Income and Growth Strategy - Allianz Global Investors

Income and Growth StrategyActive is: Positioning the scene for brilliant opportunities

Adopting a three-sleeve approach with asset classes of high yield bonds, convertible bonds and equities. Setting in place the dual opportunities with potential income and growth.

Content

4 Coronavirus and the Economic Outlook

5 A Three-sleeve Approach for Income and Growth

6 High Yield Bonds: A Highly Sought-after Investment Vehicle

8 Why Invest in High Yield Bonds?

11 Risks of High Yield Bonds

12 Convertible Bonds: Combining the Advantages of Bonds and Stocks

13 Why Invest in Convertible Bonds?

16 Risks of Convertible Bonds

17 US Equities: Valuation May Look Compelling

18 Use of Covered Call Options: An Opportunistic Approach to Dampen Volatility

20 Allianz Income and Growth (“the Fund”) Q&A

25 About Allianz Global Investors

The US economy entered 2020 on a solid footing only to be disrupted by the outbreak of coronavirus (COVID-19). The spread of the virus and its exponential growth were unpredictable, which led to a sudden cessation of global economic activities. The short-term trajectory of global economies and corporate profitability are highly uncertain and evolving due to the headwinds associated with the spread of COVID-19 globally.

Strong Policy Response: Global central banks and governments have announced new and aggressive stimulus measures to help cushion the economic fallout. In the US, the US Federal Reserve (US Fed) has taken dramatic steps to slash interest rates to near-zero, returned to quantitative easing, and

Coronavirus and the Economic Outlook

unveiled other measures to address liquidity in the market. Additionally, the US government has increased its fiscal response substantially. The strong monetary and fiscal policy response under way should help to revive global growth in H2 2020.

Extreme Volatility: US markets witnessed one of the strongest and most extreme sell-offs since the global financial crisis amidst the outbreak of COVID-19. The oil price war among Russia, Saudi Arabia and US shale added to virus-related volatility. With the Chicago Board Options Exchange (CBOE) Volatility Index (VIX) approaching a high since 2008, and more uncertainty surrounding the virus and oil, many asset markets have experienced dislocations and oversold conditions.

Improved Risk/Reward: Given the extreme volatility levels that have recently been present in the markets, the short-term forecast is challenging. However, valuations in many asset classes are approaching attractive levels. It is difficult to time the market, but investors with a long-term horizon are now presented with potentially attractive risk/reward opportunities.

Hence, it is important for investors to build a resilient portfolio by balancing risk and reward. A strategy with consistent potential income distribution, capital growth potential and downside risk management could improve contributions to the resilience of a portfolio.

Income and Growth Strategy

4

A Three-sleeve Approach for Income and Growth

“Three-sleeve” approach for optimal performance

There is no guarantee that these investment strategies and processes will be effective under all market conditions and investors should evaluate their ability to invest for a long-term based on their individual risk profile especially during periods of downturn in the market.

Under the current environment, investors can consider a three-sleeve approach investing in high yield bonds, convertible bonds and equities.

Investors could enjoy three potential benefits:

1. A steady flow of potential income, including coupons from high yield bonds and convertible bonds, and dividends from equities.

2. Upside potential when the markets go up

3. Downside risk management against a declining market environment.

EquitiesConvertible bonds

High yield bonds

Potential Income &Growth


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What are high yield bonds?As the name implies, high yield bonds are bonds with higher yields.

Credit ratings of high yield bonds are lower than or equivalent to BBB-. For this reason interest rates offered by such bonds are usually more attractive than bonds with higher ratings such as US Treasuries and investment-grade corporate bonds. The last few decades have seen much growth in the breadth and depth of the

high yield market, and this asset class has now become a popular investment instrument globally.

US high yield gross issuance was only USD 220 billion in 1990, but by the end of December 2019 it was around USD 1.60 trillion1.

The US dollar high yield bond market is the largest. According to the ICE Bank of America (BofA) US High Yield Index, the US dollar high yield market makes up almost 70% of the global high yield market2.

High Yield Bonds: A Highly Sought-after Investment Vehicle

Growth of the high yield bond market1

Source1 JP Morgan, as at 31 December 2019. 2 ICE BofA Merrill Lynch, JP Morgan, Bloomberg and Allianz Global Investors; as at 31 December 2019.

1.601.23

0.65

0.22

2.0

1.5

1.0

0.5

01990 2000 2010 2019

Mar

ket S

ize

(USD

Tril

lion)


6

Industry diversification by ICE BofA US High Yield Index3

Real Estate1.7%

Energy12.5%

Insurance1.1%

Basic Industry10.4%

Transportation1.0%

Media10.8%

Utilities2.6%

Banks1.7%

Consumer Goods 3.5%

Telecom10.5%

Automotive2.0%

Healthcare10.4%

Leisure5.0%

Financial Services

4.4%

Services5.8%

Capital Goods6.6%

Retail4.7%

Technology & Electronics

5.1%

Info Corner: What is bond rating?

Bonds can be divided into two segments, namely, investment grade and non-investment grade. Investment grade bonds have stronger creditworthiness but lower yields while non-investment grade bonds are more risky due to weaker creditworthiness of issuers. Issuers of non-investment grade bonds are more willing to offer higher interest rates to attract investors and thus they are also known as high yield bonds. It is worth mentioning that the creditworthiness of high yield bonds has improved greatly in recent years.

The US high yield bond universe is well diversified. It covers a wide range of sectors, allowing investors to allocate across diversified bond holdings.

3 ICE Data Services. Weights are based on ICE BofA US High Yield Index. This is for guidance only and not indicative of future allocation. Diversification does not assure a profit or protect against loss. Data as at December 2019.


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Potential attractive yields from US high yield bonds

No rt h America

0.67%1

9.02%1

2.34%1

-0.47%1

0.01%1

US 10-Year Treasury

S&P 500 Index

Japan 10-Year Bond

Why Invest in High Yield Bonds?

Source1 Bloomberg, US investment grade corporates represented by ICE BofA US Corporate Index and high yield bond

represented by ICE BofA US High Yield Index, yield represented yield to maturity of the index, data as at 31 March 2020.

1. Potential yieldsUnder current market environment, the relative value proposition of high yield bonds is clear. As of 31 March 2020, the US 10-year Treasury bonds and US investment grade corporates offered a yield of 0.67% and 3.66% respectively1. US stocks have delivered dividend yields with the S&P 500 Index yielding 2.34%1;

whereas US high yield market offered a yield of 9.02%1, making it a compelling opportunity for both international and domestic investors. Many investors have now included high yield bonds in their portfolios in order to enhance potential returns and hedge against inflation.

US High Yield Bond

-0.47%1

German 10-Year Bond


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Performance of US high yield market in the past 30 years4

3 Morningstar, high yield bond represented by ICE BofA US High Yield Index, data as of 29 February 2020.4 Morningstar, ICE BofA Merrill Lynch, Bloomberg, Allianz Global Investors, as at 31 December 2019. High yield bond

performance is measured by ICE BofA US High Yield Index. Past performance, or any prediction, projection or forecast is not indicative of future performance.

Per

form

ance

(%)

2. Track recordUS high yield bonds recorded outstanding past performance, with an average annual return of 7.15%3 and 5.16%3 over the past 10 and 5 years respectively.

In addition, the US high yield market has recorded negative returns in only 7 years between 1989 and 2019. With 24 years of positive returns4, it is undoubtedly the front-runner in the sector, which should explain why it is attractive to investors.


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Correlations between US high yield and other asset classes2

Source1 Barclays, ICE Index, FactSet, Allianz Global Investors, as at 31 December 2019. 10-year Treasuries: ICE BofA US Treasury

Current 10-Year Index.2 Barclays, ICE Index, FactSet, Allianz Global Investors, as at 31 December 2019. US Small Stocks: Russell 2000 Index;

US Large Stocks: Russell 1000 Index; Non-US Stocks: MSCI EAFE Index; Barclays Government/Credit Bond: Barclays US Aggregate Bond Index; 10-year US Treasuries: ICE BofA US Treasury Current 10-Year Index.

0.62US Small Stocks

0.62US Large Stocks 0.58

Non-US Stocks

0.23Barclays Govt./

Credit Bond

-0.0410-Year US Treasuries

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

-0.1

-0.2

3. Fixed income diversification benefitsBased on the research, high yield bond historically delivered equity-like returns, with less volatility than stocks. It also provides fixed income diversification benefits given its relatively low correlations with US Treasuries and other core

fixed income. US Treasury bonds are very sensitive to changes in interest rates. US Treasury bond prices will normally decline as interest rates rise. In contrast, high yield bonds in general are driven by fundamentals of the issuers, so their correlation with 10-year US Treasuries is relatively low, currently only -0.041.


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Risks of High Yield Bonds1. Default rates remain at low levelsThe main risk associated with high yield bonds is corporate default, also known as default risk. High yield defaults in 2020 are expected to remain below their long-term historical average. Spreads continue to be well supported by the improved fundamental backdrop for most issuers. The current default rate of US high yield bonds is 3.35%3 and default rate is even lower for BB and B rated bonds.

Default rates at low level3

BB B CCC All Speculative Grade Issuers (past 12 months)

BB

, B, C

CC

(%)

All i

ssue

rs (%

)

3 ICE BofA Merrill Lynch, JP Morgan, Allianz Global Investors, as at 31 March 2020. US high yield bonds are represented by the ICE BofA US High-Yield Index.

4 Morningstar, data from 1 January 1988 to 29 February 2020.

2. Beware of market fluctuationsThe high yield market could be volatile, and investors need to beware of market fluctuations. The path toward achieving positive results is hardly linear, and periods of heightened volatility should be expected. The annualized volatility of US high yield bonds between 1988 and the end of February 2020 amounted to 7.93%4, lower than the S&P 500 Index (14.12%)4 during the same period.


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What are convertible bonds?Convertible bonds combine the features of stocks and bonds, and they are typically issued by a company.

Similar to other bonds, convertible bonds provide coupon income at a fixed rate. Moreover, investors

Scenario 1: Share price rises

Assuming the share price of company ABC rises to USD 6, holders of the convertible bonds may purchase the shares through conversion at a lower price and make a profit.

Info Corner: How do convertible bondholders react to change in share price?

For example, in December 2014, company ABC issued five-year convertible bonds with a coupon rate of 3% p.a. and an exercise price of USD 5. Investors may exercise their right to convert the bonds into shares before December 2019.

may convert the bonds into stocks when share price goes up to capture the upside potential of the underlying stock.

The coupon rates of convertible bonds are usually lower than traditional corporate bonds but are higher than the typical dividend yields of stocks.

Scenario 2: Share price declines

Assuming the share price of company ABC falls to USD 4, which is lower than the exercise price, the holder may continue to hold onto the bonds and receive coupon income.

Note: The above examples are for illustration only and does not represent actual results.Hypothetical example – not representative of any specific convertible. Convertibles involve the risk factors of both stocks and bonds. They fluctuate in value with the price changes of the underlying stock. If interest rates on the bonds rise, the value of the corresponding convertible will fall. Investing in convertibles may have to convert the securities before they would otherwise, which may have an adverse effect on the ability to achieve the investment objective.

Convertible Bonds: Combining the Advantages of Bonds and Stocks


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Why Invest in Convertible Bonds?1. Offensive yet defensiveConvertible bonds enjoy the advantages of both bonds and stocks. Most importantly, they offer flexibility to investors to cope with market volatility.

For instance, when the stock market is doing well, investors can convert the bonds into shares in order to capture the potential upside. When the stock market is doing poorly, investors may hold the convertible bonds and enjoy a stream of potential income.

Upsidepotential ofunderlying

equity

Lower downsiderisk from the bond

CONVER

TIBLE

S

Combining the advantages of bonds and stocks

2. Market and investment opportunities continue to widenSimilar to the US high yield market, the size of the US convertible bond market is also the largest in the world, offering a variety of investment opportunities.

Issuance of convertible bonds has been on the rise since 2017. Meanwhile, moderate redemption pressure reflects that market development remains healthy.


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The market size of US convertible bonds is projected to grow1

Source1 ICE Data Services, BofA. Data as of 31 December 2019. US convertible bonds are represented by the ICE BofA All US

Convertibles Index. Projections are based on assumptions with respect to future events. The actual future events may differ from the assumptions.

2 FactSet, ICE Data Services, Morningstar. Data as of January 1988 to March 2020. US convertible bonds are represented by the ICE BofA All US Convertibles Index. US government credit bonds are represented by the Bloomberg Barclays US Government/Credit Bond Index. Past performance is not a reliable indicator of future results.

3. Less volatile than stocks; lower interest rate risk than US TreasuriesHistorically, convertible bonds have exhibited a high correlation to equities, meaning their price movements are quite similar to the stock market. In contrast, the correlation between convertible bonds and US Treasuries is relatively low, meaning their prices rarely move in tandem with each other.

As convertible bonds share the characteristics of stocks, they behave more like stocks irrespective of the interest rates cycle.

Between January 1988 and March 2020, US government/credit bonds rose in 96 quarters and fell in 33 quarters (by an average of 1.2% in each quarter). Convertible bonds managed to go up by an average of 3.0% in each quarter when US government / credit bonds fell2.


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Performance of convertible bonds between January 1988 and March 20202

2

0

-2

4

Ave

rage

Qua

rter

ly R

etur

n %

Participated in much of the upside of

government / credit bond market

96 Up Quarters

2.2 2.53.0

-1.2

33 Down Quarters

ICE BofA All US Convertibles IndexBloomberg Barclays US Government Credit Bond Index6

Past performance, or any prediction, projection or forecast is not indicative of future performance.


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Risks of Convertible BondsConvertible bonds are subject to risks associated with both stocks and bonds. These bonds can fluctuate in value when interest rates rise and/or the price of the underlying stock changes.

If interest rates rise, values of convertible bonds may decline.

Some of the companies that issue convertible bonds are below investment grade, which means these bonds can be more risky than investment-grade issues.

Convertible bonds are often issued by smaller companies and may be more volatile than securities issued by larger companies. It is worth noting that the convertible bonds market is relatively complicated as it is difficult for retail investors to access on their

own. A more practicable way of investing in convertible bonds is to entrust the task to a professional management team.

In general, a fund management team analyses different aspects of the investment, such as:

• Financial condition• Valuation• Credit rating• Bond spread

The team decides whether to buy a convertible bond only after reviewing the above fundamentals. As market conditions change, holdings are adjusted by selling, holding or converting the bonds into shares.

Info Corner: Are convertible bonds subject to limitations?

Many companies issue convertible bonds with a call option that gives them the right to repurchase the convertible bond from the holder at a specified price (usually the par value of the bond). This call option can limit the opportunity for capturing the potential for appreciation of the underlying common stock. On the other hand, if the bond is structured with a put option, the holder has the right to sell the bond to the issuer on a specified date. This type of feature can limit risk should the underlying stock price drop sharply.


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Source1 FactSet, as at 12 March 2020.

US Equities: Valuations May Look Compelling1. Earnings growth will be back loadedShort-term corporate profitability will be highly uncertain and evolving due to the headwinds associated with the spread of the virus globally. Despite near-term headwinds, the health of the US economy will not be fundamentally derailed, and society will move forward. Earnings will rebound once the virus has peaked and this rebound will most likely happen in the latter part of the year.

2. Valuations have contracted below the long-term averageWith the S&P 500 down over 25% from the high, the valuations of US equities have contracted to a level below their long-term average. The forward 12-month P/E ratio for the S&P 500 is 14.0 which is below the 5-year (16.7), 10-year (15.0), 15-year (14.6) and 20-year (15.5) average.1


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What are covered call options?It is an option strategy that pairs a long position with a short-call option on the same stock in exchange for an upfront premium paid by the buyer.

An option is the right to buy or sell a stock at a specified price on or before a specified date. There are two types of options: call option and put option.

If investors expect the stock market remains flat, they may sell an option on a stock and use the premium to cover part of the potential volatility.

If investors expect the overall market to be increasingly volatile, they may sell an index option to obtain a premium to cover part of the market drop.

Understanding how covered calls actually workLet's look at a hypothetical example in order to understand

how covered calls actually work.

• An investor buys 100 shares of ABC Co. for USD 30 a share, the total cost being USD 3,000.

• The investor at the same time sells a call option of ABC Co. Exercise price at USD 35.

• Option premium: USD 4 per contract (one contract per share).

Scenario 1: The investor benefits from additional cash flow and appreciation but did not participate in additional profits*.

Scenario 2: The investor benefits from additional cash flow from premium and appreciation.

Scenario 3: The investor benefits from additional cash flow from premium.

Scenario 4: The investor benefits from additional cash flow, premium earned is enough to offset downside.

Scenario 5: The additional cash flow from premium can only offset part of the stock depreciation.

Use of Covered Call Options: An Opportunistic Approach to Dampen Volatility

Note: The example above and on the next page is for illustration only and does not represent actual results.* Additional profits = market price - exercise price.


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• Gain = USD 400 (premium)• Realized gain of common stock = USD 500

[(USD 35 - USD 30) x 100 shares]• Net portfolio effect = USD 900

Market price of ABC Co.: USD 37 per share; Stock up 23.3%Scenario 1

In-the- Money

Strike price lessthan stock price

• Gain = USD 400 (premium)• Realized gain of common stock = USD 500


Market price of ABC Co.: USD 35 per share; Stock up 16.7%Scenario 2

At-the-Money

Strike price sameas stock price

• Gain = USD 400 (premium)• Net portfolio effect = USD 400

Market price of ABC Co.: USD 30 per share; Stock flatScenario 3

Out-of-the- Money

Strike price greaterthan stock price; and stock price

same as purchase price

• Gain = USD 400 (premium)• Unrealized depreciation of common stock = USD 300


Market price of ABC Co.: USD 27 per share; Stock down 10%Scenario 4

Out-of-the- Money


less than purchase price

• Gain = USD 400 (premium)• Unrealized depreciation of common stock = USD 500

[(USD 25 - USD 30) x 100 shares]• Net portfolio effect = -USD 100

Market price of ABC Co.: USD 25 per share; Stock down 16.6%Scenario 5

Out-of-the- Money


less than purchase price

How covered calls work


19

Allianz Income and Growth (“the Fund”) Q&A


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The short-term trajectories of global economies and corporate profitability are highly uncertain and evolving due to the headwinds associated with the spread of COVID-19 globally. In response to this uncertainty, global central banks have announced new and aggressive stimulus measures. The US Federal Reserve (US Fed) has taken dramatic steps to slash interest rates to near-zero, returned to quantitative easing, and unveiled other measures to insulate the economy against coronavirus fallout. Additionally, governments worldwide are considering emergency fiscal stimulus action to help cushion the economic fallout and prevent the spread of the virus.

The situation continues to move very rapidly and requires close monitoring. Despite the near-term headwinds, we remain constructive on the intermediate-term outlook. US equity valuations have come in dramatically with the market correction. The forward 12-month P/E ratio for the S&P 500 Index now resides around the 5-year average. In addition, the convertible market has seen continued strong new issuance. This could provide balanced convertible opportunities and also improve sector diversification. High-yield spreads have widened near the upper end of the trailing 3-year range while default rate expectations remain unchanged.

During this period of volatility, the Fund performed as expected, mitigating downside risks due to its exposure to US high-yield bonds and convertibles, which have defensive characteristics that help buffer downside participation when US equities come under pressure.

What is the impact of COVID-19 to the US economy/markets and how has the outlook for 2020 changed as a result? Is this affecting the Fund?

1


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No, the Fund has experienced multiple periods of volatility since inception. The most recent drawdown of the Fund happened in Q4 2018 when equity markets corrected, and the previous drawdown happened in 2014-2016 when the convertible and high yield markets experienced volatility.

In Q4 2018, US stocks turned in their worst fourth-quarter performance since 2008. Investors lost confidence in the staying power of earnings and the stability of the economy, fearing that trade wars and the US Fed might be making a monetary policy mistake. The S&P 500 Index lost 13.52%1 for the quarter, of which 9.03%1 came in December alone, its biggest monthly loss since February 2009. That being said, there was no change in overall fundamentals to substantiate the sharp sell-off.

The other drawdown happened in mid-2014, when high-yield bonds entered a bear market which lasted into February 2016. In 2015, convertible bonds declined 3%2 with the underlying equity falling 7%2. Equities were range-bound from Q4 2014 to Q3 2016 (between 1,800 and 2,100 on the S&P 500)2. In addition, option income was limited because equity implied volatility was depressed and stayed in a narrow range for extended periods of time, spiking only briefly.

For each of the drawdown periods, the volatility of the Fund, which adopts a “three-sleeve” approach, was much smaller than that of the broad market as measured by the S&P 500 and the downside capture ranged from 54% to 96% of the S&P 500.

Despite these headwinds, there were opportunities for the Fund to take advantage of better prices/valuations, potential attractive yields and wider spreads.

Is this the first time the Fund has experienced challenging market environments?

2Source1 Morningstar, as of 31 December 2018.2 Bloomberg. Convertible bond refers to ICE BofA US Convertible Index;

Underlying equity refers the constituents in the convertible bond index.


22

The Fund complements both core fixed income and equity allocations. Income generation remains a top priority for investors. However, low interest rates and low-yielding investment opportunities may not provide enough income to meet their long-term objectives. Furthermore, most investors understand that an allocation to equities is crucial to pursuing their financial goals. Yet, concerns about stock market volatility have left them uncomfortable with equity-only strategies, which may present more downside risk than they are willing to accept.

US high yield bonds, convertible bonds and US large-cap equities offer compelling investment opportunities. The Fund adopts a “three-sleeve” approach, aiming to provide potential income while participating in the upside potential.

In light of the market sell-off, high yield bond spreads ended the quarter at 877 basis points and the average price of the market fell to 85.8 cents on the dollar.1 The backdrop offers an attractive opportunity for long-term investors. Meanwhile, US equity valuations have come in sharply and reside below their long-term average. More convertible bonds are approaching their bond floors. Today the downside risk is much more contained because of this dynamic and balance sheet strength.

Almost any portfolio could benefit from the many advantages that income can provide, from lowering volatility to contributing to potential total return. The bottom line for investors is that they must not allow short-term market uncertainty to derail their long-term goals. Investors would be wise to “re-risk” their portfolios and consider a range of income-generating strategies that have historically held up well during down markets, offering both stock-like potential returns and helping to moderate volatility.

Why may investors consider the Fund?

3Source1 Bloomberg, as of 31 March 2020.


23

The distribution share classes of the Fund aim to generate income potential through steady monthly distributions (aims for regular distribution, yields are not guaranteed, dividends may be paid out from capital). These distributions predominantly come from the several potential sources of income in the Fund, namely, high yield coupons, convertible bond coupons, equity dividends and potential capital gains from the three sleeves. Distribution may comprise both income and/or realized gains and will vary depending on market conditions.

How does the Fund meet its potential monthly distribution?

4

The Fund aims to earn a potential regular income for investors. However, investors who focus exclusively on distribution yield must also consider total return, which is the combination of yield and the return provided by the underlying asset classes. A typical bond fund generally distributes its earned coupon income; while the Fund generates its payout from multiple sources of potential income, including coupons, dividends, and capital gains. When a fund distributes income, the fund’s NAV will drop by the equivalent amount in price but the total return remained unchanged. The difference in distributions also made up the total return. Besides income distribution, the fluctuations in underlying asset class can have varying degrees of impact on return. Hence, investors should not confuse yield with total return.

What are the difference between total return and distribution (yield)?

5


24

About Allianz Global InvestorsAllianz Global Investors is a leading active asset manager with over 800 investment professionals in 25 offices worldwide and managing more than EUR 563 billion in assets for individuals, families and institutions.

Active is the most important word in our vocabulary.

SourceAllianz Global Investors, as at 31 December 2019.

Active is how we create and share value with clients. We believe in solving, not selling, and in adding value beyond pure economic gain. We invest for the long term, employing our innovative investment expertise and global resources. Our goal is to ensure a superior experience for our clients, wherever they are based and whatever their investment needs.


25

Pub

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d as

at A

pr 2

020

Information herein is based on sources we believe to be accurate and reliable as at the date it was made. We reserve the right to revise any information herein at any time without notice. No offer or solicitation to buy or sell securities and no investment advice or recommendation is made herein. In making investment decisions, investors should not rely solely on this publication but should seek independent professional advice. However, if you choose not to seek professional advice, you should consider the suitability of the product for yourself. Past performance of the fund manager(s) and the fund is not indicative of future performance. Prices of units in the Fund and the income from them, if any, may fall as well as rise and cannot be guaranteed. Distribution payments of the Fund, where applicable, may at the sole discretion of the Manager, be made out of either income and/or net capital gains or capital of the Fund. As a result, it may reduce the Fund’s net asset value. The dividend yields and payouts are not guaranteed and might change depending on the market conditions or at the Manager’s discretion. Investment involves risks including the possible loss of principal amount invested and risks associated with investment in emerging and less developed markets. The Fund may invest in financial derivative instruments and/or structured products and be subject to various risks (including counterparty, liquidity, credit and market risks etc.). Investing in fixed income instruments (if applicable) may expose investors to various risks, including but not limited to creditworthiness, interest rate, liquidity and restricted flexibility risks. Changes to the economic environment and market conditions may affect these risks, resulting in an adverse effect to the value of the investment. During periods of rising nominal interest rates, the values of fixed income instruments (including short positions with respect to fixed income instruments) are generally expected to decline. Conversely, during periods of declining interest rates, the values are generally expected to rise. Liquidity risk may possibly delay or prevent account withdrawals or redemptions. Past performance, or any prediction, projection or forecast, is not indicative of future performance. Investors should read the Prospectus obtainable from Allianz Global Investors Singapore Limited or any of its appointed distributors for further details including the risk factors, before investing. This advertisement has not been reviewed by the Monetary Authority of Singapore (MAS). MAS authorization/recognition is not a recommendation or endorsement. The issuer of this advertisement is Allianz Global Investors Singapore Limited (12 Marina View, #13-02 Asia Square Tower 2, Singapore 018961, Company Registration No. 199907169Z).

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Income and Growth Strategy - Allianz Global Investors