HSBC Training Deck - Income and Growth

ALLIANZ
INCOME AND GROWTH
Allianz Global Investors Singapore
Distribution Training
March 2018
© Copyright Allianz PNB Life

For training use only. Not for public distribution.
ALLIANZ INCOME AND GROWTH

The Fund aims at long-term capital appreciation and income, investing primarily in a combination of common stocks and other equity securities,
debt securities and convertible securities. The allocation across these asset classes varies substantially from time to time.
The Fund is exposed to significant risks which include investment/general market, company-specific, creditworthiness, asset allocation and
interest rate changes risks. The Fund’s investments focus on US and Canada which may increase concentration risk.
The Fund may invest in high-yield (non-investment grade and unrated) investments and convertible bonds which may subject to higher risks,
such as volatility, credit, default, interest rate changes, general market and liquidity risks and therefore may increase the risk of loss of original
investment.
The Fund may invest in financial derivative instruments ("FDI") for efficient portfolio management (including for hedging) which may expose to
higher leverage, counterparty, liquidity, valuation, volatility, market and over the counter transaction risks. The Fund will not invest extensively in
FDI for investment purpose.
Dividend payments may, at the sole discretion of the Investment Manager, be made out of the Fund’s capital or effectively out of the Fund’s
capital which represents a return or withdrawal of part of the amount investors originally invested and/or capital gains attributable to the original
investment. This may result in an immediate decrease in the NAV per share and the capital of the Fund available for investment in the future and
capital growth may be reduced.
This investment may involve risks that could result in loss of part or entire amount of investors’ investment.
In making investment decisions, investors should not rely solely on this material.
Income and Growth | Distribution Training
© Copyright Allianz PNB Life 21-Nov-18 2
WHAT ARE THE FUND’S KEY RISKS?

I N V E S T M E N T I N V O LV E S R I S K S . P L E A S E R E F E R TO T H E P R O S P E CT US F O R D E TA I L S I N C L U D I N G T H E R I S K
FACTORS.
1. Investment Risk / General Market Risk
The Fund is an investment fund. There is no guarantee of the repayment of principal. The instruments invested by the Fund may fall in value.
The Fund invests directly or indirectly in securities, and is exposed to various general trends and tendencies in the economic and political situations
as well as securities markets and investment sentiment, which are partially attributable to irrational factors. Such factors could lead to substantial
and longer-lasting drops in prices affecting the entire market. Securities from top-rated issuers are subject to essentially the same general market
risk as other securities and assets. All these factors may adversely impact the net asset value of the Fund.
2. Company-specific Risk
The Fund may invest in securities which may be affected by company-specific factors, such as the issuer’s business situation. If a company-
specific factor deteriorates, the price of the respective asset may drop significantly and for an extended period of time, possibly even without regard
to an otherwise generally positive market trend. All these factors may adversely impact the net asset value of the Fund.
3. Creditworthiness Risk
The creditworthiness (ability to pay) of the issuer of an asset in particular of a security or money-market instrument directly or indirectly held by a
Fund may subsequently fall. This usually leads to a decrease in the price of the asset greater than that caused by general market fluctuations.
The securities held by the Fund may be downgraded and may fall in value. This will also lead to a fall in the net asset value of the Fund.

FACTORS.
4. Risk of Interest Rate Changes
To the extent that this Fund invests in interest-bearing securities (e.g. debt securities including convertible debt securities, etc.), it is exposed to
interest rate fluctuations. If market interest rates rise, the value of the interest-bearing assets held by the Fund may decline substantially. This applies
to an even greater degree if this Fund also holds interest-bearing securities with a longer time to maturity and a lower nominal interest rate.
5. Specific risks of Investing in High-Yield (Non-Investment Grade and Unrated) Investments and Convertible Bonds
Investing in high-yield (non-investment grade and unrated) investments and convertible bonds are normally associated with higher volatility, greater
risk of loss of principal and interest, increased creditworthiness risk, risk of default, risk of interest rate changes, general market risk, and liquidity risk
(for example, the asset cannot be sold or can only be sold at a significant discount to the purchase price), all of which may adversely impact the net
asset value of the Fund.
The value of convertible bonds may be affected by the price movement of the underlying securities (i.e. equities), among other things. Convertible
bonds may also have call provisions and other features which may give rise to the risk of a call. All these factors may adversely impact the net asset
value of the Fund.
6. Country and Region Risk

The Fund’s investments focus on U.S. and Canada, which may increase the concentration risk. Consequently, the Fund is particularly susceptible to
adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory events and risks of this region, or of companies based and/or
operating in this region. The net asset value of the Fund may be more volatile than a diversified fund.

FACTORS.
7. Asset Allocation Risk
The performance of the Fund is partially dependent on the success of the asset allocation strategy employed by the Fund. There is no assurance
that the strategy employed by the Fund will be successful and therefore the investment objective of the Fund may not be achieved. The investments
of the Fund may be periodically rebalanced and therefore the Fund may incur greater transaction costs than a Sub-Fund with static allocation
strategy.
8. Derivatives Risk
The Fund may invest in derivatives (including certificates) which may expose the Fund to higher leverage, counterparty, liquidity, valuation, volatility,
market and over the counter transaction risks, all of which may adversely impact the net asset value of the Fund. The leverage component of an FDI
can result in a loss significantly greater than the amount invested in the FDI by the Fund.
The Fund’s use of FDI in hedging and/or efficient portfolio management may become ineffective and/or cause the Fund to suffer significant losses.
9. Risk related to Distribution out of Capital and Distribution effectively out of Capital
The payment of distributions out of capital/distributions effectively out of capital represents a return or withdrawal of part of the amount investors
originally invested and/or capital gains attributable to the original investment. Any distributions involving payment of distributions out of the Fund’s
capital/distributions effectively out of the Fund’s capital may result in an immediate decrease in the net asset value per Share and may reduce the
capital available for the Fund for future investment and capital growth.
The distribution amount and net asset value of any hedged share classes of the Fund may be adversely affected by differences in the interest rates
of the reference currency of the hedged share class and the base currency of the Fund, resulting in an increase in the amount of distribution that is
paid out of capital and hence a greater erosion of capital than other non-hedged share classes.
CONTENT
TOPICS

WHY INVEST
IN THE US?
01
POSITIVE OUTLOOK FOR US ECONOMY: US DATA STAYS OVERALL SOLID,

ESPECIALLY LABOR MARKETS. THIS IS SUPPORTIVE OF US EQUITIES
S&P500 vs. Initial Jobless Claims (inverted) AllianzGI economic forecasts in a
nutshell
Source: AllianzGI Economics & Strategy, Bloomberg, Datastream, as of 31/12/2017. Past performance, or any prediction, projection or forecast, is not indicative of future performance.
POSITIVE OUTLOOK FOR US ECONOMY:

ENJOYING OVERALL SOLID CYCLICAL DATA
Source: FactSet. Top left data as of 31 October 2017; Top right data as of 31 December 2017; Bottom left data as of 31 December 2017; Bottom right data as of 31 December 2017.
FEDERAL RESERVE & MONETARY POLICY

Current Policy
 Remains accommodative, supporting strong labor market conditions and a sustained return to 2% inflation
 Maintained 2018 forecast of three rate hikes; initiated balance sheet normalization program in October 2017
Expectation
 Gradual, measured approach toward adjustments and policy continuity under designated new Chair Powell
 The path of the federal funds rate will depend on the economic outlook
Source: FactSet; Federal Reserve; Allianz Global Investors. Left chart data as at 30 November 2017; right chart data as of 31 December
© Copyright Allianz PNB Life 21-Nov-18 2017. 10
US HY MARKET FUNDAMENTALS SUPPORTIVE;

DEFAULT RATE ON A DECLINE TO A BELOW AVERAGE LEVEL
• The U.S. high yield market is currently bifurcated between high quality and low quality issuers
• Active management and credit research is key to delivering attractive risk-adjusted returns in today’s market environment
80 16
BB B CCC All Speculative Grade Issuers, trailing 12-months
70 14 Past performance is not a reliable indicator of future
results.
Specific risks of investing in high yield and non-
60 12 investment grade bonds and convertible bonds
Investing in high-yielding, non-investment grade bonds,
50 10 unrated securities and convertible bonds usually has to
BB, B, CCC (Percent %)
All Issuers (Percent %)

bear higher credit risk, default risk, risk of interest rate
changes, general market risk and liquidity risk (e.g. the
40 8 asset may not be sold Or can only be sold at a much
lower price than the purchase price). The value of the
30 6 Convertible Bonds may be affected, among other
things, by the price movements of the underlying
securities and, in particular, some of the Convertible
20 4 Bonds may also have redemption terms and other
characteristics that may constitute redemption risk.
10 2 Data as at 30/09/2017.
Source: BofA Merrill Lynch; JP Morgan; Allianz Global

0 0 Investors. Data as at 30/09/2017.
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
US HIGH YIELD FUNDAMENTALS

CONTINUED IMPROVEMENT
DELEVERAGING, IMPROVING EARNINGS AND REVENUE  IMPROVED INTEREST COVERAGE
Income and Growth | Distribution Training Source: BofA Merrill Lynch; Allianz Global Investors. Data as at 31/06/2017.
US EQUITIES: S&P 500 EARNINGS & ESTIMATES

CONTINUED IMPROVEMENT
DELEVERAGING, IMPROVING EARNINGS AND REVENUE  IMPROVED INTEREST COVERAGE
160 3,000
S&P 500 Operating Earnings S&P 500 Price Value
140
2,500
120
12-Month Earnings per Share ($)
2,000
100
Price Value ($)

80 1,500 Earnings are
projected to rise
60
1,000 throughout 2018.
40
500
20
0 0
1993
1996
2018
1992
1994
1995
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: S&P Dow Jones Indices, FactSet. Data as at 31 December 2017.
Note: 12-month operating earnings per share, estimates (green) are bottom up

US EQUITIES
RISE IN CORPORATE PROFITS COULD LEAD TO
ADDITIONAL GAINS FOR US EQUITIES
Historically, S&P earnings

and the S&P index
have moved together.
Source: Standard & Poor’s, Compustat, FactSet, J.P. Morgan Asset Management. Forward Price to Earnings Ratio is a bottom-up calculation
based on the most recent S&P 500 Index price, divided by consensus estimates for earnings in the next 12 months (NTM), and is provided by
FactSet Market Aggregates. Returns are cumulative and based on S&P 500 Index price movement only, and do not include the reinvestment of
dividends. Past performance is not indicative of future returns. As of 31/12/2017.
WHY ALLIANZ
INCOME AND
GROWTH?
02
WHY ALLIANZ INCOME AND GROWTH

(Yields are not guaranteed. Dividend may be paid out of capital. This may result in an immediate decrease in the NAV per distribution unit and may
reduce the capital available for the Fund for future investment and capital growth. The Fund may strategically apply Covered Call Option Strategy on the
underlying assets which may cause the Fund to forego any appreciation in the stock price above the option strike price, limiting the Fund's growth
potential)
1Dividendpayments are applicable for USD Class AM Dis (monthly distribution) and for reference only. 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.
(1) INCOME: MULTIPLE SOURCES OF INCOME

potential)
A strategy aims to capture multiple
sources of income and growth
potential from 3 distinct asset
classes
High-yield bond coupons

Convertible bond coupons
Equity dividends
Covered call option premiums
Gains from high-yield
Gains from convertible
Gains from equity
We believe the current market environment calls for a broader income toolkit
that includes less traditional income-generating strategies.
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.
(1) INCOME: AIM FOR MONTHLY DIVIDEND PAYOUT

potential)
Historical Dividend
Average
Average
Monthly
Period Annualized
Distribution
Yield^ (%)
(USD/share)
2012 0.07500 9.57

(Nov – Dec ‘12)
2013 0.07500 9.02
2014 0.07500 8.92
2015 0.07500 9.55
2016 0.07375 10.54
2017 0.06900 9.51
^Annualized Dividend Yield = [(1+ Dividend Per Share/Ex-Dividend Date NAV)12 -1] X 100. The annualized dividend yield is calculated based on the latest dividend distribution with dividend reinvested, and may be higher or lower than the actual annual dividend yield.
*Dividend payments may, at the sole discretion of the Investment Manager, be made out of the Fund’s capital or effectively out of the Fund's capital which represents a return or withdrawal of part of the amount investors originally invested and/or capital gains attributable to the original investment.
This may result in an immediate decrease in the NAV per share and the capital of the Fund available for investment in the future and capital growth may be reduced. Dividend payments shown above are applicable for USD Class AM Dis (monthly distribution) and for reference only. The dividend
payments shown above is reviewed semi-annually. Actual review period and projected monthly payout covering period are subject to change without prior notice. The new level of projected monthly payout is intended to cover the first half of the Fund’s financial year, from October 2017 to March
2018 or until further notice. We will continue to review the projected payout level for suitability and sustainability. Source: Allianz Global Investors, as at 31/1/2018.
(2) STOCK-LIKE RETURNS, LESS VOLATILITY

US CONVERTIBLES PROVIDE UPSIDE PARTICIPATION
AND LESS DOWNSIDE VOLATILITY
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. Funds
that invest in convertibles may have to convert the
securities before they would otherwise, which may
have an adverse effect on the Fund’s ability to
achieve its investment objective. Source: Allianz
Global Investors.

investment grade bonds and convertible bonds
Investing in high-yielding, non-investment grade
bonds, unrated securities and convertible bonds
usually has to bear higher credit risk, default risk,
risk of interest rate changes, general market risk
and liquidity risk (e.g. the asset may not be sold or
can only be sold at a much lower price than the
purchase price). The value of the Convertible
Bonds may be affected, among other things, by
the price movements of the underlying securities
and, in particular, some of the Convertible Bonds
may also have redemption terms and other
characteristics that may constitute redemption risk.
Data as at 30/09/2017.


PARTICIPATE IN THE UPSIDE POTENTIAL OF US EQUITIES
WHILE TACTICALLY USING COVERED CALLS TO ENHANCE INCOME PRODUCTION
A covered call option strategy may cause the Fund

to forego any appreciation in the stock price above
the option strike price. Also, the option strategy
could cause the Fund to recognize larger amounts
of net short term capital gains, which are taxable
at the higher ordinary income tax rates. 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.


STRONG DOWNSIDE PROTECTION
Past performance is not a reliable indicator of

future results. This chart is not indicative of the
past or future performance of any Allianz Global
Investors product. In an environment where
interest rates may trend upward, rising rates
would negatively impact most bond funds, and
fixed income securities held by a fund are likely to
decrease in value. Bond funds and individual
bonds with a longer duration (a measure of the
expected life of a security) tend to be more
sensitive to changes in interest rates, usually
making them more volatile than securities with
shorter durations. Note: Fixed income up and
down quarters are based on quarterly
performance of the Barclays U.S. Government
Credit Bond Index. Source: Barclays; BofA Merrill
Lynch;

and liquidity risk (e.g. the asset may not be sold
or can only be sold at a much lower price than the
characteristics that may constitute redemption
risk. Allianz Global Investors. Data as at
© Copyright Allianz PNB Life 21-Nov-18 31/12/2017. 21

ASYMMETRIC RISK / REWARD PROFILE
Past performance is not a reliable indicator of

future results. The performance of the indexes are
not indicative of the past or future performance of
any Allianz Global Investors product. Standard
deviation is an absolute measure of volatility
measuring dispersion about an average which, for
an index, depicts how widely the returns varied
over a certain period of time. The greater the
degree of dispersion, the greater the risk. Unless
otherwise noted, index returns reflect the
reinvestment of income dividends and capital
gains, if any, but do not reflect fees, brokerage
commissions or other expenses of investing. It is
not possible to invest directly in an index.

usually has to bear higher credit risk, default risk, High yield and convertible
and liquidity risk (e.g. the asset may not be sold bonds usually have a
or can only be sold at a much lower price than the
favorable risk / reward
profile relative to other asset
classes.
risk.
Source: BofA Merrill Lynch; FactSet; Allianz
Global Investors. Data as at 31/12/2017.

(3) STRONG PERFORMANCE

ASYMMETRIC RISK / REWARD PROFILE
Source: Allianz Global Investors, as at 31/1/2018. Source: Morningstar, as at 31/12/2017. Copyright © 2018 Morningstar Asia Limited ("Morningstar"). All Rights Reserved.
The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or
timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

E X P E R I E N C E D T E A M : O U R H I G H LY C R E D E N T I A L E D I N V E S T M E N T T E A M
HAS EXTENSIVE INDUSTRY EXPERIENCE AND UTILIZES THE FIRM’S GLOBAL
R E S E A R C H P L AT F O R M
1 Chartered Financial Analyst , 2 Certificate in Investment Performance Measurement, 3 Certified Investment Management Analyst. Doug Forsyth and Brit Stickney are the portfolio managers on the Allianz US High Yield strategy.
Numbers in parentheses reflect years of tenure at AllianzGI US and affiliates/years of industry experience and are updated twice a year, first quarter and third quarter. As at 30/09/2017.

EXPERIENCED TEAM
The tenured investment team has

experience managing assets
throughout the capital structure and
long, successful track records
across the platform of assets.
Source: Allianz Global Investors. Assets in strategy information reflects the total assets associated with each strategy.
PERFORMANCE IN A
INTEREST RATE
ENVIRONMENT
03
HISTORICAL RATE HIKE CYCLES

Start 29-Mar-88 04-Feb-94 30-Jun-99 30-Jun-04 16-Dec-15
End 24-Feb-89 01-Feb-95 16-May-00 29-Jun-06 31-Dec-17
# of Months 11 12 11 24 24+
Total Rate Hike 3.25% 3.00% 1.75% 4.25% 1.25%
Asset Class Performance (%)
US Core Bonds 3.41 -2.04 2.02 2.99 6.31
US Investment Grade Bonds 5.54 -2.78 0.06 2.96 12.76
10-Year US Treasuries 4.94 -6.96 3.88 4.61 9.18
US Equities 15.09 0.67 9.65 7.81 36.55
US Convertible Bonds 11.09 -8.49 25.43 4.80 26.45
US High Yield Bonds 8.95 -1.71 -1.84 7.41 27.01
Source: Morningstar Direct, as of 31/12/2017.

Past performance, or any prediction, projection or forecast, is not indicative of future performance.
US Core Bonds - Bloomberg Barclays US Aggregate Bond TR USD; US Investment Grade Bonds – ICE BofAML US Corporate Master TR USD; 10-Year US Treasuries - ICE BofAML US Treasuries 10+Year TR USD; US Equities - S&P 500 TR USD;
US Convertible Bonds - ICE BofAML US Convertible; US High Yield Bonds - ICE BofAML US High Yield Master II TR USD
PERFORMANCE WHEN TREASURY YIELDS SPIKED
Source: Morningstar Direct, as of 31/1/2018. Past performance, or any prediction, projection or forecast, is not indicative of future performance. US Equities - S&P 500 TR USD; US Convertible Bonds – ICE BofAML US Convertible; US High Yield Bonds
- ICE BofAML US High Yield Master II TR USD; US Core Bonds - Bloomberg Barclays US Aggregate Bond TR USD; US Investment Grade Bonds - ICE BofAML US Corporate Master TR USD; 10-Year US Treasuries - ICE BofAML US Treasuries
10+Year TR USD
FUND
DETAILS
04
PORTFOLIO CHARACTERISTICS (1/2)
Source: Allianz Global Investors, as at 31/1/2018.

1. Source: Morningstar, as at 31/12/2017. Copyright © 2018 Morningstar Asia Limited ("Morningstar"). All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or
distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
PORTFOLIO CHARACTERISTICS (2/2)
Source: Allianz Global Investors, as at 31/1/2018.

ALLIANZ INCOME AND GROWTH

Opportunities Risks
 Attractive potential returns of equities with other equity securities (i.e.  Equities and other equities securities (i.e. covered call, short-call
covered call, short-call option), high-yield bonds and convertible bonds option), high-yield bonds and convertible bonds may be subject to
 Equities with covered call strategies pair a long position with a short- volatility and loss risks. The volatility of the fund unit price may be
call option on the same stock generate premium and provide upside strongly increased
potential. It may also reduce exposure to equity market volatility  The Fund may tactically use a covered call option strategy. This
 Investments specifically in the U.S. capital market strategy may cause the Fund to forego any appreciation in the
 Currency gains possible against investor currency in unit classes not underlying instrument‘s stock price above the option strike price, and so
hedged limits the growth potential of the Fund. Equity may fall more than the
 Flexible investment policy may permit better use of opportunities respective call premium, resulting in the losses of premium cushions on
 Broad diversification across numerous securities equity holdings
 Potential additional returns from security analysis and active  Underperformance of the U.S. capital market possible
management  Currency losses possible against investor currency in unit classes not
hedged
 Flexible investment policy is no guarantee that losses will be excluded
 Limited participation in the potential of individual securities
 Success of single security analysis and active management not
guaranteed
 Any distributions involving payment of distributions out of the Fund’s
Source: Allianz Global Investors. capital may result in an immediate decrease in the Net Asset Value per
© Copyright Allianz PNB Life 21-Nov-18 Share and may reduce the capital available for the Fund for future 32
investment and capital growth
APPENDIX
04
WHAT ARE HIGH YIELD BONDS?
Source: Allianz Global Investors.

Specific risks of investing in high yield and non-investment grade bonds and convertible bonds Investing in high-yielding, non-investment grade bonds, unrated securities and convertible bonds usually has to bear higher credit risk, default risk, risk of interest rate changes,
general market risk and liquidity risk (e.g. the asset may not be sold or can only be sold at a much lower price than the purchase price). The value of the Convertible Bonds may be affected, among other things, by the price movements of the underlying securities and, in
particular, some of the Convertible Bonds may also have redemption terms and other characteristics that may constitute redemption risk.
WHAT ARE CONVERTIBLE BONDS?
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.
Funds that invest in convertibles may have to
convert the securities before they would
otherwise, which may have an adverse effect on
the Fund’s ability to achieve its investment
objective. Source: Allianz Global Investors.

and liquidity risk (e.g. the asset may not be sold
or can only be sold at a much lower price than
the purchase price). The value of the Convertible
risk.

WHAT ARE CONVERTIBLE BONDS?
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. Funds that invest in convertibles may have to convert the securities before they would otherwise, which may have an adverse effect on the Fund’s ability to achieve its investment objective. Source: Allianz Global Investors.
Specific risks of investing in high yield and non-investment grade bonds and convertible bonds Investing in high-yielding, non-investment grade bonds, unrated securities and convertible bonds usually has to bear higher credit risk, default risk, risk of interest rate
changes, general market risk and liquidity risk (e.g. the asset may not be sold or can only be sold at a much lower price than the purchase price). The value of the Convertible Bonds may be affected, among other things, by the price movements of the underlying
securities and, in particular, some of the Convertible Bonds may also have redemption terms and other characteristics that may constitute redemption risk.
WHAT ARE COVERED CALL OPTIONS?

• A covered call is an options strategy whereby an investor holds a long position in an asset and writes (sells) call options on
that same asset in an attempt to generate increased income from the asset. A covered call is also known as a “buy-write”.
• An option is a right, not an obligation, to buy or sell a stock (or other security) for a specified price on or before a
specific date. There are two types of equity options:- Source: Allianz Global Investors.
Hypothetical example-not representative of
1) Call option is the right to buy a stock any specific stocks.
2) Put option is the right to sell a stock
Specific risks of investing in high yield and
non-investment grade bonds and convertible
bonds Investing in high-yielding, non-
• Premium is the price of an option a buyer must pay to an option seller for an option contract. In return, the option seller is investment grade bonds, unrated securities
obligated to deliver the underlying security to the option buyer if the option is exercised. and convertible bonds usually has to bear
higher credit risk, default risk, risk of interest
rate changes, general market risk and
liquidity risk (e.g. the asset may not be sold
• When you sell a covered call, also known as writing a call, it means that you already own shares of the underlying stock or can only be sold at a much lower price
and you are selling someone the right, but not the obligation, to buy that stock at a set price (strike price) until the than the purchase price). The value of the
Convertible Bonds may be affected, among
option expires—the price won’t change no matter which way the market goes. In return, the buyer pays you cash, also other things, by the price movements of the
underlying securities and, in particular, some
known as the premium. of the Convertible Bonds may also have
redemption terms and other characteristics
that may constitute redemption risk. Data as
• For example, you already own 100 shares of ABC Co., which is currently at $30 a share. You decide to sell (or write) one at 30/09/2017.
covered call option, which covers 100 shares of stock. You agreed to sell those 100 shares at an agreed-upon price, known
as the strike price. The strike price you choose determines how much premium you receive for selling the option. For covered
calls, in general, the higher the strike price is from the stock price, the lower the premium. Therefore, a $33 strike price
is more valuable than a $35 strike price. Because it is more likely for ABC. Co to reach $33 than $35, thus it is more likely that
the buyer of the call will make money. Because of that, the premium for lower strike price option is usually higher than an
option with a higher strike price.

Three possible outcomes of a covered call options: (In-The-Money, At-The-Money, Out-Of-The-
Money)
Definitions Scenario Implication: Buyer Implication: Seller Gain / Loss: Seller
1 In-the-money Strike price less The buyer will most likely • The seller will mostly likely have The net gain for the seller is
than stock price exercise his right to buy the to deliver the stock to the buyer. the premium PLUS the
stock, as the strike price is • The seller received the premium difference between the stock Source: Allianz Global Investors.
Hypothetical example-not representative of
less than the market price of from the buyer. purchase price and the strike any specific stocks.
the stock. price.
Specific risks of investing in high yield and
non-investment grade bonds and convertible
bonds Investing in high-yielding, non-
2 At-the-money Strike price The buyer is indifferent • The seller may not need to deliver The net gain is the premium investment grade bonds, unrated securities
and convertible bonds usually has to bear
same as stock the stock to the buyer, if the buyer the seller receives for selling higher credit risk, default risk, risk of interest
price does not exercise the right. the call option. rate changes, general market risk and
• The seller received the premium liquidity risk (e.g. the asset may not be sold
or can only be sold at a much lower price
from the buyer. than the purchase price). The value of the
Convertible Bonds may be affected, among
other things, by the price movements of the
underlying securities and, in particular, some
of the Convertible Bonds may also have
redemption terms and other characteristics
3 Out-of-the- Strike price The buyer will most likely not • The seller will mostly likely not The net gain is the premium that may constitute redemption risk.
money greater than exercise his right to buy the have to deliver the stock to the the seller receives for selling
stock price stock, as the strike price is buyer. the call option.
greater than the market price • The seller received the premium
of the stock from the buyer.


Source: Allianz Global Investors.
Example: Writing a covered call on ABC stock: This example is for illustration only and does not represent any actual performance. Hypothetical
example-not representative of any specific stocks. Specific risks of investing in high yield and non-
• Strike price: USD35 investment grade bonds and convertible bonds Investing in high-yielding, non-investment grade
bonds, unrated securities and convertible bonds usually has to bear higher credit risk, default risk, risk
• Premium: USD4 per contract of interest rate changes, general market risk and liquidity risk (e.g. the asset may not be sold or can
only be sold at a much lower price than the purchase price). The value of the Convertible Bonds may
• Own 100 shares of ABC Co. purchase at USD30 per share be affected, among other things, by the price movements of the underlying securities and, in
particular, some of the Convertible Bonds may also have redemption terms and other characteristics
that may constitute redemption risk.
Definition Scenario Market price of ABC Co. Gain / Loss: Seller

1 In-the-money Strike price less than stock price USD37 per share • Gain= USD400 (premium)
• Realized gain common stock USD500 ((USD35-USD30) x 100 shares).
• Net portfolio effect = USD900
2 At-the-money Strike price same as stock price USD35 per share • Gain = USD400 (premium)
• Realized gain common stock USD500 (USD35-USD30) x 100 shares).
• Net portfolio effect =USD900
3 Out-of-the-money Strike price greater than stock price USD30 per share • Gain = USD400 (premium)
• Net portfolio effect = USD400
4 Out-of-the-money Strike price greater than stock price USD27 per share • Gain = USD400 (premium)
• Unrealized depreciation of common stock USD300 (USD27-USD30) x
100)
• Net portfolio effect: USD100
 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 and appreciation.
 Scenario 3 : The investor benefits from additional cash flow.
 Scenario 4 : The investor benefits from additional cash flow, offsetting some downside.

DIFFERENT INCOME GOALS, ONE SOLUTION

Available Share Classes Distribution Accumulation
Investor Objective Income-Focused Growth-Focused
Aim for consistent monthly distributions and the potential for growth
Investor Profile Accumulating and building assets
of principal
Hypothetical Investment of $100,000 in Allianz Income and Growth

Date: Oct 16, 2012 – Dec 31, 2016
$135,000
$131,248
$130,000 Total investment value: $ 131,248
Accumulation Class
$125,000
$120,000
$127,250
$115,000
Total investment value: $127,250
Distribution Class Portfolio
$110,000
Value: $ 89,900
$105,000 Distributions: $ 37,350
$100,000
$95,000
2012 2013 2014 2015 2016
Dividend payments are for reference only but are not guaranteed. They may, at the sole discretion of the Investment Manager, be made out of the Fund’s income and/or capital which represents a return or withdrawal of part of the amount investors originally invested
and/or capital gains attributable to the original investment. This may result in an immediate decrease of the NAV and the capital of the Fund available for investment in the future and capital growth may be reduced. For details, please refer to the Fund’s distribution
policy disclosed in the offering documents. 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. Past performance, or any prediction, projection or forecast, is not indicative of future performance.
DISCLAIMER
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 material 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 material has not been reviewed by the Monetary Authority of Singapore (MAS). MAS authorization/recognition is not a recommendation
or endorsement. The issuer of this material is Allianz Global Investors Singapore Limited (12 Marina View, #13-02 Asia Square Tower 2, Singapore 018961, Company
Registration No. 199907169Z).

THANK
YOU


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ALLIANZ

INCOME AND GROWTH

Allianz Global Investors Singapore

© Copyright Allianz PNB Life

ALLIANZ INCOME AND GROWTH

WHAT ARE THE FUND’S KEY RISKS?

WHAT ARE THE FUND’S KEY RISKS?

6. Country and Region Risk

WHAT ARE THE FUND’S KEY RISKS?

Income and Growth | Distribution Training

POSITIVE OUTLOOK FOR US ECONOMY: US DATA STAYS OVERALL SOLID,

POSITIVE OUTLOOK FOR US ECONOMY:

FEDERAL RESERVE & MONETARY POLICY

US HY MARKET FUNDAMENTALS SUPPORTIVE;

All Issuers (Percent %)

Source: BofA Merrill Lynch; JP Morgan; Allianz Global

US HIGH YIELD FUNDAMENTALS

US EQUITIES: S&P 500 EARNINGS & ESTIMATES

Price Value ($)

Income and Growth | Distribution Training

Historically, S&P earnings

WHY ALLIANZ INCOME AND GROWTH

(1) INCOME: MULTIPLE SOURCES OF INCOME

High-yield bond coupons

(1) INCOME: AIM FOR MONTHLY DIVIDEND PAYOUT

2012 0.07500 9.57

2013 0.07500 9.02

2014 0.07500 8.92

2015 0.07500 9.55

2016 0.07375 10.54

2017 0.06900 9.51

(2) STOCK-LIKE RETURNS, LESS VOLATILITY

Hypothetical example-not representative of any

Specific risks of investing in high yield and non-

Income and Growth | Distribution Training

(2) STOCK-LIKE RETURNS, LESS VOLATILITY

A covered call option strategy may cause the Fund

Income and Growth | Distribution Training

(2) STOCK-LIKE RETURNS, LESS VOLATILITY

Past performance is not a reliable indicator of

Specific risks of investing in high yield and non-

(2) STOCK-LIKE RETURNS, LESS VOLATILITY

Past performance is not a reliable indicator of

Specific risks of investing in high yield and non-

Income and Growth | Distribution Training

(3) STRONG PERFORMANCE

(3) STRONG PERFORMANCE

(3) STRONG PERFORMANCE

The tenured investment team has

HISTORICAL RATE HIKE CYCLES

End 24-Feb-89 01-Feb-95 16-May-00 29-Jun-06 31-Dec-17

Total Rate Hike 3.25% 3.00% 1.75% 4.25% 1.25%

Asset Class Performance (%)

US Core Bonds 3.41 -2.04 2.02 2.99 6.31

US Investment Grade Bonds 5.54 -2.78 0.06 2.96 12.76

10-Year US Treasuries 4.94 -6.96 3.88 4.61 9.18

US Equities 15.09 0.67 9.65 7.81 36.55

US Convertible Bonds 11.09 -8.49 25.43 4.80 26.45

US High Yield Bonds 8.95 -1.71 -1.84 7.41 27.01

Source: Morningstar Direct, as of 31/12/2017.

PERFORMANCE WHEN TREASURY YIELDS SPIKED

PORTFOLIO CHARACTERISTICS (1/2)

Source: Allianz Global Investors, as at 31/1/2018.