 2008) -3.40% Lowest (Q4, 2008) -21.72% AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION TargetPLUS Growth Fund 5/1/2007 -39.38% -25.73% Russell 3000 Index -37.31% -24.66% S&P 500 Index -37.00% -24.19%
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. 18 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 TARGETPLUS MODERATE FUND (ACQUIRED FUND) [Bar Chart Graphic - 2008: -32.37%] HIGHEST AND LOWEST QUARTER RETURNS (FOR PERIODS SHOWN IN THE BAR CHART) Highest (Q2, 2008) -3.28% Lowest (Q4, 2008) -17.09% AVERAGE ANNUAL TOTAL RETURNS
INCEPTION ONE YEAR ENDED DECEMBER 31, 2008 SINCE INCEPTION TargetPLUS Moderate Fund 5/1/2007 -32.37% -20.04% Russell 3000[R] Index -37.31% -24.66% S&P 500 Index -37.00% -24.19%
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. 19 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 MODERATE INDEX STRATEGY (ACQUIRING FUND) The performance bar charts and tables are not presented because the Fund has not had a full calendar year of operations. The Fund commanced operations July 10, 2009, and has no performance history prior to that date. TABLE A-1 AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2008 --------------------------------------------------------------------- |FUND (inception date) |LAST 1 YEAR|SINCE INCEPTION| --------------------------------------------------------------------- |TargetPLUS Growth Fund (5/1/2007) | -39.38% | -25.73% | --------------------------------------------------------------------- |TargetPLUS Moderate Fund(5/1/2007) | -32.37% | -20.04% | --------------------------------------------------------------------- |Moderate Index Strategy Fund(7/10/2009)| 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 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. The Reorganizations are not expected to qualify as tax- free reorganizations 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 treat of the Reorganizations 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 REORGANIZATIONS. For more information about the federal income tax consequences of the Reorganization, see the section entitled "Tax Status of the Reorganization." 20 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.
TARGETPLUS GROWTH TARGETPLUS MODERATE MODERATE INDEX STRATEGY MODERATE INDEX STRATEGY FUND - PRO FORMA FUND(ACQUIRED FUND) FUND(ACQUIRED FUND) FUND(ACQUIRING FUND) WITH ACQUIRED FUNDS ------------------------------------------------------------------------------------------------------------------------------------ Management Fee 0.52% (a) 0.52% (a) 0.05% (b) 0.05% (c) Distribution (12b-1) 0.25% (d) 0.25% (d) -- -- Fees Underlying Fund Fees -- -- 0.61% (e) 0.61% (e) and Expenses Other Expenses 0.38% 0.53% 0.15% 0.16% Total Annual Fund 1.15% 1.30% 0.81% 0.82% Operating Expenses Fee Waiver (f) -0.24% -0.32% -- -- Net Annual Fund 0.91% 0.98% 0.81% 0.82% Operating Expenses (f)
(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 Moderate Index Strategy Fund commenced operations on July 10, 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)Underlying Fund Fees and Expenses are incurred indirectly by the Acquiring Fund through the Fund's investment in the Index Strategy Underlying Funds and unregistered investment pools. Accordingly, Underlying Fund Fees and Expenses affect the Fund's total returns. Because these fees and expenses are not included in the Fund's Financial Highlights in the accompanying prospectus for the Acquiring Fund, the Fund's Total Annual Fund Operating Expenses do not correlate to the ratios of expenses to average net assets shown in the Financial Highlights table. (f)The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense and, for the Acquired Fund, Underlying Fund Fees and Expenses), to 0.89% for TargetPLUS Growth Fund and TargetPLUS Moderate Fund and 0.20% for Moderate Index Strategy 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. 21 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 --------------------------------------------------------------------------------------------- TargetPLUS Growth Fund (Acquired Fund) $93 $342 $610 $1,376 TargetPLUS Moderate Fund (Acquired Fund) $100 $381 $682 $1,540 Moderate Index Strategy Fund (Acquiring Fund) $83 $259 $450 $1,002 Moderate Index Strategy Fund - Pro Forma with Acquired Funds $84 $262 $455 $1,014
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. 22 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 * The Contract Owners of each Acquired Fund who are eligible to provide voting instructions for the meeting will have approved the respective Plans. 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. If the separate accounts investing in the Acquired 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 an Acquired Fund. The Reorganization is not expected to qualify as a tax-free reorganization for United States federal income tax purposes. Thus, the Acquired Funds generally will recognize gain or loss equal to the difference between the fair market value of their assets and their tax basis in such assets. Any unused excess capital loss carry forwards of the Acquired Funds will cease to exist after the Reorganization. The Acquired Funds expect that the amount of such unused capital loss carry forwards lost as a 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 determination 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 principal investment strategies which differ insofar as the Acquiring Fund is a "fund of funds", while the Acquired Funds invest in a diversified portfolio of equity and fixed income securities. 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 generally 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 23 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 Acquired Funds are subject to Distribution (12b-1) Fees but not Acquired Fund Fees and Expenses; the Acquiring Fund, on the other hand, is subject to Acquired Fund Fees and Expenses but not Distribution (12b-1) Fees. The Acquiring Fund's Other Expenses are lower than those for the Acquired Funds. The Board considered the fact that, 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 the Acquired Funds currently are operating with expenses above the respective caps and are receiving fee waivers from the Manager, but that the Acquiring Fund is not. The Board also considered the fact that following the Reorganization total fund operating expenses for the combined Fund, including expenses related to the Reorganization, are expected to reach the cap contained in the Acquiring Fund's expense limitation agreement and that the Manager is expected to absorb expenses related to the merger through fee waivers. Net Annual Fund Operating Expenses are nevertheless expected to be less for the Acquiring Fund after the Reorganization than for the Acquired Funds. * 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 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 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 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 Acquired Funds commenced operations on May 1, 2007, and the Acquiring Fund commenced operations on July 10, 2009. Therefore, the Board also considered the overall track record of the Manager in managing other funds with similar investment objectives and allocation strategies. Although the Board was cognizant of the fact that an investment adviser's past performance is no guarantee of its future results, the Board did recognize that the overall track record of the Manager 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 similar investment objectives. The Reorganization should allow for a concentrated selling effort, thereby potentially benefiting shareholders of the combined Funds. * 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 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 24 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 both Funds.
FUND MANAGEMENT FEE RETAINED AFTER PAYMENT OF SUBADVISORY FEE (1) TargetPLUS Growth Fund (Acquired Fund) 0.17% TargetPLUS Moderate Fund (Acquired Fund) 0.17% Moderate Index Strategy Fund (Acquiring Fund) 0.05% (2)(3) Weighted Average Before Reorganization 0.17% MODERATE INDEX STRATEGY FUND - PRO FORMA WITH ACQUIRED FUNDS 0.05% (3)
(1)Calculations are as of May 31, 2009, based on assets under management at May 31, 2009. (2)The Acquiring Fund had no net assets under management at May 31, 2009. The rate shown is the current management fee for the Acquiring Fund. (3)The Manager does not pay subadvisory fees out if its management fee for the Acquiring Fund. Underlying Fund Fees and Expenses are not factored into this table. 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 23, 2009. 25 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 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, 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 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. 26 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 FUND
FUND NET ASSETS NET ASSET VALUE PER SHARE SHARES OUTSTANDING TargetPLUS Growth Fund (Acquired Fund)* $66,305,422 $6.02 11,014,322 TargetPLUS Moderate Fund (Acquired Fund)* $53,814,586 $6.79 7,920,378 Moderate Index Strategy Fund (Acquiring Fund)** N/A N/A N/A Adjustments*** -$135,500 -- -6,936,249 Moderate Index Strategy Fund - Pro Forma with the Acquired Funds $119,984,508 $10.00 11,998,451
* 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 Moderate Index Strategy Fund commenced operations on July 10, 2009, and did not have any net assets or shares outstanding 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. 27 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 TargetPLUS Growth Fund Allianz Life Variable Account [00.00]% N/A B TargetPLUS Moderate Fund Allianz Life Variable Account [00.00]% N/A B Moderate Index Strategy Allianz Life Variable Account [00.00]% [00.00]% Fund B
28 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 TargetPLUS Growth Fund (the "Acquired Fund"), and the Allianz Variable Insurance Products Fund of Funds Trust (the "FOF Trust" or the "Buying Trust") on behalf of its series, the AZL Moderate Index Strategy 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 TargetPLUS Growth Fund|AZL Moderate Index Strategy 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 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 FOF 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. A-2 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: A-3 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 (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. A-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 Boards 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 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. A-5 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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." IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed. ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST on behalf of AZL TargetPLUS Growth Fund By /s/ Jeffrey W. Kletti Jeffrey W. Kletti President A-6 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 ALLIANZ VARIABLE INSURANCE PRODUCTS FUND OF FUNDS TRUST on behalf of AZL Moderate Index Strategy 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 A-7 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 TargetPLUS Moderate Fund (the "Acquired Fund"), and the Allianz Variable Insurance Products Fund of Funds Trust (the "FOF Trust" or the "Buying Trust") on behalf of its series, the AZL Moderate Index Strategy 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 TargetPLUS Moderate Fund|AZL Moderate Index Strategy 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 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 FOF 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. B-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. B-2 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: B-3 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 (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. B-4 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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 Boards 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 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. B-5 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 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." IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed. ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST on behalf of AZL TargetPLUS Moderate Fund By /s/ Jeffrey W. Kletti Jeffrey W. Kletti President B-6 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 ALLIANZ VARIABLE INSURANCE PRODUCTS FUND OF FUNDS TRUST on behalf of AZL Moderate Index Strategy 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 B-7 The Allianz Variable Insurance Products Trust - Proxy Statement/Prospectus - August 7, 2009 PART B - SAI _____________________ STATEMENT OF ADDITIONAL INFORMATION Acquisition of the Assets of AZL(R) BlackRock Growth Fund AZL(R) Columbia Technology Fund AZL(R) First Trust Target Double Play Fund AZL(R) JPMorgan Large Cap Equity Fund AZL(R) NACM International Fund AZL(R) Oppenheimer Global Fund AZL(R) Oppenheimer International Growth Fund AZL(R) PIMCO Fundamental IndexPLUS Total Return Fund AZL(R) Schroder International Small Cap Fund AZL TargetPLUS(R) Balanced Fund AZL TargetPLUS(R) Equity Fund AZL TargetPLUS(R) Growth Fund AZL TargetPLUS(R) Moderate Fund By and in Exchange for Shares of AZL(R) AIM International Equity Fund AZL(R) Balanced Index Strategy Fund AZL(R) BlackRock Capital Appreciation Fund AZL(R) International Index Fund AZL(R) JPMorgan U.S. Equity Fund AZL(R) Moderate Index Strategy Fund AZL(R) S&P 500 Index Fund AZL(R) Van Kampen Global Franchise Fund EACH A "FUND" OF ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST or ALLIANZ VARIABLE INSURANCE PRODUCTS FUND OF FUNDS TRUST (COLLECTIVELY KNOWN AS THE "TRUSTS) August __, 2009 This Statement of Additional Information relates specifically to the reorganization of the 13 series of the Trusts identified above (each an "Acquired Fund") into the respective series of the Trusts identified above (each an "Acquiring Fund"). Pursuant to this reorganization each Acquiring Fund would acquire all of the assets of a corresponding Acquired Fund that has substantially similar investment objectives and strategies, except as otherwise described in the Proxy Statement/Prospectus dated August ___, 2009, and Acquiring Fund shares would be distributed proportionately by each Acquired Fund to the holders of its shares in complete liquidation of the Acquired Fund. For the name of the Acquiring Fund(s) into which your Acquired Fund(s) would be reorganized see the cover page of the Proxy Statement/Prospectus. This Statement of Additional Information is not a prospectus. A Proxy Statement/Prospectus dated August ___, 2009, relating to the matters referenced above may be obtained without charge by writing the Trusts at 3-825, 5701 Golden Hills Drive, Minneapolis MN 55416, or by calling toll free 1-800-624-0197. This Statement of Additional Information should be read in conjunction with the Proxy Statement/Prospectus. TABLE OF CONTENTS PAGE ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS................................. 3 FINANCIAL INFORMATION...................................................3 PRO FORMA FINANCIAL STATEMENTS..........................................6 PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS...................83 2 The Allianz Variable Insurance Products Trust - Statement of Additional Information ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS This Statement of Additional Information is accompanied by the following document, which contains additional information about the Acquiring Funds and the Acquired Funds and which is incorporated by reference herein: Statement of Additional Information dated April 27, 2009, of Allianz Variable Insurance Products Trust (the "Trust") in the form filed by the Trust with the Securities and Exchange Commission (the "SEC") on April 29, 2009, pursuant to Rule 497 (Registration Nos. 333-83423 and 811-9491), EDGAR Accession Number 0001091439-09-000014. Statement of Additional Information dated April 27, 2009, of Allianz Variable Insurance Products Fund of Funds Trust (the "Trust") in the form filed by the Trust with the Securities and Exchange Commission (the "SEC") on April 29, 2009, pursuant to Rule 497 (Registration Nos. 333-119867 and 811-21624), EDGAR Accession Number 0001301708-09-000005. -------------------------------------------------------------------------------- FINANCIAL INFORMATION Historical financial information regarding the Acquiring Funds and the Acquired Funds is included in the following documents, which accompany this Statement of Additional Information and which are incorporated by reference herein. The AZL Balanced Index Strategy Fund, AZL International Index Fund, and the AZL Moderate Index Strategy Fund commenced operations after December 31, 2008. Therefore, no financial information for these Funds is reflected below. Acquiring Funds The AZL(R) AIM International Equity Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-0023666. The AZL(R) BlackRock Capital Appreciation Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-0023666. The AZL(R) JPMorgan U.S. Equity Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-0023666. The AZL(R) S&P 500 Index Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-0023666. The AZL(R) Van Kampen Global Franchise Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-0023666. The AZL(R) AIM International Equity Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL(R) BlackRock Capital Appreciation Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL(R) JPMorgan U.S. Equity Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL(R) S&P 500 Index Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. 3 The Allianz Variable Insurance Products Trust - Statement of Additional Information The AZL(R) Van Kampen Global Franchise Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. Acquired Funds The AZL(R) BlackRock Growth Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL(R) Columbia Technology Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL(R) First Trust Target Double Play Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL(R) JPMorgan Large Cap Equity Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL(R) NACM International Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL(R) Oppenheimer Global Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL(R) Oppenheimer International Growth Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL(R) PIMCO Fundamental IndexPLUS Total Return Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL(R) Schroder International Small Cap Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL TargetPLUS(R) Balanced Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL TargetPLUS(R) Equity Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL TargetPLUS(R) Growth Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL TargetPLUS(R) Moderate Fund's Annual Report for the fiscal year ended December 31, 2008, in the form N-CSR filed by the Trust with the SEC on March 9, 2009, EDGAR Accession Number 0000950152-09-002366. The AZL(R) BlackRock Growth Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. 4 The Allianz Variable Insurance Products Trust - Statement of Additional Information The AZL(R) Columbia Technology Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL(R) First Trust Target Double Play Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL(R) JPMorgan Large Cap Equity Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL(R) NACM International Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL(R) Oppenheimer Global Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL(R) Oppenheimer International Growth Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL(R) PIMCO Fundamental IndexPLUS Total Return Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL(R) Schroder International Small Cap Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL TargetPLUS(R) Balanced Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL TargetPLUS(R) Equity Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL TargetPLUS(R) Growth Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. The AZL TargetPLUS(R) Moderate Fund's Semi-Annual Shareholder Report for the six-month period ended June 30, 2008, in the form N-CSRS filed by the Trust with the SEC on September 4, 2008, EDGAR Accession Number 0000 950152-08-006989. 5 The Allianz Variable Insurance Products Trust - Statement of Additional Information PRO FORMA FINANCIAL STATEMENTS Set forth on the following pages are pro forma financial statements presented to show the effect of the proposed acquisition of each Acquired Fund by the corresponding Acquiring Fund as if such acquisition had taken place as of the close of business on December 31, 2008.
AZL AIM International Equity Fund Pro Forma AZL Oppenheimer AZL AIM Statements of Assets and Liabilities International International December 31, 2008 Growth Equity Pro Forma Pro Forma (Unaudited) Fund Fund Adjustments Combined -------------------------------------------------- ------------------ ------------------ ------------------ ------------------- -------------------------------------------------- ------------------ ------------------ ------------------ ------------------- Assets: Investment securities, at cost $ 148,519,927 $ 211,791,659 $ - $ 360,311,586 ================== ================== ================== =================== Investment securities, at value $ 117,554,286 $ 166,769,609 $ - $ 284,323,895 Interest and dividends receivable 99,949 97,624 - 197,573 Foreign currency, at value (cost $10,733,306) 786,052 9,731,676 - 10,517,728 Receivable for capital shares issued 71,378 33,548 - 104,926 Reclaim receivable 131,235 412,685 - 543,920 Receivable from affiliate 7,376 - 7,376 Prepaid expenses 3,044 4,797 - 7,841 ------------------ ------------------ ------------------ ------------------- Total Assets 118,653,320 177,049,939 - 295,703,259 ------------------ ------------------ ------------------ ------------------- Liabilities: Payable for investments purchased 3,863,785 46,055 - 3,909,840 Payable for capital shares redeemed 4,485 45,324 - 49,809 Manager fees payable 71,761 129,216 - 200,977 Administration fees payable 4,542 7,174 - 11,716 Distribution fees payable 22,722 35,893 - 58,615 Administrative and compliance services fees payable 1,797 2,651 - 4,448 Reorganization fees payable (A) - - 147,500 147,500 Other accrued liabilities 35,654 37,136 - 72,790 ------------------ ------------------ ------------------ ------------------- Total Liabilities 4,004,746 303,449 147,500 $ 4,455,695 ------------------ ------------------ ------------------ ------------------- Net Assets $ 114,648,574 $ 176,746,490 $ (147,500) $ 291,247,564 ================== ================== ================== =================== Net Assets Consist of: $ Capital $ 163,856,773 240,643,297 $ - $ 404,500,070 Accumulated net investment income/(loss) 1,774,590 3,985,567 (147,500) 5,760,157 Accumulated net realized gains/(losses) from investment transactions (20,089,463) (22,608,743) - (42,698,206) Net unrealized appreciation/(depreciation) on investments (30,893,326) (45,273,631) - (76,166,957) ------------------- ------------------ ------------------ ------------------ Net Assets $ 114,648,574 $ 176,746,490 $ (147,500) $ 291,247,564 ================== ================== ================== =================== Shares of beneficial interest (unlimited number 11,026,155 17,138,394 76,544 28,241,093 of shares authorized, no par value) (B) Net Asset Value (offering and redemption price per share) (B) $10.40 $10.31 - $10.31 ================== ================== ================== =================== (A) Represents the estimated reorganization fees and expenses that are to be expected to be paid by the Funds. (B) Shares of the AZL Oppenheimer International Growth Fund are exchanged for new shares of the AZL AIM International Equity Fund, to commence operations upon consummation of the merger. See accompanying notes to the Pro Forma financial statements. 6 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL AIM International Equity Fund AZL Oppenheimer AZL AIM Statements of Operations International International For the Year Ended December 31, 2008 Growth Equity Pro Forma Pro Forma (Unaudited) Fund Fund Adjustments Combined Investment Income: Interest $ 33,863 $ 92,493 $ - $ 126,356 Dividends 5,113,281 8,800,039 - 13,913,320 Income from securities lending 194,775 156,789 - 351,564 Foreign withholding tax (342,107) (602,536) - (944,643) ------------------ ------------------ ------------------ ------------------ Total Investment Income 4,999,812 8,446,785 - 13,446,597 ------------------ ------------------ ------------------ ------------------ Expenses: Manager fees 1,434,121 2,518,022 284,992 (A) 4,237,135 Administration fees 84,832 124,244 - 209,076 Distribution fees 478,364 699,449 - 1,177,813 Custodian fees 104,832 281,781 (255,213) (B) 131,400 Administrative and compliance services fees 7,665 11,117 - 18,782 Trustees' fees 16,461 23,728 - 40,189 Professional fees 31,552 45,101 (16,694) (B) 59,959 Shareholder reports 36,102 40,594 (12,000) (B) 64,696 Interest expense on cash overdraft 57,635 46,010 - 103,645 Reorganization fees (C) - - - - Other expenses 36,860 32,459 (30,600) (B) 38,719 ------------------ ------------------ ------------------ ------------------ Total expenses Total expenses before reductions 2,288,424 3,822,505 (29,515) 6,081,414 Less expenses waived/reimbursed by the Manager - - (110,157) (110,157) Less expenses paid indirectly - (5,646) - (5,646) ------------------ ------------------ ------------------ ------------------ Net Expenses 2,288,424 3,816,859 (139,672) 5,965,611 ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ Net Investment Income/(Loss) 2,711,388 4,629,926 139,672 7,480,986 ------------------ ------------------ ------------------ ------------------ Realized and Unrealized Gains/(Losses) on Investments: Net realized gains/(losses) on securities and foreign currency transactions (19,112,617) (22,250,097) - (41,362,714) Change in unrealized appreciation/(depreciation) on investments (88,168,506) (126,572,565) - (214,741,071) ------------------ ------------------ ------------------ ------------------ Net Realized and Unrealized Gains/(Losses) on Investments (107,281,123) (148,822,662) - (256,103,785) ================== ================== ================== ================== ------------------ ------------------ ================== ================== Change in Net Assets Resulting from Operations $ (104,569,735) $ (144,192,736) $ 139,672 $ (248,622,799) ================== ================== ================== ==================
A Based on contract in effect for the surviving AZL AIM International Equity Fund. B Decrease due to the elimination of duplicative expenses achieved by merging the funds. C Estimated reorganization fees and expenses that are to be paid by the Funds are $147,500 These amounts have not been included in the Pro Forma adjustments above, as such expenses are non-recurring in nature and are not expected to be incurred in ongoing operations. See accompanying notes to the Pro Forma financial statements. 7 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL AIM International Equity Fund Pro Forma Notes to Combining Financial Statements December 31, 2008 (Unaudited) 1. DESCRIPTION OF THE FUND: The AZL AIM International Equity Fund, ("AIM International Equity Fund") a series of the Allianz Variable Insurance Products Trust (the "Trust"), is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end investment company established as a Delaware statutory trust. The Trust is authorized to issue an unlimited number of shares of the AIM International Equity Fund without par value. Shares of the AIM International Equity Fund are available through the variable annuity contracts and variable life insurance policies offered through the separate accounts of participating insurance companies. Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the AIM International Equity Fund. In addition, in the normal course of business, the AIM International Equity Fund may enter into contracts with its vendors and others that provide for general indemnifications. The AIM International Equity Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the AIM International Equity Fund. However, based on experience, the AIM International Equity Fund expects that risk of loss to be remote. The pro forma adjustments and pro forma combined columns of the Statements of Operations reflect the adjustments necessary to show expenses at the rates which would have been in effect if the AIM International Equity and the AZL Oppenheimer International Growth ("Oppenheimer Fund") Funds were combined for the twelve month period ended December 31, 2008. Manager, administration and 12b-1 (Distribution) fees in the pro forma combined column are calculated at the rates in effect for the AIM International Equity Fund based upon the combined net assets of the corresponding AIM International Equity Fund and the Oppenheimer Fund. Certain pro forma adjustments were made to estimate the benefit of combining operations of separate funds into one survivor fund. 2. BASIS OF COMBINATION: The accompanying pro forma financial statements are presented to show the effect of the proposed acquisition of the Oppenheimer Fund a series of the Trust, by the AIM International Equity Fund as if such acquisition had taken place as of January 1, 2008. Under the terms of the Plan of Reorganization, the combination of AIM International and Oppenheimer Fund will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition would be accomplished by an acquisition of the net assets of Oppenheimer Fund in exchange for shares of AIM International Equity Fund at the December 31, 2008 net asset value. The Statements of Assets and Liabilities and the related Statements of Operations of Oppenheimer Fund and AIM International Equity Fund have been combined as of and for the twelve month period ended December 31, 2008. Following the acquisition, the AIM International Equity Fund will be the accounting survivor. In accordance with U.S. generally accepted accounting principles ("GAAP"), the historical cost 8 The Allianz Variable Insurance Products Trust - Statement of Additional Information of investment securities will be carried forward to the AIM International Equity Fund and the results of operations for pre-combination periods of the AIM International Equity Fund will not be restated. The accompanying pro forma financial statements should be read in conjunction with the financial statements of AIM International Equity Fund and Oppenheimer Fund included in their respective annual report dated December 31, 2008. The following notes refer to the accompanying pro forma financial statements as if the above-mentioned acquisition of Oppenheimer Fund by the AIM International Equity Fund had taken place as of January 1, 2008. 3. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the AIM International Equity Fund in the preparation of its financial statements. The policies conform to GAAP. The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. Security Valuation Effective January 1, 2008, the AIM International Equity Fund adopted Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." There was no impact to the AIM International Equity Funds' net assets or results of operations upon adoption. SFAS No.157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Security prices are generally provided by an independent third party pricing service approved by the Trust's Board of Trustees ("Trustees") as of the close of the New York Stock Exchange (generally 4:00 pm EST). Equity securities are valued at the last quoted sale price or, if there is no sale, the last quoted bid price is used for long securities and the last quoted ask price is used for securities sold short. Securities on NASDAQ Stock Market, Inc. ("NASDAQ") are valued at the official closing price as reported by NASDAQ. Investments in other investment companies are valued at their published net asset value. Debt and other fixed income securities are generally valued at an evaluated bid price provided by an independent pricing source approved by the Trustees. To value debt securities, pricing services may use various pricing techniques which take into account appropriate factors such as market activity, yield, quality, coupon rate, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. Short term securities of sufficient credit quality with sixty days or less remaining until maturity may be valued at amortized cost, which approximates fair value. Exchange traded options and futures contracts are valued at the last sales price as of the close of the primary exchange. Forward foreign currency contracts are generally valued at the foreign currency exchange rate as of the close of the NYSE. Non-exchange traded derivatives, such as certain options and swaps, are generally valued by approved independent pricing services utilizing pricing techniques which take into account factors such as yield, quality, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. 9 The Allianz Variable Insurance Products Trust - Statement of Additional Information Other assets and securities for which no quotation is readily available or deemed unreliable are valued at fair value as determined in good faith by the Board of Trustees ("Trustees") or persons acting on the behalf of the Trustees. Fair value pricing may be used for significant events such as securities whose trading has been suspended, whose price has become stale or for which there is no currently available price at the close of the New York Stock Exchange (generally 4 PM Eastern Time). The Fund utilizes a pricing service to assist in determining the fair value of securities when certain significant events occur that may affect the value of foreign securities. In accordance with procedures adopted by the Trustees, fair value pricing may be used if events materially affecting the value of foreign securities occur between the time when the exchange on which they are traded closes and the time when the Fund's net asset value is calculated. Management identifies possible fluctuation in international securities by monitoring the increase or decrease in the value of a designated benchmark index. In the event of an increase or decrease greater than predetermined levels, the Fund may use a systematic valuation model provided by an independent third party to fair value its international equity securities. Investment Transactions and Investment Income Investment transactions are recorded no later than one business day after trade date. For financial reporting purposes, investment transactions are recorded on trade date on the last business day of the reporting period. Net realized gains and losses on investments sold and on foreign currency transactions are recorded on the basis of identified cost. Interest income is recorded on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts. Dividend income is recorded on the ex-dividend date, except in the case of foreign securities, in which case dividends are recorded as soon as such information becomes available. Futures Contracts The Fund may enter into futures contracts. The Fund may use futures contracts to manage its exposure to the securities markets or to movements in market conditions or foreign exchange rates. Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Fund is required to segregate liquid assets in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and a payable or receivable for the change in value ("variation margin") is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts, the possibility of an illiquid market, and the inability of the counterparty to meet the terms of the contract. Real Estate Investment Trusts The Fund may own shares of real estate investment trusts ("REITs") which report information on the source of their distributions annually. Certain distributions received from REITs during the year, which are known to be a return of capital, are recorded as a reduction to the cost of the individual REIT. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the fair value of investments, 10 The Allianz Variable Insurance Products Trust - Statement of Additional Information assets and liabilities. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies. Risks Associated with Foreign Securities and Currencies Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of domestic issuers. Such risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability or diplomatic developments which could adversely affect investments in those securities. Certain foreign investments may also be subject to foreign withholding taxes. Foreign Currency Exchange Contracts The Fund may enter into forward foreign currency exchange contracts primarily to hedge against foreign currency exchange rate risks on its non-U.S. dollar denominated investment securities. When entering into a forward currency contract, the Fund agrees to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed future date. These contracts are valued daily, and the Fund's net equity therein, representing unrealized gain or loss on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into the contracts and the forward rates at the reporting date, is included in the Statement of Assets and Liabilities. Realized and unrealized gains and losses are included in the Statement of Operations. These instruments involve market risk, credit risk, or both kinds of risks, in excess of the amount recognized in the Statement of Assets and Liabilities. Risks arise from the possible inability of counterparts to meet the terms of their contracts and from movement in currency and investment securities values and interest rates. Dividends to Shareholders Dividends to shareholders are recorded on the ex-dividend date. The AIM International Equity Fund distributes its income dividends and all of its net realized capital gains, if any, on an annual basis. The amount of dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (e.g., return of capital, net operating loss, reclassification of certain market discounts, gain/loss, paydowns, and distributions), such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. Dividends to shareholders which exceed net investment income and net realized gains for tax purposes are reported as distributions of capital. Expense Allocation Expenses directly attributable to the AIM International Equity Fund are charged directly to the AIM International Equity Fund, while expenses attributable to more than one Fund of the Trust are allocated among the respective Funds of the Trust based upon relative 11 The Allianz Variable Insurance Products Trust - Statement of Additional Information net assets or some other reasonable method. Expenses which are attributable to more than one Trust are allocated across the Allianz Variable Insurance Products and Allianz Variable Insurance Products Fund of Funds Trust's based upon relative net assets or another reasonable basis. Allianz Investment Management, LLC (the "Manager"), serves as the investment manager for the Trust and the Allianz Variable Insurance Products Fund of Funds Trust. Securities Lending To generate additional income, the AIM International Equity Fund may lend up to 33- 1/3% of its assets pursuant to agreements requiring that the loan be continuously secured by any combination of cash, or U.S. government or U.S. government agency securities, equal initially to at least 102% of the fair value plus accrued interest on the securities loaned (105% for foreign securities). The AIM International Equity Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities lent while simultaneously seeking to earn income on the investment of collateral. Collateral is marked to market daily to provide a level of collateral at least equal to the fair value of securities loaned. There may be risks of delay in recovery of the securities or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers, such as broker-dealers, banks or institutional borrowers of securities, deemed by the Manager to be of good standing and credit worthy and when in its judgment, the consideration which can be earned currently from such securities loans justifies the attendant risks. Loans are subject to termination by the Trust or the borrower at any time, and are, therefore, not considered to be illiquid investments. At December 31, 2008, the AIM International Equity Fund had no amounts outstanding related to securities lending. Commission Recapture Certain Funds of the Trust participate in a commission recapture program. The Funds of the Trust will utilize the recaptured commissions to pay for, in whole or part, certain expenses of the AIM International Equity Fund, excluding investment advisory fees. Any amounts for the Fund, if applicable, are disclosed as "Expenses paid indirectly" on the Statement of Operations. 4. Related Party Transactions The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to a subadvisory agreement between the Manager and OppenheimerFunds, Inc. ("OFI"), OFI provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.45%. The fees payable to the Manager are based on a tiered structure for various net asset levels as follows: the first $50 million at 0.875%, the next $150 million at 0.715%, the next $300 million at 0.625%, and over $500 million at 0.60%. The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to a portfolio management agreement between the Manager and 12 The Allianz Variable Insurance Products Trust - Statement of Additional Information Invesco Aim Capital Management, Inc. ("INVESCO Aim") (Formerly "AIM Capital Management, Inc."), INVESCO Aim provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.45%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate* Expense Limit ----------------- ---------------------- AZL AIM International Equity Fund 0.90% 1.45% * The Manager has voluntarily reduced the management fee to 0.85% on assets above $250 million. 5. CAPITAL SHARES: The pro forma net asset value per share assumes the issuance of shares of the AIM International Equity Fund that would have been issued at December 31, 2008, in connection with the proposed reorganization. The number of shares assumed to be issued is equal to the net asset value of shares of Oppenheimer Fund, as of December 31, 2008, divided by the net asset value per share of the shares of AIM International Equity Fund as of December 31, 2008. The pro forma number of shares outstanding, by class, for the combined fund consists of the following at December 31, 2008:
Capital Shares Shares of AIM International SHARES ASSUMED TOTAL OUTSTANDING Equity Fund ISSUED IN SHARES PRE- COMBINATION REORGANIZATION POST- COMBINATION Shares of Beneficial Interest 17,138,394 11,102,699 28,241,093
----------------------- ---------------------- ------------- --------------------- Oppenheimer AIM International International Equity Fund Growth Fund Adjustment Pro Forma Combined ----------------------- ---------------------- ------------- --------------------- Net Assets $ 176,746,490 $ 114,648,574 $ (147,500) $291,247,564 ---------- Net Asset Value Per Share $ 10.31 $ 10.40 - $ 10.31 --------- Shares Outstanding 17,138,394 11,026,155 76,544 28,241,093
13 The Allianz Variable Insurance Products Trust - Statement of Additional Information 6. Investment Valuation Summary The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below: o Level 1 - quoted prices in active markets for identical assets o Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, prepayments speeds, credit risk, etc.) o Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments. For example, money market securities held in the AZL Money Market Fund are valued using amortized cost in accordance with rules under the Investment Company Act of 1940. Generally, amortized cost approximates the current fair value of a security, but since the valuation is not obtained from a quoted price in an active market, such securities are reflected as Level 2. The following is a summary of the valuation inputs used as of December 31, 2008 in valuing the Fund's investments based upon three levels defined above:
Other Financial Valuation Inputs Investment Securities Instruments* ------------------------------------------- --------------------------- -------------------------- Level 1 - Quoted $53,653,161 $- Prices Level 2 - Other Significant $230,670,734 - Observable Inputs Level 3 - Significant Unobservable - - Inputs --------------------------- -------------------------- $284,323,895 $- Total --------------------------- -- -------------------------- --------------------------- -- --------------------------
* Other financial instruments would include any derivative instruments such as futures, forwards and swap agreements. These investments are generally recorded in the financial statements at the unrealized gain or loss on the investment. 7. FEDERAL INCOME TAX INFORMATION: It is the AIM International Equity Fund's policy to continue to comply with the requirements of the Internal Revenue Code under Subchapter M, applicable to regulated investment companies, and to distribute all of its taxable income, including any net realized gains on investments, to its shareholders. Therefore, no provision is made for federal income taxes. In addition, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48") provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to 14 The Allianz Variable Insurance Products Trust - Statement of Additional Information determine whether it is more-likely-than-not (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable), including the recognition of any related interest and penalties as an operating expense. Implementation of FIN 48 included a review of tax positions taken in tax years that remain subject to examination by tax authorities (i.e., the last 4 tax year ends and the interim tax period since then, as applicable). FIN 48 did not impact the Fund's net assets or results of operations for the period ended December 31, 2008. 15 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL Balanced Index Strategy Fund AZL Pro Forma AZL Balanced Statements of Assets and Liabilities TargetPLUS Index December 31, 2008 Balanced Strategy Pro Forma Pro Forma (Unaudited) Fund Fund Adjustments Combined Assets: Investment securities, at cost $ 53,601,301 $ - $ - ^ $ 53,601,301 =============== ============= ============== ==================== Investment securities, at value $ 52,847,398 $ - $ - ^ $ 52,847,398 Repurchase agreements, at value\cost 8,400,000 - - 8,400,000 Segregated cash for collateral 116,400 - - 116,400 Interest and dividends receivable 186,135 - - 186,135 Foreign currency, at value (cost $85,316) 85,790 - - 85,790 Unrealized Appreciation on interest rate swaps 701,522 - - 701,522 Unrealized Appreciation on credit default swaps 3,458 - - 3,458 Swap premiums paid 67,544 - - 67,544 Receivable for capital shares issued 355,627 - - 355,627 Receivable for investments sold 3,968,411 - - 3,968,411 Unrealized appreciation for foreign currency contracts 9,872 - - 9,872 Receivable from Manager 7,087 - - 7,087 Prepaid expenses 1,051 - - 1,051 --------------- ------------- -------------- -------------------- Total Assets 66,750,295 - - 66,750,295 --------------- ------------- -------------- -------------------- Liabilities: Unrealized depreciation on foreign currency contracts 52,546 - - 52,546 Unrealized depreciation on interest rate swaps 323,627 - - 323,627 Unrealized depreciation on credit default swaps 517,434 - - 517,434 Swap premiums received 572,538 - - 572,538 Payable for investments purchased 15,748,100 - - 15,748,100 Written options (Premiums received $28,200) 155,496 - - 155,496 Payable for variation margin on futures Contracts 19,030 - - 19,030 Administration fees payable 398 - - 398 Distribution fees payable 9,239 - - 9,239 Administrative and compliance services fees payable 325 - - 325 Reorganization fees payable (A) - - 73,500 73,500 Other accrued liabilities 1,810 - - 1,810 --------------- ------------- -------------- -------------------- Total Liabilities 17,400,543 - 73,500 17,474,043 --------------- ------------- -------------- -------------------- Net Assets $ 49,349,752 $ - $(73,500) $ 49,276,252 =============== ============= ============== ==================== Net Assets Consist of: Capital $ 56,935,752 $ - $ - $ 56,935,752 Accumulated net investment income/(loss) 789,237 - (73,500) 789,237 Accumulated net realized gains/(losses) from investment transactions (7,575,348) - - (7,575,348) Net unrealized appreciation/(depreciation) on investments (799,889) - - (799,889) -------------------- --------------- ------------- -------------- Net Assets $ 49,349,752 $ - $ (73,500) $ 49,276,252 =============== ============= ============== ==================== Shares of beneficial interest (unlimited number of 6,503,800 - (1,576,175) 4,927,625 shares authorized, no par value) (B) Net Asset Value (offering and redemption price per share) (B) $ 7.59 $ 10.00 $ - $ 10.00 =============== ============= ============== ====================
^ No adjustments have been made to the Total Investment securities in the unaudited pro forma combined statements of assets and liabilities because upon consummation of the merger, securities would have to be sold in order for the AZL Balanced Index Strategy Fund to comply with its prospectus restrictions. The foregoing sentence shall not restrict in any way the ability of the investment adviser of either of the funds from buying or selling securities in the normal course of such fund's business and operations. (A) Represents the estimated reorganization fees and expenses that are to be expected to be paid by the Funds. (B) Shares of the AZL TargetPLUS Balanced Fund are exchanged for new shares of the AZL Balanced Index Strategy Fund, to commence operations upon consummation of the merger. See accompanying notes to the Pro Forma financial statements. 16 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL AZL Balanced Index Strategy Fund AZL Balanced Statements of Operations TargetPlus Index For the Year Ended December 31, 2008 Balanced Strategy Pro Forma Pro Forma (Unaudited) Fund Fund Adjustments Combined ------------------------------------------------------ --------------- ------------- --------------- ------------------- Investment Income: ^ Interest $ 427,672 $ - $ - $ 427,672 Dividends 423,484 - - 423,484 Income from securities lending 23,048 - - 23,048 --------------- ------------- --------------- ------------------- Total Investment Income 874,204 - - 874,204 --------------- ------------- --------------- ------------------- Expenses: Manager fees 133,474 - (120,650) (A) 12,824 Administration fees 11,742 - 16,366(A) 28,108 Distribution fees 64,170 - (64,170) (A) - Custodian fees 101,001 - (99,501) (B) 1,500 Administrative and compliance services fees 975 - - 975 Trustees' fees 1,995 - - 1,995 Professional fees 4,040 - (2,000) (B) 2,040 Shareholder reports 3,559 - (1,800) (B) 1,759 Interest expense on cash overdraft 28,471 - - 28,471 Reorganization fees(C) - - - - Other expenses 11,095 - (9,000) 2,095 --------------- ------------- --------------- ------------------- Total expenses before reductions 360,522 - (280,755) 79,767 Less expenses waived/reimbursed by the Manager (103,605) - 103,605(A) - Less expenses paid indirectly (7,992) - 7,992(A) - --------------- ------------- --------------- ------------------- Net Expenses 248,925 - (169,158) 79,767 --------------- ------------- --------------- ------------------- --------------- ------------------- Net Investment Income/(Loss) 625,279 - 169,158 794,437 --------------- ------------- --------------- ------------------- Realized and Unrealized Gains/(Losses) on Investments: ^ Net realized gains/(losses) on securities and foreign currency transactions (7,401,782) - - (7,401,782) Net realized gains/(losses) on swap agreements (66,206) - - (66,206) Net realized gains/(losses) on futures transactions 74,185 - - 74,185 Net realized gains/(losses) on options transactions 33,938 - - 33,938 Change in unrealized appreciation/(depreciation) on investments (806,315) - - (806,315) --------------- ------------- --------------- ------------------- Net Realized and Unrealized Gains/(Losses) on Investments (8,166,180) - - (8,166,180) =============== ============= =============== =================== --------------- ------------- =============== =================== Change in Net Assets Resulting from Operations $ (7,540,901) $ - $ 169,158 $ (7,371,743) =============== ============= =============== ===================
^ No adjustments have been made to the Total Investment securities in the unaudited pro forma combined statements of assets and liabilities because upon consummation of the merger, securities would have to be sold in order for the AZL Balanced Index Strategy Fund to comply with its prospectus restrictions. A Based on contract in effect for the surviving AZL Balanced Index Strategy Fund. B Decrease due to the elimination of duplicative expenses achieved by merging the funds. C Estimated reorganization fees and expenses that are to be paid by the funds are $73,500. These amounts have not been included in the ProForma Adjustments, as such expenses are non-recurring in nature and are not expected to be incurred in ongoing operations. See accompanying notes to the Pro Forma financial statements. 17 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL Balanced Index Strategy Fund Pro Forma Notes to Combining Financial Statements December 31, 2008 (Unaudited) 1. DESCRIPTION OF THE FUND: The AZL Balanced Index Strategy Fund, ("Balanced Index") a series of the Allianz Variable Insurance Products Fund of Funds Trust (the "Trust"), is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end investment company established as a Delaware statutory trust. The Trust is authorized to issue an unlimited number of shares of the Balanced Index without par value. Shares of the Balanced Index are available through the variable annuity contracts and variable life insurance policies offered through the separate accounts of participating insurance companies. Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Balanced Index Strategy Fund. In addition, in the normal course of business, the Balanced Index may enter into contracts with its vendors and others that provide for general indemnifications. The Balanced Index's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Balanced Index Strategy Fund. However, based on experience, the Balanced Index expects that risk of loss to be remote. The pro forma adjustments and pro forma combined columns of the Statement of Operations reflect the adjustments necessary to show expenses at the rates which would have been in effect if the Balanced Index and the AZL TargetPLUS Balanced ("TargetPLUS Balanced Fund") Funds were combined for the twelve month period ended December 31, 2008. Manager, administration and 12b-1(Distribution) fees in the pro forma combined column are calculated at the rates in effect for the Balanced Index based upon the combined net assets of the corresponding Balanced Index and the TargetPLUS Balanced Fund. Certain pro forma adjustments were made to estimate the benefit of combining operations of separate funds into one survivor fund. 2. BASIS OF COMBINATION: The accompanying pro forma financial statements are presented to show the effect of the proposed acquisition of the TargetPLUS Balanced Fund a series of the Allianz Variable Insurance Products Trust("VIP Trust"), by the Balanced Index as if such acquisition had taken place as of January 1, 2008. Under the terms of the Plan of Reorganization, the combination of Balanced Index and TargetPLUS Balanced Fund will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition would be accomplished by an acquisition of the net assets of TargetPLUS Balanced Fund in exchange for shares of Balanced Index at the December 31, 2008 net asset value. The Statement of Assets and Liabilities and the related Statement of Operations of TargetPLUS Balanced Fund and Balanced Index have been combined as of and for the twelve month period ended December 31, 2008. Following the acquisition, the Balanced Index will be the accounting survivor. In accordance with U.S. generally accepted accounting principles ("GAAP"), the historical cost of investment securities will be carried forward to the Balanced Index. 18 The Allianz Variable Insurance Products Trust - Statement of Additional Information The assets of the Balanced Index Strategy consist of investments in underlying affiliated investment companies. As a result, the Balanced Index Strategy bears an indirect, proportionate share of the underlying Funds' expenses, in addition to the direct expenses of the Fund. None of the investments owned by the TargetPLUS Balanced Fund as of December 31, 2008, as reflected on the accompanying pro forma combined schedule of investments, are in underlying affiliated investment companies and, as such, none are permissible investments for the Balanced Index Strategy. If the investments owned by the TargetPLUS Balanced Fund as of December 31, 2008 were in underlying affiliated investment companies, such investments would constitute permissible investments and the Balanced Index's indirect, proportionate share of the underlying Funds' expenses would have increased. All investments owned by the TargetPLUS Balanced Fund as of December 31, 2008, as reflected on the accompanying pro forma combined schedule of investments, will be sold prior to completion of the Balanced Index Strategy 's acquisition of the Balanced Fund's assets. These sales will result in realized gains and losses which will be distributed to shareholders of the Balanced Fund prior to completion of the acquisition. The accompanying pro forma financial statements should be read in conjunction with the financial statements of Balanced Index and TargetPLUS Balanced Fund included in their respective annual report dated December 31, 2008. The following notes refer to the accompanying pro forma financial statements as if the above-mentioned acquisition of TargetPLUS Balanced Fund by the Balanced Index had taken place as of January 1, 2008. 3. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Balanced Index in the preparation of its financial statements. The policies conform to GAAP. The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. Security Valuation Effective January 1, 2008, the Trust adopted Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." There was no impact to the Balanced Index Strategy Funds' net assets or results of operations upon adoption. SFAS No.157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments in other investment companies are valued at their published net asset value. Security prices are generally provided by an independent third party pricing service approved by the Trust's Board of Trustees ("Trustees") as of the close of the New York Stock Exchange (generally 4:00 pm EST). Equity securities are valued at the last quoted sale price or, if there is no sale, the last quoted bid price is used for long securities and the last quoted ask price is used for securities sold short. Securities on NASDAQ Stock Market, Inc. ("NASDAQ") are valued at the official closing price as reported by NASDAQ. Investments in other investment companies are valued at their published net asset value. 19 The Allianz Variable Insurance Products Trust - Statement of Additional Information Debt and other fixed income securities are generally valued at an evaluated bid price provided by an independent pricing source approved by the Trustees. To value debt securities, pricing services may use various pricing techniques which take into account appropriate factors such as market activity, yield, quality, coupon rate, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. Short term securities of sufficient credit quality with sixty days or less remaining until maturity may be valued at amortized cost, which approximates fair value. Investment Transactions and Investment Income Investment transactions are recorded no later than one business day after trade date. For financial reporting purposes, investment transactions are recorded on trade date on the last business day of the reporting period. Net realized gains and losses on investments sold and on foreign currency transactions are recorded on the basis of identified cost. Interest income is recorded on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts. Dividend income is recorded on the ex-dividend date. Dividends to Shareholders Dividends to shareholders are recorded on the ex-dividend date. The Balanced Index distributes its income dividends and all of its net realized capital gains, if any, on an annual basis. The amount of dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (e.g., return of capital, net operating loss, reclassification of certain market discounts, gain/loss, paydowns, and distributions), such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. Dividends to shareholders which exceed net investment income and net realized gains for tax purposes are reported as distributions of capital. Expense Allocation Expenses directly attributable to the Balanced Index is charged directly to the Balanced Index Strategy Fund, while expenses attributable to more than one Fund of the Trust are allocated among the respective Funds of the Trust based upon relative net assets or some other reasonable method. Expenses which are attributable to more than one Trust are allocated across the Trust and VIP Trust based upon relative net assets or another reasonable basis. Allianz Investment Management, LLC (the "Manager"), serves as the investment manager for the Trust and the VIP Trust. 4. MANAGER FEES: The Manager provides investment advisory and management services for the Fund. The Manager has retained two money management organizations (the "Subadvisers") First Trust Advisors L.P. ("First Trust") which is independent of the Manager, and Pacific Investment Management Company LLC ("PIMCO") which is an affiliate of the Manager, to make investment decisions on behalf of the Fund. Pursuant to separate amended and restated subadvisory agreements between the Manager and First Trust and between the Manager and PIMCO, First Trust and PIMCO provide investment advisory services as the Subadvisers for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For 20 The Allianz Variable Insurance Products Trust - Statement of Additional Information its services, the Subadvisers are entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense of the Fund is 0.89%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate Expense Limit AZL TargetPLUS Balanced Fund . . . . . .. . . . . 0.52% 0.89% The Manager provides investment advisory and management services for the Fund. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. Expenses incurred are reflected on the Statement of Operations as "Manager fees." The annual expense limit of the Fund is 0.20%. Annual Rate Expense Limit AZL Balanced Index Strategy Fund . .. . . . . . . 0.05% 0.20% The Manager or an affiliate of the Manager serves as the investment adviser of certain underlying funds in which the Fund invests. At December 31, 2009 these underlying funds will be noted as Affiliated Investment Companies in the Fund's Schedule of Portfolio Investments. The Manager or an affiliate of the Manager is paid a separate fee from the underlying funds for such services. 5. CAPITAL SHARES: The pro forma net asset value per share assumes the issuance of shares of the Balanced Index that would have been issued at December 31, 2008, in connection with the proposed reorganization. The number of shares assumed to be issued is equal to the net asset value of shares of TargetPLUS Balanced Fund, as of December 31, 2008, divided by the net asset value per share of the shares of Balanced Index as of December 31, 2008. The pro forma number of shares outstanding, by class, for the combined fund consists of the following at December 31, 2008:
Capital Shares Shares of Balanced SHARES ASSUMED TOTAL OUTSTANDING Index Strategy Fund ISSUED IN SHARES PRE- COMBINATION REORGANIZATION POST- COMBINATION Shares of Beneficial Interest - 4,927,625 4,927,625
----------------------- ---------------------- ------------- --------------------- Balanced Index TargetPLUS Balanced Strategy Fund Strategy Fund Adjustment Pro Forma Combined ----------------------- ---------------------- ------------- --------------------- Net Assets $ - $ 49,349,752 $ (73,500) $ 49,276,252 ---------- Net Asset Value Per Share $ 10.00 $ 7.59 - $ 10.00 --------- Shares Outstanding - 6,503,800 (1,576,175) 4,927,625
21 The Allianz Variable Insurance Products Trust - Statement of Additional Information 6. INVESTMENT VALUATION SUMMARY: The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below: o Level 1--quoted prices in active markets for identical assets o Level 2 --other significant observable inputs (including quoted prices for similar securities, interest rates, prepayments o Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments. For example, short-term debt securities of sufficient credit quality maturing in sixty days or less are generally valued at amortized cost, which approximates fair value. Generally, amortized cost approximates the current fair value of a security, but since the valuation is not obtained from a quoted price in an active market, such securities are reflected as Level 2. The following is a summary of the valuation inputs used as of December 31, 2008 in valuing the Fund's investments based upon three levels defined above:
Securities Sold Investment Short and Other Financial Valuation Inputs Securities ^ Written Options ^ Instruments* ^ ---------------- ------------ ----------------- -------------- Level 1 -- Quoted Prices $21,204,601 $ - $ 262,231 Level 2 -- Other Significant Observable Inputs 40,042,797 (155,496) (178,755) Level 3 -- Significant Unobservable Inputs - - - ------------------ ------------------------- --------------------- ------------------ ------------------------- --------------------- Total $61,247,398 $(155,496) $ 83,476 ================== ========================= =====================
* Other financial instruments would include any derivative instruments, such as futures, forwards and swap agreements, but excluding written options. These investments are generally recorded in the financial statements at the unrealized gain or loss on the investment. ^ No adjustments have been made to the Total Investment securities in the unaudited pro forma combined statements of assets and liabilities because upon consummation of the merger, securities would have to be sold in order for the AZL Balanced Index Strategy Fund to comply with its prospectus restrictions. The foregoing sentence shall not restrict in any way the ability of the investment adviser of either of the funds from buying or selling securities in the normal course of such fund's business and operations. 7. FEDERAL INCOME TAX INFORMATION: It is the Balanced Index's policy to continue to comply with the requirements of the Internal Revenue Code under Subchapter M, applicable to regulated investment companies, and to distribute all of its taxable income, including any net realized gains on investments, to its shareholders. Therefore, no provision is made for federal income taxes. 22 The Allianz Variable Insurance Products Trust - Statement of Additional Information In addition, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48") provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether it is more-likely-than-not (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable), including the recognition of any related interest and penalties as an operating expense. Implementation of FIN 48 included a review of tax positions taken in tax years that remain subject to examination by tax authorities (i.e., the last 4 tax year ends and the interim tax period since then, as applicable). FIN 48 did not impact the Fund's net assets or results of operations for the period ended December 31, 2008. 23 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL BlackRock Capital Appreciation Fund Pro Forma AZL BlackRock Statements of Assets and Liabilities AZL BlackRock AZL Columbia Capital December 31, 2008 Growth Technology Appreciation Pro Forma Pro Forma (Unaudited) Fund Fund Fund Adjustments Combined ------------------------------------------- ---------------- --------------- ---------------- --------------- ----------------- Assets: Investment securities, at cost $ 164,171,125 $ 49,810,078 $ 94,760,736 $ - $ 308,741,939 ================ =============== ================ =============== ================= Investment securities, at value $ 138,776,499 $ 41,641,230 $ 99,001,539 $ - 279,419,268 Interest and dividends receivable 261,799 12,755 132,227 - 406,781 Reclaim receivable - 1,234 - - 1,234 Receivable for capital shares issued 43,036 80,523 762,435 - 885,994 Receivables for investments sold 866,558 58,871 - - 925,429 Prepaid expenses 4,902 1,132 1,541 - 7,575 ---------------- --------------- ---------------- --------------- ----------------- Total Assets 99,897,742 - 281,646,281 139,952,794 41,795,745 ---------------- --------------- ---------------- --------------- ----------------- Liabilities: Payable for investments purchased 3,141,274 1,955,732 443,946 - 5,540,952 Payable for capital shares redeemed - 96 14,952 - 15,048 Manager fees payable 77,396 27,639 59,704 - 164,739 Administration fees payable 5,585 1,632 3,922 - 11,139 Distribution fees payable 27,642 8,154 19,901 - 55,697 Administrative and compliance services fees payable 3,115 696 604 - 4,415 Reorganization fees payable (A) - - - 134,800 134,800 Other accrued liabilities 117,610 11,391 10,274 - 139,275 ---------------- --------------- ---------------- --------------- ----------------- Total Liabilities 3,372,622 2,005,340 553,303 134,800 6,066,065 ---------------- --------------- ---------------- --------------- ----------------- Net Assets $ 136,580,172 $ 39,790,405 $ 99,344,439 $ (134,800) 275,580,216 ================ =============== ================ =============== ================= Net Assets Consist of: Capital $ 253,602,422 $ 77,827,772 $111,161,109 $ - $ 442,591,303 Accumulated net investment income/(loss) 166,726 (8,330) 4,467 (134,800) 28,063 Accumulated net realized gains/(losses) from investment transactions (91,794,350) (29,860,109) (16,061,940) - (137,716,399) Net unrealized appreciation/(depreciation) on investments (25,394,626) (8,168,928) 4,240,803 - (29,322,751) ---------------- --------------- ---------------- --------------- ----------------- Net Assets $ 136,580,172 $ 39,790,405 $ 99,344,439 $ (134,800) 275,580,216 ================ =============== ================ =============== ================= Shares of beneficial interest (unlimited 26,976,834 8,328,533 11,474,707 (14,949,424) 31,830,650 number of shares authorized, no par value) (A) Net Asset Value (offering and redemption price per share) (B) $5.06 $4.78 $8.66 - $8.66 ================ =============== ================ =============== ================= (A) Represents the estimated reorganization fees and expenses that are to be expected to be paid by the Funds. (B) Shares of the AZL BlackRock Growth Fund and the AZL Columbia Technology Fund are exchanged for new shares of the AZL BlackRock Capital Appreciation Fund, to commence operations See accompanying notes to the Pro Forma financial statements. 24 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL BlackRock Capital Appreciation Fund AZL BlackRock Statements of Operations AZL BlackRock AZL Columbia Capital For the Year Ended December 31, 2008 Growth Technology Appreciation Pro Forma Pro Forma (Unaudited) Fund Fund Fund Adjustments Combined Investment Income: Interest $ 50,141 $ 8,403 $ 6,382 $ - $ 64,926 Dividends 1,675,628 426,415 719,199 - 2,821,242 Income from securities lending 59,352 85,977 13,375 - 158,704 Foreign withholding tax - (9,002) - - (9,002) ----------------- ---------------- ---------------- --------------- --------------- Total Investment Income 1,785,121 511,793 738,956 - 3,035,870 ---------------- ---------------- --------------- --------------- ----------------- Expenses: Manager fees 1,206,420 556,178 477,169 (78,545) (A) 2,161,222 Administration fees 67,140 30,695 26,893 - 124,728 Distribution fees 354,854 172,892 149,115 - 676,861 Custodian fees 32,283 35,311 19,253 (64,847) (B) 22,000 Administrative and compliance services fees 9,163 2,877 2,237 - 14,277 Trustees' fees 12,839 5,921 4,524 - 23,284 Professional fees 20,926 10,352 9,060 (6,000) (B) 34,338 Shareholder reports 21,628 17,319 11,244 (4,475) (B) 45,716 Interest expense on cash overdraft 11,874 9,121 6,382 - 27,377 Reorganization fees ( C ) - - - - - Other expenses 7,430 3,328 4,754 (2,600) (B) 12,912 ---------------- ---------------- --------------- --------------- ----------------- Total expenses before reductions 1,744,557 843,994 710,631 (156,467) 3,142,715 Less expenses waived/reimbursed by the Manager (128,807) (4,848) 23,554 (A) (110,101) Less expenses paid indirectly (43,291) (87,691) (14,329) - (145,311) ----------------- ---------------- ---------------- --------------- --------------- Net Expenses 1,572,459 756,303 691,454 (132,913) 2,887,303 ---------------- ---------------- --------------- --------------- ----------------- --------------- Net Investment Income/(Loss) 212,662 (244,510) 47,502 132,913 148,567 ---------------- ---------------- --------------- --------------- ----------------- Realized and Unrealized Gains/(Losses) on Investments: Net realized gains/(losses) on securities and foreign currency transactions (75,219,212) (28,050,312) (14,953,732) - (118,223,256) Change in unrealized appreciation/(depreciation) on investments (23,740,775) (19,062,897) (4,586,848) - (47,390,520) ---------------- ---------------- --------------- --------------- ----------------- Net Realized and Unrealized Gains/(Losses) on Investments (98,959,987) (47,113,209) (19,540,580) - (165,613,776) ================ ================ =============== =============== ================= ---------------- ---------------- --------------- =============== ================= Change in Net Assets Resulting from $(98,747,325) $(47,357,719) $(19,493,078) $ 132,913 $(165,465,209) Operations ================ ================ =============== =============== =================
A Based on contract in effect for the surviving AZL BlackRock Capital Appreciation Fund. B Decrease due to the elimination of duplicative expenses achieved by merging the funds. C Estimated reorganization fees and expenses that are to be paid by the Funds are $134,800. These amounts have not been included in the Pro Forma adjustments above, as such expenses are non-recurring in nature and are not expected to be incurred in ongoing operations. See accompanying notes to the Pro Forma financial statements. 25 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL BlackRock Capital Appreciation Fund Pro Forma Notes to Combining Financial Statements December 31, 2008 (Unaudited) 1. DESCRIPTION OF THE FUND: The AZL BlackRock Capital Appreciation Fund, ("BlackRock Capital Appreciation Fund") a series of the Allianz Variable Insurance Products Trust (the "Trust"), is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a non-diversified, open-end investment company established as a Delaware statutory trust. The Trust is authorized to issue an unlimited number of shares of the BlackRock Capital Appreciation Fund without par value. Shares of the BlackRock Capital Appreciation Fund are available through the variable annuity contracts and variable life insurance policies offered through the separate accounts of participating insurance companies. Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the BlackRock Capital Appreciation Fund. In addition, in the normal course of business, the BlackRock Capital Appreciation Fund may enter into contracts with its vendors and others that provide for general indemnifications. The BlackRock Capital Appreciation Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the BlackRock Capital Appreciation Fund. However, based on experience, the BlackRock Capital Appreciation Fund expects that risk of loss to be remote. The pro forma adjustments and pro forma combined columns of the Statement of Operations reflect the adjustments necessary to show expenses at the rates which would have been in effect if the BlackRock Capital Appreciation, AZL Columbia Technology Fund ("Columbia Tech") and the AZL BlackRock Growth ("BlackRock Growth Fund") Funds were combined for the twelve month period ended December 31, 2008. Manager, administration and 12b-1 (distribution) fees in the pro forma combined column are calculated at the rates in effect for the BlackRock Capital Appreciation Fund based upon the combined net assets of the corresponding BlackRock Capital Appreciation Fund, Columbia Tech and the BlackRock Growth Fund. Certain pro forma adjustments were made to estimate the benefit of combining operations of separate funds into one survivor fund. 2. BASIS OF COMBINATION: The accompanying pro forma financial statements are presented to show the effect of the proposed acquisition of the BlackRock Growth Fund a series of the Trust, by the BlackRock Capital Appreciation Fund as if such acquisition had taken place as of January 1, 2008. Under the terms of the Plan of Reorganization, the combination of BlackRock Capital Appreciation Fund, BlackRock Growth Fund and Columbia Tech will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition would be accomplished by an acquisition of the net assets of the BlackRock Growth Fund and Columbia Tech in exchange for shares of BlackRock Capital Appreciation Fund at the December 31, 2008 net asset value. The Statements of Assets and Liabilities and the related Statements of Operations of the BlackRock Growth Fund, Columbia Tech and BlackRock Capital Appreciation Fund have been combined as of and for the twelve month period ended December 31, 2008. Following the acquisition, the BlackRock Capital Appreciation Fund will be the accounting survivor. In accordance with U.S. generally accepted 26 The Allianz Variable Insurance Products Trust - Statement of Additional Information accounting principles ("GAAP"), the historical cost of investment securities will be carried forward to the BlackRock Capital Appreciation Fund and the results of operations for pre-combination periods of the BlackRock Capital Appreciation Fund will not be restated. The accompanying pro forma financial statements should be read in conjunction with the financial statements of BlackRock Capital Appreciation Fund, BlackRock Growth Fund and Columbia Tech included in their respective annual report dated December 31, 2008. The following notes refer to the accompanying pro forma financial statements as if the above-mentioned acquisition of the Blackrock Growth Fund and the Columbia Tech by the BlackRock Capital Appreciation Fund had taken place as of January 1, 2008. 3. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the BlackRock Capital Appreciation Fund in the preparation of its financial statements. The policies conform to GAAP. The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Security Valuation Effective January 1, 2008, the Fund's adopted Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." There was no impact to the Fund's net assets or results of operations upon adoption. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Security prices are generally provided by an independent third party pricing service approved by the Trust's Board of Trustees ("Trustees") as of the close of the New York Stock Exchange (generally 4:00 pm EST). Equity securities are valued at the last quoted sale price or, if there is no sale, the last quoted bid price is used for long securities and the last quoted ask price is used for securities sold short. Securities on NASDAQ Stock Market, Inc. ("NASDAQ") are valued at the official closing price as reported by NASDAQ. Investments in other investment companies are valued at their published net asset value. Debt and other fixed income securities are generally valued at an evaluated bid price provided by an independent pricing source approved by the Trustees. To value debt securities, pricing services may use various pricing techniques which take into account appropriate factors such as market activity, yield, quality, coupon rate, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. Short term securities of sufficient credit quality with sixty days or less remaining until maturity may be valued at amortized cost, which approximates fair value. Exchange traded options and futures contracts are valued at the last sales price as of the close of the primary exchange. Forward foreign currency contracts are generally valued at the foreign currency exchange rate as of the close of the NYSE. Non-exchange traded derivatives, such as certain options and swaps, are generally valued by approved independent pricing services utilizing pricing techniques which take into account factors such as yield, quality, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. 27 The Allianz Variable Insurance Products Trust - Statement of Additional Information Other assets and securities for which no quotation is readily available or deemed unreliable are valued at fair value as determined in good faith by the Board of Trustees ("Trustees") or persons acting on the behalf of the Trustees. Fair value pricing may be used for significant events such as securities whose trading has been suspended, whose price has become stale or for which there is no currently available price at the close of the New York Stock Exchange (generally 4 PM Eastern Time). The Fund utilizes a pricing service to assist in determining the fair value of securities when certain significant events occur that may affect the value of foreign securities. In accordance with procedures adopted by the Trustees, fair value pricing may be used if events materially affecting the value of foreign securities occur between the time when the exchange on which they are traded closes and the time when the Fund's net asset value is calculated. Management identifies possible fluctuation in international securities by monitoring the increase or decrease in the value of a designated benchmark index. In the event of an increase or decrease greater than predetermined levels, the Fund may use a systematic valuation model provided by an independent third party to fair value its international equity securities. Investment Transactions and Investment Income Investment transactions are recorded no later than one business day after trade date. For financial reporting purposes, investment transactions are recorded on trade date on the last business day of the reporting period. Net realized gains and losses on investments sold and on foreign currency transactions are recorded on the basis of identified cost. Interest income is recorded on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts. Dividend income is recorded on the ex-dividend date, except in the case of foreign securities, in which case dividends are recorded as soon as such information becomes available. Futures Contracts The Fund may enter into futures contracts. The Fund may use futures contracts to manage its exposure to the securities markets or to movements in market conditions or foreign exchange rates. Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Fund is required to segregate liquid assets in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and a payable or receivable for the change in value ("variation margin") is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts, the possibility of an illiquid market, and the inability of the counterparty to meet the terms of the contract. Real Estate Investment Trusts The Fund may own shares of real estate investment trusts ("REITs") which report information on the source of their distributions annually. Certain distributions received from REITs during the year, which are known to be a return of capital, are recorded as a reduction to the cost of the individual REIT. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the fair value of investments, assets and liabilities. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from 28 The Allianz Variable Insurance Products Trust - Statement of Additional Information fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies. Risks Associated with Foreign Securities and Currencies Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of domestic issuers. Such risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability or diplomatic developments which could adversely affect investments in those securities. Certain foreign investments may also be subject to foreign withholding taxes. Forward Foreign Currency Exchange Contracts The Fund may enter into forward foreign currency exchange contracts primarily to hedge against foreign currency exchange rate risks on its non- U.S. dollar denominated investment securities. When entering into a forward currency contract, the Fund agrees to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed future date. These contracts are valued daily, and the Fund `s net equity therein, representing unrealized gain or loss on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into the contracts and the forward rates at the reporting date, is included in the Statement of Assets and Liabilities. Realized and unrealized gains and losses are included in the Statement of Operations. These instruments involve market risk, credit risk, or both kinds of risks, in excess of the amount recognized in the statement of assets and liabilities. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movement in currency and investment securities values and interest rates. Dividends to Shareholders Dividends to shareholders are recorded on the ex-dividend date. The BlackRock Capital Appreciation Fund distributes its income dividends and all of its net realized capital gains, if any, on an annual basis. The amount of dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (e.g., return of capital, net operating loss, reclassification of certain market discounts, gain/loss, paydowns, and distributions), such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales and post October losses) do not require reclassification. Dividends to shareholders which exceed net investment income and net realized gains for tax purposes are reported as distributions of capital. Expense Allocation Expenses directly attributable to the BlackRock Capital Appreciation Fund are charged directly to the BlackRock Capital Appreciation Fund, while expenses attributable to more than one Fund of the Trust are allocated among the respective Funds of the Trust based upon relative net assets or some other reasonable method. Expenses which are attributable to more than one Trust are allocated across the Allianz Variable Insurance Products and Allianz Variable Insurance Products Fund of Funds Trust's based upon relative net assets or another reasonable basis. Allianz Investment Management, LLC (the "Manager"), serves as the investment manager for the Trust and the Allianz Variable Insurance Products Fund of Funds Trust. Securities Lending To generate additional income, the BlackRock Capital Appreciation Fund may lend up to 33 1/3% of its assets pursuant to agreements requiring that the loan be continuously secured by any combination of cash, or U.S. government or U.S. government agency securities, equal initially to at least 102% of the fair value 29 The Allianz Variable Insurance Products Trust - Statement of Additional Information plus accrued interest on the securities loaned (105% for foreign securities). The BlackRock Capital Appreciation Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities lent while simultaneously seeking to earn income on the investment of collateral. Collateral is marked to market daily to provide a level of collateral at least equal to the fair value of securities loaned. There may be risks of delay in recovery of the securities or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers, such as broker-dealers, banks or institutional borrowers of securities, deemed by the Manager to be of good standing and credit worthy and when in its judgment, the consideration which can be earned currently from such securities loans justifies the attendant risks. Loans are subject to termination by the Trust or the borrower at any time, and are, therefore, not considered to be illiquid investments. At December 31, 2008, the Blackrock Capital Appreciation Fund had no amounts outstanding related to securities lending. Commission Recapture Certain Funds of the Trust participate in a commission recapture program. The Funds of the Trust will utilize the recaptured commissions to pay for, in whole or part, certain expenses of the BlackRock Capital Appreciation Fund, excluding investment advisory fees. Any amounts for the Fund, if applicable, are disclosed as "Expenses paid indirectly" on the Statement of Operations. 4. Related Party Transactions The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to a Subadvisory agreement, effective November 24, 2008 between the Manager and BlackRock Advisors, LLC ("BML"), BML provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. Prior to November 24, 2008, the Fund was subadvised by Jennison Associates LLC. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.20%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate* Expense Limit AZL BlackRock Capital Appreciation Fund . . .. 0.80% 1.20% * Effective November 24, 2008, the Manager and the Fund have entered into a written agreement whereby the Manager has voluntarily reduced the management fee to 0.75% through April 30, 2010. For the period January 1, 2008 to November 23, 2008 the voluntary waiver was not in effect. The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to an amended and restated subadvisory agreement between the Manager and Columbia Management Advisors, LLC ("Columbia Advisors"), Columbia Advisors provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual 30 The Allianz Variable Insurance Products Trust - Statement of Additional Information expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.35%. The fees payable to the Manager are based on a tiered structure for various net assets levels as follows: the first $10 million at 1.00%, the next $10 million at 0.875%, and over $20 million at 0.75%. The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to a Subadvisory agreement, effective January 26, 2009 between the Manager and BlackRock Advisors, LLC ("BML"), BML provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. Prior to January 26, 2009, the Fund was subadvised by Legg Mason Capital Management, Inc. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.30%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate* Expense Limit AZL BlackRock Growth Fund. . . . . . . . .. . 0.85% 1.30% * The Manager and the Fund have entered into a written agreement whereby the Manager has voluntarily reduced the management fees to 0.80% through April 30, 2010, effective July 1, 2008 through April 30, 2010, the fee has been further reduced to 0.70% on the first $200 million of assets and 0.65% on assets over $200 million. 5. CAPITAL SHARES: The pro forma net asset value per share assumes the issuance of shares of the BlackRock Capital Appreciation Fund that would have been issued at December 31, 2008, in connection with the proposed reorganization. The number of shares assumed to be issued is equal to the net asset value of shares of the Columbia Tech and BlackRock Growth Fund, as of December 31, 2008, divided by the net asset value per share of the shares of BlackRock Capital Appreciation Fund as of December 31, 2008. The pro forma number of shares outstanding, by class, for the combined fund consists of the following at December 31, 2008: 31 The Allianz Variable Insurance Products Trust - Statement of Additional Information
Capital Shares Shares of BlackRock Capital Appreciation SHARES ASSUMED TOTAL OUTSTANDING Fund ISSUED IN SHARES PRE- COMBINATION REORGANIZATION POST- COMBINATION Shares of Beneficial Interest 11,474,707 20,355,943 31,830,650
----------------------- ---------------------- ----------------- ------------ -------------------- BlackRock Capital Columbia Technology Appreciation BlackRock Growth Fund Fund Fund Adjustment Pro Forma Combined ----------------------- ---------------------- ----------------- ------------ -------------------- Net Assets $136,580,172 $39,790,405 $ 99,344,439 $(134,800) $ 275,580,216 ------------------------------------------------------------------------------------------------------------------------- Net Asset Value Per Share $ 5.06 $ 4.78 $ 8.66 - $ 8.66 --------- Shares Outstanding 26,976,834 8,328,533 11,474,707 (14,949,424) 31,830,650
6. Investment Valuation Summary The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below: o Level 1 - quoted prices in active markets for identical assets o Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, prepayments speeds, credit risk, etc.) o Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments. For example, money market securities held in the AZL Money Market Fund are valued using amortized cost in accordance with rules under the Investment Company Act of 1940. Generally, amortized cost approximates the current fair value of a security, but since the valuation is not obtained from a quoted price in an active market, such securities are reflected as Level 2. The following is a summary of the valuation inputs used as of December 31, 2008 in valuing the Fund's investments based upon three levels defined above: 32 The Allianz Variable Insurance Products Trust - Statement of Additional Information
Investment Other Financial Valuation Inputs Securities Instruments* ------------------------------------------- --------------------------- ------------------------- Level 1 - Quoted Prices $278,873,591 $- Level 2 - Other Significant 545,677 - Observable Inputs Level 3 - Significant Unobservable - - Inputs --------------------------- ------------------------- Total $279,419,268 $- --------------------------- -------------------------
* Other financial instruments would include any derivative instruments, such as futures, forwards and swap agreements. These investments are generally recorded in the financial statements at the unrealized gain or loss on the investment. 7. FEDERAL INCOME TAX INFORMATION: It is the BlackRock Capital Appreciation Fund's policy to continue to comply with the requirements of the Internal Revenue Code under Subchapter M, applicable to regulated investment companies, and to distribute all of its taxable income, including any net realized gains on investments, to its shareholders. Therefore, no provision is made for federal income taxes. In addition, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48") provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether it is more-likely-than-not (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable), including the recognition of any related interest and penalties as an operating expense. Implementation of FIN 48 included a review of tax positions taken in tax years that remain subject to examination by tax authorities (i.e., the last 4 tax year ends and the interim tax period since then, as applicable). FIN 48 did not impact the Fund's net assets or results of operations for the period ended December 31, 2008. 33 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL International Index Fund AZL NACM AZL Schroder AZL Pro Forma International International International Statements of Assets and Liabilities Fund Small Cap Index Pro Forma Pro Forma December 31, 2008 (Unaudited) Fund Fund Adjustments Combined Assets: Investment securities, at cost $67,009,060 $96,617,292 $ - $ - $163,626,352 =============== ============== =============== =============== =============== Investment securities, at value $57,394,311 $57,849,176 $ - $ - $115,243,487 Interest and dividends receivable 41,395 58,654 - - 100,049 Foreign currency, at value (cost $348,181) 16,901 330,504 - - 347,405 Receivable for capital shares issued 38,506 37,603 - - 76,109 Receivable for investments sold 409,755 - - - 409,755 Unrealized appreciation for foreign currency contracts 888 - - - 888 Reclaim receivable 57,302 77,216 - - 134,518 Prepaid expenses 1,466 1,517 - - 2,983 --------------- -------------- --------------- --------------- --------------- Total Assets 57,960,524 58,354,670 - - 116,315,194 --------------- -------------- --------------- --------------- --------------- Liabilities: Unrealized depreciation on foreign currency contracts 10,130 - - 10,130 Payable for investments purchased 1,947,473 1,171 - - 1,948,644 Payable for capital shares redeemed 11,991 10,508 - - 22,499 Manager fees payable 16,157 45,597 - - 61,754 Administration fees payable 2,223 2,278 - - 4,501 Distribution fees payable 11,130 11,399 - - 22,529 Administrative and compliance services fees payable 757 797 - - 1,554 Reorganization fees payable (A) - - - 85,000 85,000 Other accrued liabilities 10,200 12,518 - - 22,718 --------------- --------------- -------------- --------------- --------------- --------------- Total Liabilities 2,010,061 84,268 - 85,000 2,179,329 --------------- -------------- --------------- --------------- --------------- --------------- Net Assets $ 55,950,463 $ $ - $ (85,000) $114,135,865 58,270,402 =============== ============== =============== =============== =============== Net Assets Consist of: $ Capital 106,004,588 $111,897,181 $ - $ - $217,901,769 Accumulated net investment income/(loss) 1,543 (5,485) - (85,000) (88,942) Accumulated net realized gains/(losses) from investment transactions (40,433,908) (14,848,294) - - (55,282,202) Net unrealized appreciation/(depreciation) on investments (9,621,760) (38,773,000) - - (48,394,760) --------------- --------------- -------------- --------------- --------------- --------------- Net Assets $ 55,950,463 $58,270,402 $ - $ (85,000) $114,135,865 =============== ============== =============== =============== =============== Shares of beneficial interest (unlimited number 10,925,213 11,719,903 - (11,231,529) 11,413,587 of shares authorized, no par value) (B) Net Asset Value (offering and redemption price per share) (B) $5.12 $4.97 $10.00 - $10.00 =============== ============== =============== =============== =============== A) Represents the estimated reorganization fees and expenses that are expected to be paid by the Funds. B) Shares of the AZL NACM International Fund and the AZL Schroder International Small Cap Fund are exchanged for new shares of the AZL International Index Fund, to commence operations upon consummation of the merger. See accompanying notes to the Pro Forma financial statements. 34 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL International Index Fund AZL Schroder AZL Statements of Operations AZL NACM International International For the Twelve Months Ended December 31, International Small Cap Index Pro Forma Pro Forma 2008 (Unaudited) Fund Fund Fund Adjustments Combined Investment Income: Interest $ 40,505 $ - $ - $ - $ 40,505 Dividends 2,454,636 2,491,026 - - 4,945,662 Income from securities lending 63,644 98,967 - - 162,611 Foreign withholding tax (226,420) (196,010) - (422,430) ----------------- ----------------- -------------- -------------- ----------------- Total Investment Income 2,332,365 2,393,983 - - 4,726,348 ----------------- ----------------- -------------- -------------- ----------------- Expenses: Manager fees 606,480 761,993 - (852,929) (A) 515,544 Administration fees 31,845 33,968 - - 65,813 Distribution fees 178,377 190,498 - - 368,875 Custodian fees 154,971 105,960 - (125,931) (B) 135,000 Administrative and compliance services fees 2,860 3,073 - - 5,933 Trustees' fees 6,182 6,560 - - 12,742 Professional fees 11,372 12,514 - (5,500) (B) 18,386 Shareholder reports 2,989 4,766 - (3,000) (B) 4,755 Recoupment of prior expenses reimbursed by the Manager 5,372 - - - 5,372 Interest expense on cash overdraft 41,837 18,590 - - 60,427 Reorganization fees (C) - - - - - Other expenses 31,912 41,496 - (30,600) (B) 42,808 ----------------- ----------------- -------------- -------------- ----------------- Total expenses before reductions 1,074,197 1,179,418 - (1,017,960) 1,235,655 Less expenses waived/reimbursed by the Manager - - - (147,298) (147,298) Less expenses paid indirectly (423) - - - (423) ----------------- ----------------- -------------- -------------- ----------------- Net Expenses 1,073,774 1,179,418 - (1,165,258) 1,087,934 ----------------- ----------------- -------------- -------------- ----------------- -------------- ----------------- Net Investment Income/(Loss) 1,258,591 1,214,565 - 1,165,258 3,638,414 ----------------- ----------------- -------------- -------------- ----------------- Realized and Unrealized Gains/(Losses) on Investments: Net realized gains/(losses) on securities and foreign currency transactions (34,612,642) (13,993,320) - - (48,605,962) Change in unrealized appreciation/(depreciation) on investments (10,103,281) (33,491,174) - - (43,594,455) ----------------- ----------------- -------------- -------------- ----------------- Net Realized and Unrealized Gains/(Losses) on Investments (44,715,923) (47,484,494) - - (92,200,417) ================= ================= ============== ============== ================= ----------------- ----------------- -------------- ============== ================= Change in Net Assets Resulting from $ (43,457,332) $ (46,269,929) $ - $ 1,165,258 $ (88,562,003) Operations ================= ================= ============== ============== =================
A Based on contract in effect for the surviving AZL International Index Fund. B Decrease due to the elimination of duplicative expenses achieved by merging the funds. C Estimated reorganization fees and expenses that are to be paid by the Funds are $85,000. These amounts have not been included in the Pro Forma adjustments above, as such expenses are non-recurring in nature and are not expected to be incurred in ongoing operations. 35 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL International Index Fund Pro Forma Notes to Combining Financial Statements December 31, 2008 (Unaudited) 1. DESCRIPTION OF THE FUND: The AZL International Index Fund, ("International Index Fund") a series of the Allianz Variable Insurance Products Trust (the "Trust"), is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end investment company established as a Delaware statutory trust. The Trust is authorized to issue an unlimited number of shares of the International Index Fund without par value. Shares of the International Index Fund are available through the variable annuity contracts and variable life insurance policies offered through the separate accounts of participating insurance companies. Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the International Index Fund. In addition, in the normal course of business, the International Index Fund may enter into contracts with its vendors and others that provide for general indemnifications. The International Index Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the International Index Fund. However, based on experience, the International Index Fund expects that risk of loss to be remote. The pro forma adjustments and pro forma combined columns of the Statement of Operations reflect the adjustments necessary to show expenses at the rates which would have been in effect if the International Index, the AZL NACM International Fund ("NACM International Fund") and the AZL Schroder International Small Cap Fund ("Schroder International Small Cap Fund") Funds were combined for the twelve month period ended December 31, 2008. Manager, administration and 12b-1 (Distribution) fees in the pro forma combined column are calculated at the rates in effect for the International Index Fund based upon the combined net assets of the corresponding International Index Fund and the NACM International Fund and the Schroder International Small Cap Fund. Certain pro forma adjustments were made to estimate the benefit of combining operations of separate funds into one survivor fund. 2. BASIS OF COMBINATION: The accompanying pro forma financial statements are presented to show the effect of the proposed acquisition of the NACM International Fund and Schroder International Small Cap Fund a series of the Trust, by the International Index Fund as if such acquisition had taken place as of January 1, 2008. Under the terms of the Plan of Reorganization, the combination of International Index Fund and NACM International Fund and Schroder International Small Cap Fund will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition would be accomplished by an acquisition of the net assets of NACM International Fund and Schroder International Small Cap Fund in exchange for shares of International Index Fund at the December 31, 2008 net asset value. The Statement of Assets and Liabilities and the related Statement of Operations of NACM International Fund and Schroder International Small Cap Fund and International Index Fund have been combined as of and for the twelve month period ended December 31, 2008. Following the acquisition, the International Index Fund will be the accounting survivor. In accordance with U.S. generally accepted accounting 36 The Allianz Variable Insurance Products Trust - Statement of Additional Information principles ("GAAP"), the historical cost of investment securities will be carried forward to the International Index Fund and the results of operations for pre-combination periods of the International Index Fund will not be restated. The accompanying pro forma financial statements should be read in conjunction with the financial statements of NACM International Fund and Schroder International Small Cap Fund included in their respective annual report dated December 31, 2008. The following notes refer to the accompanying pro forma financial statements as if the above-mentioned acquisition of NACM International Fund and Schroder International Small Cap by the International Index Fund had taken place as of January 1, 2008. 3. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the International Index Fund in the preparation of its financial statements. The policies conform to GAAP. The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. Security Valuation Effective January 1, 2008, the International Index Fund adopted Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." There was no impact to the International Index Funds' net assets or results of operations upon adoption. SFAS No.157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Security prices are generally provided by an independent third party pricing service approved by the Trust's Board of Trustees ("Trustees") as of the close of the New York Stock Exchange (generally 4:00 pm EST). Equity securities are valued at the last quoted sale price or, if there is no sale, the last quoted bid price is used for long securities and the last quoted ask price is used for securities sold short. Securities on NASDAQ Stock Market, Inc. ("NASDAQ") are valued at the official closing price as reported by NASDAQ. Investments in other investment companies are valued at their published net asset value. Debt and other fixed income securities are generally valued at an evaluated bid price provided by an independent pricing source approved by the Trustees. To value debt securities, pricing services may use various pricing techniques which take into account appropriate factors such as market activity, yield, quality, coupon rate, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. Short term securities of sufficient credit quality with sixty days or less remaining until maturity may be valued at amortized cost, which approximates fair value. Exchange traded options and futures contracts are valued at the last sales price as of the close of the primary exchange. Forward foreign currency contracts are generally valued at the foreign currency exchange rate as of the close of the NYSE. Non-exchange traded derivatives, such as certain options and swaps, are generally valued by approved independent pricing services utilizing pricing techniques which take into account factors such as yield, quality, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. 37 The Allianz Variable Insurance Products Trust - Statement of Additional Information Other assets and securities for which no quotation is readily available or deemed unreliable are valued at fair value as determined in good faith by the Board of Trustees ("Trustees") or persons acting on the behalf of the Trustees. Fair value pricing may be used for significant events such as securities whose trading has been suspended, whose price has become stale or for which there is no currently available price at the close of the New York Stock Exchange (generally 4 PM Eastern Time). The Fund utilizes a pricing service to assist in determining the fair value of securities when certain significant events occur that may affect the value of foreign securities. In accordance with procedures adopted by the Trustees, fair value pricing may be used if events materially affecting the value of foreign securities occur between the time when the exchange on which they are traded closes and the time when the Fund's net asset value is calculated. Management identifies possible fluctuation in international securities by monitoring the increase or decrease in the value of a designated benchmark index. In the event of an increase or decrease greater than predetermined levels, the Fund may use a systematic valuation model provided by an independent third party to fair value its international equity securities. Investment Transactions and Investment Income Investment transactions are recorded no later than one business day after trade date. For financial reporting purposes, investment transactions are recorded on trade date on the last business day of the reporting period. Net realized gains and losses on investments sold and on foreign currency transactions are recorded on the basis of identified cost. Interest income is recorded on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts. Dividend income is recorded on the ex-dividend date, except in the case of foreign securities, in which case dividends are recorded as soon as such information becomes available. Futures Contracts The Fund may enter into futures contracts. The Fund may use futures contracts to manage its exposure to the securities markets or to movements in market conditions or foreign exchange rates. Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Fund is required to segregate liquid assets in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and a payable or receivable for the change in value ("variation margin") is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts, the possibility of an illiquid market, and the inability of the counterparty to meet the terms of the contract. Real Estate Investment Trusts The Fund may own shares of real estate investment trusts ("REITs") which report information on the source of their distributions annually. Certain distributions received from REITs during the year, which are known to be a return of capital, are recorded as a reduction to the cost of the individual REIT. 38 The Allianz Variable Insurance Products Trust - Statement of Additional Information Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the fair value of investments, assets and liabilities. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies. Risks Associated with Foreign Securities and Currencies Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of domestic issuers. Such risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability or diplomatic developments which could adversely affect investments in those securities. Certain foreign investments may also be subject to foreign withholding taxes. Forward Foreign Currency Exchange Contracts The Fund may enter into forward foreign currency exchange contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses in the Statement of Assets and Liabilities and the Statement of Operations until the contract settlement date, at which time realized gains and losses are included in the Statement of Operations. Dividends to Shareholders Dividends to shareholders are recorded on the ex-dividend date. The International Index Fund distributes its income dividends and all of its net realized capital gains, if any, on an annual basis. The amount of dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (e.g., return of capital, net operating loss, reclassification of certain market discounts, gain/loss, paydowns, and distributions), such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. Dividends to shareholders which exceed net investment income and net realized gains for tax purposes are reported as distributions of capital. Expense Allocation Expenses directly attributable to the International Index Fund are charged directly to the International Index Fund, while expenses attributable to more than one Fund of the Trust are allocated among the respective Funds of the Trust based upon relative net assets or some other reasonable method. Expenses which 39 The Allianz Variable Insurance Products Trust - Statement of Additional Information are attributable to more than one Trust are allocated across the Allianz Variable Insurance Products and Allianz Variable Insurance Products Fund of Funds Trust's based upon relative net assets or another reasonable basis. Allianz Investment Management, LLC (the "Manager"), serves as the investment manager for the Trust and the Allianz Variable Insurance Products Fund of Funds Trust. Securities Lending To generate additional income, the International Index Fund may lend up to 33-1/3% of its assets pursuant to agreements requiring that the loan be continuously secured by any combination of cash, or U.S. government or U.S. government agency securities, equal initially to at least 102% of the fair value plus accrued interest on the securities loaned (105% for foreign securities). The International Index Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities lent while simultaneously seeking to earn income on the investment of collateral. Collateral is marked to market daily to provide a level of collateral at least equal to the fair value of securities loaned. There may be risks of delay in recovery of the securities or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers, such as broker-dealers, banks or institutional borrowers of securities, deemed by the Manager to be of good standing and credit worthy and when in its judgment, the consideration which can be earned currently from such securities loans justifies the attendant risks. Loans are subject to termination by the Trust or the borrower at any time, and are, therefore, not considered to be illiquid investments. At December 31, 2008, the International Index Fund had no amounts outstanding related to securities lending. Commission Recapture Certain Funds of the Trust participate in a commission recapture program. The Funds of the Trust will utilize the recaptured commissions to pay for, in whole or part, certain expenses of the International Index Fund, excluding investment advisory fees. Any amounts for the Fund, if applicable, are disclosed as "Expenses paid indirectly" on the Statement of Operations. 3. Related Party Transactions The Manager provides investment advisory and management services for the Fund. The Manager has retained an affiliated money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to a subadvisory agreement between the Manager and Nicholas - Applegate Capital Management, LLC ("NACM"), NACM provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.45%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate Expense Limit NACM International Fund . . . . . . . . . . . . 0.85% 1.45% 40 The Allianz Variable Insurance Products Trust - Statement of Additional Information The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to a subadvisory agreement between the Manager and Schroder Investment Management North America Inc. ("Schroders"), Schroders provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. Schroder Investment Management North America Ltd (Schroder Ltd), an affiliate of Schroders, serves as the Sub-subadviser to the Fund and is responsible for day-to-day management of the Fund's assets. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. For its services the Sub-subadviser is entitled to a fee payable by the Subadviser. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.65%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate Expense Limit AZL Schroder International Small Cap Fund . . . . 1.00% 1.65% The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to a Subadvisory agreement, between the Manager and BlackRock Investment Management, LLC ("BlackRock Investment"), BlackRock Investment provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.20%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate Expense Limit AZL International Index Fund . . . . . . 0.35% 0.70% 5. CAPITAL SHARES: The pro forma net asset value per share assumes the issuance of shares of the International Index Fund that would have been issued at December 31, 2008, in connection with the proposed reorganization. The number of shares assumed to be issued is equal to the net asset value of shares of NACM International Fund and Schroder International Small Cap Fund, as of December 31, 2008, divided by the net asset value per share of the shares of International Index Fund as of December 31, 2008. The pro forma number of shares outstanding, by class, for the combined fund consists of the following at December 31, 2008:
41 The Allianz Variable Insurance Products Trust - Statement of Additional Information Capital Shares Shares of International Index SHARES ASSUMED TOTAL OUTSTANDING Fund ISSUED IN SHARES PRE- COMBINATION REORGANIZATION POST- COMBINATION Shares of Beneficial Interest - 11,413,587 11,413,587
6. Investment Valuation Summary ----------------------- ---------------------- ----------------- ------------ -------------------- NACM International Schroder International Fund International Fund Index Fund Adjustment Pro Forma Combined ----------------------- ---------------------- ----------------- ------------ -------------------- Net Assets $55,950,463 $58,270,402 $- $(85,000) $114,135,865 ---------- ----------------------- ---------------------- ----------------- ------------ -------------------- Net Asset Value Per Share $ 5.12 $ 4.97 $ 10.00 - $ 10.00 --------- Shares Outstanding 10,925,213 11,719,903 - (11,231,529) 11,413,587
The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below: o Level 1--quoted prices in active markets for identical assets o Level 2 --other significant observable inputs (including quoted prices for similar securities, interest rates, prepayments speeds, credit risk, etc.) o Level 3-- significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments. For example, short-term debt securities of sufficient credit quality maturing in sixty days or less are generally valued at amortized cost, which approximates fair value. Generally, amortized cost approximates the current fair value of a security, but since the valuation is not obtained from a quoted price in an active market, such securities are reflected as Level 2. The following is a summary of the valuation inputs used as of December 31, 2008 in valuing the Fund's investments based upon three levels defined above: Investment Other Financial Valuation Inputs Securities Instruments* ------------------------------------------- ------------- --------- Level 1 --Quoted Prices . . . . . . . . . . . . . . $ 5,826,999 $ -- Level 2 --Other Significant Observable Inputs . . . .109,416,488 (9,242) Level 3 -- Significant Unobservable Inputs . . . .. . . . -- -- Total . . . . . . . . . . . . . . . . . . . . . . . $115,243,487 $(9,242) * Other financial instruments would include any derivative instruments, such as futures, forwards and swap agreements. These investments are generally recorded in the financial statements at the unrealized gain or loss on the investment. 42 The Allianz Variable Insurance Products Trust - Statement of Additional Information 7. FEDERAL INCOME TAX INFORMATION: It is the International Index Fund's policy to continue to comply with the requirements of the Internal Revenue Code under Subchapter M, applicable to regulated investment companies, and to distribute all of its taxable income, including any net realized gains on investments, to its shareholders. Therefore, no provision is made for federal income taxes. In addition, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48") provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether it is more-likely-than-not (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable), including the recognition of any related interest and penalties as an operating expense. Implementation of FIN 48 included a review of tax positions taken in tax years that remain subject to examination by tax authorities (i.e., the last 4 tax year ends and the interim tax period since then, as applicable). FIN 48 did not impact the Fund's net assets or results of operations for the period ended December 31, 2008. 43 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL JPMorgan U.S. Equity Fund Pro Forma Statements of Assets and Liabilities AZL JPMorgan AZL JPMorgan December 31, 2008 Large Cap U.S. Equity Pro Forma Pro Forma (Unaudited) Equity Fund Fund Adjustments Combined Assets: Investment securities, at cost $86,567,310 $86,561,365 $ - $173,128,675 ================ ============== =============== =============== Investment securities, at value $59,031,537 $63,058,886 $ - $122,090,423 Interest and dividends receivable 90,936 98,064 - 189,000 Receivable for capital shares issued 118,924 17,484 - 136,408 Receivable for investments sold 397,984 81,120 - 479,104 Prepaid expenses 4,201 1,721 - 5,922 ---------------- -------------- --------------- --------------- Total Assets 59,643,582 63,257,275 - 122,900,857 ---------------- -------------- --------------- --------------- Liabilities: Payable for investments purchased - 501 - 501 Payable for capital shares redeemed 129 - - 129 Manager fees payable 73,253 20,789 - 94,042 Administration fees payable 4,927 2,531 - 7,458 Distribution fees payable 24,418 12,654 - 37,072 Administrative and compliance services fees payable 2,589 959 - 3,548 Reorganization fees payable (A) - - 48,500 48,500 Other accrued liabilities 43,410 16,965 - 60,375 ---------------- -------------- --------------- --------------- Total Liabilities 148,726 54,399 48,500 251,625 ---------------- -------------- --------------- --------------- Net Assets $ 59,494,856 $ $ (48,500) $ 63,202,876 122,649,232 ================ ============== =============== =============== Net Assets Consist of: Capital $ 268,423,350 $ 106,481,482 $ - $ 374,904,832 Accumulated net investment income/(loss) 2,497,607 773,312 (48,500) 3,222,419 Accumulated net realized gains/(losses) from investment transactions (183,890,328) (20,549,439) - (204,439,767) Net unrealized appreciation/(depreciation) on investments (27,535,773) (23,502,479) - (51,038,252) ---------------- -------------- --------------- --------------- Net Assets $ 59,494,856 $63,202,876 $ (48,500) $ 122,649,232 ================ ============== =============== =============== Shares of beneficial interest (unlimited number of shares 11,925,015 9,959,766 (2,557,158) 19,237,623 authorized, no par value) (B) Net Asset Value (offering and redemption price per share) (B) $4.99 $6.35 - $6.35 ================ ============== =============== =============== (A) Represents the estimated reorganization fees and expenses that are to be expected to be paid by the Funds. (B) Shares of the AZL JPMorgan Large Cap Equity Fund are exchanged for new shares of the AZL JPMorgan U.S. Equity Fund, to commence operations upon consummation of the merger. See accompanying notes to the Pro Forma financial statements.
44 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL JPMorgan U.S. Equity Fund Statements of Operations AZL JPMorgan AZL JPMorgan For the Year Ended December 31, 2008 Large Cap U.S. Equity Pro Forma Pro Forma (Unaudited) Equity Fund Fund Adjustments Combined Investment Income: Interest $ 14,978 $ 15,571 $ - $ 30,549 Dividends 4,554,881 1,929,055 - 6,483,936 Income from securities lending 862,305 24,405 - 886,710 ---------------- --------------- -------------- ------------------ Total Investment Income 5,432,164 1,969,031 - 7,401,195 ---------------- --------------- -------------- ------------------ Expenses: Manager fees 2,028,883 788,315 134,982(A) 2,952,180 Administration fees 119,789 43,773 - 163,562 Distribution fees 676,294 246,349 - 922,643 Custodian fees 44,941 116,007 (67,848) (B) 93,100 Administrative and compliance services fees 10,996 3,998 - 14,994 Trustees' fees 24,852 8,502 - 33,354 Professional fees 45,933 16,461 (8,000) (B) 54,394 Shareholder reports 26,243 23,315 (10,500) (B) 39,058 Interest expense on cash overdraft 16,538 15,673 - 32,211 Reorganization fees(C) - - - - Other expenses 12,872 14,151 (1,000) (B) 26,023 ---------------- --------------- -------------- ------------------ Total expenses before reductions 3,007,341 1,276,544 47,634 4,331,519 Less expenses waived/reimbursed by the Manager - (81,162) (102,966) (A) (184,128) Less expenses paid indirectly (72,784) - - (72,784) ---------------- --------------- -------------- ------------------ Net Expenses 2,934,557 1,195,382 (55,332) 4,074,607 ---------------- --------------- -------------- ------------------ -------------- ------------------ Net Investment Income/(Loss) 2,497,607 773,649 55,332 3,326,588 ---------------- --------------- -------------- ------------------ Realized and Unrealized Gains/(Losses) on Investments: Net realized gains/(losses) on securities and foreign currency transactions (181,565,565) (18,657,907) - (200,223,472) Change in unrealized appreciation/(depreciation) on investments (32,090,995) (28,207,467) - (60,298,462) ---------------- --------------- -------------- ------------------ Net Realized and Unrealized Gains/(Losses) on Investments (213,656,560) (46,865,374) - (260,521,934) ================ =============== ============== ================== ---------------- --------------- ============== ================== Change in Net Assets Resulting from Operations $ (211,158,953) $ (46,091,725) $ 55,332 $ (257,195,346) ================ =============== ============== ==================
(A) Based on contract in effect for the surviving AZL JPMorgan U.S. Equity Fund. (B) Decrease due to the elimination of duplicative expenses achieved by merging the funds. (C) Estimated reorganization fees and expenses that are to be paid by the Funds are $48,500. These amounts have not been included in the Proforma Adjustments above, as such expenses are non-recurring in nature and are not expected to be incurred in ongoing operations. See accompanying notes to the Pro Forma financial statements. 45 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL JPMorgan U.S. Equity Fund Pro Forma Notes to Combining Financial Statements December 31, 2008 (Unaudited) 1. DESCRIPTION OF THE FUND: The AZL JPMorgan U.S. Equity Fund, ("JPMorgan U.S. Equity Fund") a series of the Allianz Variable Insurance Products Trust (the "Trust"), is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end investment company established as a Delaware statutory trust. The Trust is authorized to issue an unlimited number of shares of the JPMorgan U.S. Equity Fund without par value. Shares of the JPMorgan U.S. Equity Fund are available through the variable annuity contracts and variable life insurance policies offered through the separate accounts of participating insurance companies. Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the JPMorgan U.S. Equity Fund. In addition, in the normal course of business, the JPMorgan U.S. Equity Fund may enter into contracts with its vendors and others that provide for general indemnifications. The JPMorgan U.S. Equity Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the JPMorgan U.S. Equity Fund. However, based on experience, the JPMorgan U.S. Equity Fund expects that risk of loss to be remote. The pro forma adjustments and pro forma combined columns of the Statement of Operations reflect the adjustments necessary to show expenses at the rates which would have been in effect if the JPMorgan U.S. Equity and the AZL JPMorgan Large Cap Equity ("JPMorgan Large Cap Equity Fund") Funds were combined for the twelve month period ended December 31, 2008. Manager, administration and 12b-1 (Distribution) fees in the pro forma combined column are calculated at the rates in effect for the JPMorgan U.S. Equity Fund based upon the combined net assets of the corresponding JPMorgan U.S. Equity Fund and the JPMorgan Large Cap Equity Fund. Certain pro forma adjustments were made to estimate the benefit of combining operations of separate funds into one survivor fund. 2. BASIS OF COMBINATION: The accompanying pro forma financial statements are presented to show the effect of the proposed acquisition of the JPMorgan Large Cap Equity Fund a series of the Trust, by the JPMorgan U.S. Equity Fund as if such acquisition had taken place as of January 1, 2008. Under the terms of the Plan of Reorganization, the combination of JPMorgan U.S. Equity Fund and JPMorgan Large Cap Equity Fund will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition would be accomplished by an acquisition of the net assets of JPMorgan Large Cap Equity Fund in exchange for shares of JPMorgan U.S. Equity Fund at the December 31, 2008 net asset value. The Statements of Assets and Liabilities and the related Statements of Operations of JPMorgan Large Cap Equity Fund and JPMorgan U.S. Equity Fund have been combined as of and for the twelve month period ended December 31, 2008. Following the acquisition, the JPMorgan U.S. Equity Fund will be the accounting survivor. In accordance with U.S. generally accepted accounting principles ("GAAP"), the historical cost of investment securities will be carried forward to the JPMorgan U.S. Equity Fund and the results of operations for pre-combination periods of the JPMorgan U.S. Equity Fund will not be restated. 46 The Allianz Variable Insurance Products Trust - Statement of Additional Information The accompanying pro forma financial statements should be read in conjunction with the financial statements of JPMorgan U.S. Equity Fund and JPMorgan Large Cap Equity Fund included in their respective annual report dated December 31, 2008. The following notes refer to the accompanying pro forma financial statements as if the above-mentioned acquisition of JPMorgan Large Cap Equity Fund by the JPMorgan U.S. Equity Fund had taken place as of January 1, 2008. 3. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the JPMorgan U.S. Equity Fund in the preparation of its financial statements. The policies conform to GAAP. The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Security Valuation Effective January 1, 2008, the JPMorgan U.S. Equity Fund adopted Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." There was no impact to the JPMorgan U.S. Equity Funds' net assets or results of operations upon adoption. SFAS No.157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Security prices are generally provided by an independent third party pricing service approved by the Trust's Board of Trustees ("Trustees") as of the close of the New York Stock Exchange (generally 4:00 pm EST). Equity securities are valued at the last quoted sale price or, if there is no sale, the last quoted bid price is used for long securities and the last quoted ask price is used for securities sold short. Securities on NASDAQ Stock Market, Inc. ("NASDAQ") are valued at the official closing price as reported by NASDAQ. Investments in other investment companies are valued at their published net asset value. Debt and other fixed income securities are generally valued at an evaluated bid price provided by an independent pricing source approved by the Trustees. To value debt securities, pricing services may use various pricing techniques which take into account appropriate factors such as market activity, yield, quality, coupon rate, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. Short term securities of sufficient credit quality with sixty days or less remaining until maturity may be valued at amortized cost, which approximates fair value. Exchange traded options and futures contracts are valued at the last sales price as of the close of the primary exchange. Forward foreign currency contracts are generally valued at the foreign currency exchange rate as of the close of the NYSE. Non-exchange traded derivatives, such as certain options and swaps, are generally valued by approved independent pricing services utilizing pricing techniques which take into account factors such as yield, quality, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. Other assets and securities for which no quotation is readily available or deemed unreliable are valued at fair value as determined in good faith by the Board of Trustees ("Trustees") or persons acting on the 48 The Allianz Variable Insurance Products Trust - Statement of Additional Information behalf of the Trustees. Fair value pricing may be used for significant events such as securities whose trading has been suspended, whose price has become stale or for which there is no currently available price at the close of the New York Stock Exchange (generally 4 PMEastern Time). The Fund utilizes a pricing service to assist in determining the fair value of securities when certain significant events occur that may affect the value of foreign securities. In accordance with procedures adopted by the Trustees, fair value pricing may be used if events materially affecting the value of foreign securities occur between the time when the exchange on which they are traded closes and the time when the Fund's net asset value is calculated. Management identifies possible fluctuation in international securities by monitoring the increase or decrease in the value of a designated benchmark index. In the event of an increase or decrease greater than predetermined levels, the Fund may use a systematic valuation model provided by an independent third party to fair value its international equity securities. Investment Transactions and Investment Income Investment transactions are recorded no later than one business day after trade date. For financial reporting purposes, investment transactions are recorded on trade date on the last business day of the reporting period. Net realized gains and losses on investments sold and on foreign currency transactions are recorded on the basis of identified cost. Interest income is recorded on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts. Dividend income is recorded on the ex-dividend date, except in the case of foreign securities, in which case dividends are recorded as soon as such information becomes available. Futures Contracts The Fund may enter into futures contracts. The Fund may use futures contracts to manage its exposure to the securities markets or to movements in market conditions or foreign exchange rates. Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Fund is required to segregate liquid assets in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and a payable or receivable for the change in value ("variation margin") is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts, the possibility of an illiquid market, and the inability of the counterparty to meet the terms of the contract. Real Estate Investment Trusts The Fund may own shares of real estate investment trusts ("REITs") which report information on the source of their distributions annually. Certain distributions received from REITs during the year, which are known to be a return of capital, are recorded as a reduction to the cost of the individual REIT. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the fair value of investments, assets and liabilities. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. The Fund does not isolate that 48 The Allianz Variable Insurance Products Trust - Statement of Additional Information portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies. Risks Associated with Foreign Securities and Currencies Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of domestic issuers. Such risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability or diplomatic developments which could adversely affect investments in those securities. Certain foreign investments may also be subject to foreign withholding taxes. Forward Foreign Currency Exchange Contracts The Fund may enter into forward foreign currency exchange contracts primarily to hedge against foreign currency exchange rate risks on its non- U.S. dollar denominated investment securities. When entering into a forward currency contract, the Fund agrees to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed future date. These contracts are valued daily, and the Fund `s net equity therein, representing unrealized gain or loss on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into the contracts and the forward rates at the reporting date, is included in the Statement of Assets and Liabilities. Realized and unrealized gains and losses are included in the Statement of Operations. These instruments involve market risk, credit risk, or both kinds of risks, in excess of the amount recognized in the statement of assets and liabilities. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movement in currency and investment securities values and interest rates. Dividends to Shareholders Dividends to shareholders are recorded on the ex-dividend date. The JPMorgan U.S. Equity Fund distributes its income dividends and all of its net realized capital gains, if any, on an annual basis. The amount of dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (e.g., return of capital, net operating loss, reclassification of certain market discounts, gain/loss, paydowns, and distributions), such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. Dividends to shareholders which exceed net investment income and net realized gains for tax purposes are reported as distributions of capital. Expense Allocation Expenses directly attributable to the JPMorgan U.S. Equity Fund are charged directly to the JPMorgan U.S. Equity Fund, while expenses attributable to more than one Fund of the Trust are allocated among the respective Funds of the Trust based upon relative net assets or some other reasonable method. Expenses which are attributable to more than one Trust are allocated across the Allianz Variable Insurance Products and Allianz Variable Insurance Products Fund of Funds Trust's based upon relative net assets or another reasonable basis. Allianz Investment Management, LLC (the "Manager"), serves as the investment manager for the Trust and the Allianz Variable Insurance Products Fund of Funds Trust. 49 The Allianz Variable Insurance Products Trust - Statement of Additional Information Securities Lending To generate additional income, the JPMorgan U.S. Equity Fund may lend up to 33-1/3% of its assets pursuant to agreements requiring that the loan be continuously secured by any combination of cash, or U.S. government or U.S. government agency securities, equal initially to at least 102% of the fair value plus accrued interest on the securities loaned (105% for foreign securities). The JPMorgan U.S. Equity Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities lent while simultaneously seeking to earn income on the investment of collateral. Collateral is marked to market daily to provide a level of collateral at least equal to the fair value of securities loaned. There may be risks of delay in recovery of the securities or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers, such as broker-dealers, banks or institutional borrowers of securities, deemed by the Manager to be of good standing and credit worthy and when in its judgment, the consideration which can be earned currently from such securities loans justifies the attendant risks. Loans are subject to termination by the Trust or the borrower at any time, and are, therefore, not considered to be illiquid investments. At December 31, 2008, the JPMorgan U.S. Equity Fund had no amounts outstanding related to securities lending. Commission Recapture Certain Funds of the Trust participate in a commission recapture program. The Funds of the Trust will utilize the recaptured commissions to pay for, in whole or part, certain expenses of the JPMorgan U.S. Equity Fund, excluding investment advisory fees. Any amounts for the Fund, if applicable, are disclosed as "Expenses paid indirectly" on the Statement of Operations. 4. Related Party Transactions The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to an amended and restated subadvisory agreement between the Manager and Legg Mason Capital Management, Inc. ("LMCM"), LMCM provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.20%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate Expense Limit AZL Legg Mason Value Fund . . . . . . . . . . . 0.75% 1.20% Any amounts contractually waived or reimbursed by the Manager in a particular fiscal year will be subject to repayment by the Fund to the Manager to the extent that from time to time through the next three fiscal years the repayment will not cause the Fund's expenses to exceed the stated limit during the respective year. Any amounts recouped by the Manager during the period are reflected on the Statement of Operations as "Recoupment of prior expenses reimbursed by the Manager." At December 31, 2008, there 50 The Allianz Variable Insurance Products Trust - Statement of Additional Information were no remaining contractual reimbursements that may potentially be made by the Fund in subsequent years. In addition, the Manager may voluntarily waive or reimburse additional fees in order to maintain more competitive expense ratios. Any voluntary waivers or reimbursements are not subject to repayment in subsequent years. Information on the total amount waived/reimbursed by the Manager or repaid to the Manager by the Fund during the period can be found on the Statement of Operations. Effective January 26, 2009, J.P. Morgan Investment Management Inc. will replace Legg Mason Capital Management, Inc. as the Sub adviser to the AZL Legg Mason Value Fund. In addition, on January 26, 2009 the Fund changed its name to AZL JPMorgan Large Cap Equity Fund. The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to a subadvisory agreement between the Manager and OppenheimerFunds, Inc. ("OFI"), OFI provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.20%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate* Expense Limit AZL JPMorgan U.S. Equity Fund . . . . . . . .. . . 0.80% 1.20% * The Manager and the Fund have entered into a written agreement whereby the Manager has voluntarily reduced the management fee to 0.75% through April 30, 2010. Any amounts contractually waived or reimbursed by the Manager in a particular fiscal year will be subject to repayment by the Fund to the Manager to the extent that from time to time through the next three fiscal years the repayment will not cause the Fund's expenses to exceed the stated limit during the respective year. Any amounts recouped by the Manager during the period are reflected on the Statement of Operations as "Recoupment of prior expenses reimbursed by the Manager." At December 31, 2008, the contractual reimbursements that may potentially be made by the Fund in subsequent years were as follows: Expires 12/31/2011 AZL JPMorgan U.S. Equity Fund. . . . . . . . . . . . . . . . . . $31,893 In addition, the Manager may voluntarily waive or reimburse additional fees in order to maintain more competitive expense ratios. Any voluntary waivers or reimbursements are not subject to repayment in subsequent years. Information on the total amount waived/reimbursed by the Manager or repaid to the Manager by the Fund during the year can be found on the Statement of Operations. 51 The Allianz Variable Insurance Products Trust - Statement of Additional Information Effective January 26, 2009, J.P.Morgan Investment Management Inc. will replace OppenheimerFunds Inc. as the Sub adviser to the AZL Oppenheimer Main Street Fund. In addition, on January 26, 2009 the Fund will change its name to AZL JPMorgan U.S. Equity Fund. 5. CAPITAL SHARES: The pro forma net asset value per share assumes the issuance of shares of the JPMorgan U.S. Equity Fund that would have been issued at December 31, 2008, in connection with the proposed reorganization. The number of shares assumed to be issued is equal to the net asset value of shares of JPMorgan Large Cap Equity Fund, as of December 31, 2008, divided by the net asset value per share of the shares of JPMorgan U.S. Equity Fund as of December 31, 2008. The pro forma number of shares outstanding, by class, for the combined fund consists of the following at December 31, 2008.
Capital Shares Shares of JPMorgan SHARES ASSUMED TOTAL OUTSTANDING U.S. Equity ISSUED IN SHARES PRE- COMBINATION REORGANIZATION POST- COMBINATION Shares of Beneficial Interest 9,959,766 9,367,857 19,327,623
----------------------- ---------------------- ------------- --------------------- JPMorgan Large Cap JPMorgan U.S. Equity Equity Fund Fund Adjustment Pro Forma Combined ----------------------- ---------------------- ------------- --------------------- Net Assets $59,494,856 $ 63,202,876 $ (48,500) $122,649,232 ---------- Net Asset Value Per Share $ 4.99 $ 6.35 - $ 6.35 --------- Shares Outstanding 11,925,015 9,959,766 (2,557,158) 19,327,623
6. Investment Valuation Summary The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below: o Level 1--quoted prices in active markets for identical assets o Level 2 --other significant observable inputs (including quoted prices for similar securities, interest rates, prepayments speeds, credit risk, etc.) o Level 3-- significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments. For example, short-term debt securities of sufficient credit quality maturing in sixty days or less are generally valued at amortized cost, which approximates fair 52 The Allianz Variable Insurance Products Trust - Statement of Additional Information value. Generally, amortized cost approximates the current fair value of a security, but since the valuation is not obtained from a quoted price in an active market, such securities are reflected as Level 2. The following is a summary of the valuation inputs used as of December 31, 2008 in valuing the Fund's investments based upon three levels defined above: Investment Other Financial Valuation Inputs Securities Instruments* ------------------------------------------- ------------- --------- Level 1 --Quoted Prices . . . . . . . $122,090,423 $ -- Level 2 --Other Significant Observable Inputs . . . . -- -- Level 3 -- Significant Unobservable Inputs . . . . . . -- -- ---------------------------- Total . . . . . . . . . . . . . . . . . . . . . . . $ 122,090,423 $-- ============================ * Other financial instruments would include any derivative instruments, such as futures, forwards and swap agreements. These investments are generally recorded in the financial statements at the unrealized gain or loss on the investment. 7. FEDERAL INCOME TAX INFORMATION: It is the JPMorgan U.S. Equity Fund's policy to continue to comply with the requirements of the Internal Revenue Code under Subchapter M, applicable to regulated investment companies, and to distribute all of its taxable income, including any net realized gains on investments, to its shareholders. Therefore, no provision is made for federal income taxes. In addition, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48") provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether it is more-likely-than-not (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable), including the recognition of any related interest and penalties as an operating expense. Implementation of FIN 48 included a review of tax positions taken in tax years that remain subject to examination by tax authorities (i.e., the last 4 tax year ends and the interim tax period since then, as applicable). FIN 48 did not impact the Fund's net assets or results of operations for the period ended December 31, 2008. 53 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL Moderate Index Strategy Fund Pro Forma Statements of Assets and Liabilities AZL Moderate December 31, 2008 AZL TargetPLUS AZL TargetPLUS Index Pro Forma Pro Forma (Unaudited) Growth Fund Moderate Fund Strategy Fund Adjustments Combined Assets: Investment securities, at cost $ 73,937,985 $ 57,263,397 $ -^ $ - $ 131,201,382 ================================================================================== Investment securities, at value $ 68,765,805 $ 55,097,377 $ - $ - $ 123,863,182 Repurchase agreements, at value/cost 6,500,000 7,900,000 - - 14,400,000 Segregated cash for collateral 108,300 104,900 - - 213,200 Interest and dividends receivable 258,841 192,678 - - 451,519 Foreign currency, at value (cost $121,233) 69,266 123,334 - - 192,600 Unrealized appreciation on interest rate swaps 629,029 677,123 - - 1,306,152 Unrealized appreciation on credit default swaps 5,144 8,358 - - 13,502 Swap premiums paid 65,330 151,884 - - 217,214 Receivable for capital shares issued 153,550 730,755 - - 884,305 Receivable for investments sold 2,075,575 518,938 - - 2,594,513 Unrealized appreciation for forward foreign currency contracts 10,605 11,465 - - 22,070 Receivable from Manager 6,236 13,523 - - 19,759 Prepaid expenses 1,673 1,209 - - 2,882 ---------------------------------------------------------------------------------- Total Assets 78,649,354 65,531,544 - - 144,180,898 ---------------------------------------------------------------------------------- Liabilities: Unrealized depreciation on forward foreign currency contracts 51,741 93,315 - - 145,056 Unrealized depreciation on interest rate swaps 399,434 358,144 - - 757,578 Unrealized depreciation on credit default swaps 476,611 543,678 - - 1,020,289 Swap premiums received 372,371 392,986 - - 765,357 Securities sold short (Premiums received $505,938) 512,500 - - - 512,500 Payable for investments purchased 10,284,347 10,059,246 - - 20,343,593 Payable for capital shares redeemed 142 107 - - 249 Written Options (Premiums received $78,960) 202,145 233,244 - - 435,389 Payable for variation margin on futures contracts 18,132 20,733 - - 38,865 Administration fees payable 2,615 2,026 - - 4,641 Distribution fees payable 13,100 10,175 - - 23,275 Administrative and compliance services fees payable 755 465 - - 1,220 Reorganization fees payable (A) - - - 135,500 135,500 Other accrued liabilities 10,039 2,839 - - 12,878 ---------------------------------------------------------------------------------- Total Liabilities 12,343,932 11,716,958 - 135,500 24,196,390 ---------------------------------------------------------------------------------- Net Assets $ 66,305,422 $ 53,814,586 $ - $ (135,500) $ 119,984,508 ================================================================================== Net Assets Consist of: Capital $ 99,166,662 $ 69,654,208 $ - $ - $ 168,820,870 Accumulated net investment income/(loss) 1,754,448 1,149,881 - (135,500) 2,768,829 Accumulated net realized gains/(losses) from investment transactions (29,221,374) (14,621,271) - - (43,842,645) Net unrealized appreciation/(depreciation) on investments (5,394,314) (2,368,232) - - (7,762,546) ------------------ ---------------------------------------------------------------- Net Assets $ 66,305,422 $ 53,814,586 $ - $ (135,500) $ 119,984,508 ================================================================================== Shares of beneficial interest (unlimited 11,014,322 7,920,378 - (6,936,249) 11,998,451 number of shares authorized, no par value) (B) Net Asset Value (offering and redemption price per share) (B) $ 6.02 $ 6.79 $ 10.00 $ - $ 10.00 ================================================================================== ^ No adjustments have been made to the Total Investment securities in the unaudited pro forma combined statements of assets and liabilities because upon consummation of the merger, securities would have to be sold in order for the AZL Moderate Index Strategy Fund to comply with its prospectus restrictions. The foregoing sentence shall not restrict in any way the ability of the investment adviser of either of the funds from buying or selling securities in the normal course of such fund's business and operations. (A) Represents the estimated reorganization fees and expenses that are to be expected to be paid by the Funds. (B) Shares of the AZL TargetPLUS Growth Fund and AZL TargetPLUS Moderate Fund are exchanged for new shares of the AZL Moderate Index Strategy Fund, to commence operations upon consummation of the merger. See accompanying notes to the Pro Forma financial statements. 54 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL Moderate Index Strategy Fund Statements of Operations AZL AZL AZL Moderate For the year ended December 31, 2008 TargetPLUS TargetPLUS Index Pro Forma Pro Forma (Unaudited) Growth Fund Moderate Fund Strategy Fund Adjustments Combined Investment Income: ^ Interest $ 429,820 $ 460,826 $ - $ - $ 890,646 Dividends 1,611,310 827,602 - - 2,438,912 Income from securities lending 94,376 48,636 - - 143,012 ----------------------------------------------------------------------------- Total Investment Income 2,135,506 1,337,064 - - 3,472,570 ----------------------------------------------------------------------------- Expenses: Manager fees 319,777 197,112 - (467,253) (A) 49,636 Administration fees 27,676 17,152 - 5,172 (A) 50,000 Distribution fees 153,738 94,765 - (248,503) (A) - Custodian fees 152,861 120,298 - (271,659) (B) 1,500 Administrative and compliance services fees 2,496 1,493 - - 3,989 Trustees' fees 5,090 3,051 - - 8,141 Professional fees 9,672 5,853 - (6,000) (B) 9,525 Shareholder reports 7,216 4,371 - (4,000) (B) 7,587 Interest expense on cash overdraft 12,724 33,406 - - 46,130 Reorganization fees ( C ) - - - - - Other expenses 14,243 12,915 - - 27,158 ----------------------------------------------------------------------------- Total expenses before reductions 705,493 490,416 - (992,243) 203,666 Less expenses waived/reimbursed by the Manager (145,460) (119,645) - 265,105 (A) - Less expenses paid indirectly (15,993) (10,109) - 26,102 (A) - ----------------------------------------------------------------------------- Net Expenses 544,040 360,662 - (701,036) 203,666 ----------------------------------------------------------------------------- ----------------------------------------------- Net Investment Income/(Loss) 1,591,466 976,402 - 701,036 3,268,904 ----------------------------------------------------------------------------- Realized and Unrealized Gains/(Losses) on Investments:^ Net realized gains/(losses) on securities and foreign currency transactions (28,544,360) (13,981,598) - - (42,525,958) Net realized gains/(losses) on swap agreements (65,323) 53,829 - - (11,494) Net realized gains/(losses) on futures transactions 97,719 46,159 - - 143,878 Net realized gains/(losses) on options transactions 25,915 29,358 - - 55,273 Change in unrealized appreciation/(depreciation) on investments (5,308,039) (2,438,307) - - (7,746,346) ----------------------------------------------------------------------------- Net Realized and Unrealized Gains/(Losses) on Investments (33,794,088) (16,290,559) - - (50,084,647) ============================================================================= ------------------------------=============================================== Change in Net Assets Resulting from Operations $(32,202,622) $(15,314,157) $ - $ 701,036 $ (46,815,743) =============================================================================
^ No adjustments have been made to the Total Investment securities in the unaudited pro forma combined statements of assets and liabilities because upon consummation of the merger, securities would have to be sold in order for the AZL Moderate Index Strategy Fund to comply with its prospectus restrictions. A Based on contract in effect for the surviving AZL Moderate Index Strategy Fund. B Decrease due to the elimination of duplicative expenses achieved by merging the funds. C Estimated reorganization fees and expenses that are to be paid by the funds are $135,500. These amounts have not been included in the ProForma Adjustments, as such expenses are non-recurring in nature and are not expected to be incurred in ongoing operations. See accompanying notes to the Pro Forma financial statements. 55 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL Moderate Index Strategy Fund Pro Forma Notes to Combining Financial Statements December 31, 2008 (Unaudited) 1. DESCRIPTION OF THE FUND: The AZL Moderate Index Strategy Fund, ("Moderate Index") a series of the Allianz Variable Insurance Products Fund of Funds Trust (the "Trust"), is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end investment company established as a Delaware statutory trust. The Trust is authorized to issue an unlimited number of shares of the Moderate Index without par value. Shares of the Moderate Index are available through the variable annuity contracts and variable life insurance policies offered through the separate accounts of participating insurance companies. Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Moderate Index Strategy Fund. In addition, in the normal course of business, the Moderate Index may enter into contracts with its vendors and others that provide for general indemnifications. The Moderate Index's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Moderate Index Strategy Fund. However, based on experience, the Moderate Index expects that risk of loss to be remote. The pro forma adjustments and pro forma combined columns of the Statement of Operations reflect the adjustments necessary to show expenses at the rates which would have been in effect if the Moderate Index, AZL TargetPLUS Growth ("TargetPLUS Growth Fund") and AZL TargetPLUS Moderate ("TargetPLUS Moderate Fund") Funds were combined for the twelve month period ended December 31, 2008. Manager, administration and 12b-1(Distribution) fees in the pro forma combined column are calculated at the rates in effect for the Moderate Index based upon the combined net assets of the corresponding Moderate Index, TargetPLUS Growth Fund and TargetPLUS Moderate Fund. Certain pro forma adjustments were made to estimate the benefit of combining operations of separate funds into one survivor fund. 2. BASIS OF COMBINATION: The accompanying pro forma financial statements are presented to show the effect of the proposed acquisition of the TargetPLUS Growth Fund and TargetPLUS Moderate Fund a series of the Allianz Variable Insurance Products Trust("VIP Trust"), by the Moderate Index as if such acquisition had taken place as of January 1, 2008. Under the terms of the Plan of Reorganization, the combination of Moderate Index, TargetPLUS Growth Fund and TargetPLUS Moderate Fund will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition would be accomplished by an acquisition of the net assets of the TargetPLUS Growth Fund and TargetPLUS Moderate Fund in exchange for shares of Moderate Index at the December 31, 2008 net asset value. The Statement of Assets and Liabilities and the related Statement of Operations of the TargetPLUS Growth Fund, TargetPLUS Moderate Fund and Moderate Index have been combined as of and for the twelve month period ended December 31, 2008. Following the acquisition, the Moderate Index will be the accounting survivor. In accordance with U.S. generally accepted accounting principles ("GAAP"), the historical cost of investment securities will be carried forward to the Moderate Index. 56 The Allianz Variable Insurance Products Trust - Statement of Additional Information The assets of the Moderate Index Strategy consist of investments in underlying affiliated investment companies. As a result, the Moderate Index Strategy bears an indirect, proportionate share of the underlying Funds' expenses, in addition to the direct expenses of the Fund. None of the investments were owned by the TargetPLUS Growth Fund or TargetPLUS Moderate Fund as of December 31, 2008, as reflected on the accompanying pro forma combined schedule of investments, are in underlying affiliated investment companies and, as such, none are permissible investments for the Moderate Index Strategy. If the investments owned by the TargetPLUS Growth Fund and TargetPLUS Moderate Fund as of December 31, 2008 were in underlying affiliated investment companies, such investments would constitute permissible investments and the Moderate Index's indirect, proportionate share of the underlying Funds' expenses would have increased. All investments owned by the TargetPLUS Growth Fund and TargetPLUS Moderate Fund as of December 31, 2008, were reflected on the accompanying pro forma combined schedule of investments, will be sold prior to completion of the Moderate Index Strategy 's acquisition of the Moderate Fund's assets. These sales will result in realized gains and losses which will be distributed to shareholders of the Moderate Fund prior to completion of the acquisition. The accompanying pro forma financial statements should be read in conjunction with the financial statements of Moderate Index. TargetPLUS Growth Fund and TargetPLUS Moderate Fund included in their respective annual report dated December 31, 2008. The following notes refer to the accompanying pro forma financial statements as if the above-mentioned acquisition of the TargetPLUS Growth Fund and TargetPLUS Moderate Fund by the Moderate Index had taken place as of January 1, 2008. 3. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Moderate Index in the preparation of its financial statements. The policies conform to GAAP. The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. Security Valuation Effective January 1, 2008, the Trust adopted Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." There was no impact to the Moderate Index Strategy Funds' net assets or results of operations upon adoption. SFAS No.157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments in other investment companies are valued at their published net asset value. Security prices are generally provided by an independent third party pricing service approved by the Trust's Board of Trustees ("Trustees") as of the close of the New York Stock Exchange (generally 4:00 pm EST). Equity securities are valued at the last quoted sale price or, if there is no sale, the last quoted bid price is used for long securities and the last quoted ask price is used for securities sold short. Securities on NASDAQ 57 The Allianz Variable Insurance Products Trust - Statement of Additional Information Stock Market, Inc. ("NASDAQ") are valued at the official closing price as reported by NASDAQ. Investments in other investment companies are valued at their published net asset value. Debt and other fixed income securities are generally valued at an evaluated bid price provided by an independent pricing source approved by the Trustees. To value debt securities, pricing services may use various pricing techniques which take into account appropriate factors such as market activity, yield, quality, coupon rate, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. Short term securities of sufficient credit quality with sixty days or less remaining until maturity may be valued at amortized cost, which approximates fair value. Investment Transactions and Investment Income Investment transactions are recorded no later than one business day after trade date. For financial reporting purposes, investment transactions are recorded on trade date on the last business day of the reporting period. Net realized gains and losses on investments sold and on foreign currency transactions are recorded on the basis of identified cost. Interest income is recorded on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts. Dividend income is recorded on the ex-dividend date. Dividends to Shareholders Dividends to shareholders are recorded on the ex-dividend date. The Moderate Index distributes its income dividends and all of its net realized capital gains, if any, on an annual basis. The amount of dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (e.g., return of capital, net operating loss, reclassification of certain market discounts, gain/loss, paydowns, and distributions), such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. Dividends to shareholders which exceed net investment income and net realized gains for tax purposes are reported as distributions of capital. Expense Allocation Expenses directly attributable to the Moderate Index is charged directly to the Moderate Index Strategy Fund, while expenses attributable to more than one Fund of the Trust are allocated among the respective Funds of the Trust based upon relative net assets or some other reasonable method. Expenses which are attributable to more than one Trust are allocated across the Trust and VIP Trust based upon relative net assets or another reasonable basis. Allianz Investment Management, LLC (the "Manager"), serves as the investment manager for the Trust and the VIP Trust. 4. MANAGER FEES: The Manager provides investment advisory and management services for the Fund. The Manager has retained two money management organizations (the "Subadvisers") First Trust Advisors L.P. ("First Trust") which is independent of the Manager, and Pacific Investment Management Company LLC ("PIMCO") which is an affiliate of the Manager, to make investment decisions on behalf of the Fund. Pursuant to separate amended and restated subadvisory agreements between the Manager and First Trust and between the Manager and PIMCO, First Trust and PIMCO provide investment advisory services as 58 The Allianz Variable Insurance Products Trust - Statement of Additional Information the Subadvisers for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadvisers are entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense of the Fund is 0.89%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate Expense Limit AZL TargetPLUS Growth Fund . . . . . 0.52% 0.89% Annual Rate Expense Limit AZL TargetPLUS Moderate Fund . . . . 0.52% 0.89% The Manager provides investment advisory and management services for the Fund. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. Expenses incurred are reflected on the Statement of Operations as "Manager fees." The annual expense limit of the Fund is 0.20%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate Expense Limit AZL Moderate Index Strategy Fund. .. . . . 0.05% 0.20% The Manager or an affiliate of the Manager serves as the investment adviser of certain underlying funds in which the Fund invests. At December 31, 2009 these underlying funds will be noted as Affiliated Investment Companies in the Fund's Schedule of Portfolio Investments. The Manager or an affiliate of the Manager is paid a separate fee from the underlying funds for such services. 5. CAPITAL SHARES: The pro forma net asset value per share assumes the issuance of shares of the Moderate Index that would have been issued at December 31, 2008, in connection with the proposed reorganization. The number of shares assumed to be issued is equal to the net asset value of shares of TargetPLUS Moderate Fund, as of December 31, 2008, divided by the net asset value per share of the shares of Moderate Index as of December 31, 2008. The pro forma number of shares outstanding, by class, for the combined fund consists of the following at December 31, 2008: 59 The Allianz Variable Insurance Products Trust - Statement of Additional Information
Capital Shares Shares of Moderate SHARES ASSUMED TOTAL OUTSTANDING Index Strategy Fund ISSUED IN SHARES PRE- COMBINATION REORGANIZATION POST- COMBINATION Shares of Beneficial Interest - 11,998,451 11,998,451
----------------------- ---------------------- ----------------- ------------ -------------------- Moderate Index TargetPLUS Growth TargetPLUS Strategy Fund Fund Moderate Fund Adjustment Pro Forma Combined ----------------------- ---------------------- ----------------- ------------ -------------------- Net Assets $- $ 66,305,422 $ 53,814,586 $(135,500) $ 119,984,508 ---------- ----------------------- ---------------------- ----------------- ------------ -------------------- Net Asset Value Per Share $ 10.00 $ 6.02 $ 6.79 - $ 10.00 --------- Shares Outstanding - 11,014,322 7,920,378 (6,9,36,249) 11,998,451
6. INVESTMENT VALUATION SUMMARY: The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below: o Level 1--quoted prices in active markets for identical assets o Level 2 --other significant observable inputs (including quoted prices for similar securities, interest rates, prepayments o Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) o The inputs or methodology used for valuing investments is not nec. For example, short-term debt securities of sufficient credit quality maturing in sixty days or less are generally valued at amortized cost, which approximates fair value. Generally, amortized cost approximates the current fair value of a security, but since the valuation is not obtained from a quoted price in an active market, such securities are reflected as Level 2. The following is a summary of the valuation inputs used as of December 31, 2008 in valuing the Fund's investments based upon three levels defined above:
Securities Sold Investment Short and Other Financial Valuation Inputs Securities ^ Written Options ^ Instruments* ^ --------------------------------------------- ------------- ------------------- --------------- Level 1 -- Quoted Prices $71,962,538 $-- $528,208 Level 2 -- Other Significant Observable 66,300,644 (947,889) (-581,199) Inputs Level 3 -- Significant Unobservable Inputs -- -- -- ------------- ------------------- --------------- Total $138,263,182 $(947,889) $(52,991) ------------- ------------------- ---------------
60 The Allianz Variable Insurance Products Trust - Statement of Additional Information * Other financial instruments would include any derivative instruments, such as futures, forwards and swap agreements, but excluding written options. These investments are generally recorded in the financial statements at the unrealized gain or loss on the investment. ^ No adjustments have been made to the Total Investment securities in the unaudited pro forma combined statements of assets and liabilities because upon consummation of the merger, securities would have to be sold in order for the AZL Moderate Index Strategy Fund to comply with its prospectus restrictions. The foregoing sentence shall not restrict in any way the ability of the investment adviser of either of the funds from buying or selling securities in the normal course of such fund's business and operations. 7. FEDERAL INCOME TAX INFORMATION: It is the Moderate Index's policy to continue to comply with the requirements of the Internal Revenue Code under Subchapter M, applicable to regulated investment companies, and to distribute all of its taxable income, including any net realized gains on investments, to its shareholders. Therefore, no provision is made for federal income taxes. In addition, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48") provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether it is more-likely-than-not (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable), including the recognition of any related interest and penalties as an operating expense. Implementation of FIN 48 included a review of tax positions taken in tax years that remain subject to examination by tax authorities (i.e., the last 4 tax year ends and the interim tax period since then, as applicable). FIN 48 did not impact the Fund's net assets or results of operations for the period ended December 31, 2008. 61 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL S&P 500 Index Fund AZL AZL PIMCO Pro Forma First Trust Fundamental Statements of Assets and Liabilities AZL S&P 500 Target Double IndexPLUS AZL TargetPLUS December 31, 2008 Index Play Total Return Equity Pro Forma Pro Forma (Unaudited) Fund Fund Fund Fund Adjustments Combined ---------------------------------------------------------------------------------------------------------------------------------- Assets: Investment securities, at cost $305,320,894 $ 57,998,588 $ 153,045,872 $ 63,419,825 $ - ^ $579,785,179 ============================================================================================== Investment securities, at value $ $ 56,164,818 $ 148,457,344 $ 56,647,086 - $ 256,253,089 517,522,337 Repurchase agreements, at value/cost - - 7,300,000 - - 7,300,000 Cash 5,234 - 435 - - 5,669 Segregated cash for collateral - - 613,000 - - 613,000 Interest and dividends receivable 526,868 131,879 514,561 172,435 - 1,345,743 Foreign currency, at value (cost $708,668) - - 709,420 - - 709,420 Unrealized appreciation on interest rate swaps - - 1,330,076 - - 1,330,076 Unrealized appreciation on total return swaps - - 2,774,600 - - 2,774,600 Unrealized appreciation on credit default swaps - - 3,356 - - 3,356 Swaps premium paid - - 670,999 - - 670,999 Receivable for capital shares issued 76,148 116,346 6,794 324,842 - 524,130 Receivable for investments sold 30,411,237 - 7,455,051 - - 37,866,288 Unrealized appreciation for forward foreign currency contracts - - 97,153 - - 97,153 Receivable from Manager 3,083 - - - - 3,083 Receivable for variation margin on futures contracts 119,831 - - - - 119,831 Prepaid expenses 5,026 1,513 1,676 1,476 - 9,691 --------------- ---------------------------------------------------------------- --------------- Total Assets 169,934,465 57,145,839 - 570,895,376 287,400,516 56,414,556 ---------------------------------------------------------------------------------------------- Liabilities: Unrealized depreciation on forward foreign currency contracts - - 332,615 3,515 - 336,130 Unrealized depreciation on interest rate swaps - - 5,551,167 - - 5,551,167 Unrealized depreciation on credit default swaps - - 1,033,243 - - 1,033,243 Unrealized depreciation on total return swaps - - 1,722,400 - - 1,722,400 Swaps premium received - - 1,147,103 - - 1,147,103 Payable for investments purchased 403,172 - 92,929,838 355,855 - 93,688,865 Payable for capital shares redeemed 30,126,081 534 23,796 53 - 30,150,464 Written options (Premium received $279,965) - - 1,050,171 - - 1,050,171 Payable for variation margin on futures contracts - - 195,657 - - 195,657 Manager fees payable - 16,380 20,722 8,901 - 46,003 Administration fees payable 8,865 2,214 2,518 2,224 - 15,821 Distribution fees payable 42,297 11,067 12,598 11,127 - 77,089 Administrative and compliance services fees payable 1,097 871 984 837 - 3,789 Reorganization fees payable (A) - - - - 179,000 179,000 Other accrued liabilities 8,957 11,268 10,192 17,976 - 48,393 ---------------------------------------------------------------------------------------------- Total Liabilities 30,590,469 42,334 104,033,004 400,488 179,000 135,245,295 ---------------------------------------------------------------------------------------------- Net Assets $ $ 56,372,222 $ 65,901,461 $ 56,745,351 $ (179,000) $ 435,650,081 256,810,047 ============================================================================================== Net Assets Consist of: Capital $333,087,948 $113,528,828 $ 73,931,112 $ 107,712,190 $ - $ 628,260,078 Accumulated net investment income/(loss) 1,857,839 1,833,668 114,392 2,081,954 (179,000) 5,887,853 Accumulated net realized gains/(losses) from investment transactions (29,275,941) (57,156,504) (919,297) (46,272,730) - (133,624,472)
62 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL S&P 500 Index Fund AZL PIMCO Statements of Assets and Liabilities First Trust Fundamental Pro Forma AZL S&P 500 Target Double IndexPLUS AZL TargetPLUS December 31, 2008 Index Play Total Return Equity Pro Forma Pro Forma (Unaudited) Fund Fund Fund Fund Adjustments Combined ---------------------------------------------------------------------------------------------------------------------------------- Net unrealized (48,859,799) (1,833,770) (7,224,746) (6,776,063) - (64,694,378) appreciation/(depreciation) on investments ---------------------------------------------------------------- ---------------- Net Assets $256,810,047 $ 56,372,222 $ 65,901,461 $ 56,745,351 $(179,000) $ 435,650,081 ============================================================================================== Class 1 Net Assets $ 11,157,643 $ - $ - $ - $ - $ 11,157,643 Shares of beneficial interest (unlimited number of shares authorized, no par value) 1,811,687 - - - - 1,811,687 Net Asset Value (offering and redemption price per share) $ 6.16 $ - $ - $ - $ - $ 6.16 ============================================================================================== Class 2 Net Assets $245,652,404 $ 56,372,222 $ 65,901,461 $ 56,745,351 $(179,000) $ 424,492,438 Shares of beneficial interest (unlimited number of shares authorized, no par value) (A) 39,954,337 11,379,331 10,903,208 10,425,605 (3,620,236) 69,042,245 Net Asset Value (offering and redemption price per share) (A) $ 6.15 $ 4.95 $ 6.04 $ 5.44 $ - $ 6.15 ==============================================================================================
^ No adjustments have been made to the Total Investments in the unaudited pro forma combined statements of assets and liabilities because upon consummation of the merger, securities would have to be sold in order for the AZL S&P 500 Index Fund to comply with its prospectus restrictions. The foregoing sentence shall not restrict in any way the ability of the investment adviser of either of the funds from buying or selling securities in the normal course of such fund's business and operations. (A) Represents the estimated reorganization fees and expenses that are to be expected to be paid by the Funds. (B) Shares of the AZL First Trust Target Double Play Fund, AZL PIMCO Fundamental IndexPLUS Total Return Fund and AZL TargetPLUS Equity Fund are exchanged for new shares of the AZL S&P 500 Index Fund Class 2 Shares, to commence operations upon consummation of the merger. See accompanying notes to the Pro Forma financial statements. 63 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL S&P 500 Index Fund AZL PIMCO Statements of Operations AZL First Trust Fundamental For the Twelve Months Ended AZL S&P 500 Target Double IndexPLUS AZL TargetPLUS December 31, 2008 Index Play Total Return Equity Pro Forma Pro Forma (Unaudited) Fund Fund Fund Fund Adjustments Combined ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ Investment Income:^ Interest $ 14,039 $ 9,498 $ 4,456,741 $ 6,982 $ - $ 4,487,260 Dividends 2,230,918 2,124,453 43,019 2,525,060 - 6,923,450 Income from securities lending 7,666 311,783 7,018 177,088 - 503,555 ------------------------------------------------------------------------------------------------- Total Investment Income 2,252,623 2,445,734 4,506,778 2,709,130 - 11,914,265 ------------------------------------------------------------------------------------------------- Expenses: Manager fees 136,767 472,209 561,138 468,524 (1,108,673) (A) 529,965 Administration fees 37,256 35,115 33,513 34,822 - 140,706 Distribution fees - Class 2 191,859 197,141 187,046 195,552 - 771,598 Accounting agent fees - - 38,382 - (38,382) (B) - Custodian fees 63,102 33,830 59,605 101,563 (209,600) (B) 48,500 Administrative and compliance services fees 2,790 3,284 3,232 1,061 - 10,367 Trustees' fees 7,169 6,643 6,446 6,788 - 27,046 Professional fees 10,933 11,950 11,330 12,677 (6,000) (B) 40,890 Shareholder reports 9,936 8,531 3,948 7,951 (3,000) (B) 27,366 Interest expense - - 1,281 - (1,281) (B) - Interest expense on cash overdraft 14,505 9,840 10,103 7,501 - 41,949 Reorganization fees payable (C) - - - - - - Other expenses 34,504 3,481 4,649 24,943 - 67,577 ------------------------------------------------------------------------------------------------- Total expenses before 508,821 782,024 920,673 861,382 (1,366,936) 1,705,964 reductions Less expenses waived/reimbursed by the Manager (109,374) (149,220) (11,468) (235,937) 318,404(A) (187,595) Less expenses paid indirectly - (20,738) - (14,704) - (35,442) ----------------- ---------------- ---------------------------------------------------------------- Net Expenses 399,447 612,066 909,205 610,741 (1,048,532) 1,482,927 ------------------------------------------------------------------------------------------------- ------------------------------- Net Investment Income/(Loss) 1,853,176 1,833,668 3,597,573 2,098,389 1,048,532 10,431,338 ------------------------------------------------------------------------------------------------- Realized and Unrealized Gains/(Losses) on Investments: ^ Net realized gains/(losses) on securities and foreign currency transactions (28,445,622) (54,474,768) 2,065,213 (44,246,438) - (125,101,615) Net realized gains/(losses) on swap agreements - - (38,672,880) - - (38,672,880) Net realized gains/(losses) on futures transactions (468,657) - 2,360,881 - - 1,892,224 Net realized gains/(losses) on options transactions - - 378,193 - - 378,193 Change in unrealized appreciation/(depreciation) on investments (48,613,597) (3,354,038) (9,190,624) (6,693,121) - (67,851,380) ------------------------------------------------------------------------------------------------- 64 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL S&P 500 Index Fund AZL S&P 500 AZL First Trust AZL PIMCO AZL TargetPLUS Pro Forma Pro Forma Statements of Operations Fundamental For the Twelve Months Ended Target Double IndexPLUS December 31, 2008 Index Play Total Return Equity (Unaudited) Fund Fund Fund Fund Adjustments Combined ------------------------------------------------------------------------------------------------------------------------------------ Net Realized and Unrealized Gains/(Losses) on Investments (77,527,876) (57,828,806) (43,059,217) (50,939,559) - (229,355,458) ================================================================== ------------------------------------------------------------------------------------------------- Change in Net Assets Resulting $(75,674,700) $(55,995,138) $(39,461,644) $(48,841,170) $ 1,048,532 $ (218,924,120) from Operations =================================================================================================
^ No adjustments have been made to the Total Investments in the unadited pro forma combined statements of assets and liabilities because upon consummation of the merger, securities would have to be sold in order for the AZL S&P 500 Index Fund to coply with its prospectus restrictions. The foregoing sentence shall not restrict in any way the ability of the investment adviser of either of the funds from buying or selling securities in the normal course of such fund's business and operations. A Based on contract in effect for the surviving AZL S&P 500 Index Fund. B Decrease due to the elimination of duplicative expenses achieved by merging the funds. C Estimated reorganization fees and expenses that are to be paid by the Funds are $179,000. These amounts have not been included in the Pro Forma estimates, as such expenses are non-recurring in nature are not expected to be incurred in ongoing operations. See accompanying notes to the Pro Forma financial statements. 65 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL S&P 500 Index Fund Pro Forma Notes to Combining Financial Statements December 31, 2008 (Unaudited) 1. DESCRIPTION OF THE FUND: The AZL S&P 500 Index Fund, ("S&P Fund") a series of the Allianz Variable Insurance Products Trust (the "Trust"), is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a non-diversified, open-end investment company established as a Delaware statutory trust. The Trust is authorized to issue an unlimited number of shares of the S&P Fund without par value. The Trust is authorized to offer Class 1 and Class 2 shares of the Fund. Each class of shares has identical rights and privileges except with respect to the fees paid under the Distribution and Service Plan and voting rights on matters affecting a single class of shares. Shares of the S&P Fund are available through the variable annuity contracts and variable life insurance policies offered through the separate accounts of participating insurance companies. Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the S&P Fund. In addition, in the normal course of business, the S&P Fund may enter into contracts with its vendors and others that provide for general indemnifications. The S&P Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the S&P Fund. However, based on experience, the S&P Fund expects that risk of loss to be remote. The pro forma adjustments and pro forma combined columns of the Statement of Operations reflect the adjustments necessary to show expenses at the rates which would have been in effect if the S&P and the AZL PIMCO Fundamental IndexPLUS Total Return ("PIMCO Fund"), AZL TargetPLUS Equity ("TP Equity Fund") and AZL First Trust Target Double Play ("Target Double Play Fund") Funds were combined for the twelve month period ended December 31, 2008. Manager, administration and 12b-1 fees in the pro forma combined column are calculated at the projected rates in effect for the S&P Fund based upon the combined net assets of the corresponding the S&P Fund and the PIMCO Fund, TP Equity Fund and Target Double Play Fund. Certain pro forma adjustments were made to estimate the benefit of combining operations of separate funds into one survivor fund. 2. BASIS OF COMBINATION: The accompanying pro forma financial statements are presented to show the effect of the proposed acquisition of the PIMCO Fund, TP Equity Fund and Target Double Play Fund a series of the Trust, by the S&P Fund as if such acquisition had taken place as of January 1, 2008. Under the terms of the Plan of Reorganization, the combination of S&P Fund and PIMCO Fund, TP Equity Fund, Target Double Play Fund will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition would be accomplished by an acquisition of the net assets of PIMCO Fund, TP Equity Fund and Target Double Play Fund in exchange for shares of S&P Fund at the December 31, 2008 net asset value. The statement of assets and liabilities and the related statement of operation of PIMCO Fund, TP Equity Fund, Target Double Play Fund and S&P Fund have been combined as of and for the twelve month period ended December 31, 2008. Following the acquisition, the S&P Fund will be the accounting survivor. In accordance with U.S. generally accepted accounting principles ("GAAP"), the historical cost of 66 The Allianz Variable Insurance Products Trust - Statement of Additional Information investment securities will be carried forward to the S&P Fund and the results of operations for pre-combination periods of the S&P Fund will not be restated. The accompanying pro forma financial statements should be read in conjunction with the financial statements of S&P Fund and PIMCO Fund, TP Equity Fund, Target Double Play Fund included in their respective annual report dated December 31, 2008. The following notes refer to the accompanying pro forma financial statements as if the above-mentioned acquisition of PIMCO Fund, TP Equity Fund and Target Double Play Fund by the S&P Fund had taken place as of January 1, 2008. 3. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the S&P Fund in the preparation of its financial statements. The policies conform to GAAP. The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Security Valuation Effective January 1, 2008, the Fund's adopted Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." There was no impact to the Fund's net assets or results of operations upon adoption. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Security prices are generally provided by an independent third party pricing service approved by the Trust's Board of Trustees ("Trustees") as of the close of the New York Stock Exchange (generally 4:00 pm EST). Equity securities are valued at the last quoted sale price or, if there is no sale, the last quoted bid price is used for long securities and the last quoted ask price is used for securities sold short. Securities on NASDAQ Stock Market, Inc. ("NASDAQ") are valued at the official closing price as reported by NASDAQ. Investments in other investment companies are valued at their published net asset value. Debt and other fixed income securities are generally valued at an evaluated bid price provided by an independent pricing source approved by the Trustees. To value debt securities, pricing services may use various pricing techniques which take into account appropriate factors such as market activity, yield, quality, coupon rate, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. Short term securities of sufficient credit quality with sixty days or less remaining until maturity may be valued at amortized cost, which approximates fair value. Exchange traded options and futures contracts are valued at the last sales price as of the close of the primary exchange. Forward foreign currency contracts are generally valued at the foreign currency exchange rate as of the close of the NYSE. Non-exchange traded derivatives, such as certain options and swaps, are generally valued by approved independent pricing services utilizing pricing techniques which take into account factors such as yield, quality, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. 67 The Allianz Variable Insurance Products Trust - Statement of Additional Information Other assets and securities for which no quotation is readily available or deemed unreliable are valued at fair value as determined in good faith by the Board of Trustees ("Trustees") or persons acting on the behalf of the Trustees. Fair value pricing may be used for significant events such as securities whose trading has been suspended, whose price has become stale or for which there is no currently available price at the close of the New York Stock Exchange (generally 4 PM Eastern Time). The Fund utilizes a pricing service to assist in determining the fair value of securities when certain significant events occur that may affect the value of foreign securities. In accordance with procedures adopted by the Trustees, fair value pricing may be used if events materially affecting the value of foreign securities occur between the time when the exchange on which they are traded closes and the time when the Fund's net asset value is calculated. Management identifies possible fluctuation in international securities by monitoring the increase or decrease in the value of a designated benchmark index. In the event of an increase or decrease greater than predetermined levels, the Fund may use a systematic valuation model provided by an independent third party to fair value its international equity securities. Investment Transactions and Investment Income Investment transactions are recorded no later than one business day after trade date. For financial reporting purposes, investment transactions are recorded on trade date on the last business day of the reporting period. Net realized gains and losses on investments sold and on foreign currency transactions are recorded on the basis of identified cost. Interest income is recorded on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts. Dividend income is recorded on the ex-dividend date, except in the case of foreign securities, in which case dividends are recorded as soon as such information becomes available. Futures Contracts The Fund may enter into futures contracts. The Fund may use futures contracts to manage its exposure to the securities markets or to movements in market conditions or foreign exchange rates. Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Fund is required to segregate liquid assets in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and a payable or receivable for the change in value ("variation margin") is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts, the possibility of an illiquid market, and the inability of the counterparty to meet the terms of the contract. Real Estate Investment Trusts The Fund may own shares of real estate investment trusts ("REITs") which report information on the source of their distributions annually. Certain distributions received from REITs during the year, which are known to be a return of capital, are recorded as a reduction to the cost of the individual REIT. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the fair value of investments, assets and liabilities. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from 68 The Allianz Variable Insurance Products Trust - Statement of Additional Information fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies. Risks Associated with Foreign Securities and Currencies Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of domestic issuers. Such risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability or diplomatic developments which could adversely affect investments in those securities. Certain foreign investments may also be subject to foreign withholding taxes. Forward Foreign Currency Exchange Contracts The Fund may enter into forward foreign currency exchange contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses in the Statement of Assets and Liabilities and the Statement of Operations until the contract settlement date, at which time realized gains and losses are included in the Statement of Operations. Dividends to Shareholders Dividends to shareholders are recorded on the ex-dividend date. The S&P Fund distributes its income dividends and all of its net realized capital gains, if any, on an annual basis. The amount of dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (e.g., return of capital, net operating loss, reclassification of certain market discounts, gain/loss, paydowns, and distributions), such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. Dividends to shareholders which exceed net investment income and net realized gains for tax purposes are reported as distributions of capital. Expense Allocation Expenses directly attributable to the S&P Fund are charged directly to the S&P Fund, while expenses attributable to more than one Fund are allocated among the respective Funds based upon relative net assets or some other reasonable method. Each class of shares bears its pro-rata portion of expenses attributable to its series, except that each class separately bears expenses related specifically to that class, such as distribution fees. Expenses which are attributable to more than one Trust are allocated across the Allianz Variable Insurance Products and Allianz Variable Insurance Products Fund of Funds Trusts based upon relative net assets or another reasonable basis. Allianz Investment Management LLC (the "Manager"), serves as the investment manager for the Trust and the Allianz Variable Insurance Products Trust. Securities Lending To generate additional income, the S&P Fund may lend up to 331/3% of its assets pursuant to agreements requiring that the loan be continuously secured by any combination of cash, or U.S. government or U.S. government agency securities, equal initially to at least 102% of the fair value plus accrued interest on the 69 The Allianz Variable Insurance Products Trust - Statement of Additional Information securities loaned (105% for foreign securities). The S&P Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities lent while simultaneously seeking to earn income on the investment of collateral. Collateral is marked to market daily to provide a level of collateral at least equal to the fair value of securities loaned. There may be risks of delay in recovery of the securities or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers, such as broker-dealers, banks or institutional borrowers of securities, deemed by the Manager to be of good standing and credit worthy and when in its judgment, the consideration which can be earned currently from such securities loans justifies the attendant risks. Loans are subject to termination by the Trust or the borrower at any time, and are, therefore, not considered to be illiquid investments. At December 31, 2008, the S&P Fund had no amounts outstanding related to securities lending. Commission Recapture Certain Funds of the Trust participate in a commission recapture program. The Funds of the Trust will utilize the recaptured commissions to pay for, in whole or part, certain expenses of the S&P Fund, excluding investment advisory fees. Any amounts for the Fund, if applicable, are disclosed as "Expenses paid indirectly" on the Statement of Operations. 4. MANAGER FEES: The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to a subadvisory agreement between the Manager and the Dreyfus Corporation ("Dreyfus"), Dreyfus provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Class 1 is 0.24% and Class 2 is 0.49%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate Expense Limit AZL S&P 500 Index Fund Class 1 . . . . . . . . . . . 0.17% 0.24% AZL S&P 500 Index Fund Class 2 . . . . . . . . . . . 0.17% 0.49% The Manager provides investment advisory and management services for the Fund. The Manager has retained an affiliated money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to an amended and restated subadvisory agreement between the Manager and Pacific Investment Management Company LLC ("PIMCO"), PIMCO provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.20%. 70 The Allianz Variable Insurance Products Trust - Statement of Additional Information For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Expense Rate Limit AZL PIMCO Fundamental IndexPLUS Total Return Fund . . . .0.75% 1.20% The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to an amended and restated subadvisory agreement between the Manager and First Trust Advisors L.P. ("First Trust"), First Trust provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 0.79%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate* Expense Limit AZL TargetPLUS Equity Fund . . . . . . . . . 0.60% 0.79% * The Manager and the Fund have entered into a written agreement whereby the Manager has voluntarily reduced the management fee to 0.45% through April 30, 2010. The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to an amended and restated subadvisory agreement between the Manager and First Trust Advisors L.P. ("First Trust"), First Trust provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 0.79%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate* Expense Limit AZL First Trust Target Double Play Fund . . . . 0.60% 0.79% * The Manager and the Fund have entered into a written agreement whereby the Manager has voluntarily reduced the management fee to 0.45% through April 30, 2010. 71 The Allianz Variable Insurance Products Trust - Statement of Additional Information 5. CAPITAL SHARES: The pro forma net asset value per share assumes the issuance of shares of the S&P Fund that would have been issued at December 31, 2008, in connection with the proposed reorganization. The number of shares assumed to be issued is equal to the net asset value of shares of PIMCO Fund, TP Equity Fund and Target Double Play Fund as of December 31, 2008, divided by the net asset value per share of the shares of S&P Fund as of December 31, 2008. The pro forma number of shares outstanding, by class, for the combined fund consists of the following at December 31, 2008:
Capital Shares Shares of S&P 500 Index Fund, SHARES ASSUMED TOTAL OUTSTANDING Class 2 ISSUED IN SHARES PRE- COMBINATION REORGANIZATION POST- COMBINATION Shares of Beneficial Interest 39,954,337 29,087,908 69,042,245
PIMCO Fundamental S&P 500 Target Double IndexPLUS Total TargetPLUS Index Fund, Pro Forma Play Fund Return Fund Equity Fund Class 2 Adjustment Combined $ $ $ Net Assets $ 56,372,222 $ 65,901,461 56,745,351 245,652,404 (179,000) $424.492.438 ----------------- --------------------- ----------------- -------------- ------------ -------------- Net Asset Value Per $ 4.95 $ 6.04 $ 5.44 $ 6.15 - $ 6.15 Share Shares Outstanding 11,379,331 10,903,208 10,425,605 39,954,337 (3,620,236) 69,042,245
6. INVESTMENT VALUATION SUMMARY: The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below: * Level 1--quoted prices in active markets for identical assets * Level 2 --other significant observable inputs (including quoted prices for similar securities, interest rates, prepayments speeds, credit risk, etc.) * Level 3-- significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments. For example, short-term debt securities of sufficient credit quality maturing in sixty days or less are generally valued at amortized cost, which approximates fair value. Generally, amortized cost approximates the current fair value of a security, but since the valuation is not obtained from a quoted price in an active market, such securities are reflected as Level 2. 72 The Allianz Variable Insurance Products Trust - Statement of Additional Information The following is a summary of the valuation inputs used as of December 31, 2008 in valuing the Funds' investments based upon three levels defined above:
Securities Other Investment Sold Short and Financial Valuation Inputs Securities^ Written Options ^ Instruments*^ ---------------- ----------- --------------- ------------- Level 1 - Quoted Prices $362,250,994 $ (12,376) $2,777,007 Level 2 - Other Significant Observable Inputs 162,571,343 (1,037,795) (4,437,755) Level 3 - Significant Unobservable Inputs - - - ----------- ---------- ------------ Total $524,822,337 $(1,050,171) $(1,660,748) ============ ========== ============
* Other financial instruments would include any derivative instruments, such as futures, forwards and swap agreements, but excluding written options. These investments are generally recorded in the financial statements at the unrealized gain or loss on the investment. ^ No adjustments have been made to the Total Investments in the unaudited pro forma combined statements of assets and liabilities because upon consummation of the merger, securities would have to be sold in order for the AZL S&P 500 Index Fund to comply with its prospectus restrictions. The foregoing sentence shall not restrict in any way the ability of the investment adviser of either of the funds from buying or selling securities in the normal course of such fund's business and operations. 7. FEDERAL INCOME TAX INFORMATION: It is the S&P Fund's policy to continue to comply with the requirements of the Internal Revenue Code under Subchapter M, applicable to regulated investment companies, and to distribute all of its taxable income, including any net realized gains on investments, to its shareholders. Therefore, no provision is made for federal income taxes. In addition, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48") provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether it is more-likely-than-not (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable), including the recognition of any related interest and penalties as an operating expense. Implementation of FIN 48 included a review of tax positions taken in tax years that remain subject to examination by tax authorities (i.e., the last 4 tax year ends and the interim tax period since then, as applicable). FIN 48 did not impact the Fund's net assets or results of operations for the period ended December 31, 2008. 73 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL Van Kampen Global Franchise Fund Pro Forma Statements of Assets and Liabilities AZL Van Kampen December 31, 2008 AZL Oppenheimer Global Franchise Pro Forma Pro Forma (Unaudited) Global Fund Fund Adjustments Combined Assets: Investment securities, at cost $ 126,168,331 $ 233,203,212 $ - $ 359,371,543 ================== ================== ================== =================== Investment securities, at value $ 98,117,188 $ 205,570,121 $ - $ 303,687,309 Interest and dividends receivable 129,386 258,633 - 388,019 Foreign currency, at value (cost $275,355) - 279,183 - 279,183 Receivable for capital shares issued 10,938 210,084 - 221,022 Receivable for investments sold 9,296 - - 9,296 Unrealized appreciation for forward foreign currency conracts - 1,026,696 - 1,026,696 Reclaim receivable 142,602 385,830 - 528,432 Prepaid expenses 2,843 5,849 - 8,692 ------------------ ------------------ ------------------ ------------------- Total Assets 98,412,253 207,736,396 - 306,148,649 ------------------ ------------------ ------------------ ------------------- Liabilities: Foreign currency cash overdraft (cost $317,997) 317,997 - - 317,997 Payable for investments purchased 260,949 112,737 - 373,686 Payable for capital shares redeemed 24,523 - - 24,523 Manager fees payable 62,734 157,641 - 220,375 Administration fees payable 3,919 8,530 - 12,449 Distribution fees payable 19,604 42,640 - 62,244 Administrative and compliance services fees payable 1,567 3,105 - 4,672 Reorganization fees payable (A) - - 146,500 146,500 Other accrued liabilities 28,639 60,734 - 89,373 ------------------ ------------------- ------------------ ------------------ Total Liabilities 719,932 385,387 146,500 1,251,819 ------------------ ------------------ ------------------ ------------------- Net Assets $ 97,692,321 $ 207,351,009 $ (146,500) $ 304,896,830 ================== ================== ================== =================== Net Assets Consist of: $ Capital $ 138,250,641 228,958,018 $ - $ 367,208,659 Accumulated net investment income/(loss) 1,872,504 16,646,192 (146,500) 18,372,196 Accumulated net realized gains/(losses) from investment transactions (14,388,595) (11,684,307) - (26,072,902) Net unrealized appreciation/(depreciation) on investments (28,042,229) (26,568,894) - (54,611,123) ------------------- ------------------ ------------------ ------------------ Net Assets $ 97,692,321 $ 207,351,009 $ (146,500) $ 304,896,830 ================== ================== ================== =================== Shares of beneficial interest (unlimited number 11,910,120 16,239,080 (4,270,558) 23,878,642 of shares authorized, no par value) (B) Net Asset Value (offering and redemption price per share) (B) $8.20 $12.77 - $12.77 ================== ================== ================== =================== (A) Represents the estimated reorganization fees and expenses that are to be expected to be paid by the Funds. (B) Shares of the AZL Oppenheimer Global Fund are exchanged for new shares of the AZL Van Kampen Global Franchise Fund, to commence operations upon consummation of the merger. See accompanying notes to the Pro Forma financial statements. 74 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL Van Kampen Global Franchise Fund Statements of Operations AZL Van Kampen For the Year Ended December 31, 2008 AZL Oppenheimer Global Franchise Pro Forma Pro Forma (Unaudited) Global Fund Fund Adjustments Combined -------------------------------------------------- ------------------ ------------------ ------------------ ------------------ Investment Income: Interest $ 21,946 $ 33,855 $ - $ 55,801 Dividends 4,222,839 11,962,378 - 16,185,217 Income from securities lending 203,439 173,173 - 376,612 Foreign withholding tax (310,750) (912,984) - (1,223,734) ------------------ ------------------ ------------------ ------------------ Total Investment Income 4,137,474 11,256,422 - 15,393,896 ------------------ ------------------ ------------------ ------------------ Expenses: Manager fees 1,434,256 2,970,244 82,281 (A) 4,486,781 Administration fees 70,730 139,073 - 209,803 Distribution fees 398,404 781,643 - 1,180,047 Custodian fees 150,292 113,963 (157,355) (B) 106,900 Administrative and compliance services fees 6,488 12,594 - 19,082 Trustees' fees 13,691 27,608 - 41,299 Professional fees 27,115 53,470 (20,488) (B) 60,097 Shareholder reports 35,594 51,499 (12,000) (B) 75,093 Interest expense on cash overdraft 22,822 23,791 - 46,613 Reorganization fees (C) - - - - Other expenses 29,969 33,308 (15,300) (B) 47,977 ------------------ ------------------ ------------------ ------------------ Total expenses before reductions 2,189,361 4,207,193 (122,862) 6,273,692 Less expenses waived/reimbursed by the Manager (159,359) (162,826) (107) (322,292) Less expenses paid indirectly - (384) - (384) ------------------ ------------------ ------------------ ------------------ Net Expenses 2,030,002 4,043,983 (122,969) 5,951,016 ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ Net Investment Income/(Loss) 2,107,472 7,212,439 122,969 9,442,880 ------------------ ------------------ ------------------ ------------------ Realized and Unrealized Gains/(Losses) on Investments: Net realized gains/(losses) on securities and foreign currency transactions (12,964,785) (165,354) - (13,130,139) Change in unrealized appreciation/(depreciation) on investments (69,842,558) (114,813,305) - (184,655,863) ------------------ ------------------ ------------------ ------------------ Net Realized and Unrealized Gains/(Losses) on Investments (82,807,343) (114,978,659) - (197,786,002) ------------------ ------------------ ------------------ ------------------ Change in Net Assets Resulting from Operations $ (80,699,871) $ (107,766,220) $ 122,969 $ (188,343,122) ================== ================== ================== ==================
A Based on contract in effect for the surviving AZL Van Kampen Global Franchise Fund. B Decrease due to the elimination of duplicative expenses achieved by merging the funds. C Estimated reorganization fees and expenses that are to be paid by the Funds are $146,500. These amounts have not been included in the Pro Forma adjustments above, as such expenses are non-recurring in nature and are not expected to be incurred in ongoing operations. See accompanying notes to the Pro Forma financial statements. 75 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL Van Kampen Global Franchise Fund Pro Forma Notes to Combining Financial Statements December 31, 2008 (Unaudited) 1. DESCRIPTION OF THE FUND: The AZL Van Kampen Global Franchise Fund, ("VK Global Franchise Fund") a series of the Allianz Variable Insurance Products Trust (the "Trust"), is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end investment company established as a Delaware statutory trust. The Trust is authorized to issue an unlimited number of shares of the VK Global Franchise Fund without par value. Shares of the VK Global Franchise Fund are available through the variable annuity contracts and variable life insurance policies offered through the separate accounts of participating insurance companies. Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the VK Global Franchise Fund. In addition, in the normal course of business, the VK Global Franchise Fund may enter into contracts with its vendors and others that provide for general indemnifications. The VK Global Franchise Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the VK Global Franchise Fund. However, based on experience, the VK Global Franchise Fund expects that risk of loss to be remote. The pro forma adjustments and pro forma combined columns of the Statement of Operations reflect the adjustments necessary to show expenses at the rates which would have been in effect if the VK Global Franchise and the AZL Oppenheimer Global ("Oppenheimer Global Fund") Funds were combined for the twelve month period ended December 31, 2008. Manager, administration and 12b-1 (Distribution) fees in the pro forma combined column are calculated at the rates in effect for the VK Global Franchise Fund based upon the combined net assets of the corresponding VK Global Franchise Fund and the Oppenheimer Global Fund. Certain pro forma adjustments were made to estimate the benefit of combining operations of separate funds into one survivor fund. 2. BASIS OF COMBINATION: The accompanying pro forma financial statements are presented to show the effect of the proposed acquisition of the Oppenheimer Global Fund a series of the Trust, by the VK Global Franchise Fund as if such acquisition had taken place as of January 1, 2008. Under the terms of the Plan of Reorganization, the combination of VK Global Franchise Fund and Oppenheimer Global Fund will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition would be accomplished by an acquisition of the net assets of Oppenheimer Global Fund in exchange for shares of VK Global Franchise Fund at the December 31, 2008 net asset value. The Statements of Assets and Liabilities and the related Statements of Operations of Oppenheimber Global Fund and VK Global Franchise Fund have been combined as of and for the twelve month period ended December 31, 2008. Following the acquisition, the VK Global Franchise Fund will be the accounting survivor. In accordance with U.S. generally accepted accounting principles ("GAAP"), the historical cost of investment securities will be carried forward to the VK Global Franchise Fund and the results of operations for pre-combination periods of the VK Global Franchise Fund will not be restated. 76 The Allianz Variable Insurance Products Trust - Statement of Additional Information The accompanying pro forma financial statements should be read in conjunction with the financial statements of VK Global Franchise and Oppenheimer Global Fund included in their respective annual report dated December 31, 2008. The following notes refer to the accompanying pro forma financial statements as if the above-mentioned acquisition of Oppenheimer Global Fund by the VK Global Franchise Fund had taken place as of January 1, 2008. 3. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the VK Global Franchise Fund in the preparation of its financial statements. The policies conform to GAAP. The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Security Valuation Effective January 1, 2008, the VK Global Franchise Fund adopted Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." There was no impact to the VK Global Franchise Funds' net assets or results of operations upon adoption. SFAS No.157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Security prices are generally provided by an independent third party pricing service approved by the Trust's Board of Trustees ("Trustees") as of the close of the New York Stock Exchange (generally 4:00 pm EST). Equity securities are valued at the last quoted sale price or, if there is no sale, the last quoted bid price is used for long securities and the last quoted ask price is used for securities sold short. Securities on NASDAQ Stock Market, Inc. ("NASDAQ") are valued at the official closing price as reported by NASDAQ. Investments in other investment companies are valued at their published net asset value. Debt and other fixed income securities are generally valued at an evaluated bid price provided by an independent pricing source approved by the Trustees. To value debt securities, pricing services may use various pricing techniques which take into account appropriate factors such as market activity, yield, quality, coupon rate, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. Short term securities of sufficient credit quality with sixty days or less remaining until maturity may be valued at amortized cost, which approximates fair value. Exchange traded options and futures contracts are valued at the last sales price as of the close of the primary exchange. Forward foreign currency contracts are generally valued at the foreign currency exchange rate as of the close of the NYSE. Non-exchange traded derivatives, such as certain options and swaps, are generally valued by approved independent pricing services utilizing pricing techniques which take into account factors such as yield, quality, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. Other assets and securities for which no quotation is readily available or deemed unreliable are valued at fair value as determined in good faith by the Board of Trustees ("Trustees") or persons acting on the 77 The Allianz Variable Insurance Products Trust - Statement of Additional Information behalf of the Trustees. Fair value pricing may be used for significant events such as securities whose trading has been suspended, whose price has become stale or for which there is no currently available price at the close of the New York Stock Exchange (generally 4 PM Eastern Time). The Fund utilizes a pricing service to assist in determining the fair value of securities when certain significant events occur that may affect the value of foreign securities. In accordance with procedures adopted by the Trustees, fair value pricing may be used if events materially affecting the value of foreign securities occur between the time when the exchange on which they are traded closes and the time when the Fund's net asset value is calculated. Management identifies possible fluctuation in international securities by monitoring the increase or decrease in the value of a designated benchmark index. In the event of an increase or decrease greater than predetermined levels, the Fund may use a systematic valuation model provided by an independent third party to fair value its international equity securities. Investment Transactions and Investment Income Investment transactions are recorded no later than one business day after trade date. For financial reporting purposes, investment transactions are recorded on trade date on the last business day of the reporting period. Net realized gains and losses on investments sold and on foreign currency transactions are recorded on the basis of identified cost. Interest income is recorded on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts. Dividend income is recorded on the ex-dividend date, except in the case of foreign securities, in which case dividends are recorded as soon as such information becomes available. Futures Contracts The Fund may enter into futures contracts. The Fund may use futures contracts to manage its exposure to the securities markets or to movements in market conditions or foreign exchange rates. Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Fund is required to segregate liquid assets in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and a payable or receivable for the change in value ("variation margin") is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts, the possibility of an illiquid market, and the inability of the counterparty to meet the terms of the contract. Real Estate Investment Trusts The Fund may own shares of real estate investment trusts ("REITs") which report information on the source of their distributions annually. Certain distributions received from REITs during the year, which are known to be a return of capital, are recorded as a reduction to the cost of the individual REIT. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the fair value of investments, assets and liabilities. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. The Fund does not isolate that 78 The Allianz Variable Insurance Products Trust - Statement of Additional Information portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies. Risks Associated with Foreign Securities and Currencies Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of domestic issuers. Such risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability or diplomatic developments which could adversely affect investments in those securities. Certain foreign investments may also be subject to foreign withholding taxes. Forward Foreign Currency Exchange Contracts The Fund may enter into forward foreign currency exchange contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses in the Statement of Assets and Liabilities and the Statement of Operations until the contract settlement date, at which time realized gains and losses are included in the Statement of Operations. Dividends to Shareholders Dividends to shareholders are recorded on the ex-dividend date. The VK Global Franchise Fund distributes its income dividends and all of its net realized capital gains, if any, on an annual basis. The amount of dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (e.g., return of capital, net operating loss, reclassification of certain market discounts, gain/loss, paydowns, and distributions), such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales and post October losses) do not require reclassification. Dividends to shareholders which exceed net investment income and net realized gains for tax purposes are reported as distributions of capital. Expense Allocation Expenses directly attributable to the VK Global Franchise Fund are charged directly to the VK Global Franchise Fund, while expenses attributable to more than one Fund of the Trust are allocated among the respective Funds of the Trust based upon relative net assets or some other reasonable method. Expenses which are attributable to more than one Trust are allocated across the Allianz Variable Insurance Products and Allianz Variable Insurance Products Fund of Funds Trust's based upon relative net assets or another reasonable basis. Allianz Investment Management, LLC (the "Manager"), serves as the investment manager for the Trust and the Allianz Variable Insurance Products Fund of Funds Trust. 79 The Allianz Variable Insurance Products Trust - Statement of Additional Information Securities Lending To generate additional income, the VK Global Franchise Fund may lend up to 33-1/3% of its assets pursuant to agreements requiring that the loan be continuously secured by any combination of cash, or U.S. government or U.S. government agency securities, equal initially to at least 102% of the fair value plus accrued interest on the securities loaned (105% for foreign securities). The VK Global Franchise Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities lent while simultaneously seeking to earn income on the investment of collateral. Collateral is marked to market daily to provide a level of collateral at least equal to the fair value of securities loaned. There may be risks of delay in recovery of the securities or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers, such as broker-dealers, banks or institutional borrowers of securities, deemed by the Manager to be of good standing and credit worthy and when in its judgment, the consideration which can be earned currently from such securities loans justifies the attendant risks. Loans are subject to termination by the Trust or the borrower at any time, and are, therefore, not considered to be illiquid investments. At December 31, 2008, the VK Global Franchise Fund had no amounts outstanding related to securities lending. Commission Recapture Certain Funds of the Trust participate in a commission recapture program. The Funds of the Trust will utilize the recaptured commissions to pay for, in whole or part, certain expenses of the VK Global Franchise Fund, excluding investment advisory fees. Any amounts for the Fund, if applicable, are disclosed as "Expenses paid indirectly" on the Statement of Operations. 4. Related Party Transactions The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to a subadvisory agreement between the Manager and Van Kampen Asset Management ("VKAM"), VKAM provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.39%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate* Expense Limit AZL Van Kampen Global Franchise Fund . . . . 0.95% 1.39% * The Manager is voluntarily reducing the management fee to 0.95% on the first $100 million, 0.90% on the next $100 million, and 0.85% on assets above $200 million. 80 The Allianz Variable Insurance Products Trust - Statement of Additional Information The Manager provides investment advisory and management services for the Fund. The Manager has retained an independent money management organization (the "Subadviser") to make investment decisions on behalf of the Fund. Pursuant to a subadvisory agreement between the Manager and OppenheimerFunds, Inc. ("OFI"), OFI provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. The Manager is entitled to a fee, computed daily and paid monthly, based on the average daily net assets of the Fund. Expenses incurred by the Fund are reflected on the Statement of Operations as "Manager fees." For its services, the Subadviser is entitled to a fee payable by the Manager. The Manager has contractually agreed to waive fees and reimburse the Fund to limit the annual expenses, excluding interest expense (e.g., cash overdraft fees) and expenses paid indirectly, based on the daily net assets of the Fund, through April 30, 2010. The annual expense limit of the Fund is 1.39%. For the year ended December 31, 2008, the annual rate due to the Manager and the annual expense limit were as follows: Annual Rate* Expense Limit AZL Oppenheimer Global Fund . . . . . . .. . . 0.90% 1.39% * The Manager is voluntarily reducing the management fee to 0.80%. 5. CAPITAL SHARES: The pro forma net asset value per share assumes the issuance of shares of the VK Global Franchise Fund that would have been issued at December 31, 2008, in connection with the proposed reorganization. The number of shares assumed to be issued is equal to the net asset value of shares of Oppenheimer Global Fund, as of December 31, 2008, divided by the net asset value per share of the shares of VK Global Franchise Fund as of December 31, 2008. The pro forma number of shares outstanding, by class, for the combined fund consists of the following at December 31, 2008.
Capital Shares Shares of Van Kampen SHARES ASSUMED Global Franchise Fund ISSUED IN TOTAL OUTSTANDING SHARES PRE- COMBINATION REORGANIZATION POST- COMBINATION Shares of Beneficial Interest 16,239,080 7,639,562 23,878,642
----------------------- ---------------------- ------------- ----------------------------- Oppenheimer Global Van Kampen Global Fund Franchise Fund Adjustment Pro Forma Combined ----------------------- ---------------------- ------------- ----------------------------- Net Assets $ 97,692,321 $ 207,351,009 $ (146,500) $ 304,896,830 ---------- Net Asset Value Per Share $ 8.20 $ 12.77 - $ 12.77 --------- Shares Outstanding 11,910,120 16,239,080 (4,270,558) 23,878,642
81 The Allianz Variable Insurance Products Trust - Statement of Additional Information 6. Investment Valuation Summary The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below: o Level 1--quoted prices in active markets for identical assets o Level 2 --other significant observable inputs (including quoted prices for similar securities, interest rates, prepayments speeds, credit risk, etc.) o Level 3-- significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments. For example, short-term debt securities of sufficient credit quality maturing in sixty days or less are generally valued at amortized cost, which approximates fair value. Generally, amortized cost approximates the current fair value of a security, but since the valuation is not obtained from a quoted price in an active market, such securities are reflected as Level 2. The following is a summary of the valuation inputs used as of December 31, 2008 in valuing the Fund's investments based upon three levels defined above:
Investment Other Financial Valuation Inputs Securities ^ Instruments* ---------------- ------------ ----------------- Level 1 -- Quoted Prices $117,438,954 $ -- Level 2 -- Other Significant Observable Inputs 186,248,355 -- Level 3 -- Significant Unobservable Inputs -- -- -------------------- ----------------- -------------------- ----------------- Total $303,687,309 $ -- ==================== =================
* Other financial instruments would include any derivative instruments, such as futures, forwards and swap agreements. These investments are generally recorded in the financial statements at the unrealized gain or loss on the investment. 7. FEDERAL INCOME TAX INFORMATION: It is the VK Global Franchise Fund's policy to continue to comply with the requirements of the Internal Revenue Code under Subchapter M, applicable to regulated investment companies, and to distribute all of its taxable income, including any net realized gains on investments, to its shareholders. Therefore, no provision is made for federal income taxes. In addition, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes ('FIN 48') provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether it is more-likely-than-not (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable), including the recognition of any related interest and penalties as an operating expense. Implementation of FIN 48 included a review of tax positions taken in tax years that remain subject to examination by tax authorities (i.e., the last 4 tax year ends and the interim tax period since then, as applicable). FIN 48 did not impact the Fund's net assets or results of operations for the period ended December 31, 2008. 82 The Allianz Variable Insurance Products Trust - Statement of Additional Information PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS The Pro Forma Combined Schedules of Portfolio Investments on the following pages contain information about the securities holdings of the Pro Forma Combined Funds as of December 31, 2008. These holdings have changed and will continue to change over time due to normal portfolio turnover in response to changes in market conditions. Accordingly, it is expected that some of each Acquired fund's holdings may be sold subsequent to the Reorganization. It is also expected that any holdings of an Acquired Fund that are not compatible with the corresponding Acquiring Fund's investment objective and policies will be liquidated in an orderly manner in connection with the Reorganization and that the proceeds of these sales will be held in temporary investments or reinvested in assets that are consistent with the Acquiring Fund's investment objective and policies. The portion of an Acquired Fund's assets that will be liquidated in connection with the Reorganization will depend on market conditions and on the assessment by each Acquiring Fund's subadviser of the compatibility of those holdings with the Acquiring Fund's portfolio composition and investment objective and policies at the time of the Reorganization. Sales of an Acquired Fund's investments in connection with the Reorganization may occur at times and prices that are disadvantageous and could result in realizing gains, or losses, that would not otherwise have been realized and incurring transaction costs that would not otherwise have been incurred at that time. 83 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL AIM International Equity Fund Schedule of Portfolio Investments Pro Forma December 31, 2008 (Unaudited)
AZL AZL Oppenheimer AZL AIM Oppenheimer AZL AIM International International International International Growth Fund Equity Fund Pro Forma Growth Fund Equity Fund Pro Forma Combined Combined Fair Shares Shares Shares Security Description Fair Value Fair Value Value ------------------ --------------- ----------- --------------- ------------------- ----------------- ------------- ---------------- ------------------ --------------- ----------- --------------- ------------------- ----------------- ------------- ---------------- Common Stocks (88.4%): Aerospace & Defense(1.6%): Empresa Brasileira de 203,000 203,000 Aeronautica SA, ADR $ 811,923 $ 811,923 174,970 174,970 Finmeccanica SpA $2,680,000 2,680,000 Singapore Technologies 665,000 665,000 Engineering, Ltd. 1,100,220 1,100,220 --------- 811,923 3,780,220 4,592,143 Air Freight & Logistics (0.6%) 88,369 88,369 TNT NV 1,697,042 1,697,042 Auto Components (0.3%) 56,200 56,200 Denso Corp. 935,136 935,136 Automobiles (2.4%): Bayerische Motoren 10,731 10,731 Werke AG (BMW) 335,316 335,316 30,574 30,574 Honda Motor Co. 663,214 663,214 6,933 28,859 35,792 Porsche AG 549,309 2,286,531 2,835,840 29,300 71,400 100,700 Toyota Motor Corp. 959,283 2,337,640 3,296,923 2,507,122 4,624,171 7,131,293 Beverages (2.4%): 142,275 142,275 Anheuser-Busch Inbev NV 3,298,179 3,298,179 187,926 187,926 C&C Group plc 380,467 380,467 15,550 61,333 76,883 Heineken NV 477,698 1,755,689 2,233,387 16,026 16,026 Pernod-Ricard SA 1,188,279 1,188,279 2,046,444 5,053,868 7,100,312 Biotechnology (0.5%): 53,700 53,700 CSL, Ltd. 1,267,682 1,267,682 2,547,200 2,547,200 Proteome Systems, Ltd.* 53,262 53,262 1,320,944 1,320,944 84 The Allianz Variable Insurance Products Trust - Statement of Additional Information Capital Markets (1.0%): 642,070 642,070 Collins Stewart plc 550,228 550,228 12,438 12,438 Deutsche Boerse AG 905,786 905,786 224,320 224,320 ICAP plc 935,265 935,265 332,420 332,420 Tullet Prebon plc 654,851 654,851 2,140,344 905,786 3,046,130 Chemicals (2.8%): 60,002 60,002 Bayer AG 3,510,835 3,510,835 248,220 248,220 Filtrona plc 490,609 490,609 82,718 82,718 Nufarm, Ltd. 609,465 609,465 568 568 Sika AG-BEARER 483,574 483,574 15,207 15,207 Syngenta AG 2,947,307 2,947,307 1,583,648 6,458,142 8,041,790 Commercial Banks (2.5%): 281,034 281,034 Akbank T.A.S. 877,578 877,578 Banco Santander Central 122,672 122,672 Hispano SA 1,183,789 1,183,789 42,197 42,197 BNP Paribas, Inc. 1,781,627 1,781,627 13,052 13,052 Credit Suisse Group 357,897 357,897 18,500 18,500 ICICI Bank, Ltd., ADR 356,125 356,125 United Overseas Bank, 293,000 293,000 Ltd. 2,645,755 2,645,755 714,022 6,488,749 7,202,771 Commercial Services & Supplies (2.7%): 117,620 117,620 Aggreko plc 757,572 757,572 203,310 203,310 BTG plc* 410,542 410,542 276,170 150,973 427,143 Capita Group plc 2,941,877 1,608,227 4,550,104 130,726 130,726 Experian plc 818,463 818,463 Prosegur Compania de 40,700 40,700 Seguridad SA 1,348,550 1,348,550 6,277,004 1,608,227 7,885,231 85 The Allianz Variable Insurance Products Trust - Statement of Additional Information Communications Equipment (2.0%): 21,200 109,451 130,651 Nokia OYJ 328,625 1,696,620 2,025,245 167,500 167,500 Tandberg ASA 1,845,008 1,845,008 Telefonaktiebolaget LM 263,380 263,380 Ericsson, Class B 2,021,132 2,021,132 4,194,765 1,696,620 5,891,385 Computers & Peripherals (0.0%): Logitech International 8,481 8,481 SA* 132,458 132,458 Construction & Engineering (0.7%): Koninklijke Boskalis 15,125 15,125 Westminster NV, CVA 351,288 351,288 43,969 43,969 Leighton Holdings, Ltd. 854,941 854,941 TREVI-- Finanziaria 35,000 35,000 Industriale SPA 363,922 363,922 8,699 8,699 Vinci SA 366,299 366,299 1,936,450 1,936,450 Construction Materials (0.5%) 58,520 58,520 CRH plc 1,476,742 1,476,742 Distributors (0.4%) 616,000 616,000 Li & Fung, Ltd. 1,062,823 1,062,823 Diversified Consumer Services (0.2%): 52,490 52,490 Dignity plc. 454,379 454,379 Diversified Financia Services (0.3%): 65,407 65,407 3I Group plc 257,612 257,612 Housing Development 7,000 7,000 Finance, Ltd. 218,325 218,325 Paragon Group of Cos., 336,652 336,652 plc (The) 275,083 275,083 3,452 6,211 9,663 Reinet Investments SCA* 33,606 60,465 94,071 784,626 60,465 845,091 86 The Allianz Variable Insurance Products Trust - Statement of Additional Information Diversified Telecommunication Philippine Long Services (2.6%) 40,350 40,350 Distance Telephone Co. 1,855,172 1,855,172 PT Telekomunikasi 1,983,500 1,983,500 Indonesia 1,296,036 1,296,036 199,628 199,628 Telefonica SA 4,474,251 4,474,251 7,625,459 7,625,459 Electric Utilities (0.1%): 19,300 19,300 Fortum OYJ 414,506 414,506 Electrical Equipment (1.9): 195,548 195,548 ABB, Ltd. 2,948,979 2,948,979 33,530 33,530 Alstom SA 1,979,818 1,979,818 55,100 55,100 Ushio, Inc. 726,576 726,576 5,655,373 5,655,373 Electronic Equipment & Instruments Hon Hai Precision (4.6%): 462,073 462,073 Industry Co., Ltd. 912,236 912,236 70,300 96,100 166,400 HOYA Corp. 1,221,510 1,669,802 2,891,312 20,861 20,861 IBIDEN Co., Ltd. 430,135 430,135 8,620 13,770 22,390 Keyence Corp. 1,765,387 2,820,114 4,585,501 43,400 56,600 100,000 Nidec Corp. 1,688,099 2,201,530 3,889,629 Nippon Electric Glass 34,500 34,500 Co., Ltd. 181,253 181,253 29,600 29,600 Omron Corp. 397,381 397,381 5,683,765 7,603,682 13,287,447 Energy Equipment & Services (0.8%): Ceres Power Holdings 344,260 344,260 plc* 406,773 406,773 116,842 116,842 Petroleum Geo-Services* 477,187 477,187 17,000 17,000 Saipem SpA 285,421 285,421 38,830 38,830 Technip SA 1,189,464 1,189,464 1,881,658 477,187 2,358,845 87 The Allianz Variable Insurance Products Trust - Statement of Additional Information Food & Staples Retailing (1.3%): 593,038 593,038 Tesco plc 3,088,925 3,088,925 36,509 36,509 Woolworths, Ltd. 680,987 680,987 680,987 3,088,925 3,769,912 Food Products (2.9%): Barry Callebaut AG, 3,518 3,518 Registered Shares 2,298,504 2,298,504 20,008 132,796 152,804 SFR Nestle SA, Class B 788,900 5,236,046 6,024,946 3,087,404 5,236,046 8,323,450 Health Care Equipment & Art Advanced Research Supplies (5.3%): 957,913 957,913 Technologies, Inc. (b) 31,046 31,046 53,540 53,540 Cochlear, Ltd. 2,107,188 2,107,188 27,700 27,700 DiaSorin SPA 550,683 550,683 18,590 18,590 Essilor International SA 872,146 872,146 10,025 10,025 Nobel Biocare Holding AG 205,441 205,441 149,800 149,800 Ortivus AB, Class B* 59,909 59,909 98,987 98,987 Smith & Nephew plc 627,889 627,889 269,418 269,418 Sonic Healthcare, Ltd. 2,741,810 2,741,810 10,472 37,591 48,063 Sonova Holding AG 632,033 2,268,788 2,900,821 Straumann Holding AG, 4,438 4,438 Registered Shares 782,039 782,039 22,920 22,920 Synthes, Inc. 2,898,455 2,898,455 25,700 25,700 Terumo Corp. 1,203,823 1,203,823 William Demant Holding 12,700 12,700 A/S* 527,693 527,693 11,132,967 4,375,976 15,508,943 Hotels,Restaurants & Leisure (1.7%): 29,400 29,400 Carnival Corp. 715,008 715,008 539,247 539,247 Compass Group plc 2,675,318 2,675,318 88 The Allianz Variable Insurance Products Trust - Statement of Additional Information 164,410 164,410 Enterprise Inns plc 132,409 132,409 37,993 37,993 OPAP SA 1,092,874 1,092,874 119,991 119,991 William Hill plc. 373,118 373,118 1,220,535 3,768,192 4,988,727 Household Durables (0.9%): Desarrolladora Homex, 45,925 45,925 SA de C.V., ADR* 1,048,468 1,048,468 Koninklijke Philips 30,800 30,800 Electronics NV 598,961 598,961 17,466 17,466 SEB SA 524,139 524,139 Urbi, Desarolloas 323,300 323,300 Urbanos, SA de CV* 441,344 441,344 1,123,100 1,489,812 2,612,912 Household Products (1.8%): 55,881 55,881 Henkel AG & KGaA 1,820,755 1,820,755 Reckitt Benckiser Group 16,738 76,294 93,032 plc 623,413 2,841,599 3,465,012 623,413 4,662,354 5,285,767 Independent Power Producers & Energy Traders (0.6%) 523,330 523,330 International Power plc 1,816,606 1,816,606 Industrial Conglomerates 452,000 452,000 Hutchinson Whampoa, Ltd. 2,280,082 2,280,082 (1.8%): 362,000 362,000 Keppel Corp., Ltd. 1,097,516 1,097,516 2,289 2,289 Phoenix Mecano AG 682,000 682,000 14,103 14,103 Siemens AG 1,058,408 1,058,408 1,740,408 3,377,598 5,118,006 Insurance (2.4%): 105,461 105,461 AMP, Ltd. 400,803 400,803 138,584 138,584 Aviva plc 784,258 784,258 89 The Allianz Variable Insurance Products Trust - Statement of Additional Information 94,651 94,651 Axa 2,109,978 2,109,978 148,612 148,612 Prudential plc 904,561 904,561 QBE Insurance Group, 114,764 43,712 158,476 Ltd. 2,085,536 794,351 2,879,887 3,390,900 3,688,587 7,079,487 Internet Software & Services (1.2%): United Internet AG, 56,159 56,159 Registered Shares 494,581 494,581 7,047 7,047 Yahoo! Japan Corp. 2,883,601 2,883,601 3,378,182 3,378,182 IT Services (2.4%): 148,373 148,373 Autonomy Corp. plc* 2,041,722 2,041,722 33,028 33,028 Cap Gemini SA 1,272,867 1,272,867 47,959 47,959 Compugroup Holding AG* 217,790 217,790 Infosys Technologies, 135,203 135,203 Ltd., ADR 3,321,938 3,321,938 2,259,512 4,594,805 6,854,317 Machinery (2.3%): 154,799 154,799 Aalberts Industries NV 1,105,693 1,105,693 Bharat Heavy 47,684 47,684 Electricals, Ltd. 1,351,189 1,351,189 31,851 31,851 Demag Cranes AG. 842,662 842,662 36,200 36,200 Fanuc, Ltd. 2,575,078 2,575,078 Hyundai Heavy 1,448 1,448 Industries Co., Ltd.* 235,549 235,549 11,600 11,600 Outotec OYJ 179,570 179,570 Takeuchi Manufacturing 35,213 35,213 Co., Ltd. 337,467 337,467 2,700,941 3,926,267 6,627,208 Marine (0.2%): Tsakos Energy 28,500 28,500 Navigation, Ltd. 522,120 522,120 90 The Allianz Variable Insurance Products Trust - Statement of Additional Information Media (3.0%): British Sky 72,511 72,511 Broadcasting Group plc 504,385 504,385 36,200 132,156 168,356 Grupo Televisa SA, ADR 540,828 1,974,410 2,515,238 287,063 287,063 Informa Group Co., plc 1,018,273 1,018,273 40,900 40,900 Mediaset SPA 233,545 233,545 232,338 232,338 Reed Elsevier plc 1,693,060 1,693,060 30,640 30,640 Vivendi Universal SA 997,454 997,454 228,498 228,498 WPP plc 1,331,647 1,331,647 150,800 150,800 Zee Telefilms, Ltd. 437,792 437,792 2,714,004 6,017,390 8,731,394 Metals & Mining (1.9%): 126,643 126,643 BHP Billiton, Ltd. 2,666,505 2,666,505 Companhia Vale do Rio Doce, ADR, Preferred 94,600 94,600 Shares 1,007,490 1,007,490 Impala Platinum 83,200 83,200 Holdings, Ltd. 1,228,513 1,228,513 23,682 23,682 Rio Tinto plc 512,989 512,989 2,748,992 2,666,505 5,415,497 Multiline Retail (0.1%): Pinault Printemps 5,720 5,720 Redoute 373,621 373,621 Office Electronics (0.4%) 37,050 37,050 Canon, Inc. 1,163,313 1,163,313 Oil, Gas & Consumable Fuels 130,950 130,950 BG Group plc 1,817,637 1,817,637 (5.1%): 19,300 19,300 BP plc, ADR 902,082 902,082 Canadian Natural 30,801 30,801 Resources, Ltd. 1,216,617 1,216,617 91 The Allianz Variable Insurance Products Trust - Statement of Additional Information 130,764 130,764 Eni SpA 3,098,219 3,098,219 207,900 207,900 MaireTecnimont SpA 422,754 422,754 Petroleo Brasileiro SA, 55,253 55,253 ADR, Class A 1,127,714 1,127,714 71,812 71,812 Suncor Energy, Inc. 1,380,150 1,380,150 26,050 61,725 87,775 Total SA 1,420,025 3,364,724 4,784,749 4,562,498 0,187,424 14,749,922 Personal Products (0.2%): 5,160 5,160 L'Oreal SA 448,335 448,335 Pharmaceuticals (9.6%): 10,200 10,200 Astella Pharma, Inc. 415,144 415,144 13,072 13,072 GlaxoSmithKline plc 242,615 242,615 50,500 50,500 Grifols SA 877,006 877,006 Marshall Edwards, 176,800 176,800 Inc.(a)* 123,760 123,760 Marshall Edwards, Inc., 238,700 238,700 Private Equity(d)* 139,102 139,102 29,929 29,929 Merck KGaA 2,721,186 2,721,186 45,561 45,561 NeuroSearch A/S* 1,178,977 1,178,977 28,369 28,369 NicOx SA* 309,770 309,770 Novo Nordisk A/S, Class 56,092 56,092 B 2,854,994 2,854,994 667,032 667,032 Novogen, Ltd.* 366,039 366,039 12,841 40,522 53,363 Roche Holding AG. 1,977,499 6,240,339 8,217,838 13,216 13,216 Sanofi-Aventis SA, ADR 839,305 839,305 Santhera 4,945 4,945 Pharmaceuticals* 182,092 182,092 31,000 31,000 Shionogi & Co., Ltd. 796,409 796,409 214,490 214,490 Shire, Ltd. 3,135,894 3,135,894 Takeda Chemical 14,400 14,400 Industries, Ltd. 747,128 747,128 Teva Pharmaceuticals 118,938 118,938 Industries, Ltd., ADR 5,063,191 5,063,191 8,194,846 0,015,604 28,210,450 92 The Allianz Variable Insurance Products Trust - Statement of Additional Information Real Estate Management & 72,400 72,400 Solidere, GDR 1,197,496 1,197,496 Development (0.4%): Road & Rail (0.5%): Canadian National 34,859 Railway Co. 1,264,776 1,264,776 52,340 Toll Holdings, Ltd. 226,234 226,234 226,234 1,264,776 1,491,010 Semiconductors & Semiconductor Taiwan Semiconductor Equipment (0.7%) Manufacturing Co., Ltd. 251,313 251,313 ADR 1,985,373 1,985,373 Software (2.5%): Infosys Technologies, 41,468 41,468 Ltd. 960,504 960,504 6,800 4,100 10,900 Nintendo Co., Ltd. 2,613,102 1,575,547 4,188,649 158,960 158,960 Sage Group plc 390,797 390,797 24,156 24,156 SAP AG 858,945 858,945 17,900 17,900 SQUARE ENIX Co., Ltd. 577,992 577,992 33,489 33,489 Temenos Group AG* 447,150 447,150 5,848,490 1,575,547 7,424,037 Specialty Retail (1.4%): Compagnie Financiere 26,785 26,785 Richemont SA, Class A 520,239 520,239 298,200 298,200 Espirit Holdings, Ltd. 1,699,794 1,699,794 93 The Allianz Variable Insurance Products Trust - Statement of Additional Information 16,300 16,300 Hennes & Mauritz AB 637,298 637,298 Industria de Diseno 25,700 25,700 Textil SA 1,135,846 1,135,846 2,293,383 1,699,794 3,993,177 Textiles, Apparel & 154,617 154,617 Burberry Group plc 495,769 495,769 Luxury Goods 34,800 34,800 Luxottica Group SPA 622,028 622,028 (1.5%): LVMH Moet Hennessy 10,160 10,160 Louis Vuitton SA 682,534 682,534 10,103 10,103 Puma AG 2,012,400 2,012,400 Swatch Group AG, B 4,376 4,376 Shares. 611,522 611,522 2,411,853 2,012,400 4,424,253 ITobacco (2.1%): British American 16,381 27,737 44,118 Tobacco plc 425,530 720,525 1,146,055 Imperial Tobacco Group 188,155 188,155 plc 5,024,988 5,024,988 425,530 5,745,513 6,171,043 Trading Companies & Distributors 154,012 154,012 Bunzl plc 1,314,255 1,314,255 (0.5%): 39,660 39,660 Wolseley plc 221,074 221,074 1,535,329 1,535,329 Wireless Telecommunication American Movil, SAB de Services (2.8%): 97,034 97,034 C.V,, ADR, Series L 3,007,083 3,007,083 156 156 KDDI Corp. 1,111,338 1,111,338 394,250 1,615,438 2,009,688 Vodafone Group plc 793,477 3,251,271 4,044,748 1,904,815 6,258,354 8,163,169 Total Common Stocks (Cost $333,499,870) 106,448,639 151,008,167 257,456,806 94 The Allianz Variable Insurance Products Trust - Statement of Additional Information Warrants (0.0%): Pharmaceuticals (0.1%): Marshall Edwards, 48,545 48,545 Inc., Private Equity* 27,808 27,808 Marshall Edwards, 10,000 10,000 Inc., Private Equity* 27,565 27,565 Total Warrants (Cost $--) 55,373 55,373 Investment Company (9.2%): Dreyfus Treasury Prime 11,050,274 11,050,274 Cash Management, 0.17%(c) 11,050,274 15,761,442 26,811,716 Total Investment Company (Cost $26,811,716) 11,050,274 15,761,442 26,811,716 Total Investment Securities (Cost $360,311,586)(e)-- 97.6% 117,554,286 166,769,609 284,323,895 Net other assets (liabilities) (2,905,712) 9,976,881 7,071,169 Adjustments for Reorganization Fees (e) - ((0.1)% - - (147,500) Net Assets -- 100.0% 114,648,574 176,746,490 291,247,564 Percentages indicated are based on net assets as of December 31, 2008. * Non-income producing security ADR--American Depository Receipt GDR--Global Depository Receipt PLC--Public Liability Co. SPA--Standby Purchase Agreement 95 The Allianz Variable Insurance Products Trust - Statement of Additional Information (a) Rule 144A, Section 4(2) or other security which is restricted to resale to institutional investors. The subadviser has deemed these securities to be liquid based on procedures approved by the Board of Trustees. (b) Rule 144A, Section 4(2) or other security which is restricted to resale to institutional investors. The subadviser has deemed these securities to be illiquid based on procedures approved by the Board of Trustees. As of December 31, 2008, these securities represent 0.0% of the net assets of the Fund. (c) The rate presented represents the effective yield at December 31, 2008. (d) Security was fair valued as of December 31, 2008. Represents 0.0% of the net assets of the Fund. (e) Represents the estimate reorganization fees and expenses that are to be expected to be paid by the Funds. (f) Cost for federal income tax purposes is $367,336,478. The gross unrealized appreciation/(depreciation) on a tax basis is as follows: Unrealized appreciation $ 14,098,325 Unrealized depreciation (97,110,908) -------------------------------------------- Net unrealized depreciation $ (83,012,583)
96 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL Balanced Index Strategy Fund Pro Forma Combined Schedule of Portfolio Investments ^ (Unaudited) AZL Balanced AZL Balanced AZL TargetPLUS Index Strategy AZL TargetPLUS Index Strategy Balanced Fund Fund Pro Forma Security Description Balanced Fund Fund Pro Forma Combined Combined Fair Shares Shares Shares Fair Value Fair Value Value --------------------- ---------------- ------------- ------------------------------------------ ----------- ------ --------------- Asset Backed Securities (0.4%): $ 200,000 $ - 200,000 SLM Student Loan Trust, Series 2008-9, $ 187,444 $ - $ 187,444 Class A, 5.04%, 4/25/23 (a)+ ------------- ----- -------------- Total Asset Backed Securities 187,444 - 187,444 ============= ===== ============== (Cost $199,202) Common Stocks (46.1%): Aerospace & Defense (0.5%): 2,436 - 2,436 American Science & Engineering, Inc. 180,166 - 180,166 881 - 881 Axsys Technologies, Inc.* 48,332 - 48,332 ------------- ----- -------------- 228,498 - 228,498 ------------- ----- -------------- Airline (0.7%): 289,000 - 289,000 Cathay Pacific Airways, Ltd. 325,908 - 325,908 ------------- ----- -------------- Auto Components (1.1%): 225,788 - 225,788 GKN plc 319,609 - 319,609 18,863 - 18,863 Superior Industries International, Inc. 198,439 - 198,439 ------------- ----- -------------- 518,048 - 518,048 ------------- ----- -------------- Automobiles (0.7%): 5,276 - 5,276 DaimlerChrysler AG 201,965 - 201,965 7,714 - 7,714 Honda Motor Co., Ltd., ADR 164,617 - 164,617 ------------- ----- -------------- 366,582 - 366,582 ------------- ----- -------------- Biotechnology (1.2%): 5,781 - 5,781 Amgen, Inc.* 333,853 - 333,853 3,771 - 3,771 Myriad Genetics, Inc.* 249,866 - 249,866 ------------- ----- -------------- 583,719 - 583,719 ------------- ----- -------------- 97 The Allianz Variable Insurance Products Trust - Statement of Additional Information Capital Markets (1.8%): 6,537 - 6,537 Credit Suisse Group, SP ADR 179,649 - 179,649 5,274 - 5,274 Deutsche Bank AG 214,599 - 214,599 6,782 - 6,782 Stifel Financial Corp.* 310,955 - 310,955 13,338 - 13,338 UBS AG* 190,733 - 190,733 ------------- ----- -------------- 895,936 - 895,936 ------------- ----- -------------- Chemicals (1.5%): 11,661 - 11,661 E.I. du Pont de Nemours & Co. 295,023 - 295,023 6,521 - 6,521 Eastman Chemical Co. 206,781 - 206,781 8,979 - 8,979 Sensient Technologies Corp. 214,419 - 214,419 ------------- ----- -------------- 716,223 - 716,223 ------------- ----- -------------- Commercial Banks (5.9%): 27,310 - 27,310 Allied Irish Banks plc, SP ADR 128,084 - 128,084 21,197 - 21,197 Banco Santander SA, SP ADR 201,160 - 201,160 16,995 - 16,995 Barclays plc, ADR 166,551 - 166,551 20,113 - 20,113 First Bancorp 224,059 - 224,059 5,802 - 5,802 First Financial Bankshares, Inc. 320,329 - 320,329 3,688 - 3,688 First Financial Corp. 151,171 - 151,171 18,764 - 18,764 FNB Corp. 247,685 - 247,685 5,345 - 5,345 Home Bancshares, Inc. 144,048 - 144,048 27,759 - 27,759 Huntington Bancshares, Inc. 212,634 - 212,634 8,832 - 8,832 KB Financial Group, Inc., ADR* 231,398 - 231,398 16,412 - 16,412 Lloyds TSB Group plc, SP ADR 126,372 - 126,372 21,541 - 21,541 Regions Financial Corp. 171,466 - 171,466 10,301 - 10,301 Royal Bank of Scotland Group plc, SP ADR 157,502 - 157,502 7,119 - 7,119 SunTrust Banks, Inc. 210,295 - 210,295 98 The Allianz Variable Insurance Products Trust - Statement of Additional Information 15,677 - 15,677 Umpqua Holdings Corp. 226,846 - 226,846 ------------- ----- -------------- 2,919,600 - 2,919,600 ------------- ----- -------------- Commercial Services & Supplies (0.9%): 12,874 - 12,874 Navigant Consulting, Inc.* 204,310 - 204,310 17,138 - 17,138 R.R. Donnelley & Sons Co. 232,734 - 232,734 ------------- ----- -------------- 437,044 - 437,044 ------------- ----- -------------- Containers & Packaging (0.2%): 2,984 - 2,984 Rock-Tenn Co., Class A 101,993 - 101,993 ------------- ----- -------------- Diversified Consumer Services (1.7%): 4,205 - 4,205 Apollo Group, Inc., Class A* 322,187 - 322,187 3,090 - 3,090 ITT Educational Services, Inc.* 293,488 - 293,488 1,140 - 1,140 Strayer Education, Inc. 244,428 - 244,428 ------------- ----- -------------- 860,103 - 860,103 ------------- ----- -------------- Diversified Financial Services (1.0%): 18,614 - 18,614 Bank of America Corp. 262,085 - 262,085 21,704 - 21,704 ING Groep NV, ADR 240,915 - 240,915 ------------- ----- -------------- 503,000 - 503,000 ------------- ----- -------------- Diversified Telecommunication Services (1.7%): 139,231 - 139,231 BT Group plc 273,493 - 273,493 11,860 - 11,860 Deutsche Telekom AG, ADR 181,458 - 181,458 7,280 - 7,280 Nippon Telegraph & Telephone Corp., ADR 197,943 - 197,943 12,425 - 12,425 Telecom Italia SPA, ADR 201,906 - 201,906 ------------- ----- -------------- 854,800 - 854,800 ------------- ----- -------------- 99 The Allianz Variable Insurance Products Trust - Statement of Additional Information Electric Utilities (0.9%): 18,140 - 18,140 Korea Electric Power Corp., ADR* 210,605 - 210,605 7,306 - 7,306 Pinnacle West Capital Corp. 234,742 - 234,742 ------------- ----- -------------- 445,347 - 445,347 ------------- ----- -------------- Electronic Equipment, Instruments & Component: (0.3%): 3,689 - 3,689 Hitachi, Ltd., SP ADR 144,387 - 144,387 ------------- ----- -------------- Food & Staples Retailing (0.8%): 1,008 - 1,008 Nash Finch Co. 45,249 - 45,249 1,827 - 1,827 Spartan Stores, Inc. 42,478 - 42,478 5,699 - 5,699 Wal-Mart Stores, Inc. 319,486 - 319,486 ------------- ----- -------------- 407,213 - 407,213 ------------- ----- -------------- Food Products (0.5%): 7,691 - 7,691 Flowers Foods, Inc. 187,353 - 187,353 2,492 - 2,492 Treehouse Foods, Inc.* 67,882 - 67,882 ------------- ----- -------------- 255,235 - 255,235 ------------- ----- -------------- Gas Utilities (1.9%): 6,485 - 6,485 Laclede Group, Inc. (The) 303,758 - 303,758 20,724 - 20,724 Piedmont Natural Gas Co., Inc. 656,329 - 656,329 ------------- ----- -------------- 960,087 - 960,087 ------------- ----- -------------- Health Care Equipment & Supplies (0.4%): 4,593 - 4,593 CryoLife, Inc.* 44,598 - 44,598 1,797 - 1,797 Greatbatch, Inc.* 47,549 - 47,549 4,714 - 4,714 STERIS Corp. 112,617 - 112,617 ------------- ----- -------------- 204,764 - 204,764 ------------- ----- -------------- 100 The Allianz Variable Insurance Products Trust - Statement of Additional Information Health Care Providers & Services (0.5%): 7,840 - 7,840 Gentiva Health Services, Inc.* 229,398 - 229,398 ------------- ----- -------------- Health Care Technology (0.1%): 1,537 - 1,537 Computer Programs & Systems, Inc. 41,192 - 41,192 ------------- ----- -------------- Hotels, Restaurants & Leisure (1.5%): 106,936 - 106,936 Ladbrokes plc 285,923 - 285,923 5,581 - 5,581 McDonald's Corp. 347,082 - 347,082 2,340 - 2,340 Panera Bread Co., Class A* 122,242 - 122,242 ------------- ----- -------------- 755,247 - 755,247 ------------- ----- -------------- Household Durables (0.4%): 7,840 - 7,840 Sony Corp., SP ADR 185,392 - 185,392 ------------- ----- -------------- Industrial Conglomerates (1.9%): 403,000 - 403,000 Citic Pacific, Ltd. 439,127 - 439,127 17,741 - 17,741 General Electric Co. 287,404 - 287,404 13,835 - 13,835 Textron, Inc. 191,891 - 191,891 ------------- ----- -------------- 918,422 - 918,422 ------------- ----- -------------- Insurance (0.9%): 37,140 - 37,140 AEGON NV 224,697 - 224,697 9,887 - 9,887 Axa, ADR 222,161 - 222,161 ------------- ----- -------------- 446,858 - 446,858 ------------- ----- -------------- IT Services (1.4%): 285,025 - 285,025 LogicaCMG plc 284,594 - 284,594 7,633 - 7,633 ManTech International Corp., Class A* 413,632 - 413,632 ------------- ----- -------------- 698,226 - 698,226 ------------- ----- -------------- 101 The Allianz Variable Insurance Products Trust - Statement of Additional Information Life Sciences Tools & Services (0.5%): 11,060 - 11,060 Luminex Corp.* 236,242 - 236,242 ------------- ----- -------------- Machinery (0.6%): 15,387 - 15,387 Briggs & Stratton Corp. 270,657 - 270,657 ------------- ----- -------------- Media (1.1%): 585,637 - 585,637 ITV plc 335,696 - 335,696 29,712 - 29,712 New York Times Co., Class A 217,789 - 217,789 ------------- ----- -------------- 553,485 - 553,485 ------------- ----- -------------- Metals & Mining (2.8%): 27,405 - 27,405 Alcoa, Inc. 308,580 - 308,580 6,763 - 6,763 ArcelorMittal, Class A 166,302 - 166,302 10,807 - 10,807 Compass Minerals International, Inc. 633,939 - 633,939 2,902 - 2,902 POSCO, ADR 218,376 - 218,376 ------------- ----- -------------- 1,327,197 - 1,327,197 ------------- ----- -------------- Multi-Utilities (1.3%): 18,208 - 18,208 NiSource, Inc. 199,742 - 199,742 6,345 - 6,345 SCANA Corp. 225,882 - 225,882 6,676 - 6,676 Veolia Environment, ADR 211,696 - 211,696 ------------- ----- -------------- 637,320 - 637,320 ------------- ----- -------------- Multiline Retail (1.2%): 7,423 - 7,423 Dollar Tree, Inc.* 310,281 - 310,281 11,184 - 11,184 Family Dollar Stores, Inc. 291,567 - 291,567 ------------- ----- -------------- 601,848 - 601,848 ------------- ----- -------------- 102 The Allianz Variable Insurance Products Trust - Statement of Additional Information Oil, Gas & Consumable Fuels (1.6%): 3,080 - 3,080 Clayton Williams Energy, Inc.* 139,955 - 139,955 9,765 - 9,765 Goodrich Petroleum Corp.* 292,462 - 292,462 7,259 - 7,259 Petro-Canada 158,900 - 158,900 8,838 - 8,838 Repsol YPF SA, ADR 190,105 - 190,105 ------------- ----- -------------- 781,422 - 781,422 ------------- ----- -------------- Paper & Forest Products (0.4%): 18,553 - 18,553 MeadWestvaco Corp. 207,608 - 207,608 ------------- ----- -------------- Pharmaceuticals (1.2%): 17,873 - 17,873 Pfizer, Inc. 316,531 - 316,531 20,837 - 20,837 ViroPharma, Inc.* 271,298 - 271,298 ------------- ----- -------------- 587,829 - 587,829 ------------- ----- -------------- Real Estate Management & Development (1.7%): 391,000 - 391,000 New World Developments Co., Ltd. 399,472 - 399,472 408,000 - 408,000 Sino Land Co., Ltd. 426,433 - 426,433 ------------- ----- -------------- 825,905 - 825,905 ------------- ----- -------------- Specialty Retail (1.2%): 2,972 - 2,972 AutoZone, Inc.* 414,505 - 414,505 3,515 - 3,515 Buckle, Inc. (The) 76,697 - 76,697 2,863 - 2,863 Tractor Supply Co.* 103,469 - 103,469 ------------- ----- -------------- 594,671 - 594,671 ------------- ----- -------------- Thrifts & Mortgage Finance (0.8%): 13,817 - 13,817 First Niagara Financial Group, Ltd. 223,421 - 223,421 103 The Allianz Variable Insurance Products Trust - Statement of Additional Information 12,891 - 12,891 Washington Federal, Inc. 192,849 - 192,849 ------------- ----- -------------- 416,270 - 416,270 ------------- ----- -------------- Tobacco (0.4%): 6,606 - 6,606 Universal Corp. 197,321 - 197,321 ------------- ----- -------------- Transportation Infrastructure (0.9%): 452,000 - 452,000 Cosco Pacific, Ltd. 465,363 - 465,363 ------------- ----- -------------- Total Common Stocks (Cost $23,993,601) 22,706,360 - 22,706,360 ============= ===== ============== Convertible Bonds (0.2%): Diversified Financial Services (0.2%): Prudential Financial, Inc., 0.37%,12/15/37 $ 100,000 $ - $ 100,000 Callable 6/16/09 @ 100(a)+ 94,650 - 94,650 ------------- ----- -------------- Total Convertible Bonds (Cost $97,604) 94,650 - 94,650 ============= ===== ============== Corporate Bonds (6.7%): Commercial Banks (2.4%): 100,000 - 100,000 ANZ National Bank, Ltd., 6.20%, 7/19/13(b)+ 96,756 - 96,756 Bank of America Corp., Series L, 1.88%, 100,000 - 100,000 6/22/12, MTN(a)+ 100,450 - 100,450 200,000 - 200,000 Bank of America Corp., 8.13%, 12/31/49+ 143,858 - 143,858 100,000 - 100,000 Barclays Bank plc, 6.05%, 12/4/17(b)+ 88,219 - 88,219 100,000 - 100,000 Barclays Bank plc, 7.43%, 9/29/49(a) (b)+ 50,558 - 50,558 100,000 - 100,000 New York Community Bank, 3.00%, 12/16/11+ 102,681 - 102,681 100,000 - 100,000 PNC Funding Corp., 2.30%, 6/22/12+ 100,999 - 100,999 100,000 - 100,000 Regions Bank, 3.25%, 12/9/11+. 104,036 - 104,036 200,000 - 200,000 SunTrust Bank, Inc., 3.00%, 11/16/11+ 206,821 - 206,821 100,000 - 100,000 UBS AG Stamford CT, 5.88%, 12/20/17+ 91,864 - 91,864 104 The Allianz Variable Insurance Products Trust - Statement of Additional Information 100,000 - 100,000 Wachovia Bank NA, 2.33%, 3/15/16(a)+ 72,313 - 72,313 10,000 - 10,000 Wells Fargo Co., 5.25%, 10/23/12+ 10,185 - 10,185 ------------- ----- -------------- 1,168,740 - 1,168,740 ------------- ----- -------------- Commercial Services & Supplies (0.0%): First Data Corp., 9.88%, 9/24/15, Callable 25,000 - 25,000 9/30/11 @ 104.94+ 15,125 - 15,125 ------------- ----- -------------- Diversified Consumer Services (0.5%): American Express Credit Co., 100,000 - 100,000 Series C, 5.88%, 5/2/13+ 95,998 - 95,998 Citigroup Capital XXI, 8.40%, 12/21/57, 100,000 - 100,000 Callable 12/21/37 @ 100+ 77,124 - 77,124 10,000 - 10,000 General Electric Capital Corp.,5.25%,10/19/12+ 10,072 - 10,072 100,000 - 100,000 John Deere Capital Corp., 2.94%, 6/10/11(a)+ 91,249 - 91,249 ------------- ----- -------------- 274,443 - 274,443 ------------- ----- -------------- Diversified Financial Services (3.0%): American General Finance Corp., Series G, 100,000 - 100,000 5.38%, 9/1/09, MTN+ 71,517 - 71,517 300,000 - 300,000 American International Group, 8.25%, 8/15/18+ 219,576 - 219,576 100,000 - 100,000 Citigroup, Inc., 6.13%, 11/21/17+ 101,054 - 101,054 200,000 - 200,000 Citigroup, Inc., 8.45%, 4/29/49+ 132,058 - 132,058 100,000 - 100,000 Goldman Sachs Group, Inc., 5.95%, 1/18/18+ 94,817 - 94,817 200,000 - 200,000 Goldman Sachs Group, Inc., 6.15%, 4/1/18+ 192,192 - 192,192 100,000 - 100,000 J.P. Morgan Chase & Co., 6.00%, 1/15/18+ 105,553 - 105,553 J.P. Morgan Chase & Co.,Series 1, 7.94%, 4/29/49, 100,000 - 100,000 Callable 4/30/18 @ 100+ 83,183 - 83,183 Macquarie Bank, Ltd., Series B, 4.10%, 12/17/13 100,000 - 100,000 MTN(b) 101,985 - 101,985 105 The Allianz Variable Insurance Products Trust - Statement of Additional Information Merrill Lynch & Co., Series E, 4.20%, 5/30/14, 100,000 - 100,000 MTN(a)+ 109,621 - 109,621 Morgan Stanley, Series F, 5.95%, 12/28/17, 200,000 - 200,000 MTN+ 165,996 - 165,996 100,000 - 100,000 Morgan Stanley Series F, 6.63%, 4/1/18, MTN+ 87,729 - 87,729 ---------- ----- -------------- 1,465,281 - 1,465,281 ---------- ----- -------------- Electric Utilities (0.2%): 100,000 - 100,000 Southern Co., Series 08-A, 2.92%, 8/20/10(a)+ 96,702 - 96,702 ---------- ----- -------------- Electronic Equipment & Instruments (0.2%): 100,000 - 100,000 General Electric Co. 5.25%, 12/6/17+ 99,695 - 99,695 ---------- ----- -------------- Media (0.4%): 200,000 - 200,000 Time Warner Cable, Inc., 5.40%, 7/2/12+ 186,749 - 186,749 ---------- ----- -------------- Total Corporate Bonds (Cost $3,203,030) 3,306,735 - 3,306,735 ---------- ----- -------------- Yankee Dollars (0.3%): 100,000 - 100,000 British Telecom plc, 5.95%, 1/15/18+ 86,997 - 86,997 Royal Bank of Scotland Group plc, 100,000 - 100,000 6.99%, 10/29/49(b)+ 46,753 - 46,753 ---------- ----- -------------- Total Yankee Dollars (Cost $137,040) 133,750 - 133,750 ---------- ----- -------------- Preferred Stocks (0.6%): 200 - 200 Bank of America Corp., Series L+ 130,000 - 130,000 200 - 200 Wachovia Corp., Series L+ 150,000 - 150,000 ---------- ----- -------------- Total Preferred Stocks (Cost $269,961) 280,000 - 280,000 ---------- ----- -------------- Municipal Bonds (0.4%): 200,000 - 200,000 Illinois State GO, 4.50%, 6/24/09+ 201,742 - 201,742 ---------- ----- -------------- Total Municipal Bonds (Cost $200,467) 201,742 - 201,742 ---------- ----- -------------- 106 The Allianz Variable Insurance Products Trust - Statement of Additional Information U.S. Government Agency Mortgages (47.3%): Federal Home Loan Bank (6.4%): 3,100,000 - 3,100,000 0.23%, 1/21/09(d)+ 3,100,000 - 3,100,000 ---------- ----- -------------- Federal Home Loan Mortgage Corporation (1.7%): 650,000 - 650,000 5.25%, 1/12/09+ 650,890 - 650,890 200,000 - 200,000 5.25%, 7/10/15+ 203,725 - 203,725 ---------- ----- -------------- 854,615 - 854,615 ---------- ----- -------------- Federal Home Loan Mortgage Corporation (7.9%): 3,900,000 - 3,900,000 0.15%, 1/21/09(d)+ 3,900,000 - 3,900,000 ---------- ----- -------------- Federal National Mortgage Association (18.7%): 800,000 - 800,000 1.12%, 2/2/09(d)+ 799,993 - 799,993 1,000,000 - 1,000,000 6.50%, 1/1/35 1,038,438 - 1,038,438 700,000 - 700,000 5.50%, 1/15/37, TBA 717,500 - 717,500 474,882 - 474,882 5.00%, 3/1/37+ 485,412 - 485,412 499,999 - 499,999 6.00%, 5/1/37, Pool #888429+ 515,333 - 515,333 479,849 - 479,849 5.50%, 2/1/38, Pool #995021+ 492,465 - 492,465 284,801 - 284,801 5.50%, 6/1/38, Pool #889996+ 292,273 - 292,273 500,000 - 500,000 5.50%, 9/1/38, Pool #987818+ 513,068 - 513,068 192,231 - 192,231 5.50%, 9/1/38, Pool #889995+ 197,275 - 197,275 4,100,000 - 4,100,000 5.00%, 1/13/39, Pool #19888 TBA 4,185,846 - 4,185,846 ---------- ----- -------------- 9,237,603 - 9,237,603 ---------- ----- -------------- Government National Mortgage Association (12.4%): 1,000,000 - 1,000,000 5.00%, 1/1/35, Pool #7063 TBA 1,025,000 - 1,025,000 1,000,000 - 1,000,000 5.50%, 1/15/37, Pool #14591 TBA 1,029,688 - 1,029,688 2,500,000 - 2,500,000 6.00%, 1/15/37, Pool #7063 TBA 2,578,905 - 2,578,905 391,584 - 391,584 6.00%, 2/15/37, Pool #663819+ 404,735 - 404,735 107 The Allianz Variable Insurance Products Trust - Statement of Additional Information 437,759 - 437,759 6.00%, 5/15/37+ 452,461 - 452,461 591,336 - 591,336 6.00%, 6/15/38, Pool #675493+ 611,196 - 611,196 ---------- ----- -------------- 6,101,985 - 6,101,985 ---------- ----- -------------- United Mexican States (0.2%): 40,000 - 40,000 5.63%, 1/15/17+ 40,000 - 40,000 40,000 - 40,000 8.30%, 8/15/31, MTN+ 49,000 - 49,000 20,000 - 20,000 6.75%, 9/27/34, MTN+ 21,100 - 21,100 ---------- ----- -------------- 110,100 - 110,100 ---------- ----- -------------- Total U.S. Government Agency Mortgages ---------- ----- -------------- (Cost $23,022,821) 23,304,303 - 23,304,303 ---------- ----- -------------- U.S. Treasury Obligations (1.1%): U.S. Treasury Bonds (0.9%) 100,000 - 100,000 6.00%, 2/15/26+ 139,563 - 139,563 200,000 - 200,000 5.00%, 5/15/37+ 289,781 - 289,781 ---------- ----- -------------- 429,344 - 429,344 ---------- ----- -------------- U.S. Treasury Inflation Index Bond (0.2%) 100,000 - 100,000 2.00%, 1/15/26+ 102,783 - 102,783 ---------- ----- -------------- Total U.S. Treasury Obligations 532,127 - 532,127 (Cost $430,250) ========== ===== ============== Repurchase Agreements (17.0%): J. P. Morgan Chase Bank, N.A., dated 12/31/08, 0.04%, due 1/2/09, proceeds $4,900,011; fully collateralized by FNMA, 7.25% 1/15/10, 4,900,000 - 4,900,000 value at $4,838,176+ 4,900,000 - 4,900,000 108 The Allianz Variable Insurance Products Trust - Statement of Additional Information Barclays Capital, Inc., dated 12/31/08, 0.06%, due 1/5/09, proceeds $3,500,029; fully collateralized by FNMA, 3.85% 4/17/13, 3,500,000 - 3,500,000 value at $3,548,133 3,500,000 - 3,500,000 ----------- ------------------- Total Repurchase Agreements 8,400,000 - 8,400,000 ----------- ------------------- (Cost $8,400,000) Foreign Bonds (0.3%): American International Group, Inc., 100,000 - 100,000 5.07%, 4/26/11, MTN(a)+ 75,300 - 75,300 150,000 - 150,000 Gaz Capital SA, Series 7, 6.21%, 11/22/16+ 97,460 - 97,460 ----------- ------------------- Total Foreign Bonds (Cost $241,828) 172,760 - 172,760 ----------- ------------------- Investment Company (3.6%): 1,773,859 - 1,773,859 Dreyfus Treasury Prime Cash Management, 1,773,859 - 1,773,859 0.17%(d) ----------- ------------------- Total Investment Company 1,773,859 - 1,773,859 ----------- ------------------- (Cost $1,773,859) Purchased Call Option (0.3%): 1-Year Interest Rate SWAP, Receive 3-Month USD-LIBOR Floating Rate Index, 310 - 310 Strike @ 4.25 Exp. 7/8/11+ 153,668 - 153,668 ----------- ------------------- Total Purchased Call Options 153,668 - 153,668 ----------- ------------------- (Cost $30,923) Put Options Purchased (0.0%): Federal National Mortgage Association, 109 The Allianz Variable Insurance Products Trust - Statement of Additional Information 5.00%, Strike @ 50.00 260 - 260 Exp. 1/6/09(c) - - - Federal National Mortgage Association, 5.50%, Strike @ 53.00 50 - 50 Exp. 1/6/09(c) - - - Purchased, continued $ 30 Federal National Mortgage Association, 6.00%, Strike @ 55.00 30 - 30 Exp. 1/6/09(c) - - - Federal National Mortgage Association, 6.00%, Strike @ 52.00 20 - 20 Exp. 1/6/09(c) - - - Government National Mortgage Association, 6.00%, Strike @ 45.00 150 - 150 Exp. 1/14/09(c) - - - Federal National Mortgage Association, 5.00%, Strike @ 45.00 100 - 100 Exp. 1/6/09(c) - - - ----------- ----- ------------- Total Put Options Purchased (Cost $715) - - ----------- ----- ------------- ------------- --- ------------- Total Investment Securities 61,247,398 - 61,247,398 ------------- --- ------------- (Cost 62,001,301)(e) --124.3% ------------- --- ------------- 110 The Allianz Variable Insurance Products Trust - Statement of Additional Information Net other assets (liabilities) -- (24.2)% (11,897,646) - (11,897,646) Adjustment for reorganization fees (f)-(0.1)% - - (73,500) ------------- --- ------------- Net Assets -- 100.0% $ 49,349,752 $ - $ 49,276,252 ------------- ----- ----------- Percentages indicated are based on net assets as of December 31, 2008. * Non-income producing security + Investment securities are segregated as collateral. The aggregate fair value of these securities is $22,589,817. ^ No adjustments have been made to the unaudited pro forma combined schedule of portfolio investments due to the fact that upon consummation of the merger, securities would have to be sold in securities would have to be sentence sold in order for the AZL Balanced Index Strategy Fund to comply with its prospectus restrictions. The foregoing shall not restrict in any way the ability of the investment adviser of either of the funds from buying or selling securities in the normal course of such fund's business and operations. ADR--American Depository Receipt GO--General Obligation LIBOR--Represents the London InterBank Offered Rate PLC--Public Liability Co. SPA--Standby Purchase Agreement TBA--To be announced. Represents 19.3% of the Fund's net assets. (a) Variable rate security. The rate presented represents the rate in effect at December 31, 2008. The date presented represents the final maturity date. (b)Rule 144A, Section 4(2) or other security which is restricted to resale to institutional investor. The subadviser has deemed these securities to be liquid based on procedures approved by the Board of Trustees. (c) Rule 144A, Section 4(2) or other security which is restricted to resale to institutional investors. The subadviser has deemed these securities to be illiquid based on procedures approved by the Board of Trustees. As of December 31, 2008, these securities represent 0.0% of the net assets of the Fund. 111 The Allianz Variable Insurance Products Trust - Statement of Additional Information (d) The rate presented represents the effective yield at December 31, 2008. (e) Cost for federal income tax purposes is $62,431,879. The gross unrealized appreciation/(depreciation) on a tax basis is as follows: Unrealized appreciation . . . . . . . . . . . . . . . . . . . $ 2,803,653 Unrealized depreciation . . . .. . . . . . . . . . .. . (3,988,134) ---------------------------------------------------------------------------- Net unrealized depreciation . . . . . . . . . . . . . . . . . $ (1,184,481) ============================================================================ (f) Represents the estimated reorganization fees and expenses that are to be expected to be paid by the Funds.
112 The Allianz Variable Insurance Products Trust - Statement of Additional Information
As of December 31, 2008 the Fund's open foreign currency exchange contracts were as follows: Appreciation/ Long Contracts Delivery Date Contract Amount Fair Value (Depreciation) ---------------------------------------------------------------------------- --------------- ----------------- ------------------ Received 22,252 Brazilian Real in exchange for U.S. Dollars 6/2/2009 $11,696 $9,092 $(2,604) Received 13,137 Brazilian Real in exchange for U.S. Dollars 2/3/2009 5,915 5,565 (350) Received 284,660 Chinese Renminbi in exchange for U.S. Dollars 2/11/2009 43,000 41,463 (1,537) Received 410,195 Chinese Renminbi in exchange for U.S. Dollars 9/8/2009 59,160 59,062 (98) Received 761,369 Chinese Renminbi in exchange for U.S. Dollars 7/15/2009 118,000 109,770 (8,230) Received 13,000 European Euro in exchange for U.S. Dollars 1/13/2009 18,059 18,057 (2) Received 47,449 British Sterling Pounds in exchange for U.S. Dollars 1/2/2009 69,765 68,204 (1,561) Received 695,189 Hong Kong Dollars in exchange for U.S. Dollars 1/2/2009 89,703 89,702 (1) Received 206,360,000 Indonesian Rupiah in exchange for U.S. Dollars 3/31/2009 19,931 18,425 (1,506) Received 861,000 Japanese Yen in exchange for U.S. Dollars 1/8/2009 8,990 9,502 512 Received 3,579 Mexican Nuevo Peso in exchange for U.S. Dollars 5/19/2009 328 250 (78) Received 10,792 Malaysian Ringgit in exchange for U.S. Dollars 2/12/2009 3,048 3,117 69 Received 1,461,070 Philippine Peso in exchange for U.S. Dollars 2/6/2009 31,241 30,639 (602) Received 2,608 Polish Zloty in exchange for U.S. Dollars 5/6/2009 1,155 871 (284) Received 52,445 New Romanian Leu in exchange for U.S. Dollars 1/28/2009 21,319 17,968 (3,351) Received 83,585 Singapore Dollars in exchange for U.S. Dollars 7/30/2009 56,257 57,959 1,702 ------------------ $(17,921) ===================
113 The Allianz Variable Insurance Products Trust - Statement of Additional Information
Delivery Contract Appreciation/ Short Contracts Date Amount Fair Value (Depreciation) ------------------------------------------------------------- ----------- ---------- ------------ -------------- Delivered 19,031 Brazilian Real in exchange for U.S. Dollars 2/3/2009 $8,690 $8,062 $628 Delivered 679,360 Chinese Renminbi in exchange for U.S. Dollars 7/15/2009 98,000 97,946 54 Delivered 164,000 European Euro in exchange for U.S. Dollars 1/13/2009 206,471 227,800 (21,329) Delivered 70,629 British Sterling Pounds in exchange for U.S. Dollars 1/13/2009 106,963 101,479 5,484 Delivered 15,802,736 Hungarian Forint in exchange for U.S. Dollars 5/6/2009 71,056 81,590 (10,534) Delivered 293,844 Japanese Yen in exchange for U.S. Dollars 1/8/2009 3,086 3,243 (157) Delivered 52,445 New Romanian Leu exchange for U.S. Dollars 1/28/2009 19,391 17,968 1,423 Delivered 23,087 South African Rand in exchange for U.S. Dollars 5/14/2009 2,095 2,417 (322) ------------------ $(24,753) ==================
114 The Allianz Variable Insurance Products Trust - Statement of Additional Information
As of December 31, 2008 the Fund's open futures contracts were as follows: Unrealized Expiration Number of Appreciation/ Description Type Date Contracts (Depreciation) ------------ ------------ ------------ ----------------- Euro-Schatz 2-Year March Futures Short 3/09 1 $ (706) Euro Bobl March Futures Long 3/09 4 5,848 Euro Bond March Futures Long 3/09 2 6,636 Long Gilt March Futures Short 3/09 2 (13,728) 90-Day British Sterling Pound March Futures Long 3/09 2 3,566 90-Day British Sterling Pound June Futures Long 6/09 4 33,638 90-Day British Sterling Pound December Futures Long 12/09 3 21,541 90-Day Eurodollar March Futures Long 3/09 3 8,475 90-Day Eurodollar June Futures Long 6/09 3 13,200 90-Day Eurodollar September Futures Long 9/09 2 10,150 90-Day Eurodollar December Futures Long 12/09 24 145,463 U.S. Treasury 5-Year Note March Futures Long 3/09 12 11,875 U.S. Treasury 10-Year Note March Futures Long 3/09 5 16,273 ---------- Total $262,231 ==========
115 The Allianz Variable Insurance Products Trust - Statement of Additional Information
Interest Rate Swaps at December 31, 2008: Unrealized Floating Rate (Pay)/Receive Expiration Appreciation/ Counterparty Index Floating Rate Fixed Rate Date Notional Amount (Depreciation) ------------------------------------- ------------------- -------------- ----------- ---------- ------------------- --------------- HSBC Bank USA South African Pay 9.99% 11/9/2010 $ 300,000 $ 692 Interbank Citibank South Africa Pay 9.99% 11/9/2010 100,000 219 Interbank Barclays Bank PLC 6-Month EUR Libor Pay 4.00% 9/19/2017 100,000 10,618 Morgan Stanley Capital Services Inc. 6-Month GBP Libor Pay 6.00% 9/18/2009 100,000 2,104 UBS AG Brazil Cetip Pay 13.85% 1/2/2012 500,000 11,794 Interbank Deposit Rate Goldman Sachs Group 6-Month GBP LIBOR Pay 4.50% 9/17/2011 600,000 43,305 Morgan Stanley Capital Services Inc. 3-Month USD Libor Pay 5.00% 12/17/2018 536,000 109,997 Royal Bank of Scotland 3-Month USD Libor Pay 4.00% 6/17/2010 3,400,000 56,804 Morgan Stanley Capital Services Inc. 6-Month EUR Pay 5.50% 12/17/2010 100,000 7,193 Euribor Goldman Sachs Group 6-Month GBP LIBOR Receive 4.00% 6/15/2037 100,000 (10,530) Merrill Lynch Capital Services, Inc. 3-Month USD Libor Pay 4.00% 12/17/2013 400,000 38,462 Goldman Sachs Group 3-Month USD Libor Pay 4.00% 6/17/2010 5,000,000 120,736 Deutsch Bank 6-Month EUR Pay 4.50% 3/18/2024 100,000 7,497 Euribor Goldman Sachs Group 6-Month GBP LIBOR Pay 5.00% 3/18/2014 100,000 14,490 Bank of America 3-Month USD Libor Receive 5.00% 12/17/2028 200,000 (58,690) Merrill Lynch Capital Services, Inc. 3-Month USD Libor Receive 5.00% 12/17/2028 100,000 (32,250) 116 The Allianz Variable Insurance Products Trust - Statement of Additional Information Goldman Sachs Group 6-Month EUR Pay 4.50% 3/18/2024 600,000 56,074 Euribor Deutsch Bank 6-Month GBP LIBOR Pay 5.00% 3/18/2011 100,000 8,331 Royal Bank of Scotland 6-Month GBP LIBOR Pay 5.00% 3/18/2014 200,000 29,562 Barclays Bank PLC 3-Month USD Libor Pay 4.00% 6/17/2010 1,200,000 26,613 Credit Suisse 3-Month USD Libor Receive 5.00% 12/17/2028 200,000 (64,289) Citibank 6-Month GBP LIBOR Pay 5.00% 3/18/2011 200,000 16,333 Bank of America 3-Month USD Libor Pay 4.00% 12/17/2013 400,000 38,988 Citibank 3-Month USD Libor Receive 3.00% 6/17/2029 200,000 12,844 Merrill Lynch Capital Services, Inc. 3-Month USD Libor Receive 5.00% 12/17/2038 200,000 (68,656) Royal Bank of Scotland PLC 3-Month USD Libor Pay 4.00% 6/17/2014 100,000 1,481 Credit Suisse 3-Month USD Libor Receive 4.00% 6/17/2024 200,000 (3,476) Citibank 3-Month USD Libor Pay 4.00% 6/17/2014 100,000 1,648 --------- $377,894
117 The Allianz Variable Insurance Products Trust - Statement of Additional Information
Credit Default Swaps at December 31, 2008: Credit Default Swaps on Corporate and Sovereign Issues Unrealized Implied Buy/Sell (Pay)/Receive Expiration Appreciation/ Credit Counterparty Reference Entity Protection(I) Fixed Rate Date Notional Amount(2)Market Value (Depreciation) Spread(3) ------------------ ---------------- ------------- ----------- ----------- ----------------- ------------ -------------- ------------ Morgan Stanley BRITISH TELECOM Buy (1.36) 3/20/18 $ 100,000 $ (73) $ (111) 1.37% Capital Service PLC Credit Default Swaps on Credit Indices Unrealized Buy/Sell (Pay)/Receive Expiration Appreciation/ Counterparty Reference Entity Protection(I) Fixed Rate Date Notional Amount(2) Market Value(4)(Depreciation) ------------------ ---------------- ------------ ----------- ----------- ------------------ ------------ ------------------ Deutsch Bank CDX IG9 Future Sell 1.29% 12/20/12 $ 200,000 $ 947 $ 1,033 Deutsch Bank CDX IG9 Future Sell 0.82 12/20/12 97,228 878 900 Barclays Bank CDX IG9 Future Sell 0.82 12/20/12 97,228 878 900 Merrill Lynch CDX IG11 Future Sell 1.5 12/20/13 200,000 (3,994) (2,944) International Merrill Lynch CDX Hy-9 Future Sell 3.75 12/20/12 490,000 (86,361) (67,819) International Bank of America HY-8 Future Sell 2.75 06/20/12 339,080 (57,570) (50,290) Barclays Bank CDX EM10 future Sell 3.35 12/20/13 2,400,000 (359,992) (114,058) Deutsch Bank CDX EM10 future Sell 3.35 12/20/13 800,000 (119,997) (79,884) UBS AG CDX EM9 future Sell 2.65 06/20/13 700,000 (109,793) (100,400) Credit Sussie Market ABX.HE.AA Sell 0.15 08/25/37 100,000 (94,500) (24,499) 07-01 Royal Bank of CDX Hy-10 Future Sell 5 06/20/13 200,000 (31,666) (17,722) scotland 118 The Allianz Variable Insurance Products Trust - Statement of Additional Information Barclays Bank CDX Hy-10 Future Sell 5 06/20/13 200,000 (31,666) (18,222) Credit Sussie CDX Hy-10 Future Sell 5 06/20/13 200,000 (31,666) (18,302) Deutsch Bank CDX IG11 Future Sell 1.5 12/20/13 2,000,000 (39,943) (23,184) Goldman Sachs CDX IG7 Future Sell 0.65 12/20/16 97,600 (7,125) 626 ------------------ ---------------- ------------------ $ 8,121,136 $ (971,570) $ (513,865) ================== ================ ================== (1) If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the related defaulted reference entities and take delivery of the reference entities or (ii) pay a net amount equal to the notional amount of the related defaulted reference entities less their recovery value. If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the related defaulted reference entities and deliver the reference entities or (ii) receive a net amount equal to the notional amount of the related defaulted reference entities less their recovery value. (2) The notional amount represents the maximum potential amount the Fund could be required to make as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. (3) Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues and sovereign issues of an emerging country as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a referenced entity reflects the cost of buying/ selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. (4) The market value of credit default swap agreements on credit indices serve as an indicator of the current status of the payment/performance risk for the credit derivative as of the period end. Increasing values, in absolute termswhen compared to the notional amount of the swap, represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.
Written Swap Options outstanding on December 31, 2008: Number of Description Counterparty Floating Rate Exercise Rate Expiration Date Contracts Premium Fair Value Index ------------------ ------------- ------------- ------------- --------------- --------- ------------- ---------------- Call --OTC 7-Year Royal Bank of Rec--3-month 4.90% 7/8/16 $ (100) $ (28,200) $ (155,496) Interest Rate Swap Scotland USD-LIBOR --------- ------------- ---------------- $ (100) $ (28,200) $ (155,496) ========= ============== ================
119 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL BlackRock Capital Appreciation Fund Pro Forma compined Schedule of Portfolio Investment(Unaudited) BlackRock BlackRock BlackRock Capital BlackRock Capital Growth Columbia Proforma Appreciation Growth Columbia Proforma Appreciation Fund Fund Technology Combined Fund Fund Technology Fund Combined Shares Shares Fund Shares Shares Security Description Fair Value Shares Fair Value Fair Value ------------------ ---------------- ----------- -------- --------------------- ----------- ----------- ---------------- ------------ Common Stocks (98.1%): Aerospace & Defense (2.1%): 73,200 73,200 Boeing Co. (The) $ 3,123,444 $ - $3,123,444 Honeywell 48,300 48,300 International, Inc. 1,585,689 1,585,689 23,600 23,600 Northrop Grumman Corp. 1,062,944 1,062,944 ---------- ------------ ----------- 2,648,633 3,123,444 5,772,077 ------------ ---------- ----------- Air Freight & Logistics (2.1%): Expeditors International 36,900 36,900 of Washington, Inc. 1,227,663 1,227,663 United Parcel Service, 9,100 71,600 80,700 Inc., Class B 501,956 3,949,456 4,451,412 ---------- ------------ ----------- 1,729,619 3,949,456 5,679,075 ------------ ---------- ----------- Airline (0.4%): ------------ ----------- 94,500 94,500 Delta Air Lines,Inc.* 1,082,970 1,082,970 ------------ ----------- Beverages (3.3%): 58,600 58,600 Coca-Cola Co. 2,652,822 2,652,822 19,500 100,000 119,500 PepsiCo, Inc. 1,068,015 5,477,000 6,545,015 ---------- ------------ ----------- 3,720,837 5,477,000 9,197,837 ------------ ---------- ----------- Biotechnology (2.1%): 34,700 34,700 Celgene Corp.* 1,918,216 1,918,216 Genentech, 3,160 3,160 Inc.* 261,996 261,996 24,300 24,300 Genzyme Corp.* 1,612,791 1,612,791 120 The Allianz Variable Insurance Products Trust - Statement of Additional Information 37,200 37,200 Gilead Sciences,Inc.* 1,902,408 1,902,408 ------------- ---------------- ---------- 5,433,415 261,996 5,695,411 ------------- ---------------- ----------- Capital Markets (1.9%): 50,100 50,100 Janus Capital Group, 402,303 402,303 Inc. 126,300 126,300 State Street Corp. 4,967,379 4,967,379 ------------------------ ----------- 402,303 4,967,379 5,369,682 ------------------------ ----------- Chemicals (1.4%): 22,900 22,900 Ecolab, Inc. 804,935 804,935 86,900 86,900 Mosaic Corp. 3,006,740 3,006,740 ------------------------ ----------- 804,935 3,006,740 3,811,675 ------------------------ ----------- Commercial Banks (0.4%): ------------- ----------- 33,800 33,800 Wells Fargo & Co. 996,424 996,424 ------------- ----------- Commercial Services & Supplies (0.5%): CoStar Group, 5,391 5,391 Inc.* 177,579 177,579 FTI Consulting, 3,020 3,020 Inc.* 134,934 134,934 32,000 32,000 Waste Management, 1,060,480 1,060,480 Inc. ------------- ---------------- ----------- 1,060,480 312,513 1,372,993 ------------- ---------------- ----------- Communications Equipment (10.5%): 121 The Allianz Variable Insurance Products Trust - Statement of Additional Information 212,100 339,300 551,400 Cisco Systems,Inc.*. 3,457,230 5,530,590 8,987,820 18,700 18,700 Harris Corp. 711,535 711,535 Juniper Networks, 12,190 12,190 Inc.* 213,447 213,447 Nokia Corp., 354,100 25,950 380,050 ADR. 5,523,960 404,820 5,928,780 103,100 160,500 73,550 337,150 QUALCOMM, Inc. 3,694,073 5,750,715 2,635,297 12,080,085 Research In Motion, 21,030 21,030 Ltd.* 853,397 853,397 ------------ ---------- ---------------- ----------- 7,151,303 16,805,265 4,818,496 28,775,064 ------------ ---------- ---------------- ----------- Computers & Peripherals (5.4%): 23,400 47,788 71,188 Apple, Inc.* 1,997,190 4,078,706 6,075,896 496,100 50,370 546,470 EMC Corp.* 5,194,167 527,374 5,721,541 49,600 9,950 59,550 Hewlett-Packard Co. 1,799,984 361,085 2,161,069 38,760 38,760 NetApp, Inc.* 541,477 541,477 PC Connection, 14,713 14,713 Inc.* 75,331 75,331 ------------- ---------------- ----------- 3,797,174 5,194,167 5,583,973 14,575,314 ------------------------- ---------------- ----------- Construction & Engineering (4.8%): 19,800 19,800 Fluor Corp. 888,426 888,426 131,500 131,500 Foster Wheeler, Ltd.* 3,074,470 3,074,470 284,800 284,800 Quanta Services, Inc.* 5,639,040 5,639,040 181,500 181,500 Shaw Group, Inc.* 3,715,305 3,715,305 ------------------------- ----------- 888,426 12,428,815 13,317,241 ------------------------- ----------- 122 The Allianz Variable Insurance Products Trust - Statement of Additional Information Consumer Finance (1.5%): ---------------- ----------- 225,500 225,500 American Express Co. 4,183,025 4,183,025 ---------------- ----------- Diversified Consumer Services (0.7%): ------------- ----------- Apollo Group, Inc., 26,200 26,200 Class A* 2,007,444 2,007,444 ------------- ----------- Diversified Financial Services (2.0%): 1,900 1,900 CME Group, Inc. 395,409 395,409 29,600 29,600 JP Morgan Chase & Co. 933,288 933,288 157,400 157,400 NYSE Euronext 4,309,612 4,309,612 ------------- ---------------- 1,328,697 4,309,612 5,638,309 ------------- ---------------- ----------- Diversified Telecommunication Services (0.3%): 20,600 20,600 AT&T, Inc. 587,100 587,100 Neutral Tandem, 21,560 21,560 Inc.* 349,703 349,703 ------------- ------------------------- 587,100 349,703 936,803 ------------- ------------------------- Electric Utilities (0.5%): ------------- ----------- 26,900 26,900 Exelon Corp. 1,495,909 1,495,909 ------------- ---------- Energy Equipment & Services (1.5%): 31,900 31,900 Schlumberger, Ltd. 1,350,327 1,350,327 7,200 54,100 61,300 Transocean, Ltd.* 340,200 2,556,225 2,896,425 ---------------- ------------- ----------- 1,690,527 2,556,225 4,246,752 ------------- ---------------- ----------- Electronic Equipment (0.1%): Energy Conversion 6,000 6,000 Devices, Inc.*(a) 151,260 151,260 123 The Allianz Variable Insurance Products Trust - Statement of Additional Information First Solar, 1,770 1,770 Inc.* 244,189 244,189 ----------------------- 395,449 395,449 ----------------------- Electronic Equipment & Instruments (0.3%): Agilent Technologies, 24,190 24,190 Inc.* 378,090 378,090 Trimble Navigation, 18,500 18,500 Ltd.* 399,785 399,785 ----------------------- 777,875 777,875 ----------------------- Food & Staples Retailing (4.1%): 38,600 137,200 175,800 CVS Caremark Corp. 1,109,364 3,943,128 5,052,492 25,700 25,700 Kroger Co. 678,737 678,737 32,800 32,800 Safeway, Inc. 779,656 779,656 84,300 84,300 Wal-Mart Stores, Inc. 4,725,858 4,725,858 ---------------- ------------- ----------- 7,293,615 3,943,128 11,236,743 ------------- ---------------- ----------- Health Care Equipment & Supplies (3.3%): 8,200 8,200 Bard (C.R.), Inc. 690,932 690,932 20,800 20,800 Henry Schein, Inc.* 763,152 763,152 Intuitive Surgical, 2,260 2,260 Inc.* 286,997 286,997 45,600 90,400 136,000 Medtronic, Inc. 1,432,752 2,840,368 4,273,120 NuVasive, 4,898 4,898 Inc.* 169,716 169,716 69400 69,400 Zimmer Holdings, Inc.* 2,805,148 2,805,148 ---------------- ------------- ----------------------- 2,886,836 5,645,516 456,713 8,989,065 ------------- ----------- ------------------------ 124 The Allianz Variable Insurance Products Trust - Statement of Additional Information Health Care Providers & Services (2.1%): 154,400 154,400 Aetna, Inc. 4,400,400 4,400,400 52,700 52,700 UnitedHealth Group, Inc. 1,401,820 1,401,820 ------------- ---------------- ----------- 1,401,820 4,400,400 5,802,220 ------------- ---------------- ----------- Hotels, Restaurants & Leisure (2.2%): 47,600 47,600 Burger King Holdings, Inc. 1,136,688 1,136,688 24,800 24,800 McDonald's Corp. 1,542,312 1,542,312 106,900 106,900 Yum! Brands, Inc. 3,367,350 3,367,350 ---------------- ------------- ---------- 2,679,000 3,367,350 6,046,350 ------------- ---------------- ----------- Household Durables (0.2%): ------------- ----------- 63,600 63,600 D. R. Horton, Inc. 449,652 449,652 ------------- ----------- Household Products (0.4%): 12,800 12,800 Clorox Co. (The) 711,168 711,168 7,900 7,900 Procter & Gamble Co. 488,378 488,378 ------------- ----------- 1,199,546 1,199,546 ------------- ----------- Industrial Conglomerate (1.4%): ---------------- ------------ 243,600 243,600 General Electric Co. 3,946,320 3,946,320 ---------------- ----------- Insurance (0.4%): ------------ ------------ 25,600 25,600 Travelers Cos., Inc. (The) 1,157,120 1,157,120 ------------ ------------ 125 The Allianz Variable Insurance Products Trust - Statement of Additional Information Internet & Catalog Retail (2.2%): ---------------- ------------ ---------- 22,000 96,500 118,500 Amazon.com, Inc.* 1,128,160 4,948,520 6,076,680 ------------ ---------------- ---------- Internet Software & Services (6.7%): Ariba, 21,740 21,740 Inc.* 156,745 156,745 202,700 202,700 eBay, Inc. * 2,829,692 2,829,692 Equinix, 15,221 15,221 Inc.* 809,605 809,605 F5 Networks, 9,920 9,920 Inc.* 226,771 226,771 8,400 13,875 22,275 Google, Inc., Class A* 2,584,260 4,268,644 6,852,904 Omniture, 61,478 61,478 Inc.* 654,126 654,126 VeriSign, 29,020 29,020 Inc.* 553,702 553,702 22,592 22,592 Vocus, Inc.* 411,400 411,400 465,800 465,800 Yahoo!, Inc.* 5,682,760 5,682,760 ---------------- ----------- ---------------- -------- 2,584,260 12,781,096 2,812,34918,177,705 ----------- ---------------- ---------------- -------- IT Services (1.2%): Accenture, Ltd., Class 24,020 24,020 A 787,616 787,616 Affiliated Computer 25,150 25,150 Services, Inc., Class A* 1,155,642 1,155,642 Cognizant Technology Solutions Corp., Class 38,640 38,640 A*. 697,838 697,838 Fiserv, 16,410 16,410 Inc.* 596,832 596,832 126 The Allianz Variable Insurance Products Trust - Statement of Additional Information ---------------- ------- 3,237,928 3,237,928 ---------------- ------- Life Sciences Tools & Services (0.5%): Illumina, 12,590 12,590 Inc.* 327,969 327,969 Thermo Fisher Scientific, 31,400 31,400 Inc.* 1,069,798 1,069,798 ------------- ---------------- ------ 1,069,798 327,969 1,397,767 ------------- ---------------- ------ Machinery (3.6%): 137,700 137,700 Catepillar, Inc. 6,151,059 6,151,059 37,100 37,100 Cummins, Inc. 991,683 991,683 49,500 49,500 Danaher Corp. 2,802,195 2,802,195 ------------- ------------- ---------- 3,793,878 6,151,059 9,944,937 ------------- ---------------- --------- Metals & Mining (0.8%): 32,400 32,400 Agnico-Eagle Mines, Ltd. 1,663,092 1,663,092 Freeport-McMoRan Copper & 24,200 24,200 Gold, Inc., Class A 591,448 591,448 ------------- ----------------- 2,254,540 2,254,540 ------------- ----------------- Multiline Retail (0.7%): ------------- ----------------- 53,300 53,300 Kohl's Corp.* 1,929,460 1,929,460 ------------- ----------------- Oil, Gas & Consumable Fuels (4.6%): 31,100 31,100 EOG Resources, Inc. 2,070,638 2,070,638 22,300 22,300 Exxon Mobil Corp. 1,780,209 1,780,209 127 The Allianz Variable Insurance Products Trust - Statement of Additional Information 191,000 191,000 Halliburton Co. 3,472,380 3,472,380 40,500 40,500 Massey Energy Co. 558,495 558,495 22,000 22,000 Valero Energy Corp. 476,080 476,080 119,600 119,600 XTO Energy, Inc. 4,218,292 4,218,292 ---------------- ------------- ---------------- 4,885,422 7,690,672 12,576,094 ------------- ---------------- ---------------- Pharmaceuticals (4.3%): 53,000 53,000 Abbott Laboratories 2,828,610 2,828,610 82,300 82,300 Allergan, Inc. 3,318,336 3,318,336 67,200 67,200 Bristol-Myers Squibb Co. 1,562,400 1,562,400 6,050 6,050 ICON plc, ADR* 119,125 119,125 28,600 28,600 Johnson & Johnson Co. 1,711,138 1,711,138 Medco Health Solutions, 40,900 40,900 Inc.* 1,714,119 1,714,119 Teva Pharmaceutical 16,900 16,900 Industries, Ltd., ADR. 719,433 719,433 ---------------- ------------- -------------- ------- 8,535,700 3,318,336 119,125 11,973,161 ------------- ---------------- ---------------- ----- Semiconductors & Semiconductor equipment (3.7%): 29,780 29,780 Altera Corp. 497,624 497,624 Analog Devices, 54,270 54,270 Inc. 1,032,215 1,032,215 35,998 35,998 ASML Holding NV 650,484 650,484 63,800 63,800 Broadcom Corp., Class A* 1,082,686 1,082,686 128 The Allianz Variable Insurance Products Trust - Statement of Additional Information 24,200 24,200 FEI Co.* 456,412 456,412 Hittite Microwave 8,780 8,780 Corp.* 258,659 258,659 Intersil Corp., Class 19,530 19,530 A 179,481 179,481 24,900 24,900 Lam Research Corp.* 529,872 529,872 Marvell Technology Group, 33,800 33,800 Ltd.* 225,446 225,446 MEMC Electronic Materials, 14,370 14,370 Inc.* 205,204 205,204 Microsemi 27,250 27,250 Corp.* 344,440 344,440 Netlogic Microsystems, 8,550 8,550 Inc.* 188,185 188,185 270,700 270,700 PMC-Sierra, Inc.* 1,315,602 1,315,602 Tessera Technologies, 14,231 14,231 Inc.* 169,064 169,064 178,400 178,400 Texas Instrument, Inc. 2,768,768 2,768,768 Varian Semiconductor Equipment Associates, 12,290 12,290 Inc.* 222,695 222,695 ---------------- ------------- ------------------------ 2,928,160 2,768,768 4,429,909 10,126,837 ------------- ---------------------------------------- Software (10.0%): 156,600 37,370 193,970 Activision Blizzard, Inc.* 1,353,024 322,877 1,675,901 129 The Allianz Variable Insurance Products Trust - Statement of Additional Information 42,200 55,130 97,330 Adobe Systems, Inc.* 898,438 1,173,718 2,072,156 40,230 40,230 Amdocs, Ltd.* 735,807 735,807 11,019 11,019 Ansys, Inc.* 307,320 307,320 Blackboard, 18,483 18,483 Inc.* 484,809 484,809 44,410 44,410 CA, Inc. 822,917 822,917 Check Point Software 67,500 41,260 108,760 Technologies, Ltd.* 1,281,825 783,527 2,065,352 Citrix Systems, 26,320 26,320 Inc.* 620,362 620,362 Concur Technologies, 6,685 6,685 Inc.* 219,402 219,402 122,400 122,400 Electronics Arts, Inc.* 1,963,296 1,963,296 274,900 274,900 International Game Technology 3,268,561 3,268,561 Intuit, 24,800 24,800 Inc.*. 589,992 589,992 25,780 25,780 McAfee, Inc.* 891,214 891,214 127,200 142,700 35,250 305,150 Microsoft Corp. 2,472,768 2,774,088 685,260 5,932,116 Nintendo Co., 1,420 1,420 Ltd. 545,677 545,677 Nuance Communications, 53,110 53,110 Inc.* 550,220 550,220 68,900 62,390 131,290 Oracle Corp.* 1,221,597 1,106,175 2,327,772 29,200 13,600 42,800 Salesforce.com, Inc.* 934,692 435,336 1,370,028 130 The Allianz Variable Insurance Products Trust - Statement of Additional Information 6,800 6,800 SAP AG, ADR 246,296 246,296 51,510 51,510 Symantec Corp.* 696,415 696,415 Teradata 13,040 13,040 Corp.* 193,383 193,383 ------------- ------------- ---------------------- 8,162,344 8,005,945 11,410,707 27,578,996 ------------- ---------------- ---------------- ----- Specialty Retail (0.6%): 19,400 19,400 Home Depot, Inc. 446,588 446,588 39,500 39,500 Ross Stores, Inc. 1,174,335 1,174,335 ------------- ----------------- 1,620,923 1,620,923 ------------- ----------------- Textiles, Apparel & Luxury Goods(0.9%): ---------------- ----------------- 51,300 51,300 Nike, Inc., Class B 2,616,300 2,616,300 ---------------- ----------------- Tobacco (1.0%): ------------- ----------------- Philip Morris 64,500 64,500 International, Inc. 2,806,395 2,806,395 ------------- ----------------- Wireless Telecommunication Services (1.4%): American Tower Corp., Class 72,700 42,176 114,876 A* 2,131,564 1,236,601 3,368,165 SBA Communications Corp., 37,960 37,960 Class A* 619,507 619,507 ------------- ----------- ----------------- 2,131,564 1,856,108 3,987,672 ------------- ----------- ----------------- ------------- ----------- ----------------- Total Common Stocks (Cost $299,782,411) 97,724,389 135,584,538 37,150,813 270,459,740 --------- ----------- ----------- ------------------ 131 The Allianz Variable Insurance Products Trust - Statement of Additional Information Investment Company (3.2%): Dreyfus Treasury Prime Cash 1,277,150 3,191,961 4,490,417 8,959,528 Management, 0.17%(b) 1,277,150 3,191,961 4,490,417 8,959,528 ---------- ----------- --------- ------------------ Total Investment Company 1,277,150 3,191,961 8,959,528 (Cost $8,959,528) 4,490,417 ---------- ---------- ----------- ------------------ Total Investment Securities Cost $308,741,939) (c)-- 101.3% 99,001,539 138,776,499 41,641,230 279,419,268 Net other assets (liabilities)-- (1.3)% 342,900 (2,196,327) (1,850,825) (3,704,252) ---------- ---------- ----------- ------------------ Adjustment for reorganization fees (d) - 0.0% (134,800) Net Assets -- 100.0% $ 136,580,172 $ 275,580,216 99,344,439 $39,790,405 ---------- ---------- ----------- ------------------ 132 The Allianz Variable Insurance Products Trust - Statement of Additional Information Percentages indicated are based on net assets as of December 31, 2008. * Non-income producing security ADR --American Depository Receipt PLC --Public Liability Co. (a) Rule 144A, Section 4(b) or other security which is restricted to resale to institutional investors. The subadviser has deemed these securities to be illiquid based on procedures approved by the Board of Trustees. As of December 31, 2008, these securities represent 0.1% of the net assets of the Fund. (b) The rate presented represents the effective yield at December 31.2008. (c) Cost for federal income tax purposes is $328,645,402. The gross unrealized appreciation/(depreciation) on a tax basis is as follows: Unrealized appreciation $ 10,395,107 Unrealized depreciation (59,621,241) -------------- Net unrealized depreciation $(49,226,134) ============== (d) Represents the estimated reorganization fees and expenses that are to be expected to be paid by the Funds.
133 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL INTERNATIONAL INDEX FUND PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited) AZL SCHRODER AZL NACM AZL INTERNATIONAL SMALL INTERNATIONAL INTERNATIONAL CAP FUND FUND INDEX FUND PRO FORMA COMBINED SHARES SHARES SHARES SHARES ------------------------ --------------- ---------------- ------------- COMMON STOCKS (95.8%): AEROSPACE & DEFENSE (2.3%): - 121,479 - 121,479 BAE Systems plc - 8,096 - 8,096 Cobham plc European Aeronautic Defence and - 25,576 - 25,576 Space Co. - 18,525 - 18,525 Finmeccanica SpA 85,984 - - 85,984 Meggitt plc 21,000 - - 21,000 MTU Aero Engines Holding AG 55,000 - - 55,000 Saab AB AUTO COMPONENTS (1.0%): 8,900 - - 8,900 Alpha Corp. 21,300 - - 21,300 Exedy Corp. 14,000 - - 14,000 Koito Manufacturing Co., Ltd. 46,000 - - 46,000 Musashi Seimitsu Industry Co., Ltd. 31,800 - - 31,800 Nifco, Inc. AZL SCHRODER AZL INTERNATIONAL AZL NACM INTERNATIONAL SMALL CAP FUND INTERNATIONAL FUND INDEX FUND PRO FORMA COMBINED FAIR FAIR VALUE FAIR VALUE FAIR VALUE VALUE ----------------- ------------------- -------------- ---------------- $ - $ 661,931 $ - $ 661,931 - 24,066 - 24,066 - 431,750 - 431,750 - 283,746 - 283,746 199,411 - - 199,411 565,950 - - 565,950 502,936 - - 502,936 ----------------- ------------------- -------------- ---------------- 1,268,297 1,401,493 - 2,669,790 ----------------- ------------------- -------------- ---------------- 70,530 - - 70,530 212,874 - - 212,874 86,575 - - 86,575 399,881 - - 399,881 323,977 - - 323,977 ----------------- ------------------- -------------- ---------------- 134 The Allianz Variable Insurance Products Trust - Statement of Additional Information AUTOMOBILES (1.9%): 9,000 - 9,000 Accell Group NV - 5,752 - 5,752 Bayerische Motoren Werke AG (BMW) - 4,282 - 4,282 DaimlerChrysler AG - 18,600 - 18,600 Honda Motor Co. 20,000 - - 20,000 Rosenbauer International AG 128,000 - - 128,000 ShinMaywa Industries, Ltd. - 8,000 - 8,000 Toyota Motor Corp. BEVERAGES (1.5%): 15,000 - - 15,000 A.G. Barr plc - 34,873 - 34,873 Diageo plc - 90,235 - 90,235 Foster's Group, Ltd. 9,011 - - 9,011 Hawesko Holding AG 1,093,837 - - 1,093,837 ----------------- ------------------- -------------- ---------------- 225,750 - - 225,750 - 179,735 - 179,735 - 160,854 - 160,854 - 403,473 - 403,473 619,270 - - 619,270 347,618 - - 347,618 - 261,920 - 261,920 ----------------- ------------------- -------------- ---------------- 1,192,638 1,005,982 - 2,198,620 ----------------- ------------------- -------------- ---------------- 279,596 - - 279,596 - 484,984 - 484,984 - 347,050 - 347,050 233,339 - - 233,339 135 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 52,000 - 52,000 Sapporo Holdings, Ltd. BIOTECHNOLOGY (1.1%): - 11,973 - 11,973 Actelion, Ltd.* - 23,912 - 23,912 CSL, Ltd. BUILDING PRODUCTS (0.8%): 76,000 - - 76,000 Alumasc Group plc (The) 60,000 - - 60,000 BSS Group plc 3,000 - - 3,000 Geberit Internatinal AG 92,724 - - 92,724 James Hardie Industries NV CHEMICALS (4.4%): 47,400 - - 47,400 Aica Kogyo Co., Ltd. - 327,519 - 327,519 ----------------- ------------------- -------------- ---------------- 512,935 1,159,553 - 1,672,488 ----------------- ------------------- -------------- ---------------- - 674,620 - 674,620 - 564,485 - 564,485 ----------------- ------------------- -------------- ---------------- - 1,239,105 - 1,239,105 ----------------- ------------------- -------------- ---------------- 63,907 - - 63,907 217,135 - - 217,135 323,330 - - 323,330 303,607 - - 303,607 ----------------- ------------------- -------------- ---------------- 907,979 - - 907,979 ----------------- ------------------- -------------- ---------------- 528,396 - - 528,396 136 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 15,113 - 15,113 BASF AG 126,000 - - 126,000 Chugoku Marine Paints, Ltd. 29,400 - - 29,400 Fujikura Kasei Co., Ltd. 1,396 - - 1,396 Kcc Corp. 30,000 - - 30,000 Koninklijke Ten Cate NV 8,100 - - 8,100 Lintec Corp. 48,000 - - 48,000 Nihon Parkerizing Co., Ltd. 740 - - 740 Sika AG-BEARER - 2,801 - 2,801 Syngenta AG - 4,400 - 4,400 Yara International ASA COMMERCIAL BANKS (5.0%): - 45,209 - 45,209 Banco Bilbao Vizcaya Argentaria SA - 57,713 - 57,713 Banco Santander Central Hispano SA - 18,000 - 18,000 Bank of Kyoto, Ltd. (The) 19,800 - - 19,800 Bank Sarasin & CIE-REG B - 593,024 - 593,024 926,072 - - 926,072 152,794 - - 152,794 325,538 - - 325,538 677,738 - - 677,738 112,395 - - 112,395 416,368 - - 416,368 630,009 - - 630,009 - 542,869 - 542,869 - 96,231 - 96,231 ----------------- ------------------- -------------- ---------------- 3,769,310 1,232,124 - 5,001,434 ----------------- ------------------- -------------- ---------------- - 554,676 - 554,676 - 556,933 - 556,933 - 201,801 - 201,801 591,746 - - 591,746 137 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 9,000 - 9,000 Chugoku Bank, Ltd. (The) - 4,521 - 4,521 Credit Suisse Group - 8,331 - 8,331 Deutsche Bank AG 109,200 - - 109,200 Dah Sing Banking Group, Ltd. 326,300 - - 326,300 Eon Capital Bhd - 63,200 - 63,200 HSBC Holdings plc Industrial & Commerical Bank of - 321,000 - 321,000 China 56,000 - - 56,000 Minato Bank, Ltd. Mitsubishi Tokyo Financial Group, - 65,300 - 65,300 Inc. - 21,480 - 21,480 National Australia Bank, Ltd. - 29,100 - 29,100 Nordea AB - 3,402 - 3,402 Societe Generale Sumitomo Trust & Banking Co., Ltd. - 28,000 - 28,000 (The) - 13,000 - 13,000 Suruga Bank, Ltd. 16,100 - - 16,100 Tokyo Tomin Bank, Ltd. - 26,924 - 26,924 Westpac Banking Corp. - 138,626 - 138,626 - 123,970 - 123,970 - 334,935 - 334,935 78,893 - - 78,893 303,234 - - 303,234 - 606,691 - 606,691 - 170,606 - 170,606 87,330 - - 87,330 - 405,271 - 405,271 - 314,813 - 314,813 - 204,955 - 204,955 - 172,283 - 172,283 - 165,751 - 165,751 - 128,778 - 128,778 260,530 - - 260,530 - 320,536 - 320,536 ----------------- ------------------- -------------- ---------------- 138 The Allianz Variable Insurance Products Trust - Statement of Additional Information COMMERCIAL SERVICES & SUPPLIES (2.7%): 20,000 - - 20,000 Arcadis NV 17,180 - - 17,180 Atkins (WS) plc 35,000 - - 35,000 BPP Holdings plc 8,000 - - 8,000 Eurokai Kgaa 22,000 - - 22,000 Kapsch TrafficCom AG - 9,591 - 9,591 Loomis AB, B Shares* 12,000 - - 12,000 Nishio Rent All Co., Ltd. - 728 - 728 Rakuten, Inc. - 4,200 - 4,200 Rinnai Corp. 100,000 - - 100,000 Scott Wilson Group plc - 48,200 - 48,200 Securitas AB, Class A 35,000 - - 35,000 Speedy Hire plc 81,982 - - 81,982 Transpacific Industries Group, Ltd. 1,321,733 4,400,625 - 5,722,358 ----------------- ------------------- -------------- ---------------- 263,638 - - 263,638 166,857 - - 166,857 164,962 - - 164,962 315,219 - - 315,219 498,509 - - 498,509 - 59,462 - 59,462 86,701 - - 86,701 - 463,590 - 463,590 - 164,516 - 164,516 138,034 - - 138,034 - 395,858 - 395,858 70,740 - - 70,740 187,843 - - 187,843 139 The Allianz Variable Insurance Products Trust - Statement of Additional Information 3,000 - - 3,000 Xing AG* COMMUNICATIONS EQUIPMENT (0.5%): 7,000 - - 7,000 EVS Broadcast Equipment SA 7,500 - - 7,500 Icom, Inc. Telefonaktiebolaget LM Ericsson, - 19,000 - 19,000 Class B COMPUTERS & PERIPHERALS (0.3%): 23,800 - - 23,800 Nidec Copal Corp. - 39 - 39 NTT Data Corp. CONSTRUCTION & ENGINEERING (1.9%): ACS, Actividades de Construccion y - 4,969 - 4,969 Servicios SA 11,500 - - 11,500 Bilfinger Berger AG 113,669 - - 113,669 ----------------- ------------------- -------------- ---------------- 2,006,172 1,083,426 - 3,089,598 ----------------- ------------------- -------------- ---------------- 249,541 - - 249,541 159,778 - - 159,778 - 145,803 - 145,803 ----------------- ------------------- -------------- ---------------- 409,319 145,803 - 555,122 ----------------- ------------------- -------------- ---------------- 166,315 - - 166,315 - 156,587 - 156,587 ----------------- ------------------- -------------- ---------------- 166,315 156,587 - 322,902 ----------------- ------------------- -------------- ---------------- - 228,397 - 228,397 588,447 - - 588,447 140 The Allianz Variable Insurance Products Trust - Statement of Additional Information 50,265 - - 50,265 Downer EDII, Ltd. 30,000 - - 30,000 Keller Group plc 20,000 - - 20,000 Kier Group plc - 14,300 - 14,300 Leopalace21 Corp. 22,000 - - 22,000 Morgan Sindall plc 70,000 - - 70,000 Redrow plc 20,745 - - 20,745 United Group, Ltd. - 3,497 - 3,497 Vinci SA CONSTRUCTION MATERIALS (0.4%): 54,500 - - 54,500 DC Co., Ltd. 80,103 - - 80,103 Fletcher Building, Ltd. CONTAINERS & PACKAGING (1.0%): 135,249 - - 135,249 249,270 - - 249,270 261,805 - - 261,805 - 145,028 - 145,028 172,080 - - 172,080 165,134 - - 165,134 120,144 - - 120,144 - 147,204 - 147,204 ----------------- ------------------- -------------- ---------------- 1,692,129 520,629 - 2,212,758 ----------------- ------------------- -------------- ---------------- 193,959 - - 193,959 270,110 - - 270,110 ----------------- ------------------- -------------- ---------------- 464,069 - - 464,069 ----------------- ------------------- -------------- ---------------- 141 The Allianz Variable Insurance Products Trust - Statement of Additional Information 596,000 - - 596,000 Goodpack, Ltd. 44,400 - - 44,400 JSP Corp. 35,500 - - 35,500 Nitta Corp. DISTRIBUTORS (0.5%): 70,000 - - 70,000 Inchcape plc 36,300 - - 36,300 Trusco Nakayama Corp. DIVERSIFIED CONSUMER SERVICES (0.2%): 10,000 - - 10,000 Homeserve plc 6,200 - - 6,200 InnoConcepts NV DIVERSIFIED FINANCIAL SERVICES (3.9%): 4,700 - - 4,700 Acino Holding AG 344,940 - - 344,940 314,287 - - 314,287 471,254 - - 471,254 ----------------- ------------------- -------------- ---------------- 1,130,481 - - 1,130,481 ----------------- ------------------- -------------- ---------------- 37,190 - - 37,190 467,759 - - 467,759 ----------------- ------------------- -------------- ---------------- 504,949 - - 504,949 ----------------- ------------------- -------------- ---------------- 141,512 - - 141,512 28,635 - - 28,635 ----------------- ------------------- -------------- ---------------- 170,147 - - 170,147 ----------------- ------------------- -------------- ---------------- 1,020,480 - - 1,020,480 142 The Allianz Variable Insurance Products Trust - Statement of Additional Information 120,000 - - 120,000 Albemarle & Bond Holdings plc 22,174 - - 22,174 Altamir Amboise 1,185,000 - - 1,185,000 ARA Asset Management, Ltd.(a) 120,000 - - 120,000 Azimut Holding SpA 204,000 - - 204,000 China Everbright, Ltd. 4,500 - - 4,500 Compagnie Financiere Tradition 136,665 - - 136,665 Evolution Group plc 19,087 - - 19,087 Grenkeleasing AG 5,000 - - 5,000 Hellenic Exchanges SA - 18,132 - 18,132 Standard Chartered plc - 585 - 585 UBS AG* - 16,641 - 16,641 UBS AG, Registered Shares* 840,000 - - 840,000 Yuanta Financial Holding Co., Ltd. DIVERSIFIED REIT (0.4%): 32,500 - - 32,500 Shaftesbury plc 352,106 - - 352,106 78,384 - - 78,384 303,339 - - 303,339 646,286 - - 646,286 253,484 - - 253,484 293,884 - - 293,884 169,706 - - 169,706 483,197 - - 483,197 39,361 - - 39,361 - 231,731 - 231,731 - 8,365 - 8,365 - 241,460 - 241,460 382,882 - - 382,882 ----------------- ------------------- -------------- ---------------- 4,023,109 481,556 - 4,504,665 ----------------- ------------------- -------------- ---------------- 169,601 - - 169,601 143 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 1,537 - 1,537 Unibail DIVERSIFIED TELECOMMUNICATION SERVICES (3.0%): - 38,348 - 38,348 France Telecom SA - 14,737 - 14,737 Koninklijke KPN NV - 104 - 104 Nippon Telegraph and Telephone Corp - 540 - 540 Swisscom AG, Registered Shares - 63,640 - 63,640 Telefonica SA ELECTRIC UTILITIES (3.3%): - 6,200 - 6,200 Chubu Electric Power Co., Inc. - 40,500 - 40,500 CLP Holdings, Ltd. - 15,056 - 15,056 Drax Group plc - 15,556 - 15,556 E.On AG - 119,276 - 119,276 Enel SpA - 228,897 - 228,897 ----------------- ------------------- -------------- ---------------- 169,601 228,897 - 398,498 ----------------- ------------------- -------------- ---------------- - 1,072,518 - 1,072,518 - 213,675 - 213,675 . - 566,227 - 566,227 - 174,403 - 174,403 - 1,426,360 - 1,426,360 ----------------- ------------------- -------------- ---------------- - 3,453,183 - 3,453,183 ----------------- ------------------- -------------- ---------------- - 188,476 - 188,476 - 275,373 - 275,373 - 122,019 - 122,019 - 619,681 - 619,681 - 762,696 - 762,696 144 The Allianz Variable Insurance Products Trust - Statement of Additional Information 21,000 - - 21,000 Red Electrica Corporacion - 21,500 - 21,500 Tokyo Electric Power Co., Inc. (The ELECTRICAL EQUIPMENT (1.1%): - 18,834 - 18,834 ABB, Ltd. - 7,163 - 7,163 Alstom SA 70,000 - - 70,000 E2V Technologies plc 4,135 - - 4,135 Newave Energy Holdings SA* 30,200 - - 30,200 Sumida Corp. ELECTRONIC EQUIPMENT & INSTRUMENTS (0.9%): - 78,000 - 78,000 Fujitsu, Ltd. - 23,000 - 23,000 Hitachi, Ltd. Matsushita Electric Industrial Co., - 30,000 - 30,000 Ltd. 1,063,792 - - 1,063,792 ) - 718,027 - 718,027 ----------------- ------------------- -------------- ---------------- 1,063,792 2,686,272 - 3,750,064 ----------------- ------------------- -------------- ---------------- - 284,028 - 284,028 - 422,947 - 422,947 211,610 - - 211,610 151,566 - - 151,566 168,044 - - 168,044 ----------------- ------------------- -------------- ---------------- 531,220 706,975 - 1,238,195 ----------------- ------------------- -------------- ---------------- - 377,093 - 377,093 - 89,216 - 89,216 - 375,994 - 375,994 145 The Allianz Variable Insurance Products Trust - Statement of Additional Information 6,900 - - 6,900 Ryosan Co., Ltd. 4,100 - - 4,100 Sato Corp. ENERGY EQUIPMENT & SERVICES (1.5%): 80,000 - - 80,000 Chloride Group plc 20,000 - - 20,000 FuGro NV 24,000 - - 24,000 Groupe Bourbon SA Schoeller-Blackman Oilfield 10,000 - - 10,000 Equipment AG FOOD & STAPLES RETAILING (1.6%): - 7,000 - 7,000 Don Quijote Co., Ltd. 5,500 - - 5,500 Greggs plc 700 - - 700 Guyenne et Gascogne SA - 11,215 - 11,215 Koninklijke Ahold NV - 16,700 - 16,700 Seven & I Holdings, Ltd. 165,501 - - 165,501 46,389 - - 46,389 ----------------- ------------------- -------------- ---------------- 211,890 842,303 - 1,054,193 ----------------- ------------------- -------------- ---------------- 166,591 - - 166,591 574,123 - - 574,123 607,495 - - 607,495 309,984 - - 309,984 ----------------- ------------------- -------------- ---------------- 1,658,193 - - 1,658,193 ----------------- ------------------- -------------- ---------------- - 139,484 - 139,484 266,342 - - 266,342 59,954 - - 59,954 - 137,822 - 137,822 - 572,264 - 572,264 146 The Allianz Variable Insurance Products Trust - Statement of Additional Information 10,100 - - 10,100 Tsuruha Holdings Co. - 11,792 - 11,792 Unilever NV FOOD PRODUCTS (3.2%): 697,000 - - 697,000 Beijing Jingkelong Co., Ltd. 33,000 - - 33,000 Cranswick plc - 12,000 - 12,000 Nippon Meat Packers, Inc. - 6,300 - 6,300 Nissin Foods Holdings Co., Ltd. - 38,936 - 38,936 SFR Nestle SA, Class B - 12,000 - 12,000 Toyo Suisan Kaisha, Ltd. 20,000 - - 20,000 Trigon Agri A/S* - 9,888 - 9,888 Unilever plc 1,071,000 - - 1,071,000 Want Want China Holdings, Ltd. - 13,000 - 13,000 Yamazaki Baking Co., Ltd. 390,797 - - 390,797 - 285,689 - 285,689 ----------------- ------------------- -------------- ---------------- 717,093 1,135,259 - 1,852,352 ----------------- ------------------- -------------- ---------------- 244,304 - - 244,304 277,543 - - 277,543 - 181,389 - 181,389 - 221,008 - 221,008 - 1,535,217 - 1,535,217 - 344,990 - 344,990 13,875 - - 13,875 - 224,655 - 224,655 446,272 - - 446,272 - 200,081 - 200,081 ----------------- ------------------- -------------- ---------------- 147 The Allianz Variable Insurance Products Trust - Statement of Additional Information GAS UTILITIES (0.4%): 20,000 - - 20,000 Enagas HEALTH CARE EQUIPMENT & SUPPLIES (1.7%): 46,204 - - 46,204 Consort Medical plc 9,900 - - 9,900 Elekta AB, Class B Fisher & Paykel Healthcare Corp., 175,380 - - 175,380 Ltd. 44,000 - - 44,000 Oridion Systems, Ltd.* 39,643 - - 39,643 Sonic Healthcare, Ltd. - 78,811 - 78,811 Smith & Nephew plc HEALTH CARE PROVIDERS & SERVICES (0.3%): 6,300 - - 6,300 MorphoSys AG* 263,000 - - 263,000 Parkway Holdings, Ltd. 981,994 2,707,340 - 3,689,334 ----------------- ------------------- -------------- ---------------- 438,699 - - 438,699 ----------------- ------------------- -------------- ---------------- 265,084 - - 265,084 98,081 - - 98,081 324,661 - - 324,661 299,815 - - 299,815 403,438 - - 403,438 - 499,910 - 499,910 ----------------- ------------------- -------------- ---------------- 1,391,079 499,910 - 1,890,989 ----------------- ------------------- -------------- ---------------- 162,399 - - 162,399 228,131 - - 228,131 ----------------- ------------------- -------------- ---------------- 390,530 - - 390,530 ----------------- ------------------- -------------- ---------------- 148 The Allianz Variable Insurance Products Trust - Statement of Additional Information HOTELS, RESTAURANTS & LEISURE (0.9%): - 84,153 - 84,153 Compass Group plc 16,300 - - 16,300 His Co., Ltd. 40,000 - - 40,000 Holidaybreak plc 58,412 - - 58,412 Homair SA* 10,500 - - 10,500 Tipp24 AG HOUSEHOLD DURABLES (0.5%): Babis Vovos International 36,067 - - 36,067 Construction SA* 23,000 - - 23,000 Fourlis Holdings SA HOUSEHOLD PRODUCTS (0.3%): Alapis Holding Industrial and 43,559 - - 43,559 Commercial SA - 4,000 - 4,000 Kao Corp. - 417,501 - 417,501 338,675 - - 338,675 112,649 - - 112,649 97,696 - - 97,696 86,139 - - 86,139 ----------------- ------------------- -------------- ---------------- 635,159 417,501 - 1,052,660 ----------------- ------------------- -------------- ---------------- 449,205 - - 449,205 160,671 - - 160,671 ----------------- ------------------- -------------- ---------------- 609,876 - - 609,876 ----------------- ------------------- -------------- ---------------- 32,836 - - 32,836 - 121,158 - 121,158 149 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 5,208 - 5,208 Reckitt Benckiser Group plc INDUSTRIAL CONGLOMERATES (1.9%): 3,000 - - 3,000 Bel Sofina Compagnie Nationale A 4,000 - - 4,000 Portefeuille 10,000 - - 10,000 DCC plc 80,000 - - 80,000 Mitie Group plc - 7,900 - 7,900 Mitsubishi Corp. 100,000 - - 100,000 Oxford Instruments plc 14,000 - - 14,000 Rheinmetall AG - 6,790 - 6,790 Siemens AG - 10,679 - 10,679 Smiths Group plc INSURANCE (5.4%): - 11,492 - 11,492 Assicurazioni Generali SpA - 193,974 - 193,974 ----------------- ------------------- -------------- ---------------- 32,836 315,132 - 347,968 ----------------- ------------------- -------------- ---------------- 200,438 - - 200,438 194,482 - - 194,482 143,467 - - 143,467 237,521 - - 237,521 - 110,928 - 110,928 213,999 - - 213,999 454,247 - - 454,247 - 509,579 - 509,579 - 137,460 - 137,460 ----------------- ------------------- -------------- ---------------- 1,444,154 757,967 - 2,202,121 ----------------- ------------------- -------------- ---------------- - 315,001 - 315,001 150 The Allianz Variable Insurance Products Trust - Statement of Additional Information China Insurance International 261,000 - - 261,000 Holdings Co., Ltd. - 224,331 - 224,331 Corporacion Mapfre SA 2,400 - - 2,400 Helvetia Patria Holding Mitsui Sumitomo Insurance - 11,600 - 11,600 Group Holdings, Inc. - 68 - 68 Mizuho Financial Group, Inc. Muenchener Rueckversicherungs-Gesellscha - 1,557 - 1,557 AG - 9,756 - 9,756 QBE Insurance Group, Ltd. - 279,353 - 279,353 RSA Insurance Group plc - 20,511 - 20,511 Sampo OYJ, A Shares - 10,723 - 10,723 SCOR SE - 41,000 - 41,000 Sompo Japan Insurance, Inc. - 5,700 - 5,700 Tokio Marine Holdings, Inc. 9,000 - - 9,000 TrygVesta AS - 4,229 - 4,229 Zurich Financial Services AG 403,878 - - 403,878 - 760,422 - 760,422 521,596 - - 521,596 - 370,046 - 370,046 - 205,022 - 205,022 ft - 241,454 - 241,454 - 177,290 - 177,290 - 558,250 - 558,250 - 383,066 - 383,066 - 246,497 - 246,497 - 300,315 - 300,315 - 167,060 - 167,060 558,497 - - 558,497 - 918,400 - 918,400 ----------------- ------------------- -------------- ---------------- 151 The Allianz Variable Insurance Products Trust - Statement of Additional Information INTERNET & CATALOG RETAIL (0.2%): 75,000 - - 75,000 Findel plc 4,500 - - 4,500 Meetic* IT SERVICES (1.7%): 19,450 - - 19,450 Alten* 78,033 - - 78,033 Computershare, Ltd. 3,000 - - 3,000 Easydentic* NEC Networks & System 16,700 - - 16,700 Integration Corp. 3,350 - - 3,350 Obic Co., Ltd. 23,000 - - 23,000 Sword Group LEISURE EQUIPMENT & PRODUCTS (0.2%): 1,483,971 4,642,823 - 6,126,794 ----------------- ------------------- -------------- ---------------- 106,161 - - 106,161 66,016 - - 66,016 ----------------- ------------------- -------------- ---------------- 172,177 - - 172,177 ----------------- ------------------- -------------- ---------------- 413,762 - - 413,762 426,585 - - 426,585 44,303 - - 44,303 203,730 - - 203,730 548,260 - - 548,260 317,140 - - 317,140 ----------------- ------------------- -------------- ---------------- 1,953,780 - - 1,953,780 ----------------- ------------------- -------------- ---------------- 152 The Allianz Variable Insurance Products Trust - Statement of Additional Information 50,000 - - 50,000 Vitec Group plc MACHINERY (3.7%): 9,000 - - 9,000 Andritz AG 180,000 - - 180,000 Assetco plc 90,315 - - 90,315 Bodycote plc 377 - - 377 Bucher Industries AG Daihatsu Diesel Manufacturing 80,000 - - 80,000 Co., Ltd. 6,000 - - 6,000 Frigoglass SA 30,000 - - 30,000 FURUKAWA-SKY Aluminum Corp. 7,400 - - 7,400 Glory, Ltd. 35,000 - - 35,000 Hamworthy plc 29,000 - - 29,000 Hisaka Works, Ltd. 17,020 - - 17,020 Hyunjin Materials Co., Ltd.* Mitsubishi Heavy Industries, - 96,000 - 96,000 Ltd. 3,900 - - 3,900 Misumi Group, Inc. 9,600 - - 9,600 Miura Co., Ltd. 169,765 - - 169,765 ----------------- ------------------- -------------- ---------------- 230,013 - - 230,013 132,524 - - 132,524 160,632 - - 160,632 38,160 - - 38,160 515,352 - - 515,352 28,638 - - 28,638 72,462 - - 72,462 144,766 - - 144,766 120,303 - - 120,303 386,424 - - 386,424 312,856 - - 312,856 - 428,424 - 428,424 46,796 - - 46,796 237,623 - - 237,623 153 The Allianz Variable Insurance Products Trust - Statement of Additional Information 55,000 - - 55,000 Nabtesco Corp. 95,000 - - 95,000 NIPPON THOMPSON Co., Ltd. 12,800 - - 12,800 OSG Corp. 19,000 - - 19,000 Union Tools Co. MARINE (0.5%): - 30,000 - 30,000 Mitsui O.S.K. Lines, Ltd. 29,459 - - 29,459 Store Electronic* MEDIA (1.4%): 460,000 - - 460,000 C.I.R. SPA Daily Mail & General Trust 55,000 - - 55,000 plc NV, Class A 119,927 - - 119,927 Fairfax Media, Ltd. - 16,597 - 16,597 Reed Elsevier plc 73,000 - - 73,000 Television Broadcasts, Ltd. 368,192 - - 368,192 398,958 - - 398,958 109,160 - - 109,160 433,891 - - 433,891 ----------------- ------------------- -------------- ---------------- 3,736,750 428,424 - 4,165,174 ----------------- ------------------- -------------- ---------------- - 184,274 - 184,274 423,608 - - 423,608 ----------------- ------------------- -------------- ---------------- 423,608 184,274 - 607,882 ----------------- ------------------- -------------- ---------------- 473,644 - - 473,644 214,575 - - 214,575 137,556 - - 137,556 - 120,943 - 120,943 239,179 - - 239,179 154 The Allianz Variable Insurance Products Trust - Statement of Additional Information 35,000 - - 35,000 United Business Media, Ltd. - 4,368 - 4,368 Vivendi Universal SA METALS & MINING (3.8%): - 14,489 - 14,489 Anglo American plc - 14,424 - 14,424 Arcelor - 9,993 - 9,993 BHP Billiton plc - 40,964 - 40,964 BHP Billiton, Ltd. 230,000 - - 230,000 China Molybdenum Co., Ltd. 104,000 - - 104,000 DAIDO STELL Co., Ltd. 84,000 - - 84,000 Dowa Holdings Co., Ltd. 152,968 - - 152,968 Iluka Resources, Ltd.* - 14,070 - 14,070 Newcrest Mining, Ltd. - 6,685 - 6,685 Rio Tinto plc - 8,029 - 8,029 Rio Tinto, Ltd. 257,605 - - 257,605 - 142,196 - 142,196 ----------------- ------------------- -------------- ---------------- 1,322,559 263,139 - 1,585,698 ----------------- ------------------- -------------- ---------------- - 330,871 - 330,871 - 347,625 - 347,625 - 188,191 - 188,191 - 862,509 - 862,509 105,741 - - 105,741 314,686 - - 314,686 309,062 - - 309,062 497,823 - - 497,823 - 333,604 - 333,604 - 144,807 - 144,807 - 214,995 - 214,995 155 The Allianz Variable Insurance Products Trust - Statement of Additional Information 14,152 - - 14,152 TK Corp.* - 3,653 - 3,653 Vallourec SA MULTI-UTILITIES (1.8%): 52,907 - - 52,907 Acea SpA 10,000 - - 10,000 BKW FMB Energie AG - 4,087 - 4,087 RWE AG MULTILINE RETAIL (0.2%): 4,563 - - 4,563 Hyundai Dept. Store* OFFICE ELECTRONICS (0.6%): - 8,400 - 8,400 Canon, Inc. - 31,000 - 31,000 Ricoh Co., Ltd. 253,710 - - 253,710 - 415,429 - 415,429 ----------------- ------------------- -------------- ---------------- 1,481,022 2,838,031 - 4,319,053 ----------------- ------------------- -------------- ---------------- 716,707 - - 716,707 972,591 - - 972,591 - 365,232 - 365,232 ----------------- ------------------- -------------- ---------------- 1,689,298 365,232 - 2,054,530 ----------------- ------------------- -------------- ---------------- 225,842 - - 225,842 ----------------- ------------------- -------------- ---------------- - 263,747 - 263,747 - 394,884 - 394,884 ----------------- ------------------- -------------- ---------------- - 658,631 - 658,631 ----------------- ------------------- -------------- ---------------- 156 The Allianz Variable Insurance Products Trust - Statement of Additional Information OIL, GAS & CONSUMABLE FUELS (7.1%): 3 31,836 - 31,839 BG Group plc - 95,469 - 95,469 BP plc - 41,152 - 41,152 Eni SpA - 6,807 - 6,807 GDF Suez 20,000 - - 20,000 Hunting plc 50,000 - - 50,000 John Wood Group plc 8,100 - - 8,100 MODEC, Inc. - 15,622 - 15,622 National Grid plc - 88,000 - 88,000 Osaka Gas Co., Ltd. - 13,742 - 13,742 Royal Dutch Shell plc - 58,165 - 58,165 Royal Dutch Shell plc 10,000 - - 10,000 Rubis 19,600 13,175 - 32,775 SBM Offshore NV - 16,700 - 16,700 SeaDrill, Ltd. 7,892 - - 7,892 SFC Smart Fuel Cell AG* - 85,000 - 85,000 TOKYO GAS CO., Ltd. - 441,896 - 441,896 - 731,333 - 731,333 - 975,023 - 975,023 - 337,092 - 337,092 120,951 - - 120,951 136,356 - - 136,356 157,384 - - 157,384 - 154,350 - 154,350 - 406,543 - 406,543 - 359,133 - 359,133 - 1,463,514 - 1,463,514 629,874 - - 629,874 256,812 172,628 - 429,440 - 136,204 - 136,204 75,085 - - 75,085 - 430,830 - 430,830 157 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 20,485 - 20,485 Total SA PAPER & FOREST PRODUCTS (0.4%): - 46 - 46 Nippon Paper Group, Inc. - 36,000 - 36,000 Oji Paper Co., Ltd. PERSONAL PRODUCTS (0.3%): 13,000 - - 13,000 Oriflame Cosmetics SA PHARMACEUTICALS (7.3%): - 30,061 - 30,061 AstraZeneca plc 1,552 - - 1,552 Basilea Pharmaceutica AG* 40,000 - - 40,000 Dechra Pharmaceuticals plc 5,000 - - 5,000 Gerresheimer AG - 55,036 - 55,036 GlaxoSmithKline plc 13,000 - - 13,000 Ipsen SA - 1,116,669 - 1,116,669 ----------------- ------------------- -------------- ---------------- 1,376,462 6,725,215 - 8,101,677 ----------------- ------------------- -------------- ---------------- - 190,260 - 190,260 - 211,681 - 211,681 ----------------- ------------------- -------------- ---------------- - 401,941 - 401,941 ----------------- ------------------- -------------- ---------------- 376,891 - - 376,891 ----------------- ------------------- -------------- ---------------- - 1,217,735 - 1,217,735 219,080 - - 219,080 211,841 - - 211,841 139,032 - - 139,032 - 1,021,462 - 1,021,462 507,536 - - 507,536 158 The Allianz Variable Insurance Products Trust - Statement of Additional Information Laboratorios Farmaceuticos 7,428 - - 7,428 Rovi SA Nichi-iko Pharmaceutical Co., 25,800 - - 25,800 Ltd. - 23,291 - 23,291 Novartis AG, Registered Share 25,000 - - 25,000 Pronova BioPharma AS* - 5,028 - 5,028 Roche Holding AG - 7,961 - 7,961 Sanofi-Aventis SA, ADR Takeda Chemical Industries, - 8,600 - 8,600 Ltd. 7,600 - - 7,600 Tsumura & Co. 6,500 - - 6,500 Virbac SA 2,412 - - 2,412 Yuhan Corp.* REAL ESTATE MANAGEMENT & DEVELOPMENT (0.5%): 658,000 - - 658,000 Agile Property Holdings, Ltd. 62,500 - - 62,500 Grainger Trust plc - 19,000 - 19,000 Swire Pacific, Ltd., Class A 60,753 - - 60,753 803,100 - - 803,100 s - 1,167,477 - 1,167,477 83,146 - - 83,146 - 774,306 - 774,306 - 505,577 - 505,577 - 446,202 - 446,202 281,980 - - 281,980 523,714 - - 523,714 420,462 - - 420,462 ----------------- ------------------- -------------- ---------------- 3,250,644 5,132,759 - 8,383,403 ----------------- ------------------- -------------- ---------------- 347,204 - - 347,204 123,051 - - 123,051 - 131,746 - 131,746 ----------------- ------------------- -------------- ---------------- 159 The Allianz Variable Insurance Products Trust - Statement of Additional Information RETAIL REIT (0.2%): 238,000 - - 238,000 CapitaMall Trust ROAD & RAIL (0.4%): - 59 - 59 East Japan Railway Co. SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.1%): 65,000 - - 65,000 CSR plc* SOFTWARE (1.7%): 15,079 - - 15,079 Exact Holding NV 131,000 - - 131,000 F-Secure OYJ 1,576 - - 1,576 Invision Software AG* - 1,300 - 1,300 Nintendo Co., Ltd. - 4,014 - 4,014 SAP AG 32,000 - - 32,000 Smartrac NV* 13,000 - - 13,000 Temenos Group AG* 470,255 131,746 - 602,001 ----------------- ------------------- -------------- ---------------- 265,073 - - 265,073 ----------------- ------------------- -------------- ---------------- - 466,781 - 466,781 ----------------- ------------------- -------------- ---------------- 159,132 - - 159,132 ----------------- ------------------- -------------- ---------------- 277,085 - - 277,085 345,062 - - 345,062 8,910 - - 8,910 - 499,563 - 499,563 - 142,731 - 142,731 547,320 - - 547,320 173,578 - - 173,578 ----------------- ------------------- -------------- ---------------- 1,351,955 642,294 - 1,994,249 ----------------- ------------------- -------------- ---------------- 160 The Allianz Variable Insurance Products Trust - Statement of Additional Information SPECIALTY RETAIL (3.2%): 49,100 - - 49,100 Arcs Co., Ltd. - 14,400 - 14,400 FamilyMart Co., Ltd. 40,000 - - 40,000 Jumbo SA 120,000 - - 120,000 Mobilezone Holding AG 19,000 - - 19,000 Nishimatsuya Chain Co., Ltd. 29,000 - - 29,000 Saft Groupe SA 13,600 - - 13,600 Tsutsumi Jewelry Co., Ltd. TEXTILES, APPAREL & LUXURY GOODS (0.9%): - 6,100 - 6,100 Fast Retailing Co., Ltd. Prime Success International 868,000 - - 868,000 Group, Ltd. TOBACCO (1.9%): - 41,070 - 41,070 British American Tobacco plc 820,982 - - 820,982 - 625,699 - 625,699 242,450 - - 242,450 760,747 - - 760,747 173,725 - - 173,725 783,390 - - 783,390 289,417 - - 289,417 ----------------- ------------------- -------------- ---------------- 3,070,711 625,699 - 3,696,410 ----------------- ------------------- -------------- ---------------- - 889,212 - 889,212 141,992 - - 141,992 ----------------- ------------------- -------------- ---------------- 141,992 889,212 - 1,031,204 ----------------- ------------------- -------------- ---------------- - 1,066,878 - 1,066,878 161 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 9,976 - 9,976 Imperial Tobacco Group plc 55,000 - - 55,000 Swedish Match AB TRADING COMPANIES & DISTRIBUTORS (0.1%): 35,000 - - 35,000 Sig plc TRANSPORTATION INFRASTRUCTURE (0.7%): 15,000 - - 15,000 Forth Ports plc 63,000 - - 63,000 Hopewell Holdings, Ltd. 343,000 - - 343,000 Smrt Corp., Ltd. WIRELESS TELECOMMUNICATION SERVICES (1.2%): - 21,401 - 21,401 Deutsche Telekom AG 12,000 - - 12,000 Elisa Oyj - 145 - 145 NTT DoCoMo, Inc. - 289,078 - 289,078 Vodafone Group plc - 266,425 - 266,425 787,772 - - 787,772 ----------------- ------------------- -------------- ---------------- 787,772 1,333,303 - 2,121,075 ----------------- ------------------- -------------- ---------------- 90,340 - - 90,340 ----------------- ------------------- -------------- ---------------- 198,654 - - 198,654 208,390 - - 208,390 395,032 - - 395,032 ----------------- ------------------- -------------- ---------------- 802,076 - - 802,076 ----------------- ------------------- -------------- ---------------- - 324,516 - 324,516 207,689 - - 207,689 - 285,900 - 285,900 - 581,806 - 581,806 ----------------- ------------------- -------------- ---------------- 162 The Allianz Variable Insurance Products Trust - Statement of Additional Information TOTAL COMMON STOCKS (COST $157,807,719) INVESTMENT COMPANY (5.1%): Dreyfus Treasury Prime Cash 1,923,670 3,894,963 - 5,818,633 Management, 0.17%(b) TOTAL INVESTMENT COMPANY (COST $5,818,633) WARRANTS (0.0%): CONTAINERS & PACKAGING (0.0%): 74,500 - - 74,500 Goodpack, Ltd. TOTAL WARRANTS (COST $--) TOTAL INVESTMENT SECURITIES (COST $163,626,352)(B)--101.0% NET OTHER ASSETS (LIABILITIES) -- (0.9)% Adjustments for Reorganization Fees (c)- (0.1)% NET ASSETS -- 100.0% 207,689 1,192,222 - 1,399,911 ----------------- ------------------- -------------- ---------------- 55,919,299 53,499,348 - 109,418,647 ----------------- ------------------- -------------- ---------------- 1,923,670 3,894,963 - 5,818,633 ----------------- ------------------ --------------- ---------------- 1,923,670 3,894,963 - 5,818,633 ----------------- ------------------ --------------- ---------------- 6,207 - - 6,207 ----------------- ------------------ --------------- ---------------- 6,207 - - 6,207 ----------------- ------------------ --------------- ---------------- 57,849,176 57,394,311 - 115,243,487 421,226 (1,443,848) - (1,022,622) - (85,000) ----------------- ------------------ --------------- ---------------- $ 58,270,402 $55,950,463 $- $114,135,865 ================= ================== =============== ================ 163 The Allianz Variable Insurance Products Trust - Statement of Additional Information Percentages indicated are based on net assets as of December 31, 2008. * Non-income producing security ADR --American Depository Receipt PLC --Public Liability Co. SPA --Standby Purchase Agreement (a) Rule 144A, Section 4(z) or other security which is restricted to resale to institutional investors. The manager has deemed these securities to be liquid based on procedures approved by the Board of Trustees. (b) The rate presented represents the effective yield at December 31, 2008. (c) Represents the estimated reorganization fees and expenses that are to be expected to be paid by the Funds. (d) Cost for federal income tax purposes is $165,596,874. The gross unrealized appreciation/(depreciation) on a tax basis is as follows: Unrealized appreciation $3,814,932 Unrealized depreciation (54,168,319) -------------- Net unrealized depreciation $(50,353,387) ==============
164 The Allianz Variable Insurance Products Trust - Statement of Additional Information
AZL JPMORGAN U.S. EQUITY FUND PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited) AZL JPMORGAN LARGE CAP AZL JPMORGAN U.S. EQUITY FUND EQUITY FUND PRO FORMA SECURITY DESCRIPTION SHARES SHARES COMBINED SHARES COMMON STOCKS ( 97.9%) AEROSPACE & DEFENSE ( 2.2%): 3,590 3,590 BE Aerospace, Inc.* 6,940 6,900 13,840 Boeing Co. (The) 1,660 1,660 Ceradyne, Inc.* 370 370 Cubic Corp. DynCorp International, 60 60 Inc., Class A * Esterline Technologies 1,410 1,410 Corp.* 3,800 3,800 General Dynamics Corp. 1,430 1,430 Goodrich Corp. Honeywell International, 7,400 7,400 Inc. L-3 Communications 2,350 2,350 Holdings, Inc. 800 800 Lockheed Martin Corp. 10,930 10,930 Northrop Grumman Corp. 850 850 Orbital Sciences Corp.* 2,060 2,060 Precision Castparts Corp. 4,900 4,900 Raytheon Co. Spirit Aerosystems 1,300 1,300 Holdings, Inc.* AZL JPMORGAN AZL JPMORGAN LARGE CAP U.S. EQUITY FUND EQUITY FUND PRO FORMA COMBINED FAIR FAIR VALUE FAIR VALUE VALUE $ 27,607 $ 27,607 296,130 294,423 590,553 33,715 33,715 10,064 10,064 910 910 53,425 53,425 218,842 218,842 52,939 52,939 242,942 242,942 173,383 173,383 67,264 67,264 492,287 492,287 16,600 16,600 122,529 122,529 250,096 250,096 13,221 13,221 165 The Allianz Variable Insurance Products Trust - Statement of Additional Information 800 800 Triumph Group, Inc. 4,740 4,740 United Technologies Corp. AIR FREIGHT & LOGISTICS ( 0.0%): 760 760 HUB Group, Inc., Class A* 450 450 Pacer International, Inc. 750 750 UTi Worldwide, Inc. AIRLINES ( 0.1%): 730 730 Alaska Air Group, Inc.* Continental Airlines, 2,680 2,680 Inc., Class B* 1,800 1,800 SkyWest, Inc. 3,800 3,800 UAL Corp. 3,450 3,450 US Airways Group, Inc.* AUTO COMPONENTS ( 0.3%): 2,390 2,390 ArvinMeritor, Inc. 2,230 2,230 Autoliv, Inc. 1,910 1,910 BorgWarner, Inc. 33,968 33,968 254,064 254,064 2,359,986 294,423 2,654,409 20,163 20,163 4,693 4,693 10,755 10,755 35,611 35,611 21,353 21,353 48,401 48,401 33,480 33,480 41,876 41,876 26,668 26,668 171,778 171,778 6,811 6,811 47,856 47,856 41,581 41,581 166 The Allianz Variable Insurance Products Trust - Statement of Additional Information 210 210 Exide Technologies* 20 20 Federal-Mogul Corp.* 2,360 2,360 Gentex Corp. Goodyear Tire & Rubber 5,680 5,680 Co.* 5,930 5,930 Johnson Controls, Inc. 2,930 2,930 Lear Corp.* TRW Automotive Holdings 4,430 4,430 Corp.* 2,680 2,680 WABCO Holdings, Inc. AUTOMOBILES ( 0.0%): 3,400 3,400 Oshkosh Truck Corp. 1,950 1,950 Thor Industries, Inc. BEVERAGES ( 0.4%): 7,040 7,040 Coca-Cola Co. 4,180 4,180 PepsiCo, Inc. BIOTECHNOLOGY ( 2.4%): 6,340 40,500 46,840 Amgen, Inc.* 1,111 1,111 85 85 20,839 20,839 33,909 33,909 107,689 107,689 4,131 4,131 15,948 15,948 42,317 42,317 322,277 322,277 30,226 30,226 25,701 25,701 55,927 55,927 318,701 318,701 228,938 228,938 547,639 547,639 366,135 2,338,875 2,705,010 167 The Allianz Variable Insurance Products Trust - Statement of Additional Information Cubist Pharmaceuticals, 1,050 1,050 Inc.* 724 724 Facet Biotech Corp. 2,500 2,500 Genentech, Inc.* 740 740 Martek Biosciences Corp. BUILDING PRODUCTS ( 0.1%): Armstrong World 1,020 1,020 Industries, Inc. 1,500 1,500 Lennox International, Inc. 1,290 1,290 Louisiana-Pacific Corp. 1,900 1,900 Owens Corning, Inc.* Simpson Manufacturing 230 230 Co., Inc. CAPITAL MARKETS ( 3.6%): 2,070 2,070 Ameriprise Financial, Inc. 450 450 BlackRock, Inc. 40 40 Cohen & Steers, Inc. 11,920 11,920 E*TRADE Financial Corp.* 2,150 2,150 Franklin Resources, Inc. 2,470 4,200 6,670 Goldman Sachs Group, Inc. 25,368 25,368 6,943 6,943 207,275 207,275 22,430 22,430 628,151 2,338,875 2,967,026 22,053 22,053 48,435 48,435 2,012 2,012 32,870 32,870 6,385 6,385 111,755 111,755 48,355 48,355 60,368 60,368 440 440 13,708 13,708 137,127 137,127 208,443 354,438 562,881 168 The Allianz Variable Insurance Products Trust - Statement of Additional Information Interactive Brokers 1,700 1,700 Group, Inc., Class A* Investment Technology 500 500 Group, Inc.* 2,860 2,860 Janus Capital Group, Inc. 690 690 Jefferies Group, Inc. 2,290 2,290 Knight Capital Group, Inc. 600 600 Lazard, Ltd., Class A 2,100 2,100 Legg Mason, Inc. 128,050 128,050 Merrill Lynch & Co., Inc. 720 720 Piper Jaffray Cos., Inc.* 41,900 41,900 State Stree Corp. 3,680 3,680 T. Rowe Price Group, Inc. TD AMERITRADE Holding 7,770 7,770 Corp.* CHEMICALS ( 0.8%): Air Products & Chemicals, 400 400 Inc. 3,872 3,872 Ashland, Inc. 350 350 Cabot Corp. 2,330 2,330 Celanese Corp., Series A CF Industries Holdings, 810 810 Inc. 30,413 30,413 11,360 11,360 22,966 22,966 9,701 9,701 36,984 36,984 17,844 17,844 46,011 46,011 1,490,502 1,490,502 28,627 28,627 1,647,927 1,647,927 130,419 130,419 110,722 110,722 913,488 3,492,867 4,406,355 20,108 20,108 40,695 40,695 5,355 5,355 28,962 28,962 169 The Allianz Variable Insurance Products Trust - Statement of Additional Information 6,910 6,910 Chemtura Corp. 1,080 1,080 Cytec Industries, Inc. 2,890 2,890 Dow Chemical Co. (The) E.I. du Pont de Nemours & 1,210 1,210 Co. 1,020 1,020 Eastman Chemical Co. 1,240 1,240 Ferro Corp. 2,020 2,020 H.B. Fuller Co. 440 440 Koppers Holdings, Inc. Minerals Technologies, 680 680 Inc. 2,700 2,700 Monsanto Co. 8,790 8,790 Mosaic Co. 2,240 2,240 Nalco Holding Co. 440 440 NewMarket Corp. 2,400 2,400 NOVA Chemicals Corp 1,230 1,230 Olin Corp. 50 50 OM Group, Inc.* 1,040 1,040 Rockwood Holdings, Inc.* 2,430 2,430 RPM International, Inc. 39,819 39,819 9,674 9,674 22,918 22,918 43,610 43,610 30,613 30,613 32,344 32,344 8,742 8,742 32,542 32,542 9,513 9,513 27,812 27,812 189,945 189,945 304,134 304,134 25,850 25,850 15,360 15,360 11,448 11,448 22,238 22,238 1,055 1,055 11,232 11,232 170 The Allianz Variable Insurance Products Trust - Statement of Additional Information 680 680 Scotts Co., Class A 130 130 Valhi, Inc. 1,820 1,820 Valspar Corp. (The) 280 280 W. R. Grace & Co.* 880 880 Westlake Chemical Corp. COMMERCIAL BANKS ( 0.8%): 5,180 5,180 Colonial Bancgroup, Inc. 2,380 2,380 East West Bancorp, Inc. 700 700 First Bancorp First Citizens 10 10 BancShares, Inc., Class A First Commonwealth 30 30 Financial Corp. First Horizon National 6,538 6,538 Corp. First Midwest Bancorp, 900 900 Inc. 300 300 Hancock Holding Co. International Bancshares 640 640 Corp. National Penn Bancshares, 1,480 1,480 Inc. 32,295 32,295 20,210 20,210 1,391 1,391 32,924 32,924 1,672 1,672 14,335 14,335 1,036,796 1,036,796 10,723 10,723 38,009 38,009 7,798 7,798 1,528 1,528 371 371 69,108 69,108 17,973 17,973 13,638 13,638 13,971 13,971 21,475 21,475 171 The Allianz Variable Insurance Products Trust - Statement of Additional Information NewAlliance Bancshares, 660 660 Inc. 1,320 1,320 Old National Bancorp 2,460 2,460 Pacific Capital Bancorp 1,050 1,050 PacWest Bancorp 80 80 Park National Corp. 6,430 6,430 Popular, Inc. 7,120 7,120 Regions Financial Corp. 550 550 Sterling Financial Corp. Susquehanna Bancshares, 1,560 1,560 Inc. 2,380 2,380 Terra Industries, Inc. 640 640 Trustmark Corp. 7,950 7,950 U.S. Bancorp 2,430 2,430 UCBH Holdings, Inc. 850 850 Umpqua Holdings Corp. United Community Banks, 491 491 Inc. 2,390 2,390 Webster Financial Corp. 8,560 8,560 Wells Fargo & Co. 440 440 Whitney Holding Corp. 8,692 8,692 23,971 23,971 41,525 41,525 28,245 28,245 5,740 5,740 33,179 33,179 56,675 56,675 4,840 4,840 24,820 24,820 39,674 39,674 13,818 13,818 198,829 198,829 16,718 16,718 12,299 12,299 6,673 6,673 32,934 32,934 252,349 252,349 7,036 7,036 172 The Allianz Variable Insurance Products Trust - Statement of Additional Information 100 100 Wintrust Financial Corp. 780 780 Zions Bancorp COMMERCIAL SERVICES & SUPPLIES ( 0.9%): 690 690 Administaff, Inc. American Reprographics 200 200 Co.* 2,380 2,380 Avis Budget Group, Inc.* 870 870 Brink's Co. (The) 270 270 Clean Harbors, Inc.* Clear Channel Outdoor 1,050 1,050 Holdings, Inc., Class A* 830 830 Copart, Inc.* Corporate Executive Board 820 820 Co. 600 600 CoStar Group, Inc.* 3,010 3,010 Deluxe Corp. 120 120 EnergySolutions, Inc. 1,680 1,680 Equifax, Inc. 2,830 2,830 Fair Isaac Corp. First Advantage Corp., 190 190 Class A* 2,057 2,057 19,118 19,118 1,023,786 1,023,786 14,932 14,932 1,380 1,380 1,666 1,666 23,386 23,386 17,129 17,129 6,457 6,457 22,568 22,568 18,089 18,089 19,764 19,764 45,030 45,030 678 678 44,554 44,554 47,714 47,714 2,688 2,688 173 The Allianz Variable Insurance Products Trust - Statement of Additional Information 940 940 Frontline, Ltd. 720 720 Harte-Hanks, Inc. Heartland Payment 290 290 Systems, Inc. 1,860 1,860 Herman Miller, Inc. Hertz Global Holdings, 6,070 6,070 Inc.* 1,250 1,250 Hewitt Associates, Inc.* 2,070 2,070 HNI Corp. 1,690 1,690 Interface, Inc. 2,680 2,680 Korn/Ferry International* 2,090 2,090 Lamar Advertising Co.* 30 30 M & F Worldwide Corp.* 1,490 1,490 Manpower, Inc. 4,760 4,760 Monster Worldwide, Inc.* 5,360 5,360 MPS Group, Inc.* 340 340 Navigant Consulting, Inc.* 2,200 2,200 Pitney Bowes, Inc. 3,170 3,170 R.R. Donnelley & Sons Co. Resources Connection, 1,700 1,700 Inc.* 27,833 27,833 4,493 4,493 5,075 5,075 24,236 24,236 30,775 30,775 35,475 35,475 32,789 32,789 7,842 7,842 30,606 30,606 26,250 26,250 463 463 50,645 50,645 57,548 57,548 40,361 40,361 5,396 5,396 56,056 56,056 43,049 43,049 27,846 27,846 174 The Allianz Variable Insurance Products Trust - Statement of Additional Information Robert Half 3,160 3,160 International, Inc. 5,170 5,170 Steelcase, Inc., Class A 1,990 1,990 TeleTech Holdings, Inc.* Ticketmaster 780 780 Entertainment, Inc.* 930 930 Trueblue, Inc.* 380 380 United Stationers, Inc.* 900 900 Vail Resorts, Inc.* 230 230 Viad Corp. 1,380 1,380 Warner Music Group Corp. 2,500 2,500 Waste Management, Inc. Watson Wyatt Worldwide, 920 920 Inc. COMMUNICATIONS EQUIPMENT ( 3.0%): 9,890 9,890 3 Com Corp.* 2,380 2,380 ADTRAN, Inc. 2,530 2,530 Avocent Corp.* 4,055 4,055 Ciena Corp.* 60,460 117,100 177,560 Cisco Systems, Inc.* 65,791 65,791 29,055 29,055 16,616 16,616 5,008 5,008 8,900 8,900 12,726 12,726 23,940 23,940 5,690 5,690 4,168 4,168 82,850 82,850 43,994 43,994 1,071,511 1,071,511 22,549 22,549 35,414 35,414 45,312 45,312 27,169 27,169 985,498 1,908,730 2,894,228 175 The Allianz Variable Insurance Products Trust - Statement of Additional Information 2,940 2,940 CommScope, Inc.* Comtech 290 290 Telecommunications Corp.* 9,210 9,210 Corning, Inc. 1,480 1,480 Harris Corp. 12,760 12,760 JDS Uniphase Corp.* 3,010 3,010 Plantronics, Inc. 2,250 2,250 Polycom, Inc.* 7,980 7,980 QUALCOMM, Inc. 190 190 Sonus Networks, Inc.* 290 290 Starent Networks Corp.* 2,140 2,140 Tekelec* 14,000 14,000 Tellabs, Inc.* 160 160 ViaSat, Inc.* COMPUTERS & PERIPHERALS ( 6.2%): 4,270 4,270 Apple, Inc.* 660 660 Avid Technology, Inc.* Brocade Communications 13,530 13,530 Systems, Inc.* 176 The Allianz Variable Insurance Products Trust - Statement of Additional Information 3,510 3,510 Dell, Inc.* Electronics For Imaging, 940 940 Inc.* 13,440 37,700 51,140 EMC Corp.* 5,550 5,550 Emulex Corp.* 28,720 53,050 81,770 Hewlett-Packard Co. 810 810 Intermec, Inc.* International Business 13,130 25,150 38,280 Machines Corp. Lexmark International, 2,150 2,150 Inc.* 3,270 3,270 NCR Corp.* 2,010 2,010 NetApp, Inc.* 5,060 5,060 QLogic Corp.* 3,730 3,730 SanDisk Corp.* 18,530 18,530 Seagate Technology 1,930 1,930 Synaptics, Inc.* 3,310 3,310 Western Digital Corp.* 45,688 45,688 13,288 13,288 87,771 87,771 56,314 56,314 46,574 46,574 39,732 39,732 30,397 30,397 285,923 285,923 300 300 3,460 3,460 28,548 28,548 57,680 57,680 3,853 3,853 1,815,470 1,908,730 3,724,200 364,444 364,444 7,201 7,201 37,884 37,884 CONSTRUCTION & ENGINEERING ( 0.4%): 50 50 Aecom Technology Corp.* 35,942 35,942 8,986 8,986 140,717 394,719 535,436 38,739 38,739 1,042,249 1,925,184 2,967,433 10,757 10,757 1,105,021 2,116,624 3,221,645 57,835 57,835 46,238 46,238 28,080 28,080 68,006 68,006 35,808 35,808 82,088 82,088 31,961 31,961 37,899 37,899 3,179,855 4,436,527 7,616,382 177 The Allianz Variable Insurance Products Trust - Statement of Additional Information 1,990 1,990 Centex Corp. Chicago Bridge & Iron Co., New York Registered 3,050 3,050 Shares 3,060 3,060 Emcor Group, Inc.* 3,720 3,720 Fluor Corp. 1,160 1,160 Granite Construction, Inc. 830 830 KBR, Inc. Navistar International 1,060 1,060 Corp.* 2,250 2,250 Perini Corp.* 350 350 Pulte Homes, Inc. 1,280 1,280 Shaw Group, Inc.* CONSUMER FINANCE ( 0.4%): 19,700 19,700 American Express Co. 3,120 3,120 AmeriCredit Corp.* Cash America 1,490 1,490 International, Inc. 350 350 EZCORP, Inc., Class A* 1,537 1,537 21,174 21,174 30,652 30,652 68,636 68,636 166,916 166,916 50,959 50,959 12,616 12,616 22,663 22,663 52,605 52,605 3,825 3,825 26,202 26,202 457,785 457,785 365,435 365,435 23,837 23,837 40,751 40,751 5,324 5,324 69,912 365,435 435,347 178 The Allianz Variable Insurance Products Trust - Statement of Additional Information CONTAINERS & PACKAGING ( 0.2%): 2,340 2,340 Owens-Illinois, Inc.* 1,120 1,120 Packaging Corp. of America 780 780 Rock-Tenn Co., Class A 2,840 2,840 Sealed Air Corp. 1,910 1,910 Sonoco Products Co. 7,190 7,190 Temple Inland, Inc. Textainer Group Holdings, 220 220 Ltd. DISTRIBUTORS ( 0.1%): Ingram Micro, Inc., Class 4,040 4,040 A* 760 760 LKQ Corp.* 2,470 2,470 WESCO International, Inc.* DIVERSIFIED CONSUMER SERVICES ( 0.1%): Brink's Home Security 480 480 Holdings, Inc.* 1,940 1,940 Career Education Corp.* 970 970 Corinthian Colleges, Inc.* Interval Leisure Group, 780 780 Inc.* 63,952 63,952 15,075 15,075 26,660 26,660 42,430 42,430 44,236 44,236 34,512 34,512 2,332 2,332 229,197 229,197 54,095 54,095 8,862 8,862 47,498 47,498 110,455 110,455 10,522 10,522 34,803 34,803 15,879 15,879 4,204 4,204 179 The Allianz Variable Insurance Products Trust - Statement of Additional Information 620 620 Regis Corp. 470 470 RSC Holdings, Inc.* Service Corp. 4,000 4,000 International DIVERSIFIED FINANCIAL SERVICES ( 5.1%): Affiliated Managers 250 250 Group, Inc.* 25,578 29,628 55,206 Bank of America Corp. Capital One Financial 1,040 15,280 16,320 Corp. 760 760 Cathay General Bancorp 7,090 7,090 CIT Group, Inc. 223,400 223,400 Citigroup, Inc. Discover Financial 6,530 6,530 Services 740 740 FirstMerit Corp. GAMCO Investors, Inc., 150 150 Class A 70 70 GLG Partners, Inc. 380 380 Greenhill & Co., Inc. 15,174 36,300 51,474 JP Morgan Chase & Co. 550 550 KBW, Inc.* 9,009 9,009 4,004 4,004 19,880 19,880 98,301 98,301 10,480 10,480 360,138 417,162 777,300 33,165 487,279 520,444 18,050 18,050 32,188 32,188 1,499,014 1,499,014 62,231 62,231 15,237 15,237 4,098 4,098 159 159 26,513 26,513 478,436 1,144,539 1,622,975 12,650 12,650 180 The Allianz Variable Insurance Products Trust - Statement of Additional Information 510 510 Nelnet, Inc., Class A 4,060 51,600 55,660 NYSE Euronext 1,030 1,030 PHH Corp.* 20 20 PICO Holdings, Inc.* 1,280 1,280 SEI Investments Co. 560 560 Stifel Financial Corp.* 120 120 Student Loan Corp. (The) 133 133 Tree.Com Inc.* DIVERSIFIED TELECOMMUNICATION SERVICES (1.8%): 37,619 14,100 51,719 AT&T, Inc. 4,580 4,580 Cincinnati Bell, Inc.* 1,370 1,370 EchoStar Corp., Class A* 2,100 2,100 Embarq Corp. 1,930 1,930 MasTec, Inc.* Premiere Global Services, 1,340 1,340 Inc.* Qwest Communications 16,680 16,680 International, Inc. 4,630 4,630 tw telecom, Inc.* 7,308 7,308 111,163 1,412,808 1,523,971 13,112 13,112 532 532 20,109 20,109 25,676 25,676 4,920 4,920 346 346 1,236,511 4,960,802 6,197,313 1,072,142 401,850 1,473,992 8,839 8,839 20,372 20,372 75,516 75,516 22,350 22,350 11,537 11,537 60,715 60,715 39,216 39,216 181 The Allianz Variable Insurance Products Trust - Statement of Additional Information Verizon Communications, 14,530 14,530 Inc. 5,420 5,420 Windstream Corp. ELECTRIC UTILITIES ( 0.2%): 12,010 12,010 Duke Energy Corp. 4,540 4,540 Reliant Energy, Inc.* 760 760 Unisource Energy Corp. ELECTRICAL EQUIPMENT ( 0.5%): 940 940 A.O. Smith Corp. 1,670 1,670 Acuity Brands, Inc. 2,550 2,550 Baldor Electric Co. 2,370 2,370 Belden CDT, Inc. 550 550 Brady Corp., Class A Cooper Industries, Ltd., 1,010 1,010 Class A 6,140 6,140 Emerson Electric Co. GrafTech International, 6,770 6,770 Ltd.* 220 220 Regal-Beloit Corp. Rockwell International 1,530 1,530 Corp. 492,567 492,567 49,864 49,864 1,853,118 401,850 2,254,968 180,270 180,270 26,241 26,241 22,314 22,314 228,825 228,825 27,749 27,749 58,300 58,300 45,517 45,517 49,486 49,486 13,173 13,173 29,522 29,522 224,785 224,785 56,326 56,326 8,358 8,358 49,327 49,327 182 The Allianz Variable Insurance Products Trust - Statement of Additional Information 1,550 1,550 Thomas & Betts Corp.* 1,720 1,720 Woodward Governor Co. ELECTRONIC EQUIPMENT & INSTRUMENTS ( 0.6%): Agilent Technologies, 5,100 5,100 Inc.* 1,510 1,510 Amphenol Corp., Class A Anixter International, 1,120 1,120 Inc.* 2,640 2,640 Arrow Electronics, Inc.* 2,920 2,920 Avnet, Inc.* 1,230 1,230 AVX Corp. 360 360 Bally Technologies, Inc* Benchmark Electronics, 3,700 3,700 Inc.* 1,540 1,540 Cogent Inc.* 500 500 Cognex Corp. 670 670 Coherent, Inc.* Dolby Laboratories, Inc., 1,010 1,010 Class A* 1,000 1,000 Hubbell, Inc., Class B 400 400 Itron, Inc.* 37,061 37,061 39,594 39,594 639,198 639,198 79,713 79,713 36,210 36,210 33,734 33,734 49,738 49,738 53,173 53,173 9,766 9,766 8,651 8,651 47,249 47,249 20,898 20,898 7,400 7,400 14,378 14,378 33,088 33,088 32,680 32,680 25,496 25,496 183 The Allianz Variable Insurance Products Trust - Statement of Additional Information 5,450 5,450 Jabil Circuit, Inc. L-1 Identity Solutions, 440 440 Inc.* 20 20 Littlelfuse, Inc.* 3,170 3,170 Molex, Inc. 40 40 MTS Systems Corp. 1,290 1,290 National Instruments Corp. 850 850 Plexus Corp.* Rofin-Sinar Technologies, 530 530 Inc.* 430 430 Roper Industries, Inc. 120 120 ScanSource, Inc.* 270 270 Technitrol, Inc. 2,340 2,340 Trimble Navigation, Ltd.* 3,400 3,400 Tyco Electronics, Ltd. Vishay Intertechnology, 8,160 8,160 Inc.* ENERGY EQUIPMENT & SERVICES ( 1.4%): 6,390 6,390 Baker Hughes, Inc.* Basic Energy Services, 650 650 Inc. 36,788 36,788 2,966 2,966 332 332 45,933 45,933 1,066 1,066 31,424 31,424 14,408 14,408 10,907 10,907 18,666 18,666 2,312 2,312 940 940 50,567 50,567 55,114 55,114 27,907 27,907 751,504 751,504 204,927 204,927 8,476 8,476 184 The Allianz Variable Insurance Products Trust - Statement of Additional Information 3,020 3,020 BJ Services Co. Complete Production 3,220 3,220 Services, Inc.* Diamond Offshore 1,300 1,300 Drilling, Inc. 2,220 2,220 Dresser-Rand Group, Inc.* 560 560 Dril-Quip, Inc.* 1,570 1,570 ENSCO International, Inc. Hornbeck Offshore 60 60 Services, Inc.* 160 160 ION Geophysical Corp.* 300 300 Lufkin Industries, Inc. 2,880 2,880 Nabors Industries, Ltd.* National-Oilwell Varco, 5,470 5,470 Inc.* 13,410 13,410 Noble Corp. Oceaneering 1,060 1,060 International, Inc.* Oil States International, 2,460 2,460 Inc.* 2,980 2,980 Parker Drilling Co.* 2,830 2,830 Patterson-UTI Energy, Inc. 150 150 Pioneer Drilling Co.* 6,090 6,090 Schlumberger, Ltd. 35,243 35,243 26,243 26,243 76,622 76,622 38,295 38,295 11,486 11,486 44,572 44,572 980 980 549 549 10,350 10,350 34,474 34,474 133,687 133,687 295,825 295,825 30,888 30,888 45,977 45,977 8,642 8,642 32,573 32,573 836 836 257,790 257,790 185 The Allianz Variable Insurance Products Trust - Statement of Additional Information 680 680 Seacor Holdings, Inc.* 300 300 Smith International, Inc. 470 470 TETRA Technologies, Inc.* 890 890 Tidewater, Inc. 3,010 3,010 Transocean, Ltd.* 1,580 1,580 Unit Corp.* Weatherford 9,620 9,620 International, Ltd.* FOOD & STAPLES RETAILING ( 1.0%): Casey's General Stores, 990 990 Inc. 2,560 2,560 CVS Caremark Corp. Fresh Del Monte Produce, 250 250 Inc.* 6,950 6,950 Kroger Co. 18,160 18,160 Safeway, Inc. 1,210 1,210 Supervalu, Inc. 8,910 8,910 Wal-Mart Stores, Inc. 100 100 Weis Markets, Inc. 180 180 Winn-Dixie Stores, Inc.* 45,322 45,322 6,867 6,867 2,284 2,284 35,840 35,840 142,223 142,223 42,218 42,218 104,088 104,088 1,677,277 1,677,277 22,542 22,542 73,574 73,574 5,605 5,605 183,550 183,550 431,663 431,663 17,666 17,666 499,495 499,495 3,363 3,363 2,898 2,898 186 The Allianz Variable Insurance Products Trust - Statement of Additional Information FOOD PRODUCTS ( 0.0%): 200 200 Bunge, Ltd. Darling International, 680 680 Inc.* 1,070 1,070 Del Monte Foods Co. 270 270 Ralcorp Holdings, Inc.* GAS UTILITIES ( 0.3%): 470 470 Laclede Group, Inc. (The) 5,970 5,970 Noble Energy, Inc. South Jersey Industries, 10 10 Inc. 420 420 Southwest Gas Corp. 470 470 WGL Holdings, Inc. HEALTH CARE EQUIPMENT & SUPPLIES ( 0.2%): American Medical Systems 150 150 Holdings, Inc.* 290 290 Analogic Corp. 30 30 Celera Corp.* 2,280 2,280 Herbalife, Ltd. 1,240,356 1,240,356 10,354 10,354 3,733 3,733 7,640 7,640 15,768 15,768 37,495 37,495 22,015 22,015 293,843 293,843 399 399 10,592 10,592 15,364 15,364 342,213 342,213 1,349 1,349 7,911 7,911 334 334 49,430 49,430 187 The Allianz Variable Insurance Products Trust - Statement of Additional Information 1,010 1,010 Hill-Rom Holdings, Inc. Inverness Medical 480 480 Innovation, Inc.* 1,400 1,400 Medtronic, Inc. Sirona Dental Systems, 630 630 Inc.* 450 450 STERIS Corp. 2,300 2,300 Zimmer Holdings, Inc.* HEALTH CARE PROVIDERS & SERVICES ( 8.6%): 20,210 150,050 170,260 Aetna, Inc. 2,160 2,160 AMERIGROUP Corp.* Brookdale Senior Living, 1,680 1,680 Inc. 550 550 Cardinal Health, Inc. 2,290 2,290 Centene Corp.* 940 940 Chemed Corp. 3,550 3,550 CIGNA Corp. Community Health Systems, 570 570 Inc.* Coventry Health Care, 2,000 2,000 Inc.* Emergency Medical 230 230 Services Corp., Series A* 16,625 16,625 9,077 9,077 43,988 43,988 6,615 6,615 10,750 10,750 92,966 92,966 239,045 239,045 575,985 4,276,425 4,852,410 63,763 63,763 9,374 9,374 18,959 18,959 45,136 45,136 37,384 37,384 59,817 59,817 8,311 8,311 29,760 29,760 8,420 8,420 188 The Allianz Variable Insurance Products Trust - Statement of Additional Information 3,350 3,350 Health Net, Inc.* 1,020 1,020 Healthspring, Inc.* 120 120 Hillenbrand, Inc. 1,320 1,320 Kindred Healthcare, Inc.* 1,820 1,820 LifePoint Hospitals, Inc.* 1,260 1,260 Lincare Holdings, Inc.* Magellan Health Services, 310 310 Inc.* 230 230 Molina Heathcare, Inc.* 1,120 1,120 Omnicare, Inc. 230 230 Owens & Minor, Inc. Pediatrix Medical Group, 600 600 Inc.* 170,400 170,400 UnitedHealth Group, Inc. Universal American 660 660 Financial Corp.* Universal Health 920 920 Services, Inc., Class B 50 50 VCA Antech, Inc.* WellCare Health Plans, 1,020 1,020 Inc.* 13,330 13,330 WellPoint, Inc.* 36,482 36,482 20,369 20,369 2,002 2,002 17,186 17,186 41,569 41,569 33,932 33,932 12,140 12,140 4,050 4,050 31,091 31,091 8,660 8,660 19,020 19,020 4,532,640 4,532,640 5,821 5,821 34,564 34,564 994 994 13,117 13,117 561,593 561,593 189 The Allianz Variable Insurance Products Trust - Statement of Additional Information HEALTH CARE TECHNOLOGY ( 0.0%): Allscripts Healthcare 510 510 Solution, Inc. 510 510 IMS Health, Inc. HOTELS, RESTAURANTS & LEISURE ( 0.4%): 400 400 Ameristar Casinos, Inc. 1,030 1,030 Bob Evans Farms, Inc. 3,980 3,980 Boyd Gaming Corp. Brinker International, 3,300 3,300 Inc. 3,010 3,010 Carnival Corp. 1,600 1,600 CEC Entertainment, Inc.* Chipotle Mexican Grill, 42 42 Inc.* International Speedway 710 710 Corp., Class A 2,150 2,150 Jack in the Box, Inc.* 720 720 Life Time Fitness, Inc.* 1,640 1,640 McDonald's Corp. 670 670 Panera Bread Co., Class A* Papa John's 260 260 International, Inc.* 1,699,499 8,809,065 10,508,564 5,059 5,059 7,732 7,732 12,791 12,791 3,456 3,456 21,043 21,043 18,825 18,825 34,782 34,782 73,203 73,203 38,800 38,800 2,406 2,406 20,398 20,398 47,493 47,493 9,324 9,324 101,992 101,992 35,001 35,001 4,792 4,792 190 The Allianz Variable Insurance Products Trust - Statement of Additional Information 870 870 Sonic Corp.* 580 580 Speedway Motorsports, Inc. 1,680 1,680 WMS Industries, Inc.* 4,630 4,630 Wyndham Worldwide Corp. HOUSEHOLD DURABLES ( 0.2%): American Greetings Corp., 1,550 1,550 Class A Harman International 2,330 2,330 Industries, Inc. 930 930 KB Home 2,980 2,980 Lennar Corp. 260 260 M.D.C. Holdings, Inc. 480 480 Meritage Corp.* 1,260 1,260 Ryland Group, Inc. (The) 1,220 1,220 Snap-On, Inc. 1,090 1,090 Stanley Works (The) Tempur-Pedic 3,290 3,290 International, Inc. HOUSEHOLD PRODUCTS ( 0.7%): 400 400 Jarden Corp.* 10,588 10,588 9,344 9,344 45,192 45,192 30,327 30,327 506,966 506,966 11,733 11,733 38,981 38,981 12,667 12,667 25,837 25,837 7,878 7,878 5,842 5,842 22,264 22,264 48,043 48,043 37,169 37,169 23,326 23,326 233,740 233,740 4,600 4,600 191 The Allianz Variable Insurance Products Trust - Statement of Additional Information 14,562 14,562 Procter & Gamble Co. INDEPENDENT POWER PRODUCERS & ENERGY TRADERS ( 3.7%): 549,850 549,850 AES Corp. (The)* 1,780 1,780 Mirant Corp.* INDUSTRIAL CONGLOMERATES ( 2.9%): 3,350 5,600 8,950 3M Co. 210 210 Carlisle Cos., Inc. 55,520 130,100 185,620 General Electric Co. 1,700 1,700 Harsco Corp. McDermott International, 600 600 Inc.* 1,020 1,020 Tyco International, Ltd. INSURANCE ( 2.4%): Allied World Assurance 1,080 1,080 Co. Holdings, Ltd. 1,930 16,750 18,680 Allstate Corp. (The) American Financial Group, 2,450 2,450 Inc. American National 20 20 Insurance Co. 900,223 900,223 904,823 904,823 4,530,764 4,530,764 33,589 33,589 33,589 4,530,764 4,564,353 192,759 322,224 514,983 4,347 4,347 899,424 2,107,620 3,007,044 47,056 47,056 5,928 5,928 22,032 22,032 1,171,546 2,429,844 3,601,390 43,848 43,848 63,227 548,730 611,957 56,056 56,056 1,475 1,475 192 The Allianz Variable Insurance Products Trust - Statement of Additional Information AmTrust Financial 140 140 Services, Inc. 440 440 Arch Capital Group, Ltd.* Aspen Insurance Holdings, 1,940 1,940 Ltd. 1,020 1,020 Assured Guaranty, Ltd. Axis Capital Holdings, 1,980 1,980 Ltd. Berkshire Hathaway, Inc., 77 77 Class B* 2,720 2,720 Brown & Brown, Inc. Catalyst Health 540 540 Solutions, Inc.* 4,980 4,980 Chubb Corp. (The) 1,030 1,030 Cincinnati Financial Corp. 2,410 2,410 CNA Financial Corp. 200 200 CNA Surety Corp.* 1,510 1,510 Conseco, Inc.* Delphi Financial Group, 1,430 1,430 Inc., Class A 1,180 1,180 Employers Holdings, Inc. Endurance Specialty 840 840 Holdings, Ltd. FBL Financial Group, 40 40 Inc., Class A Fidelity National 930 930 Financial, Inc., Class A 1,624 1,624 30,844 30,844 47,045 47,045 11,628 11,628 57,658 57,658 247,478 247,478 56,848 56,848 13,149 13,149 253,980 253,980 29,942 29,942 39,620 39,620 3,840 3,840 7,822 7,822 26,369 26,369 19,470 19,470 25,645 25,645 618 618 16,507 16,507 193 The Allianz Variable Insurance Products Trust - Statement of Additional Information 290 290 First American Corp. Flagstone Reinsurance 90 90 Holdings, Ltd. 5,490 5,490 Genworth Financial, Inc. Hanover Insurance Group, 870 870 Inc. (The) 420 420 Harleysville Group, Inc. Hartford Financial 1,350 1,350 Services Group, Inc. HCC Insurance Holdings, 1,340 1,340 Inc. Infinity Property & 50 50 Casualty Corp. 1,540 1,540 IPC Holdings, Ltd. 2,290 2,290 Lincoln National Corp. 7,210 7,210 Loews Corp. 1,640 1,640 Max Capital Group, Ltd. Montpelier Re Holdings, 680 680 Ltd. Nationwide Financial 290 290 Services, Inc., Class A 210 210 Navigators Group, Inc.* 1,070 1,070 Odyssey Re Holdings Corp. Old Republic 1,750 1,750 International Corp. OneBeacon Insurance 500 500 Group, Ltd. 8,378 8,378 879 879 15,537 15,537 37,384 37,384 14,587 14,587 22,167 22,167 35,845 35,845 2,337 2,337 46,046 46,046 43,144 43,144 203,682 203,682 29,028 29,028 11,417 11,417 15,141 15,141 11,531 11,531 55,437 55,437 20,860 20,860 5,220 5,220 194 The Allianz Variable Insurance Products Trust - Statement of Additional Information 660 660 PartnerRe, Ltd. 1,430 1,430 Phoenix Cos., Inc. Platinum Underwriters 1,530 1,530 Holdings, Ltd. 630 630 ProAssurance Corp.* 3,180 3,180 Protective Life Corp. 5,560 5,560 Prudential Financial, Inc. 470 470 RLI Corp. Selective Insurance 1,060 1,060 Group, Inc. StanCorp Financial Group, 1,120 1,120 Inc. 100 100 State Auto Financial Corp. Transatlantic Holdings, 280 280 Inc. 3,710 3,710 Travelers Cos., Inc. (The) 200 200 United Fire & Casualty Co. 1,350 1,350 Unitrin, Inc. 90 90 Validus Holdings, Ltd. 2,330 2,330 W.R. Berkley Corp. Waddell & Reed Financial, 210 210 Inc., Class A 2,360 2,360 XL Capital, Ltd., Class A 47,038 47,038 4,676 4,676 55,202 55,202 33,251 33,251 45,633 45,633 168,246 168,246 28,745 28,745 24,306 24,306 46,782 46,782 3,006 3,006 11,217 11,217 167,692 167,692 6,214 6,214 21,519 21,519 2,354 2,354 72,230 72,230 3,247 3,247 8,732 8,732 195 The Allianz Variable Insurance Products Trust - Statement of Additional Information Zenith National Insurance 510 510 Corp. INTERNET & CATALOG RETAIL ( 2.0%): 44,500 44,500 Amazon.com, Inc.* 4,940 4,940 Expedia, Inc.* 780 780 HSN, Inc.* 100 100 IAC/InterActive Corp.* Liberty Media Corp. - 8,800 8,800 Capital, Series A* 2,080 2,080 Netflix, Inc.* 740 740 Priceline.com, Inc.* INTERNET SOFTWARE & SERVICES ( 5.7%): 2,920 2,920 Akamai Technologies, Inc.* 1,870 1,870 Digital River, Inc.* 4,120 4,120 EarthLink, Inc.* 7,070 178,150 185,220 eBay, Inc.* 2,910 2,910 F5 Networks, Inc.* 540 5,775 6,315 Google, Inc., Class A* J2 Global Communications, 2,570 2,570 Inc.* 16,101 16,101 2,399,504 548,730 2,948,234 2,281,960 2,281,960 40,705 40,705 5,671 5,671 1,573 1,573 27,456 27,456 62,171 62,171 54,501 54,501 192,077 2,281,960 2,474,037 44,063 44,063 46,376 46,376 27,851 27,851 98,697 2,486,974 2,585,671 66,523 66,523 166,131 1,776,679 1,942,810 196 The Allianz Variable Insurance Products Trust - Statement of Additional Information 370 370 RealNetworks, Inc.* 700 700 Sohu.com, Inc.* 4,090 4,090 ValueClick, Inc.* 2,280 2,280 VeriSign, Inc.* 540 540 VistaPrint, Ltd.* 172,550 172,550 Yahoo!, Inc.* IT SERVICES ( 0.5%): 3,750 3,750 Acxiom Corp. Affiliated Computer 230 230 Services, Inc., Class A* Broadridge Financial 3,020 3,020 Solutions, Inc. 1,950 1,950 Computer Sciences Corp.* 6,700 6,700 Convergys Corp.* CSG Systems 1,110 1,110 International, Inc.* 810 810 DST Systems, Inc.* 50 50 Euronet Worldwide, Inc.* Fidelity National 1,090 1,090 Information Services, Inc. 51,503 51,503 1,306 1,306 33,138 33,138 27,976 27,976 43,502 43,502 10,049 10,049 2,105,110 2,105,110 617,115 6,368,763 6,985,878 30,412 30,412 10,568 10,568 37,871 37,871 68,523 68,523 42,947 42,947 19,392 19,392 30,764 30,764 581 581 17,734 17,734 197 The Allianz Variable Insurance Products Trust - Statement of Additional Information 1,630 1,630 Gartner Group, Inc.* 1,670 1,670 NeuStar, Inc., Class A* Perot Systems Corp., 2,960 2,960 Class A* 3,730 3,730 Sapient Corp.* 440 440 Sykes Enterprises, Inc.* 670 670 SYNNEX Corp.* 190 190 Syntel, Inc. 820 820 Tech Data Corp.* Total System Services, 2,690 2,690 Inc. 4,670 4,670 Unisys Corp.* WebMD Health Corp., Class 10 10 A* 7,020 7,020 Western Union Co. LEISURE EQUIPMENT & PRODUCTS ( 1.4%): 4,110 4,110 Brunswick Corp. 261,950 261,950 Eastman Kodak Co. 890 890 Polaris Industries, Inc. 340 340 Pool Corp. 29,063 29,063 31,947 31,947 40,463 40,463 16,561 16,561 8,413 8,413 7,591 7,591 4,393 4,393 14,629 14,629 37,660 37,660 3,969 3,969 236 236 100,667 100,667 554,384 554,384 17,303 17,303 1,723,631 1,723,631 25,498 25,498 6,110 6,110 198 The Allianz Variable Insurance Products Trust - Statement of Additional Information LIFE SCIENCES TOOLS & SERVICES ( 0.0%): Thermo Fisher Scientific, 850 850 Inc.* 360 360 Varian, Inc.* MACHINERY ( 2.2%): 990 990 Actuant Corp., Class A 230 230 AGCO Corp.* 670 670 Barnes Group, Inc. 1,200 1,200 Briggs & Stratton Corp. Bucyrus International, 1,830 1,830 Inc., Class A 9,400 9,400 Caterpillar, Inc. 420 420 Chart Industries, Inc.* 1,530 1,530 Crane Co. 9,290 9,290 Cummins, Inc. 1,870 7,000 8,870 Deere & Co. 2,250 2,250 Dover Corp. 100 100 Eaton Corp. 980 980 Enpro Industries, Inc.* 48,911 1,723,631 1,772,542 28,959 28,959 12,064 12,064 41,023 41,023 18,830 18,830 5,426 5,426 9,715 9,715 21,108 21,108 33,892 33,892 419,898 419,898 4,465 4,465 26,377 26,377 248,322 248,322 71,658 268,240 339,898 74,070 74,070 4,971 4,971 199 The Allianz Variable Insurance Products Trust - Statement of Additional Information 200 200 Flowserve Corp. 2,170 2,170 Gardner Denver, Inc.* 1,260 1,260 Graco, Inc. 1,810 1,810 IDEX Corp. 5,330 5,330 Illinois Tool Works, Inc. Ingersoll Rand Co., Class 10,570 10,570 A 1,510 1,510 Joy Global, Inc. 2,840 2,840 Kennametal, Inc. Lincoln Electric 970 970 Holdings, Inc. 4,630 4,630 Manitowoc Co. 1,490 1,490 Mueller Industries, Inc., Mueller Water Products, 2,530 2,530 Inc., Class A 1,030 1,030 Nordson Corp. 8,850 8,850 Parker Hannifin Corp. 1,530 1,530 Robbins & Myers, Inc. 40 40 Sauer-Danfoss, Inc 1,120 1,120 Terex Corp.* 3,240 3,240 Timken Co. 21,109 21,109 10,300 10,300 50,648 50,648 29,900 29,900 43,711 43,711 186,816 186,816 183,389 183,389 34,564 34,564 63,020 63,020 49,402 49,402 40,096 40,096 37,369 37,369 21,252 21,252 33,259 33,259 376,479 376,479 24,740 24,740 350 350 19,398 19,398 200 The Allianz Variable Insurance Products Trust - Statement of Additional Information 1,830 1,830 Titan International, Inc. 1,630 1,630 Toro Co. 2,570 2,570 Trinity Industries, Inc. Watts Water Technologies, 1,260 1,260 Inc., Class A MARINE ( 0.0%): 560 560 Alexander & Baldwin, Inc. Excel Maritime Carriers, 300 300 Ltd. Genco Shipping & Trading, 1,500 1,500 Ltd. 460 460 GulfMark Offshore, Inc.* 330 330 Kirby Corp.* Nordic American Tanker 20 20 Shipping, Ltd. TBS International, Ltd., 70 70 Class A* MEDIA ( 3.6%): 270 270 Arbitron, Inc. Cablevision Systems 2,810 2,810 Corp., Class A 35,460 35,460 CBS Corp. 63,601 63,601 15,098 15,098 53,790 53,790 40,503 40,503 31,462 31,462 2,387,138 268,240 2,655,378 - 14,034 14,034 2,112 2,112 22,200 22,200 10,943 10,943 9,029 9,029 675 675 702 702 59,695 59,695 3,586 3,586 47,320 47,320 201 The Allianz Variable Insurance Products Trust - Statement of Additional Information Central Eurpoean Media 170 170 Enterprises, Ltd.* 30 30 Cinemark Holdings, Inc. 900 900 Cox Radio, Inc.* 6,440 6,440 DIRECTV Group, Inc. (The)* DISH Network Corp., Class 3,790 3,790 A* DreamWorks Animation SKG, 2,120 2,120 Inc.* 3,660 3,660 Gannett Co., Inc. Hearst - Argyle 120 120 Television, Inc. Liberty Media Corp. - 740 740 Capital, Series A* Liberty Media Corp. - 2,360 2,360 Entertainment, Series A* McGraw-Hill Cos., Inc. 4,930 4,930 (The) Mediacom Communications 60 60 Corp., Class A* 2,360 2,360 Meredith Corp. 29,990 29,990 News Corp. 1,200 1,200 Scholastic Corp. 68,150 231,650 299,800 Time Warner, Inc. 290,418 290,418 3,692 3,692 223 223 5,409 5,409 147,541 147,541 42,031 42,031 53,551 53,551 29,280 29,280 727 727 3,485 3,485 41,253 41,253 114,327 114,327 258 258 39,506 39,506 272,609 272,609 16,296 16,296 685,589 2,330,399 3,015,988 202 The Allianz Variable Insurance Products Trust - Statement of Additional Information 3,912 3,912 Viacom, Inc., Class B* 10,880 10,880 Walt Disney Co. (The) METALS & MINING ( 2.2%): 4,800 4,800 AK Steel Holding Corp. 31,040 31,040 Alcoa, Inc. Allegheny Technologies, 1,520 1,520 Inc. 2,460 2,460 Carpenter Technology Corp. 2,740 2,740 Century Aluminum Co.* 3,360 3,360 Commercial Metals Co. Compass Minerals 210 210 International, Inc. Freeport-McMoRan Copper & 12,950 12,950 Gold, Inc., Class A 390 390 Kaiser Aluminum Corp. 10,400 15,600 26,000 Nucor Corp. 100 100 Olympic Steel, Inc. Reliance Steel & Aluminum 1,860 1,860 Co. RTI International Metals, 80 80 Inc.* Schnitzer Steel 1,400 1,400 Industries, Inc. 74,563 74,563 246,867 246,867 2,118,531 2,330,399 4,448,930 44,736 44,736 349,510 349,510 38,806 38,806 50,528 50,528 27,400 27,400 39,883 39,883 12,319 12,319 316,498 316,498 8,783 8,783 480,480 720,720 1,201,200 2,037 2,037 37,088 37,088 1,145 1,145 52,710 52,710 203 The Allianz Variable Insurance Products Trust - Statement of Additional Information 29,080 29,080 Southern Copper Corp. 1,720 1,720 United States Steel Corp. 620 620 Walter Industries, Inc. Worthington Industries, 2,060 2,060 Inc. MULTI-UTILITIES ( 0.0%): 1,610 1,610 Avista Corp. 120 120 CH Energy Group, Inc. Integrys Energy Group, 360 360 Inc. MULTILINE RETAIL ( 2.7%): 2,460 2,460 Big Lots, Inc.* 3,960 3,960 Dillards, Inc., Class A 1,610 1,610 Dollar Tree, Inc.* 170 170 J. Crew Group, Inc.* 52,300 52,300 J.C. Penney Co., Inc. 2,110 2,110 Kohl's Corp.* 4,900 4,900 Macy's, Inc. 2,540 2,540 Nordstrom, Inc. 49,950 49,950 Sears Holdings Corp.* 467,025 467,025 63,984 63,984 10,856 10,856 22,701 22,701 2,026,489 720,720 2,747,209 31,201 31,201 6,167 6,167 15,473 15,473 52,841 52,841 35,646 35,646 15,721 15,721 67,298 67,298 2,074 2,074 1,030,310 1,030,310 76,382 76,382 50,715 50,715 33,807 33,807 204 The Allianz Variable Insurance Products Trust - Statement of Additional Information 40 40 Signet Jewlers, Ltd. OFFICE ELECTRONICS ( 0.4%): 49,820 49,820 Xerox Corp. Zebra Technologies Corp., 2,170 2,170 Class A* OIL, GAS & CONSUMABLE FUELS ( 9.0%): 14,670 14,670 Anadarko Petroleum Corp. 8,900 8,900 Apache Corp. 350 350 Arena Resources, Inc.* Berry Petroleum Co., 1,950 1,950 Class A 1,130 1,130 Bill Barrett Corp.* 90 90 BPZ Resources, Inc.* 610 610 Carrizo Oil & Gas, Inc.* 5,060 6,900 11,960 Chesapeake Energy Corp. 18,827 18,827 ChevronTexaco Corp. 1,270 1,270 Cimarex Energy Co. Clayton Williams Energy, 90 90 Inc.* 1,941,557 1,941,557 347 347 281,990 2,971,867 3,253,857 397,066 397,066 43,964 43,964 441,030 441,030 565,528 565,528 663,317 663,317 9,832 9,832 14,742 14,742 23,877 23,877 576 576 9,821 9,821 81,820 111,573 193,393 1,392,633 1,392,633 34,011 34,011 205 The Allianz Variable Insurance Products Trust - Statement of Additional Information 19,059 6,950 26,009 ConocoPhillips 40 40 Contango Oil & Gas Co.* 590 590 CVR Energy, Inc.* 960 960 Delta Petroleum Corp.* 3,090 3,090 Denbury Resources, Inc.* 3,670 3,670 Devon Energy Corp. 1,100 1,100 Encore Acquisition Co.* 1,000 1,000 Exterran Holdings, Inc.* 35,920 35,920 Exxon Mobil Corp. Foundation Coal Holdings, 2,790 2,790 Inc. 3,650 3,650 Frontier Oil Corp. 9,830 9,830 Halliburton Co. Helix Energy Solutions 1,420 1,420 Group, Inc.* 1,110 1,110 Helmerich & Payne, Inc. 170 170 Hercules Offshore, Inc.* 7,680 7,680 Hess Corp. 840 840 Holly Corp. International Coal Group, 270 270 Inc.* 4,090 4,090 987,256 360,010 1,347,266 2,252 2,252 2,360 2,360 4,570 4,570 33,743 33,743 241,156 241,156 28,072 28,072 21,300 21,300 2,867,494 2,867,494 39,116 39,116 46,099 46,099 178,709 178,709 10,281 10,281 25,252 25,252 808 808 411,955 411,955 15,313 15,313 206 The Allianz Variable Insurance Products Trust - Statement of Additional Information 5,900 5,900 Key Energy Services, Inc.* 15,450 15,450 Marathon Oil Corp. 3,870 3,870 Mariner Energy, Inc.* 2,140 2,140 Massey Energy Co. 790 790 McMoran Exploration Co.* 6,930 6,930 Murphy Oil Corp. 15,440 15,440 Occidental Petroleum Corp. Overseas Shipholding 1,150 1,150 Group, Inc. Pioneer Natural Resources 900 900 Co. Plains Exploration & 1,770 1,770 Production Co.* 235 235 Precision Drilling Trust 1,990 1,990 Pride International, Inc.* Quicksilver Resources, 2,730 2,730 Inc.* 1,500 1,500 Rosetta Resources, Inc.* St. Mary Land & 440 440 Exploration Co. 2,796 2,796 Stone Energy Corp.* 1,440 1,440 Sunoco, Inc. Superior Energy Services, 2,240 2,240 Inc.* 621 621 26,019 26,019 422,712 422,712 39,474 39,474 29,511 29,511 7,742 7,742 307,345 307,345 926,246 926,246 48,426 48,426 14,562 14,562 41,135 41,135 1,968 1,968 31,800 31,800 15,206 15,206 10,620 10,620 8,936 8,936 30,812 30,812 62,582 62,582 207 The Allianz Variable Insurance Products Trust - Statement of Additional Information 1,690 1,690 Swift Energy Co.* 5,730 5,730 Tesoro Petroleum Corp. 20,750 20,750 Valero Energy Corp. 2,930 2,930 W&T Offshore, Inc. 280 280 Whiting Petroleum Corp.* 5,050 5,050 Williams-Sonoma, Inc. 30 30 World Fuel Services Corp. 4,760 4,760 XTO Energy, Inc. PAPER & FOREST PRODUCTS ( 0.1%): 16,030 16,030 Domtar Corp.* 6,470 6,470 International Paper Co. 1,110 1,110 MeadWestvaco Corp. Smurfit-Stone Container 5,220 5,220 Corp.* PERSONAL PRODUCTS ( 0.5%): 20,800 20,800 Avon Products, Inc. 340 340 Chattem, Inc.* 35,683 35,683 28,409 28,409 75,464 75,464 449,030 449,030 41,958 41,958 9,369 9,369 39,693 39,693 1,110 1,110 167,885 167,885 ----------------- ----------------- -------------- 10,590,301 471,583 11,061,884 ----------------- -------------- ----------------- 26,770 26,770 76,346 76,346 12,421 12,421 1,331 1,331 ----------------- ----------------- 116,868 116,868 ----------------- ----------------- 499,824 499,824 24,320 24,320 208 The Allianz Variable Insurance Products Trust - Statement of Additional Information 2,290 2,290 NBTY, Inc.* Nu Skin Enterprises, 720 720 Inc., Class A 130 130 Revlon, Inc., Class A* PHARMACEUTICALS ( 2.8%): 2,660 2,660 Abbott Laboratories 7,490 7,490 Eli Lilly & Co. Endo Pharmaceuticals 1,810 1,810 Holdings, Inc.* 3,090 3,090 Forest Laboratories, Inc.* 16,360 16,360 Johnson & Johnson Co. K-V Pharmaceutical Co., 130 130 Class A* King Pharmaceuticals, 6,500 6,500 Inc.* Medicis Pharmaceutical 3,130 3,130 Corp., Class A 13,190 9,800 22,990 Merck & Co., Inc. 3,630 3,630 PDL BioPharma, Inc 50,580 50,580 Pfizer, Inc. 50 50 PharMerica Corp.* 1,940 1,940 Sepracor, Inc.* Warner Chilcott, Ltd., 110 110 Class A* 35,838 35,838 7,510 7,510 867 867 ----------------- ----------------- -------------- 68,535 499,824 568,359 ----------------- -------------- ----------------- 141,964 141,964 301,622 301,622 46,843 46,843 78,702 78,702 978,819 978,819 374 374 69,030 69,030 43,507 43,507 400,976 297,920 698,896 22,433 22,433 895,772 895,772 784 784 21,301 21,301 209 The Allianz Variable Insurance Products Trust - Statement of Additional Information Watson Pharmaceuticals, 1,320 1,320 Inc.* 1,480 1,480 Wyeth REAL ESTATE MANAGEMENT & DEVELOPMENT (0.0%): CB Richard Ellis Group, 2,590 2,590 Inc.* Forest City Enterprises, 1,380 1,380 Inc., Class A 350 350 Jones Lang LaSalle, Inc. ROAD & RAIL ( 0.3%): 70 70 AMERCO* 1,560 1,560 Arkansas Best Corp. 1,640 1,640 CSX Corp. 800 800 Heartland Express, Inc. 4,850 4,850 Norfolk Southern Corp. Old Dominion Freight 50 50 Line, Inc.* 110 110 Ryder System, Inc. 70 70 Wabtec Corp. 2,380 2,380 Werner Enterprises, Inc. 1,595 1,595 35,073 35,073 55,515 55,515 ----------------- ----------------- -------------- 3,094,310 297,920 3,392,230 ----------------- -------------- ----------------- 11,189 11,189 9,246 9,246 9,695 9,695 ----------------- ----------------- 30,130 30,130 ----------------- ----------------- 2,417 2,417 46,972 46,972 53,251 53,251 12,608 12,608 228,192 228,192 1,423 1,423 4,266 4,266 2,783 2,783 210 The Allianz Variable Insurance Products Trust - Statement of Additional Information 1,330 1,330 YRC Worldwide, Inc.* SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT ( 3.9%): Advanced Micro Devices, 940 940 Inc.* 4,510 4,510 Altera Corp. 8,860 8,860 Amkor Technology, Inc.* 3,530 3,530 Analog Devices, Inc. 38,440 38,440 Applied Materials, Inc. 2,170 2,170 Atheros Communications* 6,970 6,970 Atmel Corp.* 4,770 4,770 Broadcom Corp., Class A* Cabot Microelectronics 580 580 Corp.* 1,050 1,050 Cymer, Inc.* 1,460 1,460 Entegris, Inc.* Fairchild Semiconductor 7,400 7,400 International, Inc.* 330 330 FEI Co.* Integrated Device 8,220 8,220 Technology, Inc.* 41,269 41,269 3,817 3,817 ----------------- ----------------- 396,998 396,998 ----------------- ----------------- 2,030 2,030 75,362 75,362 19,315 19,315 67,141 67,141 389,397 389,397 31,053 31,053 21,816 21,816 80,947 80,947 15,121 15,121 23,006 23,006 3,197 3,197 36,186 36,186 6,224 6,224 211 The Allianz Variable Insurance Products Trust - Statement of Additional Information 69,910 69,910 Intel Corp. International Rectifier 1,280 1,280 Corp.* 4,190 4,190 Intersil Corp., Class A 2,460 2,460 KLA-Tencor Corp. 13,180 13,180 LSI Logic Corp.* Marvell Technology Group, 7,020 7,020 Ltd.* MEMC Electronic 3,080 3,080 Materials, Inc.* 790 790 Microsemi Corp.* 2,690 2,690 MKS Instruments, Inc.* National Semiconductor 3,130 3,130 Corp. 3,440 3,440 Novellus Systems, Inc.* 6,120 6,120 NVIDIA Corp.* 3,160 3,160 ON Semiconductor Corp.* 7,280 7,280 PMC-Sierra, Inc.* 190 190 Power Integrations, Inc. 3,610 3,610 RF Micro Devices, Inc.* 3,550 3,550 Semtech Corp.* Silicon Laboratories, 1,890 1,890 Inc.* 46,114 46,114 1,024,881 1,024,881 17,280 17,280 38,506 38,506 53,603 53,603 43,362 43,362 46,823 46,823 43,982 43,982 9,986 9,986 39,785 39,785 31,519 31,519 42,450 42,450 49,388 49,388 10,744 10,744 35,381 35,381 3,777 3,777 2,816 2,816 40,009 40,009 212 The Allianz Variable Insurance Products Trust - Statement of Additional Information 3,540 3,540 Skyworks Solutions, Inc.* 10,300 10,300 Teradyne, Inc.* Tessera Technologies, 800 800 Inc.* 37,420 100,050 137,470 Texas Instruments, Inc. Varian Semiconductor Equipment Associates, 1,440 1,440 Inc.* 1,680 1,680 Verigy, Ltd.* 3,120 3,120 Xilinx, Inc. SOFTWARE ( 6.0%): 1,100 1,100 Adobe Systems, Inc.* 150 150 Advent Software, Inc.* 3,090 3,090 Amdocs, Ltd.* 1,080 1,080 Ansys, Inc.* 2,950 2,950 Autodesk, Inc.* 30 30 Blackbaud, Inc. 800 800 BMC Software, Inc.* 8,080 123,850 131,930 CA, Inc. 46,834 46,834 19,612 19,612 43,466 43,466 9,504 9,504 580,758 1,552,776 2,133,534 26,093 26,093 16,162 16,162 55,598 55,598 ----------------- ----------------- -------------- 3,149,228 1,552,776 4,702,004 ----------------- -------------- ----------------- 23,419 23,419 2,996 2,996 56,516 56,516 30,121 30,121 57,967 57,967 405 405 21,528 21,528 149,722 2,294,941 2,444,663 213 The Allianz Variable Insurance Products Trust - Statement of Additional Information Cadence Design Systems, 9,150 9,150 Inc.* Check Point Software 1,330 1,330 Technologies, Ltd.* 2,070 2,070 Citrix Systems, Inc.* 7,840 7,840 Compuware Corp.* 510 510 Concur Technologies, Inc.* 63,850 63,850 Electronic Arts, Inc.* FactSet Research Systems, 840 840 Inc. 1,490 1,490 Informatica Corp.* Jack Henry & Associates, 1,050 1,050 Inc. 2,120 2,120 Lawson Software, Inc.* 1,610 1,610 Mentor Graphics Corp.* 1,450 1,450 Micros Systems, Inc.* 72,680 16,700 89,380 Microsoft Corp. MicroStrategy, Inc., 100 100 Class A* Net 1 UEPS Technologies, 1,560 1,560 Inc.* Nuance Communications, 3,520 3,520 Inc.* 1,000 1,000 Open Text Corp.* 34,376 34,376 Oracle Corp.* 33,489 33,489 25,257 25,257 48,790 48,790 52,920 52,920 16,738 16,738 1,024,154 1,024,154 37,162 37,162 20,458 20,458 20,381 20,381 10,049 10,049 8,324 8,324 23,664 23,664 1,412,899 324,648 1,737,547 3,713 3,713 21,372 21,372 36,467 36,467 30,130 30,130 609,486 609,486 214 The Allianz Variable Insurance Products Trust - Statement of Additional Information Parametric Technology 3,800 3,800 Corp.* 780 780 Progress Software Corp.* 2,840 2,840 Quest Software, Inc.* 530 530 Solera Holdings, Inc.* 10,260 10,260 Sun Microsystems, Inc.* 2,220 2,220 Sybase, Inc.* 43,760 43,760 Symantec Corp.* 2,670 2,670 Synopsys, Inc.* Take-Two Interactive 2,860 2,860 Software, Inc. 2,350 2,350 Teradata Corp.* 690 690 THQ, Inc.* 9,480 9,480 TIBCO Software, Inc.* 3,400 3,400 Wind River Systems, Inc.* SPECIALTY RETAIL ( 1.5%): 640 640 Aaron Rents, Inc. Abercrombie & Fitch Co., 2,030 2,030 Class A 3,640 3,640 Aeropostale, Inc.* American Eagle 3,960 3,960 Outfitters, Inc. 48,070 48,070 15,023 15,023 35,756 35,756 12,773 12,773 39,193 39,193 54,989 54,989 591,635 591,635 49,448 49,448 21,622 21,622 34,851 34,851 2,891 2,891 49,201 49,201 30,702 30,702 ----------------- ----------------- -------------- 3,740,127 3,643,743 7,383,870 ----------------- -------------- ----------------- 17,037 17,037 46,832 46,832 58,604 58,604 215 The Allianz Variable Insurance Products Trust - Statement of Additional Information 5,010 5,010 AnnTaylor Stores Corp.* 5,440 5,440 AutoNation, Inc.* 2,390 2,390 Barnes & Noble, Inc. 1,490 1,490 Bebe Stores, Inc. 13,100 13,100 Best Buy Co., Inc. 1,380 1,380 Buckle, Inc. (The) 3,040 3,040 Callaway Golf Co. 330 330 Chico's FAS, Inc.* Children's Place Retail 1,850 1,850 Stores, Inc.* 2,640 2,640 Dress Barn, Inc.* 3,190 3,190 Foot Locker, Inc. 21,420 21,420 Gap, Inc. (The) 1,340 1,340 Guess?, Inc. 590 590 Gymboree Corp.* 3,910 3,910 Home Depot, Inc. 5,000 5,000 Limited Brands, Inc. 1,080 1,080 Lowe's Cos., Inc. 2,210 2,210 Men's Wearhouse, Inc. 37,066 37,066 28,908 28,908 53,747 53,747 35,850 35,850 11,130 11,130 368,241 368,241 30,112 30,112 28,242 28,242 1,379 1,379 40,108 40,108 28,354 28,354 23,415 23,415 286,814 286,814 20,569 20,569 15,393 15,393 90,008 90,008 50,200 50,200 23,242 23,242 216 The Allianz Variable Insurance Products Trust - Statement of Additional Information MSC Industrial Direct 1,160 1,160 Co., Inc., Class A 8,430 8,430 Office Depot, Inc.* 500 500 OfficeMax, Inc. Penske Automotive Group, 1,550 1,550 Inc. 2,920 2,920 RadioShack Corp. 2,050 2,050 Rent-A-Center, Inc.* 710 710 Ross Stores, Inc. Sally Beauty Holdings, 2,760 2,760 Inc.* 900 900 Sherwin Williams Co. 3,590 3,590 TJX Cos., Inc. 1,370 1,370 Tractor Supply Co.* 750 750 Urban Outfitters, Inc.* 1,690 1,690 Zale Corp.* TEXTILES, APPAREL & LUXURY GOODS ( 0.3%): 1,220 1,220 Carter's, Inc.* 3,520 3,520 Coach, Inc.* 1,710 1,710 Fossil, Inc.* 29,923 29,923 42,723 42,723 25,121 25,121 3,820 3,820 11,904 11,904 34,865 34,865 36,182 36,182 21,108 21,108 15,704 15,704 53,775 53,775 73,846 73,846 49,512 49,512 11,235 11,235 5,628 5,628 ----------------- ----------------- 1,710,597 1,710,597 ----------------- ----------------- 23,497 23,497 73,110 73,110 217 The Allianz Variable Insurance Products Trust - Statement of Additional Information 3,560 3,560 Jones Apparel Group, Inc. 6,930 6,930 Liz Claiborne, Inc. 1,810 1,810 Phillips-Van Heusen Corp. 820 820 Polo Ralph Lauren Corp. Quiksilver Resources, 2,870 2,870 Inc.* Skechers U.S.A., Inc., 870 870 Class A* 1,550 1,550 Talbots, Inc. (The) 2,080 2,080 Timberland Co., Class A* 200 200 UniFirst Corp. 2,790 2,790 Warnaco Group, Inc. (The)* 1,630 1,630 Wolverine World Wide, Inc. THRIFTS & MORTGAGE FINANCE ( 0.0%): 2,860 2,860 MGIC Investment Corp. 30 30 Northwest Bancorp, Inc. Provident Financial 900 900 Services, Inc. 28,557 28,557 20,862 20,862 18,018 18,018 36,435 36,435 37,236 37,236 5,281 5,281 11,153 11,153 3,705 3,705 24,024 24,024 5,938 5,938 54,768 54,768 34,295 34,295 ----------------- ----------------- 376,879 376,879 ----------------- ----------------- 9,953 9,953 641 641 13,770 13,770 ----------------- ----------------- 24,364 24,364 ----------------- ----------------- 218 The Allianz Variable Insurance Products Trust - Statement of Additional Information TOBACCO ( 0.4%): 4,050 4,050 Altria Group, Inc. Philip Morris 10,870 10,870 International, Inc. 530 530 Universal Corp. TRADING COMPANIES & DISTRIBUTORS ( 0.1%): Applied Industrial 1,180 1,180 Technologies, Inc. 550 550 GATX Corp. 4,508 4,508 United Rentals, Inc.* 560 560 Watsco, Inc. WIRELESS TELECOMMUNICATION SERVICES (0.3%): Centennial Communications 1,480 1,480 Corp.* 330 330 Global Crossing, Ltd.* 1,660 1,660 InterDigital, Inc.* 1,930 1,930 NII Holdings, Inc.* 1,050 1,050 NTELOS Holdings Corp. 41,299 41,299 Sprint Nextel Corp.* 60,993 60,993 472,954 472,954 15,831 15,831 ----------------- ----------------- 549,778 549,778 ----------------- ----------------- 22,326 22,326 17,033 17,033 41,113 41,113 21,504 21,504 ----------------- ----------------- 101,976 101,976 ----------------- ----------------- 11,929 11,929 2,620 2,620 45,650 45,650 35,088 35,088 25,893 25,893 75,577 75,577 219 The Allianz Variable Insurance Products Trust - Statement of Additional Information 2,130 2,130 Syniverse Holdings, Inc.* Telephone and Data 1,840 1,840 Systems, Inc. 730 730 U.S. Cellular Corp.* TOTAL COMMON STOCKS (Cost $171,218,759) INVESTMENT COMPANY ( 1.6%): Dreyfus Treasury Prime Cash 527,717 1,382,199 1,909,916 Management, 0.17%(a) TOTAL INVESTMENT COMPANIES Cost ($1,909,916) TOTAL INVESTMENT SECURITIES Cost ($173,128,675)(b) - 99.5% NET OTHER ASSETS (LIABILITIES) - 0.5% ADJUSTMENT FOR REORGANIZATION FEES (c) - (0.0%) NET ASSETS - 100.0% 25,432 25,432 58,420 58,420 31,565 31,565 ----------------- ----------------- 312,174 312,174 ----------------- ----------------- ----------------- ----------------- -------------- 120,180,507 62,531,169 57,649,338 ----------------- -------------- ----------------- 527,717 1,382,199 1,909,916 ----------------- -------------- ----------------- 527,717 1,382,199 1,909,916 ----------------- -------------- ----------------- 63,058,886 59,031,537 122,090,423 143,990 463,319 607,309 - - (48,500) ----------------- -------------- ----------------- $ 63,202,876 $59,494,856 $122,649,232 ================= ============== ================= * Non-income producing security (a) The rate presented represents the effective yield at December 31.2008. (b) Cost for federal income tax purposes is $187,316,520. The gross unrealized appreciation/(depreciation) on a tax basis is as follows: Unrealized appreciation $3,288,509 Unrealized depreciation (68,514,606) Net unrealized depreciation (65,226,097) (c) Represents the estimated reorganization fees and expense that are to be expected to be paid by the Funds.
220 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL MODERATE INDEX STRATEGY FUND PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
AZL AZL MODERATE AZL TARGETPLUS INDEX AZL TARGETPLUS AZL AZL TARGETPLUS MODERATE STRATEGY TARGETPLUS MODERATE MODERATE GROWTH FUND FUND FUND PROFORMA GROWTH FUND FUND INDEX PROFORMA SHARES SHARES SHARES COMBINED SECURITY DESCRIPTION FAIR VALUE FAIR STRATEGY COMBINED VALUE FUND SHARES --------- ---------------------- ---------- -------- ------- ---------------------- ------------- --------- -------- --------- ASSET BACKED SECURITIES (0.1%): 100,000 - 100,000 SLM Student Loan $ 93,722 $ - $ - $93,722 Trust, Series 2008-9, Class A, 5.04%, 4/25/23 (a)+ Total Asset Backed 93,722 - - 93,722 Securities (Cost $99,601) COMMON STOCKS (68.0%): AEROSPACE & DEFENSE (0.7%): 5,279 3,476 - 8,755 American Science & 390,435 257,085 - 647,520 Engineering, Inc. 1,909 1,257 - 3,166 Axsys Technologies, 104,728 68,959 - 173,687 Inc.* 495,163 326,044 - 821,207 AIRLINE (1.0%): 627,000 412,000 - 1,039,000 Cathay Pacific 707,073 464,616 - 1,171,689 Airways, Ltd. AUTO COMPONENTS (1.5%): 489,305 322,132 - 811,437 GKN plc 692,625 455,987 - 1,148,612 40,877 26,911 - 67,788 Superior Industries 430,026 283,104 - 713,130 International, Inc. 1,122,651 739,091 - 1,861,742 AUTOMOBILES (1.1%): 11,434 7,528 - 18,962 DaimlerChrysler AG 437,694 288,172 - 725,866 16,716 11,005 - 27,721 Honda Motor Co., 356,719 234,847 - 591,566 Ltd., ADR 794,413 523,019 - 1,317,432 BIOTECHNOLOGY (1.7%): 12,527 8,246 - 20,773 Amgen, Inc.* 723,434 476,206 - 1,199,640 8,172 5,380 - 13,552 Myriad Genetics, 541,477 356,479 - 897,956 Inc.* 1,264,911 832,685 - 2,097,596 221 The Allianz Variable Insurance Products Trust - Statement of Additional Information CAPITAL MARKETS (2.7%): 13,775 9,069 - 22,844 Credit Suisse 389,282 256,290 - 645,572 Group, SP ADR 11,431 7,526 - 18,957 Deutsche Bank AG 465,127 306,233 - 771,360 14,695 9,675 - 24,370 Stifel Financial 673,766 443,599 - 1,117,365 Corp.* 28,905 19,029 - 47,934 UBS AG* 413,342 272,115 - 685,457 1,941,517 1,278,237 - 3,219,754 CHEMICALS (2.1%): 25,271 16,637 - 41,908 E.I. du Pont de 639,356 420,916 - 1,060,272 Nemours & Co. 14,133 9,305 - 23,438 Eastman Chemical 448,158 295,061 - 743,219 Co. 19,460 12,812 - 32,272 Sensient 464,705 305,951 - 770,656 Technologies Corp. 1,552,219 1,021,928 - 2,574,147 COMMERCIAL BANKS (8.7%): 59,185 38,964 - 98,149 Allied Irish Banks 277,578 182,741 - 460,319 plc, SP ADR 45,935 30,241 - 76,176 Banco Santander SA, 435,923 286,987 - 722,910 SP ADR 36,829 24,247 - 61,076 Barclays plc, ADR 360,924 237,621 - 598,545 43,588 28,695 - 72,283 First Bancorp 485,570 319,662 - 805,232 12,574 8,277 - 20,851 First Financial 694,211 456,973 - 1,151,184 Bankshares, Inc. 7,993 5,262 - 13,255 First Financial 327,633 215,689 - 543,322 Corp. 40,663 26,771 - 67,434 FNB Corp. 536,752 353,377 - 890,129 11,583 7,626 - 19,209 Home Bancshares, 312,162 205,521 - 517,683 Inc. 60,156 39,603 - 99,759 Huntington 460,795 303,359 - 764,154 Bancshares, Inc. 19,142 12,602 - 31,744 KB Financial Group, 501,520 330,172 - 831,692 Inc., ADR* 35,567 23,416 - 58,983 Lloyds TSB Group 273,866 180,303 - 454,169 plc, SP ADR 222 The Allianz Variable Insurance Products Trust - Statement of Additional Information 46,683 30,733 - 77,416 Regions Financial 371,597 244,635 - 616,232 Corp. 22,322 14,696 - 37,018 Royal Bank of 341,303 224,702 - 566,005 Scotland Group plc, SP ADR 15,428 10,157 - 25,585 SunTrust Banks, 455,743 300,038 - 755,781 Inc. 33,976 22,368 - 56,344 Umpqua Holdings 491,633 323,665 - 815,298 Corp. 6,327,210 4,165,445 - 10,492,655 COMMERCIAL SERVICES & SUPPLIES (1.3%): 27,900 18,368 - 46,268 Navigant 442,773 291,500 - 734,273 Consulting, Inc.* 37,137 24,449 - 61,586 R.R. Donnelley & 504,320 332,018 - 836,338 Sons Co. 947,093 623,518 - 1,570,611 CONTAINERS & PACKAGING (0.3%): 6,468 4,258 - 10,726 Rock-Tenn Co., 221,076 145,538 - 366,614 Class A DIVERSIFIED CONSUMER SERVICES (2.6%): 9,112 5,999 - 15,111 Apollo Group, Inc., 698,162 459,643 - 1,157,805 Class A* 6,696 4,408 - 11,104 ITT Educational 635,986 418,672 - 1,054,658 Services, Inc.* 2,471 1,627 - 4,098 Strayer Education, 529,807 348,845 - 878,652 Inc. 1,863,955 1,227,160 - 3,091,115 DIVERSIFIED FINANCIAL SERVICES (1.5%): 40,338 26,557 - 66,895 Bank of America 567,959 373,923 - 941,882 Corp. 47,034 30,965 - 77,999 ING Groep NV, ADR 522,077 343,711 - 865,788 1,090,036 717,634 - 1,807,670 223 The Allianz Variable Insurance Products Trust - Statement of Additional Information DIVERSIFIED TELECOMMUNICATION SERVICES (2.6%): 301,726 198,640 - 500,366 BT Group plc 592,683 390,191 - 982,874 25,702 16,921 - 42,623 Deutsche Telekom 393,241 258,891 - 652,132 AG, ADR 15,777 10,387 - 26,164 Nippon Telegraph & 428,977 282,422 - 711,399 Telephone Corp., ADR 26,925 17,727 - 44,652 Telecom Italia SPA, 437,531 288,064 - 725,595 ADR 1,852,432 1,219,568 - 3,072,000 ELECTRIC UTILITIES (1.3%): 39,311 25,880 - 65,191 Korea Electric 456,401 300,467 - 756,868 Power Corp., ADR* 15,835 10,425 - 26,260 Pinnacle West 508,778 334,955 - 843,733 Capital Corp. 965,179 635,422 - 1,600,601 ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (0.4%): 7,995 5,264 - 13,259 Hitachi, Ltd., SP 312,924 206,033 - 518,957 ADR. FOOD & STAPLES RETAILING (1.2%): 2,185 1,438 - 3,623 Nash Finch Co. 98,085 64,552 - 162,637 3,958 2,606 - 6,564 Spartan Stores, 92,023 60,589 - 152,612 Inc. 12,352 8,132 - 20,484 Wal-Mart Stores, 692,453 455,880 - 1,148,333 Inc. 882,561 581,021 - 1,463,582 FOOD PRODUCTS (0.8%): 16,667 10,973 - 27,640 Flowers Foods, 406,008 267,302 - 673,310 Inc. 5,403 3,558 - 8,961 Treehouse Foods, 147,178 96,920 - 244,098 Inc.* 553,186 364,222 - 917,408 224 The Allianz Variable Insurance Products Trust - Statement of Additional Information GAS UTILITIES (2.9%): 14,055 9,253 - 23,308 Laclede Group, Inc. 658,336 433,410 - 1,091,746 (The) 44,909 29,565 - 74,474 Piedmont Natural 1,422,268 936,324 - 2,358,592 Gas Co., Inc. 2,080,604 1,369,734 - 3,450,338 HEALTH CARE EQUIPMENT & SUPPLIES (0.6%): 9,954 6,553 - 16,507 CryoLife, Inc.* 96,653 63,630 - 160,283 3,895 2,564 - 6,459 Greatbatch, Inc.* 103,062 67,843 - 170,905 10,217 6,727 - 16,944 STERIS Corp. 244,084 160,708 - 404,792 443,799 292,181 - 735,980 HEALTH CARE PROVIDERS & SERVICES (0.7%): 16,989 11,185 - 28,174 Gentiva Health 497,098 327,273 - 824,371 Services, Inc.* HEALTH CARE TECHNOLOGY (0.1%): 3,332 2,194 - 5,526 Computer Programs & 89,298 58,799 - 148,097 Systems, Inc. HOTELS, RESTAURANTS & LEISURE (2.3%): 231,740 152,565 - 384,305 Ladbrokes plc 619,621 407,925 - 1,027,546 12,094 7,962 - 20,056 McDonald's Corp. 752,126 495,157 - 1,247,283 5,071 3,338 - 8,409 Panera Bread Co., 264,909 174,377 - 439,286 Class A* 1,636,656 1,077,459 - 2,714,115 225 The Allianz Variable Insurance Products Trust - Statement of Additional Information HOUSEHOLD DURABLES (0.6%): 18,370 12,094 - 30,464 Sony Corp., SP ADR 401,752 264,496 - 666,248 INDUSTRIAL CONGLOMERATES (2.7%): 876,000 576,000 - 1,452,000 Citic Pacific, 954,529 627,635 - 1,582,164 Ltd. 38,446 25,311 - 63,757 General Electric 622,825 410,038 - 1,032,863 Co. 29,982 19,738 - 49,720 Textron, Inc. 415,850 273,766 - 689,616 1,993,204 1,311,439 - 3,304,643 INSURANCE (1.3%): 80,486 52,987 - 133,473 AEGON NV 486,940 320,571 - 807,511 21,426 14,106 - 35,532 Axa, ADR 481,442 316,962 - 798,404 968,382 637,533 - 1,605,915 IT SERVICES (2.1%): 617,678 406,646 - 1,024,324 LogicaCMG plc 616,744 406,031 - 1,022,775 16,542 10,889 - 27,431 ManTech 896,411 590,075 - 1,486,486 International Corp., Class A* 1,513,155 996,106 - 2,509,261 LIFE SCIENCES TOOLS & SERVICES (0.7%): 23,969 15,780 - 39,749 Luminex Corp.* 511,978 337,061 - 849,039 MACHINERY (0.8%): 33,344 21,952 - 55,296 Briggs & Stratton 586,521 386,136 - 972,657 Corp. MEDIA (1.7%): 1,269,134 835,529 - 2,104,663 ITV plc 727,486 478,937 - 1,206,423 64,389 42,390 - 106,779 New York Times Co., 471,972 310,719 - 782,691 Class A 226 The Allianz Variable Insurance Products Trust - Statement of Additional Information 1,199,458 789,656 - 1,989,114 METALS & MINING (4.0%): 59,392 39,101 - 98,493 Alcoa, Inc. 668,754 440,277 - 1,109,031 14,657 9,649 - 24,306 ArcelorMittal, 360,416 237,269 - 597,685 Class A 23,420 15,418 - 38,838 Compass Minerals 1,373,817 904,420 - 2,278,237 International, Inc. 6,288 4,140 - 10,428 POSCO, ADR 473,172 311,535 - 784,707 2,876,159 1,893,501 - 4,769,660 MULTI-UTILITIES (1.9%): 39,461 25,979 - 65,440 NiSource, Inc. 432,887 284,990 - 717,877 13,750 9,052 - 22,802 SCANA Corp. 489,500 322,251 - 811,751 14,469 9,526 - 23,995 Veolia Environment, 458,812 302,069 - 760,881 ADR 1,381,199 909,310 - 2,290,509 MULTILINE RETAIL (1.8%): 16,086 10,590 - 26,676 Dollar Tree, Inc.* 672,395 442,662 - 1,115,057 24,238 15,956 - 40,194 Family Dollar 631,884 415,973 - 1,047,857 Stores, Inc. 1,304,279 858,635 - 2,162,914 OIL, GAS & CONSUMABLE FUELS (2.3%): 6,674 4,394 - 11,068 Clayton Williams 303,266 199,663 - 502,929 Energy, Inc.* 21,160 13,930 - 35,090 Goodrich Petroleum 633,742 417,203 - 1,050,945 Corp.* 15,730 10,357 - 26,087 Petro-Canada 344,330 226,715 - 571,045 19,151 12,609 - 31,760 Repsol YPF SA, ADR 411,938 271,220 - 683,158 227 The Allianz Variable Insurance Products Trust - Statement of Additional Information 1,693,276 1,114,801 - 2,808,077 PAPER & FOREST PRODUCTS (0.6%): 40,208 26,471 - 66,679 MeadWestvaco Corp. 449,927 296,210 - 746,137 PHARMACEUTICALS (1.8%): 38,733 25,499 - 64,232 Pfizer, Inc. 685,962 451,587 - 1,137,549 45,156 29,728 - 74,884 ViroPharma, Inc.* 587,931 387,059 - 974,990 1,273,893 838,646 - 2,112,539 REAL ESTATE MANAGEMENT & DEVELOPMENT (2.5%): 849,000 558,000 - 1,407,000 New World 867,396 570,091 - 1,437,487 Developments Co., Ltd. 887,000 583,000 - 1,470,000 Sino Land Co., 927,073 609,338 - 1,536,411 Ltd. 1,794,469 1,179,429 - 2,973,898 SPECIALTY RETAIL (1.8%): 6,438 4,239 - 10,677 AutoZone, Inc.* 897,908 591,214 - 1,489,122 7,617 5,015 - 12,632 Buckle, Inc. 166,203 109,427 - 275,630 (The) 6,205 4,085 - 10,290 Tractor Supply 224,248 147,632 - 371,880 Co.* 1,288,359 848,273 - 2,136,632 THRIFTS & MORTGAGE FINANCE (1.2%): 29,944 19,713 - 49,657 First Niagara 484,194 318,759 - 802,953 Financial Group, Inc. 27,937 18,393 - 46,330 Washington Federal, 417,938 275,160 - 693,098 Inc. 902,132 593,919 - 1,496,051 228 The Allianz Variable Insurance Products Trust - Statement of Additional Information TOBACCO (0.6%): 14,315 9,424 - 23,739 Universal Corp. 427,589 281,495 - 709,084 TRANSPORTATION INFRASTRUCTURE (1.4%): 981,000 644,000 - 1,625,000 Cosco Pacific, 1,010,003 663,040 - 1,673,043 Ltd. Total Common Stocks 49,216,789 32,396,313 - 81,613,102 (Cost $89,808,218) CONVERTIBLE BONDS (0.2%): DIVERSIFIED FINANCIAL SERVICES (0.2%): 100,000 Prudential 94,650 94,650 - 189,300 Financial, Inc., 0.37%, 12/15/37, Callable 6/16/09 @ 100(a)(d)+ Total Convertible 94,650 94,650 - 189,300 Bonds (Cost $195,836) CORPORATE BONDS (5.4%): COMMERCIAL BANKS (1.7%): 100,000 - 100,000 ANZ National Bank, 96,756 - - 96,756 Ltd., 6.20%, 7/19/13(b)+ 25,000 Bank of America - 24,961 - Corp., 5.75%, 12/1/17+ 100,000 100,000 - 200,000 Bank of America 71,929 71,929 - 143,858 Corp., 8.13%, 12/31/49+ 100,000 100,000 - 200,000 Bank of America 100,450 100,450 - 200,900 Corp., Series L, 1.88%, 6/22/12, MTN(a)+ 100,000 100,000 - 200,000 Barclays Bank plc, 99,694 99,694 - 199,388 2.50%, 8/10/09(a) (b)+ 250,000 - 250,000 Barclays Bank plc, - 220,549 - 220,549 6.05%, 12/4/17(b)+ 100,000 100,000 - 200,000 Barclays Bank plc, 50,558 50,558 - 101,116 7.43%, 9/29/49(a) (b)+ 100,000 100,000 - 200,000 Citigroup Funding, 94,807 94,807 - 189,614 Inc., 3.56%, 5/7/10(a)+ 100,000 - 100,000 New York Community - 102,681 - 102,681 Bank, 3.00%, 12/16/11+ 100,000 100,000 - 200,000 PNC Funding Corp., 100,999 100,999 - 201,998 229 The Allianz Variable Insurance Products Trust - Statement of Additional Information 2.30%, 6/22/12+ 100,000 100,000 - 200,000 Regions Bank, 104,036 104,036 - 208,072 3.25%, 12/9/11+ 100000 200,000 - 300,000 SunTrust Bank, 103,410 206,821 - 310,231 Inc., 3.00%, 11/16/11+ 100,000 100,000 - 200,000 UBS AG Stamford CT, 91,864 91,864 - 183,728 5.88%, 12/20/17+ 20,000 10,000 - 30,000 Wells Fargo Co., 20,371 10,185 - 30,556 5.25%, 10/23/12+ 934,874 1,279,534 - 2,092,691 COMMERCIAL SERVICES & SUPPLIES (0.0%): 35,000 25,000 - 60,000 First Data Corp., 21,175 15,125 - 36,300 9.88%, 9/24/15, Callable 9/30/11 @ 104.94+ DIVERSIFIED CONSUMER SERVICES (0.6%): 100,000 - 100,000 American Express 95,997 - - 95,997 Credit Co., Series C, 5.88%, 5/2/13+ 100,000 - 100,000 American 67,029 - - 67,029 International Group, 5.85%, 1/16/18, MTN(b)+ 100,000 - 100,000 American 73,192 - - 73,192 International Group, 8.25%, 8/25/18+ 25,000 - 25,000 Bear Stearns Co., 25,980 - - 25,980 Inc., 6.40%, 10/2/17+ 100,000 - 100,000 Citigroup Capital - 77,124 - 77,124 XXI, 8.30%, 12/21/57, Callable 12/21/37 @ 100+ 20,000 10,000 - 30,000 General Electric 20,144 10,072 - 30,216 Capital Corp., 5.25%, 10/19/12+ 100,000 100,000 - 200,000 John Deere Capital 91,249 91,249 - 182,498 Corp., 2.94%, 6/10/11(a)+ 100,000 - 100,000 National Rural 92,858 - - 92,858 Utilities, 4.75%, 3/1/14+ 25,000 25,000 - 50,000 Petrobras 22,475 22,475 - 44,950 International Finance, Inc., 5.88%, 3/1/18+ 488,924 200,920 - 689,844 DIVERSIFIED FINANCIAL SERVICES (1.9%): 230 The Allianz Variable Insurance Products Trust - Statement of Additional Information 100,000 - 100,000 American International Group, 66,088 - 66,088 5.45%, 5/18/17,(b) MTN+ 100,000 - 100,000 Goldman Sachs 94,817 - - 94,817 Group, Inc., 5.95%, 1/18/18+ 200,000 - 200,000 American International Group, 146,384 - 146,384 8.25%, 8/15/18+ 100,000 100,000 - 200,000 Citigroup, Inc., 101,054 101,054 - 202,108 6.13%, 11/21/17+ 200,000 200,000 - 400,000 Citigroup, Inc., 132,058 132,058 - 264,116 8.45%, 4/29/49+ 100,000 - 100,000 Goldman Sachs Group, Inc., 5.95%, 94,817 - 94,817 1/18/18+ 100,000 100,000 - 200,000 Goldman Sachs 96,096 96,096 - 192,192 Group, Inc., 6.15%, 4/1/18+ 100,000 100,000 - 200,000 J.P. Morgan Chase & 83,183 83,183 - 166,366 Co., Series 1, 7.94%, 4/29/49, Callable 4/30/18 @ 100+ 100,000 100,000 - 200,000 Macquarie Bank, 101,985 101,985 - 203,970 Ltd., Series B, 4.10%, 12/17/13, MTN(b) 100,000 - 100,000 Merrill Lynch & 104,603 - 104,603 Co., 6.88%, 4/25/18+ 200,000 200,000 - 400,000 Merrill Lynch & 219,242 219,242 - 438,484 Co., Series E, 4.20%, 5/30/14, MTN(a)+ 100,000 200,000 - 300,000 Morgan Stanley, 87,729 175,458 - 263,187 Series F, 6.63%, 4/1/18, MTN+. 916,164 1,320,968 - 2,237,132 DIVERSIFIED TELECOMMUNICATION SERVICES (0.2%): 100,000 - 100,000 AT&T, Inc., 6.30%, 105,711 - - 105,711 1/15/38+ 100,000 - 100,000 AT&T, Inc., 5.50%, - 101,063 - 101,063 2/1/18+ 105,711 101,063 - 206,774 ELECTRIC UTILITIES (0.2%): 100,000 - 100,000 Southern Cal 101,789 - - 101,789 Edison, 5.00%, 1/15/14+ 100,000 - 100,000 Southern Co., 96,702 - - 96,702 Series 08-A, 2.92%, 8/20/10(a)+ 198,491 - - 198,491 231 The Allianz Variable Insurance Products Trust - Statement of Additional Information ELECTRONIC EQUIPMENT & INSTRUMENTS (0.2%): 100,000 100,000 - 200,000 General Electric 99,695 99,695 - 199,390 Co., 5.25%, 12/6/17+ INSURANCE (0.1%): 100,000 100,000 - 200,000 American 38,903 38,903 - 77,806 International Group, 8.18%, 5/15/58 (b)+ HEALTH CARE PROVIDERS & SERVICES (0.1 %): 100,000 - 100,000 GlaxoSmithKline - 112,983 - 112,983 Capital, Inc., 6.38%, 5/15/38+ MEDIA (0.3%): 200,000 100,000 - 300,000 Rogers 194,763 97,381 - 292,144 Communications, 6.75%, 3/15/15+ 100,000 - 100,000 Time Warner Cable, 93,375 - - 93,375 Inc., 5.40%, 7/2/12+ 288,138 97,381 - 385,519 PHARMACEUTICALS (0.1%): 100,000 - 100,000 Amgen, Inc., 5.85%, 103,274 - - 103,274 6/1/17+ Total Corporate 3,195,349 3,266,572 - 6,461,921 Bonds (Cost $6,599,943) MORTGAGE BACKED SECURITIES (0.1 %): ASSET BACKED SECURITY (0.1 %): 100,000 - 100,000 Chase Issuance - 96,557 - 96,557 Trust, Series 2007-A14, Class A14, 1.45%, 9/15/11 (a)+ Total Mortgage - 96,557 - 96,557 Backed Securities (Cost $99,564) YANKEE DOLLARS (0.2%): 100,000 - 100,000 Deutsche Bank AG - 98,179 - 98,179 London, 4.88%, 5/20/13+ 232 The Allianz Variable Insurance Products Trust - Statement of Additional Information 100,000 - 100,000 Royal Bank of - 46,753 - 46,753 Scotland Group plc, 6.99%, 10/29/49(b)+ 100,000 - 100,000 British Telecom plc, 86,997 - - 86,997 5.95%, 1/15/18+ Total Yankee Dollars 86,997 144,932 - 231,929 (Cost $237,095) PREFERRED STOCKS (0.3 %): COMMERCIAL BANKS (0.2 %): 100 200 - 300 Wachovia Corp., 75,000 150,000 - 225,000 Series L, Class A+ DIVERSIFIED FINANCIAL SERVICES (0.1 %): 100 100 - 200 Bank of America 65,000 65,000 - 130,000 Corp., Series L+ Total Preferred 140,000 215,000 - 355,000 Stocks (Cost $335,160) MUNICIPAL BONDS (0.5%): CALIFORNIA (0.2%): 100,000 100,000 - 200,000 Los Angeles 91,704 91,704 - 183,408 Department of Water & Power Revenue, Series A-1, 5.00%, 7/1/37, Callable 7/1/17 @ 100+. ILLINOIS (0.3%): 100,000 100,000 - 200,000 Chicago Illinois 102,576 102,576 - 205,152 Transit Authority Sales & Transfer Tax Receipts Revenue, Series B, 6.90%, 12/1/40+ 100,000 100,000 - 200,000 Illinois State GO, 100,871 100,871 - 201,742 4.50%, 6/24/09+ 203,447 203,447 - 406,894 Total Municipal 295,151 295,151 - 590,302 Bonds (Cost $607,172) U.S. GOVERNMENT AGENCY MORTGAGES (22.1%): FEDERAL HOME LOAN BANK (1.2%) 1,500,000 - 1,500,000 0.14%, 1/21/09(d)+ - 1,500,000 - 1,500,000 233 The Allianz Variable Insurance Products Trust - Statement of Additional Information FEDERAL HOME LOAN MORTGAGE CORPORATION (4.5%) 500,000 350,000 - 850,000 5.25%, 1/12/09+ 500,685 350,479 - 851,164 1,000,000 - 1,000,000 5.50%, 1/15/38, 1,023,438 - - 1,023,438 Pool #27315 TBA 3,000,000 - 3,000,000 0.15%, 1/21/09(d)+ - 3,000,000 - 3,000,000 500,000 - 500,000 0.15%, 1/21/09(d)+ 500,000 - - 500,000 2,024,123 - 5,374,602 3,350,479 FEDERAL NATIONAL MORTGAGE ASSOCIATION (13.7%) 600,000 600,000 - 1,200,000 1.12%, 2/2/09(d)+ 599,995 599,995 - 1,199,990 1,000,000 - 1,000,000 6.50%, 1/1/35 - 1,038,438 - 1,038,438 474,882 379,905 - 854,787 5.00%, 3/1/37+ 485,412 388,329 - 873,741 499,359 - 499,359 6.00%, 7/1/37, Pool 514,645 - - 514,645 #944544+ 472,107 472,107 - 944,214 5.50%, 8/1/37, Pool 484,815 484,814 - 969,629 #995024+ 479,849 479,849 - 959,698 5.50%, 2/1/38, Pool 492,465 492,465 - 984,930 #995021+ 400,000 - 400,000 6.00%, 2/1/38, Pool 412,204 - - 412,204 #971908+ 500,000 - 500,000 6.00%, 3/1/38, Pool - 515,334 - 515,334 #986288+ 460,075 1,571,332 - 2,031,407 5.50%, 9/1/38, Pool 472,146 1,612,558 - 2,084,704 #889995+ 500,000 - 500,000 5.50%, 9/1/38, Pool 513,068 - - 513,068 #987818+ 499,448 - 499,448 6.00%, 11/1/38, - 514,687 - 514,687 Pool #993542+ 3,100,000 3,600,000 - 6,700,000 5.00%, 1/13/39, 3,164,908 3,675,377 - 6,840,285 Pool #19888 TBA 7,139,658 9,321,997 - 16,461,655 GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (2.5%) 234 The Allianz Variable Insurance Products Trust - Statement of Additional Information 1,000,000 - 1,000,00 06.50%, 1/1/37, Pool - 1,039,688 - 1,039,688 #24184 1,000,000 - 1,000,00 05.50%, 1/15/37, - 1,029,688 - 1,029,688 Pool #14591 TBA 443,939 - 443,939 6.00%, 11/15/37+ - 458,849 - 458,849 494,183 - 494,183 6.00%, 7/15/38, - 511,046 - 511,046 Pool #782365+ - 3,039,271 - 3,039,271 UNITED MEXICAN STATES (0.2%) 40,000 40,000 - 80,000 5.63%, 1/15/17+ 40,000 40,000 - 80,000 40,000 40,000 - 80,000 8.30%, 8/15/31, 49,000 49,000 - 98,000 MTN+ 20,000 20,000 - 40,000 6.75%, 9/27/34, 21,100 21,100 - 42,200 MTN+ 110,100 110,100 - 220,200 Total U.S. 9,273,881 17,321,847 - 26,595,728 Government Agency Mortgages (Cost $26,002,265) U.S. TREASURY OBLIGATIONS (3.7%): FEDERAL HOME LOAN BANK (0.5%) 600,000 - 600,000 0.03%, 1/14/09(d)+ 600,000 - - 600,000 U.S. TREASURY BILL (2.7%) 3,200,000 - 3,200,000 0.00%, 1/8/09(d)+ 3,200,000 - - 3,200,000 U.S. TREASURY BONDS (0.2%) 200,000 - 200,000 5.00%, 5/15/37+ 289,781 - - 289,781 U.S. TREASURY INFLATION INDEX BOND (0.0%) 50,000 - 50,000 2.00%, 1/15/26 + 51,391 - - 51,391 235 The Allianz Variable Insurance Products Trust - Statement of Additional Information U.S. TREASURY NOTES (0.3%) 50,000 20,000 - 70,000 8.13%, 8/15/21 + 76,047 30,419 - 106,466 150,000 - 150,000 5.25%, 11/15/28+ 198,047 - 198,047 274,094 30,419 - 304,513 Total U.S. Treasury 4,415,266 30,419 - 4,445,685 Obligations (Cost $4,350,282) PURCHASED CALL OPTIONS (0.3%): 380 440 - 820 1-Year Interest 188,367 218,109 - 406,476 Rate SWAP, Receive 3-Month USD-LIBOR Floating Rate Index, Strike @ 4.25 Exp. 7/8/11+ 2 2 - 4 Euro-Bund Option 28 28 - 56 March 09, Strike @ 109.50 Exp. 2/23/09 5 4 - 9 10-Year U.S. 78 63 - 141 Treasury Future Option February 09, Strike @ 142.00 Exp. 1/26/09. Total Purchased Call 188,473 218,200 - 406,673 Options (Cost $82,151) PUT OPTIONS PURCHASED (0.0%): 110 260 - 370 Federal National - - - - Mortgage Association, 5.00%, Strike @ 50.00 Exp. 1/6/09(c) 100 - 100 Federal National - - - - Mortgage Association, 5.00%, Strike @ 64.00 Exp. 2/5/09(c) 100 - 100 Federal National - - - - Mortgage Association, 5.00%, Strike @ 62.00 Exp. 2/6/09(c) 50 - 50 Federal National - - - - Mortgage Association, 5.50%, Strike @ 53.00 Exp. 1/6/09(c) 40 50 - 90 Federal National - - - - Mortgage Association, 6.00%, Strike @ 55.00 Exp. 1/6/09(c) Total Put Options - - - - Purchased (Cost $832) REPURCHASE AGREEMENTS (12.0%): 2,000,000 5,000,000 - 7,000,000 J.P. Morgan Chase 2,000,000 5,000,000 - 7,000,000 Bank, N.A., dated 12/31/08, 0.04%, due 1/2/09, proceeds 7,000,015; fully collateralized by FNMA, 7.25% 1/15/10, value at 6,910,155+ 236 The Allianz Variable Insurance Products Trust - Statement of Additional Information 4,500,000 2,900,000 - 7,400,000 Barclays Capital, 4,500,000 2,900,000 - 7,400,000 Inc., dated 12/31/08, 0.06%, due 1/5/09, proceeds 7,400,062; fully collateralized by FNMA, 3.85% 4/17/13, value at 7,508,956 Total Repurchase 6,500,000 7,900,000 - 14,400,000 Agreements (Cost $14,400,000) INVESTMENT COMPANY (2.3%): 1,765,527 1,017,736 - 2,783,263 Dreyfus Treasury 1,765,527 1,017,736 - 2,783,263 Prime Cash Management, 0.17%(d) Total Investment 1,765,527 1,017,736 - 2,783,263 Company (Cost $2,783,263) Total Investment 75,265,805 62,997,377 - 138,263,182 Securities (Cost $145,601,382)(e)--115.2% Net other assets (8,960,383) (9,182,791) - (18,143,174) (liabilities)-- (15.1)% Adjustments for Reorganization - (135,000) Fees(f)--(0.1)% Net Assets -- 100.0% $66,305,422 $53,814,588 $ - $119,984,508 Percentages indicated are based on net assets as of December 31, 2008. * Non-income producing security + Investment securities are segregated as collateral. The aggregate fair value of these securities is $35,291,113 ADR --American Depository Receipt FNMA --Federal National Mortgage Association GO --General Obligation LIBOR --Represents the London InterBank Offered Rate MTN --Medium Term Note PLC --Public Liability Co. SPA --Standby Purchase Agreement TBA --To be announced. Represents 7.4% of the Fund's net assets. (a) Variable rate security. The rate presented represents the rate in effect at December 31, 2008. The date presented represents the final maturity date. (b) Rule 144A, Section 4(2) or other security which is restricted to resale to institutional investor. The subadviser has deemed these securities to be liquid based on procedures approved by the Board of Trustees. 237 The Allianz Variable Insurance Products Trust - Statement of Additional Information (c) Rule 144A, Section 4(2) or other security which is restricted to resale to institutional investors. The manager has deemed these securities to be illiquid based on procedures approved by the Board of Trustees. As of December 31, 2008, these securities represent 0.0% of the net assets of the Fund. (d) The rate presented represents the effective yield at December 31, 2008. (e) Cost for federal income tax purposes is $128,647,481. The gross unrealized appreciation/(depreciation) on a tax basis is as follows: (f) Represents the estimate reorganization fees and expenses that are to be expected to be paid by the Funds. Unrealized appreciation $7,549,572 Unrealized (17,165,273) ------------ depreciation Net unrealized $(9,615,701) ============ depreciation
DELIVERY CONTRACT FAIR APPRECIATION/ SHORT CONTRACTS DATE AMOUNT VALUE (DEPRECIATION) Delivered 19,489 Brazilian Real in 2/3/2009 $8,899 $8,256 $643 exchange for U.S. Dollars Delivered 15,136,500 Chilean Peso 5/14/2009 23,127 23,237 (110) in exchange for U.S. Dollars Delivered 679,388 Chinese 7/15/2009 98,000 97,950 50 Renminbi in exchange for U.S. Dollars Delivered 184,000 European Euro 1/13/2009 232,399 255,580 (23,181) in exchange for U.S. Dollars Delivered 67,961 British Sterling 1/13/2009 101,784 97,646 4,138 Pounds in exchange for U.S. Dollars Delivered 15,127,621 Hungarian 5/6/2009 68,020 78,104 (10,084) Forint in exchange for U.S. Dollars Delivered 185,719 Japanese Yen in 1/8/2009 1,951 2,050 (99) exchange for U.S. Dollars Delivered 79,342 New Romanian Leu 1/28/2009 29,336 27,184 2,152 exchange for U.S. Dollars Delivered 1,987,600 Russian Ruble 5/6/2009 59,042 57,710 1,332 in exchange for U.S. Dollars Delivered 146,805 Singapore 1/16/2009 97,978 101,876 (3,898) Dollars in exchange for U.S. Dollars Delivered 5,955 South African 5/14/2009 540 623 (83) Rand in exchange for U.S. Dollars $(29,140) TARGETPLUS GROWTH As of December 31, 2008 the Fund's open foreign currency exchange contracts were as follows: DELIVERY CONTRACT FAIR APPRECIATION/ LONG CONTRACTS DATE AMOUNT VALUE (DEPRECIATION) 238 The Allianz Variable Insurance Products Trust - Statement of Additional Information Received 29,385 Brazilian Real in 6/2/2009 $15,446 $12,006 $(3,440) exchange for U.S. Dollars Received 17,516 Brazilian Real in 2/3/2009 7,886 7,420 (466) exchange for U.S. Dollars Received 364,100 Chinese Renminbi 2/11/2009 55,000 53,034 (1,966) in exchange for U.S. Dollars Received 410,195 Chinese Renminbi 9/8/2009 59,160 59,062 (98) in exchange for U.S. Dollars Received 657,994 Chinese Renminbi 7/15/2009 102,000 94,866 (7,134) in exchange for U.S. Dollars Received 5,000 European Euro in 1/13/2009 6,946 6,945 (1) exchange for U.S. Dollars Received 47,449 British Sterling 1/2/2009 69,765 68,204 (1,561) Pounds in exchange for U.S. Dollars Received 695,189 Hong Kong Dollars 1/2/2009 89,703 89,702 (1) in exchange for U.S. Dollars Received 285,890,000 Indonesian 3/31/2009 26,789 25,526 (1,263) Rupiah in exchange for U.S. Dollars Received 758,000 Japanese Yen in 1/8/2009 7,915 8,365 450 exchange for U.S. Dollars Received 15,808 Mexican Nuevo Peso 5/19/2009 1,447 1,103 (344) in exchange for U.S. Dollars Received 13,102 Malaysian Ringgit 2/12/2009 3,701 3,784 83 in exchange for U.S. Dollars Received 1,117,570 Philippine Peso 2/6/2009 23,908 23,436 (472) in exchange for U.S. Dollars Received 967,100 Philippine Peso 5/6/2009 20,000 20,172 172 in exchange for U.S. Dollars Received 5,065 Polish Zloty in 5/6/2009 2,244 1,692 (552) exchange for U.S. Dollars Received 78,617 New Romanian Leu 1/28/2009 31,959 26,935 (5,024) in exchange for U.S. Dollars Received 5,550 Russian Ruble in 5/6/2009 166 161 (5) exchange for U.S. Dollars Received 125,347 Singapore Dollars 7/30/2009 84,493 86,917 2,424 in exchange for U.S. Dollars $(19,198) DELIVERY CONTRACT FAIR APPRECIATION/ SHORT CONTRACTS DATE AMOUNT VALUE (DEPRECIATION) Delivered 26,414 Brazilian Real in 2/3/2009 $12,061 $11,189 $872 exchange for U.S. Dollars Delivered 769,540 Chinese 7/15/2009 111,000 110,948 52 Renminbi in exchange for U.S. Dollars Delivered 133,000 European Euro 1/13/2009 167,984 184,740 (16,756) in exchange for U.S. Dollars Delivered 69,176 British Sterling 1/13/2009 103,805 99,392 4,413 Pounds in exchange for U.S. Dollars 239 The Allianz Variable Insurance Products Trust - Statement of Additional Information Delivered 12,831,158 Hungarian 5/6/2009 57,694 66,247 (8,553) Forint in exchange for U.S. Dollars Delivered 232,719 Japanese Yen in 1/8/2009 2,444 2,568 (124) exchange for U.S. Dollars Delivered 78,617 New Romanian Leu 1/28/2009 29,068 26,935 2,133 exchange for U.S. Dollars Delivered 5,550 Russian Ruble in 5/6/2009 167 161 6 exchange for U.S. Dollars Delivered 146,805 Singapore 1/16/2009 97,977 101,876 (3,899) Dollars in exchange for U.S. Dollars Delivered 5,899 South African 5/14/2009 536 618 (82) Rand in exchange for U.S. Dollars $(21,938) TARGETPLUS MODERATE FUND Futures Contracts: UNREALIZED EXPIRATION NUMBER OF APPRECIATION/ DESCRIPTION TYPE DATE CONTRACTS (DEPRECIATION) Euro Euribor June Futures Long 6/10 3 $63 90-Day Euribor September Long 9/10 5 0 Futures Euro Bobl June Futures Long 6/09 7 3,481 Euro Bund June Futures Long 6/09 4 3,677 90-Day British Sterling Pound Long 12/09 7 25,866 December Futures 90-Day Eurodollar June Futures Long 6/10 5 13,950 90-Day Eurodollar September Long 9/09 12 20,000 Futures 90-Day Eurodollar December Long 12/10 19 14,475 Futures 90-Day Eurodollar December Long 12/09 5 37,750 Futures U.S. Treasury 10-Year Note Long 6/09 36 121,500 June Futures TOTAL UNREALIZED $240,762 APPRECIATION/(DEPRECIATION) ON FUTURES TARGETPLUS GROWTH FUND Futures Contracts: UNREALIZED EXPIRATION NUMBER OF APPRECIATION/ DESCRIPTION TYPE DATE CONTRACTS (DEPRECIATION) Euro-Schatz 2-Year March Short 3/09 (2) ($1,413) Futures Euro Euribor March Futures Long 3/09 1 8,845 90-Day Euribor December Long 12/09 1 5,981 Futures Euro Bobl March Futures Long 3/09 2 2,924 Euro Bond March Futures Short 3/09 (1) (3,115) Euro Bond March Futures Long 3/09 2 6,636 Long Gilt March Futures Short 3/09 (2) (13,727) 90-Day British Sterling Pound Long 3/09 3 5,348 March Futures 90-Day British Sterling Pound Long 6/09 2 17,160 June Futures 90-Day British Sterling Pound Long 9/09 1 8,424 September Futures 90-Day British Sterling Pound Long 12/09 2 15,295 December Futures 90-Day Eurodollar June Futures Short 6/09 (2) (5,625) 240 The Allianz Variable Insurance Products Trust - Statement of Additional Information 90-Day Eurodollar September Long 9/09 8 58,000 Futures 90-Day Eurodollar December Long 12/09 17 98,375 Futures U.S. Treasury 5-Year Note Long 3/09 13 13,648 March Futures U.S. Treasury 10-Year Note Long 3/09 6 20,305 March Futures TOTAL UNREALIZED $237,061 APPRECIATION/(DEPRECIATION) ON FUTURES
241 The Allianz Variable Insurance Products Trust - Statement of Additional Information
TARGETPLUS MODERATE FUND Interest Rate Swaps at December 31, 2008: UNREALIZED FLOATING RATE (PAY)/RECEIVE FIXED EXPIRATION NOTIONAL APPRECIATION/ COUNTERPARTY INDEX FLOATING RATE RATE DATE AMOUNT (DEPRECIATION) --------------------- ------------------ ---------------- ------- ---------- ----------- -------------- Morgan Stanley 6-Month GBP Pay 6.00% 9/18/09 $ $2,104 Capital Services LIBOR 100,000 Inc. Goldman Sachs Group 3-Month USD LIBOR Pay 4.00 6/17/10 2,300,000 55,539 Citibank 3-Month USD LIBOR Receive 3.00 6/17/29 200,000 12,844 UBS AG Brazil Cetip Pay 12.54 1/2/12 100,000 446 Interbank Deposit Rate Morgan Stanley Brazil Cetip Pay 12.54 1/2/12 300,000 3,526 Capital Services Interbank Inc. Deposit Rate Deutsche Bank 3-Month USD LIBOR Pay 4.00 6/17/10 2,500,000 54,076 HSBC Bank USA South Africa Pay 9.99 11/9/10 400,000 929 Interbank Citibank South Africa Pay 9.99 11/9/10 100,000 219 Interbank Barclays Bank PLC 6-Month EUR LIBOR Pay 4.00 9/19/17 100,000 10,618 Merrill Lynch 3-Month USD LIBOR Receive 5.00 12/17/38 300,000 (111,626) Capital Services, Inc. Royal Bank of 3-Month USD LIBOR Pay 4.00 6/17/14 200,000 2,962 Scotland PLC Merrill Lynch 3-Month USD LIBOR Pay 4.00 12/17/13 400,000 38,462 Capital Services, Inc. Goldman Sachs Group 6-Month GBP Pay 5.00 3/18/14 100,000 14,490 LIBOR Bank of America 3-Month USD LIBOR Receive 5.00 12/17/28 100,000 (29,345) Merrill Lynch 3-Month USD LIBOR Receive 5.00 12/17/28 100,000 (32,250) Capital Services, Inc. Goldman Sachs Group 6-Month EUR LIBOR Pay 4.50 3/18/14 300,000 29,128 Goldman Sachs Group 3-Month USD LIBOR Pay 4.00 12/17/13 100,000 10,712 Goldman Sachs Group 6-Month GBP Pay 4.50 9/17/11 600,000 43,305 LIBOR Deutsche Bank 6-Month GBP Pay 5.00 3/18/11 100,000 8,331 LIBOR Morgan Stanley 3-Month USD LIBOR Pay 5.00 12/17/18 282,000 57,871 Capital Services Inc. Royal Bank of 6-Month GBP Pay 5.00 3/18/14 100,000 14,781 Scotland PLC LIBOR Barclays Bank PLC 3-Month USD LIBOR Pay 4.00 6/17/10 4,300,000 95,362 Royal Bank of 3-Month USD LIBOR Pay 4.00 6/17/10 1,400,000 23,390 Scotland PLC 242 The Allianz Variable Insurance Products Trust - Statement of Additional Information Credit Suisse 3-Month USD LIBOR Receive 5.00 12/17/28 200,000 (64,289) International Morgan Stanley 6-Month EUR LIBOR Pay 5.50 12/17/10 100,000 7,193 Capital Services Inc. Credit Suisse 3-Month USD LIBOR Receive 4.00 6/17/24 200,000 (3,476) Barclays Bank PLC 6-Month EUR LIBOR Pay 4.50 6/15/10 300,000 6,622 Citibank 6-Month GBP Pay 5.00 3/18/11 100,000 8,166 LIBOR Goldman Sachs Group 6-Month GBP Receive 4.00 6/15/37 100,000 (10,530) LIBOR Bank of America 3-Month USD LIBOR Pay 4.00 12/17/13 400,000 38,988 Citibank 3-Month USD LIBOR Pay 4.00 6/17/14 200,000 3,296 Morgan Stanley 3-Month USD LIBOR Pay 4.00 6/17/14 900,000 12,943 Capital Services Inc. Deutsche Bank 6-Month EUR LIBOR Pay 5.50 9/15/10 200,000 11,430 Barclays Bank PLC 3-Month USD LIBOR Pay 4.00 6/17/14 200,000 2,762 -------------- -------------- $2,104 ============== TARGETPLUS GROWTH FUND Interest Rate Swaps at December 31, 2008: UNREALIZED FLOATING RATE (PAY)/RECEIVE FIXED EXPIRATION NOTIONAL APPRECIATION/ COUNTERPARTY INDEX FLOATING RATE RATE DATE AMOUNT (DEPRECIATION) --------------------- ------------------ ---------------- ------- ---------- ----------- -------------- Morgan Stanley Capital 6-Month GBP Pay 6.00% 9/18/09 $ $2,104 Services Inc. LIBOR 100,000 Deutsche Bank 6-Month EUR Pay 4.00 6/17/10 3,300,000 79,686 LIBOR Citibank 3-Month USD LIBOR Receive 3.00 6/17/29 200,000 12,844 Morgan Stanley Brazil Cetip Pay 12.54 1/2/12 300,000 3,526 Capital Services Interbank Inc. Deposit Rate HSBC Bank USA South African Pay 9.99 11/9/10 500,000 1,183 Johanesburg Interbank Barclays Bank PLC 6-Month EUR Pay 4.00 9/19/17 100,000 10,618 LIBOR UBS AG Brazil Cetip Pay 13.85 1/2/12 100,000 2,359 Interbank Deposit Rate Merrill Lynch 3-Month USD LIBOR Receive 5.00 12/17/38 300,000 (111,626) Capital Services, Inc. Royal Bank of 3-Month USD LIBOR Pay 4.00 6/17/14 100,000 1,481 Scotland PLC Merrill Lynch 3-Month USD LIBOR Pay 5.00 12/17/13 400,000 38,462 Capital Services, Inc. Goldman Sachs Group 6-Month GBP Pay 5.00 3/18/14 100,000 14,490 LIBOR Bank of America 3-Month USD LIBOR Receive 5.00 12/17/28 200,000 (58,690) Merrill Lynch 3-Month USD LIBOR Receive 5.00 12/17/28 100,000 (32,250) 243 The Allianz Variable Insurance Products Trust - Statement of Additional Information Capital Services, Inc. Goldman Sachs Group 6-Month EUR Pay 4.50 3/18/14 200,000 19,418 LIBOR Goldman Sachs Group 3-Month USD LIBOR Pay 4.00 12/17/13 100,000 10,712 Goldman Sachs Group 6-Month GBP Pay 4.50 9/17/11 700,000 50,522 LIBOR Deutsche Bank 6-Month GBP Pay 5.00 3/18/11 100,000 8,331 LIBOR Morgan Stanley 3-Month USD LIBOR Pay 5.00 12/17/18 782,000 160,480 Capital Services Inc. Royal Bank of 3-Month USD LIBOR Pay 5.00 3/18/14 100,000 14,781 Scotland PLC Credit Suisse 3-Month USD LIBOR Receive 5.00 12/17/28 200,000 (64,289) International Morgan Stanley 6-Month EUR Pay 5.50 12/17/10 100,000 7,193 Capital Services LIBOR Inc. Credit Suisse 3-Month USD LIBOR Receive 4.00 6/17/24 200,000 (3,476) Barclays Bank PLC 6-Month EUR Pay 4.50 6/15/10 300,000 6,622 LIBOR Citibank 6-Month GBP Pay 5.00 3/18/11 100,000 8,166 LIBOR Goldman Sachs Group 6-Month GBP Receive 4.00 6/15/37 100,000 (10,530) LIBOR Bank of America 3-Month USD LIBOR Pay 4.00 12/17/13 400,000 38,988 Citibank 3-Month USD LIBOR Pay 4.00 6/17/14 100,000 1,648 Morgan Stanley 3-Month USD LIBOR Pay 4.00 6/17/14 500,000 7,190 Capital Services Inc. Citibank 3-Month USD LIBOR Pay 4.00 6/17/16 100,000 (1,781) Deutsche Bank 6-Month EUR Pay 5.50 9/15/10 200,000 11,433 LIBOR -------------- $229,595 ==============
TARGETPLUS MODERATE FUND Credit Default Swaps at December 31, 2008:
Credit Default Swaps on Corporate and Sovereign Issues UNREALIZED IMPLIED REFERENCE BUY/SELL (PAY)/RECEIVE EXPIRATION NOTIONAL MARKET APPRECIATION/ CREDIT COUNTERPARTY EQUITY PROTECTION FIXED RATE DATE AMOUNT(2) VALUE (DEPRECIATION) SPREAD(3) ----- ---------- -- --------------- ---------- --------------- -------------- ---------- --------------- ----------------- --------- ----- ---------- -- ---------- ---- ------- -- --------- ----- --------- ---- ---------- ---------- ---- ----------- ----- --------- Barclays Gazprom Sell 0.83 6/20/17 $ 80,000 ($ 31,189) $ (31,167) 8.82% Bank
244 The Allianz Variable Insurance Products Trust - Statement of Additional Information
Credit Default Swaps on Credit Indices REFERENCE BUY/SELL (PAY)/RECEIVE EXPIRATION NOTIONAL MARKET UNREALIZED APPRECIATION/ COUNTERPARTY EQUITY PROTECTION FIXED RATE DATE AMOUNT(2) VALUE(4) (DEPRECIATION) ----- ---------- -- --------------- ------------- --------------- -------------- --------------- --------------- ------------------- ----- ---------- -- --------------- ------- ----- --------- ----- --------- ---- ---------- ---- ---------- ---- ----------- ------ Deutsche CDX IG11 Sell 1.50% 12/20/13 $500,000 $(29,958) $(17,612) Bank Future Merrill CDX IG11 Sell 1.50 12/20/13 200,000 (3,994) (2,944) Lynch Future International Barclays CDX EM10 SP Sell 3.35 12/20/13 1,800,000 (269,994) (144,307) Bank Deutsche CDX EM10 SP Sell 3.35 12/20/13 800,000 (119,997) (79,884) Bank Deutsche IG-9 Sell 1.29 12/20/12 100,000 473 516 Bank Future Royal HY-10 Future Sell 5.00 12/20/12 200,000 (31,666) (17,722) Bank of Scotland Goldman CDX IG7 Future Sell 0.65 12/20/16 97,600 (7,125) 626 Sachs Merrill HY-9 Future Sell 3.75 12/20/12 686,000 (120,905) (94,947) Lynch International Barclays HY-10 Future Sell 5.00 6/20/13 400,000 (63,332) (36,443) Bank Credit HY-10 Future Sell 5.00 6/20/13 200,000 (31,666) (18,302) Suisse Bank of HY-8 Future Sell 2.75 6/20/12 303,800 (51,580) (42,979) America Barclays CDX IG10 Buy (1.55) 6/20/13 97,600 2,239 4,362 Bank Future Deutsche CDX IG10 Buy (1.50) 6/20/18 97,600 132 1,874 Bank Future Goldman CDX IG10 Buy (1.50) 6/20/18 97,600 132 980 Sachs Future UBS AG CDX EM9 Future Sell 2.65 6/20/13 400,000 (62,739) (57,371) $6,980,200 $(789,980) $(504,153) (1) If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the related defaulted reference entities and take delivery of the reference entities or (ii) pay a net amount equal to the notional amount of the related defaulted reference entities less their recovery value. If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap 245 The Allianz Variable Insurance Products Trust - Statement of Additional Information agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the related defaulted reference entities and deliver the reference entities or (ii) receive a net amount equal to the notional amount of the related defaulted reference entities less their recovery value. (2) The notional amount represents the maximum potential amount the Fund could be required to make as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. (3) Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues and sovereign issues of an emerging country as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. (4) The market value of credit default swap agreements on credit indices serve as an indicator of the current status of the payment/performance risk for the credit derivative as of the period end. Increasing values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. TARGETPLUS GROWTH FUND Credit Default Swaps at December 31, 2008: Credit Default Swaps on Corporate and Sovereign Issues UNREALIZED IMPLIED REFERENCE BUY/SELL (PAY)/RECEIVE EXPIRATION NOTIONAL MARKET APPRECIATION/ CREDIT COUNTERPARTY EQUITY PROTECTION(I) FIXED RATE DATE AMOUNT(2) VALUE (DEPRECIATION) SPREAD(3) ----- ---------- -- --------------- ------------- --------------- ----------- --------------- ----------- -------------------------- ----- ------------- --------------- ------- ----- --------- ----- --------- - ---------- ---- ---------- ----------- -------------- Morgan Britel NEGB Buy (1.36) 3/20/18 $100,000 $ (73) $ (111) 1.37% Stanley Capital Services Barclays Gazprom Sell 0.83 6/20/17 75,000 (29,240) (29,219) 8.82% Bank $175,000 $(29,313) $(29,330) Credit Default Swaps on Credit Indices REFERENCE BUY/SELL (PAY)/RECEIVE EXPIRATION NOTIONAL MARKET UNREALIZED APPRECIATION/ COUNTERPARTY EQUITY PROTECTION(I) FIXED RATE DATE AMOUNT(2) VALUE(4) (DEPRECIATION) ----- ---------- -- --------------- ------------- --------------- ----------- --------------- ----------- -------------------------- ----- ---------- -- ---------- ---- ------- ----- --------- ----- --------- - ---------- ---- ---------- ----------- ----- -------- Deutsche CDX IG11 Sell 1.50% 12/20/13 $800,000 $(15,977) $(9,274) Bank Future 246 The Allianz Variable Insurance Products Trust - Statement of Additional Information Merrill CDX IG11 Sell 1.50 12/20/13 200,000 (3,994) (2,944) Lynch Future International Barclays CDX EM10 SP Sell 3.35 12/20/13 1,400,000 (209,996) (117,463) Bank Deutsche CDX EM10 SP Sell 3.35 12/20/13 800,000 (119,997) (79,884) Bank Deutsche IG-9 Sell 1.29 12/20/12 100,000 473 516 Bank Future Royal HY-10 Future Sell 5.00 6/20/13 200,000 (31,666) (17,722) Bank of Scotland Goldman CDX IG7 Future Sell 0.65 12/20/16 97,600 (7,125) 626 Sachs Morgan IG-9 Sell 1.34 12/20/12 300,000 1,994 2,128 Stanley Future Capital Services Merrill HY-9 Future Sell 3.75 12/20/12 490,000 (86,361) (46,637) Lynch International Barclays HY-10 Future Sell 5.00 6/20/13 200,000 (31,666) (18,222) Bank Credit HY-10 Future Sell 5.00 6/20/13 200,000 (31,666) (18,302) Suisse Bank of HY-8 Future Sell 2.75 6/20/12 470,400 (79,866) (65,121) America Deutsche CDX IG10 Buy (1.50) 6/20/18 97,600 132 1,874 Bank Future UBS AG CDX EM9 Future Sell 2.65 6/20/13 500,000 $(78,424) (71,712) $5,855,600 $(694,139) $(442,137)
(1) If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the related defaulted reference entities and take delivery of the reference entities or (ii) pay a net amount equal to the notional amount of the related defaulted reference entities less their recovery value. If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the related defaulted reference entities and deliver the reference entities or (ii) receive a net amount equal to the notional amount of the related defaulted reference entities less their recovery value. (2) The notional amount represents the maximum potential amount the Fund could be required to make as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. (3) Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues and sovereign issues of an emerging country as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. 247 The Allianz Variable Insurance Products Trust - Statement of Additional Information (4) The market value of credit default swap agreements on credit indices serve as an indicator of the current status of the payment/performance risk for the credit derivative as of the period end. Increasing values, in absolute termswhen compared to the notional amount of the swap, represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. TARGETPLUS MODERATE FUND Written Swap Options outstanding on December 31, 2008:
PAY/RECEIVE EXERCISE EXPIRATION NUMBER OF FAIR DESCRIPTION COUNTERPARTY FLOATING INDEX RATE DATE CONTRACTS PREMIUM VALUE ------------------------------ --------- --------------- --------- ---------- ------------ ------- ------- Call - OTC 7-Year Interest Royal Bank Rec--3-month 4.90% 7/8/16 (150) $(42,300) $(233,244) Rate Swap of Scotland USD-LIBOR ------- ------- $(42,300) $(233,244) ======= ======= TARGETPLUS GROWTH FUND Written Swap Options outstanding on December 31, 2008: PAY/RECEIVE EXERCISE EXPIRATION NUMBER OF FAIR DESCRIPTION COUNTERPARTY FLOATING INDEX RATE DATE CONTRACTS PREMIUM VALUE ------------------------------ --------- --------------- --------- ---------- ------------ ------- ------- Call - OTC 7-Year Interest Royal Bank Rec---3-month 4.90% 7/8/16 (130) $(36,660) $(202,145) Rate Swap of Scotland USD-LIBOR ------- ------- $(36,660) $(202,145) ======= =======
248 The Allianz Variable Insurance Products Trust - Statement of Additional Information TARGETPLUS GROWTH FUND Securities Sold Short -(0.8)% COUPON EXPIRATION NUMBER OF FAIR UNREALIZED SECURITY DESCRIPTION RATE DATE CONTRACTS PREMIUM VALUE GAIN/LOSS ------------------------------ --------- ---------- --------- ---------- ------------ ------- Federal National Mortgage 5.50% 1/1/39 (500,000) $(505,938) $(512,500) $(6,562) Association - January TBA ---------- ------------ ------- $(512,500) $(505,938) $(6,562) ========== ============ =======
FUTURES CONTRACTS Securities with an aggregate fair value of $1,049,225 have been segregated with the broker to cover margin requirements for the following open contracts as of December 31, 2008. EXPIRATION NUMBER OF UNREALIZED TYPE DATE CONTRACTS APPRECIATION/ DESCRIPTION (DEPRECIATION) S&P 500 Index E-Mini March Futures Long 3/09 196 $208,006 AZL TargetPLUS Equity Fund As of December 31, 2008 the Fund's open foreign currency exchange contracts were as follows: DELIVERY CONTRACT FAIR APPRECIATION/ DATE AMOUNT VALUE (DEPRECIATION) LONG CONTRACTS Received 106,762 British Sterling Pounds in exchange for U.S. Dollars 1/2/2009 $156,972 $ 153,460 $ (3,512) Received 1,568,565 Hong Kong Dollars in exchange for U.S. Dollars 1/2/2009 202,398 202,395 (3) ---------- $ (3,515) ========== AZL PIMCO Fundamental IndexPLUS Total Return Fund As of December 31, 2008 the Fund's open foreign currency exchange contracts were as follows:
DELIVERY CONTRACT FAIR APPRECIATION/ DATE AMOUNT VALUE (DEPRECIATION) LONG CONTRACTS Received 54,000 United Arab Emirates Dirham in exchange for U.S. Dollars 4/16/2009 $14,974 $14,645 $ (329) Received 510,284 Brazilian Real in exchange for U.S. Dollars 6/2/2009 268,218 208,487 (59,731) Received 5,515,337 Chinese Renminbi in exchange for U.S. Dollars 7/15/2009 850,000 795,169 (54,831) Received 1,274,552 Chinese Renminbi in exchange for U.S. Dollars 9/8/2009 183,977 183,515 (462) Received 223,875 European Euro in exchange for U.S. Dollars 1/13/2009 301,531 310,968 9,437 Received 456,800,000 Indonesian Rupiah in exchange for U.S. Dollars 3/31/2009 43,397 40,786 (2,611) 249 The Allianz Variable Insurance Products Trust - Statement of Additional Information Received 14,879,339 Indian Rupee in exchange for U.S. Dollars 4/9/2009 296,620 303,080 6,460 Received 4,894,000 Japanese Yen in exchange for U.S. Dollars 1/8/2009 51,282 54,010 2,728 Received 4,000 Kuwaiti Dinar in exchange for U.S. Dollars 4/16/2009 15,323 14,262 (1,061) Received 644,019 Malaysian Ringgit in exchange for U.S. Dollars 2/12/2009 191,829 186,017 (5,812) Received 247,570 Malaysian Ringgit in exchange for U.S. Dollars 4/14/2009 70,000 71,497 1,497 Received 7,256,090 Philippine Peso in exchange for U.S. Dollars 2/6/2009 157,430 152,162 (5,268) Received 3,871,300 Philippine Peso in exchange for U.S. Dollars 5/6/2009 80,000 80,749 749 Received 3,521,000 Russian Ruble in exchange for U.S. Dollars 5/6/2009 146,224 102,232 (43,992) Received 55,600 Saudi Arabian Riyal in exchange for U.S. Dollars 4/16/2009 15,029 14,811 (218) Received 88,188 Singapore Dollars in exchange for U.S. Dollars 1/16/2009 60,000 61,198 1,198 Received 449,169 Singapore Dollars in exchange for U.S. Dollars 4/14/2009 306,212 311,468 5,256 Received 57,856 Singapore Dollars in exchange for U.S. Dollars 7/30/2009 40,000 40,118 118 ---------- $ (146,872) ========== DELIVERY CONTRACT FAIR APPRECIATION/ DATE AMOUNT VALUE (DEPRECIATION) SHORT CONTRACTS --------------- Delivered 54,000 United Arab Emirates Dirham in exchange for U.S. Dollars 4/16/2009 $14,615 $14,645 $ (30) Delivered 152,000 Australian Dollars in exchange for U.S. Dollars 1/22/2009 98,443 105,660 (7,217) Delivered 368,146 Brazilian Real in exchange for U.S. Dollars 2/3/2009 152,621 155,953 (3,332) Delivered 92,900 Brazilian Real in exchange for U.S. Dollars 6/2/2009 36,575 37,956 (1,381) Delivered 4,269,962 Chinese Renminbi in exchange for U.S. Dollars 7/15/2009 603,936 615,618 (11,682) Delivered 620,000 European Euro in exchange for U.S. Dollars 1/13/2009 783,084 861,194 (78,110) Delivered 592,000 British Sterling Pounds in exchange for U.S. Dollars 1/13/2009 877,557 850,581 26,976 Delivered 456,800,000 Indonesian Rupiah in exchange for U.S. Dollars 3/31/2009 37,341 40,786 (3,445) Delivered 14,879,339 Indian Rupee in exchange for U.S. Dollars 4/9/2009 289,704 303,080 (13,376) Delivered 5,872,857 Japanese Yen in exchange for U.S. Dollars 1/8/2009 62,000 64,813 (2,813) Delivered 4,000 Kuwaiti Dinar in exchange for U.S. Dollars 4/16/2009 14,000 14,262 (262) Delivered 38,691 Malaysian Ringgit in exchange for U.S. Dollars 2/19/2009 10,800 11,174 (374) Delivered 247,570 Malaysian Ringgit in exchange for U.S. Dollars 4/14/2009 67,347 71,497 (4,150) Delivered 605,328 Malaysian Ringgit in exchange for U.S. Dollars 2/12/2009 167,769 174,842 (7,073) Delivered 7,256,090 Philippine Peso in exchange for U.S. Dollars 2/6/2009 145,461 152,162 (6,701) Delivered 3,871,300 Philippine Peso in exchange for U.S. Dollars 5/6/2009 76,690 80,749 (4,059) Delivered 3,521,000 Russian Ruble in exchange for U.S. Dollars 5/6/2009 144,966 102,232 42,734 Delivered 55,600 Saudi Arabian Riyal in exchange for U.S. Dollars 4/16/2009 14,740 14,811 (71) Delivered 88,188 Singapore Dollars in exchange for U.S. Dollars 1/16/2009 59,580 61,198 (1,618) Delivered 449,169 Singapore Dollars in exchange for U.S. Dollars 4/14/2009 300,941 311,469 (10,528) 250 The Allianz Variable Insurance Products Trust - Statement of Additional Information Delivered 57,856 Singapore Dollars in exchange for U.S. Dollars 7/30/2009 38,040 40,118 (2,078) ---------- $(88,590) ========== As of December 31, 2008 the Fund's open future contracts were as follows: FUTURES CONTRACTS EXPIRATION NUMBER OF UNREALIZED DESCRIPTION TYPE DATE CONTRACTS APPRECIATION/ ------------ ----- ---- --------- (DEPRECIATION) Euro Eribor March Futures Long 3/09 3 $31,678 Euro Eribor June Futures Long 6/09 2 22,509 90-Day British Sterling Pound March Futures Long 3/09 30 260,646 90-Day British Sterling Pound June Futures Long 6/09 24 206,759 90-Day British Sterling Pound December Futures Long 12/09 1 5,363 90-Day Eurodollar March Futures Long 3/10 29 214,600 90-Day Eurodollar March Futures Long 3/09 88 591,888 90-Day Eurodollar June Futures Long 6/10 1 5,538 90-Day Eurodollar June Futures Long 6/09 57 313,000 90-Day Eurodollar September Futures Long 9/10 1 5,712 90-Day Eurodollar September Futures Long 9/09 62 447,712 90-Day Eurodollar December Futures Long 12/09 35 246,925 U.S. Treasury 5-Year Note March Futures Long 3/09 42 (24,688) U.S. Treasury 2-Year Note March Futures Long 3/09 5 6,703 U.S. Treasury 10-Year Note March Futures Long 3/09 91 234,656 ---------- $2,569,001 ==========
TOTAL RETURN SWAPS AT DECEMBER 31, 2008:
UNREALIZED RECEIVE EXPIRATION NOTIONAL APPRECIATION/ COUNTERPARTY TOTAL RETURN PAY DATE AMOUNT (DEPRECIATION) Enhanced Merrill Lynch & Co., Inc. RAFI 1000 1-month USD LIBOR Total plus Return Index 0.20% 10/15/09 $493,682 $1,528,959 Enhanced Credit Suisse First Boston RAFI 1000 1-month USD LIBOR Total plus Return Index 0.20% 10/15/09 207,618 796,055 Enhanced Credit Suisse First Boston RAFI 1000 1-month USD LIBOR 1000 Total plus Return Index 0.20% 03/13/09 71,293 449,586 251 The Allianz Variable Insurance Products Trust - Statement of Additional Information Enhanced Merrill Lynch & Co., Inc. RAFI 1000 1-month USD LIBOR Total plus Return Index 0.23% 09/15/09 52,381 (1,722,400) --------------------- $1,052,200
Credit Default Swaps at December 31, 2008
CREDIT DEFAULT SWAPS ON CORPORATE AND SOVEREIGN ISSUES (PAY)/RECEIVE UNREALIZED IMPLIED REFERENCE BUY/SELL FIXED EXPIRATION NOTIONAL MARKET (DEPRECIATION)CREDIT COUNTERPARTY ENTITY PROTECTION RATE DATE AMOUNT(2) VALUE APPRECIATION SPREAD(3) General Citibank Electric Corp. Sell 1.10% 6/20/10 $100,000 $(4,738) $(4,708) 4.50% Barclays General Capital Electric Corp. Sell 0.85 6/20/10 100,000 (5,088) (5,064) 4.50% General 9 BNP Paribas Electric Corp. Sell 1.10 12/20/0 200,000 (6,550) (6,451) 4.55% Deutsche Bank General Group Electric Corp. Sell 1.02 6/20/10 100,000 (4,850) (4,822) 4.50% General Goldman Sachs Electric Corp. Sell 8.90 3/20/13 100,000 (73,411) (73,114) 79.34% Berkshire Deutsche Bank Hathaway Group Finance Cor Sell 0.88 3/20/13 3,000,000 (264,675) (263,795) 3.30% Credit Suisse First Federal Republic of Boston Panama Sell 0.30 2/20/09 700,000 (2,048) (2,048) 2.38% Government of Morgan Stanley Ukraine Sell 0.61 2/20/09 400,000 (19,636) (19,636) 36.42% Federal Barclays Republic of Capital Indonesia Sell 0.37 3/20/09 700,000 (5,715) (5,715) 4.13% Federal Republic of Morgan Stanley Peru Sell 0.31 3/20/09 300,000 (524) (258) 1.11% General Motors Goldman Sachs Corp. Sell 9.05 3/20/13 100,000 (73,254) (72,953) 79.34% General Motors Goldman Sachs Corp. Sell 5.00 6/20/13 800,000 (622,608)(479,275) 77.71% General Motors Merrill Lynch Corp. Sell 1.08 12/20/09 200,000 (6,512) (6,489) 4.55% -------- -------- --------- $6,800,000 $(1,089,609)$(944,328) ======== ======== ========= 252 The Allianz Variable Insurance Products Trust - Statement of Additional Information CREDIT DEFAULT SWAPS ON CREDIT INDICES (PAY)/RECEIVE UNREALIZED REFERENCE BUY/SELL FIXED EXPIRATION NOTIONAL MARKET (DEPRECIATION) COUNTERPARTY ENTITY PROTECTION RATE DATE AMOUNT(2) VALUE APPRECIATION Deutsche Bank CDX IG11 Group Future Sell 1.50% 12/20/13 $200,000 $(3,994) $ 567 HY 8 Year 100 Citibank 25-35% Future Sell 2.14 6/20/12 500,000 (85,422)(85,065) Morgan IG-9 10 Year Stanley Future Buy (0.80) 12/20/17 97,600 4,983 (3,850) Deutsche Bank IG9 5 Year Group 30-100% Future Sell 0.71 12/20/12 388,914 2,151 2,243 Goldman IG9 10 Year Sachs 30-100% Future Sell 0.55 12/20/17 97,228 531 546 ------- ------- --------- $1,283,742 $(81,751) $(85,559) ======= ======= =========
(1) If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the related defaulted reference entities and take delivery of the reference entities or (ii) pay a net amount equal to the notional amount of the related defaulted reference entities less their recovery value. If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the related defaulted reference entities and deliver the reference entities or (ii) receive a net amount equal to the notional amount of the related defaulted reference entities less their recovery value. (2) The notional amount represents the maximum potential amount the Fund could be required to make as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement (3) Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues and sovereign issues of an emerging country as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. (4) The market value of credit default swap agreements on credit indices serve as an indicator of the current status of the payment/performance risk for the credit derivative as of the period end. Increasing values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. 253 The Allianz Variable Insurance Products Trust - Statement of Additional Information
FLOATING RATE (PAY)/RECEIVE FIXED EXPIRATION NOTIONAL UNREALIZED COUNTERPARTY INDEX FLOATING RATE RATE DATE AMOUNT APPRECIATION/(DEPRECIATION) ------------ ----- ------------- ---- ---- ------ -------------------------- Brazil Cetip Interbank Morgan Stanley Deposit Rate Pay 12.78% 1/4/10 $300.000 $ (827) Brazil Cetip Union Bank of Interbank Switzerland Deposit Rate Pay 12.41 1/4/10 200,000 821 Credit Suisse First Boston 6-Month GBP LIBOR Pay 5.00 6/15/09 100,000 3,560 Barclays Capital 6-Month GBP LIBOR Pay 6.00 3/20/09 300,000 (2,583) Royal Bank of Scotland 6-Month GBP LIBOR Receive 4.00 12/15/36 100,000 (37,565) Brazil Cetip Merrill Lynch Interbank & Co. Deposit Rate Pay 12.95 1/4/10 100,000 8,413 Goldman Sachs Group 6-Month GBP LIBOR Pay 5.00 6/15/09 600,000 20,855 Barclays Capital 6-Month GBP LIBOR Pay 5.00 6/15/09 300,000 12,381 Brazil Cetip Barclays Interbank Capital Deposit Rate Pay 11.36 1/4/10 300,000 1,691 Brazil Cetip Goldman Sachs Interbank Group Deposit Rate Pay 11.470 1/4/10 100,000 1,734 Brazil Cetip Merrill Lynch Interbank & Co. Deposit Rate Pay 11.43 1/4/10 200,000 3,429 254 The Allianz Variable Insurance Products Trust - Statement of Additional Information Royal Bank of Scotland 6-Month GBP LIBOR Pay 6.00 3/20/09 200,000 (1,815) Brazil Cetip Interbank Morgan Stanley Deposit Rate Pay 12.67 1/4/10 200,000 1,080 Brazil Cetip Union Bank of Interbank Switzerland Deposit Rate Pay 10.58 1/2/12 400,000 3,931 Brazil Cetip Merrill Lynch Interbank & Co. Deposit Rate Pay 11.98 1/2/12 400,000 1,095 Citibank 3-Month USD LIBOR Receive 3.00 6/17/29 500,000 32,109 Brazil Cetip Barclays Interbank Capital Deposit Rate Pay 12.54 1/2/12 200,000 1,179 Brazil Cetip Union Bank of Interbank Switzerland Deposit Rate Pay 12.54 1/2/12 200,000 (53) Brazil Cetip Merrill Lynch Interbank & Co. Deposit Rate Pay 12.54 1/2/12 400,000 1,980 Deutsche Bank AG 3-Month USD LIBOR Receive 3.00 6/17/29 1,200,000 48,725 3-Month Union Bank of Australian Bank Switzerland Bill Rate Pay 7.50 3/15/10 100,000 3,218 Royal Bank of Scotland 3-Month USD LIBOR Receive 3.00 6/17/29 300,000 7,686 3-Month Union Bank of Australian Bank Switzerland Bill Rate Pay 7.00 6/15/10 2,400,000 50,536 255 The Allianz Variable Insurance Products Trust - Statement of Additional Information Merrill Lynch & Co. 3-Month USD LIBOR Receive 5.00 12/17/38 800,000 (287,029) Morgan Stanley 3-Month USD LIBOR Receive 5.00 12/17/38 2,300,000 (1,095,673) Merrill Lynch & Co. 3-Month USD LIBOR Pay 4.00 6/17/11 800,000 18,258 Morgan Stanley 3-Month USD LIBOR Receive 5.00 12/17/28 100,000 (32,689) Deutsche Bank AG 6-Month GBP LIBOR Receive 4.00 12/15/36 300,000 (133,838) Royal Bank of Scotland 3-Month USD LIBOR Pay 4.00 6/17/11 3,000,000 31,089 Deutsche Bank AG 3-Month USD LIBOR Pay 4.00 6/17/11 100,000 1,385 Bank of America 3-Month USD LIBOR Receive 5.00 12/17/28 200,000 (69,633) Royal Bank of Scotland 3-Month USD LIBOR Receive 5.00 12/17/28 100,000 (34,397) Citibank North America 3-Month USD LIBOR Receive 5.00 12/17/38 1,200,000 (565,473) 6-Month Union Bank of Australian Bank Switzerland Bill Rate Pay 7.50 3/15/11 700,000 31,060 Bank of America 3-Month USD LIBOR Receive 5.00 12/17/38 500,000 (210,152) Royal Bank of Scotland 3-Month USD LIBOR Receive 5.00 12/17/38 5,000,000 (1,736,515) HSBC Bank USA 6-Month GBP LIBOR Pay 5.00 9/17/13 200,000 19,412 Goldman Sachs Group 6-Month GBP LIBOR Pay 6.00 6/19/09 1,500,000 35,581 256 The Allianz Variable Insurance Products Trust - Statement of Additional Information Goldman Sachs Group 6-Month GBP LIBOR Receive 5.50 12/15/36 100,000 (40,909) BNP Paribas 6-Month EUR LIBOR Pay 4.50 3/18/14 200,000 18,678 Deutsche Bank AG 3-Month USD LIBOR Receive 5.00 12/17/38 900,000 (418,511) Royal Bank of Scotland 3-Month USD LIBOR Pay 4.00 6/17/10 1,100,000 31,341 Barclays Capital 3-Month USD LIBOR Pay 4.00 12/16/10 200,000 4,336 Royal Bank of Scotland 6-Month GBP LIBOR Pay 5.25 3/18/14 100,000 14,001 Goldman Sachs Group 6-Month GBP LIBOR Pay 5.25 3/18/14 100,000 13,943 Morgan Stanley 3-Month USD LIBOR Pay 4.00 6/17/10 800,000 23,064 -------------------- (4,221,091) ====================
257 The Allianz Variable Insurance Products Trust - Statement of Additional Information WRITTEN OPTIONS OUTSTANDING ON DECEMBER 31, 2008: EXERCISE EXPIRATION NUMBER OF FAIR SECURITY DESCRIPTION PRICE DATE CONTRACTS PREMIUM VALUE -------------------- ----- ---- --------- ------- ----- Put - IMM Eurodollar Time Deposit March Future $98 3/17/09 (4) $(1,115) $(225) Put - IMM Eurodollar Time Deposit March Future 98 3/17/09 (3) (1,329) (263) Put - IMM Eurodollar Time Deposit March Future 99 3/17/09 (7) (1,008) (1,006) Put - CBOT U.S. 5 Year Treasury Note February Future 118 2/21/09 (7) (4,022) (5,961) Put - CBOT U.S. 10 Year Treasury Note March Future 124 2/21/09 (3) (3,649) (4,921) ------- ------- $(11,123)$(12,376) ======= ======= 258 The Allianz Variable Insurance Products Trust - Statement of Additional Information
WRITTEN SWAP OPTIONS OUTSTANDING ON DECEMBER 31, 2008: PAY/RECEIVE EXERCISE EXPIRATION NUMBER OF FAIR DESCRIPTION COUNTERPARTY FLOATING INDEX RATE DATE CONTRACTS PREMIUM VALUE ----------- ------------ --------------- ---- ---- --------- ------- ----- Call---OTC 7-Year Barclay's Rec---3-month Interest Rate Swap Capital USD-LIBOR 4.60% 2/2/09 (100) $(32,100)$(143,912) Call---OTC 7-Year Royal Bank Rec---3-month Interest Rate Swap of Scotland USD-LIBOR 4.25 2/2/09 (220) (66,330) (266,818) Call---OTC 5-Year Barclay's Rec---3-month Interest Rate Swap Capital USD-LIBOR 4.15 8/3/09 (60) (15,060) (52,563) Call---OTC 7-Year Royal Bank Rec---3-month Interest Rate Swap of Scotland USD-LIBOR 4.40 8/3/09 (200) (65,040) (247,528) Call---OTC 5-Year Merrill Rec---3-month Interest Rate Swap Lynch USD-LIBOR 4.40 8/3/09 (260) (85,800) (321,786) Call---OTC 5-Year Barclay's Pay--3-month Interest Rate Swap Capital USD LIBOR 2.75 5/22/09 (50) (3,612) (5,189) ------- -------- $(267,942) $(1,037,795) ======= ========
259 The Allianz Variable Insurance Products Trust - Statement of Additional Information
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) AZL AZL PIMCO PIMCO FUNDAMENENTAL FUNDAMNENTAL AZL AZL INDEXPLUS AZL S&P AZL AZL INDEXPLUS TARGETPLUS TARGETPLUS TOTAL PRO FORMA 500 TARGETPLUS TARGETPLUS TOTAL PRO AZL S&P 500 EQUITY DOUBLE PLAY RETURN SECURITY INDEX EQUITY DOUBLE RETURN FORMA INDEX FUND FUND FUND FUND DESCRIPTION FUND FUND PLAY FUND FUND SHARES COMBINED SHARES OR SHARES OR OR SHARES OR COMBINED SHARES OR PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL FAIR FAIR FAIR FAIR PRINCIPAL AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT VALUE VALUE FAIR VALUE VALUE VALUE --------------- -------- ---------- ---------- ----------- ----------------- ---------- -------- ------------ --------- ------- --------------- -------- ---------- ---------- ----------- ----------------- ---------- -------- ------------ --------- ------- ASSET BACKED SECURITIES (1.7%): $- $- $- $600,000 Access Group, $600,000 Inc., Series 2008-1, Class A, 4.84%, $- $- $- $551,743 $551,743 10/27/25(a)+ - - - 24,052 24,052 Accredited Mortgage Loan Trust, Series 06-2, Class A1, 0.51%, 9/25/36(a)+ - - - 23,557 23,557 - - - 58,075 58,075 ACE Securities Corp Home Equity Loan Trust, Series 06-HE4, Class A2A, 0.53%, - - - 52,563 52,563 10/25/36(a)+ - - - 16,833 16,833 ACE Securities Corp Home Equity Loan Trust, Series 06-ASP5, Class A2A, 0.55%, - - - 16,261 16,261 10/25/36(a)+ - - - 181,784 181,784 Amortizing Residential Collateral Trust, Series 01-BC6, Class A, 1.17%, - - - 165,853 165,853 10/25/31(a)+ - - - 8,659 8,659 Argent Securities, Inc., Series 06-M2, Class A2A, 0.52%, - - - 8,499 8,499 9/25/36(a)+ - - - 22,973 22,973 Asset Backed Funding Certificates, Series 06-OPT2, Class A3A, 260 The Allianz Variable Insurance Products Trust - Statement of Additional Information 0.53%, - - - 22,357 22,357 10/25/36(a)+ - - - 33,966 33,966 Asset Backed Funding Certificates, Series 06-HE1, Class A2A, 0.53%, - - - 29,343 29,343 1/25/37(a)+ - - - 21,014 21,014 Asset Backed Securities Corp. Home Equity Loan Trust, Series 04-HE6, Class A1, 0.75%, - - - 16,460 16,460 9/25/34(a)+ - - - 700,000 700,000 Bank of America Credit Card Trust, Series 2007-A9, Class A9, 1.24%, - - - 572,337 572,337 11/17/14(a)+ - - - 240,666 240,666 Carrington Mortgage Loan Trust, Series 06-NC5, Class A1, 0.52%, - - - 213,972 213,972 1/25/37(a)+ - - - 200,000 200,000 Chase Issuance Trust, Series 06-A3, Class A3, 1.19%, - - - 196,352 196,352 7/15/11(a)+ - - - 600,000 600,000 Chase Issuance Trust, Series 2008-A10, Class A10, 1.95%, - - - 473,625 473,625 8/17/15(a)+ - - - 1,000,000 1,000,000 Chase Issuance Trust, Series 2008-A13, Class A13, 3.50%, - - - 822,500 822,500 9/15/15(a)+ - - - 496,429 496,429 Citigroup Mortgage Loan 261 The Allianz Variable Insurance Products Trust - Statement of Additional Information Trust, Inc., Series 06-WFH3, Class A2, 0.57%, - - - 455,045 455,045 10/25/36(a)+ - - - 460,005 460,005 Countrywide Asset-Backed Certificates, Series 2006-06, Class 2A2, 0.65%, - - - 365,015 365,015 9/25/36(a)+ - - - 33,546 33,546 Countrywide Asset-Backed Certificates, Series 06-19, Class 2A1, 0.53%, - - - 32,343 32,343 3/25/37(a)+ - - - 71,310 71,310 Countrywide Asset-Backed Certificates, Series 06-21, Class 2A1, 0.52%, - - - 64,016 64,016 5/25/37(a)+ - - - 267,333 267,333 Countrywide Asset-Backed Certificates, Series 06-23, Class 2A1, 0.52%, - - - 239,987 239,987 11/25/37(a)+ - - - 25,104 25,104 Countrywide Asset-Backed Certificates, Series 06-15, Class A1, 0.58%, - - - 23,661 23,661 10/25/46(a)+ - - - 12,047 12,047 Countrywide Asset-Backed Certificates, Series 06-16, Class 2A1, 0.52%, - - - 11,676 11,676 12/25/46(a)+ - - - 39,837 39,837 Countrywide Asset-Backed Certificates, 262 The Allianz Variable Insurance Products Trust - Statement of Additional Information Series 06-17, Class 2A1, 0.52%, - - - 38,490 38,490 3/25/47(a)+ - - - 41,964 41,964 Countrywide Asset-Backed Certificates, Series 06-22, Class 2A1, 0.52%, - - - 38,813 38,813 5/25/47(a)+ - - - 296,288 296,288 Countrywide Asset-Backed Certificates, Series 06-24, Class 2A1, 0.52%, - - - 258,715 258,715 6/25/47(a)+ - - - 42,472 42,472 Credit-Based Asset Servicing and Securitization, Series 06-CB9, Class A1, 0.53%, - - - 36,870 36,870 11/25/36(a)+ - - - 60,785 60,785 First Franklin Mortgage Loan Asset Backed Certificates, Series 06-FF9, Class 2A1, 0.53%, - - - 59,097 59,097 6/25/36(a)+ - - - 48,556 48,556 Fremont Home Loan Trust, Series 06-E, Class 2A1, 0.53%, - - - 42,355 42,355 1/25/37(a)+ - - - 141,962 141,962 GE-WMC Mortgage Securities, LLC, Series 06-1, Class A2A, 0.51%, - - - 133,395 133,395 8/25/36(a)+ - - - 36,730 36,730 GSAMP Trust, Series 06-FM2, Class A2A, 263 The Allianz Variable Insurance Products Trust - Statement of Additional Information 0.54%, - - - 35,295 35,295 9/25/36(a)+ - - - 34,212 34,212 Household Home Equity Loan Trust, Series 06-4, Class A1V, 0.58%, - - - 32,241 32,241 3/20/36(a)+ - - - 38,726 38,726 HSI Asset Securitization Corp. Trust, Series 06-HE2, Class 2A1, 0.52%, - - - 33,684 33,684 12/25/36(a)+ - - - 27,158 27,158 Indymac Residential Asset Backed Trust, Series 06-E, Class 2A1, 0.53%, - - - 25,341 25,341 4/25/37(a)+ - - - 19,150 19,150 J.P. Morgan Mortgage Acquisition Corp., Series 06-WMC3, Class A2, 0.52%, - - - 17,800 17,800 8/25/36(a)+ - - - 255,097 255,097 J.P. Morgan Mortgage Acquisition Corp., Series 06-CH2, Class AV2, 0.52%, - - - 226,946 226,946 10/25/36(a)+ - - - 57,208 57,208 Lehman XS Trust, Series 06-17, Class WF11, 0.59%, - - - 53,773 53,773 11/25/36(a)+ - - - 8,885 8,885 Lehman XS Trust, Series 06-9, Class A1A, 0.54%, - - - 8,483 8,483 5/25/46(a)+ - - - 43,256 43,256 Lehman XS Trust, 264 The Allianz Variable Insurance Products Trust - Statement of Additional Information Series 06-11, Class 1A1, 0.55%, - - - 41,520 41,520 6/25/46(a)+ - - - 77,283 77,283 Lehman XS Trust, Series 06-16N, Class A1A, 0.55%, - - - 66,144 66,144 11/25/46(a)+ - - - 3,092 3,092 Long Beach Mortgage Loan Trust, Series 04-4, Class 1A1, 0.75%, - - - 1,046 1,046 10/25/34(a)+ - - - 147,956 147,956 Long Beach Mortgage Loan Trust, Series 06-9, Class 2A1, 0.53%, - - - 140,558 140,558 10/25/36(a)+ - - - 484,705 484,705 Massachusetts Educational Financing Authority, Series 2008-1, Class A1, 4.49%, - - - 367,845 367,845 4/25/38(a)+ - - - 57,481 57,481 Master Asset Backed Securities Trust, Series 06-HE5, Class A1, 0.53%, - - - 53,674 53,674 11/25/36(a)+ - - - 88,413 88,413 Merrill Lynch Mortgage Investors Trust, Series 06-FF1, Class A2A, 0.54%, - - - 83,065 83,065 8/25/36(a)+ - - - 103,557 103,557 Park Place Securities, Inc., Series 04-MCW1, Class A1, 265 The Allianz Variable Insurance Products Trust - Statement of Additional Information 0.78%, - - - 74,158 74,158 10/25/34(a)+ - - - 48,033 48,033 Residential Asset Mortgage Products, Inc., Series 06-RZ4, Class A1A, 0.55%, - - - 44,546 44,546 10/25/36(a)+ - - - 14,447 14,447 Residential Asset Securities Corp., Series 06-KS8, Class A1, 0.53%, - - - 14,228 14,228 10/25/36(a)+ - - - 38,731 38,731 Residential Asset Securities Corp., Series 06-KS9, Class AI1, 0.54%, - - - 37,135 37,135 11/25/36(a)+ - - - 16,785 16,785 Saxon Asset Securities Trust, Series 06-3, Class A1, 0.53%, 10/25/46(a)+ - - - 15,951 15,951 - - - 32,657 32,657 SBI Heloc Trust, Series 06-A1, Class 1A2A, 0.64%, - - - 30,256 30,256 8/25/36(a) (b)+ - - - 6,615 6,615 SLM Student Loan Trust, Series 05-5, Class A1, 3.54%, - - - 6,599 6,599 1/25/18(a)+ - - - 1,000,000 1,000,000 SLM Student Loan Trust, Series 2008-9, Class A, 5.04%, - - - 937,220 937,220 4/25/23(a)+ - - - 140,453 140,453 Soundview Home Equity Loan 266 The Allianz Variable Insurance Products Trust - Statement of Additional Information Trust, Series 06-EQ2, Class A1, 0.55%, - - - 133,072 133,072 1/25/37(a)+ - - - 17,135 17,135 Wells Fargo Home Equity Trust, Series 06-3, Class A1, 0.52%, - - - 16,487 16,487 1/25/37(a)+ Total Asset Backed Securities ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- (Cost $8,506,586) - - - 7,461,967 7,461,967 ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- COLLATERALIZED MORTGAGE OBLIGATIONS (1.0%): - - - 100,000 100,000 Banc of America Commercial Mortgage, Inc., Series 2006-2, Class A4, 5.74%, - - - 81,674 81,674 5/10/45(a)+ - - - 158,536 158,536 Banc of America Funding Corp., 6.13%, - - - 85,214 85,214 1/20/47(a)+ - - - 41,942 41,942 Bear Stearns Adjustable Rate Mortgage Trust, Series 2004-9 Class 22A1, 4.79%, - - - 31,579 31,579 11/25/34(a)+ - - - 175,514 175,514 Bear Stearns Adjustable Rate Mortgage Trust, Series 2004-8, Class 2A1, 5.11%, - - - 162,860 162,860 11/25/34(a)+ - - - 50,271 50,271 Bear Stearns Adjustable Rate Mortgage Trust, Series 2004-10, Class 22A1, 267 The Allianz Variable Insurance Products Trust - Statement of Additional Information 4.96%, - - - 37,861 37,861 1/25/35(a)+ - - - 371,231 371,231 Bear Stearns Adjustable Rate Mortgage Trust, Series 2005-2, Class A2, 4.13%, - - - 289,102 289,102 3/25/35(a)+ - - - 49,714 49,714 Bear Stearns Alt-A Trust, 5.50%, - - - 23,121 23,121 9/25/35(a)+ - - - 108,622 108,622 Bear Stearns Mortgage Funding Trust, Series 07-AR1, Class 2A1, 0.54%, - - - 83,927 83,927 2/25/37(a)+ - - - 101,954 101,954 Countrywide Home Loans, Series 2004-22, Class A3, 4.79%, - - - 63,426 63,426 11/25/34(a)+ - - - 178,677 178,677 Countrywide Home Loans, Series 2004-HYB9, Class 1A1, 4.73%, - - - 111,005 111,005 2/20/35(a)+ - - - 400,000 400,000 Credit Suisse Mortgage Capital Certificates, Series 2007-C5, Class A4, 5.70%, - - - 264,573 264,573 9/15/40(a)+ - - - 68,835 68,835 Fannie Mae, Series 06-118, Class A1, 268 The Allianz Variable Insurance Products Trust - Statement of Additional Information 0.53%, - - - 60,496 60,496 12/25/36(a)+ - - - 112,975 112,975 First Horizon Mortgage Pass- Through Trust, Series 2005-AR3, Class 2A1, 5.35%, - - - 79,979 79,979 8/25/35(a)+ - - - 145,473 145,473 Freddie Mac, Series 3335, Class BF, 1.35%, - - - 141,247 141,247 7/15/19(a)+ - - - 85,234 85,234 Freddie Mac, Series 3149, Class LF, 1.50%, - - - 81,485 81,485 5/15/36(a)+ - - - 71,983 71,983 Greenpoint Mortgage Funding Trust, Series 06-AR8, Class 1A1A, 0.55%, - - - 66,192 66,192 1/25/47(a)+ - - - 69,878 69,878 Greenpoint Mortgage Pass- Through Certificates, Series 2003-1, Class A1, 5.51%, - - - 53,988 53,988 10/25/33(a)+ - - - 157,763 157,763 GS Mortgage Securities Corp. II, Series 2007-EOP Class A1, 1.97%, - - - 116,055 116,055 3/6/20(a) (b)+ - - - 80,644 80,644 GSR Mortgage Loan Trust, Series 2005-AR7, Class 6A1, 269 The Allianz Variable Insurance Products Trust - Statement of Additional Information 5.25%, - - - 59,996 59,996 11/25/35(a)+ - - - 24,614 24,614 Harborview Mortgage Loan Trust, Series 05-2, Class 2A1A, 0.80%, - - - 11,464 11,464 5/19/35(a)+ - - - 107,425 107,425 Harborview Mortgage Loan Trust, Series 2005-4, Class 3A1, 5.14%, - - - 58,381 58,381 7/19/35(a)+ - - - 62,323 62,323 Indymac Index Mortgage Loan Trust, Series 2004-AR5, Class B1, 5.06%, - - - 42,732 42,732 12/25/34(a)+ - - - 19,320 19,320 Indymac Index Mortgage Loan Trust, Series 06-AR35, Class 2A2, 0.57%, - - - 18,263 18,263 1/25/37(a)+ - - - 300,000 300,000 JP Morgan Chase Commercial Mortgage Securities Trust, Series 2007-LDPX, Class A3, 5.42%, 1/15/49+ - - - 212,090 212,090 - - - 100,000 100,000 JP Morgan Chase Commercial Mortgage Securities Trust, 270 The Allianz Variable Insurance Products Trust - Statement of Additional Information Series 2007-LD12, Class A4, 5.88%, - - - 71,115 71,115 2/15/51(a)+ - - - 121,976 121,976 JP Morgan Mortgage Trust, Series 2005-A1, Class 6T1, 5.02%, - - - 91,514 91,514 2/25/35(a)+ - - - 12,171 12,171 LB-UBS Commercial Mortgage Trust, Series 02-C2, Class A2, 4.90%, - - - 12,121 12,121 6/15/26(a)+ - - - 11,096 11,096 Lehman Brothers Commercial Mortgage Trust, Series 06-LLFA, Class A1, 1.28%, - - - 8,286 8,286 9/15/21(a) (b)+ - - - 32,523 32,523 MASTR Adjustable Rate Mortgages Trust, Series 2004-13, Class 3A4, 3.79%, - - - 31,562 31,562 11/21/34(a)+ - - - 216,045 216,045 Merrill Lynch Floating Trust, Series 06-1, Class A1, 1.27%, - - - 163,882 163,882 6/15/22(a) (b)+ - - - 61,290 61,290 Merrill Lynch Mortgage Investors Trust, Series 2005-A10, Class A, 0.68%, - - - 32,608 32,608 2/25/36(a)+ - - - 100,000 100,000 Merrill Lynch/Countrywide 271 The Allianz Variable Insurance Products Trust - Statement of Additional Information Commercial Mortgage Trust, Series 2007-6, Class A4, 5.49%, 3/12/51+ - - - 68,848 68,848 - - - 26,445 26,445 MLCC Mortgage Investors, Inc., Series 2005-2, Class 3A, 1.34%, - - - 19,636 19,636 10/25/35(a)+ - - - 19,084 19,084 MLCC Mortgage Investors, Inc., Series 2005-3, Class 4A, 0.72%, - - - 13,671 13,671 11/25/35(a)+ - - - 900,000 900,000 Morgan Stanley Capital I Trust, Series 2007-IQ15, Class A4, 5.88%, - - - 666,786 666,786 6/11/49(a)+ - - - 56,581 56,581 Structured Asset Mortgage Investments, Inc., Series 2005-AR5, Class A2, 0.83%, - - - 42,527 42,527 7/19/35(a)+ - - - 60,600 60,600 Thornburg Mortgage Securities Trust, Series 06-6, Class A1, 0.58%, 11/25/46(a)+ - - - 50,241 50,241 - - - 201,837 201,837 Thornburg Mortgage Securities Trust, Series 06-5, Class A1, 0.59%, 272 The Allianz Variable Insurance Products Trust - Statement of Additional Information 9/25/46(a)+ - - - 167,253 167,253 - - - 149,851 149,851 Wachovia Bank Commercial Mortgage Trust, 1.28%, - - - 106,006 106,006 6/15/20(a) (b)+ - - - 274,465 274,465 Wachovia Bank Commercial Mortgage Trust, Series 06-WL7A, Class A1, 1.29%, - - - 209,499 209,499 9/15/21(a) (b)+ - - - 2,574 2,574 Washington Mutual Mortgage Pass-Through Certificates, Series 06-AR11, Class A1B1, 0.76%, - - - 2,533 2,533 8/25/45(a)+ - - - 69,549 69,549 Washington Mutual Mortgage Pass-Through Certificates, Series 06-AR11, Class 2A, 4.63%, - - - 37,857 37,857 9/25/46(a)+ - - - 213,547 213,547 Washington Mutual Mortgage Pass-Through Certificates, Series 06-AR13, Class 2A, 4.63%, - - - 116,291 116,291 10/25/46(a)+ - - - 73,795 73,795 Washington Mutual Mortgage Pass-Through Certificates, Series 06-AR19, Class 1A1A, 273 The Allianz Variable Insurance Products Trust - Statement of Additional Information 2.99%, - - - 37,587 37,587 1/25/47(a)+ - - - 118,418 118,418 Wells Fargo Mortgage Back Securities Trust, Series 2004-CC, Class A1, 4.96%, - - - 91,792 91,792 1/25/35(a)+ Total Collateralized Mortgage Obligations ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- (Cost $5,657,830) - - - 4,278,325 4,278,325 ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- COMMON STOCKS (81.7%): Aerospace & Defense (1.8%): - 2,121 5,486 - 7,607 Axsys - 116,358 300,962 - 417,320 Technologies, Inc.* - 5,864 - - 5,864 American - 433,702 - - 433,702 Science & Engineering, Inc. 23,051 - - - 23,051 Boeing Co. (The) 983,586 - - - 983,586 12,256 - - - 12,256 General 705,823 - - - 705,823 Dynamics Corp. 3,844 - - - 3,844 Goodrich Corp. 142,305 - - - 142,305 22,837 - - - 22,837 Honeywell 749,739 - - - 749,739 International, Inc. 3,743 - - - 3,743 L-3 276,158 - - - 276,158 Communications Holdings, Inc. 10,472 - - - 10,472 Lockheed Martin 880,486 - - - 880,486 Corp. 10,270 - - - 10,270 Northrop 462,561 - - - 462,561 Grumman Corp. 4,370 - - - 4,370 Precision 259,927 - - - 259,927 Castparts Corp. 13,017 - - - 13,017 Raytheon Co. 664,388 - - - 664,388 4,954 - - - 4,954 Rockwell 193,652 - - - 193,652 Collins, Inc. 29,917 - - - 29,917 United 1,603,551 - - - 1,603,551 Technologies Corp. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 6,922,176 550,060 300,962 - 7,773,198 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 274 The Allianz Variable Insurance Products Trust - Statement of Additional Information Air Freight & Logistics (0.7%): 5,306 - - - 5,306 C.H. Robinson 291,989 - - - 291,989 Worldwide, Inc. 6,641 - - - 6,641 Expeditors - - - - - International of Washington, Inc. 220,946 - - - 220,946 9,783 - - - 9,783 FedEx Corp. 627,580 - - - 627,580 31,320 - - - 31,320 United Parcel - - - - - Service, Inc., Class B 1,727,611 - - - 1,727,611 ---------- -------- ------------ ------------------ ---------- -------- ------------ ------------------ 2,868,126 - - - 2,868,126 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Airline (0.2%): - 699,000 - - 699,000 Cathay Pacific - 788,268 - - 788,268 Airways, Ltd. 23,151 - - - 23,151 Southwest 199,562 - - - 199,562 Airlines Co. ---------- -------- ------------ --------- ------- ---------- -------- ------------ --------- ------- Auto Components 199,562 788,268 - - 987,830 (0.7%): ---------- -------- ------------ --------- ------- ---------- -------- ------------ --------- ------- - 543,619 - - 543,619 GKN plc . - 769,508 - - 769,508 8,672 - - - 8,672 Goodyear Tire & 51,772 - - - 51,772 Rubber Co.* 18,646 - - - 18,646 Johnson 338,611 - - - 338,611 Controls, Inc. 45,415 117,531 - 162,946 Superior - 477,766 1,236,426 - 1,714,192 Industries International, Inc. ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- 390,383 1,247,274 1,236,426 - 2,874,083 ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- Automobiles (0.3%): - 12,704 - - 12,704 DaimlerChrysler - 486,309 - - 486,309 AG . 74,704 - - - 74,704 Ford Motor Co.* 171,072 - - - 171,072 20,339 - - - 20,339 General Motors 65,085 - - - 65,085 Corp. 7,259 - - - 7,259 Harley-Davidson, 123,185 - - - 123,185 Inc. - 18,574 - - 18,574 Honda Motor - 396,369 - - 396,369 Co., Ltd., ADR 275 The Allianz Variable Insurance Products Trust - Statement of Additional Information ---------- -------- ------------ -------- -------- ---------- -------- ------------ -------- -------- 359,342 882,678 - - 1,242,020 ---------- -------- ------------ -------- -------- ---------- -------- ------------ -------- -------- Beverages (1.5%): 3,065 - - - 3,065 Brown-Forman 157,817 - - - 157,817 Corp., Class B 62,637 - - - 62,637 Coca-Cola Co. 2,835,577 - - - 2,835,577 9,887 - - - 9,887 Coca-Cola 118,941 - - - 118,941 Enterprises, Inc. 6,053 - - - 6,053 Constellation 95,456 - - - 95,456 Brands, Inc.* 7,916 - - - 7,916 Dr. Pepper 128,635 - - - 128,635 Snapple Group, Inc.* 4,663 - - - 4,663 Molson Coors 228,114 - - - 228,114 Brewing Co. 4,201 - - - 4,201 Pepsi Bottling 94,564 - - - 94,564 Group, Inc. (The) 48,894 - - - 48,894 PepsiCo, Inc. 2,677,924 - - - 2,677,924 ---------- -------- ------------ ------- --------- ---------- -------- ------------ ------- --------- 6,337,028 - - - 6,337,028 ---------- -------- ------------ ------- --------- ---------- -------- ------------ ------- --------- Biotechnology (2.4%): 33,349 13,917 36,016 - 83,282 Amgen, Inc.* 1,925,905 803,707 2,079,924 - 4,809,536 9,163 - - - 9,163 Biogen, Inc.* 436,434 - - - 436,434 14,409 - - - 14,409 Celgene Corp.* 796,529 - - - 796,529 2,140 - - - 2,140 Cephalon, Inc.* 164,865 - - - 164,865 8,502 - - - 8,502 Genzyme Corp.* 564,278 - - - 564,278 28,949 - - - 28,949 Gilead 1,480,452 - - - 1,480,452 Sciences, Inc.* - 9,078 23,495 - 32,573 Myriad - 601,508 1,556,779 - 2,158,287 Genetics, Inc.* ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 5,368,463 1,405,215 3,636,703 - 10,410,381 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Building Products (0.1%): 4,034 - - - 4,034 Fastenal Co. 140,585 - - - 140,585 11,222 - - - 11,222 Masco Corp. 124,901 - - - 124,901 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 265,486 - - - 265,486 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 276 The Allianz Variable Insurance Products Trust - Statement of Additional Information Capital Markets (1.6%): 6,766 - - - 6,766 Ameriprise 158,054 - - - 158,054 Financial, Inc. 29,391 - - - 29,391 Charles Schwab 475,252 - - - 475,252 Corp. - 15,305 - - 15,305 Credit Suisse - 432,519 - - 432,519 Group, SP ADR. - 12,700 - - 12,700 Deutsche Bank - 516,763 - - 516,763 AG . 11,750 - - - 11,750 E*TRADE 13,512 - - 13,512 Financial Corp.* 3,181 - - - 3,181 Federated 53,950 - - 53,950 Investors, Inc. 4,745 - - - 4,745 Franklin 302,636 - - - 302,636 Resources, Inc. 13,912 - - - 13,912 Goldman Sachs 1,174,034 - - - 1,174,034 Group, Inc. 12,036 - - - 12,036 Invesco, Ltd. 173,800 - - - 173,800 4,920 - - - 4,920 Janus Capital 39,508 - - 39,508 Group, Inc. 4,413 - - - 4,413 Legg Mason, 96,689 - - 96,689 Inc. 56,696 - - - 56,696 Merrill Lynch & 659,941 - - - 659,941 Co., Inc. 33,367 - - - 33,367 Morgan Stanley 535,207 - - 535,207 7,000 - - - 7,000 Northern Trust 364,980 - - 364,980 Corp. 13,571 - - - 13,571 State Street 533,747 - - - 533,747 Corp. - 16,328 - - 16,328 Stifel - 748,639 - - 748,639 Financial Corp.* 8,101 - - - 8,101 T. Rowe Price 287,099 - - - 287,099 Group, Inc. - 32,113 - - 32,113 UBS AG* - 459,216 - - 459,216 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 4,868,409 2,157,137 - - 7,025,546 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Chemicals (2.0%): 6,575 - - - 6,575 Air Products & 330,525 - - - 330,525 Chemicals, Inc. 1,895 - - - 1,895 CF Industries 93,158 - - - 93,158 Holdings, Inc. 29,016 - - - 29,016 Dow Chemical 437,851 - - - 437,851 Co. (The) 28,371 28,076 - - 56,447 E.I. du Pont de 717,786 710,323 - - 1,428,109 Nemours & Co. 2,594 15,703 40,636 - 58,933 Eastman 82,256 497,942 1,288,568 - 1,868,766 Chemical Co. 5,244 - - - 5,244 Ecolab, Inc. 184,327 - - - 184,327 2,624 - - - 2,624 International Flavor & 277 The Allianz Variable Insurance Products Trust - Statement of Additional Information Fragrances, Inc. 77,985 - - - 77,985 17,239 - - - 17,239 Monsanto Co. 1,212,764 - - - 1,212,764 5,142 - - - 5,142 PPG Industries, 218,175 - - - 218,175 Inc. 9,692 - - - 9,692 Praxair, Inc. 575,317 - - - 575,317 3,915 - - - 3,915 Rohm & Haas Co. 241,908 - - - 241,908 - 21,620 55,949 - 77,569 Sensient - 516,286 1,336,062 - 1,852,348 Technologies Corp. 3,919 - - - 3,919 Sigma Aldrich 165,539 - - - 165,539 Corp. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 4,337,591 1,724,551 2,624,630 - 8,686,772 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Commercial Banks (5.5%): - 65,753 - - 65,753 Allied Irish - 308,382 - - 308,382 Banks plc, SP ADR - 51,035 - - 51,035 Banco Santander - 484,322 - - 484,322 SA, SP ADR. 36,099 - - - 36,099 Bank of New York Mellon Corp. 1,022,685 - - - 1,022,685 - 40,918 - - 40,918 Barclays plc, - 400,996 - - 400,996 ADR 17,355 - - - 17,355 BB&T Corp. 476,568 - - - 476,568 4,677 - - - 4,677 Comerica, Inc. 92,838 - - - 92,838 18,035 - - - 18,035 Fifth Third 148,969 - - - 148,969 Bancorp . - 48,425 125,323 - 173,748 First Bancorp . - 539,455 1,396,098 - 1,935,553 - 13,969 - - 13,969 First Financial - 771,228 - - 771,228 Bankshares, Inc. - 8,879 - - 8,879 First Financial - 363,950 - - 363,950 Corp. 7,338 - - - 7,338 First Horizon 77,563 - - - 77,563 National Corp. - 45,178 116,916 - 162,094 FNB Corp. - 596,350 1,543,291 - 2,139,641 - 12,870 12,870 Home - 346,847 - - 346,847 Bancshares, Inc. 12,198 66,835 172,965 - 251,998 Huntington 93,437 511,956 1,324,912 - 1,930,305 Bancshares, Inc. - 21,265 - - 21,265 KB Financial - 557,143 - - 557,143 Group, Inc., 278 The Allianz Variable Insurance Products Trust - Statement of Additional Information ADR* 15,440 - - - 15,440 KeyCorp . 131,549 - - - 131,549 - 39,516 - - 39,516 Lloyds TSB - 304,273 - - 304,273 Group plc, SP ADR. 2,409 - - - 2,409 M&T Bank Corp. 138,301 - - - 138,301 8,105 - - - 8,105 Marshall & 110,552 - - - 110,552 Ilsley Corp. 59,322 - - - 59,322 National City 107,373 - - - 107,373 Corp. 11,127 - - - 11,127 PNC Financial - - - - 0 Services - - - - - Group,Inc. 545,223 - - - 545,223 21,638 51,863 134,220 - 207,721 Regions 172,238 412,829 1,068,391 - 1,653,458 Financial Corp. - 24,800 - - 24,800 Royal Bank of - 379,192 - - 379,192 Scotland Group plc, SP ADR 11,111 17,139 44,356 - 72,606 SunTrust Banks, 328,219 506,286 1,310,276 - 2,144,781 Inc. - 37,746 97,686 - 135,432 Umpqua Holdings - 546,185 1,413,517 - 1,959,702 Corp. 55,210 - - - 55,210 U.S. Bancorp . 1,380,802 - - - 1,380,802 76,574 - - - 76,574 Wachovia Corp. 424,220 - - - 424,220 117,629 - - - 117,629 Wells Fargo & 3,467,703 - - - 3,467,703 Co. 3,843 - - - 3,843 Zions Bancorp . 94,192 - - - 94,192 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 8,812,432 7,029,394 8,056,485 - 23,898,311 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Commercial Services & Supplies (0.9%): 3,309 - - - 3,309 Avery Dennison 108,304 - - - 108,304 Corp. 4,085 - - - 4,085 Cintas Corp. 94,894 - - - 94,894 3,931 - - - 3,931 Equifax, Inc. 104,250 - - - 104,250 4,425 - - - 4,425 Monster 53,498 - - - 53,498 Worldwide, Inc.* - 30,997 - - 30,997 Navigant - 491,922 - - 491,922 Consulting, Inc.* 6,443 - - - 6,443 Pitney Bowes, 164,168 - - - 164,168 Inc. 7,312 - 106,779 - 114,091 R.R. Donnelley 99,297 - 1,450,059 - 1,549,356 & Sons Co. 10,060 - - - 10,060 Republic Services, Inc., Class A 249,387 - - - 249,387 279 The Allianz Variable Insurance Products Trust - Statement of Additional Information 4,825 - - - 4,825 Robert Half 100,456 - - - 100,456 International, Inc. - 41,260 - - 41,260 R.R. Donnelley - 560,311 - - 560,311 & Sons Co. 2,671 - - - 2,671 Stericycle, 139,106 - - - 139,106 Inc.* 15,413 - - - 15,413 Waste 510,787 - - - 510,787 Management, Inc. ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 1,624,147 1,052,233 1,450,059 - 4,126,439 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Communications Equipment (1.4%): 3,068 - - - 3,068 Ciena Corp.* 20,556 - - - 20,556 184,332 - - - 184,332 Cisco Systems, 3,004,612 - - - 3,004,612 Inc.* 48,818 - - - 48,818 Corning, Inc. 465,235 - - - 465,235 4,206 - - - 4,206 Harris Corp. 160,038 - - - 160,038 7,412 - - - 7,412 JDS Uniphase 27,054 - - - 27,054 Corp.* 16,558 - - - 16,558 Juniper 289,931 - - - 289,931 Networks, Inc.* 71,084 - - - 71,084 Motorola, Inc. 314,902 - - - 314,902 52,104 - - - 52,104 QUALCOMM, Inc. 1,866,886 - - - 1,866,886 14,273 - - - 14,273 Tellabs, Inc.* 58,805 - - - 58,805 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 6,208,019 - - - 6,208,019 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Computers & Peripherals (2.4%): 27,983 - - - 27,983 Apple, Inc.* 2,388,349 - - - 2,388,349 54,385 - - - 54,385 Dell, Inc.* 556,903 - - - 556,903 64,157 - - - 64,157 EMC Corp.* 671,724 - - - 671,724 77,101 - - - 77,101 Hewlett-Packard 2,797,995 - - - 2,797,995 Co. 42,297 - - - 42,297 International 3,559,716 - - - 3,559,716 Business Machines Corp. 2,616 - - - 2,616 Lexmark 70,370 - - - 70,370 International, Inc.* 10,307 - - - 10,307 NetApp, Inc.* 143,989 - - - 143,989 4,589 - - - 4,589 QLogic Corp.* 61,676 - - - 61,676 7,542 - - - 7,542 SanDisk Corp.* 72,403 - - - 72,403 ---------- -------- ------------ --------- -------- 280 The Allianz Variable Insurance Products Trust - Statement of Additional Information ---------- -------- ------------ --------- -------- 10,323,125 - - - 10,323,125 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Construction & Engineering (0.1%): 4,470 - - - 4,470 Centex Corp. 47,561 - - - 47,561 5,689 - - - 5,689 Fluor Corp. 255,266 - - - 255,266 3,844 - - - 3,844 Jacobs 184,896 - - - 184,896 Engineering Group, Inc.* 7,128 - - - 7,128 Pulte Homes, 77,909 - - - 77,909 Inc. ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 565,632 - - - 565,632 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Construction Materials (0.1%): ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 3,451 - - - 3,451 Vulcan 240,121 - - - 240,121 Materials Co. ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Consumer Finance (0.2%): 36,463 - - - 36,463 American 676,389 - - - 676,389 Express Co. 14,577 - - - 14,577 SLM Corp.* 129,735 - - - 129,735 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 806,124 - - - 806,124 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Containers & Packaging (0.3%): 2,949 - - - 2,949 Ball Corp. 122,649 - - - 122,649 3,322 - - - 3,322 Bemis Co., Inc. 78,665 - - - 78,665 5,188 - - - 5,188 Owens-Illinois, 141,788 - - - 141,788 Inc.* 4,088 - - - 4,088 Pactiv Corp.* 101,709 - - - 101,709 - 7,186 18,598 - 25,784 Rock-Tenn Co., - 245,617 635,680 - 881,297 Class A 5,265 - - - 5,265 Sealed Air 78,659 - - - 78,659 Corp. ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 523,470 245,617 635,680 - 1,404,767 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Distributors (0.0%): ---------- -------- ------------ -------- -------- ---------- -------- ------------ -------- -------- 4,988 - - - 4,988 Genuine Parts 188,846 - - - 188,846 Co. 281 The Allianz Variable Insurance Products Trust - Statement of Additional Information ---------- -------- ------------ -------- -------- ---------- -------- ------------ --------- ------- Diversified Consumer Services (1.8%): 3,340 10,123 26,197 - 39,660 Apollo Group, 255,911 775,624 2,007,214 - 3,038,749 Inc., Class A* 10,620 - - - 10,620 H&R Block, Inc. 241,286 - - - 241,286 - 7,439 19,254 - 26,693 ITT Educational - 706,556 1,828,745 - 2,535,301 Services, Inc.* - 2,745 7,103 - 9,848 Strayer - 588,556 1,522,954 - 2,111,510 Education, Inc. ---------- -------- ------------ ------- --------- ---------- -------- ------------ ------- --------- 497,197 2,070,736 5,358,913 - 7,926,846 ---------- -------- ------------ ------- --------- ---------- -------- ------------ ------- --------- Diversified Financial Services (2.3%): 7,004 - - - 7,004 American 22,693 - - - 22,693 Capital, Ltd. 152,522 44,817 - - 197,339 Bank of America 2,147,510 631,023 - - 2,778,533 Corp. 12,295 - - - 12,295 Capital One 392,088 - - - 392,088 Financial Corp. 8,897 - - - 8,897 CIT Group, Inc. 40,392 - - - 40,392 171,454 - - - 171,454 Citigroup, Inc. 1,150,456 - - - 1,150,456 2,104 - - - 2,104 CME Group, Inc. 437,863 - - - 437,863 14,979 - - - 14,979 Discover 142,750 - - - 142,750 Financial Services 7,911 - - - 7,911 HCP, Inc. 219,689 - - - 219,689 - 52,256 - - 52,256 ING Groep NV, - 580,042 - - 580,042 ADR 2,260 - - - 2,260 Intercontinental 186,314 - - - 186,314 Exchange, Inc.* 117,512 - - - 117,512 JP Morgan Chase 3,705,153 - - - 3,705,153 & Co. 5,509 - - - 5,509 Leucadia 109,078 - - - 109,078 National Corp.* 6,056 - - - 6,056 Moody's Corp. 121,665 - - - 121,665 4,236 - - - 4,236 NASDAQ Stock 104,672 - - - 104,672 Market, Inc.* 8,299 - - - 8,299 NYSE Euronext 227,227 - - - 227,227 ---------- -------- ------------ -------- --------- ---------- -------- ------------ ------- --------- 9,007,550 1,211,065 - - 10,218,615 ---------- -------- ------------ ------- --------- ---------- -------- ------------ ------- --------- 282 The Allianz Variable Insurance Products Trust - Statement of Additional Information Diversified Telecommunication Services (2.5%): 185,558 - - - 185,558 AT&T, Inc. 5,288,403 - - - 5,288,403 - 335,219 - - 335,219 BT Group plc. - 658,474 - - 658,474 3,338 - - - 3,338 CenturyTel, Inc. 91,228 - - - 91,228 - 28,556 - - 28,556 Deutsche - 436,907 - - 436,907 Telekom AG, ADR . 4,442 - - - 4,442 Embarq Corp. 159,734 - - - 159,734 11,103 - - - 11,103 Frontier 97,040 - - - 97,040 Communications Corp. - 17,529 - - 17,529 Nippon - 476,613 - - 476,613 Telegraph & Telephone Corp. ADR 45,788 - - - 45,788 Qwest Communications International, 166,668 - - - 166,668 Inc. - 29,915 - - 29,915 Telecom Italia - 486,119 - - 486,119 SPA, ADR 89,424 - - - 89,424 Verizon 3,031,474 - - - 3,031,474 Communications, Inc. 13,702 - - - 13,702 Windstream Corp. 126,058 - - - 126,058 ---------- -------- ------------ ------- --------- ---------- -------- ------------ ------- --------- 8,960,605 2,058,113 - - 11,018,718 ---------- -------- ------------ ------- --------- ---------- -------- ------------ ------- --------- Electric Utilities (2.0%): 5,287 - - - 5,287 Allegheny 179,018 - - - 179,018 Energy, Inc. 12,672 - - - 12,672 American 421,724 - - - 421,724 Electric Power Co., Inc. 39,768 - - - 39,768 Duke Energy 596,918 - - - 596,918 Corp. 15,797 - - - 15,797 Dynegy, Inc.* . 31,594 - - - 31,594 10,222 - - - 10,222 Edison 328,330 - - - 328,330 International 5,948 - - - 5,948 Entergy Corp. 494,457 - - - 494,457 20,699 - - - 20,699 Exelon Corp. 1,151,071 - - - 1,151,071 9,575 - - - 9,575 FirstEnergy 465,153 - - - 465,153 Corp. 12,848 - - - 12,848 FPL Group, Inc. 646,640 - - - 646,640 - 43,675 - - 43,675 Korea Electric - 507,067 - - 507,067 Power Corp., ADR * 6,739 - - - 6,739 Pepco Holdings, 119,685 - - - 119,685 Inc. 283 The Allianz Variable Insurance Products Trust - Statement of Additional Information 3,137 17,592 45,529 - 66,258 Pinnacle West 100,792 565,231 1,462,847 - 2,128,870 Capital Corp. 11,771 - - - 11,771 PPL Corp. 361,252 - - - 361,252 8,255 - - - 8,255 Progress 328,962 - - - 328,962 Energy, Inc. 24,362 - - - 24,362 Southern Co. 901,394 - - - 901,394 3,653 - - - 3,653 Wisconsin 153,353 - - - 153,353 Energy Corp. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 6,280,343 1,072,298 1,462,847 - 8,815,488 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Electrical Equipment (0.4%): 5,416 - - - 5,416 Cooper - Industries, Ltd., - - - - - Class A 158,310 - - - 158,310 24,125 - - - 24,125 Emerson 883,216 - - - 883,216 Electric Co. - 8,882 - - 8,882 Hitachi, Ltd., - 347,641 - - 347,641 SP ADR 4,417 - - - 4,417 Rockwell 142,404 - - - 142,404 International Corp. ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 1,183,930 347,641 - - 1,531,571 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Electronic Equipment & Instruments (0.2%): 10,941 - - - 10,941 Agilent 171,008 - - - 171,008 Technologies, Inc.* 5,484 - - - 5,484 Amphenol Corp., 131,506 - - - 131,506 Class A 4,295 - - - 4,295 FLIR Systems, 131,770 - - - 131,770 Inc.* 7,577 - - - 7,577 Jabil Circuit, 51,145 - - - 51,145 Inc. 5,040 - - - 5,040 Molex, Inc. 73,030 - - - 73,030 14,337 - - - 14,337 Tyco 232,403 - - - 232,403 Electronics, Ltd. ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 790,862 - - - 790,862 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Energy Equipment & Services (0.8%): 9,648 - - - 9,648 Baker Hughes, 309,411 - - - 309,411 Inc. 9,087 - - - 9,087 BJ Services Co. 106,045 - - - 106,045 6,854 - - - 6,854 Cameron 140,507 - - - 140,507 International Corp.* 284 The Allianz Variable Insurance Products Trust - Statement of Additional Information 4,423 - - - 4,423 ENSCO 125,569 - - - 125,569 International, Inc. 8,857 - - - 8,857 Nabors 106,018 - - - 106,018 Industries, Ltd.* 13,094 - - - 13,094 National-Oilwell 320,017 - - - 320,017 Varco, Inc.* 8,257 - - - 8,257 Noble Corp. 182,150 - - - 182,150 4,051 - - - 4,051 Rowan Cos., Inc. 64,411 - - - 64,411 37,644 - - - 37,644 Schlumberger, 1,593,471 - - - 1,593,471 Ltd. 6,839 - - - 6,839 Smith 156,545 - - - 156,545 International, Inc. 21,337 - - - 21,337 Weatherford 230,866 - - - 230,866 International, Ltd.* ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 3,335,010 - - - 3,335,010 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Food & Staples Retailing (2.7%): 13,572 - - - 13,572 Costco 712,530 - - - 712,530 Wholesale Corp. 45,191 - - - 45,191 CVS Caremark 1,298,789 - - 1,298,789 Corp. 20,503 - - - 20,503 Kroger Co. 541,484 - - - 541,484 - 2,426 6,280 - 8,706 Nash Finch Co. - 108,903 281,909 - 390,812 13,450 - - - 13,450 Safeway, Inc. 319,707 - - - 319,707 - 4,397 11,379 - 15,776 Spartan Stores, - 102,230 264,562 - 366,792 Inc. 6,579 - - - 6,579 Supervalu, Inc. 96,053 - - - 96,053 18,816 - - - 18,816 SYSCO Corp. 431,639 - - 431,639 70,396 13,723 35,514 - 119,633 Wal-Mart 3,946,400 769,312 1,990,915 - 6,706,627 Stores, Inc. 31,125 - - - 31,125 Walgreen Co. 767,854 - - - 767,854 5,047 - - - 5,047 Whole Foods 47,644 - - - 47,644 Market, Inc. ---------- -------- ------------ ------- --------- ---------- -------- ------------ ------- --------- 8,162,100 980,445 2,537,386 - 11,679,931 ---------- -------- ------------ ------ --------- ---------- -------- ------------ ------ --------- Food Products (1.5%): 20,160 - - - 20,160 Archer-Daniels 581,213 - - - 581,213 Midland Co. 6,439 - - - 6,439 Campbell Soup 193,234 - - - 193,234 Co. 14,006 - - - 14,006 ConAgra Foods, 231,099 - - - 231,099 Inc. 5,131 - - - 5,131 Dean Foods Co.* 92,204 - - - 92,204 285 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 18,517 47,920 - 66,437 Flowers Foods, - 451,074 1,167,331 - 1,618,405 Inc. 10,504 - - - 10,504 General Mills, 638,118 - - - 638,118 Inc. 9,871 - - - 9,871 H.J. Heinz Co. 371,150 - - - 371,150 5,189 - - - 5,189 Hershey Co. 180,266 - - - 180,266 3,702 - - - 3,702 J.M. Smucker 160,519 - - - 160,519 Co. (The) 7,906 - - - 7,906 Kellogg Co. 346,678 - - - 346,678 46,224 - - - 46,224 Kraft Foods, 1,241,114 - - - 1,241,114 Inc. 4,056 - - - 4,056 McCormick & Co. 129,224 - - - 129,224 22,137 - - - 22,137 Sara Lee Corp. 216,721 - - - 216,721 - 6,003 15,535 - 21,538 Treehouse - 163,522 423,174 - 586,696 Foods, Inc.* 10,072 - - - 10,072 Tyson Foods, 88,231 - - - 88,231 Inc., Class A ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 4,469,771 614,596 1,590,505 - 6,674,872 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Gas Utilities (0.7%): 4,084 - - - 4,084 Equitable 137,018 - - - 137,018 Resources, Inc. - 15,615 - - 15,615 Laclede Group, - 731,406 - - 731,406 Inc. (The) 1,621 - - - 1,621 NICOR, Inc. 56,314 - - - 56,314 5,416 - - - 5,416 Noble Energy, 266,575 - - - 266,575 Inc. - 49,895 - - 49,895 Piedmont - 1,580,175 - - 1,580,175 Natural Gas Co., Inc. 5,424 - - - 5,424 Questar Corp. 177,311 - - - 177,311 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 637,218 2,311,581 - - 2,948,799 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Health Care Equipment & Supplies (1.6%): 3,109 - - - 3,109 Bard (C.R.), 261,965 - - - 261,965 Inc. 19,509 - - - 19,509 Baxter 1,045,487 - - - 1,045,487 International, Inc. 7,639 - - - 7,639 Becton 522,431 - - - 522,431 Dickinson & Co. 47,126 - - - 47,126 Boston 364,755 - - - 364,755 Scientific Corp.* - 11,059 28,619 - 39,678 CryoLife, Inc.* - 107,383 277,890 - 385,273 15,825 - - - 15,825 Covidien, Ltd. 573,498 - - - 573,498 4,647 - - - 4,647 DENTSPLY 131,231 - - - 131,231 International, Inc. 286 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 4,327 11,197 - 15,524 Greatbatch, - 114,493 296,273 - 410,766 Inc.* 4,980 - - - 4,980 Hospira, Inc.* 133,564 - - - 133,564 1,222 - - - 1,222 Intuitive 155,182 - - - 155,182 Surgical, Inc.* 35,179 - - - 35,179 Medtronic, Inc. 1,105,324 - - - 1,105,324 - 11,351 29,377 - 40,728 STERIS Corp. - 271,175 701,816 - 972,991 10,802 - - - 10,802 St. Jude 356,034 - - - 356,034 Medical, Inc.* 7,598 - - - 7,598 Stryker Corp. 303,540 - - - 303,540 3,878 - - - 3,878 Varian Medical 135,885 - - - 135,885 Systems, Inc.* 7,042 - - - 7,042 Zimmer 284,638 - - - 284,638 Holdings, Inc.* ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 5,373,534 493,051 1,275,979 - 7,142,564 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Health Care Providers & Services (1.2%): 14,480 - - - 14,480 Aetna, Inc. 412,680 - - - 412,680 4,885 - - - 4,885 Amerisource 174,199 - - - 174,199 Bergen Corp. 11,290 - - - 11,290 Cardinal 389,166 - - - 389,166 Health, Inc. 8,583 - - - 8,583 CIGNA Corp. 144,624 - - - 144,624 5,330 - - - 5,330 Coventry Health 79,310 - - - 79,310 Care, Inc.* 3,244 - - - 3,244 DaVita, Inc.* 160,805 - - - 160,805 7,773 - - - 7,773 Express 427,360 - - - 427,360 Scripts, Inc.* - 18,875 - - 18,875 Gentiva Health - 552,283 - - 552,283 Services, Inc.* 5,282 - - - 5,282 Humana, Inc.* 196,913 - - - 196,913 3,382 - - - 3,382 Laboratory - - - - - Corp. of America - - - - - Holdings* 217,835 - - - 217,835 8,658 - - - 8,658 McKesson HBOC, 335,324 - - - 335,324 Inc. 3,269 - - - 3,269 Patterson 61,294 - - - 61,294 Companies, Inc.* 4,966 - - - 4,966 Quest 257,785 - - - 257,785 Diagnostics, Inc. 287 The Allianz Variable Insurance Products Trust - Statement of Additional Information 9,154 - - - 9,154 Tenet 10,527 - - - 10,527 Healthcare Corp.* 37,995 - - - 37,995 UnitedHealth 1,010,667 - - - 1,010,667 Group, Inc. 16,004 - - - 16,004 WellPoint, 674,248 - - - 674,248 Inc.* ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 4,552,737 552,283 - - 5,105,020 ---------- -------- ------------ --------- ------- ---------- -------- ------------ --------- ------- Health Care Technology (0.1%): - 3,701 9,581 - 13,282 Computer - 99,187 256,771 - 355,958 Programs & Systems, Inc. 6,060 - - - 6,060 IMS Health, Inc. 91,870 - - - 91,870 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Hotels, 91,870 99,187 256,771 - 447,828 Restaurants & Leisure (1.9%): ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 13,712 - - - 13,712 Carnival Corp. 333,476 - - - 333,476 4,325 - - - 4,325 Darden 121,878 - - - 121,878 Restaurants, Inc. - 257,463 - - 257,463 Ladbrokes plc - 688,399 - - 688,399 9,170 - - - 9,170 Marriott - - - - - International, Inc., - - - - - Class A 178,356 - - - 178,356 35,083 13,437 34,771 - 83,291 McDonald's 2,181,812 835,647 2,162,408 - 5,179,867 Corp. - 5,635 14,583 - 20,218 Panera Bread - 294,372 761,816 - 1,056,188 Co., Class A* 23,035 - - - 23,035 Starbucks Corp.* 217,911 - - - 217,911 5,689 - - - 5,689 Starwood Hotels - - - - - & Resorts - - - - - Worldwide, Inc. 101,833 - - - 101,833 5,532 - - - 5,532 Wyndham 36,235 - - - 36,235 Worldwide Corp. 2,053 - - - 2,053 Wynn Resorts, 86,760 - - - 86,760 Ltd.* 14,528 - - - 14,528 Yum! Brands, 457,632 - - - 457,632 Inc. ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- 3,715,893 1,818,418 2,924,224 - 8,458,535 ---------- -------- ------------ -------- --------- ---------- -------- ------------ -------- --------- Household Durables (0.3%): 2,002 - - - 2,002 Black & Decker 83,704 - - - 83,704 Corp. 9,857 - - - 9,857 D. R. Horton, 69,689 - - - 69,689 Inc. 288 The Allianz Variable Insurance Products Trust - Statement of Additional Information 4,691 - - - 4,691 Fortune Brands, 193,644 - - - 193,644 Inc. 1,832 - - - 1,832 Harman 30,649 - - - 30,649 International Industries, Inc. 2,349 - - - 2,349 KB Home 31,993 - - - 31,993 5,210 - - - 5,210 Leggett & 79,140 - - - 79,140 Platt, Inc. 4,396 - - - 4,396 Lennar Corp. 38,113 - - 38,113 9,884 - - - 9,884 Newell 96,666 - - - 96,666 Rubbermaid, Inc. 1,916 - - - 1,916 Snap-On, Inc. 75,452 - - - 75,452 - 20,408 - - 20,408 Sony Corp., SP - 446,323 - - 446,323 ADR 2,627 - - - 2,627 Stanley Works 89,581 - - - 89,581 (The) 2,285 - - - 2,285 Whirlpool Corp. 94,485 - - - 94,485 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 883,116 446,323 - - 1,329,439 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Household Products (1.8%): 4,347 - - - 4,347 Clorox Co. 241,520 - - - 241,520 (The) . 15,878 - - - 15,878 Colgate-Palmolive 1,088,278 - - - 1,088,278 Co. 13,008 - - - 13,008 Kimberly-Clark 686,042 - - - 686,042 Corp. 94,015 - - - 94,015 Procter & 5,812,007 - - - 5,812,007 Gamble Co. ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- 7,827,847 - - - 7,827,847 ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- Independent Power Producers & Energy Traders (0.1%): 21,037 - - - 21,037 AES Corp. 173,345 - - - 173,345 (The)* 5,571 - - - 5,571 Constellation 139,776 - - - 139,776 Energy Group, Inc. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 313,121 - - - 313,121 ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- Industrial Conglomerates (2.3%): 21,804 - - - 21,804 3M Co. 1,254,602 - - - 1,254,602 - 972,000 - - 972,000 Citic Pacific, - 1,059,134 - - 1,059,134 Ltd. 330,725 42,713 - - 373,438 General 5,357,745 691,951 - - 6,049,696 Electric Co. 289 The Allianz Variable Insurance Products Trust - Statement of Additional Information 7,498 33,311 86,205 - 127,014 Textron, Inc. 103,997 462,023 1,195,663 - 1,761,683 14,838 - - - 14,838 Tyco 320,501 - - - 320,501 International, Ltd. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 7,036,845 2,213,108 1,195,663 - 10,445,616 ---------- -------- ------------ --------- -------- ---------- -------- ------------ -------- --------- Insurance (1.8%): - 89,420 - - 89,420 AEGON NV - 540,991 - - 540,991 14,654 - - - 14,654 AFLAC, Inc. 671,739 - - - 671,739 16,842 - - - 16,842 Allstate Corp. 551,744 - - - 551,744 (The) 77,510 - - - 77,510 American 121,691 - - - 121,691 International Group, Inc. 8,470 - - - 8,470 Aon Corp. 386,910 - - - 386,910 3,662 - - - 3,662 Assurant, Inc. 109,860 - - - 109,860 - 23,803 - - 23,803 Axa, ADR - 534,853 - - 534,853 11,179 - - - 11,179 Chubb Corp. 570,129 - - - 570,129 (The) 5,072 - - - 5,072 Cincinnati 147,443 - - - 147,443 Financial Corp. 15,582 - - - 15,582 Genworth 44,097 - - - 44,097 Financial, Inc. 9,414 - - - 9,414 Hartford - - - - - Financial Services - - - - - Group, Inc. 154,578 - - - 154,578 7,992 - - - 7,992 Lincoln 150,569 - - - 150,569 National Corp. 11,356 - - - 11,356 Loews Corp. 320,807 - - - 320,807 16,139 - - - 16,139 Marsh & 391,693 - - - 391,693 McLennan Cos., Inc. 6,343 - - - 6,343 MBIA, Inc.* 25,816 - - - 25,816 24,959 - - - 24,959 MetLife, Inc. 870,071 - - - 870,071 8,111 - - - 8,111 Principal 183,065 - - - 183,065 Financial Group, Inc. 21,194 - - - 21,194 Progressive 313,883 - - - 313,883 Corp. (The) 13,312 - - - 13,312 Prudential 402,821 - - - 402,821 Financial, Inc. 2,650 - - - 2,650 Torchmark Corp. 118,455 - - - 118,455 18,383 - - - 18,383 Travelers Cos., 830,912 - - - 830,912 Inc. (The) 10,361 - - - 10,361 UnumProvident 192,715 - - - 192,715 Corp. 10,304 - - - 10,304 XL Capital, 38,125 - - - 38,125 Ltd., Class A ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 6,597,123 1,075,844 - - 7,672,967 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 290 The Allianz Variable Insurance Products Trust - Statement of Additional Information Internet & Catalog Retail (0.1%): 10,106 - - - 10,106 Amazon.com, 518,236 - - - 518,236 Inc.* 7,512 - - - 7,512 Expedia, Inc.* 61,899 - - - 61,899 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 580,135 - - - 580,135 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Internet Software & Services (0.8%): 5,636 - - - 5,636 Akamai 85,047 - - - 85,047 Technologies, Inc.* 33,696 - - - 33,696 eBay, Inc.* 470,396 - - - 470,396 7,530 - - - 7,530 Google, Inc., 2,316,604 - - - 2,316,604 Class A* 6,047 - - - 6,047 VeriSign, Inc.* 115,377 - - - 115,377 43,604 - - - 43,604 Yahoo!, Inc.* 531,969 - - - 531,969 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 3,519,393 - - - 3,519,393 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- IT Services (1.1%): 3,045 - - - 3,045 Affiliated Computer Services, Inc., Class A* 139,918 - - - 139,918 15,965 - - - 15,965 Automatic Data 628,063 - - - 628,063 Processing, Inc. 9,102 - - - 9,102 Cognizant Technology Solutions Corp., Class A* 164,382 - - - 164,382 4,735 - - - 4,735 Computer 166,388 - - - 166,388 Sciences Corp.* 4,122 - - - 4,122 Convergys 26,422 - - - 26,422 Corp.* 1,682 - - - 1,682 Dun & 129,850 - - - 129,850 Bradstreet Corp. 5,907 - - - 5,907 Fidelity National Information Services, Inc. 96,107 - - - 96,107 5,010 - - - 5,010 Fiserv, Inc.* 182,214 - - - 182,214 - 686,242 - - 686,242 LogicaCMG plc . - 685,204 - - 685,204 - 18,376 10,672 - 29,048 ManTech - 995,796 578,316 - 1,574,112 International Corp., Class A * 291 The Allianz Variable Insurance Products Trust - Statement of Additional Information 2,270 - - - 2,270 MasterCard, 324,451 - - - 324,451 Inc., Class A 10,066 - - - 10,066 Paychex, Inc. 264,534 - - - 264,534 7,019 - - - 7,019 Total System 98,266 - - - 98,266 Services, Inc. 22,450 - - - 22,450 Western Union 321,933 - - - 321,933 Co. ---------- -------- ------------ --------- ------- ---------- -------- ------------ --------- ------- 2,542,528 1,681,000 578,316 - 4,801,844 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Leisure Equipment & Products (0.1%): 9,628 - - - 9,628 Eastman Kodak 63,352 - - - 63,352 Co. 3,860 - - - 3,860 Hasbro, Inc. 112,596 - - - 112,596 11,213 - - - 11,213 Mattel, Inc. 179,408 - - - 179,408 ---------- -------- ------------ --------- ------- ---------- -------- ------------ --------- ------- 355,356 - - - 355,356 ---------- -------- ------------ --------- ------- ---------- -------- ------------ --------- ------- Life Sciences Tools & Services (0.3%): 5,382 - - - 5,382 Life 125,455 - - - 125,455 Technologies Corp.* - 26,630 - - 26,630 Luminex Corp.* - 568,817 - - 568,817 1,970 - - - 1,970 Millipore Corp.* 101,494 - - - 101,494 4,237 - - - 4,237 PerkinElmer, 58,937 - - - 58,937 Inc. 13,199 - - - 13,199 Thermo Fisher 449,690 - - - 449,690 Scientific, Inc. 3,062 - - - 3,062 Waters Corp.* 112,222 - - - 112,222 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 847,798 568,817 - - 1,416,615 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Machinery (1.5%): - 37,046 95,872 - 132,918 Briggs & - 651,639 1,686,388 - 2,338,027 Stratton Corp. 18,971 - - - 18,971 Caterpillar, 847,435 - - - 847,435 Inc. 6,294 - - - 6,294 Cummins, Inc. 168,239 - - - 168,239 8,031 - - - 8,031 Danaher Corp. 454,635 - - - 454,635 13,417 - - - 13,417 Deere & Co. 514,139 - - - 514,139 5,819 - - - 5,819 Dover Corp. 191,561 - - - 191,561 5,169 - - - 5,169 Eaton Corp. 256,951 - - - 256,951 1,757 - - - 1,757 Flowserve Corp. 90,486 - - - 90,486 292 The Allianz Variable Insurance Products Trust - Statement of Additional Information 12,361 - - - 12,361 Illinois Tool 433,253 - - - 433,253 Works, Inc. 9,969 - - - 9,969 Ingersoll Rand 172,962 - - - 172,962 Co., Class A . 5,692 - - - 5,692 ITT Industries, 261,775 - - - 261,775 Inc. 4,067 - - - 4,067 Manitowoc Co. 35,220 - - - 35,220 11,379 - - - 11,379 PACCAR, Inc. 325,439 - - - 325,439 3,672 - - - 3,672 Pall Corp. 104,395 - - - 104,395 5,046 - - - 5,046 Parker Hannifin 214,657 - - - 214,657 Corp. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 4,071,147 651,639 1,686,388 - 6,409,174 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Media (2.1%): 21,261 - - - 21,261 CBS Corp. 174,128 - - - 174,128 90,625 - - - 90,625 Comcast Corp., 1,529,750 - - - 1,529,750 Class A 17,147 - - - 17,147 DIRECTV Group, 392,838 - - - 392,838 Inc. (The)* 8,173 - - - 8,173 Gannett Co., 65,384 - - - 65,384 Inc. 17,065 - - - 17,065 Interpublic 67,577 - - - 67,577 Group of Cos., Inc. (The)* - 1,410,014 - - ITV plc - 808,241 - - 808,241 1,410,014 9,852 - - - 9,852 McGraw-Hill 228,468 - - - 228,468 Cos., Inc. (The) 1,227 - - - 1,227 Meredith Corp. 20,540 - - - 20,540 3,936 71,535 185,133 - 260,604 New York Times 28,851 524,351 1,357,025 - 1,910,227 Co., Class A 72,298 - - - 72,298 News Corp. 657,189 - - - 657,189 9,743 - - - 9,743 Omnicom Group, 262,282 - - - 262,282 Inc. 3,224 - - - 3,224 Scripps - - - - - Networks Interactive, - - - - - Class A 70,928 - - - 70,928 112,866 - - - 112,866 Time Warner, 1,135,432 - - - 1,135,432 Inc. 19,256 - - - 19,256 Viacom, Inc., 367,019 - - - 367,019 Class B* 58,244 - - - 58,244 Walt Disney Co. 1,321,556 - - - 1,321,556 (The) 200 - - - 200 Washington Post - - - - - Co. (The), 293 The Allianz Variable Insurance Products Trust - Statement of Additional Information Class B 78,050 - - - 78,050 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 6,399,992 1,332,592 1,357,025 - 9,089,609 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Metals & Mining (1.4%): 3,496 - - - 3,496 AK Steel 32,582 - - - 32,582 Holding Corp. 25,092 65,984 - - 91,076 Alcoa, Inc. 282,536 742,980 - - 1,025,516 3,211 - - - 3,211 Allegheny 81,977 - - - 81,977 Technologies, Inc. - 16,284 16,284 ArcelorMittal, - 400,424 - - 400,424 Class A - 26,019 15,111 - 41,130 Compass - 1,526,274 886,411 - 2,412,685 Minerals International, Inc. 11,843 - - - 11,843 Freeport-McMoRan Copper & Gold, Inc., 289,443 - - - 289,443 Class A 14,277 - - - 14,277 Newmont Mining 581,074 - - - 581,074 Corp. 9,861 - - - 9,861 Nucor Corp. 455,578 - - - 455,578 - 6,988 - - 6,988 POSCO, ADR - 525,847 - - 525,847 2,879 - - - 2,879 Titanium Metals 25,364 - - - 25,364 Corp. 3,629 - - - 3,629 United States 134,999 - - - 134,999 Steel Corp. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 1,883,553 3,195,525 886,411 - 5,965,489 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Multi-Utilities (1.8%): 6,622 - - - 6,622 Ameren Corp. 220,248 - - - 220,248 10,740 - - - 10,740 Centerpoint 135,539 - - - 135,539 Energy, Inc. 7,548 - - - 7,548 CMS Energy 76,235 - - - 76,235 Corp. 8,586 - - - 8,586 Consolidated 334,253 - - - 334,253 Edison, Inc. 18,274 - - - 18,274 Dominion 654,940 - - - 654,940 Resources, Inc. 5,100 - - - 5,100 DTE Energy Co. 181,917 - - - 181,917 2,378 - - - 2,378 Integrys Energy 102,206 - - - 102,206 Group, Inc. 8,525 43,841 113,458 - 165,824 NiSource, Inc. 93,519 480,936 1,244,634 - 1,819,089 294 The Allianz Variable Insurance Products Trust - Statement of Additional Information 11,337 - - - 11,337 PG&E Corp. 438,855 - - - 438,855 15,896 - - - 15,896 Public Service 463,686 - - - 463,686 Enterprise Group, Inc. 3,643 15,277 39,534 - 58,454 SCANA Corp. 129,691 543,861 1,407,411 - 2,080,963 7,644 - - - 7,644 Sempra Energy 325,864 - - - 325,864 7,093 - - - 7,093 TECO Energy, 87,599 - - - 87,599 Inc. - 16,076 - - 16,076 Veolia - 509,770 - - 509,770 Environnement, ADR 14,076 - - - 14,076 Xcel Energy, 261,110 - - - 261,110 Inc. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 3,505,662 1,534,567 2,652,045 - 7,692,274 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Multiline Retail (1.6%): 2,558 - - - 2,558 Big Lots, Inc.* 37,065 - - - 37,065 - 17,872 46,250 - 64,122 Dollar Tree, - 747,050 1,933,250 - 2,680,300 Inc.* 4,352 26,929 69,690 - 100,971 Family Dollar 113,457 702,039 1,816,818 - 2,632,314 Stores, Inc. 6,933 - - - 6,933 J.C. Penney 136,580 - - - 136,580 Co., Inc. 9,562 - - - 9,562 Kohl's Corp.* 346,144 - - - 346,144 13,116 - - - 13,116 Macy's, Inc. 135,751 - - - 135,751 5,704 - - - 5,704 Nordstrom, Inc. 75,920 - - - 75,920 1,857 - - - 1,857 Sears Holdings 72,182 - - - 72,182 Corp.* 23,673 - - - 23,673 Target Corp. 817,429 - - - 817,429 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 1,734,528 1,449,089 3,750,068 - 6,933,685 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Office Electronics (0.0%): ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 27,104 - - - 27,104 Xerox Corp. 216,019 - - - 216,019 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Oil, Gas & Consumable Fuels (7.1%): 14,426 - - - 14,426 Anadarko 556,122 - - - 556,122 Petroleum Corp. 10,523 - - - 10,523 Apache Corp. 784,279 - - - 784,279 3,444 - - - 3,444 Cabot Oil & Gas - - - - - Corp., - - - - - Class A 89,544 - - - 89,544 295 The Allianz Variable Insurance Products Trust - Statement of Additional Information 16,956 - - - 16,956 Chesapeake 274,179 - - - 274,179 Energy Corp. 63,974 - - - 63,974 ChevronTexaco 4,732,157 - - - 4,732,157 Corp. - 7,414 - - 7,414 Clayton - 336,892 - - 336,892 Williams Energy, Inc.* 46,929 - - - 46,929 ConocoPhillips 2,430,922 - - - 2,430,922 5,664 - - - 5,664 Consol Energy, 161,877 - - - 161,877 Inc. 13,896 - - - 13,896 Devon Energy 913,106 - - - 913,106 Corp. 21,920 - - - 21,920 El Paso Corp. 171,634 - - - 171,634 7,842 - - - 7,842 EOG Resources, 522,120 - - - 522,120 Inc. 160,189 - - - 160,189 Exxon Mobil 12,787,888 - - - 12,787,888 Corp. - 23,510 - - 23,510 Goodrich - 704,124 - - 704,124 Petroleum Corp.* 28,080 - - - 28,080 Halliburton Co. 510,494 - - - 510,494 8,911 - - - 8,911 Hess Corp. 477,986 - - - 477,986 22,176 - - - 22,176 Marathon Oil 606,735 - - - 606,735 Corp. 2,655 - - - 2,655 Massey Energy 36,613 - - - 36,613 Co. 5,971 - - - 5,971 Murphy Oil Corp. 264,814 - - - 264,814 25,486 - - - 25,486 Occidental 1,528,905 - - - 1,528,905 Petroleum Corp. 8,344 - - - 8,344 Peabody Energy 189,826 - - - 189,826 Corp. - 17,477 - - 17,477 Petro-Canada - 382,572 - - 382,572 4,215 - - - 4,215 Pioneer Natural 68,199 - - - 68,199 Resources Co. 4,856 - - - 4,856 Range Resources 166,998 - - - 166,998 Corp. - 21,279 - - 21,279 Repsol YPF SA, - 457,711 - - 457,711 ADR 10,772 - - - 10,772 Southwestern 312,065 - - - 312,065 Energy Co.* 19,167 - - - 19,167 Spectra Energy 301,689 - - - 301,689 Corp. 3,653 - - - 3,653 Sunoco, Inc. 158,759 - - - 158,759 4,973 - - - 4,973 Tesoro 65,494 - - - 65,494 Petroleum Corp. 16,195 - - - 16,195 Valero Energy 350,460 - - - 350,460 Corp. 18,140 - - - 18,140 Williams Cos., 262,667 - - - 262,667 Inc. (The) 18,132 - - - 18,132 XTO Energy, 639,516 - - - 639,516 Inc. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 29,365,048 1,881,299 - - 31,246,347 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 296 The Allianz Variable Insurance Products Trust - Statement of Additional Information Paper & Forest Products (0.5%): 13,361 - - - 13,361 International 157,660 - - - 157,660 Paper Co. 6,113 44,672 115,608 - 166,393 MeadWestvaco 68,404 499,880 1,293,654 - 1,861,938 Corp. 6,615 - - - 6,615 Weyerhaeuser 202,485 - - - 202,485 Co. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 428,549 499,880 1,293,654 - 2,222,083 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Personal Products (0.1%): 13,374 - - - 13,374 Avon Products, 321,377 - - - 321,377 Inc. 3,609 - - - 3,609 Estee Lauder Co., Inc. (The), Class A 111,735 - - - 111,735 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 433,112 - - - 433,112 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Pharmaceuticals (4.9%): 48,844 - - - 48,844 Abbott 2,606,804 - - - 2,606,804 Laboratories 9,654 - - - 9,654 Allergan, Inc. 389,249 - - - 389,249 62,295 - - - 62,295 Bristol-Myers 1,448,359 - - - 1,448,359 Squibb Co. 31,480 - - - 31,480 Eli Lilly & Co. 1,267,700 - - - 1,267,700 9,444 - - - 9,444 Forest 240,539 - - - 240,539 Laboratories, Inc.* 87,364 - - - 87,364 Johnson & 5,226,988 - - - 5,226,988 Johnson Co. 8,216 - - - 8,216 King 87,254 - - - 87,254 Pharmaceuticals, Inc.* 15,657 - - - 15,657 Medco Health 656,185 - - - 656,185 Solutions, Inc.* 66,546 - - - 66,546 Merck & Co., 2,022,998 - - - 2,022,998 Inc. 9,470 - - - 9,470 Mylan, Inc.* 93,658 - - - 93,658 212,300 43,032 - - 255,332 Pfizer, Inc. 3,759,833 762,097 - - 4,521,930 51,126 - - - 51,126 Schering Plough 870,676 - - - 870,676 Corp. - 50,168 - - 50,168 ViroPharma, - 653,187 - - 653,187 Inc.* 3,487 - - - 3,487 Watson 92,650 - - - 92,650 Pharmaceuticals, Inc.* 297 The Allianz Variable Insurance Products Trust - Statement of Additional Information 41,902 - - - 41,902 Wyeth 1,571,744 - - - 1,571,744 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 20,334,637 1,415,284 - - 21,749,921 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Real Estate Investment Trusts (REITs) (0.5%): 3,913 - - - 3,913 Apartment Investment & - - - - - Management Co., 45,195 - - - 45,195 Class A 2,408 - - - 2,408 Avalonbay 145,877 - - - 145,877 Communities, Inc. 3,782 - - - 3,782 Boston 208,010 - - - 208,010 Properties, Inc. 4,093 - - - 4,093 Developers 19,974 - - - 19,974 Diversified Realty Corp. 8,524 - - - 8,524 Equity 254,186 - - - 254,186 Residential Property Trust 16,285 - - - 16,285 Host Hotels & 123,277 - - - 123,277 Resorts, Inc. 7,144 - - - 7,144 Kimco Realty 130,592 - - - 130,592 Corp. 5,217 - - - 5,217 Plum Creek 181,239 - - - 181,239 Timber Co., Inc. 8,857 - - - 8,857 ProLogis Trust 123,024 - - - 123,024 3,932 - - - 3,932 Public Storage, 312,594 - - - 312,594 Inc. 7,088 - - - 7,088 Simon Property 376,585 - - - 376,585 Group, Inc. 4,306 - - - 4,306 Vornado Realty 259,867 - - - 259,867 Trust ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 2,180,420 - - - 2,180,420 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Real Estate Management & Development (0.5%): 7,517 - - - 7,517 CB Richard 32,473 - - - 32,473 Ellis Group, Inc.* - 942,000 - - 942,000 New World - 962,411 - - 962,411 Developments Co., Ltd. 298 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 987,000 - - 987,000 Sino Land Co., - 1,031,591 - - 1,031,591 Ltd. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 32,473 1,994,002 - - 2,026,475 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Road & Rail (0.6%): 8,825 - - - 8,825 Burlington 668,141 - - - 668,141 Northern Santa Fe Corp. 12,385 - - - 12,385 CSX Corp. 402,141 - - - 402,141 11,635 - - - 11,635 Norfolk 547,427 - - - 547,427 Southern Corp. 1,990 - - - 1,990 Ryder System, 77,172 - - - 77,172 Inc. 15,924 - - - 15,924 Union Pacific 761,167 - - - 761,167 Corp. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 2,456,048 - - - 2,456,048 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Semiconductors & Semiconductor Equipment (1.2%): 18,944 - - - 18,944 Advanced Micro 40,919 - - - 40,919 Devices, Inc.* 9,293 - - - 9,293 Altera Corp. 155,286 - - - 155,286 9,106 - - - 9,106 Analog Devices, 173,196 - - - 173,196 Inc. 42,136 - - - 42,136 Applied 426,838 - - - 426,838 Materials, Inc. 13,917 - - - 13,917 Broadcom Corp., 236,172 - - - 236,172 Class A* 175,093 - - - 175,093 Intel Corp. 2,566,863 - - - 2,566,863 5,262 - - - 5,262 KLA-Tencor Corp. 114,659 - - - 114,659 6,928 - - - 6,928 Linear 153,247 - - - 153,247 Technology Corp. 21,505 - - - 21,505 LSI Logic 70,751 - - - 70,751 Corp.* 6,980 - - - 6,980 MEMC Electronic 99,674 - - - 99,674 Materials, Inc.* 5,665 - - - 5,665 Microchip 110,638 - - - 110,638 Technology, Inc. 25,476 - - - 25,476 Micron 67,257 - - - 67,257 Technology, Inc.* 6,981 - - - 6,981 National 70,299 - - - 70,299 Semiconductor Corp. 3,044 - - - 3,044 Novellus 37,563 - - - 37,563 Systems, Inc.* 16,763 - - - 16,763 NVIDIA Corp.* 135,277 - - - 135,277 5,727 - - - 5,727 Teradyne, Inc.* 24,168 - - - 24,168 299 The Allianz Variable Insurance Products Trust - Statement of Additional Information 40,750 - - - 40,750 Texas 632,440 - - - 632,440 Instruments, Inc. 8,558 - - - 8,558 Xilinx, Inc. 152,504 - - - 152,504 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 5,267,751 - - - 5,267,751 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Software (2.1%): 16,664 - - - 16,664 Adobe Systems, 354,776 - - - 354,776 Inc.* 7,063 - - - 7,063 Autodesk, Inc.* 138,788 - - - 138,788 5,860 - - - 5,860 BMC Software, 157,692 - - - 157,692 Inc.* 12,339 - - - 12,339 CA, Inc. 228,642 - - - 228,642 5,669 - - - 5,669 Citrix Systems, 133,618 - - - 133,618 Inc.* 8,841 - - - 8,841 Compuware 59,677 - - - 59,677 Corp.* 10,026 - - - 10,026 Electronic 160,817 - - - 160,817 Arts, Inc.* 9,174 - - - 9,174 International 109,079 - - - 109,079 Game Technology 10,028 - - - 10,028 Intuit, Inc.* 238,566 - - - 238,566 4,771 - - - 4,771 McAfee, Inc.* 164,933 - - - 164,933 240,881 - - - 240,881 Microsoft Corp. 4,682,727 - - - 4,682,727 10,761 - - - 10,761 Novell, Inc.* 41,860 - - - 41,860 123,311 - - - 123,311 Oracle Corp.* 2,186,304 - - - 2,186,304 3,265 - - - 3,265 Salesforce.com, 104,513 - - - 104,513 Inc.* 22,946 - - - 22,946 Sun 87,654 - - - 87,654 Microsystems, Inc.* 26,236 - - - 26,236 Symantec Corp.* 354,711 - - - 354,711 5,865 - - - 5,865 Teradata Corp.* 86,978 - - - 86,978 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 9,291,335 - - - 9,291,335 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Specialty Retail (2.2%): 3,115 - - - 3,115 Abercrombie & Fitch Co., - - - - - Class A 71,863 - - - 71,863 3,370 - - - 3,370 AutoNation, 33,296 - - - 33,296 Inc.* 1,196 7,154 18,511 - 26,861 AutoZone, Inc.* 166,806 997,768 2,581,729 - 3,746,303 8,131 - - - 8,131 Bed Bath & 206,690 - - - 206,690 Beyond, Inc.* 10,594 - - - 10,594 Best Buy Co., 297,797 - - - 297,797 Inc. - 8,462 21,902 - 30,364 Buckle, Inc. - 184,641 477,902 - 662,543 (The) 300 The Allianz Variable Insurance Products Trust - Statement of Additional Information 5,103 - - - 5,103 GameStop Corp., 110,531 - - - 110,531 Class A* 14,592 - - - 14,592 Gap, Inc. (The) 195,387 - - - 195,387 53,346 - - - 53,346 Home Depot, Inc. 1,228,025 - - - 1,228,025 9,019 - - - 9,019 Limited Brands, 90,551 - - - 90,551 Inc. 46,105 - - - 46,105 Lowe's Cos., 992,179 - - - 992,179 Inc. 9,287 - - - 9,287 Office Depot, 27,675 - - - 27,675 Inc.* 4,490 - - - 4,490 RadioShack Corp. 53,611 - - - 53,611 3,072 - - - 3,072 Sherwin 183,552 - - - 183,552 Williams Co. 22,399 - - - 22,399 Staples, Inc. 401,390 - - - 401,390 3,824 - - - 3,824 Tiffany & Co. 90,361 - - - 90,361 13,052 - - - 13,052 TJX Cos., Inc. 268,480 - - - 268,480 - 6,893 17,838 - 24,731 Tractor Supply - 249,113 644,665 - 893,778 Co.* ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 4,418,194 1,431,522 3,704,296 - 9,554,012 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Textiles, Apparel & Luxury Goods (0.3%): 10,236 - - - 10,236 Coach, Inc.* 212,602 - - - 212,602 2,846 - - - 2,846 Jones Apparel 16,678 - - - 16,678 Group, Inc. 12,331 - - - 12,331 Nike, Inc., 628,881 - - - 628,881 Class B 1,875 - - - 1,875 Polo Ralph 85,144 - - - 85,144 Lauren Corp. 2,750 - - - 2,750 V.F. Corp. 150,617 - - - 150,617 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 1,093,922 - - - 1,093,922 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Thrifts & Mortgage Finance (0.9%): - 33,267 86,093 - 119,360 First Niagara - 537,927 1,392,124 - 1,930,051 Financial Group, Inc. 16,337 - - - 16,337 Hudson City 260,738 - - - 260,738 Bancorp, Inc. 10,884 - - - 10,884 People's United 194,062 - - - 194,062 Financial, Inc. 19,536 - - - 19,536 Sovereign 58,217 - - - 58,217 Bancorp, Inc.* - 31,037 80,323 - 111,360 Washington - 464,314 1,201,632 - 1,665,946 Federal, Inc. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 513,017 1,002,241 2,593,756 - 4,109,014 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 301 The Allianz Variable Insurance Products Trust - Statement of Additional Information Tobacco (1.4%): 64,812 - - - 64,812 Altria Group, 976,069 - - - 976,069 Inc. 5,271 - - - 5,271 Lorillard, Inc. 297,021 - - - 297,021 63,688 - - - 63,688 Philip Morris 2,771,065 - - - 2,771,065 International, Inc. 5,294 - - - 5,294 Reynolds 213,401 - - - 213,401 American, Inc. - 15,904 41,160 - 57,064 Universal Corp. - 475,052 1,229,449 - 1,704,501 4,656 - - - 4,656 UST, Inc. 323,033 - - - 323,033 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 4,580,589 475,052 1,229,449 - 6,285,090 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Trading Companies & Distributors (0.0%): ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 2,020 - - - 2,020 W.W. Grainger, 159,257 - - - 159,257 Inc. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Transportation Infrastructure (0.3%): - 1,089,000 - - 1,089,000 Cosco Pacific, - 1,121,196 - - 1,121,196 Ltd. ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Wireless Telecommunication Services (0.1%): 12,451 - - - 12,451 American Tower Corp., Class A* 365,063 - - - 365,063 82,170 - - - 82,170 Sprint Nextel 150,371 - - - 150,371 Corp.* 515,434 - - - 515,434 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Total Common 247,651,051 54,680,821 54,274,641 - 356,606,513 Stocks (Cost $414,280,746) ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- CORPORATE BONDS (7.0%): Automobiles (0.1%): - - - 200,000 200,000 DaimlerChrysler 302 The Allianz Variable Insurance Products Trust - Statement of Additional Information NA Holding Corp., Series E, 2.35%, 3/13/09(a)+ - - - 199,900 199,900 - - - 100,000 100,000 DaimlerChrysler NA Holding Corp., 3.64%, - - - 94,719 94,719 8/3/09(a)+ ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- - - - 294,619 294,619 ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- Biotechnology (0.1%): - - - 300,000 300,000 Amgen, Inc., 6.90%, 6/1/38+ - - - 342,548 342,548 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Chemicals (0.0%): - - - 100,000 100,000 Rohm & Haas Co., 6.00%, 9/15/17+ - - - 91,009 91,009 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Commercial Banks (1.7%): - - - 300,000 300,000 American Express Centurion Bank, 1.46%, 6/12/09(a)+ - - - 291,127 291,127 - - - 400,000 400,000 American Express Centurion Bank, 5.55%, 10/17/12+ - - - 379,978 379,978 - - - 100,000 100,000 ANZ National Bank, Ltd., 6.20%, - - - 96,756 96,756 7/19/13(b)+ - - - 500,000 500,000 Banc of America Corp., 2.28%, - - - 335,795 335,795 6/15/16(a)+ - - - 100,000 100,000 Bank of America Corp., 2.83%, - - - 98,030 98,030 11/6/09(a)+ - - - 1,200,000 Bank of America 1,200,000 Corp., 303 The Allianz Variable Insurance Products Trust - Statement of Additional Information 8.13%, 12/31/49+ - - - 863,146 863,146 - - - 100,000 100,000 Barclays Bank plc, 6.05%, - - - 88,220 88,220 12/4/17(b)+ - - - 300,000 300,000 BNP Paribas, 5.19%, - - - 170,186 170,186 6/29/49(b)+ - - - 900,000 900,000 Chase Manhattan Corp., 7.00%, - - - 909,508 909,508 11/15/09+ - - - 100,000 100,000 Citigroup, Inc., 1.50%, - - - 94,330 94,330 12/28/09(a)+ - - - 200,000 200,000 Citigroup, Inc., 2.39%, - - - 184,741 184,741 5/18/10(a)+ - - - 300,000 300,000 Citigroup, Inc., 5.50%, 4/11/13+ - - - 292,105 292,105 - - - 200,000 200,000 Citigroup, Inc., 6.00%, 8/15/17+ - - - 199,082 199,082 - - - 100,000 100,000 Citigroup, Inc., 6.13%, 8/25/36+ - - - 89,579 89,579 - - - 100,000 100,000 Credit Agricole, 2.18%, - - - 99,719 99,719 5/28/09(a) (b)+ - - - 100,000 100,000 DnB NOR Bank ASA, 4.89%, - - - 99,975 99,975 10/13/09(a) (b)+ - - - 300,000 300,000 HBOS Treasury Services PLC, 4.59%, - - - 299,115 299,115 7/17/09(a) (b)+ - - - 200,000 200,000 ICICI Bank, Ltd., 5.29%, 1/12/10(a) (b)+ - - - 165,500 165,500 - - - 100,000 100,000 J.P. Morgan Chase & Co., 0.52%, - - - 99,124 99,124 6/26/09(a)+ - - - 200,000 200,000 Key Bank NA, Series BKNT, 4.47%, 6/2/10(a) (b)+ - - - 192,892 192,892 - - - 200,000 200,000 KeyCorp, 304 The Allianz Variable Insurance Products Trust - Statement of Additional Information Series E, 4.28%, 11/22/10, MTN(a)+ - - - 194,585 194,585 - - - 500,000 500,000 Regions Bank, 7.50%, - - - 429,716 429,716 5/15/18(b)+ - - - 1,000,000 SunTrust Bank, 1,000,000 2.28%, - - - 912,190 912,190 5/21/12(a)+ - - - 100,000 100,000 UBS AG Stamford CT, 5.88%, - - - 91,864 91,864 12/20/17+ - - - 300,000 300,000 Wachovia Bank NA, 1.54%, - - - 297,991 297,991 3/23/09(a)+ - - - 100,000 100,000 Wachovia Corp., 2.25%, - - - 96,867 96,867 12/1/09(a)+ - - - 100,000 100,000 Wachovia Corp., 2.35%, - - - 94,346 94,346 6/1/10(a)+ - - - 300,000 300,000 Wells Fargo & Co., 5.63%, - - - 312,983 312,983 12/11/17+ ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- - - - 7,479,450 7,479,450 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Commercial Services & Supplies (0.1%): - - - 100,000 100,000 The President & Fellows of Harvard College, 6.00%, - - - 107,903 107,903 1/15/19(b) - - - 500,000 500,000 The President & Fellows of Harvard College, 6.50%, - - - 544,850 544,850 1/15/39(b) ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- - - - 652,753 652,753 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- ------- Computers & Peripherals (0.3%): - - - 200,000 200,000 Dell, Inc., 5.65%, 4/15/18+ - - - 179,011 179,011 - - - 1,000,000 1,000,000 IBM Corp., 305 The Allianz Variable Insurance Products Trust - Statement of Additional Information 5.70%, 9/14/17+ - - - 1,069,115 1,069,115 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- - - - 1,248,126 1,248,126 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Diversified Consumer Services (1.8%): - - - 100,000 100,000 Allstate Life Global Funding Trust, 1.54%, - - - 99,169 99,169 3/23/09(a)+ - - - 100,000 100,000 Allstate Life Global Funding Trust, 5.38%, 4/30/13, MTN+ - - - 98,440 98,440 - - - 200,000 200,000 American Express Credit Co., 1.93%, - - - 185,986 185,986 11/9/09(a)+ - - - 100,000 100,000 American Express Credit Co., Series C, - - - 95,997 95,997 5.88%, 5/2/13+ - - - 100,000 100,000 American General Finance, 6.90%, - - - 43,277 43,277 12/15/17, MTN+ - - - 200,000 200,000 American Honda Finance Corp., 2.25%, - - - 199,777 199,777 3/9/09(a) (b)+ - - - 400,000 400,000 American Honda Finance Corp., 2.30%, - - - 398,450 398,450 5/12/09(a) (b)+ - - - 200,000 200,000 American International Group, 5.85%, 1/16/18, - - - 134,057 134,057 MTN+ 306 The Allianz Variable Insurance Products Trust - Statement of Additional Information - - - 1,000,000 1,000,000 Appalachian Power Co., 6.60%, 5/1/09+ - - - 991,392 991,392 - - - 400,000 400,000 Bear Stearns Cos., Inc., 1.56%, - - - 397,422 397,422 3/30/09(a)+ - - - 50,000 50,000 Bear Stearns Cos., Inc., 2.46%, - - - 49,192 49,192 9/9/09(a)+ - - - 100,000 100,000 C10 Capital SPV, Ltd., 6.72%, - - - 47,583 47,583 12/31/49(b)+ - - - 100,000 100,000 Caterpillar Financial Services Corp., 4.85%, 12/7/12, MTN+ - - - 94,879 94,879 - - - 100,000 100,000 CIT Group, Inc., 3.62%, - - - 99,862 99,862 1/30/09(a)+ - - - 100,000 100,000 CIT Group, Inc., 2.30%, - - - 97,617 97,617 6/8/09(a)+ - - - 100,000 100,000 CIT Group, Inc., 2.27%, - - - 96,114 96,114 8/17/09(a)+ - - - 200,000 200,000 Citigroup Capital XXI, 8.30%, 12/21/57, Callable 12/21/37 @ 100+ - - - 154,247 154,247 - - - 30,000 30,000 Citigroup Funding, Inc., 0.47%, 4/23/09(a)+ - - - 29,652 29,652 - - - 1,200,000 1,200,000 Countrywide Home Loans, Inc., Series M, 4.13%, 9/15/09, MTN+ - - - 1,185,937 1,185,937 - - - 300,000 300,000 ENEL Finance International, 6.80%, - - - 230,340 230,340 9/15/37(b)+ - - - 600,000 600,000 Ford Motor Credit Corp., 307 The Allianz Variable Insurance Products Trust - Statement of Additional Information 7.25%, 10/25/11+ - - - 438,305 438,305 - - - 200,000 200,000 General Electric Capital Corp., 4.57%, - - - 191,105 191,105 1/20/10(a)+ - - - 100,000 100,000 General Electric Capital Corp., 2.45%, - - - 94,199 94,199 5/10/10(a)+ - - - 300,000 300,000 General Electric Capital Corp., 2.22%, - - - 263,070 263,070 8/15/11(a)+ - - - 50,000 50,000 General Electric Capital Corp., 3.24%, - - - 26,342 26,342 5/5/26(a)+ - - - 300,000 300,000 General Electric Capital Corp., 6.38%, - - - 188,571 188,571 11/15/67+ - - - 100,000 100,000 HSBC Finance Corp., 4.48%, - - - 93,826 93,826 10/21/09(a)+ - - - 50,000 50,000 HSBC Finance Corp., 2.64%, - - - 45,191 45,191 5/10/10(a)+ - - - 400,000 400,000 International Lease Financial Corp., 2.37%, - - - 318,837 318,837 5/24/10(a)+ - - - 100,000 100,000 NGPL PipeCo LLC, 6.51%, - - - 94,902 94,902 12/15/12(b)+ - - - 100,000 100,000 Santander, 6.67%, - - - 63,604 63,604 10/29/49+(b) - - - 450,000 450,000 SLM Corp., 3.68%, - - - 424,169 424,169 7/27/09(a)+ - - - 100,000 100,000 SMFG Preferred Capital, 6.08%, - - - 67,463 67,463 1/29/49(b)+ 308 The Allianz Variable Insurance Products Trust - Statement of Additional Information - - - 200,000 200,000 UBS Preferred Funding Trust V, 6.24%, 5/29/49+ - - - 109,225 109,225 - - - 100,000 100,000 Westfield Group, 5.70%, - - - 66,796 66,796 10/1/16(b)+ ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- - - - 7,214,995 7,214,995 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Diversified Financial Services (1.8%): - - - 1,500,000 1,500,000 Associates Corp. NA, 7.00%, 2/10/09+ - - - 1,497,662 1,497,662 - - - 800,000 800,000 Citigroup, Inc., 8.45%, 4/29/49+ - - - 528,232 528,232 - - - 300,000 300,000 General Electric Capital Corp., 5.50%, - - - 231,742 231,742 9/15/67(c)+ - - - 300,000 300,000 GMAC LLC, 6.88%, 8/28/12+ - - - 227,482 227,482 - - - 50,000 50,000 Goldman Sachs Group, Inc., 1.59%, - - - 48,745 48,745 6/23/09(a)+ - - - 100,000 100,000 Goldman Sachs Group, Inc., 2.23%, - - - 95,784 95,784 11/16/09(a)+ - - - 300,000 300,000 Goldman Sachs Group, Inc., 5.63%, 1/15/17+ - - - 257,723 257,723 - - - 300,000 300,000 Goldman Sachs Group, Inc., 5.95%, 1/18/18+ - - - 284,452 284,452 - - - 100,000 100,000 Goldman Sachs Group, Inc., 6.15%, 4/1/18+ - - - 96,096 96,096 309 The Allianz Variable Insurance Products Trust - Statement of Additional Information - - - 40,000 40,000 J.P. Morgan Chase & Co., 6.00%, 1/15/18+ - - - 42,221 42,221 - - - 100,000 100,000 Lehman Brothers Holdings, 0.00%, - - - 9,000 9,000 11/24/08(e) - - - 100,000 100,000 Lehman Brothers Holdings, 0.00%, 4/3/09(e) - - - 9,000 9,000 - - - 200,000 200,000 Lehman Brothers Holdings, 0.00%, - - - 19,000 19,000 9/26/14(e) - - - 50,000 50,000 Merrill Lynch & Co., 2.96%, - - - 49,813 49,813 2/6/09(a)+ - - - 1,000,000 Merrill Lynch & 1,000,000 Co., Series C, 4.02%, 5/20/09, MTN(a)+ - - - 987,308 987,308 - - - 100,000 100,000 Merrill Lynch & Co., 2.29%, - - - 95,961 95,961 12/4/09(a)+ - - - 200,000 200,000 Merrill Lynch & Co., 6.88%, 4/25/18+ - - - 209,205 209,205 - - - 400,000 400,000 Morgan Stanley, 2.50%, - - - 398,007 398,007 2/9/09(a)+ - - - 100,000 100,000 Morgan Stanley, 2.56%, - - - 98,368 98,368 5/7/09(a)+ - - - 100,000 100,000 Morgan Stanley, Series F, 4.84%, - - - 91,879 91,879 1/15/10(a)+ - - - 400,000 400,000 Morgan Stanley, 5.03%, - - - 372,656 372,656 1/15/10(a)+ - - - 200,000 200,000 Morgan Stanley, Series F, 310 The Allianz Variable Insurance Products Trust - Statement of Additional Information 4.23%, 5/14/10, MTN(a)+ - - - 186,159 186,159 - - - 100,000 100,000 Transcapital Ltd., 8.70%, - - - 64,395 64,395 8/7/18(b)+ - - - 400,000 400,000 Wachovia Corp., 5.75%, 2/1/18+ - - - 400,796 400,796 - - - 1,700,000 1,700,000 Wachovia Corp., 7.98%, 2/28/49+ - - - 1,449,080 1,449,080 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- - - - 7,750,766 7,750,766 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Food & Staples Retailing (0.0%): - - - 200,000 200,000 Kraft Foods, Inc., 6.13%, 2/1/18+ - - - 195,979 195,979 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Health Care Providers & Services (0.0%): - - - 100,000 100,000 UnitedHealth Group, Inc., 4.88%, 2/15/13+ - - - 93,362 93,362 ---------- -------- ------------ -------- -------- ---------- -------- ------------ -------- -------- Industrial Conglomerate (0.1%): - - - 400,000 400,000 Honeywell International, Inc., 2.06%, - - - 399,356 399,356 3/13/09(a)+ ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Insurance (0.4%): - - - 500,000 500,000 Marsh & McLennan Cos., Inc., 7.13%, 6/15/09 - - - 498,670 498,670 - - - 300,000 300,000 Met Life Global Funding, 2.19%, - - - 269,094 269,094 5/17/10(a) (b)+ - - - 100,000 100,000 Monumental Global Funding II, 311 The Allianz Variable Insurance Products Trust - Statement of Additional Information 5.50%, - - - 94,341 94,341 4/22/13(b)+ - - - 100,000 100,000 Principal Life Income Funding Trust, 5.55%, 4/27/15, - - - 96,001 96,001 MTN+ - - - 700,000 700,000 Sun Life Financial, Inc., 1.62%, - - - 677,501 677,501 7/6/11(a) (b)+ ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- - - - 1,635,607 1,635,607 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Media (0.1%): - - - 100,000 100,000 Comcast Corp., 5.12%, - - - 98,634 98,634 7/14/09(a)+ - - - 200,000 200,000 Time Warner, Inc., 5.88%, - - - 179,297 179,297 11/15/16+ ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- - - - 277,931 277,931 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Multiline Retail (0.1%): - - 600,000 600,000 Home Depot, Inc. (The), - 3.75%, 9/15/09+ - - - 594,314 594,314 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Oil, Gas & Consumable Fuels (0.4%): - - - 600,000 600,000 Anadarko Petroleum Corp., 2.40%, - - - 574,094 574,094 9/15/09(a)+ - - - 400,000 400,000 Gaz Capital SA, Series 2, 8.63%, 4/28/34, Puttable - - - 320,000 320,000 4/28/14 @ 100+ - - - 200,000 200,000 Gazprom, 9.63%, - - - 182,000 182,000 3/1/13+ - - - 40,000 40,000 Gazprom OAO, 10.50%, - - - 40,205 40,205 10/21/09+ - - - 300,000 300,000 Kinder Morgan Energy Partners LP, 312 The Allianz Variable Insurance Products Trust - Statement of Additional Information 5.95%, 2/15/18+ - - - 256,039 256,039 - - - 300,000 300,000 Suncor Energy, Inc., 6.10%, 6/1/18+ - - - 258,523 258,523 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- - - - 1,630,861 1,630,861 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Pharmaceuticals (0.0%): - - - 100,000 100,000 AstraZeneca PLC, 5.90%, 9/15/17+ - - - 106,273 106,273 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Road & Rail (0.0%): - - - 200,000 200,000 Union Pacific Corp., 5.70%, 8/15/18+ - - - 192,547 192,547 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Tobacco (0.0%): - - - 100,000 100,000 Philip Morris International, Inc., 6.38%, 5/16/38+ - - - 104,007 104,007 ---------- -------- --------- --------- --------- ---------- -------- --------- --------- --------- Total Corporate - - - 30,304,503 30,304,503 Bonds (Cost $33,288,640) ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- YANKEE DOLLARS (0.2%): Commercial Banks (0.1%): - - - 100,000 100,000 Credit Agricole, 2.23%, - - - 98,812 98,812 5/28/10(a) (b)+ - - - 100,000 100,000 HSBC Holdings PLC, 6.50%, 9/15/37+ - - - 101,558 101,558 - - - 100,000 100,000 National Australia Bank, Ltd., 2.20%, - - - 100,073 100,073 9/11/09(a) (b)+ ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- - - - 300,443 300,443 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- 313 The Allianz Variable Insurance Products Trust - Statement of Additional Information Diversified Consumer Services (0.1%): - - - 200,000 200,000 Deutsche Telekom International Finance BV, 1.68%, - - - 198,227 198,227 3/23/09(a)+ - - - 100,000 100,000 Siemens Financieringsmaatschappij NV, 2.18%, - - - 100,089 100,089 8/14/09(a) (b)+ - - - 200,000 200,000 Telefonica Emisiones Sau, 1.83%, - - - 193,622 193,622 6/19/09(a)+ ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- - - - 491,938 491,938 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Total Yankee - - - 792,381 792,381 Dollars (Cost $799,857) ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- PREFERRED STOCKS (0.2%): Commercial Banks (0.1%): - - - 200 200 Wachovia Corp. Series L, Class - - - 150,000 150,000 A+ ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Diversified Financial Services (0.1%): - - - 1,800 1,800 American International Group+ - - - 15,300 15,300 - - - 300 300 Bank of America Corp., Series L+ - - - 195,000 195,000 34 DG Funding - - - 341,063 341,063 Trust(c) ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- - - - 551,363 551,363 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Total Preferred - - - 701,363 701,363 Stocks (Cost $812,345) 314 The Allianz Variable Insurance Products Trust - Statement of Additional Information ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- MUNICIPAL BONDS (0.4%): Arizona (0.1%): - - - 300,000 300,000 Salt River Project Arizona Agriculture Improvement & Power District Electricity System Revenue, Series A, 5.00%, 1/1/37, Callable 1/1/16 - - - 283,191 283,191 @ 100+ ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- California (0.0%): - - - 200,000 200,000 Los Angeles California United School District, Series A-1, 4.50%, 7/1/23, Callable 7/1/17 - - - 183,546 183,546 @ 100+ ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Illinois (0.1%): - - - 200,000 200,000 Chicago Illinois Transit Authority Sales & Transfer Tax Receipts Revenue, Series A, 6.90%, 12/1/40+ - - - 205,152 205,152 - - - 100,000 100,000 Chicago Illinois Transit Authority Sales & Transfer Tax Receipts Revenue, Series B, - - - 102,576 102,576 6.90%, 12/1/40+ ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- - - - 307,728 307,728 ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- Massachusetts (0.1%): - - - 300,000 300,000 Massachusetts State, Series D, 5.50%, 11/1/14+ - - - 341,823 341,823 315 The Allianz Variable Insurance Products Trust - Statement of Additional Information ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- New York (0.1%): - - - 800,000 800,000 New York City Municipal Water Finance Authority, Water & Sewer System Revenue, Series AA, 4.75%, 6/15/37, Callable - - - 681,344 681,344 6/15/16 @ 100+ ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- Total Municipal - - - 1,797,632 1,797,632 Bonds (Cost $1,861,841) ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- U.S. GOVERNMENT AGENCY MORTGAGES (18.5%): Federal Home Loan Bank (0.7%) - - - 3,000,000 3,000,000 0.08%,1/21/09(d)+ - - - 3,000,000 3,000,000 ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- Federal Home Loan Mortgage Corporation (2.2%) - - - 690,714 690,714 1.43%, 2/15/19, Series 3346 - - - 663,496 663,496 FA(a)+ - - - 644,383 644,383 6.00%, 9/1/27+ - - - 665,013 665,013 - - - 3,000,000 6.00%, 1/15/37, - - - 3,090,000 3,090,000 3,000,000 TBA - - - 3,000,000 5.00%, 1/15/38, 3,000,000 Pool #12713 TBA - - - 3,065,625 3,065,625 - - - 404,607 404,607 6.00%, 3/1/38, Pool #A74291+ - - - 417,206 417,206 - - - 150,049 150,049 5.50%, 7/1/38, Pool #A79018+ - - - 153,736 153,736 - - - 847,263 847,263 5.50%, 7/1/38, Pool #A79021+ - - - 868,084 868,084 - - - 491,384 491,384 5.50%, 8/1/38, Pool #G04588+ - - - 503,459 503,459 316 The Allianz Variable Insurance Products Trust - Statement of Additional Information - - - 194,053 194,053 6.00%, 8/1/38, Pool #A81114+ - - - 200,095 200,095 - - - 85,087 85,087 3.68%, - - - 76,546 76,546 2/25/45(a)+ ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- - - - 9,703,260 9,703,260 ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- Federal Home Loan Mortgage Corporation (1.1%) - - - 4,400,000 4,400,000 5.50%, 1/15/38, Pool #27315 TBA - - - 4,503,127 4,503,127 ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- Federal National Mortgage Association (14.5%) - - - 900,000 900,000 1.12%, - - - 899,992 899,992 2/2/09(d)+ 46,080 46,080 5.50%, 3/1/22, Pool #910081+ - - - 47,538 47,538 - - - 796,513 796,513 5.50%, 7/1/23, Pool #964571+ - - - 821,646 821,646 - - - 325,693 325,693 6.00%, 3/1/27+ - - - 335,837 335,837 - - - 257,630 257,630 6.00%, 5/1/27+ - - - 265,655 265,655 - - - 646,504 646,504 6.00%, 9/1/27+ - - - 666,640 666,640 - - - 630,719 630,719 6.00%, 10/1/27+ - - - 650,363 650,363 - - - 650,345 650,345 6.00%, 11/1/27+ - - - 670,600 670,600 - - - 500,000 500,000 6.50%, 1/1/35 - - - 519,219 519,219 - - - 22,900,000 22,900,000 5.50%, 1/15/37, - - - 23,472,500 23,472,500 TBA - - - 385,847 385,847 6.50%, 10/1/37, Pool #947575+ - - - 401,199 401,199 - - - 8,900,000 8,900,000 6.00%, 1/15/38 - - - 9,161,438 9,161,438 - - - 949,699 949,699 5.50%, 6/1/38, Pool #889996+ - - - 974,615 974,615 - - - 24,000,000 24,000,000 5.00%, 1/13/39, 317 The Allianz Variable Insurance Products Trust - Statement of Additional Information Pool #19888 TBA - - - 24,502,512 24,502,512 ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- - - - 63,389,754 63,389,754 ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- Total U.S. Government Agency Mortgages ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- (Cost $79,773,594) - - - 80,596,141 80,596,141 ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- U.S. TREASURY OBLIGATIONS (4.6%): U.S. Treasury Bills ( 1.2%) - - - - - U.S. Treasury Bills, 1,050,000 - - - 0.05%, 1,049,225 - - - 1,049,225 1,050,000 6/18/09**+ - - - 2,940,000 2,940,000 0.03%, - - - 2,939,985 2,939,985 1/15/09(d)+ - - - 810,000 810,000 0.30%, - - - 809,997 809,997 1/22/09(d)+ - - - 500,000 500,000 0.20%, - - - 499,984 499,984 2/19/09(d)+ ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- 1,049,225 - - 4,249,966 5,299,191 ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- U.S. Treasury Inflation Index Bond (1.6%) - - - 3,800,000 3,800,000 2.38%, 1/15/25+ - - - 4,290,967 4,290,967 - - - 800,000 800,000 2.00%, 1/15/26+ - - - 822,265 822,265 - - - 1,800,000 1,800,000 1.75%, 1/15/28 - - - 1,719,208 1,719,208 ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- - - - 6,832,440 6,832,440 ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- U.S. Treasury Inflation Index Notes (1.7%) - - - 500,000 500,000 3.50%, 1/15/11 - - - 610,645 610,645 - - - 1,100,000 1,100,000 2.00%, 4/15/12 - - - 1,144,841 1,144,841 - - - 800,000 800,000 3.00%, 7/15/12 - - - 944,419 944,419 - - - 1,000,000 1,000,000 1.88%, 7/15/13 - - - 1,110,179 1,110,179 - - - 300,000 300,000 2.00%, 1/15/14 - - - 333,169 333,169 - - - 600,000 600,000 2.00%, 7/15/14 - - - 651,939 651,939 318 The Allianz Variable Insurance Products Trust - Statement of Additional Information - - - 1,900,000 1,900,000 1.88%, 7/15/15 - - - 1,998,336 1,998,336 - - - 800,000 800,000 2.38%, 1/15/17 - - - 852,365 852,365 ---------- -------- ---------- --------- -------- ---------- -------- ---------- --------- -------- - - - 7,645,893 7,645,893 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- U.S. Treasury Inflation Protected Bonds (0.1%) - - - 300,000 300,000 0.88%, 4/15/10 - - - 322,329 322,329 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Total U.S. Treasury Obligations ---------- -------- --------- --------- --------- ---------- -------- --------- --------- --------- (Cost $20,605,436) 1,049,225 - - 19,050,628 20,099,853 ---------- -------- --------- --------- --------- ---------- -------- --------- --------- --------- REPURCHASE AGREEMENTS (1.7%): - - - 2,400,000 2,400,000 J.P. Morgan Chase Bank, N.A., dated 12/31/08, 0.04%, due 1/2/09, proceeds $2,400,005; fully collateralized by FNMA, 3.85% 4/17/13, value at $2,400,024+ - - - 2,400,000 2,400,000 - - - 4,900,000 4,900,000 Barclays Capital, Inc., dated 12/31/08, 0.06%, due 1/5/09, fully proceeds $4,900,011; collateralized by FHLB, 4.50% 9/16/13, value at $4,972,419 - - - 4,900,000 4,900,000 Total Repurchase Agreements ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- (Cost $7,300,000) - - - 7,300,000 7,300,000 ---------- -------- ---------- --------- --------- ---------- -------- ---------- --------- --------- 319 The Allianz Variable Insurance Products Trust - Statement of Additional Information PURCHASED CALL OPTIONS (0.2%): - - - 600 600 Receive 3-Month USD-LIBOR Floating Rate Index, Strike @ 3.50 Exp. 2/2/09+ - - - 235,941 235,941 - - - 660 660 Receive 3-Month USD-LIBOR Floating Rate Index, Strike @ 3.15 Exp. 2/4/11+ - - - 214,185 214,185 - - - 140 140 Receive 3-Month USD-LIBOR Floating Rate Index, Strike @ 3.45 Exp. 8/3/09+ - - - 46,978 46,978 - - - 590 590 Receive 3-Month USD-LIBOR Floating Rate Index, Strike @ 3.45 Exp. 8/5/16+ - - - 197,981 197,981 - - - 770 770 Receive 3-Month USD-LIBOR Floating Rate Index, Strike @ 3.45 Exp. 8/3/09 - - - 258,382 258,382 - - - 94 94 10 Year U.S. Treasury Future Option, Strike @ 83.00 Exp. 2/21/09 - - - 1,469 1,469 320 The Allianz Variable Insurance Products Trust - Statement of Additional Information - - - 42 42 5 Year U.S. Treasury Future Option, Strike @ 86.50 Exp. 2/21/09 - - - 328 328 ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Total Purchased - - - 955,264 955,264 Call Options (Cost $304,160) ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- PUT OPTIONS PURCHASED (0.0%): - - - 100 100 Federal Home Loan Mortgage Corporation, 5.50%, Strike @ 73.00 Exp. 1/6/09(c) - - - 0 0 - - - 340 340 Federal Home Loan Mortgage Corporation, 5.50%, Strike @ 75.25 Exp. 2/6/09(c) - - - 0 0 - - - 300 300 Federal Home Loan Mortgage Corporation, 6.00%, Strike @ 68.00 Exp. 2/6/09(c) - - - 0 0 - - - 300 300 Federal Home Loan Mortgage Corporation, 5.00%, Strike @ 71.25 Exp. 2/6/09(c) - - - 0 0 - - - 850 850 Federal National Mortgage Association, 321 The Allianz Variable Insurance Products Trust - Statement of Additional Information 5.00%, Strike @ 47.00 Exp. 1/6/09(c) - - - 0 0 - - - 1,200 1,200 Federal National Mortgage Association, 5.00%, Strike @ 51.00 Exp. 1/6/09(c) - - - 0 0 - - - 900 900 Federal National Mortgage Association, 5.00%, Strike @ 65.00 Exp. 2/6/09(c) - - - 0 0 - - - 900 900 Federal National Mortgage Association, 5.50%, Strike @ 55.00 Exp. 1/6/09(c) - - - 0 0 - - - 20 20 Federal National Mortgage Association, 5.50%, Strike @ 60.00 Exp. 1/6/09(c) - - - 0 0 - - - 400 400 Federal National Mortgage Association, 5.50%, Strike @ 64.00 Exp. 1/6/09(c) - - - 0 0 - - - 2,200 2,200 Federal National Mortgage Association, 5.50%, Strike @ 65.00 Exp. 1/6/09(c) - - - 0 0 - - - 200 200 Federal National Mortgage Association, 6.00%, Strike @ 80.25 Exp. 2/6/09(c) - - - 0 0 - - - 390 390 Federal National Mortgage Association, 322 The Allianz Variable Insurance Products Trust - Statement of Additional Information 6.00%, Strike @ 68.00 Exp. 2/6/09(c) - - - 0 0 - - - 200 200 Federal National Mortgage Association, 6.00%, Strike @ 80.50 Exp. 2/6/09(c) - - - 0 0 - - - 100 100 September FNMA 5.00%, Strike @ 94.14 Exp. 2/16/09(c) - - - 73,585 73,585 Total Put Options Purchased ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- (Cost $39,334) - - - 73,585 73,585 ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- INVESTMENT COMPANY (3.2%): 7,552,813 1,966,265 1,890,177 2,445,555 13,854,810 Dreyfus Treasury Prime Cash Management, 7,552,813 1,966,265 1,890,177 2,445,555 13,854,810 0.17%(d) ---------- -------- ------------ --------- -------- ---------- -------- ------------ --------- -------- Total Investment Company (Cost $13,854,810) 7,552,813 1,966,265 1,890,177 2,445,555 13,854,810 ---------- -------- ------------ --------- --------- ---------- -------- ------------ --------- --------- Total Investment Securities ^ (Cost 256,253,089 56,647,086 56,164,818 155,757,344 524,822,337 $587,085,179)(f)--120.4% Net other assets 556,958 98,265 207,404 (89,855,883)(88,993,256) (liabilities)-- 20.4% ---------- -------- ------------ --------- -------- -------- -------- --------- --------- --------- Adjustments for - - - - (179,000) Reorganization Fees ======== ============ ========= ======== -------- ------------ --------- -------- Net Assets -- $256,810,047 $56,745,351 $56,372,222 $65,901,461 $435,650,081 100.0% ======== ============ ========= ======== ========== ======== ============ ========= ========
323 The Allianz Variable Insurance Products Trust - Statement of Additional Information Percentages indicated are based on net assets as of December 31, 2008. * Non-income producing security ** The rate presented represents the effective yield at time of purchase. + Investment securities are segregated as collateral. The aggregate fair value of these securities is $69,595,913. ^ No adjustments have been made to the Total Investments in the unadited pro forma combined statements of assets and liabilities because upon consummation of the merger, securities would have to be sold in order for the AZL S&P 500 Index Fund to coply with its prospectus restrictions. The foregoing sentence shall not restrict in any way the ability of the investment adviser of either of the funds from buying or selling securities in the normal course of such fund's business and operations. FNMA--Federal National Mortgage Association FSA--Insured by Federal Financial Security Assurance LIBOR--Represents the London InterBank Offered Rate LLC--Limited Liability Co. LP--Limited Partnership PLC--Public Liability Co. TBA--To be announced, Represents 88.9% of the Fund's net assets. (a) Variable rate security. The rate presented represents the rate in effect at December 31, 2008. The date presented represents the final maturity date. (b) Rule 144A, Section 4(2) or other security which is restricted to resale to institutional investor. The subadviser has deemed these securities to be liquid based on procedures approved by the Board of Trustees. (c) Rule 144A, Section 4(2) or other security which is restricted to resale to institutional investors. The subadviser has deemed these securities to be illiquid based on procedures approved by the Board of Trustees. As of December 31, 2008, these securities represent 1.0% of the net assets of the Fund. (d) The rate presented represents the effective yield at December 31, 2008. (e) Defaulted Bond. In connection with the Lehman Brothers Holdings, Inc. bankruptcy filing announcement on September 15, 2008, the Fund stopped accruing prospective interest amounts on that date. (f) Represents the estimate reorganization fees and expenses that are to be expected to be paid by the Funds. (g) Cost for federal income tax purposes is $618,924,789. The gross unrealized appreciation/(depreciation) on a tax basis is as follows: Unrealized appreciation $15,364,977 Unrealized depreciation (109,467,429) ----------- ----------- Net unrealized $(94,102,452) depreciation AZL S&P 500 Index Fund FUTURES CONTRACTS Securities with an aggregate fair value of $1,049,225 have been segregated with the broker to cover margin requirements for the following open contracts as of December 31, 2008. UNREALIZED EXPIRATION NUMBER OF APPRECIATION/ DESCRIPTION TYPE DATE CONTRACTS (DEPRECIATION) S&P 500 Index E-Mini March Futures Long 3/09 196 $208,006 AZL TargetPLUS Equity Fund 324 The Allianz Variable Insurance Products Trust - Statement of Additional Information As of December 31, 2008 the Fund's open foreign currency exchange contracts were as follows: DELIVERY CONTRACT FAIR APPRECIATION/ LONG CONTRACTS DATE AMOUNT VALUE (DEPRECIATION) Received 106,762 British 1/2/2009 $153,460 $(3,512) Sterling Pounds in $156,972 exchange for U.S. Dollars Received 1,568,565 Hong 1/2/2009 202,398 202,395 (3) Kong Dollars in exchange for U.S. Dollars ---------- ---------- $(3,515) ========== ========== AZL PIMCO Fundamental IndexPLUS Total Return Fund As of December 31, 2008 the Fund's open foreign currency exchange contracts were as follows: LONG CONTRACTS DELIVERY CONTRACT FAIR APPRECIATION/ DATE AMOUNT VALUE (DEPRECIATION) Received 54,000 United Arab Emirates Dirham in exchange for U.S. Dollars 4/16/2009 $14,974 $14,645 $(329) Received 510,284 6/2/2009 268,218 208,487 (59,731) Brazilian Real in exchange for U.S. Dollars Received 5,515,337 7/15/2009 850,000 795,169 (54,831) Chinese Renminbi in exchange for U.S. Dollars Received 1,274,552 9/8/2009 183,977 183,515 (462) Chinese Renminbi in exchange for U.S. Dollars Received 223,875 European 1/13/2009 301,531 310,968 9,437 Euro in exchange for U.S. Dollars Received 456,800,000 3/31/2009 43,397 40,786 (2,611) Indonesian Rupiah in 325 The Allianz Variable Insurance Products Trust - Statement of Additional Information exchange for U.S. Dollars Received 14,879,339 4/9/2009 296,620 303,080 6,460 Indian Rupee in exchange for U.S. Dollars Received 4,894,000 1/8/2009 51,282 54,010 2,728 Japanese Yen in exchange for U.S. Dollars Received 4,000 Kuwaiti 4/16/2009 15,323 14,262 (1,061) Dinar in exchange for U.S. Dollars Received 644,019 2/12/2009 191,829 186,017 (5,812) Malaysian Ringgit in exchange for U.S. Dollars Received 247,570 4/14/2009 70,000 71,497 1,497 Malaysian Ringgit in exchange for U.S. Dollars Received 7,256,090 2/6/2009 157,430 152,162 (5,268) Philippine Peso in exchange for U.S. Dollars Received 3,871,300 5/6/2009 80,000 80,749 749 Philippine Peso in exchange for U.S. Dollars Received 3,521,000 5/6/2009 146,224 102,232 (43,992) Russian Ruble in exchange for U.S. Dollars Received 55,600 Saudi 4/16/2009 15,029 14,811 (218) Arabian Riyal in exchange for U.S. Dollars Received 88,188 Singapore 1/16/2009 60,000 61,198 1,198 Dollars in exchange for U.S. Dollars Received 449,169 4/14/2009 306,212 311,468 5,256 Singapore Dollars in exchange for U.S. Dollars Received 57,856 Singapore 7/30/2009 40,000 40,118 118 Dollars in exchange for U.S. Dollars 326 The Allianz Variable Insurance Products Trust - Statement of Additional Information ---------- ---------- $(146,872) ========== ========== APPRECIATION/ SHORT CONTRACTS DELIVERY CONTRACT FAIR VALUE (DEPRECIATION) --------------- DATE AMOUNT Delivered 54,000 United Arab Emirates Dirham in exchange for U.S. Dollars 4/16/2009 $14,615 $14,645 $(30) Delivered 152,000 1/22/2009 98,443 105,660 (7,217) Australian Dollars in exchange for U.S. Dollars Delivered 368,146 2/3/2009 152,621 155,953 (3,332) Brazilian Real in exchange for U.S. Dollars Delivered 92,900 6/2/2009 36,575 37,956 (1,381) Brazilian Real in exchange for U.S. Dollars Delivered 4,269,962 7/15/2009 603,936 615,618 (11,682) Chinese Renminbi in exchange for U.S. Dollars Delivered 620,000 1/13/2009 783,084 861,194 (78,110) European Euro in exchange for U.S. Dollars Delivered 592,000 British 1/13/2009 877,557 850,581 26,976 Sterling Pounds in exchange for U.S. Dollars Delivered 456,800,000 3/31/2009 37,341 40,786 (3,445) Indonesian Rupiah in exchange for U.S. Dollars Delivered 14,879,339 4/9/2009 289,704 303,080 (13,376) Indian Rupee in exchange for U.S. Dollars Delivered 5,872,857 1/8/2009 62,000 64,813 (2,813) Japanese Yen in exchange for U.S. Dollars Delivered 4,000 Kuwaiti 4/16/2009 14,000 14,262 (262) Dinar in exchange for U.S. Dollars Delivered 38,691 2/19/2009 10,800 11,174 (374) Malaysian Ringgit in 327 The Allianz Variable Insurance Products Trust - Statement of Additional Information exchange for U.S. Dollars Delivered 247,570 4/14/2009 67,347 71,497 (4,150) Malaysian Ringgit in exchange for U.S. Dollars Delivered 605,328 2/12/2009 167,769 174,842 (7,073) Malaysian Ringgit in exchange for U.S. Dollars Delivered 7,256,090 2/6/2009 145,461 152,162 (6,701) Philippine Peso in exchange for U.S. Dollars Delivered 3,871,300 5/6/2009 76,690 80,749 (4,059) Philippine Peso in exchange for U.S. Dollars Delivered 3,521,000 5/6/2009 144,966 102,232 42,734 Russian Ruble in exchange for U.S. Dollars Delivered 55,600 Saudi 4/16/2009 14,740 14,811 (71) Arabian Riyal in exchange for U.S. Dollars Delivered 88,188 1/16/2009 59,580 61,198 (1,618) Singapore Dollars in exchange for U.S. Dollars Delivered 449,169 4/14/2009 300,941 311,469 (10,528) Singapore Dollars in exchange for U.S. Dollars Delivered 57,856 7/30/2009 38,040 40,118 (2,078) Singapore Dollars in exchange for U.S. Dollars ---------- ---------- $(88,590) ========== ========== As of December 31, 2008 the Fund's open future contracts were as follows: UNREALIZED FUTURES CONTRACTS EXPIRATION NUMBER OF APPRECIATION/ DESCRIPTION TYPE DATE CONTRACTS (DEPRECIATION) Euro Eribor March Futures Long 3/09 3 $31,678 328 The Allianz Variable Insurance Products Trust - Statement of Additional Information Euro Eribor June Futures Long 6/09 2 22,509 90-Day British Sterling Long 3/09 30 260,646 Pound March Futures 90-Day British Sterling Long 6/09 24 206,759 Pound June Futures 90-Day British Sterling Long 12/09 1 5,363 Pound December Futures 90-Day Eurodollar March Long 3/10 29 214,600 Futures 90-Day Eurodollar March Long 3/09 88 591,888 Futures 90-Day Eurodollar June Long 6/10 1 5,538 Futures 90-Day Eurodollar June Long 6/09 57 313,000 Futures 90-Day Eurodollar Long 9/10 1 5,712 September Futures 90-Day Eurodollar Long 9/09 62 447,712 September Futures 90-Day Eurodollar Long 12/09 35 246,925 December Futures U.S. Treasury 5-Year Note Long 3/09 42 (24,688) March Futures U.S. Treasury 2-Year Note Long 3/09 5 6,703 March Futures U.S. Treasury 10-Year Long 3/09 91 234,656 Note March Futures ---------- ---------- $2,569,001 ========== ========== TOTAL RETURN SWAPS AT DECEMBER 31, 2008:
RECEIVE UNREALIZED TOTAL EXPIRATION NOTIONAL APPRECIATION/ COUNTERPARTY RETURN PAY DATE AMOUNT (DEPRECIATION) Merrill Lynch & Co., Inc. Enhanced 1-month RAFI 1000 USD LIBOR Total plus 10/15/09 Return 0.20% $493,682 $1,528,959 Index Credit Suisse First Boston Enhanced 1-month RAFI 1000 USD LIBOR Total plus 10/15/09 207,618 796,055 Return 0.20% Index Credit Suisse First Boston Enhanced 1-month RAFI 1000 USD LIBOR 1000 plus 03/13/09 71,293 449,586 329 The Allianz Variable Insurance Products Trust - Statement of Additional Information Total 0.20% Return Index Merrill Lynch & Co., Inc. Enhanced 1-month RAFI 1000 USD LIBOR Total plus 09/15/09 52,381 (1,722,400) Return 0.23% Index ------------ ------------ $1,052,200
Credit Default Swaps at December 31, 2008
CREDIT DEFAULT SWAPS ON CORPORATE AND SOVEREIGN ISSUES UNREALIZED IMPLIED REFERENCE BUY/SELL (PAY)/RECEIVEXPIRATION NOTIONAL MARKET (DEPRECIATION) CREDIT COUNTERPARTY ENTITY PROTECTION(FIXED RATE DATE AMOUNT(2) VALUE APPRECIATION/ SPREAD(3) Citibank General Sell 1.10% 6/20/10 $100,000 $ (4,738) $ (4,708) 4.50% Electric Corp. Barclays Capital General Sell 0.85 6/20/10 100,000 (5,088) (5,064) 4.50% Electric Corp. BNP Paribas General Sell 1.10 12/20/09 200,000 (6,550) (6,451) 4.55% Electric Corp. Deutsche Bank Group General Sell 1.02 6/20/10 100,000 (4,850) (4,822) 4.50% Electric Corp. Goldman Sachs General Sell 8.90 3/20/13 100,000 (73,411) (73,114) 79.34% Electric Corp. Deutsche Bank Group Sell 0.88 3/20/13 3,000,000 (264,675) (263,795) 3.30% Berkshire Hathaway Finance Cor Credit Suisse First Boston Federal Sell 0.30 2/20/09 700,000 (2,048) (2,048) 2.38% Republic of Panama Morgan Stanley Sell 0.61 2/20/09 400,000 (19,636) (19,636) 36.42% Government of Ukraine Barclays Capital Federal Sell 0.37 3/20/09 700,000 (5,715) (5,715) 4.13% Republic of Indonesia Morgan Stanley Federal Sell 0.31 3/20/09 300,000 (524) (258) 1.11% Republic of Peru Goldman Sachs General Sell 9.05 3/20/13 100,000 (73,254) (72,953) 79.34% Motors Corp. Goldman Sachs General Sell 5.00 6/20/13 800,000 (622,608) (479,275) 77.71% Motors Corp. Merrill Lynch General Sell 1.08 12/20/09 200,000 (6,512) (6,489) 4.55% Motors Corp. ------------ ----------- ------------- ------------ ----------- ------------- $6,800,000 $(1,089,609) $ (944,328) ============ =========== ============= ============ =========== =============
330 The Allianz Variable Insurance Products Trust - Statement of Additional Information CREDIT DEFAULT SWAPS ON CREDIT INDICES
(PAY)/RECEIVE UNREALIZED REFERENCE BUY/SELL FIXED EXPIRATION NOTIONAL MARKET APPRECIATION/ COUNTERPARTY ENTITY PROTECTION RATE DATE AMOUNT(2) VALUE(4) (DEPRECIATION) ------------ ------ --------- ---- ---- --------- -------- -------------- Deutsche Bank Group CDX IG11 Sell 1.50% 12/20/13 $200,000 $(3,994) $567 Future Citibank HY 8 Sell 2.14 6/20/12 500,000 (85,422) (85,065) Year 100 25-35% Future Morgan Stanley IG-9 10 Buy (0.80) 12/20/17 97,600 4,983 (3,850) Year Future Deutsche Bank Group IG9 5 Sell 0.71 12/20/12 388,914 2,151 2,243 Year 30-100% Future Goldman Sachs IG9 10 Sell 0.55 12/20/17 97,228 531 546 Year 30-100% Future -------------- ---------- --------- -------------- ---------- --------- $1,283,742 $(81,751) $(85,559) ============== ========== ========= ============== ========== =========
(1) If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the related defaulted reference entities and take delivery of the reference entities or (ii) pay a net amount equal to the notional amount of the related defaulted reference entities less their recovery value. If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the related defaulted reference entities and deliver the reference entities or (ii) receive a net amount equal to the notional amount of the related defaulted reference entities less their recovery value. (2) The notional amount represents the maximum potential amount the Fund could be required to make as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. (3) Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues and sovereign issues of an emerging country as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. (4) The market value of credit default swap agreements on credit indices serve 331 The Allianz Variable Insurance Products Trust - Statement of Additional Information as an indicator of the current status of the payment/performance risk for the credit derivative as of the period end. Increasing values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. INTEREST RATE SWAPS AT DECEMBER 31, 2008
(PAY)/ RECEIVE UNREALIZED FLOATING RATE FLOATING FIXED EXPIRATION NOTIONAL APPRECIATION/ COUNTERPARTY INDEX RATE RATE DATE AMOUNT (DEPRECIATION) ------------ ----- ---- ---- ---- ------ ------------- Morgan Stanley Brazil Cetip Pay 12.78% 1/4/10 $(827) Interbank $300.000 Deposit Rate Union Bank of Brazil Cetip Pay 12.41 1/4/10 200,000 821 Switzerland Interbank Deposit Rate Credit Suisse 6-Month GBP LIBOR Pay 5.00 6/15/09 100,000 3,560 First Boston Barclays 6-Month GBP LIBOR Pay 6.00 3/20/09 300,000 (2,583) Capital Royal Bank of 6-Month GBP LIBOR Receive 4.00 12/15/36 100,000 (37,565) Scotland Merrill Lynch Brazil Cetip Pay 12.95 1/4/10 100,000 8,413 & Co. Interbank Deposit Rate Goldman Sachs 6-Month GBP LIBOR Pay 5.00 6/15/09 600,000 20,855 Group Barclays 6-Month GBP LIBOR Pay 5.00 6/15/09 300,000 12,381 Capital Barclays Brazil Cetip Pay 11.36 1/4/10 300,000 1,691 Capital Interbank Deposit Rate Goldman Sachs Brazil Cetip Pay 11.470 1/4/10 100,000 1,734 Group Interbank Deposit Rate Merrill Lynch Brazil Cetip Pay 11.43 1/4/10 200,000 3,429 & Co. Interbank Deposit Rate Royal Bank of 6-Month GBP LIBOR Pay 6.00 3/20/09 200,000 (1,815) Scotland Morgan Stanley Brazil Cetip Pay 12.67 1/4/10 200,000 1,080 Interbank Deposit Rate Union Bank of Brazil Cetip Pay 10.58 1/2/12 400,000 3,931 Switzerland Interbank Deposit Rate Merrill Lynch Brazil Cetip Pay 11.98 1/2/12 400,000 1,095 & Co. Interbank Deposit Rate Citibank 3-Month USD LIBOR Receive 3.00 6/17/29 500,000 32,109 Barclays Brazil Cetip Pay 12.54 1/2/12 200,000 1,179 Capital Interbank Deposit Rate Union Bank of Brazil Cetip Pay 12.54 1/2/12 200,000 (53) Switzerland Interbank Deposit Rate Merrill Lynch Brazil Cetip Pay 12.54 1/2/12 400,000 1,980 & Co. Interbank 332 The Allianz Variable Insurance Products Trust - Statement of Additional Information Deposit Rate Deutsche Bank 3-Month USD LIBOR Receive 3.00 6/17/29 1,200,000 48,725 AG Union Bank of 3-Month Pay 7.50 3/15/10 100,000 3,218 Switzerland Australian Bank Bill Rate Royal Bank of 3-Month USD LIBOR Receive 3.00 6/17/29 300,000 7,686 Scotland Union Bank of 3-Month Pay 7.00 6/15/10 2,400,000 50,536 Switzerland Australian Bank Bill Rate Merrill Lynch 3-Month USD LIBOR Receive 5.00 12/17/38 800,000 (287,029) & Co. Morgan Stanley 3-Month USD LIBOR Receive 5.00 12/17/38 2,300,000 (1,095,673) Merrill Lynch 3-Month USD LIBOR Pay 4.00 6/17/11 800,000 18,258 & Co. Morgan Stanley 3-Month USD LIBOR Receive 5.00 12/17/28 100,000 (32,689) Deutsche Bank 6-Month GBP LIBOR Receive 4.00 12/15/36 300,000 (133,838) AG Royal Bank of 3-Month USD LIBOR Pay 4.00 6/17/11 3,000,000 31,089 Scotland Deutsche Bank 3-Month USD LIBOR Pay 4.00 6/17/11 100,000 1,385 AG Bank of America 3-Month USD LIBOR Receive 5.00 12/17/28 200,000 (69,633) Royal Bank of 3-Month USD LIBOR Receive 5.00 12/17/28 100,000 (34,397) Scotland Citibank North 3-Month USD LIBOR Receive 5.00 12/17/38 1,200,000 (565,473) America Union Bank of 6-Month Pay 7.50 3/15/11 700,000 31,060 Switzerland Australian Bank Bill Rate Bank of America 3-Month USD LIBOR Receive 5.00 12/17/38 500,000 (210,152) Royal Bank of 3-Month USD LIBOR Receive 5.00 12/17/38 5,000,000 (1,736,515) Scotland HSBC Bank USA 6-Month GBP LIBOR Pay 5.00 9/17/13 200,000 19,412 Goldman Sachs 6-Month GBP LIBOR Pay 6.00 6/19/09 1,500,000 35,581 Group Goldman Sachs 6-Month GBP LIBOR Receive 5.50 12/15/36 100,000 (40,909) Group BNP Paribas 6-Month EUR LIBOR Pay 4.50 3/18/14 200,000 18,678 Deutsche Bank 3-Month USD LIBOR Receive 5.00 12/17/38 900,000 (418,511) AG Royal Bank of 3-Month USD LIBOR Pay 4.00 6/17/10 1,100,000 31,341 Scotland Barclays 3-Month USD LIBOR Pay 4.00 12/16/10 200,000 4,336 Capital Royal Bank of 6-Month GBP LIBOR Pay 5.25 3/18/14 100,000 14,001 Scotland Goldman Sachs 6-Month GBP LIBOR Pay 5.25 3/18/14 100,000 13,943 Group Morgan Stanley 3-Month USD LIBOR Pay 4.00 6/17/10 800,000 23,064 -------------- -------------- (4,221,091) ==============
333 The Allianz Variable Insurance Products Trust - Statement of Additional Information WRITTEN OPTIONS OUTSTANDING ON DECEMBER 31, 2008: EXERCISE EXPIRATION NUMBER OF FAIR SECURITY DESCRIPTION PRICE DATE CONTRACTS PREMIUM VALUE -------------------- ----- ---- --------- ------- ----- Put - IMM Eurodollar Time $98 3/17/09 (4) $(1,115) $(225) Deposit March Future Put - IMM Eurodollar Time 98 3/17/09 (3) (1,329) (263) Deposit March Future Put - IMM Eurodollar Time 99 3/17/09 (7) (1,008) (1,006) Deposit March Future Put - CBOT U.S. 5 Year 118 2/21/09 (7) (4,022) (5,961) Treasury Note February Future Put - CBOT U.S. 10 Year 124 2/21/09 (3) (3,649) (4,921) Treasury Note March Future --------- -------- --------- -------- $(11,123) $(12,376) ========= ======== ========= ========
WRITTEN SWAP OPTIONS OUTSTANDING ON DECEMBER 31, 2008: PAY/RECEIVE EXERCISE EXPIRATION NUMBER OF FAIR DESCRIPTION COUNTERPARTY FLOATING INDEX RATE DATE CONTRACTS PREMIUM VALUE ----------- ------------ -------------- ---- ---- --------- ------ ----- Call---OTC 7-Year Interest Rate Barclay's Capital Rec---3-month 4.60% 2/2/09 (100) $(32,10 $(143,912) Swap USD-LIBOR Call---OTC 7-Year Interest Rate Royal Bank of Rec---3-month 4.25 2/2/09 (220) (66,330 (266,818) Swap Scotland USD-LIBOR Call---OTC 5-Year Interest Rate Barclay's Capital Rec---3-month 4.15 8/3/09 (60) (15,060 (52,563) Swap USD-LIBOR Call---OTC 7-Year Interest Rate Royal Bank of Rec---3-month 4.40 8/3/09 (200) (65,040 (247,528) Swap Scotland USD-LIBOR Call---OTC 5-Year Interest Rate Merrill Lynch Rec---3-month 4.40 8/3/09 (260) (85,800 (321,786) Swap USD-LIBOR Call---OTC 5-Year Interest Rate Barclay's Capital Pay--3-month 2.75 5/22/09 (50) (3,612) (5,189) Swap USD LIBOR ------ ------- ------ ------- $(267,942) $(1,037,795) ====== ======= ====== =======
334 The Allianz Variable Insurance Products Trust - Statement of Additional Information AZL VAN KAMPEN GLOBAL FRANCHISE FUND SCHEDULE OF PORTFOLIO INVESTMENTS PRO FORMA DECEMBER 31, 2008 (UNAUDITED)
AZL VAN AZL KAMPEN AZL VAN KAMPEN OPPENHEIMER GLOBAL AZL GLOBAL FRANCHISE GLOBAL FRANCHISE OPPENHEIMER FUND FUND PRO FORMA FUND GLOBAL FUND PRO FORMA SHARES COMBINED OR SHARES OR PRINCIPAL PRINCIPAL SECURITY COMBINED SHARES AMOUNT AMOUNT DESCRIPTION FAIR VALUE FAIR VALUE FAIR VALUE -------------------- ---------- --------------- ------------------- ------------- ------------- ------------- COMMON STOCKS (96.3%): AEROSPACE & DEFENSE (1.5%): - 11,240 11,240 Boeing Co. (The) $ - $ 479,611 $ 479,611 Empresa Brasileira de - 40,200 40,200 Aeronautica SA, ADR - 651,642 651,642 European Aeronautic - 69,630 69,630 Defence and Space Co. - 1,175,429 1,175,429 Lockheed Martin - 8,310 8,310 Corp. - 698,705 698,705 Northrop Grumman - 11,020 11,020 Corp. - 496,341 496,341 - 19,900 19,900 Raytheon Co. - 1,015,696 1,015,696 ------------- ------------- ------------- - 4,517,424 4,517,424 ------------- ------------- ------------- AIR FREIGHT & LOGISTICS (0.3%): - 41,300 41,300 TNT NV - 793,127 793,127 ------------- ------------- ------------- AUTOMOBILES (1.9%): Bayerische Motoren Werke AG - 29,134 29,134 (BMW) - 910,362 910,362 Bayerische Motoren Werke - 10,923 10,923 (BMW) - 217,649 217,649 Harley-Davidson, 199,828 - 199,828 Inc. 3,391,081 - 3,391,081 - 6,259 6,259 Porsche AG - 495,908 495,908 - 25,000 25,000 Toyota Motor Corp. - 818,501 818,501 ------------- ------------- ------------- 3,391,081 2,442,420 5,833,501 ------------- ------------- ------------- 335 The Allianz Variable Insurance Products Trust - Statement of Additional Information BEVERAGES (6.8%): Brown-Forman 99,359 - 99,359 Corp., Class B 5,115,995 - 5,115,995 892,967 - 892,967 C&C Group plc 1,807,864 - 1,807,864 Companhia de - 16,790 16,790 Bebidas das Americas, ADR, Preferred Shares - 743,965 743,965 383,372 44,304 427,676 Diageo plc 5,331,612 616,142 5,947,754 Fomento Economico - 387,800 387,800 Mexicano, SAB de CV - 1,159,627 1,159,627 Grupo Modelo, SA - 172,390 172,390 de CV, Series C - 547,867 547,867 72,035 - 72,035 Pernod-Ricard SA 5,341,176 - 5,341,176 ------------- ------------- ------------- 17,596,647 3,067,601 20,664,248 ------------- ------------- ------------- BIOTECHNOLOGY (0.3%): Acadia Pharmaceuticals, - 16,600 16,600 Inc.* - 14,940 14,940 - 14,700 14,700 InterMune, Inc.* - 155,526 155,526 Regeneron Pharmaceuticals, - 9,800 9,800 Inc.* - 179,928 179,928 Seattle Genetics, - 27,600 27,600 Inc.* - 246,744 246,744 - 24,400 24,400 Theravance, Inc.* - 302,316 302,316 ------------- ------------- ------------- - 899,454 899,454 ------------- ------------- ------------- BUILDING PRODUCTS (0.4%): Assa Abloy AB, - 116,800 116,800 Class B - 1,326,014 1,326,014 ------------- ------------- ------------- CHEMICALS (1.5%): Scotts Co., Class 156,216 - A 4,642,740 - 4,642,740 ------------- ------------- ------------- 336 The Allianz Variable Insurance Products Trust - Statement of Additional Information COMMERCIAL BANKS (1.5%): Credit Suisse - 49,350 49,350 Group - 1,353,218 1,353,218 - 121,190 121,190 HSBC Holdings plc - 1,163,369 1,163,369 ICICI Bank, Ltd., - 500 500 ADR - 9,625 9,625 Royal Bank of - 346,190 346,190 Scotland Group plc - 250,204 250,204 - 11,662 11,662 Societe Generale - 590,585 590,585 Sumitomo Mitsui Financial Group, - 247 247 Inc.(a) - 1,083,879 1,083,879 ------------- ------------- ------------- - 4,450,880 4,450,880 ------------- ------------- ------------- COMMERCIAL SERVICES & SUPPLIES (3.0%): 1,326,413 - 1,326,413 Experian plc 8,304,549 - 8,304,549 - 18,500 18,500 Secom Co., Ltd. - 953,120 953,120 ------------- ------------- ------------- 8,304,549 953,120 9,257,669 ------------- ------------- ------------- COMMUNICATIONS EQUIPMENT (2.3%): - 87,870 87,870 Corning, Inc. - 837,401 837,401 Juniper Networks, - 105,670 105,670 Inc.* - 1,850,282 1,850,282 - 50,780 50,780 Tandberg ASA - 559,340 559,340 Ericsson LM, - 504,870 504,870 Class B - 3,874,285 3,874,285 Wire and Wireless - 126,900 126,900 India, Ltd.* - 32,283 32,283 ------------- ------------- ------------- - 7,153,591 7,153,591 ------------- ------------- ------------- CONSUMER FINANCE (0.4%): - 105,400 105,400 SLM Corp.* - 938,060 938,060 Sony Financial - 111 111 Holdings, Inc. - 426,357 426,357 ------------- ------------- ------------- - 1,364,417 1,364,417 ------------- ------------- ------------- 337 The Allianz Variable Insurance Products Trust - Statement of Additional Information DIVERSIFIED CONSUMER SERVICES (2.8%): Career Education 209,537 - 209,537 Corp.* 3,759,094 - 3,759,094 Weight Watchers International, 165,015 - 165,015 Inc. 4,854,741 - 4,854,741 ------------- ------------- ------------- 8,613,835 - 8,613,835 ------------- ------------- ------------- DIVERSIFIED FINANCIAL SERVICES (1.7%): - 51,850 51,850 3I Group plc - 204,216 204,216 - 29,400 29,400 Citigroup, Inc. - 197,274 197,274 - 500 500 CME Group, Inc. - 104,055 104,055 Investor AB, B - 71,153 71,153 Shares - 1,071,348 1,071,348 174,543 - 174,543 Moody's Corp. 3,506,569 - 3,506,569 ------------- ------------- ------------- 3,506,569 1,576,893 5,083,462 ------------- ------------- ------------- ELECTRIC UTILITIES (0.3%): - 42,100 42,100 Fortum OYJ - 904,180 904,180 ------------- ------------- ------------- ELECTRICAL EQUIPMENT (0.4%): Emerson Electric - 21,800 21,800 Co. - 798,098 798,098 Mitsubishi - 80,000 80,000 Electric Corp. - 500,727 500,727 ------------- ------------- ------------- - 1,298,825 1,298,825 ------------- ------------- ------------- ELECTRONIC EQUIPMENT & INSTRUMENTS (1.2%): - 46,100 46,100 HOYA Corp. - 801,018 801,018 - 4,630 4,630 Keyence Corp. - 948,230 948,230 - 7,300 7,300 KYOCERA Corp. - 526,738 526,738 Murata Manufacturing - 28,100 28,100 Co., Ltd. - 1,101,759 1,101,759 - 7,900 7,900 Nidec Corp. - 307,281 307,281 ------------- ------------- ------------- 338 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 3,685,026 3,685,026 ------------- ------------- ------------- ENERGY EQUIPMENT & SERVICES (0.6%): - 26,730 26,730 Technip SA - 818,810 818,810 - 18,672 18,672 Transocean, Ltd.* - 882,252 882,252 ------------- ------------- ------------- - 1,701,062 1,701,062 ------------- ------------- ------------- FOOD & STAPLES RETAILING (1.2%): Seven & I - 23,785 23,785 Holdings, Ltd. - 815,048 815,048 - 212,163 212,163 Tesco plc - 1,105,082 1,105,082 Wal-Mart Stores, - 31,500 31,500 Inc. - 1,765,890 1,765,890 ------------- ------------- ------------- - 3,686,020 3,686,020 ------------- ------------- ------------- FOOD PRODUCTS (11.9%): 873,842 97,385 971,227 Cadbury plc 7,647,823 852,309 8,500,132 105,160 - 105,160 Groupe Danone 6,346,214 - 6,346,214 111,684 - 111,684 Kellogg Co. 4,897,343 - 4,897,343 SFR Nestle SA, 195,642 - 195,642 Class B 7,714,016 - 7,714,016 385,989 - 385,989 Unilever plc 8,769,665 - 8,769,665 ------------- ------------- ------------- 35,375,061 852,309 36,227,370 ------------- ------------- ------------- HEALTH CARE PROVIDERS & SERVICES (0.4%): - 33,900 33,900 Aetna, Inc. - 966,150 966,150 - 8,900 8,900 WellPoint, Inc.* - 374,957 374,957 ------------- ------------- ------------- - 1,341,107 1,341,107 ------------- ------------- ------------- HOTELS, RESTAURANTS & LEISURE (2.2%): Aristocrat - 23,187 23,187 Leisure, Ltd. - 64,049 64,049 - 53,200 53,200 Carnival Corp. - 1,293,824 1,293,824 339 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 25,000 25,000 McDonald's Corp. - 1,554,750 1,554,750 Shuffle Master, - 28,800 28,800 Inc.* - 142,848 142,848 376,750 - 376,750 Starbucks Corp.* 3,564,055 - 3,564,055 ------------- ------------- ------------- 3,564,055 3,055,471 6,619,526 ------------- ------------- ------------- HOUSEHOLD DURABLES (2.5%): Fortune Brands, 119,600 - 119,600 Inc. 4,937,088 - 4,937,088 Koninklijke Philips - 63,900 63,900 Electronics NV - 1,242,650 1,242,650 - 65,200 65,200 Sony Corp. - 1,417,697 1,417,697 ------------- ------------- ------------- 4,937,088 2,660,347 7,597,435 ------------- ------------- ------------- HOUSEHOLD PRODUCTS (7.6%): Colgate-Palmolive - 18,400 18,400 Co. - 1,261,136 1,261,136 Hindustan - 46,200 46,200 Unilever, Ltd. - 238,561 238,561 218,000 - 218,000 Kao Corp. 6,603,145 - 6,603,145 Procter & Gamble 106,593 - 106,593 Co. 6,589,579 - 6,589,579 Reckitt Benckiser 203,469 27,723 231,192 Group plc 7,578,279 1,032,553 8,610,832 ------------- ------------- ------------- 20,771,003 2,532,250 23,303,253 ------------- ------------- ------------- INDUSTRIAL CONGLOMERATES (1.3%): - 22,900 22,900 3M Co. - 1,317,666 1,317,666 - 33,819 33,819 Siemens AG - 2,538,062 2,538,062 ------------- ------------- ------------- - 3,855,728 3,855,728 ------------- ------------- ------------- INSURANCE (0.7%): - 25,800 25,800 AFLAC, Inc. - 1,182,672 1,182,672 - 129,890 129,890 Prudential plc - 790,605 790,605 340 The Allianz Variable Insurance Products Trust - Statement of Additional Information XL Capital, Ltd., - 68,300 68,300 Class A - 252,710 252,710 ------------- ------------- ------------- - 2,225,987 2,225,987 ------------- ------------- ------------- INTERNET SOFTWARE & SERVICES (1.7%): 280,345 100,100 380,445 eBay, Inc.* 3,913,616 1,397,396 5,311,012 ------------- ------------- ------------- IT SERVICES (0.5%): Automatic Data - 42,200 42,200 Processing, Inc. - 1,660,148 1,660,148 ------------- ------------- ------------- LEISURE EQUIPMENT & PRODUCTS (0.1%): Sega Sammy - 28,400 28,400 Holdings, Inc. - 329,619 329,619 ------------- ------------- ------------- MACHINERY (1.6%): - 5,900 5,900 Fanuc, Ltd. - 419,695 419,695 207,490 - 207,490 Kone Oyj, B Shares 4,548,900 - 4,548,900 ------------- ------------- ------------- 4,548,900 419,695 4,968,595 ------------- ------------- ------------- MEDIA (7.2%): Dish TV India, - 139,270 139,270 Ltd.* - 57,772 57,772 Grupo Televisa - 77,700 77,700 SA, ADR - 1,160,838 1,160,838 McGraw-Hill Cos., 136,988 - 136,988 Inc. (The) 3,176,752 - 3,176,752 610,914 - 610,914 Reed Elsevier NV 7,197,029 - 7,197,029 Sirius XM Radio, - 608,300 608,300 Inc.* - 72,996 72,996 Walt Disney Co. - 60,500 60,500 (The) - 1,372,745 1,372,745 Wolters Kluwer 450,965 - 450,965 CVA NV 8,515,920 - 8,515,920 Zee Entertainment - 144,300 144,300 Enterprises - 418,921 418,921 ------------- ------------- ------------- 18,889,701 3,083,272 21,972,973 ------------- ------------- ------------- OIL, GAS & CONSUMABLE FUELS (1.0%): 341 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 19,770 19,770 BP plc, ADR - 924,050 924,050 Husky Energy, - 48,020 48,020 Inc. - 1,201,084 1,201,084 - 16,940 16,940 Total SA - 923,425 923,425 ------------- ------------- ------------- - 3,048,559 3,048,559 ------------- ------------- ------------- PERSONAL PRODUCTS (1.6%): Estee Lauder Co., 159,530 - 159,530 Inc. (The), Class A 4,939,049 - 4,939,049 ------------- ------------- ------------- PHARMACEUTICALS (3.7%): Basilea - 1,394 1,394 Pharmaceutica AG* - 196,777 196,777 - 12,902 12,902 NicOx SA* - 140,881 140,881 Novartis AG, 120,920 - 120,920 Registered Shares 6,061,197 - 6,061,197 - 18,595 18,595 Roche Holding AG - 2,863,608 2,863,608 Sanofi-Aventis - 15,705 15,705 SA, ADR - 997,373 997,373 Shionogi & Co., - 37,000 37,000 Ltd. - 950,553 950,553 ------------- ------------- ------------- 6,061,197 5,149,192 11,210,389 ------------- ------------- ------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (1.6%): - 61,600 61,600 Altera Corp. - 1,029,336 1,029,336 - 26,700 26,700 Cree, Inc.* - 423,729 423,729 - 24,400 24,400 Linear Technology Corp. - 539,728 539,728 Maxim Integrated - 60,400 60,400 Products, Inc. - 689,768 689,768 342 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 125,429 125,429 MediaTek, Inc. - 848,489 848,489 - 619,173 619,173 Taiwan Semiconductor Manufacturing Co., Ltd. - 848,670 848,670 - 49,854 49,854 Taiwan Semiconductor Manufacturing Co., Ltd., ADR - 393,847 393,847 ------------- ------------- ------------- - 4,773,567 4,773,567 ------------- ------------- ------------- SOFTWARE (2.9%): - 58,100 58,100 Adobe Systems, Inc.* - 1,236,949 1,236,949 Infosys Technologies, - 58,386 58,386 Ltd. - 1,352,367 1,352,367 International Game - 21,950 21,950 Technology - 260,985 260,985 - 75,600 75,600 Intuit, Inc.* - 1,798,524 1,798,524 - 87,500 87,500 Microsoft Corp. - 1,701,000 1,701,000 - 2,200 2,200 Nintendo Co., Ltd. - 845,415 845,415 - 47,807 47,807 SAP AG - 1,699,933 1,699,933 ------------- ------------- ------------- - 8,895,173 8,895,173 ------------- ------------- ------------- SPECIALTY RETAIL (1.4%): 343 The Allianz Variable Insurance Products Trust - Statement of Additional Information - 43,940 43,940 Hennes & Mauritz AB - 1,717,968 1,717,968 Industria de Diseno - 33,100 33,100 Textil SA - 1,462,899 1,462,899 - 41,000 41,000 Tiffany & Co. - 968,830 968,830 ------------- ------------- ------------- - 4,149,697 4,149,697 ------------- ------------- ------------- TEXTILES, APPAREL & LUXURY GOODS (1.0%): - 87,700 87,700 Bulgari SPA - 547,492 547,492 - 73,554 73,554 Burberry Group plc - 235,846 235,846 - 25,840 25,840 LVMH Moet Hennessy Louis Vuitton SA - 1,735,894 1,735,894 - 13,700 13,700 Tod's SPA - 576,935 576,935 ------------- ------------- ------------- - 3,096,167 3,096,167 ------------- ------------- ------------- TOBACCO (16.1%): British American 647,023 - 647,023 Tobacco plc 16,807,749 - 16,807,749 Imperial Tobacco Group 486,722 - 486,722 plc 12,998,709 - 12,998,709 Philip Morris 235,697 - 235,697 International, Inc. 10,255,176 - 10,255,176 600,404 - 600,404 Swedish Match AB 8,599,665 - 8,599,665 ------------- ------------- ------------- 344 The Allianz Variable Insurance Products Trust - Statement of Additional Information 48,661,299 - 48,661,299 ------------- ------------- ------------- WIRELESS TELECOMMUNICATION SERVICES (1.2%): - 267 267 KDDI Corp. - 1,902,097 1,902,097 SK Telecom Co., Ltd., - 28,760 28,760 ADR - 522,857 522,857 Turkcell Iletisim - 23,300 23,300 Hizmetleri AS, ADR - 339,714 339,714 - 490,195 490,195 Vodafone Group plc - 986,579 986,579 ------------- ------------- ------------- - 3,751,247 3,751,247 ------------- ------------- ------------- Total Common Stocks (Cost $349,442,340) 197,716,390 96,096,985 293,813,375 ------------- ------------- ------------- PREFERRED STOCKS (0.0%): - 250 250 Schering-Plough Corp. - 43,625 43,625 ------------- ------------- ------------- Total Preferred Stocks (Cost $38,832) - 43,625 43,625 ------------- ------------- ------------- INVESTMENT COMPANY (3.3%): Dreyfus Treasury Prime 7,853,731 1,881,640 9,735,371 Cash Management, 0.17%(b) 7,853,731 1,881,640 9,735,371 ------------- ------------- ------------- Total Investment Company (Cost $9,735,371) 7,853,731 1,881,640 9,735,371 ------------- ------------- ------------- 345 The Allianz Variable Insurance Products Trust - Statement of Additional Information RIGHTS (0.0%): - 163,555 163,555 Dish TV India, Ltd.* - - - ------------- ------------- ------------- Total Rights (Cost $--) - - - ------------- ------------- ------------- CONVERTIBLE BONDS (0.0%): PHARMACEUTICALS (0.0%): $ $ - 155,000 155,000 Theravance, Inc., 3.00%, 1/15/15 - 94,938 94,938 ------------- ------------- ------------- Total Convertible Bonds (Cost $155,000) - 94,938 94,938 ------------- ------------- ------------- Total Investment Securities (Cost $359,371,543)(c)--99.6% 205,570,121 98,117,188 303,687,309 Net other assets (liabilities)-- 0.4% 1,780,888 (424,867) 1,356,021 ------------- ------------- ------------- Adjustment for reorganization fees (d) - 0.0% (146,500) ------------- ------------- ------------- Net Assets -- 100.0% $207,351,009 $ 97,692,321 $ 304,896,830 ============= ============= =============
Percentages indicated are based on net assets as of December 31, 2008. * Non-income producing security ADR--American Depository Receipt PLC--Public Liability Co. SPA--Standby Purchase Agreement (a) Security was fair valued as of December 31, 2008. Represents 0.4% of the net assets of the Fund. (b) The rate presented represents the effective yield at December 31, 2008. (c) Cost for federal income tax purposes is $369,700,623. The gross unrealized appreciation/(depreciation) on a tax basis is as follows: 346 The Allianz Variable Insurance Products Trust - Statement of Additional Information Unrealized appreciation $21,672,983 Unrealized depreciation (87,686,297) ---------- Net unrealized $(66,013,314) depreciation (d) Represents the estimated reorganization fees and expenses that are to be expected to be paid by the Funds. The following represents the concentrations by country of risk (based on the domicile of the security issuer) relative to the total fair value of investment securities as of December 31, 2008: COUNTRY PERCENTAGE United States 35.4% Japan 6.8% United Kingdom 22.2% Sweden 5.5% Germany 1.9% Switzerland 6.3% France 5.6% Netherlands 6.2% Mexico 0.9% India 0.7% Ireland 3.3% Taiwan 0.7% Spain 0.5% Brazil 0.5% Panama 0.4% Canada 0.4% Italy 0.4% Finland 1.7% Norway 0.2% Korea 0.2% Turkey 0.1% Cayman Islands 0.1% Australia 0.0% ---- 100.0% As of December 31, 2008 the Fund's open foreign currency exchange contracts were as follows: 347 The Allianz Variable Insurance Products Trust - Statement of Additional Information Delivery Contract Fair Appreciation/ SHORT CONTRACTS DATE AMOUNT VALUE (DEPRECIATION) --------------- ---- ------ ----- -------------- Deliver 17,320,000 British Sterling Pounds in exchange for U.S. Dollars 1/26/09 $25,901,416 $24,874,720 $1,026,696 347 The Allianz Variable Insurance Products Trust - Statement of Additional Information PART C OTHER INFORMATION _____________________ ITEM 15. INDEMNIFICATION The Trust's Agreement and Declaration of Trust provides that the Trust will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the Trust, except if it is determined in the manner specified in the Agreement and Declaration of Trust that they have not acted in good faith in the reasonable belief that their actions were in or not opposed to the best interests of the Trust or that such indemnification would relieve any officer or Trustee of any liability to the Trust or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties or, in a criminal proceeding, such Trustee or officers had reasonable cause to believe their conduct was unlawful. The Trust, at its expense, provides liability insurance for the benefit of its Trustees and officers. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 16. EXHIBITS Exhibit Number Description of Exhibit ------- --------------------------------------------------------------- (1)(a) Agreement and Declaration of Trust, dated July 13, 1999, filed on July 21, 1999 as Exhibit (a) to Registration Statement No. 333-83423, is incorporated by reference. (1)(b) Agreement and Declaration of Trust dated June 16, 2004, filed on October 21, 2004 as Exhibit (a) to Registrant's N1A filing (file Nos. 333-119867 and 811-21624), is incorporated by reference. (2)(a) By-laws, dated July 13, 1999, filed on July 21, 1999 as Exhibit (b) to Registration Statement No. 333-83423, is incorporated by reference. (2)(b) By-laws, filed on October 21, 2004, as Exhibit (b) to Registrant's N1A filing (file Nos. 333-119867 and 811-21624), is incorporated by reference. (3) Not Applicable (4) Form of Agreement and Plan of Reorganization. (Included as Exhibit A to the Prospectus/Proxy Statement comprising Part A of this Registration Statement.) (5) See (1) and (2) above. (6)(a) Investment Management Agreement, dated April 27, 2001, between USAllianz Advisers, LLC and USAllianz Variable Insurance Products Trust, filed on October 24, 2001 as Exhibit (d)(2)(i) to Registrant's Post-Effective Amendment No. 7, is incorporated by reference. (6)(a)(i) Amended Schedule A, dated January 26, 2009, to Investment Management Agreement between USAllianz Advisers, LLC and USAllianz Variable Insurance Products Trust, dated April 27, 2001, filed on February 4, 2009 as Exhibit (d)(1)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (6)(a)(ii) Attachment 1 dated January 26, 2009, to Schedule A of the Investment Management Agreement dated April 27, 2001, filed on April 24, 2009 as exhibit (d)(1)(ii) to Registrant's Post Effective Amendment No. 26, in incorporated by reference. (6)(b) Portfolio Management Agreement, dated May 1, 2002, between USAllianz Advisers, LLC, USAllianz Variable Insurance Products Trust, and A I M Capital Management, Inc., filed on December 27, 2006 as Exhibit (d)(2) to Registrant's Post-Effective Amendment No. 20, is incorporated by reference. (6)(b)(i) Amendment, dated September 8, 2003, to the Portfolio Management Agreement dated May 1, 2002, between USAllianz Advisers, LLC, USAllianz Variable Insurance Products Trust, and A I M Capital Management, Inc., filed on December 27, 2006 as Exhibit (d)(2)(i) to Registrant's Post-Effective Amendment No. 20, is incorporated by reference. (6)(b)(ii) Amended Schedule A, dated March 28, 2005, to the Portfolio Management Agreement dated May 1, 2002, between USAllianz Advisers, LLC, USAllianz Variable Insurance Products Trust, and A I M Capital Management, Inc., filed on December 27, 2006 as Exhibit (d)(2)(ii) to Registrant's Post-Effective Amendment No. 20, is incorporated by reference. (6)(c) Subadvisory Agreement, dated November 28, 2007, between Allianz Life Advisers, LLC, and BlackRock Institutional Management Corporation, filed on April 29, 2008, as Exhibit (d)(3) to Registrant's Post-Effective Amendment No. 24, is incorporated by reference. (6)(d)* Subadvisory Agreement, dated April 29, 2009 between Allianz Investment Management LLC and BlackRock Investment Management, LLC, filed herewith. (6)(e) Subadvisory Agreement, dated January 26, 2009 between Allianz Investment Management LLC and BlackRock Capital Management, Inc., filed on April 24, 2009 as exhibit (d)(5) to Registrant's Post Effective Amendment No. 26, in incorporated by reference. (6)(f)* Subadvisory Agreement, dated April 29, 2009 between Allianz Investment Management LLC and BlackRock Financial Management, Inc., filed herewith. (6)(g) Amended and Restated Subadvisory Agreement, dated September 17, 2008, between Allianz Investment Management LLC and Columbia Management Advisers, LLC, filed on February 4, 2009 as Exhibit (d)(6) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (6)(g)(i) Amended Schedule A, effective November 24, 2008 to the Amended and Restated Subadvisory Agreement, dated September 17, 2008 between Allianz Investment Management LLC and Columbia Management Advisers, LLC, filed on February 4, 2009 as Exhibit (d)(6)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (6)(h) Amended and Restated Subadvisory Agreement, dated July 1, 2008, between Allianz Investment Management LLC and Davis Selected Advisers, L.P., filed on September 17, 2008 as Exhibit (6)(e) to Registrant's Form N-14, Pre-effective Amendment No. 1 (File No. 333-153047), is incorporated by reference. (6)(i) Subadvisory Agreement dated May 1, 2007 between Allianz Life Advisers, LLC, and The Dreyfus Corporation, filed on April 27, 2007 as Exhibit (d)(5) to Registrant's Post-Effective Amendment No. 23, is incorporated by reference. (6)(i)(i) Revised Schedule A effective September 22, 2008 to the Subadvisory Agreement dated May 1, 2007 between Allianz Life Advisers, LLC, and The Dreyfus Corporation, filed on February 4, 2009 as Exhibit (d)(8)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (6)(j) Amended and Restated Subadvisory Agreement, dated May 1, 2007, between Allianz Investment Management LLC and First Trust Advisors L.P., filed on April 27, 2007 as Exhibit (d)(6) to Registrant's Post-Effective Amendment No. 23, is incorporated by reference. (6)(k) Portfolio Management Agreement, dated March 8, 2004, between USAllianz Advisers, LLC, USAllianz Variable Insurance Products Trust, and Founders Asset Management LLC, filed on December 27, 2006 as Exhibit (d)(7) to Registrant's Post-Effective Amendment No. 20, is incorporated by reference. (6)(l) Form of Subadvisory Agreement dated ___________, 2009 between Allianz Investment Management LLC and Franklin Advisers, Inc., filed on April 24, 2009 as exhibit (d)(12) to Registrant's Post Effective Amendment No. 26, in incorporated by reference. (6)(m) Portfolio Management Agreement, dated April 12, 2005, between USAllianz Advisers, LLC, USAllianz Variable Insurance Products Trust, and Franklin Advisory Services, LLC, filed on December 27, 2006 as Exhibit (d)(8) to Registrant's Post-Effective Amendment No. 20, is incorporated by reference. (6)(n) Form of Subadvisory Agreement dated ___________, 2009 between Allianz Investment Management LLC and Franklin Mutual Advisers, LLC, filed on April 24, 2009 as exhibit (d)(14) to Registrant's Post Effective Amendment No. 26, in incorporated by reference. (6)(o) Portfolio Management Agreement, dated April 29, 2005, between USAllianz Advisers, LLC, USAllianz Variable Insurance Products Trust, and Jennison Associates LLC, filed on December 27, 2006 as Exhibit (d)(9) to Registrant's Post-Effective Amendment No. 20, is incorporated by reference. (6)(o)(i) Schedule A dated November 24, 2008 to the Portfolio Management Agreement, dated April 29, 2005, between USAllianz Advisers, LLC, USAllianz Variable Insurance Products Trust, and Jennison Associates LLC, filed on February 4, 2009 as Exhibit (d)(14)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (6)(p) Subadvisory Agreement dated January 26, 2009 between Allianz Investment Management LLC and J.P. Morgan Investment Management, Inc., filed on February 4, 2009 as Exhibit (d)(15) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (6)(q)* Subadvisory Agreement dated April 30, 2009 between Allianz Investment Management LLC and NFJ Investment Group LLC, filed herewith. (6)(r) Subadvisory Agreement, dated May 1, 2007, between Allianz Life Advisers, LLC and Nicholas-Applegate Capital Management LLC, filed on April 27, 2007 as Exhibit (d)(12) to Registrant's Post-Effective Amendment No. 23, is incorporated by reference. (6)(s) Subadvisory Agreement, dated August 24, 2006, between Allianz Life Advisers, LLC, and Oppenheimer Capital, LLC, filed on December 27, 2006 as Exhibit (d)(12) to Registrant's Post-Effective Amendment No. 20, is incorporated by reference. (6)(s)(i) Schedule A dated November 24, 2008 to the Subadvisory Agreement, dated August 24, 2006, between Allianz Life Advisers, LLC, and Oppenheimer Capital, LLC, filed on April 24, 2009 as exhibit (d)(19)(i) to Registrant's Post Effective Amendment No. 26, in incorporated by reference. (6)(t) Subadvisory Agreement, dated May 1, 2006, between Allianz Life Advisers, LLC and OppenheimerFunds, Inc., filed on April 27, 2006 as Exhibit (d)(20) to Registrant's Post-Effective Amendment No. 17, is incorporated by reference. (6)(t)(i) Amended Schedule A, dated January 26, 2009, to the Subadvisory Agreement dated May 1, 2006, between Allianz Life Advisers, LLC and OppenheimerFunds, Inc., filed on April 24, 2009 as exhibit (d)(20)(i) to Registrant's Post Effective Amendment No. 26, in incorporated by reference. (6)(u) Amended and Restated Subadvisory Agreement, dated April 30, 2007, between Allianz Life Advisers, LLC and Pacific Investment Management Company LLC, filed on April 27, 2007 as Exhibit (d)(15) to Registrant's Post-Effective Amendment No. 23, is incorporated by reference. (6)(v) Sub-Subadvisory Agreement dated April 30, 2007, between Allianz Life Advisers, LLC, Pacific Investment Management Company LLC, and Research Affiliates LLC, filed on April 27, 2007 as Exhibit (d)(16) to Registrant's Post-Effective Amendment No. 23, is incorporated by reference. (6)(w) Subadvisory Agreement, dated February 23, 2007, between Allianz Life Advisers, LLC and Schroder Investment Management North America Inc, filed on April 27, 2007 as Exhibit (d)(19) to Registrant's Post-Effective Amendment No. 23, is incorporated by reference. (6)(w)(i) Amended Schedule A dated December 10, 2007 to the Subadvisory Agreement, dated February 23, 2007, between Allianz Life Advisers, LLC and Schroder Investment Management North America Inc, filed on February 4, 2009 as Exhibit (d)(22)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (6)(x) Form of Subadvisory Agreement dated ___________, 2009 between Allianz Investment Management LLC and Templeton Global Advisors Limited, filed on April 24, 2009 as exhibit (d)(24) to Registrant's Post Effective Amendment No. 26, in incorporated by reference. (6)(y) Subadvisory Agreement, dated June 13, 2007, between Allianz Life Advisers, LLC and Turner Investment Partners, Inc., filed on June 22, 2007 as Exhibit (6)(t) to Registrant's Registration Statement on Form N-14, is incorporated by reference. (6)(y)(i) Updated Schedule A dated June 13, 2007 to the Subadvisory Agreement, dated June 13, 2007, between Allianz Life Advisers, LLC and Turner Investment Partners, Inc., filed on February 4, 2009 as Exhibit (d)(24)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (6)(z) Subadvisory Agreement, dated May 1, 2006, between Allianz Life Advisers, LLC and Van Kampen Asset Management, filed on April 27, 2006 as Exhibit (d)(19) to Registrant's Post-Effective Amendment No. 17, is incorporated by reference. (6)(aa) Investment Management Agreement, dated December 2, 2004, between USAllianz Advisers, LLC and USAllianz Variable Insurance Products Fund of Funds Trust, filed on December 30, 2004 as Exhibit (d)(1) to Registrant's Pre-effective Amendment No. 2, is incorporatd by reference. (6)(aa)(i) Schedule A dated October 6, 2006 to the Investment Management Agreement, dated December 2, 2004, between USAllianz Advisers, LLC and USAllianz Variable Insurance Products Fund of Funds Trust, filed on February 2, 2009 as Exhibit (d)(1)(i) to Registrant's Post-Effective Amendment No. 4, is incorporated by reference. (6)(aa)(ii) Attachment 1, dated October 22, 2008, to Schedule A of the Investment Management Agreement, dated December 2, 2004, between USAllianz Advisers, LLC and USAllianz Variable Insurance Products Fund of Funds Trust, filed on February 2, 2009 as Exhibit (d)(1)(ii) to Registrant's Post-Effective Amendment No. 4, is incorporated by reference. (6)(ab) Morningstar Consulting Agreement, dated January 1, 2005, between Morningstar Associates, LLC, and USAllianz Advisers, LLC, filed on April 27, 2006 to Registrant's Post-Effective Amendment No. 1, is incorporated by reference. (6)(ab)(i) Second Amendment dated January 1, 2008 to the Morningstar Consulting Agreement, dated January 1, 2005, between Morningstar Associates, LLC, and USAllianz Advisers, LLC, filed on February 2, 2009 as Exhibit (d)(2)(i) to Registrant's Post-Effective Amendment No. 4, is incorporated by reference. (6)(ab)(ii) Amendment dated December 22, 2008 to the Morningstar Consulting Agreement, dated January 1, 2005, between Morningstar Associates, LLC, and USAllianz Advisers, LLC, filed on February 2, 2009 as Exhibit (d)(2)(ii) to Registrant's Post-Effective Amendment No. 4, is incorporated by reference. (7)(a) Distribution Agreement, dated August 28, 2007, between Allianz Variable Insurance Products Trust, Allianz Variable Insurance Products Fund of Funds Trust and Allianz Life Financial Services, LLC, filed on April 29, 2008, as Exhibit (e)(1) to Registrant's Post-Effective Amendment No. 24, is incorporated by reference. (7)(a)(i) Schedule I dated January 26, 2009 to the Distribution Agreement, dated August 28, 2007, between Allianz Variable Insurance Products Trust, Allianz Variable Insurance Products Fund of Funds Trust and Allianz Life Financial Services, LLC, filed on February 4, 2009 as Exhibit (e)(1)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (7)(a)(ii) Fee Agreement Letter dated August 28, 2007 to the Distribution Agreement between Allianz Variable Insurance Products Trust, Allianz Variable Insurance Products Fund of Funds Trust and Allianz Life Financial Services, LLC, filed on February 4, 2009 as Exhibit (e)(1)(ii) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (7)(b) Participation Agreement dated August 28, 2007 between Allianz Variable Insurance Products Trust, Allianz Life Insurance Company of North America, and Allianz Life Financial Services, LLC, filed on April 29, 2008, as Exhibit (e)(2) to Registrant's Post-Effective Amendment No. 24, is incorporated by reference. (7)(b)(i) Schedule A dated January 26, 2009 to the Participation Agreement dated August 28, 2007 between Allianz Variable Insurance Products Trust, Allianz Life Insurance Company of North America, and Allianz Life Financial Services, LLC, filed on February 4, 2009 as Exhibit (e)(2)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (7)(c) Participation Agreement dated August 28, 2007 between Allianz Variable Insurance Products Trust, Allianz Life Insurance Company of New York, and Allianz Life Financial Services, LLC, filed on April 29, 2008, as Exhibit (e)(3) to Registrant's Post-Effective Amendment No. 24, is incorporated by reference. (7)(c)(i) Schedule A dated January 26, 2009, to the Participation Agreement dated August 28, 2007, between Allianz Variable Insurance Products Trust, Allianz Life Insurance Company of New York, and Allianz Life Financial Services, LLC, filed filed on February 4, 2009 as Exhibit (e)(3)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (7)(d) Participation Agreement, dated August 28, 2007, between Allianz Variable Insurance Products Fund of Funds Trust, Allianz Life Insurance Company of North America, and Allianz Life Financial Services, LLC, filed on April 29, 2008 to Registrant's Post-Effective Amendment No. 3, is incorporated by reference. (7)(e) Participation Agreement, dated August 28, 2007, between Allianz Variable Insurance Products Fund of Funds Trust, Allianz Life Insurance Company of New York, and Allianz Life Financial Services, LLC, filed on April 29, 2008 to Registrant's Post-Effective Amendment No. 3, is incorporated by reference. (8) N/A (9)(a) Mutual Fund Custody and Services Agreement, dated November 26, 2008, between Allianz Variable Insurance Products Trust, Allianz Variable Insurance Products Fund of Funds Trust and The Bank of New York Mellon, filed on February 4, 2009 as Exhibit (g)(1) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (9)(a)(i) Custody and Securities Lending Fee Schedule between Allianz Life Variable Insurance Products Trust, Allianz Variable Insurance Products Fund of Funds Trust and The Bank of New York Mellon, filed on February 4, 2009 as Exhibit (g)(1)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (10)(a) Rule 12b-1 Plan of Distribution for the Allianz Variable Insurance Products Trust effective October 27, 1999, filed on October 26, 1999 as Exhibit (m) to Registrant's Pre-Effective Amendment No. 2, is incorporated by reference. (10)(a)(i) Exhibit A dated January 26, 2009, to the Plan of Distribution for the Allianz Variable Insurance Products Trust effective October 27, 1999, filed on February 4, 2009 as Exhibit (m)(1)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (10)(b) Rule 18f-3 Multiple Class Plan, dated February 23, 2007, for the Allianz Variable Insurance Products Trust, filed on April 27, 2007 as Exhibit (n) to Registrant's Post-Effective Amendment No. 23, is incorporated by reference. (11)** Opinion and consent of Dorsey & Whitney LLP with respect to the legality of the securities being registered, to be filed by amendment. (12)** Opinion and consent of Dorsey & Whitney LLP with respect to tax matters, to be filed by amendment. (13)(a) Amended and Restated Services Agreement dated October 23, 2007, between Allianz Variable Insurance Products Trust and Citi Fund Services Ohio, Inc., filed on April 29, 2008, as Exhibit (h)(1) to Registrant's Post-Effective Amendment No. 24, is incorporated by reference. (13)(a)(i) Schedule A, updated January 26, 2009, to the Amended and Restated Services Agreement dated October 23, 2007, between Allianz Variable Insurance Products Trust and Citi Fund Services Ohio, Inc., filed on February 4, 2009 as Exhibit (h)(1)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (13)(b) Amended and Restated Administrative Services Agreement, dated November 1, 2008, by and among Allianz Variable Insurance Products Trust, Allianz Variable Insurance Products Fund of Funds Trust, and Allianz Investment Management LLC, filed on February 4, 2009 as Exhibit (h)(2) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (13)(c)* Chief Compliance Officer Agreement, dated June 10, 2009, by and among Allianz Variable Insurance Products Trust, Allianz Variable Insurance Products Fund of Funds Trust, and Allianz Investment Management LLC, filed herewith. (13)(d)* Compliance Services Agreement, dated June 10, 2009, by and among Allianz Variable Insurance Products Trust, Allianz Variable Insurance Products Fund of Funds Trust, and Allianz Investment Management LLC, filed herewith. (13)(e) Amended Expense Limitation Agreement, dated May 1, 2007, between Allianz Life Advisers LLC, and Allianz Variable Insurance Products Trust, filed on April 29, 2008, as Exhibit (h)(5) to Registrant's Post-Effective Amendment No. 24, is incorporated by reference. (13)(e)(i) Updated Exhibit A dated January 26, 2009, to the Amended Expense Limitation Agreement, dated May 1, 2007, between Allianz Life Advisers LLC and Allianz Variable Insurance Products Trust, filed on February 4, 2009 as Exhibit (h)(5)(i) to Registrant's Post-Effective Amendment No. 25, is incorporated by reference. (13)(f) Brokerage Transaction Agreement dated February 6, 2003, between Lynch, Jone & Ryan Inc., and USAllianz Investor Services, filed on December 27, 2006 as Exhibit (h)(8) to Registrant's Post-Effective Amendment No. 20, is incorporated by reference. (13)(g) Amended and Restated Services Agreement dated October 23, 2007, between Allianz Variable Insurance Products Funds of Funds Trust and CITI Fund Services Ohio, Inc, filed on April 29, 2008 to Registrant's Post-Effective Amendment No. 3, is incorporated by reference. (13)(h) Amended Expense Limitation Agreement, dated May 1, 2007, between Allianz Life Advisers LLC and Allianz Variable Insurance Products Fund of Funds Trust, filed on February 2, 2009 as Exhibit (h)(2) to Registrant's Post-Effective Amendment No. 4, is incorporated by reference. (13)(h)(i) Exhibit A dated October 22, 2008 to the Amended Expense Limitation Agreement dated May 1, 2007, between Allianz Life Advisers LLC and Allianz Variable Insurance Products Fund of Funds Trust, filed on February 2, 2009 as Exhibit (h)(2)(i) to Registrant's Post-Effective Amendment No. 4, is incorporated by reference. (14)** Consent of KPMG LLP with respect to financial statements of the Registrant, to be filed by amendment. (15) N/A (16)* Powers of attorney, filed herewith. (17)(a)* Form of contract holder voting instructions, to be filed by amendment. (17)(b)* Prospectus of the acquiring funds dated ___________, 2009 for shares of the Allianz Variable Insurance Products trust, filed herewith. (17)(c)* Prospectus of the acquiring funds dated ___________, 2009 for shares of the Allianz Variable Insurance Products Fund of Funds trust, filed herewith. (17)(d)* Supplement to the Allianz Variable Insurance Products Trust prospectus, dated June 22, 2009, filed herewith. (17)(e) Prospectus of the acquired funds dated April 27, 2009 for shares of the Allianz Variable Insurance Products trust and Allianz Variable Insurance Products Fund of Funds Trust, filed on April 24, 2009 as part of Registrants Post Effective Amendment No. 26 and Post Effective Amendment No. 5, repectively, are incorporated by reference. (17)(f) Annual reports of the acquired funds, as of December 31, 2008, for the Allianz Variable Insurance Products trust and Allianz Variable Insurance Products Fund of Funds Trust, filed by Registrants on March 9, 2009 under form N-CSR, are incorporated by reference. ____________________________ *filed herewith **to be filed by amendment ITEM 17. UNDERTAKINGS. (1) The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this Registration Statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act [17 CFR 230.145c], the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the Registration Statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. (3) The undersigned Registrant agrees to file, by post-effective amendment, an opinion of counsel or a copy of a ruling of the Internal Revenue Service supporting the tax consequences of the proposed reorganization within a reasonable time after receipt of such opinion or ruling. SIGNATURES As required by the Securities Act of 1933, this registration statement has been signed on behalf of the registrant, in the city of Golden Valley, and the state of Minnesota on the 24th day of June, 2009. ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST ALLIANZ VARIABLE INSURANCE PRODUCTS FUND OF FUNDS TRUST By: /s/ Jeffrey Kletti ------------------------------------ Jeffrey Kletti, President As required by the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on June 24, 2009. SIGNATURE TITLE ---------- ----- /s/ Peter R. Burnim* Trustee --------------------------- Peter R. Burnim /s/ Peggy L. Ettestad* Trustee --------------------------- Peggy L. Ettestad /s/ Roger A. Gelfenbien* Trustee --------------------------- Roger A. Gelfenbien /s/ Dickson W. Lewis* Trustee --------------------------- Dickson W. Lewis /s/ Claire R. Leonardi* Trustee --------------------------- Claire R. Leonardi /s/ Peter W. McClean* Trustee --------------------------- Peter W. McClean /s/ Arthur C. Reeds III* Trustee --------------------------- Arthur C. Reeds III /s/ Troy Sheets Treasurer (principal financial and --------------------------- accounting officer) Troy Sheets /s/ Robert DeChellis* Trustee -------------------------- Robert DeChellis By: /s/ Jeffrey W. Kletti --------------------------- Jeffrey Kletti, President and Trustee *Pursuant to powers of attorney filed as Exhibit 16 to this Registration Statement EXHIBITS TO FORM N-14 ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST ALLIANZ VARIABLE INSURANCE PRODUCTS FUND OF FUNDS TRUST INDEX TO EXHIBITS EXHIBIT DESCRIPTION OF EXHIBIT EX-99.6d BlackRock Investment Management LLC Subadv Agmt 4-29-09 EX-99.6f BlackRock Financial Management Inc. Subadv Agmt 4-29-09 EX-99.6q NFJ Investment Group LLC Subadv Agmt 4-30-09 EX-99.13c Chief Compliance Officer Agreement 6-10-09 EX-99.13d Compliance Services Agreement 6-10-09 EX-99.16 Powers of Attorney EX-99.17a Form of Contract Holder Voting Instructions EX-99.17b Allianz Acquiring Funds VIP Prospectus dated August__, 2009 EX-99.17c Allianz Acquiring Funds FOF Prospectus dated August__, 2009 EX-99.17d AZL VIP Trust Prospectus supplement 6-22-09