Allianz Variable Insurance Products Trust Annual Report

This report is submitted for the general information of the shareholder of the Fund. The report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus, which contains details concerning the sales charges and other pertinent information.

Growth of a $10,000 Investment

LOGO

The chart above represents a comparison of a hypothetical investment in the Fund versus a similar investment in the Fund’s benchmark, and represents the reinvestment of dividends and capital gains in the Fund.

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (5/1/02)
AZL^® Allianz AGIC Opportunity Fund		–11.54	%		18.44	%		–0.90	%		4.88	%
Russell 2000^® Growth Index		–2.91	%		19.00	%		2.09	%		5.11	%

Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please visit www.Allianzlife.com.

Expense Ratio


	Gross
AZL^® Allianz AGIC Opportunity Fund		1.20	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.35% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

¹	The hypothetical $10,000 investment for the Russell 2000^® Growth Index is calculated from April 30, 2002.

The total return of the Fund does not reflect the effect of any insurance charges, the annual maintenance fee or the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Such charges, fees and tax payments would reduce the performance quoted.

The Fund’s performance is measured against the Russell 2000^® Growth Index, an unmanaged index that measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 companies 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.

As a shareholder of the AZL Allianz AGIC Opportunity Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.

The Actual Expense table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

The Hypothetical Expense table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.


Shares			Fair Value

	Common Stocks (99.9%):
	Aerospace & Defense (1.6%):
	211,479	AerCap Holdings NV	$	2,387,598

	Airlines (1.6%):
	40,649	Copa Holdings SA, Class A		2,384,877

	Auto Components (2.1%):
	61,075	Tenneco, Inc.*^		1,818,814
	45,622	Tesla Motors, Inc.*^		1,302,964

				3,121,778

	Biotechnology (3.7%):
	43,475	Cubist Pharmaceuticals, Inc.*^		1,722,479
	129,000	Emergent Biosolutions, Inc.*^		2,172,360
	79,641	Myriad Genetics, Inc.*		1,667,683

				5,562,522

	Capital Markets (1.3%):
	330,550	WisdomTree Investments, Inc.*^		1,999,827

	Commercial Services & Supplies (3.3%):
	233,699	Innerworkings, Inc.^		2,175,738
	157,067	Mobile Mini, Inc.*		2,740,819

				4,916,557

	Communications Equipment (6.0%):
	95,225	Acme Packet, Inc.*^		2,943,405
	80,450	Aruba Networks, Inc.*^		1,489,934
	250,738	Sycamore Networks, Inc.*		4,488,210

				8,921,549

	Diversified Consumer Services (2.5%):
	86,749	American Public Education*^		3,754,497

	Diversified Financial Services (2.7%):
	59,200	Encore Capital Group, Inc.*		1,258,592
	106,950	Financial Engines, Inc.*^		2,388,193
	9,725	MarketAxess Holdings, Inc.		292,820

				3,939,605

	Electrical Equipment (2.3%):
	76,384	Polypore International, Inc.*^		3,360,132

	Electronic Equipment, Instruments & Components (1.8%):
	81,000	IPG Photonics Corp.*^		2,743,470

	Energy Equipment & Services (1.2%):
	134,950	Tesco Corp.*		1,705,768

	Food & Staples Retailing (0.9%):
	33,025	Fresh Market, Inc. (The)*^		1,317,697

	Health Care Equipment & Supplies (7.5%):
	78,235	Align Technology, Inc.*^		1,856,125
	27,264	Endologix, Inc.*		312,991
	456,769	Hansen Medical, Inc.^		1,178,464
	77,350	Insulet Corp.*^		1,456,501
	193,870	NuVasive, Inc.*		2,440,823
	60,525	Zoll Medical Corp.*		3,823,969

				11,068,873


Shares			Fair Value

	Common Stocks, continued
	Health Care Providers & Services (0.9%):
	29,169	IPC The Hospitalist Co.*^	$	1,333,607

	Hotels, Restaurants & Leisure (2.5%):
	1,100	Buffalo Wild Wings, Inc.*^		74,261
	46,439	Life Time Fitness, Inc.*^		2,171,023
	100,350	Texas Roadhouse, Inc.^		1,495,215

				3,740,499

	Internet & Catalog Retail (4.4%):
	157,032	Constant Contact, Inc.*^		3,644,713
	76,600	ReachLocal, Inc.*^		473,388
	104,725	Shutterfly, Inc.*^		2,383,541

				6,501,642

	Internet Software & Services (6.2%):
	106,075	Ancestry.com, Inc.*^		2,435,482
	144,073	BroadSoft, Inc.*^		4,351,004
	80,843	VistaPrint NV*^		2,473,796

				9,260,282

	IT Services (1.0%):
	97,200	ServiceSource International, Inc.^		1,525,068

	Machinery (4.2%):
	105,525	Dynamic Materials Corp.^		2,087,285
	530,136	Wabash National Corp.*		4,156,266

				6,243,551

	Metals & Mining (4.7%):
	243,375	Globe Specialty Metals, Inc.^		3,258,791
	412,317	Horsehead Holding Corp.*^		3,714,976

				6,973,767

	Oil, Gas & Consumable Fuels (10.6%):
	107,225	Carrizo Oil & Gas, Inc.*^		2,825,379
	293,311	Comstock Resources, Inc.*^		4,487,658
	353,908	Goodrich Petroleum Corp.*^		4,859,157
	530,262	Quicksilver Resources, Inc.*^		3,558,058

				15,730,252

	Pharmaceuticals (3.6%):
	31,650	Jazz Pharmaceuticals, Inc.*		1,222,640
	69,725	Questcor Pharmaceuticals, Inc.*^		2,899,165
	25,300	Salix Pharmaceuticals, Inc.*^		1,210,605

				5,332,410

	Professional Services (3.9%):
	61,775	Acacia Research*^		2,255,405
	30,925	Corporate Executive Board Co. (The)^		1,178,243
	26,375	FTI Consulting, Inc.*^		1,118,828
	31,187	Huron Consulting Group, Inc.*		1,208,184

				5,760,660


Shares			Fair Value

	Common Stocks, continued
	Road & Rail (1.5%):
	131,197	Celadon Group, Inc.	$	1,549,437
	128,607	Vitran Corp., Inc.		740,776

				2,290,213

	Semiconductors & Semiconductor Equipment (7.1%):
	70,375	Cavium, Inc.*^		2,000,761
	22,425	Cymer, Inc.*^		1,115,868
	278,650	Inphi Corp.*^		3,332,654
	42,825	Mellanox Technologies, Ltd.*		1,391,384
	198,850	Teradyne, Inc.*^		2,710,326

				10,550,993

	Software (3.4%):
	22,050	Concur Technologies, Inc.*^		1,119,920
	175,765	Mitek Systems, Inc.^		1,274,296
	54,375	QLIK Technologies, Inc.*^		1,315,875
	179,168	Rosetta Stone, Inc.^		1,367,052

				5,077,143

	Specialty Retail (1.1%):
	62,600	Cabela’s, Inc., Class A*^		1,591,292

	Textiles, Apparel & Luxury Goods (2.0%):
	39,800	Steven Madden, Ltd.*^		1,373,100
	48,375	Vera Bradley, Inc.*		1,560,094

				2,933,194


Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Trading Companies & Distributors (3.3%):
	72,900	Titan Machinery, Inc.*^	$	1,584,117
	112,725	United Rentals, Inc.*^		3,331,024

				4,915,141

	Transportation Infrastructure (1.0%):
	293,985	Scorpio Tankers, Inc.*		1,437,587

	Total Common Stocks (Cost $157,107,270)			148,382,051

	Securities Held as Collateral for Securities on Loan (29.2%):
$	43,352,006	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)		43,352,006

	Total Securities Held as Collateral for Securities on Loan (Cost $43,352,006)			43,352,006

	Unaffiliated Investment Company (0.3%):
	497,082	Dreyfus Treasury Prime Cash Management, 0.00%(b)		497,082

	Total Unaffiliated Investment Company (Cost $497,082)			497,082

	Total Investment Securities (Cost $200,956,358)(c) — 129.4%			192,231,139
	Net other assets (liabilities) — (29.4)%			(43,622,405	)

	Net Assets — 100.0%		$	148,608,734

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	200,956,358

Investment securities, at value*	$	192,231,139
Interest and dividends receivable		30,264
Receivable for capital shares issued		4,872
Receivable for expenses paid indirectly		3,317
Receivable for investments sold		1,373,856
Prepaid expenses		1,474

Total Assets		193,644,922

Liabilities:
Payable for investments purchased		1,400,713
Payable for capital shares redeemed		105,763
Payable for collateral received on loaned securities		43,352,006
Manager fees payable		108,826
Administration fees payable		4,920
Distribution fees payable		32,007
Custodian fees payable		5,478
Administrative and compliance services fees payable		1,460
Trustee fees payable		79
Other accrued liabilities		24,936

Total Liabilities		45,036,188

Net Assets	$	148,608,734

Net Assets Consist of:
Capital	$	163,903,617
Accumulated net realized gains/(losses) from investment transactions		(6,569,664	)
Net unrealized appreciation/(depreciation) on investments		(8,725,219	)

Net Assets	$	148,608,734

Shares of beneficial interest (unlimited number of shares authorized, no par value)		12,827,999
Net Asset Value (offering and redemption price per share)	$	11.58

*	Includes securities on loan of $41,902,938.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	294,213
Income from securities lending		332,442

Total Investment Income		626,655

Expenses:
Manager fees		1,569,340
Administration fees		73,980
Distribution fees		461,569
Custodian fees		30,308
Administrative and compliance services fees		9,242
Trustee fees		15,183
Professional fees		16,175
Shareholder reports		21,842
Other expenses		6,928

Total expenses before reductions		2,204,567
Less expenses paid indirectly		(79,980	)

Net expenses		2,124,587

Net Investment Income/(Loss)		(1,497,932	)

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		19,026,080
Change in unrealized appreciation/depreciation on investments		(36,465,162	)

Net Realized/Unrealized Gains/(Losses) on Investments		(17,439,082	)

Change in Net Assets Resulting From Operations	$	(18,937,014	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Allianz AGIC Opportunity Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

The Trust is authorized to issue an unlimited number of shares of the Fund without par value. Shares of the 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 Fund. In addition, in the normal course of business, the Fund may enter into contracts with its vendors and others that provide for general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects the risk of loss to be remote.

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies conform with U.S. generally accepted accounting principles (“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. Management has evaluated events and transactions subsequent to period end through the date the financial statements were issued, for purposes of recognition or disclosure in these financial statements and there are no subsequent events to report.

The Fund records its investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. The valuation techniques used to determine fair value are further described in Note 4 below.

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.

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.

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 in the net realized and unrealized gain or loss on investments and foreign currencies.

Income received by the Fund from sources within foreign countries may be subject to withholding and other income or similar taxes imposed by such countries. The Funds accrue such taxes, as applicable, based on their current interpretation of tax rules in the foreign markets in which they invest.

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.

Dividends to shareholders are recorded on the ex-dividend date. The Fund distributes its dividends from net investment income and net realized capital gains, if any, on an annual basis. The amount of dividends from net investment income and from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are either 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 that exceed net investment income and net realized gains for tax purposes are reported as distributions of capital.

Expenses directly attributable to the Fund are charged directly to the 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. 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 Fund of Funds Trust.

market daily to provide a level of collateral at least equal to the fair value of securities loaned. The Fund bears all of the gains and losses on such investments. The 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 cash collateral received. In extremely low interest rate environments, the broker rebate fee may exceed the interest earned or the cash collateral which would result in a loss to the Fund. The investment of cash collateral deposited by the borrower is subject to inherent market risks such as interest rate risk, credit risk, liquidity risk, and other risks that are present in the market, and as such, the value of these investments may not be sufficient, when liquidated, to repay the borrower when the loaned security is returned. 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 Allianz Investment Management LLC (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. Securities on loan at December 31, 2011 are presented on the Fund’s Schedule of Portfolio Investments (“Schedule”). The average outstanding amount of securities on loan was $48.9 million for the year ended December 31, 2011.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $32,963 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

Certain Funds of the Trust participate in a commission recapture program. The Fund will utilize the recaptured commissions to pay for, in whole or part, certain expenses of the Fund, excluding investment advisory fees. Any amounts received by the Fund, if applicable, are disclosed as “Expenses paid indirectly” on the Statement of Operations.

All open derivative positions at period end are reflected on the Fund’s Schedule of Portfolio Investments. The following is a description of the derivative instruments that the Fund may utilize, including the primary underlying risk exposures related to each instrument type.

During the year ended December 31, 2011, the Fund did not enter into any forward currency contracts. The Fund may enter into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed.

During the year ended December 31, 2011, the Fund did not enter into any futures contracts. The Fund may enter into 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, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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.

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 Allianz Global Investors Capital (“AGIC”), AGIC 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

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, 2011, there were no remaining contractual reimbursements that are subject to repayment 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. During the year ended December 31, 2011, there were no voluntary waivers.

Pursuant to separate agreements between the Funds and the Manager, the Manager provides a Chief Compliance Officer (“CCO”) and certain compliance oversight and regulatory filing services to the Trust. Under these agreements the Manager is entitled to an amount equal to a portion of the compensation and certain other expenses related to the individuals performing the CCO and compliance oversight services, as well as $75 per hour for time incurred in connection with the preparation and filing of certain documents with the Securities and Exchange Commission. The fees are paid to the Manager on a quarterly basis. The total expenses incurred by the Fund for these services are reflected on the Statement of Operations as “Administrative and compliance services fees.”

Citi Fund Services Ohio, Inc. (“Citi” or the “Administrator”), a wholly owned subsidiary of Citigroup, Inc., with which an officer of the Trust is affiliated, serves as the Trust’s administrator, transfer agent, and fund accountant, and assists the Trust in all aspects of its administration and operation. The Administrator is entitled to a Trust-wide asset-based fee, which is based on the following schedule: 0.05% of daily average net assets on the first $4 billion, 0.04% of daily average net assets on the next $2 billion, 0.02% of daily average net assets on the next $2 billion and 0.01% of daily average net assets over $8 billion. The overall Trust-wide fees are accrued daily and paid monthly and are subject to a minimum annual fee. In addition, the Administrator is entitled to annual account fees related to the transfer agency system, an annual fee for each additional class of shares of any Fund, certain annual fees in supporting fair value services, and a Trust-wide annual fee for providing infrastructure and support in implementing the written policies and procedures comprising the Fund’s compliance program. Fees payable to the Administrator are subject to certain reductions associated with services provided to new funds. The Administrator is also reimbursed for certain expenses incurred. The total expenses incurred by the Fund for these services are reflected on the Statement of Operations as “Administration fees.”

Allianz Life Financial Services, LLC (“ALFS”), an affiliate of the Manager, serves as distributor of the Fund and receives 12b-1 fees directly from the Fund, plus a Trust-wide annual fee of $42,500, paid by the Manager from its profits and not by the Trust, for recordkeeping and reporting services.

The Trust has adopted a distribution and service plan in conformance with Rule 12b-1of the 1940 Act. Pursuant to this plan, the Fund is authorized to pay certain fees for the sale and distribution of its shares and services provided to its shareholders at an annual rate not to exceed 0.25% of the Fund’s average daily net assets. These fees are reflected on the Statement of Operations as “Distribution fees.”

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $2,760 was paid from the Fund relating to these fees and expenses.

Certain Officers and Trustees of the Trust are affiliated with the Manager or the Administrator. Such Officers (except for the Trust’s CCO as noted above) and Trustees receive no compensation from the Trust for serving in their respective roles. For their service to the Trust and to the Allianz Variable Insurance Products Fund of Funds Trust, each non-interested Trustee receives a $36,000 annual Board retainer and a $8,000 meeting fee for each regular in-person Board meeting and a $4,000 meeting fee for each Committee meeting. In addition, Trustees may receive compensation for special meetings and telephonic meetings. Also, the Trustees are reimbursed for certain expenses associated with attending Board meetings. Compensation to the Trustees is allocated between the Trust and the Allianz Variable Insurance Products Fund of Funds Trust in proportion to the assets under management of each Trust. During the year ended December 31, 2011, actual Trustee compensation was $924,000 in total for both Trusts.

The valuation techniques employed by the Fund, as described below, maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund’s investments are summarized in the three broad levels listed below:

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

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 (“NYSE”) (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 listed on NASDAQ Stock Market, Inc. (“NASDAQ”) are valued at the official closing price as reported by NASDAQ. In each of these situations, valuations are typically categorized as a Level 1 in the fair value hierarchy. Investments in open-end investment companies are valued at their respective net asset value as reported by such companies and are typically categorized as Level 1 in the fair value hierarchy.

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. In each of these situations, valuations are typically categorized as Level 2 in the fair value hierarchy.

Exchange traded futures contracts are valued at the last sales price as of the close of the primary exchange and are typically categorized as Level 1 in the fair value hierarchy. Forward currency contracts are generally valued at the foreign currency exchange rate as of the close of the NYSE and are typically categorized as Level 2 in the fair value hierarchy.

Other assets and securities for which market quotations are not readily available, or are deemed unreliable are valued at fair value as determined in good faith by the 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 NYSE. Depending on the source and relative significance of valuation inputs, these instruments may be classified as Level 2 or Level 3 in the fair value hierarchy. 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 which are then typically categorized as Level 2 in the fair value hierarchy.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

In May 2011, the FASB issued ASU No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS”. ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011-04 will require reporting entities to disclose quantitative information about the unobservable inputs used in the fair value measurements categorized within Level 3 of the fair value hierarchy. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. Adoption of ASU 2011-04 will have no effect on the Fund’s net assets. At this time, management is evaluating the impact of ASU 2011-04 on the financial statement disclosures.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

It is the 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.

Management of the Funds has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., the last four tax year ends and the interim tax period since then, as applicable). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.

Cost for federal income tax purposes at December 31, 2011 is $206,941,010. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

As of the end of its tax year ended December 31, 2011, the Fund has capital loss carry forwards (“CLCFs”) as summarized in the table below. Under the provisions of the Regulated Investment Company Modernization Act of 2010, CLCFs that originated in a tax year that began before December 23, 2010 (pre-effective CLCFs) may be carried forward, subject to certain limitations, and applied to offset future capital gains, and thus reduce the amount of distributable capital gains, for up to eight succeeding tax years, after which any unutilized CLCFs expire. Pre-effective CLCFs are applied as short-term capital loss regardless of whether the originating capital loss was short term or long term. CLCFs that originate in tax years beginning after December 22, 2010 (post-effective CLCFs), are applied consistent with the character in which they originated as a new loss on the first day of the immediately succeeding tax year, and thus take precedent over the application of pre-effective CLCFs. Post-effective CLCFs can be carried forward indefinitely.

During the year ended December 31, 2011, the Fund utilized $17,861,820 in CLCFs to offset capital gains.

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Allianz AGIC Opportunity Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, upon request, by visiting the Securities and Exchange Commission’s (“Commission”) website at www.sec.gov, or by calling 800-624-0197.

Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30th is available (i) without charge, upon request, by calling 800-624-0197; (ii) on the Allianz Variable Insurance Products Trust’s website at https://www.allianzlife.com; and (iii) on the Commission’s website at http://www.sec.gov.

The Fund files complete Schedules of Portfolio Holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. Schedules of Portfolio Holdings for the Fund in this report are available without charge on the Commission’s website at http://www.sec.gov, or may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.

The Allianz Variable Insurance Products Trust (the “Trust”) is a manager-of-managers fund. That means that the Trust’s Manager (“Allianz Investment Management LLC”) is responsible for monitoring the various Subadvisers that have day-to-day responsibility for the decisions made for each of the Trust’s investment portfolios. The Trust’s Manager is responsible for determining, in the first instance, which investment advisers to consider recommending for selection as a Subadviser.

In reviewing the services provided by the Manager and the terms of the investment management agreement, the Board receives and reviews information related to the Manager’s experience and expertise in the variable insurance marketplace. Currently, the Funds are offered only through variable annuities and variable life insurance policies, and not in the retail fund market. In addition, the Board receives information regarding the Manager’s expertise with regard to portfolio diversification and asset allocation requirements within variable insurance products issued by Allianz Life Insurance Company of North America and its subsidiary, Allianz Life Insurance Company of New York. Currently, the Funds are offered only through Allianz Life and Allianz of New York variable products.

The Trust’s Manager has adopted policies and procedures to assist it in the process of analyzing each potential Subadviser with expertise in particular asset classes for purposes of making the recommendation that a specific investment adviser be selected. The Trust’s Board reviews and considers the information provided by the Manager in deciding which investment advisers to select. After an investment adviser becomes a Subadviser, a similarly rigorous process is instituted by the Manager to monitor the investment performance and other responsibilities of the Subadviser. The Manager reports to the Trust’s Board on its analysis at the regular meetings of the Board, which are held at least quarterly. Where warranted, the Manager will add or remove a particular Subadviser from a “watch” list that it maintains. Watch list criteria include, for example: (a) Fund performance over various time periods; (b) Fund risk issues, such as changes in key personnel involved with Fund management, changes in investment philosophy or process, or “capacity” concerns; and (c) organizational risk issues, such as regulatory, compliance or legal concerns, or changes in the ownership of the Subadviser. The Manager may place a Fund on the watch list for other reasons, and if so, will explain its rationale to the Trustees. Funds which are on the watch list are subject to special scrutiny of the Manager and the Board of Trustees. Funds may be removed from such watch list, if for example, performance improves or regulatory matters are satisfactorily resolved. However, in some situations where Funds which have been on the watch list, the Manager has recommended the retention of a new Subadviser, and the Board of Trustees has subsequently approved new Subadvisory Agreements with such Subadvisers.

In assessing the Manager’s and Subadvisers’ (collectively, the “Advisory Organizations”), performance of their obligations, the Board considers whether there has occurred a circumstance or event that would constitute a reason for it to not renew an advisory contract. In this regard, the Board is mindful of the potential disruption of a Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew a contract.

As required by the Investment Company Act of 1940 (“1940 Act”), the Trust’s Board has reviewed and approved the Trust’s Investment Management Agreement with the Manager (the “Advisory Agreement”) and portfolio management agreements (the “Subadvisory Agreements”) with the Subadvisers. The Board’s decision to approve these contracts reflects the exercise of its business judgment on whether to approve new arrangements and continue the existing arrangements. During its review of these contracts, the Board considers many factors, among the most material of which are: the Fund’s investment objectives and long term performance; the Advisory Organizations’ management philosophy, personnel, and processes, including their compliance history and the adequacy of their compliance processes; the preferences and expectations of Fund shareholders (and underlying contract owners) and their relative sophistication; the continuing state of competition in the mutual fund industry; and comparable fees in the mutual fund industry.

The Board also considers the compensation and benefits received by the Advisory Organizations. This includes fees received for services provided to the Fund by affiliated persons of the Advisory Organizations and research services received by the Advisory Organizations from brokers that execute Fund trades, as well as advisory fees. The Board considered the fact that: (1) the Manager and the Trust are parties to an Administrative Service Agreement, a Compliance Services Agreement, and a Chief Compliance Officer Agreement, under which the Manager is compensated by the Trust for performing certain administrative and compliance services including providing an employee of the Manager or one of its affiliates to act as the Trust’s Chief Compliance Officer; and (2) Allianz Life Financial Services, LLC, an affiliated person of the Manager, is a registered securities broker-dealer and receives (along with its affiliated persons) payments made by the Trust pursuant to Rule 12b-1.

affiliates as a result of the adviser’s relationship with the fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts bearing on the adviser’s service and fee. The Trust’s Board is aware of these factors and takes them into account in its review of the Trust’s advisory contracts.

The Board considered and weighed these circumstances in light of its experience in governing the Trust and working with the Advisory Organizations on matters relating to the Funds, and is assisted in its deliberations by the advice of legal counsel to the Independent Trustees. In this regard, the Board requests and receives a significant amount of information about the Funds and the Advisory Organizations. Some of this information is provided at each regular meeting of the Board; additional information is provided in connection with the particular meeting or meetings at which the Board’s formal review of an advisory contract occurs. In between regularly scheduled meetings, the Board may receive information on particular matters as the need arises. Thus, the Board’s evaluation of an advisory contract is informed by reports covering such matters as: an Advisory Organization’s investment philosophy, personnel, and processes; the Fund’s short- and long-term performance (in absolute terms as well as in relationship to its benchmark(s), certain competitor or “peer group” funds and similar funds managed by the particular Subadviser), and comments on the reasons for performance; the Fund’s expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities; the nature and extent of the advisory and other services provided to the Fund by the Advisory Organizations and their affiliates; compliance and audit reports concerning the Funds and the companies that service them; and relevant developments in the mutual fund industry and how the Funds and/or Advisory Organizations are responding to them.

The Board also receives financial information about Advisory Organizations, including reports on the compensation and benefits the Advisory Organizations derive from their relationships with the Funds. These reports cover not only the fees under the advisory contracts, but also fees, if any, received for providing other services to the Funds. The reports also discuss any indirect or “fall out” benefits an Advisory Organization may derive from its relationship with the Funds.

The Advisory and Subadvisory Agreements (collectively, the “Agreements”) were most recently considered at Board of Trustees meetings held in the fall of 2011. Information relevant to the approval of such Agreements was considered at a telephonic Board of Trustees meeting on October 19, 2011, and at an “in person” Board of Trustees meeting held October 26, 2011. The Agreements were approved at the Board meeting of October 26, 2011. At such meeting the Board also approved an Expense Limitation Agreement between the Manager and the Trust for the period ending April 30, 2013. In connection with such meetings, the Trustees requested and evaluated extensive materials from the Manager, including performance and expense information for other investment companies with similar investment objectives derived from data compiled by an independent third party provider and other sources believed to be reliable by the Manager. Prior to voting, the Trustees reviewed the proposed approval/continuance of the Agreements with management and with experienced counsel who are independent of the Manager and received a memorandum from such counsel discussing the legal standards for their consideration of the proposed approvals/continuances. The independent (“disinterested”) Trustees also discussed the proposed approvals/continuances in a private session with such counsel at which no representatives of the Manager were present. In reaching their determinations relating to the approval and/or continuance of the Agreements, in respect of each Fund, the Trustees considered all factors they believed relevant. The Board based its decision to approve the Agreements on the totality of the circumstances and relevant factors, and with a view to past and future long-term considerations. Not all of the factors and considerations discussed above and below are necessarily relevant to every Fund, and the Board did not assign relative weights to factors discussed herein or deem any one or group of them to be controlling in and of themselves.

An SEC Rule requires that shareholder reports include a discussion of certain factors relating to the selection of investment advisers and the approval of advisory fees. The “factors” enumerated by the SEC are set forth below in italics, as well as the Board’s conclusions regarding such factors:

(1) The nature, extent and quality of services provided by the Manager and Subadvisers. The Trustees noted that the Manager, subject to the control of the Board of Trustees, administers each Fund’s business and other affairs. As the Trust is a manager of managers fund, the Manager is responsible for monitoring the various Subadvisers that have day-to-day responsibility for the decisions made for each of the Trust’s investment portfolios. The Trust’s Manager is responsible for determining, in the first instance, which investment advisers to consider recommending to the Board of Trustees for selection as a Subadviser.

The Trustees noted that the Manager also provides the Trust and each Fund with such administrative and other services (exclusive of, and in addition to, any such services provided by any others retained by the Trust on behalf of the Funds) and executive and other personnel as are necessary for the operation of the Trust and the Funds. Except for the Trust’s Chief Compliance Officer, the Manager pays all of the compensation of Trustees and officers of the Trust who are employees of the Manager or its affiliates.

The Trustees considered the scope and quality of services provided by the Manager and the Subadvisers and noted that the scope of such services provided had expanded as a result of recent regulatory and other developments. The Trustees noted that, for example, the Manager and Subadvisers are responsible for maintaining and monitoring their own compliance programs, and these compliance programs have recently been refined and enhanced in light of new regulatory requirements. The Trustees considered the capabilities and resources which the Manager has dedicated to performing services on behalf of the Trust and its Funds. The quality of administrative and other services, including the Manager’s role in coordinating the activities of the Trust’s other service providers, also were considered. The Trustees concluded that, overall, they were satisfied with the nature, extent and quality of services provided (and expected to be provided) to the Trust and to each of the Funds under the Agreements.

(2) The investment performance of the Funds, the Manager and the Subadvisers. In connection with every in-person quarterly Board of Trustees meeting, Trustees receive extensive information on the performance results of each of the Funds. This includes, for example, performance information on all of the Funds for the previous quarter, and previous one, three and five-year periods, and since inception. (For Funds which have been in existence for less than five years, Trustees may receive performance information on comparable funds managed by the particular Subadviser for periods prior to the creation of a particular Fund.) Such performance information includes information on absolute total return, performance versus Subadvisers’ comparable fund(s), performance versus the appropriate benchmark(s), and performance versus peer groups. For example, in connection with the Board of Trustees meeting held October 26, 2011, the Manager reported that for the three year period ended June 30, 2011, ten Funds were in the top 40%, six were in the middle 20% and five were in the bottom 40%, and for the one year period ended June 30, 2011, nine Funds were in the top 40%, eight were in the middle 20%, and 11 were in the bottom 40%. The Manager also reported that for the five year period ended June 30, 2011, nine Funds were in the top 40%, three were in the middle 20%, and seven were in the bottom 40%. At the Board of Trustees meeting held October 26, 2011, the Trustees determined that the overall investment performance of the Funds was acceptable.

(3) The costs of services to be provided and profits to be realized by the Manager and the Subadvisers and their affiliates from their relationship with the Funds. The Manager has supplied information to the Board of Trustees pertaining to the level of investment advisory fees to which the Funds are subject. The Manager has agreed to temporarily “cap” Fund expenses at certain levels, and information is provided to Trustees setting forth “contractual” advisory fees and “actual” fees after taking expense caps into account. Based upon the information provided, the “actual” advisory fees payable by the Funds overall are generally comparable to the average level of fees paid by Fund peer groups. For the 29 Funds reviewed by the Board of Trustees in the fall of 2011, 24 Funds paid “actual” advisory fees in a percentage amount within the 65th percentile or lower for each Fund’s applicable category. The Trustees recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The Board has concluded that the advisory fees to be paid to the Manager by the Funds are not unreasonable.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65^th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.

The Manager has committed to providing the Funds with a high quality of service and working to reduce Fund expenses over time, particularly as the Funds grow larger. The Trustees concluded therefore that the expense ratios of the Funds were not unreasonable.

The Manager provided information concerning the profitability of the Manager’s investment advisory activities for the period from 2009 through June 30, 2011. The Trustees recognized that it is difficult to make comparisons of profitability from investment company advisory agreements because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocation of expenses and the adviser’s capital structure and cost of capital. In considering profitability information, the Trustees considered the possible effect of certain fall-out benefits to the Manager and its affiliates. The Trustees focused on profitability of the Manager’s relationships with the Funds before taxes and distribution expenses. The Trustees recognized that the Manager should, in the abstract, be entitled to earn a reasonable level of profits for the services it provides to each Fund and, based on their review, concluded that they were satisfied that the Manager’s level of profitability from its relationship with the Funds was not excessive.

The Manager, on behalf of the Board of Trustees, endeavored to obtain information on the profitability of each Subadviser in connection with its relationship with the Fund or Funds which it subadvises. The Manager was unable to obtain meaningful profitability information from some of the unaffiliated Subadvisers. The Manager assured the Board of Trustees that the Agreements with the Subadvisers which are not affiliated with it were negotiated on an “arm’s length” basis, so that arguably, such profitability information should be less relevant. The Trustees were also provided with certain information on profitability for Subadvisers which are affiliated with the Manager. Trustees recognized the difficulty of allocating costs to multiple advisory accounts and products of a large advisory organization. Based upon the information provided, the Trustees determined that there was no evidence that the level of such profitability attributable to subadvising the Funds was excessive.

(4) and (5) The extent to which economies of scale would be realized as the Funds grow, and whether fee levels reflect these economies of scale. The Trustees noted that most of the advisory fee schedules for the Funds do not contain breakpoints that reduce the fee rate on assets above specified levels, although certain Subadvisory Agreements have such “breakpoints.” The Trustees recognized that breakpoints may be an appropriate way for the Manager to share its economies of scale, if any, with Funds that have substantial assets. However, they also recognized that there may not be a direct relationship between any economies of scale realized by Funds and those realized by the Manager as assets increase. The Trustees do not believe there is a uniform methodology for establishing breakpoints that give effect to Fund-specific service provided by the Manager. The Trustees noted that in the fund industry as a whole, as well as among funds similar to the Funds, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. Depending on the age, size, and other characteristics of a particular fund and its manager’s cost structure, different conclusions can be drawn as to whether there are economies of scale to be realized at any particular level of assets, notwithstanding the intuitive conclusion that such economies exist, or will be realized at some level of total assets. Moreover, because different managers have different cost structures and service models, it is difficult to draw meaningful conclusions from the breakpoints that may have been adopted by other funds. The Trustees also noted that the advisory agreements for many funds do not have breakpoints at all, or if breakpoints exist, they may be at asset levels significantly greater than those of the individual Funds. The Trustees also noted that the total assets in all of the Funds as of June 30, 2011 were approximately $6.2 billion, and that no single non-money market Fund had assets in excess of $428 million.

The Trustees noted that the Manager has agreed to temporarily “cap” Fund expenses at certain levels, which has the effect of reducing expenses as would the implementation of advisory fee breakpoints. The Manager has committed to continue to consider the continuation of fee “caps” and/or advisory fee breakpoints as the Funds grow larger. The Board receives quarterly reports on the level of Fund assets. It expects to consider whether or not to approve the Agreements at a meeting to be held prior to December 31, 2012, and will at that time, or prior thereto, consider: (a) the extent to which economies of scale can be realized, and (b) whether the advisory fee should be modified to reflect such economies of scale, if any.

Having taken these factors into account, the Trustees concluded that the absence of breakpoints in certain of the Funds’ advisory fee rate schedules was acceptable under each Fund’s circumstances.

The Trust is managed by the Trustees in accordance with the laws of the state of Delaware governing business trusts. There are currently nine Trustees, two of whom are “interested persons” of the Trust within the meaning of that term under the 1940 Act. The Trustees and Officers of the Trust, their addresses, ages, their positions held with the Trust, their terms of office with the Trust and length of time served, their principal occupation(s) during the past five years, the number of portfolios in the Trust they oversee, and their other directorships held during the past five years are as follows:


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011 the AZL^® BlackRock Capital Appreciation Fund returned –9.11%. That compared to a 2.64% return for its benchmark, the Russell 1000^® Growth Index¹.

A mood of optimism within U.S. equity markets at the start of 2011 quickly gave way to nervousness and fear. A number of major global events early in the year combined to reduce expectations for overall economic growth and send investors seeking safety. Revolutions in Egypt and Libya and the historic natural disaster in Japan prompted a prolonged bout of risk aversion during the first half of the year. Later in the year, the sovereign debt crisis in Europe, Standard and Poor’s decision to downgrade U.S. Treasuries and the unproductive American budget debate dominated the headlines and kept equity investors on edge. China continued to be an important factor in 2011; its falling growth rate and monetary policy tightening continued to have global implications.

In the U.S., these concerns were somewhat offset by double-digit earnings growth, attractive valuations and the improvement of domestic economic data in the fourth quarter. These factors enabled the U.S. market (and the Russell 1000^® Growth Index) to rally and close the 12-month period in positive territory, outperforming most other countries for the year. Given investors’ defensive mind-set during the year, the most stable dividend-paying companies drove the market’s strength, with the consumer staples sector delivering the Index’s best performance. The health care and consumer discretionary sectors performed relatively well in this environment, while the materials and industrials sectors delivered disappointing performance. As a result, the Russell 1000^® Growth Index (+2.64%) outperformed the Russell 1000^® Value Index² (+0.39%) by more than two percentage points for the year.

Against this backdrop, the Fund’s emphasis on company fundamentals and its bias toward stocks of higher growth companies was not rewarded. Security selection was broadly negative, and underperformance occurred across several sectors. Negative stock selection in the information technology, energy, health care and industrials sectors accounted for the majority of the Fund’s underperformance relative to its benchmark.*

The most significant underperformance came from the information technology sector, largely due to an underweight position in a major technology company as well as stock selection in the semiconductors and semiconductor equipment industries. Stock selection in the energy sector also negatively impacted the portfolio’s relative performance. The Fund’s weakness in the health care sector was largely attributable to one biotechnology firm, which released disappointing sales results and lowered revenue expectations for a new drug. In industrials, the Fund’s airline holdings were negatively affected by concerns over economic growth and a spike in crude oil prices stemming from unrest in the Middle East and North Africa.*

The portfolio benefited from an underweight position in the cyclically sensitive materials sector, which was the worst performing sector in the Index. In addition, several of the Fund’s top holdings delivered strong performance. Two of the Fund’s largest positions in information technology delivered double-digit returns during the year, due to the continued strength of the Smartphone market. In addition, the Fund’s largest holding in the industrials sector outperformed the Index.*

Past performance does not guarantee future results.

The Fund’s portfolio composition is subject to change. There is no guarantee that any sectors mentioned will continue to perform well or that securities in such sectors will be held by the Fund in the future. The information contained in this commentary is for informational purposes only and should not be construed as a recommendation to purchase or sell securities in the sector mentioned. The Fund’s holdings and weightings are as of December 31, 2011.

¹	The Russell 1000^® Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.

²	The Russell 1000^® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.

Investors cannot invest directly in an index.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (4/29/05)
AZL^® BlackRock Capital Appreciation Fund		–9.11	%		13.64	%		0.70	%		3.66	%
Russell 1000^® Growth Index		2.64	%		18.02	%		2.50	%		5.11	%

Expense Ratio


	Gross
AZL^® BlackRock Capital Appreciation Fund		1.14	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager voluntarily reduced the management fee to 0.70%. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.20% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against the Russell 1000^® Growth Index, an unmanaged index that measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies 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.

As a shareholder of the AZL BlackRock Capital Appreciation Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value


	Common Stocks (98.2%):
	Aerospace & Defense (6.8%):
	273,200	Boeing Co. (The)	$	20,039,220
	38,800	Precision Castparts Corp.		6,393,852
	83,100	United Technologies Corp.		6,073,779

				32,506,851

	Auto Components (2.0%):
	31,400	BorgWarner, Inc.*		2,001,436
	136,800	Johnson Controls, Inc.		4,276,368
	114,900	Tesla Motors, Inc.*^		3,281,544

				9,559,348

	Beverages (4.2%):
	194,800	Coca-Cola Co. (The)		13,630,156
	96,200	PepsiCo, Inc.		6,382,870

				20,013,026

	Biotechnology (1.4%):
	61,400	Biogen Idec, Inc.*		6,757,070

	Capital Markets (1.5%):
	275,800	Jefferies Group, Inc.^		3,792,250
	237,300	Morgan Stanley		3,590,349

				7,382,599

	Chemicals (2.2%):
	112,500	Celanese Corp., Series A		4,980,375
	61,600	Monsanto Co.		4,316,312
	23,300	Potash Corp. of Saskatchewan, Inc.		961,824

				10,258,511

	Commercial Banks (1.2%):
	202,700	Wells Fargo & Co.		5,586,412

	Communications Equipment (4.6%):
	232,900	Cisco Systems, Inc.		4,210,832
	324,300	QUALCOMM, Inc.		17,739,210

				21,950,042

	Computers & Peripherals (8.2%):
	87,400	Apple, Inc.*		35,397,000
	73,300	SanDisk Corp.*		3,607,093

				39,004,093

	Diversified Consumer Services (1.8%):
	160,700	Apollo Group, Inc., Class A*^		8,656,909

	Diversified Telecommunication Services (1.8%):
	217,200	Verizon Communications, Inc.		8,714,064

	Energy Equipment & Services (3.7%):
	107,500	Halliburton Co.		3,709,825
	74,800	National-Oilwell Varco, Inc.		5,085,652
	127,500	Schlumberger, Ltd.		8,709,525

				17,505,002

	Food & Staples Retailing (2.8%):
	140,600	Wal-Mart Stores, Inc.		8,402,256
	68,300	Whole Foods Market, Inc.		4,752,314

				13,154,570


Shares			Fair Value

	Common Stocks, continued
	Food Products (0.2%):
	21,700	Green Mountain Coffee Roasters, Inc.*^	$	973,245

	Health Care Equipment & Supplies (1.1%):
	48,800	Stryker Corp.		2,425,848
	56,600	Valeant Pharmaceuticals International, Inc.*		2,642,654

				5,068,502

	Health Care Providers & Services (2.2%):
	183,600	AmerisourceBergen Corp.^		6,828,084
	90,900	Cardinal Health, Inc.		3,691,449

				10,519,533

	Health Care Technology (1.6%):
	126,400	Cerner Corp.*^		7,742,000

	Hotels, Restaurants & Leisure (3.3%):
	8,600	Chipotle Mexican Grill, Inc.*		2,904,564
	146,900	Las Vegas Sands Corp.*		6,277,037
	140,100	Starbucks Corp.		6,446,001

				15,627,602

	Household Products (3.4%):
	245,500	Procter & Gamble Co. (The)		16,377,305

	Industrial Conglomerates (2.6%):
	263,300	Danaher Corp.^		12,385,632

	Internet & Catalog Retail (2.3%):
	62,900	Amazon.com, Inc.*		10,887,990

	Internet Software & Services (5.2%):
	175,300	eBay, Inc.*		5,316,849
	24,500	Google, Inc., Class A*		15,824,550
	89,200	Rackspace Hosting, Inc.*^		3,836,492

				24,977,891

	IT Services (3.6%):
	77,200	Accenture plc, Class A		4,109,356
	22,100	International Business Machines Corp.		4,063,748
	115,100	VeriFone Systems, Inc.*^		4,088,352
	48,200	Visa, Inc., Class A^		4,893,746

				17,155,202

	Machinery (2.9%):
	141,400	Eaton Corp.		6,155,142
	81,600	Stanley Black & Decker, Inc.		5,516,160
	174,500	Terex Corp.*^		2,357,495

				14,028,797

	Media (1.1%):
	224,800	Comcast Corp., Class A		5,330,008

	Metals & Mining (0.6%):
	81,300	Freeport-McMoRan Copper & Gold, Inc.		2,991,027


Shares			Fair Value

	Common Stocks, continued
	Oil, Gas & Consumable Fuels (6.7%):
	134,702	Alpha Natural Resources, Inc.*	$	2,751,962
	117,600	Anadarko Petroleum Corp.		8,976,408
	146,100	Exxon Mobil Corp.		12,383,436
	127,400	Range Resources Corp.		7,891,156

				32,002,962

	Pharmaceuticals (3.7%):
	62,900	Allergan, Inc.		5,518,846
	96,400	Johnson & Johnson Co.		6,321,912
	279,900	Pfizer, Inc.		6,057,036

				17,897,794

	Professional Services (0.6%):
	77,300	Manpower, Inc.		2,763,475

	Semiconductors & Semiconductor Equipment (3.9%):
	74,600	Avago Technologies, Ltd.		2,152,956
	127,000	Broadcom Corp., Class A		3,728,720
	298,700	Marvell Technology Group, Ltd.*		4,136,995
	156,400	NXP Semiconductors NV, ADR*		2,403,868
	79,200	Texas Instruments, Inc.		2,305,512
	116,600	Xilinx, Inc.^		3,738,196

				18,466,247

	Software (6.2%):
	128,700	Check Point Software Technologies, Ltd.*^		6,761,898
	180,500	Microsoft Corp.		4,685,780
	121,800	Oracle Corp.		3,124,170
	146,100	Red Hat, Inc.*^		6,032,469
	61,000	Salesforce.com, Inc.*^		6,189,060
	35,300	VMware, Inc., Class A*		2,936,607

				29,729,984


Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Specialty Retail (2.7%):
	190,800	Home Depot, Inc.	$	8,021,232
	71,800	Tiffany & Co.^		4,757,468

				12,778,700

	Textiles, Apparel & Luxury Goods (1.1%):
	72,100	Coach, Inc.		4,400,984
	27,200	Michael Kors Holdings, Ltd.*		741,200

				5,142,184

	Wireless Telecommunication Services (1.0%):
	61,800	American Tower Corp., Class A		3,708,618
	53,800	NII Holdings, Inc.*		1,145,940

				4,854,558

	Total Common Stocks (Cost $405,251,520)			468,749,135

	Securities Held as Collateral for Securities on Loan (9.5%):
$	45,353,613	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)		45,353,613

	Total Securities Held as Collateral for Securities on Loan (Cost $45,353,613)			45,353,613

	Unaffiliated Investment Company (1.9%):
	9,223,765	Dreyfus Treasury Prime Cash Management, 0.00%(b)		9,223,765

	Total Unaffiliated Investment Company (Cost $9,223,765)			9,223,765

	Total Investment Securities (Cost $459,828,898)(c) — 109.6%			523,326,513
	Net other assets (liabilities) — (9.6)%			(45,707,168	)

	Net Assets — 100.0%		$	477,619,345

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	459,828,898

Investment securities, at value*	$	523,326,513
Interest and dividends receivable		292,397
Foreign currency, at value (cost $816)		770
Receivable for capital shares issued		13,838
Receivable for expenses paid indirectly		17,051
Receivable for investments sold		1,945,205
Reclaims receivable		379
Prepaid expenses		5,471

Total Assets		525,601,624

Liabilities:
Payable for investments purchased		1,987,261
Payable for capital shares redeemed		173,767
Payable for collateral received on loaned securities		45,353,613
Manager fees payable		283,782
Administration fees payable		13,518
Distribution fees payable		101,351
Custodian fees payable		4,088
Administrative and compliance services fees payable		3,789
Trustee fees payable		204
Other accrued liabilities		60,906

Total Liabilities		47,982,279

Net Assets	$	477,619,345

Net Assets Consist of:
Capital	$	498,137,382
Accumulated net investment income/(loss)		227,805
Accumulated net realized gains/(losses) from investment transactions		(84,243,396	)
Net unrealized appreciation/(depreciation) on investments		63,497,554

Net Assets	$	477,619,345

Shares of beneficial interest (unlimited number of shares authorized, no par value)		37,995,354
Net Asset Value (offering and redemption price per share)	$	12.57

*	Includes securities on loan of $44,063,124.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	5,515,711
Income from securities lending		123,809
Foreign withholding tax		(447	)

Total Investment Income		5,639,073

Expenses:
Manager fees		4,225,790
Administration fees		199,108
Distribution fees		1,320,557
Custodian fees		28,361
Administrative and compliance services fees		25,154
Trustee fees		42,477
Professional fees		44,974
Shareholder reports		53,458
Other expenses		20,804

Total expenses before reductions		5,960,683
Less expenses voluntarily waived/reimbursed by the Manager		(590,952	)
Less expenses paid indirectly		(17,863	)

Net expenses		5,351,868

Net Investment Income/(Loss)		287,205

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		35,470,256
Change in unrealized appreciation/depreciation on investments		(83,154,004	)

Net Realized/Unrealized Gains/(Losses) on Investments		(47,683,748	)

Change in Net Assets Resulting From Operations	$	(47,396,543	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL BlackRock Capital Appreciation Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $12,410 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

Futures contracts involve, to varying degrees, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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.

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 Capital Management, Inc. (“BlackRock Capital”), BlackRock Capital 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

The overall Trust-wide fees are accrued daily and paid monthly and are subject to a minimum annual fee. In addition, the Administrator is entitled to annual account fees related to the transfer agency system, an annual fee for each additional class of shares of any Fund, certain annual fees in supporting fair value services, and a Trust-wide annual fee for providing infrastructure and support in implementing the written policies and procedures comprising the Fund’s compliance program. Fees payable to the Administrator are subject to certain reductions associated with services provided to new funds. The Administrator is also reimbursed for certain expenses incurred. The total expenses incurred by the Fund for these services are reflected on the Statement of Operations as “Administration fees.”

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $7,894 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

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 (“NYSE) (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 listed on NASDAQ Stock Market, Inc. (“NASDAQ”) are valued at the official closing price as reported by NASDAQ. In each of these situations, valuations are typically categorized as a Level 1 in the fair value hierarchy. Investments in open-end investment companies are valued at their respective net asset value as reported by such companies and are typically categorized as Level 1 in the fair value hierarchy.

days or less remaining until maturity may be valued at amortized cost, which approximates fair value. In each of these situations, valuations are typically categorized as Level 2 in the fair value hierarchy.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $464,213,425. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $37,020,237 in CLCFs to offset capital gains.

During the year ended December 31, 2011 there were no dividends paid to shareholders.

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

On October 15, 2010, the Fund acquired all of the net assets of the AZL Allianz AGIC Growth Fund, an open-end investment company, pursuant to a plan of reorganization approved by AZL Allianz AGIC Growth Fund shareholders on October 13, 2010. The purpose of the transaction was to combine two funds managed by the Manager with comparable investment objectives and strategies. The acquisition was accomplished by a tax-free exchange of 513,942 shares of the Fund, valued at $6,489,469, for 613,239 shares of the AZL Allianz AGIC Growth Fund outstanding on October 15, 2010.

We have audited the accompanying statement of assets and liabilities of AZL BlackRock Capital Appreciation Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

(1) The nature, extent and quality of services provided by the Manager and Subadvisers. The Trustees noted that the Manager, subject to the control of the Board of Trustees, administers each Fund’s business and other affairs. As the Trust is a manager of managers fund, the Manager is responsible for monitoring the various Subadvisers that have day-to-day responsibility for the decisions made for each of the Trust’s investment portfolios. The Trust’s Manager is responsible for determining, in the first instance, which investment advisers to consider recommending to the Board of Trustees for selection as a Subadviser.

(2) The investment performance of the Funds, the Manager and the Subadvisers. In connection with every in-person quarterly Board of Trustees meeting, Trustees receive extensive information on the performance results of each of the Funds. This includes, for example, performance information on all of the Funds for the previous quarter, and previous one, three and five-year periods, and since inception. (For Funds which have been in existence for less than five years, Trustees may receive performance information on comparable funds managed by the particular Subadviser for periods prior to the creation of a particular Fund.) Such performance information includes information on absolute total return, performance versus Subadvisers’ comparable fund(s), performance versus the appropriate benchmark(s), and performance versus peer groups. For example, in connection with the Board of Trustees meeting held October 26, 2011, the Manager reported that for the three year period ended June 30, 2011, ten Funds were in the top 40%, six were in the middle 20% and five were in the bottom 40%, and for the one year period ended June 30, 2011, nine Funds were in the top 40%, eight were in the middle 20%, and 11 were in the bottom 40%. The Manager also reported that for the five year period ended June 30, 2011, nine Funds were in the top 40%, three were in the middle 20%, and seven were in the bottom 40%. At the Board of Trustees meeting held October 26, 2011, the Trustees determined that the overall investment performance of the Funds was acceptable.

(3) The costs of services to be provided and profits to be realized by the Manager and the Subadvisers and their affiliates from their relationship with the Funds. The Manager has supplied information to the Board of Trustees pertaining to the level of investment advisory fees to which the Funds are subject. The Manager has agreed to temporarily “cap” Fund expenses at certain levels, and information is provided to Trustees setting forth “contractual” advisory fees and “actual” fees after taking expense caps into account. Based upon the information provided, the “actual” advisory fees payable by the Funds overall are generally comparable to the average level of fees paid by Fund peer groups. For the 29 Funds reviewed by the Board of Trustees in the fall of 2011, 24 Funds paid “actual” advisory fees in a percentage amount within the 65^th percentile or lower for each Fund’s applicable category. The Trustees recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The Board has concluded that the advisory fees to be paid to the Manager by the Funds are not unreasonable.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (5/1/06)
AZL^® Columbia Mid Cap Value Fund		–3.57	%		16.10	%		–4.90	%		–4.05	%
Russell Midcap^® Value Index		–1.38	%		18.19	%		0.04	%		1.88	%

Expense Ratio²


	Gross
AZL^® Columbia Mid Cap Value Fund		1.11	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.30% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

¹	The hypothetical $10,000 investment for the Russell Midcap^® Value Index is calculated from April 30, 2006.

Acquired Fund Fees and Expenses are incurred indirectly by the Fund through the valuation of the Fund’s investments in the Permitted Underlying Funds. Accordingly, Acquired Fund Fees and Expenses affect the Fund’s total returns. Because these fees and expenses are not included in the Fund’s financial highlights, 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. Without Acquired Fund Fees and Expenses the Fund’s gross ratio would be 1.10%.

The Fund’s performance is measured against the Russell Midcap^® Value Index, an unmanaged index that measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap Index companies with lower price-to-book ratios and lower 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.

As a shareholder of the AZL Columbia Mid Cap Value Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (96.0%):
	Aerospace & Defense (0.2%):
	27,846	AerCap Holdings NV*	$	314,381

	Auto Components (0.9%):
	4,500	BorgWarner, Inc.*^		286,830
	28,332	Tenneco, Inc.*^		843,727

				1,130,557

	Automobiles (0.7%):
	22,711	Harley-Davidson, Inc.		882,777

	Beverages (0.1%):
	2,742	Beam, Inc.		140,473

	Building Products (0.7%):
	34,303	Owens Corning, Inc.*^		985,182

	Capital Markets (2.1%):
	45,200	Raymond James Financial, Inc.		1,399,392
	86,600	TD Ameritrade Holding Corp.		1,355,290

				2,754,682

	Chemicals (4.1%):
	16,000	Albemarle Corp.^		824,160
	34,400	Celanese Corp., Series A		1,522,888
	25,200	International Flavor & Fragrances, Inc.^		1,320,984
	21,339	PPG Industries, Inc.		1,781,593

				5,449,625

	Commercial Banks (7.6%):
	25,035	City National Corp.^		1,106,046
	50,400	Comerica, Inc.		1,300,320
	29,800	Cullen/Frost Bankers, Inc.^		1,576,718
	181,491	Fifth Third Bancorp		2,308,566
	235,543	Huntington Bancshares, Inc.		1,293,131
	24,551	SVB Financial Group*^		1,170,837
	83,656	Zions Bancorp^		1,361,920

				10,117,538

	Communications Equipment (0.1%):
	44,200	Tellabs, Inc.		178,568

	Computers & Peripherals (1.1%):
	49,500	Diebold, Inc.^		1,488,465

	Construction & Engineering (0.4%):
	24,100	Foster Wheeler AG, ADR*		461,274

	Consumer Finance (1.1%):
	61,468	Discover Financial Services		1,475,232

	Containers & Packaging (1.1%):
	58,900	Packaging Corp. of America		1,486,636

	Distributors (1.0%):
	20,500	Genuine Parts Co.^		1,254,600

	Diversified Financial Services (0.7%):
	26,900	CIT Group, Inc.*		938,003

	Electric Utilities (0.9%):
	32,800	Northeast Utilities		1,183,096


Shares			Fair Value

	Common Stocks, continued
	Electrical Equipment (0.8%):
	20,200	Cooper Industries plc, A Shares	$	1,093,830

	Electronic Equipment, Instruments & Components (0.8%):
	27,900	Arrow Electronics, Inc.*		1,043,739

	Energy Equipment & Services (2.7%):
	15,500	Cameron International Corp.*		762,445
	11,200	Dresser-Rand Group, Inc.*^		558,992
	28,701	Rowan Cos., Inc.*^		870,501
	22,900	Superior Energy Services, Inc.*^		651,276
	48,000	Weatherford International, Ltd.*		702,720

				3,545,934

	Food & Staples Retailing (0.8%):
	51,900	Safeway, Inc.^		1,091,976

	Food Products (3.0%):
	23,200	Hershey Co.		1,433,296
	24,706	J.M. Smucker Co. (The)		1,931,268
	7,800	Ralcorp Holdings, Inc.*		666,900

				4,031,464

	Gas Utilities (1.4%):
	27,100	QEP Resources, Inc.		794,030
	55,800	Questar Corp.		1,108,188

				1,902,218

	Health Care Equipment & Supplies (2.6%):
	10,400	Cooper Cos., Inc. (The)		733,408
	27,900	Teleflex, Inc.		1,709,991
	18,900	Zimmer Holdings, Inc.*^		1,009,638

				3,453,037

	Health Care Providers & Services (1.7%):
	32,700	Coventry Health Care, Inc.*		993,099
	21,142	Quest Diagnostics, Inc.^		1,227,505

				2,220,604

	Hotels, Restaurants & Leisure (2.0%):
	18,423	Darden Restaurants, Inc.^		839,720
	51,563	International Game Technology		886,884
	33,700	Royal Caribbean Cruises, Ltd.^		834,749
	2,900	Starwood Hotels & Resorts Worldwide, Inc.		139,113

				2,700,466

	Household Durables (0.7%):
	72,300	D.R. Horton, Inc.^		911,703

	Household Products (1.6%):
	11,000	Clorox Co. (The)		732,160
	17,200	Energizer Holdings, Inc.*		1,332,656

				2,064,816

	Independent Power Producers & Energy Traders (0.8%):
	94,036	AES Corp. (The)*		1,113,386


Shares			Fair Value

	Common Stocks, continued
	Insurance (6.1%):
	51,300	Axis Capital Holdings, Ltd.	$	1,639,548
	74,814	Hartford Financial Services Group, Inc. (The)		1,215,728
	62,172	Principal Financial Group, Inc.		1,529,431
	43,625	Reinsurance Group of America, Inc.^		2,279,406
	73,035	XL Group plc		1,443,902

				8,108,015

	Internet & Catalog Retail (2.0%):
	14,900	Expedia, Inc.^		432,398
	111,700	Liberty Media Corp. – Interactive, Class A*		1,811,215
	14,900	TripAdvisor, Inc.*^		375,629

				2,619,242

	Leisure Equipment & Products (1.5%):
	30,674	Hasbro, Inc.^		978,194
	35,800	Mattel, Inc.		993,808

				1,972,002

	Life Sciences Tools & Services (0.5%):
	17,600	Agilent Technologies, Inc.*		614,768

	Machinery (5.3%):
	22,400	AGCO Corp.*		962,528
	33,200	Babcock & Wilcox Co. (The)*		801,448
	30,000	Crane Co.		1,401,300
	22,600	Kennametal, Inc.^		825,352
	19,400	Parker Hannifin Corp.		1,479,250
	23,623	Stanley Black & Decker, Inc.		1,596,915

				7,066,793

	Media (1.7%):
	18,900	CBS Corp., Class B		512,946
	62,306	DISH Network Corp., Class A		1,774,475

				2,287,421

	Metals & Mining (0.4%):
	20,200	United States Steel Corp.^		534,492

	Multi-Utilities (11.1%):
	100,600	CMS Energy Corp.^		2,221,248
	25,300	PG&E Corp.		1,042,866
	44,966	Public Service Enterprise Group, Inc.		1,484,328
	35,800	SCANA Corp.^		1,613,148
	55,902	Sempra Energy		3,074,610
	82,697	Wisconsin Energy Corp.		2,891,087
	88,600	Xcel Energy, Inc.		2,448,904

				14,776,191

	Multiline Retail (1.2%):
	51,000	Macy’s, Inc.		1,641,180

	Oil, Gas & Consumable Fuels (5.9%):
	9,100	Cabot Oil & Gas Corp.		690,690
	13,226	Cimarex Energy Co.^		818,689


Shares			Fair Value

	Common Stocks, continued
	Oil, Gas & Consumable Fuels, continued
	9,300	Noble Energy, Inc.^	$	877,827
	18,251	Peabody Energy Corp.		604,291
	99,763	Spectra Energy Corp.^		3,067,712
	41,400	Valero Energy Corp.		871,470
	19,827	Whiting Petroleum Corp.*		925,723

				7,856,402

	Pharmaceuticals (0.7%):
	14,400	Watson Pharmaceuticals, Inc.*		868,896

	Professional Services (1.0%):
	35,991	Manpower, Inc.		1,286,678

	Real Estate Investment Trusts (REITs) (8.7%):
	14,400	Alexandria Real Estate Equities, Inc.		993,168
	59,200	CBRE Group, Inc.*		901,024
	65,528	General Growth Properties, Inc.^		984,231
	93,423	Host Hotels & Resorts, Inc.		1,379,858
	47,484	ProLogis, Inc.		1,357,567
	31,372	Rayonier, Inc.^		1,400,132
	29,600	Taubman Centers, Inc.^		1,838,160
	80,000	UDR, Inc.		2,008,000
	36,485	Weyerhaeuser Co.		681,175

				11,543,315

	Road & Rail (2.4%):
	32,672	Con-way, Inc.^		952,715
	97,300	Hertz Global Holdings, Inc.*^		1,140,356
	21,700	Ryder System, Inc.		1,153,138

				3,246,209

	Semiconductors & Semiconductor Equipment (1.3%):
	64,000	Atmel Corp.*^		518,400
	19,100	Avago Technologies, Ltd.		551,226
	7,100	Lam Research Corp.*		262,842
	8,000	Novellus Systems, Inc.*		330,320

				1,662,788

	Software (1.5%):
	27,900	Autodesk, Inc.*		846,207
	47,544	Nuance Communications, Inc.*^		1,196,207

				2,042,414

	Specialty Retail (1.5%):
	57,700	Foot Locker, Inc.		1,375,568
	14,400	Limited Brands, Inc.^		581,040

				1,956,608

	Thrifts & Mortgage Finance (0.8%):
	83,300	People’s United Financial, Inc.		1,070,405
	Tobacco (0.7%):
	7,700	Lorillard, Inc.		877,800

	Total Common Stocks (Cost $113,095,691)			127,445,881

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	145,923,648

Investment securities, at value*	$	160,273,838
Interest and dividends receivable		217,507
Receivable for capital shares issued		95,492
Receivable for expenses paid indirectly		336
Prepaid expenses		1,490

Total Assets		160,588,663

Liabilities:
Payable for capital shares redeemed		11,807
Payable for collateral received on loaned securities		27,656,881
Manager fees payable		83,008
Administration fees payable		4,158
Distribution fees payable		27,669
Custodian fees payable		1,375
Administrative and compliance services fees payable		870
Trustee fees payable		47
Other accrued liabilities		13,081

Total Liabilities		27,798,896

Net Assets	$	132,789,767

Net Assets Consist of:
Capital	$	143,499,967
Accumulated net investment income/(loss)		873,086
Accumulated net realized gains/(losses) from investment transactions		(25,933,476	)
Net unrealized appreciation/(depreciation) on investments		14,350,190

Net Assets	$	132,789,767

Shares of beneficial interest (unlimited number of shares authorized, no par value)		17,330,828
Net Asset Value (offering and redemption price per share)	$	7.66

*	Includes securities on loan of $26,825,277.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	2,260,332
Income from securities lending		26,893
Foreign withholding tax		(173	)

Total Investment Income		2,287,052

Expenses:
Manager fees		1,023,227
Administration fees		56,213
Distribution fees		341,075
Custodian fees		9,076
Administrative and compliance services fees		6,060
Trustee fees		10,059
Professional fees		10,874
Shareholder reports		12,238
Other expenses		4,612

Total expenses before reductions		1,473,434
Less expenses paid indirectly		(32,271	)

Net expenses		1,441,163

Net Investment Income/(Loss)		845,889

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		8,395,647
Change in unrealized appreciation/depreciation on investments		(14,489,800	)

Net Realized/Unrealized Gains/(Losses) on Investments		(6,094,153	)

Change in Net Assets Resulting From Operations	$	(5,248,264	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Columbia Mid Cap Value Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $2,655 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

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 subadvisory agreement between the Manager and Columbia Management Investment Advisers, LLC (“CMIA”), CMIA 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $1,998 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

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 NYSE. Depending on the source and relative significance of valuation inputs, these instruments may be classified as Level 2 or Level 3 in the fair value hierarchy. 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.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $146,558,501. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $8,161,875 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Columbia Mid Cap Value Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

that, for example, the Manager and Subadvisers are responsible for maintaining and monitoring their own compliance programs, and these compliance programs have recently been refined and enhanced in light of new regulatory requirements. The Trustees considered the capabilities and resources which the Manager has dedicated to performing services on behalf of the Trust and its Funds. The quality of administrative and other services, including the Manager’s role in coordinating the activities of the Trust’s other service providers, also were considered. The Trustees concluded that, overall, they were satisfied with the nature, extent and quality of services provided (and expected to be provided) to the Trust and to each of the Funds under the Agreements.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.

profitability information from some of the unaffiliated Subadvisers. The Manager assured the Board of Trustees that the Agreements with the Subadvisers which are not affiliated with it were negotiated on an “arm’s length” basis, so that arguably, such profitability information should be less relevant. The Trustees were also provided with certain information on profitability for Subadvisers which are affiliated with the Manager. Trustees recognized the difficulty of allocating costs to multiple advisory accounts and products of a large advisory organization. Based upon the information provided, the Trustees determined that there was no evidence that the level of such profitability attributable to subadvising the Funds was excessive.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2010 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

Fund Objective

The Fund’s investment objective is to seek long-term capital appreciation. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing at least 80% of net assets in equity securities of companies that have market capitalizations in the range of the companies in the Russell 2000^® Value Index.

Investment Concerns

International investing may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations.

Smaller companies typically have a higher risk of failure and historically have experienced a greater degree of volatility.

Value-based investments are subject to the risk that the broad market may not recognize their intrinsic value.

Investments in the Funds are subject to the risks related to direct investment in real estate, such as real estate risk, regulatory risks, concentration risk, and diversification risk. By itself the Fund does not constitute a complete investment plan and should be considered a long-term investment for investors who can afford to weather changes in the value of their investments.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (5/3/04)
AZL^® Columbia Small Cap Value Fund		–6.21	%		13.77	%		–1.70	%		3.58	%
Russell 2000^® Value Index		–5.50	%		12.36	%		–1.87	%		4.55	%

Expense Ratio


	Gross
AZL^® Columbia Small Cap Value Fund		1.27	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager has voluntarily reduced the management fee to 0.85% on the first $100 million of assets and 0.80% on assets above $100 million. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.35% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The hypothetical $10,000 investment for the Russell 2000^® Value Index is calculated from April 30, 2004. The total return of the Fund does not reflect the effect of any insurance charges, the annual maintenance fee or the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Such charges, fees and tax payments would reduce the performance quoted.

The Fund’s performance is measured against the Russell 2000^® Value Index, an unmanaged index that measures the performance of the small-cap value segment of the U.S. equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower 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.

As a shareholder of the AZL Columbia Small Cap Value Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (99.5%):
	Aerospace & Defense (1.4%):
	24,300	AAR Corp.	$	465,831
	27,295	Ceradyne, Inc.*^		730,960
	24,950	Curtiss-Wright Corp.^		881,484

				2,078,275

	Building Products (0.4%):
	18,523	Universal Forest Products, Inc.		571,805

	Capital Markets (1.3%):
	122,674	GFI Group, Inc.		505,417
	1,481	Greenhill & Co., Inc.^		53,864
	45,165	Investment Technology Group, Inc.*		488,234
	74,420	Knight Capital Group, Inc., Class A*^		879,644

				1,927,159

	Chemicals (3.4%):
	11,480	Cabot Corp.^		368,967
	44,960	Chemtura Corp.*		509,847
	10,840	Cytec Industries, Inc.^		484,006
	95,600	Ferro Corp.*^		467,484
	43,800	H.B. Fuller Co.^		1,012,218
	14,340	Minerals Technologies, Inc.		810,640
	54,477	OM Group, Inc.*		1,219,740

				4,872,902

	Commercial Banks (9.3%):
	58,055	Ameris Bancorp*^		596,805
	15,460	BancFirst Corp.^		580,368
	18,877	BancTrust Financial Group, Inc.*		23,408
	6,410	BOK Financial Corp.^		352,101
	30,775	Bryn Mawr Bank Corp.^		599,805
	36,610	Chemical Financial Corp.^		780,525
	42,780	Columbia Banking System, Inc.^		824,371
	24,760	Community Trust Bancorp, Inc.^		728,439
	3,948	First Citizens BancShares, Inc., Class A^		690,861
	154,427	First Commonwealth Financial Corp.		812,286
	27,590	First Financial Corp.^		918,195
	211	First National Bank Alaska		324,940
	70,310	FirstMerit Corp.^		1,063,790
	54,230	Glacier Bancorp, Inc.		652,387
	35,752	Hancock Holding Co.^		1,142,992
	41,209	Investors Bancorp, Inc.*^		555,497
	22,423	Merchants Bancshares, Inc.^		654,752
	29,680	Northfield Bancorp, Inc.^		420,269
	28,583	Northrim BanCorp, Inc.		500,488
	28,388	West Coast Bancorp*		442,853
	29,984	Wintrust Financial Corp.^		841,051

				13,506,183

	Commercial Services & Supplies (1.8%):
	29,680	ABM Industries, Inc.^		612,002
	11,600	Consolidated Graphics, Inc.*		560,048
	26,897	Ennis, Inc.^		358,537


Shares			Fair Value

Common Stocks, continued
	Commercial Services & Supplies, continued
	12,530	G & K Services, Inc., Class A	$	364,748
	22,640	United Stationers, Inc.		737,158

				2,632,493

	Communications Equipment (1.4%):
	23,770	Anaren, Inc.*		395,058
	16,664	Bel Fuse, Inc., Class B^		312,450
	17,752	Black Box Corp.^		497,766
	68,495	Symmetricom, Inc.*^		369,188
	109,230	Tellabs, Inc.^		441,289

				2,015,751

	Computers & Peripherals (0.3%):
	30,730	QLogic Corp.*^		460,950

	Construction & Engineering (2.5%):
	38,306	Comfort Systems USA, Inc.		410,640
	42,383	Dycom Industries, Inc.*		886,652
	34,560	Emcor Group, Inc.^		926,553
	5,928	Great Lakes Dredge & Dock Co.		32,960
	31,436	KHD Humboldt Wedag International AG*^		203,408
	18,890	Layne Christensen Co.*		457,138
	50,346	Pike Electric Corp.*		361,988
	29,536	Sterling Construction Co., Inc.*		318,103

				3,597,442

	Consumer Finance (0.6%):
	19,099	Cash America International, Inc.^		890,586

	Containers & Packaging (1.5%):
	27,046	Greif, Inc., Class A^		1,231,945
	8,690	Greif, Inc., Class B^		391,485
	20,216	Packaging Corp. of America^		510,252

				2,133,682

	Diversified Consumer Services (0.7%):
	40,815	Lincoln Educational ServicesCorp.		322,439
	39,024	Regis Corp.^		645,847

				968,286

	Diversified Financial Services (1.0%):
	32,189	INTL FCStone, Inc.*		758,695
	34,692	Medallion Financial Corp.		394,795
	12,257	PICO Holdings, Inc.*		252,249

				1,405,739

	Diversified Telecommunication Services (1.1%):
	59,697	Cbeyond, Inc.*		478,173
	18,953	Lumos Networks Corp.		290,739
	46,320	Neutral Tandem, Inc.*		495,161
	30,213	Warwick Valley Telephone Co.^		398,509

				1,662,582


Shares			Fair Value

Common Stocks, continued
	Electric Utilities (2.1%):
	23,508	ALLETE, Inc.^	$	986,866
	24,120	IDACORP, Inc.^		1,022,929
	6,010	ITT Corp.		116,173
	18,440	MGE Energy, Inc.^		862,439

				2,988,407

	Electrical Equipment (1.7%):
	19,930	Belden CDT, Inc.^		663,270
	24,180	Brady Corp., Class A^		763,362
	48,798	GrafTech International, Ltd.*^		666,093
	13,599	Powell Industries, Inc.*		425,377

				2,518,102

	Electronic Equipment, Instruments & Components (2.6%):
	13,075	Anixter International, Inc.*^		779,793
	45,265	Benchmark Electronics, Inc.*^		609,720
	29,065	Electro Scientific Industries, Inc.^		420,861
	14,796	Littlelfuse, Inc.^		635,932
	34,199	Methode Electronics, Inc.		283,510
	13,572	MTS Systems Corp.		553,059
	87,803	Nam Tai Electronics, Inc.		466,234

				3,749,109

	Energy Equipment & Services (2.1%):
	23,907	Gulf Island Fabrication, Inc.^		698,323
	45,565	Matrix Service Co.*		430,134
	4,370	RPC, Inc.^		79,752
	43,680	TETRA Technologies, Inc.*^		407,971
	61,609	TGC Industries, Inc.*		439,888
	12,412	Tidewater, Inc.^		611,912
	63,761	Union Drilling, Inc.*^		397,869

				3,065,849

	Food & Staples Retailing (1.6%):
	19,140	Andersons, Inc. (The)		835,653
	18,722	Ruddick Corp.^		798,306
	33,482	Spartan Stores, Inc.^		619,417

				2,253,376

	Food Products (1.0%):
	62,980	Chiquita Brands International, Inc.*		525,253
	4,470	Darling International, Inc.*		59,406
	34,330	Fresh Del Monte Produce, Inc.		858,594

				1,443,253

	Gas Utilities (1.2%):
	18,336	Laclede Group, Inc. (The)^		742,058
	24,954	Southwest Gas Corp.^		1,060,295

				1,802,353

	Health Care Equipment & Supplies (2.9%):
	8,780	Analogic Corp.^		503,270
	33,149	AngioDynamics, Inc.*^		490,937
	24,934	Cantel Medical Corp.		696,407
	13,772	ICU Medical, Inc.*^		619,740
	18,416	Kensey Nash Corp.		353,403
	48,986	Medical Action Industries, Inc.*^		256,197


Shares			Fair Value

Common Stocks, continued
	Health Care Equipment & Supplies, continued
	12,358	Orthofix International NV*	$	435,372
	29,142	Quidel Corp.*^		440,918
	47,285	Symmetry Medical, Inc.*^		377,807

				4,174,051

	Health Care Providers & Services (3.7%):
	29,507	AmSurg Corp.*^		768,362
	22,730	Centene Corp.*^		899,881
	20,230	Lincare Holdings, Inc.^		520,113
	16,260	Magellan Health Services, Inc.*^		804,382
	48,886	MedCath Corp.^		356,379
	26,410	Molina Healthcare, Inc.*^		589,735
	20,418	Owens & Minor, Inc.^		567,416
	21,570	Triple-S Management Corp., Class B*		431,832
	20,864	U.S. Physical Therapy, Inc.		410,604

				5,348,704

	Hotels, Restaurants & Leisure (2.1%):
	43,111	Benihana, Inc.*^		441,025
	24,172	Bob Evans Farms, Inc.^		810,729
	54,530	Chesapeake Lodging Trust^		843,034
	16,490	P.F. Chang’s China Bistro, Inc.^		509,706
	15,779	Red Robin Gourmet Burgers*		437,078

				3,041,572

	Household Durables (0.9%):
	37,875	American Greetings Corp., Class A^		473,816
	10,923	Cavco Industries, Inc.*^		437,575
	21,343	CSS Industries, Inc.		425,153

				1,336,544

	Household Products (0.5%):
	25,600	Aaron’s, Inc.^		683,008

	Insurance (7.6%):
	10,470	Allied World Assurance Co. Holdings AG		658,877
	31,889	American Safety Insurance Holdings, Ltd.*		693,586
	27,990	Argo Group International Holdings, Ltd.		810,590
	24,589	Baldwin & Lyons, Inc., Class B^		536,040
	48,235	eHealth, Inc.*^		709,054
	26,651	EMC Insurance Group, Inc.^		548,211
	15,420	Endurance Specialty Holdings, Ltd.		589,815
	21,676	FBL Financial Group, Inc., Class A^		737,418
	42,302	Global Indemnity plc*		838,849
	18,605	Hanover Insurance Group, Inc. (The)		650,245
	48,081	Horace Mann Educators Corp.		659,190
	2,782	National Western Life Insurance Co., Class A^		378,797


Shares			Fair Value

Common Stocks, continued
	Insurance, continued
	15,227	Navigators Group, Inc.*	$	726,023
	40,480	Old Republic International Corp.^		375,250
	19,150	Safety Insurance Group, Inc.^		775,192
	34,341	Stewart Information Services Corp.^		396,639
	44,633	United Fire & Casualty Co.^		900,694

				10,984,470

	Internet Software & Services (1.4%):
	52,512	InfoSpace, Inc.*^		577,107
	17,237	j2 Global, Inc.^		485,049
	86,641	United Online, Inc.		471,327
	30,980	ValueClick, Inc.*^		504,664

				2,038,147

	IT Services (3.0%):
	54,736	Acxiom Corp.*		668,327
	15,724	CACI International, Inc., Class A*^		879,286
	62,435	Convergys Corp.*^		797,295
	28,980	CSG Systems International, Inc.*^		426,296
	104,339	Global Cash Access Holdings, Inc.*		464,308
	34,038	MoneyGram International, Inc.*		604,174
	27,980	TeleTech Holdings, Inc.*		453,276

				4,292,962

	Machinery (4.4%):
	17,406	Astec Industries, Inc.*		560,647
	36,232	Briggs & Stratton Corp.^		561,234
	16,089	CIRCOR International, Inc.		568,103
	20,205	EnPro Industries, Inc.*^		666,361
	19,072	Freightcar America, Inc.*		399,558
	18,501	Harsco Corp.^		380,750
	28,688	Kadant, Inc.*		648,636
	19,260	L.B. Foster Co., Class A^		544,865
	23,338	Mueller Industries, Inc.		896,646
	23,447	Robbins & Myers, Inc.		1,138,352

				6,365,152

	Marine (0.2%):
	45,910	Diana Shipping, Inc.		343,407

	Metals & Mining (1.3%):
	22,782	Olympic Steel, Inc.^		531,276
	92,490	Thompson Creek Metals Co., Inc.*		643,730
	42,420	Worthington Industries, Inc.^		694,840

				1,869,846

	Multi-Utilities (0.4%):
	9,033	CH Energy Group, Inc.^		527,347


Shares			Fair Value

Common Stocks, continued
	Oil, Gas & Consumable Fuels (2.8%):
	20,520	Bill Barrett Corp.*^	$	699,116
	35,400	Cloud Peak Energy, Inc.*^		683,928
	32,180	Forest Oil Corp.*^		436,039
	41,710	James River Coal Co.*^		288,633
	23,486	Stone Energy Corp.*^		619,561
	25,677	Swift Energy Co.*^		763,121
	87,506	VAALCO Energy, Inc.*^		528,536

				4,018,934

	Paper & Forest Products (0.4%):
	74,583	Wausau Paper Corp.^		616,056

	Pharmaceuticals (2.4%):
	31,670	Impax Laboratories, Inc.*^		638,784
	18,470	Medicis Pharmaceutical Corp., Class A^		614,127
	20,490	Par Pharmaceutical Cos., Inc.*^		670,638
	59,796	Symetra Financial Corp.^		542,350
	37,760	ViroPharma, Inc.*^		1,034,246

				3,500,145

	Professional Services (1.0%):
	20,558	FTI Consulting, Inc.*^		872,070
	30,159	Korn/Ferry International*		514,513

				1,386,583

	Real Estate Investment Trusts (REITs) (5.3%):
	24,280	Corporate Office Properties Trust^		516,193
	112,121	Cousins Properties, Inc.		718,695
	110,226	DiamondRock Hospitality, Co.^		1,062,578
	38,887	Franklin Street Properties Corp.^		386,926
	17,082	Getty Realty Corp.^		238,294
	13,168	National Health Investors, Inc.^		579,129
	27,677	Potlatch Corp.^		861,031
	59,066	Starwood Property Trust, Inc.^		1,093,312
	129,866	Sunstone Hotel Investors, Inc.*^		1,058,408
	42,021	Terreno Realty Corp.^		636,198
	26,772	Urstadt Biddle Properties, Inc., Class A^		484,038

				7,634,802

	Real Estate Management & Development (0.1%):
	23,647	Avatar Holdings, Inc.*^		169,786

	Road & Rail (1.4%):
	29,022	Heartland Express, Inc.^		414,724
	11,917	Ryder System, Inc.		633,269
	43,146	Werner Enterprises, Inc.^		1,039,819

				2,087,812

	Semiconductors & Semiconductor Equipment (4.1%):
	91,640	Amkor Technology, Inc.*^		399,550
	27,610	ATMI, Inc.*^		553,028
	16,050	Cabot Microelectronics Corp.*^		758,363
	14,270	Cymer, Inc.*^		710,075


Shares			Fair Value

Common Stocks, continued
	Semiconductors & Semiconductor Equipment, continued
	93,460	Entegris, Inc.*^	$	815,438
	76,620	Integrated Device Technology, Inc.*^		418,345
	30,130	MKS Instruments, Inc.^		838,217
	7,142	Novellus Systems, Inc.*^		294,893
	37,190	Teradyne, Inc.*		506,900
	42,209	Tessera Technologies, Inc.*^		707,001

				6,001,810

	Software (1.2%):
	49,026	Compuware Corp.*^		407,896
	28,564	Monotype Imaging Holdings, Inc.*^		445,313
	22,055	Parametric Technology Corp.*^		402,724
	27,100	Progress Software Corp.*^		524,385

				1,780,318

	Specialty Retail (5.9%):
	16,340	Children’s Place Retail Stores, Inc. (The)*^		867,981
	40,645	Finish Line, Inc. (The), Class A^		783,839
	23,240	Foot Locker, Inc.^		554,042
	23,905	GameStop Corp., Class A*^		576,828
	41,456	hhgregg, Inc.*^		599,039
	75,250	Jones Group, Inc. (The)		793,887
	28,567	Men’s Wearhouse, Inc. (The)^		925,856
	81,670	OfficeMax, Inc.*		370,782
	63,530	RadioShack Corp.^		616,876
	42,511	Rent-A-Center, Inc.^		1,572,907
	17,888	Shoe Carnival, Inc.*		459,722
	32,997	Stage Store, Inc.		458,328

				8,580,087

	Textiles, Apparel & Luxury Goods (1.3%):
	32,931	Movado Group, Inc.		598,356
	12,390	UniFirst Corp.^		703,009
	11,960	Warnaco Group, Inc. (The)*^		598,478

				1,899,843

	Thrifts & Mortgage Finance (4.8%):
	122,255	Bank Mutual Corp.^		388,771
	77,226	BankFinancial Corp.		426,287
	83,470	Beneficial Mutual Bancorp, Inc.*^		697,809
	86,316	Brookline Bancorp, Inc.^		728,507
	45,332	Clifton Savings Bancorp, Inc.^		420,681


Shares or Principal Amount			Fair Value

Common Stocks, continued
	Thrifts & Mortgage Finance, continued
	38,087	ESSA Bancorp, Inc.	$	398,771
	62,499	Home Federal Bancorp, Inc.^		649,990
	175,241	MGIC Investment Corp.*^		653,649
	59,140	Provident New York Bancorp^		392,690
	77,151	TrustCo Bank Corp.^		432,817
	29,971	United Financial Bancorp, Inc.		482,233
	49,019	Washington Federal, Inc.^		685,776
	73,976	Westfield Financial, Inc.^		544,463

				6,902,444

	Trading Companies & Distributors (0.9%):
	19,192	Applied Industrial Technologies, Inc.		674,983
	22,760	Kaman Corp., Class A^		621,803

				1,296,786

	Wireless Telecommunication Services (0.5%):
	19,553	NTELOS Holdings Corp.		398,490
	30,087	Shenandoah Telecommunications Co.^		315,312

				713,802

	Total Common Stocks (Cost $134,830,011)			144,138,702

	Securities Held as Collateral for Securities on Loan (27.9%):
$	40,456,477	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)		40,456,477

	Total Securities Held as Collateral for Securities on Loan (Cost $40,456,477)			40,456,477

	Unaffiliated Investment Company (0.4%):
	510,802	Dreyfus Treasury Prime Cash Management, 0.00%(b)		510,802

	Total Unaffiliated Investment Company (Cost $510,802)			510,802

	Total Investment Securities (Cost $175,797,290)(c) — 127.8%			185,105,981
	Net other assets (liabilities) — (27.8)%			(40,218,460	)

	Net Assets — 100.0%		$	144,887,521

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	175,797,290

Investment securities, at value*	$	185,105,981
Interest and dividends receivable		195,336
Receivable for capital shares issued		174,187
Receivable for expenses paid indirectly		3,202
Receivable for investments sold		207,839
Prepaid expenses		1,472

Total Assets		185,688,017

Liabilities:
Payable for investments purchased		167,179
Payable for capital shares redeemed		16,838
Payable for collateral received on loaned securities		40,456,477
Manager fees payable		101,880
Administration fees payable		4,784
Distribution fees payable		30,510
Custodian fees payable		4,644
Administrative and compliance services fees payable		1,107
Trustee fees payable		60
Other accrued liabilities		17,017

Total Liabilities		40,800,496

Net Assets	$	144,887,521

Net Assets Consist of:
Capital	$	135,987,675
Accumulated net investment income/(loss)		542,265
Accumulated net realized gains/(losses) from investment transactions		(951,110	)
Net unrealized appreciation/(depreciation) on investments		9,308,691

Net Assets	$	144,887,521

Shares of beneficial interest (unlimited number of shares authorized, no par value)		14,318,335
Net Asset Value (offering and redemption price per share)	$	10.12

*	Includes securities on loan of $39,052,098.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	2,472,794
Income from securities lending		78,312
Foreign withholding tax		(1,304	)

Total Investment Income		2,549,802

Expenses:
Manager fees		1,388,929
Administration fees		65,823
Distribution fees		385,813
Custodian fees		31,132
Administrative and compliance services fees		7,256
Trustee fees		12,253
Professional fees		12,943
Shareholder reports		14,665
Other expenses		5,849

Total expenses before reductions		1,924,663
Less expenses voluntarily waived/reimbursed by the Manager		(80,679	)
Less expenses paid indirectly		(28,643	)

Net expenses		1,815,341

Net Investment Income/(Loss)		734,461

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		10,432,036
Net realized gains/(losses) on forward currency contracts		7
Change in unrealized appreciation/depreciation on investments		(19,961,831	)

Net Realized/Unrealized Gains/(Losses) on Investments		(9,529,788	)

Change in Net Assets Resulting From Operations	$	(8,795,327	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Columbia Small Cap Value Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

at least 102% of the fair value plus accrued interest on the securities loaned (105% for foreign securities) and is marked to market daily to provide a level of collateral at least equal to the fair value of securities loaned. The Fund bears all of the gains and losses on such investments. The 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 cash collateral received. In extremely low interest rate environments, the broker rebate fee may exceed the interest earned or the cash collateral which would result in a loss to the Fund. The investment of cash collateral deposited by the borrower is subject to inherent market risks such as interest rate risk, credit risk, liquidity risk, and other risks that are present in the market, and as such, the value of these investments may not be sufficient, when liquidated, to repay the borrower when the loaned security is returned. 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 Allianz Investment Management LLC (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. Securities on loan at December 31, 2011 are presented on the Fund’s Schedule of Portfolio Investments (“Schedule”). The average outstanding amount of securities on loan was $32.2 million for the year ended December 31, 2011.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $7,365 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The foreign currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. As of December 31, 2011, the Fund did not hold any foreign currency contracts. During the year ended December 31, 2011, the Fund had limited activity in these transactions.

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, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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.

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 subadvisory agreement between the Manager and Columbia Management Investment Advisers, LLC (“CMIA”), CMIA provides investment advisory services as the Subadvisor 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $2,304 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $179,656,694. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $6,672,503 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Columbia Small Cap Value Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 44 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

The financial sector was the Fund’s largest holding. Because of this sector’s poor performance during the year, financials were the second most significant detractor to the Fund’s absolute performance. However, an overweight position relative to the Fund’s benchmark was more than made up for by stock selection in the sector. The Fund’s financial companies outperformed the corresponding sector within the Index and were the largest contributor to the Fund’s relative performance.*

Stock selection and an overweight position in the consumer staples sector contributed positively to the Fund’s performance. The Fund’s consumer staple companies outperformed the corresponding sector within the Index. The Fund’s average weighting of 16% in this stronger performing sector, compared to 9% for the Index, also benefited its performance relative to the Index.*

Past performance does not guarantee future results.

¹	The Russell 1000^® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values. Investors cannot invest directly in an index.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			10 Year
AZL^® Davis New York Venture Fund		–4.20	%		12.27	%		–2.59	%		1.74	%
Russell 1000^® Value Index		0.39	%		11.55	%		–2.64	%		3.89	%

Expense Ratio


	Gross
AZL^® Davis New York Venture Fund		1.08	%

The Fund’s performance is measured against the Russell 1000^® Value Index, an unmanaged index that measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected 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 by the Fund. Investors cannot invest directly in an index.

As a shareholder of the AZL Davis New York Venture Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (95.3%):
	Aerospace & Defense (0.9%):
	38,450	Lockheed Martin Corp.^	$	3,110,605

	Automobiles (0.5%):
	49,690	Harley-Davidson, Inc.		1,931,450

	Beverages (4.6%):
	129,250	Coca-Cola Co. (The)		9,043,623
	44,010	Diageo plc, Sponsored ADR		3,847,354
	95,246	Heineken Holding NV		3,886,661

				16,777,638

	Capital Markets (6.6%):
	44,130	Ameriprise Financial, Inc.		2,190,613
	730,550	Bank of New York Mellon Corp.^		14,545,251
	138,040	Charles Schwab Corp. (The)		1,554,330
	13,870	Goldman Sachs Group, Inc. (The)		1,254,264
	112,550	Julius Baer Group, Ltd.		4,378,692

				23,923,150

	Chemicals (4.0%):
	23,490	Air Products & Chemicals, Inc.		2,001,113
	30,430	Ecolab, Inc.		1,759,158
	85,320	Monsanto Co.		5,978,373
	64,996	Potash Corp. of Saskatchewan, Inc.		2,683,035
	20,800	Praxair, Inc.		2,223,520

				14,645,199

	Commercial Banks (5.2%):
	693,876	Wells Fargo & Co.		19,123,222

	Commercial Services & Supplies (2.0%):
	237,880	Iron Mountain, Inc.^		7,326,704

	Computers & Peripherals (0.7%):
	103,720	Hewlett-Packard Co.		2,671,827

	Construction Materials (0.4%):
	19,400	Martin Marietta Materials, Inc.^		1,462,954

	Consumer Finance (5.1%):
	390,840	American Express Co.		18,435,923

	Containers & Packaging (0.4%):
	91,980	Sealed Air Corp.		1,582,976

	Distributors (0.3%):
	545,200	Li & Fung, Ltd.		1,003,738

	Diversified Financial Services (0.4%):
	21,614	Bank of America Corp.		120,174
	2,560	CME Group, Inc.		623,795
	23,536	JPMorgan Chase & Co.		782,572

				1,526,541

	Energy Equipment & Services (0.6%):
	11,100	Schlumberger, Ltd.		758,241
	37,759	Transocean, Ltd.		1,449,568

				2,207,809


Shares			Fair Value

	Common Stocks, continued
	Food & Staples Retailing (9.9%):
	231,020	Costco Wholesale Corp.	$	19,248,586
	416,389	CVS Caremark Corp.		16,980,344

				36,228,930

	Food Products (1.3%):
	52,400	Kraft Foods, Inc., Class A		1,957,664
	16,340	Nestle SA, Registered Shares		938,425
	49,650	Unilever NV, NYS		1,706,471

				4,602,560

	Health Care Equipment & Supplies (0.8%):
	38,600	Baxter International, Inc.		1,909,928
	14,210	Becton, Dickinson & Co.		1,061,771

				2,971,699

	Health Care Providers & Services (1.9%):
	152,120	Express Scripts, Inc.*		6,798,243

	Household Durables (0.2%):
	14,272	Hunter Douglas NV		534,900

	Insurance (11.5%):
	34,100	ACE, Ltd.		2,391,092
	9,080	Aon Corp.		424,944
	82	Berkshire Hathaway, Inc., Class A*		9,409,910
	14,240	Everest Re Group, Ltd.		1,197,442
	1,990	Fairfax Financial Holdings, Ltd.(b)		853,854
	4,010	Fairfax Financial Holdings, Ltd.		1,729,112
	309,250	Loews Corp.		11,643,262
	1,100	Markel Corp.*^		456,137
	489,510	Progressive Corp. (The)		9,550,340
	80,498	Transatlantic Holdings, Inc.		4,405,655

				42,061,748

	Internet & Catalog Retail (1.2%):
	33,095	Expedia, Inc.^		960,417
	76,160	Liberty Media Corp. - Interactive, Class A*		1,234,934
	18,370	Netflix, Inc.*^		1,272,857
	33,095	TripAdvisor, Inc.*^		834,325

				4,302,533

	Internet Software & Services (3.1%):
	17,440	Google, Inc., Class A*		11,264,496

	IT Services (0.4%):
	14,090	Visa, Inc., Class A^		1,430,558

	Life Sciences Tools & Services (0.3%):
	34,110	Agilent Technologies, Inc.*		1,191,462

	Machinery (0.4%):
	37,680	PACCAR, Inc.^		1,411,870


Shares			Fair Value

	Common Stocks, continued
	Marine (0.9%):
	1,000,700	China Shipping Development Co., Ltd., Share H	$	621,656
	22,070	Kuehne & Nagel International AG, Registered Shares		2,470,940

				3,092,596

	Media (1.6%):
	31,400	Grupo Televisa SA, Sponsored ADR		661,284
	142,120	Walt Disney Co. (The)		5,329,500

				5,990,784

	Metals & Mining (1.0%):
	56,850	BHP Billiton plc		1,652,654
	85,190	MMX Mineracao e Metalicos SA*		130,218
	36,815	Rio Tinto plc		1,781,298

				3,564,170

	Oil, Gas & Consumable Fuels (12.1%):
	283,220	Canadian Natural Resources, Ltd.		10,583,931
	1,246,700	China Coal Energy Co., Share H		1,348,922
	66,180	Devon Energy Corp.		4,103,160
	140,310	EOG Resources, Inc.		13,821,938
	126,850	Occidental Petroleum Corp.		11,885,845
	298,560	OGX Petroleo e Gas Participacoes SA*		2,180,953

				43,924,749

	Paper & Forest Products (0.1%):
	278,530	Sino-Forest Corp., Class A*(a)		384,371
	9,900	Sino-Forest Corp., Class A*(a)(c )		13,662

				398,033

	Personal Products (0.1%):
	24,990	Natura Cosmeticos SA		485,995

	Pharmaceuticals (6.3%):
	120,140	Johnson & Johnson Co.		7,878,781
	227,602	Merck & Co., Inc.		8,580,595
	38,900	Roche Holding AG		6,580,776

				23,040,152

	Real Estate Management & Development (1.2%):
	53,560	Brookfield Asset Management, Inc., Class A		1,471,829
	543,300	Hang Lung Group, Ltd.		2,974,307

				4,446,136

	Semiconductors & Semiconductor Equipment (1.9%):
	45,790	Intel Corp.		1,110,407
	193,500	Texas Instruments, Inc.		5,632,785

				6,743,192


Shares or Principal Amount			Fair Value
	Common Stocks, continued
	Software (2.0%):
	165,350	Activision Blizzard, Inc.	$	2,037,112
	179,490	Microsoft Corp.		4,659,560
	28,500	Oracle Corp.		731,025

				7,427,697

	Specialty Retail (3.2%):
	153,610	Bed Bath & Beyond, Inc.*		8,904,771
	86,710	CarMax, Inc.*^		2,642,921

				11,547,692

	Textiles, Apparel & Luxury Goods (0.1%):
	9,600	Compagnie Financiere Richemont SA, Class A		483,540

	Tobacco (0.8%):
	39,010	Philip Morris International, Inc.		3,061,505

	Transportation Infrastructure (1.0%):
	1,181,626	China Merchants Holdings International Co., Ltd.		3,417,530
	54,630	LLX Logistica SA*		98,741

				3,516,271

	Wireless Telecommunication Services (0.3%):
	53,750	America Movil SAB de C.V., Sponsored ADR, Series L		1,214,750

	Total Common Stocks (Cost $250,371,433)			347,465,997

	Convertible Bond (0.0%):
	Paper & Forest Products (0.0%):
$	488,000	Sino-Forest Corp., 5.00%, 8/1/13(c)		126,880

	Total Convertible Bonds (Cost $488,000)			126,880

	Securities Held as Collateral for Securities on Loan (5.9%):
	21,648,860	Allianz Variable Insurance Products Securities Lending Collateral Trust(d)		21,648,860

	Total Securities Held as Collateral for Securities on Loan (Cost $21,648,860)			21,648,860

	Unaffiliated Investment Company (4.5%):
	16,343,983	Dreyfus Treasury Prime Cash Management, 0.00%(e)		16,343,983

	Total Unaffiliated Investment Company (Cost $16,343,983)			16,343,983

	Total Investment Securities (Cost $288,852,276)(f) — 105.7%			385,585,720
	Net other assets (liabilities) — (5.7)%			(20,943,722	)

	Net Assets — 100.0%		$	364,641,998

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	288,852,276

Investment securities, at value*	$	385,585,720
Interest and dividends receivable		470,095
Foreign currency, at value (cost $722)		765
Receivable for capital shares issued		613
Receivable for investments sold		747,844
Reclaims receivable		149,096
Prepaid expenses		4,332

Total Assets		386,958,465

Liabilities:
Payable for capital shares redeemed		287,101
Payable for collateral received on loaned securities		21,648,860
Manager fees payable		215,552
Administration fees payable		12,778
Distribution fees payable		76,983
Custodian fees payable		5,296
Administrative and compliance services fees payable		2,959
Trustee fees payable		160
Other accrued liabilities		66,778

Total Liabilities		22,316,467

Net Assets	$	364,641,998

Net Assets Consist of:
Capital	$	437,929,278
Accumulated net investment income/(loss)		879,185
Accumulated net realized gains/(losses) from investment transactions		(170,908,381	)
Net unrealized appreciation/(depreciation) on investments		96,741,916

Net Assets	$	364,641,998

Shares of beneficial interest (unlimited number of shares authorized, no par value)		33,213,022
Net Asset Value (offering and redemption price per share)	$	10.98

*	Includes securities on loan of $21,160,206.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	24,787
Dividends		7,082,994
Income from securities lending		58,063
Foreign withholding tax		(136,387	)

Total Investment Income		7,029,457

Expenses:
Manager fees		2,986,371
Administration fees		170,055
Distribution fees		995,457
Custodian fees		37,272
Administrative and compliance services fees		20,802
Trustee fees		34,901
Professional fees		37,119
Shareholder reports		65,846
Other expenses		21,918

Total expenses before reductions		4,369,741
Less expenses voluntarily waived/reimbursed by the Manager		(157,452	)
Less expenses paid indirectly		(4,425	)

Net expenses		4,207,864

Net Investment Income/(Loss)		2,821,593

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		19,227,256
Net realized gains/(losses) on forward currency contracts		(15,691	)
Change in unrealized appreciation/depreciation on investments		(39,423,172	)

Net Realized/Unrealized Gains/(Losses) on Investments		(20,211,607	)

Change in Net Assets Resulting From Operations	$	(17,390,014	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Davis New York Venture Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

To generate additional income, the 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, 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) and is marked to market daily to provide a level of collateral at least equal to the fair value of securities loaned. The Fund bears all of the gains and losses on such investments. The 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 cash collateral received. In extremely low interest rate environments, the broker rebate fee may exceed the interest earned or the cash collateral which would result in a loss to the Fund. The investment of cash collateral deposited by the borrower is subject to inherent market risks such as interest rate risk, credit risk, liquidity risk, and other risks that are present in the market, and as such, the value of these investments may not be sufficient, when liquidated, to repay the borrower when the loaned security is returned. 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 Allianz Investment Management LLC (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. Securities on loan at December 31, 2011 are presented on the Fund’s Schedule of Portfolio Investments (“Schedule”). The average outstanding amount of securities on loan was $20.3 million for the year ended December 31, 2011.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $5,762 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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 may enter into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. As of December 31, 2011, the Fund did not hold any forward currency contracts. During the year ended December 31, 2011, the Fund had limited activity in these transactions.

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, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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.

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 Davis Selected Advisers, L.P. (“Davis”), Davis 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $5,928 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:

As of December 31, 2011, the Fund held securities that were valued in good faith pursuant to procedures approved by the Board of Trustees. The Sino-Forest Corp., Class A and Sino-Forest Corp., Class A - 144A common stocks were valued at the last traded price.

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

Following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

A restricted security is a security which has been purchased through a private offering and cannot be resold to the general public without prior registration under the Securities Act of 1933 (the “1933 Act”) or pursuant to the resale limitations provided by Rule 144A under the 1933 Act, or an exemption from the registration requirements of the 1933 Act. Whether a restricted security is illiquid is determined pursuant to guidelines established by the Board of Trustees. Not all restricted securities are considered illiquid. At December 31, 2011, the Fund held restricted securities representing 0.0% of net assets, all of which have been deemed illiquid. The restricted illiquid securities held as of December 31, 2011 are presented in the Fund’s Schedule of Portfolio Investments.

Cost for federal income tax purposes at December 31, 2011 is $293,660,548. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $18,229,273 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Davis New York Venture Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

a U.S. based oil company, which hurt relative returns as the stock continued to perform well through the end of the year. Additionally, performance was hurt by the Fund’s minimal exposure to shares of a U.S. fast food chain that performed well during in the year.*

The Fund’s performance benefited from individual holdings in the consumer staples sector. Among the Fund’s best performing holdings was a global food products company that benefited from several acquisitions during the year. Continued consumer spending on natural and organic products, despite the economy, also benefited another of the Fund’s holdings in the consumer staples sector.*

Past performance does not guarantee future results.

¹	The Russell 1000^® Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. Investors cannot invest directly in an index.

²	Arab spring is a revolutionary wave of demonstrations and protests occurring in Arab countries.

Growth of a $10,000 Investment

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Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			10 Year
AZL^® Dreyfus Equity Growth Fund		–3.20	%		17.05	%		0.36	%		1.09	%
Russell 1000^® Growth Index		2.64	%		18.02	%		2.50	%		2.60	%

Expense Ratio


	Gross
AZL^® Dreyfus Equity Growth Fund		1.11	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager has voluntarily reduced the management fee to 0.70%. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.20% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

As a shareholder of the AZL Dreyfus Equity Growth Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (98.6%):
	Aerospace & Defense (1.1%):
	15,310	Precision Castparts Corp.	$	2,522,935

	Auto Components (0.8%):
	54,030	Johnson Controls, Inc.		1,688,978

	Beverages (3.1%):
	54,880	Coca-Cola Enterprises, Inc.		1,414,806
	83,200	PepsiCo, Inc.		5,520,320

				6,935,126

	Biotechnology (3.4%):
	17,140	Alexion Pharmaceuticals, Inc.*		1,225,510
	15,750	Biogen Idec, Inc.*		1,733,287
	33,060	Celgene Corp.*		2,234,856
	55,290	Gilead Sciences, Inc.*		2,263,020

				7,456,673

	Chemicals (2.8%):
	20,220	Air Products & Chemicals, Inc.		1,722,542
	42,400	Eastman Chemical Co.		1,656,144
	39,530	Monsanto Co.		2,769,867

				6,148,553

	Commercial Banks (0.9%):
	70,020	Wells Fargo & Co.		1,929,751

	Communications Equipment (4.6%):
	17,050	F5 Networks, Inc.*		1,809,346
	119,200	QUALCOMM, Inc.		6,520,240
	77,880	Riverbed Technology, Inc.*		1,830,180

				10,159,766

	Computers & Peripherals (8.7%):
	34,133	Apple, Inc.*		13,823,865
	123,890	EMC Corp.*		2,668,591
	52,750	SanDisk Corp.*		2,595,827

				19,088,283

	Consumer Finance (0.8%):
	75,600	Discover Financial Services		1,814,400

	Diversified Financial Services (0.5%):
	9,160	IntercontinentalExchange, Inc.*		1,104,238

	Electrical Equipment (1.5%):
	59,600	Cooper Industries plc, A Shares		3,227,340

	Energy Equipment & Services (4.5%):
	27,680	Cameron International Corp.*		1,361,579
	45,330	Ensco plc, Sponsored ADR		2,126,883
	27,020	National-Oilwell Varco, Inc.		1,837,090
	68,090	Schlumberger, Ltd.		4,651,228

				9,976,780

	Food & Staples Retailing (0.8%):
	25,150	Whole Foods Market, Inc.		1,749,937

	Food Products (2.6%):
	110,890	ConAgra Foods, Inc.		2,927,496
	74,580	Kraft Foods, Inc., Class A		2,786,309

				5,713,805


Shares			Fair Value

	Common Stocks, continued
	Health Care Providers & Services (2.8%):
	31,960	McKesson, Inc.	$	2,490,004
	77,730	Omnicare, Inc.		2,677,798
	19,860	WellCare Health Plans, Inc.*		1,042,650

				6,210,452

	Hotels, Restaurants & Leisure (0.7%):
	61,910	Royal Caribbean Cruises, Ltd.		1,533,511

	Household Durables (0.8%):
	104,060	Newell Rubbermaid, Inc.		1,680,569

	Household Products (2.6%):
	31,810	Energizer Holdings, Inc.*		2,464,639
	47,500	Procter & Gamble Co. (The)		3,168,725

				5,633,364

	Industrial Conglomerates (1.5%):
	72,390	Danaher Corp.		3,405,226

	Internet & Catalog Retail (2.8%):
	23,130	Amazon.com, Inc.*		4,003,803
	4,730	Priceline.com, Inc.*		2,212,268

				6,216,071

	Internet Software & Services (3.9%):
	13,227	Google, Inc., Class A*		8,543,319

	IT Services (2.8%):
	6,850	MasterCard, Inc., Class A		2,553,817
	64,160	Paychex, Inc.		1,931,858
	35,126	Teradata Corp.*		1,703,962

				6,189,637

	Life Sciences Tools & Services (0.6%):
	35,970	Agilent Technologies, Inc.*		1,256,432

	Machinery (7.3%):
	66,590	Caterpillar, Inc.		6,033,054
	32,590	Cummins, Inc.		2,868,572
	54,102	Dover Corp.		3,140,621
	92,140	Eaton Corp.		4,010,854

				16,053,101

	Media (3.0%):
	44,530	DIRECTV Group, Inc. (The), Class A*		1,904,103
	44,340	Omnicom Group, Inc.		1,976,677
	58,010	Viacom, Inc., Class B		2,634,234

				6,515,014

	Metals & Mining (1.9%):
	25,440	Cliffs Natural Resources, Inc.		1,586,184
	68,410	Freeport-McMoRan Copper & Gold, Inc.		2,516,804

				4,102,988

	Multiline Retail (2.7%):
	87,560	Macy’s, Inc.		2,817,681
	32,530	Nordstrom, Inc.		1,617,066
	30,340	Target Corp.		1,554,015

				5,988,762


Shares			Fair Value

	Common Stocks, continued
	Oil, Gas & Consumable Fuels (5.8%):
	27,560	Chevron Corp.	$	2,932,384
	19,920	EQT Corp.		1,091,417
	29,130	EOG Resources, Inc.		2,869,596
	24,500	Occidental Petroleum Corp.		2,295,650
	24,400	Pioneer Natural Resources Co.		2,183,312
	41,590	Southwestern Energy Co.*		1,328,385

				12,700,744

	Pharmaceuticals (5.0%):
	19,120	Allergan, Inc.		1,677,589
	35,310	Bristol-Myers Squibb Co.		1,244,324
	27,420	Johnson & Johnson Co.		1,798,204
	30,510	Merck & Co., Inc.		1,150,227
	12,660	Perrigo Co.		1,231,818
	107,160	Pfizer, Inc.		2,318,943
	27,410	Watson Pharmaceuticals, Inc.*		1,653,919

				11,075,024

	Semiconductors & Semiconductor Equipment (4.0%):
	82,310	Analog Devices, Inc.		2,945,052
	35,320	Broadcom Corp., Class A		1,036,995
	112,740	Cypress Semiconductor Corp.		1,904,179
	100,000	Texas Instruments, Inc.		2,911,000

				8,797,226

	Software (6.2%):
	23,680	Citrix Systems, Inc.*		1,437,850
	98,350	Electronic Arts, Inc.*		2,026,010
	48,050	Intuit, Inc.		2,526,949
	162,460	Oracle Corp.		4,167,099


Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Softwar, continued
	16,580	Salesforce.com, Inc.*	$	1,682,207
	21,388	VMware, Inc., Class A*		1,779,268

				13,619,383

	Specialty Retail (2.8%):
	32,880	Dick’s Sporting Goods, Inc.		1,212,614
	59,310	Express, Inc.*		1,182,641
	46,190	Limited Brands, Inc.		1,863,767
	38,300	Ross Stores, Inc.		1,820,399

				6,079,421

	Textiles, Apparel & Luxury Goods (2.2%):
	43,500	Michael Kors Holdings, Ltd.*		1,185,375
	28,620	PVH Corp.		2,017,424
	22,440	Under Armour, Inc., Class A*		1,610,967

				4,813,766

	Tobacco (3.1%):
	86,430	Philip Morris International, Inc.		6,783,026

	Total Common Stocks (Cost $198,144,017)			216,713,601

	Unaffiliated Investment Company (1.4%):
	3,101,914	Dreyfus Treasury Prime Cash Management, 0.00%(a)		3,101,914

	Total Unaffiliated Investment Company (Cost $3,101,914)			3,101,914

	Total Investment Securities (Cost $201,245,931)(b) — 100.0%			219,815,515
	Net other assets (liabilities) — 0.0%			(95,548	)

	Net Assets — 100.0%		$	219,719,967

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	201,245,931

Investment securities, at value	$	219,815,515
Interest and dividends receivable		265,836
Receivable for capital shares issued		14,859
Receivable for expenses paid indirectly		3,429
Prepaid expenses		3,056

Total Assets		220,102,695

Liabilities:
Payable for capital shares redeemed		166,957
Manager fees payable		131,170
Administration fees payable		6,186
Distribution fees payable		46,847
Custodian fees payable		2,225
Administrative and compliance services fees payable		1,578
Trustee fees payable		85
Other accrued liabilities		27,680

Total Liabilities		382,728

Net Assets	$	219,719,967

Net Assets Consist of:
Capital	$	223,316,272
Accumulated net investment income/(loss)		924,184
Accumulated net realized gains/(losses) from investment transactions		(23,090,073	)
Net unrealized appreciation/(depreciation) on investments		18,569,584

Net Assets	$	219,719,967

Shares of beneficial interest (unlimited number of shares authorized, no par value)		23,675,926
Net Asset Value (offering and redemption price per share)	$	9.28

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	165
Dividends		3,160,785

Total Investment Income		3,160,950

Expenses:
Manager fees		1,698,752
Administration fees		86,678
Distribution fees		553,750
Custodian fees		13,788
Administrative and compliance services fees		11,081
Trustee fees		18,654
Professional fees		20,310
Shareholder reports		28,887
Other expenses		7,459

Total expenses before reductions		2,439,359
Less expenses voluntarily waived/reimbursed by the Manager		(148,254	)
Less expenses paid indirectly		(74,598	)

Net expenses		2,216,507

Net Investment Income/(Loss)		944,443

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		14,308,232
Change in unrealized appreciation/depreciation on investments		(29,001,418	)

Net Realized/Unrealized Gains/(Losses) on Investments		(14,693,186	)

Change in Net Assets Resulting From Operations	$	(13,748,743	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Dreyfus Equity Growth Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

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.

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 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $3,156 was paid from the Fund relating to these fees and expenses.

During the year ended December 31, 2011, the Fund paid approximately $111,235 to affiliated broker/dealers of the Subadviser on the execution of purchases and sales of the Fund’s portfolio investments.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $202,502,747. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $15,085,660 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Dreyfus Equity Growth Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.



Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			10 Year
AZL^® Eaton Vance Large Cap Value Fund		–4.45	%		9.91	%		–3.69	%		2.02	%
Russell 1000^® Value Index		0.39	%		11.55	%		–2.64	%		3.89	%

Expense Ratio


	Gross
AZL^® Eaton Vance Large Cap Value Fund		1.09	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager voluntarily reduced the management fee to 0.75% on the first $100 million of assets, 0.70% on the next $400 million, and 0.65% on assets above $500 million. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.20% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against the Russell 1000^® Value Index, an unmanaged index that measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected 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.

As a shareholder of the AZL Eaton Vance Large Cap Value Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (97.3%):
	Aerospace & Defense (3.8%):
	65,126	Boeing Co. (The)	$	4,776,992
	35,181	General Dynamics Corp.		2,336,370
	28,160	Lockheed Martin Corp.^		2,278,144
	100,293	United Technologies Corp.		7,330,416

				16,721,922

	Auto Components (0.5%):
	65,477	Johnson Controls, Inc.		2,046,811

	Beverages (0.8%):
	52,767	PepsiCo, Inc.		3,501,090

	Biotechnology (1.7%):
	114,337	Amgen, Inc.		7,341,579

	Capital Markets (1.7%):
	44,598	Ameriprise Financial, Inc.		2,213,845
	35,203	Goldman Sachs Group, Inc. (The)		3,183,407
	52,996	State Street Corp.		2,136,269

				7,533,521

	Chemicals (0.5%):
	26,177	Air Products & Chemicals, Inc.		2,230,019

	Commercial Banks (6.6%):
	255,155	Fifth Third Bancorp		3,245,572
	422,363	KeyCorp		3,247,971
	123,137	PNC Financial Services Group, Inc.^		7,101,311
	144,260	U.S. Bancorp		3,902,233
	404,715	Wells Fargo & Co.		11,153,945

				28,651,032

	Computers & Peripherals (3.1%):
	27,817	Apple, Inc.*		11,265,885
	87,946	Hewlett-Packard Co.		2,265,489

				13,531,374

	Consumer Finance (1.8%):
	167,214	American Express Co.		7,887,484

	Diversified Financial Services (3.5%):
	168,909	Citigroup, Inc.		4,443,996
	327,283	JPMorgan Chase & Co.		10,882,159

				15,326,155

	Diversified Telecommunication Services (3.7%):
	316,702	AT&T, Inc.		9,577,069
	167,186	Verizon Communications, Inc.		6,707,502

				16,284,571

	Electric Utilities (3.1%):
	173,300	American Electric Power Co., Inc.^		7,159,023
	207,623	PPL Corp.		6,108,269

				13,267,292

	Energy Equipment & Services (0.7%):
	61,636	Baker Hughes, Inc.		2,997,975


Shares			Fair Value

	Common Stocks, continued
	Food & Staples Retailing (2.4%):
	202,327	CVS Caremark Corp.	$	8,250,895
	35,197	Wal-Mart Stores, Inc.		2,103,373

				10,354,268

	Food Products (3.0%):
	135,480	Kraft Foods, Inc., Class A		5,061,533
	58,116	Nestle SA, Registered Shares		3,337,669
	139,063	Unilever NV, NYS^		4,779,595

				13,178,797

	Health Care Equipment & Supplies (1.0%):
	96,754	Covidien plc		4,354,897

	Health Care Providers & Services (3.3%):
	29,925	Humana, Inc.		2,621,729
	228,781	UnitedHealth Group, Inc.		11,594,621

				14,216,350

	Hotels, Restaurants & Leisure (0.9%):
	121,451	Carnival Corp.		3,964,161

	Industrial Conglomerates (2.5%):
	607,069	General Electric Co.		10,872,606

	Insurance (5.6%):
	76,515	ACE, Ltd.		5,365,232
	52,751	Aon Corp.		2,468,747
	140,759	MetLife, Inc.		4,388,866
	88,024	Prudential Financial, Inc.		4,411,763
	51,930	Travelers Cos., Inc. (The)		3,072,698
	235,763	XL Group plc		4,661,034

				24,368,340

	IT Services (1.7%):
	13,680	Accenture plc, Class A		728,186
	36,632	International Business Machines Corp.		6,735,892

				7,464,078

	Life Sciences Tools & Services (0.6%):
	61,611	Thermo Fisher Scientific, Inc.*		2,770,647

	Machinery (0.6%):
	35,175	Deere & Co.		2,720,786

	Media (3.4%):
	158,324	Comcast Corp., Class A		3,753,862
	109,158	Time Warner, Inc.^		3,944,970
	193,690	Walt Disney Co. (The)		7,263,375

				14,962,207

	Metals & Mining (2.3%):
	70,404	BHP Billiton, Ltd., Sponsored ADR^		4,972,635
	137,270	Freeport-McMoRan Copper & Gold, Inc.		5,050,163

				10,022,798


Shares			Fair Value

	Common Stocks, continued
	Multi-Utilities (4.0%):
	123,186	PG&E Corp.	$	5,077,727
	182,099	Public Service Enterprise Group, Inc.^		6,011,088
	112,618	Sempra Energy		6,193,990

				17,282,805

	Multiline Retail (1.6%):
	56,129	Kohl’s Corp.		2,769,966
	70,382	Macy’s, Inc.		2,264,893
	40,440	Target Corp.		2,071,337

				7,106,196

	Oil, Gas & Consumable Fuels (11.9%):
	61,561	Anadarko Petroleum Corp.		4,698,951
	24,590	Apache Corp.		2,227,362
	105,608	Chevron Corp.		11,236,692
	109,138	ConocoPhillips		7,952,886
	116,154	Exxon Mobil Corp.		9,845,213
	60,219	Hess Corp.		3,420,439
	102,056	Occidental Petroleum Corp.		9,562,647
	94,171	Peabody Energy Corp.		3,118,002

				52,062,192

	Pharmaceuticals (7.3%):
	183,773	Johnson & Johnson Co.		12,051,833
	184,739	Merck & Co., Inc.		6,964,660
	592,771	Pfizer, Inc.		12,827,565

				31,844,058

	Real Estate Investment Trusts (REITs) (3.8%):
	43,105	Avalonbay Communities, Inc.^		5,629,513
	53,650	Boston Properties, Inc.^		5,343,540
	44,027	Simon Property Group, Inc.		5,676,841

				16,649,894


Shares			Fair Value

	Common Stocks, continued
	Road & Rail (2.0%):
	80,904	Union Pacific Corp.	$	8,570,970

	Software (3.4%):
	290,386	Microsoft Corp.		7,538,421
	290,328	Oracle Corp.		7,446,913

				14,985,334

	Specialty Retail (2.0%):
	137,220	TJX Cos., Inc. (The)		8,857,551

	Tobacco (1.3%):
	70,365	Philip Morris International, Inc.		5,522,245

	Wireless Telecommunication Services (1.2%):
	184,807	Vodafone Group plc, Sponsored ADR		5,180,140

	Total Common Stocks (Cost $386,855,174)			424,632,145

	Securities Held as Collateral for Securities on Loan (4.1%):
	$17,989,565	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)		17,989,565

	Total Securities Held as Collateral for Securities on Loan (Cost $17,989,565)			17,989,565

	Unaffiliated Investment Company (2.5%):
	10,783,502	Dreyfus Treasury Prime Cash Management, 0.00%(b)		10,783,502

	Total Unaffiliated Investment Company (Cost $10,783,502)			10,783,502

	Total Investment Securities (Cost $415,628,241)(c)—103.9%			453,405,212
	Net other assets (liabilities) — (3.9)%			(17,153,818	)

	Net Assets — 100.0%		$	436,251,394

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	415,628,241

Investment securities, at value*	$	453,405,212
Interest and dividends receivable		1,071,140
Foreign currency, at value (cost $135,856)		134,174
Receivable for capital shares issued		291,894
Receivable for investments sold		562,661
Reclaims receivable		108,887
Prepaid expenses		4,906

Total Assets		455,578,874

Liabilities:
Payable for investments purchased		870,225
Payable for capital shares redeemed		44,856
Payable for collateral received on loaned securities		17,989,565
Manager fees payable		258,726
Administration fees payable		12,564
Distribution fees payable		90,885
Custodian fees payable		2,927
Administrative and compliance services fees payable		3,413
Trustee fees payable		184
Other accrued liabilities		54,135

Total Liabilities		19,327,480

Net Assets	$	436,251,394

Net Assets Consist of:
Capital	$	552,248,764
Accumulated net investment income/(loss)		6,442,187
Accumulated net realized gains/(losses) from investment transactions		(160,218,269	)
Net unrealized appreciation/(depreciation) on investments		37,778,712

Net Assets	$	436,251,394

Shares of beneficial interest (unlimited number of shares authorized, no par value)		55,968,962
Net Asset Value (offering and redemption price per share)	$	7.79

*	Includes securities on loan of $17,554,317.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	11,063,469
Income from securities lending		47,368

Total Investment Income		11,110,837

Expenses:
Manager fees		3,394,921
Administration fees		172,809
Distribution fees		1,140,519
Custodian fees		18,303
Administrative and compliance services fees		21,534
Trustee fees		36,218
Professional fees		38,526
Shareholder reports		44,595
Other expenses		17,331

Total expenses before reductions		4,884,756
Less expenses voluntarily waived/reimbursed by the Manager		(151,553	)

Net expenses		4,733,203

Net Investment Income/(Loss)		6,377,634

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		(9,563,612	)
Net realized gains/(losses) on forward currency contracts		(12,248	)
Change in unrealized appreciation/depreciation on investments		(16,906,038	)

Net Realized/Unrealized Gains/(Losses) on Investments		(26,481,898	)

Change in Net Assets Resulting From Operations	$	(20,104,264	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Eaton Vance Large Cap Value Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Investment transactions are recorded not later than on the business day after trade date. However, for financial reporting purposes, investment transactions are accounted for on trade date. 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.

received. In extremely low interest rate environments, the broker rabate fee may exceed the interest earned or the cash collateral which would result in a loss to the Fund. The investment of cash collateral deposited by the borrower is subject to inherent market risks such as interest rate risk, credit risk, liquidity risk, and other risks that are present in the market, and as such, the value of these investments may not be sufficient, when liquidated, to repay the borrower when the loaned security is returned. 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 Allianz Investment Management LLC (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. Securities on loan at December 31, 2011 are presented on the Fund’s Schedule of Portfolio Investments (“Schedule”). The average outstanding amount of securities on loan was $24.7 million for the year ended December 31, 2011.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $4,691 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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 may enter into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. As of December 31, 2011, the Fund did not hold any forward currency contracts. During the year ended December 31, 2011, the Fund had limited activity in these transactions.

involve, to varying degrees, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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.

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 Eaton Vance Management (“Eaton Vance”), Eaton Vance 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $6,777 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

hierarchy. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. Adoption of ASU 2011-04 will have no effect on the Fund’s net assets. At this time, management is evaluating the impact of ASU 2011-04 on the financial statement disclosures.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $421,027,446. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Eaton Vance Large Cap Value Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

Inflation-Protected Securities strengthened relative performance as investors reduced their expectations for another U.S. recession.*

Periods of underperformance relative to the benchmark were mostly related to a short duration bias mid-year. In particular, duration short relative to the benchmark in July and August detracted from performance as interest rates rallied significantly during this period of extreme risk aversion. Additionally, sector allocation within investment-grade credit in August decreased returns, as the Fund was overweight in financials and underweight in industrials. Financials bore the brunt of investors’ fears over the European sovereign debt crisis and were the worst performing credit sub-sector in the Fund’s benchmark.*

Past performance does not guarantee future results.

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. Investors cannot invest directly in an index.

Fund Objective

The Fund’s investment objective is to exceed the total return of the Barclays Capital U.S. Aggregate Bond Index. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing in a combination of corporate and asset-backed securities in an amount that is within 40% of the weightings of the Index, in government securities in an amount that is within 30% of the weightings of the Index, and in mortgage securities in an amount that is within 30% of the weightings of the Index.

Investment Concerns

Bonds offer a relatively stable level of income, although bond prices will fluctuate, providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return.

Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to default. Because of the sensitivity of mortgage-related securities to changes in interest rates, the Fund’s performance may be more volatile than if it did not hold these securities.

Investing in derivatives instruments involves risks that may be different from or greater than the risk associated with investing directly in securities or other traditional instruments.

The performance of the Fund is expected to be lower than that of the Index because of Fund fees and expenses. Securities in which the Fund will invest may involve substantial risk and may be subject to sudden severe price declines.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			Since Inception (7/10/09)
AZL^® Enhanced Bond Index Fund		7.28	%		5.34	%
Barclays Capital U.S. Aggregate Bond Index		7.84	%		6.94	%

Expense Ratio¹


	Gross
AZL^® Enhanced Bond Index Fund		0.75	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 0.70% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against the Barclays Capital U.S. Aggregate Bond Index, which is an unmanaged 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. 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.

As a shareholder of the AZL Enhanced Bond Index Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Principal Amount			Fair Value

	Asset Backed Securities (5.6%):
$	810,323	321 Henderson Receivables LLC, Series 2010-3A, Class A, 3.82%, 1/15/32(a)	$	798,142
	1,220,000	AmeriCredit Automobile Receivables Trust, Series 2011-2, Class A3, 1.61%, 10/8/15		1,224,794
	1,786,642	Ares Collateralized Loan Obligation Funds, Series 2007-3RA, Class A2, 0.62%, 4/16/21(a)(b)		1,656,396
	440,000	Citibank Credit Card Issuance Trust, Series 2008-C6, Class C6, 6.30%, 6/20/14		450,567
	1,240,000	Citibank Omni Master Trust, Series 2009-A13, Class A13, 5.35%, 8/15/18(a)		1,354,484
	435,000	Credit Acceptance Auto Loan Trust, Series 2010-1, Class A, 2.06%, 4/16/18(a)		433,412
	27,979	GSAA Home Equity Trust, Series 2007-5, Class 1AV1, 0.39%, 5/25/37(b)		11,486
	463,647	Henderson Receivables LLC, Series 2010-1A, Class A, 5.56%, 7/15/59(a)		501,265
	460,000	Nelnet Student Loan Trust, Series 2008-2, Class A4, 2.27%, 6/26/34(b)		473,742
	503,141	Santander Consumer Acquired Receivables Trust, Series 2011-S1A, Class B, 1.66%, 6/15/13(a)		497,484
	588,615	Santander Consumer Acquired Receivables Trust, Series 2011-S1A, Class C, 2.01%, 6/15/13(a)		581,802
	845,000	Santander Drive Auto Receivables Trust, Series 2010-B, Class A3, 1.31%, 2/17/14(a)		845,477
	1,315,000	Santander Drive Auto Receivables Trust, Series 2011-2, Class A2, 1.04%, 4/15/14		1,313,512
	2,270,000	Santander Drive Auto Receivables Trust, Series 2011-3, Class C, 3.09%, 5/15/17		2,260,261
	1,320,000	Santander Drive Auto Receivables Trust, Series 2011-4, Class A2, 1.37%, 7/15/13		1,319,161


Principal Amount			Fair Value

	Asset Backed Securities, continued
$	830,000	Santander Drive Auto Receivables Trust, Series 2011-4, Class C, 3.82%, 5/15/15	$	830,967
	500,794	Santander Drive Auto Receivables Trust, Series 2011-S1A, Class B, 1.48%, 7/15/13(a)		493,332
	371,225	Santander Drive Auto Receivables Trust, Series 2011-S2A, Class C, 2.86%, 8/15/13(a)		369,105
	750,000	SLC Student Loan Trust, Series 2008-1, Class A4A, 2.15%, 12/15/32(b)		768,221
	937,868	SLM Student Loan Trust, Series 2004-B, Class A2, 0.75%, 6/15/21(b)		898,652
	530,000	SLM Student Loan Trust, Series 2008-4, Class A4, 2.07%, 1/24/17(b)		543,986
	625,000	SLM Student Loan Trust, Series 2008-5, Class A4, 2.12%, 7/25/23(b)		641,421
	723,256	SLM Student Loan Trust, Series 2010-1, Class A, 0.69%, 7/25/17(b)		716,319
	218,854	Structured Receivables Finance LLC, Series 2010-B, Class A, 3.73%, 2/16/26(a)		217,786

	Total Asset Backed Securities (Cost $19,260,156)			19,201,774

	Collateralized Mortgage Obligations (6.7%):
	350,000	Arkle Master Issuer plc, Series 2006-1X, Class 5A2, 1.11%, 2/17/52(a)(b)		540,778
	590,000	Arkle Master Issuer plc, Series 2010-1A, Class 2A, 1.62%, 5/17/60(a)(b)		587,549
	690,000	Arkle Master Issuer plc, Series 2010-2A, Class 1A1, 1.87%, 5/17/60(a)(b)		688,321
	200,000	Banc of America Commercial Mortgage, Inc., Series 2006-4, Class AM, 5.68%, 8/10/16		205,336
	527,546	Banc of America Commercial Mortgage, Inc., Series 2007-3, Class A2, 5.62%, 7/10/12(b)		532,839
	1,510,000	Banc of America Commercial Mortgage, Inc., Series 2007-4, Class A3, 5.79%, 8/10/14(b)		1,589,882


Principal Amount			Fair Value

	Collateralized Mortgage Obligations, continued
$	50,000	Bear Stearns Commercial Mortgage Securities, Inc., Series 2005-PW10, Class AM, 5.45%, 12/15/15(b)	$	47,416
	590,000	Commercial Mortgage Pass-Through Certificate, Series 2006-C8, Class AM, 5.35%, 12/10/16		575,371
	100,000	Credit Suisse Mortgage Capital Certificates, Series 2006-C3, Class AM, 5.64%, 6/15/16(b)		99,546
	692,534	Credit Suisse Mortgage Capital Certificates, Series 2007-C2, Class A2, 5.45%, 1/15/49(b)		699,223
	759,695	Credit Suisse Mortgage Capital Certificates, Series 2007-C3, Class A2, 5.90%, 6/15/39(b)		763,809
	1,126,291	DBUBS Mortgage Trust, Series 2011-LC1A, Class A1, 3.74%, 6/10/17(a)		1,159,077
	1,320,000	DBUBS Mortgage Trust, Series 2011-LC1A, Class A2, 4.53%, 7/1/19(a)		1,423,381
	460,000	Extended Stay America Trust, Series 2010-ESHA, Class B, 4.22%, 11/5/15(a)		461,750
	88,983	Fannie Mae, Series 2009-70, Class NT, 4.00%, 8/25/19		94,725
	755,000	Fannie Mae, Series 2011-52, Class GB, 5.00%, 6/25/41		847,876
	1,055,000	Fannie Mae, Series 2011-99, Class DB, 5.00%, 10/25/41		1,188,487
	57,095	Freddie Mac, Series 2890, Class KC, 4.50%, 2/15/19		58,978
	110,000	Greenwich Capital Commercial Funding Corp., Series 2006-GG7, Class AJ, 5.88%, 7/10/16(b)		77,000
	797,905	GS Mortgage Securities Trust, Series 2007-GG10, Class A4, 5.98%, 5/10/17(b)		866,514
	890,000	Holmes Master Issuer plc, Series 2010-1A, Class A2, 1.80%, 10/15/54(a)(b)		887,827
	729,000	JPMorgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1A, Class A2, 4.77%, 3/12/39		748,797


Principal Amount			Fair Value

	Collateralized Mortgage Obligations, continued
$	180,000	JPMorgan Chase Commercial Mortgage Securities Corp., Series 2006-CB16, Class AJ, 5.62%, 5/12/45	$	136,833
	1,260,000	JPMorgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP8, Class A3B, 5.45%, 5/15/45		1,300,401
	965,000	JPMorgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP9, Class A3, 5.34%, 5/15/47		1,023,384
	995,550	JPMorgan Chase Commercial Mortgage Securities Corp., Series 2007-LD11, Class A2, 5.80%, 6/15/49(b)		1,006,608
	170,000	LB-UBS Commercial Mortgage Trust, Series 2006-C4, Class AM, 6.09%, 6/15/38(b)		173,199
	390,000	LB-UBS Commercial Mortgage Trust, Series 2006-C7, Class AM, 5.38%, 10/15/16		377,186
	190,000	LB-UBS Commercial Mortgage Trust, Series 2007-C7, Class A3, 5.87%, 9/15/45(b)		208,393
	1,160,000	Merrill Lynch Mortgage Trust, Series 2004-KEY2, Class A4, 4.86%, 8/12/39(b)		1,233,561
	650,000	Merrill Lynch/Countrywide Commercial Mortgage Trust, Series 2007-8, Class A3, 6.17%, 7/12/17(b)		705,438
	1,035,000	Morgan Stanley Capital I, Series 2007-HQ12, Class A5, 5.60%, 3/12/17(b)		1,085,762
	200,000	Morgan Stanley Capital I, Series 2007-IQ15, Class A2, 5.84%, 8/11/12(b)		202,498
	319,000	Permanent Master Issuer plc, Series 2006-1, Class 6A1, 1.09%, 4/15/20(a)(b)		484,720
	620,000	RBSCF Trust, Series 2010-RR3, Class WBTA, 5.90%, 4/16/17(a)(b)		683,579

	Total Collateralized Mortgage Obligations (Cost $22,420,201)			22,766,044

	Corporate Bonds (15.2%):
	Automobiles (0.4%):
	1,375,000	Daimler Finance NA LLC, 1.88%, 9/15/14(a)		1,367,556


Principal Amount			Fair Value

	Corporate Bonds, continued
	Biotechnology (0.2%):
$	555,000	Gilead Sciences, Inc., 3.05%, 12/1/16	$	568,034

	Capital Markets (1.3%):
	425,000	Goldman Sachs Group, Inc. (The), 6.15%, 4/1/18		438,638
	2,175,000	Goldman Sachs Group, Inc. (The), 3.63%, 2/7/16		2,101,535
	370,000	Goldman Sachs Group, Inc. (The), 5.25%, 7/27/21		360,950
	150,000	Morgan Stanley, 4.00%, 7/24/15		140,663
	105,000	Morgan Stanley, Series F, 5.55%, 4/27/17, MTN		101,305
	905,000	Morgan Stanley, Series F, 6.25%, 8/28/17, MTN		885,673
	310,000	Morgan Stanley, Series G, 2.95%, 5/14/13, MTN(b)		297,669

				4,326,433

	Computers & Peripherals (0.4%):
	1,450,000	IBM Corp., 1.95%, 7/22/16		1,492,283

	Diversified Financial Services (2.0%):
	370,000	Bank of America Corp., 5.63%, 10/14/16		354,971
	510,000	Bank of America Corp., 5.00%, 5/13/21, MTN		464,526
	935,000	Bank of America Corp., Series 1, 3.75%, 7/12/16^		865,734
	1,710,000	Citigroup, Inc., 4.59%, 12/15/15		1,720,939
	535,000	Crown Castle Towers LLC, 6.11%, 1/15/20(a)		590,286
	370,000	General Electric Capital Corp., 4.38%, 9/16/20, MTN		378,097
	875,000	JPMorgan Chase & Co., 3.45%, 3/1/16		888,959
	260,000	JPMorgan Chase & Co., 6.30%, 4/23/19		294,485
	1,025,000	JPMorgan Chase & Co., 4.35%, 8/15/21		1,035,155
	323,233	SteelRiver Transmission Co. LLC, 4.71%, 6/30/17(a)		329,633

				6,922,785

	Diversified Telecommunication Services (0.5%):
	400,000	AT&T, Inc., 6.40%, 5/15/38		494,151
	522,000	GTE Corp., 6.84%, 4/15/18		625,261


Principal Amount			Fair Value

	Corporate Bonds, continued
	Diversified Telecommunication Services, continued
$	450,000	Verizon Communications, Inc., 6.90%, 4/15/38	$	601,467
	100,000	Virgin Media Secured Finance plc, 5.50%, 1/15/21		153,717

				1,874,596

	Electric Utilities (1.4%):
	220,000	Carolina Power & Light Co., 5.70%, 4/1/35		268,131
	600,000	Constellation Energy Group, Inc., 5.15%, 12/1/20, Callable 9/1/20 @ 100		650,184
	100,000	Duke Energy Corp., 3.95%, 9/15/14		106,692
	65,000	Florida Power & Light Co., 5.95%, 2/1/38		85,226
	40,000	MidAmerican Energy Holdings Co., 5.95%, 5/15/37		47,268
	452,000	Ohio Power Co., Series K, 6.00%, 6/1/16		521,965
	450,000	Ohio Power Co., Series M, 5.38%, 10/1/21		516,193
	850,000	Pacificorp, 5.65%, 7/15/18		1,014,749
	350,000	Progress Energy Carolinas, Inc., 5.30%, 1/15/19		409,796
	925,000	Xcel Energy, Inc., 4.70%, 5/15/20, Callable 11/15/19 @ 100		1,042,495

				4,662,699

	Electronic Equipment, Instruments & Components (0.4%):
	675,000	Agilent Technologies, Inc., 6.50%, 11/1/17		781,681
	400,000	SBA Tower Trust, 4.25%, 4/15/15(a)		411,213

				1,192,894

	Food Products (0.4%):
	76,000	Kraft Foods, Inc., 6.13%, 2/1/18		89,084
	614,000	Kraft Foods, Inc., 4.13%, 2/9/16		666,636
	329,000	Kraft Foods, Inc., 6.50%, 8/11/17		391,367
	225,000	Kraft Foods, Inc., 5.38%, 2/10/20		259,617

				1,406,704

	Gas Utilities (0.2%):
	74,000	Keyspan Gas East Corp., 5.82%, 4/1/41(a)		90,279
	575,000	LG&E and KU Energy LLC, 3.75%, 11/15/20		580,475

				670,754


Principal Amount			Fair Value

	Corporate Bonds, continued
	Health Care Equipment & Supplies (0.5%):
$	825,000	Becton Dickinson & Co., 1.75%, 11/8/16	$	831,202
	210,000	Boston Scientific Corp., 6.25%, 11/15/15		232,790
	525,000	Stryker Corp., 2.00%, 9/30/16		537,249

				1,601,241

	Health Care Technology (0.4%):
	1,270,000	Amgen, Inc., 3.88%, 11/15/21, Callable 8/15/21 @ 100		1,281,576
	43,000	Life Technologies Corp., 6.00%, 3/1/20		48,067
	182,000	Life Technologies Corp., 5.00%, 1/15/21, Callable 10/15/20 @ 100		190,436

				1,520,079

	Industrial Conglomerates (0.7%):
	650,000	Danaher Corp., 2.30%, 6/23/16		675,602
	1,000,000	Dow Chemical Co. (The), 4.13%, 11/15/21, Callable 8/15/21 @ 100		1,025,720
	555,000	General Electric Capital Corp., Series G, 6.15%, 8/7/37, MTN		607,108

				2,308,430

	Insurance (1.3%):
	125,000	American International Group, Inc., Series MP, 5.45%, 5/18/17, MTN		119,455
	185,000	Berkshire Hathaway, Inc., 2.20%, 8/15/16^		190,433
	960,000	MetLife Global Funding I, 2.50%, 1/11/13(a)		971,631
	1,120,000	MetLife Global Funding I, 2.00%, 1/10/14(a)		1,126,610
	1,125,000	MetLife, Inc., 6.75%, 6/1/16^		1,296,043
	200,000	UnitedHealth Group, Inc., 3.88%, 10/15/20, Callable 7/15/20 @ 100		212,413
	385,000	UnitedHealth Group, Inc., 3.38%, 11/15/21, Callable 8/15/21 @ 100^		398,183

				4,314,768

	Machinery (0.2%):
	656,000	Xylem, Inc., 3.55%, 9/20/16(a)		676,442


Principal Amount			Fair Value

	Corporate Bonds, continued
	Media (2.2%):
$	671,000	Comcast Corp., 5.88%, 2/15/18	$	775,855
	300,000	Comcast Corp., 5.70%, 5/15/18		345,228
	337,000	Comcast Corp., 6.40%, 3/1/40^		418,912
	295,000	Cox Communications, Inc., 8.38%, 3/1/39(a)		394,993
	575,000	DIRECTV Holdings LLC / DIRECTV Financing Co., Inc., 3.50%, 3/1/16		592,781
	925,000	DIRECTV Holdings LLC / DIRECTV Financing Co., Inc., 7.63%, 5/15/16, Callable 5/15/12 @ 103.81		981,656
	173,000	DIRECTV Holdings LLC / DIRECTV Financing Co., Inc., 5.88%, 10/1/19		194,732
	280,000	NBCUniversal Media LLC, 5.15%, 4/30/20		311,745
	490,000	News America, Inc., 7.25%, 5/18/18		590,291
	525,000	Omnicom Group, Inc., 5.90%, 4/15/16		583,743
	820,000	Scripps Networks Interactive, Inc., 2.70%, 12/15/16		820,436
	250,000	Time Warner Cable, Inc., 5.50%, 9/1/41, Callable 3/1/41 @ 100		263,450
	1,015,000	Time Warner, Inc., 6.20%, 7/1/13		1,089,161

				7,362,983

	Metals & Mining (0.5%):
	420,000	Barrick NA Finance LLC, 4.40%, 5/30/21^		454,858
	1,295,000	Freeport-McMoRan Copper & Gold, Inc., 8.38%, 4/1/17, Callable 4/1/12 @ 104.19		1,375,938

				1,830,796

	Multi-Utilities (0.2%):
	300,000	Columbus Southern Power Co., 6.05%, 5/1/18		352,853
	400,000	Dominion Resources, Inc., Series C, 4.90%, 8/1/41^		432,620

				785,473

	Oil, Gas & Consumable Fuels (1.0%):
	150,000	Anadarko Petroleum Corp., 7.63%, 3/15/14		166,628
	58,000	Anadarko Petroleum Corp., 5.75%, 6/15/14		62,419


Principal Amount			Fair Value

	Corporate Bonds, continued
	Oil, Gas & Consumable Fuels, continued
$	425,000	Anadarko Petroleum Corp., 6.38%, 9/15/17	$	492,632
	216,000	El Paso Pipeline Partners Operating Co. LLC, 6.50%, 4/1/20		238,059
	50,000	Enterprise Products Operating LP, 6.13%, 2/1/13		52,186
	750,000	Enterprise Products Operating LP, Series L, 6.30%, 9/15/17		878,346
	225,000	Kinder Morgan Energy Partners LP, 5.95%, 2/15/18		257,050
	186,000	Marathon Petroleum Corp., 6.50%, 3/1/41^		210,780
	30,000	Petrobras International Finance, Inc., 5.88%, 3/1/18		32,831
	265,000	Rockies Express Pipeline LLC, 3.90%, 4/15/15(a)		261,871
	300,000	Southwestern Energy Co., 7.50%, 2/1/18		345,750
	480,000	Williams Partners LP, 4.00%, 11/15/21		492,874

				3,491,426

	Paper & Forest Products (0.6%):
	400,000	Georgia-Pacific LLC, 7.70%, 6/15/15		464,736
	480,000	International Paper Co., 7.95%, 6/15/18		584,270
	791,000	International Paper Co., 4.75%, 2/15/22, Callable 11/15/21 @ 100^		840,795

				1,889,801

	Real Estate Investment Trusts (REITs) (0.1%):
	270,000	ERP Operating LP, 4.63%, 12/15/21		275,334

	Road & Rail (0.1%):
	250,000	CSX Corp., 4.75%, 5/30/42, Callable 11/30/41 @ 100		257,962

	Specialty Retail (0.1%):
	408,000	Lowe’s Cos., Inc., 5.13%, 11/15/41		452,064

	Thrifts & Mortgage Finance (0.0%):
	90,000	Prudential Financial, Inc., Series D, 4.75%, 9/17/15, MTN		95,031

	Tobacco (0.1%):
	359,000	Philip Morris International, Inc., 2.50%, 5/16/16		371,218

	Total Corporate Bonds (Cost $50,159,657)			51,717,786


Principal Amount			Fair Value

	Yankee Dollars (8.7%):
	Capital Markets (0.2%):
$	760,000	UBS AG Stamford CT, 2.25%, 8/12/13	$	753,225

	Commercial Banks (3.3%):
	385,000	Barclays Bank plc, 6.05%, 12/4/17(a)		348,139
	655,000	DnB NOR ASA, 2.10%, 10/14/15(a)		649,692
	1,355,000	DnB NOR ASA, 2.90%, 3/29/16(a)		1,377,488
	240,000	Eksportfinans A/S, 3.00%, 11/17/14		213,688
	201,000	Eksportfinans A/S, 5.50%, 5/25/16, MTN^		185,335
	875,000	HSBC Bank plc, 3.10%, 5/24/16(a)		875,052
	265,000	HSBC Holdings plc, 6.10%, 1/14/42		300,368
	1,920,000	Nordea Eiendomskreditt AS, 2.13%, 9/22/16(a)		1,873,292
	2,135,000	Royal Bank of Canada, 1.45%, 10/30/14		2,146,083
	1,205,000	SpareBank 1 Boligkreditt AS, Series 2011-2, 2.63%, 5/27/16(a)		1,215,444
	1,015,000	Swedbank Hypotek AB, 2.95%, 3/28/16(a)		1,040,504
	910,000	Toronto-Dominion Bank (The), 2.38%, 10/19/16		926,007

				11,151,092

	Diversified Financial Services (1.5%):
	500,000	BP Capital Markets plc, 3.88%, 3/10/15		533,903
	725,000	BP Capital Markets plc, 3.13%, 10/1/15		759,382
	630,000	BP Capital Markets plc, 3.56%, 11/1/21		655,883
	680,000	CDP Financial, Inc., 3.00%, 11/25/14(a)		707,143
	425,000	Credit Suisse Group AG, 5.40%, 1/14/20		400,845
	1,355,000	Credit Suisse Guernsey, Ltd., 2.60%, 5/27/16(a)		1,373,142
	260,000	Credit Suisse Guernsey, Ltd., 5.86%, 12/31/49, Callable 5/15/17 @ 100(b)		211,250
	100,000	Credit Suisse, NY, 5.50%, 5/1/14		103,942
	310,000	Manulife Financial Corp., 3.40%, 9/17/15		311,729

				5,057,219


Principal Amount			Fair Value

	Yankee Dollars, continued
	Diversified Telecommunication Services (0.5%):
$	485,000	Telefonica Emisiones SAU, 4.95%, 1/15/15	$	482,449
	315,000	Virgin Media Secured Finance plc, 6.50%, 1/15/18, Callable 1/15/14 @ 103.25		334,687
	765,000	Vodafone Group plc, 4.15%, 6/10/14		811,141

				1,628,277

	Metals & Mining (0.7%):
	120,000	Codelco, Inc., 3.75%, 11/4/20(a)		121,865
	665,000	Codelco, Inc., 3.88%, 11/3/21(a)		677,075
	680,000	Newcrest Finance Pty, Ltd., 4.45%, 11/15/21(a)		670,732
	815,000	Xstrata Canada Financial Corp., 2.85%, 11/10/14(a)		819,162

				2,288,834

	Oil, Gas & Consumable Fuels (1.1%):
	235,000	Canadian Natural Resources, Ltd., 6.50%, 2/15/37		302,575
	225,000	Nexen, Inc., 6.20%, 7/30/19		261,474
	500,000	Nexen, Inc., 6.40%, 5/15/37		529,630
	260,000	Nexen, Inc., 7.50%, 7/30/39		311,685
	1,080,000	Petrobras International Finance Co., 3.88%, 1/27/16		1,112,628
	645,000	Petrobras International Finance Co., 5.75%, 1/20/20		690,227
	495,000	Transocean, Inc., 7.35%, 12/15/41		549,860

				3,758,079

	Pharmaceuticals (0.2%):
	775,000	Teva Pharmaceutial Finance BV, Series 2, 3.65%, 11/10/21		788,280

	Sovereign Bonds (1.0%):
	1,950,000	Aid-Israel, 5.50%, 9/18/23		2,489,582
	234,000	Republic of Italy, 6.88%, 9/27/23		225,436
	492,650	Russia Foreign Bond, 7.50%, 3/31/30(a)(c)		572,090

				3,287,108

	Wireless Telecommunication Services (0.2%):
	893,000	America Movil SAB de C.V., 2.38%, 9/8/16		890,512

	Total Yankee Dollars (Cost $29,079,028)			29,602,626


Principal Amount			Fair Value

	Municipal Bond (0.0%):
$	130,000	Municipal Electric Authority of Georgia, Build America Bonds, Revenue, Series A, 7.06%, 4/1/57	$	132,111

	Total Municipal Bonds (Cost $119,421)			132,111

	Foreign Bond (0.2%):
	580,000	NRW Bank, 4.10%, 12/28/12+		580,871

	Total Foreign Bonds (Cost $584,570)			580,871

	U.S. Government Agency (0.0%):
	130,000	Tennessee Valley Authority, 5.25%, 9/15/39		165,947

	Total U.S. Government Agencies (Cost $128,595)			165,947

	U.S. Government Agency Mortgages (40.6%):
	Federal Home Loan Mortgage Corporation (7.4%)
	500,000	5.50%, 1/15/42 TBA		542,500
	4,425,000	0.63%, 12/23/13		4,424,845
	464,000	5.13%, 11/17/17		558,699
	5,290,000	3.53%, 9/30/19, Callable 3/30/12 @ 100		5,327,972
	485,295	5.00%, 3/1/38, Pool #G04913		522,316
	1,593,531	5.00%, 12/1/38, Pool #G05132		1,714,097
	231,524	5.00%, 1/1/39, Pool #G05205		249,041
	2,123,916	4.50%, 10/1/39, Pool #G08368		2,252,539
	3,175,964	4.50%, 11/1/39, Pool #G08372		3,368,299
	1,744,141	5.50%, 5/1/40, Pool # G06817		1,894,907
	1,159,439	4.00%, 12/1/40, Pool #A95575		1,221,969
	373,796	4.00%, 12/1/40, Pool #A95656		393,956
	539,846	4.00%, 12/1/40, Pool #A95856		568,961
	1,064,655	4.50%, 8/1/41, Pool #Q02663		1,134,786
	187,507	4.50%, 8/1/41, Pool #Q02776		199,859
	400,000	5.00%, 1/15/42 TBA		429,812

				24,804,558

	Federal National Mortgage Association (29.4%)
	7,300,000	6.00%, 1/25/42 TBA		8,037,985
	1,065,000	5.00%, 3/2/15		1,208,122
	8,050,000	1.38%, 11/15/16^		8,121,098
	1,045,000	5.00%, 5/11/17^		1,240,383
	1,090,250	5.00%, 1/1/18, Pool #AL0058		1,172,274
	741,359	4.00%, 7/1/19, Pool #AE0968		781,931
	2,285,000	4.54%, 10/9/19(e)		1,756,857
	1,147,932	5.50%, 7/1/25, Pool #AE0096		1,260,614
	696,411	3.50%, 11/1/26, Pool #AJ6935		728,915
	2,100,000	3.50%, 1/25/27 TBA		2,195,812
	3,000,000	4.00%, 1/25/27 TBA		3,163,594
	100,000	4.50%, 1/25/27 TBA		106,594
	1,200,000	5.50%, 1/25/27 TBA		1,301,625
	1,400,000	3.00%, 2/25/27 TBA		1,441,344
	1,153,062	5.50%, 1/1/33, Pool #676661		1,260,481
	827,933	5.50%, 5/1/33, Pool #555424		905,063


Principal Amount			Fair Value

	U.S. Government Agency Mortgages, continued
	Federal National Mortgage Association, continued
$	563,650	5.00%, 7/1/34, Pool #725589	$	609,555
	1,993,348	5.50%, 2/1/35, Pool #735989		2,179,049
	131,398	6.00%, 4/1/35, Pool #735504		146,472
	4,279,409	5.50%, 9/1/36, Pool #995113		4,678,079
	113,045	6.50%, 7/1/37, Pool #888596		126,544
	639,204	5.50%, 2/1/38, Pool #961545		696,555
	1,184,560	5.50%, 5/1/38, Pool #889441		1,290,842
	1,634,465	5.50%, 5/1/38, Pool #889692		1,781,114
	1,253,963	5.50%, 6/1/38, Pool #995018		1,368,039
	346,671	5.50%, 9/1/38, Pool #889995		377,775
	508,391	6.50%, 10/1/38, Pool #889984		569,098
	512,093	5.50%, 10/1/39, Pool #AD0362		560,440
	351,072	6.50%, 10/1/39, Pool #AL0583		390,197
	402,689	5.50%, 12/1/39, Pool #AD0571		440,707
	916,018	3.24%, 7/1/41, Pool #AL0533(b)		955,153
	195,631	4.50%, 7/1/41, Pool #AI7800		209,993
	879,849	4.50%, 7/1/41, Pool #AI7782		944,446
	2,446,033	4.50%, 7/1/41, Pool #AL0616		2,622,223
	5,910,707	4.50%, 7/1/41, Pool #AL0617		6,336,462
	1,694,146	4.50%, 8/1/41, Pool #AI5917		1,818,526
	1,519,899	4.50%, 8/1/41, Pool #AI8191		1,627,211
	230,398	4.50%, 8/1/41, Pool #AI8222		246,665
	2,038,691	4.00%, 10/1/41, Pool #AJ4046		2,155,330
	596,506	3.50%, 11/1/41, Pool #AB3934		614,010
	998,302	3.50%, 11/1/41, Pool #AJ5927		1,027,597
	1,297,566	3.50%, 11/1/41, Pool #AJ4163		1,335,643
	399,339	3.50%, 12/1/41, Pool #AJ5930		411,057
	11,383,489	3.50%, 12/1/41, Pool #AB4103		11,717,535
	2,500,000	4.00%, 1/25/42 TBA		2,626,172
	6,200,000	4.50%, 1/25/42 TBA		6,597,187
	8,800,000	5.00%, 1/25/42 TBA		9,506,750

				100,649,118

	Government National Mortgage Association (3.8%)
	162,430	6.50%, 8/20/38, Pool #4223		185,237
	273,649	6.50%, 10/15/38, Pool #673213		311,780
	86,482	6.50%, 11/20/38, Pool #4292		98,625
	179,573	6.50%, 12/15/38, Pool #782510		204,623
	1,220,595	5.00%, 4/15/39, Pool #782619		1,353,388
	3,000,000	5.00%, 1/15/41 TBA		3,322,969
	1,100,000	4.00%, 1/15/42 TBA		1,179,922
	1,100,000	4.00%, 1/20/42 TBA		1,176,484
	3,900,000	4.50%, 1/20/42 TBA		4,247,343
	1,000,000	5.00%, 1/20/42 TBA		1,105,625

				13,185,996

	Total U.S. Government Agency Mortgages (Cost $136,946,017)			138,639,672


Shares or Principal Amount			Fair Value

	U.S. Treasury Obligations (27.9%):
	U.S. Treasury Bonds (10.6%)
$	1,620,000	4.50%, 2/15/36	$	2,119,922
	2,200,000	6.50%, 11/15/26		3,337,814
	11,000,000	6.63%, 2/15/27		16,926,250
	380,000	4.63%, 2/15/40		512,525
	1,855,000	4.38%, 5/15/40		2,409,760
	3,160,000	3.88%, 8/15/40		3,788,050
	2,633,300	4.75%, 2/15/41(f)		3,629,017
	3,428,000	3.13%, 11/15/41		3,591,365

				36,314,703

	U.S. Treasury Inflation Index Bonds (1.6%)
	2,235,000	0.63%, 7/15/21		2,401,925
	2,290,000	2.13%, 2/15/41(f)		3,198,059

				5,599,984

	U.S. Treasury Inflation Index Notes (3.4%)
	5,678,900	2.00%, 4/15/12		6,364,296
	4,715,000	0.13%, 4/15/16		5,042,106

				11,406,402

	U.S. Treasury Notes (12.3%)
	3,855,000	0.25%, 11/30/13^		3,855,451
	15,890,000	0.38%, 11/15/14^		15,899,931
	675,000	0.25%, 12/15/14^		672,785
	955,000	2.00%, 4/30/16^		1,008,421
	2,220,000	1.00%, 9/30/16		2,242,893
	75,000	2.38%, 7/31/17		80,607
	835,000	2.38%, 6/30/18		894,754
	1,235,000	1.38%, 9/30/18(f)		1,241,658
	3,295,000	1.75%, 10/31/18		3,391,277
	8,850,000	1.38%, 11/30/18^(f)		8,880,426
	565,000	3.63%, 2/15/20(f)		655,268
	2,950,000	2.00%, 11/15/21		2,983,648

				41,807,119

	Total U.S. Treasury Obligations (Cost $92,227,478)			95,128,208

	Securities Held as Collateral for Securities on Loan (12.8%):
	43,686,455	Allianz Variable Insurance Products Securities Lending Collateral Trust(g)		43,686,455

	Total Securities Held as Collateral for Securities on Loan (Cost $43,686,455)			43,686,455

	Unaffiliated Investment Company (8.1%):
	27,491,310	Dreyfus Treasury Prime Cash Management, 0.00%(e)		27,491,310

	Total Unaffiliated Investment Company (Cost $27,491,310)			27,491,310

	Total Investment Securities (Cost $422,102,888)(h) — 125.8%			429,112,804
	Net other assets (liabilities) — (25.8)%			(87,894,119	)

	Net Assets—100.0%		$	341,218,685

As of December 31, 2011, the Fund’s open forward currency contracts were as follows:

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	422,102,888

Investment securities, at value*	$	429,112,804
Interest and dividends receivable		1,902,505
Foreign currency, at value (cost $160,032)		159,089
Unrealized appreciation on forward currency contracts		41,177
Receivable for capital shares issued		906,347
Receivable for investments sold		74,729,148
Receivable for variation margin on futures contracts		15,500
Prepaid expenses		4,490

Total Assets		506,871,060

Liabilities:
Unrealized depreciation on forward currency contracts		7,249
Payable for investments purchased		96,412,719
Payable for collateral received on loaned securities		43,686,455
Securities sold short (Proceeds received $25,192,461)		25,318,937
Payable for variation margin on futures contracts		23,453
Manager fees payable		97,996
Administration fees payable		11,927
Distribution fees payable		69,997
Custodian fees payable		3,419
Administrative and compliance services fees payable		1,926
Trustee fees payable		104
Other accrued liabilities		18,193

Total Liabilities		165,652,375

Net Assets	$	341,218,685

Net Assets Consist of:
Capital	$	321,707,187
Accumulated net investment income/(loss)		5,287,248
Accumulated net realized gains/(losses) from investment transactions		7,367,589
Net unrealized appreciation/(depreciation) on investments		6,856,661

Net Assets	$	341,218,685

Shares of beneficial interest (unlimited number of shares authorized, no par value)		30,954,666
Net Asset Value (offering and redemption price per share)	$	11.02

*	Includes securities on loan of $42,754,425.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	6,545,911
Dividends		99
Income from securities lending		30,790

Total Investment Income		6,576,800

Expenses:
Manager fees		966,157
Administration fees		136,587
Distribution fees		690,114
Custodian fees		17,679
Administrative and compliance services fees		11,380
Trustee fees		19,214
Professional fees		21,328
Shareholder reports		6,735
Recoupment of prior expenses reimbursed by the Manager		24,651
Other expenses		8,402

Total expenses		1,902,247

Net Investment Income/(Loss)		4,674,553

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		10,306,213
Net realized gains/(losses) on futures contracts		(1,177,072	)
Net realized gains/(losses) on forward currency contracts		11,178
Change in unrealized appreciation/depreciation on investments		6,792,395

Net Realized/Unrealized Gains/(Losses) on Investments		15,932,714

Change in Net Assets Resulting From Operations	$	20,607,267

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Enhanced Bond Index Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

The Fund may purchase securities on a when-issued basis. When-issued securities are securities purchased for delivery beyond the normal settlement date at a stated price and yield and thereby involve risk that the yield obtained in the transaction will be less than that available in the market when the delivery takes place. A Fund will not pay for such securities or start earning interest on them until they are received. When a Fund agrees to purchase securities on a when-issued basis, the Fund will segregate or designate cash or liquid assets equal to the amount of the commitment. Securities purchased on a when-issued basis are recorded as an asset and are subject to changes in the value based upon changes in the general level of interest rates. A Fund may sell when-issued securities before they are delivered, which may result in a capital gain or loss.

The Fund may engage in short sales against the box (i.e., where the fund owns or has an unconditional right to acquire at no additional cost a security substantially similar to the security sold short) for hedging purposes to limit exposure to a possible market decline in the value of its portfolio securities. In a short sale, the Fund sells a borrowed security and has a corresponding obligation to the lender to return the identical security. The Fund may also incur an interest expense if a security that has been sold short has an interest payment. When a Fund engages in a short sale, the Fund records a liability for securities sold short and records an asset equal to the proceeds received. The amount of the liability is subsequently marked to market to reflect the market value of the securities sold short. To borrow the security, a Fund also may be required to pay a premium, which would increase the cost of the security sold.

from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are either 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 that exceed net investment income and net realized gains for tax purposes are reported as distributions of capital.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $3,087 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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 currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The contract amount of forward currency contracts outstanding was $3.2 million as of December 31, 2011. The monthly average amount for these contracts was $2.4 million for the year ended December 31, 2011.

During the year ended December 31, 2011, the Fund used futures contracts to provide market exposure on the Fund’s cash balances. 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, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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. The notional amount of futures contracts outstanding was $38.0 million as of December 31, 2011. The monthly average notional amount for these contracts was $45.1 million for the year ended December 31, 2011.

The following is a summary of the fair value of derivative instruments as of December 31, 2011:

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 Financial Management, Inc. (“BlackRock Financial”), BlackRock Financial 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

Fees payable to the Administrator are subject to certain reductions associated with services provided to new funds. The Administrator is also reimbursed for certain expenses incurred. The total expenses incurred by the Fund for these services are reflected on the Statement of Operations as “Administration fees.”

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $3,861 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1			Level 2			Level 3		Total
Investment Securities+:
Asset Backed Securities	$	—		$	19,201,774		$	—	$	19,201,774
Collateralized Mortgage Obligations		—			22,766,044			—		22,766,044
Corporate Bonds		—			51,717,786			—		51,717,786
Yankee Dollars		—			29,602,626			—		29,602,626
Municipal Bonds		—			132,111			—		132,111
Foreign Bonds		—			580,871			—		580,871
U.S. Government Agency		—			165,947			—		165,947
U.S. Government Agency Mortgages		—			138,639,672			—		138,639,672
U.S. Treasury Obligations		—			95,128,208			—		95,128,208
Securities Held as Collateral for Securities on Loan		—			43,686,455			—		43,686,455
Unaffiliated Investment Company		27,491,310			—			—		27,491,310

Total Investment Securities		27,491,310			401,621,494			—		429,112,804

Securities Sold Short		—			(25,318,937	)		—		(25,318,937	)

Other Financial Instruments:*
Futures Contracts		(59,701	)		—			—		(59,701	)
Forward Currency Contracts		—			33,928			—		33,928

Total Investments	$	27,431,609		$	376,336,485		$	—	$	403,768,094

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

and annual reporting periods beginning after December 15, 2011. Adoption of ASU 2011-04 will have no effect on the Fund’s net assets. At this time, management is evaluating the impact of ASU 2011-04 on the financial statement disclosures.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

For the year ended December 31, 2011, purchases and sales on long-term U.S government securities were as follows:

Cost for federal income tax purposes at December 31, 2011 is $396,980,933. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Enhanced Bond Index Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the three-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the three-year period then ended, in conformity with U.S. generally accepted accounting principles.

During the year ended December 31, 2011, the Fund declared net short-term capital gain distributions of $3,362,902.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/ Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (5/1/03)
AZL^® Franklin Small Cap Value Fund		–3.92	%		16.84	%		0.22	%		8.16	%
Russell 2000^® Value Index		–5.50	%		12.36	%		–1.87	%		8.45	%¹

Expense Ratio


	Gross
AZL^® Franklin Small Cap Value Fund		1.09	%

¹	The hypothetical $10,000 investment and the since inception performance data for the Russell 2000^® Value Index is calculated from April 30, 2003.

As a shareholder of the AZL Franklin Small Cap Value Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare – these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (96.8%):
	Aerospace & Defense (1.8%):
	94,900	AAR Corp.	$	1,819,233
	64,000	Ceradyne, Inc.*		1,713,920

				3,533,153

	Airlines (1.0%):
	159,000	SkyWest, Inc.		2,001,810

	Auto Components (3.5%):
	53,000	Autoliv, Inc.^		2,834,970
	40,500	Drew Industries, Inc.*^		993,465
	104,200	Gentex Corp.^		3,083,278

				6,911,713

	Automobiles (2.0%):
	131,000	Thor Industries, Inc.^		3,593,330
	65,100	Winnebago Industries, Inc.*^		480,438

				4,073,768

	Building Products (4.9%):
	69,900	American Woodmark Corp.^		954,834
	126,900	Apogee Enterprises, Inc.^		1,555,794
	144,000	Gibraltar Industries, Inc.*		2,010,240
	70,900	Simpson Manufacturing Co., Inc.		2,386,494
	91,000	Universal Forest Products, Inc.^		2,809,170

				9,716,532

	Chemicals (4.0%):
	74,000	A. Schulman, Inc.		1,567,320
	52,400	Cabot Corp.^		1,684,136
	31,900	H.B. Fuller Co.^		737,209
	116,600	RPM International, Inc.^		2,862,530
	30,300	Sensient Technologies Corp.		1,148,370

				7,999,565

	Commercial Banks (1.3%):
	57,400	Chemical Financial Corp.^		1,223,768
	98,000	Oriental Financial Group, Inc.^		1,186,780
	11,400	Peoples Bancorp, Inc.^		168,834

				2,579,382

	Commercial Services & Supplies (1.9%):
	98,400	ABM Industries, Inc.		2,029,008
	52,100	Mine Safety Appliances Co.^		1,725,552

				3,754,560

	Construction & Engineering (2.1%):
	53,000	Emcor Group, Inc.^		1,420,930
	120,500	Granite Construction, Inc.^		2,858,260

				4,279,190

	Containers & Packaging (0.3%):
	10,000	AptarGroup, Inc.^		521,700

	Diversified Consumer Services (2.3%):
	87,000	Hillenbrand, Inc.^		1,941,840
	162,000	Regis Corp.^		2,681,100

				4,622,940

	Electric Utilities (0.8%):
	98,500	NV Energy, Inc.		1,610,475


Shares			Fair Value

	Common Stocks, continued
	Electrical Equipment (4.1%):
	19,050	A.O. Smith Corp.^	$	764,286
	73,000	Brady Corp., Class A^		2,304,610
	3,900	EnerSys*		101,283
	29,600	Franklin Electric Co., Inc.^		1,289,376
	16,500	General Cable Corp.*^		412,665
	36,000	Powell Industries, Inc.*		1,126,080
	24,200	Roper Industries, Inc.^		2,102,254

				8,100,554

	Electronic Equipment, Instruments & Components (3.3%):
	206,000	Benchmark Electronics, Inc.*^		2,774,820
	43,100	Multi-Fineline Electronix, Inc.*		885,705
	93,900	Rofin-Sinar Technologies, Inc.*		2,145,615
	63,900	Schawk, Inc.		716,319

				6,522,459

	Energy Equipment & Services (10.1%):
	63,500	Atwood Oceanics, Inc.*^		2,526,665
	76,100	Bristow Group, Inc.^		3,606,379
	125,400	Helix Energy Solutions Group, Inc.*^		1,981,320
	40,800	Oil States International, Inc.*^		3,115,896
	101,000	Rowan Cos., Inc.*		3,063,330
	68,800	Tidewater, Inc.^		3,391,840
	52,400	Unit Corp.*		2,431,360

				20,116,790

	Food & Staples Retailing (0.0%):
	500	Casey’s General Stores, Inc.^		25,755

	Food Products (1.1%):
	30,901	Lancaster Colony Corp.^		2,142,675

	Gas Utilities (0.9%):
	35,200	Energen Corp.^		1,760,000

	Health Care Equipment & Supplies (2.6%):
	17,900	Hill-Rom Holdings, Inc.^		603,051
	51,200	STERIS Corp.^		1,526,784
	37,100	Teleflex, Inc.^		2,273,859
	23,000	West Pharmaceutical Services, Inc.^		872,850

				5,276,544

	Household Durables (3.0%):
	73,400	D.R. Horton, Inc.^		925,574
	29,000	Ethan Allen Interiors, Inc.^		687,590
	81,600	Hooker Furniture Corp.^		935,952
	174,900	La-Z-Boy, Inc.*		2,081,310
	33,400	M.D.C. Holdings, Inc.^		588,842
	69,600	M/I Homes, Inc.*		668,160

				5,887,428

	Industrial Conglomerates (1.3%):
	57,100	Carlisle Cos., Inc.		2,529,530

	Insurance (11.3%):
	300	American National Insurance Co.		21,909
	37,700	Arthur J. Gallagher & Co.^		1,260,688


Shares			Fair Value

	Common Stocks, continued
	Insurance, continued
	78,700	Aspen Insurance Holdings, Ltd.	$	2,085,550
	60,000	Hanover Insurance Group, Inc. (The)^		2,097,000
	29,200	HCC Insurance Holdings, Inc.		803,000
	99,200	Montpelier Re Holdings, Ltd.		1,760,800
	222,400	Old Republic International Corp.^		2,061,648
	179,000	Protective Life Corp.^		4,038,240
	7,000	RLI Corp.^		510,020
	64,000	StanCorp Financial Group, Inc.^		2,352,000
	124,600	Tower Group, Inc.^		2,513,182
	16,700	Transatlantic Holdings, Inc.		913,991
	68,600	Validus Holdings, Ltd.		2,160,900

				22,578,928

	Leisure Equipment & Products (0.8%):
	83,500	Brunswick Corp.^		1,508,010

	Life Sciences Tools & Services (0.3%):
	3,600	Mettler-Toledo International, Inc.*^		531,756

	Machinery (15.1%):
	51,400	Astec Industries, Inc.*		1,655,594
	92,800	Briggs & Stratton Corp.^		1,437,472
	18,500	CIRCOR International, Inc.		653,235
	63,000	EnPro Industries, Inc.*		2,077,740
	37,500	Gardner Denver, Inc.		2,889,750
	44,900	Graco, Inc.^		1,835,961
	62,000	Kaydon Corp.^		1,891,000
	64,971	Kennametal, Inc.^		2,372,741
	67,500	Lincoln Electric Holdings, Inc.^		2,640,600
	64,500	Mueller Industries, Inc.^		2,478,090
	35,200	Nordson Corp.		1,449,536
	34,100	Pentair, Inc.^		1,135,189
	15,900	Timken Co.		615,489
	123,400	Trinity Industries, Inc.^		3,709,404
	221,100	Wabash National Corp.*		1,733,424
	40,800	Watts Water Technologies, Inc., Class A^		1,395,768

				29,970,993

	Metals & Mining (3.1%):
	61,000	Commercial Metals Co.^		843,630
	69,300	Reliance Steel & Aluminum Co.^		3,374,217
	157,000	Steel Dynamics, Inc.^		2,064,550

				6,282,397

	Multiline Retail (1.7%):
	45,000	Fred’s, Inc.^		656,100
	49,800	J.C. Penney Co., Inc.^		1,750,470
	93,700	Saks, Inc.*^		913,575
	17,800	Tuesday Morning Corp.*^		61,410

				3,381,555


Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Oil, Gas & Consumable Fuels (1.0%):
	16,500	Arch Coal, Inc.^	$	239,415
	60,000	Overseas Shipholding Group, Inc.		655,800
	40,000	Teekay Shipping Corp.^		1,069,200

				1,964,415

	Professional Services (0.6%):
	47,400	Insperity, Inc.		1,201,590

	Road & Rail (1.1%):
	35,900	Genesee & Wyoming, Inc., Class A*^		2,174,822

	Semiconductors & Semiconductor Equipment (0.6%):
	113,400	Cohu, Inc.^		1,287,090

	Specialty Retail (7.6%):
	159,800	Brown Shoe Co., Inc.^		1,422,220
	71,100	Cato Corp.^		1,720,620
	183,300	Christopher & Banks Corp.		428,922
	104,700	GameStop Corp., Class A*^		2,526,411
	73,409	Group 1 Automotive, Inc.^		3,802,586
	85,000	Men’s Wearhouse, Inc. (The)^		2,754,850
	91,500	Pier 1 Imports, Inc.*^		1,274,595
	97,200	West Marine, Inc.*		1,130,436

				15,060,640

	Textiles, Apparel & Luxury Goods (0.0%):
	3,200	Maidenform Brands, Inc.*		58,560

	Thrifts & Mortgage Finance (0.8%):
	271,117	TrustCo Bank Corp.^		1,520,967

	Trading Companies & Distributors (0.5%):
	31,400	Applied Industrial Technologies, Inc.^		1,104,338

	Total Common Stocks (Cost $161,301,985)			192,592,584

	Securities Held as Collateral for Securities on Loan (27.7%):
$	55,018,067	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)		55,018,067

	Total Securities Held as Collateral for Securities on Loan (Cost $55,018,067)			55,018,067

	Unaffiliated Investment Company (3.1%):
	6,266,044	Dreyfus Treasury Prime Cash Management, 0.00%(b)		6,266,044

	Total Unaffiliated Investment Company (Cost $6,266,044)			6,266,044

	Total Investment Securities (Cost $222,586,096)(c) —127.6%			253,876,695
	Net other assets (liabilities) — (27.6)%			(54,857,047	)

	Net Assets — 100.0%		$	199,019,648

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	222,586,096

Investment securities, at value*	$	253,876,695
Cash		17,150
Interest and dividends receivable		187,262
Receivable for capital shares issued		197,925
Receivable for investments sold		29,415
Prepaid expenses		2,024

Total Assets		254,310,471

Liabilities:
Payable for investments purchased		55,972
Payable for capital shares redeemed		2,930
Payable for collateral received on loaned securities		55,018,067
Manager fees payable		125,586
Administration fees payable		6,317
Distribution fees payable		41,862
Custodian fees payable		1,909
Administrative and compliance services fees payable		1,646
Trustee fees payable		89
Other accrued liabilities		36,445

Total Liabilities		55,290,823

Net Assets	$	199,019,648

Net Assets Consist of:
Capital	$	214,837,235
Accumulated net investment income/(loss)		1,295,495
Accumulated net realized gains/(losses) from investment transactions		(48,403,681	)
Net unrealized appreciation/(depreciation) on investments		31,290,599

Net Assets	$	199,019,648

Shares of beneficial interest (unlimited number of shares authorized, no par value)		12,471,325
Net Asset Value (offering and redemption price per share)	$	15.96

*	Includes securities on loan of $53,346,244.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	3,569,031
Income from securities lending		74,546
Foreign withholding tax		(980	)

Total Investment Income		3,642,597

Expenses:
Manager fees		1,608,170
Administration fees		84,942
Distribution fees		536,056
Custodian fees		12,428
Administrative and compliance services fees		12,013
Trustee fees		20,148
Professional fees		21,391
Shareholder reports		43,289
Other expenses		8,662

Total expenses		2,347,099

Net Investment Income/(Loss)		1,295,498

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		14,093,276
Change in unrealized appreciation/depreciation on investments		(24,528,593	)

Net Realized/Unrealized Gains/(Losses) on Investments		(10,435,317	)

Change in Net Assets Resulting From Operations	$	(9,139,819	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Franklin Small Cap Value Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

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.

such, the value of these investments may not be sufficient, when liquidated, to repay the borrower when the loaned security is returned. 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 Allianz Investment Management LLC (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. Securities on loan at December 31, 2011 are presented on the Fund’s Schedule of Portfolio Investments (“Schedule”). The average outstanding amount of securities on loan was $55.1 million for the year ended December 31, 2011.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $7,365 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

Pursuant to a portfolio management agreement between the Manager, Franklin Advisory Services, LLC (“Franklin”), and the Trust, Franklin 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $3,200 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

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 which are then typically categorized as Level 2 in the fair value hierarchy.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $223,889,173. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $14,091,197 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

Effective at close of business on February 24, 2012, Federated Global Investment Management Corp. (“Federated”) replaced Franklin Advisory Services, LLC (“Franklin”) as the subadviser to the AZL^® Franklin Small Cap Value Fund and the following name change was effective at close of business on February 24, 2012.

We have audited the accompanying statement of assets and liabilities of AZL Franklin Small Cap Value Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

(2) The investment performance of the Funds, the Manager and the Subadvisers. In connection with every in-person quarterly Board of Trustees meeting, Trustees receive extensive information on the performance results of each of the Funds. This includes, for example, performance information on all of the Funds for the previous quarter, and previous one, three and five-year periods, and since inception. (For Funds which have been in existence for less than five years, Trustees may receive performance information on comparable funds managed by the particular Subadviser for periods prior to the creation of a particular Fund.) Such performance information includes information on absolute total return, performance versus Subadvisers’ comparable fund(s), performance versus the appropriate benchmark(s), and performance versus peer groups. For example, in connection with the Board of Trustees meeting held October 26, 2011, the Manager reported that for the three year period ended June 30, 2011, ten Funds were in the top 40%, six were in the middle 20% and five were in the bottom 40%, and for the one year period ended June 30, 2011, nine Funds were in the top 40%, eight were in the middle 20%, and 11 were in the bottom 40%. The Manager also reported that for the five year period ended June 30, 2011, nine Funds were in the top 40%, three were in the middle 20%, and seven were in the bottom 40%. At the Board of Trustees meeting held October 26, 2011, the Trustees determined that the overall investment performance of the Funds was acceptable.

(3) The costs of services to be provided and profits to be realized by the Manager and the Subadvisers and their affiliates from their relationship with the Funds. The Manager has supplied information to the Board of Trustees pertaining to the level of investment advisory fees to which the Funds are subject. The Manager has agreed to temporarily “cap” Fund expenses at certain levels, and information is provided to Trustees setting forth “contractual” advisory fees and “actual” fees after taking expense caps into account. Based upon the information provided, the “actual” advisory fees payable by the Funds overall are generally comparable to the average level of fees paid by Fund peer groups. For the 29 Funds reviewed by the Board of Trustees in the fall of 2011, 24 Funds paid “actual” advisory fees in a percentage amount within the 65^th percentile or lower for each Fund’s applicable category. The Trustees recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The Board has concluded that the advisory fees to be paid to the Manager by the Funds are not unreasonable.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50^th percentile; (2) three of the Funds were between the 50^th and 65^th percentiles; (3) for three of the Funds with expense ranks above the 65^th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65^th percentile or below; (4) for one Fund with an expense rank above the 65^th percentile, the Manager expects such Fund to be below the 65^th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65^th percentile, the Manager reported that the peer group makes for poor comparability.

Following a recommendation by the Manager, at an “in-person” Board of Trustees meeting held December 7, 2011, the Board of Trustees approved Federated Global Investment Management Corp. (“Federated”) to replace Franklin Advisory Services, LLC as the Subadviser to the AZL Franklin Small Cap Value Fund (the “Fund”). This change is expected to occur in February, 2012, at which time the name of the Fund will be changed to “AZL Federated Clover Small Value Fund.”

Key factors in the Manager’s recommendation include Federated’s: (1) sound philosophy, management team, and process; (2) consistent performance driven by stock selection; (3) investment process which has led to strong absolute and risk-adjusted returns relative to peer performance; and that (4) following the retention of Federated, the shareholder fee structure will remain unchanged.

At the Board of Trustees meeting on December 7, 2011, the Trustees were provided with information on Federated’s investment philosophy and investment process, and the Federated team which will be responsible for managing the Fund. The Trustees received historical performance information which indicated that a Federated managed fund (which has been managed by personnel and pursuant to the process which will be used for the Fund) significantly outperformed the Fund for the last two, three, four and five year periods ending September 30, 2011. Other information supplied indicated that over the five year period ended September 30, 2011, the Federated managed fund had strong risk adjusted returns.

At the Board of Trustees meeting on December 7, 2011, the Trustees were provided with information that the change in Subadvisers will not have an impact on shareholder fees. Under the new Subadvisory Agreement fee schedule, there will be a maximum reduction of five basis points, but the Manager’s fee under the Advisory Agreement will be unchanged. The Trustees were supplied with information which indicated that following the change in Subadvisers, the Fund will continue to have a total expense ratio in the 38^th percentile in the category of Small Cap Value Funds.

At the meeting on December 7, 2011, the Board of Trustees reaffirmed their conclusions on the “factors” discussed in (1) through (5) above to the extent relevant in connection with the decision to retain Federated as the new Subadviser to the Fund.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon , Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® Franklin Templeton Founding Strategy Plus Fund returned –1.83%. That compared to a 4.98% total return for its benchmark, the Balanced Composite Index, which is comprised of a 60% weighting in the S&P 500 Index¹ and a 40% weighting in the Barclays Capital U.S. Aggregate Bond Index².

The Fund invests in a combination of subportfolios, or strategies, each of which is managed by a Franklin Templeton asset manager. Two of the strategies invest primarily in U.S. and foreign equity securities, one portfolio invests in U.S. stocks and bonds, and the fourth portfolio invests in foreign fixed-income securities. The Fund generally makes equal allocations–approximately 25%–to each of the following four strategies:

•

Franklin Mutual Shares Strategy

•

Templeton Growth Strategy

•

Franklin Income Strategy

•

Templeton Global Bond Strategy

U.S. equity markets made a small gain during the year with wide variations among sectors, while international developed and emerging markets declined. Global equity markets reacted to several significant developments, including the European debt crisis, debate over raising the U.S. debt ceiling, geopolitical factors surrounding populist uprisings in the Middle East and North Africa, the aftermath of the earthquake and tsunami in Japan and generally slowing global growth.

In the fixed income markets, U.S. Treasuries performed well due to their perception as a safe haven. The performance of most non-Treasury fixed income sectors dragged because of continued investor uncertainty regarding regulatory reform, increased regulation and mortgage market weakness. Key domestic fixed income sectors contributing to the Fund’s

absolute performance included capital goods, consumer non-cyclical, and consumer cyclical. Sectors detracting from the Fund’s absolute performance included transportation and basic industry.

The Templeton Global Bond Strategy interest rate positioning boosted the Fund’s absolute performance. However, the overall currency positions hurt absolute and relative performance, but its global sovereign credit exposure bolstered returns.*

The Fund’s performance relative to its composite benchmark benefited from stock selection in the consumer discretionary sector, overweighting in health care and underweighting in the materials sector. Nevertheless, financials stocks, including a large U.S.-based banking conglomerate, declined generally due to worries about the European sovereign debt crisis and detracted from absolute results. Furthermore, many investors shunned industrial stocks as global growth began to slow, and a position in a large industrial conglomerate performed poorly, hurting the Fund’s returns.*

Past performance does not guarantee future results.

¹	The Standard & Poor’s 500 Index (“S&P 500”) is representative 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.

Fund Objective

The Fund’s investment objective is to seek long-term capital appreciation, with income as a secondary goal. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing in a combination of subportfolios or strategies.

Investment Concerns

Small- to mid-capitalization companies typically have a higher risk of failure and historically have experienced a greater degree of volatility.

Investing in derivatives instruments involves risks that may be different from or greater than the risk associated with investing directly in securities or other traditional instruments.

Emerging market investing may be subject to additional economic, political, liquidity, and currency risks not associated with more developed countries.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

The chart above represents a comparison of a hypothetical investment in the Fund versus a similar investment in the Fund’s benchmark, as well as the two component indices of the Fund’s benchmark, and represents the reinvestment of dividends and capital gains in the Fund.

Average Annual Total Returns as of December 31, 2011


	1 Year			Since Inception (10/23/09)
AZL^® Franklin Templeton Founding Strategy Plus Fund		–1.83	%		4.73	%
S&P 500 Index		2.11	%		9.46	%
Barclays Capital U.S. Aggregate Bond Index		7.84	%		6.66	%
Balanced Composite Index		4.98	%		8.90	%

Expense Ratio


	Gross
AZL^® Franklin Templeton Founding Strategy Plus Fund		1.26	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.20% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against a composite index (the “Balanced Composite Index”), which is comprised of 60% of the Standard & Poor’s 500 Index (“S&P 500”) and 40% of the Barclays Capital U.S. Aggregate Bond Index. The S&P 500 is representative 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 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 the deduction of fees for services provided to the Fund. Investors cannot invest directly in an index.

As a shareholder of the AZL Franklin Templeton Founding Strategy Plus Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (52.3%):
	Aerospace & Defense (0.9%):
	74,880	BAE Systems plc	$	330,093
	2,670	Boeing Co. (The)		195,845
	2,520	Embraer SA, ADR		63,554
	2,362	Gencorp, Inc.*		12,566
	3,520	Goodrich Corp.		435,424
	22,590	Raytheon Co.		1,092,904
	16,510	Thales SA		519,431

				2,649,817

	Air Freight & Logistics (0.4%):
	19,100	Deutsche Post AG		293,621
	2,510	FedEx Corp.		209,610
	13,845	TNT Express NV		103,163
	14,659	TNT NV		46,445
	5,950	United Parcel Service, Inc., Class B		435,481

				1,088,320

	Airlines (0.5%):
	58,520	Deutsche Lufthansa AG, Registered Shares		695,539
	308,140	International Consolidated Airlines Group SA*		702,165

				1,397,704

	Auto Components (0.2%):
	8,720	Compagnie Generale DES Establissements Michelin SCA, Class B		512,572

	Automobiles (0.7%):
	1,698	Daimler AG, Registered Shares		74,527
	26,356	General Motors Co.*		534,236
	207,000	Mazda Motor Corp.*		365,213
	54,600	Nissan Motor Co., Ltd.		490,193
	21,100	Toyota Motor Corp.		702,406

				2,166,575

	Beverages (1.2%):
	17,126	Coca-Cola Enterprises, Inc.		441,508
	10,000	Diageo plc		218,167
	20,201	Dr Pepper Snapple Group, Inc.		797,535
	16,133	PepsiCo, Inc.		1,070,425
	12,990	Pernod Ricard SA		1,202,160

				3,729,795

	Biotechnology (1.0%):
	42,762	Amgen, Inc.		2,745,748
	58,940	Savient Pharmaceuticals, Inc.*^		131,436

				2,877,184

	Building Products (0.2%):
	21,705	Owens Corning, Inc.*^		623,368

	Capital Markets (0.8%):
	13,620	Bank of New York Mellon Corp.		271,174
	24,940	Credit Suisse Group AG, Registered Shares		585,380


Shares			Fair Value

	Common Stocks, continued
	Capital Markets, continued
	85,127	Morgan Stanley	$	1,287,971
	72,600	Nomura Holdings, Inc.		219,391

				2,363,916

	Chemicals (0.6%):
	15,231	Akzo Nobel NV^		732,752
	4,787	Linde AG		712,052
	10,000	LyondellBasell Industries NV, Class A		324,900

				1,769,704

	Commercial Banks (2.5%):
	19,901	Banco Santander SA		150,341
	46,750	Barclays plc		126,620
	9,040	BNP Paribas SA		353,857
	62,420	Credit Agricole SA		351,153
	3,625	Danske Bank A/S		46,173
	47,000	DBS Group Holdings, Ltd.		416,455
	76,092	HSBC Holdings plc		576,054
	38,540	HSBC Holdings plc		292,509
	8,000	ICICI Bank, Ltd., Sponsored ADR		211,440
	449,361	Intesa Sanpaolo		746,279
	20,557	KB Financial Group, Inc.*		649,297
	5,000	M&T Bank Corp.^		381,700
	21,832	PNC Financial Services Group, Inc.		1,259,051
	46,928	UniCredit SpA		386,852
	62,871	Wells Fargo & Co.		1,732,725

				7,680,506

	Commercial Services & Supplies (0.1%):
	239,690	Rentokil Initial plc*		232,192

	Communications Equipment (1.2%):
	64,810	Brocade Communications Systems, Inc.*		336,364
	128,673	Cisco Systems, Inc.		2,326,408
	10,430	Motorola Mobility Holdings, Inc.*		404,684
	66,150	Telefonaktiebolaget LM Ericsson, B Shares		672,318

				3,739,774

	Computers & Peripherals (0.5%):
	33,010	Dell, Inc.*		482,936
	13,170	Hewlett-Packard Co.		339,259
	38,880	Seagate Technology plc		637,632

				1,459,827

	Construction & Engineering (0.0%):
	13,760	Carillion plc		64,000

	Construction Materials (0.3%):
	51,641	CRH plc		1,025,107

	Consumer Finance (0.3%):
	16,300	American Express Co.		768,871


Shares			Fair Value

	Common Stocks, continued
	Diversified Financial Services (1.7%):
	75,870	Bank of America Corp.	$	421,837
	1,251	Bond Street Holdings LLC, Class A*(a)		22,518
	13,131	Canary Wharf Group plc*(a)		48,189
	9,695	CIT Group, Inc.*		338,065
	41,273	Citigroup, Inc.		1,085,893
	7,222	Deutsche Boerse AG*		378,581
	97,552	ING Groep NV*		695,095
	29,010	JPMorgan Chase & Co.		964,582
	14,730	NYSE Euronext		384,453
	74,639	UBS AG, Registered Shares*		886,867

				5,226,080

	Diversified Telecommunication Services (1.1%):
	20,820	AT&T, Inc.		629,597
	4,000	CenturyTel, Inc.		148,800
	7,020	China Telecom Corp., Ltd., Sponsored ADR^		401,053
	40,700	France Telecom SA		636,868
	6,473	Frontier Communications Corp.^		33,336
	343,520	Singapore Telecommunications, Ltd.		818,977
	30,361	Telefonica SA		523,901
	84,310	Telstra Corp., Ltd.		286,919

				3,479,451

	Electric Utilities (1.8%):
	5,930	American Electric Power Co., Inc.		244,968
	22,590	Duke Energy Corp.^		496,980
	30,636	E.ON AG		658,480
	11,202	Entergy Corp.		818,306
	19,199	Exelon Corp.		832,661
	4,000	FirstEnergy Corp.		177,200
	15,080	GDF Suez		410,085
	11,750	NextEra Energy, Inc.		715,340
	9,000	PPL Corp.		264,780
	9,722	Prime ATET&D Holdings No. 1 Pty., Ltd.(a)(b)		—
	8,770	Progress Energy, Inc.		491,295
	10,000	Southern Co.		462,900

				5,572,995

	Electrical Equipment (0.2%):
	24,090	Alstom SA		726,385

	Electronic Equipment, Instruments & Components (0.4%):
	41,590	Flextronics International, Ltd.*		235,399
	31,071	TE Connectivity, Ltd.		957,298

				1,192,697

	Energy Equipment & Services (0.09%):
	7,850	Baker Hughes, Inc.		381,824
	6,886	Ensco plc, Sponsored ADR		323,091
	10,290	Halliburton Co.		355,108
	22,980	Noble Corp.		694,456


Shares			Fair Value

	Common Stocks, continued
	Energy Equipment & Services, continued
	1,500	Schlumberger, Ltd.	$	102,465
	17,354	Transocean, Ltd.		666,220
	6,000	Weatherford International, Ltd.*		87,840

				2,611,004

	Food & Staples Retailing (1.9%):
	74,951	CVS Caremark Corp.		3,056,502
	44,965	Kroger Co. (The)		1,089,052
	134,760	Tesco plc		843,443
	10,438	Wal-Mart Stores, Inc.		623,775

				5,612,772

	Food Products (0.9%):
	62,652	Cable & Wireless Communications plc		37,071
	20,176	General Mills, Inc.		815,312
	47,733	Kraft Foods, Inc., Class A		1,783,305
	2,220	Nestle SA, Registered Shares		127,497

				2,763,185

	Gas Utilities (0.0%):
	2,870	AGL Resources, Inc.		121,286

	Health Care Equipment & Supplies (0.9%):
	94,179	Boston Scientific Corp.*		502,916
	57,014	Medtronic, Inc.		2,180,785

				2,683,701

	Health Care Providers & Services (0.6%):
	5,536	Community Health Systems, Inc.*		96,603
	10,899	Coventry Health Care, Inc.*		331,003
	5,440	Quest Diagnostics, Inc.		315,846
	29,117	Tenet Healthcare Corp.*		149,370
	20,588	UnitedHealth Group, Inc.		1,043,400

				1,936,222

	Household Durables (0.1%):
	21,380	D.R. Horton, Inc.^		269,602
	18,737	Persimmon plc		136,172

				405,774

	Independent Power Producers & Energy Traders (0.2%):
	30,629	NRG Energy, Inc.*		554,997

	Industrial Conglomerates (1.2%):
	242,000	Citic Pacific, Ltd.		433,902
	98,120	General Electric Co.		1,757,329
	49,230	Koninklijke Philips Electronics NV		1,031,519
	6,574	Orkla ASA		48,948
	3,940	Siemens AG		376,779

				3,648,477


Shares			Fair Value

	Common Stocks, continued
	Insurance (2.3%):
	20,997	ACE, Ltd.	$	1,472,310
	139,200	AIA Group, Ltd.		433,879
	883	Alleghany Corp.*^		251,911
	32,150	American International Group, Inc.*		745,880
	48,053	AXA SA		619,206
	3,604	CNO Financial Group, Inc.*		22,741
	15,246	MetLife, Inc.		475,370
	4,840	Muenchener Rueckversicherungs-Gesellschaft AG, Registered Shares		593,600
	8,188	Old Republic International Corp.^		75,903
	19,114	QBE Insurance Group, Ltd.		253,012
	4,760	RenaissanceRe Holdings, Ltd.		354,001
	13,810	Swiss Re AG*		703,549
	980	White Mountains Insurance Group, Ltd.		444,391
	1,971	Zurich Financial Services AG		445,224

				6,890,977

	Internet Software & Services (0.2%):
	1,160	Google, Inc., Class A*		749,244

	Leisure Equipment & Products (0.1%):
	15,868	Mattel, Inc.		440,496

	Life Sciences Tools & Services (0.1%):
	3,100	Lonza Group AG, Registered Shares		182,477

	Machinery (0.4%):
	1,650	Caterpillar, Inc.		149,490
	3,788	Federal Signal Corp.*		15,720
	17,446	Oshkosh Corp.*		372,996
	7,972	Stanley Black & Decker, Inc.		538,907

				1,077,113

	Marine (0.4%):
	120	A.P. Moller - Maersk A/S, Class B		789,778
	13,450	Huntington Ingalls Industries, Inc.*^		420,716

				1,210,494

	Media (3.3%):
	61,652	British Sky Broadcasting Group plc		700,438
	54,210	Comcast Corp., Special Class A		1,277,188
	3,910	Comcast Corp., Class A		92,706
	132,825	News Corp., Class A		2,369,598
	10,276	News Corp., Class B		186,818
	47,530	Reed Elsevier NV		552,740
	28,648	Time Warner Cable, Inc.		1,821,153
	14,330	Time Warner, Inc.		517,886
	36,180	Viacom, Inc., Class B		1,642,934


Shares			Fair Value

	Common Stocks, continued
	Media, continued
	21,550	Vivendi	$	470,403
	6,700	Walt Disney Co. (The)		251,250

				9,883,114

	Metals & Mining (0.7%):
	3,000	AngloGold Ashanti, Ltd., Sponsored ADR		127,350
	148,437	Aviva plc		688,951
	5,000	Barrick Gold Corp.		226,250
	2,000	Freeport-McMoRan Copper & Gold, Inc.		73,580
	1,000	Nucor Corp.		39,570
	1,152	POSCO		381,799
	24,164	ThyssenKrupp AG		553,075

				2,090,575

	Multi-Utilities (0.9%):
	9,270	Dominion Resources, Inc.		492,051
	21,020	PG&E Corp.		866,444
	12,060	Public Service Enterprise Group, Inc.		398,101
	11,070	Sempra Energy		608,850
	3,650	TECO Energy, Inc.		69,861
	12,390	Xcel Energy, Inc.		342,460

				2,777,767

	Multiline Retail (0.5%):
	8,890	Kohl’s Corp.		438,721
	77,970	Marks & Spencer Group plc		376,072
	12,880	Target Corp.		659,714

				1,474,507

	Office Electronics (0.5%):
	41,100	Konica Minolta Holdings, Inc.		306,128
	157,160	Xerox Corp.		1,250,994

				1,557,122

	Oil, Gas & Consumable Fuels (5.6%):
	2,000	Alpha Natural Resources, Inc.*		40,860
	10,440	Apache Corp.		945,655
	183,601	BP plc		1,309,051
	18,160	BP plc, Sponsored ADR		776,158
	29,300	Canadian Oil Sands Trust		668,851
	10,660	Chevron Corp.		1,134,224
	8,650	ConocoPhillips		630,326
	21,515	El Paso Corp.		571,654
	31,256	Eni SpA		645,533
	10,000	Exxon Mobil Corp.		847,600
	52,398	Marathon Oil Corp.		1,533,690
	15,674	Marathon Petroleum Corp.		521,787
	10,370	Murphy Oil Corp.		578,024
	50,940	OAO Gazprom, Sponsored GDR		544,090
	9,010	Petroleo Brasileiro SA, Sponsored ADR		211,645


Shares			Fair Value

	Common Stocks, continued
	Oil, Gas & Consumable Fuels, continued
	34,472	Royal Dutch Shell plc, A Shares(a)(b)	$	—
	38,349	Royal Dutch Shell plc, A Shares		1,395,148
	330	Royal Dutch Shell plc, A Shares		12,129
	32,218	Royal Dutch Shell plc, B Shares		1,225,857
	6,140	Royal Dutch Shell plc, ADR		448,773
	3,300	Spectra Energy Corp.		101,475
	19,938	StatoilHydro ASA		510,889
	43,300	Talisman Energy, Inc.		551,825
	16,820	Total SA		858,407
	23,186	Williams Cos., Inc. (The)		765,602

				16,829,253

	Paper & Forest Products (0.6%):
	4,464	Domtar Corp.		356,941
	39,927	International Paper Co.		1,181,839
	4,589	MeadWestvaco Corp.		137,441

				1,676,221

	Pharmaceuticals (5.6%):
	5,970	Abbott Laboratories		335,693
	25,306	Eli Lilly & Co.		1,051,718
	48,190	GlaxoSmithKline plc		1,098,645
	12,482	Hospira, Inc.*^		379,078
	12,500	Johnson & Johnson Co.		819,750
	121,654	Merck & Co., Inc.		4,586,356
	6,860	Merck KGaA		683,809
	2,560	Novartis AG, Registered Shares		146,290
	179,008	Pfizer, Inc.		3,873,733
	14,320	Roche Holding AG		2,422,538
	16,620	Sanofi-Aventis		1,215,957
	11,530	Teva Pharmaceutical Industries, Ltd., Sponsored ADR		465,351

				17,078,918

	Professional Services (0.3%):
	1,970	Adecco SA, Registered Shares		82,131
	24,750	Hays plc		24,518
	24,750	Randstad Holding NV		728,482

				835,131

	Real Estate Investment Trusts (REITs) (0.1%):
	376	Alexander’s, Inc.		139,131
	28,600	Westfield Retail Trust		72,740

				211,871

	Real Estate Management & Development (0.1%):
	22,000	Cheung Kong Holdings, Ltd.		260,684
	3,700	Forestar Group, Inc.*		55,981
	8,240	Swire Pacific, Ltd., Class A		99,220

				415,885

	Road & Rail (0.2%):
	9,860	East Japan Railway Co.		627,568

	Semiconductors & Semiconductor Equipment (0.9%):
	43,000	Intel Corp.		1,042,750
	1,053	Samsung Electronics Co., Ltd.		967,460


Shares			Fair Value

	Common Stocks, continued
	Semiconductors & Semiconductor Equipment, continued
	262,000	Taiwan Semiconductor Manufacturing Co., Ltd.	$	655,443

				2,665,653

	Software (1.8%):
	2,010	Check Point Software Technologies, Ltd.*^		105,605
	108,522	Microsoft Corp.		2,817,231
	5,717	Nintendo Co., Ltd.		788,333
	24,440	Oracle Corp.		626,886
	12,060	SAP AG		637,576
	36,164	Symantec Corp.*		565,967

				5,541,598

	Specialty Retail (0.3%):
	4,890	Home Depot, Inc.		205,576
	147,370	Kingfisher plc		572,825
	670	USS Co., Ltd.		60,567

				838,968

	Tobacco (2.4%):
	44,586	Altria Group, Inc.		1,321,975
	46,095	British American Tobacco plc		2,185,196
	48,826	Imperial Tobacco Group plc		1,845,258
	6,722	Lorillard, Inc.		766,308
	9,599	Philip Morris International, Inc.		753,329
	10,937	Reynolds American, Inc.		453,011

				7,325,077

	Trading Companies & Distributors (0.1%):
	15,900	ITOCHU Corp.		161,267
	6,270	Wolseley plc		206,619

				367,886

	Wireless Telecommunication Services (1.6%):
	36,000	China Mobile, Ltd.		351,010
	4,760	SK Telecom Co., Ltd., ADR		64,784
	275,520	Sprint Nextel Corp.*		644,717
	38,060	Turkcell Iletisim Hizmetleri AS, Sponsored ADR*		447,586
	1,156,259	Vodafone Group plc		3,209,569

				4,717,666

	Total Common Stocks (Cost $163,531,430)			158,149,839

	Preferred Stocks (0.1%):
	Diversified Financial Services (0.0%):
	6,800	GMAC Capital Trust I, Series 2, 0.51%, Callable 2/15/16 @ 25		131,512

	Metals & Mining (0.1%):
	9,730	Vale SA, Sponsored ADR, Preferred Shares, 0.30%,		200,438

	Total Preferred Stocks (Cost $440,934)			331,950


Shares or Principal Amount			Fair Value

	Equity Linked Notes (0.2%):
	Capital Markets (0.1%):
$	5,000	UBS AG into Newmont Mining Corp., 8.00%,*(c)	$	304,050

	Oil, Gas & Consumable Fuels (0.1%):
	10,000	Deutsche Bank AG into Chesapeake Energy Corp., 8.50%,(c)		229,130

	Total Equity Linked Notes (Cost $624,200)			533,180

	Convertible Preferred Stocks (0.7%):
	Automobiles (0.1%):
	6,000	General Motors Co., Series B, 0.59%,		205,500

	Commercial Banks (0.0%):
	116	Wells Fargo & Co., Series L, Class A, 18.75%,		122,380

	Diversified Financial Services (0.2%):
	800	Bank of America Corp., Series L, 18.13%,		630,416
	1,500	Citigroup, Inc., 1.88%,		121,875

				752,291

	Insurance (0.1%):
	4,200	MetLife, Inc., 0.94%,		258,804

	Metals & Mining (0.1%):
	7,000	AngloGold Ashanti Holdings Plc, 0.75%,		334,110

	Oil, Gas & Consumable Fuels (0.2%):
	100	Chesapeake Energy Corp., Series A, 5.75%,(c)		98,000
	3,500	SandRidge Energy, Inc., 7.00%,(d)		416,937

				514,937

	Real Estate Investment Trusts (REITs) (0.0%):
	2,500	FelCor Lodging Trust, Inc., Series A, 0.49%,		55,391

	Total Convertible Preferred Stocks (Cost $2,382,563)			2,243,413

	Convertible Bonds (0.3%):
	Construction Materials (0.2%):
$	455,000	Cemex SAB de C.V., 3.25%, 3/15/16(c)		296,319
	300,000	Cemex SAB de C.V., 3.75%, 3/15/18(c)		194,625

				490,944

	Real Estate Investment Trusts (REITs) (0.0%):
	97,000	iStar Financial, Inc., 0.87%, 10/1/12(e)		87,300


Principal Amount			Fair Value

	Convertible Bonds, continued
	Real Estate Management & Development (0.1%):
$	500,000	Forest City Enterprises, Inc., 4.25%, 8/15/18(c)	$	436,250

	Total Convertible Bonds (Cost $1,344,321)			1,014,494

	Floating Rate Loans (2.1%):
	Automobiles (0.2%):
	698,250	Chrysler Group LLC, Tranche B Term Loan, 6.00%, 5/24/17(e)		659,323

	Electric Utilities (0.3%):
	1,606,986	Texas Competitive Electric Holdings Co. LLC, 4.78%, 10/10/17(e)		1,014,120

	Food & Staples Retailing (0.2%):
	500,000	BJ’s Wholesale Club, Inc., 1st Lien Term Loan B, 7.00%, 9/29/18(e)		500,890

	Independent Power Producers & Energy Traders (0.3%):
	349,125	Dynegy Midwest Generation LLC, Term Loan B, 9.25%, 8/5/16(e)		350,598
	648,375	Dynegy Power LLC, Term Loan, 9.25%, 8/5/16(e)		655,397

				1,005,995

	IT Services (0.1%):
	498,750	Go Daddy Operating Co., LLC, Initial Term Loan, 7.00%, 9/28/18(e)		498,127

	Media (0.5%):
	54,885	Clear Channel Communications, Inc., Tranche C, 3.95%, 1/19/16(e)		39,243
	53,000	Clear Channel Communications, Inc., Delayed Draw Term Loan 2, 3.95%, 1/29/16(e)		37,876
	354,000	Clear Channel Communications, Inc., Tranche B, 3.95%, 1/29/16(e)		261,224
	1,000,000	Cumulus Media Holdings, Inc., 2nd Lien Term Loan, 7.50%, 9/16/18(e)		971,250
	33,000	Tribune Co., , 6/4/14(f)		18,628
	223,000	Tribune Co., Tranche B Term Loan, 6/4/14(f)		129,804

				1,458,025


Principal Amount			Fair Value

	Floating Rate Loans, continued
	Real Estate Investment Trusts (REITs) (0.2%):
$	35,321	iStar Financial, Inc., 5.00%, 6/28/13(e)	$	35,039
	526,000	iStar Financial, Inc., Term Loan A2, 7.00%, 6/30/14(e)		507,264

				542,303

	Real Estate Management & Development (0.1%):
	11,358	Realogy Corp., Synthetic LC Facility, 4.40%, 10/10/13(e)		10,542
	166,143	Realogy Corp., 4.69%, 10/10/16(e)		147,678
	50,000	Realogy Corp., 13.32%, 10/15/17(e)		50,000

				208,220

	Software (0.2%):
	500,000	Sophia LP / Sophia FInance, Inc., 7.00%, 7/31/18(e)		499,690

	Total Floating Rate Loans (Cost $6,722,583)			6,386,693

	Collateralized Mortgage Obligation (0.1%):
	477,662	Banc of America Large Loan, Inc., Series 2010, Class HLTN, 2.03%, 11/15/13(c)(e)		431,599

	Total Collateralized Mortgage Obligations (Cost $437,223)			431,599

	Corporate Bonds (11.2%):
	Airlines (0.2%):
	900,000	American Airlines, Inc., 7.50%, 3/15/16, Callable 3/15/13 @ 105.62(c)(f)		643,500

	Auto Components (0.1%):
	300,000	Goodyear Tire & Rubber Co., 8.25%, 8/15/20, Callable 8/15/15 @ 104.13^		327,000
	100,000	United Rentals (North America), Inc., 8.38%, 9/15/20, Callable 9/15/15 @ 104.19^		97,500

				424,500

	Chemicals (0.1%):
	100,000	Hexion US Finance Corp./ Hexion Nova Scotia Finance ULC, 8.88%, 2/1/18, Callable 2/1/14 @ 104.44		93,750
	100,000	Kerling plc, 10.63%, 2/1/17, Callable 2/1/14 @ 105.31(c)		114,528

				208,278


Principal Amount			Fair Value

	Corporate Bonds, continued
	Commercial Banks (0.2%):
$	500,000	M&T Bank Corp., Series D, 6.88%, 12/29/49, Callable 6/15/16 @ 100(c)	$	494,785

	Computers & Peripherals (0.5%):
	1,200,000	CDW LLC / CDW Finance Corp., 8.50%, 4/1/19, Callable 4/1/15 @ 104.25		1,209,000
	150,000	SunGard Data Systems, Inc., 7.63%, 11/15/20, Callable 11/15/15 @ 103.81		154,125
	47,520	Vanguard Health Systems, Inc., 10.90%, 2/1/16, Callable 2/1/13 @ 77.52		29,700

				1,392,825

	Construction Materials (0.2%):
	500,000	Vulcan Materials Co., 7.50%, 6/15/21^		540,000

	Containers & Packaging (0.3%):
	50,000	Berry Plastics Corp., 9.75%, 1/15/21, Callable 1/15/16 @ 104.88		49,875
	400,000	Building Materials Corp., 6.75%, 5/1/21, Callable 5/1/16 @ 103.38(c)		420,000
	300,000	Sealed Air Corp., 8.13%, 9/15/19, Callable 9/15/15 @ 104.06(c)		328,500
	100,000	Sealed Air Corp., 8.38%, 9/15/21, Callable 9/15/16 @ 104.19^(c)		110,500

				908,875

	Diversified Consumer Services (0.1%):
	200,000	Visant Corp., 10.00%, 10/1/17, Callable 10/1/13 @ 107.50		183,000

	Diversified Financial Services (1.0%):
	82,000	Capmark Financial Group, Inc., Series B, 9.00%, 9/30/15, Callable 2/6/12 @ 100(e)		83,025
	473	CIT Group, Inc., 7.00%, 5/1/15, Callable 1/1/12 @ 100		474
	391,000	CIT Group, Inc., 7.00%, 5/4/15, Callable 1/1/12 @ 100(c)		391,489
	991	CIT Group, Inc., 7.00%, 5/1/16, Callable 1/1/12 @ 100		991


Principal Amount			Fair Value

	Corporate Bonds, continued
	Diversified Financial Services, continued
$	1,080,000	CIT Group, Inc., 7.00%, 5/2/16, Callable 1/1/12 @ 100(c)	$	1,078,650
	296	CIT Group, Inc., 7.00%, 5/1/17, Callable 1/1/12 @ 100		296
	1,150,000	CIT Group, Inc., 7.00%, 5/2/17, Callable 1/1/12 @ 100(c)		1,148,562
	250,000	JPMorgan Chase & Co., Series 1, 7.90%, 4/29/49, Callable 4/30/18 @ 100(e)		266,173

				2,969,660

	Diversified Telecommunication Services (0.1%):
	50,000	Cequel Communications Holdings I LLC, 8.63%, 11/15/17, Callable 11/15/12 @ 106.47(c)		53,000
	100,000	Frontier Communications Corp., 8.50%, 4/15/20^		102,375

				155,375

	Electric Utilities (0.4%):
	1,165,000	Texas Competitive Electric Holdings Co. LLC, Series A, 10.25%, 11/1/15, Callable 2/9/12 @ 105.13(f)		413,575
	781,000	Texas Competitive Electric Holdings Co. LLC, 11.50%, 10/1/20, Callable 4/1/16 @ 105.75(c)		662,874
	134,000	Texas Competitive Electric Holdings Co. LLC, Series B, 15.00%, 4/1/21, Callable 10/1/15 @ 107.50		73,700
	12,551	Texas Competitive Electric Holdings Co. LLC, PIK, 10.50%, 11/1/16, Callable 11/1/12 @ 105.25(f)		4,487

				1,154,636

	Electronic Equipment, Instruments & Components (0.2%):
	500,000	Sanmina-SCI Corp., 7.00%, 5/15/19, Callable 5/15/14 @ 105.25^(c)		487,500

	Energy Equipment & Services (0.2%):
	100,000	Antero Resources Finance Corp., 9.38%, 12/1/17, Callable 12/1/13 @ 104.69		108,000
	300,000	Antero Resources Finance Corp., 7.25%, 8/1/19, Callable 8/1/14 @ 105.44(c)		307,500


Principal Amount			Fair Value

	Corporate Bonds, continued
	Energy Equipment & Services, continued
$	100,000	Green Field Energy Services, Inc., 13.00%, 11/15/16, Callable 11/15/14 @ 109.75(c)	$	97,000

				512,500

	Food & Staples Retailing (0.1%):
	81,000	Rite Aid Corp., 8.63%, 3/1/15, Callable 3/1/12 @ 102.16		78,165
	104,000	Rite Aid Corp., 9.38%, 12/15/15, Callable 6/15/12 @ 102.34		100,360

				178,525

	Food Products (0.1%):
	200,000	Dean Foods Co., 9.75%, 12/15/18, Callable 12/15/14 @ 104.88^		213,000
	135,000	Supervalu, Inc., 8.00%, 5/1/16^		139,387

				352,387

	Health Care Providers & Services (1.3%):
	282,000	Community Health Systems, Inc., 8.88%, 7/15/15, Callable 7/15/12 @ 102.22		291,165
	399,000	HCA, Inc., 6.50%, 2/15/16		404,985
	900,000	HCA, Inc., 6.50%, 2/15/20		933,750
	50,000	HCA, Inc., 7.88%, 2/15/20, Callable 8/15/14 @ 103.94^		54,000
	800,000	HCA, Inc., 7.50%, 2/15/22^		818,000
	100,000	Health Management Associates, Inc., 7.38%, 1/15/20, Callable 1/15/16 @ 103.69(c)		104,000
	100,000	Kinetic Concepts, Inc./KCI USA, Inc., 10.50%, 11/1/18, Callable 11/1/15 @ 105.25(c)		98,000
	300,000	Mylan, Inc., 6.00%, 11/15/18, Callable 11/15/14 @ 103(c)		308,625
	500,000	Tenet Healthcare Corp., 9.25%, 2/1/15		525,625
	50,000	Vanguard Health Holding LLC/Vanguard Health Holding, Inc., 8.00%, 2/1/18, Callable 2/1/14 @ 104		49,625


Principal Amount			Fair Value

	Corporate Bonds, continued
	Health Care Providers & Services, continued
$	300,000	Vanguard Health Holding LLC/Vanguard Health Holding, Inc., 7.75%, 2/1/19, Callable 2/1/14 @ 105.81	$	288,000

				3,875,775

	Hotels, Restaurants & Leisure (0.5%):
	100,000	CityCenter Holdings LLC/ CityCenter Finance Corp., 7.63%, 1/15/16, Callable 1/15/14 @ 103.81(c)		102,500
	422,233	CityCenter Holdings LLC/ CityCenter Finance Corp., PIK, 10.75%, 1/15/17, Callable 1/15/14 @ 105.38(c)		435,428
	500,000	ClubCorp Club Operations, Inc., 10.00%, 12/1/18, Callable 12/1/14 @ 105		480,000
	500,000	MGM Resorts International, 10.00%, 11/1/16^		525,000

				1,542,928

	Independent Power Producers & Energy Traders (0.5%):
	200,000	Calpine Corp., 7.88%, 7/31/20, Callable 7/31/15 @ 103.94(c)		215,500
	250,000	Calpine Corp., 7.50%, 2/15/21, Callable 11/1/15 @ 103.75(c)		267,500
	500,000	Calpine Corp., 7.88%, 1/15/23, Callable 1/15/17 @ 103.94(c)		537,500
	410,000	Dynegy Holdings, Inc., 7.50%, 6/1/15(f)		270,600
	50,000	Dynegy Holdings, Inc., 8.38%, 5/1/16(f)		33,250
	170,000	Dynegy Holdings, Inc., 7.75%, 6/1/19(f)		111,350
	120,000	NRG Energy, Inc., 7.38%, 1/15/17, Callable 1/15/12 @ 103.69		124,500
	115,000	RRI Energy, Inc., 7.88%, 6/15/17		110,975

				1,671,175

	Internet Software & Services (0.4%):
	25,000	CDW LLC/CDW Finance Corp., 11.00%, 10/12/15, Callable 2/9/12 @ 105.50		26,250
	250,000	CDW LLC/CDW Finance Corp., 12.54%, 10/12/17, Callable 10/15/12 @ 106.27		251,250


Principal Amount			Fair Value

	Corporate Bonds, continued
	Internet Software & Services, continued
$	58,808	First Data Corp., 10.55%, 9/24/15, Callable 2/6/12 @ 105.28	$	56,088
	47,000	First Data Corp., 11.25%, 3/31/16, Callable 2/9/12 @ 105.62^		39,010
	389,000	First Data Corp., 8.25%, 1/15/21, Callable 1/15/16 @ 104.13(c)		348,155
	600,000	First Data Corp., 12.63%, 1/15/21, Callable 1/15/16 @ 112.62(c)		522,000
	30,000	First Data Corp., PIK, 9.88%, 9/24/15, Callable 2/9/12 @ 104.94		28,200
	141,000	First Data Corp., PIK, 8.75%, 1/15/22, Callable 1/15/16 @ 104.38(c)		121,260

				1,392,213

	IT Services (0.1%):
	200,000	Sterling Merger, Inc., 11.00%, 10/1/19, Callable 10/1/15 @ 105.50(c)		195,000

	Machinery (0.4%):
	245,000	Aviation Capital Group, 6.75%, 4/6/21(c)		230,834
	500,000	Dynacast International LLC/Dynacast Finance, Inc., 9.25%, 7/15/19, Callable 7/15/15 @ 104.63(c)		470,000
	400,000	Manitowoc Co., Inc., 9.50%, 2/15/18, Callable 2/15/14 @ 104.75^		426,000
	100,000	RBS Global & Rexnord Corp., 8.50%, 5/1/18, Callable 5/1/14 @ 104.25		106,000

				1,232,834

	Media (1.3%):
	325,000	Cablevision Systems Corp., 8.63%, 9/15/17		359,938
	100,000	Cablevision Systems Corp., 7.75%, 4/15/18		106,000
	100,000	Cablevision Systems Corp., 8.00%, 4/15/20		107,250
	1,000,000	CCO Holdings LLC/CCO Holdings Capital Corp., 7.00%, 1/15/19, Callable 1/15/14 @ 105.25		1,042,500


Principal Amount			Fair Value

	Corporate Bonds, continued
	Media, continued
$	500,000	CCO Holdings LLC / CCO Holdings Capital Corp., 6.50%, 4/30/21, Callable 4/30/15 @ 104.88	$	506,250
	837,000	Clear Channel Communications, Inc., 9.00%, 3/1/21, Callable 3/1/16 @ 104.50		696,802
	112,000	Clear Channel Communications, Inc., PIK, 11.00%, 8/1/16, Callable 8/1/12 @ 105.50		70,560
	1,000,000	CSC Holdings LLC, 6.75%, 11/15/21(c)		1,052,500

				3,941,800

	Oil, Gas & Consumable Fuels (1.4%):
	100,000	ATP Oil & Gas Corp., 11.88%, 5/1/15, Callable 5/1/13 @ 111.88		65,750
	345,000	Chesapeake Energy Corp., 6.50%, 8/15/17		367,425
	200,000	Chesapeake Energy Corp., 6.88%, 8/15/18, Callable 8/15/13 @ 105.16^		214,000
	200,000	Chesapeake Energy Corp., 7.25%, 12/15/18^		221,000
	200,000	Energy Transfer Equity LP, 7.50%, 10/15/20		218,500
	500,000	Energy XXI Gulf Coast, Inc., 9.25%, 12/15/17, Callable 12/15/14 @ 104.63		542,500
	400,000	EXCO Resources, Inc., 7.50%, 9/15/18, Callable 9/15/14 @ 103.75		378,000
	100,000	Linn Energy LLC / Linn Energy Finance Corp., 8.63%, 4/15/20, Callable 4/15/15 @ 104.31		108,500
	500,000	Peabody Energy Corp., 6.25%, 11/15/21(c)		517,500
	600,000	Plains Exploration & Production Co., 6.75%, 2/1/22, Callable 2/1/17 @ 103.38		628,500
	135,000	SandRidge Energy, Inc., 4.00%, 4/1/14, Callable 2/9/12 @ 101(e)		131,197
	65,000	SandRidge Energy, Inc., 8.00%, 6/1/18, Callable 6/1/13 @ 104(c)		65,650
	500,000	SandRidge Energy, Inc., 8.75%, 1/15/20, Callable 1/15/15 @ 104.38		516,250


Principal Amount			Fair Value

	Corporate Bonds, continued
	Oil, Gas & Consumable Fuels, continued
$	400,000	W & T Offshore, Inc., 8.50%, 6/15/19, Callable 6/15/15 @ 104.25(c)	$	414,000

				4,388,772

	Pharmaceuticals (0.0%):
	100,000	Grifols, Inc., 8.25%, 2/1/18, Callable 2/1/14 @ 106.19		105,000

	Real Estate Investment Trusts (REITs) (0.1%):
	155,000	FelCor Lodging LP, 10.00%, 10/1/14		169,725
	55,000	iStar Financial, Inc., 8.63%, 6/1/13		50,875

				220,600

	Real Estate Management & Development (0.0%):
	48,000	Realogy Corp., 11.50%, 4/15/17, Callable 4/15/13 @ 105.75(g)		37,440
	39,000	Realogy Corp., 7.88%, 2/15/19, Callable 2/15/15 @ 103.94		33,930

				71,370

	Road & Rail (0.0%):
	19,000	Hertz Corp. (The), 8.88%, 1/1/14, Callable 2/9/12 @ 100^		19,095

	Semiconductors & Semiconductor Equipment (0.4%):
	271,000	Freescale Semiconductor, Inc., 9.25%, 4/15/18, Callable 4/15/14 @ 104.63(c)		289,631
	400,000	Freescale Semiconductor, Inc., 8.05%, 2/1/20, Callable 6/1/15 @ 104.03		376,000
	480,000	Freescale Semiconductor, Inc., 10.75%, 8/1/20, Callable 8/1/15 @ 105.38		500,400

				1,166,031

	Software (0.1%):
	400,000	Chrysler GP/Chrysler CG Co. Issuer, 8.25%, 6/15/21, Callable 6/15/16 @ 104.13^(c)		364,000

	Specialty Retail (0.1%):
	400,000	Academy, Ltd., 9.25%, 8/1/19, Callable 8/1/14 @ 106.94^(c)		395,000

	Tobacco (0.3%):
	300,000	Reynolds Group Issuer LLC/Reynolds Group Issuer, Inc., 7.88%, 8/15/19, Callable 8/15/15 @ 103.94(c)		313,500


Principal Amount			Fair Value

	Corporate Bonds, continued
	Tobacco, continued
$	200,000	Reynolds Group Issuer LLC/Reynolds Group Issuer, Inc., 9.88%, 8/15/19, Callable 8/15/15 @ 104.94(c)	$	194,000
	600,000	Reynolds Group Issuer LLC/Reynolds Group Issuer, Inc., 8.25%, 2/15/21, Callable 2/15/16 @ 104.13(c)		531,000

				1,038,500

	Wireless Telecommunication Services (0.5%):
	100,000	CommScope, Inc., 8.25%, 1/15/19, Callable 1/15/15 @ 104.13(c)		100,000
	500,000	Cricket Communications, Inc., 7.75%, 10/15/20, Callable 10/15/15 @ 103.88		437,500
	500,000	Sprint Nextel Corp., 9.00%, 11/15/18(c)		525,000
	500,000	Sprint Nextel Corp., 11.50%, 11/15/21(c)		495,000

				1,557,500

	Total Corporate Bonds (Cost $34,239,627)			33,783,939

	Foreign Bonds (19.3%):
	Chemicals (0.2%):
	500,000	Kinove German Bondco GmbH, 10.00%, 6/15/18, Callable 6/15/14 @ 107.50+(c)		575,873

	Commercial Banks (0.8%):
	130,000	Bank Negara Monetary Notes, Series 3511, 2.75%, 1/3/12+(g)		41,022
	530,000	Bank Negara Monetary Notes, Series 6711, 2.78%, 1/10/12+(h)		167,176
	40,000	Bank Negara Monetary Notes, Series 5211, 2.66%, 1/17/12+(h)		12,610
	40,000	Bank Negara Monetary Notes, Series 4211, 2.74%, 1/19/12+(h)		12,607
	60,000	Bank Negara Monetary Notes, Series 2711, 2.76%, 1/26/12+(h)		18,900
	160,000	Bank Negara Monetary Notes, Series 5411, 2.72%, 1/31/12+(h)		50,380
	750,000	Bank Negara Monetary Notes, Series 4811, 2.72%, 2/16/12+(h)		235,862


Principal Amount			Fair Value

	Foreign Bonds, continued
	Commercial Banks, continued
$	1,145,000	Bank Negara Monetary Notes, Series 0911, 2.72%, 2/21/12+(h)	$	359,933
	480,000	Bank Negara Monetary Notes, Series 4011, 2.70%, 3/8/12+(h)		150,676
	370,000	Bank Negara Monetary Notes, Series 4711, 2.66%, 4/5/12+(h)		115,887
	200,000	Bank Negara Monetary Notes, Seires 6111, 2.86%, 4/19/12+(h)		62,569
	15,000	Bank Negara Monetary Notes, Series 6511, 2.76%, 4/26/12+(h)		4,690
	210,000	Bank Negara Monetary Notes, Series 6811, 2.75%, 5/17/12+(h)		65,546
	1,830,000	Bank Negara Monetary Notes, Series 3111, 2.84%, 5/29/12+(h)		570,622
	50,000	Bank Negara Monetary Notes, Series 6211, 2.75%, 6/14/12+(h)		15,571
	250,000	Boparan Finance plc, 9.75%, 4/30/18, Callable 4/30/14 @ 107.31+(c)		260,437
	250,000	Boparan Finance plc, 9.88%, 4/30/18, Callable 4/30/14 @ 107.41+(c)		310,540

				2,455,028

	Sovereign Bonds (18.3%):
	340,000	Australian Government, Series 123, 5.75%, 4/15/12+		349,429
	25,000	Brazil Nota do Tesouro Nacional, Series NTNB, 0.00%, 5/15/13+(i)		29,094
	365,000	Brazil Nota do Tesouro Nacional, Series NTNB, 6.00%, 5/15/15+(i)		426,820
	1,200,000	Brazil Nota do Tesouro Nacional, Series NTNF, 1.72%, 1/1/17+(i)		618,581
	140,000	Brazil Nota do Tesouro Nacional, Series NTNB, 0.00%, 5/15/45+(i)		170,867
	3,025,000	Egypt Treasury Bill, Series 371, 10.33%, 1/17/12+(h)		498,480


Principal Amount			Fair Value

	Foreign Bonds, continued
	Sovereign Bonds, continued
$	525,000	Egypt Treasury Bill, Series 364, 12.02%, 2/21/12+(h)	$	85,033
	8,900,000	Hungary Government Bond, Series 13/D, 6.75%, 2/12/13+		35,901
	7,100,000	Hungary Government Bond, Series 13/E, 7.50%, 10/24/13+		28,608
	17,300,000	Hungary Government Bond, Series 14/C, 5.50%, 2/12/14+		66,250
	50,000,000	Hungary Government Bond, Series 14/D, 6.75%, 8/22/14+		194,245
	7,800,000	Hungary Government Bond, Series 15/A, 8.00%, 2/12/15+		30,900
	12,500,000	Hungary Government Bond, Series 16/C, 5.50%, 2/12/16+		44,760
	11,200,000	Hungary Government Bond, Series 17/B, 6.75%, 2/24/17+		41,079
	40,900,000	Hungary Government Bond, Series 17/A, 6.75%, 11/24/17+		145,596
	11,000,000	Hungary Government Bond, Series 19/A, 6.50%, 6/24/19+		37,112
	800,000	Hungary Government Bond, Series 20/A, 7.50%, 11/12/20+		2,835
	7,000,000	Hungary Government Bond, Series 22/A, 7.00%, 6/24/22+		23,720
	14,300,000	Hungary Treasury Bill, Series 12M, 5.69%, 8/22/12+(h)		55,952
	3,400,000,000	Indonesia Government, Series FR49, 9.00%, 9/15/13+		400,209
	5,300,000,000	Indonesia Government, Series FR34, 12.80%, 6/15/21+		862,006
	3,200,000,000	Indonesia Government, Series FR44, 10.00%, 9/15/24+		456,274
	3,300,000,000	Indonesia Government, Series FR47, 10.00%, 2/15/28+		467,778


Principal Amount			Fair Value

	Foreign Bonds, continued
	Sovereign Bonds, continued
$	1,680,000,000	Indonesia Treasury Bill, Series SP38, 4.44%, 9/14/12+(h)	$	178,185
	432,000	Irish Government, 4.00%, 1/15/14+		517,797
	280,000	Irish Government, 4.60%, 4/18/16+		321,989
	227,000	Irish Government, 4.50%, 10/18/18+		232,211
	374,000	Irish Government, 4.40%, 6/18/19+		381,463
	917,000	Irish Government, 5.90%, 10/18/19+		1,014,617
	202,000	Irish Government, 4.50%, 4/18/20+		200,136
	292,000	Irish Government, 5.00%, 10/18/20+		305,978
	397,000	Irish Government, 5.40%, 3/13/25+		404,465
	115,000	Israel Fixed Bond, Series 0312, 4.00%, 3/30/12+		31,189
	530,000	Israel Fixed Bond, Series 0313, 5.00%, 3/31/13+		148,261
	3,352,000	Israel Fixed Bond, Series 0913, 3.50%, 9/30/13+		899,057
	1,715,000	Israel Treasury Bill, Series 0112, 2.37%, 1/4/12+(h)		449,951
	475,000	Israel Treasury Bill, Series 0212, 3.02%, 2/1/12+(h)		124,385
	685,000	Israel Treasury Bill, Series 0252, 3.10%, 2/29/12+(h)		179,017
	640,000	Israel Treasury Bill, Series 0412, 3.20%, 4/4/12+(h)		166,887
	2,250,000	Israel Treasury Bill, Series 512, 3.32%, 5/2/12+(h)		585,472
	1,770,000	Kommuninvest I Sverige AB, Series K1210, 1.75%, 10/8/12, MTN+		257,137
	2,045,000,000	Korea Treasury Bond, Series 1206, 4.00%, 6/10/12+		1,780,402
	1,808,000,000	Korea Treasury Bond, Series 1212, 4.25%, 12/10/12+		1,581,988


Principal Amount			Fair Value

	Foreign Bonds, continued
	Sovereign Bonds, continued
$	104,000,000	Korea Treasury Bond, Series 1303, 5.25%, 3/10/13+	$	92,219
	4,318,710,000	Korea Treasury Bond, Series 1306, 3.75%, 6/10/13+		3,768,441
	2,909,780,000	Korea Treasury Bond, Series 1312, 3.00%, 12/10/13+		2,510,945
	30,000	Malaysia Treasury Bill, Series 182, 2.65%, 1/20/12+(h)		9,455
	20,000	Malaysia Treasury Bill, Series 182, 2.73%, 4/13/12+(h)		6,260
	50,000	Malaysia Treasury Bill, Series 364, 2.84%, 6/1/12+(h)		15,588
	60,000	Malaysia Treasury Bill, Series 364, 2.66%, 7/27/12+(h)		18,620
	2,059,000	Malaysian Government, Series 0309, 2.71%, 2/14/12+		649,527
	4,830,000	Malaysian Government, Series 5-06, 3.72%, 6/15/12+		1,529,304
	3,395,000	Malaysian Government, Series 0109, 2.51%, 8/27/12+		1,068,418
	4,815,000	Malaysian Government, Series 3-03, 3.70%, 2/25/13+		1,532,896
	270,000	Malaysian Government, Series 0507, 3.70%, 5/15/13+		86,086
	1,910,000	Malaysian Government, Series 0509, 3.21%, 5/31/13+		605,102
	1,040,000	Malaysian Government, Series 0108, 3.46%, 7/31/13+		330,853
	290,000	Mexico Bonos Desarr, Series M, 7.50%, 6/21/12+(e)(j)		21,069
	2,750,000	Mexico Bonos Desarr, Series MI10, 9.00%, 12/20/12+(e)(j)		205,110
	13,340,000	Mexico Bonos Desarr, Series M, 9.00%, 6/20/13+(e)(j)		1,012,512


Principal Amount			Fair Value

	Foreign Bonds, continued
	Sovereign Bonds, continued
$	19,619,000	Mexico Bonos Desarr, Series MI10, 8.00%, 12/19/13+(e)(j)	$	1,487,128
	2,060,000	Mexico Bonos Desarr, Series M, 7.00%, 6/19/14+(e)(j)		154,413
	1,450,000	Mexico Bonos Desarr, Series MI10, 9.50%, 12/18/14+(e)(j)		116,277
	1,210,000	New South Wales Treasury Corp., Series 12, 6.00%, 5/1/12+		1,244,881
	340,000	New South Wales Treasury Corp., Series 813, 5.50%, 8/1/13+		356,407
	10,240,000	Norwegian Treasury Bill, 2.52%, 3/21/12+(h)		1,708,003
	3,800,000	Norwegian Treasury Bill, 2.19%, 6/20/12+(h)		631,458
	8,170,000	Philippine Government International Bond, Series 5-65, 5.75%, 2/21/12+		187,351
	5,130,000	Philippine Government International Bond, Series R3-7, 5.25%, 9/24/12+		119,997
	3,760,000	Philippine Government International Bond, Series 3-19, 5.25%, 1/7/13+		88,644
	10,730,000	Philippine Government International Bond, Series 7-43, 8.75%, 3/3/13+		263,784
	1,090,000	Philippine Treasury Bill, 2.02%, 1/11/12+(h)		24,855
	2,820,000	Philippine Treasury Bill, 2.58%, 2/8/12+(h)		64,218
	990,000	Philippine Treasury Bill, 2.46%, 2/22/12+(h)		22,531
	3,530,000	Philippine Treasury Bill, 2.29%, 3/7/12+(h)		80,268
	1,100,000	Philippine Treasury Bill, 2.19%, 3/21/12+(h)		25,008
	190,000	Philippine Treasury Bill, 2.39%, 7/11/12+(h)		4,299
	2,010,000	Philippine Treasury Bill, 1.20%, 8/22/12+(h)		45,114
	800,000	Philippine Treasury Bill, 0.78%, 9/5/12+(h)		18,046
	505,000	Poland Government Bond, Series 0112, 4.46%, 1/25/12+		146,223


Principal Amount			Fair Value

	Foreign Bonds, continued
	Sovereign Bonds, continued
$	2,929,000	Poland Government Bond, Series 0412, 4.75%, 4/25/12+	$	850,940
	910,000	Poland Government Bond, Series 0712, 4.69%, 7/25/12+		257,732
	1,864,000	Poland Government Bond, Series 1012, 4.70%, 10/25/12+		521,842
	6,608,000	Poland Government Bond, Series 0113, 4.84%, 1/25/13+(h)		1,829,227
	1,960,000	Poland Government Bond, Series 0413, 5.25%, 4/25/13+		572,923
	2,289,000	Poland Government Bond, Series 0713, 4.82%, 7/25/13+		618,063
	580,000	Poland Government Bond, Series 1013, 5.00%, 10/24/13+		168,961
	750,000	Poland Government Bond, Series 0414, 5.75%, 4/25/14+		221,641
	720,000	Poland Government Bond, Series 1015, 6.25%, 10/24/15+		216,941
	780,000	Queensland Treasury Corp., Series 13, 6.00%, 8/14/13+		824,851
	1,615,000	Queensland Treasury Corp., 6.00%, 8/21/13+		1,698,401
	200,000	Republic of Hungary, 5.75%, 6/11/18+		216,865
	70,000	Republic of Hungary, 6.00%, 1/11/19+		76,600
	80,000	Republic of South Africa, Series E, 4.50%, 4/5/16, MTN+		106,375
	860,000	Singapore Government, 2.63%, 4/1/12+		666,640
	450,000	Singapore Government, 3.50%, 7/1/12+		352,439
	180,000	Singapore Government, 2.50%, 10/1/12+		141,013
	680,000	Singapore Government, 1.63%, 4/1/13+		532,719
	190,000	Singapore Treasury Bill, Series 365, 0.08%, 5/2/12+(h)		146,341


Principal Amount			Fair Value

	Foreign Bonds, continued
	Sovereign Bonds, continued
$	240,000	Singapore Treasury Bill, Series 366, 0.00%, 11/1/12+(h)	$	184,585
	30,725,000	Swedish Government Bond, Series 1046, 5.50%, 10/8/12+		4,616,657
	4,870,000	Swedish Government Bond, Series 1055, 1.50%, 8/30/13+		708,670
	100,000	Ukraine Government, 4.95%, 10/13/15+(c)		106,116
	623,000	United Kingdom Treasury Note, 5.00%, 3/7/12+		975,252
	762,000	United Kingdom Treasury Note, 5.25%, 6/7/12+		1,208,168
	2,050,000	Western Australian Treasury Corp., Series 12, 5.50%, 7/17/12+		2,112,219
	220,000	Western Australian Treasury Corp., Series 13, 8.00%, 6/15/13+		238,090

				55,253,697

	Total Foreign Bonds (Cost $61,456,164)			58,284,598

	Yankee Dollars (3.0%):
	Commercial Banks (0.4%):
	100,000	Export-Import Bank of Korea, 8.13%, 1/21/14		110,519
	110,000	Korea Development Bank, 8.00%, 1/23/14		121,030
	500,000	UPCB Finance III, Ltd., 6.63%, 7/1/20(c)		492,500
	500,000	UPCB Finance V, Ltd., 7.25%, 11/15/21(c)		506,250

				1,230,299

	Construction & Engineering (0.1%):
	400,000	Abengoa Finance SAU, 8.88%, 11/1/17(c)		400,000

	Consumer Finance (0.0%):
	100,000	NXP BV/NXP Funding LLC, 9.75%, 8/1/18(c)		109,000

	Diversified Financial Services (0.1%):
	275,000	CEVA Group plc, 8.38%, 12/1/17(c)		257,812
	100,000	CEVA Group plc, 11.50%, 4/1/18(c)		90,250

				348,062

	Metals & Mining (0.3%):
	100,000	FMG Resources Pty, Ltd., 7.00%, 11/1/15(c)		101,000
	500,000	FMG Resources Pty, Ltd., 6.88%, 2/1/18(c)		478,750
	250,000	FMG Resources Pty, Ltd., 8.25%, 11/1/19(c)		254,375

				834,125


Principal Amount			Fair Value

	Yankee Dollars, continued
	Multi-Utilities (0.2%):
$	500,000	CGGVeritas, 6.50%, 6/1/21	$	485,000

	Oil, Gas & Consumable Fuels (0.2%):
	180,000	Expro Finance Luxembourg, 8.50%, 12/15/16(c)		158,400
	440,000	Petroplus Finance, Ltd., 6.75%, 5/1/14^(c)		261,800
	85,000	Petroplus Finance, Ltd., 7.00%, 5/1/17(c)		42,075

				462,275

	Sovereign Bonds (1.3%):
	170,000	Emirate of Abu Dhabi, 6.75%, 4/8/19(c)		208,250
	200,000	Financing of Infrastructure, 7.40%, 4/20/18(c)		155,500
	175,000	Indonesia Government International Bond, 11.63%, 3/4/19(c)		258,563
	960,000	Republic of Argentina, 0.44%, 8/3/12(e)		118,560
	483,000	Republic of Hungary, 6.25%, 1/29/20		434,700
	410,000	Republic of Hungary, 6.38%, 3/29/21		366,950
	320,000	Republic of Iraq, 5.80%, 1/15/28(c)		262,400
	230,000	Republic of Lithuania, 7.38%, 2/11/20(c)		248,400
	100,000	Republic of Lithuania, 7.38%, 2/11/20(c)		108,000
	150,000	Republic of Lithuania, 6.13%, 3/9/21(c)		149,250
	617,900	Russia Foreign Bond, 7.50%, 3/31/30(c)(g)		717,536
	100,000	Socialist Republic of Vietnam, 6.75%, 1/29/20(c)		100,750
	240,000	South Africa Government International Bond, 6.88%, 5/27/19		289,200
	100,000	Ukraine Government, 7.65%, 6/11/13(c)		96,000
	200,000	Ukraine Government, 6.25%, 6/17/16(c)		175,500
	100,000	Ukraine Government, 7.75%, 9/23/20(c)		86,500
	330,000	Ukraine Government, 7.95%, 2/23/21(c)		291,314

				4,067,373

	Thrifts & Mortgage Finance (0.2%):
	500,000	OGX Petroleo e Gas Participacoes SA, 8.50%, 6/1/18(c)		490,000

	Wireless Telecommunication Services (0.2%):
	500,000	Intelsat Jackson Holdings SA, 7.50%, 4/1/21(c)		505,625

	Total Yankee Dollars (Cost $9,873,221)			8,931,759


Shares or Principal Amount			Fair Value

	Municipal Bonds (0.1%):
	California (0.1%):
$	15,000	California State, Build America Bonds, GO, 6.65%, 3/1/22	$	17,372
	25,000	California State, Build America Bonds, GO, 7.95%, 3/1/36, Callable 3/1/20 @ 100		28,269
	125,000	California State, Build America Bonds, GO, 7.63%, 3/1/40		153,794

				199,435

	Illinois (0.0%):
	60,000	Illinois State, GO, 4.42%, 1/1/15		62,107

	Michigan (0.0%):
	5,000	Detroit Michigan, GO, 4.50%, 11/1/23, Callable 11/1/20 @ 100		5,400

	Total Municipal Bonds (Cost $236,549)			266,942

	U.S. Government Agency (0.1%):
	455,000	Federal Home Loan Bank, 0.00%, 1/3/12(h)		455,000

	Total U.S. Government Agencies (Cost $455,000)			455,000

	Warrant (0.0%):
	Oil, Gas & Consumable Fuels (0.0%):
	100	Green Field Energy Services, Inc.*(c)		4,500

	Total Warrants (Cost $—)			4,500

	Securities Held as Collateral for Securities on Loan (2.7%):
$	8,120,309	Allianz Variable Insurance Products Securities Lending Collateral Trust(k)		8,120,309

	Total Securities Held as Collateral for Securities on Loan (Cost $8,120,309)			8,120,309

	Unaffiliated Investment Company (8.1%):
	24,487,520	Dreyfus Treasury Prime Cash Management, 0.00%(h)		24,487,520

	Total Unaffiliated Investment Company (Cost $24,487,520)			24,487,520

	Total Investment Securities (Cost $314,351,644)(l) — 100.3%			303,425,735
	Net other assets (liabilities) — (0.3)%			(834,186	)

	Net Assets — 100.0%		$	302,591,549

As of December 31, 2011, the Fund’s open forward currency contracts were as follows:


Long Contracts	Counterparty		Delivery Date		Contract Amount		Fair Value		Unrealized Appreciation/ (Depreciation)
Receive 43,228 Australian Dollar in exchange for U.S. Dollar		Morgan Stanley		2/8/12	$	42,033	$	43,998	$	1,965
Receive 43,216 Australian Dollar in exchange for U.S. Dollar		UBS Warburg		2/8/12		41,909		43,985		2,076
Receive 350,567 Australian Dollar in exchange for U.S. Dollar		Barclays Bank		2/23/12		350,567		356,240		5,673
Receive 570,000 Australian Dollar in exchange for U.S. Dollar		Deutsche Bank		9/13/12		575,301		568,698		(6,603	)
Receive 435,000 Brazilian Real in exchange for U.S. Dollar		Deutsche Bank		10/31/12		237,445		220,730		(16,715	)
Receive 17,552 British Pound in exchange for U.S. Dollar		Barclays Bank		1/24/12		27,810		27,247		(563	)
Receive 11,688 British Pound in exchange for U.S. Dollar		Citibank		1/24/12		18,470		18,144		(326	)
Receive 17,502 British Pound in exchange for U.S. Dollar		Deutsche Bank		1/24/12		27,704		27,169		(535	)
Receive 9,301 British Pound in exchange for U.S. Dollar		Deutsche Bank		1/26/12		14,799		14,438		(361	)
Receive 11,788 British Pound in exchange for U.S. Dollar		Barclays Bank		1/27/12		18,541		18,299		(242	)
Receive 2,341 British Pound in exchange for U.S. Dollar		JPMorgan Chase		1/27/12		3,725		3,634		(91	)
Receive 7,025 British Pound in exchange for U.S. Dollar		Morgan Stanley		1/27/12		11,059		10,905		(154	)
Receive 4,650 British Pound in exchange for U.S. Dollar		JPMorgan Chase		1/30/12		7,318		7,218		(100	)
Receive 2,361 British Pound in exchange for U.S. Dollar		Morgan Stanley		1/31/12		3,738		3,665		(73	)
Receive 981 British Pound in exchange for U.S. Dollar		Barclays Bank		2/1/12		1,547		1,523		(24	)
Receive 7,906 British Pound in exchange for U.S. Dollar		Citibank		2/1/12		12,506		12,272		(234	)
Receive 9,103 British Pound in exchange for U.S. Dollar		Morgan Stanley		2/1/12		14,349		14,130		(219	)
Receive 61,544 British Pound in exchange for U.S. Dollar		Barclays Bank		2/14/12		98,063		95,518		(2,545	)
Receive 69,700 British Pound in exchange for U.S. Dollar		Barclays Bank		2/21/12		108,855		108,168		(687	)
Receive 74,696 British Pound in exchange for U.S. Dollar		Deutsche Bank		3/29/12		118,995		115,877		(3,118	)
Receive 74,687 British Pound in exchange for U.S. Dollar		Morgan Stanley		3/29/12		118,996		115,863		(3,133	)
Receive 149,827 British Pound in exchange for U.S. Dollar		Barclays Bank		3/30/12		237,991		232,427		(5,564	)
Receive 89,848 British Pound in exchange for U.S. Dollar		Credit Suisse		4/2/12		142,796		139,377		(3,419	)
Receive 8,700,000 Chilean Peso in exchange for U.S. Dollar		Morgan Stanley		1/13/12		17,145		16,723		(422	)
Receive 305,012,200 Chilean Peso in exchange for U.S. Dollar		Morgan Stanley		1/20/12		610,000		585,690		(24,310	)
Receive 4,400,000 Chilean Peso in exchange for U.S. Dollar		Deutsche Bank		2/10/12		8,939		8,428		(511	)
Receive 4,400,000 Chilean Peso in exchange for U.S. Dollar		Barclays Bank		2/13/12		8,929		8,426		(503	)
Receive 4,400,000 Chilean Peso in exchange for U.S. Dollar		Deutsche Bank		2/14/12		8,972		8,425		(547	)
Receive 8,010,000 Chilean Peso in exchange for U.S. Dollar		Morgan Stanley		2/14/12		16,476		15,337		(1,139	)
Receive 7,240,000 Chilean Peso in exchange for U.S. Dollar		Morgan Stanley		2/16/12		15,040		13,861		(1,179	)
Receive 7,250,000 Chilean Peso in exchange for U.S. Dollar		Morgan Stanley		2/16/12		15,054		13,880		(1,174	)
Receive 3,890,000 Chilean Peso in exchange for U.S. Dollar		Deutsche Bank		2/21/12		8,044		7,444		(600	)
Receive 4,300,000 Chilean Peso in exchange for U.S. Dollar		JPMorgan Chase		2/21/12		8,827		8,228		(599	)
Receive 7,300,000 Chilean Peso in exchange for U.S. Dollar		JPMorgan Chase		2/22/12		15,153		13,968		(1,185	)
Receive 2,610,000 Chilean Peso in exchange for U.S. Dollar		Deutsche Bank		2/23/12		5,392		4,993		(399	)
Receive 3,250,000 Chilean Peso in exchange for U.S. Dollar		Deutsche Bank		2/27/12		6,714		6,216		(498	)
Receive 9,210,000 Chilean Peso in exchange for U.S. Dollar		Morgan Stanley		2/27/12		18,983		17,615		(1,368	)
Receive 3,900,000 Chilean Peso in exchange for U.S. Dollar		JPMorgan Chase		2/28/12		8,033		7,458		(575	)
Receive 5,600,000 Chilean Peso in exchange for U.S. Dollar		Morgan Stanley		2/28/12		11,426		10,709		(717	)
Receive 8,000,000 Chilean Peso in exchange for U.S. Dollar		Barclays Bank		2/29/12		16,297		15,298		(999	)
Receive 3,250,000 Chilean Peso in exchange for U.S. Dollar		Deutsche Bank		2/29/12		6,714		6,214		(500	)
Receive 4,000,000 Chilean Peso in exchange for U.S. Dollar		Barclays Bank		3/1/12		8,137		7,648		(489	)
Receive 700,000 Chilean Peso in exchange for U.S. Dollar		Deutsche Bank		3/1/12		1,425		1,338		(87	)
Receive 700,000 Chilean Peso in exchange for U.S. Dollar		Deutsche Bank		3/2/12		1,425		1,338		(87	)
Receive 2,500,000 Chilean Peso in exchange for U.S. Dollar		Morgan Stanley		3/12/12		5,083		4,774		(309	)
Receive 4,300,000 Chilean Peso in exchange for U.S. Dollar		JPMorgan Chase		3/21/12		8,630		8,203		(427	)
Receive 4,500,000 Chilean Peso in exchange for U.S. Dollar		Morgan Stanley		5/11/12		9,268		8,547		(721	)
Receive 162,750,000 Chilean Peso in exchange for U.S. Dollar		Deutsche Bank		7/11/12		337,796		307,667		(30,129	)
Receive 990,530,400 Chilean Peso in exchange for U.S. Dollar		JPMorgan Chase		9/12/12		2,060,000		1,864,251		(195,749	)
Receive 153,759,000 Chilean Peso in exchange for U.S. Dollar		Barclays Bank		10/29/12		294,670		288,427		(6,243	)
Receive 307,366,000 Chilean Peso in exchange for U.S. Dollar		Deutsche Bank		10/29/12		589,106		576,570		(12,536	)


Long Contracts	Counterparty		Delivery Date		Contract Amount		Fair Value		Unrealized Appreciation/ (Depreciation)
Receive 110,600 European Euro in exchange for U.S. Dollar		Bank of America		3/15/12	$	152,335	$	143,214	$	(9,121	)
Receive 21,750 European Euro in exchange for U.S. Dollar		Barclays Bank		3/15/12		29,467		28,163		(1,304	)
Receive 110,130 European Euro in exchange for U.S. Dollar		Barclays Bank		3/15/12		148,770		142,605		(6,165	)
Receive 192,450 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/15/12		258,909		249,200		(9,709	)
Receive 111,074 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/15/12		144,445		143,828		(617	)
Receive 21,750 European Euro in exchange for U.S. Dollar		HSBC		3/15/12		29,463		28,164		(1,299	)
Receive 61,100 European Euro in exchange for U.S. Dollar		State Street Bank		3/15/12		79,190		79,117		(73	)
Receive 21,000,000 Hungarian Forint in exchange for U.S. Dollar		Deutsche Bank		9/28/12		96,507		84,143		(12,364	)
Receive 22,200,000 Hungarian Forint in exchange for U.S. Dollar		Deutsche Bank		9/28/12		100,475		88,951		(11,524	)
Receive 43,950,000 Indian Rupee in exchange for U.S. Dollar		JPMorgan Chase		3/15/12		918,495		815,914		(102,581	)
Receive 28,560,000 Indian Rupee in exchange for U.S. Dollar		Deutsche Bank		5/29/12		600,000		524,067		(75,933	)
Receive 14,490,000 Indian Rupee in exchange for U.S. Dollar		JPMorgan Chase		7/12/12		312,309		264,269		(48,040	)
Receive 41,781,250 Indian Rupee in exchange for U.S. Dollar		JPMorgan Chase		10/31/12		813,501		753,401		(60,100	)
Receive 1,225,000,000 Indonesian Rupiah in exchange for U.S. Dollar		JPMorgan Chase		3/19/12		135,284		134,151		(1,133	)
Receive 255,000,000 Indonesian Rupiah in exchange for U.S. Dollar		Deutsche Bank		3/26/12		26,566		27,907		1,341
Receive 128,000,000 Indonesian Rupiah in exchange for U.S. Dollar		JPMorgan Chase		3/26/12		13,333		14,008		675
Receive 803,000,000 Indonesian Rupiah in exchange for U.S. Dollar		JPMorgan Chase		9/17/12		84,526		86,415		1,889
Receive 1,050,000,000 Indonesian Rupiah in exchange for U.S. Dollar		JPMorgan Chase		9/19/12		112,722		112,972		250
Receive 1,365,000,000 Indonesian Rupiah in exchange for U.S. Dollar		JPMorgan Chase		9/20/12		147,968		146,847		(1,121	)
Receive 923,000,000 Indonesian Rupiah in exchange for U.S. Dollar		HSBC		9/21/12		98,611		99,285		674
Receive 1,849,000,000 Indonesian Rupiah in exchange for U.S. Dollar		JPMorgan Chase		9/21/12		197,226		198,893		1,667
Receive 944,000,000 Indonesian Rupiah in exchange for U.S. Dollar		JPMorgan Chase		9/24/12		98,590		101,511		2,921
Receive 273,000,000 Indonesian Rupiah in exchange for U.S. Dollar		Deutsche Bank		9/26/12		27,936		29,350		1,414
Receive 183,000,000 Indonesian Rupiah in exchange for U.S. Dollar		JPMorgan Chase		9/26/12		18,626		19,674		1,048
Receive 126,000,000 Indonesian Rupiah in exchange for U.S. Dollar		JPMorgan Chase		12/17/12		13,030		13,423		393
Receive 525,246 Japanese Yen in exchange for U.S. Dollar		Bank of America		1/20/12		6,833		6,828		(5	)
Receive 233,633 Japanese Yen in exchange for U.S. Dollar		Bank of America		1/20/12		3,003		3,037		34
Receive 220,650 Japanese Yen in exchange for U.S. Dollar		Deutsche Bank		1/20/12		2,833		2,869		36
Receive 158,000,000 Korean Won in exchange for U.S. Dollar		Deutsche Bank		6/27/12		134,680		136,706		2,026
Receive 158,000,000 Korean Won in exchange for U.S. Dollar		Deutsche Bank		6/27/12		135,844		136,706		862
Receive 317,000,000 Korean Won in exchange for U.S. Dollar		HSBC		9/26/12		268,425		274,221		5,796
Receive 11,644,900 Mexican Peso in exchange for U.S. Dollar		HSBC		9/4/12		905,548		817,716		(87,832	)
Receive 35,270,000 Philippine Peso in exchange for U.S. Dollar		Deutsche Bank		1/31/12		818,120		803,575		(14,545	)
Receive 9,520,000 Philippine Peso in exchange for U.S. Dollar		JPMorgan Chase		7/11/12		221,343		215,443		(5,900	)
Receive 28,970,800 Philippine Peso in exchange for U.S. Dollar		Deutsche Bank		7/18/12		670,000		655,564		(14,436	)
Receive 3,200,000 Philippine Peso in exchange for U.S. Dollar		HSBC		9/28/12		73,203		72,339		(864	)
Receive 2,600,000 Philippine Peso in exchange for U.S. Dollar		HSBC		10/3/12		59,232		58,771		(461	)
Receive 4,820,000 Philippine Peso in exchange for U.S. Dollar		Morgan Stanley		10/29/12		111,574		108,914		(2,660	)
Receive 3,000,000 Philippine Peso in exchange for U.S. Dollar		Deutsche Bank		11/14/12		69,380		67,774		(1,606	)
Receive 123,000 Singapore Dollar in exchange for U.S. Dollar		Deutsche Bank		2/7/12		96,316		94,853		(1,463	)
Receive 123,000 Singapore Dollar in exchange for U.S. Dollar		HSBC		2/7/12		96,328		94,853		(1,475	)
Receive 221,000 Singapore Dollar in exchange for U.S. Dollar		Deutsche Bank		2/8/12		173,790		170,428		(3,362	)
Receive 25,000 Singapore Dollar in exchange for U.S. Dollar		Deutsche Bank		2/8/12		19,642		19,279		(363	)
Receive 34,819 Singapore Dollar in exchange for U.S. Dollar		Barclays Bank		2/9/12		27,333		26,851		(482	)
Receive 125,400 Singapore Dollar in exchange for U.S. Dollar		HSBC		2/13/12		98,472		96,706		(1,766	)
Receive 90,300 Singapore Dollar in exchange for U.S. Dollar		HSBC		2/14/12		70,909		69,638		(1,271	)
Receive 103,000 Singapore Dollar in exchange for U.S. Dollar		Barclays Bank		2/17/12		80,617		79,433		(1,184	)
Receive 154,000 Singapore Dollar in exchange for U.S. Dollar		Deutsche Bank		2/17/12		120,456		118,763		(1,693	)
Receive 154,000 Singapore Dollar in exchange for U.S. Dollar		HSBC		2/17/12		120,460		118,763		(1,697	)
Receive 212,000 Singapore Dollar in exchange for U.S. Dollar		Deutsche Bank		2/24/12		165,849		163,496		(2,353	)
Receive 132,000 Singapore Dollar in exchange for U.S. Dollar		Deutsche Bank		2/27/12		103,521		101,800		(1,721	)
Receive 132,000 Singapore Dollar in exchange for U.S. Dollar		Deutsche Bank		2/29/12		103,390		101,801		(1,589	)
Receive 220,800 Singapore Dollar in exchange for U.S. Dollar		Deutsche Bank		3/19/12		173,086		170,310		(2,776	)


Long Contracts	Counterparty		Delivery Date		Contract Amount		Fair Value		Unrealized Appreciation/ (Depreciation)
Receive 252,000 Singapore Dollar in exchange for U.S. Dollar		HSBC		3/19/12	$	197,498	$	194,375	$	(3,123	)
Receive 316,000 Singapore Dollar in exchange for U.S. Dollar		JPMorgan Chase		3/19/12		247,087		243,740		(3,347	)
Receive 237,700 Singapore Dollar in exchange for U.S. Dollar		Deutsche Bank		3/21/12		185,428		183,348		(2,080	)
Receive 190,000 Singapore Dollar in exchange for U.S. Dollar		HSBC		3/21/12		148,385		146,555		(1,830	)
Receive 321,000 Singapore Dollar in exchange for U.S. Dollar		CS First Boston		3/26/12		249,903		247,611		(2,292	)
Receive 321,000 Singapore Dollar in exchange for U.S. Dollar		Morgan Stanley		3/26/12		250,076		247,611		(2,465	)
Receive 748,020 Singapore Dollar in exchange for U.S. Dollar		Deutsche Bank		5/29/12		600,000		577,421		(22,579	)
Receive 38,400 Swiss Franc in exchange for U.S. Dollar		Bank of America		2/10/12		42,958		40,932		(2,026	)
Receive 33,023 Swiss Franc in exchange for U.S. Dollar		Bank of America		2/10/12		36,073		35,200		(873	)
Receive 9,305 Swiss Franc in exchange for U.S. Dollar		Bank of America		2/10/12		9,951		9,918		(33	)
Receive 15,000 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		19,942		15,989		(3,953	)
Receive 40,000 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		53,277		42,638		(10,639	)
Receive 27,800 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		30,181		29,633		(548	)
Receive 20,947 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		23,260		22,328		(932	)
Receive 25,015 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		27,944		26,665		(1,279	)
Receive 35,000 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		38,274		37,308		(966	)
Receive 39,000 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		42,449		41,572		(877	)
Receive 57,000 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		62,319		60,759		(1,560	)
Receive 32,255 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		35,274		34,382		(892	)
Receive 34,000 Swiss Franc in exchange for U.S. Dollar		State Street Bank		2/10/12		45,951		36,242		(9,709	)
Receive 66,250 Swiss Franc in exchange for U.S. Dollar		State Street Bank		2/10/12		73,550		70,619		(2,931	)
Receive 36,962 Swiss Franc in exchange for U.S. Dollar		State Street Bank		2/10/12		41,229		39,399		(1,830	)
Receive 11,882 Swiss Franc in exchange for U.S. Dollar		State Street Bank		2/10/12		12,934		12,665		(269	)
Receive 13,000 Swiss Franc in exchange for U.S. Dollar		State Street Bank		2/10/12		13,911		13,857		(54	)

									$	(867,643	)


Short Contracts	Counterparty		Delivery Date		Contract Amount		Fair Value		Unrealized Appreciation/ (Depreciation)
Deliver 81,000 Australian Dollar in exchange for U.S. Dollar		Bank of America		2/23/12	$	84,532	$	82,311	$	2,221
Deliver 246,567 Australian Dollar in exchange for U.S. Dollar		Bank of America		2/23/12		252,238		250,557		1,681
Deliver 16,400 Australian Dollar in exchange for U.S. Dollar		Barclays Bank		2/23/12		15,828		16,666		(838	)
Deliver 6,600 Australian Dollar in exchange for U.S. Dollar		Deutsche Bank		2/23/12		6,370		6,707		(337	)
Deliver 82,798 British Pound in exchange for U.S. Dollar		Bank of America		2/21/12		129,512		128,495		1,017
Deliver 3,379,702 British Pound in exchange for U.S. Dollar		Bank of America		2/21/12		5,329,791		5,244,998		84,793
Deliver 131,620 British Pound in exchange for U.S. Dollar		Deutsche Bank		2/21/12		206,490		204,263		2,227
Deliver 115,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		1/5/12		153,301		148,825		4,476
Deliver 1,650,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		1/23/12		2,215,884		2,135,534		80,350
Deliver 15,000 European Euro in exchange for U.S. Dollar		JPMorgan Chase		2/16/12		20,064		19,418		646
Deliver 15,000 European Euro in exchange for U.S. Dollar		UBS Warburg		2/16/12		20,073		19,418		655
Deliver 17,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		2/17/12		22,811		22,007		804
Deliver 17,000 European Euro in exchange for U.S. Dollar		UBS Warburg		2/21/12		22,760		22,008		752
Deliver 146,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		2/27/12		198,935		189,015		9,920
Deliver 89,930 European Euro in exchange for U.S. Dollar		Deutsche Bank		2/29/12		122,890		116,428		6,462
Deliver 41,800 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/1/12		56,992		54,117		2,875
Deliver 43,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/5/12		58,768		55,673		3,095
Deliver 15,000 European Euro in exchange for U.S. Dollar		HSBC		3/8/12		20,730		19,422		1,308
Deliver 43,000 European Euro in exchange for U.S. Dollar		Morgan Stanley		3/8/12		59,488		55,675		3,813
Deliver 57,000 European Euro in exchange for U.S. Dollar		UBS Warburg		3/8/12		78,862		73,802		5,060
Deliver 2,559,677 European Euro in exchange for U.S. Dollar		Bank of America		3/15/12		3,501,638		3,314,485		187,153
Deliver 11,390 European Euro in exchange for U.S. Dollar		Bank of America		3/15/12		15,287		14,749		538
Deliver 17,713 European Euro in exchange for U.S. Dollar		Bank of America		3/15/12		23,742		22,936		806
Deliver 4,486 European Euro in exchange for U.S. Dollar		Bank of America		3/15/12		5,875		5,808		67


Short Contracts	Counterparty		Delivery Date		Contract Amount		Fair Value		Unrealized Appreciation/ (Depreciation)
Deliver 47,650 European Euro in exchange for U.S. Dollar		Barclays Bank		3/15/12	$	66,055	$	61,702	$	4,353
Deliver 17,288 European Euro in exchange for U.S. Dollar		Barclays Bank		3/15/12		23,335		22,386		949
Deliver 22,781 European Euro in exchange for U.S. Dollar		Barclays Bank		3/15/12		30,618		29,498		1,120
Deliver 8,856 European Euro in exchange for U.S. Dollar		Barclays Bank		3/15/12		11,852		11,468		384
Deliver 690,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/15/12		948,060		893,470		54,590
Deliver 47,650 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/15/12		66,037		61,702		4,335
Deliver 230,400 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/15/12		309,644		298,341		11,303
Deliver 163,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/15/12		224,803		211,066		13,737
Deliver 130,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/15/12		184,535		168,335		16,200
Deliver 119,212 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/15/12		160,316		154,365		5,951
Deliver 35,426 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/15/12		47,479		45,872		1,607
Deliver 6,437 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/15/12		8,454		8,335		119
Deliver 82,000 European Euro in exchange for U.S. Dollar		HSBC		3/15/12		113,457		106,181		7,276
Deliver 17,288 European Euro in exchange for U.S. Dollar		HSBC		3/15/12		23,326		22,386		940
Deliver 119,212 European Euro in exchange for U.S. Dollar		State Street Bank		3/15/12		160,414		154,366		6,048
Deliver 13,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/16/12		17,983		16,834		1,149
Deliver 121,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/16/12		167,386		156,683		10,703
Deliver 87,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/21/12		120,749		112,663		8,086
Deliver 86,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/22/12		120,508		111,369		9,139
Deliver 78,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		3/26/12		109,169		101,014		8,155
Deliver 109,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		4/4/12		153,118		141,179		11,939
Deliver 73,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		4/5/12		102,173		94,552		7,621
Deliver 61,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		4/10/12		85,912		79,015		6,897
Deliver 73,000 European Euro in exchange for U.S. Dollar		HSBC		4/10/12		102,567		94,560		8,007
Deliver 37,000 European Euro in exchange for U.S. Dollar		UBS Warburg		4/10/12		51,954		47,928		4,026
Deliver 99,000 European Euro in exchange for U.S. Dollar		UBS Warburg		4/12/12		141,132		128,243		12,889
Deliver 370,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		4/16/12		528,027		479,320		48,707
Deliver 60,000 European Euro in exchange for U.S. Dollar		HSBC		4/16/12		85,984		77,727		8,257
Deliver 319,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		4/23/12		451,018		413,296		37,722
Deliver 112,000 European Euro in exchange for U.S. Dollar		Barclays Bank		5/7/12		164,648		145,138		19,510
Deliver 153,000 European Euro in exchange for U.S. Dollar		Credit Suisse		5/7/12		224,298		198,269		26,029
Deliver 181,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		5/7/12		264,731		234,554		30,177
Deliver 112,000 European Euro in exchange for U.S. Dollar		Morgan Stanley		5/7/12		164,750		145,138		19,612
Deliver 112,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		5/9/12		161,588		145,143		16,445
Deliver 56,000 European Euro in exchange for U.S. Dollar		UBS Warburg		5/9/12		80,326		72,571		7,755
Deliver 118,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		5/18/12		165,312		152,939		12,373
Deliver 147,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		5/21/12		205,247		190,535		14,712
Deliver 24,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		5/21/12		33,667		31,108		2,559
Deliver 118,000 European Euro in exchange for U.S. Dollar		UBS Warburg		5/21/12		164,823		152,947		11,876
Deliver 260,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		5/29/12		361,725		337,042		24,683
Deliver 500,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		5/29/12		695,625		648,158		47,467
Deliver 57,050 European Euro in exchange for U.S. Dollar		Deutsche Bank		6/6/12		81,644		73,964		7,680
Deliver 147,700 European Euro in exchange for U.S. Dollar		Deutsche Bank		6/7/12		212,710		191,492		21,218
Deliver 76,800 European Euro in exchange for U.S. Dollar		UBS Warburg		6/7/12		110,239		99,571		10,668
Deliver 44,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		6/11/12		63,741		57,049		6,692
Deliver 231,600 European Euro in exchange for U.S. Dollar		Deutsche Bank		6/11/12		333,932		300,287		33,645
Deliver 103,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		6/13/12		147,774		133,551		14,223
Deliver 21,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		6/14/12		30,006		27,229		2,777
Deliver 1,030,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		7/11/12		1,458,687		1,336,169		122,518
Deliver 82,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		7/16/12		114,885		106,385		8,500
Deliver 226,000 European Euro in exchange for U.S. Dollar		Morgan Stanley		7/16/12		315,298		293,208		22,090
Deliver 257,000 European Euro in exchange for U.S. Dollar		UBS Warburg		7/16/12		360,019		333,427		26,592
Deliver 129,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		7/18/12		180,947		167,369		13,578


Short Contracts	Counterparty		Delivery Date		Contract Amount		Fair Value		Unrealized Appreciation/ (Depreciation)
Deliver 51,000 European Euro in exchange for U.S. Dollar		Morgan Stanley		7/18/12	$	71,400	$	66,169	$	5,231
Deliver 257,000 European Euro in exchange for U.S. Dollar		UBS Warburg		7/18/12		360,378		333,440		26,938
Deliver 97,000 European Euro in exchange for U.S. Dollar		Barclays Bank		7/19/12		135,906		125,853		10,053
Deliver 470,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		7/19/12		656,773		609,805		46,968
Deliver 71,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		7/20/12		99,034		92,121		6,913
Deliver 366,000 European Euro in exchange for U.S. Dollar		Morgan Stanley		7/20/12		510,039		474,879		35,160
Deliver 64,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		7/23/12		89,776		83,044		6,732
Deliver 29,795 European Euro in exchange for U.S. Dollar		Deutsche Bank		7/23/12		41,955		38,661		3,294
Deliver 9,975 European Euro in exchange for U.S. Dollar		Deutsche Bank		7/25/12		14,191		12,944		1,247
Deliver 9,978 European Euro in exchange for U.S. Dollar		Deutsche Bank		7/27/12		14,203		12,948		1,255
Deliver 19,995 European Euro in exchange for U.S. Dollar		Barclays Bank		7/31/12		28,472		25,948		2,524
Deliver 48,730 European Euro in exchange for U.S. Dollar		Barclays Bank		8/1/12		69,060		63,241		5,819
Deliver 48,862 European Euro in exchange for U.S. Dollar		Barclays Bank		8/2/12		69,663		63,414		6,249
Deliver 78,136 European Euro in exchange for U.S. Dollar		Barclays Bank		8/6/12		111,000		101,414		9,586
Deliver 136,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/6/12		191,311		176,517		14,794
Deliver 87,500 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/6/12		124,332		113,568		10,764
Deliver 46,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/6/12		65,363		59,704		5,659
Deliver 34,482 European Euro in exchange for U.S. Dollar		Citibank		8/8/12		48,411		44,757		3,654
Deliver 117,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/8/12		164,648		151,863		12,785
Deliver 122,500 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/8/12		172,388		159,002		13,386
Deliver 9,686 European Euro in exchange for U.S. Dollar		Citibank		8/9/12		13,629		12,573		1,056
Deliver 92,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/9/12		130,372		119,416		10,956
Deliver 88,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/9/12		124,475		114,224		10,251
Deliver 61,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/10/12		86,211		79,180		7,031
Deliver 46,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/13/12		65,199		59,713		5,486
Deliver 71,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/13/12		100,510		92,165		8,345
Deliver 395,000 European Euro in exchange for U.S. Dollar		Barclays Bank		8/20/12		566,212		512,822		53,390
Deliver 263,000 European Euro in exchange for U.S. Dollar		Barclays Bank		8/20/12		379,235		341,448		37,787
Deliver 263,000 European Euro in exchange for U.S. Dollar		CS First Boston		8/20/12		377,720		341,448		36,272
Deliver 263,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/20/12		377,134		341,448		35,686
Deliver 132,000 European Euro in exchange for U.S. Dollar		Morgan Stanley		8/20/12		189,400		171,373		18,027
Deliver 28,299 European Euro in exchange for U.S. Dollar		Barclays Bank		8/23/12		40,694		36,742		3,952
Deliver 47,689 European Euro in exchange for U.S. Dollar		Barclays Bank		8/24/12		68,415		61,919		6,496
Deliver 30,957 European Euro in exchange for U.S. Dollar		Barclays Bank		8/27/12		44,625		40,197		4,428
Deliver 28,089 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/29/12		40,212		36,474		3,738
Deliver 891 European Euro in exchange for U.S. Dollar		Deutsche Bank		8/31/12		1,289		1,157		132
Deliver 15,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		9/6/12		21,282		19,481		1,801
Deliver 29,182 European Euro in exchange for U.S. Dollar		Barclays Bank		9/10/12		40,974		37,902		3,072
Deliver 34,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		9/10/12		47,560		44,160		3,400
Deliver 28,968 European Euro in exchange for U.S. Dollar		Barclays Bank		9/12/12		40,497		37,626		2,871
Deliver 15,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		9/13/12		20,525		19,484		1,041
Deliver 81,755 European Euro in exchange for U.S. Dollar		Barclays Bank		9/14/12		111,827		106,194		5,633
Deliver 76,694 European Euro in exchange for U.S. Dollar		UBS Warburg		9/17/12		105,125		99,626		5,499
Deliver 19,406 European Euro in exchange for U.S. Dollar		Barclays Bank		9/19/12		26,900		25,209		1,691
Deliver 45,864 European Euro in exchange for U.S. Dollar		Barclays Bank		9/24/12		62,399		59,586		2,813
Deliver 133,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		9/24/12		181,669		172,792		8,877
Deliver 96,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		9/24/12		131,269		124,722		6,547
Deliver 107,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		9/26/12		144,759		139,018		5,741
Deliver 270,000 European Euro in exchange for U.S. Dollar		CS First Boston		9/28/12		364,365		350,808		13,557
Deliver 130,000 European Euro in exchange for U.S. Dollar		CS First Boston		9/28/12		176,410		168,908		7,502
Deliver 350,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		9/28/12		470,008		454,751		15,257
Deliver 840,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		9/28/12		1,141,509		1,091,402		50,107
Deliver 130,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		9/28/12		176,776		168,908		7,868


Short Contracts	Counterparty		Delivery Date		Contract Amount		Fair Value		Unrealized Appreciation/ (Depreciation)
Deliver 180,000 European Euro in exchange for U.S. Dollar		HSBC		9/28/12	$	241,808	$	233,872	$	7,936
Deliver 130,000 European Euro in exchange for U.S. Dollar		Morgan Stanley		9/28/12		176,615		168,908		7,707
Deliver 420,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		10/9/12		554,765		545,820		8,945
Deliver 320,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		10/15/12		441,088		415,913		25,175
Deliver 20,617 European Euro in exchange for U.S. Dollar		Barclays Bank		10/24/12		28,330		26,801		1,529
Deliver 154,898 European Euro in exchange for U.S. Dollar		Barclays Bank		10/25/12		214,905		201,365		13,540
Deliver 60,360 European Euro in exchange for U.S. Dollar		Citibank		10/26/12		84,031		78,468		5,563
Deliver 1,644,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		10/31/12		2,317,729		2,137,430		180,299
Deliver 103,075 European Euro in exchange for U.S. Dollar		Deutsche Bank		10/31/12		145,316		134,012		11,304
Deliver 7,376 European Euro in exchange for U.S. Dollar		Deutsche Bank		11/2/12		10,259		9,590		669
Deliver 49,418 European Euro in exchange for U.S. Dollar		Barclays Bank		11/5/12		68,128		64,257		3,871
Deliver 278,508 European Euro in exchange for U.S. Dollar		Barclays Bank		11/8/12		382,991		362,157		20,834
Deliver 335,703 European Euro in exchange for U.S. Dollar		Barclays Bank		11/15/12		458,017		436,591		21,426
Deliver 93,863 European Euro in exchange for U.S. Dollar		Barclays Bank		11/19/12		128,672		122,081		6,591
Deliver 327,027 European Euro in exchange for U.S. Dollar		Barclays Bank		11/21/12		443,776		425,358		18,418
Deliver 172,504 European Euro in exchange for U.S. Dollar		Barclays Bank		11/23/12		234,140		224,382		9,758
Deliver 100,000 European Euro in exchange for U.S. Dollar		Deutsche Bank		12/3/12		134,590		130,099		4,491
Deliver 97,000 European Euro in exchange for U.S. Dollar		Barclays Bank		12/12/12		130,630		126,219		4,411
Deliver 525,093 European Euro in exchange for U.S. Dollar		Deutsche Bank		12/20/12		687,346		683,371		3,975
Deliver 5,989,000 Japanese Yen in exchange for U.S. Dollar		Deutsche Bank		1/4/12		77,287		77,835		(548	)
Deliver 3,030,000 Japanese Yen in exchange for U.S. Dollar		Barclays Bank		1/10/12		36,638		39,383		(2,745	)
Deliver 1,520,000 Japanese Yen in exchange for U.S. Dollar		Citibank		1/10/12		18,391		19,756		(1,365	)
Deliver 1,520,000 Japanese Yen in exchange for U.S. Dollar		UBS Warburg		1/10/12		18,382		19,756		(1,374	)
Deliver 1,520,000 Japanese Yen in exchange for U.S. Dollar		Deutsche Bank		1/12/12		18,384		19,757		(1,373	)
Deliver 1,520,000 Japanese Yen in exchange for U.S. Dollar		HSBC		1/12/12		18,421		19,757		(1,336	)
Deliver 4,090,000 Japanese Yen in exchange for U.S. Dollar		Barclays Bank		1/13/12		49,515		53,163		(3,648	)
Deliver 4,120,000 Japanese Yen in exchange for U.S. Dollar		HSBC		1/13/12		49,917		53,553		(3,636	)
Deliver 3,250,000 Japanese Yen in exchange for U.S. Dollar		UBS Warburg		1/13/12		39,364		42,245		(2,881	)
Deliver 7,722,356 Japanese Yen in exchange for U.S. Dollar		Deutsche Bank		1/20/12		100,761		100,390		371
Deliver 331,000 Japanese Yen in exchange for U.S. Dollar		HSBC		1/20/12		4,274		4,303		(29	)
Deliver 50,187,445 Japanese Yen in exchange for U.S. Dollar		Morgan Stanley		1/20/12		610,000		652,432		(42,432	)
Deliver 1,413,045 Japanese Yen in exchange for U.S. Dollar		State Street Bank		1/20/12		18,217		18,369		(152	)
Deliver 8,700,000 Japanese Yen in exchange for U.S. Dollar		Barclays Bank		1/26/12		105,762		113,111		(7,349	)
Deliver 5,078,281 Japanese Yen in exchange for U.S. Dollar		Deutsche Bank		1/26/12		61,879		66,024		(4,145	)
Deliver 2,170,000 Japanese Yen in exchange for U.S. Dollar		Deutsche Bank		1/26/12		26,400		28,213		(1,813	)
Deliver 7,610,000 Japanese Yen in exchange for U.S. Dollar		UBS Warburg		1/26/12		92,574		98,940		(6,366	)
Deliver 9,353,364 Japanese Yen in exchange for U.S. Dollar		HSBC		1/27/12		114,121		121,607		(7,486	)
Deliver 3,336,000 Japanese Yen in exchange for U.S. Dollar		HSBC		2/10/12		40,752		43,384		(2,632	)
Deliver 3,771,000 Japanese Yen in exchange for U.S. Dollar		Morgan Stanley		2/10/12		46,149		49,041		(2,892	)
Deliver 964,860 Japanese Yen in exchange for U.S. Dollar		Deutsche Bank		2/15/12		11,745		12,549		(804	)
Deliver 1,140,000 Japanese Yen in exchange for U.S. Dollar		JPMorgan Chase		2/15/12		13,889		14,827		(938	)
Deliver 680,000 Japanese Yen in exchange for U.S. Dollar		JPMorgan Chase		2/16/12		8,220		8,844		(624	)
Deliver 4,020,000 Japanese Yen in exchange for U.S. Dollar		HSBC		2/22/12		48,513		52,292		(3,779	)
Deliver 4,000,000 Japanese Yen in exchange for U.S. Dollar		JPMorgan Chase		2/23/12		48,248		52,033		(3,785	)
Deliver 4,600,000 Japanese Yen in exchange for U.S. Dollar		HSBC		3/1/12		56,615		59,846		(3,231	)
Deliver 4,600,000 Japanese Yen in exchange for U.S. Dollar		JPMorgan Chase		3/1/12		56,595		59,846		(3,251	)
Deliver 5,100,000 Japanese Yen in exchange for U.S. Dollar		UBS Warburg		3/1/12		62,735		66,351		(3,616	)
Deliver 2,260,084 Japanese Yen in exchange for U.S. Dollar		Citibank		3/15/12		29,138		29,413		(275	)
Deliver 44,142,850 Japanese Yen in exchange for U.S. Dollar		JPMorgan Chase		3/15/12		535,000		574,488		(39,488	)
Deliver 5,012,000 Japanese Yen in exchange for U.S. Dollar		Citibank		3/19/12		62,384		65,234		(2,850	)
Deliver 3,000,000 Japanese Yen in exchange for U.S. Dollar		Morgan Stanley		3/19/12		37,330		39,046		(1,716	)
Deliver 4,060,000 Japanese Yen in exchange for U.S. Dollar		UBS Warburg		3/19/12		50,538		52,843		(2,305	)
Deliver 4,542,830 Japanese Yen in exchange for U.S. Dollar		UBS Warburg		3/23/12		56,242		59,133		(2,891	)


Short Contracts	Counterparty		Delivery Date		Contract Amount		Fair Value		Unrealized Appreciation/ (Depreciation)
Deliver 68,447,040 Japanese Yen in exchange for U.S. Dollar		Morgan Stanley		4/16/12	$	820,000	$	891,501	$	(71,501	)
Deliver 3,500,000 Japanese Yen in exchange for U.S. Dollar		Citibank		4/20/12		42,638		45,591		(2,953	)
Deliver 3,500,000 Japanese Yen in exchange for U.S. Dollar		UBS Warburg		4/20/12		42,613		45,591		(2,978	)
Deliver 11,180,000 Japanese Yen in exchange for U.S. Dollar		Citibank		5/10/12		139,101		145,707		(6,606	)
Deliver 7,475,000 Japanese Yen in exchange for U.S. Dollar		Deutsche Bank		5/11/12		92,981		97,423		(4,442	)
Deliver 11,175,000 Japanese Yen in exchange for U.S. Dollar		UBS Warburg		5/11/12		139,010		145,646		(6,636	)
Deliver 48,990,000 Japanese Yen in exchange for U.S. Dollar		Credit Suisse		5/29/12		600,000		638,798		(38,798	)
Deliver 2,416,000 Japanese Yen in exchange for U.S. Dollar		Citibank		6/15/12		31,215		31,517		(302	)
Deliver 6,679,000 Japanese Yen in exchange for U.S. Dollar		Bank of America		6/29/12		86,161		87,160		(999	)
Deliver 9,732,000 Japanese Yen in exchange for U.S. Dollar		Barclays Bank		6/29/12		125,672		127,002		(1,330	)
Deliver 26,073,000 Japanese Yen in exchange for U.S. Dollar		Deutsche Bank		7/11/12		322,287		340,373		(18,086	)
Deliver 22,800,000 Japanese Yen in exchange for U.S. Dollar		JPMorgan Chase		8/30/12		299,193		298,084		1,109
Deliver 2,251,755 Japanese Yen in exchange for U.S. Dollar		Barclays Bank		9/18/12		29,053		29,456		(403	)
Deliver 121,466,500 Japanese Yen in exchange for U.S. Dollar		UBS Warburg		9/28/12		1,598,348		1,589,398		8,950
Deliver 20,662,500 Japanese Yen in exchange for U.S. Dollar		Deutsche Bank		10/29/12		273,784		270,617		3,167
Deliver 91,650,000 Japanese Yen in exchange for U.S. Dollar		JPMorgan Chase		10/31/12		1,217,051		1,200,415		16,636
Deliver 6,194,000 Japanese Yen in exchange for U.S. Dollar		Deutsche Bank		11/16/12		81,112		81,166		(54	)
Deliver 7,667,000 Japanese Yen in exchange for U.S. Dollar		Barclays Bank		11/19/12		100,617		100,477		140
Deliver 1,616,000 Japanese Yen in exchange for U.S. Dollar		HSBC		11/19/12		21,171		21,178		(7	)
Deliver 3,093,000 Japanese Yen in exchange for U.S. Dollar		JPMorgan Chase		11/19/12		40,481		40,534		(53	)
Deliver 2,471,000 Japanese Yen in exchange for U.S. Dollar		UBS Warburg		11/19/12		32,407		32,383		24
Deliver 8,613,000 Japanese Yen in exchange for U.S. Dollar		Barclays Bank		11/21/12		113,180		112,881		299
Deliver 41,392,500 Japanese Yen in exchange for U.S. Dollar		Morgan Stanley		12/17/12		535,673		542,903		(7,230	)
Deliver 2,255,332 Japanese Yen in exchange for U.S. Dollar		JPMorgan Chase		12/27/12		29,187		29,590		(403	)
Deliver 29,000 Swiss Franc in exchange for U.S. Dollar		Bank of America		2/10/12		33,856		30,912		2,944
Deliver 9,400 Swiss Franc in exchange for U.S. Dollar		Bank of America		2/10/12		10,072		10,020		52
Deliver 348,799 Swiss Franc in exchange for U.S. Dollar		Barclays Bank		2/10/12		460,097		371,800		88,297
Deliver 5,652 Swiss Franc in exchange for U.S. Dollar		Barclays Bank		2/10/12		7,079		6,025		1,054
Deliver 22,457 Swiss Franc in exchange for U.S. Dollar		Barclays Bank		2/10/12		28,316		23,938		4,378
Deliver 10,522 Swiss Franc in exchange for U.S. Dollar		Barclays Bank		2/10/12		11,667		11,215		452
Deliver 14,500 Swiss Franc in exchange for U.S. Dollar		Barclays Bank		2/10/12		16,279		15,456		823
Deliver 360,201 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		474,191		383,953		90,238
Deliver 11,343 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		14,158		12,091		2,067
Deliver 6,211 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		6,800		6,620		180
Deliver 4,778 Swiss Franc in exchange for U.S. Dollar		Deutsche Bank		2/10/12		5,308		5,094		214
Deliver 15,311 Swiss Franc in exchange for U.S. Dollar		State Street Bank		2/10/12		17,435		16,321		1,114

									$	2,102,868

As of December 31, 2011, the Fund’s open forward cross currency contracts were as follows:


Purchase/Sale	Counterparty	Amount Purchased			Amount Sold			Contract Value		Fair Value		Net Unrealized Appreciation/ (Depreciation)
Norwegian Krone/European Euro	Morgan Stanley		158,780	NOK		20,010	EUR	$	26,757	$	27,025	$	268
Norwegian Krone/European Euro	Morgan Stanley		240,000	NOK		30,244	EUR		40,443		40,849		406
Norwegian Krone/European Euro	UBS Warburg		600,000	NOK		75,559	EUR		101,109		102,191		1,082
Norwegian Krone/European Euro	UBS Warburg		180,000	NOK		22,848	EUR		30,782		30,862		80
Polish Zloty/European Euro	Deutsche Bank		233,000	PLN		58,594	EUR		79,137		70,667		(8,470	)
Polish Zloty/European Euro	Barclays Bank		233,000	PLN		58,559	EUR		79,195		70,764		(8,431	)
Polish Zloty/European Euro	Deutsche Bank		233,000	PLN		58,027	EUR		78,338		70,568		(7,770	)
Polish Zloty/European Euro	Morgan Stanley		91,000	PLN		22,722	EUR		31,683		28,318		(3,365	)
Polish Zloty/European Euro	Deutsche Bank		700,000	PLN		158,278	EUR		225,026		218,094		(6,932	)
Swedish Krona/European Euro	Deutsche Bank		5,900,000	SEK		633,857	EUR		855,486		882,629		27,143
Swedish Krona/European Euro	Deutsche Bank		4,380,000	SEK		479,412	EUR		679,959		687,780		7,821

												$	6,268

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	314,351,644

Investment securities, at value*	$	303,425,735
Interest and dividends receivable		1,961,018
Foreign currency, at value (cost $4,633,013)		4,609,056
Unrealized appreciation on forward currency contracts		2,637,876
Receivable for capital shares issued		695,929
Receivable for expenses paid indirectly		152
Receivable for investments sold		71,833
Reclaims receivable		102,092
Prepaid expenses		4,032

Total Assets		313,507,723

Liabilities:
Cash overdraft		452,597
Unrealized depreciation on forward currency contracts		1,396,383
Written options (Premiums received $4,050)		5,680
Payable for investments purchased		633,180
Payable for collateral received on loaned securities		8,120,309
Manager fees payable		176,485
Administration fees payable		11,308
Distribution fees payable		63,030
Custodian fees payable		32,324
Administrative and compliance services fees payable		1,511
Trustee fees payable		82
Other accrued liabilities		23,285

Total Liabilities		10,916,174

Net Assets	$	302,591,549

Net Assets Consist of:
Capital	$	304,025,342
Accumulated net investment income/(loss)		6,798,880
Accumulated net realized gains/(losses) from investment transactions		1,511,095
Net unrealized appreciation/(depreciation) on investments		(9,743,768	)

Net Assets	$	302,591,549

Shares of beneficial interest (unlimited number of shares authorized, no par value)		28,149,526
Net Asset Value (offering and redemption price per share)	$	10.75

*	Includes securities on loan of $7,805,887.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	5,716,143
Dividends		4,401,090
Income from securities lending		63,461
Foreign withholding tax		(247,823	)

Total Investment Income		9,932,871

Expenses:
Manager fees		1,713,160
Administration fees		155,475
Distribution fees		611,841
Custodian fees		228,131
Administrative and compliance services fees		10,680
Trustee fees		18,540
Professional fees		20,527
Shareholder reports		22,229
Recoupment of prior expenses reimbursed by the Manager		53,765
Other expenses		11,325

Total expenses before reductions		2,845,673
Less expenses paid indirectly		(629	)

Net expenses		2,845,044

Net Investment Income/(Loss)		7,087,827

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		2,074,269
Net realized gains/(losses) on forward currency contracts		(914,337	)
Change in unrealized appreciation/depreciation on investments		(17,536,993	)

Net Realized/Unrealized Gains/(Losses) on Investments		(16,377,061	)

Change in Net Assets Resulting From Operations	$	(9,289,234	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Franklin Templeton Founding Strategy Plus Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

The Fund may invest in floating rate loans, which usually take the form of loan participations and assignments. These loans are made by banks and other large financial institutions to various companies and are typically senior in the borrowing companies’ capital structure. Coupon rates are floating, not fixed and are tied to a benchmark lending rate. Loans involve a risk of loss in case of default or insolvency of the financial intermediaries who are parties to the transactions. A Fund records an investment when the borrower withdraws money and records the interest as earned.

The Fund may invest in structured notes, the values of which are based on the price movements of a reference security or index. Structured notes are derivative debt securities, the interest rate or principal of which is determined by an unrelated indicator. The terms of the structured notes may provide that in certain circumstances no principal is due at maturity and therefore, may result in a loss of invested capital. Structured notes may be positively or negatively indexed, so that appreciation of the reference may produce an increase or a decrease in the interest rate or the value of the structured note at maturity may be calculated as a specified multiple of the change in the value of the reference; therefore, the value of such security may be very volatile. Structured notes may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the reference. Structured notes may also be more volatile, less liquid, and more difficult to accurately price than less complex securities or more traditional debt securities.

transaction will be less than that available in the market when the delivery takes place. A Fund will not pay for such securities or start earning interest on them until they are received. When a Fund agrees to purchase securities on a when-issued basis, the Fund will segregate or designate cash or liquid assets equal to the amount of the commitment. Securities purchased on a when-issued basis are recorded as an asset and are subject to changes in the value based upon changes in the general level of interest rates. A Fund may sell when-issued securities before they are delivered, which may result in a capital gain or loss.

therefore, not considered to be illiquid investments. Securities on loan at December 31, 2011 are presented on the Fund’s Schedule of Portfolio Investments (“Schedule”). The average outstanding amount of securities on loan was $10.7 million for the year ended December 31, 2011.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $6,277 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The contract amount of forward currency contracts outstanding was $71.1 million as of December 31, 2011. The monthly average amount for these contracts was $47.9 million for the year ended December 31, 2011.

The Fund may purchase or write put and call options on a security or an index of securities. During the year ended December 31, 2011, the Fund used written call options to hedge against security prices (equity risk).

A stock index fluctuates with changes in the market values of the stocks included in the index, and therefore options on stock indexes and options on stocks involve elements of equity price risk.

Purchased Options Contracts – The Fund pays a premium which is included in “Investments, at value” on the Statement of Assets and Liabilities and marked to market to reflect the current value of the option. Premiums paid for purchasing put options that expire are treated as realized losses. When a put option is exercised or closed, premiums paid for purchasing put options are offset against proceeds to determine the realized gain/loss on the transaction. The Fund bears the risk of loss of the premium and change in value should the counterparty not perform under the contract.

Written Options Contracts – The Fund receives a premium which is recorded as a liability and is subsequently adjusted to the current value of the options written. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options that are either exercised or closed are offset against the proceeds received or the amount paid on the transaction to determine realized gains or losses. The risk associated with writing an option is that the Fund bears the market risk of an unfavorable change in the price of an underlying asset and are required to buy or sell an underlying asset under the contractual terms of the option at a price different from the current value.

Realized gains and losses are reported as “Net realized gains/(losses) from option transactions” on the Statement of Operations.

The Fund had the following transactions in written call and put options during the year ended December 31, 2011:

The following is a summary of the fair value of derivative instruments as of December 31, 2011:

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

The Manager provides investment advisory and management services for the Fund. The Manager has retained three independent money management organizations (the “Subadviser”), Franklin Advisers, Inc. (“Advisers”), Franklin Mutual Advisers, LLC (“Franklin Mutual”) and Templeton Global Advisors Limited (“Global Advisors”) to make investment decisions on behalf of the Fund. Pursuant to subadvisory agreements between the Manager and Advisers, the Manager and Franklin Mutual, and the Manager and Global Advisors, and the Trust, Advisers, Franklin Mutual and Global Advisors provide investment advisory services as 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011,$3,358 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


Investment Securities:	Level 1		Level 2		Level 3		Total
Common Stocks:
Aerospace & Defense	$	1,800,293	$	849,524	$	—	$	2,649,817
Air Freight & Logistics		645,091		443,229		—		1,088,320
Automobiles		534,236		1,632,339		—		2,166,575
Beverages		2,309,468		1,420,327		—		3,729,795
Biotechnology		2,877,184		—		—		2,877,184
Building Products		623,368		—		—		623,368
Capital Markets		1,559,145		804,771		—		2,363,916
Chemicals		324,900		1,444,804		—		1,769,704
Commercial Banks		3,584,916		4,095,590		—		7,680,506
Communications Equipment		3,067,456		672,318		—		3,739,774
Computers & Peripherals		1,459,827		—		—		1,459,827
Consumer Finance		768,871		—		—		768,871
Diversified Financial Services		3,194,830		1,960,543		70,707		5,226,080
Diversified Telecommunication Services		1,212,786		2,266,665		—		3,479,451
Electric Utilities		4,504,430		1,068,565		—		5,572,995
Electronic Equipment, Instruments & Components		1,192,697		—		—		1,192,697
Energy Equipment & Services		2,611,004		—		—		2,611,004
Food & Staples Retailing		4,769,329		843,443		—		5,612,772
Food Products		2,598,617		164,568		—		2,763,185
Gas Utilities		121,286		—		—		121,286
Health Care Equipment & Supplies		2,683,701		—		—		2,683,701
Health Care Providers & Services		1,936,222		—		—		1,936,222
Household Durables		269,602		136,172		—		405,774
Independent Power Producers & Energy Traders		554,997		—		—		554,997
Industrial Conglomerates		1,757,329		1,891,148		—		3,648,477
Insurance		3,842,507		3,048,470		—		6,890,977
Internet Software & Services		749,244		—		—		749,244
Leisure Equipment & Products		440,496		—		—		440,496


Investment Securities:	Level 1			Level 2		Level 3		Total
Machinery	$	1,077,113		$	—	$	—	$	1,077,113
Marine		420,716			789,778		—		1,210,494
Media		8,159,533			1,723,581		—		9,883,114
Metals & Mining		466,750			1,623,825		—		2,090,575
Multi-Utilities		2,777,767			—		—		2,777,767
Multiline Retail		1,098,435			376,072		—		1,474,507
Office Electronics		1,250,994			306,128		—		1,557,122
Oil, Gas & Consumable Fuels		10,872,239			5,957,014		—		16,829,253
Paper & Forest Products		1,676,221			—		—		1,676,221
Pharmaceuticals		11,511,679			5,567,239		—		17,078,918
Real Estate Investment Trusts (REITs)		139,131			72,740		—		211,871
Real Estate Management & Development		55,981			359,904		—		415,885
Semiconductors & Semiconductor Equipment		1,042,750			1,622,903		—		2,665,653
Software		4,115,689			1,425,909		—		5,541,598
Specialty Retail		205,576			633,392		—		838,968
Tobacco		3,294,623			4,030,454		—		7,325,077
Wireless Telecommunication Services		1,157,087			3,560,579		—		4,717,666
All Other Common Stocks+		—			5,971,022		—		5,971,022
Preferred Stocks+		331,950			—		—		331,950
Equity Linked Notes+		—			533,180		—		533,180
Convertible Preferred Stocks:
Oil, Gas & Consumable Fuels		—			514,937		—		514,937
Real Estate Investment Trusts (REITs)		—			55,391		—		55,391
All Other Convertible Preferred Stocks+		1,673,085			—		—		1,673,085
Convertible Bonds		—			1,014,494		—		1,014,494
Floating Rate Loans+		—			6,386,693		—		6,386,693
Collateralized Mortgage Obligations		—			431,599		—		431,599
Corporate Bonds+		—			33,783,939		—		33,783,939
Foreign Bonds		—			58,284,598		—		58,284,598
Yankee Dollars		—			8,931,759		—		8,931,759
Municipal Bonds		—			266,942		—		266,942
U.S. Government Agency		—			455,000		—		455,000
Warrants		—			4,500		—		4,500
Securities Held as Collateral for Securities on Loan		—			8,120,309		—		8,120,309
Unaffiliated Investment Company		24,487,520			—		—		24,487,520

Total Investment Securities		127,808,671			175,546,357		70,707		303,425,735

Other Financial Instruments:*
Written Call Options		(5,680	)		—		—		(5,680	)
Forward Currency Contracts		—			1,241,493		—		1,241,493

Total Investments	$	127,802,991		$	176,787,850	$	70,707	$	304,661,548

As of December 31, 2011, the Fund held securities that were valued in good faith pursuant to procedures approved by the Board of Trustees. The inputs used to value the Canary Wharf Group plc common stock included a discount applied to the closing price of a similar security that held the majority of the Company’s shares. The Bond Street Holding LLC, Class A common stock was valued at the last traded price.

Following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:


	Balance as of December 31, 2010	Net Realized gains/(losses)	Change in unrealized appreciation/ depreciation			Gross purchases		Settlements			Transfers in/ (out) of Level 3		Balance as of December 31, 2011
Investment Securities:
Common Stocks:
Diversified Finanical Services	$81,086	$—	$	(11,261	)	$	882	$	—		$	—	$	70,707
Electric Utilities	53,349	12,870		(15,426	)		—		(50,793	)		—		—

Total Investment Securities	$134,435	$12,870	$	(26,687	)	$	882	$	(50,793	)	$	—	$	70,707

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $314,512,735. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Franklin Templeton Founding Strategy Plus Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the three-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the three-year period then ended, in conformity with U.S. generally accepted accounting principles.

For the year ended December 31, 2011, 26.21% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

During the year ended December 31, 2011, the Fund declared net long-term capital gain distributions of $148,139.

During the year ended December 31, 2011, the Fund declared net short-term capital gain distributions of $253,280.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon , Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® Gateway Fund returned 3.06%. That compared to a 2.11% total return for its benchmark, the S&P 500 Index¹.

The Fund’s objective is to capture the majority of the returns associated with equity market investments while exposing investors to less risk than other equity investments. The Fund implements its strategy by holding a broadly diversified portfolio of common stocks, while also selling index call options and purchasing index put options. The use of index call options helps reduce the Fund’s volatility and provides steady cash flow that comprises an important source of the Fund’s return. However, index call options reduce the Fund’s ability to profit from increases in the value of its equity portfolio. The Fund also purchases index put options, which may help protect the Fund against significant market declines that could occur over a short period of time.*

Volatility is an important driver of options pricing: The greater the volatility in the marketplace, the higher the premium on index call options. During the period under review, the volatility in daily stock market movements drove up the implied volatility embedded in option prices. Heightened volatility directly translates into higher cash flow received for the Fund’s sale of index call options. In contrast to the S&P 500 Index, which was close to flat for the year, the Chicago Board Options Exchange Market Volatility Index²(the “VIX”)—a commonly accepted measure of equity market volatility—increased nearly 32%. Elevated VIX levels were especially beneficial to the Fund’s performance relative to the S&P 500 during the second half of the year.*

The Fund’s management team uses a consistent process to maintain the Fund’s diversified equity portfolio so that it closely tracks the performance of the S&P 500. The Portfolio managers strive to avoid material deviations from the S&P 500 in terms of style or sector weightings. The over- or

under-performance of the Fund compared to the benchmark is usually a direct result of the Fund’s hedging strategy. Specifically, in strong bull markets, the Fund will generally lag the broad equity market, as the opportunity cost of risk management becomes more apparent. Conversely, if the broad equity market sells off, the benefits of hedging and risk management are easier to see. An example of the latter phenomenon occurred in the second half of 2011, when the Fund rose 0.58%, and the S&P 500 fell 3.68%. This strong relative performance occurred in part because of the collection of time premium for the Fund’s call writing, or the degree to which the Fund was able to take advantage of the difference between the price of options and their intrinsic value.*

Another important factor supporting the Fund’s performance was the sale of a portion of its put protection in early August as the stock market decline began in earnest. However, the declining volatility level during October created a favorable pricing environment that allowed the Fund’s investment management team to restore index put options to the levels that occurred at the beginning of August.*

Past performance does not guarantee future results.

¹	The Standard & Poor’s 500^® Index (“S&P 500”) is representative 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.

²	Chicago Board Options Exchange Market Volatility Index (“VIX”) is a measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectations of 30 day volatility.

Investors cannot invest directly in an index.

Growth of a $10,000 Investment

LOGO

The chart above represents a comparison of a hypothetical investment in the Fund versus a similar investment in the Fund’s benchmark and represents the reinvestment of dividends and capital gains in the Fund.

Average Annual Total Returns as of December 31, 2011


	1 Year			Since Inception (4/30/10)
AZL^® Gateway Fund		3.06	%		3.02	%
S&P 500 Index		2.11	%		5.74	%

Expense Ratio¹


	Gross
AZL^® Gateway Fund		1.61	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.25% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against the Standard & Poor’s 500 Index (“S&P 500”), an unmanaged index that is representative of 500 selected common stocks, most of which are listed on the New York Stock Exchange, which 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.

As a shareholder of the AZL Gateway Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks +(97.6%):
	Aerospace & Defense (2.6%):
	4,860	Boeing Co. (The)	$	356,481
	1,520	Goodrich Corp.		188,024
	4,365	Honeywell International, Inc.		237,238
	3,835	Raytheon Co.		185,537
	5,265	United Technologies Corp.		384,819

				1,352,099

	Air Freight & Logistics (1.0%):
	7,150	United Parcel Service, Inc., Class B		523,309

	Auto Components (0.0%):
	1,560	Cooper Tire & Rubber Co.		21,856

	Automobiles (0.2%):
	11,690	Ford Motor Co.		125,784

	Beverages (2.4%):
	10,290	Coca-Cola Co. (The)		719,992
	8,235	PepsiCo, Inc.		546,392

				1,266,384

	Biotechnology (1.2%):
	5,115	Amgen, Inc.		328,434
	1,240	Biogen Idec, Inc.*		136,462
	3,080	Gilead Sciences, Inc.*		126,064
	610	Human Genome Sciences, Inc.*		4,508
	2,850	PDL BioPharma, Inc.		17,670

				613,138

	Capital Markets (1.6%):
	8,450	Charles Schwab Corp. (The)		95,147
	3,625	Eaton Vance Corp.		85,695
	3,070	Goldman Sachs Group, Inc. (The)		277,620
	6,405	Legg Mason, Inc.		154,040
	9,930	Morgan Stanley		150,241
	650	TD Ameritrade Holding Corp.		10,173
	1,835	Waddell & Reed Financial, Inc., Class A		45,453

				818,369

	Chemicals (2.0%):
	9,450	Dow Chemical Co. (The)		271,782
	7,810	E.I. du Pont de Nemours & Co.		357,542
	4,360	Eastman Chemical Co.		170,302
	1,190	Monsanto Co.		83,383
	3,960	Olin Corp.		77,814
	2,980	RPM International, Inc.		73,159

				1,033,982

	Commercial Banks (2.4%):
	1,640	Associated Banc-Corp.		18,319
	1,260	FirstMerit Corp.		19,064
	1,680	Old National Bancorp		19,572
	120	Toronto-Dominion Bank (The)		8,977


Shares			Fair Value


	Common Stocks, continued
	Commercial Banks, continued
	12,475	U.S. Bancorp	$	337,448
	31,155	Wells Fargo & Co.		858,632

				1,262,012

	Commercial Services & Supplies (0.5%):
	2,995	Avery Dennison Corp.		85,896
	760	Deluxe Corp.		17,298
	2,400	R.R. Donnelley & Sons Co.		34,632
	4,155	Waste Management, Inc.		135,910

				273,736

	Communications Equipment (2.1%):
	22,470	Cisco Systems, Inc.		406,258
	1,813	Motorola Mobility Holdings, Inc.*		70,344
	2,129	Motorola Solutions, Inc.		98,551
	320	Plantronics, Inc.		11,405
	9,490	QUALCOMM, Inc.		519,103

				1,105,661

	Computers & Peripherals (4.1%):
	4,335	Apple, Inc.*		1,755,675
	4,040	Dell, Inc.*		59,105
	1,200	EMC Corp.*		25,848
	10,535	Hewlett-Packard Co.		271,382

				2,112,010

	Consumer Finance (0.6%):
	3,400	American Express Co.		160,378
	5,600	Discover Financial Services		134,400

				294,778

	Containers & Packaging (0.1%):
	1,110	Sonoco Products Co.		36,586

	Distributors (0.3%):
	2,775	Genuine Parts Co.		169,830

	Diversified Financial Services (2.8%):
	34,415	Bank of America Corp.		191,347
	10,158	Citigroup, Inc.		267,257
	765	CME Group, Inc.		186,408
	23,960	JPMorgan Chase & Co.		796,670
	1,595	NYSE Euronext		41,629

				1,483,311

	Diversified Telecommunication Services (3.7%):
	35,485	AT&T, Inc.		1,073,066
	12,804	Frontier Communications Corp.		65,941
	19,575	Verizon Communications, Inc.		785,349

				1,924,356

	Electric Utilities (1.8%):
	19,165	Duke Energy Corp.		421,630
	770	Hawaiian Electric Industries, Inc.		20,390
	9,815	Pepco Holdings, Inc.		199,244
	5,600	Progress Energy, Inc.		313,712

				954,976


Shares			Fair Value


	Common Stocks, continued
	Electrical Equipment (0.6%):
	5,210	Emerson Electric Co.	$	242,734
	960	Hubbell, Inc., Class B		64,186

				306,920

	Electronic Equipment, Instruments & Components (0.4%):
	10,490	Corning, Inc.		136,160
	2,520	TE Connectivity, Ltd.		77,641

				213,801

	Energy Equipment & Services (2.2%):
	2,270	Baker Hughes, Inc.		110,413
	575	CARBO Ceramics, Inc.		70,915
	190	Diamond Offshore Drilling, Inc.		10,499
	7,040	Halliburton Co.		242,950
	4,645	Patterson-UTI Energy, Inc.		92,807
	8,151	Schlumberger, Ltd.		556,795
	1,220	Tidewater, Inc.		60,146

				1,144,525

	Food & Staples Retailing (1.7%):
	8,215	CVS Caremark Corp.		335,008
	1,790	Supervalu, Inc.		14,535
	9,240	Wal-Mart Stores, Inc.		552,182

				901,725

	Food Products (1.5%):
	7,580	ConAgra Foods, Inc.		200,112
	12,250	Kraft Foods, Inc., Class A		457,660
	7,165	Sara Lee Corp.		135,562

				793,334

	Gas Utilities (0.8%):
	636	AGL Resources, Inc.		26,877
	1,820	National Fuel Gas Co.		101,156
	2,390	ONEOK, Inc.		207,189
	1,290	WGL Holdings, Inc.		57,044

				392,266


	Health Care Equipment & Supplies (1.3%):
	4,060	Baxter International, Inc.		200,889
	4,750	Boston Scientific Corp.*		25,365
	1,220	Covidien plc		54,912
	390	Intuitive Surgical, Inc.*		180,574
	5,115	Medtronic, Inc.		195,649

				657,389

	Health Care Providers & Services (2.1%):
	4,905	Aetna, Inc.		206,942
	1,845	Coventry Health Care, Inc.*		56,033
	1,600	HCA Holdings, Inc.*		35,248
	2,980	Medco Health Solutions, Inc.*		166,582
	8,020	UnitedHealth Group, Inc.		406,453
	1,080	Universal Health Services, Inc., Class B		41,969
	2,520	WellPoint, Inc.		166,950

				1,080,177


Shares			Fair Value


	Common Stocks, continued
	Health Care Technology (0.0%):
	600	Quality Systems, Inc.	$	22,194

	Hotels, Restaurants & Leisure (1.9%):
	6,840	International Game Technology		117,648
	650	Las Vegas Sands Corp.*		27,775
	7,775	McDonald’s Corp.		780,066
	520	Tim Hortons, Inc.		25,178
	2,590	Wendy’s Co. (The)		13,882
	190	Wynn Resorts, Ltd.		20,993

				985,542

	Household Durables (0.8%):
	5,500	Leggett & Platt, Inc.		126,720
	5,455	Newell Rubbermaid, Inc.		88,098
	700	Toll Brothers, Inc.*		14,294
	2,105	Tupperware Brands Corp.		117,817
	970	Whirlpool Corp.		46,027

				392,956

	Household Products (2.0%):
	2,020	Colgate-Palmolive Co.		186,628
	2,045	Kimberly-Clark Corp.		150,430
	10,645	Procter & Gamble Co. (The)		710,128

				1,047,186

	Industrial Conglomerates (2.3%):
	3,185	3M Co.		260,310
	48,705	General Electric Co.		872,307
	1,490	Tyco International, Ltd.		69,598

				1,202,215

	Insurance (2.5%):
	540	AEGON NV, NYS*		2,171
	1,660	AFLAC, Inc.		71,812
	6,160	Allstate Corp. (The)		168,846
	1,570	American International Group, Inc.*		36,424
	900	Aon Corp.		42,120
	2,810	Arthur J. Gallagher & Co.		93,967
	1,900	Berkshire Hathaway, Inc., Class B*		144,970
	4,255	Fidelity National Financial, Inc., Class A		67,782
	410	Kemper Corp.		11,976
	4,460	Lincoln National Corp.		86,613
	4,665	Marsh & McLennan Cos., Inc.		147,507
	870	Mercury General Corp.		39,689
	4,930	Old Republic International Corp.		45,701
	1,570	Principal Financial Group, Inc.		38,622
	2,990	Travelers Cos., Inc. (The)		176,918
	6,905	XL Group plc		136,512

				1,311,630

	Internet & Catalog Retail (0.7%):
	1,995	Amazon.com, Inc.*		345,335


Shares			Fair Value

	Common Stocks, continued
	Internet Software & Services (2.4%):
	2,360	Akamai Technologies, Inc.*	$	76,181
	660	AOL, Inc.*		9,966
	200	Baidu, Inc., Sponsored ADR*		23,294
	7,110	eBay, Inc.*		215,646
	1,335	Google, Inc., Class A*		862,276
	1,890	VeriSign, Inc.		67,511

				1,254,874

	IT Services (4.2%):
	6,530	Automatic Data Processing, Inc.		352,685
	1,500	Broadridge Financial Solutions, Inc.		33,825
	3,220	Cognizant Technology Solutions Corp., Class A*		207,078
	2,420	Fidelity National Information Services, Inc.		64,348
	5,375	International Business Machines Corp.		988,355
	320	Lender Processing Services, Inc.		4,822
	7,765	Paychex, Inc.		233,804
	1,390	Visa, Inc., Class A		141,127
	8,115	Western Union Co.		148,180

				2,174,224

	Leisure Equipment & Products (0.4%):
	3,750	Eastman Kodak Co.*		2,436
	7,010	Mattel, Inc.		194,597

				197,033

	Machinery (3.2%):
	2,640	Caterpillar, Inc.		239,184
	3,090	Cummins, Inc.		271,982
	3,200	Deere & Co.		247,520
	5,320	Eaton Corp.		231,580
	2,225	Parker Hannifin Corp.		169,656
	1,020	Pentair, Inc.		33,956
	1,005	Snap-On, Inc.		50,873
	1,685	SPX Corp.		101,555
	4,090	Stanley Black & Decker, Inc.		276,484
	1,830	Timken Co.		70,839

				1,693,629

	Media (2.4%):
	6,675	News Corp., Class B		121,352
	3,315	Omnicom Group, Inc.		147,783
	2,520	Time Warner Cable, Inc.		160,196
	7,300	Time Warner, Inc.		263,822
	700	Virgin Media, Inc.		14,966
	14,620	Walt Disney Co. (The)		548,250

				1,256,369

	Metals & Mining (0.9%):
	13,275	Alcoa, Inc.		114,829
	930	Companhia Siderurgica Nacional SA, Sponsored ADR		7,607


Shares			Fair Value

	Common Stocks, continued
	Metals & Mining, continued
	3,020	Freeport-McMoRan Copper & Gold, Inc.	$	111,106
	3,675	Gerdau SA, Sponsored ADR		28,702
	2,710	Nucor Corp.		107,234
	1,750	Southern Copper Corp.		52,815
	600	Steel Dynamics, Inc.		7,890
	1,100	Worthington Industries, Inc.		18,018

				448,201

	Multi-Utilities (2.0%):
	5,930	Ameren Corp.		196,461
	2,400	CenterPoint Energy, Inc.		48,216
	5,165	Consolidated Edison, Inc.		320,385
	2,655	Integrys Energy Group, Inc.		143,848
	1,285	OGE Energy Corp.		72,872
	7,410	Public Service Enterprise Group, Inc.		244,604

				1,026,386

	Multiline Retail (1.1%):
	4,165	J.C. Penney Co., Inc.		146,400
	7,040	Macy’s, Inc.		226,547
	3,770	Nordstrom, Inc.		187,406
	10	Sears Holdings Corp.*		318
	450	Target Corp.		23,049

				583,720

	Oil, Gas & Consumable Fuels (9.6%):
	7,695	Chesapeake Energy Corp.		171,522
	11,310	Chevron Corp.		1,203,384
	590	CNOOC, Ltd., Sponsored ADR		103,061
	9,350	ConocoPhillips		681,334
	2,020	Consol Energy, Inc.		74,134
	23,240	Exxon Mobil Corp.		1,969,822
	6,350	Occidental Petroleum Corp.		594,995
	3,955	Southwestern Energy Co.*		126,323
	1,170	Statoil ASA, Sponsored ADR		29,964
	530	Total SA, Sponsored ADR		27,088

				4,981,627

	Paper & Forest Products (0.4%):
	6,760	MeadWestvaco Corp.		202,462

	Personal Products (0.1%):
	4,540	Avon Products, Inc.		79,314

	Pharmaceuticals (6.7%):
	9,680	Abbott Laboratories		544,306
	1,810	Bristol-Myers Squibb Co.		63,784
	2,600	Eli Lilly & Co.		108,056
	2,410	GlaxoSmithKline plc, Sponsored ADR		109,968
	12,800	Johnson & Johnson Co.		839,424
	18,960	Merck & Co., Inc.		714,792
	50,735	Pfizer, Inc.		1,097,906

				3,478,236


Shares			Fair Value


	Common Stocks, continued
	Professional Services (0.1%):
	640	Dun & Bradstreet Corp.	$	47,891

	Real Estate Investment Trusts (REITs) (1.8%):
	8,550	Annaly Capital Management, Inc.		136,458
	10,280	Duke Realty Corp.		123,874
	440	Hatteras Financial Corp.		11,603
	1,170	Healthcare Realty Trust, Inc.		21,750
	6,490	Liberty Property Trust		200,411
	4,175	Mack-Cali Realty Corp.		111,431
	4,345	Senior Housing Properties Trust		97,502
	4,088	Ventas, Inc.		225,371

				928,400

	Road & Rail (0.5%):
	12,725	CSX Corp.		267,989

	Semiconductors & Semiconductor Equipment (2.4%):
	6,920	Advanced Micro Devices, Inc.*		37,368
	560	Altera Corp.		20,776
	2,590	Analog Devices, Inc.		92,670
	1,310	Applied Materials, Inc.		14,030
	120	First Solar, Inc.*		4,051
	25,515	Intel Corp.		618,739
	2,625	Linear Technology Corp.		78,829
	450	Maxim Integrated Products, Inc.		11,718
	3,615	Microchip Technology, Inc.		132,417
	3,575	NVIDIA Corp.*		49,550
	5,040	Texas Instruments, Inc.		146,714
	1,860	Xilinx, Inc.		59,632

				1,266,494

	Software (3.6%):
	5,400	Activision Blizzard, Inc.		66,528
	3,085	Adobe Systems, Inc.*		87,213
	2,510	Autodesk, Inc.*		76,128
	40,785	Microsoft Corp.		1,058,779
	21,275	Oracle Corp.		545,704
	3,420	Symantec Corp.*		53,523

				1,887,875

	Specialty Retail (2.8%):
	1,830	Abercrombie & Fitch Co., Class A		89,377
	3,840	American Eagle Outfitters, Inc.		58,714
	2,125	Best Buy Co., Inc.		49,661
	1,770	Foot Locker, Inc.		42,197
	2,205	Gap, Inc. (The)		40,903
	11,925	Home Depot, Inc.		501,327
	4,810	Limited Brands, Inc.		194,083
	7,950	Lowe’s Cos., Inc.		201,771
	4,240	RadioShack Corp.		41,170
	2,930	Tiffany & Co.		194,142
	720	TJX Cos., Inc. (The)		46,476

				1,459,821


Shares or Contracts			Fair Value


	Common Stocks, continued
	Thrifts & Mortgage Finance (0.2%):
	1,394	Capitol Federal Financial, Inc.	$	16,087
	9,005	New York Community Bancorp, Inc.		111,392

				127,479

	Tobacco (2.3%):
	12,730	Altria Group, Inc.		377,444
	8,195	Philip Morris International, Inc.		643,144
	3,340	Reynolds American, Inc.		138,343
	1,721	Vector Group, Ltd.		30,565

				1,189,496

	Trading Companies & Distributors (0.1%):
	1,255	GATX Corp.		54,793

	Wireless Telecommunication Services (0.2%):
	1,800	Clearwire Corp., Class A*		3,492
	2,970	Vodafone Group plc, Sponsored ADR		83,249

				86,741

	Total Common Stocks (Cost $49,348,920)			50,862,426

	Purchased Put Options (0.3%):
	84	On S&P 500 Index, Strike @ 1,125 Exp. 1/21/12		16,380
	123	On S&P 500 Index, Strike @ 1,100 Exp. 1/21/12		14,760
	58	On S&P 500 Index, Strike @ 1,075 Exp. 2/18/12		36,540
	59	On S&P 500 Index, Strike @ 1,125 Exp. 2/18/12		63,130
	75	On S&P 500 Index, Strike @ 1,100 Exp. 2/18/12		61,500

	Total Purchased Put Options (Cost $809,838)			192,310

	Unaffiliated Investment Company (9.3%):
	4,829,614	Dreyfus Treasury Prime Cash Management, 0.00%(a)		4,829,614

	Total Unaffiliated Investment Company (Cost $4,829,614)			4,829,614

	Total Investment Securities (Cost $54,988,372)(b) — 107.2%			55,884,350
	Net other assets (liabilities) — (7.2)%			(3,768,679	)

	Net Assets — 100.0%		$	52,115,671

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	54,988,372

Investment securities, at value	$	55,884,350
Interest and dividends receivable		94,495
Receivable for capital shares issued		125,608
Receivable for expenses paid indirectly		1,606
Prepaid expenses		649

Total Assets		56,106,708

Liabilities:
Written options (Premiums received $2,417,493)		2,447,655
Payable for investments purchased		1,487,925
Payable for capital shares redeemed		291
Manager fees payable		38,148
Administration fees payable		1,868
Distribution fees payable		10,353
Custodian fees payable		1,910
Administrative and compliance services fees payable		208
Trustee fees payable		11
Other accrued liabilities		2,668

Total Liabilities		3,991,037

Net Assets	$	52,115,671

Net Assets Consist of:
Capital	$	50,901,986
Accumulated net investment income/(loss)		458,963
Accumulated net realized gains/(losses) from investment transactions		(111,094	)
Net unrealized appreciation/(depreciation) on investments		865,816

Net Assets	$	52,115,671

Shares of beneficial interest (unlimited number of shares authorized, no par value)		4,993,517
Net Asset Value (offering and redemption price per share)	$	10.44

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	873,493
Foreign withholding tax		(140	)

Total Investment Income		873,353

Expenses:
Manager fees		267,836
Administration fees		20,260
Distribution fees		83,699
Custodian fees		15,173
Administrative and compliance services fees		1,484
Trustee fees		2,509
Professional fees		2,887
Shareholder reports		2,693
Recoupment of prior expenses reimbursed by the Manager		21,020
Other expenses		938

Total expenses before reductions		418,499
Less expenses paid indirectly		(4,551	)

Net expenses		413,948

Net Investment Income/(Loss)		459,405

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		(218,514	)
Net realized gains/(losses) on options contracts		588,596
Change in unrealized appreciation/depreciation on investments		220,721

Net Realized/Unrealized Gains/(Losses) on Investments		590,803

Change in Net Assets Resulting From Operations	$	1,050,208

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Gateway Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

The Fund seeks to capture the majority of the returns associated with equity market investments, while exposing investors to less risk than other equity investments. To meet this investment goal, the Fund invests in a broadly diversified portfolio of common stocks, while also selling index call options and purchasing index put options. Writing index call options reduces the Fund’s volatility, provides a steady cash flow and is an important source of the Fund’s return, although it reduces the Fund’s ability to profit from increases in the value of its equity portfolio. The Fund also buys index put options, which can protect the Fund from a significant market decline that may occur over a short period of time. The value of an index put option generally increases as the prices of stocks constituting the index decrease and decreases as those stocks increase in price. The combination of the diversified stock portfolio, the steady cash flow from the sale of index call options and the downside protection from index put options is intended to provide the Fund with the majority of the returns associated with equity market investments while exposing investors to less risk than other equity investments. During the year ended December 31, 2011, written index call options and purchased index put options were used in accordance with this objective.

A stock index fluctuates with changes in the market values of the stocks included in the index, and therefore options on stock indexes involve elements of equity price risk.

Purchased Options Contracts—The Fund pays a premium which is included in “Investments, at value” on the Statement of Assets and Liabilities and marked to market to reflect the current value of the option. Premiums paid for purchasing put options that expire are treated as realized losses. When a put option is exercised or closed, premiums paid for purchasing put options are offset against proceeds to determine the realized gain/loss on the transaction.

Written Options Contracts—The Fund receives a premium which is recorded as a liability and is subsequently adjusted to the current value of the options written. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options that are either exercised or closed are offset against the proceeds received or the amount paid on the transaction to determine realized gains or losses.

Realized gains and losses are reported as “Net realized gains/(losses) from option transactions” on the Statement of Operations.

The Fund had the following transactions in purchased call and put options during the year ended December 31, 2011:

The Fund had the following transactions in written call and put options during the year ended December 31, 2011:

The following is a summary of the fair value of derivative instruments as of December 31, 2011:

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

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, 2011, the contractual reimbursements that are subject to repayment by the Fund in subsequent years were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $446 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

The Fund generally values index options at the average of the closing bid and ask quotations on the principal exchange on which the option is traded and are typically categorized as Level 1 in the fair value hierarchy. For options where market quotations are not readily available, fair value procedures as described below may be applied.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1			Level 2		Level 3		Total
Investment Securities:
Common Stocks+	$	50,862,426		$	—	$	—	$	50,862,426
Purchased Put Options		192,310			—		—		192,310
Unaffiliated Investment Company		4,829,614			—		—		4,829,614

Total Investment Securities		55,884,350			—		—		55,884,350

Other Financial Instruments:*
Written Call Options		(2,447,655	)		—		—		(2,447,655	)

Total Investments	$	53,436,695		$	—	$	—	$	53,436,695

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $52,948,479. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011 there were no dividends paid to shareholders.

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Gateway Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended and the statements of changes in net assets and the financial highlights for each of the periods in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended and the changes in its net assets and the financial highlights for each of the periods in the two-year period then ended, in conformity with U.S. generally accepted accounting principles.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® International Index Fund returned –12.78%. That compared to a –11.73% total return for its benchmark, the MSCI EAFE Index¹.

The Fund attempts to replicate the performance of the MSCI EAFE Index, which tracks the performance of 22 international equity markets.

International equities lost the trading tug-of-war between assets perceived as high risk and those perceived as low risk that characterized 2011. Political turmoil, natural disasters and, above all, global debt problems consumed investors’ attention and drove broad market swings. As the year progressed, news flow grew increasingly influential over investors’ trading activity, to the point where company fundamentals became virtually meaningless.

Early in the year, stocks moved unevenly higher despite political upheaval spreading across the Middle East and North Africa regions and a sharp rise in oil and other commodity prices. March brought devastating natural disasters that left Japan with massive infrastructure damage, resulting in global supply chain disruptions. All the while, inflationary pressures persisted in developing countries. Nevertheless, the global economy continued to expand, although at a slower pace. Solid corporate profits, improving labor market conditions and reasonably upbeat leading indicators pushed most of the world’s equity markets forward.

After reaching a peak at the end of April, equities were met with a sharp reversal when the heightened possibility of Greece defaulting on its debt rekindled fears about the potential impact of the sovereign debt crisis spreading in Europe. During the same weeks it became evident that the pace of economic growth had slowed in the United States and other developed nations. In the United States, a prolonged debt ceiling debate revealed the ineffectiveness of the nation’s policymakers and ultimately led to Standard & Poor’s decision to downgrade the U.S. government’s credit rating in early August. This announcement spurred one of the most volatile periods in equity trading history. Stock markets across the world swooned as debt problems in Europe spread to Italy and Spain, and global economic indicators grew increasingly bleak.

Equities rebounded in October as stronger economic data from the United States helped to calm fears of a global double-dip recession and European leaders demonstrated greater unity in their quest to stem the debt crisis. After months of deliberation, at last finance ministers agreed upon a new plan to reduce Greece’s debt burden, recapitalize the region’s banks and increase the size of the euro-zone bailout fund. However, a lack of details about the rescue plan raised doubts among investors and thwarted the rally at the end of October. International equities generally declined through the final two months of the year as political instability in Greece and Italy fueled uncertainty about whether Europe’s leaders would be able to contain the crisis. Market volatility softened in December with the support of global central bank actions and improving economic data.

Of the 22 developed countries in the MSCI EAFE Index, only Ireland (+13.71%) and New Zealand (+5.54%) posted gains for the year (in USD). While equity markets sold off broadly across Europe, countries participating in the euro currency union saw particularly painful losses. Greece (–62.77%) finished well below all other countries in the Index.

Health care was the top performing sector in the Fund’s benchmark in 2011. In addition, the defensive consumer staples sector outperformed amid highly volatile conditions. Heightened uncertainty did not bode well for the more cyclical materials sector. Financials were also battered by the world’s debt problems.*

The underperformance of the Fund compared to its benchmark was the result of Fund expenses that are not incurred by the benchmark.

Past performance does not guarantee future results.

The Morgan Stanley Capital International, Europe, Australasia and Far East (“MSCI EAFE”) Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. Investors cannot invest directly in an index.

Fund Objective

The Fund’s investment objective is to seek to match the performance of the Morgan Stanley Capital International Europe, Australasia and Far East Index (“MSCI EAFE^® Index”) as closely as possible. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing at least 80% 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.

Investment Concerns

Emerging market investing may be subject to additional economic, political, liquidity, and currency risks not associated with more developed countries.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			Since Inception (5/1/09)
AZL^® International Index Fund		–12.78	%		8.51	%
MSCI EAFE Index (gross of withholding taxes)		–11.73	%		10.33	%
MSCI EAFE Index (net of withholding taxes)		–12.14	%		9.85	%

Expense Ratio


	Gross
AZL^® International Index Fund		0.83	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contact limiting operating expenses, excluding certain expenses (such as interest expense), to 0.77% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against the Morgan Stanley Capital International, Europe, Australasia and Far East (“MSCI EAFE”) Index, which is an unmanaged free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The index noted as “gross of withholding taxes” does not reflect the deduction of fees associated with a mutual fund, such as investment management and fund accounting fees. The index noted as “net of withholding taxes” reflects the reinvestment of dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Fund’s performance reflects the deduction of fees for services provided to the Fund. Investors cannot invest directly in an index.

As a shareholder of the AZL International Index Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (97.7%):
	Aerospace & Defense (0.7%):
	132,046	BAE Systems plc	$	582,098
	45,152	Cobham plc		128,091
	817	Elbit Systems, Ltd.		33,627
	16,115	European Aeronautic Defence & Space Co. NV		501,298
	14,519	Finmeccanica SpA^		53,531
	29,768	Meggitt plc		162,861
	73,944	Rolls-Royce Holdings plc		853,921
	6,546	Safran SA^		195,640
	62,000	Singapore Technologies Engineering, Ltd.		128,432
	4,014	Thales SA		126,287

				2,765,786

	Air Freight & Logistics (0.3%):
	33,406	Deutsche Post AG		513,545
	77,000	Global Logistic Properties, Ltd.*		103,978
	14,405	TNT Express NV		107,336
	27,356	Toll Holdings, Ltd.		117,833
	15,500	YAMATO HOLDINGS Co., Ltd.		261,029

				1,103,721

	Airlines (0.2%):
	34,000	All Nippon Airways Co., Ltd.^		95,021
	49,000	Cathay Pacific Airways, Ltd.		84,166
	9,285	Deutsche Lufthansa AG, Registered Shares		110,357
	38,521	International Consolidated Airlines Group SA*		86,359
	46,621	Qantas Airways, Ltd.*		69,504
	1,200	Ryanair Holdings plc, Sponsored ADR*		33,432
	22,000	Singapore Airlines, Ltd.		172,032

				650,871

	Auto Components (0.8%):
	7,600	AISIN SEIKI Co., Ltd.		216,299
	25,800	Bridgestone Corp.		584,152
	7,093	Compagnie Generale DES Establissements Michelin SCA, Class B		416,935
	3,079	Continental AG		191,623
	19,200	DENSO Corp.		529,572
	59,979	GKN plc		169,457
	4,000	Koito Manufacturing Co., Ltd.		56,063
	6,000	NGK Spark Plug Co., Ltd.		74,378
	6,300	NHK SPRING Co., Ltd.		55,758
	3,900	NOK Corp.		66,954
	4,414	Nokian Renkaat OYJ		141,616
	9,841	Pirelli & C. SpA		82,514
	5,400	Stanley Electric Co., Ltd.		79,252
	6,400	Sumitomo Rubber Industries, Ltd.		76,764
	2,900	Toyoda Gosei Co., Ltd.		46,178


Shares			Fair Value

	Common Stocks, continued
	Auto Components, continued
	2,100	Toyota Boshoku Corp.	$	21,884
	7,300	Toyota Industries Corp.		198,428

				3,007,827

	Automobiles (2.9%):
	13,077	Bayerische Motoren Werke AG (BMW)		874,162
	8,000	Daihatsu Motor Co., Ltd.		142,669
	35,789	Daimler AG, Registered Shares		1,570,814
	30,660	Fiat Industrial SpA*		261,192
	29,757	Fiat SpA		136,063
	24,000	Fuji Heavy Industries, Ltd.		144,794
	64,400	Honda Motor Co., Ltd.^		1,961,637
	46,000	Isuzu Motors, Ltd.		212,452
	62,000	Mazda Motor Corp.*		109,387
	148,000	Mitsubishi Motors Corp.		174,852
	98,200	Nissan Motor Co., Ltd.		881,629
	6,256	PSA Peugeot Citroen SA		97,542
	7,638	Renault SA		263,237
	13,200	Suzuki Motor Corp.		272,200
	109,000	Toyota Motor Corp.		3,628,545
	1,193	Volkswagen AG		159,918
	11,200	Yamaha Motor Co., Ltd.^		141,517

				11,032,610

	Beverages (2.2%):
	31,723	Anheuser-Busch InBev NV		1,937,174
	15,600	Asahi Breweries, Ltd.^		342,859
	4,248	Carlsberg A/S, Class B		300,081
	22,820	Coca-Cola Amatil, Ltd.		268,526
	7,413	Coca-Cola Hellenic Bottling Co. SA		127,000
	2,300	Coca-Cola West Co., Ltd.		39,880
	98,949	Diageo plc		2,158,740
	4,577	Heineken Holding NV		186,772
	10,230	Heineken NV		472,216
	32,000	Kirin Holdings Co., Ltd.		388,887
	7,893	Pernod Ricard SA		730,458
	37,658	SABMiller plc		1,319,949

				8,272,542

	Biotechnology (0.2%):
	4,316	Actelion, Ltd., Registered Shares		147,623
	20,725	CSL, Ltd.		678,166
	5,186	Grifols SA*		87,055

				912,844

	Building Products (0.6%):
	40,000	Asahi Glass Co., Ltd.^		336,756
	12,286	Assa Abloy AB, Class B		307,856
	15,872	Compagnie de Saint-Gobain		608,204
	9,400	Daikin Industries, Ltd.		257,056
	1,556	Geberit AG, Registered Shares		299,643


Shares			Fair Value

	Common Stocks, continued
	Building Products, continued
	10,700	JS Group Corp.	$	205,317
	34,000	Nippon Sheet Glass Co., Ltd.		63,531
	11,000	TOTO, Ltd.		84,815

				2,163,178

	Capital Markets (1.3%):
	39,885	3i Group plc		111,532
	45,071	Credit Suisse Group AG, Registered Shares		1,057,885
	65,300	Daiwa Securities Group, Inc.^		203,295
	36,723	Deutsche Bank AG, Registered Shares		1,387,837
	7,313	GAM Holding, Ltd.		79,055
	22,629	ICAP plc		121,716
	21,926	Investec plc		114,956
	18,151	Investor AB, B Shares		337,473
	8,287	Julius Baer Group, Ltd.		322,401
	13,972	Macquarie Group, Ltd.		339,543
	72,661	Man Group plc		140,904
	20,338	Mediobanca SpA		116,894
	144,000	Nomura Holdings, Inc.		435,155
	514	Partners Group Holding AG		89,566
	7,906	Ratos AB, B Shares		92,473
	949	SBI Holdings, Inc.		69,430
	4,244	Schroders plc		86,227

				5,106,342

	Chemicals (3.6%):
	11,208	Air Liquide SA		1,384,989
	6,000	Air Water, Inc.		76,348
	9,185	Akzo Nobel NV		441,883
	2,170	Arkema, Inc.		153,283
	50,000	ASAHI KASEI Corp.		301,172
	36,296	BASF SE		2,531,026
	1,335	Brenntag AG		124,004
	11,000	Daicel Chemical Industries, Ltd.		66,967
	18,000	Denki Kagaku Kogyo Kabushiki Kaisha		66,569
	334	Givaudan SA, Registered Shares		317,111
	4,400	Hitachi Chemical Co., Ltd.		77,418
	63,305	Incitec Pivot, Ltd.		200,818
	17,314	Israel Chemicals, Ltd.		179,847
	8,604	Johnson Matthey plc		244,943
	7,100	JSR Corp.		130,818
	6,820	K+S AG, Registered Shares		307,473
	10,000	Kaneka Corp.		53,235
	9,000	Kansai Paint Co., Ltd.		80,290
	6,172	Koninklijke DSM NV		285,952
	13,400	Kuraray Co., Ltd.		190,441
	3,194	Lanxess AG		165,231
	6,745	Linde AG		1,003,300
	52,500	Mitsubishi Chemical Holdings Corp.		288,895


Shares			Fair Value

	Common Stocks, continued
	Chemicals, continued
	17,000	Mitsubishi Gas Chemical Co., Inc.	$	94,197
	32,000	Mitsui Chemicals, Inc.		97,560
	6,500	Nitto Denko Corp.		232,249
	9,192	Novozymes A/S, B Shares		283,120
	14,542	Orica, Ltd.		360,620
	16,100	Shin-Etsu Chemical Co., Ltd.		792,005
	57,000	Showa Denko K.K.		115,407
	82	Sika AG-Bearer Shares		154,120
	2,380	Solvay SA		195,211
	61,000	SUMITOMO CHEMICAL Co., Ltd.		222,449
	3,745	Syngenta AG		1,102,572
	10,000	Taiyo Nippon Sanso Corp.		69,708
	38,000	Teijin, Ltd.		116,837
	58,000	TORAY INDUSTRIES, Inc.		414,883
	18,000	Tosoh Corp.		48,102
	41,000	Ube Industries, Ltd.		112,229
	4,418	Umicore		181,878
	625	Wacker Chemie AG^		50,264
	7,493	Yara International ASA		300,285

				13,615,709

	Commercial Banks (11.1%):
	24,000	Aozora Bank, Ltd.		66,026
	103,885	Australia & New Zealand Banking Group, Ltd.		2,176,590
	27,973	Banca Carige SpA^		53,372
	188,318	Banca Monte dei Paschi di Siena SpA^		61,014
	181,099	Banco Bilbao Vizcaya Argentaria SA^		1,556,312
	43,128	Banco de Sabadell SA		163,268
	28,458	Banco Espirito Santo SA^		49,646
	65,391	Banco Popolare Societa Cooperativa^		84,146
	40,135	Banco Popular Espanol SA^		182,608
	333,543	Banco Santander SA		2,519,732
	41,847	Bank Hapoalim BM		136,630
	46,665	Bank Leumi Le		133,838
	62,000	Bank of East Asia, Ltd. (The)		235,147
	14,000	Bank of Kyoto, Ltd. (The)		120,525
	50,000	Bank of Yokohama, Ltd. (The)		236,310
	33,351	Bankia SA*		154,987
	8,504	Bankinter SA^		52,042
	451,443	Barclays plc		1,222,709
	13,898	Bendigo and Adelaide Bank, Ltd.		113,963
	38,174	BNP Paribas SA		1,494,261
	146,500	BOC Hong Kong Holdings, Ltd.		345,430
	30,000	Chiba Bank, Ltd. (The)		193,179
	7,000	Chugoku Bank, Ltd. (The)		97,603


Shares			Fair Value

	Common Stocks, continued
	Commercial Banks, continued
	122,030	Chuo Mitsui Trust Holdings, Inc.	$	357,866
	142,338	Commerzbank AG^		239,687
	61,601	Commonwealth Bank of Australia		3,095,038
	40,252	Credit Agricole SA		226,444
	25,907	Danske Bank A/S		329,986
	70,000	DBS Group Holdings, Ltd.		620,252
	38,601	DnB NOR ASA		377,349
	7,424	Erste Group Bank AG		130,011
	31,000	Fukuoka Financial Group, Inc.		130,317
	17,000	Gunma Bank, Ltd. (The)		93,515
	18,000	Hachijuni Bank, Ltd. (The)		102,798
	30,100	Hang Seng Bank, Ltd.		356,720
	19,000	Hiroshima Bank, Ltd. (The)		88,297
	50,000	Hokuhoku Financial Group, Inc.		97,365
	705,374	HSBC Holdings plc		5,353,608
	398,780	Intesa Sanpaolo		662,276
	40,629	Intesa Sanpaolo		50,320
	30,726	Israel Discount Bank*		41,197
	9,000	Iyo Bank, Ltd. (The)		88,822
	26,000	Joyo Bank, Ltd. (The)		114,986
	5,917	KBC Groep NV		74,287
	1,633,389	Lloyds Banking Group plc*		652,269
	503,300	Mitsubishi UFJ Financial Group, Inc.		2,135,670
	4,424	Mizrahi Tefahot Bank, Ltd.		35,050
	901,039	Mizuho Financial Group, Inc.		1,216,284
	86,980	National Australia Bank, Ltd.		2,073,184
	38,124	National Bank of Greece SA		79,388
	36,059	Natixis		90,447
	25,000	NISHI-NIPPON CITY BANK, Ltd. (The)		71,904
	103,896	Nordea Bank AB		802,517
	101,000	Oversea-Chinese Banking Corp., Ltd.		608,323
	1,711	Raiffeisen International Bank-Holding AG^		44,257
	74,587	Resona Holdings, Inc.		328,250
	690,675	Royal Bank of Scotland Group plc*		218,919
	24,800	Seven Bank, Ltd.		48,637
	51,000	Shinsei Bank, Ltd.		52,881
	23,000	Shizuoka Bank, Ltd. (The)		242,185
	56,371	Skandinaviska Enskilda Banken AB, Class A		327,788
	26,248	Societe Generale		582,479
	94,013	Standard Chartered plc		2,046,502
	53,069	Sumitomo Mitsui Financial Group, Inc.		1,476,825
	8,000	Suruga Bank, Ltd.		71,565
	22,913	Svenska Cellulosa AB, B Shares		339,381


Shares			Fair Value

	Common Stocks, continued
	Commercial Banks, continued
	19,379	Svenska Handelsbanken AB, A Shares	$	509,221
	32,031	Swedbank AB, A Shares		414,305
	32,167	UBI Banca – Unione di Banche Italiane SCPA^		131,052
	53,130	UniCredit SpA		437,982
	50,000	United Overseas Bank, Ltd.		587,343
	119,747	Westpac Banking Corp.		2,443,750
	8,000	Wing Hang Bank, Ltd.		65,377
	8,000	Yamaguchi Financial Group, Inc.		76,347

				42,290,561

	Commercial Services & Supplies (0.6%):
	10,595	Aggreko plc		330,424
	14,137	Babcock International Group plc		160,798
	58,454	Brambles, Ltd.		427,299
	22,000	Dai Nippon Printing Co., Ltd.		211,923
	56,255	G4S plc		236,736
	8,400	SECOM Co., Ltd.		387,251
	11,934	Securitas AB, B Shares		102,932
	19,921	Serco Group plc		146,456
	1,185	Societe BIC SA		104,905
	22,000	TOPPAN PRINTING Co., Ltd.		161,634

				2,270,358

	Communications Equipment (0.6%):
	93,012	Alcatel-Lucent*		144,985
	147,883	Nokia OYJ		714,528
	119,080	Telefonaktiebolaget LM Ericsson, B Shares		1,210,275

				2,069,788

	Computers & Peripherals (0.3%):
	74,000	Fujitsu, Ltd.		384,069
	100,000	NEC Corp.*		202,394
	4,900	Seiko Epson Corp.		65,008
	159,000	Toshiba Corp.		649,473

				1,300,944

	Construction & Engineering (0.7%):
	5,393	ACS, Actividades de Construccion y Servicios SA^		159,623
	29,552	Balfour Beatty plc		121,023
	7,591	Bouygues SA^		238,143
	6,000	Chiyoda Corp.		60,961
	1,381	Eiffage SA		33,270
	2,015	Fomento de Construcciones y Contratas SA^		52,199
	1,742	Hochtief AG		100,749
	8,000	JGC Corp.		191,824
	35,000	Kajima Corp.		107,484
	6,000	Kinden Corp.		50,677
	2,897	Koninklijke Boskalis Westminster NV		106,292


Shares			Fair Value

	Common Stocks, continued
	Construction & Engineering, continued
	5,731	Leighton Holdings, Ltd.	$	111,352
	27,000	Obayashi Corp.		119,893
	22,000	Shimizu Corp.		92,258
	15,545	Skanska AB, B Shares		256,511
	39,000	TAISEI Corp.		98,744
	17,863	Vinci SA		779,236

				2,680,239

	Construction Materials (0.6%):
	27,589	Boral, Ltd.		101,362
	7,665	CIMPOR-Cimentos de Portugal SGPS SA		52,733
	28,022	CRH plc		556,255
	27,582	Fletcher Building, Ltd.		131,699
	5,600	HeidelbergCement AG		237,606
	9,756	Holcim, Ltd., Registered Shares		521,379
	1,441	Imerys SA		66,004
	17,641	James Hardie Industries SE		123,109
	7,858	Lafarge SA		274,524

				2,064,671

	Consumer Finance (0.1%):
	2,900	Aeon Credit Service Co., Ltd.		45,778
	5,600	Credit Saison Co., Ltd.		112,126
	4,180	ORIX Corp.		344,666

				502,570

	Containers & Packaging (0.2%):
	49,005	Amcor, Ltd.		360,923
	33,559	Rexam plc		183,602
	5,600	Toyo Seikan Kaisha, Ltd.		76,289

				620,814

	Distributors (0.2%):
	4,000	Jardine Cycle & Carriage, Ltd.		148,579
	226,000	Li & Fung, Ltd.		416,076

				564,655

	Diversified Consumer Services (0.1%):
	2,600	Benesse Holdings, Inc.		125,849
	95,700	Sands China, Ltd.*		271,248

				397,097

	Diversified Financial Services (1.4%):
	6,999	ASX, Ltd.		218,604
	74,028	BGP Holdings plc*(a)		—
	29,995	Criteria Caixacorp SA		146,653
	7,609	Deutsche Boerse AG*		398,868
	1,156	Eurazeo		40,931
	2,410	EXOR SpA		48,187
	82,000	First Pacific Co., Ltd.		85,099
	3,124	Groupe Bruxelles Lambert SA		207,539
	40,500	Hong Kong Exchanges & Clearing, Ltd.		648,559
	4,519	Industrivarden AB, C Shares		53,710
	151,305	ING Groep NV*		1,078,106
	8,109	Kinnevik Investment AB, Class B		157,910


Shares			Fair Value

	Common Stocks, continued
	Diversified Financial Services, continued
	5,491	London Stock Exchange Group plc	$	67,677
	2,160	Mitsubishi UFJ Lease & Finance Co., Ltd.		85,526
	1,229	Pargesa Holding SA		80,138
	5,180	Pohjola Bank plc		50,122
	55,899	Resolution, Ltd.		217,256
	34,000	Singapore Exchange, Ltd.		160,374
	143,802	UBS AG, Registered Shares*		1,708,668

				5,453,927

	Diversified Telecommunication Services (3.3%):
	5,987	Belgacom SA		187,385
	69,816	Bezeq The Israeli Telecommunication Corp., Ltd.		128,094
	307,036	BT Group plc		906,523
	110,969	Deutsche Telekom AG		1,272,994
	5,672	Elisa OYJ		118,101
	73,248	France Telecom SA		1,146,176
	8,245	Hellenic Telecommunications Organization SA		30,640
	787	Iliad SA		97,063
	18,472	Inmarsat plc		115,616
	58,344	Koninklijke KPN NV		696,484
	18,776	Nippon Telegraph and Telephone Corp.		953,814
	169,000	PCCW, Ltd.		58,163
	27,349	Portugal Telecom SGPS SA, Registered Shares^		157,651
	314,000	Singapore Telecommunications, Ltd.		748,600
	925	Swisscom AG, Registered Shares		349,833
	14,001	TDC A/S		112,066
	12,631	Tele2 AB, B Shares		245,642
	75,503	Telecom Corp. of New Zealand, Ltd.		120,774
	372,946	Telecom Italia SpA		398,169
	235,997	Telecom Italia SpA		210,565
	162,329	Telefonica SA		2,801,102
	12,734	Telekom Austria AG		152,493
	28,763	Telenor ASA		470,806
	85,443	TeliaSonera AB		579,180
	170,897	Telstra Corp., Ltd.		581,587

				12,639,521

	Electric Utilities (2.7%):
	940	Acciona SA^		81,057
	19,000	Cheung Kong Infrastructure Holdings, Ltd.		111,087
	26,800	Chubu Electric Power Co., Inc.		500,526
	11,400	Chugoku Electric Power Co., Inc. (The)		199,916
	76,500	CLP Holdings, Ltd.		650,458
	13,021	Contact Energy, Ltd.		53,390


Shares			Fair Value

	Common Stocks, continued
	Electric Utilities, continued
	71,154	E.ON AG	$	1,529,359
	74,172	EDP – Energias de Portugal SA		229,467
	7,686	EDP Renovaveis SA*		46,918
	9,701	Electricite de France		235,102
	260,013	Enel SpA		1,053,550
	17,642	Fortum OYJ		375,304
	48,918	GDF Suez		1,330,274
	7,400	Hokkaido Electric Power Co., Inc.		105,425
	6,900	Hokuriku Electric Power Co.		128,902
	55,500	Hongkong Electric Holdings, Ltd.		410,472
	151,028	Iberdrola SA		941,702
	30,000	Kansai Electric Power Co., Inc. (The)		460,442
	15,500	Kyushu Electric Power Co., Inc.		222,023
	2,819	Oesterreichische Elektrizitaetswirtschafts AG, Class A		75,498
	4,147	Red Electrica Corporacion SA		176,925
	37,000	Scottish & Southern Energy plc		741,083
	7,300	Shikoku Electric Power Co., Inc.		209,165
	61,025	SP AusNet		58,606
	47,832	Terna – Rete Elettrica Nationale SpA		160,727
	18,200	Tohoku Electric Power Co., Inc.		174,935
	59,000	Tokyo Electric Power Co., Inc. (The)*		140,206

				10,402,519

	Electrical Equipment (1.2%):
	86,614	ABB, Ltd.		1,629,993
	8,313	Alstom SA		250,662
	1,468	Bekaert NV		46,850
	20,000	Fuji Electric Holdings Co., Ltd.		54,750
	23,000	Furukawa Electric Co., Ltd. (The)		52,820
	13,000	GS Yuasa Corp.		69,846
	8,910	Legrand SA		285,402
	77,000	Mitsubishi Electric Corp.		736,411
	8,280	Prysmian SpA		102,314
	19,336	Schneider Electric SA		1,010,395
	30,000	Sumitomo Electric Industries, Ltd.		326,263
	3,700	Ushio, Inc.		53,346
	8,198	Vestas Wind Systems A/S*^		88,157

				4,707,209

	Electronic Equipment, Instruments & Components (1.2%):
	9,300	Citizen Holdings Co., Ltd.		53,904
	83,144	Foxconn International Holdings, Ltd.*		53,442
	18,100	Fujifilm Holdings Corp.		428,205
	2,800	Hamamatsu Photonics K.K.		97,884
	1,300	HIROSE ELECTRIC Co., Ltd.		113,906


Shares			Fair Value

	Common Stocks, continued
	Electronic Equipment, Instruments & Components, continued
	2,300	Hitachi High-Technologies Corp.	$	49,861
	178,100	Hitachi, Ltd.		933,765
	17,200	HOYA Corp.		370,078
	5,000	IBIDEN Co., Ltd.		99,255
	1,600	Keyence Corp.		385,532
	6,000	KYOCERA Corp.		481,930
	800	MABUCHI MOTOR Co., Ltd.		33,378
	8,000	Murata Manufacturing Co., Ltd.		410,584
	4,300	Nidec Corp.		373,321
	16,000	Nippon Electric Glass Co., Ltd.		159,002
	7,900	Omron Corp.		158,595
	10,000	Shimadzu Corp.		84,631
	4,900	TDK Corp.		216,707
	8,000	Yaskawa Electric Corp.		68,027
	8,800	Yokogawa Electric Corp.*		79,353

				4,651,360

	Energy Equipment & Services (0.8%):
	6,849	Aker Solutions ASA		71,674
	12,766	AMEC plc		179,076
	5,790	Compagnie Generale de Geophysique-Veritas		134,708
	67,132	Enel Green Power SpA		139,750
	2,689	Fugro NV		155,409
	10,417	Petrofac, Ltd.		232,585
	10,420	Saipem SpA		440,365
	6,719	SBM Offshore NV		138,100
	13,046	Seadrill, Ltd.		435,537
	10,989	Subsea 7 SA		202,965
	3,910	Technip-Coflexip SA		365,397
	18,662	Tenaris SA		346,244
	7,507	WorleyParsons, Ltd.		196,635

				3,038,445

	Food & Staples Retailing (2.3%):
	23,500	AEON Co., Ltd.		322,610
	22,702	Carrefour SA		515,921
	2,142	Casino Guichard-Perrachon SA		179,979
	3,049	Colruyt SA		115,179
	3,960	Delhaize Group		222,009
	23,563	Distribuidora Internacional de Alimentacion SA*		106,345
	2,600	FamilyMart Co., Ltd.		105,039
	48,476	J Sainsbury plc		227,709
	8,718	Jeronimo Martins SGPS SA*		143,973
	2,792	Kesko OYJ, B Shares		93,595
	45,873	Koninklijke Ahold NV		616,818
	2,500	LAWSON, Inc.		156,053
	31,052	Metcash, Ltd.		128,187
	5,108	Metro AG		186,402
	57,000	Olam International, Ltd.		93,263
	29,900	Seven & I Holdings Co., Ltd.		832,750
	316,750	Tesco plc		1,982,491


Shares			Fair Value

	Common Stocks, continued
	Food & Staples Retailing, continued
	39,734	Wesfarmers, Ltd.	$	1,197,166
	86,497	William Morrison Supermarkets plc		437,050
	48,062	Woolworths, Ltd.		1,232,567

				8,895,106

	Food Products (4.0%):
	26,000	Ajinomoto Co., Inc.		311,995
	3,413	Aryzta AG		164,727
	13,919	Associated British Foods plc		239,079
	70	Barry Callebaut AG, Registered Shares		68,920
	23,072	Danone SA		1,449,048
	262,382	Golden Agri-Resources, Ltd.		144,269
	6,000	Kikkoman Corp.		68,871
	37	Lindt & Spruengli AG		110,008
	4	Lindt & Spruengli AG, Registered Shares		133,566
	2,826	Meiji Holdings Co., Ltd.		117,256
	130,435	Nestle SA, Registered Shares		7,491,033
	7,000	Nippon Meat Packers, Inc.		87,058
	7,500	Nisshin Seifun Group, Inc.		90,867
	2,400	Nissin Foods Holdings Co., Ltd.		94,012
	2,679	Suedzucker AG		85,269
	18,921	Tate & Lyle plc		206,551
	4,000	Toyo Suisan Kaisha, Ltd.		96,910
	58,846	Unilever NV(a)(b)		—
	64,372	Unilever NV		2,210,368
	50,713	Unilever plc		1,701,922
	75,000	Wilmar International, Ltd.		288,987
	3,900	Yakult Honsha Co., Ltd.^		122,830
	5,000	Yamazaki Baking Co., Ltd.		65,659

				15,349,205

	Gas Utilities (0.5%):
	7,343	Enagas		135,352
	13,931	Gas Natural SDG SA^		238,380
	184,940	Hong Kong & China Gas Co., Ltd.		428,464
	73,000	Osaka Gas Co., Ltd.		288,086
	63,779	Snam Rete Gas SpA		280,299
	17,000	Toho Gas Co., Ltd.		108,252
	98,000	Tokyo Gas Co., Ltd.		450,459

				1,929,292

	Health Care Equipment & Supplies (0.8%):
	2,240	Cochlear, Ltd.		142,190
	914	Coloplast A/S, Class B		131,227
	7,989	Essilor International SA Cie Generale d’Optique*		563,190
	4,431	Fresenius SE		409,863
	8,030	Getinge AB, B Shares		202,966
	8,800	Olympus Co., Ltd.		115,630
	35,504	Smith & Nephew plc		343,964


Shares			Fair Value

	Common Stocks, continued
	Health Care Equipment & Supplies, continued
	1,983	Sonova Holding AG, Registered Shares	$	207,443
	296	Straumann Holding AG, Registered Shares		51,080
	2,585	Synthes, Inc.		432,842
	3,000	Sysmex Corp.		97,706
	6,800	Terumo Corp.		319,956
	867	William Demant Holding A/S*		71,994

				3,090,051

	Health Care Providers & Services (0.3%):
	1,400	Alfresa Holdings Corp.		58,977
	3,182	Celesio AG		50,401
	8,314	Fresenius Medical Care AG & Co. KGaA		564,837
	6,200	Medipal Holdings Corp.		64,717
	4,945	Ramsay Health Care, Ltd.		97,403
	14,740	Sonic Healthcare, Ltd.		169,792
	2,600	Suzuken Co., Ltd.		72,045

				1,078,172

	Hotels, Restaurants & Leisure (1.0%):
	5,752	Accor SA		144,941
	4,481	Autogrill SpA		43,567
	7,135	Carnival plc		234,386
	74,470	Compass Group plc		704,976
	19,062	Crown, Ltd.		157,507
	27,168	Echo Entertainment Group, Ltd.*		99,595
	6,178	Edenred		151,443
	50,000	Galaxy Entertainment Group, Ltd.*		90,806
	242,757	Genting Singapore plc*^		281,787
	11,723	InterContinental Hotels Group plc		209,641
	2,829	McDonald’s Holdings Co., Ltd.^		76,359
	8,306	OPAP SA		73,386
	2,000	Oriental Land Co., Ltd.		211,284
	57,333	Shangri-La Asia, Ltd.		98,846
	63,000	SJM Holdings, Ltd.		102,177
	24,270	Sky City Entertainment Group, Ltd.		64,889
	3,664	Sodexo		262,834
	24,877	Tabcorp Holdings, Ltd.		69,376
	53,939	Tatts Group, Ltd.		134,419
	21,585	Tui Travel plc		55,383
	7,123	Whitbread plc		172,776
	63,600	Wynn Macau, Ltd.		158,534

				3,598,912

	Household Durables (0.7%):
	10,100	Casio Computer Co., Ltd.^		61,222
	9,418	Electrolux AB, Series B		149,501
	18,540	Husqvarna AB, B Shares		85,242
	4,400	Makita Corp.		142,193


Shares			Fair Value

	Common Stocks, continued
	Household Durables, continued
	86,800	Panasonic Corp.	$	736,690
	1,200	Rinnai Corp.		85,876
	17,000	Sekisui Chemical Co., Ltd.		140,036
	23,000	Sekisui House, Ltd.		203,688
	40,000	Sharp Corp.		349,329
	39,500	Sony Corp.		712,056

				2,665,833

	Household Products (0.6%):
	5,096	Henkel AG & Co. KGaA		246,640
	20,700	Kao Corp.		565,291
	24,461	Reckitt Benckiser Group plc		1,205,163
	4,400	Unicharm Corp.		216,959

				2,234,053

	Independent Power Producers & Energy Traders (0.1%):
	4,700	Electric Power Development Co., Ltd.		124,952
	60,653	International Power plc		317,249

				442,201

	Industrial Conglomerates (1.6%):
	36,000	Fraser and Neave, Ltd.		171,909
	84,000	Hutchison Whampoa, Ltd.		700,140
	57,200	Keppel Corp., Ltd.		409,013
	39,964	Koninklijke Philips Electronics NV		837,368
	56,500	NWS Holdings, Ltd.		83,180
	30,891	Orkla ASA		230,006
	40,000	SembCorp Industries, Ltd.		124,501
	32,516	Siemens AG		3,109,480
	15,795	Smiths Group plc		223,375
	1,260	Wendel		83,576

				5,972,548

	Insurance (4.0%):
	7,897	Admiral Group plc		104,329
	68,675	AEGON NV*		273,509
	333,000	AIA Group, Ltd.		1,037,943
	17,715	Allianz SE, Registered Shares+		1,692,834
	111,188	AMP, Ltd.		461,895
	45,925	Assicurazioni Generali SpA		687,924
	68,738	AXA SA		885,752
	1,935	Baloise Holding AG, Registered Shares		132,168
	5,561	CNP Assurances		68,778
	356	Dai-ichi Life Insurance Co., Ltd. (The)		349,545
	3,755	Delta Lloyd NV		62,829
	89,443	Fortis		138,549
	8,151	Gjensidige Forsikring ASA		94,460
	2,475	Hannover Rueckversicherung AG, Registered Shares		122,747
	82,754	Insurance Australia Group, Ltd.		251,785
	229,858	Legal & General Group plc		364,824
	30,866	Mapfre SA^		97,542


Shares			Fair Value

	Common Stocks, continued
	Insurance, continued
	22,511	MS&AD Insurance Group Holdings, Inc.	$	416,600
	7,126	Muenchener Rueckversicherungs-Gesellschaft AG, Registered Shares		873,966
	14,625	NKSJ Holdings, Inc.		286,593
	219,508	Old Mutual plc		459,290
	101,064	Prudential plc		995,640
	43,293	QBE Insurance Group, Ltd.		573,069
	136,582	RSA Insurance Group plc		222,124
	16,791	Sampo OYJ, A Shares		415,989
	6,884	SCOR SE		160,380
	6,700	Sony Financial Holdings, Inc.		98,599
	90,164	Standard Life plc		287,429
	50,145	Suncorp-Metway, Ltd.		428,886
	1,150	Swiss Life Holding AG, Registered Shares		105,188
	13,678	Swiss Re AG*		696,824
	22,336	T&D Holdings, Inc.		207,837
	28,600	Tokio Marine Holdings, Inc.		632,799
	983	Tryg A/S		54,494
	1,469	Vienna Insurance Group Weiner Staeditische Versicherung AG		58,117
	5,756	Zurich Financial Services AG		1,300,208

				15,101,445

	Internet & Catalog Retail (0.1%):
	4,000	DeNA Co., Ltd.		119,675
	289	Rakuten, Inc.		310,889

				430,564

	Internet Software & Services (0.1%):
	3,700	Gree, Inc.		127,268
	4,125	United Internet AG, Registered Shares		73,665
	563	Yahoo! Japan Corp.		181,224

				382,157

	IT Services (0.2%):
	2,056	Atos Origin SA		89,945
	5,812	Cap Gemini SA		180,761
	17,579	Computershare, Ltd.		143,805
	3,723	Indra Sistemas SA		47,182
	1,100	Itochu Techno-Solutions Corp.		49,365
	3,900	Nomura Research Institute, Ltd.		88,100
	51	NTT Data Corp.		162,748
	700	Otsuka Corp.		48,209

				810,115

	Leisure Equipment & Products (0.2%):
	8,000	Namco Bandai Holdings, Inc.		113,866
	13,200	Nikon Corp.		293,589
	2,200	Sankyo Co., Ltd.		111,434
	8,300	Sega Sammy Holdings, Inc.		179,189


Shares			Fair Value

	Common Stocks, continued
	Leisure Equipment & Products, continued
	3,100	Shimano, Inc.	$	150,513
	6,000	Yamaha Corp.		54,966

				903,557

	Life Sciences Tools & Services (0.1%):
	2,040	Lonza Group AG, Registered Shares		120,082
	9,308	QIAGEN NV*		128,158

				248,240

	Machinery (2.6%):
	13,600	Alfa Laval AB		256,664
	15,000	AMADA Co., Ltd.		94,887
	26,510	Atlas Copco AB, A Shares		567,821
	15,092	Atlas Copco AB, B Shares		285,749
	40,000	Cosco Corp., Ltd.^		26,932
	7,500	Fanuc, Ltd.		1,146,672
	7,084	GEA Group AG		200,298
	10,243	Hexagon AB, B Shares		152,277
	11,000	Hino Motors, Ltd.		66,638
	4,000	Hitachi Construction Machinery Co., Ltd.		67,222
	53,000	IHI Corp.		128,599
	32,942	Invensys plc		107,392
	12,000	Japan Steel Works, Ltd. (The)		83,291
	8,200	JTEKT Corp.		80,533
	55,000	Kawasaki Heavy Industries, Ltd.		136,959
	37,400	Komatsu, Ltd.		872,421
	6,257	Kone OYJ, B Shares		323,618
	45,000	Kubota Corp.		376,584
	4,600	Kurita Water Industries, Ltd.		119,739
	2,535	MAN AG		225,352
	4,928	Metso Corp. OYJ		181,577
	121,000	Mitsubishi Heavy Industries, Ltd.		515,114
	3,900	Nabtesco Corp.		70,895
	11,000	NGK INSULATORS, Ltd.		130,295
	18,000	NSK, Ltd.		116,741
	20,000	NTN Corp.		80,426
	39,798	Sandvik AB		485,846
	13,313	Scania AB, B Shares		196,528
	1,933	Schindler Holding AG		224,415
	848	Schindler Holding AG, Registered Shares		98,290
	34,000	SembCorp Marine, Ltd.		99,747
	15,518	SKF AB, B Shares		327,820
	2,100	SMC Corp.		338,313
	890	Sulzer AG, Registered Shares		94,744
	21,000	Sumitomo Heavy Industries, Ltd.		122,279
	5,000	THK Co., Ltd.		98,267
	4,510	Vallourec SA		291,460
	54,551	Volvo AB, B Shares		593,388
	6,470	Wartsila Corp. OYJ		186,158
	8,444	Weir Group plc (The)		264,857


Shares			Fair Value

	Common Stocks, continued
	Machinery, continued
	73,250	Yangzijiang Shipbuilding Holdings, Ltd.	$	51,266
	5,971	Zardoya Otis SA		81,641

				9,969,715

	Marine (0.5%):
	53	A.P. Moller – Maersk A/S, Class B		348,819
	21	A.P. Moller – Maersk A/S, Class A		130,595
	210,000	Hutchison Port Holdings Trust		130,027
	32,000	Kawasaki Kisen Kaisha, Ltd.^		57,682
	2,149	Kuehne & Nagel International AG, Registered Shares		240,600
	45,000	Mitsui O.S.K. Lines, Ltd.		174,098
	30,500	Neptune Orient Lines, Ltd.		26,375
	64,000	Nippon Yusen Kabushiki Kaisha		163,623
	9,000	Orient Overseas International, Ltd.		52,325
	13,758	Transocean, Ltd.		531,284

				1,855,428

	Media (1.5%):
	1,614	Axel Springer AG		69,350
	45,059	British Sky Broadcasting Group plc		511,922
	6,977	Dentsu, Inc.		212,648
	3,890	Eutelsat Communications		151,484
	82,302	Fairfax Media, Ltd.^		60,472
	900	Hakuhodo DY Holdings, Inc.		51,636
	143,535	ITV plc		151,316
	2,512	JC Decaux SA*		57,667
	64	Jupiter Telecommunications Co., Ltd.		64,886
	3,447	Kabel Deutschland Holding AG		174,415
	4,939	Lagardere S.C.A.		129,846
	26,250	Mediaset SpA		72,408
	2,016	Modern Times Group MTG AB, B Shares		96,031
	31,892	Pearson plc		597,144
	5,746	Publicis Groupe		263,680
	27,367	Reed Elsevier NV		318,259
	47,993	Reed Elsevier plc		386,945
	2,925	Sanoma OYJ^		33,462
	11,940	SES		286,416
	55,000	Singapore Press Holdings, Ltd.^		156,362
	4,442	Societe Television Francaise 1		43,170
	4,800	Toho Co., Ltd.		85,521
	49,260	Vivendi		1,075,270
	12,132	Wolters Kluwer NV		208,857
	49,679	WPP plc		518,711

				5,777,878

	Metals & Mining (5.5%):
	3,503	Acerinox SA^		44,701
	95,670	Alumina, Ltd.		108,810
	52,284	Anglo American plc		1,926,598


Shares			Fair Value

	Common Stocks, continued
	Metals & Mining, continued
	15,840	Antofagasta plc	$	296,511
	34,008	ArcelorMittal		620,424
	113,697	Aviva plc		527,710
	83,464	BHP Billiton plc		2,426,335
	126,929	BHP Billiton, Ltd.		4,479,537
	11,180	Boliden AB		162,220
	12,000	Daido Steel Co., Ltd.		75,215
	10,697	Eurasian Natural Resource Corp.		104,846
	49,951	Fortescue Metals Group, Ltd.		218,802
	7,019	Fresnillo plc		166,069
	32,337	Glencore International plc		196,315
	6,000	Hitachi Metals, Ltd.		65,172
	16,557	Iluka Resources, Ltd.		261,540
	18,500	JFE Holdings, Inc.		336,376
	8,613	Kazakhmys plc		123,014
	97,000	Kobe Steel, Ltd.		149,769
	6,564	Lonmin plc		99,270
	68,939	Lynas Corp., Ltd.*^		73,746
	1,900	Maruichi Steel Tube, Ltd.		42,352
	45,000	Mitsubishi Materials Corp.		122,007
	30,293	Newcrest Mining, Ltd.		917,480
	203,000	Nippon Steel Corp.		505,699
	26,000	Nisshin Steel Co., Ltd.		39,797
	36,792	Norsk Hydro ASA		170,429
	52,164	OneSteel, Ltd.		37,371
	12,659	OZ Minerals, Ltd.		129,213
	3,628	Randgold Resources, Ltd.		370,655
	55,283	Rio Tinto plc		2,674,873
	17,302	Rio Tinto, Ltd.		1,070,678
	1,705	Salzgitter AG		85,228
	6,748	Sims Metal Management, Ltd.		87,474
	6,062	SSAB AB, A Shares^		53,093
	20,000	Sumitomo Metal & Mining Co., Ltd.		256,612
	134,000	Sumitomo Metal Industries, Ltd.		243,407
	15,434	ThyssenKrupp AG		353,259
	4,462	Vedanta Resources plc		69,805
	4,154	Voestalpine AG		116,868
	81,986	Xstrata plc		1,234,377
	1,900	YAMATO KOGYO Co., Ltd.		54,493

				21,098,150

	Multi-Utilities (1.0%):
	41,721	A2A SpA		39,085
	18,325	AGL Energy, Ltd.		268,267
	204,856	Centrica plc		919,236
	140,618	National Grid plc		1,364,029
	19,482	RWE AG		682,420
	10,964	Suez Environnement Co.		125,877
	27,332	United Utilities Group plc		257,035
	14,039	Veolia Environnement		154,588

				3,810,537


Shares			Fair Value

	Common Stocks, continued
	Multiline Retail (0.4%):
	20,381	Harvey Norman Holdings, Ltd.	$	38,175
	14,900	Isetan Mitsukoshi Holdings, Ltd.		156,078
	20,000	J. FRONT RETAILING Co., Ltd.		96,551
	25,366	Lifestyle International Holdings, Ltd.		55,867
	61,761	Marks & Spencer Group plc		297,891
	9,400	MARUI GROUP Co., Ltd.		73,194
	6,689	Next plc		284,062
	2,997	Pinault Printemps Redoute		428,560
	10,000	Takashimaya Co., Ltd.		72,306

				1,502,684

	Office Electronics (0.7%):
	9,000	Brother Industries, Ltd.		110,363
	44,700	Canon, Inc.		1,978,439
	19,000	Konica Minolta Holdings, Inc.		141,519
	1,345	Neopost SA(a)(b)		—
	1,345	Neopost SA		90,350
	26,000	Ricoh Co., Ltd.		226,415

				2,547,086

	Oil, Gas & Consumable Fuels (8.1%):
	133,966	BG Group plc		2,856,582
	748,714	BP plc		5,338,234
	56,783	Cairn Energy plc*		233,394
	5,117	Caltex Australia, Ltd.		61,478
	26,000	Cosmo Oil Co., Ltd.		72,569
	156	Delek Group, Ltd.		29,420
	94,962	Eni SpA		1,961,259
	11,172	Essar Energy, Ltd.*		29,529
	8,882	Galp Energia SGPS SA, B Shares		130,681
	1,000	Idemitsu Kosan Co., Ltd.		103,010
	86	INPEX Corp.		540,958
	94	Israel Corp., Ltd. (The)		58,827
	1,100	Japan Petroleum Exploration Co., Ltd.		42,973
	88,770	JX Holdings, Inc.		535,648
	8,977	Lundin Petroleum AB*		220,377
	4,544	Neste Oil OYJ		45,706
	6,549	OMV AG		198,888
	42,166	Origin Energy, Ltd.		572,922
	3,472	Orion OYJ, Class B		67,549
	31,344	Repsol YPF SA		957,456
	143,038	Royal Dutch Shell plc, A Shares		5,257,434
	106,092	Royal Dutch Shell plc, B Shares		4,036,675
	37,462	Santos, Ltd.		467,896
	6,600	Showa Shell Sekiyu K.K.^		44,455
	44,087	StatoilHydro ASA		1,129,680
	12,000	TonenGeneral Sekiyu K.K.^		131,051
	83,894	Total SA		4,281,523
	35,697	Tullow Oil plc		775,786
	25,061	Woodside Petroleum, Ltd.		783,272

				30,965,232


Shares			Fair Value

	Common Stocks, continued
	Paper & Forest Products (0.2%):
	2,254	Holmen AB, B Shares	$	64,726
	4,167	Nippon Paper Group, Inc.		90,928
	34,000	Oji Paper Co., Ltd.		174,383
	22,747	Stora Enso OYJ, R Shares		135,491
	20,241	UPM-Kymmene OYJ		221,823

				687,351

	Personal Products (0.4%):
	3,980	Beiersdorf AG		225,689
	9,495	L’Oreal SA		990,771
	14,300	Shiseido Co., Ltd.		262,748

				1,479,208

	Pharmaceuticals (8.4%):
	17,600	Astellas Pharma, Inc.		715,306
	53,108	AstraZeneca plc		2,459,477
	32,677	Bayer AG		2,088,880
	9,000	Chugai Pharmaceutical Co., Ltd.		148,304
	26,500	Daiichi Sankyo Co., Ltd.		525,033
	6,700	Dainippon Sumitomo Pharma Co., Ltd.		76,301
	10,000	Eisai Co., Ltd.		414,020
	19,764	Elan Corp. plc*		272,466
	200,554	GlaxoSmithKline plc		4,572,270
	2,300	Hisamitsu Pharmaceutical Co., Inc.		97,389
	10,000	Kyowa Hakko Kogyo Co., Ltd.		122,331
	2,576	Merck KGaA		256,777
	2,300	Miraca Holdings, Inc.		91,654
	8,900	Mitsubishi Tanabe Pharma Corp.		140,785
	92,241	Novartis AG, Registered Shares		5,271,073
	16,804	Novo Nordisk A/S, B Shares		1,933,598
	3,200	Ono Pharmaceutical Co., Ltd.		179,570
	9,800	Otsuka Holdings Co., Ltd.		275,702
	27,767	Roche Holding AG		4,697,388
	45,295	Sanofi-Aventis		3,313,886
	3,000	Santen Pharmaceutical Co., Ltd.		123,642
	11,700	Shionogi & Co., Ltd.		150,215
	22,359	Shire plc		775,900
	1,400	Taisho Pharmaceutical Holdings Co., Ltd.		107,927
	31,100	Takeda Pharmacuetical Co., Ltd.		1,366,427
	37,157	Teva Pharmaceutical Industries, Ltd.		1,499,623
	2,300	Tsumura & Co.		67,813
	4,036	UCB SA		169,380

				31,913,137

	Professional Services (0.5%):
	5,317	Adecco SA, Registered Shares		221,671
	2,135	Bureau Veritas SA		155,185
	2,590	Campbell Brothers, Ltd.		129,565
	24,790	Capita Group plc		241,708
	39,616	Experian plc		537,835
	6,216	Intertek Group plc		195,662


Shares			Fair Value

	Common Stocks, continued
	Professional Services, continued
	4,866	Randstad Holding NV	$	143,224
	219	SGS SA, Registered Shares		361,710

				1,986,560

	Real Estate Investment Trusts (REITs) (1.4%):
	70,000	Ascendas Real Estate Investment Trust		98,835
	33,733	British Land Co. plc		241,160
	83,000	CapitaMall Trust		108,634
	51,606	CapitaMalls Asia, Ltd.		44,874
	72,676	CFS Retail Property Trust		125,100
	2,446	Corio NV		105,888
	184,778	Dexus Property Group		156,883
	1,061	Fonciere des Regions SA		67,885
	925	Gecina SA		77,688
	279,286	Goodman Group		162,519
	70,460	GPT Group		221,019
	27,410	Hammerson plc+		152,543
	878	Icade		68,969
	29	Japan Prime Realty Investment Corp.		68,378
	19	Japan Real Estate Investment Corp.		148,104
	74	Japan Retail Fund Investment Corp.		109,650
	4,233	Klepierre		120,246
	31,236	Land Securities Group plc		307,046
	22,994	Liberty International plc		111,072
	88,500	Link REIT (The)		326,097
	130,863	Mirvac Group		157,840
	22	Nippon Building Fund, Inc.		180,067
	10	Nomura Real Estate Office Fund, Inc.		51,377
	30,124	SEGRO plc		97,409
	95,175	Stockland		310,074
	3,628	Unibail-Rodamco		649,244
	87,161	Westfield Group		696,393
	116,594	Westfield Retail Trust		296,539

				5,261,533

	Real Estate Management & Development (1.6%):
	2,900	AEON Mall Co., Ltd.		61,479
	99,000	Capitaland, Ltd.		168,260
	54,000	Cheung Kong Holdings, Ltd.		639,860
	20,000	City Developments, Ltd.		136,962
	2,800	Daito Trust Construction Co., Ltd.		240,304
	19,000	Daiwa House Industry Co., Ltd.		226,450
	34,000	Hang Lung Group, Ltd.		186,134
	98,000	Hang Lung Properties, Ltd.		278,632
	37,000	Henderson Land Development Co., Ltd.		183,199
	24,500	Hopewell Holdings, Ltd.		62,533
	26,000	Hysan Development Co., Ltd.		85,167
	7,136	Immoeast AG(a)(b)		—


Shares			Fair Value

	Common Stocks, continued
	Real Estate Management & Development, continued
	37,457	Immofinanz Immobilien Anlagen AG	$	112,806
	29,000	Keppel Land, Ltd.		49,493
	5,544	Kerry Group plc, Class A		202,904
	29,500	Kerry Properties, Ltd.		97,518
	21,277	Lend Lease Group		155,507
	49,000	Mitsubishi Estate Co., Ltd.		731,267
	33,000	Mitsui Fudosan Co., Ltd.		480,396
	146,000	New World Development Co., Ltd.		117,201
	3,600	Nomura Real Estate Holdings, Inc.		53,534
	45	NTT Urban Development Corp.		30,662
	115,600	Sino Land Co., Ltd.		164,492
	14,000	Sumitomo Realty & Development Co., Ltd.		244,859
	56,000	Sun Hung Kai Properties, Ltd.		698,994
	29,000	Swire Pacific, Ltd., Class A		349,197
	16,000	Tokyu Land Corp.		60,419
	17,000	UOL Group, Ltd.		52,320
	61,300	Wharf Holdings, Ltd. (The)		276,577
	34,000	Wheelock & Co., Ltd.		84,134

				6,231,260

	Road & Rail (1.0%):
	38,866	Asciano Group		178,942
	60	Central Japan Railway Co.		506,529
	76,000	ComfortDelGro Corp., Ltd.		82,820
	7,986	DSV A/S		142,799
	13,413	East Japan Railway Co.		853,709
	19,000	Keihin Electric Express Railway Co., Ltd.		170,530
	22,000	Keio Corp.		155,131
	12,000	Keisei Electric Railway Co., Ltd.		88,204
	64,000	Kintetsu Corp.^		250,211
	57,500	MTR Corp., Ltd.		185,733
	35,000	Nippon Express Co., Ltd.		136,331
	25,000	Odakyu Electric Railway Co., Ltd.		241,575
	66,370	QR National, Ltd.		231,782
	41,000	Tobu Railway Co., Ltd.		209,315
	44,000	Tokyu Corp.		216,574
	6,800	West Japan Railway Co.		295,508

				3,945,693

	Semiconductors & Semiconductor Equipment (0.6%):
	5,600	Advantest Corp.		53,226
	53,048	ARM Holdings plc		488,952
	7,400	ASM Pacific Technology, Ltd.		82,997
	16,928	ASML Holding NV		709,354
	11,000	Elpida Memory, Inc.		51,075
	42,951	Infineon Technologies AG		323,241
	3,800	ROHM Co., Ltd.		177,023
	24,247	STMicroelectronics NV		143,189
	4,200	SUMCO Corp.*		30,974
	6,900	Tokyo Electron, Ltd.		350,649

				2,410,680


Shares			Fair Value

	Common Stocks, continued
	Software (0.9%):
	12,696	Amadeus IT Holding SA, A Shares	$	205,073
	2,439	Dassault Systemes SA		195,267
	3,800	Konami Corp.		113,696
	3,900	Nintendo Co., Ltd.		537,782
	1,400	Oracle Corp.		46,318
	51,221	Sage Group plc (The)		233,692
	36,358	SAP AG		1,922,139
	2,400	Square Enix Holdings Co., Ltd.		47,074
	4,100	Trend Micro, Inc.^		122,444

				3,423,485

	Specialty Retail (0.9%):
	900	ABC-Mart, Inc.		34,211
	2,100	Fast Retailing Co., Ltd.		381,727
	40,394	Hennes & Mauritz AB, B Shares		1,296,834
	8,678	Industria de Diseno Textil SA		708,934
	93,337	Kingfisher plc		362,800
	1,550	Nitori Co., Ltd.		145,363
	1,700	Sanrio Co., Ltd.		87,293
	900	Shimamura Co., Ltd.		92,091
	920	USS Co., Ltd.		83,166
	3,280	Yamada Denki Co., Ltd.		222,919

				3,415,338

	Textiles, Apparel & Luxury Goods (1.2%):
	8,187	Adidas AG		532,450
	5,600	ASICS Corp.		63,120
	17,130	Burberry Group plc		313,422
	2,112	Christian Dior SA		249,595
	20,655	Compagnie Financiere Richemont SA, Class A		1,040,366
	4,583	Luxottica Group SpA		128,234
	10,039	LVMH Moet Hennessy Louis Vuitton SA		1,414,212
	1,219	Swatch Group AG (The)		454,323
	1,738	Swatch Group AG (The), Registered Shares		115,445
	30,500	Yue Yuen Industrial Holdings, Ltd.		96,362

				4,407,529

	Tobacco (1.7%):
	78,132	British American Tobacco plc		3,703,954
	40,036	Imperial Tobacco Group plc		1,513,062
	177	Japan Tobacco, Inc.		832,176
	8,343	Swedish Match AB, Class B		296,262

				6,345,454

	Trading Companies & Distributors (1.2%):
	12,882	Bunzl plc		176,235
	60,000	ITOCHU Corp.		608,556
	66,000	Marubeni Corp.		401,500
	55,500	Mitsubishi Corp.		1,119,450
	68,600	Mitsui & Co., Ltd.		1,065,165
	155,090	Noble Group, Ltd.		134,590
	51,700	Sojitz Corp.		79,835


Shares			Fair Value

	Common Stocks, continued
	Trading Companies & Distributors, continued
	44,800	Sumitomo Corp.	$	605,557
	8,900	Toyota Tsushu Corp.		157,164
	11,279	Wolseley plc		371,683

				4,719,735

	Transportation Infrastructure (0.4%):
	15,006	Abertis Infraestructuras SA		238,740
	1,466	Aeroports de Paris		100,182
	12,453	Atlantia SpA		198,633
	38,860	Auckland International Airport, Ltd.		76,192
	14,121	Ferrovial SA		170,234
	1,337	Fraport AG		65,743
	20,908	Groupe Eurotunnel SA		141,732
	10,000	Kamigumi Co., Ltd.		86,227
	2,852	Koninklijke Vopak NV		150,239
	4,000	Mitsubishi Logistics Corp.		44,385
	14,522	Sydney Airport		39,464
	50,858	Transurban Group		292,021

				1,603,792

	Water Utilities (0.1%):
	9,186	Severn Trent plc		212,930

	Wireless Telecommunication Services (2.4%):
	1,935	Cellcom Israel, Ltd.		32,407
	116	KDDI Corp.		746,936
	2,968	Millicom International Cellular SA, SDR		297,363
	1,103	Mobistar SA		57,604
	2,483	NICE Systems, Ltd.*		84,554
	603	NTT DoCoMo, Inc.		1,108,172
	3,848	Partner Communications Co., Ltd.		34,046
	35,200	SOFTBANK Corp.		1,035,904
	23,202	StarHub, Ltd.		52,099
	2,009,070	Vodafone Group plc		5,576,821

				9,025,906

	Total Common Stocks (Cost $388,113,071)			372,013,860


Shares or Principal Amount			Fair Value

	Preferred Stocks (0.5%):
	Aerospace & Defense (0.0%):
	4,766,175	Rolls-Royce Holdings plc, C Shares*(a)(b)	$	—

	Airlines (0.0%):
	1,580	RWE AG		52,002

	Automobiles (0.4%):
	2,125	Bayerische Motoren Werke AG (BMW), Preferred Shares		100,506
	6,060	Porsche Automobil Holding SE, Preferred Shares		324,264
	5,711	Volkswagen AG, Preferred Shares		853,915

				1,278,685

	Household Products (0.1%):
	7,046	Henkel AG & Co. KGaA		406,567

	Media (0.0%):
	3,292	ProSiebenSat.1 Media AG, Preferred Shares		60,128

	Total Preferred Stocks (Cost $1,665,533)			1,797,382

	Securities Held as Collateral for Securities on Loan (2.0%):
$	7,754,081	Allianz Variable Insurance Products Securities Lending Collateral Trust(c)		7,754,081

	Total Securities Held as Collateral for Securities on Loan (Cost $7,754,081)			7,754,081

	Unaffiliated Investment Company (0.9%):
	3,524,709	Dreyfus Treasury Prime Cash Management, 0.00%(d)		3,524,709

	Total Unaffiliated Investment Company (Cost $3,524,709)			3,524,709

	Total Investment Securities (Cost $401,057,394)(e) — 101.1%			385,090,032
	Net other assets (liabilities) — (1.1)%			(4,327,097	)

	Net Assets — 100.0%		$	380,762,935

Cash of $351,000 has been segregated to cover margin requirements for the following open contracts as of December 31, 2011:

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	401,057,394

Investment securities, at value*	$	385,090,032
Segregated cash for collateral		351,000
Interest and dividends receivable		725,415
Foreign currency, at value (cost $6,654,226)		6,693,167
Receivable for capital shares issued		705,395
Receivable for investments sold		4,482
Reclaims receivable		450,639
Receivable for variation margin on futures contracts		359,641
Receivable from Manager		7,837
Prepaid expenses		4,657

Total Assets		394,392,265

Liabilities:
Payable for investments purchased		5,191,037
Payable for capital shares redeemed		35,422
Payable for collateral received on loaned securities		7,754,081
Payable for variation margin on futures contracts		419,362
Administration fees payable		19,316
Distribution fees payable		79,060
Custodian fees payable		60,068
Administrative and compliance services fees payable		2,535
Trustee fees payable		137
Other accrued liabilities		68,312

Total Liabilities		13,629,330

Net Assets	$	380,762,935

Net Assets Consist of:
Capital	$	488,039,335
Accumulated net investment income/(loss)		9,368,906
Accumulated net realized gains/(losses) from investment transactions		(100,777,101	)
Net unrealized appreciation/(depreciation) on investments		(15,868,205	)

Net Assets	$	380,762,935

Shares of beneficial interest (unlimited number of shares authorized, no par value)		31,654,038
Net Asset Value (offering and redemption price per share)	$	12.03

*	Includes securities on loan of $6,349,571.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	203
Dividends		13,457,245
Income from securities lending		219,231
Foreign withholding tax		(1,112,755	)

Total Investment Income		12,563,924

Expenses:
Manager fees		1,277,255
Administration fees		250,158
Distribution fees		912,327
Custodian fees		352,431
Administrative and compliance services fees		16,363
Trustee fees		27,731
Professional fees		29,791
Shareholder reports		16,852
Other expenses		156,723

Total expenses before reductions		3,039,631
Less expenses contractually waived/reimbursed by the Manager		(322,520	)
Less expenses paid indirectly		(2,011	)

Net expenses		2,715,100

Net Investment Income/(Loss)		9,848,824

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		1,922,190
Net realized gains/(losses) on futures contracts		(897,273	)
Net realized gains/(losses) on forward currency contracts		135,288
Change in unrealized appreciation/depreciation on investments		(57,941,131	)

Net Realized/Unrealized Gains/(Losses) on Investments		(56,780,926	)

Change in Net Assets Resulting From Operations	$	(46,932,102	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL International Index Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $21,687 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. As of December 31, 2011, the Fund did not hold any forward currency contracts. During the year ended December 31, 2011, the Fund had limited activity in these transactions.

The following is a summary of the fair value of derivative instruments as of December 31, 2011:

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

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, 2011, the contractual reimbursements that are subject to repayment by the Fund in subsequent years were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $5,313 was paid from the Fund relating to these fees and expenses.

receives a $36,000 annual Board retainer and a $8,000 meeting fee for each regular in-person Board meeting and a $4,000 meeting fee for each Committee meeting. In addition, Trustees may receive compensation for special meetings and telephonic meetings. Also, the Trustees are reimbursed for certain expenses associated with attending Board meetings. Compensation to the Trustees is allocated between the Trust and the Allianz Variable Insurance Products Fund of Funds Trust in proportion to the assets under management of each Trust. During the year ended December 31, 2011, actual Trustee compensation was $924,000 in total for both Trusts.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks:
Airlines	$	33,432	$	617,439	$	—	$	650,871
Hotels, Restaurants & Leisure		76,359		3,522,553		—		3,598,912
All Other Common Stocks+		—		367,764,077		—		367,764,077
Preferred Stocks+		—		1,797,382		—		1,797,382
Securities Held as Collateral for Securities on Loan		—		7,754,081		—		7,754,081
Unaffiliated Investment Company		3,524,709		—		—		3,524,709

Total Investment Securities		3,634,500		381,455,532		—		385,090,032

Other Financial Instruments:*
Futures Contracts		77,613		—		—		77,613

Total Investments	$	3,712,113		381,455,532		—		385,167,645

As of December 31, 2011, the Fund held securities that were valued in good faith pursuant to procedures approved by the Board of Trustees. The BGP Holdings plc common stock was valued at $0.

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $404,024,486. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $2,378,268 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL International Index Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the three-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the three-year period then ended, in conformity with U.S. generally accepted accounting principles.

The Board is aware that various courts have interpreted provisions of the 1940 Act and have indicated in their decisions that the following factors may be relevant to an adviser’s compensation: the nature and quality of the services provided by the adviser, including the performance of the fund; the adviser’s cost of providing the services; the extent to which the adviser may realize “economies of scale” as the fund grows larger; any indirect benefits that may accrue to the adviser and its affiliates as a result of the adviser’s relationship with the fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts bearing on the adviser’s service and fee. The Trust’s Board is aware of these factors and takes them into account in its review of the Trust’s advisory contracts.

(3) The costs of services to be provided and profits to be realized by the Manager and the Subadvisers and their affiliates from their relationship with the Funds. The Manager has supplied information to the Board of Trustees pertaining to the level of investment advisory fees to which the Funds are subject. The Manager has agreed to temporarily “cap” Fund expenses at certain levels, and information is provided to Trustees setting forth “contractual” advisory fees and “actual” fees after taking expense caps into account. Based upon the information provided, the “actual” advisory fees payable by the Funds overall are generally comparable to the average level of fees paid by Fund peer groups. For the 29 Funds reviewed by the Board of Trustees in the fall of 2011, 24 Funds paid “actual” advisory fees in a percentage amount within the 65^th percentile or lower for each Fund’s applicable category. The Trustees recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The Board has concluded that the advisory fees to be paid to the Manager by the Funds are not unreasonable.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.

profitability information, the Trustees considered the possible effect of certain fall-out benefits to the Manager and its affiliates. The Trustees focused on profitability of the Manager’s relationships with the Funds before taxes and distribution expenses. The Trustees recognized that the Manager should, in the abstract, be entitled to earn a reasonable level of profits for the services it provides to each Fund and, based on their review, concluded that they were satisfied that the Manager’s level of profitability from its relationship with the Funds was not excessive.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® Invesco Equity and Income Fund returned –2.18% compared to a 2.11% and 7.84% total return for its benchmarks, the S&P 500 Index¹ and the Barclays Capital U.S. Aggregate Bond Index², respectively.

The financial markets faced a challenging year. Investors grew increasingly concerned over the size and scope of the European sovereign debt crisis, and over the deficit issues facing the U.S. government. Political upheaval in the Middle East and northern Africa and a devastating earthquake and tsunami in Japan also contributed to investors’ uneasiness. Corporate earnings remained strong, but were often overshadowed by investor concerns about continuing high unemployment and a weak housing market in the U.S. Stocks and fixed-income investments posted mixed results in that environment.

In the Fund’s equity portfolio, stock selection in the consumer staples sector was the largest detractor from performance relative to the benchmark. Stock selection in the energy sector also negatively affected performance, particularly due to holdings in certain gas equipment service companies and exploration and production firms. An overweight position in the technology sector dragged on performance relative to the benchmark, as did individual stock selection within that sector. In addition, the Fund was hurt by exposure to stocks in the hardware and equipment industry.*

The equity portion of the Fund’s portfolio benefited in relative terms from an underweight position in the financial sector, which was the

worst performing sector in the benchmark during the year. Strong stock selection in the materials and telecommunications sectors also benefited relative performance.*

Within the fixed-income portion of the portfolio, the Fund benefited from exposure to investment-grade corporate, U.S. Treasury and agency bonds. Those gains, however, were largely offset by the Fund’s allocation to convertible securities. Convertible bonds were very sensitive to movements in the equity markets during the year, which led to weak performance.*

Currency forward contracts were used during the year for the sole purpose of hedging currency exposure of the U.S.-dollar-denominated American Depositary Receipts in the Fund.*

Past performance does not guarantee future results.

¹	The Standard & Poor’s 500 Index (“S&P 500”) is representative 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.

²	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.

Investors cannot invest directly in an index.

Fund Objective

The Fund’s investment objective is to seek the highest possible income consistent with safety of principal, with long-term growth of capital as an important secondary objective. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing at least 65% of its total assets in income-producing equity securities.

Investment Concerns

Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return.

The Fund is subject to the risk that principal value reacts in opposition to the movement of interest rates and that a rising interest rate environment increases the risk of loss of principal.

Emerging market investing may be subject to additional economic, political, liquidity, and currency risks not associated with more developed countries.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

The chart above represents a comparison of a hypothetical investment in the Fund versus a similar investment in the Fund’s benchmarks, and represents the reinvestment of dividends and capital gains in the Fund.

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (5/3/04)
AZL^® Invesco Equity and Income Fund		–2.18	%		10.32	%		1.04	%		4.29	%
S&P 500 Index		2.11	%		14.11	%		–0.25	%		3.66	%
Barclays Capital U.S. Aggregate Bond Index		7.84	%		6.77	%		6.50	%		5.69	%

Expense Ratio²


	Gross
AZL^® Invesco Equity and Income Fund		1.11	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager voluntarily reduced the management fee to 0.70% on the first $100 million of assets, 0.675% on the next $100 million, and 0.65% on assets above $200 million. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.20% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

¹	The hypothetical $10,000 investment for the S&P 500 Index and the Barclays Capital U.S. Aggregate Bond Index is calculated from April 30, 2004.

Acquired Fund Fees and Expenses are incurred indirectly by the Fund through the valuation of the Fund’s investments in the Permitted Underlying Funds. Accordingly, Acquired Fees and Expenses affect the Fund’s total returns. Because these fees and expenses are not included in the Fund’s financial highlights, 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. Without Acquired Fund Fees and expenses the Fund’s gross ratio would be 1.10%.

The Fund’s performance is measured against the Standard & Poor’s 500 Index (“S&P 500”) and the Barclays Capital U.S. Aggregate Bond Index. The S&P 500 is representative 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 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 the deduction of fees for services provided to the Fund.

Investors cannot invest directly in an index.

As a shareholder of the AZL Invesco Equity and Income Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value


	Common Stocks (61.9%):
	Beverages (1.0%):
	44,617	Coca-Cola Co. (The)	$	3,121,851
	22,876	PepsiCo, Inc.		1,517,823

				4,639,674

	Capital Markets (1.7%):
	235,301	Charles Schwab Corp. (The)		2,649,489
	55,975	Northern Trust Corp.		2,219,968
	61,044	State Street Corp.		2,460,684

				7,330,141

	Chemicals (0.7%):
	34,940	PPG Industries, Inc.		2,917,141

	Commercial Banks (3.9%):
	100,001	BB&T Corp.^		2,517,025
	71,096	Comerica, Inc.		1,834,277
	172,731	Fifth Third Bancorp		2,197,138
	93,171	PNC Financial Services Group, Inc.^		5,373,172
	81,667	U.S. Bancorp		2,209,092
	116,384	Wells Fargo & Co.		3,207,543

				17,338,247

	Commercial Services & Supplies (0.4%):
	57,024	Cintas Corp.^		1,985,005

	Computers & Peripherals (1.4%):
	185,407	Dell, Inc.*		2,712,505
	140,887	Hewlett-Packard Co.		3,629,249

				6,341,754

	Diversified Financial Services (3.7%):
	167,484	Citigroup, Inc.		4,406,504
	360,659	JPMorgan Chase & Co.		11,991,912

				16,398,416

	Diversified Telecommunication Services (0.9%):
	96,379	Verizon Communications, Inc.		3,866,726

	Electric Utilities (2.7%):
	120,473	American Electric Power Co., Inc.		4,976,739
	63,152	Edison International		2,614,493
	25,439	Entergy Corp.		1,858,319
	58,069	FirstEnergy Corp.		2,572,457

				12,022,008

	Energy Equipment & Services (1.6%):
	50,037	Baker Hughes, Inc.		2,433,799
	41,262	Cameron International Corp.*		2,029,678
	37,758	Schlumberger, Ltd.		2,579,249

				7,042,726

	Food & Staples Retailing (1.5%):
	132,340	SYSCO Corp.		3,881,532
	90,551	Walgreen Co.		2,993,616

				6,875,148


Shares			Fair Value

	Common Stocks, continued
	Food Products (2.3%):
	102,557	Archer-Daniels Midland Co.	$	2,933,130
	80,847	Kraft Foods, Inc., Class A		3,020,444
	126,895	Unilever NV, NYS		4,361,381

				10,314,955

	Health Care Equipment & Supplies (0.9%):
	105,688	Medtronic, Inc.		4,042,566

	Health Care Providers & Services (2.5%):
	51,899	Cardinal Health, Inc.		2,107,619
	34,575	CIGNA Corp.		1,452,150
	42,463	HCA Holdings, Inc.*		935,460
	126,424	UnitedHealth Group, Inc.		6,407,168

				10,902,397

	Household Durables (0.1%):
	33,949	Sony Corp., Sponsored ADR		612,440

	Household Products (2.2%):
	22,739	Energizer Holdings, Inc.*		1,761,818
	117,528	Procter & Gamble Co. (The)		7,840,293

				9,602,111

	Industrial Conglomerates (4.3%):
	705,232	General Electric Co.		12,630,705
	137,897	Tyco International, Ltd.		6,441,169

				19,071,874

	Insurance (2.7%):
	36,672	Chubb Corp. (The)^		2,538,436
	293,798	Marsh & McLennan Cos., Inc.		9,289,893

				11,828,329

	Internet Software & Services (1.9%):
	224,655	eBay, Inc.*^		6,813,786
	88,725	Yahoo!, Inc.*		1,431,134

				8,244,920

	IT Services (1.3%):
	99,078	Amdocs, Ltd.*		2,826,695
	150,754	Western Union Co.		2,752,768

				5,579,463

	Machinery (0.7%):
	101,535	Ingersoll-Rand plc		3,093,771

	Media (4.8%):
	248,340	Comcast Corp., Class A^		5,888,142
	60,446	Time Warner Cable, Inc.		3,842,552
	137,607	Time Warner, Inc.		4,973,117
	141,781	Viacom, Inc., Class B		6,438,275

				21,142,086

	Oil, Gas & Consumable Fuels (7.1%):
	104,243	Anadarko Petroleum Corp.		7,956,868
	40,120	Devon Energy Corp.		2,487,440
	45,090	Exxon Mobil Corp.		3,821,828
	83,913	Hess Corp.		4,766,259
	33,340	Occidental Petroleum Corp.		3,123,958



Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Oil, Gas & Consumable Fuels, continued
	88,626	Royal Dutch Shell plc, ADR	$	6,477,674
	634	Sunoco, Inc.		26,007
	81,742	Williams Cos., Inc. (The)		2,699,121

				31,359,155

	Personal Products (1.0%):
	252,497	Avon Products, Inc.		4,411,123

	Pharmaceuticals (5.3%):
	27,439	Abbott Laboratories		1,542,895
	169,857	Bristol-Myers Squibb Co.^		5,985,761
	24,395	Eli Lilly & Co.		1,013,856
	15,105	Hospira, Inc.*^		458,739
	152,246	Merck & Co., Inc.		5,739,674
	395,299	Pfizer, Inc.		8,554,270

				23,295,195

	Semiconductors & Semiconductor Equipment (1.5%):
	221,078	Applied Materials, Inc.		2,367,745
	107,578	Intel Corp.		2,608,767
	207,661	STMicroelectronics NV		1,226,328
	109,984	STMicroelectronics NV, NYS		652,205

				6,855,045

	Software (1.4%):
	241,592	Microsoft Corp.		6,271,728

	Specialty Retail (1.2%):
	123,590	Home Depot, Inc.		5,195,724

	Wireless Telecommunication Services (1.2%):
	194,865	Vodafone Group plc, Sponsored ADR		5,462,066

	Total Common Stocks (Cost $246,476,581)			274,041,934

	Preferred Stocks (1.4%):
	Commercial Banks (0.3%):
	13,608	KeyCorp, Series A^		1,435,644

	Diversified Financial Services (0.0%):
	3,370	Nielsen Holdings NV		194,828

	Health Care Providers & Services (0.4%):
	1,310	HealthSouth Corp., Series A		1,149,525
	9,754	Omnicare Capital Trust II		449,903

				1,599,428

	Multi-Utilities (0.20%):
	22,092	Centerpoint Energy, Inc., 9/15/29		758,032

	Oil, Gas & Consumable Fuels (0.3%):
	27,346	El Paso Energy Capital Trust I		1,252,789

	Road & Rail (0.2%):
	91,449	Swift Mandatory Common Exchange Security Trust(a)		783,370

	Total Preferred Stocks (Cost $5,598,739)			6,024,091

	Convertible Bonds (10.3%):
	Biotechnology (1.4%):
$	1,252,000	Amylin Pharmaceuticals, Inc., 3.00%, 6/15/14		1,114,280


Principal Amount			Fair Value

	Convertible Bonds, continued
	Biotechnology, continued
$	347,000	Dendreon Corp., 2.88%, 1/15/16	$	243,334
	2,903,000	Gilead Sciences, Inc., Series D, 1.63%, 5/1/16		3,321,106
	1,744,000	Invitrogen Corp., 1.50%, 2/15/24		1,744,000

				6,422,720

	Capital Markets (0.7%):
	1,747,000	Affiliated Managers Group, Inc., 3.95%, 8/15/38, Callable 8/15/13 @ 100		1,895,495
	1,200,000	Goldman Sachs Group, Inc. (The), 1.00%, 3/15/17, Callable 3/13/15 @ 100, MTN(a)		1,058,450

				2,953,945

	Communications Equipment (1.0%):
	1,106,000	Ciena Corp., 4.00%, 3/15/15(a)		1,086,645
	2,529,000	Lucent Technologies Corp., 2.88%, 6/15/25		2,219,197

	983,000	TW Telecom, Inc., 2.38%, 4/1/26, Callable 4/6/13 @ 100		1,157,483

				4,463,325

	Computers & Peripherals (0.8%):
	3,608,000	Sandisk Corp., 1.00%, 5/15/13		3,513,290

	Construction Materials (0.3%):
	2,000,000	Cemex SAB de C.V., 4.88%, 3/15/15^		1,305,000

	Diversified Telecommunication Services (0.3%):
	793,000	JDS Uniphase Corp., 1.00%, 5/15/26, Callable 5/20/13 @ 100^		779,123
	400,000	JDS Uniphase Corp., 1.00%, 5/15/26(a)		388,500

				1,167,623

	Energy Equipment & Services (0.2%):
	1,000,000	Helix Energy Solutions Group, Inc., 3.25%, 12/15/25, Callable 12/20/12 @ 100		1,002,500

	Health Care Equipment & Supplies (0.9%):
	1,890,000	LifePoint Hospitals, Inc., 3.50%, 5/15/14		1,932,525
	503,000	NuVasive, Inc., 2.75%, 7/1/17		366,561
	1,252,000	Teleflex, Inc., 3.88%, 8/1/17		1,505,530

				3,804,616


Principal Amount			Fair Value

	Convertible Bonds, continued
	Health Care Providers & Services (0.3%):
$	416,000	Omnicare, Inc., 3.75%, 12/15/25	$	578,240
	771,000	Omnicare, Inc., 3.25%, 12/15/35		707,392

				1,285,632

	Hotels, Restaurants & Leisure (1.1%):
	2,049,000	International Game Technology, Inc., 3.25%, 5/1/14^(a)		2,425,504
	2,693,000	MGM Resorts International, 4.25%, 4/15/15^		2,554,983

				4,980,487

	Internet & Catalog Retail (0.3%):
	1,209,700	Liberty Media Corp., 3.13%, 3/30/23		1,353,352

	Machinery (0.3%):
	836,000	Linear Technology Corp., Series A, 3.00%, 5/1/27, Callable 5/1/14 @ 100		853,765
	460,000	Linear Technology Corp., 3.00%, 5/1/27(a)		469,775

				1,323,540

	Media (0.6%):
	1,317,000	Gaylord Entertainment Co., 3.75%, 10/1/14(a)		1,465,163
	641,000	Interpublic Group of Cos., Inc. (The), 4.25%, 3/15/23, Callable 3/15/12 @ 100		648,211
	480,000	Interpublic Group of Cos., Inc. (The), 4.75%, 3/15/23, Callable 3/15/13 @ 100		526,800

				2,640,174

	Pharmaceuticals (0.6%):
	1,094,000	Endo Pharmaceuticals Holdings, Inc., 1.75%, 4/15/15		1,431,772
	885,000	Salix Pharmaceuticals, Ltd., 2.75%, 5/15/15		1,144,969

				2,576,741

	Semiconductors & Semiconductor Equipment (0.6%):
	1,003,000	Micron Technology, Inc., Series A, 1.50%, 8/1/31, Callable 8/5/15 @ 100(a)		900,192
	663,000	Novellus Systems, Inc., 2.63%, 5/15/41(a)		793,943
	452,000	Xilinx, Inc., 3.13%, 3/15/37		513,020


Principal Amount			Fair Value

	Convertible Bonds, continued
	Semiconductors & Semiconductor Equipment, continued
$	512,000	Xilinx, Inc., 3.13%, 3/15/37(a)	$	581,120

				2,788,275

	Software (0.4%):
	592,000	Cadence Design Systems, Inc., 1.50%, 12/15/13		583,860
	901,000	Symantec Corp., 1.00%, 6/15/13^		1,003,489

				1,587,349

	Thrifts & Mortgage Finance (0.1%):
	990,000	MGIC Investment Corp., 5.00%, 5/1/17		595,238

	Wireless Telecommunication Services (0.4%):
	1,691,000	SBA Communications Corp., 1.88%, 5/1/13		1,908,716

	Total Convertible Bonds (Cost $46,032,694)			45,672,523

	Corporate Bonds (4.0%):
	Aerospace & Defense (0.0%):
	65,000	Raytheon Co., 1.63%, 10/15/15		65,445

	Airlines (0.0%):
	105,000	Continental Airlines 2010-A, Class A, 4.75%, 1/12/21^		107,100
	84,894	Delta Air Lines, Inc., 6.20%, 7/2/18		90,412

				197,512

	Automobiles (0.0%):
	55,000	Daimler Finance LLC, 7.30%, 1/15/12		55,102

	Beverages (0.1%):
	20,000	Anheuser-Busch InBev NV Worldwide, Inc., 5.38%, 11/15/14		22,223
	135,000	Anheuser-Busch InBev NV Worldwide, Inc., 3.63%, 4/15/15		143,754
	80,000	FBG Finance, Ltd., 5.13%, 6/15/15(a)		87,065

				253,042

	Capital Markets (0.4%):
	120,000	Bear Stearns Co., Inc., 7.25%, 2/1/18		140,682
	305,000	Goldman Sachs Group, Inc. (The), 6.15%, 4/1/18		314,787
	175,000	Goldman Sachs Group, Inc. (The), 5.25%, 7/27/21		170,719
	140,000	Goldman Sachs Group, Inc. (The), 6.75%, 10/1/37		130,272


Principal Amount			Fair Value

	Corporate Bonds, continued
	Capital Markets, continued
$	175,000	Jefferies Group, Inc., 6.88%, 4/15/21	$	157,500
	70,000	Merrill Lynch & Co., 6.88%, 4/25/18		69,016
	235,000	Morgan Stanley, 4.00%, 7/24/15		220,372
	295,000	Morgan Stanley, 3.45%, 11/2/15		271,604
	120,000	Morgan Stanley, 5.75%, 1/25/21		111,937

				1,586,889

	Commercial Banks (0.2%):
	28,000	AT&T, Inc., 5.35%, 9/1/40		31,497
	75,000	Enterprise Products Partners LP, 6.50%, 1/31/19		87,336
	105,000	HBOS plc, 6.75%, 5/21/18(a)		84,188
	50,000	PNC Funding Corp., 6.70%, 6/10/19		61,002
	185,000	U.S. Bancorp, 2.00%, 6/14/13^		188,018
	250,000	U.S. Bank NA, 3.78%, 4/29/20, Callable 4/29/15 @ 100(b)		257,440
	230,000	Wells Fargo & Co., 5.63%, 12/11/17		262,092

				971,573

	Commercial Services & Supplies (0.1%):
	195,000	Cintas Corp., 2.85%, 6/1/16		199,981
	135,000	Waste Management, Inc., 5.00%, 3/15/14^		144,680

				344,661

	Communications Equipment (0.0%):
	45,000	Juniper Networks, Inc., 4.60%, 3/15/21		47,688

	Computers & Peripherals (0.0%):
	195,000	Hewlett-Packard Co., 2.63%, 12/9/14		196,718

	Consumer Finance (0.1%):
	140,000	Capital One Financial Corp., 6.75%, 9/15/17		156,872
	200,000	GMAC, Inc., 2.20%, 12/19/12		203,814
	165,000	HSBC Finance Corp., 7.00%, 5/15/12		168,077

				528,763


Principal Amount			Fair Value

	Corporate Bonds, continued
	Diversified Financial Services (0.9%):
$	295,000	Bank of America Corp., 5.75%, 12/1/17	$	278,634
	175,000	Bank of America Corp., 5.65%, 5/1/18		166,732
	180,000	Charles Schwab Corp. (The), 4.45%, 7/22/20		190,451
	1,000,000	Citibank NA, 1.75%, 12/28/12		1,015,284
	1,050,000	Citigroup Funding, Inc., 2.25%, 12/10/12		1,069,500
	135,000	Citigroup, Inc., 6.13%, 11/21/17		144,076
	220,000	Citigroup, Inc., 8.50%, 5/22/19		258,959
	115,000	ERAC USA Finance Co., 2.75%, 7/1/13(a)		116,940
	185,000	General Electric Capital Corp., 4.65%, 10/17/21, MTN		193,078
	120,000	JPMorgan Chase & Co., 6.00%, 1/15/18		133,882
	65,000	JPMorgan Chase & Co., 6.30%, 4/23/19		73,621
	150,000	JPMorgan Chase & Co., 4.40%, 7/22/20		153,182
	130,000	PNC Funding Corp., 5.13%, 2/8/20		146,896

				3,941,235

	Diversified Telecommunication Services (0.1%):
	1,000	AT&T, Inc., 8.00%, 11/15/31		1,413
	65,000	Verizon Communications, Inc., 3.00%, 4/1/16^		68,067
	65,000	Verizon Communications, Inc., 6.35%, 4/1/19		79,203
	120,000	Verizon Communications, Inc., 8.95%, 3/1/39		192,175
	90,000	Verizon Communications, Inc., 4.75%, 11/1/41^		96,861

				437,719

	Electric Utilities (0.1%):
	175,000	Louisville Gas & Electric Co., 1.63%, 11/15/15		175,896
	125,000	Ohio Power Co., Series M, 5.38%, 10/1/21		143,387

				319,283

	Electronic Equipment, Instruments & Components (0.0%):
	10,000	Corning, Inc., 6.63%, 5/15/19		12,068
	20,000	Corning, Inc., 7.25%, 8/15/36, Callable 8/15/26 @ 100		24,127

				36,195


Principal Amount			Fair Value

	Corporate Bonds, continued
	Energy Equipment & Services (0.0%):
$	45,000	Texas East Transmission, 7.00%, 7/15/32	$	57,393

	Food & Staples Retailing (0.1%):
	117,712	CVS Pass-Through Trust, 6.04%, 12/10/28		122,501
	19,141	CVS Pass-Through Trust, 8.35%, 7/10/31(a)		23,426
	185,000	Safeway, Inc., 3.95%, 8/15/20^		182,693
	15,000	Wal-Mart Stores, Inc., 6.50%, 8/15/37		20,722

				349,342

	Food Products (0.1%):
	85,000	Corn Products International, Inc., 6.63%, 4/15/37		101,059
	85,000	GlaxoSmithKline plc, 5.65%, 5/15/18		102,307
	85,000	Kraft Foods, Inc., 5.38%, 2/10/20		98,077
	135,000	Kraft Foods, Inc., 7.00%, 8/11/37		180,353
	15,000	Kraft Foods, Inc., 6.88%, 2/1/38		19,862

				501,658

	Health Care Equipment & Supplies (0.1%):
	95,000	Boston Scientific Corp., 4.50%, 1/15/15		99,694
	130,000	CareFusion Corp., 4.13%, 8/1/12		131,975

				231,669

	Health Care Providers & Services (0.2%):
	220,000	Aetna, Inc., 3.95%, 9/1/20		227,615
	335,000	Express Scripts, Inc., 5.25%, 6/15/12		341,333
	75,000	Medco Health Solutions, Inc., 2.75%, 9/15/15		75,424
	135,000	WellPoint, Inc., 4.35%, 8/15/20		145,833

				790,205

	Hotels, Restaurants & Leisure (0.1%):
	170,000	Expedia, Inc., 5.95%, 8/15/20		171,434
	225,000	Wyndham Worldwide Corp., 5.63%, 3/1/21		232,327
	20,000	Yum! Brands, Inc., 6.25%, 3/15/18		23,436
	60,000	Yum! Brands, Inc., 5.30%, 9/15/19		67,130

				494,327


Principal Amount			Fair Value

	Corporate Bonds, continued
	Household Products (0.1%):
	350,000	Pentair, Inc., 5.00%, 5/15/21, Callable 2/15/21 @ 100	$	369,450
	225,000	Tupperware Corp., 4.75%, 6/1/21, Callable 3/1/21 @ 100(a)		225,448

				594,898

	Industrial Conglomerates (0.3%):
	1,200,000	General Electric Capital Corp., Series G, 2.63%, 12/28/12, MTN		1,228,722
	75,000	General Electric Capital Corp., Series G, 6.00%, 8/7/19, MTN		86,147
	160,000	General Electric Co., 5.25%, 12/6/17		183,642

				1,498,511

	Insurance (0.1%):
	115,000	CNA Financial Corp., 5.88%, 8/15/20^		118,134
	75,000	Pacific Life Corp., 6.00%, 2/10/20(a)		79,823
	70,000	Travelers Cos., Inc. (The), 5.35%, 11/1/40		80,874

				278,831

	Media (0.3%):
	135,000	Comcast Corp., 5.70%, 5/15/18		155,352
	20,000	Cox Communications, Inc., 8.38%, 3/1/39(a)		26,779
	430,000	DIRECTV Holdings LLC/DIRECTV Financing Co., Inc., 7.63%, 5/15/16, Callable 5/15/12 @ 103.81		456,338
	80,000	NBCUniversal Media LLC, 2.10%, 4/1/14		81,318
	65,000	NBCUniversal Media LLC, 5.15%, 4/30/20		72,369
	75,000	NBCUniversal Media LLC, 5.95%, 4/1/41		88,156
	160,000	Time Warner Cable, Inc., 5.88%, 11/15/40, Callable 5/15/40 @ 100		173,162
	40,000	Time Warner, Inc., 5.88%, 11/15/16		46,169
	60,000	Time Warner, Inc., 8.75%, 2/14/19		76,616

				1,176,259

	Metals & Mining (0.0%):
	115,000	Freeport-McMoRan Copper & Gold, Inc., 8.38%, 4/1/17, Callable 4/1/12 @ 104.19		122,187


Principal Amount			Fair Value

	Corporate Bonds, continued
	Multi-Utilities (0.0%):
$	40,000	NiSource Finance Corp., 6.80%, 1/15/19	$	46,850

	Multiline Retail (0.0%):
	90,000	Macy’s Retail Holdings, Inc., 5.35%, 3/15/12		90,617

	Oil, Gas & Consumable Fuels (0.1%):
	35,000	Enterprise Products Operating LP, 5.25%, 1/31/20		38,644
	50,000	Hess Corp., 5.60%, 2/15/41		55,864
	300,000	Morgan Stanley, 3.80%, 4/29/16		276,394
	45,000	Spectra Energy Capital Corp., 7.50%, 9/15/38		58,553

				429,455

	Paper & Forest Products (0.0%):
	125,000	International Paper Co., 6.00%, 11/15/41, Callable 5/15/41 @ 100		135,702

	Pharmaceuticals (0.1%):
	110,000	Express Scripts, Inc., 3.13%, 5/15/16^		110,610
	95,000	Merck & Co., Inc., 5.00%, 6/30/19		112,031
	230,000	Pfizer, Inc., 6.20%, 3/15/19		283,798

				506,439

	Real Estate Investment Trusts (REITs) (0.1%):
	115,000	Digital Realty Trust LP, 4.50%, 7/15/15^		117,299
	185,000	Senior Housing Properties Trust, 4.30%, 1/15/16, Callable 10/15/15 @ 100		182,326
	75,000	WEA Finance LLC, 7.13%, 4/15/18(a)		83,822

				383,447

	Road & Rail (0.1%):
	20,000	CSX Corp., 6.15%, 5/1/37		24,051
	140,000	CSX Corp., 5.50%, 4/15/41, Callable 10/15/40 @ 100		158,578
	105,000	Ryder System, Inc., 3.15%, 3/2/15, MTN		107,905
	20,000	Union Pacific Corp., 6.13%, 2/15/20		24,482

				315,016

	Software (0.0%):
	75,000	Adobe Systems, Inc., 4.75%, 2/1/20		81,417


Principal Amount			Fair Value

	Corporate Bonds, continued
	Specialty Retail (0.1%):
$	100,000	Advance Auto Parts, Inc., 5.75%, 5/1/20	$	109,516
	140,000	AutoZone, Inc., 6.50%, 1/15/14		153,796
	155,000	Best Buy Co., Inc., 5.50%, 3/15/21, Callable 12/15/20 @ 100^		148,270

				411,582

	Thrifts & Mortgage Finance (0.0%):
	80,000	Prudential Financial, Inc., Series D, 4.75%, 9/17/15, MTN		84,472
	20,000	Prudential Financial, Inc., 7.38%, 6/15/19		23,641
	35,000	Prudential Financial, Inc., 6.63%, 12/1/37		38,325

				146,438

	Wireless Telecommunication Services (0.1%):
	55,000	American Tower Corp., 4.63%, 4/1/15		57,327
	125,000	American Tower Corp., 4.50%, 1/15/18		127,158
	25,000	SBC Communications, Inc., 6.15%, 9/15/34		29,656

				214,141

	Total Corporate Bonds (Cost $17,151,582)			17,838,209

	Yankee Dollars (1.4%):
	Commercial Banks (0.5%):
	65,000	Abbey National Treasury Services plc, 2.88%, 4/25/14		60,596
	100,000	Abbey National Treasury Services plc, 3.88%, 11/10/14(a)		93,851
	85,000	Abbey National Treasury Services plc, 4.00%, 4/27/16		76,258
	135,000	Bank of Nova Scotia, NY, 2.38%, 12/17/13		138,604
	175,000	Barclays Bank plc, 6.75%, 5/22/19		194,009
	110,000	Barclays Bank plc, 5.14%, 10/14/20		93,114
	155,000	BPCE SA, 2.38%, 10/4/13(a)		150,125
	95,000	Commonwealth Bank of Australia, 5.00%, 10/15/19(a)		100,751
	255,000	HSBC Bank plc, 4.13%, 8/12/20(a)		251,625
	250,000	Lloyds TSB Bank plc, 4.88%, 1/21/16		243,646
	100,000	Lloyds TSB Bank plc, 5.80%, 1/13/20(a)		94,938


Principal Amount			Fair Value

	Yankee Dollars, continued
	Commercial Banks, continued
$	100,000	Royal Bank of Scotland plc, 4.88%, 3/16/15	$	95,618
	100,000	Santander U.S. Debt SA, 3.72%, 1/20/15(a)		90,802
	305,000	Societe Generale, 2.50%, 1/15/14(a)		282,430
	100,000	Standard Chartered plc, 3.85%, 4/27/15(a)		100,646
	160,000	Westpac Banking Corp., NY, 2.10%, 8/2/13		161,563

				2,228,576

	Diversified Financial Services (0.2%):
	155,000	Credit Suisse Group AG, 5.40%, 1/14/20		146,190
	30,000	Credit Suisse, NY, 6.00%, 2/15/18		29,587
	100,000	Credit Suisse, NY, 5.30%, 8/13/19		103,131
	125,000	National Australia Bank, 3.75%, 3/2/15(a)		128,994
	180,000	Nationwide Building Society, 6.25%, 2/25/20(a)		178,592
	180,000	Rabobank Nederland NV, 4.75%, 1/15/20(a)		189,076
	60,000	UBS AG Stamford CT, 5.88%, 12/20/17		62,463

				838,033

	Diversified Telecommunication Services (0.1%):
	75,000	Deutsche Telekom International Finance BV, 6.00%, 7/8/19		86,100
	155,000	Telecom Italia Capital SA, 7.00%, 6/4/18		144,909

				231,009

	Electric Utilities (0.0%):
	50,000	Electricite de France, 4.60%, 1/27/20(a)		51,104
	100,000	Enel Finance International SA, 5.13%, 10/7/19(a)		89,335

				140,439

	Electronic Equipment, Instruments & Components (0.0%):
	70,000	Philips Electronics NV, 5.75%, 3/11/18		80,183

	Food & Staples Retailing (0.0%):
	40,000	Delhaize Group, 5.88%, 2/1/14		43,415

	Food Products (0.0%):
	100,000	Grupo Bimbo SAB de C.V., 4.88%, 6/30/20(a)		105,340


Principal Amount			Fair Value

	Yankee Dollars, continued
	Independent Power Producers & Energy Traders (0.0%):
$	100,000	Iberdrola Finance Ireland, Ltd., 3.80%, 9/11/14(a)	$	99,839

	Insurance (0.0%):
	100,000	AEGON NV, 4.63%, 12/1/15		103,670

	Media (0.0%):
	100,000	WPP Finance, 8.00%, 9/15/14		111,391

	Metals & Mining (0.3%):
	100,000	Anglo American Capital plc, 9.38%, 4/8/19(a)		127,242
	205,000	ArcelorMittal, 3.75%, 8/5/15		195,975
	145,000	ArcelorMittal, 9.85%, 6/1/19		161,272
	30,000	ArcelorMittal, 5.50%, 3/1/21^		27,537
	30,000	ArcelorMittal, 6.75%, 3/1/41		26,977
	155,000	Barrick Gold Corp., 2.90%, 5/30/16		159,083
	265,000	Gold Fields Holdings Co., Ltd., 4.88%, 10/7/20(a)		233,980
	100,000	Rio Tinto Finance (USA), Ltd., 9.00%, 5/1/19		136,477
	55,000	Vale Overseas, Ltd., 5.63%, 9/15/19^		60,588
	65,000	Vale Overseas, Ltd., 6.88%, 11/10/39		74,451

				1,203,582

	Oil, Gas & Consumable Fuels (0.1%):
	130,000	Petroleos Mexicanos, 5.50%, 1/21/21		141,050
	40,000	Shell International Finance B.V., 3.10%, 6/28/15		42,886

				183,936

	Real Estate Investment Trusts (REITs) (0.1%):
	430,000	Dexus Diversified Trust /Dexus Office Trust, 5.60%, 3/15/21(a)		436,973

	Real Estate Management & Development (0.0%):
	30,000	Brookfield Asset Management, Inc., 7.13%, 6/15/12		30,721

	Sovereign Bonds (0.0%):
	95,000	Republic of Italy, 6.88%, 9/27/23		91,523

	Wireless Telecommunication Services (0.1%):
	200,000	America Movil SAB de C.V., 2.38%, 9/8/16		199,443

	Total Yankee Dollars (Cost $6,135,672)			6,128,073


Principal Amount			Fair Value


	Municipal Bond (0.0%):
	Texas (0.0%):
$	80,000	Texas State Transportation Commission Revenue, Series B, Build America Bonds, 5.03%, 4/1/26	$	92,423

	Total Municipal Bond (Cost $80,000)			92,423

	U.S. Government Agency Mortgages (0.5%):
	Federal Home Loan Mortgage Corporation (0.3%)
	250,000	3.00%, 7/28/14^		265,281
	950,000	4.88%, 6/13/18^		1,144,675

				1,409,956

	Federal National Mortgage Association (0.2%)
	540,000	4.38%, 10/15/15		610,194
	185,000	6.63%, 11/15/30		274,013

				884,207

	Total U.S. Government Agency Mortgages (Cost $2,051,413)			2,294,163

	U.S. Treasury Obligations (6.6%):
	U.S. Treasury Bonds (1.4%)
	300,000	6.63%, 2/15/27		461,625
	1,280,000	3.50%, 2/15/39		1,439,800
	420,000	4.25%, 5/15/39		534,319
	400,000	4.38%, 11/15/39		519,312
	350,000	4.63%, 2/15/40		472,063
	2,500,000	4.25%, 11/15/40		3,188,280

				6,615,399

	U.S. Treasury Notes (5.2%)
	550,000	0.88%, 2/29/12		550,730
	6,500,000	1.00%, 4/30/12		6,520,312
	250,000	4.38%, 8/15/12		256,582
	180,000	4.13%, 8/31/12		184,746
	500,000	1.38%, 1/15/13		506,211
	1,680,000	2.75%, 10/31/13		1,756,059
	1,350,000	1.75%, 3/31/14		1,394,191


Principal Amount			Fair Value

	U.S. Treasury Obligations, continued
	U.S. Treasury Notes, continued
$	200,000	2.63%, 6/30/14	$	211,375
	2,470,000	2.25%, 1/31/15		2,609,130
	2,300,000	2.50%, 3/31/15^		2,452,375
	3,500,000	2.63%, 4/30/16		3,786,836
	6,000	3.63%, 2/15/20		6,959
	1,500,000	2.63%, 11/15/20		1,614,843
	85,000	2.13%, 8/15/21		87,178
	500,000	6.88%, 8/15/25		770,000

				22,707,527

	Total U.S. Treasury Obligations (Cost $27,067,475)			29,322,926

	Exchange Traded Fund (0.2%):
	39,187	SPDR S&P Homebuilders^		670,098

	Total Exchange Traded Fund (Cost $662,601)			670,098

	Securities Held as Collateral for Securities on Loan (4.9%):
$	21,559,963	Allianz Variable Insurance Products Securities Lending Collateral Trust(c)		21,559,963

	Total Securities Held as Collateral for Securities on Loan (Cost $21,559,963)			21,559,963

	Unaffiliated Investment Company (13.2%):
	58,438,001	Dreyfus Treasury Prime Cash Management, 0.00%(d)		58,438,001

	Total Unaffiliated Investment Company (Cost $58,438,001)			58,438,001

	Total Investment Securities (Cost $431,254,721)+(e) — 104.4%			462,082,404
	Net other assets (liabilities) — (4.4)%			(19,686,053	)

	Net Assets — 100.0%		$	442,396,351

As of December 31, 2011, the Fund’s open forward currency contracts were as follows:

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	431,254,721

Investment securities, at value*	$	462,082,404
Cash		2,436
Interest and dividends receivable		1,391,772
Unrealized appreciation on forward currency contracts		375,914
Receivable for capital shares issued		264,662
Receivable for expenses paid indirectly		5,980
Receivable for investments sold		321,317
Prepaid expenses		5,418

Total Assets		464,449,903

Liabilities:
Payable for investments purchased		92,882
Payable for collateral received on loaned securities		21,559,963
Manager fees payable		243,231
Administration fees payable		14,522
Distribution fees payable		91,100
Custodian fees payable		3,250
Administrative and compliance services fees payable		3,032
Trustee fees payable		164
Other accrued liabilities		45,408

Total Liabilities		22,053,552

Net Assets	$	442,396,351

Net Assets Consist of:
Capital	$	419,525,182
Accumulated net investment income/(loss)		5,969,145
Accumulated net realized gains/(losses) from investment transactions		(14,301,573	)
Net unrealized appreciation/(depreciation) on investments		31,203,597

Net Assets	$	442,396,351

Shares of beneficial interest (unlimited number of shares authorized, no par value)		38,336,935
Net Asset Value (offering and redemption price per share)	$	11.54

*	Includes securities on loan of $20,941,227.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	3,548,889
Dividends		6,804,723
Income from securities lending		105,030
Foreign withholding tax		(3,532	)

Total Investment Income		10,455,110

Expenses:
Manager fees		3,051,071
Administration fees		187,165
Distribution fees		1,017,024
Custodian fees		23,624
Administrative and compliance services fees		19,649
Trustee fees		32,883
Professional fees		35,882
Shareholder reports		41,300
Other expenses		14,540

Total expenses before reductions		4,423,138
Less expenses voluntarily waived/reimbursed by the Manager		(331,810	)
Less expenses paid indirectly		(5,980	)

Net expenses		4,085,348

Net Investment Income/(Loss)		6,369,762

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		1,743,867
Net realized gains/(losses) on forward currency contracts		437,617
Payments by affiliates for the violation of certain investment policies and limitations		1,491
Change in unrealized appreciation/depreciation on investments		(19,761,900	)

Net Realized/Unrealized Gains/(Losses) on Investments		(17,578,925	)

Change in Net Assets Resulting From Operations	$	(11,209,163	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Invesco Equity and Income Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $10,418 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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 as well as to hedge the currency exposure of the U.S. dollar denominated American Depositary Receipts held in the Fund. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The contract amount of forward currency contracts outstanding was $13.1 million as of December 31, 2011. The monthly average amount for these contracts was $7.7 million for the year ended December 31, 2011.

The following is a summary of the fair value of derivative instruments as of December 31, 2011.

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 Invesco Advisers, Inc. (“Invesco”), Invesco 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

are reflected on the Statement of Operations as “Recoupment of prior expenses reimbursed by the Manager.” At December 31, 2011, there were no remaining contractual reimbursements that are subject to repayment by the Fund in subsequent years.

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, 5,841 was paid from the Fund relating to these fees and expenses.

During the year ended December 31, 2011, the Subadvisor reimbursed $1,491 to the Fund related to the violation of certain investment policies and limitations. The impact to the total return is disclosed in the Financial Highlights.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks
Semiconductors & Semiconductor Equipment	$	5,628,717	$	1,226,328	$	—	$	6,855,045
All Other Common Stocks+		267,186,889		—		—		267,186,889
Preferred Stocks+		—		6,024,091		—		6,024,091
Convertible Bonds+		—		45,672,523		—		45,672,523
Corporate Bonds+		—		17,838,209		—		17,838,209
Yankee Dollars+		—		6,128,073		—		6,128,073
Municipal Bonds		—		92,423		—		92,423
U.S. Government Agency Mortgages		—		2,294,163		—		2,294,163
U.S. Treasury Obligations		—		29,322,926		—		29,322,926
Exchange Traded Fund		670,098		—		—		670,098
Securities Held as Collateral for Securities on Loan		—		21,559,963		—		21,559,963
Unaffiliated Investment Company		58,438,001		—		—		58,438,001

Total Investment Securities		331,923,705		130,158,699		—		462,082,404

Other Financial Instruments:*
Forward Currency Contracts		—		375,914		—		375,914

Total Investments	$	331,923,705	$	130,534,613	$	—	$	462,458,318

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $435,992,691. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $1,310,290 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Invesco Equity and Income Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

For the year ended December 31, 2011, 68.30% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

performance relative to the benchmark. Stock selection in the energy sector also negatively affected performance, particularly due to holdings in certain gas equipment service companies and exploration and production firms.*

An overweight position in the technology sector dragged on performance, relative to the benchmark, as did individual stock selection within that sector. In addition, the Fund was hurt by exposure to stocks in the hardware and equipment industry.*

The Fund benefited in relative terms from an underweight position in the financial sector, which was the worst performing sector in the benchmark during the year. Strong stock selection in the materials and telecommunications sectors benefited relative performance.*

Past performance does not guarantee future results.

¹	The Russell 1000^® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values. Investors cannot invest directly in an index.

Fund Objective

The Fund’s investment objective is to seek income and long-term growth of capital. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing primarily in income-producing equity securities, including common stocks and convertible securities although investments are also made in non-convertible preferred stocks and debt securities rated “investment grade,” which are securities rated within the four highest grades assigned by S&P^® or by Moody’s.

Investment Concerns

The Fund is subject to the risk that principal value reacts in opposition to the movement of interest rates and that a rising interest rate environment increases the risk of loss of principal.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			10 Year
AZL^® Invesco Growth and Income Fund		–1.94	%		10.86	%		–1.25	%		3.93	%
Russell 1000^® Value Index		0.39	%		11.55	%		–2.64	%		3.89	%

Expense Ratio


	Gross
AZL^® Invesco Growth and Income Fund		1.11	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager voluntarily reduced the management fee to 0.675% on the first $100 million of assets and 0.65% on assets above $100 million. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.20% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against the Russell 1000^® Value Index, an unmanaged index that measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected 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.

As a shareholder of the AZL Invesco Growth and Income Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (92.0%):
	Beverages (1.5%):
	36,944	Coca-Cola Co. (The)	$	2,584,972
	18,929	PepsiCo, Inc.		1,255,939

				3,840,911

	Capital Markets (2.4%):
	193,074	Charles Schwab Corp. (The)		2,174,013
	46,162	Northern Trust Corp.		1,830,785
	52,999	State Street Corp.		2,136,390

				6,141,188

	Chemicals (1.0%):
	30,062	PPG Industries, Inc.		2,509,876

	Commercial Banks (5.8%):
	82,986	BB&T Corp.^		2,088,758
	58,328	Comerica, Inc.		1,504,862
	142,811	Fifth Third Bancorp		1,816,556
	81,811	PNC Financial Services Group, Inc.		4,718,040
	67,117	U.S. Bancorp		1,815,515
	96,223	Wells Fargo & Co.		2,651,906

				14,595,637

	Commercial Services & Supplies (0.7%):
	52,250	Cintas Corp.^		1,818,823

	Computers & Peripherals (2.1%):
	160,452	Dell, Inc.*		2,347,413
	116,689	Hewlett-Packard Co.		3,005,908

				5,353,321

	Diversified Financial Services (5.4%):
	136,557	Citigroup, Inc.		3,592,814
	298,919	JPMorgan Chase & Co.		9,939,057

				13,531,871

	Diversified Telecommunication Services (1.4%):
	84,623	Verizon Communications, Inc.		3,395,075

	Electric Utilities (4.0%):
	96,441	American Electric Power Co., Inc.		3,983,978
	52,294	Edison International		2,164,971
	20,874	Entergy Corp.		1,524,846
	51,044	FirstEnergy Corp.		2,261,249

				9,935,044

	Energy Equipment & Services (2.2%):
	40,270	Baker Hughes, Inc.		1,958,733
	29,486	Cameron International Corp.*		1,450,416
	30,968	Schlumberger, Ltd.		2,115,424

				5,524,573

	Food & Staples Retailing (2.3%):
	114,808	SYSCO Corp.^		3,367,319
	74,751	Walgreen Co.		2,471,268

				5,838,587

	Food Products (3.5%):
	85,932	Archer-Daniels Midland Co.		2,457,655
	69,631	Kraft Foods, Inc., Class A		2,601,414
	109,403	Unilever NV, NYS		3,760,181

				8,819,250

	Health Care Equipment & Supplies (1.3%):
	84,882	Medtronic, Inc.		3,246,737


Shares			Fair Value
	Common Stocks, continued
	Health Care Providers & Services (3.6%):
	47,556	Cardinal Health, Inc.	$	1,931,249
	28,615	CIGNA Corp.		1,201,830
	33,993	HCA Holdings, Inc.*		748,866
	101,205	UnitedHealth Group, Inc.		5,129,069

				9,011,014

	Household Durables (0.2%):
	27,821	Sony Corp., Sponsored ADR^		501,891

	Household Products (3.2%):
	18,668	Energizer Holdings, Inc.*^		1,446,396
	97,318	Procter & Gamble Co. (The)		6,492,084

				7,938,480

	Industrial Conglomerates (6.4%):
	599,741	General Electric Co.		10,741,361
	114,185	Tyco International, Ltd.		5,333,582

				16,074,943

	Insurance (3.8%):
	30,086	Chubb Corp. (The)^		2,082,553
	235,326	Marsh & McLennan Cos., Inc.^		7,441,008

				9,523,561

	Internet Software & Services (2.8%):
	193,875	eBay, Inc.*^		5,880,229
	73,104	Yahoo!, Inc.*		1,179,167

				7,059,396

	IT Services (1.9%):
	86,444	Amdocs, Ltd.*		2,466,247
	130,465	Western Union Co.		2,382,291

				4,848,538

	Machinery (1.1%):
	89,042	Ingersoll-Rand plc		2,713,110

	Media (7.5%):
	218,065	Comcast Corp., Class A		5,170,321
	55,328	Time Warner Cable, Inc.		3,517,201
	127,612	Time Warner, Inc.		4,611,898
	119,740	Viacom, Inc., Class B		5,437,393

				18,736,813

	Oil, Gas & Consumable Fuels (10.7%):
	88,189	Anadarko Petroleum Corp.		6,731,467
	36,778	Devon Energy Corp.		2,280,236
	39,349	Exxon Mobil Corp.		3,335,221
	67,945	Hess Corp.		3,859,276
	27,429	Occidental Petroleum Corp.		2,570,097
	81,164	Royal Dutch Shell plc, ADR		5,932,277
	530	Sunoco, Inc.		21,741
	67,665	Williams Cos., Inc. (The)		2,234,298

				26,964,613

	Personal Products (1.4%):
	206,241	Avon Products, Inc.		3,603,030

	Pharmaceuticals (7.7%):
	22,012	Abbott Laboratories		1,237,735
	140,572	Bristol-Myers Squibb Co.		4,953,757
	20,026	Eli Lilly & Co.		832,281
	12,393	Hospira, Inc.*^		376,375
	122,274	Merck & Co., Inc.		4,609,730
	332,848	Pfizer, Inc.		7,202,831

				19,212,709


Shares			Fair Value

	Common Stocks, continued
	Semiconductors & Semiconductor Equipment (2.3%):
	182,077	Applied Materials, Inc.	$	1,950,045
	88,880	Intel Corp.		2,155,340
	171,952	STMicroelectronics NV		1,015,451
	97,593	STMicroelectronics NV, NYS		578,726

				5,699,562

	Software (2.1%):
	205,590	Microsoft Corp.		5,337,116

	Specialty Retail (1.8%):
	107,593	Home Depot, Inc.		4,523,210

	Wireless Telecommunication Services (1.9%):
	171,101	Vodafone Group plc, Sponsored ADR		4,795,961

	Total Common Stocks (Cost $203,452,059)			231,094,840

	Exchange Traded Fund (0.2%):
	31,424	SPDR S&P Homebuilders^		537,351

	Total Exchange Traded Fund (Cost $531,429)			537,351


Shares or Principal Amount			Fair Value

	Securities Held as Collateral for Securities on Loan (4.5%):
$	11,437,206	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)	$	11,437,206

	Total Securities Held as Collateral for Securities on Loan (Cost $11,437,206)			11,437,206

	Unaffiliated Investment Company (7.4%):
	18,557,903	Dreyfus Treasury Prime Cash Management, 0.00%(b)		18,557,903

	Total Unaffiliated Investment Company (Cost $18,557,903)			18,557,903

	Total Investment Securities (Cost $233,978,597)+(c) — 104.1%			261,627,300
	Net other assets (liabilities) — (4.1)%			(10,325,763	)

	Net Assets — 100.0%		$	251,301,537

As of December 31, 2011, the Fund’s open forward currency contracts were as follows:

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	233,978,597

Investment securities, at value*	$	261,627,300
Interest and dividends receivable		548,907
Unrealized appreciation on forward currency contracts		335,750
Receivable for capital shares issued		376,460
Receivable for expenses paid indirectly		1,579
Receivable for investments sold		149,964
Prepaid expenses		2,813

Total Assets		263,042,773

Liabilities:
Payable for investments purchased		53,453
Payable for capital shares redeemed		18,888
Payable for collateral received on loaned securities		11,437,206
Manager fees payable		137,626
Administration fees payable		7,269
Distribution fees payable		52,116
Custodian fees payable		2,244
Administrative and compliance services fees payable		1,885
Trustee fees payable		102
Other accrued liabilities		30,447

Total Liabilities		11,741,236

Net Assets	$	251,301,537

Net Assets Consist of:
Capital	$	243,272,484
Accumulated net investment income/(loss)		3,829,512
Accumulated net realized gains/(losses) from investment transactions		(23,784,912	)
Net unrealized appreciation/(depreciation) on investments		27,984,453

Net Assets	$	251,301,537

Shares of beneficial interest (unlimited number of shares authorized, no par value)		24,192,395
Net Asset Value (offering and redemption price per share)	$	10.39

*	Includes securities on loan of $11,088,143.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	5,987,801
Income from securities lending		24,729
Foreign withholding tax		(2,961	)

Total Investment Income		6,009,569

Expenses:
Manager fees		1,985,819
Administration fees		102,200
Distribution fees		655,010
Custodian fees		14,744
Administrative and compliance services fees		12,932
Trustee fees		21,559
Professional fees		23,155
Shareholder reports		28,520
Other expenses		9,834

Total expenses before reductions		2,853,773
Less expenses voluntarily waived/reimbursed by the Manager		(257,788	)
Less expenses paid indirectly		(35,052	)

Net expenses		2,560,933

Net Investment Income/(Loss)		3,448,636

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		1,387,652
Net realized gains/(losses) on forward currency contracts		413,837
Payments by affiliates for the violation of certain investment policies and limitations		1,687
Change in unrealized appreciation/depreciation on investments		(11,021,396	)

Net Realized/Unrealized Gains/(Losses) on Investments		(9,218,220	)

Change in Net Assets Resulting From Operations	$	(5,769,584	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Invesco Growth and Income Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $2,447 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The contract amount of forward currency contracts outstanding was $11.6 million as of December 31, 2011. The monthly average amount for these contracts was $7.4 million for the year ended December 31, 2011.

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, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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.

The following is a summary of the fair value of derivative instruments as of December 31, 2011.

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 Invesco Advisers, Inc. (“Invesco”), Invesco 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

period are reflected on the Statement of Operations as “Recoupment of prior expenses reimbursed by the Manager.” At December 31, 2011, there were no remaining contractual reimbursements that are subject to repayment by the Fund in subsequent years.

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $3,877 was paid from the Fund relating to these fees and expenses.

During the year ended December 31, 2011, the Subadviser reimbursed $1,687 to the Fund related to the violation of certain investment policies and limitations. The impact to the total return is disclosed in the Financial Highlights.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


Investment Securities:	Level 1		Level 2		Level 3		Total
Common Stocks:
Semiconductors & Semiconductor Equipment	$	4,684,111	$	1,015,451	$	—	$	5,699,562
All Other Common Stocks+		225,395,278		—		—		225,395,278
Exchange Traded Fund		537,351		—		—		537,351
Securities Held as Collateral for Securities on Loan		—		11,437,206		—		11,437,206
Unaffiliated Investment Company		18,557,903		—		—		18,557,903

Total Investment Securities	$	249,174,643	$	12,452,657	$	—	$	261,627,300

Other Financial Instruments:*
Forward Currency Contracts		—		335,750		—		335,750

Total Investments	$	249,174,643	$	12,788,407	$	—	$	261,963,050

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $235,487,810. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $1,247,222 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Invesco Growth and Income Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® Invesco International Equity Fund returned—7.32%, that compared to a—11.73% total return for its benchmark, the MSCI EAFE Index¹.

Global equity markets faced a challenging environment in 2011. China’s economic growth continued to slow as the U.S. battled high unemployment and mounting deficits. Several European countries faced significant debt issues that enveloped the eurozone for much of the period. In addition, numerous world events caught investors’ attention, including political unrest in the Middle East and northern Africa, and the devastating earthquake and tsunami in Japan in March. In this environment, many investors favored safety over risk. That contributed to poor performance among international equities during the period.

The Fund was not immune to the volatility in the equity markets during the year. The consumer staples and health care sectors were the only two sectors that contributed positive returns to the Fund during the year. All other Fund sector exposures posted losses.*

Relative results were favorable, however, as the Fund meaningfully outperformed its benchmark, the MSCI EAFE Index. That outperformance primarily came from holdings in the consumer discretionary, financials and materials sectors. A modest exposure to cash during this volatile period benefited relative performance. That cash exposure was not an allocation strategy, but rather a residual effect of the subadviser’s bottom-up stock selection process.*

In the consumer discretionary sector, holdings in the automobile industry provided a particular boost to relative performance. The Fund’s performance benefited from its holdings in the financials sector—one of the year’s weakest performers. Stock selection combined with an underweight allocation, relative to the benchmark, helped the Fund in that sector. The Fund’s performance also benefited from exposure to the United Kingdom, which was the Fund’s largest single-country exposure.*

The Fund’s performance was hurt by holdings in the telecommunications service sector. In particular, exposure to the wireless industry dragged on relative returns. Stock selection in the energy sector also hurt relative performance. From a geographic perspective, the Fund’s exposure to emerging markets detracted from relative results as the benchmark did not have exposure to this segment of the market. Additionally, select holdings in Australia, Sweden and France also dragged on relative performance.*

Past performance does not guarantee future results.

Fund Objective

The Fund’s investment objective is to seek to provide long-term growth of capital. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing 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 to have strong earnings growth.

Investment Concerns

The value of convertible securities may be affected by interest rates, default by the issuer on principal or interest payments, and the value of underlying stock into which the securities may be converted.

Emerging market investing may be subject to additional economic, political, liquidity, and currency risks not associated with more developed countries.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (5/1/02)
AZL^® Invesco International Equity Fund		–7.32	%		11.89	%		–1.25	%		6.02	%
MSCI EAFE Index (gross of withholding taxes)		–11.73	%		8.16	%		–4.26	%		5.11	%
MSCI EAFE Index (net of withholding taxes)		–12.14	%		7.65	%		–4.72	%		4.66	%

Expense Ratio²


	Gross
AZL^® Invesco International Equity Fund		1.29	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager voluntarily reduced the management fee to 0.85%. 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, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

¹	The hypothetical $10,000 investment for the MSCI EAFE Index is calculated from April 30, 2002.

The Fund’s performance is measured against the Morgan Stanley Capital International, Europe, Australasia and Far East (“MSCI EAFE”) Index, which is an unmanaged free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The Index noted as “gross of withholding taxes” does not reflect the deduction of fees associated with a mutual fund, such as investment management and fund accounting fees. The Index noted as “net of withholding taxes” reflects the reinvestment of dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Fund’s performance reflects the deduction of fees for services provided to the Fund. Investors cannot invest directly in an index.

As a shareholder of the AZL Invesco International Equity Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (91.5%):
	Auto Components (2.9%):
	42,211	Compagnie Generale DES Establissements Michelin SCA, Class B	$	2,481,214
	187,200	DENSO Corp.		5,163,324
	21,677	Hyundai Mobis Co., Ltd.		5,504,231

				13,148,769

	Automobiles (1.4%):
	22,176	Bayerische Motoren Werke AG (BMW)		1,482,405
	147,700	Toyota Motor Corp.		4,916,844

				6,399,249

	Beverages (3.2%):
	146,082	Anheuser-Busch InBev NV		8,920,539
	84,968	Fomento Economico Mexicano SAB de C.V., Sponsored ADR		5,923,119

				14,843,658

	Biotechnology (0.8%):
	115,541	CSL, Ltd.		3,780,748

	Capital Markets (1.1%):
	125,202	Julius Baer Group, Ltd.		4,870,910

	Chemicals (2.2%):
	53,266	Agrium, Inc.		3,576,170
	22,048	Syngenta AG		6,491,188

				10,067,358

	Commercial Banks (6.3%):
	914,571	Akbank T.A.S.		2,902,649
	475,339	Banco Bradesco SA, ADR^		7,928,655
	88,251	BNP Paribas SA		3,454,446
	9,344,000	Industrial & Commercial Bank of China		5,561,200
	313,561	Swedbank AB, A Shares		4,055,755
	411,000	United Overseas Bank, Ltd.		4,827,957

				28,730,662

	Commercial Services & Supplies (1.4%):
	891,042	Brambles, Ltd.		6,513,512

	Communications Equipment (1.1%):
	516,773	Telefonaktiebolaget LM Ericsson, B Shares		5,252,247

	Diversified Financial Services (0.5%):
	115,448	Kinnevik Investment AB, Class B		2,248,167

	Diversified Telecommunication Services (0.4%):
	56,223	Koninklijke KPN NV		671,164
	146,300	VimpelCom, Ltd., Sponsored ADR		1,385,461

				2,056,625

	Electrical Equipment (1.7%):
	272,348	ABB, Ltd.		5,125,331
	51,006	Schneider Electric SA		2,665,298

				7,790,629


Shares			Fair Value

	Common Stocks, continued
	Electronic Equipment, Instruments & Components (2.0%):
	18,269	Keyence Corp.	$	4,402,057
	57,400	Nidec Corp.		4,983,395

				9,385,452

	Energy Equipment & Services (1.4%):
	244,208	WorleyParsons, Ltd.		6,396,677

	Food & Staples Retailing (2.4%):
	361,822	Koninklijke Ahold NV		4,865,134
	984,212	Tesco plc		6,160,035

				11,025,169

	Food Products (4.2%):
	91,317	Danone SA		5,735,208
	127,646	Nestle SA, Registered Shares		7,330,858
	29,700	Unilever NV(a)(b)		—
	34,002	Unilever NV		1,167,541
	153,688	Unilever plc		5,157,751

				19,391,358

	Health Care Equipment & Supplies (0.9%):
	445,318	Smith & Nephew plc		4,314,252

	Health Care Providers & Services (1.2%):
	80,331	Fresenius Medical Care AG & Co. KGaA		5,457,534

	Hotels, Restaurants & Leisure (2.3%):
	1,114,303	Compass Group plc		10,548,641

	Independent Power Producers & Energy Traders (0.7%):
	626,816	International Power plc		3,278,601

	Industrial Conglomerates (2.5%):
	630,000	Hutchison Whampoa, Ltd.		5,251,049
	839,700	Keppel Corp., Ltd.		6,004,341

				11,255,390

	Insurance (1.8%):
	10,146	Fairfax Financial Holdings, Ltd.		4,353,366
	279,903	QBE Insurance Group, Ltd.		3,705,071

				8,058,437

	Internet Software & Services (1.3%):
	32,096	NHN Corp.*		5,881,349

	IT Services (1.6%):
	104,374	Cap Gemini SA		3,246,175
	77,560	Infosys Technologies, Ltd.		4,041,923

				7,288,098

	Life Sciences Tools & Services (0.0%):
	376,113	Art Advanced Research Technologies, Inc.*(a)		—

	Machinery (2.1%):
	28,100	Fanuc, Ltd.		4,296,196
	117,700	Komatsu, Ltd.		2,745,562
	219,270	Volvo AB, B Shares		2,385,146

				9,426,904


Shares			Fair Value

	Common Stocks, continued
	Media (5.2%):
	79,548	Eutelsat Communications	$	3,097,753
	202,111	Grupo Televisa SA, Sponsored ADR		4,256,458
	666,916	Informa plc		3,726,995
	51,637	Publicis Groupe		2,369,582
	821,690	Reed Elsevier plc		6,624,904
	367,312	WPP plc		3,835,200

				23,910,892

	Metals & Mining (1.4%):
	183,642	BHP Billiton, Ltd.		6,481,034

	Multi-Utilities (0.9%):
	927,439	Centrica plc		4,161,633

	Multiline Retail (1.3%):
	139,599	Next plc		5,928,359

	Office Electronics (1.8%):
	184,050	Canon, Inc.		8,146,123

	Oil, Gas & Consumable Fuels (8.8%):
	350,577	BG Group plc		7,475,417
	102,155	Canadian Natural Resources, Ltd.		3,826,424
	129,254	Cenovus Energy, Inc.		4,293,238
	400,584	OAO Gazprom, Registered shares		4,259,469
	147,503	Petroleo Brasileiro SA, Sponsored ADR^		3,464,845
	186,181	Royal Dutch Shell plc, B Shares		7,083,966
	242,107	Suncor Energy, Inc.		6,983,902
	60,620	Total SA		3,093,737

				40,480,998

	Personal Products (0.6%):
	28,200	L’Oreal SA		2,942,574

	Pharmaceuticals (8.4%):
	36,223	Bayer AG		2,315,559
	165,981	GlaxoSmithKline plc		3,784,068
	136,390	Novartis AG, Registered Shares		7,793,949
	60,259	Novo Nordisk A/S, B Shares		6,933,865
	33,808	Roche Holding AG		5,719,354
	120,627	Shire plc		4,185,986
	198,995	Teva Pharmaceutical Industries, Ltd., Sponsored ADR		8,031,438

				38,764,219

	Road & Rail (0.9%):
	52,159	Canadian National Railway Co.		4,104,609

	Semiconductors & Semiconductor Equipment (1.4%):
	486,997	Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR		6,287,131

	Software (2.0%):
	151,643	Amadeus IT Holding SA, A Shares		2,449,422
	127,778	SAP AG		6,755,241

				9,204,663


Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Specialty Retail (2.7%):
	1,108,857	Kingfisher plc	$	4,310,112
	117,880	Yamada Denki Co., Ltd.		8,011,499

				12,321,611

	Textiles, Apparel & Luxury Goods (1.4%):
	101,710	Adidas AG		6,614,820

	Tobacco (3.8%):
	159,282	British American Tobacco plc		7,550,980
	258,890	Imperial Tobacco Group plc		9,784,106

				17,335,086

	Wireless Telecommunication Services (3.5%):
	253,390	America Movil SAB de C.V., Sponsored ADR, Series L		5,726,614
	534,500	China Mobile, Ltd.		5,211,525
	1,885,027	Vodafone Group plc		5,232,500

				16,170,639

	Total Common Stocks (Cost $383,730,528)			420,264,787

	Preferred Stocks (1.0%):
	Automobiles (1.0%):
	30,642	Volkswagen AG, Preferred Shares		4,581,627

	Total Preferred Stocks (Cost $5,642,855)			4,581,627

	Warrant (0.0%):
	Biotechnology (0.0%):
	10,000	Marshall Edwards, Inc., Private Equity(a)(c)		—

	Total Warrants (Cost $—)			—

	Securities Held as Collateral for Securities on Loan (2.3%):
$	10,625,034	Allianz Variable Insurance Products Securities Lending Collateral Trust(d)		10,625,034

	Total Securities Held as Collateral for Securities on Loan (Cost $10,625,034)			10,625,034

	Unaffiliated Investment Company (7.8%):
	35,928,873	Dreyfus Treasury Prime Cash Management, 0.00%(e)		35,928,873

	Total Unaffiliated Investment Company (Cost $35,928,873)			35,928,873

	Total Investment Securities (Cost $435,927,290)(f) — 102.6%			471,400,321
	Net other assets (liabilities) — (2.6)%			(11,871,720	)

	Net Assets — 100.0%		$	459,528,601

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	435,927,290

Investment securities, at value*	$	471,400,321
Interest and dividends receivable		603,279
Foreign currency, at value (cost $1,334,123)		1,318,683
Receivable for capital shares issued		22,166
Receivable for expenses paid indirectly		333
Receivable for investments sold		52,015
Reclaims receivable		656,652
Prepaid expenses		5,139

Total Assets		474,058,588

Liabilities:
Payable for investments purchased		3,221,094
Payable for capital shares redeemed		129,422
Payable for collateral received on loaned securities		10,625,034
Manager fees payable		331,087
Administration fees payable		14,807
Distribution fees payable		97,379
Custodian fees payable		35,672
Administrative and compliance services fees payable		4,203
Trustee fees payable		227
Other accrued liabilities		71,062

Total Liabilities		14,529,987

Net Assets	$	459,528,601

Net Assets Consist of:
Capital	$	453,329,483
Accumulated net investment income/(loss)		8,900,913
Accumulated net realized gains/(losses) from investment transactions		(38,199,919	)
Net unrealized appreciation/(depreciation) on investments		35,498,124

Net Assets	$	459,528,601

Shares of beneficial interest (unlimited number of shares authorized, no par value)		32,896,308
Net Asset Value (offering and redemption price per share)	$	13.97

*	Includes securities on loan of $10,440,676.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	64
Dividends		15,784,425
Income from securities lending		204,650
Foreign withholding tax		(997,870	)

Total Investment Income		14,991,269

Expenses:
Manager fees		4,642,016
Administration fees		217,515
Distribution fees		1,289,448
Custodian fees		220,045
Administrative and compliance services fees		25,275
Trustee fees		43,917
Professional fees		45,028
Shareholder reports		47,104
Other expenses		31,823

Total expenses before reductions		6,562,171
Less expenses voluntarily waived/reimbursed by the Manager		(412,047	)
Less expenses paid indirectly		(7,898	)

Net expenses		6,142,226

Net Investment Income/(Loss)		8,849,043

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		15,090,411
Net realized gains/(losses) on forward currency contracts		262,396
Payments by affiliates for the violation of certain investment policies and limitations		13,257
Change in unrealized appreciation/depreciation on investments		(57,609,440	)

Net Realized/Unrealized Gains/(Losses) on Investments		(42,243,376	)

Change in Net Assets Resulting From Operations	$	(33,394,333	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Invesco International Equity Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $20,251 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. As of December 31, 2011, the Fund did not hold any forward currency contracts. During the year ended December 31, 2011, the Fund had limited activity in these transactions.

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 Invesco Advisers, Inc. (“Invesco”), Invesco 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business , based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

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 in effect 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, 2011, there were no remaining contractual reimbursements that are subject to repayment by the Fund in subsequent years.

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, 7,698 was paid from the Fund relating to these fees and expenses.

During the year ended December 31, 2011, the Subadviser reimbursed $13,257 to the Fund related to the violation of certain investment policies and limitations. The impact to the total return is disclosed in the Financial Highlights.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Road & Rail	$	4,104,609	$	—	$	—	$	4,104,609
Semiconductors & Semiconductor Equipment		6,287,131		—		—		6,287,131
Wireless Telecommunication Services		5,726,614		10,444,025		—		16,170,639
All Other Common Stocks+		—		226,789,559		—		226,789,559
Preferred Stocks		—		4,581,627		—		4,581,627
Warrant		—		—		—		—
Securities Held as Collateral for Securities on Loan		—		10,625,034		—		10,625,034
Unaffiliated Investment Company		35,928,873		—		—		35,928,873

Total Investment Securities		106,070,303		365,330,018		—		471,400,321

As of December 31, 2011, the Fund held securities that were valued in good faith pursuant to procedures approved by the Board of Trustees. The Art Advanced Research Technologies, Inc. common stock and the Marshall Edwards, Inc. warrant were valued at $0.

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $441,813,434. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $11,859,418 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Invesco International Equity Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® JPMorgan International Opportunities Fund returned –13.41%. That compared to a –11.73% total return for its benchmark, the MSCI EAFE Index¹.

Allianz changed the Fund’s Subadviser roughly a third of the way through the year. At that point, the Fund’s name changed from the Morgan Stanley International Equity Fund to the JPMorgan International Opportunities Fund and on May 1, 2011, J.P. Morgan assumed management of the Fund on May 1, 2011. The Fund’s current management team seeks to provide high total return from a portfolio of equity securities of foreign companies in developed and, to a lesser extent, emerging markets.

The Fund’s negative absolute return was largely due to a challenging environment for global equity markets in the second half of the year. The Fund’s performance was strong in the first four months of the year, thanks to solid returns from the energy, utilities, and materials sectors. However, investor confidence fell in the second quarter, triggering a sharp reversal in equities. The ongoing European sovereign debt saga, the slowdown in emerging markets, and the political gridlock in Washington contributed to increasing investor anxiety.*

Losses were widespread for the year as a whole. Regionally, continental Europe was the worst performer, as currency movements aggravated the decline in share prices. The U.S. was the best performer on a regional basis. Meanwhile, the financial sector and cyclically sensitive areas like materials and industrials were hardest hit, while more defensive sectors, such as consumer staples and health care suffered declines that were more modest.

Early in the year, the Fund’s relative performance benefited from a modest overweight position in the materials sector, as well as from stock selection in the financial, consumer staples and health care sectors. Later in the year, stock selection in telecommunications and automobiles contributed positively to the Fund’s relative performance.*

At the regional level, stock selection in continental Europe and emerging markets provided the biggest boost to the Fund’s relative performance late in the year.*

Early in the period, stock selection in the information technology, consumer discretionary and industrial sectors contributed negatively to the Fund’s relative performance. Later in the year, stock selection in the financial sector and utilities dragged on relative performance, as did stock selection in the U.K. and Japan.*

Past performance does not guarantee future results.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (5/1/03)
AZL^® JPMorgan International Opportunities Fund		–13.41	%		5.04	%		–1.89	%		6.39	%
MSCI EAFE Index (gross of withholding taxes)		–11.73	%		8.16	%		–4.26	%		7.91	%¹
MSCI EAFE Index (net of withholding taxes)		–12.14	%		7.65	%		–4.72	%		7.44	%¹

Expense Ratio


	Gross
AZL^® JPMorgan International Opportunities Fund		1.34	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager voluntarily reduced the management fee to 0.85%. 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, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

¹	The hypothetical $10,000 investment and the since inception performance data for the MSCI EAFE Index is calculated from April 30, 2003.

The Fund’s performance is measured against the Morgan Stanley Capital International Europe, Australasia and Far East (“MSCI EAFE”) Index, which is an unmanaged free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The Index noted as “gross of withholding taxes” do not reflect the deduction of fees associated with a mutual fund, such as investment management and fund accounting fees. The Index noted as “net of withholding taxes” reflect the reinvestment of dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Fund’s performance reflects the deduction of fees for services provided to the Fund. Investors cannot invest directly in an index.

As a shareholder of the AZL JPMorgan International Opportunities Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value
	Common Stocks (95.0%):
	Aerospace & Defense (1.0%):
	122,335	European Aeronautic Defence & Space Co. NV	$	3,805,537

	Auto Components (0.8%):
	137,500	Bridgestone Corp.		3,113,213

	Automobiles (1.9%):
	111,300	Honda Motor Co., Ltd.		3,390,220
	453,900	Nissan Motor Co., Ltd.		4,075,063

				7,465,283

	Beverages (0.7%):
	40,611	Carlsberg A/S, Class B		2,868,784

	Building Products (0.9%):
	1,965,000	Nippon Sheet Glass Co., Ltd.		3,671,725

	Chemicals (1.3%):
	41,677	Lanxess AG		2,156,022
	38,644	Solvay SA		3,169,636

				5,325,658

	Commercial Banks (7.9%):
	190,829	Australia & New Zealand Banking Group, Ltd.		3,998,233
	304,758	DnB NOR ASA		2,979,204
	28,247	Erste Group Bank AG^		494,669
	921,888	HSBC Holdings plc		6,996,893
	6,116,018	Lloyds Banking Group plc*		2,442,337
	950,500	Mitsubishi UFJ Financial Group, Inc.		4,033,289
	300,276	Standard Chartered plc		6,536,495
	146,472	Sumitomo Mitsui Financial Group, Inc.		4,076,081

				31,557,201

	Communications Equipment (1.1%):
	440,916	Telefonaktiebolaget LM Ericsson, B Shares		4,481,271

	Computers & Peripherals (1.2%):
	944,000	Fujitsu, Ltd.		4,899,472

	Consumer Finance (0.7%):
	34,530	ORIX Corp.		2,847,203

	Diversified Consumer Services (0.6%):
	779,600	Sands China, Ltd.*		2,209,663

	Diversified Financial Services (1.6%):
	84,423	Deutsche Boerse AG*		4,425,495
	253,405	ING Groep NV*		1,805,607

				6,231,102

	Diversified Telecommunication Services (2.8%):
	362,227	Koninklijke KPN NV		4,324,099
	97,200	Nippon Telegraph and Telephone Corp.		4,937,726
	1,227,483	Telecom Corp. of New Zealand, Ltd.		1,963,471

				11,225,296


Shares			Fair Value
	Common Stocks, continued
	Electric Utilities (2.2%):
	202,404	E.ON AG	$	4,350,401
	168,292	GDF Suez		4,576,524

				8,926,925

	Electrical Equipment (4.2%):
	328,354	ABB, Ltd.		6,179,311
	546,000	Mitsubishi Electric Corp.		5,221,824
	102,967	Schneider Electric SA		5,380,498

				16,781,633

	Electronic Equipment, Instruments & Components (1.8%):
	69,300	Fujifilm Holdings Corp.		1,639,482
	684,519	Hon Hai Precision Industry Co., Ltd., Sponsored GDR		3,748,221
	695,583	Premier Farnell plc		1,936,872

				7,324,575

	Food Products (4.5%):
	122,672	Nestle SA, Registered Shares		7,045,195
	312,965	Unilever NV(a)(b)		—
	316,127	Unilever NV		10,854,983

				17,900,178

	Gas Utilities (1.7%):
	5,576,000	PT Perusahaan Gas Negara		1,956,323
	1,078,200	Snam Rete Gas SpA		4,738,525

				6,694,848

	Hotels, Restaurants & Leisure (3.0%):
	331,240	InterContinental Hotels Group plc		5,923,530
	85,630	Sodexo		6,142,606

				12,066,136

	Industrial Conglomerates (0.9%):
	441,000	Hutchison Whampoa, Ltd.		3,675,734

	Insurance (3.3%):
	4,369	Dai-ichi Life Insurance Co., Ltd. (The)		4,289,781
	535,404	Prudential plc		5,274,576
	73,155	Swiss Re AG*		3,726,874

				13,291,231

	Machinery (1.2%):
	130,264	Atlas Copco AB, A Shares		2,790,143
	481,000	Mitsubishi Heavy Industries, Ltd.		2,047,685

				4,837,828

	Media (1.3%):
	269,809	Pearson plc		5,051,889

	Metals & Mining (3.1%):
	205,766	First Quantum Minerals, Ltd.		4,050,671
	169,184	Rio Tinto plc		8,185,984

				12,236,655


Shares			Fair Value
	Common Stocks, continued
	Multi-Utilities (1.7%):
	1,018,919	Centrica plc	$	4,572,125
	174,869	Suez Environnement Co.		2,007,652

				6,579,777

	Multiline Retail (1.2%):
	33,104	Pinault Printemps Redoute		4,733,754

	Office Electronics (1.2%):
	111,900	Canon, Inc.^		4,952,737

	Oil, Gas & Consumable Fuels (10.0%):
	463,098	BG Group plc		9,874,723
	360,628	Cairn Energy plc*		1,482,280
	1,486,000	CNOOC, Ltd.		2,599,656
	800,500	JX Holdings, Inc.		4,830,306
	465,549	Royal Dutch Shell plc, A Shares(a)(b)		—
	485,582	Royal Dutch Shell plc, A Shares		17,665,613
	157,476	Tullow Oil plc		3,422,351

				39,874,929

	Paper & Forest Products (0.9%):
	257,578	Stora Enso OYJ, R Shares		1,534,247
	199,092	UPM-Kymmene OYJ		2,181,868

				3,716,115

	Personal Products (1.5%):
	239,000	Hengan International Group Co., Ltd.		2,228,097
	35,219	L’Oreal SA		3,674,982

				5,903,079

	Pharmaceuticals (9.2%):
	117,063	Bayer AG		7,483,264
	391,105	GlaxoSmithKline plc		8,916,489
	42,642	Novo Nordisk A/S, B Shares		4,906,718
	17,090	Roche Holding AG		2,891,143
	39,543	Sanofi-Aventis		2,893,056
	141,807	Shire plc		4,920,972
	111,737	Teva Pharmaceutical Industries, Ltd., Sponsored ADR		4,509,705

				36,521,347

	Professional Services (1.4%):
	399,743	Experian plc		5,426,993

	Real Estate Investment Trusts (REITs) (0.5%):
	244,454	Westfield Group		1,953,123

	Real Estate Management & Development (2.6%):
	2,050,000	China Overseas Land & Investment, Ltd.^		3,437,390
	232,000	Mitsubishi Estate Co., Ltd.		3,462,325
	286,000	Sun Hung Kai Properties, Ltd.		3,569,864

				10,469,579
	Road & Rail (0.7%):
	43,400	East Japan Railway Co.		2,762,317


Shares or Principal Amount			Fair Value
	Common Stocks, continued
	Semiconductors & Semiconductor Equipment (2.4%):
	79,336	ASML Holding NV	$	3,324,508
	6,579	Samsung Electronics Co., Ltd.		6,044,556

				9,369,064

	Specialty Retail (1.4%):
	1,587,000	Belle International Holdings, Ltd.		2,772,872
	36,348	Industria de Diseno Textil SA		2,969,388

				5,742,260

	Textiles, Apparel & Luxury Goods (1.1%):
	86,777	Compagnie Financiere Richemont SA, Class A		4,370,849

	Tobacco (3.9%):
	206,785	British American Tobacco plc		9,802,925
	1,256	Japan Tobacco, Inc.		5,905,158

				15,708,083

	Trading Companies & Distributors (1.8%):
	531,000	Marubeni Corp.		3,230,251
	244,800	Mitsui & Co., Ltd.		3,801,054

				7,031,305

	Wireless Telecommunication Services (3.8%):
	698	KDDI Corp.		4,494,495
	3,887,236	Vodafone Group plc		10,790,276

				15,284,771

	Total Common Stocks (Cost $434,144,394)			378,889,122

	Preferred Stocks (1.7%):
	Automobiles (1.1%):
	29,148	Volkswagen AG, Preferred Shares		4,358,242

	Household Products (0.6%):
	40,483	Henkel AG & Co. KGaA		2,335,944

	Total Preferred Stocks (Cost $7,630,748)			6,694,186

	Securities Held as Collateral for Securities on Loan (2.2%):
$	8,861,973	Allianz Variable Insurance Products Securities Lending Collateral Trust(c)		8,861,973

	Total Securities Held as Collateral for Securities on Loan (Cost $8,861,973)			8,861,973

	Unaffiliated Investment Company (2.8%):
	11,075,724	Dreyfus Treasury Prime Cash Management, 0.00%(d)		11,075,724

	Total Unaffiliated Investment Company (Cost $11,075,724)			11,075,724

	Total Investment Securities (Cost $461,712,839)(e) — 101.7%			405,521,005
	Net other assets (liabilities) — (1.7)%			(6,837,619	)

	Net Assets — 100.0%		$	398,683,386

As of December 31, 2011, the Fund’s open forward currency contracts were as follows:


Short Contracts	Counterparty	Delivery Date	Contract Amount		Fair Value		Unrealized Appreciation/ (Depreciation)
Deliver 4,038,737 Australian Dollar in exchange for U.S. Dollar	Citigroup	3/14/12	$	4,096,491	$	4,095,444	$	1,047
Deliver 12,938,908 British Pound in exchange for U.S. Dollar	Barclays Investments	3/14/12		20,173,206		20,075,470		97,736
Deliver 5,746,689 Canadian Dollar in exchange for U.S. Dollar	Citigroup	3/14/12		5,598,333		5,633,571		(35,238	)
Deliver 14,981,535 European Euro in exchange for U.S. Dollar	RBC Dominion Securities	3/14/12		19,846,249		19,399,114		447,135
Deliver 13,105,315 Hongkong Dollar in exchange for U.S. Dollar	State Street	3/14/12		1,685,268		1,688,016		(2,748	)
Deliver 28,106,819 Hongkong Dollar in exchange for U.S. Dollar	Credit Suisse	3/14/12		3,617,086		3,620,268		(3,182	)
Deliver 268,028,434 Japanese Yen in exchange for U.S. Dollar	RBC Dominion Securities	3/14/12		3,448,229		3,488,118		(39,889	)
Deliver 1,692,670 New Zealand Dollar in exchange for U.S. Dollar	Westpac Banking Corp.	3/14/12		1,290,031		1,310,327		(20,296	)
Deliver 1,080,240 Swiss Franc in exchange for U.S. Dollar	Credit Suisse	3/14/12		1,166,858		1,152,412		14,446
Deliver 1,200,000 Swiss Franc in exchange for U.S. Dollar	Bank National of Paris	3/14/12		1,298,245		1,280,173		18,072
Deliver 1,426,132 Swiss Franc in exchange for U.S. Dollar	UBS Warburg	3/14/12		1,526,738		1,521,413		5,325
Deliver 1,221,249 Swiss Franc in exchange for U.S. Dollar	UBS Warburg	3/14/12		1,289,258		1,302,842		(13,584	)
Deliver 568,104 Swiss Franc in exchange for U.S. Dollar	Bank National of Paris	3/14/12		613,454		606,059		7,395

							$	476,219


Long Contracts	Counterparty	Delivery Date	Contract Amount		Fair Value		Unrealized Appreciation/ (Depreciation)
Receive 32,378,111 Australian Dollar in exchange for U.S. Dollar	Westpac Banking Corp.	3/14/12	$	32,427,908	$	32,832,727	$	404,819
Receive 506,611 British Pound in exchange for U.S. Dollar	UBS Warburg	3/14/12		793,401		786,037		(7,364	)
Receive 2,706,008 British Pound in exchange for U.S. Dollar	Credit Suisse	3/14/12		4,222,942		4,198,529		(24,413	)
Receive 3,130,619 Canadian Dollar in exchange for U.S. Dollar	Credit Suisse	3/14/12		3,065,544		3,068,996		3,452
Receive 856,239 European Euro in exchange for U.S. Dollar	Credit Suisse	3/14/12		1,118,099		1,108,717		(9,382	)
Receive 1,295,375 European Euro in exchange for U.S. Dollar	UBS Warburg	3/14/12		1,711,325		1,677,340		(33,985	)
Receive 1,764,865 European Euro in exchange for U.S. Dollar	UBS Warburg	3/14/12		2,293,545		2,285,268		(8,277	)
Receive 1,731,939 European Euro in exchange for U.S. Dollar	Credit Suisse	3/14/12		2,315,873		2,242,633		(73,240	)
Receive 75,060,936 Japanese Yen in exchange for U.S. Dollar	Toronto Dominion	3/14/12		966,060		976,842		10,782
Receive 8,564,098 Singapore Dollar in exchange for U.S. Dollar	State Street	3/14/12		6,597,918		6,605,501		7,583
Receive 31,319,505 Swedish Krona in exchange for U.S. Dollar	Credit Suisse	3/14/12		4,563,483		4,538,153		(25,330	)
Receive 14,578,921 Swiss Franc in exchange for U.S. Dollar	UBS Warburg	3/14/12		15,659,590		15,552,953		(106,637	)

							$	138,008

As of December 31, 2011, the Fund’s open forward cross currency contracts were as follows:

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	461,712,839

Investment securities, at value*	$	405,521,005
Interest and dividends receivable		1,039,515
Foreign currency, at value (cost $177,285)		172,318
Unrealized appreciation on forward currency contracts		1,024,434
Receivable for capital shares issued		16,646
Receivable for investments sold		143
Reclaims receivable		717,925
Receivable for variation margin on futures contracts		52,489
Prepaid expenses		5,843

Total Assets		408,550,318

Liabilities:
Unrealized depreciation on forward currency contracts		412,484
Payable for capital shares redeemed		117,583
Payable for collateral received on loaned securities		8,861,973
Manager fees payable		286,235
Administration fees payable		12,468
Distribution fees payable		84,186
Custodian fees payable		27,450
Administrative and compliance services fees payable		3,114
Trustee fees payable		168
Other accrued liabilities		61,271

Total Liabilities		9,866,932

Net Assets	$	398,683,386

Net Assets Consist of:
Capital	$	463,853,627
Accumulated net investment income/(loss)		7,899,148
Accumulated net realized gains/(losses) from investment transactions		(17,597,117	)
Net unrealized appreciation/(depreciation) on investments		(55,472,272	)

Net Assets	$	398,683,386

Shares of beneficial interest (unlimited number of shares authorized, no par value)		29,701,331
Net Asset Value (offering and redemption price per share)	$	13.42

*	Includes securities on loan of $8,191,055.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	13,456,968
Income from securities lending		188,154
Foreign withholding tax		(1,123,552	)

Total Investment Income		12,521,570

Expenses:
Manager fees		3,850,958
Administration fees		177,097
Distribution fees		1,013,408
Custodian fees		154,691
Administrative and compliance services fees		19,242
Trustee fees		32,546
Professional fees		35,536
Shareholder reports		53,132
Other expenses		20,781

Total expenses before reductions		5,357,391
Less expenses voluntarily waived/reimbursed by the Manager		(460,951	)
Less expenses paid indirectly		(40	)

Net expenses		4,896,400

Net Investment Income/(Loss)		7,625,170

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		320,789
Net realized gains/(losses) on futures contracts		1,524,625
Net realized gains/(losses) on forward currency contracts		(1,613,937	)
Change in unrealized appreciation/depreciation on investments		(85,457,265	)

Net Realized/Unrealized Gains/(Losses) on Investments		(85,225,788	)

Change in Net Assets Resulting From Operations	$	(77,600,618	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL JPMorgan International Opportunities Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

provide a level of collateral at least equal to the fair value of securities loaned. The Fund bears all of the gains and losses on such investments. The 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 cash collateral received. In extremely low interest rate environments, the broker rebate fee may exceed the interest earned or the cash collateral which would result in a loss to the Fund. The investment of cash collateral deposited by the borrower is subject to inherent market risks such as interest rate risk, credit risk, liquidity risk, and other risks that are present in the market, and as such, the value of these investments may not be sufficient, when liquidated, to repay the borrower when the loaned security is returned. 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 Allianz Investment Management LLC (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. Securities on loan at December 31, 2011 are presented on the Fund’s Schedule of Portfolio Investments (“Schedule”). The average outstanding amount of securities on loan was $13.9 million for the year ended December 31, 2011.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $18,652 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The contract amount of forward currency contracts outstanding was $143.2 million as of December 31, 2011. The monthly average amount for these contracts was $99.2 million for the year ended December 31, 2011.

interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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. The notional amount of futures contracts outstanding was $6.5 million as of December 31, 2011. The monthly average notional amount for these contracts was $16.8 million for the year ended December 31, 2011.

The following is a summary of the fair value of derivative instruments as of December 31, 2011:

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 May 1, 2011 between the Manager and J.P. Morgan Investment Management, Inc. (“JPMIM”), JPMIM provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. Prior to May 1, 2011 the Fund was subadvised by Morgan Stanley Management, Inc. (“MSIM”). 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, 5,676 was paid from the Fund relating to these fees and expenses.

meeting fee for each Committee meeting. In addition, Trustees may receive compensation for special meetings and telephonic meetings. Also, the Trustees are reimbursed for certain expenses associated with attending Board meetings. Compensation to the Trustees is allocated between the Trust and the Allianz Variable Insurance Products Fund of Funds Trust in proportion to the assets under management of each Trust. During the year ended December 31, 2011, actual Trustee compensation was $924,000 in total for both Trusts.

During the year ended December 31, 2011, the Fund paid approximately $9,443 to affiliated broker/dealers of the Subadviser on the execution of purchases and sales of the Fund’s portfolio investments.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks:
Metals & Mining	$	4,050,671	$	8,185,984	$	—	$	12,236,655
Pharmaceuticals		4,509,705		32,011,642		—		36,521,347
All Other Common Stocks+		—		330,131,120		—		330,131,120
Preferred Stocks+		—		6,694,186		—		6,694,186
Securities Held as Collateral for Securities on Loan		—		8,861,973		—		8,861,973
Unaffiliated Investment Company		11,075,724		—		—		11,075,724

Total Investment Securities		19,636,100		385,884,905		—		405,521,005

Other Financial Instruments:*
Futures Contracts		92,192		—		—		92,192
Forward Currency Contracts		—		611,949		—		611,949

Total Investments	$	19,728,292	$	386,496,854	$	—	$	406,225,146

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $463,215,759. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL JPMorgan International Opportunities Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

For the year ended December 31, 2011, 4.04% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon , Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® JPMorgan U.S. Equity Fund returned –2.20%. That compared to a 2.11% total return for its benchmark, the S&P 500 Index¹.

The year began with a quarter of solid results from U.S. companies, including a 10% year-over-year increase in revenue and the eighth consecutive quarter of better-than-expected earnings. Nevertheless, conflicts in the Middle East pushed oil prices higher, followed by a devastating earthquake and subsequent tsunami in Japan. As a result, the S&P 500 sold off sharply; by the middle of March, the Index was down almost 7% from its February peak.

Attention quickly shifted to the European sovereign debt crisis, with Greece taking center stage in June. Contagion spread to the core of the eurozone, hurting Italian and Spanish bonds. Meanwhile, Standard & Poor’s downgraded U.S. sovereign debt in August, which triggered a market drop. The third quarter of 2011 was the year’s toughest quarter for the U.S. equity markets, as the S&P 500 declined 13.9%. The Index returned –8.7% for the first nine months of the year.

A turn in sentiment led U.S. equity markets to rally sharply in the fourth quarter, allowing the S&P 500 to finish the year in positive territory. Investor confidence improved as economic data supported the perception that the U.S. was not headed toward a recession and European policymakers took bolder actions in their efforts to stave off a sovereign debt crisis.

The Fund lagged its benchmark for the year. In particular, an overweight position in cyclical stocks and an underweight position in defensive stocks, such as real estate investment trusts², utilities, consumer staples and retail, contributed to the Fund’s underperformance.*

From a stock selection standpoint, the Fund’s relative performance was negatively impacted by an overweight position in a major automaker. In addition, overweight positions in a basic materials producer, and a truck manufacturer in the industrial sector detracted from the Fund’s relative performance.*

The Fund’s performance benefited from stock selection in the information technology sector, notably from an overweight position in a technology innovator and an underweight position in a computer and printer manufacturer. Relative performance was boosted by an overweight position in a shipping and transportation company. Additionally, an overweight position in a drug manufacturer was a top contributor to relative performance for the year.*

Past performance does not guarantee future results.

¹	The Standard & Poor’s 500 Index (“S&P 500”) is representative 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. Investors cannot invest directly in an index.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (5/3/04)
AZL^® JPMorgan U.S. Equity Fund		–2.20	%		13.89	%		–1.22	%		2.78	%
S&P 500 Index		2.11	%		14.11	%		–0.25	%		3.66	%

Expense Ratio


	Gross
AZL^® JPMorgan U.S. Equity Fund		1.14	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager has voluntarily reduced the management fee to 0.75% on the first $100 million of assets and 0.70% on assets above $100 million. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.20% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

¹	The hypothetical $10,000 investment for the S&P 500 Index is calculated from April 30, 2004.

As a shareholder of the AZL JPMorgan U.S. Equity Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (98.7%):
	Aerospace & Defense (2.9%):
	62,310	Honeywell International, Inc.	$	3,386,548
	76,373	United Technologies Corp.		5,582,103

				8,968,651

	Auto Components (1.7%):
	167,607	Johnson Controls, Inc.		5,239,395

	Automobiles (1.2%):
	191,110	General Motors Co.*		3,873,800

	Beverages (1.8%):
	79,136	Coca-Cola Co. (The)		5,537,146

	Biotechnology (2.0%):
	27,573	Biogen Idec, Inc.*		3,034,408
	35,413	Celgene Corp.*		2,393,919
	23,800	Vertex Pharmaceuticals, Inc.*		790,398

				6,218,725

	Building Products (0.1%):
	33,430	Masco Corp.		350,346

	Capital Markets (2.5%):
	16,527	Ameriprise Financial, Inc.		820,400
	29,148	Goldman Sachs Group, Inc. (The)		2,635,854
	80,303	Invesco, Ltd.		1,613,287
	80,534	Morgan Stanley		1,218,480
	12,068	State Street Corp.		486,461
	67,469	TD Ameritrade Holding Corp.		1,055,890

				7,830,372

	Chemicals (2.2%):
	25,731	Air Products & Chemicals, Inc.		2,192,024
	54,798	E.I. du Pont de Nemours & Co.		2,508,652
	30,766	Georgia Gulf Corp.*^		599,629
	21,166	Monsanto Co.		1,483,102

				6,783,407

	Commercial Banks (3.2%):
	21,657	Huntington Bancshares, Inc.		118,897
	35,413	Regions Financial Corp.		152,276
	35,954	SunTrust Banks, Inc.		636,386
	43,355	U.S. Bancorp		1,172,753
	287,670	Wells Fargo & Co.		7,928,185
	8,782	Zions Bancorp^		142,971

				10,151,468

	Communications Equipment (3.1%):
	356,159	Cisco Systems, Inc.		6,439,355
	14,759	Juniper Networks, Inc.*		301,231
	54,388	QUALCOMM, Inc.		2,975,024

				9,715,610

	Computers & Peripherals (5.5%):
	36,010	Apple, Inc.*		14,584,050
	57,295	EMC Corp.*		1,234,134
	1,300	Hewlett-Packard Co.		33,488


Shares			Fair Value

	Common Stocks, continued
	Computers & Peripherals, continued
	26,754	NetApp, Inc.*^		970,368
	6,550	SanDisk Corp.*	$	322,325

				17,144,365

	Construction & Engineering (0.5%):
	31,912	Fluor Corp.		1,603,578

	Consumer Finance (0.6%):
	8,843	American Express Co.		417,125
	37,232	Capital One Financial Corp.		1,574,541

				1,991,666

	Diversified Financial Services (2.4%):
	361,638	Bank of America Corp.		2,010,707
	123,266	Citigroup, Inc.		3,243,129
	5,620	CME Group, Inc.		1,369,425
	7,823	IntercontinentalExchange, Inc.*		943,063

				7,566,324

	Diversified Telecommunication Services (2.7%):
	114,492	AT&T, Inc.		3,462,238
	125,969	Verizon Communications, Inc.		5,053,876

				8,516,114

	Electric Utilities (2.0%):
	20,163	American Electric Power Co., Inc.		832,934
	24,543	Exelon Corp.^		1,064,430
	36,273	NextEra Energy, Inc.		2,208,300
	29,149	Northeast Utilities		1,051,404
	41,244	PPL Corp.		1,213,399

				6,370,467

	Electrical Equipment (1.3%):
	87,135	Emerson Electric Co.		4,059,620

	Energy Equipment & Services (3.7%):
	32,506	Baker Hughes, Inc.		1,581,092
	9,343	Cameron International Corp.*		459,582
	34,455	Halliburton Co.		1,189,042
	120,445	Schlumberger, Ltd.		8,227,598

				11,457,314

	Food & Staples Retailing (0.6%):
	49,291	CVS Caremark Corp.		2,010,087

	Food Products (2.6%):
	48,980	Campbell Soup Co.^		1,628,095
	42,782	General Mills, Inc.		1,728,820
	125,849	Kraft Foods, Inc., Class A		4,701,719

				8,058,634

	Gas Utilities (0.1%):
	8,086	AGL Resources, Inc.^		341,714

	Health Care Equipment & Supplies (1.1%):
	8,597	Becton, Dickinson & Co.		642,368
	60,401	Covidien plc		2,718,649

				3,361,017


Shares			Fair Value

	Common Stocks, continued
	Health Care Providers & Services (4.2%):
	60,676	Cardinal Health, Inc.	$	2,464,052
	35,044	Express Scripts, Inc.*		1,566,116
	34,942	Humana, Inc.		3,061,269
	17,133	McKesson, Inc.		1,334,832
	89,658	UnitedHealth Group, Inc.		4,543,868

				12,970,137

	Hotels, Restaurants & Leisure (2.1%):
	81,132	Carnival Corp.		2,648,148
	16,703	Darden Restaurants, Inc.^		761,323
	21,034	Marriott International, Inc., Class A^		613,562
	42,884	Yum! Brands, Inc.		2,530,585

				6,553,618

	Household Durables (0.7%):
	45,038	D.R. Horton, Inc.^		567,929
	15,959	Lennar Corp.^		313,594
	1,377	NVR, Inc.*		944,622
	16,580	Ryland Group, Inc. (The)^		261,301

				2,087,446

	Household Products (2.5%):
	15,393	Colgate-Palmolive Co.		1,422,159
	96,167	Procter & Gamble Co. (The)		6,415,301

				7,837,460

	Industrial Conglomerates (2.1%):
	16,683	3M Co.		1,363,502
	170,350	General Electric Co.		3,050,968
	46,507	Tyco International, Ltd.		2,172,342

				6,586,812

	Insurance (3.5%):
	25,751	ACE, Ltd.		1,805,660
	29,804	Allstate Corp. (The)		816,928
	12,139	Axis Capital Holdings, Ltd.		387,963
	4,278	Everest Re Group, Ltd.		359,737
	4,729	Hartford Financial Services Group, Inc. (The)		76,846
	99,527	MetLife, Inc.		3,103,252
	51,277	Prudential Financial, Inc.		2,570,003
	11,101	RenaissanceRe Holdings, Ltd.		825,581
	54,040	XL Group plc		1,068,371

				11,014,341

	Internet & Catalog Retail (1.3%):
	22,842	Amazon.com, Inc.*		3,953,950

	Internet Software & Services (0.8%):
	3,666	Google, Inc., Class A*		2,367,869
	29,800	Zynga, Inc., Class A*		280,418

				2,648,287


Shares			Fair Value

	Common Stocks, continued
	IT Services (1.6%):
	28,033	Cognizant Technology Solutions Corp., Class A*	$	1,802,802
	11,054	Genpact, Ltd.*		165,257
	5,486	International Business Machines Corp.		1,008,766
	5,056	MasterCard, Inc., Class A		1,884,978

				4,861,803

	Machinery (0.9%):
	78,165	PACCAR, Inc.^		2,928,843

	Media (4.5%):
	95,123	CBS Corp., Class B		2,581,638
	167,832	Comcast Corp., Class A		3,979,297
	203,579	Time Warner, Inc.^		7,357,345

				13,918,280

	Metals & Mining (1.1%):
	91,617	Freeport-McMoRan Copper & Gold, Inc.		3,370,589

	Multi-Utilities (0.8%):
	18,967	Dominion Resources, Inc.		1,006,768
	15,168	DTE Energy Co.		825,898
	11,590	PG&E Corp.		477,740
	5,568	Sempra Energy		306,240

				2,616,646

	Multiline Retail (0.9%):
	14,370	Kohl’s Corp.		709,159
	41,726	Target Corp.		2,137,206

				2,846,365

	Oil, Gas & Consumable Fuels (8.9%):
	24,625	Anadarko Petroleum Corp.		1,879,626
	7,983	Apache Corp.		723,100
	52,935	Chevron Corp.		5,632,284
	30,991	ConocoPhillips		2,258,314
	5,994	Devon Energy Corp.		371,628
	23,718	EOG Resources, Inc.		2,336,460
	57,193	Exxon Mobil Corp.		4,847,679
	8,782	Hess Corp.		498,818
	14,083	Marathon Petroleum Corp.		468,823
	80,303	Occidental Petroleum Corp.		7,524,392
	20,777	Southwestern Energy Co.*		663,618
	14,656	Williams Cos., Inc. (The)		483,941

				27,688,683

	Paper & Forest Products (0.2%):
	16,417	International Paper Co.		485,943

	Pharmaceuticals (6.5%):
	21,741	Abbott Laboratories		1,222,496
	9,252	Allergan, Inc.		811,771
	41,390	Johnson & Johnson Co.		2,714,356


Shares			Fair Value

	Common Stocks, continued
	Pharmaceuticals, continued
	291,577	Merck & Co., Inc.	$	10,992,453
	208,465	Pfizer, Inc.		4,511,183

				20,252,259

	Road & Rail (1.8%):
	39,200	CSX Corp.		825,552
	66,509	Norfolk Southern Corp.		4,845,846

				5,671,398

	Semiconductors & Semiconductor Equipment (2.4%):
	53,638	Altera Corp.^		1,989,970
	29,091	Broadcom Corp., Class A		854,112
	41,265	Freescale Semiconductor Holdings I, Ltd.*^		522,002
	45,607	Lam Research Corp.*		1,688,371
	5,965	Novellus Systems, Inc.*		246,295
	66,442	Xilinx, Inc.^		2,130,130

				7,430,880

	Software (4.4%):
	5,363	Citrix Systems, Inc.*		325,641
	307,399	Microsoft Corp.		7,980,078
	212,523	Oracle Corp.		5,451,215

				13,756,934

	Specialty Retail (1.6%):
	2,422	AutoZone, Inc.*		787,077
	54,295	Home Depot, Inc.		2,282,562
	56,654	Lowe’s Cos., Inc.		1,437,878
	9,614	TJX Cos., Inc. (The)		620,584

				5,128,101

	Textiles, Apparel & Luxury Goods (1.2%):
	24,871	Nike, Inc., Class B		2,396,818
	10,391	V.F. Corp.		1,319,554

				3,716,372


Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Tobacco (0.8%):
	31,564	Philip Morris International, Inc.	$	2,477,142

	Wireless Telecommunication Services (0.1%):
	84,581	Sprint Nextel Corp.*		197,919

	Total Common Stocks (Cost $277,944,933)			308,150,028

	U.S. Treasury Obligation (0.6%):
$	1,890,000	U.S. Treasury Note, 0.63%, 6/30/12		1,895,241

	Total U.S. Treasury Obligation (Cost $1,894,222)			1,895,241

	Securities Held as Collateral for Securities on Loan (4.1%):
	12,666,402	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)		12,666,402

	Total Securities Held as Collateral for Securities on Loan (Cost $12,666,402)			12,666,402

	Unaffiliated Investment Company (0.7%):
	2,307,473	Dreyfus Treasury Prime Cash Management, 0.00%(b)		2,307,473

	Total Unaffiliated Investment Company (Cost $2,307,473)			2,307,473

	Total Investment Securities (Cost $294,813,030)(c) — 104.1%			325,019,144
	Net other assets (liabilities) — (4.1)%			(12,742,528	)

	Net Assets — 100.0%		$	312,276,616

Cash of $105,000 has been segregated to cover margin requirements for the following open contracts as of December 31, 2011:

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	294,813,030

Investment securities, at value*	$	325,019,144
Cash		2,886
Segregated cash for collateral		105,000
Interest and dividends receivable		524,801
Receivable for capital shares issued		15,394
Receivable for expenses paid indirectly		3,530
Receivable for investments sold		50,163
Prepaid expenses		3,679

Total Assets		325,724,597

Liabilities:
Payable for investments purchased		415,032
Payable for capital shares redeemed		57,640
Payable for collateral received on loaned securities		12,666,402
Payable for variation margin on futures contracts		6,000
Manager fees payable		188,416
Administration fees payable		8,968
Distribution fees payable		65,775
Custodian fees payable		5,520
Administrative and compliance services fees payable		2,079
Trustee fees payable		112
Other accrued liabilities		32,037

Total Liabilities		13,447,981

Net Assets	$	312,276,616

Net Assets Consist of:
Capital	$	469,585,898
Accumulated net investment income/(loss)		2,893,822
Accumulated net realized gains/(losses) from investment transactions		(190,422,206	)
Net unrealized appreciation/(depreciation) on investments		30,219,102

Net Assets	$	312,276,616

Shares of beneficial interest (unlimited number of shares authorized, no par value)		33,882,484
Net Asset Value (offering and redemption price per share)	$	9.22

*	Includes securities on loan of $12,297,316.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	2,081
Dividends		6,317,328
Income from securities lending		12,684
Foreign withholding tax		(126	)

Total Investment Income		6,331,967

Expenses:
Manager fees		2,564,898
Administration fees		124,076
Distribution fees		801,529
Custodian fees		29,044
Administrative and compliance services fees		14,352
Trustee fees		24,230
Professional fees		25,893
Shareholder reports		29,027
Other expenses		12,297

Total expenses before reductions		3,625,346
Less expenses voluntarily waived/reimbursed by the Manager		(177,708	)
Less expenses paid indirectly		(8,602	)

Net expenses		3,439,036

Net Investment Income/(Loss)		2,892,931

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		15,653,835
Net realized gains/(losses) on futures contracts		(345,336	)
Change in unrealized appreciation/depreciation on investments		(26,138,776	)

Net Realized/Unrealized Gains/(Losses) on Investments		(10,830,277	)

Change in Net Assets Resulting From Operations	$	(7,937,346	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL JPMorgan U.S. Equity Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $1,253 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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. The notional amount of futures contracts outstanding was $1.6 million as of December 31, 2011. The monthly average notional amount for these contracts was $2.7 million for the year ended December 31, 2011.

The following is a summary of the fair value of derivative instruments as of December 31, 2011:

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 J.P. Morgan Investment Management Inc. (“JPMIM”), JPMIM 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

the Fund’s expenses to exceed the stated limit during the respective year. Any amounts recouped by the Manager during the

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, 4,721 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks+	$	308,150,028	$	—	$	—	$	308,150,028
U.S. Treasury Obligation		—		1,895,241		—		1,895,241
Securities Held as Collateral for Securities on Loan		—		12,666,402		—		12,666,402
Unaffiliated Investment Company		2,307,473		—		—		2,307,473

Total Investment Securities		310,457,501		14,561,643		—		325,019,144

Other Financial Instruments:*
Futures Contracts		12,988		—		—		12,988

Total Investments	$	310,470,489	$	14,561,643	$	—	$	325,032,132

The Fund recognizes significant transfers between Level 1 and Level 2 at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $301,991,567. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $15,928,789 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL JPMorgan U.S. Equity Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon , Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (4/29/05)
AZL^® MFS Investors Trust Fund		–2.22	%		18.12	%		1.79	%		6.51	%
S&P 500 Index		2.11	%		14.11	%		–0.25	%		3.40	%

Expense Ratio


	Gross
AZL^® MFS Investors Trust Fund		1.10	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager voluntarily reduced the management fee to 0.75% on the first $100 million of assets and 0.70% on assets above $100 million. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.20% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against the Standard & Poor’s 500 (“S&P 500”) Index, which is an unmanaged index that is representative 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.

As a shareholder of the AZL MFS Investors Trust Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (98.8%):
	Aerospace & Defense (2.0%):
	75,004	United Technologies Corp.	$	5,482,042

	Air Freight & Logistics (0.3%):
	22,043	Expeditors International of Washington, Inc.		902,881

	Automobiles (0.5%):
	21,985	Bayerische Motoren Werke AG (BMW)		1,469,637

	Beverages (3.7%):
	131,559	Diageo plc		2,870,182
	81,671	Heineken NV		3,769,928
	53,684	PepsiCo, Inc.		3,561,934

				10,202,044

	Biotechnology (1.2%):
	76,269	Gilead Sciences, Inc.*		3,121,690

	Building Products (0.8%):
	74,110	Owens Corning, Inc.*^		2,128,439

	Capital Markets (4.8%):
	97,377	Bank of New York Mellon Corp.		1,938,776
	19,680	BlackRock, Inc.^		3,507,763
	29,923	Franklin Resources, Inc.		2,874,403
	34,699	Goldman Sachs Group, Inc. (The)		3,137,831
	41,352	State Street Corp.		1,666,899

				13,125,672

	Chemicals (3.0%):
	35,540	Celanese Corp., Series A		1,573,356
	24,106	Linde AG		3,585,699
	28,681	Praxair, Inc.		3,065,999

				8,225,054

	Commercial Banks (2.2%):
	52,595	SunTrust Banks, Inc.		930,931
	179,032	Wells Fargo & Co.		4,934,122

				5,865,053

	Communications Equipment (1.6%):
	237,038	Cisco Systems, Inc.		4,285,647

	Computers & Peripherals (5.8%):
	25,511	Apple, Inc.*		10,331,955
	256,229	EMC Corp.*^		5,519,173

				15,851,128

	Construction & Engineering (0.8%):
	42,500	Fluor Corp.		2,135,625

	Consumer Finance (1.2%):
	71,460	American Express Co.		3,370,768

	Diversified Financial Services (2.7%):
	329,918	Bank of America Corp.		1,834,344
	164,050	JPMorgan Chase & Co.		5,454,663

				7,289,007


Shares			Fair Value

	Common Stocks, continued
	Diversified Telecommunication Services (1.2%):
	104,139	AT&T, Inc.	$	3,149,163

	Electric Utilities (1.7%):
	53,649	American Electric Power Co., Inc.		2,216,240
	57,120	Exelon Corp.^		2,477,295

				4,693,535

	Energy Equipment & Services (3.4%):
	51,740	Cameron International Corp.*		2,545,091
	58,877	Halliburton Co.		2,031,845
	34,961	National-Oilwell Varco, Inc.		2,376,998
	33,955	Schlumberger, Ltd.		2,319,466

				9,273,400

	Food Products (1.7%):
	41,496	Danone SA		2,606,176
	47,916	General Mills, Inc.		1,936,286

				4,542,462

	Health Care Equipment & Supplies (4.7%):
	35,247	Baxter International, Inc.		1,744,022
	31,592	Becton, Dickinson & Co.		2,360,554
	46,020	Covidien plc		2,071,360
	81,585	Medtronic, Inc.		3,120,626
	99,612	St. Jude Medical, Inc.		3,416,692

				12,713,254

	Health Care Providers & Services (0.5%):
	71,960	VCA Antech, Inc.*^		1,421,210

	Household Products (4.2%):
	26,126	Colgate-Palmolive Co.		2,413,781
	94,646	Procter & Gamble Co. (The)		6,313,835
	57,096	Reckitt Benckiser Group plc		2,813,049

				11,540,665

	Industrial Conglomerates (3.9%):
	51,050	3M Co.		4,172,317
	137,938	Danaher Corp.^		6,488,604

				10,660,921

	Insurance (2.5%):
	55,450	ACE, Ltd.		3,888,154
	60,630	Aon Corp.		2,837,484

				6,725,638

	Internet Software & Services (2.7%):
	9,533	Google, Inc., Class A*		6,157,364
	35,233	VeriSign, Inc.^		1,258,523

				7,415,887

	IT Services (4.1%):
	35,545	Accenture plc, Class A		1,892,060
	10,600	International Business Machines Corp.		1,949,128
	9,200	MasterCard, Inc., Class A^		3,429,944
	38,228	Visa, Inc., Class A		3,881,289

				11,152,421


Shares			Fair Value

	Common Stocks, continued
	Life Sciences Tools & Services (0.9%):
	56,100	Thermo Fisher Scientific, Inc.*	$	2,522,817

	Machinery (.8%):
	32,950	Stanley Black & Decker, Inc.		2,227,420

				2,227,420

	Media (4.4%):
	109,990	Comcast Corp., Class A		2,607,863
	66,750	Viacom, Inc., Class B		3,031,118
	169,467	Walt Disney Co. (The)		6,355,012

				11,993,993

	Multi-Utilities (1.8%):
	49,212	Alliant Energy Corp.		2,170,742
	80,318	Wisconsin Energy Corp.		2,807,917

				4,978,659

	Multiline Retail (2.9%):
	62,097	Kohl’s Corp.		3,064,487
	95,268	Target Corp.		4,879,627

				7,944,114

	Oil, Gas & Consumable Fuels (7.6%):
	24,370	Apache Corp.		2,207,435
	57,641	Chevron Corp.		6,133,002
	25,564	EOG Resources, Inc.		2,518,310
	46,671	Exxon Mobil Corp.		3,955,834
	23,037	Hess Corp.		1,308,502
	31,000	Kinder Morgan, Inc.		997,270
	37,302	Occidental Petroleum Corp.		3,495,197

				20,615,550

	Pharmaceuticals (4.4%):
	81,003	Abbott Laboratories		4,554,799
	80,739	Johnson & Johnson Co.		5,294,863
	50,011	Teva Pharmaceutical Industries, Ltd., Sponsored ADR		2,018,444

				11,868,106

	Road & Rail (1.2%):
	41,970	Canadian National Railway Co.		3,297,163

	Semiconductors & Semiconductor Equipment (2.6%):
	35,010	Altera Corp.		1,298,871
	31,967	ASML Holding NV, NYS		1,335,901
	117,821	Microchip Technology, Inc.^		4,315,783

				6,950,555


Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Software (3.2%):
	42,070	Check Point Software Technologies, Ltd.*^	$	2,210,357
	254,295	Oracle Corp.		6,522,667

				8,733,024

	Specialty Retail (1.8%):
	55,060	Hennes & Mauritz AB, B Shares		1,767,681
	35,233	Sherwin Williams Co.		3,145,249

				4,912,930

	Textiles, Apparel & Luxury Goods (2.5%):
	18,044	LVMH Moet Hennessy Louis Vuitton SA		2,541,891
	33,458	Nike, Inc., Class B		3,224,347
	8,230	V.F. Corp.		1,045,128

				6,811,366

	Tobacco (2.3%):
	79,184	Philip Morris International, Inc.		6,214,360

	Wireless Telecommunication Services (1.2%):
	56,034	American Tower Corp.,Class A		3,362,601

	Total Common Stocks (Cost $236,782,590)			269,175,901

	Securities Held as Collateral for Securities on Loan (6.5%):
$	17,686,947	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)		17,686,947

	Total Securities Held as Collateral for Securities on Loan (Cost $17,686,947)			17,686,947

	Unaffiliated Investment Company (1.2%):
	3,299,500	Dreyfus Treasury Prime Cash Management, 0.00%(b)		3,299,500

	Total Unaffiliated Investment Company (Cost $3,299,500)			3,299,500

	Total Investment Securities (Cost $257,769,037)(c) — 106.5%			290,162,348
	Net other assets (liabilities) — (6.5)%			(17,826,775	)

	Net Assets — 100.0%		$	272,335,573

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	257,769,037

Investment securities, at value*	$	290,162,348
Cash		11,350
Interest and dividends receivable		313,441
Foreign currency, at value (cost $2,042)		2,042
Receivable for capital shares issued		5,650
Reclaims receivable		70,571
Prepaid expenses		3,289

Total Assets		290,568,691

Liabilities:
Payable for capital shares redeemed		269,369
Payable for collateral received on loaned securities		17,686,947
Manager fees payable		165,549
Administration fees payable		8,549
Distribution fees payable		57,608
Custodian fees payable		5,035
Administrative and compliance services fees payable		2,281
Trustee fees payable		123
Other accrued liabilities		37,657

Total Liabilities		18,233,118

Net Assets	$	272,335,573

Net Assets Consist of:
Capital	$	269,592,186
Accumulated net investment income/(loss)		2,217,530
Accumulated net realized gains/(losses) from investment transactions		(31,871,951	)
Net unrealized appreciation/(depreciation) on investments		32,397,808

Net Assets	$	272,335,573

Shares of beneficial interest (unlimited number of shares authorized, no par value)		19,745,692
Net Asset Value (offering and redemption price per share)	$	13.79

*	Includes securities on loan of $17,184,356.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	5,447,109
Income from securities lending		56,558
Foreign withholding tax		(26,885	)

Total Investment Income		5,476,782

Expenses:
Manager fees		2,230,338
Administration fees		121,786
Distribution fees		743,446
Custodian fees		28,417
Administrative and compliance services fees		13,680
Trustee fees		23,067
Professional fees		24,477
Shareholder reports		30,887
Other expenses		10,741

Total expenses before reductions		3,226,839
Less expenses voluntarily waived/reimbursed by the Manager		(98,692	)
Less expenses paid indirectly		(15,235	)

Net expenses		3,112,912

Net Investment Income/(Loss)		2,363,870

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		5,784,058
Net realized gains/(losses) on forward currency contracts		46,457
Change in unrealized appreciation/depreciation on investments		(14,699,890	)

Net Realized/Unrealized Gains/(Losses) on Investments		(8,869,375	)

Change in Net Assets Resulting From Operations	$	(6,505,505	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL MFS Investors Trust Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

least 102% of the fair value plus accrued interest on the securities loaned (105% for foreign securities) and is marked to market daily to provide a level of collateral at least equal to the fair value of securities loaned. The Fund bears all of the gains and losses on such investments. The 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 cash collateral received. In extremely low interest rate environments, the broker rebate fee may exceed the interest earned or the cash collateral which would result in a loss to the Fund. The investment of cash collateral deposited by the borrower is subject to inherent market risks such as interest rate risk, credit risk, liquidity risk, and other risks that are present in the market, and as such, the value of these investments may not be sufficient, when liquidated, to repay the borrower when the loaned security is returned. 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 Allianz Investment Management LLC (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. Securities on loan at December 31, 2011 are presented on the Fund’s Schedule of Portfolio Investments (“Schedule”). The average outstanding amount of securities on loan was $14.1 million for the year ended December 31, 2011.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $5,599 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. As of December 31, 2011 the Fund did not hold any forward currency contracts. During the year ended December 31, 2011, the Fund had limited activity in these transactions.

Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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.

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 Massachusetts Financial Services Company (“MFS”), MFS 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $4,418 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks:
Automobiles	$	—	$	1,469,637	$	—	$	1,469,637
Beverages		3,561,934		6,640,110		—		10,202,044
Chemicals		4,639,355		3,585,699		—		8,225,054
Food Products		1,936,286		2,606,176		—		4,542,462
Household Products		8,727,616		2,813,049		—		11,540,665
Specialty Retail		3,145,249		1,767,681		—		4,912,930
Textiles, Apparel and Luxury Goods		4,269,475		2,541,891		—		6,811,366
All Other Common Stocks+		221,471,743		—		—		221,471,743
Securities Held as Collateral for Securities on Loan		—		17,686,947		—		17,686,947
Unaffiliated Investment Company		3,299,500		—		—		3,299,500

Total Investment Securities	$	251,051,158	$	39,111,190	$	—	$	290,162,348

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $258,696,565. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $5,800,722 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL MFS Investors Trust Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

may realize “economies of scale” as the fund grows larger; any indirect benefits that may accrue to the adviser and its affiliates as a result of the adviser’s relationship with the fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts bearing on the adviser’s service and fee. The Trust’s Board is aware of these factors and takes them into account in its review of the Trust’s advisory contracts.

(3) The costs of services to be provided and profits to be realized by the Manager and the Subadvisers and their affiliates from their relationship with the Funds. The Manager has supplied information to the Board of Trustees pertaining to the level of investment advisory fees to which the Funds are subject. The Manager has agreed to temporarily “cap” Fund expenses at certain levels, and information is provided to Trustees setting forth “contractual” advisory fees and “actual” fees after taking expense caps into account. Based upon the information provided, the “actual” advisory fees payable by the Funds overall are generally comparable to the average level of fees paid by Fund peer groups. For the 29 Funds reviewed by the Board of Trustees in the fall of 2011, 24 Funds paid “actual” advisory fees in a percentage amount within the 65^th percentile or lower for each Fund’s applicable category. The Trustees recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The Board has concluded that the advisory fees to be paid to the Manager by the Funds are not unreasonable.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years.	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003.	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999.	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001.	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001.	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999.	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® Mid Cap Index Fund returned –2.32%, which compared to a –1.73% total return for its benchmark, the S&P MidCap 400 Index^1.

The Fund attempts to replicate the performance of the S&P 400 index of mid-cap U.S. stocks. U.S. equities delivered paltry rewards for the extreme volatility investors endured in 2011. Political turmoil, natural disasters and, above all, global debt problems led to market activity during the year that was characterized by a tug-of-war between assets perceived as high risk and those perceived as low risk.

In the United States, a prolonged debt ceiling debate revealed the ineffectiveness of the nation’s policymakers and ultimately led to Standard & Poor’s decision to downgrade the U.S. government’s credit rating in early August. This announcement spurred one of the most volatile periods in trading history. Stock markets across the world whipsawed on hopes and fears driven by news flow. Equities swooned as debt problems in Europe spread to Italy and Spain, and global economic indicators grew increasingly bleak.

U.S. stocks staged a strong rebound in October as the domestic labor market improved and corporate profits continued to beat analyst expectations. Encouraging news from Europe also contributed to the rally. After months of deliberation, European leaders agreed upon a new plan to reduce Greece’s debt burden, recapitalize the region’s banks, and increase the

size of the euro-zone bailout fund. However, a lack of definitive details about the rescue plan soon raised doubts among investors and thwarted the rally at the end of October. In November, political instability in Greece and Italy fueled uncertainty as to whether Europe’s leaders would be able to contain the crisis. In the United States, bickering lawmakers failed to reach an agreement on reducing the U.S. budget deficit, further undermining investors’ confidence in policymakers on both sides of the Atlantic. Market volatility softened in December with the support of global central bank actions and continued improvement in economic data.

Among sectors in the benchmark, consumer staples and utilities performed strongest in 2011. Information technology and telecommunications experienced the largest losses among sectors in the Fund’s benchmark. Financials, which were battered by the world’s debt problems, also performed poorly. The more cyclical materials and industrials sectors also declined amid heightened uncertainty about the global economy.

The underperformance of the Fund compared to its benchmark was the result of Fund expenses that are not incurred by the benchmark.

Past performance does not guarantee future results.

The Standard & Poor’s MidCap 400 Index (“S&P 400”) is the most widely used index for mid-sized companies. The S&P 400 covers 7% of the U.S. equities market, and is part of a series of S&P U.S. indices that can be used as building blocks for portfolio composition. Investors cannot invest directly in an index.

Fund Objective

The Fund’s investment objective is to seek to match the performance of the Standard & Poor’s MidCap 400 Index (“S&P 400”) as closely as possible. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing at least 80% of its net assets in a statistically selected sampling of equity securities of companies included in the S&P 400 Index and in derivative instruments linked to the S&P 400 Index, primarily futures contracts.

Investment Concerns

Mid-capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure.

Investing in derivatives instruments involves risks that may be different from or greater than the risk associated with investing directly in securities or other traditional instruments.

The Fund does not attempt to manage market volatility or reduce the effects of poor stock performance. In addition, factors such as Fund expenses, selection of a representative portfolio, changes in the composition of the Index, or the timing of purchases or redemptions of Fund shares may affect the correlation between the performance of the Index and the Fund’s performance.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			Since Inception (5/1/09)
AZL^® Mid Cap Index Fund		–2.32	%		19.09	%
S&P MidCap 400 Index		–1.73	%		20.29	%

Expense Ratio


	Gross
AZL^® Mid Cap Index Fund		0.62	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 0.71% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against the Standard & Poor’s MidCap 400 Index (“S&P 400”), which is the most widely used index for mid-sized companies. The S&P 400 covers 7% of the U.S. equities market, and is part of a series of S&P U.S. indices that can be used as building blocks for portfolio composition. 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.

As a shareholder of the AZL Mid Cap Index Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (96.9%):
	Aerospace & Defense (1.1%):
	6,375	Alliant Techsystems, Inc.	$	364,395
	19,957	BE Aerospace, Inc.*		772,536
	5,923	Esterline Technologies Corp.*		331,510
	35,715	Exelis, Inc.		323,221
	8,356	Triumph Group, Inc.		488,408

				2,280,070

	Air Freight & Logistics (0.1%):
	19,954	UTI Worldwide, Inc.		265,189

	Airlines (0.3%):
	6,872	Alaska Air Group, Inc.*		516,019
	39,537	JetBlue Airways Corp.*		205,592

				721,611

	Auto Components (0.4%):
	27,761	Gentex Corp.		821,448

	Automobiles (0.1%):
	8,489	Thor Industries, Inc.^		232,853

	Beverages (0.6%):
	14,659	Hansen Natural Corp.*		1,350,680

	Biotechnology (1.3%):
	14,705	Regeneron Pharmaceuticals, Inc.*^		815,098
	10,046	United Therapeutics Corp.*		474,673
	40,356	Vertex Pharmaceuticals, Inc.*		1,340,223

				2,629,994

	Building Products (0.4%):
	30,159	Fortune Brands Home & Security, Inc.*		513,608
	9,978	Lennox International, Inc.		336,757

				850,365

	Capital Markets (2.0%):
	10,315	Affiliated Managers Group, Inc.*		989,724
	38,127	Apollo Investment Corp.		245,538
	22,217	Eaton Vance Corp.^		525,210
	5,593	Greenhill & Co., Inc.^		203,417
	36,378	Janus Capital Group, Inc.		229,545
	28,210	Jefferies Group, Inc.		387,888
	19,750	Raymond James Financial, Inc.		611,460
	28,367	SEI Investments Co.		492,168
	16,507	Waddell & Reed Financial, Inc., Class A		408,878

				4,093,828

	Chemicals (2.8%):
	17,175	Albemarle Corp.		884,684
	15,113	Ashland, Inc.		863,859
	12,365	Cabot Corp.		397,411
	9,595	Cytec Industries, Inc.		428,417
	10,243	Intrepid Potash, Inc.*		231,799


Shares			Fair Value

	Common Stocks, continued
	Chemicals, continued
	3,417	Minerals Technologies, Inc.	$	193,163
	2,049	NewMarket Corp.^		405,927
	15,511	Olin Corp.		304,791
	25,355	RPM International, Inc.		622,465
	8,374	Scotts Miracle-Gro Co. (The), Class A^		390,982
	9,691	Sensient Technologies Corp.		367,289
	18,084	Valspar Corp. (The)		704,734

				5,795,521

	Commercial Banks (3.7%):
	33,573	Associated Banc-Corp.		375,010
	14,463	BancorpSouth, Inc.^		159,382
	8,989	Bank of Hawaii Corp.^		399,921
	15,218	Cathay General Bancorp		227,205
	9,057	City National Corp.^		400,138
	15,314	Commerce Bancshares, Inc.		583,770
	11,851	Cullen/Frost Bankers, Inc.^		627,036
	28,841	East West Bancorp, Inc.		569,610
	21,138	FirstMerit Corp.		319,818
	38,701	Fulton Financial Corp.		379,657
	16,390	Hancock Holding Co.		523,988
	10,284	International Bancshares Corp.		188,557
	9,074	Prosperity Bancshares, Inc.^		366,136
	8,934	Signature Bank*		535,951
	8,387	SVB Financial Group*		399,976
	144,360	Synovus Financial Corp.^		203,548
	30,507	TCF Financial Corp.^		314,832
	12,407	Trustmark Corp.^		301,366
	36,217	Valley National Bancorp^		448,004
	14,222	Webster Financial Corp.		289,987
	5,531	Westamerica Bancorp^		242,811

				7,856,703

	Commercial Services & Supplies (1.7%):
	9,062	Brink’s Co. (The)		243,586
	9,138	Clean Harbors, Inc.*^		582,365
	10,322	Copart, Inc.*		494,321
	19,254	Corrections Corp. of America*		392,204
	9,833	Deluxe Corp.^		223,799
	11,267	Herman Miller, Inc.		207,876
	8,674	HNI Corp.		226,391
	5,955	Mine Safety Appliances Co.^		197,230
	12,455	Rollins, Inc.		276,750
	21,645	Waste Connections, Inc.		717,315

				3,561,837

	Communications Equipment (1.2%):
	12,317	ADTRAN, Inc.		371,481
	18,746	Ciena Corp.*^		226,827
	8,418	Plantronics, Inc.		300,018
	34,275	Polycom, Inc.*		558,682


Shares			Fair Value

	Common Stocks, continued
	Communications Equipment, continued
	29,995	Riverbed Technology, Inc.*	$	704,882
	69,361	Tellabs, Inc.		280,218

				2,442,108

	Computers & Peripherals (0.6%):
	12,120	Diebold, Inc.		364,448
	30,456	NCR Corp.*		501,306
	19,469	QLogic Corp.*		292,035

				1,157,789

	Construction & Engineering (1.1%):
	22,321	Aecom Technology Corp.*		459,143
	6,733	Granite Construction, Inc.		159,707
	28,803	KBR, Inc.		802,740
	12,607	Shaw Group, Inc.*		339,128
	15,405	URS Corp.*		541,023

				2,301,741

	Construction Materials (0.3%):
	8,842	Martin Marietta Materials, Inc.^		666,775

	Containers & Packaging (1.9%):
	12,784	AptarGroup, Inc.		666,941
	5,953	Greif, Inc., Class A		271,159
	18,916	Packaging Corp. of America		477,440
	13,644	Rock-Tenn Co., Class A		787,259
	9,590	Silgan Holdings, Inc.		370,558
	19,346	Sonoco Products Co.		637,644
	21,241	Temple-Inland, Inc.		673,552

				3,884,553

	Distributors (0.6%):
	28,361	LKQ Corp.*		853,099
	5,492	Watsco, Inc.^		360,605

				1,213,704

	Diversified Consumer Services (0.8%):
	3,953	ITT Educational Services, Inc.*^		224,886
	5,503	Matthews International Corp., Class A		172,959
	11,168	Regis Corp.		184,830
	44,116	Service Corp. International		469,836
	13,071	Sotheby’s		372,916
	2,249	Strayer Education, Inc.^		218,580

				1,644,007

	Diversified Financial Services (0.4%):
	23,329	MSCI, Inc., Class A*		768,224

	Diversified Telecommunication Services (0.3%):
	28,900	TW Telecom, Inc.*		560,082

	Electric Utilities (1.9%):
	11,739	Cleco Corp.		447,256
	26,255	Great Plains Energy, Inc.		571,834
	18,571	Hawaiian Electric Industries, Inc.		491,760
	9,630	IDACORP, Inc.		408,408


Shares			Fair Value

	Common Stocks, continued
	Electric Utilities, continued
	17,947	ITT Corp.	$	346,915
	45,665	NV Energy, Inc.		746,623
	15,413	PNM Resources, Inc.		280,979
	22,705	Westar Energy, Inc.		653,450

				3,947,225

	Electrical Equipment (2.0%):
	8,139	Acuity Brands, Inc.^		431,367
	30,979	AMETEK, Inc.		1,304,216
	10,133	General Cable Corp.*		253,426
	11,404	Hubbell, Inc., Class B		762,471
	8,034	Regal-Beloit Corp.^		409,493
	10,071	Thomas & Betts Corp.*		549,877
	11,599	Woodward, Inc.		474,747

				4,185,597

	Electronic Equipment, Instruments & Components (2.2%):
	21,620	Arrow Electronics, Inc.*		808,804
	28,708	Avnet, Inc.*		892,532
	29,682	Ingram Micro, Inc., Class A*		539,915
	7,906	Itron, Inc.*		282,798
	17,938	National Instruments Corp.		465,491
	7,986	Tech Data Corp.*		394,588
	23,860	Trimble Navigation, Ltd.*		1,035,524
	30,414	Vishay Intertechnology, Inc.*		273,422

				4,693,074

	Energy Equipment & Services (2.9%):
	10,935	Atwood Oceanics, Inc.*		435,104
	3,845	CARBO Ceramics, Inc.		474,204
	14,559	Dresser-Rand Group, Inc.*		726,640
	6,669	Dril-Quip, Inc.*		438,953
	20,408	Helix Energy Solutions Group, Inc.*^		322,446
	20,904	Oceaneering International, Inc.		964,301
	9,913	Oil States International, Inc.*		757,056
	29,862	Patterson-UTI Energy, Inc.		596,643
	15,453	Superior Energy Services, Inc.*		439,483
	10,042	Tidewater, Inc.		495,071
	8,013	Unit Corp.*		371,803

				6,021,704

	Food & Staples Retailing (0.2%):
	9,536	Ruddick Corp.		406,615

	Food Products (2.1%):
	14,665	Corn Products International, Inc.		771,232
	21,836	Flowers Foods, Inc.		414,447
	25,150	Green Mountain Coffee Roasters, Inc.*^		1,127,978
	3,850	Lancaster Colony Corp.		266,959
	10,668	Ralcorp Holdings, Inc.*		912,114


Shares			Fair Value

	Common Stocks, continued
	Food Products, continued
	31,604	Smithfield Foods, Inc.*	$	767,345
	4,807	Tootsie Roll Industries, Inc.^		113,782

				4,373,857

	Gas Utilities (1.9%):
	17,485	Atmos Energy Corp.		583,125
	13,950	Energen Corp.		697,500
	16,030	National Fuel Gas Co.		890,948
	34,362	Questar Corp.+		682,429
	22,371	UGI Corp.		657,707
	9,951	WGL Holdings, Inc.^		440,033

				3,951,742

	Health Care Equipment & Supplies (2.6%):
	9,236	Cooper Cos., Inc. (The)		651,323
	9,000	Gen-Probe, Inc.*		532,080
	11,941	Hill-Rom Holdings, Inc.		402,292
	50,911	Hologic, Inc.*		891,452
	10,865	IDEXX Laboratories, Inc.*^		836,170
	11,610	Masimo Corp.*^		216,933
	28,461	ResMed, Inc.*		722,909
	11,216	STERIS Corp.		334,461
	7,879	Teleflex, Inc.		482,904
	11,596	Thoratec Corp.*		389,162

				5,459,686

	Health Care Providers & Services (3.8%):
	9,256	AMERIGROUP Corp.*		546,844
	9,680	Catalyst Health Solutions, Inc.*		503,360
	17,526	Community Health Systems, Inc.*		305,829
	49,167	Health Management Associates, Inc., Class A*		362,361
	16,054	Health Net, Inc.*		488,363
	17,484	Henry Schein, Inc.*		1,126,494
	16,485	HMS Holdings Corp.*		527,190
	9,318	LifePoint Hospitals, Inc.*		346,164
	17,133	Lincare Holdings, Inc.		440,489
	9,464	MEDNAX, Inc.*		681,503
	22,124	Omnicare, Inc.^		762,172
	12,273	Owens & Minor, Inc.^		341,067
	18,679	Universal Health Services, Inc., Class B		725,866
	16,776	VCA Antech, Inc.*		331,326
	8,281	WellCare Health Plans, Inc.*		434,752

				7,923,780

	Health Care Technology (0.3%):
	36,729	Allscripts Healthcare Solutions, Inc.*		695,647

	Hotels, Restaurants & Leisure (1.5%):
	8,387	Bally Technologies, Inc.*		331,790
	5,691	Bob Evans Farms, Inc.		190,876


Shares			Fair Value

	Common Stocks, continued
	Hotels, Restaurants & Leisure, continued
	15,575	Brinker International, Inc.	$	416,787
	10,563	Cheesecake Factory, Inc. (The)*^		310,024
	5,479	International Speedway Corp., Class A		138,892
	8,193	Life Time Fitness, Inc.*^		383,023
	5,736	Panera Bread Co., Class A*		811,357
	10,971	Scientific Games Corp.*		106,419
	57,225	Wendy’s Co. (The)		306,726
	10,984	WMS Industries, Inc.*		225,392

				3,221,286

	Household Durables (1.4%):
	7,720	American Greetings Corp., Class A		96,577
	13,971	KB Home^		93,885
	6,944	M.D.C. Holdings, Inc.^		122,423
	11,044	Mohawk Industries, Inc.*		660,983
	963	NVR, Inc.*		660,618
	28,459	Toll Brothers, Inc.*		581,133
	11,099	Tupperware Brands Corp.		621,211

				2,836,830

	Household Products (1.3%):
	14,613	Aaron’s, Inc.		389,875
	27,679	Church & Dwight Co., Inc.		1,266,591
	12,945	Energizer Holdings, Inc.*		1,002,978

				2,659,444

	Industrial Conglomerates (0.2%):
	11,809	Carlisle Cos., Inc.		523,139

	Insurance (4.3%):
	14,901	American Financial Group, Inc.		549,698
	21,935	Arthur J. Gallagher & Co.		733,506
	13,661	Aspen Insurance Holdings, Ltd.		362,017
	22,472	Brown & Brown, Inc.		508,541
	20,607	CoreLogic, Inc.*		266,449
	10,392	Everest Re Group, Ltd.		873,863
	42,409	Fidelity National Financial, Inc., Class A		675,575
	20,491	First American Financial Corp.		259,621
	8,682	Hanover Insurance Group, Inc. (The)		303,436
	22,027	HCC Insurance Holdings, Inc.		605,743
	9,710	Kemper Corp.		283,629
	6,485	Mercury General Corp.		295,846
	49,443	Old Republic International Corp.^		458,337
	16,024	Protective Life Corp.		361,501
	14,177	Reinsurance Group of America, Inc.		740,748
	8,550	StanCorp Financial Group, Inc.^		314,213


Shares			Fair Value

	Common Stocks, continued
	Insurance, continued
	11,115	Transatlantic Holdings, Inc.	$	608,324
	21,488	W.R. Berkley Corp.		738,972

				8,940,019

	Internet & Catalog Retail (0.1%):
	7,797	HSN, Inc.		282,719

	Internet Software & Services (1.1%):
	18,897	AOL, Inc.*		285,345
	9,182	Equinix, Inc.*		931,055
	20,036	Rackspace Hosting, Inc.*^		861,748
	16,102	ValueClick, Inc.*^		262,301

				2,340,449

	IT Services (2.5%):
	15,146	Acxiom Corp.*		184,933
	9,669	Alliance Data Systems Corp.*^		1,004,029
	24,016	Broadridge Financial Solutions, Inc.		541,561
	23,250	Convergys Corp.*		296,902
	6,481	DST Systems, Inc.		295,015
	18,361	Gartner, Inc.*		638,412
	15,154	Global Payments, Inc.		717,997
	16,327	Lender Processing Services, Inc.		246,048
	4,487	ManTech International Corp., Class A^		140,174
	12,650	NeuStar, Inc., Class A*		432,250
	20,389	VeriFone Systems, Inc.*		724,217

				5,221,538

	Leisure Equipment & Products (0.4%):
	13,357	Polaris Industries, Inc.		747,725

	Life Sciences Tools & Services (1.2%):
	3,809	Bio-Rad Laboratories, Inc., Class A*		365,817
	9,567	Charles River Laboratories International, Inc.*		261,466
	11,757	Covance, Inc.*		537,530
	6,111	Mettler-Toledo International, Inc.*		902,656
	7,159	Techne Corp.		488,673

				2,556,142

	Machinery (5.0%):
	18,826	AGCO Corp.*		808,953
	9,737	CLARCOR, Inc.		486,753
	9,453	Crane Co.		441,550
	14,419	Donaldson Co., Inc.		981,645
	9,788	Gardner Denver, Inc.		754,263
	11,549	Graco, Inc.		472,239
	15,617	Harsco Corp.		321,398
	16,145	IDEX Corp.		599,141
	15,375	Kennametal, Inc.		561,495
	16,215	Lincoln Electric Holdings, Inc.		634,331


Shares			Fair Value

	Common Stocks, continued
	Machinery, continued
	11,537	Nordson Corp.	$	475,094
	17,690	Oshkosh Corp.*		378,212
	19,072	Pentair, Inc.^		634,907
	9,872	SPX Corp.		594,985
	21,226	Terex Corp.*^		286,763
	16,249	Timken Co.		628,999
	15,506	Trinity Industries, Inc.		466,110
	4,349	Valmont Industries, Inc.		394,846
	9,282	Wabtec Corp.		649,276

				10,570,960

	Marine (0.6%):
	8,068	Alexander & Baldwin, Inc.		329,336
	9,444	Huntington Ingalls Industries, Inc.*		295,408
	10,772	Kirby Corp.*		709,229

				1,333,973

	Media (1.0%):
	11,124	AMC Networks, Inc., Class A*		418,040
	13,740	DreamWorks Animation SKG, Inc., Class A*^		228,015
	9,192	John Wiley & Sons, Inc.		408,125
	11,332	Lamar Advertising Co.*^		311,630
	7,283	Meredith Corp.^		237,790
	23,394	New York Times Co. (The), Class A*		180,836
	4,892	Scholastic Corp.		146,613
	8,660	Valassis Communications, Inc.*		166,532

				2,097,581

	Metals & Mining (1.2%):
	8,549	Carpenter Technology Corp.		440,103
	22,356	Commercial Metals Co.		309,183
	6,369	Compass Minerals International, Inc.		438,506
	14,507	Reliance Steel & Aluminum Co.		706,346
	42,316	Steel Dynamics, Inc.		556,455
	10,382	Worthington Industries, Inc.		170,057

				2,620,650

	Multi-Utilities (2.1%):
	21,474	Alliant Energy Corp.		947,218
	7,637	Black Hills Corp.		256,451
	36,531	MDU Resources Group, Inc.		783,955
	20,043	NSTAR		941,219
	18,973	OGE Energy Corp.		1,075,959
	15,838	Vectren Corp.		478,783

				4,483,585

	Multiline Retail (0.2%):
	9,153	99 Cents Only Stores*^		200,908
	30,936	Saks, Inc.*^		301,626

				502,534


Shares			Fair Value

	Common Stocks, continued
	Office Electronics (0.2%):
	10,055	Zebra Technologies Corp., Class A*	$	359,768

	Oil, Gas & Consumable Fuels (3.5%):
	40,947	Arch Coal, Inc.		594,141
	9,061	Bill Barrett Corp.*		308,708
	16,591	Cimarex Energy Co.		1,026,983
	9,503	Comstock Resources, Inc.*		145,396
	21,641	Forest Oil Corp.*		293,236
	40,255	HollyFrontier Corp.		941,967
	12,222	Northern Oil & Gas, Inc.*^		293,084
	17,681	Patriot Coal Corp.*		149,758
	27,283	Plains Exploration & Production Co.*		1,001,832
	23,209	Quicksilver Resources, Inc.*^		155,732
	12,384	SM Energy Co.		905,270
	24,138	Southern Union Co.		1,016,451
	13,786	World Fuel Services Corp.		578,736

				7,411,294

	Paper & Forest Products (0.4%):
	7,052	Domtar Corp.		563,878
	26,798	Louisiana-Pacific Corp.*^		216,260

				780,138

	Pharmaceuticals (0.6%):
	22,607	Endo Pharmaceuticals Holdings, Inc.*		780,620
	12,208	Medicis Pharmaceutical Corp., Class A^		405,916

				1,186,536

	Professional Services (1.0%):
	6,442	Corporate Executive Board Co. (The)		245,440
	7,928	FTI Consulting, Inc.*^		336,306
	9,234	Korn/Ferry International*		157,532
	15,787	Manpower, Inc.		564,385
	25,036	Monster Worldwide, Inc.*		198,536
	9,970	Towers Watson & Co., Class A		597,502

				2,099,701

	Real Estate Investment Trusts (REITs) (8.5%):
	11,988	Alexandria Real Estate Equities, Inc.		826,812
	13,732	American Campus Communities, Inc.		576,195
	14,590	BRE Properties, Inc.		736,503
	13,807	Camden Property Trust		859,348
	13,929	Corporate Office Properties Trust		296,131
	48,939	Duke Realty Corp.		589,715
	11,537	Equity One, Inc.^		195,898
	6,610	Essex Property Trust, Inc.		928,771


Shares			Fair Value

	Common Stocks, continued
	Real Estate Investment Trusts (REITs), continued
	12,295	Federal Realty Investment Trust	$	1,115,772
	12,683	Highwoods Properties, Inc.		376,305
	9,355	Home Properties, Inc.		538,567
	23,901	Hospitality Properties Trust		549,245
	22,453	Liberty Property Trust		693,349
	25,530	Macerich Co. (The)^		1,291,818
	16,862	Mack-Cali Realty Corp.		450,047
	20,041	National Retail Properties, Inc.^		528,682
	20,007	OMEGA Healthcare Investors, Inc.		387,135
	7,776	Potlatch Corp.^		241,911
	23,390	Rayonier, Inc.		1,043,896
	25,800	Realty Income Corp.		901,968
	17,398	Regency Centers Corp.		654,513
	31,510	Senior Housing Properties Trust		707,084
	16,683	SL Green Realty Corp.		1,111,755
	11,207	Taubman Centers, Inc.		695,955
	42,384	UDR, Inc.		1,063,838
	23,382	Weingarten Realty Investors		510,195

				17,871,408

	Real Estate Management & Development (0.2%):
	8,411	Jones Lang LaSalle, Inc.		515,258

	Road & Rail (1.5%):
	10,787	Con-way, Inc.		314,549
	17,392	J.B. Hunt Transport Services, Inc.		783,857
	21,254	Kansas City Southern Industries, Inc.*		1,445,485
	9,076	Landstar System, Inc.		434,922
	8,782	Werner Enterprises, Inc.		211,646

				3,190,459

	Semiconductors & Semiconductor Equipment (2.5%):
	89,511	Atmel Corp.*		725,039
	22,327	Cree, Inc.*		492,087
	29,966	Cypress Semiconductor Corp.		506,126
	24,462	Fairchild Semiconductor International, Inc.*		294,522
	27,486	Integrated Device Technology, Inc.*		150,074
	13,360	International Rectifier Corp.*		259,451
	24,545	Intersil Corp., Class A		256,250
	23,132	Lam Research Corp.*		856,347
	44,808	MEMC Electronic Materials, Inc.*		176,543
	53,784	RF Micro Devices, Inc.*^		290,434
	12,863	Semtech Corp.*		319,260
	8,098	Silicon Laboratories, Inc.*		351,615
	36,415	Skyworks Solutions, Inc.*		590,651

				5,268,399


Shares			Fair Value

	Common Stocks, continued
	Software (4.4%):
	6,483	ACI Worldwide, Inc.*^	$	185,673
	6,193	Advent Software, Inc.*		150,861
	17,875	Ansys, Inc.*		1,023,880
	52,777	Cadence Design Systems, Inc.*		548,881
	42,258	Compuware Corp.*		351,587
	9,001	Concur Technologies, Inc.*^		457,161
	8,739	FactSet Research Systems, Inc.		762,740
	6,932	Fair Isaac Corp.		248,443
	20,578	Informatica Corp.*		759,946
	16,753	Jack Henry & Associates, Inc.		563,068
	18,057	Mentor Graphics Corp.*		244,853
	15,505	Micros Systems, Inc.*		722,223
	22,609	Parametric Technology Corp.*		412,840
	10,932	Quest Software, Inc.*		203,335
	21,284	Rovi Corp.*		523,161
	13,720	Solera Holdings, Inc.		611,089
	27,729	Synopsys, Inc.*		754,229
	31,195	TIBCO Software, Inc.*		745,872

				9,269,842

	Specialty Retail (4.1%):
	14,018	Advance Auto Parts, Inc.		976,073
	15,625	Aeropostale, Inc.*		238,281
	37,489	American Eagle Outfitters, Inc.		573,207
	7,918	Barnes & Noble, Inc.*^		114,653
	32,446	Chico’s FAS, Inc.		361,448
	11,721	Collective Brands, Inc.*		168,431
	18,687	Dick’s Sporting Goods, Inc.		689,177
	29,596	Foot Locker, Inc.		705,569
	12,925	Guess?, Inc.		385,424
	56,406	Office Depot, Inc.*		121,273
	21,599	PetSmart, Inc.		1,107,813
	19,318	RadioShack Corp.^		187,578
	11,369	Rent-A-Center, Inc.		420,653
	16,816	Signet Jewelers, Ltd.		739,231
	13,743	Tractor Supply Co.		964,071
	20,061	Williams-Sonoma, Inc.		772,348

				8,525,230

	Textiles, Apparel & Luxury Goods (2.0%):
	10,133	Ann, Inc.*		251,096
	13,015	Ascena Retail Group, Inc.*		386,806
	7,470	Deckers Outdoor Corp.*		564,508
	10,174	Fossil, Inc.*		807,409
	18,802	Hanesbrands, Inc.*		411,012


Shares			Fair Value
	Common Stocks, continued
	Textiles, Apparel & Luxury Goods, continued
	9,496	J. Crew Group, Inc.*(a)(b)	$	—
	13,072	PVH Corp.		921,445
	7,104	Under Armour, Inc., Class A*^		509,996
	7,833	Warnaco Group, Inc. (The)*^		391,963

				4,244,235

	Thrifts & Mortgage Finance (1.0%):
	16,380	Astoria Financial Corp.		139,066
	67,304	First Niagara Financial Group, Inc.		580,833
	84,635	New York Community Bancorp, Inc.^		1,046,935
	20,824	Washington Federal, Inc.		291,328

				2,058,162

	Tobacco (0.1%):
	4,558	Universal Corp.^		209,486

	Trading Companies & Distributors (0.7%):
	9,017	GATX Corp.^		393,682
	8,864	MSC Industrial Direct Co., Inc., Class A		634,219
	12,122	United Rentals, Inc.*^		358,205

				1,386,106

	Water Utilities (0.3%):
	26,812	Aqua America, Inc.		591,205

	Wireless Telecommunication Services (0.2%):
	17,804	Telephone and Data Systems, Inc.		460,946

	Total Common Stocks (Cost $190,354,403)			203,124,756

	Securities Held as Collateral for Securities on Loan (8.4%):
$	17,474,428	Allianz Variable Insurance Products Securities Lending Collateral Trust(c)		17,474,428

	Total Securities Held as Collateral for Securities on Loan (Cost $17,474,428)			17,474,428

	Unaffiliated Investment Company (2.5%):
	5,296,646	Dreyfus Treasury Prime Cash Management, 0.00%(d)		5,296,646

	Total Unaffiliated Investment Company (Cost $5,296,646)			5,296,646

	Total Investment Securities (Cost $213,125,477)(e) — 107.8%			225,895,830
	Net other assets (liabilities) — (7.8)%			(16,310,179	)

	Net Assets — 100.0%		$	209,585,651

Cash of $425,000 has been segregated to cover margin requirements for the following open contracts as of December 31, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	213,125,477

Investment securities, at value*	$	225,895,830
Segregated cash for collateral		425,000
Interest and dividends receivable		215,487
Receivable for capital shares issued		949,801
Receivable for investments sold		105,865
Prepaid expenses		2,522

Total Assets		227,594,505

Liabilities:
Payable for investments purchased		392,209
Payable for capital shares redeemed		7,131
Payable for collateral received on loaned securities		17,474,428
Payable for variation margin on futures contracts		23,668
Manager fees payable		43,654
Administration fees payable		5,953
Distribution fees payable		43,654
Custodian fees payable		2,326
Administrative and compliance services fees payable		859
Trustee fees payable		46
Other accrued liabilities		14,926

Total Liabilities		18,008,854

Net Assets	$	209,585,651

Net Assets Consist of:
Capital	$	190,284,874
Accumulated net investment income/(loss)		1,235,876
Accumulated net realized gains/(losses) from investment transactions		5,255,774
Net unrealized appreciation/(depreciation) on investments		12,809,127

Net Assets	$	209,585,651

Shares of beneficial interest (unlimited number of shares authorized, no par value)		13,884,302
Net Asset Value (offering and redemption price per share)	$	15.10

*	Includes securities on loan of $16,956,605.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	217
Dividends		2,360,791
Income from securities lending		20,550

Total Investment Income		2,381,558

Expenses:
Manager fees		470,124
Administration fees		80,153
Distribution fees		470,124
Custodian fees		23,943
Administrative and compliance services fees		8,184
Trustee fees		13,737
Professional fees		15,010
Shareholder reports		12,744
Recoupment of prior expenses reimbursed by the Manager		10,039
Licensing fees		67,023
Other expenses		4,591

Total expenses before reductions		1,175,672
Less expenses voluntarily waived/reimbursed by the Manager		(30,000	)

Net expenses		1,145,672

Net Investment Income/(Loss)		1,235,886

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on security transactions		6,233,830
Net realized gains/(losses) on futures contracts		(493,253	)
Change in unrealized appreciation/depreciation on investments		(12,924,143	)

Net Realized/Unrealized Gains/(Losses) on Investments		(7,183,566	)

Change in Net Assets Resulting From Operations	$	(5,947,680	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Mid Cap Index Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $2,044 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

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, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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. The notional amount of futures contracts outstanding was $5.5 million as of December 31, 2011. The monthly average notional amount for these contracts was $5.8 million for the year ended December 31, 2011.

The following is a summary of the fair value of derivative instruments as of December 31, 2011:

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

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, 2011, the contractual reimbursements that are subject to repayment by the Fund in subsequent years were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $2,678 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks+	$	203,124,756	$	—	$	—	$	203,124,756
Securities Held as Collateral for Securities on Loan		—		17,474,428		—		17,474,428
Unaffiliated Investment Company		5,296,646		—		—		5,296,646

Total Investment Securities		208,421,402		17,474,428		—		225,895,830

Other Financial Instruments:*
Futures Contracts		38,774		—		—		38,774

Total Investments	$	208,460,176	$	17,474,428	$	—	$	225,934,604

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $213,694,701. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Mid Cap Index Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the three-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the three-year period then ended, in conformity with U.S. generally accepted accounting principles.

For the year ended December 31, 2011, 21.86% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

During the year ended December 31, 2011, the Fund declared net long-term capital gain distributions of $3,104,529.

During the year ended December 31, 2011, the Fund declared net short-term capital gain distributions of $4,385,479.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years.	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003.	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999.	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001.	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001.	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999.	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 66 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon , Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

Throughout the year ended December 31, 2011, the Federal Open Market Committee (“FOMC”) maintained its target range for the federal funds rate at 0.00% to 0.25%. In June the FOMC completed the program under which it purchased $600 billion of longer-term U.S. Treasury securities for the purpose of keeping interest rates low. In August the FOMC announced its intention to keep rates low through mid-2013. In September the FOMC noted that recent data indicated that economic growth remained slow and inflation had moderated since earlier in the year.

In response to these conditions, the FOMC announced “Operation Twist,” its plan to extend the average duration of the U.S. Treasury security portfolio by purchasing an additional $400 billion of long-term Treasury bonds and selling an equal amount of short-term Treasury securities before the end of June 2012. The plan is designed to put downward pressure on long-term interest rates and make overall conditions more accommodative for economic growth.

In Europe, the sovereign debt crisis escalated in mid-2011 as fiscal problems spread from the peripheral countries of Greece, Portugal and Ireland to the larger nations of Italy and Spain, and ultimately to the core European economies of France and Germany. In September, the European Central Bank (“ECB”) announced it would offer three-month loans of U.S. dollars to eurozone banks on a full-allotment basis through its long-term refinancing operations (“LTRO”) in three separate auctions to ensure funding was available through year-end. Later in the year, the ECB announced additional long-term refinancing operations to be conducted in October and December 2011, also to alleviate year-end funding pressures. Furthermore, the ECB expanded its long-term refinancing operations in December by allowing eurozone banks to access loans with maturities of three years against a broader set of eligible collateral.

During the summer and fall, European leaders agreed to a number of measures intended to restore confidence and overcome the region’s fiscal challenges, including increasing the lending capacity of the EFSF and implementing higher capital requirements for European banks.

The U.S. Federal Reserve Bank lengthened the term of its U.S. dollar liquidity swap facilities with the ECB, the Bank of Canada, the Bank of England and the Swiss National Bank to August 1, 2012, also for the purpose of maintaining liquidity. Later in the period, these central banks, along with the Bank of Japan, agreed to reduce the interest rate on loans made through U.S. dollar liquidity swap lines by 50 basis points (0.50%), making it less expensive for banks around the world to borrow U.S. dollars.

London Interbank Offered Rates¹ (“LIBOR”) moved higher by as much as 0.35% during the year, due in large part to ongoing concerns about European sovereign debt risk.

The low-rate environment hurt the Fund’s absolute yield during the year. Meanwhile, the Fund’s weighted average maturity was shortened during the period to reduce spread and duration exposure.*

For the year, the Fund was positioned with a laddered portfolio structure. Treasury and U.S. Government Agency securities were added to increase quality, liquidity and diversification. The Fund also added investments in municipal variable rate demand notes to enhance the liquidity and diversification of the portfolio.*

Past performance does not guarantee future results.

¹	London Inter-Bank Offer Rate (“LIBOR”) is the interest rate that the largest international banks charge each other for loans.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			10 Years
AZL^® Money Market Fund		0.00	%		0.08	%		1.48	%		1.62	%
Three-Month U.S. Treasury Bill Index		0.05	%		0.11	%		1.21	%		1.78	%

Expense Ratio


	Gross
AZL^® Money Market Fund		0.70	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 0.87% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

Yield as of December 31, 2011


	7 Day Average			7 Day Effective			30 Day Average
AZL^® Money Market Fund		0.00	%		0.00	%		0.00	%

The Fund’s performance is measured against the Three-Month U.S. Treasury Bill Index. The Treasury Bill Index is an unmanaged index 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.

The Manager has voluntarily undertaken to waive, reimburse, or pay the Fund’s expenses to the extent necessary in order to maintain a minimum daily net investment income for the Fund of 0.00%. The Distributor may waive its Rule 12b-1 fees. The amount waived, reimbursed, or paid by the Manager and/or the Distributor will be repaid to the Manager and/ or the Distributor subject to certain limitations as further described in Note 3 to the Financial Statements. The ability of the Manager and/or Distributor to receive such payments could negatively affect the Fund’s future yield.

The 7-day yield quotation is as of December 31, 2011 and more closely reflects the current earnings of the Fund than the total return quotation.

As a shareholder of the AZL Money Market Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.

The Hypothetical Expense table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use thisinformation to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.


Principal Amount			Fair Value

	Certificates of Deposit (35.9%):
	Commercial Banks (34.8%):
$	15,000,000	Bank of Montreal, 0.37%, 1/25/12(a)	$	15,000,000
	20,000,000	Bank of Nova Scotia, NY, 0.30%, 1/13/12		20,000,000
	15,000,000	Bank of Tokyo-Mitsubishi UFJ, NY, 0.41%, 2/10/12		15,000,000
	8,880,000	Lloyds TSB Bank plc, NY, 0.70%, 2/14/12(a)		8,880,000
	20,000,000	Mizuho Corporate Bank, NY, 0.14%, 1/5/12		20,000,000
	15,000,000	Mizuho Corporate Bank, NY, 0.20%, 1/20/12		15,000,000
	20,000,000	National Australia Bank, NY, 0.37%, 2/10/12(a)		20,000,000
	10,000,000	National Australia Bank, NY, 0.32%, 2/21/12		10,000,000
	20,000,000	Norinchukin Bank, NY, 0.18%, 1/3/12		20,000,000
	10,000,000	Norinchukin Bank, NY, 0.18%, 1/4/12		10,000,000
	15,500,000	Rabobank Nederland NV, NY, 0.43%, 3/1/12		15,500,000
	8,000,000	Royal Bank of Canada, NY, 0.52%, 2/29/12(a)		8,000,000
	5,000,000	Royal Bank of Canada, NY, 0.40%, 4/10/12(a)		5,000,000
	11,000,000	Royal Bank of Canada, NY, 0.40%, 7/9/12(a)		11,000,000
	10,000,000	Sumitomo Mitsui Bank, NY, 0.22%, 1/20/12		10,000,000
	11,000,000	Sumitomo Mitsui Bank, NY, 0.40%, 2/9/12		11,000,000
	25,000,000	Sumitomo Trust & Bank, NY, 0.23%, 1/6/12		25,000,000
	10,000,000	Sumitomo Trust & Bank, NY, 0.24%, 1/23/12		10,000,000
	10,000,000	Svenska Handelsbanken, NY, 0.33%, 1/9/12		10,000,000
	3,500,000	Svenska Handelsbanken, NY, 0.50%, 3/29/12		3,500,000
	12,500,000	Toronto Dominion Bank, NY, 0.37%, 4/17/12		12,500,000
	4,500,000	Toronto-Dominion Bank, NY, 0.36%, 1/12/12(a)		4,500,000
	13,000,000	Westpac Banking Corp., NY, 0.42%, 1/18/12(a)		13,000,000
	8,000,000	Westpac Banking Corp., NY, 0.37%, 4/4/12(a)		7,999,917

				300,879,917


Principal Amount			Fair Value

	Certificates of Deposit, continued
	Diversified Financial Services (1.1%):
$	10,000,000	Credit Suisse, NY, 0.40%, 1/26/12	$	10,000,000

	Total Certificates of Deposit (Cost $310,879,917)			310,879,917

	Commercial Paper (35.3%):
	Commercial Banks (9.6%):
	20,000,000	Bank of Tokyo-Mitsubishi UFJ, NY, 0.33%, 1/6/12(b)		19,999,083
	20,000,000	Commonwealth Bank of Australia, 0.34%, 2/15/12(b)(c)		19,991,500
	4,000,000	National Australia Funding Delaware, Inc., 0.49%, 6/18/12(b)(c)		3,990,799
	9,050,000	Nordea North America, Inc., 0.38%, 1/20/12(b)		9,048,185
	15,000,000	Nordea North America, Inc., 0.36%, 2/3/12(b)		14,995,050
	10,000,000	State Street Corp., 0.22%, 3/5/12(b)		9,996,089
	5,000,000	Sumitomo Mitsui Bank, NY, 0.40%, 2/10/12(b)(c)		4,997,778

				83,018,484

	Diversified Financial Services (25.7%):
	5,000,000	Argento Variable Funding LLC, 0.32%, 1/23/12(b)(c)		4,999,022
	35,000,000	Barclays US Funding LLC, 0.09%, 1/3/12(b)		34,999,825
	10,000,000	Cancara Asset Securitization LLC, 0.31%, 1/13/12(b)(c)		9,998,967
	17,000,000	Credit Suisse, NY, 0.39%, 1/5/12(b)		16,999,263
	5,000,000	Credit Suisse, NY, 0.47%, 2/22/12(b)		4,996,606
	15,000,000	Fairway Finance Corp., 0.31%, 3/9/12(a)(c)		15,000,000
	8,000,000	Fairway Finance Corp., 0.32%, 5/9/12(a)(c)		8,000,000
	9,000,000	Kells Funding LLC, 0.48%, 2/10/12(a)(c)		9,000,000
	5,000,000	Kells Funding LLC, 0.57%, 3/1/12(a)(c)		5,000,000
	6,000,000	Kells Funding LLC, 0.57%, 3/8/12(a)(c)		6,000,000
	10,608,000	Regency Markets No 1 LLC, 0.36%, 1/17/12(b)(c)		10,606,303
	10,000,000	Regency Markets No 1 LLC, 0.25%, 1/25/12(b)(c)		9,998,333


Principal Amount			Fair Value
	Commercial Paper, continued
	Diversified Financial Services, continued
$	15,000,000	Sheffield Receivables Corp., 0.30%, 1/25/12(b)(c)	$	14,997,000
	10,000,000	Solitaire Funding LLC, 0.40%, 1/23/12(b)(c)		9,997,555
	15,000,000	Thames Asset Global Securitization No 1, Inc., 0.32%, 1/12/12(b)(c)		14,998,533
	10,000,000	UBS Finance Delaware LLC, 0.20%, 1/24/12(b)		9,998,722
	10,000,000	UBS Finance Delaware LLC, 0.48%, 2/13/12(b)		9,994,267
	17,000,000	Victory Receivables Corp., 0.35%, 1/6/12(b)(c)		16,999,174
	10,000,000	Victory Receivables Corp., 0.37%, 1/18/12(b)(c)		9,998,253

				222,581,823

	Total Commercial Paper (Cost $305,600,307)			305,600,307

	Municipal Bonds (11.1%):
	California (6.5%):
	16,500,000	California Health Facilities Financing Authority Revenue, Series B, 0.04%, 1/7/12, LOC: JPMorgan Chase Bank(a)		16,500,000
	10,800,000	California Housing Finance Agency Revenue, Series E, 0.07%, 1/7/12, AMT(a)		10,800,000
	7,800,000	California Housing Finance Agency Revenue, Series E-1, 0.07%, 1/7/12, AMT(a)		7,800,000
	11,000,000	Los Angeles Community Redevelopment Agency Multi-Family Housing Revenue, Series A, 0.09%, 1/7/12, LIQ FAC: Fannie Mae, AMT(a)		11,000,000
	9,900,000	San Francisco City & County Redevelopment Agency Multi-Family Housing Revenue, Series A, 0.07%, 1/7/12, LIQ FAC: Fannie Mae(a)		9,900,000

				56,000,000

	New York (2.9%):
	10,000,000	New York City Housing Development Corp. Multi-Family Rent Revenue, Series A, 0.09%, 1/7/12, LIQ FAC: Fannie Mae, AMT(a)		10,000,000


Principal Amount			Fair Value
	Municipal Bonds, continued
	New York, continued
$	15,000,000	New York City Housing Development Corp. Multi-Family Rent Revenue, Series A, 0.09%, 1/7/12, LIQ FAC: Fannie Mae(a)	$	15,000,000

				25,000,000

	Pennsylvania (1.7%):
	14,700,000	Pennsylvania Housing Finance Agency Revenue, Series 86B, 0.08%, 1/7/12, GO of Agency, LOC: Freddie Mac, Fannie Mae, AMT(a)		14,700,000

	Total Municipal Bonds (Cost $95,700,000)			95,700,000

	U.S. Government Agency Mortgages (11.7%):
	Federal Home Loan Mortgage Corporation (10.2%)
	10,000,000	0.15%, 2/15/12(b)		9,998,125
	5,000,000	0.15%, 4/3/12(b)		4,998,062
	8,500,000	0.24%, 4/3/12(a)		8,499,121
	10,000,000	0.15%, 4/4/12(b)		9,996,083
	6,000,000	1.13%, 4/25/12		6,017,940
	5,000,000	0.21%, 11/2/12, MTN(a)		4,997,461
	7,000,000	0.27%, 9/3/13(a)		6,997,636
	36,300,000	0.22%, 9/13/13(a)		36,262,563

				87,766,991

	Federal National Mortgage Association (1.5%)
	9,000,000	0.28%, 7/26/12(a)		8,998,981
	4,500,000	0.31%, 12/20/12(a)		4,499,117

				13,498,098

	Total U.S. Government Agency Mortgages (Cost $101,265,089)			101,265,089

	U.S. Treasury Obligation (2.3%):
	U.S. Treasury Notes (2.3%)
	20,000,000	0.38%, 8/31/12		20,031,225

	Total U.S. Treasury Obligations (Cost $20,031,225)			20,031,225

	Time Deposit (3.7%):
	Diversified Financial Services (3.7%):
	32,225,000	Citigroup, Inc., 0.06%, 1/3/12		32,225,000

	Total Time Deposits (Cost $32,225,000)			32,225,000

	Unaffiliated Investment Company (0.0%):
	354	Dreyfus Treasury Prime Cash Management, 0.00%(b)		354

	Total Unaffiliated Investment Company (Cost $354)			354

	Total Investment Securities (Cost $865,701,892)(d) — 100.0%			865,701,892
	Net other assets (liabilities) — 0.0%			(76,228	)

	Net Assets — 100.0%		$	865,625,664

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	865,701,892

Investment securities, at value	$	865,701,892
Interest and dividends receivable		220,525
Receivable for capital shares issued		121,898
Receivable from Manager		26,703
Prepaid expenses		14,279

Total Assets		866,085,297

Liabilities:
Payable for capital shares redeemed		150,122
Administration fees payable		24,879
Distribution fees payable		186,252
Custodian fees payable		5,263
Administrative and compliance services fees payable		6,389
Trustee fees payable		345
Other accrued liabilities		86,383

Total Liabilities		459,633

Net Assets	$	865,625,664

Net Assets Consist of:
Capital	$	865,618,318
Accumulated net realized gains/(losses) from investment transactions		7,346

Net Assets	$	865,625,664

Shares of beneficial interest (unlimited number of shares authorized, no par value)		865,618,959
Net Asset Value (offering and redemption price per share)	$	1.00

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	2,411,140
Income from securities lending		173

Total Investment Income		2,411,313

Expenses:
Manager fees		3,038,064
Administration fees		324,063
Distribution fees		2,170,050
Custodian fees		17,939
Administrative and compliance services fees		25,741
Trustee fees		44,071
Professional fees		46,826
Shareholder reports		39,826
Other expenses		23,797

Total expenses before reductions		5,730,377
Less expenses voluntarily waived/reimbursed by the Manager		(3,319,064	)

Net expenses		2,411,313

Net Investment Income/(Loss)		—

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		7,694

Net Realized/Unrealized Gains/(Losses) on Investments		7,694

Change in Net Assets Resulting From Operations	$	7,694

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Money Market Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Investments of the Fund are valued, in accordance with Rule 2a-7 of the 1940 Act, at amortized cost, which approximates fair value. Under the amortized cost method, discounts or premiums are amortized on a constant basis to the maturity of the security.

Investment transactions are recorded not later than on the business day after trade date. However, for financial reporting purposes, investment transactions are accounted for on trade date. Net realized gains and losses on investments sold 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 from net investment income are declared daily and paid monthly from the Fund. The net realized gains, if any, are declared and paid at least annually by the Fund. The amount of dividends from net investment income and from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are either 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 that exceed net investment income and net realized gains for tax purposes are reported as distributions of capital.

received. In extremely low interest rate environments, the broker rebate fee may exceed the interest earned or the cash collateral which would result in a loss to the Fund. The investment of cash collateral deposited by the borrower is subject to inherent market risks such as interest rate risk, credit risk, liquidity risk, and other risks that are present in the market, and as such, the value of these investments may not be sufficient, when liquidated, to repay the borrower when the loaned security is returned. 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 Allianz Investment Management LLC (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. There were no securities on loan at December 31, 2011. The average outstanding amount of securities on loan was $0.3 million for the year ended December 31, 2011.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $17 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

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 July 1, 2011 between the Manager and BlackRock Advisors, LLC (“BlackRock Advisors”), BlackRock Advisors provides investment advisory services as the Subadviser for the Fund subject to the general supervision of the Trustees and the Manager. Prior to July 1, 2011 the Fund was subadvised by BlackRock Institutional Management Corporation. 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

The Manager has voluntarily agreed to waive, reimburse, or pay Fund expenses to the extent necessary in order to maintain a minimum daily net investment income for the Fund of 0.00%. The Distributor may waive its Rule 12b-1 fees. The amount waived, reimbursed, or paid by the Manager and/or the Distributor will be repaid to the Manager and/or the Distributor subject to the following limitations:

The ability of the Manager and/or the Distributor to receive such payments could negatively affect the Fund’s future yield. Amounts waived under this agreement during the year ended December 31, 2011 are reflected on the Statement of Operations at “Expenses voluntarily waived/reimbursed by Manager.”

Any amounts waived or reimbursed by the Manager in a particular fiscal year under this agreement 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, 2011, the reimbursements that are subject to repayment by the Fund in subsequent years were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $12,781 was paid from the Fund relating to these fees and expenses.

The valuation techniques employed by the Fund, as described in Note 2 above, maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund’s investments are summarized in the three broad levels listed below:

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Certificates of Deposit	$	—	$	310,879,917	$	—	$	310,879,917
Commercial Paper		—		305,600,307		—		305,600,307
Municipal Bonds		—		95,700,000		—		95,700,000
U.S. Government Agency Mortgages		—		101,265,089		—		101,265,089
U.S. Treasury Obligations		—		20,031,225		—		20,031,225
Time Deposits		—		32,225,000		—		32,225,000
Unaffiliated Investment Company		354		—		—		354

Total Investment Securities	$	354	$	865,701,538	$	—	$	865,701,892

The Fund recognizes significant transfers between Level 1 and Level 2 at the reporting period end. There were no significant transfers between Level 1, 2 or 3 as of December 31, 2011.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the latest tax year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Money Market Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

During the year ended December 31, 2011, the Fund declared net short-term capital gain distributions of $15,411.

The Fund will disclose on its website at www.Allianzlife.com, within five business days after the end of each month, a complete schedule of portfolio holdings and information regarding the weighted average maturity of the Fund. In addition, the Fund will file with the Commission on Form N-MFP, within five business days after the end of each month, more detailed portfolio holdings information. The Fund’s Forms N-MFP will be available on the Commission’s website at http://www.sec.gov, on a delayed basis, and the Fund’s website will also contain a link to these filings.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years.	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003.	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999.	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001.	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001.	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999.	42	Connecticut Water Service, Inc.


Officers
Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 44 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

was hurt by stock selection in the diversified and health care sectors and by an overweight position in the hotel sector. The Fund benefited in relative terms from stock selection and an overweight position in the mall sector, and from stock selection and an underweight position in the office sector. An underweight position in the industrial sector and stock selection in the shopping center sector also helped relative performance.*

In Europe, the Fund benefited from an overweight position in the U.K. However, weak performance among certain individual stocks in the U.K. dragged on relative performance.*

Past performance does not guarantee future results.

The Financial Times London Stock Exchange (“FTSE”) European Public Real Estate Association (“EPRA”)/ NAREIT Developed Real Estate Index Series, which is designed to represent general trends in eligible real estate stocks worldwide. Relevant real estate activities are defined as the ownership, disposure and development of income-producing real estate. Investors cannot invest directly in an index.

Fund Objective

The Fund’s investment objective is to seek to provide income and capital appreciation. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing at least 80% of the Fund’s assets, plus any borrowings for investment purposes, will be invested in equity securities of companies in the real estate industry, including REOCs, REITs, and foreign real estate companies.

Investment Concerns

Emerging market investing may be subject to additional economic, political, liquidity, and currency risks not associated with more developed countries.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (5/1/06)
AZL^® Morgan Stanley Global Real Estate Fund		–9.94	%		15.13	%		–5.47	%		–1.49	%
FTSE EPRA/NAREIT Developed Real Estate Index (gross of withholding taxes)		–5.82	%		16.17	%		–5.28	%		–0.71	%
FTSE EPRA/NAREIT Developed Real Estate Index (net of withholding taxes)		–6.46	%		15.35	%		–5.93	%		–1.36	%

Expense Ratio


	Gross
AZL^® Morgan Stanley Global Real Estate Fund		1.33	%

The Fund’s performance is measured against the Financial Times London Stock Exchange (“FTSE”) European Public Real Estate Association (“EPRA”)/NAREIT Developed Real Estate Index series, which is designed to represent general trends in eligible real estate stocks worldwide. Relevant real estate activities are defined as the ownership, disposure and development of income-producing real estate. The Index noted as “gross of withholding taxes” does not reflect the deduction of fees associated with a mutual fund, such as investment management and fund accounting fees. The Index noted as “net of withholding taxes” reflects the reinvestment of dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Fund’s performance reflects the deduction of fees for services provided to the Fund. Investors cannot invest directly in an index.

As a shareholder of the AZL Morgan Stantey Global Real Estate Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (96.9%):
	Diversified Real Estate Activities (20.0%):
	960,103	Beni Stabili SpA	$	429,449
	37,100	BR Properties SA		368,115
	929,000	Capitaland, Ltd.		1,578,925
	75,000	City Developments, Ltd.		513,606
	482,000	Hang Lung Properties, Ltd.		1,370,414
	285,113	Henderson Land Development Co., Ltd.		1,411,687
	581,303	Kerry Properties, Ltd.		1,921,604
	367,000	Mitsubishi Estate Co., Ltd.		5,477,041
	321,000	Mitsui Fudosan Co., Ltd.		4,672,942
	542,026	New World Development Co., Ltd.^		435,109
	183,000	Sumitomo Realty & Development Co., Ltd.		3,200,663
	813,584	Sun Hung Kai Properties, Ltd.		10,155,189
	464,035	Wharf Holdings, Ltd. (The)		2,093,660

				33,628,404

	Diversified REIT’s (9.6%):
	184,897	British Land Co. plc		1,321,846
	114,940	Cousins Properties, Inc.		736,765
	997,805	Dexus Property Group		847,172
	6,519	Fonciere des Regions SA		417,097
	4,593	Gecina SA		385,751
	565,199	GPT Group		1,772,916
	6,115	ICADE		480,348
	206,667	Land Securities Group plc		2,031,511
	5,839	Liberty Property Trust^		180,308
	42,700	London & Stamford Property plc		71,549
	562,429	Mirvac Group		678,370
	5,982	PS Business Parks, Inc.^		331,582
	52,960	Retail Opportunity Investments Corp.^		627,046
	16,398	Shaftesbury plc		118,819
	450,178	Stockland Trust Group		1,466,653
	55,361	Vornado Realty Trust		4,255,047
	4,021	Wereldhave NV		266,046
	24,640	Winthrop Realty Trust^		250,589

				16,239,415

	Health Care Providers & Services (0.4%):
	38,388	Assisted Living Concepts, Inc., Class A		571,597
	19,005	Capital Senior Living Corp.*		150,900

				722,497

	Hotels, Resorts & Cruise Lines (2.2%):
	78,308	Starwood Hotels & Resorts Worldwide, Inc.		3,756,435

	Industrial REIT’s (1.2%):
	106,040	DCT Industrial Trust, Inc.		542,925
	1,588,334	Macquarie Goodman Group		924,263
	160,542	SERGO plc		519,128

				1,986,316


Shares			Fair Value

	Common Stocks, continued
	Mortgage REIT’s (0.4%):
	10,860	CreXus Investment Corp.	$	112,727
	34,160	Starwood Property Trust, Inc.^		632,301

				745,028

	Office REIT’s (5.7%):
	40,925	Alstria Office AG		485,575
	1,209	Befimmo SCA Sicafi		78,644
	34,439	Boston Properties, Inc.^		3,430,124
	179,000	CapitaCommercial Trust		145,379
	423	Cofinimmo SA		49,620
	219,897	Commonwealth Property Office Fund		214,607
	18,954	CommonWealth REIT		315,395
	11,770	Coresite Realty Corp.		209,741
	18,311	Derwent Valley Holdings plc		442,197
	1,930	Digital Realty Trust, Inc.^		128,673
	5,050	Douglas Emmett, Inc.^		92,112
	59,886	Great Portland Estates plc		299,413
	28,040	Hudson Pacific Properties, Inc.		397,046
	89	Japan Real Estate Investment Corp.		693,752
	51,544	Mack-Cali Realty Corp.		1,375,709
	97	Nippon Building Fund, Inc.		793,930
	1,360	Parkway Properties, Inc.^		13,410
	2,080	Societe de la Tour Eiffel		103,360
	2,457	Societe Immobiliere de Locationpour l’Industrie et le Commerce^		238,146

				9,506,833

	Real Estate Investment Trusts (REITs) (2.3%):
	12,745	BioMed Realty Trust, Inc.^		230,429
	127,000	CapitaMalls Asia, Ltd.		110,433
	14,510	Health Care REIT, Inc.^		791,230
	920	Lexington Corporate Properties Trust^		6,891
	100,000	Link REIT (The)		368,471
	10,550	OMEGA Healthcare Investors, Inc.^		204,142
	1,190	SL Green Realty Corp.^		79,302
	816,739	Westfield Retail Trust		2,077,251

				3,868,149

	Real Estate Management & Development (5.1%):
	36,081	Atrium European Real Estate, Ltd.		164,115
	2,485,087	BGP Holdings plc*(a)(b)		—
	1,865,120	China Overseas Land & Investment,Ltd.^		3,127,387
	1,599,000	China Resources Land, Ltd.^		2,577,562
	4,173	Conwert Immobilien Invest AG		46,280
	12,956	Fabege AB		101,476
	1,386,100	Guangzhou R&F Properties Co., Ltd.^		1,091,644


Shares			Fair Value

	Common Stocks, continued
	Real Estate Management & Development, continued
	13,900	Iguatemi Empresa de Shopping Centers SA	$	258,393
	109,181	Keppel Land, Ltd.		186,336
	61,216	Norwegian Property ASA		75,288
	221,603	Sino Land Co., Ltd.		315,328
	235,207	ST Modwen Properties plc		411,780
	14,000	Swire Pacific, Ltd., Class A		168,578

				8,524,167

	Real Estate Operating Companies (13.3%):
	20,933	Atrium Ljungberg AB, B Shares		222,817
	20,800	BR Malls Participacoes SA		202,143
	5,386	Brookfield Office Properties Canada		128,608
	137,879	Brookfield Properties Corp.^		2,156,428
	62,813	Capital & Counties Properties plc		179,813
	428,900	Capital & Regional plc*		211,289
	8,891	Castellum AB		109,980
	58,368	Citycon Oyj		174,060
	4,295	Deutsche Euroshop AG		137,840
	40,373	Development Securities plc		94,008
	184,710	Forest City Enterprises, Inc., Class A*^		2,183,272
	232,317	General Growth Properties, Inc.^		3,489,401
	224,967	Grainger Trust plc		373,043
	1,048,500	Hongkong Land Holdings, Ltd.		4,746,495
	61,604	Hufvudstaden AB		627,067
	490,148	Hysan Development Co., Ltd.		1,605,557
	336,612	LXB Retail Properties plc*		545,652
	151	NTT Urban Development Corp.		102,887
	35,126	Prime Office REIT AG*		197,551
	62,858	Prologis, Inc.		1,797,110
	13,988	PSP Swiss Property AG		1,168,779
	416,406	Quintain Estates & Development plc*		243,553
	284,785	Safestore Holdings, Ltd.		441,098
	80,473	Sponda Oyj		323,777
	12,450	STAG Industrial, Inc.^		142,802
	3,318	Swiss Prime Site AG		249,203
	223,920	Unite Group plc		582,258

				22,436,491

	Residential REIT’s (9.1%):
	99,014	Apartment Investment & Management Co., Class A^		2,268,411
	19,618	AvalonBay Communities, Inc.^		2,562,111
	16,884	Boardwalk REIT		836,160
	12,740	BRE Properties, Inc.^		643,115
	20,027	Camden Property Trust^		1,246,480
	20,748	Equity Lifestyle Properties, Inc.		1,383,684
	112,801	Equity Residential Property Trust		6,433,041

				15,373,002


Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Retail REIT’s (18.5%):
	42,216	Acadia Realty Trust	$	850,230
	5,005	Calloway REIT		131,550
	103,000	CapitaMall Trust		134,811
	547,137	CFS Retail Property Trust		941,809
	21,583	Corio NV		934,333
	22,432	Eurocommercial Properties NV		709,810
	11,800	Federal Realty Investment Trust^		1,070,850
	259,328	Hammerson plc		1,443,218
	11,310	Kite Realty Group Trust		51,008
	37,825	Klepierre		1,074,485
	115,090	Liberty International plc		555,938
	4,431	Mercialys SA		142,723
	157,558	Metric Property Investments plc		207,898
	85,751	Regency Centers Corp.^		3,225,953
	82,410	RioCan		2,138,533
	71,094	Simon Property Group, Inc.		9,166,860
	202,000	Suntec REIT		167,193
	19,308	Unibail		3,455,238
	594,168	Westfield Group		4,747,246

				31,149,686

	Specialized REIT’s (9.1%):
	42,150	Ashford Hospitality Trust^		337,200
	136,439	Big Yellow Group plc		518,466
	30,210	Extendicare REIT		252,121
	78,902	HCP, Inc.^		3,268,910
	97,746	Healthcare Realty Trust, Inc.^		1,817,098
	307,845	Host Hotels & Resorts, Inc.^		4,546,871
	21,088	Public Storage, Inc.		2,835,492
	63,874	Senior Housing Properties Trust		1,433,333
	8,687	Sovran Self Storage, Inc.^		370,674

				15,380,165

	Total Common Stocks (Cost $147,025,176)			163,316,588

	Securities Held as Collateral for Securities on Loan (20.3%):
$	34,129,686	Allianz Variable Insurance Products Securities Lending Collateral Trust(c)		34,129,686

	Total Securities Held as Collateral for Securities on Loan (Cost $34,129,686)			34,129,686

	Unaffiliated Investment Company (2.6%):
	4,454,468	Dreyfus Treasury Prime Cash Management, 0.00%(d)		4,454,468

	Total Unaffiliated Investment Company (Cost $4,454,468)			4,454,468

	Total Investment Securities (Cost $185,609,330)(e) — 119.8%			201,900,742
	Net other assets (liabilities) — (19.8)%			(33,435,545	)

	Net Assets — 100.0%		$	168,465,197

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	185,609,330

Investment securities, at value*	$	201,900,742
Cash		16,408
Interest and dividends receivable		704,665
Foreign currency, at value (cost $138,817)		138,094
Receivable for capital shares issued		16,217
Receivable for expenses paid indirectly		316
Receivable for investments sold		188,266
Reclaims receivable		30,516
Prepaid expenses		2,051

Total Assets		202,997,275

Liabilities:
Payable for investments purchased		168,119
Payable for capital shares redeemed		24,562
Payable for collateral received on loaned securities		34,129,686
Manager fees payable		130,212
Administration fees payable		6,286
Distribution fees payable		35,553
Custodian fees payable		18,673
Administrative and compliance services fees payable		989
Trustee fees payable		53
Other accrued liabilities		17,945

Total Liabilities		34,532,078

Net Assets	$	168,465,197

Net Assets Consist of:
Capital	$	207,733,310
Accumulated net investment income/(loss)		1,856,988
Accumulated net realized gains/(losses) from investment transactions		(57,412,622	)
Net unrealized appreciation/(depreciation) on investments		16,287,521

Net Assets	$	168,465,197

Shares of beneficial interest (unlimited number of shares authorized, no par value)		21,546,181
Net Asset Value (offering and redemption price per share)	$	7.82

*	Includes securities on loan of $32,818,336.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	5,269,949
Income from securities lending		113,349
Foreign withholding tax		(243,082	)

Total Investment Income		5,140,216

Expenses:
Manager fees		1,662,109
Administration fees		95,421
Distribution fees		461,697
Custodian fees		127,260
Administrative and compliance services fees		8,022
Trustee fees		13,409
Professional fees		14,335
Shareholder reports		17,671
Recoupment of prior expenses reimbursed by the Manager		84,305
Other expenses		8,934

Total expenses before reductions		2,493,163
Less expenses paid indirectly		(5,698	)

Net expenses		2,487,465

Net Investment Income/(Loss)		2,652,751

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		3,225,407
Net realized gains/(losses) on forward currency contracts		(770	)
Change in unrealized appreciation/depreciation on investments		(24,801,417	)

Net Realized/Unrealized Gains/(Losses) on Investments		(21,576,780	)

Change in Net Assets Resulting From Operations	$	(18,924,029	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Morgan Stanley Global Real Estate Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $10,691 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. As of December 31, 2011, the Fund did not hold any forward currency contracts. During the year ended December 31, 2011, the Fund had limited activity in these transactions.

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, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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.

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 Morgan Stanley Investment Management, Inc. (“MSIM”), MSIM 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

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, 2011, the contractual reimbursements that are subject to repayment by the Fund in subsequent years were as follows:

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. During the year ended December 31, 2011, there were no voluntary waivers.

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $2,709 was paid from the Fund relating to these fees and expenses.

During the year ended December 31, 2011, the Fund paid approximately $111 to affiliated broker/dealers of the Subadviser on the execution of purchases and sales of the Fund’s portfolio investments.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:

As of December 31, 2011, the Fund held securities that were valued in good faith pursuant to procedures approved by the Board of Trustees. The BGP Holdings plc common stock was valued at $0.

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $202,276,458. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $1,342,975 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Morgan Stanley Global Real Estate Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

For the year ended December 31, 2011, 1.58% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years.	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003.	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999.	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	General Partner of Fairview Capital, L.P., 1994 to present.	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001.	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001.	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999.	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer⁽⁴⁾ and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

Fund Objective

The Fund’s investment objective is to seek capital growth. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing at least 80% of its net assets, plus any borrowings for investment purposes, in common stocks and other equity securities of mid-capitalization growth companies.

Investment Concerns

Mid-capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure.

Growth based investments can perform differently from the market as a whole and can be more volatile that other types of securities.

Emerging market investing may be subject to additional economic, political, liquidity, and currency risks not associated with more developed countries.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			10 Year
AZL^® Morgan Stanley Mid Cap Growth Fund		–6.57	%		24.97	%		4.19	%		6.40	%
Russell Midcap^® Growth Index		–1.65	%		22.06	%		2.44	%		5.29	%

Expense Ratio


	Gross
AZL^® Morgan Stanley Mid Cap Growth Fund		1.15	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.30% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against the Russell Midcap^® Growth Index, an unmanaged index that measures the performance of the mid-cap growth segment of the U.S. equity universe. It includes those Russell Midcap Index companies 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.

As a shareholder of the AZL Morgan Stanley Mid Cap Growth Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (91.9%):
	Air Freight & Logistics (3.1%):
	56,553	C.H. Robinson Worldwide, Inc.^	$	3,946,269
	185,768	Expeditors International of Washington, Inc.^		7,609,057

				11,555,326

	Capital Markets (0.6%):
	66,344	Greenhill & Co., Inc.^		2,412,931

	Chemicals (2.5%):
	192,699	Intrepid Potash, Inc.*^		4,360,778
	127,135	Rockwood Holdings, Inc.*		5,005,305

				9,366,083

	Commercial Services & Supplies (2.5%):
	281,968	Covanta Holding Corp.^		3,860,142
	71,205	Stericycle, Inc.*^		5,548,294

				9,408,436

	Communications Equipment (4.3%):
	350,989	Motorola Solutions, Inc.^		16,247,281

	Construction Materials (1.1%):
	54,914	Martin Marietta Materials, Inc.^		4,141,065

	Diversified Consumer Services (5.0%):
	153,302	New Oriental Education & Technology Group, Inc., Sponsored ADR*^		3,686,913
	668,267	Qualicorp SA*		6,003,471
	164,293	Weight Watchers International, Inc.^		9,037,758

				18,728,142

	Diversified Financial Services (5.6%):
	48,234	IntercontinentalExchange, Inc.*^		5,814,609
	208,998	Leucadia National Corp.^		4,752,614
	313,303	MSCI, Inc., Class A*^		10,317,068

				20,884,291

	Electric Utilities (1.7%):
	234,373	Brookfield Infrastructure Partners LP^		6,492,132

	Health Care Equipment & Supplies (8.4%):
	25,055	Gen-Probe, Inc.*		1,481,252
	79,183	IDEXX Laboratories, Inc.*^		6,093,924
	31,309	Intuitive Surgical, Inc.*^		14,496,380
	211,588	Ironwood Pharmaceuticals, Inc.*^		2,532,708
	146,989	Valeant Pharmaceuticals International, Inc.*		6,862,916

				31,467,180

	Health Care Technology (0.9%):
	70,120	Athenahealth, Inc.*^		3,444,294


Shares			Fair Value

	Common Stocks, continued
	Hotels, Restaurants & Leisure (6.4%):
	141,910	Ctrip.com International, Ltd., Sponsored ADR*^	$	3,320,694
	170,452	Dunkin’ Brands Group, Inc.*^		4,257,891
	523,058	Edenred		12,821,910
	2,834,000	Sun Art Retail Group, Ltd.*^		3,534,198

				23,934,693

	Internet & Catalog Retail (1.3%):
	56,704	Groupon, Inc.*^		1,169,803
	53,030	Netflix, Inc.*^		3,674,449

				4,844,252

	Internet Software & Services (8.2%):
	205,573	Akamai Technologies, Inc.*^		6,635,896
	1,946,000	Alibaba.com, Ltd.*^		2,005,860
	90,492	LinkedIn Corp., Class A*^		5,701,901
	43,172	MercadoLibre, Inc.^		3,433,901
	358,840	Yandex NV, Class A*		7,069,148
	193,938	Youku.com, Inc., Sponsored ADR*^		3,039,009
	292,400	Zynga, Inc., Class A*^		2,751,484

				30,637,199

	IT Services (1.5%):
	158,990	Gartner, Inc.*^		5,528,082

	Life Sciences Tools & Services (2.8%):
	181,694	Illumina, Inc.*^		5,538,033
	73,062	Techne Corp.^		4,987,212

				10,525,245

	Machinery (1.6%):
	52,439	Schindler Holding AG		6,087,983

	Media (3.2%):
	142,901	McGraw-Hill Cos., Inc. (The)^		6,426,258
	95,317	Morningstar, Inc.^		5,666,596

				12,092,854

	Metals & Mining (1.4%):
	1,437,005	Lynas Corp., Ltd.*^		1,537,213
	160,922	Molycorp, Inc.*^		3,858,910

				5,396,123

	Multiline Retail (1.6%):
	70,623	Dollar Tree, Inc.*^		5,869,478

	Oil, Gas & Consumable Fuels (3.5%):
	126,569	Range Resources Corp.^		7,839,684
	184,116	Ultra Petroleum Corp.*		5,455,357

				13,295,041

	Personal Products (3.5%):
	141,116	Mead Johnson Nutrition Co., Class A^		9,698,903
	180,395	Natura Cosmeticos SA		3,508,245

				13,207,148


Shares			Fair Value

	Common Stocks, continued
	Professional Services (6.0%):
	72,020	IHS, Inc., Class A*^	$	6,205,243
	197,434	Intertek Group plc		6,214,667
	252,792	Verisk Analytics, Inc., Class A*^		10,144,543

				22,564,453

	Semiconductors & Semiconductor Equipment (0.9%):
	70,434	First Solar, Inc.*^		2,377,852
	85,318	NVIDIA Corp.*		1,182,507

				3,560,359

	Software (9.7%):
	240,029	ARM Holdings plc, Sponsored ADR		6,641,602
	48,426	Citrix Systems, Inc.*		2,940,427
	63,555	FactSet Research Systems, Inc.^		5,547,080
	187,200	Nexon Co., Ltd.		2,693,053
	113,815	Red Hat, Inc.*		4,699,421
	64,626	Salesforce.com, Inc.*^		6,556,954
	167,387	Solera Holdings, Inc.^		7,455,417

				36,533,954

	Trading Companies & Distributors (3.6%):
	307,213	Fastenal Co.^		13,397,559

	Wireless Telecommunication Services (1.0%):
	35,725	Millicom International Cellular SA, SDR		3,579,275

	Total Common Stocks (Cost $317,763,931)			345,200,859


Shares or Principal Amounts			Fair Value

	Private Placements (4.1%):
	Internet & Catalog Retail (2.4%):
	424,992	Groupon, Inc.*(a)(b)	$	8,036,953
	33,446	Peixe Urbano, Inc.(a)(b)		1,101,072

				9,138,025

	Internet Software & Services (0.5%):
	233,248	Zynga, Inc.*(a)(b)		1,975,377

	Software (0.2%):
	45,781	Workday, Inc.(a)(b)		607,056

	Transportation Infrastructure (1.0%):
	818,433	Better Place LLC(a)(b)		3,715,686

	Total Private Placements (Cost $10,382,847)			15,436,144

	Securities Held as Collateral for Securities on Loan (25.7%):
$	96,383,080	Allianz Variable Insurance Products Securities Lending Collateral Trust(c)		96,383,080

	Total Securities Held as Collateral for Securities on Loan (Cost $96,383,080)			96,383,080

	Unaffiliated Investment Company (4.0%):
	15,071,128	Dreyfus Treasury Prime Cash Management, 0.00%(d)		15,071,128

	Total Unaffiliated Investment Company (Cost $15,071,128)			15,071,128

	Total Investment Securities (Cost $439,600,986)(e) — 125.7%			472,091,211
	Net other assets (liabilities) — (25.7)%			(96,428,015	)

	Net Assets — 100.0%		$	375,663,195

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	439,600,986

Investment securities, at value*	$	472,091,211
Cash		82,031
Interest and dividends receivable		312,204
Receivable for capital shares issued		38,786
Receivable for expenses paid indirectly		5,803
Receivable for investments sold		147,081
Reclaims receivable		49,307
Prepaid expenses		4,670

Total Assets		472,731,093

Liabilities:
Payable for investments purchased		258,791
Payable for capital shares redeemed		11,807
Payable for collateral received on loaned securities		96,383,080
Manager fees payable		259,938
Administration fees payable		10,637
Distribution fees payable		80,769
Custodian fees payable		6,561
Administrative and compliance services fees payable		3,142
Trustee fees payable		169
Other accrued liabilities		53,004

Total Liabilities		97,067,898

Net Assets	$	375,663,195

Net Assets Consist of:
Capital	$	324,600,810
Accumulated net investment income/(loss)		(1,092	)
Accumulated net realized gains/(losses) from investment transactions		18,574,933
Net unrealized appreciation/(depreciation) on investments		32,488,544

Net Assets	$	375,663,195

Shares of beneficial interest (unlimited number of shares authorized, no par value)		28,200,844
Net Asset Value (offering and redemption price per share)	$	13.32

*	Includes securities on loan of $93,396,951.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	1,128
Dividends		2,910,811
Income from securities lending		1,306,490
Foreign withholding tax		(138,952	)

Total Investment Income		4,079,477

Expenses:
Manager fees		3,568,406
Administration fees		174,126
Distribution fees		1,114,854
Custodian fees		49,688
Administrative and compliance services fees		22,664
Trustee fees		38,106
Professional fees		40,362
Shareholder reports		54,597
Other expenses		17,034

Total expenses before reductions		5,079,837
Less expenses voluntarily waived/reimbursed by the Manager		(60,025	)
Less expenses paid indirectly		(42,382	)

Net expenses		4,977,430

Net Investment Income/(Loss)		(897,953	)

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		59,973,624
Net realized gains/(losses) on forward currency contracts		428,277
Change in unrealized appreciation/depreciation on investments		(84,446,893	)

Net Realized/Unrealized Gains/(Losses) on Investments		(24,044,992	)

Change in Net Assets Resulting From Operations	$	(24,942,945	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Morgan Stanley Mid Cap Growth Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $129,905 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. As of December 31, 2011, the Fund did not hold any forward currency contracts. During the year ended December 31, 2011, the Fund had limited activity in these transactions.

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 Morgan Stanley Investment Management, Inc. (“MSIM”), MSIM 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $6,614 was paid from the Fund relating to these fees and expenses.

During the year ended December 31, 2011, the Fund paid approximately $1,802 to affiliated broker/dealers of the Subadviser on the execution of purchases and sales of the Fund’s portfolio investments.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Private Placements:
Internet & Catalog Retail	$	—	$	8,036,953	$	1,101,072	$	9,138,025
Internet Software & Services		—		1,975,377		—		1,975,377
All Other Private Placements+		—		—		4,322,742		4,322,742
Securities Held as Collateral for Securities on Loan		—		96,383,080		—		96,383,080
Unaffiliated Investment Company		15,071,128		—		—		15,071,128

Total Investment Securities		324,490,881		142,176,516		5,423,814		472,091,211

As of December 31, 2011, the AZL Morgan Stanley Mid Cap Growth Fund held securities that were valued in good faith pursuant to procedures approved by the Board of Trustees. The Better Place LLC private placement was valued at original cost. The Peixe Urbano, Inc. private placement was valued at original cost, which was supported by a discounted cash flow analysis, trading multiples of comparable public companies, and certain merger/acquisition transaction valuations. The Workday, Inc. private placement was valued at original cost, which was supported by a discounted cash flow analysis and the trading multiples of comparable publicly traded software companies.

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

The following is a reconciliation of Level 3 investments based on the inputs used to determine fair value:

Following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:


	Balance as of December 31, 2010		Net realized gains/ (losses)		Change in unrealized appreciation/ depreciation		Gross purchases		Transfers in/(out) of Level 3			Balance as of December 31, 2011
Investment Securities:
Common Stocks:
Internet & Catalog Retail	$	3,356,374	$	—	$	—	$	—	$	(3,356,374	)	$	—
Private Placements:
Internet & Catalog Retail		—		—		—		1,101,072		—			1,101,072
Software		—		—		—		607,056		—			607,056
Transportation Infrastructure		2,046,081		—		1,669,605		—		—			3,715,686

Total Investment Securities	$	5,402,455	$	—	$	1,669,605	$	1,708,128	$	(3,356,374	)	$	5,423,814

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

A restricted security is a security which has been purchased through a private offering and cannot be resold to the general public without prior registration under the Securities Act of 1933 (the “1933 Act”) or pursuant to the resale limitations provided by Rule 144A under the 1933 Act, or an exemption from the registration requirements of the 1933 Act. Whether a restricted security is illiquid is determined pursuant to guidelines established by the Board of Trustees. Not all restricted securities are considered illiquid. At December 31, 2011, the Fund held restricted securities representing 4.1% of net assets, all of which have been deemed illiquid. The restricted illiquid securities held as of December 31, 2011 are presented in the Fund’s Schedule of Portfolio Investments.

Cost for federal income tax purposes at December 31, 2011 is $441,237,987. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $38,660,583 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

During the year ended December 31, 2010 there were no dividends paid to shareholders.

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Morgan Stanley Mid Cap Growth Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011 the AZL^® NFJ International Value Fund returned –10.92%. That compared to a –11.73% total return for its benchmark the MSCI EAFE Index¹.

Global markets suffered during the year. Investor concerns over the size and scope of the European sovereign debt crisis contributed to that weak performance, as did global events such as the March earthquake and tsunami in Japan and the “Arab spring”² that played out in several Middle East countries. As a result, investors sought out relatively safe areas of the market, including fixed-income securities and high-quality dividend-paying stocks. International stocks—both in developed and developing markets—did not perform well on an absolute basis during the year.

The Fund’s performance, relative to its benchmark benefited from individual stock selection in the financial sector. Despite poor performance by the sector as a whole, investors rewarded firms that exhibited financial strength in a sector buffeted by headwinds. The Fund also benefited from an underweight position relative to its benchmark in the financial sector. An overweight position in the telecom sector also helped the Fund’s relative returns, as that sector performed well during the period. However, those gains were somewhat offset by poor selection among individual telecom stocks.*

In the face of the volatility and uncertainty in Europe during the year, individual stock selection in the U.K., Europe and emerging markets helped enhance the Fund’s relative returns. The Funds’ overweight positions in the U.K. and in emerging markets were a boost to performance, relative to its benchmark.*

Stock selection in the utilities sector boosted the Fund’s return. One particular holding—a Brazilian utility—benefited from an improving economy in that country and was a significant contributor to the Fund’s outperformance. In addition, materials stocks helped the Fund’s relative performance, thanks in large part to outsized gains in the price of gold and continued demand for paper products.*

Individual holdings in Japan detracted from relative performance, though the Fund’s underweight position in that country helped performance, relative to the benchmark. Currency exposure negatively impacted the portfolio, as exchange rates ebbed and flowed along with the volatility and weakness in global markets.*

Past performance does not guarantee future results.

²	Arab spring is a revolutionary wave of demonstrations and protests occurring in Arab countries.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			Since Inception (5/1/09)
AZL^® NFJ International Value Fund		–10.92	%		11.54	%
MSCI EAFE Index (gross of withholding taxes)		–11.73	%		10.33	%
MSCI EAFE Index (net of withholding taxes)		–12.14	%		9.85	%

Expense Ratio


	Gross
AZL^® NFJ International Value Fund		1.22	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. 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, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

As a shareholder of the AZL NFJ International Value Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.

The Actual Expense table below provides information about actual account values and actual expenses. You may use the

information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply

divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the

result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you


Shares			Fair Value


	Common Stocks (95.8%):
	Aerospace & Defense (1.7%):
	90,750	BAE Systems plc, Sponsored ADR^	$	1,602,645

	Airlines (1.7%):
	923,000	Cathay Pacific Airways, Ltd.		1,585,406

	Automobiles (2.2%):
	135,500	Fuji Heavy Industries, Ltd., ADR		1,631,420
	24,600	PSA Peugeot Citroen SA^		383,557

				2,014,977

	Beverages (3.2%):
	24,900	Diageo plc, Sponsored ADR^		2,176,758
	17,100	Heineken NV		789,335

				2,966,093

	Building Products (0.9%):
	96,500	Asahi Glass Co., Ltd., ADR		797,090

	Capital Markets (1.4%):
	55,100	Credit Suisse Group AG, Registered Shares		1,293,281

	Chemicals (3.4%):
	23,800	Agrium, Inc.^		1,597,218
	43,500	Nitto Denko Corp., ADR		1,545,555

				3,142,773

	Commercial Banks (10.6%):
	82,400	Australia & New Zealand Banking Group, Ltd., Sponsored ADR^		1,715,568
	95,200	Banco Bradesco SA, ADR^		1,587,936
	48,400	Barclays plc, Sponsored ADR^		531,916
	1,317,000	Mizuho Financial Group, Inc.		1,777,777
	24,500	Toronto-Dominion Bank (The)^		1,832,845
	65,400	United Overseas Bank, Ltd., Sponsored ADR		1,540,824
	33,775	Woori Finance Holdings Co., Ltd., ADR		824,786

				9,811,652

	Diversified Telecommunication Services (5.3%):
	152,900	France Telecom SA, Sponsored ADR^		2,394,414
	144,500	Tele Norte Leste Participacoes SA, Sponsored ADR^		1,374,195
	67,400	Telstra Corp., Ltd., Sponsored ADR		1,149,170

				4,917,779

	Electric Utilities (2.8%):
	123,600	CIA Paranaense de Energia, Sponsored ADR		2,593,128

	Electronic Equipment, Instruments & Components (2.3%):
	399,800	Hitachi, Ltd.		2,096,123

	Energy Equipment & Services (1.2%):
	32,500	Seadrill, Ltd.		1,085,003

	Food & Staples Retailing (1.7%):
	27,700	Delhaize Group, Sponsored ADR		1,558,402


Shares			Fair Value


	Common Stocks, continued
	Food Products (2.3%):
	62,100	Unilever plc, Sponsored ADR	$	2,081,592

	Industrial Conglomerates (0.7%):
	46,200	Koc Holding AS, ADR		687,456

	Insurance (6.9%):
	59,100	Axis Capital Holdings, Ltd.		1,888,836
	67,600	Manulife Financial Corp.		717,912
	15,400	RenaissanceRe Holdings, Ltd.		1,145,298
	115,900	Zurich Financial Services AG, Sponsored ADR^		2,628,612

				6,380,658

	IT Services (0.9%):
	25,600	Cap Gemini SA		796,195

	Machinery (1.6%):
	88,500	Tata Motors, Ltd., Sponsored ADR^		1,495,650

	Media (2.1%):
	169,700	Reed Elsevier NV		1,973,491

	Metals & Mining (6.4%):
	18,800	POSCO, Sponsored ADR		1,543,480
	33,200	Rio Tinto plc, Sponsored ADR		1,624,144
	31,300	Vale SA, Sponsored ADR		671,385
	137,500	Yamana Gold, Inc.		2,019,875

				5,858,884

	Multiline Retail (0.8%):
	75,250	Marks & Spencer Group plc, Sponsored ADR		716,380

	Oil, Gas & Consumable Fuels (12.2%):
	987,950	China Petroleum & Chemical Corp. (Sinopec), H Shares		1,038,108
	48,500	Nexen, Inc.		771,635
	31,700	Petroleo Brasileiro SA, ADR		787,745
	41,400	Royal Dutch Shell plc, ADR		3,025,926
	61,700	Sasol, Ltd., Sponsored ADR		2,924,580
	77,700	Statoil ASA, Sponsored ADR^		1,989,897
	34,700	Yanzhou Coal Mining Co., Ltd., Sponsored ADR^		735,987

				11,273,878

	Paper & Forest Products (2.1%):
	129,600	Svenska Cellulosa AB, Sponsored ADR		1,903,824

	Pharmaceuticals (6.2%):
	62,600	AstraZeneca plc, Sponsored ADR^		2,897,754
	26,900	Sanofi-Aventis		1,968,066
	20,000	Teva Pharmaceutical Industries, Ltd., Sponsored ADR		807,200

				5,673,020

	Semiconductors & Semiconductor Equipment (2.5%):
	28,500	ASML Holding NV		1,194,268
	85,700	Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR		1,106,387

				2,300,655


Shares			Fair Value

	Common Stocks, continued
	Software (1.1%):
	55,400	Sage Group plc (The), ADR	$	1,007,172

	Tobacco (2.4%):
	58,900	Imperial Tobacco Group plc		2,225,980

	Trading Companies & Distributors (2.0%):
	6,100	Mitsui & Co., Ltd., Sponsored ADR		1,887,950

	Water Utilities (4.3%):
	71,200	Companhia de Saneamento Basico do Estado de Sao Paulo, Sponsored ADR*		3,962,280

	Wireless Telecommunication Services (2.9%):
	170	KDDI Corp.		1,094,648
	113,300	SK Telecom Co., Ltd., ADR		1,542,013

				2,636,661

	Total Common Stocks (Cost $91,570,025)			88,326,078


Shares or Principal Amount			Fair Value

	Securities Held as Collateral for Securities on Loan (12.6%):
$	11,602,391	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)	$	11,602,391

	Total Securities Held as Collateral for Securities on Loan (Cost $11,602,391)			11,602,391

	Unaffiliated Investment Company (4.0%):
	3,731,277	Dreyfus Treasury Prime Cash Management, 0.00%(b)		3,731,277

	Total Unaffiliated Investment Company (Cost $3,731,277)			3,731,277

	Total Investment Securities (Cost $106,903,693)(c) — 112.4%			103,659,746
	Net other assets (liabilities) — (12.4)%			(11,468,465	)

	Net Assets — 100.0%		$	92,191,281

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, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	106,903,693

Investment securities, at value*	$	103,659,746
Cash		4,004
Interest and dividends receivable		97,508
Foreign currency, at value (cost $89,094)		89,436
Receivable for capital shares issued		4,666
Receivable for expenses paid indirectly		120
Reclaims receivable		67,173
Prepaid expenses		627

Total Assets		103,923,280

Liabilities:
Payable for capital shares redeemed		23,615
Payable for collateral received on loaned securities		11,602,391
Manager fees payable		69,946
Administration fees payable		4,549
Distribution fees payable		19,429
Custodian fees payable		2,105
Administrative and compliance services fees payable		946
Trustee fees payable		51
Other accrued liabilities		8,967

Total Liabilities		11,731,999

Net Assets	$	92,191,281

Net Assets Consist of:
Capital	$	72,877,138
Accumulated net investment income/(loss)		2,924,226
Accumulated net realized gains/(losses) from investment transactions		19,633,538
Net unrealized appreciation/(depreciation) on investments		(3,243,621	)

Net Assets	$	92,191,281

Shares of beneficial interest (unlimited number of shares authorized, no par value)		7,595,981
Net Asset Value (offering and redemption price per share)	$	12.14

*	Includes securities on loan of $11,317,215.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	4,354,824
Income from securities lending		98,863
Foreign withholding tax		(24,929	)

Total Investment Income		4,428,758

Expenses:
Manager fees		1,101,667
Administration fees		60,227
Distribution fees		306,018
Custodian fees		14,702
Administrative and compliance services fees		5,659
Trustee fees		9,434
Professional fees		9,627
Shareholder reports		2,907
Other expenses		5,354

Total expenses before reductions		1,515,595
Less expenses voluntarily waived/reimbursed by the Manager		(57,435	)
Less expenses paid indirectly		(28,327	)

Net expenses		1,429,833

Net Investment Income/(Loss)		2,998,925

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		20,782,961
Net realized gains/(losses) on forward currency contracts		(98,297	)
Change in unrealized appreciation/depreciation on investments		(29,460,333	)

Net Realized/Unrealized Gains/(Losses) on Investments		(8,775,669	)

Change in Net Assets Resulting From Operations	$	(5,776,744	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL NFJ International Value Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $7,688 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. As of December 31, 2011 the Fund did not hold any forward currency contracts. During the year ended December 31, 2011, the Fund had limited activity in these transactions.

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 NFJ Investment Group LLC (“NFJ”), NFJ 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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

next $2 billion, 0.02% of daily average net assets on the next $2 billion and 0.01% of daily average net assets over $8 billion. The overall Trust-wide fees are accrued daily and paid monthly and are subject to a minimum annual fee. In addition, the Administrator is entitled to annual account fees related to the transfer agency system, an annual fee for each additional class of shares of any Fund, certain annual fees in supporting fair value services, and a Trust-wide annual fee for providing infrastructure and support in implementing the written policies and procedures comprising the Fund’s compliance program. Fees payable to the Administrator are subject to certain reductions associated with services provided to new funds. The Administrator is also reimbursed for certain expenses incurred. The total expenses incurred by the Fund for these services are reflected on the Statement of Operations as “Administration fees.”

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $1,951 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks:
Airlines	$	—	$	1,585,406		—	$	1,585,406
Automobiles		1,631,420		383,557		—		2,014,977
Beverages		2,176,758		789,335		—		2,966,093
Capital Markets		—		1,293,281		—		1,293,281
Commercial Banks		8,033,875		1,777,777		—		9,811,652
Electronic Equipment, Instruments & Components		—		2,096,123		—		2,096,123
Energy Equipment & Services		—		1,085,003		—		1,085,003
IT Services		—		796,195		—		796,195
Media		—		1,973,491		—		1,973,491
Oil, Gas & Consumable Fuels		10,235,770		1,038,108		—		11,273,878
Pharmaceuticals		3,704,954		1,968,066		—		5,673,020
Semiconductors & Semiconductor Equipment		1,106,387		1,194,268		—		2,300,655
Tobacco		—		2,225,980		—		2,225,980
Wireless Telecommunication Services		1,542,013		1,094,648		—		2,636,661
All Other Common Stocks+		40,593,663		—		—		40,593,663
Securities Held as Collateral for Securities on Loan		—		11,602,391		—		11,602,391
Unaffiliated Investment Company		3,731,277		—		—		3,731,277

Total Investment Securities	$	72,756,117	$	30,903,629	$	—	$	103,659,746

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

In May 2011, the FASB issued ASU No. 2011- 04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS”. ASU 2011- 04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011- 04 will require reporting entities to disclose quantitative information about the unobservable inputs used in the fair value measurements categorized within Level 3 of the fair value hierarchy. In addition, ASU 2011- 04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periodsbeginning after December 15, 2011. Adoption of ASU 2011-04 will have no effect on the Fund’s net assets. At this time, management is evaluating the impact of ASU 2011- 04 on the financial statement disclosures.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $106,989,758. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL NFJ International Value Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the three-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the three-year period then ended, in conformity with U.S. generally accepted accounting principles.

For the year ended December 31, 2011, 6.30% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

During the year ended December 31, 2011, the Fund declared net long-term capital gain distributions of $3,074,377.

During the year ended December 31, 2011, the Fund declared net short-term capital gain distributions of $709,780.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65^th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® Russell 1000 Growth Index Fund returned 1.92%. That compared to a 2.64% total return for its benchmark, the Russell 1000^® Growth Index¹.

The Fund attempts to replicate the performance of the Russell 1000^® Growth Index of large-cap growth U.S. stocks. U.S. equities delivered paltry rewards for the extreme volatility investors endured in 2011. Political turmoil, natural disasters and, above all, global debt problems led to market activity during the year that was characterized by a tug-of-war between assets perceived as high risk and those perceived as low risk. For the year, the 2.64% total return for the Russell 1000^® Growth Index outperformed the 0.39% total return for the Russell 1000^® Value Index².

recapitalize the region’s banks, and increase the size of the euro-zone bailout fund. However, a lack of definitive details about the rescue plan soon raised doubts among investors and thwarted the rally at the end of October. In November, political instability in Greece and Italy fueled uncertainty as to whether Europe’s leaders would be able to contain the crisis. In the United States, bickering lawmakers failed to reach an agreement on reducing the U.S. budget deficit, further undermining investors’ confidence in policymakers on both sides of the Atlantic. Market volatility softened in December with the support of global central bank actions and continued improvement in economic data.

U.S. stocks outperformed most international markets during the year due to their relative safety in a time of heightened uncertainty overseas. Dividend-paying stocks performed particularly well as investors sought yield in a low-interest rate environment. Among sectors in the benchmark, utilities performed strongest in 2011. The defensive consumer staples sector performed well, as did health care stocks, which benefited from increased merger and acquisition activity. The more cyclical materials and industrials sectors saw the largest losses of the sectors in the Fund’s benchmark, followed by financials, which was battered by the world’s debt problems.*

The underperformance of the Fund compared to its benchmark was the result of Fund expenses that are not incurred by the benchmark.

Past performance does not guarantee future results.

¹	The Russell 1000^® Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.

²	The Russell 1000^® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.

Investors cannot invest directly in an index.

Fund Objective

The Fund’s investment objective is to match the total return of the Russell 1000^® Growth Index. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing in all stocks in the Index in proportion to their weighting in the Index.

Investment Concerns

Returns on growth stocks may not move in tandem with returns on other categories of stocks or the market as a whole. Growth stocks may be susceptible to rapid price savings or to adverse developments in certain sectors of the market.

Investing in derivatives instruments involves risks that may be different from or greater than the risk associated with investing directly in securities or other traditional instruments.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Returns as of December 31, 2011


				Since
	1			Inception
	Year			(4/30/10)
AZL^® Russell 1000 Growth Index Fund		1.92	%		6.78	%
Russell 1000^® Growth Index		2.64	%		7.73	%

Expense Ratio


	Gross
AZL^® Russell 1000 Growth Index Fund		0.88	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 0.84% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against the Russell 1000^® Growth Index, an unmanaged index that measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies 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 fees for services provided to the Fund. Investors cannot invest directly in an index.

As a shareholder of the AZL Russell 1000 Growth Index Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (98.3%):
	Aerospace & Defense (3.4%):
	35	Alliant Techsystems, Inc.	$	2,001
	1,569	BE Aerospace, Inc.*		60,736
	11,183	Boeing Co. (The)		820,273
	876	Goodrich Corp.		108,361
	13,440	Honeywell International, Inc.		730,464
	3,950	Lockheed Martin Corp.		319,555
	2,450	Precision Castparts Corp.		403,735
	2,632	Rockwell Collins, Inc.^		145,734
	381	Spirit AeroSystems Holdings, Inc., Class A*		7,917
	854	TransDigm Group, Inc.*		81,711
	14,785	United Technologies Corp.		1,080,636

				3,761,123

	Air Freight & Logistics (1.2%):
	2,828	C.H. Robinson Worldwide, Inc.^		197,338
	3,628	Expeditors International of Washington, Inc.		148,603
	319	FedEx Corp.		26,639
	12,547	United Parcel Service, Inc., Class B		918,315
	1,652	UTI Worldwide, Inc.		21,955

				1,312,850

	Airlines (0.2%):
	2,472	AMR Corp.*		865
	434	Copa Holdings SA, Class A		25,463
	8,689	Delta Air Lines, Inc.*		70,294
	2,494	Southwest Airlines Co.		21,348
	4,833	United Continental Holdings, Inc.*^		91,199

				209,169

	Auto Components (0.5%):
	1,871	BorgWarner, Inc.*^		119,258
	2,440	Gentex Corp.		72,200
	4,182	Goodyear Tire & Rubber Co.*		59,259
	2,947	Johnson Controls, Inc.		92,123
	2,191	O’Reilly Automotive, Inc.*		175,170
	907	Tesla Motors, Inc.*^		25,904
	45	Visteon Corp.*		2,247
	1,165	WABCO Holdings, Inc.*		50,561

				596,722

	Automobiles (0.5%):
	35,699	Ford Motor Co.		384,121
	4,036	Harley-Davidson, Inc.		156,880

				541,001

	Beverages (4.2%):
	1,494	Brown-Forman Corp., Class B		120,282
	33,735	Coca-Cola Co. (The)		2,360,438
	4,254	Coca-Cola Enterprises, Inc.		109,668
	3,782	Dr Pepper Snapple Group, Inc.		149,313


Shares			Fair Value

	Common Stocks, continued
	Beverages, continued
	1,196	Hansen Natural Corp.*	$	110,200
	26,991	PepsiCo, Inc.		1,790,853

				4,640,754

	Biotechnology (2.1%):
	3,140	Alexion Pharmaceuticals, Inc.*		224,510
	2,234	Amylin Pharmaceuticals, Inc.*^		25,423
	4,127	Biogen Idec, Inc.*		454,176
	1,907	BioMarin Pharmaceutical, Inc.*^		65,563
	7,904	Celgene Corp.*		534,311
	2,527	Dendreon Corp.*^		19,205
	13,441	Gilead Sciences, Inc.*		550,140
	3,172	Human Genome Sciences, Inc.*^		23,441
	1,466	Myriad Genetics, Inc.*		30,698
	1,270	Pharmasset, Inc.*		162,814
	1,246	Regeneron Pharmaceuticals, Inc.*^		69,066
	873	United Therapeutics Corp.*^		41,249
	3,115	Vertex Pharmaceuticals, Inc.*		103,449

				2,304,045

	Building Products (0.1%):
	23	Armstrong World Industries, Inc.*^		1,009
	915	Lennox International, Inc.^		30,881
	5,984	Masco Corp.		62,713

				94,603

	Capital Markets (1.1%):
	635	Affiliated Managers Group, Inc.*		60,928
	724	BlackRock, Inc.^+		129,046
	17,891	Charles Schwab Corp. (The)		201,453
	1,988	Eaton Vance Corp.^		46,996
	1,323	Federated Investors, Inc.^		20,043
	2,475	Franklin Resources, Inc.		237,749
	507	Greenhill & Co., Inc.^		18,440
	1,921	Lazard, Ltd., Class A		50,157
	455	LPL Investment Holdings, Inc.*^		13,896
	2,447	SEI Investments Co.		42,456
	4,437	T. Rowe Price Group, Inc.		252,687
	3,742	TD Ameritrade Holding Corp.		58,562
	1,459	Waddell & Reed Financial, Inc., Class A		36,139

				1,168,552

	Chemicals (3.6%):
	3,619	Air Products & Chemicals, Inc.		308,302
	1,347	Airgas, Inc.		105,174
	1,588	Albemarle Corp.		81,798
	2,669	Celanese Corp., Series A		118,157
	932	CF Industries Holdings, Inc.		135,121


Shares			Fair Value

	Common Stocks, continued
	Chemicals, continued
	15,859	E.I. du Pont de Nemours & Co.	$	726,025
	2,433	Eastman Chemical Co.		95,033
	5,123	Ecolab, Inc.		296,161
	1,226	FMC Corp.		105,485
	594	Huntsman Corp.		5,940
	1,374	International Flavor & Fragrances, Inc.		72,025
	909	Intrepid Potash, Inc.*^		20,571
	56	KAR Auction Services, Inc.*		756
	344	Kronos Worldwide, Inc.^		6,206
	336	LyondellBasell Industries NV, Class A		10,917
	9,153	Monsanto Co.		641,351
	4,706	Mosaic Co. (The)		237,323
	2,701	PPG Industries, Inc.		225,506
	5,181	Praxair, Inc.		553,849
	1,127	Rockwood Holdings, Inc.*		44,370
	629	Scotts Miracle-Gro Co. (The), Class A^		29,368
	2,081	Sigma Aldrich Corp.^		129,979
	2,073	Solutia, Inc.*		35,821
	208	Valspar Corp. (The)		8,106
	1,114	W. R. Grace & Co.*		51,155
	66	Westlake Chemical Corp.^		2,656

				4,047,155


	Commercial Banks (0.2%):
	5,882	Wells Fargo & Co.		162,108

	Commercial Services & Supplies (0.3%):
	122	Avery Dennison Corp.		3,499
	968	Copart, Inc.*		46,357
	148	Covanta Holding Corp.		2,026
	2,846	Iron Mountain, Inc.^		87,657
	1,467	Stericycle, Inc.*		114,309
	1,705	Waste Connections, Inc.		56,504

				310,352

	Communications Equipment (1.9%):
	900	Acme Packet, Inc.*^		27,819
	1,732	Ciena Corp.*^		20,957
	1,386	F5 Networks, Inc.*		147,082
	539	Harris Corp.		19,426
	3,808	JDS Uniphase Corp.*		39,756
	9,106	Juniper Networks, Inc.*		185,853
	3,043	Polycom, Inc.*		49,601
	28,509	QUALCOMM, Inc.		1,559,442
	2,630	Riverbed Technology, Inc.*^		61,805

				2,111,741

	Computers & Peripherals (6.9%):
	15,790	Apple, Inc.*		6,394,950
	20,601	Dell, Inc.*		301,393
	35,136	EMC Corp.*		756,829


Shares			Fair Value

	Common Stocks, continued
	Computers & Peripherals, continued
	145	Fusion-io, Inc.^	$	3,509
	2,110	NCR Corp.*		34,730
	6,284	NetApp, Inc.*		227,921
	1,518	QLogic Corp.*		22,770

				7,742,102

	Construction & Engineering (0.2%):
	973	Aecom Technology Corp.*		20,014
	976	Chicago Bridge & Iron Co. NV		36,893
	2,977	Fluor Corp.		149,594
	164	KBR, Inc.		4,571

				211,072

	Construction Materials (0.0%):
	365	Martin Marietta Materials, Inc.^		27,525

	Consumer Finance (0.5%):
	10,856	American Express Co.		512,078
	961	Discover Financial Services		23,064

				535,142

	Containers & Packaging (0.3%):
	2,870	Ball Corp.		102,488
	2,675	Crown Holdings, Inc.*		89,827
	1,556	Packaging Corp. of America		39,273
	1,184	Rock-Tenn Co., Class A		68,317
	846	Silgan Holdings, Inc.		32,689
	444	Temple-Inland, Inc.		14,079

				346,673

	Distributors (0.1%):
	726	Genuine Parts Co.		44,431
	2,494	LKQ Corp.*		75,020

				119,451

	Diversified Consumer Services (0.2%):
	1,901	Apollo Group, Inc., Class A*		102,407
	161	Booz Allen Hamilton Holding Corp.*^		2,777
	988	DeVry, Inc.		37,998
	3,015	H&R Block, Inc.		49,235
	441	ITT Educational Services, Inc.*^		25,089
	490	Weight Watchers International, Inc.^		26,955

				244,461

	Diversified Financial Services (0.4%):
	929	CBOE Holdings, Inc.^		24,024
	234	FleetCor Technologies, Inc.*		6,989
	349	Green Dot Corp., Class A*^		10,896
	1,256	IntercontinentalExchange, Inc.*		151,411
	3,406	Moody’s Corp.^		114,714
	2,054	MSCI, Inc., Class A*		67,638


Shares			Fair Value

	Common Stocks, continued
	Diversified Financial Services, continued
	271	NASDAQ OMX Group, Inc. (The)*	$	6,642
	1,366	NYSE Euronext		35,653

				417,967

	Diversified Telecommunication Services (0.5%):
	343	Level 3 Communications, Inc.*^		5,828
	2,181	TW Telecom, Inc.*		42,268
	10,919	Verizon Communications, Inc.		438,070
	5,541	Windstream Corp.^		65,051

				551,217

	Electric Utilities (0.1%):
	873	ITC Holdings Corp.^		66,243

	Electrical Equipment (1.1%):
	2,748	AMETEK, Inc.		115,691
	1,849	Cooper Industries plc, A Shares		100,123
	12,836	Emerson Electric Co.		598,029
	427	General Cable Corp.*^		10,679
	131	GrafTech International, Ltd.*		1,788
	658	Polypore International, Inc.*^		28,946
	2,465	Rockwell Automation, Inc.		180,857
	1,638	Roper Industries, Inc.		142,293
	206	Thomas & Betts Corp.*		11,248

				1,189,654

	Electronic Equipment, Instruments & Components (0.4%):
	2,830	Amphenol Corp., Class A		128,454
	282	Arrow Electronics, Inc.*		10,550
	912	Dolby Laboratories, Inc., Class A*		27,825
	2,730	FLIR Systems, Inc.^		68,441
	506	IPG Photonics Corp.*^		17,138
	2,769	Jabil Circuit, Inc.		54,439
	1,520	National Instruments Corp.		39,444
	2,096	Trimble Navigation, Ltd.*		90,966

				437,257

	Energy Equipment & Services (2.8%):
	256	Atwood Oceanics, Inc.*		10,186
	2,955	Baker Hughes, Inc.		143,731
	3,085	Cameron International Corp.*		151,751
	324	CARBO Ceramics, Inc.^		39,959
	780	Core Laboratories NV		88,881
	549	Diamond Offshore Drilling, Inc.^		30,338
	1,285	Dresser-Rand Group, Inc.*^		64,134
	4,105	FMC Technologies, Inc.*^		214,404
	15,626	Halliburton Co.		539,253
	1,531	Helmerich & Payne, Inc.^		89,349
	1,855	Oceaneering International, Inc.^		85,571
	727	Oil States International, Inc.*		55,521


Shares			Fair Value

	Common Stocks, continued
	Energy Equipment & Services, continued
	271	Patterson-UTI Energy, Inc.	$	5,415
	332	Rowan Cos., Inc.*		10,070
	676	RPC, Inc.		12,337
	23,171	Schlumberger, Ltd.		1,582,811
	1,345	Superior Energy Services, Inc.*^		38,252
	53	Tidewater, Inc.^		2,613

				3,164,576

	Food & Staples Retailing (2.8%):
	7,460	Costco Wholesale Corp.		621,567
	7,310	Kroger Co. (The)		177,048
	9,966	SYSCO Corp.		292,303
	23,029	Wal-Mart Stores, Inc.		1,376,213
	14,758	Walgreen Co.		487,899
	2,641	Whole Foods Market, Inc.		183,761

				3,138,791

	Food Products (1.3%):
	640	Bunge, Ltd.		36,608
	2,295	Campbell Soup Co.^		76,286
	911	ConAgra Foods, Inc.		24,050
	1,036	Corn Products International, Inc.		54,483
	1,892	Flowers Foods, Inc.^		35,910
	8,221	General Mills, Inc.		332,211
	2,107	Green Mountain Coffee Roasters, Inc.*^		94,499
	3,211	H.J. Heinz Co.^		173,522
	1,937	Hershey Co.		119,668
	1,233	Hormel Foods Corp.		36,115
	3,929	Kellogg Co.		198,689
	1,549	McCormick & Co.^		78,101
	8,296	Sara Lee Corp.		156,960

				1,417,102

	Gas Utilities (0.1%):
	190	National Fuel Gas Co.		10,560
	127	ONEOK, Inc.		11,010
	2,328	QEP Resources, Inc.		68,211

				89,781

	Health Care Equipment & Supplies (2.7%):
	8,767	Baxter International, Inc.		433,791
	3,736	Becton, Dickinson & Co.		279,154
	1,463	C.R. Bard, Inc.		125,087
	1,194	CareFusion Corp.*		30,340
	197	Cooper Cos., Inc. (The)		13,892
	4,522	Covidien plc		203,535
	970	DENTSPLY International, Inc.^		33,940
	1,959	Edwards Lifesciences Corp.*		138,501
	811	Gen-Probe, Inc.*		47,946
	974	Hill-Rom Holdings, Inc.^		32,814
	980	IDEXX Laboratories, Inc.*^		75,421
	672	Intuitive Surgical, Inc.*		311,143


Shares			Fair Value

	Common Stocks, continued
	Health Care Equipment & Supplies, continued
	15,772	Medtronic, Inc.	$	603,279
	2,614	ResMed, Inc.*^		66,396
	938	Sirona Dental Systems, Inc.*		41,310
	5,617	St. Jude Medical, Inc.		192,663
	5,355	Stryker Corp.		266,197
	974	Thoratec Corp.*		32,687
	2,002	Varian Medical Systems, Inc.*^		134,394

				3,062,490

	Health Care Providers & Services (1.9%):
	506	AMERIGROUP Corp.*^		29,895
	4,411	AmerisourceBergen Corp.		164,045
	1,507	Brookdale Senior Living, Inc.*		26,207
	2,995	Cardinal Health, Inc.		121,627
	715	Catalyst Health Solutions, Inc.*		37,180
	1,632	DaVita, Inc.*		123,722
	8,338	Express Scripts, Inc.*		372,625
	1,133	HCA Holdings, Inc.*		24,960
	4,325	Health Management Associates, Inc., Class A*		31,875
	838	Henry Schein, Inc.*		53,992
	1,712	Laboratory Corp. of America Holdings*^		147,181
	1,493	Lincare Holdings, Inc.^		38,385
	4,306	McKesson, Inc.		335,481
	6,828	Medco Health Solutions, Inc.*		381,685
	825	MEDNAX, Inc.*		59,408
	647	Patterson Companies, Inc.^		19,099
	2,468	Quest Diagnostics, Inc.		143,292
	424	Tenet Healthcare Corp.*^		2,175
	1,545	Universal Health Services, Inc., Class B		60,039

				2,172,873

	Health Care Technology (0.2%):
	2,551	Allscripts Healthcare Solutions, Inc.*		48,316
	2,428	Cerner Corp.*^		148,715
	1,058	SXC Health Solutions Corp.*		59,756

				256,787

	Hotels, Restaurants & Leisure (3.7%):
	702	Bally Technologies, Inc.*^		27,771
	1,267	Brinker International, Inc.		33,905
	532	Chipotle Mexican Grill, Inc.*^		179,678
	37	Choice Hotels International, Inc.^		1,408
	2,331	Darden Restaurants, Inc.		106,247
	361	Dunkin’ Brands Group, Inc.*^		9,018
	64	Hyatt Hotels Corp., Class A*		2,409
	2,599	International Game Technology		44,703
	6,699	Las Vegas Sands Corp.*		286,248
	4,295	Marriott International, Inc., Class A^		125,285


Shares			Fair Value

	Common Stocks, continued
	Hotels, Restaurants & Leisure, continued
	443	Marriott Vacations Worldwide Corp.*^	$	7,602
	17,717	McDonald’s Corp.		1,777,547
	1,228	MGM Resorts International*		12,808
	496	Panera Bread Co., Class A*^		70,159
	1,269	Royal Caribbean Cruises, Ltd.		31,433
	12,801	Starbucks Corp.		588,974
	3,333	Starwood Hotels & Resorts Worldwide, Inc.		159,884
	1,353	Wynn Resorts, Ltd.		149,493
	7,951	Yum! Brands, Inc.		469,188

				4,083,760

	Household Durables (0.2%):
	118	Garmin, Ltd.^		4,697
	784	Harman International Industries, Inc.		29,823
	1,816	Leggett & Platt, Inc.^		41,841
	1,170	Tempur-Pedic International, Inc.*^		61,460
	979	Tupperware Brands Corp.		54,795

				192,616

	Household Products (1.3%):
	940	Aaron’s, Inc.^		25,079
	1,415	Church & Dwight Co., Inc.^		64,750
	122	Clorox Co. (The)		8,120
	7,531	Colgate-Palmolive Co.		695,789
	5,878	Kimberly-Clark Corp.		432,386
	3,194	Procter & Gamble Co. (The)		213,072

				1,439,196

	Industrial Conglomerates (1.2%):
	10,715	3M Co.		875,737
	88	Carlisle Cos., Inc.		3,898
	9,379	Danaher Corp.		441,188
	3,447	McDermott International, Inc.*		39,675
	253	Textron, Inc.^		4,678

				1,365,176

	Insurance (0.0%):
	468	Erie Indemnity Co., Class A		36,579
	176	Validus Holdings, Ltd.		5,544

				42,123

	Internet & Catalog Retail (1.4%):
	6,206	Amazon.com, Inc.*		1,074,259
	974	Expedia, Inc.^		28,265
	556	Groupon, Inc.*		11,470
	87	HomeAway, Inc.*^		2,023
	946	Netflix, Inc.*^		65,548
	848	Priceline.com, Inc.*		396,618
	974	TripAdvisor, Inc.*		24,555

				1,602,738


Shares			Fair Value

	Common Stocks, continued
	Internet Software & Services (3.1%):
	2,904	Akamai Technologies, Inc.*	$	93,741
	10,748	eBay, Inc.*		325,987
	801	Equinix, Inc.*		81,221
	4,298	Google, Inc., Class A*		2,776,078
	142	LinkedIn Corp., Class A*		8,947
	1,761	Rackspace Hosting, Inc.*^		75,741
	2,716	VeriSign, Inc.^		97,016
	655	VistaPrint NV*^		20,043
	985	WebMD Health Corp., Class A*^		36,987

				3,515,761

	IT Services (6.4%):
	11,026	Accenture plc, Class A		586,914
	872	Alliance Data Systems Corp.*^		90,548
	8,534	Automatic Data Processing, Inc.		460,921
	2,032	Broadridge Financial Solutions, Inc.		45,822
	5,196	Cognizant Technology Solutions Corp., Class A*		334,155
	81	DST Systems, Inc.		3,687
	1,966	Fiserv, Inc.*		115,483
	1,663	Gartner, Inc.*		57,822
	1,668	Genpact, Ltd.*		24,937
	1,389	Global Payments, Inc.		65,811
	20,682	International Business Machines Corp.		3,803,006
	1,475	Lender Processing Services, Inc.^		22,228
	1,832	MasterCard, Inc., Class A		683,006
	1,259	NeuStar, Inc., Class A*		43,020
	5,079	Paychex, Inc.		152,929
	1,670	SAIC, Inc.*^		20,524
	2,884	Teradata Corp.*		139,903
	1,711	VeriFone Systems, Inc.*^		60,775
	2,885	Visa, Inc., Class A		292,914
	10,800	Western Union Co.		197,208

				7,201,613

	Leisure Equipment & Products (0.2%):
	1,969	Hasbro, Inc.		62,791
	4,412	Mattel, Inc.		122,477
	1,107	Polaris Industries, Inc.		61,970

				247,238

	Life Sciences Tools & Services (0.6%):
	5,944	Agilent Technologies, Inc.*		207,624
	1,540	Bruker Corp.*		19,127
	891	Charles River Laboratories International, Inc.*		24,351
	1,048	Covance, Inc.*		47,915
	2,071	Illumina, Inc.*^		63,124
	245	Life Technologies Corp.*		9,533


Shares			Fair Value

	Common Stocks, continued
	Life Sciences Tools & Services, continued
	549	Mettler-Toledo International, Inc.*	$	81,093
	625	Techne Corp.		42,662
	1,566	Waters Corp.*^		115,962

				611,391

	Machinery (3.4%):
	1,975	Babcock & Wilcox Co. (The)*		47,677
	11,009	Caterpillar, Inc.		997,415
	3,352	Cummins, Inc.		295,043
	7,168	Deere & Co.		554,445
	1,304	Donaldson Co., Inc.^		88,776
	2,480	Dover Corp.		143,964
	2,214	Eaton Corp.		96,375
	868	Flowserve Corp.		86,210
	894	Gardner Denver, Inc.		68,892
	1,014	Graco, Inc.		41,462
	142	Harsco Corp.		2,922
	1,249	IDEX Corp.		46,350
	7,115	Illinois Tool Works, Inc.		332,342
	4,227	Ingersoll-Rand plc		128,797
	1,790	Joy Global, Inc.		134,196
	151	Kennametal, Inc.		5,515
	883	Lincoln Electric Holdings, Inc.		34,543
	2,289	Manitowoc Co., Inc. (The)^		21,036
	675	Navistar International Corp.*		25,569
	1,019	Nordson Corp.^		41,962
	6,242	PACCAR, Inc.^		233,888
	1,984	Pall Corp.		113,386
	1,066	Parker Hannifin Corp.		81,282
	166	Snap-On, Inc.		8,403
	220	SPX Corp.		13,259
	1,242	Timken Co.		48,078
	530	Toro Co.		32,150
	387	Valmont Industries, Inc.		35,136
	808	Wabtec Corp.		56,520

				3,815,593

	Marine (0.0%):
	640	Kirby Corp.*		42,138

	Media (3.0%):
	927	AMC Networks, Inc., Class A*		34,837
	3,727	Cablevision Systems Corp., Class A		52,998
	1,752	CBS Corp., Class B		47,549
	930	Charter Communications, Inc., Class A*		52,954
	20,535	Comcast Corp., Class A		486,885
	12,048	DIRECTV Group, Inc. (The), Class A*		515,172
	4,512	Discovery Communications, Inc., Class A*^		184,857


Shares			Fair Value

	Common Stocks, continued
	Media, continued
	2,569	DISH Network Corp., Class A	$	73,165
	2,945	Interpublic Group of Cos., Inc. (The)		28,655
	784	John Wiley & Sons, Inc.		34,809
	290	Lamar Advertising Co.*^		7,975
	4,735	Liberty Global, Inc., Class A*		194,277
	4,284	McGraw-Hill Cos., Inc. (The)		192,651
	428	Morningstar, Inc.		25,445
	1,178	Nielsen Holdings NV*		34,975
	4,802	Omnicom Group, Inc.^		214,073
	196	Pandora Media, Inc.*		1,962
	556	Regal Entertainment Group, Class A^		6,639
	1,516	Scripps Networks Interactive, Class A		64,309
	67,427	Sirius XM Radio, Inc.*		122,717
	3,058	Thomson Reuters Corp.		81,557
	5,449	Time Warner Cable, Inc.		346,393
	9,429	Viacom, Inc., Class B		428,171
	5,122	Virgin Media, Inc.^		109,508

				3,342,533

	Metals & Mining (1.1%):
	282	AK Steel Holding Corp.		2,329
	1,837	Allegheny Technologies, Inc.		87,809
	1,537	Allied Nevada Gold Corp.*		46,540
	745	Carpenter Technology Corp.		38,353
	2,494	Cliffs Natural Resources, Inc.^		155,501
	554	Compass Minerals International, Inc.		38,143
	16,177	Freeport-McMoRan Copper & Gold, Inc.		595,152
	946	Molycorp, Inc.*^		22,685
	186	Reliance Steel & Aluminum Co.		9,056
	929	Royal Gold, Inc.		62,643
	83	Schnitzer Steel Industries, Inc.^		3,509
	2,929	Southern Copper Corp.^		88,397
	2,701	Steel Dynamics, Inc.		35,518
	717	Titanium Metals Corp.^		10,741
	1,047	Walter Energy, Inc.^		63,406

				1,259,782

	Multiline Retail (0.7%):
	368	Big Lots, Inc.*		13,896
	1,693	Dollar General Corp.*		69,650
	2,089	Dollar Tree, Inc.*		173,617
	2,090	Family Dollar Stores, Inc.		120,509
	3,661	Kohl’s Corp.		180,670
	902	Macy’s, Inc.		29,026
	2,786	Nordstrom, Inc.		138,492
	621	Target Corp.		31,808

				757,668


Shares			Fair Value

	Common Stocks, continued
	Office Electronics (0.0%):
	929	Zebra Technologies Corp., Class A*	$	33,240

	Oil, Gas & Consumable Fuels (7.9%):
	2,218	Alpha Natural Resources, Inc.*		45,314
	1,295	Anadarko Petroleum Corp.		98,847
	1,886	Apache Corp.		170,834
	403	Arch Coal, Inc.		5,848
	1,785	Cabot Oil & Gas Corp.		135,481
	1,957	Chevron Corp.		208,225
	401	Cimarex Energy Co.^		24,822
	2,016	Cobalt International Energy, Inc.*		31,288
	1,766	Concho Resources, Inc.*^		165,562
	3,872	Consol Energy, Inc.		142,102
	701	Continental Resources, Inc.*^		46,764
	5,761	Denbury Resources, Inc.*		86,991
	12,359	El Paso Corp.		328,379
	4,584	EOG Resources, Inc.		451,570
	922	EQT Corp.		50,516
	2,339	EXCO Resources, Inc.^		24,443
	62,076	Exxon Mobil Corp.		5,261,563
	1,601	Forest Oil Corp.*		21,694
	3,278	HollyFrontier Corp.		76,705
	1,995	Kinder Morgan, Inc.^		64,179
	437	Kosmos Energy LLC*		5,358
	510	Murphy Oil Corp.		28,427
	1,339	Newfield Exploration Co.*		50,520
	608	Noble Energy, Inc.^		57,389
	3,998	Occidental Petroleum Corp.		374,613
	4,625	Peabody Energy Corp.		153,134
	1,618	Pioneer Natural Resources Co.		144,779
	184	Quicksilver Resources, Inc.*^		1,235
	2,745	Range Resources Corp.		170,025
	7,075	SandRidge Energy, Inc.*^		57,732
	882	SM Energy Co.		64,474
	5,943	Southwestern Energy Co.*		189,819
	2,633	Ultra Petroleum Corp.*		78,016
	2,012	Whiting Petroleum Corp.*		93,940

				8,910,588

	Paper & Forest Products (0.1%):
	1,564	International Paper Co.		46,294
	2,619	Weyerhaeuser Co.		48,897

				95,191

	Personal Products (0.4%):
	7,350	Avon Products, Inc.		128,404
	1,927	Estee Lauder Co., Inc. (The), Class A		216,441
	2,037	Herbalife, Ltd.		105,252
	625	Mead Johnson Nutrition Co., Class A		42,956

				493,053


Shares			Fair Value

	Common Stocks, continued
	Pharmaceuticals (3.0%):
	24,922	Abbott Laboratories	$	1,401,364
	5,205	Allergan, Inc.		456,687
	5,779	Eli Lilly & Co.		240,175
	1,992	Endo Pharmaceuticals Holdings, Inc.*^		68,784
	2,444	Hospira, Inc.*^		74,224
	9,549	Johnson & Johnson Co.		626,223
	6,791	Mylan, Inc.*		145,735
	1,418	Perrigo Co.^		137,971
	2,605	Warner Chilcott plc, Class A*		39,414
	2,038	Watson Pharmaceuticals, Inc.*		122,973

				3,313,550

	Professional Services (0.3%):
	845	Dun & Bradstreet Corp.		63,232
	103	Equifax, Inc.		3,990
	845	IHS, Inc., Class A*^		72,805
	2,510	Robert Half International, Inc.		71,435
	186	Towers Watson & Co., Class A		11,147
	1,710	Verisk Analytics, Inc., Class A*		68,622

				291,231

	Real Estate Investment Trusts (REITs) (1.6%):
	1,372	Apartment Investment & Management Co., Class A^		31,432
	2,042	Boston Properties, Inc.		203,383
	870	Camden Property Trust		54,149
	5,061	CBRE Group, Inc.*		77,028
	353	Corporate Office Properties Trust^		7,505
	1,722	Digital Realty Trust, Inc.^		114,806
	385	Equity Residential Property Trust		21,957
	305	Essex Property Trust, Inc.^		42,856
	804	Federal Realty Investment Trust^		72,963
	790	Macerich Co. (The)^		39,974
	1,669	Plum Creek Timber Co., Inc.^		61,019
	2,259	Public Storage, Inc.		303,745
	2,078	Rayonier, Inc.		92,741
	4,093	Simon Property Group, Inc.		527,751
	295	UDR, Inc.		7,404
	2,629	Ventas, Inc.		144,937
	346	Vornado Realty Trust		26,594

				1,830,244

	Real Estate Management & Development (0.0%):
	563	Jones Lang LaSalle, Inc.		34,489

	Road & Rail (0.7%):
	93	Con-way, Inc.		2,712
	18,834	CSX Corp.		396,644
	4,121	Hertz Global Holdings, Inc.*		48,298


Shares			Fair Value

	Common Stocks, continued
	Road & Rail, continued
	1,562	J.B. Hunt Transport Services, Inc.	$	70,400
	1,407	Kansas City Southern Industries, Inc.*		95,690
	810	Landstar System, Inc.		38,815
	1,366	Union Pacific Corp.		144,714

				797,273

	Semiconductors & Semiconductor Equipment (2.1%):
	10,533	Advanced Micro Devices, Inc.*^		56,878
	5,504	Altera Corp.^		204,199
	5,118	Analog Devices, Inc.		183,122
	1,309	Applied Materials, Inc.		14,019
	7,322	Atmel Corp.*		59,308
	3,269	Avago Technologies, Ltd.		94,343
	9,157	Broadcom Corp., Class A		268,850
	102	Cree, Inc.*^		2,248
	2,706	Cypress Semiconductor Corp.^		45,704
	1,044	First Solar, Inc.*^		35,246
	426	Freescale Semiconductor Holdings I, Ltd.*^		5,389
	987	Intersil Corp., Class A		10,304
	2,224	KLA-Tencor Corp.^		107,308
	2,161	Lam Research Corp.*		80,000
	3,891	Linear Technology Corp.		116,847
	2,885	LSI Corp.*		17,166
	5,046	Maxim Integrated Products, Inc.		131,398
	2,151	MEMC Electronic Materials, Inc.*		8,475
	3,255	Microchip Technology, Inc.^		119,231
	10,256	NVIDIA Corp.*		142,148
	7,610	ON Semiconductor Corp.*		58,749
	266	PMC-Sierra, Inc.*		1,466
	641	Silicon Laboratories, Inc.*^		27,832
	3,278	Skyworks Solutions, Inc.*		53,169
	12,593	Texas Instruments, Inc.		366,582
	4,538	Xilinx, Inc.^		145,488

				2,355,469

	Software (6.7%):
	8,617	Adobe Systems, Inc.*		243,603
	1,568	Ansys, Inc.*		89,815
	1,689	Ariba, Inc.*^		47,427
	3,926	Autodesk, Inc.*		119,076
	3,022	BMC Software, Inc.*		99,061
	4,502	Cadence Design Systems, Inc.*		46,821
	3,211	Citrix Systems, Inc.*		194,972
	2,841	Compuware Corp.*^		23,637
	5,680	Electronic Arts, Inc.*		117,008
	789	FactSet Research Systems, Inc.		68,864
	2,006	Fortinet, Inc.*		43,751


Shares			Fair Value

	Common Stocks, continued
	Software, continued
	1,835	Informatica Corp.*	$	67,767
	5,168	Intuit, Inc.		271,785
	1,387	Micros Systems, Inc.*		64,606
	126,714	Microsoft Corp.		3,289,495
	4,088	Nuance Communications, Inc.*^		102,854
	65,586	Oracle Corp.		1,682,281
	3,298	Red Hat, Inc.*		136,174
	1,884	Rovi Corp.*		46,309
	2,287	Salesforce.com, Inc.*		232,039
	1,216	Solera Holdings, Inc.		54,161
	12,906	Symantec Corp.*		201,979
	182	Synopsys, Inc.*		4,950
	2,837	TIBCO Software, Inc.*		67,833
	1,448	VMware, Inc., Class A*		120,459

				7,436,727

	Specialty Retail (2.5%):
	1,316	Abercrombie & Fitch Co., Class A		64,273
	1,260	Advance Auto Parts, Inc.		87,734
	318	AutoNation, Inc.*^		11,725
	432	AutoZone, Inc.*		140,387
	4,255	Bed Bath & Beyond, Inc.*		246,662
	671	CarMax, Inc.*^		20,452
	2,041	Chico’s FAS, Inc.		22,737
	1,610	Dick’s Sporting Goods, Inc.		59,377
	377	DSW, Inc., Class A^		16,667
	1,094	Guess?, Inc.		32,623
	16,456	Home Depot, Inc.		691,810
	4,260	Limited Brands, Inc.^		171,891
	1,954	PetSmart, Inc.		100,221
	3,864	Ross Stores, Inc.		183,656
	1,502	Sally Beauty Holdings, Inc.*		31,737
	1,533	Sherwin Williams Co.		136,851
	2,182	Tiffany & Co.^		144,579
	6,594	TJX Cos., Inc. (The)		425,643
	1,235	Tractor Supply Co.		86,635
	791	Ulta Salon, Cosmetics & Fragrance, Inc.*		51,352
	1,854	Urban Outfitters, Inc.*		51,096
	926	Williams-Sonoma, Inc.		35,651

				2,813,759

	Textiles, Apparel & Luxury Goods (1.1%):
	5,015	Coach, Inc.		306,115
	661	Deckers Outdoor Corp.*		49,952
	909	Fossil, Inc.*		72,138
	1,620	Hanesbrands, Inc.*^		35,413
	777	J. Crew Group, Inc.*(a)(b)		—
	6,097	Nike, Inc., Class B		587,568
	140	PVH Corp.		9,869


Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Textiles, Apparel & Luxury Goods, continued
	1,073	Ralph Lauren Corp.	$	148,160
	609	Under Armour, Inc., Class A*^		43,720

				1,252,935

	Thrifts & Mortgage Finance (0.0%):
	1,041	Hudson City Bancorp, Inc.^		6,506
	1,113	People’s United Financial, Inc.		14,302

				20,808

	Tobacco (2.7%):
	26,668	Altria Group, Inc.		790,706
	27,483	Philip Morris International, Inc.		2,156,866
	1,747	Reynolds American, Inc.		72,361

				3,019,933

	Trading Companies & Distributors (0.4%):
	5,037	Fastenal Co.^		219,663
	743	MSC Industrial Direct Co., Inc., Class A		53,162
	973	W.W. Grainger, Inc.^		182,136
	373	WESCO International, Inc.*		19,773

				474,734

	Water Utilities (0.0%):
	225	Aqua America, Inc.		4,961

	Wireless Telecommunication Services (0.7%):
	6,774	American Tower Corp., Class A		406,508
	2,456	Clearwire Corp., Class A*		4,765
	4,961	Crown Castle International Corp.*		222,253
	4,658	MetroPCS Communications, Inc.*		40,431
	2,510	NII Holdings, Inc.*		53,463
	1,937	SBA Communications Corp., Class A*^		83,213

				810,633

	Total Common Stocks (Cost $97,675,250)			109,959,483

	Securities Held as Collateral for Securities on Loan (7.1%):
	$7,956,541	Allianz Variable Insurance Products Securities Lending Collateral Trust(c)		7,956,541

	Total Securities Held as Collateral for Securities on Loan (Cost $7,956,541)			7,956,541

Cash of $147,000 has been segregated to cover margin requirements for the following open contracts as of December 31, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	107,405,921

Investment securities, at value*	$	119,690,154
Cash		91
Segregated cash for collateral		147,000
Interest and dividends receivable		124,194
Receivable for capital shares issued		11,299
Prepaid expenses		1,344

Total Assets		119,974,082

Liabilities:
Payable for capital shares redeemed		29,510
Payable for collateral received on loaned securities		7,956,541
Payable for variation margin on futures contracts		6,277
Manager fees payable		41,851
Administration fees payable		4,379
Distribution fees payable		23,496
Custodian fees payable		3,263
Administrative and compliance services fees payable		957
Trustee fees payable		52
Other accrued liabilities		21,186

Total Liabilities		8,087,512

Net Assets	$	111,886,570

Net Assets Consist of:
Capital	$	100,998,906
Accumulated net investment income/(loss)		764,757
Accumulated net realized gains/(losses) from investment transactions		(2,172,292	)
Net unrealized appreciation/(depreciation) on investments		12,295,199

Net Assets	$	111,886,570

Shares of beneficial interest (unlimited number of shares authorized, no par value)		10,080,061
Net Asset Value (offering and redemption price per share)	$	11.10

*	Includes securities on loan of $7,736,457.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	110
Dividends		1,643,381
Income from securities lending		15,441
Foreign withholding tax		1,257

Total Investment Income		1,660,189

Expenses:
Manager fees		469,109
Administration fees		53,787
Distribution fees		266,538
Custodian fees		17,292
Administrative and compliance services fees		4,893
Trustee fees		8,403
Professional fees		8,961
Shareholder reports		2,853
Recoupment of prior expenses reimbursed by the Manager		16,000
Other expenses		42,401

Total expenses		890,237

Net Investment Income/(Loss)		769,952

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		(602,826	)
Net realized gains/(losses) on futures contracts		54,595
Change in unrealized appreciation/depreciation on investments		1,729,081

Net Realized/Unrealized Gains/(Losses) on Investments		1,180,850

Change in Net Assets Resulting From Operations	$	1,950,802

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Russell 1000 Growth Index Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees $1,517 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

The following is a summary of the fair value of derivative instruments as of December 31, 2011:

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

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. During the year ended December 31, 2011, there were no voluntary waivers.

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $1,561 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

Other assets and securities for which market quotations are not readily available, or are deemed unreliable are valued at fair value as determined in good faith by the 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. Depending on the source and relative significance of valuation inputs, these instruments may be classified as Level 2 or Level 3 in the fair value hierarchy. 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.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks+	$	109,959,483	$	—	$	—	$	109,959,483
Securities Held as Collateral for Securities on Loan		—		7,956,541		—		7,956,541
Unaffiliated Investment Company		1,774,130		—		—		1,774,130

Total Investment Securities		111,733,613		7,956,541		—		119,690,154

Other Financial Instruments:*
Futures Contracts		10,966		—		—		10,966

Total Investments	$	111,744,579	$	7,956,541	$	—	$	119,701,120

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $107,651,116. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

During the year ended December 31, 2010 there were no dividends paid to shareholders.

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Russell 1000 Growth Index Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended and the statements of changes in net assets and the financial highlights for each of the periods in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended and the changes in its net assets and the financial highlights for each of the periods in the two-year period then ended, in conformity with U.S. generally accepted accounting principles.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® Russell 1000 Value Index Fund returned –0.25%. That compared to a 0.39% total return for its benchmark, the Russell 1000^® Value Index¹.

The Fund attempts to replicate the performance of the Russell 1000^® Value index of U.S. large-cap value stocks. U.S. equities delivered paltry rewards for the extreme volatility investors endured in 2011. Political turmoil, natural disasters and, above all, global debt problems led to market activity during the year that was characterized by a tug-of-war between assets perceived as high risk and those, perceived as low risk. For the year, the 2.64% total return for the Russell 1000^® Growth Index² outperformed the 0.39% total return for the Russell 1000^® Value Index.

recapitalize the region’s banks, and increase the

U.S. stocks outperformed most international markets during the year due to their relative safety in a time of heightened uncertainty overseas. Dividend-paying stocks performed particularly well as investors sought yield in a low-interest rate environment. Among sectors in the benchmark, utilities performed strongest in 2011 as did health care stocks, which benefited from increased merger and acquisition activity. The defensive consumer staples sector performed well. Financials were battered by the world’s debt problems, and saw the largest losses of any sector in the Fund’s benchmark. In addition, cyclical materials and the information technology sectors also declined amid heightened uncertainty about the global economy.*

The underperformance of the Fund compared to its benchmark was the result of Fund expenses that are not incurred by the benchmark.

Past performance does not guarantee future results.

¹	The Russell 1000^® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.

²	The Russell 1000^® Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.

Investors cannot invest directly in an index.

Fund Objective

The Fund’s investment objective is to match the total return of the Russell 1000^® Value Index. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing in all stocks in the Index in proportion to their weighting in the Index.

Investment Concerns

Value-based investments are subject to the risk that the broad market may not recognize their intrinsic value.

Investing in derivatives instruments involves risks that may be different from or greater than the risk associated with investing directly in securities or other traditional instruments.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Returns as of December 31, 2011


				Since
	1			Inception
	Year			(4/30/10)
AZL^® Russell 1000 Value Index Fund		–0.25	%		2.75	%
Russell 1000^® Value Index		0.39	%		3.47	%

Expense Ratio


	Gross
AZL^® Russell 1000 Value Index Fund		0.85	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 0.84% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The Fund’s performance is measured against the Russell 1000^® Value Index, an unmanaged index that measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected 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.

As a shareholder of the AZL Russell 1000 Value Index Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (98.3%):
	Aerospace & Defense (1.3%):
	859	Alliant Techsystems, Inc.	$	49,100
	137	BE Aerospace, Inc.*		5,303
	2,314	Boeing Co. (The)		169,732
	5,235	Exelis, Inc.		47,377
	9,215	General Dynamics Corp.		611,968
	2,047	Goodrich Corp.		253,214
	2,770	L-3 Communications Holdings, Inc.		184,704
	934	Lockheed Martin Corp.		75,561
	7,248	Northrop Grumman Corp.		423,863
	9,880	Raytheon Co.		477,994
	2,580	Spirit AeroSystems Holdings, Inc., Class A*		53,612
	1,387	United Technologies Corp.		101,376

				2,453,804

	Air Freight & Logistics (0.4%):
	8,248	FedEx Corp.		688,790
	255	UTI Worldwide, Inc.		3,389

				692,179

	Airlines (0.2%):
	4,527	AMR Corp.*		1,584
	180	Copa Holdings SA, Class A		10,561
	9,362	Delta Air Lines, Inc.*		75,739
	18,095	Southwest Airlines Co.		154,893
	1,310	United Continental Holdings, Inc.*^		24,720

				267,497

	Auto Components (0.5%):
	2,473	Autoliv, Inc.^		132,280
	516	Federal-Mogul Corp.*		7,611
	14,058	Johnson Controls, Inc.		439,453
	2,916	Lear Corp.		116,057
	2,848	TRW Automotive Holdings Corp.*		92,845
	1,367	Visteon Corp.*		68,268

				856,514

	Automobiles (0.5%):
	45,373	Ford Motor Co.		488,214
	21,084	General Motors Co.*		427,373
	1,236	Thor Industries, Inc.^		33,903

				949,490

	Beverages (0.3%):
	4,276	Beam, Inc.		219,059
	425	Brown-Forman Corp., Class B		34,217
	2,069	Coca-Cola Enterprises, Inc.		53,339
	5,109	Constellation Brands, Inc.*		105,603
	3,723	Molson Coors Brewing Co., Class B		162,099

				574,317

	Biotechnology (0.9%):
	24,382	Amgen, Inc.		1,565,568
	703	Vertex Pharmaceuticals, Inc.*		23,347

				1,588,915


Shares			Fair Value

	Common Stocks, continued
	Building Products (0.1%):
	504	Armstrong World Industries, Inc.*^	$	22,110
	4,276	Fortune Brands Home & Security, Inc.*		72,820
	3,462	Owens Corning, Inc.*^		99,429

				194,359

	Capital Markets (2.6%):
	413	Affiliated Managers Group, Inc.*		39,627
	9,912	American Capital, Ltd.		66,708
	6,276	Ameriprise Financial, Inc.		311,541
	5,679	Ares Capital Corp.^		87,741
	34,444	Bank of New York Mellon Corp.		685,780
	1,199	BlackRock, Inc.^+		213,710
	7,127	ETRADE Financial Corp.		56,731
	440	Federated Investors, Inc.^		6,666
	14,361	Goldman Sachs Group, Inc. (The)		1,298,665
	12,817	Invesco, Ltd.		257,493
	5,368	Janus Capital Group, Inc.^		33,872
	3,696	Jefferies Group, Inc.		50,820
	3,877	Legg Mason, Inc.^		93,242
	139	LPL Investment Holdings, Inc.*^		4,245
	42,847	Morgan Stanley		648,275
	6,023	Northern Trust Corp.		238,872
	2,833	Raymond James Financial, Inc.		87,710
	13,981	State Street Corp.		563,574

				4,745,272

	Chemicals (1.0%):
	2,195	Ashland, Inc.^		125,466
	1,798	Cabot Corp.		57,788
	299	CF Industries Holdings, Inc.		43,349
	1,346	Cytec Industries, Inc.		60,099
	32,610	Dow Chemical Co. (The)^		937,864
	4,223	Huntsman Corp.		42,230
	614	KAR Auction Services, Inc.*		8,289
	8,095	LyondellBasell Industries NV, Class A		263,006
	91	Rockwood Holdings, Inc.*		3,583
	3,635	RPM International, Inc.		89,239
	158	Scotts Miracle-Gro Co. (The), Class A^		7,377
	2,325	Valspar Corp. (The)		90,605
	188	W. R. Grace & Co.*		8,633
	404	Westlake Chemical Corp.^		16,257

				1,753,785

	Commercial Banks (4.8%):
	4,695	Associated Banc-Corp.		52,443
	1,306	Bank of Hawaii Corp.^		58,104
	19,319	BB&T Corp.^		486,259
	714	BOK Financial Corp.^		39,220
	7,621	CapitalSource, Inc.		51,061
	1,269	City National Corp.^		56,064


Shares			Fair Value

	Common Stocks, continued
	Commercial Banks, continued
	5,573	Comerica, Inc.	$	143,783
	2,154	Commerce Bancshares, Inc.^		82,110
	1,490	Cullen/Frost Bankers, Inc.^		78,836
	4,176	East West Bancorp, Inc.		82,476
	25,484	Fifth Third Bancorp		324,157
	157	First Citizens BancShares, Inc., Class A		27,473
	7,158	First Horizon National Corp.^		57,264
	2,011	First Republic Bank*^		61,557
	5,410	Fulton Financial Corp.		53,072
	23,949	Huntington Bancshares, Inc.		131,480
	26,374	KeyCorp		202,816
	3,481	M&T Bank Corp.^		265,740
	14,598	PNC Financial Services Group, Inc.		841,867
	27,852	Popular, Inc.*		38,714
	34,852	Regions Financial Corp.		149,864
	14,892	SunTrust Banks, Inc.		263,588
	19,405	Synovus Financial Corp.^		27,361
	4,337	TCF Financial Corp.^		44,758
	53,443	U.S. Bancorp		1,445,633
	4,635	Valley National Bancorp^		57,335
	126,892	Wells Fargo & Co.		3,497,144
	5,099	Zions Bancorp^		83,012

				8,703,191

	Commercial Services & Supplies (0.6%):
	2,795	Avery Dennison Corp.		80,161
	3,130	Cintas Corp.		108,955
	2,760	Corrections Corp. of America*		56,221
	2,854	Covanta Holding Corp.		39,071
	5,155	Pitney Bowes, Inc.^		95,574
	5,284	R.R. Donnelley & Sons Co.^		76,248
	8,900	Republic Services, Inc.		245,195
	361	Waste Connections, Inc.		11,964
	13,154	Waste Management, Inc.		430,267

				1,143,656

	Communications Equipment (2.0%):
	13,382	Brocade Communications Systems, Inc.*		69,453
	152,568	Cisco Systems, Inc.		2,758,429
	1,067	EchoStar Corp., Class A*		22,343
	2,405	Harris Corp.		86,676
	7,233	Motorola Mobility Holdings, Inc.*		280,640
	8,344	Motorola Solutions, Inc.		386,244
	10,018	Tellabs, Inc.		40,473

				3,644,258

	Computers & Peripherals (1.2%):
	12,001	Dell, Inc.*		175,575
	1,780	Diebold, Inc.		53,525
	216	Fusion-io, Inc.*^		5,227
	55,116	Hewlett-Packard Co.		1,419,788


Shares			Fair Value

	Common Stocks, continued
	Computers & Peripherals, continued
	2,086	Lexmark International, Inc.^	$	68,984
	868	NCR Corp.*		14,287
	492	QLogic Corp.*^		7,380
	6,612	SanDisk Corp.*		325,376
	6,446	Western Digital Corp.*		199,504

				2,269,646

	Construction & Engineering (0.3%):
	1,825	Aecom Technology Corp.*		37,540
	1,159	Chicago Bridge & Iron Co. NV		43,810
	3,517	Jacobs Engineering Group, Inc.*		142,720
	3,960	KBR, Inc.		110,365
	5,996	Quanta Services, Inc.*		129,154
	1,986	Shaw Group, Inc.*		53,423
	2,222	URS Corp.*		78,037

				595,049

	Construction Materials (0.1%):
	660	Martin Marietta Materials, Inc.^		49,771
	3,581	Vulcan Materials Co.^		140,912

				190,683

	Consumer Finance (0.9%):
	11,512	American Express Co.		543,021
	12,736	Capital One Financial Corp.^		538,605
	13,633	Discover Financial Services		327,192
	14,630	SLM Corp.		196,042

				1,604,860

	Containers & Packaging (0.3%):
	1,864	AptarGroup, Inc.		97,245
	2,922	Bemis Co., Inc.		87,894
	1,048	Greif, Inc., Class A		47,736
	4,549	Owens-Illinois, Inc.*		88,160
	251	Packaging Corp. of America		6,335
	5,337	Sealed Air Corp.		91,850
	2,765	Sonoco Products Co.^		91,134
	2,244	Temple-Inland, Inc.		71,157

				581,511

	Distributors (0.1%):
	3,172	Genuine Parts Co.		194,126

	Diversified Consumer Services (0.1%):
	312	Booz Allen Hamilton Holding Corp.*^		5,382
	1,579	Career Education Corp.*		12,585
	329	DeVry, Inc.		12,653
	1,117	Education Management Corp.*^		31,265
	3,445	H&R Block, Inc.		56,257
	6,744	Service Corp. International		71,823

				189,965


Shares			Fair Value

	Common Stocks, continued
	Diversified Financial Services (4.6%):
	281,076	Bank of America Corp.	$	1,562,783
	5,562	CIT Group, Inc.*		193,947
	80,609	Citigroup, Inc.		2,120,823
	1,860	CME Group, Inc.		453,226
	944	Interactive Brokers Group, Inc., Class A		14,103
	110,225	JPMorgan Chase & Co.		3,664,981
	5,481	Leucadia National Corp.		124,638
	3,032	NASDAQ OMX Group, Inc. (The)*		74,314
	5,018	NYSE Euronext		130,970

				8,339,785

	Diversified Telecommunication Services (4.6%):
	164,269	AT&T, Inc.		4,967,494
	16,968	CenturyTel, Inc.		631,210
	27,605	Frontier Communications Corp.^		142,166
	3,766	Level 3 Communications, Inc.*^		63,984
	558	TW Telecom, Inc.*		10,814
	60,740	Verizon Communications, Inc.		2,436,889
	6,754	Windstream Corp.^		79,292

				8,331,849

	Electric Utilities (3.8%):
	13,364	American Electric Power Co., Inc.		552,067
	36,929	Duke Energy Corp.^		812,438
	9,037	Edison International		374,132
	4,937	Entergy Corp.		360,648
	18,374	Exelon Corp.^		796,880
	11,601	FirstEnergy Corp.		513,924
	3,781	Great Plains Energy, Inc.		82,350
	2,702	Hawaiian Electric Industries, Inc.^		71,549
	2,594	ITT Corp.		50,142
	11,705	NextEra Energy, Inc.		712,601
	4,903	Northeast Utilities		176,851
	6,542	NV Energy, Inc.		106,962
	6,262	Pepco Holdings, Inc.^		127,119
	3,024	Pinnacle West Capital Corp.		145,696
	16,009	PPL Corp.		470,985
	8,170	Progress Energy, Inc.		457,683
	23,554	Southern Co.		1,090,315
	3,153	Westar Energy, Inc.		90,743

				6,993,085

	Electrical Equipment (0.2%):
	1,584	Cooper Industries plc, A Shares		85,774
	643	General Cable Corp.*^		16,082
	3,336	GrafTech International, Ltd.*		45,536
	1,671	Hubbell, Inc., Class B		111,723
	1,053	Regal-Beloit Corp.^		53,671
	1,076	Thomas & Betts Corp.*		58,750

				371,536


Shares			Fair Value

	Common Stocks, continued
	Electronic Equipment, Instruments & Components (0.6%):
	2,752	Arrow Electronics, Inc.*	$	102,952
	4,244	Avnet, Inc.*		131,946
	1,348	AVX Corp.		17,201
	43,547	Corning, Inc.		565,240
	4,486	Ingram Micro, Inc., Class A*		81,600
	1,121	Itron, Inc.*		40,098
	858	Jabil Circuit, Inc.		16,868
	3,749	Molex, Inc.^		89,451
	1,211	Tech Data Corp.*		59,836
	3,896	Vishay Intertechnology, Inc.*		35,025

				1,140,217

	Energy Equipment & Services (1.0%):
	1,103	Atwood Oceanics, Inc.*		43,888
	7,258	Baker Hughes, Inc.		353,029
	1,787	Cameron International Corp.*		87,903
	985	Diamond Offshore Drilling, Inc.^		54,431
	178	Helmerich & Payne, Inc.^		10,388
	7,971	Nabors Industries, Ltd.*		138,217
	11,736	National-Oilwell Varco, Inc.		797,931
	209	Oil States International, Inc.*		15,961
	3,810	Patterson-UTI Energy, Inc.		76,124
	3,000	Rowan Cos., Inc.*^		90,990
	594	Seacor Holdings, Inc.*		52,842
	2,534	SunPower Corp.*^		15,787
	1,379	Tidewater, Inc.^		67,985
	1,132	Unit Corp.*		52,525

				1,858,001

	Food & Staples Retailing (1.4%):
	37,612	CVS Caremark Corp.		1,533,817
	3,980	Kroger Co. (The)		96,396
	9,822	Safeway, Inc.^		206,655
	5,780	Supervalu, Inc.^		46,934
	11,813	Wal-Mart Stores, Inc.		705,945
	1,405	Walgreen Co.		46,449

				2,636,196

	Food Products (2.3%):
	18,746	Archer-Daniels Midland Co.		536,136
	3,034	Bunge, Ltd.		173,545
	1,194	Campbell Soup Co.^		39,688
	9,913	ConAgra Foods, Inc.		261,703
	440	Corn Products International, Inc.		23,140
	5,019	Dean Foods Co.*		56,213
	4,356	General Mills, Inc.		176,026
	3,713	H.J. Heinz Co.^		200,650
	1,092	Hershey Co.		67,464
	1,762	Hormel Foods Corp.^		51,609
	3,217	J.M. Smucker Co. (The)		251,473
	472	Kellogg Co.		23,869
	45,836	Kraft Foods, Inc., Class A		1,712,433
	1,138	McCormick & Co.^		57,378


Shares			Fair Value

	Common Stocks, continued
	Food Products, continued
	1,527	Ralcorp Holdings, Inc.*	$	130,558
	2,725	Sara Lee Corp.		51,557
	4,648	Smithfield Foods, Inc.*^		112,853
	8,348	Tyson Foods, Inc., Class A		172,303

				4,098,598

	Gas Utilities (0.6%):
	3,230	AGL Resources, Inc.		136,500
	2,505	Atmos Energy Corp.		83,542
	1,968	Energen Corp.		98,400
	1,964	National Fuel Gas Co.^		109,159
	2,748	ONEOK, Inc.		238,224
	1,059	QEP Resources, Inc.		31,028
	4,923	Questar Corp.+		97,771
	3,097	UGI Corp.		91,052

				885,676

	Health Care Equipment & Supplies (0.8%):
	2,332	Alere, Inc.*		53,846
	1,582	Baxter International, Inc.		78,277
	42,390	Boston Scientific Corp.*		226,363
	4,300	CareFusion Corp.*		109,263
	949	Cooper Cos., Inc. (The)		66,924
	6,408	Covidien plc		288,424
	2,318	DENTSPLY International, Inc.^		81,107
	152	Hill-Rom Holdings, Inc.^		5,121
	7,261	Hologic, Inc.*		127,140
	4,067	Medtronic, Inc.		155,563
	1,139	Teleflex, Inc.		69,809
	4,970	Zimmer Holdings, Inc.*		265,497

				1,527,334

	Health Care Providers & Services (2.3%):
	10,527	Aetna, Inc.		444,134
	431	AMERIGROUP Corp.*		25,464
	324	Brookdale Senior Living, Inc.*		5,634
	4,862	Cardinal Health, Inc.		197,446
	7,918	CIGNA Corp.		332,556
	2,599	Community Health Systems, Inc.*		45,353
	4,111	Coventry Health Care, Inc.*		124,851
	1,177	HCA Holdings, Inc.*		25,929
	2,301	Health Net, Inc.*		69,997
	1,210	Henry Schein, Inc.*		77,960
	4,671	Humana, Inc.		409,226
	1,336	LifePoint Hospitals, Inc.*^		49,632
	3,216	Omnicare, Inc.^		110,791
	1,555	Patterson Companies, Inc.^		45,904
	385	Quest Diagnostics, Inc.^		22,353
	11,554	Tenet Healthcare Corp.*^		59,272
	30,053	UnitedHealth Group, Inc.		1,523,086
	2,377	VCA Antech, Inc.*^		46,946
	9,649	WellPoint, Inc.		639,246

				4,255,780


Shares			Fair Value

	Common Stocks, continued
	Health Care Technology (0.0%):
	944	Allscripts Healthcare Solutions, Inc.*	$	17,879

	Hotels, Restaurants & Leisure (0.6%):
	77	Bally Technologies, Inc.*^		3,046
	169	Brinker International, Inc.		4,522
	11,828	Carnival Corp.		386,066
	751	Choice Hotels International, Inc.^		28,575
	105	Dunkin’ Brands Group, Inc.*^		2,623
	1,153	Hyatt Hotels Corp., Class A*		43,399
	4,126	International Game Technology		70,967
	1,654	Madison Square Garden, Inc., Class A*		47,370
	7,646	MGM Resorts International*^		79,748
	1,912	Penn National Gaming, Inc.*		72,790
	1,627	Royal Caribbean Cruises, Ltd.		40,301
	8,496	Wendy’s Co. (The)		45,539
	1,607	WMS Industries, Inc.*^		32,976
	4,272	Wyndham Worldwide Corp.		161,610

				1,019,532

	Household Durables (0.5%):
	7,760	D.R. Horton, Inc.^		97,854
	2,819	Garmin, Ltd.^		112,224
	693	Harman International Industries, Inc.		26,362
	2,556	Jarden Corp.		76,373
	1,051	Leggett & Platt, Inc.^		24,215
	4,494	Lennar Corp.^		88,307
	1,580	Mohawk Industries, Inc.*^		94,563
	8,125	Newell Rubbermaid, Inc.		131,219
	140	NVR, Inc.*		96,040
	9,303	Pulte Group, Inc.*^		58,702
	4,123	Toll Brothers, Inc.*		84,192
	2,119	Whirlpool Corp.^		100,546

				990,597

	Household Products (3.0%):
	555	Aaron’s, Inc.^		14,807
	1,677	Church & Dwight Co., Inc.^		76,739
	3,484	Clorox Co. (The)		231,895
	1,335	Colgate-Palmolive Co.		123,341
	1,933	Energizer Holdings, Inc.*		149,769
	1,351	Kimberly-Clark Corp.		99,380
	72,240	Procter & Gamble Co. (The)		4,819,130

				5,515,061

	Independent Power Producers & Energy Traders (0.4%):
	18,221	AES Corp. (The)*		215,737
	10,650	Calpine Corp.*		173,914
	5,166	Constellation Energy Group, Inc.		204,935
	20,824	GenOn Energy, Inc.*		54,351
	6,687	NRG Energy, Inc.*		121,168

				770,105


Shares			Fair Value

	Common Stocks, continued
	Industrial Conglomerates (3.4%):
	2,306	3M Co.	$	188,469
	1,533	Carlisle Cos., Inc.		67,912
	294,182	General Electric Co.		5,268,799
	751	McDermott International, Inc.*		8,644
	7,228	Textron, Inc.^		133,646
	13,008	Tyco International, Ltd.		607,604

				6,275,074

	Insurance (7.4%):
	9,359	ACE, Ltd.		656,253
	12,973	AFLAC, Inc.		561,212
	180	Alleghany Corp.*^		51,352
	1,030	Allied World Assurance Co. Holdings AG		64,818
	14,506	Allstate Corp. (The)		397,609
	2,241	American Financial Group, Inc.		82,670
	12,259	American International Group, Inc.*		284,409
	171	American National Insurance Co.		12,488
	9,169	Aon Corp.		429,109
	3,660	Arch Capital Group, Ltd.*		136,262
	3,064	Arthur J. Gallagher & Co.		102,460
	1,925	Aspen Insurance Holdings, Ltd.		51,012
	2,707	Assurant, Inc.		111,149
	5,219	Assured Guaranty, Ltd.		68,578
	3,611	Axis Capital Holdings, Ltd.		115,408
	48,558	Berkshire Hathaway, Inc., Class B*		3,704,975
	3,285	Brown & Brown, Inc.		74,340
	8,115	Chubb Corp. (The)^		561,720
	4,071	Cincinnati Financial Corp.^		124,003
	683	CNA Financial Corp.		18,270
	2,714	CoreLogic, Inc.*		35,092
	1,116	Endurance Specialty Holdings, Ltd.		42,687
	1,288	Everest Re Group, Ltd.		108,308
	6,099	Fidelity National Financial, Inc., Class A^		97,157
	13,607	Genworth Financial, Inc.*		89,126
	1,241	Hanover Insurance Group, Inc. (The)		43,373
	12,351	Hartford Financial Services Group, Inc. (The)		200,704
	2,954	HCC Insurance Holdings, Inc.		81,235
	1,387	Kemper Corp.		40,514
	8,695	Lincoln National Corp.		168,857
	8,789	Loews Corp.		330,906
	273	Markel Corp.*^		113,205
	15,214	Marsh & McLennan Cos., Inc.		481,067
	4,128	MBIA, Inc.*		47,843
	685	Mercury General Corp.^		31,250
	22,782	MetLife, Inc.		710,343
	7,304	Old Republic International Corp.		67,708
	1,879	PartnerRe, Ltd.		120,651
	8,465	Principal Financial Group, Inc.		208,239
	17,214	Progressive Corp. (The)		335,845


Shares			Fair Value

	Common Stocks, continued
	Insurance, continued
	2,346	Protective Life Corp.^	$	52,926
	13,482	Prudential Financial, Inc.		675,718
	2,069	Reinsurance Group of America, Inc.		108,105
	1,435	RenaissanceRe Holdings, Ltd.		106,721
	1,244	StanCorp Financial Group, Inc.^		45,717
	2,915	Torchmark Corp.^		126,482
	1,592	Transatlantic Holdings, Inc.		87,130
	11,619	Travelers Cos., Inc. (The)		687,496
	8,110	UnumProvident Corp.		170,878
	1,826	Validus Holdings, Ltd.		57,519
	3,202	W.R. Berkley Corp.^		110,117
	191	White Mountains Insurance Group, Ltd.		86,611
	8,583	XL Group plc		169,686

				13,447,313

	Internet & Catalog Retail (0.2%):
	1,137	Expedia, Inc.^		32,995
	219	Groupon, Inc.*		4,518
	95	HomeAway, Inc.*^		2,209
	16,675	Liberty Media Corp. - Interactive, Class A*		270,385
	1,137	TripAdvisor, Inc.*^		28,664

				338,771

	Internet Software & Services (0.6%):
	429	Akamai Technologies, Inc.*		13,848
	2,700	AOL, Inc.*^		40,770
	14,514	eBay, Inc.*		440,210
	2,128	IAC/InterActiveCorp^		90,653
	36,142	Yahoo!, Inc.*		582,970

				1,168,451

	IT Services (0.9%):
	4,846	Amdocs, Ltd.*		138,256
	177	Broadridge Financial Solutions, Inc.		3,991
	4,302	Computer Sciences Corp.^		101,957
	788	DST Systems, Inc.		35,870
	7,278	Fidelity National Information Services, Inc.		193,522
	782	Fiserv, Inc.*		45,935
	724	Genpact, Ltd.*		10,824
	764	Paychex, Inc.		23,004
	5,507	SAIC, Inc.*^		67,681
	4,494	Total System Services, Inc.		87,903
	9,820	Visa, Inc., Class A		997,025

				1,705,968

	Leisure Equipment & Products (0.0%):
	2,510	Mattel, Inc.		69,678

	Life Sciences Tools & Services (0.5%):
	541	Bio-Rad Laboratories, Inc., Class A*		51,958
	4,527	Life Technologies Corp.*		176,146
	3,206	PerkinElmer, Inc.		64,120


Shares			Fair Value

	Common Stocks, continued
	Life Sciences Tools & Services continued
	6,482	QIAGEN NV*	$	89,516
	10,631	Thermo Fisher Scientific, Inc.*		478,076

				859,816

	Machinery (1.0%):
	2,647	AGCO Corp.*		113,742
	761	CNH Global NV, NYS*		27,388
	1,332	Crane Co.		62,218
	1,126	Dover Corp.		65,364
	5,877	Eaton Corp.		255,826
	129	Flowserve Corp.		12,812
	2,014	Harsco Corp.		41,448
	221	IDEX Corp.		8,201
	816	Illinois Tool Works, Inc.		38,115
	1,792	Ingersoll-Rand plc		54,602
	2,027	Kennametal, Inc.		74,026
	914	Lincoln Electric Holdings, Inc.		35,756
	918	Navistar International Corp.*		34,774
	2,469	Oshkosh Corp.*		52,787
	2,467	Parker Hannifin Corp.		188,109
	2,686	Pentair, Inc.^		89,417
	1,349	Snap-On, Inc.		68,286
	1,013	SPX Corp.		61,053
	4,663	Stanley Black & Decker, Inc.		315,219
	3,011	Terex Corp.*^		40,679
	349	Timken Co.		13,510
	2,182	Trinity Industries, Inc.^		65,591
	5,107	Xylem, Inc.		131,199

				1,850,122

	Marine (0.1%):
	1,160	Alexander & Baldwin, Inc.		47,351
	1,353	Huntington Ingalls Industries, Inc.*^		42,322
	449	Kirby Corp.*		29,562

				119,235

	Media (3.5%):
	15,676	CBS Corp., Class B		425,447
	1,048	Clear Channel Outdoor Holdings, Inc., Class A*		13,152
	43,146	Comcast Corp., Class A		1,022,992
	1,395	DISH Network Corp., Class A		39,730
	1,979	DreamWorks Animation SKG, Inc., Class A*^		32,842
	6,767	Gannett Co., Inc.		90,475
	8,008	Interpublic Group of Cos., Inc. (The)		77,918
	1,171	Lamar Advertising Co.*^		32,203
	3,247	Liberty Media Corp. - Liberty Capital, Class A*		253,428
	1,523	McGraw-Hill Cos., Inc. (The)		68,489
	63,679	News Corp., Class A		1,136,033
	287	Nielsen Holdings NV*		8,521
	235	Pandora Media, Inc.*		2,352


Shares			Fair Value

	Common Stocks, continued
	Media, continued
	1,386	Regal Entertainment Group, Class A^	$	16,549
	5,509	Thomson Reuters Corp.		146,925
	27,763	Time Warner, Inc.		1,003,355
	52,431	Walt Disney Co. (The)		1,966,162
	137	Washington Post Co. (The), Class B^		51,623

				6,388,196

	Metals & Mining (0.9%):
	2,257	AK Steel Holding Corp.		18,643
	29,506	Alcoa, Inc.^		255,227
	3,194	Commercial Metals Co.		44,173
	13,491	Newmont Mining Corp.		809,595
	8,767	Nucor Corp.		346,910
	1,790	Reliance Steel & Aluminum Co.		87,155
	404	Schnitzer Steel Industries, Inc.^		17,081
	1,753	Steel Dynamics, Inc.		23,052
	1,020	Titanium Metals Corp.^		15,280
	4,023	United States Steel Corp.^		106,448

				1,723,564

	Multi-Utilities (2.9%):
	3,077	Alliant Energy Corp.		135,726
	6,689	Ameren Corp.		221,607
	11,800	CenterPoint Energy, Inc.		237,062
	7,000	CMS Energy Corp.		154,560
	8,116	Consolidated Edison, Inc.^		503,435
	15,972	Dominion Resources, Inc.		847,794
	4,697	DTE Energy Co.		255,752
	2,187	Integrys Energy Group, Inc.^		118,492
	5,283	MDU Resources Group, Inc.		113,373
	7,755	NiSource, Inc.		184,646
	2,873	NSTAR		134,916
	2,716	OGE Energy Corp.		154,024
	11,039	PG&E Corp.		455,028
	14,033	Public Service Enterprise Group, Inc.		463,229
	3,195	SCANA Corp.^		143,967
	6,642	Sempra Energy		365,310
	6,012	TECO Energy, Inc.^		115,070
	2,312	Vectren Corp.		69,892
	6,484	Wisconsin Energy Corp.		226,681
	13,430	Xcel Energy, Inc.		371,205

				5,271,769

	Multiline Retail (0.9%):
	1,220	Big Lots, Inc.*		46,067
	892	Dillard’s, Inc., Class A^		40,033
	4,586	J.C. Penney Co., Inc.		161,198
	1,098	Kohl’s Corp.		54,186
	10,347	Macy’s, Inc.		332,967
	1,045	Sears Holdings Corp.*^		33,210
	18,103	Target Corp.		927,236

				1,594,897


Shares			Fair Value

	Common Stocks, continued
	Office Electronics (0.2%):
	38,867	Xerox Corp.	$	309,381

	Oil, Gas & Consumable Fuels (11.0%):
	2,707	Alpha Natural Resources, Inc.*		55,304
	11,703	Anadarko Petroleum Corp.		893,290
	7,573	Apache Corp.		685,962
	5,158	Arch Coal, Inc.		74,843
	18,243	Chesapeake Energy Corp.^		406,636
	52,583	Chevron Corp.		5,594,832
	1,749	Cimarex Energy Co.^		108,263
	209	Cobalt International Energy, Inc.*		3,244
	36,830	ConocoPhillips		2,683,802
	1,927	Denbury Resources, Inc.*		29,098
	11,733	Devon Energy Corp.		727,446
	1,284	El Paso Corp.		34,116
	2,266	EQT Corp.		124,154
	319	EXCO Resources, Inc.^		3,333
	35,801	Exxon Mobil Corp.		3,034,493
	626	Forest Oil Corp.*		8,482
	8,416	Hess Corp.		478,029
	1,488	Kinder Morgan, Inc.^		47,869
	169	Kosmos Energy LLC*		2,072
	19,752	Marathon Oil Corp.		578,141
	9,876	Marathon Petroleum Corp.		328,772
	4,544	Murphy Oil Corp.		253,283
	1,612	Newfield Exploration Co.*		60,821
	3,911	Noble Energy, Inc.^		369,159
	16,054	Occidental Petroleum Corp.		1,504,260
	600	Pioneer Natural Resources Co.		53,688
	3,911	Plains Exploration & Production Co.*		143,612
	3,269	Quicksilver Resources, Inc.*^		21,935
	358	SM Energy Co.		26,170
	3,459	Southern Union Co.		145,658
	18,027	Spectra Energy Corp.		554,330
	3,014	Sunoco, Inc.		123,634
	1,186	Teekay Shipping Corp.		31,702
	3,988	Tesoro Corp.*^		93,160
	15,818	Valero Energy Corp.		332,969
	16,314	Williams Cos., Inc. (The)		538,688

				20,155,250

	Paper & Forest Products (0.4%):
	1,011	Domtar Corp.		80,839
	9,557	International Paper Co.		282,887
	4,707	MeadWestvaco Corp.		140,975
	10,607	Weyerhaeuser Co.		198,033

				702,734

	Personal Products (0.2%):
	4,631	Mead Johnson Nutrition Co., Class A		318,289

	Pharmaceuticals (8.1%):
	2,630	Abbott Laboratories		147,885


Shares			Fair Value

	Common Stocks, continued
	Pharmaceuticals continued
	47,322	Bristol-Myers Squibb Co.	$	1,667,627
	18,969	Eli Lilly & Co.		788,352
	7,411	Forest Laboratories, Inc.*		224,257
	797	Hospira, Inc.*^		24,205
	60,525	Johnson & Johnson Co.		3,969,229
	85,618	Merck & Co., Inc.		3,227,799
	1,218	Mylan, Inc.*		26,138
	219,168	Pfizer, Inc.		4,742,795
	381	Warner Chilcott plc, Class A*		5,765
	185	Watson Pharmaceuticals, Inc.*		11,163

				14,835,215

	Professional Services (0.2%):
	3,250	Equifax, Inc.		125,905
	2,280	Manpower, Inc.		81,510
	3,694	Monster Worldwide, Inc.*		29,294
	1,268	Towers Watson & Co., Class A		75,991
	562	Verisk Analytics, Inc., Class A*		22,553

				335,253

	Real Estate Investment Trusts (REITs) (3.3%):
	1,717	Alexandria Real Estate Equities, Inc.^		118,422
	6,217	American Capital Agency Corp.*		174,573
	26,381	Annaly Capital Management, Inc.^		421,041
	1,125	Apartment Investment & Management Co., Class A^		25,774
	2,609	Avalonbay Communities, Inc.		340,735
	734	Boston Properties, Inc.		73,106
	3,790	Brandywine Realty Trust^		36,005
	2,097	BRE Properties, Inc.^		105,857
	554	Camden Property Trust		34,481
	28,489	Chimera Investment Corp.^		71,507
	2,293	CommonWealth REIT		38,156
	1,351	Corporate Office Properties Trust^		28,722
	6,078	DDR Corp.^		73,969
	3,379	Douglas Emmett, Inc.^		61,633
	7,023	Duke Realty Corp.^		84,627
	7,577	Equity Residential Property Trust		432,116
	394	Essex Property Trust, Inc.^		55,361
	423	Federal Realty Investment Trust^		38,387
	15,634	General Growth Properties, Inc.		234,823
	11,263	HCP, Inc.^		466,626
	5,310	Health Care REIT, Inc.^		289,554
	3,437	Hospitality Properties Trust		78,982
	19,033	Host Hotels & Resorts, Inc.		281,117
	11,287	Kimco Realty Corp.^		183,301
	3,193	Liberty Property Trust^		98,600
	2,342	Macerich Co. (The)^		118,505
	2,458	Mack-Cali Realty Corp.^		65,604
	4,792	Piedmont Office Realty Trust, Inc., Class A^		81,656
	1,819	Plum Creek Timber Co., Inc.^		66,503


Shares			Fair Value

	Common Stocks, continued
	Real Estate Investment Trusts (REITs), continued
	12,729	ProLogis, Inc.	$	363,922
	233	Public Storage, Inc.		31,329
	3,706	Realty Income Corp.^		129,562
	2,453	Regency Centers Corp.		92,282
	4,514	Senior Housing Properties Trust		101,294
	1,489	Simon Property Group, Inc.		191,992
	2,466	SL Green Realty Corp.^		164,334
	1,550	Taubman Centers, Inc.		96,255
	5,568	UDR, Inc.		139,757
	2,763	Ventas, Inc.		152,324
	4,548	Vornado Realty Trust		349,559
	3,375	Weingarten Realty Investors^		73,643

				6,065,996

	Real Estate Management & Development (0.1%):
	3,732	Forest City Enterprises, Inc., Class A*		44,112
	617	Howard Hughes Corp. (The)*		27,253
	248	Jones Lang LaSalle, Inc.		15,193
	1,865	St. Joe Co. (The)*^		27,341

				113,899

	Road & Rail (1.2%):
	1,416	Con-way, Inc.		41,291
	749	Kansas City Southern Industries, Inc.*		50,939
	9,798	Norfolk Southern Corp.		713,882
	1,453	Ryder System, Inc.		77,212
	11,389	Union Pacific Corp.		1,206,551

				2,089,875

	Semiconductors & Semiconductor Equipment (2.8%):
	34,263	Applied Materials, Inc.		366,957
	750	Atmel Corp.*		6,075
	2,886	Cree, Inc.*^		63,607
	3,513	Fairchild Semiconductor International, Inc.*^		42,296
	418	Freescale Semiconductor Holdings I, Ltd.*^		5,288
	147,071	Intel Corp.		3,566,472
	1,909	International Rectifier Corp.*		37,073
	1,615	Intersil Corp., Class A		16,861
	1,040	KLA-Tencor Corp.^		50,180
	11,137	LSI Corp.*		66,265
	14,091	Marvell Technology Group, Ltd.*		195,160
	2,408	MEMC Electronic Materials, Inc.*		9,488
	24,056	Micron Technology, Inc.*		151,312
	1,896	Novellus Systems, Inc.*		78,286
	6,078	PMC-Sierra, Inc.*		33,490
	117	Silicon Laboratories, Inc.*^		5,080
	5,249	Teradyne, Inc.*^		71,544
	11,756	Texas Instruments, Inc.		342,217

				5,107,651

	Software (0.3%):
	11,743	Activision Blizzard, Inc.		144,674


Shares			Fair Value

	Common Stocks, continued
	Software continued
	10,641	CA, Inc.	$	215,108
	1,493	Compuware Corp.*		12,422
	3,788	Synopsys, Inc.*		103,033

				475,237

	Specialty Retail (1.6%):
	315	Abercrombie & Fitch Co., Class A		15,385
	5,444	American Eagle Outfitters, Inc.		83,239
	532	AutoNation, Inc.*^		19,615
	8,180	Best Buy Co., Inc.		191,167
	5,231	CarMax, Inc.*^		159,441
	1,505	Chico’s FAS, Inc.		16,766
	59	DSW, Inc., Class A^		2,608
	4,291	Foot Locker, Inc.		102,297
	3,919	GameStop Corp., Class A*^		94,565
	9,807	Gap, Inc. (The)		181,920
	17,598	Home Depot, Inc.		739,820
	36,118	Lowe’s Cos., Inc.		916,675
	2,641	RadioShack Corp.^		25,644
	178	Sally Beauty Holdings, Inc.*		3,761
	2,409	Signet Jewelers, Ltd.		105,900
	19,782	Staples, Inc.		274,772
	1,381	Williams-Sonoma, Inc.		53,168

				2,986,743

	Textiles, Apparel & Luxury Goods (0.2%):
	1,410	PVH Corp.		99,391
	2,412	V.F. Corp.		306,300

				405,691

	Thrifts & Mortgage Finance (0.3%):
	994	BankUnited, Inc.		21,858
	4,574	Capitol Federal Financial, Inc.		52,784
	9,648	First Niagara Financial Group, Inc.		83,262
	11,971	Hudson City Bancorp, Inc.^		74,819
	12,131	New York Community Bancorp, Inc.^		150,061
	8,491	People’s United Financial, Inc.		109,109
	2,356	TFS Financial Corp.*		21,110
	3,063	Washington Federal, Inc.		42,851

				555,854

	Tobacco (0.8%):
	14,749	Altria Group, Inc.		437,308
	3,745	Lorillard, Inc.^		426,930
	4,686	Philip Morris International, Inc.		367,757
	6,461	Reynolds American, Inc.		267,615

				1,499,610

	Trading Companies & Distributors (0.1%):
	1,021	Air Lease Corp.*^		24,208
	1,264	GATX Corp.^		55,186
	645	WESCO International, Inc.*		34,192

				113,586


Shares			Fair Value

	Common Stocks, continued
	Water Utilities (0.1%):
	4,864	American Water Works Co., Inc.	$	154,967
	3,458	Aqua America, Inc.		76,249

				231,216

	Wireless Telecommunication Services (0.2%):
	944	Clearwire Corp., Class A*		1,831
	545	NII Holdings, Inc.*		11,608
	82,984	Sprint Nextel Corp.*		194,183
	2,458	Telephone and Data Systems, Inc.^		63,638
	371	United States Cellular Corp.*		16,187

				287,447

	Total Common Stocks (Cost $176,845,204)			179,346,089


Shares or Principal Amount			Fair Value

	Securities Held as Collateral for Securities on Loan (8.1%):
$	14,843,412	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)	$	14,843,412

	Total Securities Held as Collateral for Securities on loan (Cost $14,843,412)			14,843,412

	Unaffiliated Investment Company (1.5%):
	2,782,310	Dreyfus Treasury Prime Cash Management, 0.00%(b)		2,782,310

	Total Unaffiliated Investment Company (Cost $2,782,310)			2,782,310

	Total Investment Securities (Cost $194,470,926)(c) — 107.9%			196,971,811
	Net other assets (liabilities) — (7.9)%			(14,457,166	)

	Net Assets — 100.0%		$	182,514,645

Cash of $226,000 has been segregated to cover margin requirements for the following open contracts as of December 31, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	194,470,926

Investment securities, at value*	$	196,971,811
Cash		1,908
Segregated cash for collateral		226,000
Interest and dividends receivable		338,960
Receivable for capital shares issued		19,488
Reclaims receivable		9
Prepaid expenses		2,026

Total Assets		197,560,202

Liabilities:
Payable for capital shares redeemed		43,671
Payable for collateral received on loaned securities		14,843,412
Payable for variation margin on futures contracts		12,367
Manager fees payable		66,696
Administration fees payable		6,249
Distribution fees payable		37,895
Custodian fees payable		4,314
Administrative and compliance services fees payable		1,694
Trustee fees payable		91
Other accrued liabilities		29,168

Total Liabilities		15,045,557

Net Assets	$	182,514,645

Net Assets Consist of:
Capital	$	175,910,233
Accumulated net investment income/(loss)		2,809,865
Accumulated net realized gains/(losses) from investment transactions		1,267,525
Net unrealized appreciation/(depreciation) on investments		2,527,022

Net Assets	$	182,514,645

Shares of beneficial interest (unlimited number of shares authorized, no par value)		17,616,068
Net Asset Value (offering and redemption price per share)	$	10.36

* includes securities on loans of $14,402,175

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	176
Dividends		4,109,368
Income from securities lending		38,775
Foreign withholding tax		(6,934	)

Total Investment Income		4,141,385

Expenses:
Manager fees		765,931
Administration fees		78,234
Distribution fees		435,187
Custodian fees		18,597
Administrative and compliance services fees		7,804
Trustee fees		13,187
Professional fees		14,178
Shareholder reports		4,563
Other expenses		43,710

Total expenses		1,381,391

Net Investment Income/(Loss)		2,759,994

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		4,658,786
Net realized gains/(losses) on futures contracts		(89,072	)
Change in unrealized appreciation/depreciation on investments		(8,002,760	)

Net Realized/Unrealized Gains/(Losses) on Investments		(3,433,046	)

Change in Net Assets Resulting From Operations	$	(673,052	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Russell 1000 Value Index Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $3,835 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

The following is a summary of the fair value of derivative instruments as of December 31, 2011:

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

December 31, 2011, there were no remaining contractual reimbursements that are subject to repayment 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 year can be found on the Statement of Operations. During the year ended December 31, 2011, there were no voluntary waivers.

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $2,537 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

Other assets and securities for which market quotations are not readily available, or are deemed unreliable are valued at fair value as determined in good faith by the 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. Depending on the source and relative significance of valuation inputs, these instruments may be classified as Level 2 or Level 3 in the fair value hierarchy. 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.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks+	$	179,346,089	$	—	$	—	$	179,346,089
Securities Held as Collateral for Securities on Loan		—		14,843,412		—		14,843,412
Unaffiliated Investment Company		2,782,310		—		—		2,782,310

Total Investment Securities		182,128,399		14,843,412		—		196,971,811

Other Financial Instruments:*
Futures Contracts		26,137		—		—		26,137

Total Investments	$	182,154,536	$	14,843,412	$	—	$	196,997,948

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $194,874,225. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $2,890,569 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

During the year ended December 31, 2010 there were no dividends paid to shareholders.

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Russell 1000 Value Index Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended and the statements of changes in net assets and the financial highlights for each of the periods in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended and the changes in its net assets and the financial highlights for each of the periods in the two-year period then ended, in conformity with U.S. generally accepted accounting principles.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon , Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® S&P 500 Index Fund (Class 2 Shares) returned 1.55%. That compared to a 2.11% total return for its benchmark, the S&P 500^® Index¹.

The Fund attempts to replicate the performance of the S&P 500 index of U.S. large-cap stocks.

U.S. equities delivered paltry rewards for the extreme volatility investors endured in 2011. Political turmoil, natural disasters and, above all, global debt problems led to market activity during the year that was characterized by a tug-of-war between assets perceived as high risk and those perceived as low risk.

Stocks moved unevenly higher early in the year despite political upheaval spreading across the Middle East and North Africa regions and a sharp rise in oil and other commodity prices. March brought devastating natural disasters in Japan, resulting in global supply chain disruptions. Nevertheless, equity markets were remarkably resilient as the global economic recovery appeared to be on track and investors gradually increased their appetite for risk. After peaking in late April, equities were met with a sharp reversal when the heightened possibility of Greece defaulting on its debt rekindled fears about the potential impact of the sovereign debt crisis spreading in Europe. In the United States, a prolonged debt ceiling debate revealed the ineffectiveness of the nation’s policymakers and ultimately led to Standard & Poor’s decision to downgrade the U.S. government’s credit rating in early August. This announcement spurred one of the most volatile periods in trading history. Stock markets across the world whipsawed on hopes and fears driven by news flow. Equities swooned as debt problems in Europe spread to Italy and Spain, and global economic indicators grew increasingly bleak.

U.S. stocks outperformed most international markets during the period due to their relative safety during a time of heightened uncertainty overseas. Dividend-paying stocks performed particularly well as investors sought yield in a low-interest rate environment. Among sectors in the benchmark, utilities performed strongest in 2011. The defensive consumer staples sector also performed well, as did health care stocks, which benefited from increased merger and acquisition activity. Financials were battered by the world’s debt problems, and saw the largest losses of any sector in the Fund’s benchmark. The more cyclical materials and industrials sectors also declined amid heightened uncertainty about the global economy.*

The underperformance of the Fund compared to its benchmark was the result of Fund expenses that are not incurred by the benchmark.

Past performance does not guarantee future results.

¹	The Standard & Poor’s 500^® Index (“S&P 500^®”) is representative 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. Investors cannot invest directly in an index.

Fund Objective

The Fund’s investment objective is to seek to match the total return of the Standard & Poor’s 500^® Index. This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing in all 500 stocks in the Index in proportion to their weighting in the Index.

Investment Concerns

Investing in derivatives instruments involves risks that may be different from or greater than the risk associated with investing directly in securities or other traditional instruments.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	Inception Date		1 Year			3 Year			Since Inception
AZL^® S&P 500 Index Fund (Class 1 Shares)		5/14/07		1.88	%		13.69	%		–2.12	%
AZL^® S&P 500 Index Fund (Class 2 Shares)		5/1/07		1.55	%		13.41	%		–2.05	%
S&P 500^® Index		5/1/07		2.11	%		14.11	%		–1.38	%

Expense Ratio


	Gross
AZL^® S&P 500 Index Fund (Class 1 Shares)		0.29	%
AZL^® S&P 500 Index Fund (Class 2 Shares)		0.54	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 0.46% for Class 1 Shares and 0.71% for Class 2 Shares through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

¹	The hypothetical $10,000 investment for the S&P 500 ^® Index is calculated from April 30, 2007.

The Fund’s performance is measured against the Standard & Poor’s 500^® Index (“S&P 500^®”), which is an unmanaged index that is representative 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.

As a shareholder of the AZL S&P 500 Index Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (96.9%):
	Aerospace & Defense (2.5%):
	47,237	Boeing Co. (The)	$	3,464,834
	22,635	General Dynamics Corp.		1,503,190
	7,957	Goodrich Corp.		984,281
	49,164	Honeywell International, Inc.		2,672,063
	6,347	L-3 Communications Holdings, Inc.		423,218
	16,864	Lockheed Martin Corp.^		1,364,298
	16,607	Northrop Grumman Corp.		971,177
	9,163	Precision Castparts Corp.		1,509,971
	21,998	Raytheon Co.		1,064,263
	9,645	Rockwell Collins, Inc.^		534,044
	57,588	United Technologies Corp.		4,209,107

				18,700,446

	Air Freight & Logistics (1.0%):
	10,502	C.H. Robinson Worldwide, Inc.^		732,829
	13,560	Expeditors International of Washington, Inc.		555,418
	20,159	FedEx Corp.		1,683,478
	61,336	United Parcel Service, Inc., Class B		4,489,182

				7,460,907

	Airlines (0.1%):
	49,484	Southwest Airlines Co.^		423,583

	Auto Components (0.4%):
	6,969	BorgWarner, Inc.*		444,204
	15,252	Goodyear Tire & Rubber Co.*		216,121
	43,235	Johnson Controls, Inc.		1,351,526
	8,157	O’Reilly Automotive, Inc.*^		652,152

				2,664,003

	Automobiles (0.4%):
	241,508	Ford Motor Co.^		2,598,626
	14,835	Harley-Davidson, Inc.		576,637

				3,175,263

	Beverages (2.6%):
	9,913	Beam, Inc.		507,843
	6,345	Brown-Forman Corp., Class B		510,836
	144,362	Coca-Cola Co. (The)		10,101,009
	19,832	Coca-Cola Enterprises, Inc.		511,269
	11,066	Constellation Brands, Inc.*		228,734
	13,633	Dr Pepper Snapple Group, Inc.		538,231
	10,013	Molson Coors Brewing Co., Class B		435,966
	99,372	PepsiCo, Inc.		6,593,332

				19,427,220

	Biotechnology (1.2%):
	50,414	Amgen, Inc.		3,237,083
	15,438	Biogen Idec, Inc.*		1,698,952
	28,217	Celgene Corp.*		1,907,469
	47,743	Gilead Sciences, Inc.*		1,954,121

				8,797,625

	Building Products (0.0%):
	23,238	Masco Corp.^		243,534


Shares			Fair Value

	Common Stocks, continued
	Capital Markets (1.7%):
	14,381	Ameriprise Financial, Inc.	$	713,873
	77,076	Bank of New York Mellon Corp.		1,534,583
	6,366	BlackRock, Inc.‡		1,134,676
	68,585	Charles Schwab Corp. (The)		772,267
	15,611	ETRADE Financial Corp.		124,264
	5,903	Federated Investors, Inc.^		89,430
	9,249	Franklin Resources, Inc.		888,459
	31,292	Goldman Sachs Group, Inc. (The)		2,829,736
	28,817	Invesco, Ltd.		578,934
	8,073	Legg Mason, Inc.^		194,156
	94,311	Morgan Stanley		1,426,925
	15,378	Northern Trust Corp.		609,891
	31,269	State Street Corp.		1,260,453
	16,058	T. Rowe Price Group, Inc.		914,503

				13,072,150

	Chemicals (2.1%):
	13,377	Air Products & Chemicals, Inc.		1,139,587
	4,332	Airgas, Inc.		338,243
	4,181	CF Industries Holdings, Inc.		606,161
	75,105	Dow Chemical Co. (The)^		2,160,020
	58,725	E.I. du Pont de Nemours & Co.		2,688,431
	8,804	Eastman Chemical Co.		343,884
	19,072	Ecolab, Inc.		1,102,552
	4,437	FMC Corp.^		381,760
	5,213	International Flavor & Fragrances, Inc.^		273,265
	34,027	Monsanto Co.		2,384,272
	18,919	Mosaic Co. (The)		954,085
	9,815	PPG Industries, Inc.		819,454
	19,075	Praxair, Inc.		2,039,118
	7,681	Sigma Aldrich Corp.^		479,755

				15,710,587

	Commercial Banks (2.6%):
	44,297	BB&T Corp.		1,114,956
	12,616	Comerica, Inc.^		325,493
	58,581	Fifth Third Bancorp		745,150
	16,544	First Horizon National Corp.^		132,352
	54,244	Huntington Bancshares, Inc.		297,800
	60,054	KeyCorp		461,815
	8,023	M&T Bank Corp.^		612,476
	33,435	PNC Financial Services Group, Inc.		1,928,197
	80,750	Regions Financial Corp.		347,225
	34,302	SunTrust Banks, Inc.		607,145
	121,288	U.S. Bancorp		3,280,840
	335,179	Wells Fargo & Co.		9,237,533
	11,951	Zions Bancorp^		194,562

				19,285,544


Shares			Fair Value

	Common Stocks, continued
	Commercial Services & Supplies (0.4%):
	6,675	Avery Dennison Corp.^	$	191,439
	6,868	Cintas Corp.^		239,075
	11,798	Iron Mountain, Inc.^		363,378
	12,921	Pitney Bowes, Inc.^		239,555
	11,633	R.R. Donnelley & Sons Co.^		167,864
	20,083	Republic Services, Inc.		553,287
	5,430	Stericycle, Inc.*^		423,106
	29,259	Waste Management, Inc.^		957,062

				3,134,766

	Communications Equipment (2.0%):
	341,695	Cisco Systems, Inc.+		6,177,846
	5,082	F5 Networks, Inc.*^		539,302
	7,402	Harris Corp.		266,768
	15,010	JDS Uniphase Corp.*		156,704
	33,455	Juniper Networks, Inc.*		682,817
	16,746	Motorola Mobility Holdings, Inc.*		649,745
	18,208	Motorola Solutions, Inc.		842,848
	106,836	QUALCOMM, Inc.		5,843,929

				15,159,959

	Computers & Peripherals (4.5%):
	59,074	Apple, Inc.*		23,924,970
	97,060	Dell, Inc.*		1,419,988
	129,662	EMC Corp.*^		2,792,920
	126,294	Hewlett-Packard Co.		3,253,333
	4,564	Lexmark International, Inc.^		150,932
	22,793	NetApp, Inc.*		826,702
	15,267	SanDisk Corp.*		751,289
	14,737	Western Digital Corp.*		456,110

				33,576,244

	Construction & Engineering (0.2%):
	10,784	Fluor Corp.		541,896
	8,176	Jacobs Engineering Group, Inc.*		331,782
	13,571	Quanta Services, Inc.*		292,319

				1,165,997

	Construction Materials (0.0%):
	8,131	Vulcan Materials Co.^		319,955

	Consumer Finance (0.7%):
	64,228	American Express Co.		3,029,635
	29,211	Capital One Financial Corp.		1,235,333
	34,923	Discover Financial Services		838,152
	32,436	SLM Corp.		434,642

				5,537,762

	Containers & Packaging (0.1%):
	10,366	Ball Corp.		370,170
	6,484	Bemis Co., Inc.^		195,038


Shares			Fair Value

	Common Stocks, continued
	Containers & Packaging, continued
	10,663	Owens-Illinois, Inc.*	$	206,649
	9,995	Sealed Air Corp.		172,014

				943,871

	Distributors (0.1%):
	9,838	Genuine Parts Co.^		602,086

	Diversified Consumer Services (0.1%):
	7,387	Apollo Group, Inc., Class A*		397,938
	3,816	DeVry, Inc.		146,763
	18,617	H&R Block, Inc.		304,016

				848,717

	Diversified Financial Services (2.6%):
	644,187	Bank of America Corp.		3,581,680
	185,822	Citigroup, Inc.		4,888,977
	4,199	CME Group, Inc.		1,023,170
	4,613	IntercontinentalExchange, Inc.*		556,097
	241,517	JPMorgan Chase & Co.		8,030,440
	12,686	Leucadia National Corp.		288,480
	12,417	Moody’s Corp.^		418,205
	8,267	NASDAQ OMX Group, Inc. (The)*		202,624
	16,484	NYSE Euronext		430,232

				19,419,905

	Diversified Telecommunication Services (2.8%):
	376,652	AT&T, Inc.		11,389,956
	39,247	CenturyTel, Inc.		1,459,988
	63,139	Frontier Communications Corp.^		325,166
	112	Nortel Networks Corp.*		2
	179,939	Verizon Communications, Inc.		7,219,153
	37,338	Windstream Corp.^		438,348

				20,832,613

	Electric Utilities (2.0%):
	30,687	American Electric Power Co., Inc.		1,267,680
	84,695	Duke Energy Corp.^		1,863,290
	20,711	Edison International		857,435
	11,239	Entergy Corp.		821,009
	42,135	Exelon Corp.^		1,827,395
	26,576	FirstEnergy Corp.		1,177,317
	26,852	NextEra Energy, Inc.		1,634,750
	11,189	Northeast Utilities		403,587
	14,235	Pepco Holdings, Inc.^		288,970
	7,028	Pinnacle West Capital Corp.		338,609
	36,747	PPL Corp.		1,081,097
	18,746	Progress Energy, Inc.		1,050,151
	54,778	Southern Co.		2,535,674

				15,146,964

	Electrical Equipment (0.5%):
	10,049	Cooper Industries plc, A Shares		544,153
	46,765	Emerson Electric Co.		2,178,781


Shares			Fair Value

	Common Stocks, continued
	Electrical Equipment, continued
	8,989	Rockwell Automation, Inc.^	$	659,523
	6,157	Roper Industries, Inc.		534,859

				3,917,316

	Electronic Equipment, Instruments & Components (0.4%):
	10,535	Amphenol Corp., Class A		478,184
	99,868	Corning, Inc.		1,296,286
	10,097	FLIR Systems, Inc.^		253,132
	11,742	Jabil Circuit, Inc.		230,848
	8,662	Molex, Inc.^		206,675
	26,979	TE Connectivity, Ltd.		831,223

				3,296,348

	Energy Equipment & Services (1.9%):
	27,736	Baker Hughes, Inc.		1,349,079
	15,599	Cameron International Corp.*		767,315
	4,369	Diamond Offshore Drilling, Inc.^		241,431
	15,076	FMC Technologies, Inc.*^		787,419
	58,477	Halliburton Co.		2,018,041
	6,774	Helmerich & Payne, Inc.^		395,331
	18,400	Nabors Industries, Ltd.*		319,056
	26,936	National-Oilwell Varco, Inc.		1,831,379
	16,164	Noble Corp.		488,476
	7,924	Rowan Cos., Inc.*^		240,335
	85,303	Schlumberger, Ltd.		5,827,048

				14,264,910

	Food & Staples Retailing (2.3%):
	27,545	Costco Wholesale Corp.		2,295,049
	82,733	CVS Caremark Corp.		3,373,852
	37,986	Kroger Co. (The)		920,021
	21,604	Safeway, Inc.^		454,548
	13,698	Supervalu, Inc.^		111,228
	37,559	SYSCO Corp.^		1,101,605
	111,010	Wal-Mart Stores, Inc.		6,633,958
	56,524	Walgreen Co.		1,868,683
	10,150	Whole Foods Market, Inc.^		706,237

				17,465,181

	Food Products (1.8%):
	42,433	Archer-Daniels Midland Co.		1,213,584
	11,282	Campbell Soup Co.^		375,014
	26,416	ConAgra Foods, Inc.		697,382
	11,792	Dean Foods Co.*		132,070
	40,891	General Mills, Inc.		1,652,405
	20,349	H.J. Heinz Co.^		1,099,660
	9,705	Hershey Co.		599,575
	8,898	Hormel Foods Corp.^		260,622
	7,276	J.M. Smucker Co. (The)		568,765
	15,680	Kellogg Co.		792,938
	112,288	Kraft Foods, Inc., Class A		4,195,080
	8,375	McCormick & Co.^		422,268


Shares			Fair Value

	Common Stocks, continued
	Food Products, continued
	37,532	Sara Lee Corp.	$	710,105
	18,593	Tyson Foods, Inc., Class A		383,760

				13,103,228

	Gas Utilities (0.2%):
	7,531	AGL Resources, Inc.^		318,260
	6,502	ONEOK, Inc.		563,659
	11,220	QEP Resources, Inc.		328,746

				1,210,665

	Health Care Equipment & Supplies (1.7%):
	35,894	Baxter International, Inc.		1,776,035
	13,652	Becton, Dickinson & Co.		1,020,077
	94,166	Boston Scientific Corp.*		502,846
	5,452	C.R. Bard, Inc.		466,146
	14,264	CareFusion Corp.*		362,448
	30,664	Covidien plc		1,380,187
	8,867	DENTSPLY International, Inc.^		310,256
	7,235	Edwards Lifesciences Corp.*^		511,515
	2,478	Intuitive Surgical, Inc.*		1,147,339
	67,070	Medtronic, Inc.		2,565,428
	20,275	St. Jude Medical, Inc.		695,433
	20,675	Stryker Corp.		1,027,754
	7,154	Varian Medical Systems, Inc.*^		480,248
	11,389	Zimmer Holdings, Inc.*^		608,400

				12,854,112

	Health Care Providers & Services (2.0%):
	23,028	Aetna, Inc.		971,551
	16,421	AmerisourceBergen Corp.		610,697
	21,953	Cardinal Health, Inc.		891,511
	18,150	CIGNA Corp.		762,300
	9,170	Coventry Health Care, Inc.*		278,493
	5,888	DaVita, Inc.*		446,369
	30,916	Express Scripts, Inc.*		1,381,636
	10,392	Humana, Inc.		910,443
	6,299	Laboratory Corp. of America Holdings*^		541,525
	15,605	McKesson, Inc.		1,215,786
	24,603	Medco Health Solutions, Inc.*		1,375,308
	5,763	Patterson Companies, Inc.^		170,124
	9,933	Quest Diagnostics, Inc.		576,710
	28,531	Tenet Healthcare Corp.*		146,364
	67,758	UnitedHealth Group, Inc.		3,433,975
	22,110	WellPoint, Inc.		1,464,788

				15,177,580

	Health Care Technology (0.1%):
	9,300	Cerner Corp.*^		569,625

	Hotels, Restaurants & Leisure (2.0%):
	28,762	Carnival Corp.		938,792
	2,000	Chipotle Mexican Grill, Inc.*		675,480


Shares			Fair Value

	Common Stocks, continued
	Hotels, Restaurants & Leisure, continued
	8,459	Darden Restaurants, Inc.^	$	385,561
	18,716	International Game Technology		321,915
	17,041	Marriott International, Inc., Class A^		497,086
	65,037	McDonald’s Corp.		6,525,162
	47,372	Starbucks Corp.		2,179,586
	12,142	Starwood Hotels & Resorts Worldwide, Inc.		582,452
	9,701	Wyndham Worldwide Corp.		366,989
	5,019	Wynn Resorts, Ltd.		554,549
	29,339	Yum! Brands, Inc.		1,731,294

				14,758,866

	Household Durables (0.2%):
	17,950	D.R. Horton, Inc.^		226,350
	4,540	Harman International Industries, Inc.		172,702
	8,795	Leggett & Platt, Inc.^		202,637
	10,446	Lennar Corp.^		205,264
	18,330	Newell Rubbermaid, Inc.		296,029
	21,724	Pulte Group, Inc.*^		137,078
	4,785	Whirlpool Corp.^		227,048

				1,467,108

	Household Products (2.3%):
	8,304	Clorox Co. (The)^		552,714
	30,760	Colgate-Palmolive Co.		2,841,917
	25,045	Kimberly-Clark Corp.		1,842,310
	174,872	Procter & Gamble Co. (The)		11,665,711

				16,902,652

	Independent Power Producers & Energy Traders (0.2%):
	40,980	AES Corp. (The)*		485,203
	12,689	Constellation Energy Group, Inc.		503,373
	14,617	NRG Energy, Inc.*		264,860

				1,253,436

	Industrial Conglomerates (2.3%):
	44,546	3M Co.		3,640,745
	671,017	General Electric Co.		12,017,915
	17,923	Textron, Inc.^		331,396
	29,382	Tyco International, Ltd.		1,372,433

				17,362,489

	Insurance (3.5%):
	21,405	ACE, Ltd.		1,500,918
	29,662	AFLAC, Inc.		1,283,178
	32,121	Allstate Corp. (The)		880,437
	27,852	American International Group, Inc.*^		646,166
	20,510	Aon Corp.		959,868
	5,817	Assurant, Inc.		238,846
	111,740	Berkshire Hathaway, Inc., Class B*		8,525,762


Shares			Fair Value

	Common Stocks, continued
	Insurance, continued
	17,675	Chubb Corp. (The)^	$	1,223,463
	10,222	Cincinnati Financial Corp.^		311,362
	31,722	Genworth Financial, Inc.*^		207,779
	28,087	Hartford Financial Services Group, Inc. (The)		456,414
	19,404	Lincoln National Corp.^		376,826
	19,409	Loews Corp.		730,749
	34,332	Marsh & McLennan Cos., Inc.		1,085,578
	67,215	MetLife, Inc.		2,095,764
	19,396	Principal Financial Group, Inc.		477,142
	39,198	Progressive Corp. (The)		764,753
	30,001	Prudential Financial, Inc.		1,503,650
	6,471	Torchmark Corp.^		280,777
	26,236	Travelers Cos., Inc. (The)		1,552,384
	18,584	UnumProvident Corp.		391,565
	20,372	XL Group plc		402,754

				25,896,135

	Internet & Catalog Retail (0.8%):
	23,122	Amazon.com, Inc.*		4,002,418
	6,025	Expedia, Inc.^		174,846
	3,515	Netflix, Inc.*^		243,554
	3,164	Priceline.com, Inc.*		1,479,835
	6,025	TripAdvisor, Inc.*^		151,890

				6,052,543

	Internet Software & Services (2.0%):
	11,405	Akamai Technologies, Inc.*		368,153
	73,017	eBay, Inc.*		2,214,606
	16,058	Google, Inc., Class A*		10,371,862
	10,110	VeriSign, Inc.^		361,129
	78,835	Yahoo!, Inc.*		1,271,609

				14,587,359

	IT Services (3.8%):
	40,732	Accenture plc, Class A		2,168,164
	31,057	Automatic Data Processing, Inc.		1,677,389
	19,221	Cognizant Technology Solutions Corp., Class A*		1,236,102
	9,717	Computer Sciences Corp.^		230,293
	15,418	Fidelity National Information Services, Inc.		409,965
	8,981	Fiserv, Inc.*		527,544
	74,914	International Business Machines Corp.		13,775,186
	6,776	MasterCard, Inc., Class A		2,526,228
	20,567	Paychex, Inc.		619,272
	17,810	SAIC, Inc.*^		218,885
	10,565	Teradata Corp.*		512,508
	10,451	Total System Services, Inc.		204,422
	32,323	Visa, Inc., Class A^		3,281,754
	39,395	Western Union Co.		719,353

				28,107,065


Shares			Fair Value

	Common Stocks, continued
	Leisure Equipment & Products (0.1%):
	7,447	Hasbro, Inc.	$	237,485
	21,589	Mattel, Inc.^		599,310

				836,795

	Life Sciences Tools & Services (0.4%):
	22,100	Agilent Technologies, Inc.*		771,953
	11,373	Life Technologies Corp.*		442,523
	7,278	PerkinElmer, Inc.		145,560
	23,977	Thermo Fisher Scientific, Inc.*		1,078,246
	5,696	Waters Corp.*		421,789

				2,860,071

	Machinery (2.2%):
	41,097	Caterpillar, Inc.		3,723,388
	12,225	Cummins, Inc.		1,076,044
	36,202	Danaher Corp.		1,702,942
	26,306	Deere & Co.		2,034,769
	11,857	Dover Corp.		688,299
	21,242	Eaton Corp.		924,664
	3,496	Flowserve Corp.		347,223
	30,712	Illinois Tool Works, Inc.		1,434,558
	19,842	Ingersoll-Rand plc		604,586
	6,735	Joy Global, Inc.		504,923
	22,769	PACCAR, Inc.^		853,154
	7,382	Pall Corp.^		421,881
	9,603	Parker Hannifin Corp.		732,229
	3,673	Snap-On, Inc.		185,927
	10,731	Stanley Black & Decker, Inc.		725,416
	11,824	Xylem, Inc.		303,759

				16,263,762

	Media (3.0%):
	14,086	Cablevision Systems Corp., Class A		200,303
	41,595	CBS Corp., Class B		1,128,888
	173,194	Comcast Corp., Class A		4,106,430
	44,847	DIRECTV Group, Inc. (The), Class A*		1,917,658
	16,797	Discovery Communications, Inc., Class A*^		688,173
	15,280	Gannett Co., Inc.^		204,294
	29,467	Interpublic Group of Cos., Inc. (The)		286,714
	18,649	McGraw-Hill Cos., Inc. (The)		838,645
	139,386	News Corp., Class A		2,486,646
	17,543	Omnicom Group, Inc.		782,067
	6,071	Scripps Networks Interactive, Class A^		257,532
	20,283	Time Warner Cable, Inc.		1,289,390
	63,617	Time Warner, Inc.		2,299,118
	35,099	Viacom, Inc., Class B		1,593,846


Shares			Fair Value

	Common Stocks, continued
	Media, continued
	114,188	Walt Disney Co. (The)	$	4,282,050
	298	Washington Post Co. (The), Class B^		112,289

				22,474,043

	Metals & Mining (0.9%):
	67,909	Alcoa, Inc.^		587,413
	6,824	Allegheny Technologies, Inc.		326,187
	9,090	Cliffs Natural Resources, Inc.		566,762
	60,242	Freeport-McMoRan Copper & Gold, Inc.		2,216,303
	31,446	Newmont Mining Corp.		1,887,074
	20,127	Nucor Corp.		796,425
	5,276	Titanium Metals Corp.^		79,035
	9,126	United States Steel Corp.^		241,474

				6,700,673

	Multi-Utilities (1.4%):
	15,500	Ameren Corp.		513,515
	27,264	CenterPoint Energy, Inc.		547,734
	15,973	CMS Energy Corp.		352,684
	18,613	Consolidated Edison, Inc.^		1,154,565
	36,199	Dominion Resources, Inc.		1,921,443
	10,822	DTE Energy Co.		589,258
	4,996	Integrys Energy Group, Inc.^		270,683
	17,725	NiSource, Inc.		422,032
	25,791	PG&E Corp.		1,063,105
	32,146	Public Service Enterprise Group, Inc.		1,061,140
	7,372	SCANA Corp.^		332,182
	15,231	Sempra Energy		837,705
	13,828	TECO Energy, Inc.^		264,668
	14,694	Wisconsin Energy Corp.		513,702
	30,813	Xcel Energy, Inc.		851,671

				10,696,087

	Multiline Retail (0.8%):
	4,037	Big Lots, Inc.*		152,437
	7,562	Dollar Tree, Inc.*^		628,478
	7,461	Family Dollar Stores, Inc.		430,201
	9,110	J.C. Penney Co., Inc.^		320,216
	16,108	Kohl’s Corp.		794,930
	26,684	Macy’s, Inc.		858,691
	10,294	Nordstrom, Inc.		511,715
	2,370	Sears Holdings Corp.*^		75,319
	42,682	Target Corp.		2,186,172

				5,958,159

	Office Electronics (0.1%):
	88,090	Xerox Corp.		701,196

	Oil, Gas & Consumable Fuels (9.9%):
	13,971	Alpha Natural Resources, Inc.*		285,428
	31,648	Anadarko Petroleum Corp.		2,415,692
	24,408	Apache Corp.		2,210,877


Shares			Fair Value

	Common Stocks, continued
	Oil, Gas & Consumable Fuels, continued
	6,694	Cabot Oil & Gas Corp.	$	508,075
	41,934	Chesapeake Energy Corp.		934,709
	126,578	Chevron Corp.		13,467,899
	84,392	ConocoPhillips		6,149,645
	14,500	Consol Energy, Inc.		532,150
	25,391	Denbury Resources, Inc.*^		383,404
	25,672	Devon Energy Corp.		1,591,664
	49,006	El Paso Corp.		1,302,089
	17,086	EOG Resources, Inc.		1,683,142
	9,566	EQT Corp.		524,121
	304,661	Exxon Mobil Corp.		25,823,066
	18,942	Hess Corp.		1,075,906
	44,729	Marathon Oil Corp.		1,309,218
	22,683	Marathon Petroleum Corp.		755,117
	12,341	Murphy Oil Corp.		687,887
	8,498	Newfield Exploration Co.*		320,630
	11,196	Noble Energy, Inc.^		1,056,790
	51,595	Occidental Petroleum Corp.		4,834,451
	17,293	Peabody Energy Corp.		572,571
	7,775	Pioneer Natural Resources Co.		695,707
	9,943	Range Resources Corp.		615,869
	22,145	Southwestern Energy Co.*		707,311
	41,326	Spectra Energy Corp.^		1,270,775
	6,786	Sunoco, Inc.^		278,362
	9,004	Tesoro Corp.*^		210,333
	35,577	Valero Energy Corp.		748,896
	37,454	Williams Cos., Inc. (The)		1,236,731

				74,188,515

	Paper & Forest Products (0.2%):
	27,804	International Paper Co.^		822,998
	10,905	MeadWestvaco Corp.		326,605
	33,803	Weyerhaeuser Co.		631,102

				1,780,705

	Personal Products (0.3%):
	27,106	Avon Products, Inc.		473,542
	7,099	Estee Lauder Co., Inc. (The), Class A		797,360
	12,943	Mead Johnson Nutrition Co., Class A		889,572

				2,160,474

	Pharmaceuticals (6.1%):
	99,010	Abbott Laboratories		5,567,332
	19,433	Allergan, Inc.		1,705,052
	107,697	Bristol-Myers Squibb Co.		3,795,242
	64,751	Eli Lilly & Co.		2,691,052
	16,981	Forest Laboratories, Inc.*		513,845
	10,476	Hospira, Inc.*^		318,156
	173,571	Johnson & Johnson Co.		11,382,786
	193,729	Merck & Co., Inc.		7,303,584
	27,311	Mylan, Inc.*^		586,094


Shares			Fair Value

	Common Stocks, continued
	Pharmaceuticals, continued
	5,921	Perrigo Co.^	$	576,113
	488,591	Pfizer, Inc.		10,573,109
	8,100	Watson Pharmaceuticals, Inc.*		488,754

				45,501,119

	Professional Services (0.1%):
	3,095	Dun & Bradstreet Corp.		231,599
	7,801	Equifax, Inc.		302,211
	9,107	Robert Half International, Inc.^		259,185

				792,995

	Real Estate Investment Trusts (REITs) (1.7%):
	7,474	Apartment Investment & Management Co., Class A		171,229
	6,042	Avalonbay Communities, Inc.^		789,085
	9,381	Boston Properties, Inc.		934,348
	20,666	CBRE Group, Inc.*		314,537
	18,849	Equity Residential Property Trust		1,074,959
	25,912	HCP, Inc.^		1,073,534
	12,057	Health Care REIT, Inc.^		657,468
	45,046	Host Hotels & Resorts, Inc.^		665,329
	25,683	Kimco Realty Corp.		417,092
	10,279	Plum Creek Timber Co., Inc.^		375,800
	29,184	ProLogis, Inc.		834,371
	9,022	Public Storage, Inc.		1,213,098
	18,672	Simon Property Group, Inc.		2,407,568
	18,295	Ventas, Inc.^		1,008,603
	11,723	Vornado Realty Trust		901,030

				12,838,051

	Road & Rail (0.9%):
	66,736	CSX Corp.		1,405,460
	21,363	Norfolk Southern Corp.		1,556,508
	3,205	Ryder System, Inc.		170,314
	30,705	Union Pacific Corp.		3,252,888

				6,385,170

	Semiconductors & Semiconductor Equipment (2.3%):
	36,392	Advanced Micro Devices, Inc.*^		196,517
	20,337	Altera Corp.^		754,503
	18,794	Analog Devices, Inc.		672,449
	82,714	Applied Materials, Inc.		885,867
	30,823	Broadcom Corp., Class A		904,963
	3,612	First Solar, Inc.*^		121,941
	323,653	Intel Corp.		7,848,585
	10,558	KLA-Tencor Corp.^		509,424
	14,355	Linear Technology Corp.		431,081
	35,277	LSI Corp.*^		209,898
	12,140	Microchip Technology, Inc.^		444,688
	63,382	Micron Technology, Inc.*		398,673
	4,288	Novellus Systems, Inc.*		177,052
	38,791	NVIDIA Corp.*		537,643
	11,828	Teradyne, Inc.*^		161,216


Shares			Fair Value

	Common Stocks, continued
	Semiconductors & Semiconductor Equipment, continued
	72,628	Texas Instruments, Inc.	$	2,114,201
	16,639	Xilinx, Inc.^		533,446

				16,902,147

	Software (3.4%):
	31,003	Adobe Systems, Inc.*		876,455
	14,357	Autodesk, Inc.*		435,448
	10,887	BMC Software, Inc.*		356,876
	23,520	CA, Inc.		475,457
	11,820	Citrix Systems, Inc.*		717,710
	21,031	Electronic Arts, Inc.*		433,238
	18,893	Intuit, Inc.		993,583
	475,859	Microsoft Corp.		12,353,300
	250,089	Oracle Corp.		6,414,783
	12,332	Red Hat, Inc.*		509,188
	8,642	Salesforce.com, Inc.*^		876,817
	46,855	Symantec Corp.*		733,281

				25,176,136

	Specialty Retail (1.9%):
	5,410	Abercrombie & Fitch Co., Class A		264,224
	3,052	AutoNation, Inc.*^		112,527
	1,775	AutoZone, Inc.*		576,822
	15,259	Bed Bath & Beyond, Inc.*		884,564
	18,653	Best Buy Co., Inc.^		435,921
	14,289	CarMax, Inc.*^		435,529
	8,618	GameStop Corp., Class A*^		207,952
	21,898	Gap, Inc. (The)^		406,208
	97,984	Home Depot, Inc.		4,119,247
	15,541	Limited Brands, Inc.		627,079
	79,602	Lowe’s Cos., Inc.		2,020,299
	14,532	Ross Stores, Inc.		690,706
	5,474	Sherwin Williams Co.		488,664
	44,509	Staples, Inc.		618,230
	7,988	Tiffany & Co.		529,285
	23,924	TJX Cos., Inc. (The)		1,544,294
	7,058	Urban Outfitters, Inc.*^		194,519

				14,156,070

	Textiles, Apparel & Luxury Goods (0.6%):
	18,544	Coach, Inc.		1,131,926
	23,577	Nike, Inc., Class B		2,272,115


Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Textiles, Apparel & Luxury Goods, continued
	4,063	Ralph Lauren Corp.	$	561,019
	5,540	V.F. Corp.		703,525

				4,668,585

	Thrifts & Mortgage Finance (0.1%):
	34,122	Hudson City Bancorp, Inc.^		213,262
	22,923	People’s United Financial, Inc.		294,561

				507,823

	Tobacco (1.9%):
	130,698	Altria Group, Inc.		3,875,196
	8,581	Lorillard, Inc.		978,234
	110,404	Philip Morris International, Inc.		8,664,506
	21,482	Reynolds American, Inc.		889,784

				14,407,720

	Trading Companies & Distributors (0.2%):
	18,774	Fastenal Co.^		818,734
	3,874	W.W. Grainger, Inc.^		725,174

				1,543,908

	Wireless Telecommunication Services (0.3%):
	25,025	American Tower Corp., Class A		1,501,750
	18,033	MetroPCS Communications,Inc.*		156,527
	188,145	Sprint Nextel Corp.*		440,259

				2,098,536

	Total Common Stocks (Cost $598,082,871)			723,495,059

	Securities Held as Collateral for Securities on Loan (6.9%):
$	51,296,432	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)		51,296,432

	Total Securities Held as Collateral for Securities on Loan (Cost $51,296,432)			51,296,432

	Unaffiliated Investment Company (2.7%):
	19,845,135	Dreyfus Treasury Prime Cash Management, 0.00%(b)		19,845,135

	Total Unaffiliated Investment Company (Cost $19,845,135)			19,845,135

	Total Investment Securities (Cost $669,224,438)(c) — 106.5%			794,636,626
	Net other assets (liabilities) — (6.5)%			(48,256,049	)

	Net Assets — 100.0%		$	746,380,577

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	669,224,438

Investment securities, at value*	$	794,636,626
Interest and dividends receivable		1,098,252
Receivable for capital shares issued		2,326,011
Receivable for investments sold		117,699
Receivable for variation margin on futures contracts		1,230
Prepaid expenses		9,452

Total Assets		798,189,270

Liabilities:
Payable for capital shares redeemed		36,558
Payable for collateral received on loaned securities		51,296,432
Payable for variation margin on futures contracts		78,701
Manager fees payable		105,657
Administration fees payable		21,617
Distribution fees payable		152,536
Custodian fees payable		6,414
Administrative and compliance services fees payable		5,223
Trustee fees payable		282
Other accrued liabilities		105,273

Total Liabilities		51,808,693

Net Assets	$	746,380,577

Net Assets Consist of:
Capital	$	719,710,566
Accumulated net investment income/(loss)		10,789,519
Accumulated net realized gains/(losses) from investment transactions		(109,646,996	)
Net unrealized appreciation/(depreciation) on investments		125,527,488

Net Assets	$	746,380,577

Class 1
Net Assets	$	13,488,152
Shares of beneficial interest (unlimited number of shares authorized, no par value)		1,549,160
Net Asset Value (offering and redemption price per share)	$	8.71

Class 2
Net Assets	$	732,892,425
Shares of beneficial interest (unlimited number of shares authorized, no par value)		84,544,727
Net Asset Value (offering and redemption price per share)	$	8.67

*	Includes securities on loan of $49,835,194.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	14,084,973
Income from securities lending		80,169

Total Investment Income		14,165,142

Expenses:
Manager fees		1,166,829
Administration fees		263,270
Distribution fees — Class 2		1,678,864
Custodian fees		34,307
Administrative and compliance services fees		31,564
Trustee fees		53,369
Professional fees		57,932
Shareholder reports		52,979
Other expenses		163,111

Total expenses before reductions		3,502,225
Less expenses contractually waived/reimbursed by the Manager		(53,390	)

Net expenses		3,448,835

Net Investment Income/(Loss)		10,716,307

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		765,399
Net realized gains/(losses) on futures contracts		(960,387	)
Change in unrealized appreciation/depreciation on investments		(1,871,555	)

Net Realized/Unrealized Gains/(Losses) on Investments		(2,066,543	)

Change in Net Assets Resulting From Operations	$	8,649,764

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL S&P 500 Index Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Expenses directly attributable to the Fund are charged directly to the 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 Fund of Funds Trust.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $7,928 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

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, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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. The notional amount of futures contracts outstanding was $20.8 million as of December 31, 2011. The monthly average notional amount for these contracts was $18.9 million for the year ended December 31, 2011.

The following is a summary of the fair value of derivative instruments as of December 31, 2011:

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

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, 2011, the contractual reimbursements that are subject to repayment by the Fund in subsequent years were as follows:

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. During the year ended December 31, 2011, there were no voluntary waivers.

The Trust has adopted a distribution and service plan in conformance with Rule 12b-1 of the 1940 Act. Pursuant to this plan, the Fund is authorized to pay certain fees for the sale and distribution of its shares and services provided to its shareholders at an annual rate not to exceed 0.25% of the Fund’s average daily net assets of Class 2 shares. These fees are reflected on the Statement of Operations as “Distribution fees.”

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $9,889 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks+	$	723,495,059	$	—	$	—	$	723,495,059
Securities Held as Collateral for Securities on Loan		—		51,296,432		—		51,296,432
Unaffiliated Investment Company		19,845,135		—		—		19,845,135

Total Investment Securities		743,340,194		51,296,432		—		794,636,626

Other Financial Instruments:
Futures Contracts		115,300		—		—		115,300

Total Investments	$	743,455,494	$	51,296,432	$	—	$	794,751,926

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $681,514,934. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

succeeding tax years, after which any unutilized CLCFs expire. Pre-effective CLCFs are applied as short-term capital loss regardless of whether the originating capital loss was short term or long term. CLCFs that originate in tax years beginning after December 22, 2010 (post-effective CLCFs), are applied consistent with the character in which they originated as a new loss on the first day of the immediately succeeding tax year, and thus take precedent over the application of pre-effective CLCFs. Post-effective CLCFs can be carried forward indefinitely.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL S&P 500 Index Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon , Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer⁽⁴⁾ and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® Schroder Emerging Markets Equity Fund (Class 2 Shares) returned –17.27% compared to a –18.17% total return for its benchmark, the MSCI Emerging Markets Index¹.

Global equity markets declined in 2011, reflecting a deterioration of the euro zone sovereign debt crisis, uncertainty over fiscal policy in the U.S. and increased concerns over health of the Chinese economy. Midway through the year, uncertainty about U.S. fiscal policy began to weigh on investor sentiment and in August 2011 Standard & Poor’s downgraded U.S. debt for the first time. This sparked a period of significant volatility in the equity markets as investors sought shelter in fixed-income securities such as Treasuries and high-quality stocks. Despite strong fundamentals, emerging market equities performed poorly in this environment, reflecting investors’ general aversion to risk.

The strongest performing emerging markets included Asian markets such as Indonesia, Malaysia, the Philippines, and Korea. Though Latin American emerging markets underperformed broader emerging markets during the year, some markets performed well. Colombia benefited from strength in global oil prices, while Mexico benefited from its perceived status as a relative safe haven.

Hungary and Poland performed particularly poorly owing to their exposure to the deterioration of the eurozone.

The Fund outperformed its benchmark during the year. Individual stock selection was the primary driver of performance relative to its benchmark. Stocks that benefited the Fund

during the year included a Korean electronics manufacturer, a Korean automobile maker, a Taiwanese telecommunications firm, a Chinese energy company, a Brazilian utility, and a Turkish telecommunications firm.*

Country allocation had a negative effect on relative performance. While an underweight allocation to India and overweight allocations to Thailand and Korea boosted the Fund’s relative returns, underweight allocations to Indonesia and Malaysia and overweight allocations to Turkey and Hungary dragged on performance. An expansionary monetary policy helped buoy Indonesia, which was one of the strongest performing markets during the year. Malaysia benefited from strong export growth and its defensive nature in an uncertain global market environment. Turkey underperformed due to concerns over financing its current account deficit and the central bank’s ability to contain elevated inflationary pressure. Hungary suffered due to the deterioration of the European sovereign debt market.*

Past performance does not guarantee future results.

¹	The Morgan Stanley Capital International (“MSCI”) Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity performance of emerging markets. Investors cannot invest directly in an index.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	Inception Date		1 Year			3 Year			5 Year			Since Inception
AZL^® Schroder Emerging Markets Equity Fund
(Class 1 Shares)		5/6/07		–17.09	%		17.20	%		—			–1.66	%
AZL^® Schroder Emerging Markets Equity Fund
(Class 2 Shares)		5/1/06		–17.27	%		16.89	%		0.03	%		1.01	%
MSCI Emerging Markets Index
(gross of withholding taxes)		5/1/06		–18.17	%		20.42	%		2.70	%		4.11	%
MSCI Emerging Markets Index
(net of withholding taxes)		5/1/06		–18.42	%		20.07	%		2.40	%		3.80	%

Expense Ratio


	Gross
AZL^® Schroder Emerging Markets Equity Fund (Class 1 Shares)		1.45	%
AZL^® Schroder Emerging Markets Equity Fund (Class 2 Shares)		1.70	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager voluntarily reduced the management fee to 1.08%. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense), to 1.40% for Class 1 Shares and 1.65% for Class 2 Shares through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

The hypothetical $10,000 investment for the MSCI Emerging Markets Index is calculated from April 30, 2006. The total return of the Fund does not reflect the effect of any insurance charges, the annual maintenance fee or the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Such charges, fees and tax payments would reduce the performance quoted.

The Fund’s performance is measured against the Morgan Stanley Capital International (“MSCI”) Emerging Markets Index, an unmanaged free float-adjusted market capitalization index that is designed to measure equity performance of emerging markets. The Index noted as “gross of withholding taxes” does not reflect the deduction of fees associated with a mutual fund, such as investment management and fund accounting fees. The Index noted as “net of withholding taxes” reflects the reinvestment of dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Fund’s performance reflects the deduction of fees for services provided to the Fund. Investors cannot invest directly in an index.

As a shareholder of the AZL Schroder Emerging Markets Equity Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value
	Common Stocks (96.2%):
	Auto Components (1.3%):
	11,980	Hyundai Mobis Co., Ltd.	$	3,041,965
	196,181	TAV Havalimanlari Holding AS*		835,580

				3,877,545

	Automobiles (4.5%):
	1,858,000	Dongfeng Motor Corp.		3,166,482
	38,867	Hyundai Motor Co.*		7,198,900
	65,716	Mahindra & Mahindra, Ltd.		842,249
	289,000	PT Astra International Tbk		2,359,780

				13,567,411

	Capital Markets (0.3%):
	474,281	Egyptian Financial Group-Hermes Holding*		787,453

	Chemicals (2.2%):
	54,412	Industries Qatar Q.S.C.		1,990,007
	14,109	LG Chem, Ltd.*		3,898,075
	285,000	Nan Ya Plastics Corp.		566,709
	3,783	Uralkali, SP		135,860

				6,590,651

	Commercial Banks (18.6%):
	314,403	Banco Bradesco SA, ADR		5,244,242
	739,100	Bangkok Bank Public Co., Ltd.		3,844,429
	8,590,832	China Construction Bank		6,006,330
	3,527,101	Chinatrust Financial Holding Co., Ltd.		2,200,201
	454,700	CIMB Group Holdings Berhad		1,066,044
	347,320	Commercial International Bank Egypt SAE		1,077,299
	9,351	Credicorp, Ltd.		1,023,654
	109,430	DGB Financial Group, Inc.*		1,232,469
	124,800	Grupo Financiero Banorte SA de C.V.		378,033
	64,950	Hana Financial Group, Inc.		2,000,570
	432,169	HDFC Bank, Ltd.		3,473,442
	13,708	ICICI Bank, Ltd., Sponsored ADR		362,302
	10,770,385	Industrial & Commercial Bank of China		6,410,131
	320,643	Itau Unibanco Banco Multiplo SA, Sponsored ADR		5,951,134
	928,200	Kasikornbank Public Co., Ltd.		3,591,582
	3,966,500	PT Bank Mandiri Tbk		2,945,310
	493,000	Public Bank Berhad		2,082,110
	1,472,470	Sberbank		3,288,750
	49,278	Shinhan Financial Group Co., Ltd.*		1,703,770
	318,080	Turkiye Garanti Bankasi AG		989,404
	171,559	Turkiye Halk Bankasi AS		895,316

				55,766,522


Shares			Fair Value
	Common Stocks, continued
	Computers & Peripherals (0.9%):
	190,565	Asustek Computer, Inc.	$	1,356,614
	1,964,000	Lenovo Group, Ltd.		1,305,223

				2,661,837

	Construction & Engineering (1.1%):
	26,840	GS Engineering & Construction Corp.		2,166,312
	31,800	Orascom Construction Industries, Sponsored GDR		1,060,660

				3,226,972

	Construction Materials (2.1%):
	627,000	Anhui Conch Cement Co., Ltd., Class H^		1,846,982
	1,865,500	PT Semen Gresik (Persero) Tbk		2,358,318
	1,749,427	Taiwan Cement Corp.		2,027,970

				6,233,270

	Diversified Financial Services (0.3%):
	364,002	FirstRand, Ltd.		933,937

	Diversified Telecommunication Services (1.3%):
	24,530	Chunghwa Telecom Co., Ltd., ADR		816,358
	56,458	Telefonica Brasil SA, ADR		1,542,997
	67,955	Telekomunikacja Polska SA		339,796
	300,365	Turk Telekomunikasyon AS		1,114,345

				3,813,496

	Electric Utilities (0.9%):
	42,401	Companhia Energetica de Minas Gerais SA, Preferred Shares		756,600
	104,623	Companhia Energetica de Minas Gerais SA, Sponsored ADR^		1,861,243
	13,200	Sibenergyholding JSC*(a)		—

				2,617,843

	Electronic Equipment, Instruments & Components (2.1%):
	126,776	Hon Hai Precision Industry Co., Ltd.		695,052
	1,004,129	Hon Hai Precision Industry Co., Ltd.		2,745,087
	57,585	Hon Hai Precision Industry Co., Ltd., Sponsored GDR		315,318
	61,000	Largan Precision Co., Ltd.		1,139,526
	1,129,240	WPG Holdings, Ltd.		1,299,432

				6,194,415

	Energy Equipment & Services (0.0%):
	552,000	China Suntien Green Energy Corp., Class H		96,074

	Food & Staples Retailing (3.1%):
	1,682,400	CP ALL PCL		2,761,805
	5,923	E-Mart Co., Ltd.		1,435,665
	6,230	Shinsegae Co., Ltd.*		1,325,441


Shares			Fair Value
	Common Stocks, continued
	Food & Staples Retailing, continued
	986,930	Wal-Mart de Mexico SAB de C.V., Series V^	$	2,710,024
	47,499	X5 Retail Group NV*		1,084,433

				9,317,368

	Food Products (1.7%):
	75,186	BRF - Brasil Foods SA, ADR^		1,469,886
	316,000	China Mengniu Dairy Co., Ltd.		738,473
	294,446	Grupo Bimbo SAB de C.V., Series A^		601,642
	753,000	PT Indofood Sukses Makmur Tbk		382,236
	3,752,000	PT Perusahaan Perkebunan London Sumatra Indonesia Tbk		931,499
	306,000	Tingyi (Cayman Islands) Holding Corp.		930,991

				5,054,727

	Hotels, Restaurants & Leisure (0.8%):
	726,400	Genting Berhard		2,517,274

	Household Durables (0.4%):
	395,600	PDG Realty SA Empreendimentos e Participacoes		1,251,832

	Household Products (1.1%):
	8,043	LG Household & Health Care, Ltd.*		3,406,175

	Independent Power Producers & Energy Traders (1.1%):
	1,724,000	China Resources Power Holdings Co.		3,323,063

	Industrial Conglomerates (1.3%):
	869,600	Sime Darby Berhad		2,525,667
	103,900	SM Investments Corp.		1,386,397

				3,912,064

	Insurance (1.9%):
	610,800	China Pacific Insurance Group Co., Ltd., Class H		1,736,137
	57,000	Ping An Insurance Group Co. of China		376,971
	10,957	Powszechny Zaklad Ubezpieczen SA		980,205
	14,626	Samsung Fire & Marine Insurance Co., Ltd.		2,681,966

				5,775,279

	Internet Software & Services (1.8%):
	14,400	Baidu, Inc., Sponsored ADR*		1,677,168
	5,982	Daum Communications Corp.*		623,886
	153,400	Tencent Holdings, Ltd.		3,089,300

				5,390,354

	IT Services (0.7%):
	38,029	Infosys Technologies, Ltd.		1,981,824

	Machinery (1.4%):
	4,747	Hyundai Heavy Industries Co., Ltd.*		1,064,148
	82,000	Iochpe-Maxion SA		1,110,485
	438,000	Weichai Power Co., Ltd., Class H		2,152,246

				4,326,879


Shares			Fair Value
	Common Stocks, continued
	Media (1.5%):
	119,210	Cheil Worldwide, Inc.	$	1,966,911
	164,408	Cyfrowy Polsat SA		642,696
	40,814	Naspers, Ltd.		1,781,617

				4,391,224

	Metals & Mining (3.8%):
	47,159	AngloGold Ashanti, Ltd.		2,005,924
	275,374	Centamin plc*		351,751
	24,700	Compania de Minas Buenaventura SA, Sponsored ADR		946,998
	207,900	Gerdau SA, Sponsored ADR		1,623,699
	421,380	Grupo Mexico SAB de C.V., Series B		1,108,434
	22,608	Impala Platinum Holdings, Ltd.		468,745
	14,401	KGHM Polska Miedz SA		459,040
	41,520	Mining & Metallurgical Co. Norilsk Nickel, Sponsored ADR		636,502
	49,661	Polymetal International plc		843,568
	143,400	Vale SA, Sponsored ADR		3,075,930

				11,520,591

	Multiline Retail (1.0%):
	60,000	Lojas Renner SA		1,557,844
	1,070,500	Parkson Retail Group, Ltd.^		1,311,479

				2,869,323

	Oil, Gas & Consumable Fuels (16.8%):
	3,900,000	China Petroleum & Chemical Corp. (Sinopec), H Shares^		4,098,004
	887,500	China Shenhua Energy Co., Ltd.		3,845,383
	3,399,000	CNOOC, Ltd.		5,946,319
	103,950	LUKOIL, Sponsored ADR		5,530,140
	17,150	Novatek Oao		2,140,534
	832,582	OAO Gazprom, Sponsored GDR		8,892,808
	92,601	Petroleo Brasileiro SA, ADR		2,301,135
	133,904	Petroleo Brasileiro SA, Sponsored ADR^		3,145,405
	452,600	PTT PCL		4,567,616
	51,255	Reliance Industries, Ltd.		668,728
	174,600	Rosneft Oil Co.		1,149,387
	53,182	Sasol, Ltd.		2,539,620
	14,487	SK Energy Co., Ltd.*		1,796,092
	779,600	Thai Oil Public Co., Ltd.		1,447,504
	84,000	Ultrapar Participacoes SA		1,442,124
	44,700	Ultrapar Participacoes SA, Sponsored ADR		768,840

				50,279,639

	Pharmaceuticals (0.7%):
	71,594	Dr. Reddy’s Laboratories, Ltd.		2,117,606

	Real Estate Management & Development (2.1%):
	2,502,300	Ayala Land, Inc.		870,213
	166,800	BR Malls Participacoes SA		1,621,033


Shares			Fair Value
	Common Stocks, continued
	Real Estate Management & Development, continued
	100,700	BR Properties SA	$	999,169
	1,738,000	China Overseas Land & Investment, Ltd.^		2,914,236
	54,420	Franshion Properties China, Ltd.		10,464

				6,415,115

	Semiconductors & Semiconductor Equipment (8.8%):
	34,900	Hynix Semiconductor, Inc.*		666,379
	20,143	Samsung Electronics Co., Ltd.		18,506,685
	2,884,110	Taiwan Semiconductor Manufacturing Co., Ltd.		7,215,151

				26,388,215

	Specialty Retail (1.1%):
	1,265,000	Belle International Holdings, Ltd.		2,210,260
	35,852	Foschini, Ltd. (The)		465,929
	56,729	Mr. Price Group, Ltd.		560,563

				3,236,752

	Tobacco (0.5%):
	22,976	KT&G Corp.*		1,624,081

	Transportation Infrastructure (1.5%):
	408,256	Companhia de Concessoes Rodoviarias		2,675,724
	67,147	Globaltrans Investment plc		922,848
	63,331	Imperial Holdings, Ltd.		968,242

				4,566,814

	Wireless Telecommunication Services (7.5%):
	129,900	America Movil SAB de C.V., Sponsored ADR, Series L		2,935,740
	1,717,100	Axiata Group Berhad		2,776,394
	1,053,500	China Mobile, Ltd.		10,271,921
	48,035	JSFC Sistema, Sponsored GDR, Registered Shares		803,897
	136,200	Mobile TeleSystems, Sponsored ADR		1,999,416


Shares or Principal Amount			Fair Value
	Common Stocks, continued
	Wireless Telecommunication Services, continued
	95,656	MTN Group, Ltd.	$	1,701,035
	674,100	Taiwan Mobile Co., Ltd.		2,104,941

				22,593,344

	Total Common Stocks (Cost $274,269,572)			288,626,969

	Preferred Stocks (2.2%):
	Beverages (1.0%):
	81,900	Companhia de Bebidas das Americas, Sponsored ADR, Preferred Shares^		2,955,771

	Metals & Mining (1.2%):
	182,100	Vale SA, Sponsored ADR, Preferred Shares		3,751,260

	Total Preferred Stocks (Cost $4,661,817)			6,707,031

	Warrant (0.3%):
	Diversified Financial Services (0.3%):
	302,095	Sberbank*(b)		743,154

	Total Warrant (Cost $676,070)			743,154

	Securities Held as Collateral for Securities on Loan (7.3%):
$	22,051,307	Allianz Variable Insurance Products Securities Lending Collateral Trust(c)		22,051,307

	Total Securities Held as Collateral for Securities on Loan (Cost $22,051,307)			22,051,307

	Unaffiliated Investment Company (1.4%):
	4,134,516	Dreyfus Treasury Prime Cash Management, 0.00%(d)		4,134,516

	Total Unaffiliated Investment Company (Cost $4,134,516)			4,134,516

	Total Investment Securities (Cost $305,793,282)(e) — 107.4%			322,262,977

	Net other assets (liabilities) — (7.4)%			(22,111,423	)

	Net Assets — 100.0%		$	300,151,554

The following represents the concentrations by country of risk (based on the domicile of the security issuer) relative to the totalfair value of investment securities as of December 31, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	305,793,282

Investment securities, at value*	$	322,262,977
Cash		6
Interest and dividends receivable		267,734
Foreign currency, at value (cost $239,154)		239,779
Receivable for capital shares issued		17,309
Receivable for investments sold		104,882
Reclaims receivable		16,297
Prepaid expenses		3,418

Total Assets		322,912,402

Liabilities:
Payable for investments purchased		215,874
Payable for capital shares redeemed		27,777
Payable for collateral received on loaned securities		22,051,307
Manager fees payable		279,228
Administration fees payable		10,698
Distribution fees payable		57,262
Custodian fees payable		68,316
Administrative and compliance services fees payable		2,279
Trustee fees payable		123
Other accrued liabilities		47,984

Total Liabilities		22,760,848

Net Assets	$	300,151,554

Net Assets Consist of:
Capital	$	269,415,358
Accumulated net investment income/(loss)		2,587,743
Accumulated net realized gains/(losses) from investment transactions		11,681,348
Net unrealized appreciation/(depreciation) on investments		16,467,105

Net Assets	$	300,151,554

Class 1
Net Assets	$	34,046,014
Shares of beneficial interest (unlimited number of shares authorized, no par value)		4,805,739
Net Asset Value (offering and redemption price per share)	$	7.08

Class 2
Net Assets	$	266,105,540
Shares of beneficial interest (unlimited number of shares authorized, no par value)		37,633,662
Net Asset Value (offering and redemption price per share)	$	7.07

*	Includes securities on loan of $20,734,441.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	10,113,649
Income from securities lending		45,491
Foreign withholding tax		(852,092	)

Total Investment Income		9,307,048

Expenses:
Manager fees		4,524,686
Administration fees		167,815
Distribution fees — Class 2		814,508
Custodian fees		486,786
Administrative and compliance services fees		17,866
Trustee fees		30,187
Professional fees		31,471
Shareholder reports		51,461
Other expenses		19,986

Total expenses before reductions		6,144,766
Less expenses voluntarily waived/reimbursed by the Manager		(730,252	)

Net expenses		5,414,514

Net Investment Income/(Loss)		3,892,534

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities and foreign currency transactions		21,593,578
Net realized gains/(losses) on forward currency contracts		(116,418	)
Change in unrealized appreciation/depreciation on investments		(89,384,177	)

Net Realized/Unrealized Gains/(Losses) on Investments		(67,907,017	)

Change in Net Assets Resulting From Operations	$	(64,014,483	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Schroder Emerging Markets Equity Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Expenses directly attributable to the Fund are charged directly to the 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 Fund of Funds Trust.

collateral which would result in a loss to the Fund. The investment of cash collateral deposited by the borrower is subject to inherent market risks such as interest rate risk, credit risk, liquidity risk, and other risks that are present in the market, and as such, the value of these investments may not be sufficient, when liquidated, to repay the borrower when the loaned security is returned. 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 Allianz Investment Management LLC (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. Securities on loan at December 31, 2011 are presented on the Fund’s Schedule of Portfolio Investments (“Schedule”). The average outstanding amount of securities on loan was $16.9 million for the year ended December 31, 2011.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $4,174 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund entered into forward currency 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 may enter into forward currency 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. In addition to the foreign currency risk related to the use of these contracts, 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. In the event of default by the counterparty to the transaction, the Fund’s maximum amount of loss, as either the buyer or the seller, is the unrealized appreciation of the contract. The forward currency 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 until the contract settlement date. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. As of December 31, 2011, the Fund did not hold any forward currency contracts. During the year ended December 31, 2011, the Fund had limited activity in these transactions.

During the year ended December 31, 2011, the Fund did not enter into any futures contracts. The Fund may enter into futures contracts to provide equity exposure on the Fund’s cash balances. 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, elements of

market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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.

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., (“Schroder”), Schroder 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 Schroder, 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 for investment advisory and management services 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 expenses (e.g., cash overdraft fees), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

The Trust has adopted a distribution and service plan in conformance with Rule 12b-1 of the 1940 Act. Pursuant to this plan, the Fund is authorized to pay certain fees for the sale and distribution of its shares and services provided to its shareholders at an annual rate not to exceed 0.25% of the Fund’s average daily net assets of Class 2 shares. These fees are reflected on the Statement of Operations as “Distribution fees.”

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $5,523 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks:
Capital Markets	$	787,453	$	—	$	—	$	787,453
Commercial Banks		12,959,365		42,807,157		—		55,766,522
Diversified Telecommunication Services		2,359,355		1,454,141		—		3,813,496
Electric Utilities		2,617,843		—		—		2,617,843
Food & Staples Retailing		2,710,024		6,607,344		—		9,317,368
Food Products		2,071,528		2,983,199		—		5,054,727
Household Durables		1,251,832		—		—		1,251,832
Internet Software & Services		1,677,168		3,713,186		—		5,390,354
Machinery		1,110,485		3,216,394		—		4,326,879
Metals & Mining		8,235,131		3,285,460		—		11,520,591
Multiline Retail		1,557,844		1,311,479				2,869,323
Oil, Gas & Consumable Fuels		22,080,452		28,199,187		—		50,279,639
Real Estate Management & Development		2,620,202		3,794,913		—		6,415,115
Transportation Infrastructure		2,675,724		1,891,090		—		4,566,814
Wireless Telecommunication Services		4,935,156		17,658,188		—		22,593,344
All Other Common Stocks+		—		102,055,669		—		102,055,669

As of December 31, 2011, the Fund held securities that were valued in good faith pursuant to procedures approved by the Board of Trustees. The Sibenergyholding JSC common stock was valued at $0.

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $311,458,891. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Schroder Emerging Markets Equity Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

For the year ended December 31, 2011, 5.04% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

During the year ended December 31, 2011, the Fund declared net long-term capital gain distributions of $4,471,999.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® Small Cap Stock Index Fund returned 0.29%. That compared to a 1.02% total return for its benchmark, the S&P SmallCap 600 Index¹.

The Fund attempts to replicate the performance of the S&P 600 index of U.S. small-cap stocks. U.S. equities delivered paltry rewards for the extreme volatility investors endured in 2011. Political turmoil, natural disasters and, above all, global debt problems led to market activity during the year that was characterized by a tug-of-war between assets perceived as high risk and those perceived as low risk.

a new plan to reduce Greece’s debt burden, recapitalize the region’s banks, and increase the size of the euro-zone bailout fund. However, a lack of definitive details about the rescue plan soon raised doubts among investors and thwarted the rally at the end of October. In November, political instability in Greece and Italy fueled uncertainty as to whether Europe’s leaders would be able to contain the crisis. In the United States, bickering lawmakers failed to reach an agreement on reducing the U.S. budget deficit, further undermining investors’ confidence in policymakers on both sides of the Atlantic. Market volatility softened in December with the support of global central bank actions and continued improvement in economic data.

The underperformance of the Fund compared to its benchmark was the result of Fund expenses that are not incurred by the benchmark.

Past performance does not guarantee future results.

The Standard & Poor’s SmallCap 600 Index (“S&P 600”) covers approximately 3% of the domestic equities market. Measuring the small-cap segment of the market that is typically renowned for poor trading liquidity and financial instability, the index is designed to be an efficient portfolio of companies that meet specific inclusion criteria to ensure that they are investable and financially viable. Investors cannot invest directly in an index.

Fund Objective

The Fund’s investment objective is to seek to match the performance of the Standard & Poor’s SmallCap 600^® Index (the “S&P 600”). This objective may be changed by the Trustees of the Fund without shareholder approval. The Fund seeks to achieve its objective by investing in a representative sample of stocks included in the Index and in futures whose performance is related to the index, rather than attempting to replicate the Index.

Investment Concerns

Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Smaller companies typically have a higher risk of failure and historically have experienced a greater degree of volatility.

Investing in derivatives instruments involves risks that may be different from or greater than the risk associated with investing directly in securities or other traditional instruments.

For a complete description of these and other risks associated with investing in a mutual Fund, please refer to the Fund’s prospectus.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			Since Inception (5/1/07)
AZL^® Small Cap Stock Index Fund		0.29	%		16.26	%		0.46	%
S&P SmallCap 600 Index		1.02	%		17.01	%		0.82	%

Expense Ratio


	Gross
AZL^® Small Cap Stock Index Fund		0.65	%

The above expense ratios are based on the current Fund prospectus dated May 1, 2011. The Manager and the Fund have entered into a written contract limiting operating expenses, excluding certain expenses (such as interest expense) to 0.71% through April 30, 2013. Additional information pertaining to the December 31, 2011 expense ratios can be found in the financial highlights.

¹	The hypothetical $10,000 investment data for the S&P SmallCap600 Index is calculated from April 30, 2007.

The Fund’s performance is measured against the Standard & Poor’s SmallCap 600 Index (“S&P 600”), an unmanaged index which covers approximately 3% of the domestic equities market. Measuring the small-cap segment of the market that is typically renowned for poor trading liquidity and financial instability, the index is designed to be an efficient portfolio of companies that meet specific inclusion criteria to ensure that they are investable and financially viable. 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.

As a shareholder of the AZL Small Cap Stock Index Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only. Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.

The Actual Expense table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.


Shares			Fair Value

	Common Stocks (99.0%):
	Aerospace & Defense (2.2%):
	17,137	AAR Corp.	$	328,516
	7,813	Aerovironment, Inc.*		245,875
	3,938	American Science & Engineering, Inc.		268,217
	10,671	Ceradyne, Inc.*^		285,769
	6,962	Cubic Corp.		303,474
	20,593	Curtiss-Wright Corp.^		727,551
	26,358	Gencorp, Inc.*^		140,225
	19,946	Moog, Inc., Class A*^		876,228
	25,923	Orbital Sciences Corp.*		376,661
	16,305	Teledyne Technologies, Inc.*^		894,329

				4,446,845

	Air Freight & Logistics (0.5%):
	12,588	Forward Air Corp.		403,445
	16,553	Hub Group, Inc., Class A*^		536,814

				940,259

	Airlines (0.3%):
	6,647	Allegiant Travel Co.*^		354,551
	22,367	SkyWest, Inc.		281,601

				636,152

	Auto Components (0.3%):
	8,374	Drew Industries, Inc.*^		205,414
	14,853	Spartan Motors, Inc.^		71,443
	8,583	Standard Motor Products, Inc.		172,089
	10,434	Superior Industries International, Inc.		172,579

				621,525

	Automobiles (0.0%):
	12,882	Winnebago Industries, Inc.*^		95,069

	Beverages (0.2%):
	3,707	Boston Beer Co., Inc. (The), Class A*^		402,432

	Biotechnology (0.7%):
	23,753	ArQule, Inc.*		133,967
	27,157	Cubist Pharmaceuticals, Inc.*^		1,075,960
	10,953	Emergent Biosolutions, Inc.*		184,448
	31,477	Savient Pharmaceuticals, Inc.*^		70,194

				1,464,569

	Building Products (0.9%):
	8,269	AAON, Inc.^		169,432
	12,511	Apogee Enterprises, Inc.^		153,385
	13,430	Gibraltar Industries, Inc.*		187,483
	20,338	Griffon Corp.^		185,686
	8,874	NCI Building Systems, Inc.*		96,460
	16,327	Quanex Building Products Corp.^		245,231
	17,839	Simpson Manufacturing Co., Inc.		600,461
	8,632	Universal Forest Products, Inc.		266,470

				1,904,608


Shares			Fair Value

	Common Stocks, continued
	Capital Markets (0.9%):
	8,893	Calamos Asset Management, Inc., Class A	$	111,251
	17,641	Investment Technology Group, Inc.*		190,699
	6,872	Piper Jaffray Cos., Inc.*^		138,814
	48,313	Prospect Capital Corp.^		448,828
	23,696	Stifel Financial Corp.*^		759,457
	12,973	SWS Group, Inc.^		89,125

				1,738,174

	Chemicals (2.1%):
	12,960	A. Schulman, Inc.		274,493
	10,271	American Vanguard Corp.^		137,015
	12,781	Balchem Corp.		518,141
	25,007	Calgon Carbon Corp.*^		392,860
	21,589	H.B. Fuller Co.^		498,922
	3,943	Hawkins, Inc.^		145,339
	9,092	Koppers Holdings, Inc.		312,401
	14,163	Kraton Performance Polymers, Inc.*		287,509
	8,167	LSB Industries, Inc.*^		228,921
	14,264	OM Group, Inc.*		319,371
	40,024	PolyOne Corp.^		462,277
	5,684	Quaker Chemical Corp.^		221,051
	3,657	Stepan Co.		293,145
	9,708	Zep, Inc.		135,718

				4,227,163

	Commercial Banks (5.5%):
	12,553	Bank of the Ozarks, Inc.^		371,945
	34,409	BBCN Bancorp, Inc.*^		325,165
	34,428	Boston Private Financial Holdings, Inc.^		273,358
	6,531	City Holding Co.^		221,336
	17,431	Columbia Banking System, Inc.^		335,895
	16,257	Community Bank System, Inc.^		451,945
	46,308	First Commonwealth Financial Corp.		243,580
	25,707	First Financial Bancorp		427,764
	13,876	First Financial Bankshares, Inc.^		463,875
	32,873	First Midwest Bancorp, Inc.^		333,004
	61,327	FNB Corp.^		693,608
	31,732	Glacier Bancorp, Inc.^		381,736
	14,013	Hanmi Financial Corp.*^		103,696
	9,847	Home Bancshares, Inc.		255,136
	9,482	Independent Bank Corp.		258,764
	54,227	National Penn Bancshares, Inc.^		457,676
	14,597	NBT Bancorp, Inc.^		323,032
	41,802	Old National Bancorp^		486,993
	14,799	PacWest Bancorp		280,441
	15,145	Pinnacle Financial Partners, Inc.*^		244,592


Shares			Fair Value

	Common Stocks, continued
	Commercial Banks, continued
	26,303	PrivateBancorp, Inc.	$	288,807
	12,406	S & T Bancorp, Inc.^		242,537
	7,626	Simmons First National Corp., Class A^		207,351
	13,664	Sterling Bancorp		118,057
	69,124	Susquehanna Bancshares, Inc.^		579,259
	16,528	Texas Capital Bancshares, Inc.*^		505,922
	3,635	Tompkins Financial Corp.^		139,984
	14,249	UMB Financial Corp.		530,775
	50,526	Umpqua Holdings Corp.^		626,017
	15,971	United Bankshares, Inc.^		451,500
	8,405	United Community Banks, Inc.*^		58,751
	26,670	Wilshire Bancorp, Inc.*^		96,812
	15,854	Wintrust Financial Corp.^		444,705

				11,224,018

	Commercial Services & Supplies (2.1%):
	21,144	ABM Industries, Inc.		435,989
	3,942	Consolidated Graphics, Inc.*		190,320
	8,306	G & K Services, Inc., Class A		241,788
	27,610	Geo Group, Inc. (The)*^		462,468
	29,451	Healthcare Services Group, Inc.^		520,988
	13,701	Higher One Holdings, Inc.*^		252,646
	25,430	Interface, Inc., Class A		293,462
	15,471	Mobile Mini, Inc.*		269,969
	5,522	Standard Register Co. (The)^		12,866
	17,510	Sykes Enterprises, Inc.*		274,207
	27,587	Tetra Tech, Inc.*		595,603
	18,815	United Stationers, Inc.		612,616
	8,874	Viad Corp.		155,118

				4,318,040

	Communications Equipment (2.0%):
	51,984	Arris Group, Inc.*^		562,467
	4,520	Bel Fuse, Inc., Class B^		84,750
	7,796	Black Box Corp.^		218,600
	18,883	Blue Coat Systems, Inc.*^		480,572
	8,985	Comtech Telecommunications Corp.^		257,151
	11,328	Digi International, Inc.*		126,421
	51,206	Harmonic, Inc.*		258,078
	16,570	NETGEAR, Inc.*		556,255
	8,443	Oplink Communications, Inc.*		139,056
	8,157	PC-Tel, Inc.		55,794
	18,803	Symmetricom, Inc.*		101,348
	Communications Equipment, continued
	27,200	Tekelec*		297,296
	18,628	ViaSat, Inc.*^		859,123

				3,996,911


Shares			Fair Value

	Common Stocks, continued
	Computers & Peripherals (0.7%):
	12,969	Avid Technology, Inc.*^	$	110,625
	22,632	Intermec, Inc.*		155,255
	10,208	Intevac, Inc.*		75,539
	3,481	NCI, Inc., Class A*		40,554
	14,578	Novatel Wireless, Inc.*		45,629
	9,356	Stratasys, Inc.*^		284,516
	12,154	Super Micro Computer, Inc.*		190,575
	14,198	Synaptics, Inc.*^		428,070

				1,330,763

	Construction & Engineering (0.8%):
	17,197	Aegion Corp.*		263,802
	16,539	Comfort Systems USA, Inc.		177,298
	14,850	Dycom Industries, Inc.*		310,662
	29,417	Emcor Group, Inc.		788,670
	11,994	Orion Marine Group, Inc.*^		79,760

				1,620,192

	Construction Materials (0.5%):
	19,809	Eagle Materials, Inc.^		508,299
	26,963	Headwaters, Inc.*^		59,858
	12,306	Texas Industries, Inc.		378,778

				946,935

	Consumer Finance (1.3%):
	19,348	Cardtronics, Inc.*		523,557
	12,914	Cash America International, Inc.^		602,180
	19,328	EZCORP, Inc., Class A*^		509,679
	13,262	First Cash Financial Services, Inc.*^		465,364
	6,428	World Acceptance Corp.*^		472,458

				2,573,238

	Containers & Packaging (0.1%):
	14,715	Myers Industries, Inc.		181,583

	Distributors (0.0%):
	8,330	VOXX International Corp.*		70,388

	Diversified Consumer Services (1.1%):
	7,875	American Public Education*^		340,830
	6,374	Capella Education Co.*^		229,783
	26,458	Career Education Corp.*		210,870
	13,577	Coinstar, Inc.*^		619,654
	37,516	Corinthian Colleges, Inc.*^		81,410
	27,562	Hillenbrand, Inc.		615,184
	10,036	Lincoln Educational Services Corp.		79,284
	9,491	Universal Technical Institute, Inc.*		121,295

				2,298,310

	Diversified Financial Services (0.8%):
	9,627	Encore Capital Group, Inc.*		204,670
	17,266	Financial Engines, Inc.*^		385,550
	8,964	First Bancorp*		31,284


Shares			Fair Value

	Common Stocks, continued
	Diversified Financial Services, continued
	17,095	Interactive Brokers Group, Inc., Class A	$	255,399
	22,511	Meadowbrook Insurance Group, Inc.		240,418
	7,552	Portfolio Recovery Associates, Inc.*^		509,911

				1,627,232

	Diversified Telecommunication Services (0.5%):
	4,082	Atlantic Tele-Network, Inc.		159,402
	13,385	Cbeyond, Inc.*		107,214
	86,335	Cincinnati Bell, Inc.*^		261,595
	15,376	General Communication, Inc., Class A*^		150,531
	6,530	Lumos Networks Corp.^		100,170
	13,889	Neutral Tandem, Inc.*		148,474

				927,386

	Electric Utilities (1.4%):
	14,290	ALLETE, Inc.		599,894
	5,929	Central Vermont Public Service Corp.		208,108
	17,749	El Paso Electric Co.		614,825
	22,243	UIL Holdings Corp.^		786,735
	16,288	Unisource Energy Corp.^		601,353

				2,810,915

	Electrical Equipment (2.0%):
	17,149	A.O. Smith Corp.^		688,018
	5,548	AZZ, Inc.		252,101
	20,544	Belden CDT, Inc.		683,705
	23,107	Brady Corp., Class A^		729,488
	8,477	Encore Wire Corp.^		219,554
	21,034	EnerSys*		546,253
	8,300	Franklin Electric Co., Inc.^		361,548
	24,073	II-VI, Inc.*		441,980
	3,943	Powell Industries, Inc.*		123,337
	8,753	Vicor Corp.^		69,674

				4,115,658

	Electronic Equipment, Instruments & Components (3.8%):
	6,769	Agilysys, Inc.*^		53,813
	12,212	Anixter International, Inc.*^		728,324
	25,471	Benchmark Electronics, Inc.*		343,094
	30,097	Brightpoint, Inc.*		323,844
	17,728	Checkpoint Systems, Inc.*		193,944
	18,560	Cognex Corp.^		664,262
	15,161	CTS Corp.^		139,481
	16,266	Daktronics, Inc.		155,666
	7,365	DTS, Inc.*^		200,623
	10,689	Electro Scientific Industries, Inc.		154,777
	7,337	Faro Technologies, Inc.*^		337,502


Shares			Fair Value

	Common Stocks, continued
	Electronic Equipment, Instruments & Components, continued
	19,348	Insight Enterprises, Inc.*	$	295,831
	10,155	Littlelfuse, Inc.^		436,462
	6,633	Measurement Specialties, Inc.*^		185,459
	13,516	Mercury Computer Systems, Inc.*		179,628
	16,352	Methode Electronics, Inc.		135,558
	6,924	MTS Systems Corp.		282,153
	16,592	Newport Corp.*		225,817
	8,668	OSI Systems, Inc.*^		422,825
	9,161	Park Electrochemical Corp.		234,705
	15,266	Plexus Corp.*^		417,983
	18,040	Pulse Electronics Corp.^		50,512
	10,109	RadiSys Corp.*		51,151
	12,579	Rofin-Sinar Technologies, Inc.*		287,430
	7,145	Rogers Corp.*		263,365
	11,996	ScanSource, Inc.*		431,856
	11,348	SYNNEX Corp.*^		345,660
	22,616	TTM Technologies, Inc.*^		247,871

				7,789,596

	Energy Equipment & Services (2.4%):
	12,943	Basic Energy Services, Inc.*^		254,977
	15,946	Bristow Group, Inc.^		755,681
	27,455	Exterran Holdings, Inc.*		249,840
	6,338	Gulf Island Fabrication, Inc.^		185,133
	14,968	Hornbeck Offshore Services, Inc.*^		464,307
	56,158	ION Geophysical Corp.*^		344,249
	13,439	Lufkin Industries, Inc.^		904,579
	11,411	Matrix Service Co.*		107,720
	2,046	OYO Geospace Corp.*		158,217
	27,203	Pioneer Drilling Co.*^		263,325
	9,579	Seacor Holdings, Inc.*^		852,148
	34,103	TETRA Technologies, Inc.*		318,522

				4,858,698

	Food & Staples Retailing (1.5%):
	8,158	Andersons, Inc. (The)		356,178
	21,034	B&G Foods, Inc.^		506,288
	16,785	Casey’s General Stores, Inc.^		864,595
	5,360	Nash Finch Co.		156,941
	4,047	Seneca Foods Corp., Class A*		104,494
	10,095	Spartan Stores, Inc.		186,758
	21,504	United Natural Foods, Inc.*^		860,375

				3,035,629

	Food Products (2.1%):
	6,323	Cal-Maine Foods, Inc.^		231,232
	5,545	Calavo Growers, Inc.^		142,396
	51,636	Darling International, Inc.*		686,242
	9,734	Diamond Foods, Inc.^		314,116
	19,435	Hain Celestial Group, Inc.*^		712,487
	6,366	J & J Snack Foods Corp.		339,180


Shares			Fair Value

	Common Stocks, continued
	Food Products, continued
	8,306	Sanderson Farms, Inc.^	$	416,380
	20,636	Snyders-Lance, Inc.^		464,310
	15,839	TreeHouse Foods, Inc.*^		1,035,554

				4,341,897

	Gas Utilities (2.2%):
	9,891	Laclede Group, Inc. (The)^		400,289
	18,282	New Jersey Resources Corp.^		899,475
	11,780	Northwest Natural Gas Co.^		564,615
	31,832	Piedmont Natural Gas Co., Inc.^		1,081,651
	13,296	South Jersey Industries, Inc.		755,346
	20,251	Southwest Gas Corp.^		860,465

				4,561,841

	Health Care Equipment & Supplies (3.4%):
	9,559	Abaxis, Inc.*^		264,498
	30,142	Align Technology, Inc.*^		715,119
	5,393	Analogic Corp.^		309,127
	5,783	Cantel Medical Corp.		161,519
	12,311	CONMED Corp.*^		316,023
	12,596	CryoLife, Inc.*		60,461
	10,961	Cyberonics, Inc.*		367,193
	10,342	Greatbatch, Inc.*^		228,558
	11,016	Haemonetics Corp.*		674,399
	5,367	ICU Medical, Inc.*^		241,515
	8,752	Integra LifeSciences Holdings*		269,824
	14,059	Invacare Corp.^		214,962
	3,439	Kensey Nash Corp.		65,994
	18,196	Meridian Bioscience, Inc.^		342,813
	18,501	Merit Medical Systems, Inc.*		247,543
	12,985	Natus Medical, Inc.*		122,449
	10,314	Neogen Corp.*^		316,021
	18,647	NuVasive, Inc.*		234,766
	8,629	Palomar Medical Technologies, Inc.*		80,250
	6,152	SonoSite, Inc.*		331,347
	6,479	Surmodics, Inc.*		94,982
	16,044	Symmetry Medical, Inc.*		128,192
	14,874	West Pharmaceutical Services, Inc.^		564,468
	9,771	Zoll Medical Corp.*^		617,332

				6,969,355

	Health Care Providers & Services (3.9%):
	4,991	Air Methods Corp.*^		421,490
	3,592	Almost Family, Inc.*^		59,555
	13,002	Amedisys, Inc.*^		141,852
	18,051	AMN Healthcare Services, Inc.*^		79,966
	13,829	AmSurg Corp.*^		360,107
	10,984	Bio-Reference Laboratories, Inc.*^		178,710
	22,222	Centene Corp.*		879,769


Shares			Fair Value

	Common Stocks, continued
	Health Care Providers & Services, continued
	8,772	Chemed Corp.^	$	449,214
	2,831	CorVel Corp.*		146,391
	13,818	Cross Country Healthcare, Inc.*		76,690
	7,262	Ensign Group, Inc. (The)		177,919
	13,617	Gentiva Health Services, Inc.*^		91,915
	14,670	Hanger Orthopedic Group, Inc.*^		274,182
	29,592	Healthspring, Inc.*		1,613,948
	14,678	Healthways, Inc.*^		100,691
	7,257	IPC The Hospitalist Co.*		331,790
	23,004	Kindred Healthcare, Inc.*^		270,757
	4,160	Landauer, Inc.		214,240
	6,984	LHC Group, Inc.*		89,605
	12,331	Magellan Health Services, Inc.*^		610,014
	12,493	Molina Healthcare, Inc.*		278,969
	5,612	MWI Veterinary Supply, Inc.*		372,861
	12,973	PharMerica Corp.*		196,930
	23,246	PSS World Medical, Inc.*^.		562,321

				7,979,886

	Health Care Technology (0.6%):
	4,884	Computer Programs & Systems, Inc.		249,622
	14,662	Omnicell, Inc.*		242,216
	17,393	Quality Systems, Inc.^		643,367

				1,135,205

	Hotels, Restaurants & Leisure (3.0%):
	633	Biglari Holdings, Inc.*		233,096
	10,636	BJ’s Restaurants, Inc.*^		482,024
	24,018	Boyd Gaming Corp.*^		179,174
	8,098	Buffalo Wild Wings, Inc.*^		546,696
	8,315	CEC Entertainment, Inc.^		286,452
	10,125	Cracker Barrel Old Country Store, Inc.^		510,401
	6,841	DineEquity, Inc.*^		288,759
	17,537	Interval Leisure Group, Inc.*^		238,679
	19,401	Jack in the Box, Inc.*		405,481
	8,767	Marcus Corp.^		110,552
	11,900	Marriott Vacations Worldwide Corp.*^		204,204
	5,134	Monarch Casino & Resort, Inc.*^		52,315
	11,860	Multimedia Games, Inc.*		94,168
	8,100	O’Charley’s, Inc.*^		44,469
	9,361	P.F. Chang’s China Bistro, Inc.^		289,348
	8,169	Papa John’s International, Inc.*		307,808
	5,705	Peet’s Coffee & Tea, Inc.*^		357,589
	27,424	Pinnacle Entertainment, Inc.*		278,628
	4,913	Red Robin Gourmet Burgers*^		136,090
	27,580	Ruby Tuesday, Inc.*		190,302
	15,715	Ruth’s Hospitality Group, Inc.*^		78,104


Shares			Fair Value

	Common Stocks, continued
	Hotels, Restaurants & Leisure, continued
	23,651	Shuffle Master, Inc.*	$	277,190
	27,373	Sonic Corp.*		184,220
	26,192	Texas Roadhouse, Inc.^		390,261

				6,166,010

	Household Durables (1.3%):
	2,297	Blyth, Inc.^		130,470
	11,459	Ethan Allen Interiors, Inc.^		271,693
	13,935	Helen of Troy, Ltd.*		427,804
	11,930	iRobot Corp.*^		356,111
	22,867	La-Z-Boy, Inc.*		272,117
	8,287	M/I Homes, Inc.*		79,555
	12,311	Meritage Corp.*^		285,492
	2,125	National Presto Industries, Inc.^		198,900
	19,601	Ryland Group, Inc. (The)^		308,912
	44,629	Standard-Pacific Corp.*^		141,920
	6,525	Universal Electronics, Inc.*		110,077

				2,583,051

	Household Products (0.2%):
	18,858	Central Garden & Pet Co., Class A*^		156,899
	7,039	WD-40 Co.		284,446

				441,345

	Industrial Conglomerates (0.3%):
	5,584	Standex International Corp.		190,749
	18,339	STR Holdings, Inc.*^		150,930
	10,318	Tredegar, Inc.^		229,163

				570,842

	Insurance (2.8%):
	7,967	Amerisafe, Inc.*		185,233
	24,076	Delphi Financial Group, Inc., Class A		1,066,567
	8,854	eHealth, Inc.*^		130,154
	15,460	Employers Holdings, Inc.^		279,671
	17,625	Horace Mann Educators Corp.		241,639
	5,219	Infinity Property & Casualty Corp.		296,126
	18,244	National Financial Partners Corp.*^		246,659
	4,852	Navigators Group, Inc.*		231,343
	9,412	Presidential Life Corp.		94,026
	13,465	ProAssurance Corp.		1,074,776
	7,347	RLI Corp.^		535,302
	6,703	Safety Insurance Group, Inc.		271,338
	23,922	Selective Insurance Group, Inc.		424,137
	8,529	Stewart Information Services Corp.^		98,510
	17,584	Tower Group, Inc.^		354,669
	9,109	United Fire & Casualty Co.		183,820

				5,713,970


Shares			Fair Value

	Common Stocks, continued
	Internet & Catalog Retail (0.3%):
	5,978	Blue Nile, Inc.*^	$	244,381
	12,406	Nutri/System, Inc.^		160,409
	8,968	PetMed Express, Inc.^		93,088
	5,568	Stamps.com, Inc.*^		145,492

				643,370

	Internet Software & Services (1.8%):
	14,577	comScore, Inc.*		309,032
	18,302	DealerTrack Holdings, Inc.*^		498,913
	16,437	Digital River, Inc.*		246,884
	17,409	InfoSpace, Inc.*^		191,325
	20,928	j2 Global, Inc.^		588,914
	8,866	Liquidity Services, Inc.*^		327,155
	20,919	LivePerson, Inc.*		262,533
	9,333	LogMeIn, Inc.*^		359,787
	13,595	Perficient, Inc.*		136,086
	11,296	RightNow Technologies, Inc.*^		482,678
	39,363	United Online, Inc.		214,135
	12,662	XO Group, Inc.*^		105,601

				3,723,043

	IT Services (1.8%):
	11,657	CACI International, Inc., Class A*^		651,859
	31,930	CIBER, Inc.*		123,250
	14,946	CSG Systems International, Inc.*		219,856
	6,506	Forrester Research, Inc.*		220,814
	17,412	Heartland Payment Systems, Inc.		424,156
	13,244	iGATE Corp.*^		208,328
	14,810	Maximus, Inc.		612,394
	11,147	TeleTech Holdings, Inc.*		180,581
	8,289	Virtusa Corp.*		120,025
	17,054	Wright Express Corp.*		925,691

				3,686,954

	Leisure Equipment & Products (1.0%):
	5,416	Arctic Cat, Inc.*		122,131
	39,302	Brunswick Corp.^		709,794
	28,654	Callaway Golf Co.^		158,457
	11,457	JAKKS Pacific, Inc.^		161,658
	20,998	Pool Corp.^		632,040
	8,402	Sturm, Ruger & Co., Inc.^		281,131

				2,065,211

	Life Sciences Tools & Services (0.4%):
	31,135	Affymetrix, Inc.*		127,342
	13,033	Cambrex Corp.*		93,577
	14,559	Enzo Biochem, Inc.*		32,612
	19,375	eResearch Technology, Inc.*		90,869
	26,101	PAREXEL International Corp.*^		541,335

				885,735


Shares			Fair Value

	Common Stocks, continued
	Machinery (3.8%):
	30,403	Actuant Corp., Class A^	$	689,844
	12,421	Albany International Corp., Class A		287,173
	8,812	Astec Industries, Inc.*		283,834
	6,674	Badger Meter, Inc.^		196,416
	20,758	Barnes Group, Inc.^		500,475
	22,076	Briggs & Stratton Corp.^		341,957
	3,816	Cascade Corp.		180,001
	7,620	CIRCOR International, Inc.		269,062
	9,170	EnPro Industries, Inc.*		302,427
	11,772	ESCO Technologies, Inc.		338,798
	27,481	Federal Signal Corp.*		114,046
	12,653	John Bean Technologies Corp.		194,477
	14,164	Kaydon Corp.^		432,002
	5,594	Lindsay Corp.^		307,055
	7,590	Lydall, Inc.*		72,029
	16,862	Mueller Industries, Inc.^		647,838
	20,245	Robbins & Myers, Inc.		982,895
	8,294	Tennant Co.		322,388
	13,526	Toro Co.^		820,487
	12,813	Watts Water Technologies, Inc., Class A^		438,333

				7,721,537

	Media (0.7%):
	12,024	Arbitron, Inc.		413,746
	12,153	Digital Generation, Inc.*^		144,864
	13,328	Dolan Co. (The)*^		113,555
	13,754	E.W. Scripps Co. (The), Class A*^		110,169
	19,413	Harte-Hanks, Inc.		176,464
	65,199	Live Nation, Inc.*		541,804

				1,500,602

	Metals & Mining (1.1%):
	7,161	A.M. Castle & Co.*^		67,743
	48,657	AK Steel Holding Corp.^		401,907
	11,041	AMCOL International Corp.^		296,451
	24,102	Century Aluminum Co.*		205,108
	5,331	Haynes International, Inc.		291,072
	6,983	Kaiser Aluminum Corp.^		320,380
	8,954	Materion Corp.*^		217,403
	4,049	Olympic Steel, Inc.^		94,423
	13,323	RTI International Metals, Inc.*^		309,227

				2,203,714

	Multi-Utilities (0.8%):
	25,680	Avista Corp.		661,260
	6,565	CH Energy Group, Inc.^		383,265
	15,998	NorthWestern Corp.		572,568

				1,617,093


Shares			Fair Value

	Common Stocks, continued
	Multiline Retail (0.2%):
	17,013	Fred’s, Inc.^	$	248,050
	18,896	Tuesday Morning Corp.*^		65,191

				313,241

	Oil, Gas & Consumable Fuels (1.7%):
	11,738	Approach Resources, Inc.*^		345,215
	5,622	Contango Oil & Gas Co.*^		327,088
	8,807	GeoResources, Inc.*^		258,133
	19,655	Gulfport Energy Corp.*^		578,840
	11,579	Overseas Shipholding Group, Inc.		126,558
	20,202	Penn Virginia Corp.		106,869
	10,418	Petroleum Development Corp.*		365,776
	25,217	PetroQuest Energy, Inc.*^		166,432
	21,609	Stone Energy Corp.*		570,045
	18,739	Swift Energy Co.*		556,923

				3,401,879

	Paper & Forest Products (1.1%):
	17,357	Buckeye Technologies, Inc.		580,418
	10,031	Clearwater Paper Corp.*		357,204
	4,777	Deltic Timber Corp.^		288,483
	17,203	KapStone Paper and Packaging Corp.*		270,775
	6,639	Neenah Paper, Inc.		148,182
	7,134	Schweitzer-Mauduit International, Inc.^		474,126
	21,712	Wausau Paper Corp.^		179,341

				2,298,529

	Personal Products (0.2%):
	7,150	Inter Parfums, Inc.		111,254
	6,126	Medifast, Inc.*^		84,049
	22,263	Prestige Brands Holdings, Inc.*^		250,904

				446,207

	Pharmaceuticals (2.2%):
	4,508	Hi-Tech Pharmacal Co., Inc.*^		175,316
	23,409	Medicines Co. (The)*		436,344
	15,839	Par Pharmaceutical Cos., Inc.*		518,410
	27,666	Questcor Pharmaceuticals, Inc.*^		1,150,352
	26,082	Salix Pharmaceuticals, Inc.*^		1,248,024
	31,107	ViroPharma, Inc.*^		852,021

				4,380,467

	Professional Services (0.9%):
	5,747	CDI Corp.^		79,366
	5,840	Exponent, Inc.*		268,465
	7,881	Heidrick & Struggles International, Inc.		169,757
	9,902	Insperity, Inc.		251,016
	12,520	Kelly Services, Inc., Class A^		171,274
	23,077	Navigant Consulting, Inc.*		263,308


Shares			Fair Value

	Common Stocks, continued
	Professional Services, continued
	16,278	On Assignment, Inc.*	$	181,988
	19,471	Resources Connection, Inc.		206,198
	7,323	School Specialty, Inc.*		18,307
	17,698	Trueblue, Inc.*		245,648

				1,855,327

	Real Estate Investment Trusts (REITs) (7.7%):
	18,789	Acadia Realty Trust		378,410
	67,832	BioMed Realty Trust, Inc.^		1,226,402
	24,755	Cedar Shopping Centers, Inc.		106,694
	38,546	Colonial Properties Trust^		804,070
	45,772	Cousins Properties, Inc.		293,398
	73,887	DiamondRock Hospitality, Co.^		712,271
	11,844	EastGroup Properties, Inc.^		514,977
	20,610	Entertainment Properties Trust^		900,863
	41,625	Extra Space Storage, Inc.^		1,008,574
	31,840	Franklin Street Properties Corp.^		316,808
	11,945	Getty Realty Corp.^		166,633
	34,337	Healthcare Realty Trust, Inc.		638,325
	34,152	Inland Real Estate Corp.		259,897
	25,787	Kilroy Realty Corp.^		981,711
	28,103	Kite Realty Group Trust		126,744
	36,947	LaSalle Hotel Properties^		894,487
	59,205	Lexington Corporate Properties Trust^		443,445
	13,387	LTC Properties, Inc.^		413,123
	48,791	Medical Properties Trust, Inc.^		481,567
	16,683	Mid-America Apartment Communities, Inc.^		1,043,522
	9,723	Parkway Properties, Inc.		95,869
	24,571	Pennsylvania Real Estate Investment Trust^		256,521
	22,882	Post Properties, Inc.^		1,000,401
	8,192	PS Business Parks, Inc.		454,083
	5,194	Saul Centers, Inc.		183,971
	12,289	Sovran Self Storage, Inc.		524,372
	38,237	Tanger Factory Outlet Centers, Inc.^		1,121,109
	5,585	Universal Health Realty Income Trust		217,815
	10,177	Urstadt Biddle Properties, Inc., Class A^		184,000

				15,750,062

	Real Estate Management & Development (0.1%):
	15,581	Forestar Group, Inc.*^		235,741

	Road & Rail (0.9%):
	11,223	Arkansas Best Corp.		216,267
	25,395	Heartland Express, Inc.^		362,894
	25,898	Knight Transportation, Inc.^		405,045


Shares			Fair Value

	Common Stocks, continued
	Road & Rail, continued
	20,777	Old Dominion Freight Line, Inc.*^	$	842,092

				1,826,298

	Semiconductors & Semiconductor Equipment (5.0%):
	19,588	Advanced Energy Industries, Inc.*^		210,179
	13,982	ATMI, Inc.*		280,060
	28,523	Brooks Automation, Inc.^		292,931
	9,951	Cabot Microelectronics Corp.*^		470,185
	10,384	CEVA, Inc.*^		314,220
	28,191	Cirrus Logic, Inc.*^		446,827
	10,674	Cohu, Inc.		121,150
	13,485	Cymer, Inc.*^		671,014
	16,306	Diodes, Inc.*^		347,318
	9,726	DSP Group, Inc.*		50,673
	38,320	Entropic Communications, Inc.*^		195,815
	19,794	Exar Corp.*^		128,661
	16,567	FEI Co.*^		675,602
	56,130	GT Advanced Technologies, Inc.*^		406,381
	12,306	Hittite Microwave Corp.*		607,670
	29,974	Kopin Corp.*^		116,299
	32,084	Kulicke & Soffa Industries, Inc.*		296,777
	21,960	Micrel, Inc.^		222,016
	38,312	Microsemi Corp.*		641,726
	23,134	MKS Instruments, Inc.^		643,588
	13,092	Monolithic Power Systems, Inc.*^		197,296
	7,540	Nanometrics, Inc.*		138,887
	10,752	Pericom Semiconductor Corp.*		81,823
	12,370	Power Integrations, Inc.^		410,189
	7,665	Rubicon Technology, Inc.*		71,974
	14,077	Rudolph Technologies, Inc.*^		130,353
	14,255	Sigma Designs, Inc.*		85,530
	10,058	Standard Microsystems Corp.*		259,195
	5,316	Supertex, Inc.*^		100,366
	22,738	Tessera Technologies, Inc.*		380,862
	73,351	TriQuint Semiconductor, Inc.*^		357,219
	11,346	Ultratech, Inc.*		278,771
	17,083	Veeco Instruments, Inc.*^		355,326
	10,841	Volterra Semiconductor Corp.*^		277,638

				10,264,521

	Software (3.8%):
	19,103	Blackbaud, Inc.^		529,153
	15,896	Bottomline Technologies, Inc.*		368,310
	19,191	Commvault Systems, Inc.*		819,839
	13,780	Ebix, Inc.^		304,538
	14,034	EPIQ Systems, Inc.^		168,689
	6,318	Interactive Intelligence Group*		144,809


Shares			Fair Value

	Common Stocks, continued
	Software, continued
	18,770	JDA Software Group, Inc.*	$	607,960
	9,124	Manhattan Associates, Inc.*		369,340
	3,562	MicroStrategy, Inc., Class A*		385,836
	15,899	Monotype Imaging Holdings, Inc.*^		247,865
	15,193	NetScout Systems, Inc.*^		267,397
	6,557	OPNET Technologies, Inc.		240,445
	28,232	Progress Software Corp.*		546,289
	12,665	Sourcefire, Inc.*^		410,093
	11,785	Synchronoss Technologies, Inc.*^		356,025
	38,230	Take-Two Interactive Software, Inc.*^		518,016
	18,304	Taleo Corp., Class A*^		708,182
	29,266	THQ, Inc.*		22,242
	10,752	Tyler Technologies, Inc.*^		323,743
	17,119	Websense, Inc.*^		320,639

				7,659,410

	Specialty Retail (4.7%):
	9,564	Big 5 Sporting Goods Corp.		99,848
	18,534	Brown Shoe Co., Inc.^		164,953
	11,921	Buckle, Inc. (The)^		487,211
	19,034	Cabela’s, Inc., Class A*^		483,844
	12,996	Cato Corp.		314,503
	10,968	Children’s Place Retail Stores, Inc. (The)*^		582,620
	16,106	Christopher & Banks Corp.^		37,688
	39,358	Coldwater Creek, Inc.*^		46,442
	22,856	Finish Line, Inc. (The), Class A		440,778
	10,667	Genesco, Inc.*		658,581
	10,025	Group 1 Automotive, Inc.^		519,295
	8,440	Haverty Furniture Co., Inc.		92,671
	11,668	Hibbett Sports, Inc.*		527,160
	18,629	Hot Topic, Inc.		123,138
	12,276	Jos. A. Bank Clothiers, Inc.*^		598,578
	7,155	Kirkland’s, Inc.*		95,162
	9,485	Lithia Motors, Inc., Class A^		207,342
	12,256	Lumber Liquidators Holdings, Inc.*^		216,441
	10,374	MarineMax, Inc.*		67,638
	22,580	Men’s Wearhouse, Inc. (The)		731,818
	6,380	Midas, Inc.*		54,804
	13,592	Monro Muffler Brake, Inc.^		527,234
	38,027	OfficeMax, Inc.*		172,643
	23,269	Pep Boys - Manny, Moe & Jack		255,959
	6,914	Rue21, Inc.*^		149,342
	24,783	Select Comfort Corp.*^		537,543
	15,334	Sonic Automotive, Inc., Class A^		227,097
	13,412	Stage Store, Inc.^		186,293
	12,015	Stein Mart, Inc.*		81,822


Shares			Fair Value

	Common Stocks, continued
	Specialty Retail, continued
	12,881	Vitamin Shoppe, Inc.*^	$	513,694
	11,607	Zale Corp.*^		44,223
	9,616	Zumiez, Inc.*^		266,940

				9,513,305

	Textiles, Apparel & Luxury Goods (2.7%):
	22,485	Carter’s, Inc.*^		895,128
	39,816	Crocs, Inc.*^		588,082
	32,489	Iconix Brand Group, Inc.*^		529,246
	11,819	K-Swiss, Inc., Class A*		34,511
	41,741	Liz Claiborne, Inc.*^		360,225
	10,375	Maidenform Brands, Inc.*		189,862
	7,699	Movado Group, Inc.		139,891
	6,114	Oxford Industries, Inc.^		275,864
	5,780	Perry Ellis International, Inc.*		82,192
	53,997	Quiksilver Resources, Inc.*		194,929
	16,299	Skechers U.S.A., Inc., Class A*^		197,544
	16,830	Steven Madden, Ltd.*		580,635
	11,270	True Religion Apparel, Inc.*		389,717
	6,753	UniFirst Corp.		383,165
	21,296	Wolverine World Wide, Inc.^		758,989

				5,599,980

	Thrifts & Mortgage Finance (0.9%):
	20,562	Bank Mutual Corp.^		65,387
	30,865	Brookline Bancorp, Inc.^		260,501
	12,375	Dime Community Bancshares		155,925
	43,013	Northwest Bancshares, Inc.^		535,082
	20,200	Oritani Financial Corp.		257,954
	23,744	Provident Financial Services, Inc.^		317,932
	41,191	TrustCo Bank Corp.^		231,081

				1,823,862

	Tobacco (0.1%):
	38,604	Alliance One International, Inc.*^		105,003

	Trading Companies & Distributors (0.5%):
	18,511	Applied Industrial Technologies, Inc.^		651,032
	11,557	Kaman Corp., Class A		315,737
	1,615	Lawson Products, Inc.		24,920

				991,689

	Water Utilities (0.1%):
	8,268	American States Water Co.^		288,553

	Wireless Telecommunication Services (0.1%):
	6,608	NTELOS Holdings Corp.^		134,671
	9,765	USA Mobility, Inc.		135,441

				270,112

	Total Common Stocks (Cost $175,253,309)			201,737,135

	Right (0.0%):
	Electronic Equipment, Instruments & Components (0.0%):
	10,537	Gerber Scientific, Inc.*(a)		—

	Total Right (Cost $—)			—

Cash of $205,000 has been segregated to cover margin requirements for the following open contracts as of December 31, 2011:

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	234,084,535

Investment securities, at value*	$	260,568,361
Segregated cash for collateral		205,000
Interest and dividends receivable		226,192
Receivable for capital shares issued		685,715
Receivable for investments sold		12,703
Receivable for variation margin on futures contracts		385
Prepaid expenses		2,337

Total Assets		261,700,693

Liabilities:
Payable for investments purchased		349,156
Payable for capital shares redeemed		409
Payable for collateral received on loaned securities		57,313,823
Payable for variation margin on futures contracts		8,342
Manager fees payable		44,414
Administration fees payable		7,214
Distribution fees payable		42,706
Custodian fees payable		4,888
Administrative and compliance services fees payable		1,335
Trustee fees payable		72
Other accrued liabilities		33,443

Total Liabilities		57,805,802

Net Assets	$	203,894,891

Net Assets Consist of:
Capital	$	187,833,692
Accumulated net investment income/(loss)		933,414
Accumulated net realized gains/(losses) from investment transactions		(11,360,858	)
Net unrealized appreciation/(depreciation) on investments		26,488,643

Net Assets	$	203,894,891

Shares of beneficial interest (unlimited number of shares authorized, no par value)		20,656,425
Net Asset Value (offering and redemption price per share)	$	9.87

*	Includes securities on loan of $55,321,714.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Interest	$	149
Dividends		2,091,783
Income from securities lending		97,119

Total Investment Income		2,189,051

Expenses:
Manager fees		527,660
Administration fees		90,429
Distribution fees		507,363
Custodian fees		29,131
Administrative and compliance services fees		10,103
Trustee fees		17,063
Professional fees		18,261
Shareholder reports		34,425
Other expenses		52,161

Total expenses before reductions		1,286,596
Less expenses contractually waived/reimbursed by the Manager		(30,975	)

Net expenses		1,255,621

Net Investment Income/(Loss)		933,430

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		11,227,597
Net realized gains/(losses) on futures contracts		(19,116	)
Change in unrealized appreciation/depreciation on investments		(11,731,697	)

Net Realized/Unrealized Gains/(Losses) on Investments		(523,216	)

Change in Net Assets Resulting From Operations	$	410,214

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Small Cap Stock Index Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

and losses on such investments. The 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 cash collateral received. In extremely low interest rate environments, the broker rebate fee may exceed the interest earned or the cash collateral which would result in a loss to the Fund. The investment of cash collateral deposited by the borrower is subject to inherent market risks such as interest rate risk, credit risk, liquidity risk, and other risks that are present in the market, and as such, the value of these investments may not be sufficient, when liquidated, to repay the borrower when the loaned security is returned. 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 Allianz Investment Management LLC (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. Securities on loan at December 31, 2011 are presented on the Fund’s Schedule of Portfolio Investments (“Schedule”). The average outstanding amount of securities on loan was $55.2 million for the year ended December 31, 2011.

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $9,613 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

During the year ended December 31, 2011, the Fund used futures contracts to provide equity exposure on the Fund’s cash balances. 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, elements of market risk (generally equity price risk related to stock futures, interest rate risk related to bond futures, and foreign currency risk related to currency futures) and exposure to 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 underlying securities 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. The notional amount of futures contracts outstanding was $1.6 million as of December 31, 2011. The monthly average notional amount for these contracts was $4.3 million for the year ended December 31, 2011.

The following is a summary of the fair value of derivative instruments as of December 31, 2011:

The following is a summary of the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2011:

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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

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, 2011, the contractual reimbursements that are subject to repayment by the Fund in subsequent years were as follows:

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. During the year ended December 31, 2011, there were no voluntary waivers.

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $2,965 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:


	Level 1		Level 2		Level 3		Total
Investment Securities:
Common Stocks+	$	201,737,135	$	—	$	—	$	201,737,135
Right		—		—		—		—
Securities Held as Collateral for Securities on Loan		—		57,313,823		—		57,313,823
Unaffiliated Investment Company		1,517,403		—		—		1,517,403

Total Investment Securities		203,254,538		57,313,823		—		260,568,361

Other Financial Instruments:*
Futures Contracts		4,817		—		—		4,817

Total Investments	$	203,259,355	$	57,313,823	$	—	$	260,573,178

As of December 31, 2011, the Fund held securities that were valued in good faith pursuant to procedures approved by the Board of Trustees. The Gerber Scientific, Inc. right was valued at $0.

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $243,438,166. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

During the year ended December 31, 2011, the Fund utilized $10,600,991 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

The tax character of dividends paid to shareholders during the year ended December 31, 2010 were as follows:

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

We have audited the accompanying statement of assets and liabilities of AZL Small Cap Stock Index Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2011, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

What factors affected the Fund’s performance during the year ended December 31, 2011?

For the year ended December 31, 2011, the AZL^® Turner Quantitative Small Cap Growth Fund returned –5.39%. That compared to a –2.91% total return for its benchmark, the Russell 2000^® Growth Index¹.

Volatility was the market norm in 2011 as investors’ appetite for risk increased and decreased repeatedly throughout the year. Positive economic data and headlines spurred rallies, only to have bad news chase investors from stocks in droves.

A soft patch in the U.S. economic recovery, along with European sovereign debt concerns, left markets wobbling in the second half of the year. Value indices outpaced their growth counterparts across the market cap spectrum over the fourth quarter of 2011. For the year, however, growth outperformed value in both the large- and small-cap segment of the U.S. market. Small-cap stocks exhibited the greatest divergence, with the Russell 2000^® Growth outperforming the Russell 2000^® Value Index² by 2.6%.

The Fund takes a sector neutral strategy concerning the Russell 2000^® Growth Index and has sector weights that closely mirror the corresponding weight within the Index.^*

The Fund lagged its benchmark for the year. The sectors that detracted most from the Fund’s relative performance were the producer durables and consumer discretionary sectors. Stock selection contributed to the Fund’s underperformance relative to the its benchmark. Over the fourth quarter, shares of companies with lower

price-to-book ratios underperformed shares of companies with higher price-to-book companies. Our model favored the former. Similarly, our model favored higher price-to-earnings³ stocks, which underperformed relative to lower price-to-earnings stocks.*

The outperformance of larger stocks within the Funds benchmark aided the Fund’s relative performance. Part of the Fund’s risk control process involves excluding very small, illiquid securities. As a result, the Fund held underweight positions in many of the smallest companies in the Fund’s bechmark, which aided relative performance.*

Past performance does not guarantee future results.

¹	The Russell 2000^® Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.

²	The Russell 2000^® Value Index measures the performance of the small-cap value segment of the U.S. equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.

Investors cannot invest directly in an index.

³	The Price-to-Earnings Ratio (“P/E Ratio”) is a valuation ratio of a company’s current share price to its per-share earnings. A high P/E means high projected earnings in the future.

Growth of a $10,000 Investment

LOGO

Average Annual Total Returns as of December 31, 2011


	1 Year			3 Year			5 Year			Since Inception (4/29/05)
AZL^® Turner Quantitative Small Cap Growth Fund		–5.39	%		17.00	%		–0.76	%		2.81	%
Russell 2000^® Growth Index		–2.91	%		19.00	%		2.09	%		6.27	%

Expense Ratio


	Gross
AZL^® Turner Quantitative Small Cap Growth Fund		1.22	%

As a shareholder of the AZL Turner Quantitative Small Cap Growth Fund (the “Fund”), you incur ongoing costs, including management fees, distribution fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that the expenses shown in the tables are meant to highlight your ongoing cost only.Therefore, the examples are useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Please note that the expenses that apply to subaccounts of the insurance contracts were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the periods presented below.


Shares			Fair Value

	Common Stocks (96.7%):
	Aerospace & Defense (1.0%):
	7,510	HEICO Corp.^	$	439,185
	16,250	Hexcel Corp.*^		393,412

				832,597

	Air Freight & Logistics (0.5%):
	12,890	Hub Group, Inc., Class A*		418,023

	Auto Components (1.6%):
	35,480	Dana Holding Corp.*^		431,082
	42,160	Modine Manufacturing Co.*		398,834
	13,940	Tenneco, Inc.*^		415,133

				1,245,049

	Biotechnology (6.9%):
	86,430	Achillion Pharmaceuticals, Inc.*^		658,597
	49,150	ARIAD Pharmaceuticals, Inc.*^		602,087
	12,580	Cepheid, Inc.*^		432,878
	13,170	Cubist Pharmaceuticals, Inc.*^		521,795
	34,230	Incyte Corp.*^		513,792
	34,720	Momenta Pharmaceuticals, Inc.*		603,781
	51,930	NPS Pharmaceuticals, Inc.*		342,219
	8,350	Onyx Pharmaceuticals, Inc.*^		366,983
	83,770	PDL BioPharma, Inc.^		519,374
	20,910	Seattle Genetics, Inc.*^		349,511
	13,290	United Therapeutics Corp.*		627,952

				5,538,969

	Capital Markets (0.6%):
	6,320	Virtus Investment Partners, Inc.*		480,383

	Chemicals (0.5%):
	25,000	Solutia, Inc.*^		432,000

	Commercial Banks (1.2%):
	7,550	Signature Bank*		452,925
	80,380	Western Alliance Bancorp*		500,767

				953,692

	Commercial Services & Supplies (4.6%):
	20,900	Brink’s Co. (The)		561,792
	9,020	Clean Harbors, Inc.*^		574,845
	13,200	Herman Miller, Inc.		243,540
	34,720	Interface, Inc., Class A		400,669
	29,870	Knoll, Inc.^		443,569
	64,140	Steelcase, Inc., Class A^		478,484
	19,900	Tetra Tech, Inc.*^		429,641
	16,260	United Stationers, Inc.^		529,426

				3,661,966

	Communications Equipment (3.0%):
	16,390	ADTRAN, Inc.^		494,322
	18,980	Aruba Networks, Inc.*^		351,510
	27,160	Blue Coat Systems, Inc.*		691,222
	14,050	NETGEAR, Inc.*		471,658
	65,891	ShoreTel, Inc.*		420,385

				2,429,097


Shares			Fair Value

	Common Stocks, continued
	Computers & Peripherals (2.2%):
	23,730	3D Systems Corp.*^	$	341,712
	65,480	OCZ Technology Group, Inc.*^		432,823
	13,710	Stratasys, Inc.*^		416,921
	37,270	Super Micro Computer, Inc.*		584,393

				1,775,849

	Construction & Engineering (0.5%):
	24,870	MasTec, Inc.*^		431,992

	Consumer Finance (2.5%):
	21,730	Cardtronics, Inc.*		588,014
	27,030	DFC Global Corp.*		488,162
	14,080	EZCORP, Inc., Class A*		371,289
	7,100	World Acceptance Corp.*^		521,850

				1,969,315

	Distributors (0.6%):
	6,900	Watsco, Inc.^		453,054

	Diversified Consumer Services (0.5%):
	12,720	Matthews International Corp., Class A^		399,790

	Diversified Financial Services (2.3%):
	26,290	Duff & Phelps Corp., Class A		381,205
	20,580	Encore Capital Group, Inc.*		437,531
	24,390	Financial Engines, Inc.*^		544,629
	6,830	Portfolio Recovery Associates, Inc.*^		461,161

				1,824,526

	Diversified Telecommunication Services (1.3%):
	12,960	Atlantic Tele-Network, Inc.		506,088
	30,140	Cogent Communications Group, Inc.*		509,065

				1,015,153

	Electric Utilities (0.7%):
	29,330	PNM Resources, Inc.^		534,686

	Electrical Equipment (1.7%):
	9,000	Acuity Brands, Inc.^		477,000
	13,350	Belden CDT, Inc.^		444,288
	11,640	Woodward, Inc.		476,425

				1,397,713

	Electronic Equipment, Instruments & Components (2.4%):
	45,230	Aeroflex Holding Corp.*^		463,155
	55,740	Brightpoint, Inc.*		599,762
	9,230	Littlelfuse, Inc.^		396,705
	18,430	Rofin-Sinar Technologies, Inc.*		421,126

				1,880,748

	Energy Equipment & Services (2.3%):
	12,360	Complete Production Services, Inc.*		414,802
	5,980	Dril-Quip, Inc.*		393,604
	34,180	Key Energy Services, Inc.*^		528,764
	7,090	Lufkin Industries, Inc.^		477,228

				1,814,398


Shares			Fair Value

	Common Stocks, continued
	Food & Staples Retailing (0.5%):
	10,970	United Natural Foods, Inc.*	$	438,910

	Food Products (1.3%):
	15,540	Cal-Maine Foods, Inc.^		568,298
	81,520	Smart Balance, Inc.*		436,947

				1,005,245

	Health Care Equipment & Supplies (4.2%):
	7,440	Analogic Corp.^		426,461
	16,760	ArthroCare Corp.*		530,957
	20,670	Cyberonics, Inc.*		692,445
	24,200	Meridian Bioscience, Inc.^		455,928
	22,360	NxStage Medical, Inc.*		397,561
	35,880	STAAR Surgical Co.*		376,381
	18,360	Volcano Corp.*^		436,784

				3,316, 517

	Health Care Providers & Services (3.5%):
	8,520	AMERIGROUP Corp.*^		503,361
	75,260	BioScrip, Inc.*		410,920
	63,570	Health Management Associates, Inc., Class A*^		468,511
	25,300	HealthSouth Corp.*^		447,051
	45,080	MedQuist Holdings, Inc.*		433,670
	21,680	PSS World Medical, Inc.*^		524,439

				2,787,952

	Health Care Technology (1.4%):
	6,350	Athenahealth, Inc.*^		311,912
	9,290	Computer Programs & Systems, Inc.		474,812
	7,900	Quality Systems, Inc.		292,221

				1,078,945

	Hotels, Restaurants & Leisure (2.8%):
	78,380	Boyd Gaming Corp.*^		584,715
	19,580	Jack in the Box, Inc.*		409,222
	56,820	Krispy Kreme Doughnuts, Inc.*^		371,603
	32,660	Pinnacle Entertainment, Inc.*		331,825
	38,400	Texas Roadhouse, Inc.^		572,160

				2, 269,525

	Household Durables (0.3%):
	8,590	Ethan Allen Interiors, Inc.^		203,669

	Insurance (0.6%):
	8,420	Infinity Property & Casualty Corp.		477,751

	Internet Software & Services (4.4%):
	21,610	Ancestry.com, Inc.*^		496,166
	13,770	BroadSoft, Inc.*^		415,854
	18,450	DealerTrack Holdings, Inc.*^		502,947
	12,630	OpenTable, Inc.*^		494,212
	11,480	RightNow Technologies, Inc.*^		490,540
	26,160	ValueClick, Inc.*^		426,146
	26,680	Virnetx Holding Corp.*^		666,200

				3,492,065


Shares			Fair Value

	Common Stocks, continued
	IT Services (0.7%):
	10,880	Wright Express Corp.*^	$	590,566

	Leisure Equipment & Products (0.5%):
	7,840	Polaris Industries, Inc.^		438,883

	Life Sciences Tools & Services (1.2%):
	31,790	Bruker Corp.*		394,832
	28,470	PAREXEL International Corp.*		590,468

				985,300

	Machinery (4.6%):
	23,670	Actuant Corp., Class A^		537,072
	22,900	Albany International Corp., Class A		529,448
	21,950	Barnes Group, Inc.^		529,214
	34,810	Blount International, Inc.*		505,441
	9,310	Chart Industries, Inc.*^		503,392
	10,670	EnPro Industries, Inc.*		351,897
	51,490	Meritor, Inc.*		273,927
	13,820	Watts Water Technologies, Inc., Class A^		472,782

				3,703,173

	Media (1.2%):
	78,180	Belo Corp., Class A^		492,534
	57,580	E.W. Scripps Co. (The), Class A*		461,216

				953,750

	Metals & Mining (2.1%):
	16,600	AMCOL International Corp.^		445,710
	8,260	Haynes International, Inc.		450,996
	36,470	Stillwater Mining Co.*^		381,476
	26,630	Worthington Industries, Inc.^		436,200

				1,714,382

	Multiline Retail (0.7%):
	53,460	Saks, Inc.*^		521,235

	Oil, Gas & Consumable Fuels (5.5%):
	9,490	Berry Petroleum Co., Class A^		398,770
	15,650	Carrizo Oil & Gas, Inc.*^		412,377
	24,280	Cloud Peak Energy, Inc.*^		469,090
	16,770	CVR Energy, Inc.*		314,102
	99,940	Magnum Hunter Resources Corp.*^		538,677
	20,900	Northern Oil & Gas, Inc.*		501,182
	49,090	Patriot Coal Corp.*^		415,792
	64,400	PetroQuest Energy, Inc.*^		425,040
	31,300	Rex Energy Corp.*^		461,988
	9,870	Rosetta Resources, Inc.*^		429,345

				4,366,363

	Paper & Forest Products (0.7%):
	38,440	Glatfelter^		542,773


Shares			Fair Value

	Common Stocks, continued
	Personal Products (1.9%):
	13,720	Elizabeth Arden, Inc.*	$	508,189
	9,290	Nu Skin Enterprises, Inc., Class A^		451,215
	48,380	Prestige Brands Holdings, Inc.*^		545,243

				1,504,647

	Pharmaceuticals (2.3%):
	19,390	Akorn, Inc.*^		215,617
	26,080	Auxilium Pharmaceuticals, Inc.*		519,774
	31,480	Impax Laboratories, Inc.*^		634,952
	35,510	Optimer Pharmaceuticals, Inc.*		434,642

				1,804,985

	Professional Services (2.2%):
	9,140	Acacia Research*^		333,701
	7,320	Advisory Board Co. (The)*^		543,217
	11,170	Huron Consulting Group, Inc.*		432,726
	17,270	Insperity, Inc.		437,795

				1,747,439

	Real Estate Investment Trusts (REITs) (1.0%):
	13,090	Highwoods Properties, Inc.^		388,380
	22,620	OMEGA Healthcare Investors, Inc.^		437,697

				826,077

	Road & Rail (1.8%):
	20,650	American Railcar Industries, Inc.*^		494,154
	34,720	Avis Budget Group, Inc.*^		372,198
	9,170	Genesee & Wyoming, Inc., Class A*^		555,519

				1,421,871

	Semiconductors & Semiconductor Equipment (3.4%):
	12,940	Cavium, Inc.*^		367,884
	19,020	CEVA, Inc.*^		575,545
	24,930	Microsemi Corp.*		417,578
	41,430	OmniVision Technologies, Inc.*		506,896
	13,650	Ultratech, Inc.*		335,381
	20,130	Volterra Semiconductor Corp.*^		515,529

				2,718,813

	Software (6.6%):
	17,790	ACI Worldwide, Inc.*^		509,506
	19,650	Advent Software, Inc.*^		478,674
	19,130	Blackbaud, Inc.^		529,901
	8,360	Concur Technologies, Inc.*^		424,604


Shares or Principal Amount			Fair Value

	Common Stocks, continued
	Software, continued
	19,850	Jack Henry & Associates, Inc.^	$	667,159
	23,950	Kenexa Corp.*^		639,465
	23,190	Parametric Technology Corp.*^		423,449
	21,800	Progress Software Corp.*^		421,830
	12,180	Solarwinds, Inc.*		340,431
	16,020	Tyler Technologies, Inc.*^		482,362
	4,770	Ultimate Software Group, Inc. (The)*^		310,622

				5,228,003

	Specialty Retail (1.8%):
	23,540	Finish Line, Inc. (The), Class A^		453,969
	24,300	Select Comfort Corp.*^		527,067
	28,550	Sonic Automotive, Inc., Class A^		422,825

				1,403,861

	Textiles, Apparel & Luxury Goods (1.9%):
	17,390	Ann, Inc.*^		430,924
	10,940	Carter’s, Inc.*^		435,522
	9,910	Oxford Industries, Inc.		447,139
	4,650	Warnaco Group, Inc. (The)*^		232,686

				1,546,271

	Trading Companies & Distributors (0.7%):
	15,990	Applied Industrial Technologies, Inc.		562,368

	Total Common Stocks (Cost $72,739,919)			77,140,339

	Securities Held as Collateral for Securities on Loan (27.6%):
$	22,015,292	Allianz Variable Insurance Products Securities Lending Collateral Trust(a)		22,015,292

	Total Securities Held as Collateral for Securities on Loan (Cost $22,015,292)			22,015,292

	Unaffiliated Investment Company (3.3%):
	2,653,637	Dreyfus Treasury Prime Cash Management, 0.00%(b)		2,653,637

	Total Unaffiliated Investment Company (Cost $2,653,637)			2,653,637

	Total Investment Securities (Cost $97,408,848)(c) — 127.6%			101,809,268
	Net other assets (liabilities) — (27.6)%			(22,040,841	)

	Net Assets — 100.0%		$	79,768,427

Statement of Assets and Liabilities

December 31, 2011


Assets:
Investment securities, at cost	$	97,408,848

Investment securities, at value*	$	101,809,268
Interest and dividends receivable		32,418
Receivable for capital shares issued		36,011
Prepaid expenses		839

Total Assets		101,878,536

Liabilities:
Payable for capital shares redeemed		7,318
Payable for collateral received on loaned securities		22,015,292
Manager fees payable		57,018
Administration fees payable		2,841
Distribution fees payable		16,770
Custodian fees payable		989
Administrative and compliance services fees payable		570
Trustee fees payable		31
Other accrued liabilities		9,280

Total Liabilities		22,110,109

Net Assets	$	79,768,427

Net Assets Consist of:
Capital	$	80,826,344
Accumulated net investment income/(loss)		15,051
Accumulated net realized gains/(losses) from investment transactions		(5,473,388	)
Net unrealized appreciation/(depreciation) on investments		4,400,420

Net Assets	$	79,768,427

Shares of beneficial interest (unlimited number of shares authorized, no par value)		8,507,015
Net Asset Value (offering and redemption price per share)	$	9.38

*	Includes securities on loan of $21,294,914.

Statement of Operations

For the Year Ended December 31, 2011


Investment Income:
Dividends	$	592,830
Income from securities lending		97,254

Total Investment Income		690,084

Expenses:
Manager fees		744,093
Administration fees		40,106
Distribution fees		218,850
Custodian fees		9,438
Administrative and compliance services fees		4,236
Trustee fees		6,987
Professional fees		7,496
Shareholder reports		9,527
Other expenses		3,088

Total expenses		1,043,821

Net Investment Income/(Loss)		(353,737	)

Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on securities transactions		10,853,675
Change in unrealized appreciation/depreciation on investments		(15,809,418	)

Net Realized/Unrealized Gains/(Losses) on Investments		(4,955,743	)

Change in Net Assets Resulting From Operations	$	(5,309,480	)

(Selected data for a share of beneficial interest outstanding throughout the periods indicated)

The Allianz Variable Insurance Products Trust (the “Trust”) was organized as a Delaware statutory trust on July 13, 1999. The Trust is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). These Notes to the Financial Statements are for the AZL Turner Quantitative Small Cap Growth Fund (the “Fund”). The Trust consists of 29 separate investment portfolios (collectively, the “Funds”), each of which is a series of the Trust, as follows:

Cash collateral received in connection with securities lending is invested in the Allianz Variable Insurance Products Securities Lending Collateral Trust (the “Securities Lending Collateral Trust”) managed by The Dreyfus Corporation, an affiliate of the Custodian and Securities Lending Agent. The Securities Lending Collateral Trust invests in short-term investments that have a remaining maturity of 397 days or less as calculated in accordance with Rule 2a-7 under the 1940 Act. The Fund paid securities lending fees of $9,687 during the year ended December 31, 2011. These fees have been netted against Income from Securities Lending on the Statement of Operations.

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 for investment advisory and management services 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), taxes, brokerage commissions, other expenditures that are capitalized in accordance with GAAP and other extraordinary expenses not incurred in the ordinary course of the Fund’s business, based on the daily net assets of the Fund, through April 30, 2013.

For the year ended December 31, 2011, the annual rate due to the Manager and the annual expense limit were as follows:

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. During the year ended December 31, 2011, there were no voluntary waivers.

In addition, certain legal fees and expenses are paid to a law firm, Dorsey & Whitney LLP, of which the Secretary of the Fund is a partner. During the year ended December 31, 2011, $1,297 was paid from the Fund relating to these fees and expenses.

The inputs or methodology used for valuing investments is not necessarily an indication of the risk associated with investing in those investments.

predetermined levels, the Fund may use a systematic valuation model provided by an independent third party to fair value its international equity securities which are then typically categorized as Level 2 in the fair value hierarchy.

For the year ended December 31, 2011, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.

The following is a summary of the valuation inputs used as of December 31, 2011 in valuing the Fund’s investments based upon the three levels defined above:

The Fund recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Levels 1, 2 or 3 as of December 31, 2011.

For the year ended December 31, 2011, cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition) were as follows:

Cost for federal income tax purposes at December 31, 2011 is $97,720,553. The gross unrealized appreciation/(depreciation) on a tax basis is as follows:

limitations, and applied to offset future capital gains, and thus reduce the amount of distributable capital gains, for up to eight succeeding tax years, after which any unutilized CLCFs expire. Pre-effective CLCFs are applied as short-term capital loss regardless of whether the originating capital loss was short term or long term. CLCFs that originate in tax years beginning after December 22, 2010 (post-effective CLCFs), are applied consistent with the character in which they originated as a new loss on the first day of the immediately succeeding tax year, and thus take precedent over the application of pre-effective CLCFs. Post-effective CLCFs can be carried forward indefinitely.

During the year ended December 31, 2011, the Fund utilized $11,054,073 in CLCFs to offset capital gains.

The tax character of dividends paid to shareholders during the year ended December 31, 2011 were as follows:

During the year ended December 31, 2010 there were no dividends paid to shareholders.

As of December 31, 2011, the components of accumulated earnings on a tax basis were as follows:

Effective at close of business on February 24, 2012, Oppenheimer Funds, Inc. (“Oppenheimer”) replaced Turner Investment Partners, Inc. (“Turner”) as the subadviser to the AZL^® Turner Quantitative Small Cap Growth Fund and the following name change was effective at close of business on February 24, 2012.

We have audited the accompanying statement of assets and liabilities of AZL Turner Quantitative Small Cap Growth Fund (the “Fund”) of the Allianz Variable Insurance Products Trust, including the schedule of portfolio investments, as of December 31, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

For the year ended December 31, 2011, 100.00% of the total ordinary income dividends paid by the Fund qualify for the corporate dividends received deduction available to corporate shareholders.

to which the independent Board members are fully informed about all facts bearing on the adviser’s service and fee. The Trust’s Board is aware of these factors and takes them into account in its review of the Trust’s advisory contracts.

The Manager has also supplied information to the Board of Trustees pertaining to total Fund expenses (which includes advisory fees, the 25 basis point 12b-1 fee paid by the Funds, and other Fund expenses). As noted above, the Manager has agreed to “cap” Fund expenses at certain levels. Based upon the information provided, the overall total expense ratio ranking in 2012 for the 29 Funds was as follows: (1) 21 of the Funds had total expense rankings at or below the 50th percentile; (2) three of the Funds were between the 50th and 65th percentiles; (3) for three of the Funds with expense ranks above the 65th percentile, the Manager recommended, and the Board of Trustees approved, temporary management fee waivers effective May 1, 2012, which are expected to reduce such rankings to the 65th percentile or below; (4) for one Fund with an expense rank above the 65th percentile, the Manager expects such Fund to be below the 65th percentile in 2012 because of greater Fund assets; and (5) for one Fund with an expense rank above the 65th percentile, the Manager reported that the peer group makes for poor comparability.

Agreements with the Subadvisers which are not affiliated with it were negotiated on an “arm’s length” basis, so that arguably, such profitability information should be less relevant. The Trustees were also provided with certain information on profitability for Subadvisers which are affiliated with the Manager. Trustees recognized the difficulty of allocating costs to multiple advisory accounts and products of a large advisory organization. Based upon the information provided, the Trustees determined that there was no evidence that the level of such profitability attributable to subadvising the Funds was excessive.

Following a recommendation by the Manager, at an “in-person” Board of Trustees meeting held December 7, 2011, the Board of Trustees approved Oppenheimer Funds, Inc. (“Oppenheimer”) to replace Turner Investment Partners, Inc. as the Subadviser to the AZL Turner Quantitative Small Cap Growth Fund (the “Fund”). This change is expected to occur in February, 2012, at which time the name of the Fund will be changed to “AZL Oppenheimer Discovery Fund.”

Key factors in the Manager’s recommendation include Oppenheimer’s (1) sound philosophy, management team, and process: (2) consistent performance driven by stock selection; (3) investment process which has led to strong absolute and risk adjusted returns relative to peer performance; and that (4) following the retention of Oppenheimer, the shareholder fee structure will remain unchanged.

At the Board of Trustees meeting on December 7, 2011, the Trustees were provided with information on Oppenheimer’s investment philosophy and investment process, and the Oppenheimer team which will be responsible for managing the Fund. The Trustees received historical performance information which indicated that the Oppenheimer managed fund (which has been managed by personnel and pursuant to the process which will be used for the Fund) significantly out-performed the Fund for the last one, two, three, four and five year periods ended September 30, 2011. Other information supplied indicates that over the five year period ended September 30, 2011, the Oppenheimer managed fund had strong risk adjusted returns.

At the Board of Trustees meeting on December 7, 2011, the Trustees were provided with information that the change in Subadvisers will not have an impact on shareholder fees. Under the new Subadvisory Agreement fee schedule, there will be up to a five basis point increase, but the Manager’s fee under the Advisory Agreement will be unchanged. The Trustees were supplied with information which indicated that following the change in Subadvisers, the Fund will continue to have a total expense ratio in the 40th percentile in the category of Small Cap Growth Funds.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios Overseen for Allianz VIP and VIP FOF Trust	Other Directorships Held Outside the AZL Fund Complex During Past 5 Years
Peter R. Burnim, Age 64 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director iQ Venture Partners, Inc., 2005 to present; EVP Northstar Companies, 2002 to 2005; Senior Officer Citibank and Citicorp for over 25 years	42	Argus Group Holdings; Sterling Centrecorp Inc.; Highland Financial Holdings; and Bank of Bermuda NY
Peggy L. Ettestad, Age 54 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/07	Managing Director, Red Canoe Management Consulting LLC, 2008 to present; Senior Managing Director, Residential Capital LLC, 2003 to 2008; Chief Operations Officer, Transamerica Reinsurance 2002 to 2003	42	Luther College
Roger Gelfenbien, Age 68 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Partner of Accenture 1983 to 1999	42	Virtus Funds (8 Funds)
Claire R. Leonardi, Age 56 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Chief Executive Officer, Connecticut Innovations, 2012 to present; General Partner of Fairview Capital, L.P., 1994 to present	42	The Natural History Museum of the Adirondacks
Dickson W. Lewis, Age 63 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Vice President/General Manager, Yearbooks & Canada-Lifetouch National School Studios, 2006 to present; Vice President/General Manager of Jostens, Inc., 2002 to 2006; Senior Vice President of Fortis Group, 1997 to 2002; Consultant to Hartford Insurance Co., 2001	42	None
Peter W. McClean, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 2/04	Retired; President and CEO of Measurisk, LLC, 2001 to 2003; Chief Risk Management Officer at Bank Of Bermuda Ltd., 1996 to 2001	42	PNMAC Opportunity Fund; Northeast Bank; and FHI
Arthur C. Reeds III, Age 67 5701 Golden Hills Drive Minneapolis, MN 55416	Trustee	Since 10/99	Retired; Senior Investment Officer, Hartford Foundation for Public Giving, 2000 to 2003; Chairman, Chief Executive and President of Conning Corp., 1999 to 2000; Investment Consultant 1997 to 1999	42	Connecticut Water Service, Inc.


Name, Address, and Age	Positions Held with Allianz VIP and VIP FOF Trust	Term of Office(2)/Length of Time Served	Principal Occupation(s) During Past 5 Years
Brian Muench, Age 41 5701 Golden Hills Drive Minneapolis, MN 55416	President	Since 11/10	President, Allianz Investment Management LLC from November 2010 to present; Vice President, Allianz Life from April 2011, to present; Vice President, Advisory Management, Allianz Investment Management LLC from December 2005 to November 2010; Assistant Vice President, Investments, Allianz Life from February 2002 to November 2005.
Michael Radmer, Age 66 Dorsey & Whitney LLP, Suite 1500 50 South Sixth Street Minneapolis, MN 55402-1498	Secretary	Since 2/04	Partner, Dorsey and Whitney LLP since 1976.
Ty Edwards, Age 45 Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, OH 43219	Treasurer, Principal Accounting Officer and Principal Financial Officer	Since 4/10	Senior Vice President, Financial Administration, Citi Fund Services Ohio, Inc., December 2009 to present; Director, Product Management, Columbia Management, April 2007 to April 2009; Deputy Treasurer, Columbia Funds and Director, Fund Administration, Columbia Management, January 2006 to April 2007; Vice President, Fund Administration, Columbia Management, July 2002 to December 2005.
Stephen G. Simon, Age 43 5701 Golden Hills Drive Minneapolis, MN 55416	Chief Compliance Officer(4) and Anti Money Laundering Compliance Officer	Since 11/06	Chief Compliance Officer, Allianz Investment Management LLC, July 2004 to present; President, Simon Compliance Consulting Ltd, May 2004 to July 2004; Compliance Counsel, Advantus Capital Management, Inc., January 2002 to May 2004.

(a) The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This code of ethics is included as an Exhibit.

(b) During the period covered by the report, with respect to the registrant’s code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions; there have been no amendments to, nor any waivers granted from, a provision that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item 2.

3(a)(1) The registrant’s board of directors has determined that the registrant has at least one audit committee financial expert serving on its audit committee.

3(a)(2) The audit committee financial expert is Arthur C. Reeds III, who is “independent” for purposes of this Item 3 of Form N-CSR.

The fees for 2010 relate to the consent issuance in two Form N-14 filings and the review of the annual registration statement filed with the Securities and Exchange Commission (“SEC”).

Tax fees for both years related to the preparation of the Funds’ federal and state income tax returns, federal excise tax return review and review of capital gain and income distribution calculations.

The Audit Committee (“Committee”) of the Registrant is responsible for pre-approving all audit and non-audit services performed by the independent auditor in order to assure that the provision of such services does not impair the auditor’s independence. Before the Registrant engages the independent auditor to render a service, the engagement must be either specifically approved by the Committee or entered into pursuant to the pre-approval policy. The Committee may delegate preapproval authority to one or more of its members. The member or members to whom such authority is delegated shall report any pre-approval decisions to the Committee at its next scheduled meeting. The Committee may not delegate to management the Committee’s responsibilities to pre-approve services performed by the independent auditor. The Committee has delegated pre-approval authority to its Chairman for any services not exceeding $10,000.

During the previous two fiscal years, the Registrant did not receive any non-audit services pursuant to a waiver from the audit committee approval or pre-approval requirement under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(a) The Schedule of Investments as of the close of the reporting period are included as part of the report to shareholders filed under Item 1 of the Form N-CSR.

(a)The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b)There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

(a)(1) The code of ethics that is the subject of the disclosure required by Item 2 is attached hereto.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


5701 Golden Hills Drive, Minneapolis, MN		55416-1297
(Address of principal executive offices)		(Zip code)


	Beginning Account Value 7/1/11		Ending Account Value 12/31/11		Expense Paid During Period* 7/1/11 - 12/31/11		Annualized Expense Ratio During Period** 7/1/11 - 12/31/11
AZL Allianz AGIC Opportunity Fund	$	1,000.00	$	807.00	$	5.51		1.21	%


	Beginning Account Value 7/1/11		Ending Account Value 12/31/11		Expense Paid During Period* 7/1/11 - 12/31/11		Annualized Expense Ratio During Period** 7/1/11 - 12/31/11
AZL Allianz AGIC Opportunity Fund	$	1,000.00	$	1,019.11	$	6.16		1.21	%


	AZL Allianz AGIC Opportunity Fund
	For the Year Ended December 31, 2011			For the Year Ended December 31, 2010
Change in Net Assets:
Operations:
Net investment income/(loss)	$	(1,497,932	)	$	(1,217,351	)
Net realized gains/(losses) on investment transactions		19,026,080			18,866,767
Change in unrealized appreciation/depreciation on investments		(36,465,162	)		9,195,995

Change in net assets resulting from operations		(18,937,014	)		26,845,411

Capital Transactions:
Proceeds from shares issued		33,159,171			65,928,023
Value of shares redeemed		(58,847,373	)		(50,719,178	)

Change in net assets resulting from capital transactions		(25,688,202	)		15,208,845

Change in net assets		(44,625,216	)		42,054,256
Net Assets:
Beginning of period		193,233,950			151,179,694

End of period	$	148,608,734		$	193,233,950

Share Transactions:
Shares issued		2,421,450			5,461,396
Shares redeemed		(4,356,618	)		(4,423,141	)

Change in shares		(1,935,168	)		1,038,255


	Year Ended December 31,
	2011			2010			2009			2008			2007
Net Asset Value, Beginning of Period	$	13.09		$	11.01		$	6.97		$	14.97		$	15.84

Investment Activities:
Net Investment Income/(Loss)		(0.11	)		(0.08	)		(0.07	)		(0.04	)		(0.07	)
Net Realized and Unrealized Gains/(Losses) on Investments		(1.40	)		2.16			4.11			(6.60	)		1.49

Total from Investment Activities		(1.51	)		2.08			4.04			(6.64	)		1.42

Dividends to Shareholders From:
Net Realized Gains		—			—			—			(1.36	)		(2.29	)

Total Dividends		—			—			—			(1.36	)		(2.29	)

Net Asset Value, End of Period	$	11.58		$	13.09		$	11.01		$	6.97		$	14.97

Total Return(a)		(11.54	)%		18.78	%		58.11	%		(47.15	)%		8.89	%
Ratios to Average Net Assets/ Supplemental Data:
Net Assets, End of Period ($000’s)	$	148,609		$	193,234		$	151,180		$	87,046		$	195,330
Net Investment Income/(Loss)		(0.81	)%		(0.71	)%		(0.81	)%		(0.38	)%		(0.47	)%
Expenses Before Reductions(b)		1.19	%		1.20	%		1.23	%		1.25	%		1.21	%
Expenses Net of Reductions		1.15	%		1.09	%		1.08	%		1.06	%		1.10	%
Expenses Net of Reductions, Excluding Expenses Paid Indirectly(c)		1.19	%		1.20	%		1.23	%		1.25	%		1.21	%
Portfolio Turnover Rate		123	%		138	%		163	%		203	%		184	%


Investments	Percent of net assets+
Securities Held as Collateral for Securities on Loan		29.2	%
Information Technology		25.6
Industrials		22.7
Health Care		15.7
Consumer Discretionary		14.6
Energy		11.7
Materials		4.7
Financials		4.0
Consumer Staples		0.9
Unaffiliated Investment Company		0.3

Total		129.4	%


Country	Percentage
Bermuda		1.3	%
Canada		1.3
Marshall Islands		0.7
Netherlands		1.2
Panama		1.2
United States		94.3

		100.0	%


	Annual Rate			Annual Expense Limit
AZL Allianz AGIC Opportunity Fund		0.85	%		1.35	%


	Purchases		Sales
AZL Allianz AGIC Opportunity Fund	$	227,264,441	$	253,091,949


Unrealized appreciation	$	11,399,130
Unrealized depreciation		(26,109,001	)

Net unrealized depreciation	$	(14,709,871	)


	Undistributed Ordinary Income		Accumulated Capital and Other Losses			Unrealized Appreciation/ (Depreciation)(a)			Total Accumulated Earnings/ (Deficit)
AZL Allianz AGIC Opportunity Fund	$	—	$	(585,012	)	$	(14,709,871	)	$	(15,294,883	)


The Allianz VIP Funds are distributed by Allianz Life Financial Services, LLC.
These Funds are not FDIC Insured.			ANNRPT1211 2/12


	Beginning Account Value 7/1/11		Ending Account Value 12/31/11		Expense Paid During Period* 7/1/11 - 12/31/11		Annualized Expense Ratio During Period** 7/1/11 - 12/31/11
AZL Blackrock Capital Appreciation Fund	$	1,000.00	$	889.00	$	4.90		1.03	%


	AZL BlackRock Capital Appreciation Fund
	For the Year Ended December 31, 2011			For the Year Ended December 31, 2010
Change in Net Assets:
Operations:
Net investment income/(loss)	$	287,205		$	(307,802	)
Net realized gains/(losses) on investment transactions		35,470,256			47,984,490
Change in unrealized appreciation/depreciation on investments		(83,154,004	)		42,107,784

Change in net assets resulting from operations		(47,396,543	)		89,784,472

Dividends to Shareholders:
From net investment income		—			(235,335	)
From net realized gains on investments		—			(4,787,118	)
From return of capital		—			(35	)

Change in net assets resulting from dividends to shareholders		—			(5,022,488	)

Capital Transactions:
Proceeds from shares issued		61,278,627			86,852,940
Proceeds from shares issued in merger		—			6,489,469
Proceeds from dividends reinvested		—			5,022,488
Value of shares redeemed		(99,064,010	)		(110,255,726	)

Change in net assets resulting from capital transactions		(37,785,383	)		(11,890,829	)

Change in net assets		(85,181,926	)		72,871,155
Net Assets:
Beginning of period		562,801,271			489,930,116

End of period	$	477,619,345		$	562,801,271

Accumulated net investment income/(loss)	$	227,805		$	—

Share Transactions:
Shares issued		4,515,834			7,098,066
Shares issued in merger		—			513,942
Dividends reinvested		—			427,810
Shares redeemed		(7,213,121	)		(9,131,292	)

Change in shares		(2,697,287	)		(1,091,474	)


	Annual Rate*			Annual Expense Limit
AZL BlackRock Capital Appreciation Fund		0.80	%		1.20	%


Unrealized appreciation	$	82,735,231
Unrealized depreciation		(23,622,143	)

Net unrealized appreciation	$	59,113,088


	Expires 12/31/2015		Expires 12/31/2016
AZL BlackRock Capital Appreciation Fund	$	15,585,941	$	64,272,929


	Ordinary Income		Net Long-Term Capital Gains		Total Taxable Distributions		Return of Capital		Total Distributions(a)
AZL BlackRock Capital Appreciation Fund	$	968,338	$	4,054,115	$	5,022,453	$	35	$	5,022,488


	Undistributed Ordinary Income		Accumulated Capital and Other Losses			Unrealized Appreciation(a)		Total Accumulated Earnings/ (Deficit)
AZL BlackRock Capital Appreciation Fund	$	227,805	$	(79,858,870	)	$	59,113,028	$	(20,518,037	)


	AZL Columbia Mid Cap Value Fund
	For the Year Ended December 31, 2011			For the Year Ended December 31, 2010
Change in Net Assets:
Operations:
Net investment income/(loss)	$	845,889		$	1,216,868
Net realized gains/(losses) on investment transactions		8,395,647			15,847,470
Change in unrealized appreciation/depreciation on investments		(14,489,800	)		5,565,527

Change in net assets resulting from operations		(5,248,264	)		22,629,865

Dividends to Shareholders:
From net investment income		(1,182,719	)		(679,585	)

Change in net assets resulting from dividends to shareholders		(1,182,719	)		(679,585	)

Capital Transactions:
Proceeds from shares issued		29,397,051			50,635,019
Proceeds from dividends reinvested		1,182,719			679,585
Value of shares redeemed		(24,698,775	)		(40,832,757	)

Change in net assets resulting from capital transactions		5,880,995			10,481,847

Change in net assets		(549,988	)		32,432,127
Net Assets:
Beginning of period		133,339,755			100,907,628

End of period	$	132,789,767		$	133,339,755

Accumulated net investment income/(loss)	$	873,086		$	1,209,916

Share Transactions:
Shares issued		3,647,643			7,127,210
Dividends reinvested		162,685			98,634
Shares redeemed		(3,100,729	)		(5,947,092	)

Change in shares		709,599			1,278,752


	Annual Rate			Annual Expense Limit
AZL Columbia Mid Cap Value Fund		0.75	%		1.30	%


Unrealized appreciation	$	19,403,288
Unrealized depreciation		(5,687,951	)

Net unrealized appreciation	$	13,715,337


	Expires 12/31/2017
AZL Columbia Mid Cap Value Fund	$	25,298,623


	AZL Columbia Small Cap Value Fund
	For the Year Ended December 31, 2011			For the Year Ended December 31, 2010
Change in Net Assets:
Operations:
Net investment income/(loss)	$	734,461		$	990,802
Net realized gains/(losses) on investment transactions		10,432,043			8,139,262
Change in unrealized appreciation/depreciation on investments		(19,961,831	)		18,973,108

Change in net assets resulting from operations		(8,795,327	)		28,103,172

Dividends to Shareholders:
From net investment income		(1,121,206	)		(449,988	)

Change in net assets resulting from dividends to shareholders		(1,121,206	)		(449,988	)

Capital Transactions:
Proceeds from shares issued		28,520,623			78,879,111
Proceeds from dividends reinvested		1,121,206			449,988
Value of shares redeemed		(42,460,224	)		(27,042,552	)

Change in net assets resulting from capital transactions		(12,818,395	)		52,286,547

Change in net assets		(22,734,928	)		79,939,731
Net Assets:
Beginning of period		167,622,449			87,682,718

End of period	$	144,887,521		$	167,622,449

Accumulated net investment income/(loss)	$	542,265		$	922,273

Share Transactions:
Shares issued		2,715,807			8,154,328
Dividends reinvested		118,146			49,777
Shares redeemed		(3,922,631	)		(2,910,115	)

Change in shares		(1,088,678	)		5,293,990


	Annual Rate*			Annual Expense Limit
AZL Columbia Small Cap Value Fund		0.90	%		1.35	%


Unrealized appreciation	$	18,960,107
Unrealized depreciation		(13,510,820	)

Net unrealized appreciation	$	5,449,287


	Undistributed Ordinary Income		Undistributed Long-Term Capital Gains		Unrealized Appreciation(a)		Total Accumulated Earnings/ (Deficit)
AZL Columbia Small Cap Value Fund	$	609,849	$	2,840,710	$	5,449,287	$	8,899,846


Security	Acquisition Date		Acquisition Cost		Shares or Principal Amount		Fair Value		Percentage of Net Assets
Sino-Forest Corp., 5.00%, 8/1/13		7/17/08	$	488,000	$	488,000	$	126,880		0.0	%
Sino-Forest Corp., Class A		12/11/09		166,320		9,900		13,662		0.0	%


	AZL Davis New York Venture Fund
	For the Year Ended December 31, 2011			For the Year Ended December 31, 2010
Change in Net Assets:
Operations:
Net investment income/(loss)	$	2,821,593		$	2,519,780
Net realized gains/(losses) on investment transactions		19,211,565			25,778,797
Change in unrealized appreciation/depreciation on investments		(39,423,172	)		25,298,725

Change in net assets resulting from operations		(17,390,014	)		53,597,302

Dividends to Shareholders:
From net investment income		(3,366,833	)		(9,651,159	)

Change in net assets resulting from dividends to shareholders		(3,366,833	)		(9,651,159	)

Capital Transactions:
Proceeds from shares issued		12,537,382			24,360,643
Proceeds from dividends reinvested		3,366,833			9,651,159
Value of shares redeemed		(55,810,279	)		(225,958,105	)

Change in net assets resulting from capital transactions		(39,906,064	)		(191,946,303	)

Change in net assets		(60,662,911	)		(148,000,160	)
Net Assets:
Beginning of period		425,304,909			573,305,069

End of period	$	364,641,998		$	425,304,909

Accumulated net investment income/(loss)	$	879,185		$	1,467,256

Share Transactions:
Shares issued		1,108,820			2,278,023
Dividends reinvested		319,737			940,659
Shares redeemed		(4,961,060	)		(20,627,259	)

Change in shares		(3,532,503	)		(17,408,577	)


	Annual Rate*			Annual Expense Limit
AZL Davis New York Venture Fund		0.75	%		1.20	%


Unrealized appreciation	$	107,827,013
Unrealized depreciation		(15,901,841	)

Net unrealized appreciation	$	91,925,172


Country	Percentage
Hong Kong		0.5	%
Ireland (Republic of)		1.5
Liberia		0.7
Netherlands		2.1
United Kingdom		1.0
United States		94.2

		100.0	%


	AZL Dreyfus Equity Growth Fund
	For the Year Ended December 31, 2011			For the Year Ended December 31, 2010
Change in Net Assets:
Operations:
Net investment income/(loss)	$	944,443		$	781,375
Net realized gains/(losses) on investment transactions		14,308,232			17,557,775
Change in unrealized appreciation/depreciation on investments		(29,001,418	)		15,275,507

Change in net assets resulting from operations		(13,748,743	)		33,614,657

Dividends to Shareholders:
From net investment income		(765,282	)		(665,056	)

Change in net assets resulting from dividends to shareholders		(765,282	)		(665,056	)

Capital Transactions:
Proceeds from shares issued		90,710,728			36,753,549
Proceeds from dividends reinvested		765,282			665,056
Value of shares redeemed		(50,368,130	)		(31,629,694	)

Change in net assets resulting from capital transactions		41,107,880			5,788,911

Change in net assets		26,593,855			38,738,512
Net Assets:
Beginning of period		193,126,112			154,387,600

End of period	$	219,719,967		$	193,126,112

Accumulated net investment income/(loss)	$	924,184		$	781,369

Share Transactions:
Shares issued		8,764,203			4,341,779
Dividends reinvested		84,282			80,711
Shares redeemed		(5,254,287	)		(3,991,009	)

Change in shares		3,594,198			431,481


	Annual Rate*			Annual Expense Limit
AZL Dreyfus Equity Growth Fund		1.00	%		1.20	%


Unrealized appreciation	$	23,741,749
Unrealized depreciation		(6,428,981	)

Net unrealized appreciation	$	17,312,768