ERIK NELSON, SR. SECURITIES COUNSEL [Allianz Logo]
Allianz Investment Management LLC
5701 Golden Hills Drive | Minneapolis Minnesota | 55416-1297
Telephone: 763-765-7453
Fax: 763-765-6355
August 3, 2009
Sally Samuel, Senior Counsel
Securities and Exchange Commission
Division of Investment Management
Office of Insurance Products
100 F Street NE
Washington, DC 20549
RE: Allianz Variable Insurance Products Trust (the "VIP Trust")
Pre-Effective Amendment No. 1
File No. 333-160351
and
Allianz Variable Insurance Products Fund of Funds Trust (the "FOF
Trust")
Pre-Effective Amendment No. 1
File No. 333-160352
Dear Ms. Samuel:
On July 24, 2009, we received comments telephonically from you and Tony Burak
regarding the above-referenced filings, submitted June 30, 2009, under Rule 488
in connection with the reorganization of nineteen funds of the VIP Trust and two
funds of the FOF Trust.
On July 29, 2009, we submitted a delaying amendment under Rule 473(a) to delay
the effective date of the above-referenced filings. We intend to request
acceleration of the effective date of this Pre-Effective Amendment No. 1 under
Rule 461.
This letter responds to your comments. Each comment is summarized below and
followed by our response.
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COMMENTS APPLICABLE TO ALL OR MULTIPLE PROXY STATEMENTS/PROSPECTUSES
1. In the secretary's letter, change the first sentence of the third to last
paragraph, from "If the proposal is approved, the Acquiring Fund will
acquire all of the assets of the Acquired Fund(s) . . ." to "If the
proposal is approved, the Acquiring Fund will acquire all of the assets
and assume all of the liabilities of the Acquired Fund(s) . . ."
Response: We made this change in each proxy statement/prospectus as requested.
2. In the Risk Factors section, add to the Derivative Risks disclosure
additional language indicating that the obligation to segregate the
assets may result in the fund not achieving its objectives.
Response: We added the following sentence at the end of the Derivative Risks
disclosure in each proxy statement/prospectus in which it appears: "The
obligation to segregate assets may result in the Fund not achieving its
objectives."
3. In the Annual Fund Operating Expenses tables, add disclosure to the
footnote relating to expense limitation agreements indicating that any
reimbursement obligations of the Acquired Funds will not be carried
forward to the Acquiring Fund.
Response: We added the following sentence at this end of this footnote in each
proxy statement/prospectus: "Any obligations of an Acquired Fund to reimburse
the Manager will not carry forward to the Acquiring Fund following the
Reorganization."
4. In the Annual Fund Operating Expenses tables, add additional columns
showing the pro forma expenses for the Reorganization of each Acquired
Fund separately. Also, add corresponding pro forma information to the
expense examples following the Annual Fund Operating Expenses tables.
Response: We made this change in each proxy statement/prospectus as requested.
5. In the Reasons for the Proposed Reorganization and Board Deliberations
section, include a discussion of how each factor was weighed by the Board
or summarize the factors that led the Board to their decision approving
the Reorganizations.
Response: We have added additional language at the end of this section in each
proxy statement/prospectus summarizing the factors that led the Board to approve
the Reorganizations.
6. For each tax-free Reorganization add a statement in the Tax Consequences
section disclosing the possible loss or limitations on use of taxable
loss carryforwards following the Reorganization.
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Response: We added disclosure in the Tax Consequences section with respect to
each tax-free Reorganization as requested.
7. For each Reorganization which is not tax-free, bold the portion of the
text that discloses that the Reorganization will not be a tax-free event.
Response: For each Reorganization which is not tax-free, we bolded disclosure
relating to the taxable nature of the Reorganization in the Tax Consequences
section and in the Tax Status of the Reorganization section.
8. In the Capitalization table, show additional pro forma information for
each Reorganization of an Acquired Fund into the Acquiring Fund
separately.
Response: We made this change in each proxy statement/prospectus as requested.
9. With respect to the Annual Fund Operating Expenses tables and expense
examples, expense reimbursement and fee waiver arrangements which will be
guaranteed for less than one year following the effective date of the
proxy statement/prospectus may not be shown in the table but may be
described in a footnote.
Response: In each proxy statement/prospectus, we removed the Fee Waiver and Net
Annual Fund Operating Expenses rows from the table and added a statement in the
footnote relating to the waiver of expenses (as applicable) to the effect that
"If the expense reimbursement arrangement were reflected in the table, the
Annual Operating Expenses of the Fund would be lower." Expense examples have
been revised based on gross Total Annual Fund Operating Expenses and do not
reflect waiver of expenses by the Manager.
10. With respect to the Capitalization tables, confirm that the Adjustments
to Net Assets include any repositioning costs (brokerage fees, etc.).
Response: We confirm that the Adjustments to Net Assets in the Capitalization
tables include any applicable repositioning costs.
11. With respect to the Capitalization tables, confirm that the footnote
references (which are asterisks) appear correctly in Edgar.
Response: We will ensure that footnote references in the Capitalization tables
appear correctly in Edgar.
COMMENTS APPLICABLE TO INDIVIDUAL PROXY STATEMENTS/PROSPECTUSES
FOR THE REORGANIZATION OF AZL FIRST TRUST TARGET DOUBLE PLAY FUND, AZL PIMCO
FUNDAMENTAL INDEXPLUS TOTAL RETURN FUND AND AZL TARGETPLUS EQUITY FUND INTO AZL
S&P 500 INDEX FUND
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12. On page 6, in the Comparison of Investment Strategies section, include a
discussion explaining why the merger makes sense even though the
investment objectives of the acquired and acquiring funds are divergent.
Expand the disclosure to highlight the differences in the investment
objectives of the acquiring and acquired funds. Also discuss the
difference in investment objectives and justification for the
reorganization in the Board Deliberation section.
Response: We have supplemented the disclosure in the Comparison of Investment
Strategies section and in the Reasons for the Proposed Reorganization and Board
Deliberations section as requested.
FOR THE REORGANIZATION OF AZL JPMORGAN LARGE CAP EQUITY FUND INTO AZL JPMORGAN
U.S. EQUITY FUND
13. In the secretary's letter, explicitly state that expenses will be higher.
In the Q&A, adjust the expenses disclosure to make it consistent with the
expense tables. Also include discussion of the higher expenses in the
Board Deliberation section.
Response: We have supplemented disclosure relating to contractual expenses of
the Funds in the secretary's letter, in the Q&A and in the Reasons for the
Proposed Reorganization and Board Deliberations section as requested.
FOR THE REORGANIZATION OF AZL NACM INTERNATIONAL FUND AND AZL SCHRODER
INTERNATIONAL SMALL CAP FUND INTO AZL INTERNATIONAL INDEX FUND
14. In the Q&A, in the Fees and Expenses section, and in the Reasons for the
Proposed Reorganization and Board Deliberations - Expense Ratios section,
address the increase in Other Expenses for the Acquiring Fund pro forma
as reflected in the Annual Fund Operating Expenses table.
Response: We have supplemented disclosure in the Q&A, in a footnote to the
Annual Fund Operating Expenses table, and in the Expense Ratios discussion in
the Reasons for the Proposed Reorganization and Board Deliberations section to
address the increase in pro forma Other Expenses.
15. In the Reasons for the Proposed Reorganization and Board Deliberations -
Expense Ratios section, add disclosure that the Acquiring Fund will be
subject to reimbursement to the manager for expenses previously waived.
Response: We have supplemented the disclosure in the Expense Ratios discussion
in the Reasons for the Proposed Reorganization and Board Deliberations section
to reflect the obligation of the Acquiring Fund following the Reorganization to
reimburse the Manager for expenses previously waived by the Manager.
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FOR THE REORGANIZATION OF AZL OPPENHEIMER GLOBAL FUND INTO AZL VAN KAMPEN
INTERNATIONAL EQUITY FUND
16. On page 13, include an explanation that manager's fees will increase as a
result of the reorganization. Point out that the acquiring fund fees are
higher, and include an explanation that even though overall expenses will
decline, contractual expenses may increase.
Response: We supplemented the disclosure in the Fees and Expenses section as
requested.
FOR THE REORGANIZATION OF AZL OPPENHEIMER INTERNATIONAL GROWTH FUND INTO AZL AIM
INTERNATIONAL EQUITY FUND
17. In secretary's letter and in the Q&A relating to expenses, note that
expenses will be higher.
Response: We supplemented the disclosure in the secretary's letter and in the
Q&A as requested.
18. In the Fees and Expenses section, delete the last sentence from footnote
(a) of Table A-2.
Response: We made this change as requested.
19. On page 16, in the Reasons for the Proposed Reorganization and Board
Deliberations - Potential Effects on the Manager section, note that
management fees will increase.
Response: We supplemented the disclosure in the Potential Effects on the Manager
discussion as requested.
FOR THE REORGANIZATION OF AZL TARGETPLUS BALANCED FUND INTO AZL BALANCED INDEX
STRATEGY FUND
20. On page one, in the paragraph beginning, "Each of the Funds is
subject{ellipsis}" include the 1940 Act file number for FOF Trust
documents incorporated by reference.
Response: We added the 1940 Act file number for the FOF Trust as requested.
21. On page 17, in the Performance section for the Acquiring Fund, bold the
sentence that states that there is no performance information available
for the fund.
Response: We have bolded the disclosure that performance information is not
presented due to the lack of performance history of the fund prior to July 10,
2009, as requested.
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22. In the Fees and Expenses section, Annual Fund Operating Expenses table,
change the label for the 3[rd] row from "Underlying Fund Fees and
Expenses" to "Acquired (Underlying) Fund Fees and Expenses." Also change
the same language in footnote (e) of the table.
Response: We changed all use of "Underlying Fund Fees and Expenses" to
"Acquired (Underlying) Fund Fees and Expenses" throughout the proxy
statement/prospectus.
FOR THE REORGANIZATION OF AZL TARGETPLUS GROWTH FUND AND AZL TARGETPLUS MODERATE
FUND INTO AZL MODERATE INDEX STRATEGY FUND
23. On page one, in the paragraph beginning, "Each of the Funds is
subject{ellipsis}" include the 1940 Act file number for FOF Trust
documents incorporated by reference.
Response: We added the 1940 Act file number for the FOF Trust as requested.
24. On page 19, in the Performance section for the Acquiring Fund, bold the
sentence that states that there is no performance information available
for the fund.
Response: We have bolded the disclosure that performance information is not
presented due to the lack of performance history of the fund prior to July 10,
2009, as requested.
25. In the Fees and Expenses section, Annual Fund Operating Expenses table,
change the label for the 3rd row from "Underlying Fund Fees and Expenses"
to "Acquired (Underlying) Fund Fees and Expenses." Also change the same
language in footnote (e) of the table.
Response: We changed all use of "Underlying Fund Fees and Expenses" to
"Acquired (Underlying) Fund Fees and Expenses" throughout the proxy
statement/prospectus.
COMMENTS APPLICABLE TO THE STATEMENT OF ADDITIONAL INFORMATION
26. On page 3, in the Financial Information section, remove the last "6" from
the EDGAR Accession Number for each of the first five funds listed.
Response: We made this change as requested.
27. Under the Pro Forma Financial Statements sections for each of the funds
in the SAI, ensure that each table heading for the set of pro forma
statements of assets and liabilities is labeled "Pro Forma" and not
simply "Statement of Assets and Liabilities."
Response: We confirmed that each Statement of Assets and Liabilities is labeled
"Pro Forma".
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28. Under the Pro Forma Financial Statements section, Statements of Assets
and Liabilities, on pages 6, 44, 63, and 74, remove the words, "to
commence operations upon consummation of the merger," from footnote (b)
of the relevant tables.
Response: We made this change as requested.
29. Under the "Pro Forma Financial Statements section for each of the funds,
ensure that each table heading for the Pro Forma Statements of Operations
is labeled "Pro Forma", and not merely "Statement of Operations."
Response: We confirmed that each Statement of Operations is labeled "Pro
Forma".
30. In the Pro Forma Statements of Operations, on pages 7, 17, 35, and 75, in
the row entitled "less expenses waived/reimbursed by manager," under the
"Pro Forma Adjustments" column, add a footnote reference.
Response: We added a footnote reference as requested.
31. For each reorganization, in the Pro Forma Notes, under "4. Related Party
Transactions," in the first and third paragraphs of each such section,
explicitly identify the name of the relevant fund on first use.
Response: We made this change as requested.
32. For the first footnote on page 16 (and for all similar footnotes on other
Statements of Assets and Liabilities or Statements of Operations): (i)
the footnote should be moved to the Pro Forma Schedule of Investments;
and (ii) in cases where no adjustment is necessary, after the first
comma, it should read "no securities will be sold," but if adjustments
will be made (if securities have to be sold), the footnote is not
applicable and should not be shown and there should be an adjustment on
the Pro Forma Schedule of Investments.
Response: We note that this comment relates to the pro forma financial
statements for AZL Balanced Index Strategy Fund, AZL Moderate Index Strategy
Fund, and AZL S&P 500 Index Fund.
As a result of the different investment strategies employed by these Acquiring
Funds in achieving their investment objectives (as compared to the applicable
Acquired Funds), it is anticipated that all, or substantially all, of the
investments of the Acquired Funds going into these Acquiring Funds will be sold
on or prior to the closing date of the Reorganizations.
To the extent that the comment seeks disclosure of the particular investments of
the Acquired Funds that would be sold or those that would be purchased by the
Acquiring Funds in connection with the Reorganization, such disclosure may
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violate the Fund's portfolio holdings disclosure policies. Such disclosure also
may disadvantage the Funds by alerting the market to pending securities sales or
purchases, which could adversely impact the Funds' ability to achieve best price
and execution. Such disclosure also would be highly speculative, requiring the
Funds' adviser or subadvisers to anticipate, three months ahead of time, which
specific portfolio securities may be sold or purchased to effectuate the
Reorganizations, and resulting in potentially misleading disclosure.
Accordingly, we do not believe that we can specifically identify the Acquired
Fund portfolio securities to be sold, or the securities to be purchased by the
Acquiring Funds, prior to the Reorganizations in the Pro Forma Statement of
Investments.
We have, however, made several changes to the pro forma financial statements
presented in the SAI to address this comment. These changes were discussed
carefully with the Funds' accountants. The first footnote appearing in the Pro
Forma Statement of Assets and Liabilities has been reworded, and this text
reappears in the Pro Forma Notes, under "6. Investment Valuation Summary," and
in the Schedule of Portfolio Investments. We also reworded the discussion in the
Pro Forma Notes, under "2. Basis of Combination," to address this issue. In
addition, we note that the proxy statements reflect an estimate of the
transaction costs expected to be incurred in connection with the transactions in
portfolio securities as a result of the Reorganizations; these appear as an
adjustment to net assets under the Capitalization table.
33. In the Pro Forma Notes on page 18, under "2. Basis of Combination," (and
for all other Reorganizations which are not tax-free), modify the
disclosure in the first paragraph, second sentence so that taxable
transactions are discussed.
Response: We made this change as requested.
34. In the Pro Forma Statements of Assets and Liabilities on page 24, the
footnote reference on Net Assets - Shares of Beneficial Interest should
be (B), not (A).
Response: We made this change as requested.
35. The Pro Forma Combined Schedule of Portfolio Investments, on pages 98,
120, 134, 165, 221, and 260, should be dated "As of December 31, 2008".
Response: We made this change as requested.
36. In the Pro Forma Notes for AZL BlackRock Capital Appreciation Fund, on
page 26, under "2. Basis of Combination," reference should be made to
Columbia Technology Fund. Currently, there is only reference made to
BlackRock Growth Fund".
Response: We made this change as requested.
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37. In the Pro Forma Notes for AZL JPMorgan U.S. Equity Fund, on page 50,
under "4. Related Party Transactions," utilize the Fund's new name,
"JPMorgan Large Cap Equity Fund," rather than the old name, "AZL Legg
Mason Value Fund."
Response: We made this changes as requested.
38. In the Pro Forma Notes for AZL Moderate Index Strategy Fund, on page 59,
under "5. Capital Shares," add reference to TargetPLUS Growth Fund in the
first paragraph in addition to the TargetPLUS Moderate Fund.
Response: We made this change as requested.
39. At pages 249 to 259, the discussions of "Futures Contracts
Schedule{ellipsis}" through "Written Swap Option." apply to a different
reorganization and the redundant pages should be deleted.
Response: We made this change as requested.
40. On page 260, insert the name of the Acquiring Fund, AZL S&P 500 Index
Fund, in the header.
Response: We made this change as requested.
The Registrant acknowledges that the disclosure in the filing is the
responsibility of the Registrant. The Registrant acknowledges that changes to
the Registration Statement based on staff comments do not bar the Commission
from taking future action and that should the Commission or the staff of the
Commission, acting pursuant to delegated authority, declare the filing
effective, it does not foreclose the Commission from taking any action with
respect to the filing. The Registrant represents that it will not assert
this declaration as a defense in any proceeding initiated by the commission or
by any person under the federal securities of the United States. The Registrant
further acknowledges that the action of the Commission or the staff of the
Commission, acting pursuant to delegated authority, in declaring the filing
effective does not relieve the Registrant from its full responsibility for the
adequacy and accuracy of the disclosures in the filing.
Sincerely,
/s/ Erik Nelson
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