N-CSR 1 tm2011543d2_ncsr.htm N-CSR

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number 811-21989
 
AllianzGI Equity & Convertible Income Fund
(Exact name of registrant as specified in charter)
 
1633 Broadway, New York, New York   10019
(Address of principal executive offices)   (Zip code)
 
Scott Whisten – 1633 Broadway New York, New York 10019
(Name and address of agent for service)
 
Registrant’s telephone number, including area code: 212-739-3367  
 
Date of fiscal year end: January 31  
 
Date of reporting period: January 31, 2020  
                 

 

 

 

ITEM 1. REPORT TO SHAREHOLDERS

AllianzGI Diversified Income & Convertible Fund

AllianzGI Equity & Convertible Income Fund

AllianzGI NFJ Dividend, Interest & Premium Strategy Fund

Annual Report

January 31, 2020

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds' website (us.allianzgi.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at us.allianzgi.com/edelivery.

If you prefer to receive paper copies of your shareholder reports after January 1, 2021, direct investors may inform a Fund at any time. If you invest through a financial intermediary, you should contact your financial intermediary directly. Paper copies are provided free of charge and your election to receive reports in paper will apply to all funds held with the fund complex if you invest directly with a Fund or all funds held in your account if you invest through your financial intermediary.



Table of Contents

 

2–3

   

Letter from the President

 
  4–9    

Fund Insights

 
  10–12    

Performance & Statistics

 
  13–50    

Schedules of Investments

 
  51    

Statements of Assets and Liabilities

 
  52    

Statements of Operations

 
  53–54    

Statements of Changes in Net Assets

 
  55    

Statement of Cash Flows

 
  56–58    

Financial Highlights

 
  59–77    

Notes to Financial Statements

 
  78–79    

Report of Independent Registered Public Accounting Firm

 
  80    

Tax Information

 
  81    

Annual Shareholder Meeting Results

 
  82    

Changes to the Board of Trustees/Proxy Voting Policies & Procedures

 
  83–86    

Privacy Policy

 
  87–89    

Dividend Reinvestment Plan

 
  90–92    

Board of Trustees

 
  93    

Fund Officers

 


January 31, 2020 | Annual Report 1



Letter from the President

Thomas J. Fuccillo

President & Chief
Executive Officer

Dear Shareholder:

The US economy was resilient and continued to expand during the 12-month fiscal reporting period ended January 31, 2020. In contrast, economic growth overseas remained weak. Over this period, both global equities and the overall US bond market posted strong results. After the reporting period ended, however, global equities experienced a sharp and rapid decline given concerns over the potential impact from the coronavirus. Meanwhile, US government bond yield reached record lows (and their prices rose) as investor risk aversion escalated.

For the 12-month reporting period ended January 31, 2020

n  AllianzGI Diversified Income & Convertible Fund returned 22.65% on net asset value ("NAV") and 29.04% on market price.

n  AllianzGI Equity & Convertible Income Fund returned 17.85% on NAV and 20.83% on market price.

n  AllianzGI NFJ Dividend, Interest & Premium Strategy Fund returned 13.13% on NAV and 18.17% on market price.

During the 12 months ended January 31, 2020, the Russell 3000 Index, a broad measure of US stock market performance, returned 20.53%; the Russell 1000 Value Index, a measure of large-cap value-style stocks, returned 14.88%; and the Russell 1000 Growth Index, a measure of growth-style stocks, gained 27.94%. Convertible securities, as reflected by the ICE BofA US Convertible Index, gained 18.37%.

Turning to the US economy, gross domestic product ("GDP"), the value of goods and services produced in the country, the broadest measure of economic activity and the principal indicator of economic performance, expanded at a 3.1% annual pace during the first quarter of 2019. The US economy then grew at a 2.0% and 2.1% annual pace during the second and third quarters of 2019, respectively. Finally, the Commerce Department's initial reading for fourth quarter 2019 GDP growth was 2.1%.

Looking back, the US Federal Reserve (the "Fed") raised the federal funds rate four times in 2018, with the last hike pushing the federal funds rate to a range between 2.25% and 2.50%. However, at its January 2019 meeting, the Fed signaled a "dovish pivot" and indicated that it expected to pause from tightening monetary policy as it monitored incoming economic data. As expected, at its meetings in July, September and October 2019, the Fed lowered the federal funds rate. The Fed's last rate cut pushed the federal funds rate to a range between 1.50% and 1.75%. At its meeting in January 2020, the Fed repeated its intention to pause from further actions for the time being as it analyzes incoming economic data. Then, on March 3, 2020, after the reporting period ended, the Fed cut the federal


2 Annual Report | January 31, 2020



funds rate to a range between 1.00% and 1.25%, saying, " the coronavirus poses evolving risks to economic activity.... The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy."

Outlook

As of this writing, there is much uncertainty regarding the global economy given the spread of the COVID-19. This has resulted in periods of elevated market volatility and a "flight to quality." We have already seen mass quarantines, supply disruptions and market liquidity issues – all of which present headwinds on the global economy. In this environment, investors should aim to keep their portfolios on track by having conviction and actively managing risk.

In addition to the COVID-19, major political developments, including US President Donald Trump's bid for a second term in office, warrant careful monitoring. This will likely contribute to wide "risk-on/risk-off" movements as sentiment swings between "riskier" and "safer" asset classes. We expect low beta returns for the overall market, which makes pursuing alpha – in excess of market returns – all the more important.

In our view, central banks will remain a major market driver in 2020, even as their efforts to spark economic growth become less effective and today's ultra-low interest rates provide less room to maneuver. Rates have been negative in Europe and Japan for some time, and the Fed has resumed cutting rates that were already low.

Facing dwindling options, we believe central banks will likely continue offering additional stimulus with limited effect. Governments may need to shoulder some of the burden by increasing spending, reducing taxes or both.

On behalf of Allianz Global Investors U.S. LLC, the Funds' investment adviser, thank you for investing with us. We encourage you to consult with your financial advisor and to visit our website, us.allianzgi.com/closedendfunds, for additional information. We remain dedicated to serving your investment needs.

Sincerely,

Thomas J. Fuccillo

President & Chief Executive Officer

Receive this report electronically and eliminate paper mailings.

To enroll, visit: us.allianzgi.com/edelivery.


January 31, 2020 | Annual Report 3



Fund Insights

AllianzGI Diversified Income & Convertible Fund/
AllianzGI Equity & Convertible Income Fund/
AllianzGI NFJ Dividend, Interest & Premium Strategy Fund

January 31, 2020 (unaudited)

AllianzGI Diversified Income & Convertible Fund

For the period of February 1, 2019 through January 31, 2020, as provided by Douglas G. Forsyth, CFA, Portfolio Manager.

For the twelve-month period ended January 31, 2020, the AllianzGI Diversified Income & Convertible Fund (the "Fund") returned 22.65% on net asset value ("NAV") and 29.04% on market price.

During the reporting period, the Russell 1000 Growth Index, a measure of growth-style stocks, returned 27.94%; convertible securities, as reflected by the ICE BofA US Convertible Index returned 18.37%; and high yield bonds, as reflected by the ICE BofA High Yield Master II Index, returned 9.39%.

Market Overview

Risk assets produced strong returns over the reporting period, and in stark contrast to 2018, finished 2019, on a firm footing. US equities posted double-digit gains in the second half of 2019 and major indices hit a series of fresh highs into year-end. Convertible bonds benefited from underlying stock price strength. A globally depressed yield environment continued to lend support to high-yield bonds.

Financial results and guidance for most US issuers were generally better than feared with the majority of companies in the S&P 500

Index reporting earnings and revenues above analyst estimates, according to FactSet.

Key economic reports indicated continued US expansion. In the third quarter of 2019, US gross domestic product ("GDP") growth exceeded expectations, unemployment fell to a 50-year low, housing data showed signs of renewed momentum and consumer sentiment rebounded. In contrast, manufacturing data remained weak.

In addition to overseas monetary policy stimulus, the US Federal Reserve (the "Fed") reduced rates by a total of 75 basis points in 2019. After cutting rates by 25 basis points for a third time in October to a range of 1.50% to 1.75%, the Fed left rates unchanged at its December meeting and indicated that it would keep rate changes on hold until there was either a persistent increase in the rate of inflation or deterioration in its economic outlook.

The 10-year US Treasury yield declined substantially into early September, then fluctuated sharply into year-end. After ending 2018 at 2.7%, the yield dropped below 1.5% in 2019. Fading geopolitical risks on the back of US/China trade progress helped drive the yield higher in the fourth quarter. By year-end, the ten-year yield stood at 1.9% and caused the yield curve (3-month vs. 10-year) to steepen sharply from an inverted position.


4 Annual Report | January 31, 2020



Fund Insights

AllianzGI Diversified Income & Convertible Fund/
AllianzGI Equity & Convertible Income Fund/
AllianzGI NFJ Dividend, Interest & Premium Strategy Fund

January 31, 2020 (unaudited) (continued)

Equity volatility spiked intermittently over the reporting period but generally remained subdued concurrent with stock market strength.

Portfolio Specifics

The Fund benefited from its exposure to equities, convertibles and high-yield bonds. In addition to providing a positive total return, the Fund also delivered a high level of income over the reporting period.

Information technology, consumer discretionary and communication services were the top-contributing sectors to the equity sleeve's performance during the period. Conversely, only two sectors – materials and energy – detracted from performance, and their combined impact insignificantly influenced performance.

In the convertible sleeve, sectors that contributed positively to relative performance were technology, health care and financials. energy, transportation and consumer staples. These exposures finished lower and hindered performance.

In the high yield sleeve, industries that aided performance were health care, retail and support-services. In contrast, only the energy industry was a performance headwind.

Many option positions expired below strike, and the Fund was able to retain the set premiums. Against a subdued equity volatility backdrop, the percent of equities with a

covered call structure trended lower into year-end before rising in 2020.

Outlook

We believe synchronized global central bank accommodation and stable US economic growth should support earnings growth and risk asset performance in 2020.

After three interest rate cuts in 2019, the Fed has signaled a pause in the easing cycle but has resumed expansion of its balance sheet. According to the Fed, US monetary policy is not on any pre-set course, and adjustments will continue to provide support to the economy.

We expect the US economy to expand at a moderate pace in 2020 given recent economic data points. Even stronger US growth is possible if the global manufacturing environment improves. COVID-19 may impact global growth, but we believe any slowdown is likely to be transitory. In addition, geopolitical risks and US politics could trigger market volatility but could also provide investment opportunities.

After flat earnings growth in 2019, we believe corporate profits should accelerate in 2020 with easier comparisons versus the prior year. Revenue growth should also increase relative to 2019. Based on bottom-up estimates, earnings are poised to trend higher throughout the year and could result in year-over-year earnings growth of 10% for the S&P 500 Index.


January 31, 2020 | Annual Report 5



Fund Insights

AllianzGI Diversified Income & Convertible Fund/
AllianzGI Equity & Convertible Income Fund/
AllianzGI NFJ Dividend, Interest & Premium Strategy Fund

January 31, 2020 (unaudited) (continued)

AllianzGI Equity & Convertible Income Fund

For the period of February 1, 2019 through January 31, 2020, as provided by Douglas G. Forsyth, CFA, Portfolio Manager.

For the twelve-month period ended January 31, 2020, the AllianzGI Equity & Convertible Income Fund (the "Fund") returned 17.85% on net asset value ("NAV") and 20.83% on market price.

Market Overview

Risk assets produced strong returns over the reporting period and, in stark contrast to 2018, finished 2019 on firm footing. US equities posted double-digit gains in the second half of 2019, and major indices hit a series of fresh highs into year-end. Convertible bonds benefited from underlying stock price strength.

Financial results and guidance for most US issuers were generally better than feared, with the majority of companies in the S&P 500 Index reporting earnings and revenues above analyst estimates, according to FactSet.

Key economic reports indicated continued US expansion. In the third-quarter of 2019 gross domestic product ("GDP") growth exceeded expectations, unemployment fell to a 50-year low, housing data showed signs of renewed momentum and consumer sentiment

rebounded. In contrast, manufacturing data remained weak.

In addition to overseas monetary policy stimulus, the US Federal Reserve (the "Fed") reduced rates by a total of 75 basis points in 2019. After cutting rates by 25 basis points for a third time in October to a range of 1.50% to 1.75%, the Fed left rates unchanged at its December meeting and indicated that it would keep rate changes on hold until there was either a persistent increase in the rate of inflation or deterioration in its economic outlook.

The 10-year US Treasury yield declined substantially into early September, then fluctuated sharply into year-end. After ending 2018 at 2.7%, the yield dropped below 1.5% in 2019. Fading geopolitical risks on the back of US/China trade progress helped drive the yield higher in the fourth quarter. By year-end, the 10-year yield stood at 1.9% and caused the yield curve (3-month vs. 10-year) to steepen sharply from an inverted position.

Equity volatility spiked intermittently over the reporting period but generally remained subdued concurrent with stock market strength.

Portfolio Specifics

The Fund benefited from its exposure to equities and convertibles. In addition to providing a positive total return, the Fund also


6 Annual Report | January 31, 2020



Fund Insights

AllianzGI Diversified Income & Convertible Fund/
AllianzGI Equity & Convertible Income Fund/
AllianzGI NFJ Dividend, Interest & Premium Strategy Fund

January 31, 2020 (unaudited) (continued)

delivered a high level of income over the reporting period.

Information technology, consumer discretionary and communication services were the top-contributing sectors to the equity sleeve's performance during the period. Conversely, only two sectors – materials and energy – detracted from performance and their combined impact insignificantly influenced performance.

In the convertible sleeve, sectors that contributed positively to relative performance were technology, health care and financials. The energy, materials and consumer staples industries finished lower and hindered performance.

Many option positions expired below strike, and the Fund was able to retain the set premiums. Against a subdued equity volatility backdrop, the percent of equities with a covered call structure trended lower into year end before rising in 2020.

Outlook

We believe synchronized global central bank accommodation and stable US economic growth should support earnings growth and risk asset performance in 2020.

After three interest rate cuts in 2019, the Fed has signaled a pause in the easing cycle but has resumed expansion of its balance sheet. According to the Fed, US monetary policy is not

on any pre-set course, and adjustments will continue to provide support to the economy.

We expect the US economy to expand at a moderate pace in 2020 given recent economic data points. Even stronger US growth is possible if the global manufacturing environment improves. COVID-19 may impact global growth, but we believe any slowdown is likely to be transitory. In addition, geopolitical risks and US politics could trigger market volatility but could also provide investment opportunities.

After flat earnings growth in 2019, we believe corporate profits should accelerate in 2020 with easier comparisons versus the prior year. Revenue growth should also increase relative to 2019. Based on bottom-up estimates, earnings are poised to trend higher throughout the year and could result in year-over-year earnings growth of 10% for the S&P 500 Index.

AllianzGI NFJ Dividend, Interest & Premium Strategy Fund

For the period of February 1, 2019 through January 31, 2020, as provided by the Value Equity, US team.

For the twelve-month period ended January 31, 2020, the AllianzGI NFJ Dividend, Interest & Premium Strategy Fund (the "Fund") returned 13.13% on net asset value ("NAV") and 18.17% on market price.


January 31, 2020 | Annual Report 7



Fund Insights

AllianzGI Diversified Income & Convertible Fund/
AllianzGI Equity & Convertible Income Fund/
AllianzGI NFJ Dividend, Interest & Premium Strategy Fund

January 31, 2020 (unaudited) (continued)

During the reporting period, the Russell 1000 Value Index, a measure of large-cap value style stocks, returned 14.88%; convertible securities, as reflected by the ICE BofA US Convertible Index, returned 18.37%.

Market Overview

Risk assets produced strong returns over the trailing twelve months ended January 31, 2020 and, in stark contrast to 2018, finished 2019 on firm footing. Despite notable set backs in May and August 2019, major indices hit a series of fresh highs as risk appetite was boosted by lower interest rates and optimism over a "phase one" trade deal between the US and China. Corporate earnings also beat expectations. Convertible bonds benefited from underlying stock price strength and produced a positive return over the trailing twelve months.

The US Federal Reserve (the "Fed") took markets by surprise in March, signaling that it would refrain from raising rates throughout the rest of 2019. As the trade war with China intensified over the summer, the Fed came under increasing pressure to cut rates, culminating in a 25 basis point cut in July, the first reduction since 2008, followed by two further cuts in September and October. In December, the US central bank signaled it would maintain its current policy throughout 2020, saying that the current stance of monetary policy was "appropriate" and that it would keep rates on hold until there was a

persistent increase in the rate of inflation or a deterioration in its global economic outlook.

At a sector level, technology stocks in the Russell 1000 Value Index led market gains, with semiconductor manufacturers in particular benefitting from hopes of improved trade relations between the US and China. Utilities and communication services stocks also performed well, as falling bond yields increased the attractiveness of these sectors' higher dividends, followed by strength from industrials names. In contrast, the energy sector slumped over 11% over the reporting period, while materials and consumer discretionary stocks generated more anemic gains against the market's robust gains.

Equity volatility rose in May and August, when markets trended downward, as well as in early October when equities recovered from a weak end to September. Volatility began to rise toward the end of the January, as global stocks retreated amid growing concerns over the potential impact of the new coronavirus outbreak on the global economy.

Portfolio Specifics

The Fund benefited from its exposure to equity holdings and convertible bonds.

In the equity sleeve, relative outperformance results versus the Russell 1000 Value Index were due to positive stock selection which was only modestly offset by slightly negative sector allocation. Selection was positive across the


8 Annual Report | January 31, 2020



Fund Insights

AllianzGI Diversified Income & Convertible Fund/
AllianzGI Equity & Convertible Income Fund/
AllianzGI NFJ Dividend, Interest & Premium Strategy Fund

January 31, 2020 (unaudited) (continued)

industrials and energy sectors, while holdings in the technology and utilities sectors that failed to keep pace with benchmark shares. Overweight positions in energy and underweight positions in utilities detracted over the reporting period. Conversely, overweight positions in the technology and industrials sectors boosted trailing twelve-month returns.

In the convertible sleeve, sectors that contributed positively to relative performance were technology, health care and financials. Energy, materials and consumer staples exposures finished lower and detracted from performance.

In the options sleeve, many option positions expired below strike, and the Fund was able to retain the set premiums.

Outlook

As we continue into 2020, equity market valuations appear to have positive news baked in, with the S&P 500 Index's forward price-to-earnings ratio ("P/E") multiple hovering over 19x, up from 15x at this time last year. Without the tailwind of continued multiple expansion, we believe stocks will have to rely on earnings growth to continue the decade-long bull market, so advances may be muted compared to 2019's gains.

The Fed has signaled that it will likely not change the federal funds rate this year, which is positive for risk assets as a whole, and

value equities more specifically. Consumer spending continues to support economic expansion, and with low unemployment, clean consumer balance sheets and nascent signs of wage growth, we believe that will continue to be the case for the balance of 2020. That said, there are several factors that could throw a curveball into forecasts, including a re-escalation of trade conflicts, the economic impact of COVID-19, and the presidential election. It is too early to determine the effects of a potential pandemic on the global economy; however, this year's presidential candidates offer a wider divergence of outcomes than we have seen in several decades. To that end, we anticipate market volatility may be elevated as likely economic and political outcomes shift throughout the year.

In the face of these uncertainties, slower returns and higher volatility, we believe the best strategy for investors is to focus on companies with stable earnings and clean balance sheets. Dividend payers at a reasonable price should also provide more predictable returns. As active managers, we believe this approach will become critical in the current environment for clients seeking strong absolute returns and moderated volatility over the long term.


January 31, 2020 | Annual Report 9



Performance & Statistics

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (unaudited)

Total Return(1)

 

Market Price

 

NAV

 
1 Year    

29.04

%

   

22.65

%

 

Commencement of Operations (5/27/15) to 1/31/20

   

10.05

%

   

10.19

%

 

Market Price/NAV Performance

Commencement of Operations (5/27/15) to 1/31/20

Market Price/NAV

Market Price

 

$

25.22

   

NAV(2)

 

$

24.81

   

Premium to NAV

   

1.65

%

 

Market Price Yield(3)

   

7.95

%

 

Leverage Ratio(4)

   

29.03

%

 

Investment Allocation

(as a % of total investments, before call options written)

(1) Past performance is no guarantee of future results. Total return is calculated by determining the percentage change in NAV or market price (as applicable) in the specified period. The calculation assumes that all dividends and distributions, if any, have been reinvested. Total return does not reflect broker commissions or sales charges in connection with the purchase or sale of Fund shares and includes the effect of any expense reductions, if any. Total return for a period of more than one year represents the average annual total return.

Performance at market price will differ from results at NAV. Although market price returns typically reflect investment results over time, during shorter periods returns at market price can also be influenced by factors such as changing views about the Fund, market conditions, supply and demand for the Fund's shares, or changes in the Fund's dividends.

An investment in the Fund involves risk, including the loss of principal. Total return, market price, market price yield and NAV will fluctuate with changes in market conditions. This data is provided for information purposes only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, shares of closed-end funds are traded in the open market through a stock exchange. NAV is equal to total assets attributable to common shareholders less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily.

(2) The NAV disclosed in the Fund's financial statements may differ due to accounting principles generally accepted in the United States of America.

(3) Market Price Yield is determined by dividing the annualized current (declared February 1, 2020) monthly dividend per common share (comprised of net investment income and net capital gains, if any) by the market price per common share at January 31, 2020.

(4) Represents Mandatory Redeemable Preferred Shares, Senior Secured Notes and amounts drawn under the short-term margin loan facility ("Leverage") outstanding, as a percentage of total managed assets. Total managed assets refer to total assets (including assets attributable to Leverage) minus liabilities (other than liabilities representing Leverage).


10 Annual Report | January 31, 2020



Performance & Statistics

AllianzGI Equity & Convertible Income Fund

January 31, 2020 (unaudited)

Total Return(1)

 

Market Price

 

NAV

 
1 Year    

20.83

%

   

17.85

%

 
5 Year    

11.01

%

   

9.58

%

 
10 Year    

11.49

%

   

10.37

%

 

Commencement of Operations (2/27/07) to 1/31/20

   

7.34

%

   

7.58

%

 

Market Price/NAV Performance

Commencement of Operations (2/27/07) to 1/31/20

Market Price/NAV

Market Price

 

$

23.14

   

NAV(2)

 

$

24.89

   

Discount to NAV

   

-7.03

%

 

Market Price Yield(3)

   

6.57

%

 

Investment Allocation

(as a % of total investments, before call options written)

(1) Past performance is no guarantee of future results. Total return is calculated by determining the percentage change in NAV or market price (as applicable) in the specified period. The calculation assumes that all dividends and distributions, if any, have been reinvested. Total return does not reflect broker commissions or sales charges in connection with the purchase or sale of Fund shares and includes the effect of any expense reductions, if any. Total return for a period of more than one year represents the average annual total return.

Performance at market price will differ from results at NAV. Although market price returns typically reflect investment results over time, during shorter periods returns at market price can also be influenced by factors such as changing views about the Fund, market conditions, supply and demand for the Fund's shares, or changes in the Fund's dividends.

An investment in the Fund involves risk, including the loss of principal. Total return, market price, market price yield and NAV will fluctuate with changes in market conditions. This data is provided for information purposes only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, shares of closed-end funds are traded in the open market through a stock exchange. NAV is equal to total assets less total liabilities divided by the number of shares outstanding. Holdings are subject to change daily.

(2) The NAV disclosed in the Fund's financial statements may differ due to accounting principles generally accepted in the United States of America.

(3) Market Price Yield is determined by dividing the annualized current quarterly dividend per share (comprised of net investment income and net capital gains, if any) by the market price per share at January 31, 2020.


January 31, 2020 | Annual Report 11



Performance & Statistics

AllianzGI NFJ Dividend, Interest & Premium Strategy Fund

January 31, 2020 (unaudited)

Total Return(1)

 

Market Price

 

NAV

 
1 Year    

18.17

%

   

13.13

%

 
5 Year    

5.04

%

   

4.58

%

 
10 Year    

8.35

%

   

6.71

%

 

Commencement of Operations (2/28/05) to 1/31/20

   

4.53

%

   

4.85

%

 

Market Price/NAV Performance

Commencement of Operations (2/28/05) to 1/31/20

Market Price/NAV

Market Price

 

$

13.09

   

NAV(2)

 

$

14.34

   

Discount to NAV

   

-8.72

%

 

Market Price Yield(3)

   

6.88

%

 

Investment Allocation

(as a % of total investments, before call options written)

(1) Past performance is no guarantee of future results. Total return is calculated by determining the percentage change in NAV or market price (as applicable) in the specified period. The calculation assumes that all dividends and distributions, if any, have been reinvested. Total return does not reflect broker commissions or sales charges in connection with the purchase or sale of Fund shares and includes the effect of any expense reductions, if any. Total return for a period of more than one year represents the average annual total return.

Performance at market price will differ from results at NAV. Although market price returns typically reflect investment results over time, during shorter periods returns at market price can also be influenced by factors such as changing views about the Fund, market conditions, supply and demand for the Fund's shares, or changes in the Fund's dividends.

An investment in the Fund involves risk, including the loss of principal. Total return, market price, market price yield and NAV will fluctuate with changes in market conditions. This data is provided for information purposes only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, shares of closed-end funds are traded in the open market through a stock exchange. NAV is equal to total assets less total liabilities divided by the number of shares outstanding. Holdings are subject to change daily.

(2) The NAV disclosed in the Fund's financial statements may differ due to accounting principles generally accepted in the United States of America.

(3) Market Price Yield is determined by dividing the annualized current quarterly dividend per share (comprised of net investment income and net capital gains, if any) by the market price per share at January 31, 2020.


12 Annual Report | January 31, 2020



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020

Principal
Amount
(000s)
 

 

Value

 

Convertible Bonds & Notes – 62.5%

     
       

Aerospace & Defense – 0.4%

     

$

520

   

Aerojet Rocketdyne Holdings, Inc., 2.25%, 12/15/23 (g)

 

$

1,059,519

   
   

Auto Components – 0.7%

 
 

1,760

   

Meritor, Inc., 3.25%, 10/15/37 (g)

   

1,829,300

   
   

Auto Manufacturers – 1.8%

 
 

2,475

   

Tesla, Inc., 1.25%, 3/1/21

   

4,555,193

   
   

Banks – 0.6%

 
 

395

   

BofA Finance LLC, 0.125%, 9/1/22

   

410,800

   
 

995

   

JPMorgan Chase Bank N.A., 0.125%, 1/1/23 (a)(b)

   

1,055,944

   
             

1,466,744

   
   

Biotechnology – 4.0%

 
 

250

   

Apellis Pharmaceuticals, Inc., 3.50%, 9/15/26 (a)(b)(g)

   

336,313

   
 

2,600

   

Exact Sciences Corp., 0.375%, 3/15/27 (g)

   

2,938,000

   
 

915

   

Halozyme Therapeutics, Inc., 1.25%, 12/1/24 (a)(b)(g)

   

959,386

   
       

Illumina, Inc. (g),

     
 

600

   

zero coupon, 8/15/23

   

633,000

   
 

305

   

0.50%, 6/15/21

   

380,869

   
 

1,505

   

Insmed, Inc., 1.75%, 1/15/25 (g)

   

1,424,258

   
 

885

   

Karyopharm Therapeutics Inc., 3.00%, 10/15/25

   

1,149,440

   
       

PTC Therapeutics, Inc.,

     
 

870

   

1.50%, 9/15/26 (a)(b)

   

1,056,607

   
 

1,080

   

3.00%, 8/15/22 (g)

   

1,284,572

   
             

10,162,445

   
   

Commercial Services – 2.6%

 
 

1,670

   

Chegg, Inc., 0.125%, 3/15/25 (a)(b)(g)

   

1,787,232

   
 

1,370

   

Euronet Worldwide, Inc., 0.75%, 3/15/49 (a)(b)(g)

   

1,638,993

   
 

980

   

FTI Consulting, Inc., 2.00%, 8/15/23 (g)

   

1,297,158

   
 

1,605

   

Square, Inc., 0.50%, 5/15/23 (g)

   

1,943,409

   
             

6,666,792

   
   

Computers – 2.1%

 
 

1,515

   

CyberArk Software Ltd., zero coupon, 11/15/24 (a)(b)(g)

   

1,699,701

   
 

2,450

   

Lumentum Holdings, Inc., 0.50%, 12/15/26 (a)(b)

   

2,597,336

   
 

775

   

Rapid7, Inc., 1.25%, 8/1/23 (g)

   

1,201,734

   
             

5,498,771

   
   

Diversified Financial Services – 0.2%

 
 

380

   

LendingTree, Inc., 0.625%, 6/1/22

   

607,979

   
   

Electronics – 0.2%

 
 

380

   

TTM Technologies, Inc., 1.75%, 12/15/20

   

580,582

   
   

Engineering & Construction – 0.5%

 
 

1,100

   

KBR, Inc., 2.50%, 11/1/23 (a)(b)(g)

   

1,347,871

   
   

Entertainment – 0.8%

 
 

1,695

   

Live Nation Entertainment, Inc., 2.50%, 3/15/23 (g)

   

2,020,019

   


January 31, 2020 | Annual Report 13



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Principal
Amount
(000s)
 

 

Value

 
   

Equity Real Estate Investment Trusts (REITs) – 0.7%

 

$

1,645

   

Blackstone Mortgage Trust, Inc., 4.375%, 5/5/22 (g)

 

$

1,774,971

   
   

Healthcare-Products – 3.7%

 
 

1,255

   

CONMED Corp., 2.625%, 2/1/24 (a)(b)(g)

   

1,615,812

   
 

2,480

   

Insulet Corp., 0.375%, 9/1/26 (a)(b)(g)

   

2,792,782

   
 

1,090

   

Nevro Corp., 1.75%, 6/1/21

   

1,619,727

   
 

985

   

NuVasive, Inc., 2.25%, 3/15/21

   

1,298,085

   
 

2,030

   

Repligen Corp., 0.375%, 7/15/24 (g)

   

2,256,394

   
             

9,582,800

   
   

Healthcare-Services – 1.3%

 
 

285

   

Anthem, Inc., 2.75%, 10/15/42 (g)

   

1,053,075

   
 

1,150

   

Teladoc Health, Inc., 1.375%, 5/15/25 (g)

   

2,336,123

   
             

3,389,198

   
   

Home Builders – 0.8%

 
 

1,780

   

Winnebago Industries, Inc., 1.50%, 4/1/25 (a)(b)

   

1,970,994

   
   

Insurance – 0.5%

 
 

1,040

   

AXA S.A., 7.25%, 5/15/21 (a)(b)(g)

   

1,167,400

   
   

Internet – 7.7%

 
 

600

   

Booking Holdings, Inc., 0.35%, 6/15/20 (g)

   

835,616

   
 

2,010

   

Etsy, Inc., 0.125%, 10/1/26 (a)(b)(g)

   

1,887,706

   
 

1,885

   

IAC Financeco 2, Inc., 0.875%, 6/15/26 (a)(b)(g)

   

2,083,121

   
 

2,455

   

Okta, Inc., 0.125%, 9/1/25 (a)(b)

   

2,491,211

   
 

1,670

   

Palo Alto Networks, Inc., 0.75%, 7/1/23 (g)

   

1,859,585

   
 

1,935

   

Proofpoint, Inc., 0.25%, 8/15/24 (a)(b)(g)

   

2,071,023

   
 

1,775

   

Q2 Holdings, Inc., 0.75%, 6/1/26 (a)(b)

   

2,137,702

   
 

2,390

   

Snap, Inc., 0.75%, 8/1/26 (a)(b)(g)

   

2,666,211

   
 

1,155

   

Wix.com Ltd., zero coupon, 7/1/23 (g)

   

1,431,976

   
 

325

   

Zendesk, Inc., 0.25%, 3/15/23

   

484,391

   
 

1,485

   

Zillow Group, Inc., 1.375%, 9/1/26 (a)(b)

   

1,847,897

   
             

19,796,439

   
   

Iron/Steel – 0.4%

 
 

870

   

Cleveland-Cliffs, Inc., 1.50%, 1/15/25 (g)

   

930,684

   
   

Media – 3.9%

 
       

DISH Network Corp. (g),

     
 

1,135

   

2.375%, 3/15/24

   

1,046,343

   
 

2,920

   

3.375%, 8/15/26

   

2,841,668

   
       

Liberty Media Corp.,

     
 

1,515

   

1.00%, 1/30/23 (g)

   

2,037,364

   
 

1,240

   

1.375%, 10/15/23 (g)

   

1,674,150

   
 

1,975

   

2.75%, 12/1/49 (a)(b)

   

2,070,410

   
 

165

   

World Wrestling Entertainment, Inc., 3.375%, 12/15/23 (g)

   

342,701

   
             

10,012,636

   
   

Mining – 0.5%

 
 

915

   

SSR Mining, Inc., 2.50%, 4/1/39 (a)(b)(g)

   

1,168,790

   


14 Annual Report | January 31, 2020



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Principal
Amount
(000s)
 

 

Value

 
   

Oil, Gas & Consumable Fuels – 1.6%

 

$

840

   

Helix Energy Solutions Group, Inc., 4.125%, 9/15/23 (g)

 

$

1,002,574

   
 

2,620

   

Nabors Industries, Inc., 0.75%, 1/15/24 (g)

   

1,820,524

   
 

1,385

   

Transocean, Inc., 0.50%, 1/30/23 (g)

   

1,169,664

   
             

3,992,762

   
   

Pharmaceuticals – 4.2%

 
 

1,420

   

DexCom, Inc., 0.75%, 12/1/23 (g)

   

2,256,912

   
 

965

   

Flexion Therapeutics, Inc., 3.375%, 5/1/24

   

978,317

   
 

2,100

   

Horizon Pharma Investment Ltd., 2.50%, 3/15/22 (g)

   

2,685,375

   
 

1,305

   

Neurocrine Biosciences, Inc., 2.25%, 5/15/24 (g)

   

1,893,896

   
 

1,200

   

Sarepta Therapeutics, Inc., 1.50%, 11/15/24 (g)

   

2,150,400

   
 

960

   

Teva Pharmaceutical Finance Co. LLC, 0.25%, 2/1/26, Ser. C (g)

   

922,135

   
             

10,887,035

   
   

Pipelines – 0.4%

 
 

1,475

   

Cheniere Energy, Inc., 4.25%, 3/15/45 (g)

   

1,158,532

   
   

Retail – 1.3%

 
 

1,140

   

Guess?, Inc., 2.00%, 4/15/24 (a)(b)

   

1,233,529

   
       

RH,

     
 

475

   

zero coupon, 6/15/23

   

593,465

   
 

1,350

   

zero coupon, 9/15/24 (a)(b)

   

1,574,493

   
             

3,401,487

   
   

Semiconductors – 6.4%

 
 

260

   

Advanced Micro Devices, Inc., 2.125%, 9/1/26

   

1,540,259

   
 

1,110

   

Inphi Corp., 0.75%, 9/1/21 (g)

   

1,609,768

   
 

3,085

   

Microchip Technology, Inc., 1.625%, 2/15/27 (g)

   

4,157,513

   
 

370

   

Micron Technology, Inc., 3.125%, 5/1/32, Ser. D (g)

   

1,971,782

   
 

255

   

Novellus Systems, Inc., 2.625%, 5/15/41 (g)

   

2,372,986

   
 

2,005

   

ON Semiconductor Corp., 1.625%, 10/15/23 (g)

   

2,681,392

   
 

715

   

Silicon Laboratories, Inc., 1.375%, 3/1/22 (g)

   

862,469

   
 

525

   

Teradyne, Inc., 1.25%, 12/15/23 (g)

   

1,120,200

   
             

16,316,369

   
   

Software – 13.4%

 
 

2,780

   

Akamai Technologies, Inc., 0.125%, 5/1/25 (g)

   

3,217,513

   
       

Alteryx, Inc. (a)(b)(g),

     
 

975

   

0.50%, 8/1/24

   

1,046,250

   
 

1,395

   

1.00%, 8/1/26

   

1,504,721

   
 

1,400

   

Atlassian, Inc., 0.625%, 5/1/23 (g)

   

2,600,943

   
 

1,790

   

Coupa Software, Inc., 0.125%, 6/15/25 (a)(b)(g)

   

2,253,162

   
 

1,435

   

DocuSign, Inc., 0.50%, 9/15/23 (g)

   

1,850,149

   
 

1,705

   

Envestnet, Inc., 1.75%, 6/1/23 (g)

   

2,201,765

   
 

1,280

   

Everbridge, Inc., 0.125%, 12/15/24 (a)(b)

   

1,367,148

   
 

705

   

Five9, Inc., 0.125%, 5/1/23 (g)

   

1,283,459

   
 

2,005

   

j2 Global, Inc., 1.75%, 11/1/26 (a)(b)(g)

   

2,070,163

   
 

1,195

   

LivePerson, Inc., 0.75%, 3/1/24 (a)(b)(g)

   

1,525,373

   
 

2,335

   

MongoDB, Inc., 0.25%, 1/15/26 (a)(b)

   

2,528,927

   
 

815

   

Nutanix, Inc., zero coupon, 1/15/23

   

831,559

   


January 31, 2020 | Annual Report 15



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Principal
Amount
(000s)
   
 
 
 

Value

 
    Software (continued)  

$

785

   

RingCentral, Inc., zero coupon, 3/15/23 (g)

 

$

1,983,269

   
 

1,050

   

Sea Ltd., 1.00%, 12/1/24 (a)(b)

   

1,220,468

   
 

855

   

ServiceNow, Inc., zero coupon, 6/1/22 (g)

   

2,141,241

   
 

2,365

   

Splunk, Inc., 1.125%, 9/15/25

   

2,984,334

   
 

1,865

   

Zynga, Inc., 0.25%, 6/1/24 (a)(b)(g)

   

1,911,929

   
             

34,522,373

   
   

Telecommunications – 1.6%

 
 

1,200

   

GCI Liberty, Inc., 1.75%, 9/30/46 (a)(b)(g)

   

1,742,675

   
 

1,895

   

Viavi Solutions, Inc., 1.00%, 3/1/24 (g)

   

2,354,551

   
             

4,097,226

   
   

Transportation – 0.2%

 
 

520

   

Air Transport Services Group, Inc., 1.125%, 10/15/24 (g)

   

496,161

   
 

Total Convertible Bonds & Notes (cost-$152,110,215)

         

160,461,072

   

Shares

         

Common Stock – 33.1%

     
   

Aerospace & Defense – 0.4%

 
 

3,400

   

Boeing Co.

   

1,082,118

   
   

Automobiles – 0.2%

 
 

72,600

   

Ford Motor Co. (g)

   

640,332

   
   

Banks – 0.4%

 
 

4,911

   

CCF Holdings LLC, Class A (cost-$0; purchased 12/18/18) (d)(f)(h)(i)

   

 
 

5,357

   

CCF Holdings LLC, Class B (cost-$0; purchased 12/12/18) (d)(f)(h)(i)

   

1

   
 

7,600

   

JPMorgan Chase & Co. (g)

   

1,005,936

   
             

1,005,937

   
   

Beverages – 0.5%

 
 

9,000

   

PepsiCo, Inc.

   

1,278,180

   
   

Biotechnology – 1.5%

 
 

13,200

   

AbbVie, Inc.

   

1,069,464

   
 

1,900

   

Biogen, Inc. (i)

   

510,815

   
 

15,200

   

Gilead Sciences, Inc. (g)

   

960,640

   
 

5,300

   

Vertex Pharmaceuticals, Inc. (i)

   

1,203,365

   
             

3,744,284

   
   

Building Products – 0.3%

 
 

17,452

   

Johnson Controls International PLC

   

688,481

   
   

Capital Markets – 0.6%

 
 

12,300

   

Charles Schwab Corp.

   

560,265

   
 

3,700

   

S&P Global, Inc.

   

1,086,801

   
             

1,647,066

   
   

Chemicals – 0.3%

 
 

16,600

   

Chemours Co.

   

230,242

   
 

3,800

   

Corteva, Inc. (i)

   

109,896

   


16 Annual Report | January 31, 2020



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Shares

   
 
 
 

Value

 
    Chemicals (continued)  
 

3,800

   

Dow, Inc. (i)

 

$

175,066

   
 

3,800

   

DuPont de Nemours, Inc.

   

194,484

   
             

709,688

   
   

Communications Equipment – 0.5%

 
 

25,100

   

Cisco Systems, Inc.

   

1,153,847

   
   

Diversified Telecommunication Services – 0.0%

 
 

32,499

   

Frontier Communications Corp. (i)

   

17,930

   
   

Energy Equipment & Services – 0.2%

 
 

9,200

   

National Oilwell Varco, Inc.

   

189,612

   
 

12,800

   

Schlumberger Ltd. (g)

   

428,928

   
             

618,540

   
   

Entertainment – 0.9%

 
 

4,600

   

Netflix, Inc. (g)(i)

   

1,587,414

   
 

4,700

   

Walt Disney Co. (g)

   

650,057

   
             

2,237,471

   
   

Equity Real Estate Investment Trusts (REITs) – 0.3%

 
 

4,300

   

Crown Castle International Corp.

   

644,312

   
   

Food & Staples Retailing – 1.0%

 
 

4,100

   

Costco Wholesale Corp.

   

1,252,632

   
 

32,900

   

Kroger Co. (g)

   

883,694

   
 

7,900

   

Walgreens Boots Alliance, Inc.

   

401,715

   
             

2,538,041

   
   

Healthcare Equipment & Supplies – 1.3%

 
 

4,400

   

Align Technology, Inc. (i)

   

1,131,240

   
 

19,500

   

Boston Scientific Corp. (i)

   

816,465

   
 

2,300

   

Intuitive Surgical, Inc. (i)

   

1,287,494

   
             

3,235,199

   
   

Healthcare Providers & Services – 1.0%

 
 

5,100

   

McKesson Corp.

   

727,311

   
 

6,700

   

UnitedHealth Group, Inc.

   

1,825,415

   
             

2,552,726

   
   

Hotels, Restaurants & Leisure – 1.1%

 
 

5,900

   

McDonald's Corp. (g)

   

1,262,423

   
 

11,500

   

Starbucks Corp. (g)

   

975,545

   
 

4,200

   

Wynn Resorts Ltd.

   

529,872

   
             

2,767,840

   
   

Household Durables – 0.3%

 
 

15,000

   

DR Horton, Inc. (g)

   

888,000

   
   

Industrial Conglomerates – 0.7%

 
 

3,500

   

3M Co.

   

555,310

   
 

7,300

   

Honeywell International, Inc.

   

1,264,506

   
             

1,819,816

   


January 31, 2020 | Annual Report 17



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Shares

 

 

Value

 
   

Insurance – 0.2%

 
 

5,900

   

Progressive Corp. (g)

 

$

476,071

   
   

Interactive Media & Services – 2.1%

 
 

2,000

   

Alphabet, Inc., Class A (i)

   

2,865,560

   
 

12,900

   

Facebook, Inc., Class A (i)

   

2,604,639

   
             

5,470,199

   
   

Internet & Direct Marketing Retail – 1.4%

 
 

3,100

   

Alibaba Group Holding Ltd., ADR (g)(i)

   

640,429

   
 

1,500

   

Amazon.com, Inc. (i)

   

3,013,080

   
             

3,653,509

   
   

IT Services – 3.1%

 
 

12,000

   

Fiserv, Inc. (i)

   

1,423,320

   
 

6,000

   

International Business Machines Corp. (g)

   

862,380

   
 

5,400

   

Mastercard, Inc., Class A (g)

   

1,706,076

   
 

9,600

   

PayPal Holdings, Inc. (g)(i)

   

1,093,344

   
 

14,200

   

Visa, Inc., Class A (g)

   

2,825,374

   
             

7,910,494

   
   

Life Sciences Tools & Services – 0.5%

 
 

4,100

   

Thermo Fisher Scientific, Inc.

   

1,284,079

   
   

Machinery – 0.8%

 
 

9,700

   

Caterpillar, Inc.

   

1,274,095

   
 

5,000

   

Deere & Co. (g)

   

792,900

   
             

2,066,995

   
   

Media – 0.2%

 
 

14,800

   

Comcast Corp., Class A (g)

   

639,212

   
 

13,574

   

LiveStyle, Inc. (d)(f)(i)(j)

   

1

   
             

639,213

   
   

Multi-Line Retail – 0.6%

 
 

6,300

   

Dollar General Corp.

   

966,483

   
 

5,600

   

Target Corp.

   

620,144

   
             

1,586,627

   
   

Oil, Gas & Consumable Fuels – 0.6%

 
 

14,900

   

Occidental Petroleum Corp.

   

591,828

   
 

60,184

   

Southwestern Energy Co. (i)

   

94,489

   
 

9,500

   

Valero Energy Corp. (g)

   

800,945

   
             

1,487,262

   
   

Pharmaceuticals – 2.1%

 
 

10,000

   

Allergan PLC

   

1,866,400

   
 

19,900

   

Bristol-Myers Squibb Co.

   

1,252,705

   
 

12,300

   

Merck & Co., Inc.

   

1,050,912

   
 

43,950

   

Teva Pharmaceutical Industries Ltd., ADR (i)

   

457,080

   
 

6,400

   

Zoetis, Inc.

   

858,944

   
             

5,486,041

   
   

Road & Rail – 0.3%

 
 

4,800

   

Union Pacific Corp. (g)

   

861,216

   


18 Annual Report | January 31, 2020



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Shares

 

 

Value
 
   

Semiconductors & Semiconductor Equipment – 3.4%

 
 

23,000

   

Advanced Micro Devices, Inc. (g)(i)

 

$

1,081,000

   
 

3,100

   

Broadcom, Inc. (g)

   

945,996

   
 

4,400

   

Lam Research Corp. (g)

   

1,312,124

   
 

35,500

   

Marvell Technology Group Ltd.

   

853,420

   
 

25,300

   

Micron Technology, Inc. (i)

   

1,343,177

   
 

6,400

   

NVIDIA Corp.

   

1,513,152

   
 

9,700

   

QUALCOMM, Inc.

   

827,507

   
 

6,700

   

Texas Instruments, Inc. (g)

   

808,355

   
             

8,684,731

   
   

Software – 3.7%

 
 

3,000

   

Adobe, Inc. (g)(i)

   

1,053,420

   
 

3,000

   

Atlassian Corp. PLC, Class A (i)

   

441,000

   
 

3,200

   

Intuit, Inc. (g)

   

897,216

   
 

17,800

   

Microsoft Corp.

   

3,030,094

   
 

9,500

   

Salesforce.com, Inc. (g)(i)

   

1,731,945

   
 

3,500

   

ServiceNow, Inc. (g)(i)

   

1,183,805

   
 

5,900

   

Workday, Inc., Class A (i)

   

1,089,317

   
             

9,426,797

   
   

Specialty Retail – 0.6%

 
 

7,000

   

Home Depot, Inc.

   

1,596,700

   
   

Technology Hardware, Storage & Peripherals – 1.5%

 
 

10,100

   

Apple, Inc.

   

3,126,051

   
 

12,700

   

NetApp, Inc.

   

678,180

   
             

3,804,231

   
   

Textiles, Apparel & Luxury Goods – 0.5%

 
 

12,800

   

NIKE, Inc., Class B

   

1,232,640

   
 

Total Common Stock (cost-$95,802,155)

         

84,936,613

   
Principal
Amount
(000s)
 

 
 

Corporate Bonds & Notes – 24.9%

     
   

Advertising – 0.1%

 

$

320

   

National CineMedia LLC, 5.875%, 4/15/28 (a)(b)

   

335,089

   
   

Aerospace & Defense – 0.6%

 
       

TransDigm, Inc.,

     
 

680

   

5.50%, 11/15/27 (a)(b)

   

685,440

   
 

715

   

6.50%, 5/15/25 (g)

   

745,091

   
 

200

   

Triumph Group, Inc., 6.25%, 9/15/24 (a)(b)

   

207,292

   
             

1,637,823

   


January 31, 2020 | Annual Report 19



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Principal
Amount
(000s)
 

 

Value
 
   

Auto Components – 0.6%

 

$

375

   

Adient U.S. LLC, 7.00%, 5/15/26 (a)(b)(g)

 

$

410,390

   
 

465

   

Goodyear Tire & Rubber Co., 5.00%, 5/31/26 (g)

   

483,902

   
 

645

   

Panther BF Aggregator 2 L.P., 8.50%, 5/15/27 (a)(b)(g)

   

694,569

   
             

1,588,861

   
   

Auto Manufacturers – 0.6%

 
 

510

   

Navistar International Corp., 6.625%, 11/1/25 (a)(b)(g)

   

535,926

   
 

895

   

Tesla, Inc., 5.30%, 8/15/25 (a)(b)(g)

   

906,196

   
             

1,442,122

   
   

Chemicals – 0.3%

 
 

875

   

Tronox, Inc., 6.50%, 4/15/26 (a)(b)(g)

   

872,834

   
   

Commercial Services – 1.6%

 
 

350

   

Cenveo Corp., 6.00%, 5/15/24 (cost-$409,386; purchased 12/14/15) (a)(b)(c)(d)(f)(h)

   

6,416

   
 

475

   

Herc Holdings, Inc., 5.50%, 7/15/27 (a)(b)(g)

   

497,432

   
       

Hertz Corp. (a)(b),

     
 

385

   

6.00%, 1/15/28

   

389,081

   
 

350

   

7.125%, 8/1/26

   

372,094

   
 

475

   

Laureate Education, Inc., 8.25%, 5/1/25 (a)(b)(g)

   

510,026

   
 

915

   

RR Donnelley & Sons Co., 6.00%, 4/1/24 (g)

   

935,967

   
       

United Rentals North America, Inc. (g),

     
 

310

   

5.25%, 1/15/30

   

333,358

   
 

1,000

   

5.50%, 7/15/25

   

1,036,785

   
             

4,081,159

   
   

Computers – 0.2%

 
 

520

   

Dell International LLC, 7.125%, 6/15/24 (a)(b)(g)

   

547,300

   
   

Containers & Packaging – 0.4%

 
 

455

   

Berry Global, Inc., 5.625%, 7/15/27 (a)(b)(g)

   

484,018

   
 

380

   

Trivium Packaging Finance BV, 8.50%, 8/15/27 (a)(b)(g)

   

418,703

   
             

902,721

   
   

Distribution/Wholesale – 0.2%

 
 

495

   

H&E Equipment Services, Inc., 5.625%, 9/1/25 (g)

   

517,480

   
   

Diversified Financial Services – 2.2%

 
 

1,779

   

CCF Holdings LLC, PIK 10.75%, 10.75%, 12/15/23 (a)(b)(d)(f)

   

774,754

   
 

1,500

    Community Choice Financial Issuer LLC, 9.00%, 6/15/23
(cost-$1,500,000; purchased 9/6/18) (a)(b)(g)(h)
   

1,503,750

   
       

Navient Corp.,

     
 

510

   

5.00%, 3/15/27

   

509,044

   
 

995

   

6.75%, 6/15/26 (g)

   

1,082,659

   
       

Springleaf Finance Corp. (g),

     
 

460

   

6.625%, 1/15/28

   

518,351

   
 

1,000

   

8.25%, 10/1/23

   

1,165,415

   
             

5,553,973

   
   

Electric Utilities – 0.3%

 
 

1,000

   

Talen Energy Supply LLC, 6.50%, 6/1/25 (g)

   

782,915

   


20 Annual Report | January 31, 2020



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Principal
Amount
(000s)
 

 

Value
 
   

Electronic Equipment, Instruments & Components – 0.3%

 

$

750

   

Energizer Holdings, Inc., 7.75%, 1/15/27 (a)(b)(g)

 

$

828,300

   
   

Engineering & Construction – 0.4%

 
 

500

   

AECOM, 5.875%, 10/15/24 (g)

   

555,292

   
 

435

   

Tutor Perini Corp., 6.875%, 5/1/25 (a)(b)(g)

   

409,988

   
             

965,280

   
   

Entertainment – 1.0%

 
 

885

   

AMC Entertainment Holdings, Inc., 6.125%, 5/15/27 (g)

   

754,485

   
       

Cedar Fair L.P.,

     
 

250

   

5.375%, 6/1/24 (g)

   

256,901

   
 

90

   

5.375%, 4/15/27

   

95,528

   
 

1,000

   

Scientific Games International, Inc., 5.00%, 10/15/25 (a)(b)(g)

   

1,030,960

   
 

305

   

Stars Group Holdings BV, 7.00%, 7/15/26 (a)(b)

   

331,870

   
             

2,469,744

   
   

Food & Beverage – 0.3%

 
 

310

   

Albertsons Cos., Inc., 7.50%, 3/15/26 (a)(b)(g)

   

343,906

   
 

495

   

Post Holdings, Inc., 5.75%, 3/1/27 (a)(b)(g)

   

523,375

   
             

867,281

   
   

Food Service – 0.2%

 
 

390

   

Aramark Services, Inc., 5.00%, 2/1/28 (a)(b)(g)

   

409,247

   
   

Healthcare-Products – 0.4%

 
 

590

   

Avantor, Inc., 9.00%, 10/1/25 (a)(b)(g)

   

653,298

   
 

260

   

Hill-Rom Holdings, Inc., 5.00%, 2/15/25 (a)(b)(g)

   

269,533

   
             

922,831

   
   

Healthcare-Services – 1.3%

 
 

1,000

   

Community Health Systems, Inc., 6.875%, 2/1/22 (g)

   

912,500

   
 

420

   

DaVita, Inc., 5.125%, 7/15/24 (g)

   

430,326

   
 

500

   

HCA, Inc., 7.50%, 2/15/22 (g)

   

549,735

   
 

620

   

Select Medical Corp., 6.25%, 8/15/26 (a)(b)(g)

   

670,012

   
       

Tenet Healthcare Corp.,

     
 

490

   

6.25%, 2/1/27 (a)(b)(g)

   

518,837

   
 

245

   

8.125%, 4/1/22

   

268,108

   
             

3,349,518

   
   

Internet – 0.9%

 
 

460

   

Go Daddy Operating Co. LLC, 5.25%, 12/1/27 (a)(b)(g)

   

483,276

   
 

640

   

Match Group, Inc., 5.00%, 12/15/27 (a)(b)

   

673,822

   
 

505

   

Netflix, Inc., 5.375%, 11/15/29 (a)(b)(g)

   

550,597

   
 

305

   

NortonLifeLock, Inc., 5.00%, 4/15/25 (a)(b)(g)

   

311,579

   
 

350

   

Zayo Group LLC, 5.75%, 1/15/27 (a)(b)

   

358,399

   
             

2,377,673

   
   

Lodging – 0.3%

 
 

355

   

MGM Resorts International, 5.50%, 4/15/27 (g)

   

391,156

   
 

325

   

Wynn Las Vegas LLC, 5.50%, 3/1/25 (a)(b)(g)

   

339,622

   
             

730,778

   


January 31, 2020 | Annual Report 21



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Principal
Amount
(000s)
 

 

Value
 
   

Machinery-Construction & Mining – 0.1%

 

$

330

   

Terex Corp., 5.625%, 2/1/25 (a)(b)(g)

 

$

340,313

   
   

Media – 2.8%

 
       

CCO Holdings LLC (a)(b)(g),

     
 

470

   

5.125%, 5/1/27

   

492,020

   
 

300

   

5.50%, 5/1/26

   

314,197

   
 

417

   

Clear Channel Worldwide Holdings, Inc., 9.25%, 2/15/24 (a)(b)(g)

   

454,878

   
       

CSC Holdings LLC (a)(b)(g),

     
 

460

   

7.50%, 4/1/28

   

524,410

   
 

750

   

7.75%, 7/15/25

   

792,195

   
       

Diamond Sports Group LLC (a)(b)(g),

     
 

170

   

5.375%, 8/15/26

   

169,656

   
 

985

   

6.625%, 8/15/27

   

922,797

   
       

DISH DBS Corp. (g),

     
 

165

   

5.875%, 7/15/22

   

173,544

   
 

1,010

   

5.875%, 11/15/24

   

1,024,155

   
 

1,000

   

Gray Television, Inc., 5.875%, 7/15/26 (a)(b)(g)

   

1,048,100

   
 

330

   

Meredith Corp., 6.875%, 2/1/26

   

340,544

   
 

625

   

Nexstar Broadcasting, Inc., 5.625%, 7/15/27 (a)(b)(g)

   

659,781

   
 

310

   

Virgin Media Secured Finance PLC, 5.50%, 5/15/29 (a)(b)(g)

   

326,849

   
             

7,243,126

   
   

Metal Fabricate/Hardware – 0.2%

 
 

470

   

Park-Ohio Industries, Inc., 6.625%, 4/15/27 (g)

   

478,449

   
   

Mining – 0.9%

 
 

430

   

Alcoa Nederland Holding BV, 6.75%, 9/30/24 (a)(b)(g)

   

452,614

   
 

695

   

Constellium SE, 6.625%, 3/1/25 (a)(b)(g)

   

718,449

   
 

475

   

Freeport-McMoRan, Inc., 5.25%, 9/1/29

   

504,379

   
 

170

   

Hudbay Minerals, Inc., 7.625%, 1/15/25 (a)(b)(g)

   

173,329

   
 

500

   

Joseph T. Ryerson & Son, Inc., 11.00%, 5/15/22 (a)(b)(g)

   

526,247

   
             

2,375,018

   
   

Miscellaneous Manufacturing – 0.1%

 
 

295

   

Koppers, Inc., 6.00%, 2/15/25 (a)(b)(g)

   

302,962

   
   

Oil, Gas & Consumable Fuels – 1.4%

 
 

250

   

Callon Petroleum Co., 6.125%, 10/1/24 (g)

   

239,688

   
 

1,000

   

Carrizo Oil & Gas, Inc., 6.25%, 4/15/23 (g)

   

1,004,990

   
 

1,040

   

Chesapeake Energy Corp., 8.00%, 3/15/26 (a)(b)(g)

   

532,867

   
 

85

   

Oasis Petroleum, Inc., 6.875%, 3/15/22 (g)

   

81,813

   
 

340

   

PBF Holding Co. LLC, 6.00%, 2/15/28 (a)(b)

   

348,534

   
       

Sunoco L.P. (g),

     
 

300

   

5.50%, 2/15/26

   

309,482

   
 

170

   

5.875%, 3/15/28

   

181,339

   
 

495

   

Transocean, Inc., 7.50%, 1/15/26 (a)(b)(g)

   

467,687

   
 

465

   

USA Compression Partners L.P., 6.875%, 9/1/27

   

485,576

   
             

3,651,976

   


22 Annual Report | January 31, 2020



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Principal
Amount
(000s)
 

 

Value
 
   

Paper & Forest Products – 0.3%

 

$

615

   

Mercer International, Inc., 7.375%, 1/15/25 (g)

 

$

652,414

   
   

Pharmaceuticals – 0.6%

 
 

425

   

Bausch Health Americas, Inc., 8.50%, 1/31/27 (a)(b)(g)

   

481,567

   
 

450

   

Bausch Health Cos., Inc., 7.25%, 5/30/29 (a)(b)(g)

   

505,116

   
 

465

   

Horizon Therapeutics USA, Inc., 5.50%, 8/1/27 (a)(b)(g)

   

496,690

   
             

1,483,373

   
   

Pipelines – 1.0%

 
 

1,000

   

Crestwood Midstream Partners L.P., 5.75%, 4/1/25 (g)

   

1,017,790

   
 

370

   

DCP Midstream Operating L.P., 5.125%, 5/15/29 (g)

   

391,034

   
 

450

   

NGL Energy Partners L.P., 7.50%, 4/15/26 (a)(b)(g)

   

437,568

   
       

Targa Resources Partners L.P.,

     
 

335

   

6.50%, 7/15/27

   

365,988

   
 

305

   

6.875%, 1/15/29

   

336,834

   
             

2,549,214

   
   

Real Estate – 0.3%

 
 

700

   

Kennedy-Wilson, Inc., 5.875%, 4/1/24 (g)

   

719,278

   
   

Retail – 0.8%

 
 

1,000

   

Conn's, Inc., 7.25%, 7/15/22 (g)

   

997,812

   
 

300

   

L Brands, Inc., 6.875%, 11/1/35 (g)

   

301,282

   
 

1,000

   

Neiman Marcus Group Ltd. LLC, 8.00%, 10/15/21 (a)(b)(g)

   

775,000

   
             

2,074,094

   
   

Semiconductors – 0.2%

 
 

475

   

Amkor Technology, Inc., 6.625%, 9/15/27 (a)(b)(g)

   

516,848

   
   

Software – 0.9%

 
 

455

   

IQVIA, Inc., 5.00%, 5/15/27 (a)(b)(g)

   

481,100

   
 

1,000

   

j2 Cloud Services LLC, 6.00%, 7/15/25 (a)(b)(g)

   

1,057,085

   
 

230

   

Rackspace Hosting, Inc., 8.625%, 11/15/24 (a)(b)(g)

   

228,275

   
 

480

   

SS&C Technologies, Inc., 5.50%, 9/30/27 (a)(b)(g)

   

508,644

   
             

2,275,104

   
   

Telecommunications – 2.8%

 
       

CenturyLink, Inc.,

     
 

335

   

5.125%, 12/15/26 (a)(b)

   

344,213

   
 

420

   

7.50%, 4/1/24, Ser. Y (g)

   

474,774

   
 

800

   

Cincinnati Bell, Inc., 7.00%, 7/15/24 (a)(b)(g)

   

839,008

   
 

690

   

CommScope Technologies LLC, 6.00%, 6/15/25 (a)(b)(g)

   

660,247

   
 

1,000

   

Consolidated Communications, Inc., 6.50%, 10/1/22 (g)

   

956,875

   
 

1,000

   

Hughes Satellite Systems Corp., 7.625%, 6/15/21 (g)

   

1,071,120

   
 

500

   

Intelsat Jackson Holdings S.A., 5.50%, 8/1/23 (g)

   

409,792

   
 

500

   

Level 3 Financing, Inc., 5.375%, 5/1/25 (g)

   

517,292

   
 

365

   

Sprint Corp., 7.625%, 3/1/26 (g)

   

381,608

   
       

T-Mobile USA, Inc.,

     
 

1,000

   

4.75%, 2/1/28 (g)

   

1,065,600

   
 

500

   

6.50%, 1/15/26

   

534,150

   
             

7,254,679

   


January 31, 2020 | Annual Report 23



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Principal
Amount
(000s)
 

 

Value
 
   

Toys/Games/Hobbies – 0.0%

 

$

90

   

Mattel, Inc., 5.875%, 12/15/27 (a)(b)

 

$

94,770

   
   

Transportation – 0.3%

 
       

XPO Logistics, Inc. (a)(b),

     
 

600

   

6.125%, 9/1/23

   

621,501

   
 

150

   

6.50%, 6/15/22 (g)

   

152,892

   
             

774,393

   
 

Total Corporate Bonds & Notes (cost-$64,539,516)

         

63,968,940

   

Shares

         

Convertible Preferred Stock – 13.1%

     
   

Banks – 3.3%

 
 

2,910

   

Bank of America Corp. 7.25%, Ser. L (e)(g)

   

4,576,557

   
 

2,530

   

Wells Fargo & Co. 7.50%, Ser. L (e)(g)

   

3,910,267

   
             

8,486,824

   
   

Electric Utilities – 1.3%

 
 

12,640

   

Sempra Energy 6.00%, 1/15/21, Ser. A (g)

   

1,600,351

   
 

32,580

   

Southern Co. 6.75%, 8/1/22 (g)

   

1,850,218

   
             

3,450,569

   
   

Electronics – 0.6%

 
 

1,615

   

Fortive Corp. 5.00%, 7/1/21, Ser. A (g)

   

1,556,214

   
   

Equity Real Estate Investment Trusts (REITs) – 1.1%

 
 

2,020

   

Crown Castle International Corp. 6.875%, 8/1/20, Ser. A (g)

   

2,688,297

   
   

Hand/Machine Tools – 1.6%

 
 

12,690

   

Colfax Corp. 5.75%, 1/15/22 (g)

   

1,928,245

   
       

Stanley Black & Decker, Inc.,

     
 

9,695

   

5.25%, 11/15/22

   

1,017,878

   
 

10,225

   

5.375%, 5/15/20 (g)

   

1,069,024

   
             

4,015,147

   
   

Healthcare-Products – 1.5%

 
 

21,945

   

Avantor, Inc. 6.25%, 5/15/22, Ser. A

   

1,399,213

   
 

2,090

   

Danaher Corp. 4.75%, 4/15/22, Ser. A (g)

   

2,552,183

   
             

3,951,396

   
   

Insurance – 0.7%

 
 

12,985

   

Assurant, Inc. 6.50%, 3/15/21, Ser. D (g)

   

1,668,572

   
   

Pharmaceuticals – 1.3%

 
 

26,830

   

Becton Dickinson and Co. 6.125%, 5/1/20, Ser. A (g)

   

1,758,706

   
 

29,035

   

Elanco Animal Health, Inc. 5.00%, 2/1/23

   

1,589,986

   
             

3,348,692

   
   

Semiconductors – 1.7%

 
 

3,840

   

Broadcom, Inc. 8.00%, 9/30/22, Ser. A (g)

   

4,410,624

   
 

Total Convertible Preferred Stock (cost-$30,537,323)

         

33,576,335

   


24 Annual Report | January 31, 2020



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

Shares

 
 

Value

 
Preferred Stock (a)(d)(f)(i)(j) – 0.5%      
   

Media – 0.5%

 
 

532

   

LiveStyle, Inc., Ser. A

 

$

80,359

   
 

11,500

   

LiveStyle, Inc., Ser. B

   

1,150,000

   
 

1,250

   

LiveStyle, Inc., Ser. B

   

12

   
 

Total Preferred Stock (cost-$2,429,842)

         

1,230,371

   

Units

         
Warrants (a)(d)(f)(i)(j) – 0.0%  
   

Media – 0.0%

 
 

3,000

   

LiveStyle, Inc., expires 11/30/21, Ser. C (cost-$0)

   

 
Principal
Amount
(000s)
 

     

Repurchase Agreements – 6.5%

 

$

16,805

    State Street Bank and Trust Co.,
dated 1/31/20, 0.25%, due
2/3/20, proceeds $16,805,350;
collateralized by U.S. Treasury Inflation Indexed Notes,
0.125%, due 4/15/22, valued at
$17,144,789 including accrued
interest (cost-$16,805,000)
   

16,805,000

   
Total Investments, before options written
(cost-$362,224,051) – 140.6%
       

360,978,331

   
Total Options Written – (0.0)% (premiums received-$50,658) (i)(k)(l)        

(36,567

)

 
Total Investments, net of options written
(cost-$362,173,393) – 140.6%
       

360,941,764

   

Other liabilities in excess of other assets – (40.6)%

       

(104,217,313

)

 

Net Assets – 100.0%

     

$

256,724,451

   

Notes to Schedule of Investments:

†  Actual amount rounds to less than $1.

(a)  Private Placement–Restricted as to resale and may not have a readily available market. Securities with an aggregate value of $96,285,991, representing 37.5% of net assets.

(b)  144A–Exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, typically only to qualified institutional buyers. Securities with an aggregate value of $95,055,620, representing 37.0% of net assets.

(c)  In default.

(d)  Fair-Valued–Securities with an aggregate value of $2,011,543, representing 0.8% of net assets. See Note 1(a) and Note 1(b) in the Notes to Financial Statements.

(e)  Perpetual maturity. The date shown, if any, is the next call date.

(f)  Level 3 security. See Note 1(a) and Note 1(b) in the Notes to Financial Statements.

(g)  All or partial amount segregated for the benefit of the counterparty as collateral for options written and long-term and short-term loan financing.


January 31, 2020 | Annual Report 25



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

(h)  Restricted. The aggregate cost of such securities is $1,909,386. The aggregate value is $1,510,167, representing 0.6% of net assets.

(i)  Non-income producing.

(j)  A member of the Fund's portfolio management team is a member of the board of directors of LiveStyle, Inc. The Fund's aggregate value of investments in LiveStyle, Inc. represents 0.5% of net assets.

(k)  Exchange traded-Chicago Board Options Exchange.

(l)  Exchange traded option contracts outstanding at January 31, 2020:

Options written contracts outstanding at January 31, 2020:

Description

  Exercise
Price
  Expiration
Date
  Number of
Contracts
  Notional
Amount
  Market
Value
  Premiums
Received
  Unrealized
Appreciation
(Depreciation)
 

Call options:

 

Adobe, Inc.

   

380.00

USD

 

2/21/20

   

(12

)

 

$

(1,200

)

 

$

(582

)

 

$

(599

)

 

$

17

   

Advanced Micro Devices, Inc.

   

60.00

USD

 

2/21/20

   

(90

)

   

(9,000

)

   

(765

)

   

(6,418

)

   

5,653

   

Alibaba Group Holding Ltd.

   

250.00

USD

 

2/21/20

   

(15

)

   

(1,500

)

   

(308

)

   

(2,887

)

   

2,579

   

Amazon.com, Inc.

   

2,000.00

USD

 

2/21/20

   

(2

)

   

(200

)

   

(10,890

)

   

(2,214

)

   

(8,676

)

 

Broadcom, Inc.

   

340.00

USD

 

2/21/20

   

(15

)

   

(1,500

)

   

(863

)

   

(1,980

)

   

1,117

   

Comcast Corp.

   

50.00

USD

 

2/21/20

   

(40

)

   

(4,000

)

   

(60

)

   

(720

)

   

660

   

Deere & Co.

   

175.00

USD

 

2/21/20

   

(20

)

   

(2,000

)

   

(980

)

   

(2,957

)

   

1,977

   

DR Horton, Inc.

   

62.00

USD

 

2/21/20

   

(40

)

   

(4,000

)

   

(1,280

)

   

(1,004

)

   

(276

)

 

Intuit, Inc.

   

310.00

USD

 

2/21/20

   

(3

)

   

(300

)

   

(247

)

   

(472

)

   

225

   

JPMorgan Chase & Co.

   

145.00

USD

 

2/21/20

   

(20

)

   

(2,000

)

   

(130

)

   

(382

)

   

252

   

Lam Research Corp.

   

340.00

USD

 

2/21/20

   

(9

)

   

(900

)

   

(387

)

   

(1,271

)

   

884

   

Mastercard, Inc.

   

345.00

USD

 

2/21/20

   

(27

)

   

(2,700

)

   

(932

)

   

(2,487

)

   

1,555

   

McDonald's Corp.

   

225.00

USD

 

2/21/20

   

(30

)

   

(3,000

)

   

(660

)

   

(1,202

)

   

542

   

Netflix, Inc.

   

400.00

USD

 

2/21/20

   

(16

)

   

(1,600

)

   

(616

)

   

(2,815

)

   

2,199

   

PayPal Holdings, Inc.

   

125.00

USD

 

2/21/20

   

(50

)

   

(5,000

)

   

(925

)

   

(4,637

)

   

3,712

   

Progressive Corp.

   

85.00

USD

 

2/21/20

   

(15

)

   

(1,500

)

   

(412

)

   

(362

)

   

(50

)

 

Salesforce.com, Inc.

   

195.00

USD

 

2/21/20

   

(35

)

   

(3,500

)

   

(1,820

)

   

(2,300

)

   

480

   

ServiceNow, Inc.

   

350.00

USD

 

2/21/20

   

(22

)

   

(2,200

)

   

(10,450

)

   

(4,905

)

   

(5,545

)

 

Starbucks Corp.

   

100.00

USD

 

2/21/20

   

(70

)

   

(7,000

)

   

(140

)

   

(2,524

)

   

2,384

   

Texas Instruments, Inc.

   

145.00

USD

 

2/21/20

   

(25

)

   

(2,500

)

   

(37

)

   

(1,501

)

   

1,464

   

Union Pacific Corp.

   

192.50

USD

 

2/21/20

   

(25

)

   

(2,500

)

   

(788

)

   

(2,354

)

   

1,566

   

Visa, Inc.

   

220.00

USD

 

2/21/20

   

(50

)

   

(5,000

)

   

(1,125

)

   

(2,537

)

   

1,412

   

Walt Disney Co.

   

152.50

USD

 

2/21/20

   

(28

)

   

(2,800

)

   

(2,170

)

   

(2,130

)

   

(40

)

 

Total options written contracts

                 

$

(36,567

)

 

$

(50,658

)

 

$

14,091

   

(m)  Fair Value Measurements–See Note 1(b) in the Notes to Financial Statements.

    Level 1 –
Quoted Prices
  Level 2 –
Other Significant
Observable
Inputs
  Level 3 –
Significant
Unobservable
Inputs
  Value at
1/31/20
 

Investments in Securities – Assets

 

Convertible Bonds & Notes

 

$

   

$

160,461,072

   

$

   

$

160,461,072

   

Common Stock:

 

Banks

   

1,005,936

     

     

1

     

1,005,937

   

Media

   

639,212

     

     

1

     

639,213

   

All Other

   

83,291,463

     

     

     

83,291,463

   


26 Annual Report | January 31, 2020



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

    Level 1 –
Quoted Prices
  Level 2 –
Other Significant
Observable
Inputs
  Level 3 –
Significant
Unobservable
Inputs
  Value at
1/31/20
 

Corporate Bonds & Notes:

 

Commercial Services

 

$

   

$

4,074,743

   

$

6,416

   

$

4,081,159

   

Diversified Financial Services

   

     

4,779,219

     

774,754

     

5,553,973

   

All Other

   

     

54,333,808

     

     

54,333,808

   

Convertible Preferred Stock

   

33,576,335

     

     

     

33,576,335

   

Preferred Stock

   

     

     

1,230,371

     

1,230,371

   

Repurchase Agreements

   

     

16,805,000

     

     

16,805,000

   
     

118,512,946

     

240,453,842

     

2,011,543

     

360,978,331

   

Investments in Securities – Liabilities

 

Options Written:

 

Market Price

   

(36,567

)

   

     

     

(36,567

)

 

Totals

 

$

118,476,379

   

$

240,453,842

   

$

2,011,543

   

$

360,941,764

   

A roll forward of fair value measurements using significant unobservable inputs (Level 3) for the year ended January 31, 2020, was as follows:

    Beginning
Balance
1/31/19
 

Purchases

 

Sales

  Accrued
Discount
(Premiums)
  Net
Realized
Gain
(Loss)
  Net
Change in
Unrealized
Appreciation/
Depreciation
  Transfers
into
Level 3
  Transfers
out of
Level 3
  Ending
Balance
1/31/20
 

Investments in Securities – Assets

 

Common Stock:

 

Banks

 

$

1

   

$

   

$

   

$

   

$

   

$

   

$

   

$

   

$

1

   

Media

   

1

     

     

     

     

     

     

     

     

1

   

Corporate Bonds & Notes:

 

Commercial Services

   

19,250

     

     

(4,261

)††

   

     

     

(8,573

)

   

     

     

6,416

   
Diversified Financial
Services
   

780,069

     

178,666

     

     

29,002

     

     

(212,983

)

   

     

     

774,754

   

Preferred Stock:

   

1,173,631

     

     

     

     

     

56,740

     

     

     

1,230,371

   

Totals

 

$

1,972,952

   

$

178,666

   

$

(4,261

)

 

$

29,002

   

$

   

$

(164,816

)

 

$

   

$

   

$

2,011,543

   

††  Removed via corporate action.

The table above may include Level 3 investments that are valued by brokers and pricing services. The inputs for these investments are not readily available or cannot be reasonably estimated and are generally those inputs described in Note 1(b).

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 at January 31, 2020:

    Ending Balance
at 1/31/20
  Valuation
Technique Used
  Unobservable
Inputs
  Input
Values (Ranges)
 

Investments in Securities – Assets

 

Corporate Bonds & Notes:

 
Diversified Financial
Services
 

$

774,754

    Market and Company
Comparables
  EV Multiples
Illiquidity Discount
  1.79
20%

x (0.38x – 5.03x)

 

Preferred Stock

 

$

1,230,359

    Market and Company
Comparables
  EV Multiples
Illiquidity Discount
  0.93
25%

x (0.26x – 1.47x)

 

The net change in unrealized appreciation/depreciation of Level 3 investments held at January 31, 2020 was $(156,243).


January 31, 2020 | Annual Report 27



Schedule of Investments

AllianzGI Diversified Income & Convertible Fund

January 31, 2020 (continued)

(n)  The following is a summary of the Fund's derivatives categorized by risk exposure.

The effect of derivatives on the Fund's Statements of Assets and Liabilities at January 31, 2020:

Location

 

Market Price

 

Liability derivatives:

 

Options written, at value

 

$

(36,567

)

 

The effect of derivatives on the Fund's Statements of Operations for the year ended January 31, 2020:

Location

 

Market Price

 

Net realized loss on:

 

Options written

 

$

(3,250

)

 

Net change in unrealized appreciation/depreciation of:

 

Options written

 

$

18,123

   

The average volume (based on the open positions at each month-end) of derivative activity during the year ended January 31, 2020 was 896 call options written contracts.

Glossary:

ADR  -  American Depositary Receipt

PIK  -  Payment-in-Kind

REIT  -  Real Estate Investment Trust


28 Annual Report | January 31, 2020 | See accompanying Notes to Financial Statements



Schedule of Investments

AllianzGI Equity & Convertible Income Fund

January 31, 2020

Shares

 

 

Value

 

Common Stock – 63.2%

     
   

Aerospace & Defense – 0.9%

 
 

20,000

   

Boeing Co.

 

$

6,365,400

   
   

Automobiles – 0.3%

 
 

245,100

   

Ford Motor Co.

   

2,161,782

   
   

Banks – 1.0%

 
 

50,200

   

JPMorgan Chase & Co. (g)

   

6,644,472

   
   

Beverages – 0.9%

 
 

45,800

   

PepsiCo, Inc.

   

6,504,516

   
   

Biotechnology – 2.8%

 
 

59,400

   

AbbVie, Inc.

   

4,812,588

   
 

9,700

   

Biogen, Inc. (i)

   

2,607,845

   
 

91,000

   

Gilead Sciences, Inc.

   

5,751,200

   
 

27,200

   

Vertex Pharmaceuticals, Inc. (i)

   

6,175,760

   
             

19,347,393

   
   

Building Products – 0.3%

 
 

61,244

   

Johnson Controls International PLC

   

2,416,076

   
   

Capital Markets – 1.4%

 
 

65,000

   

Charles Schwab Corp.

   

2,960,750

   
 

23,600

   

S&P Global, Inc.

   

6,932,028

   
             

9,892,778

   
   

Chemicals – 0.4%

 
 

46,400

   

Chemours Co.

   

643,568

   
 

14,533

   

Corteva, Inc. (i)

   

420,295

   
 

14,533

   

Dow, Inc. (i)

   

669,535

   
 

14,533

   

DuPont de Nemours, Inc.

   

743,799

   
             

2,477,197

   
   

Communications Equipment – 1.0%

 
 

149,600

   

Cisco Systems, Inc.

   

6,877,112

   
   

Energy Equipment & Services – 0.4%

 
 

53,600

   

National Oilwell Varco, Inc.

   

1,104,696

   
 

53,900

   

Schlumberger Ltd.

   

1,806,189

   
             

2,910,885

   
   

Entertainment – 1.7%

 
 

23,900

   

Netflix, Inc. (g)(i)

   

8,247,651

   
 

24,300

   

Walt Disney Co. (g)

   

3,360,933

   
             

11,608,584

   
   

Equity Real Estate Investment Trusts (REITs) – 0.5%

 
 

22,400

   

Crown Castle International Corp.

   

3,356,416

   
   

Food & Staples Retailing – 1.7%

 
 

21,400

   

Costco Wholesale Corp.

   

6,538,128

   
 

182,400

   

Kroger Co.

   

4,899,264

   
             

11,437,392

   


January 31, 2020 | Annual Report 29



Schedule of Investments

AllianzGI Equity & Convertible Income Fund

January 31, 2020 (continued)

Shares

 

 

Value

 
   

Healthcare Equipment & Supplies – 2.4%

 
 

23,200

   

Align Technology, Inc. (i)

 

$

5,964,720

   
 

100,800

   

Boston Scientific Corp. (i)

   

4,220,496

   
 

12,000

   

Intuitive Surgical, Inc. (i)

   

6,717,360

   
             

16,902,576

   
   

Healthcare Providers & Services – 1.9%

 
 

24,400

   

McKesson Corp.

   

3,479,684

   
 

34,900

   

UnitedHealth Group, Inc.

   

9,508,505

   
             

12,988,189

   
   

Hotels, Restaurants & Leisure – 2.1%

 
 

30,300

   

McDonald's Corp. (g)

   

6,483,291

   
 

58,900

   

Starbucks Corp. (g)

   

4,996,487

   
 

22,000

   

Wynn Resorts Ltd.

   

2,775,520

   
             

14,255,298

   
   

Household Durables – 0.7%

 
 

78,300

   

DR Horton, Inc. (g)

   

4,635,360

   
   

Industrial Conglomerates – 1.4%

 
 

17,800

   

3M Co.

   

2,824,148

   
 

37,800

   

Honeywell International, Inc.

   

6,547,716

   
             

9,371,864

   
   

Insurance – 0.4%

 
 

30,900

   

Progressive Corp. (g)

   

2,493,321

   
   

Interactive Media & Services – 4.3%

 
 

11,200

   

Alphabet, Inc., Class A (i)

   

16,047,136

   
 

67,200

   

Facebook, Inc., Class A (i)

   

13,568,352

   
             

29,615,488

   
   

Internet & Direct Marketing Retail – 2.7%

 
 

16,400

   

Alibaba Group Holding Ltd., ADR (g)(i)

   

3,388,076

   
 

7,700

   

Amazon.com, Inc. (g)(i)

   

15,467,144

   
             

18,855,220

   
   

IT Services – 5.8%

 
 

62,500

   

Fiserv, Inc. (i)

   

7,413,125

   
 

15,700

   

International Business Machines Corp.

   

2,256,561

   
 

28,300

   

Mastercard, Inc., Class A (g)

   

8,941,102

   
 

55,900

   

PayPal Holdings, Inc. (g)(i)

   

6,366,451

   
 

74,500

   

Visa, Inc., Class A (g)

   

14,823,265

   
             

39,800,504

   
   

Life Sciences Tools & Services – 1.0%

 
 

21,300

   

Thermo Fisher Scientific, Inc.

   

6,670,947

   
   

Machinery – 1.7%

 
 

50,100

   

Caterpillar, Inc.

   

6,580,635

   
 

32,800

   

Deere & Co. (g)

   

5,201,424

   
             

11,782,059

   
   

Media – 0.5%

 
 

77,600

   

Comcast Corp., Class A (g)

   

3,351,544

   


30 Annual Report | January 31, 2020



Schedule of Investments

AllianzGI Equity & Convertible Income Fund

January 31, 2020 (continued)

Shares

 

 

Value

 
   

Multi-Line Retail – 1.2%

 
 

32,700

   

Dollar General Corp.

 

$

5,016,507

   
 

29,500

   

Target Corp.

   

3,266,830

   
             

8,283,337

   
   

Oil, Gas & Consumable Fuels – 1.0%

 
 

77,900

   

Occidental Petroleum Corp.

   

3,094,188

   
 

49,700

   

Valero Energy Corp.

   

4,190,207

   
             

7,284,395

   
   

Pharmaceuticals – 2.6%

 
 

112,200

   

Bristol-Myers Squibb Co.

   

7,062,990

   
 

64,400

   

Merck & Co., Inc.

   

5,502,336

   
 

56,317

   

Teva Pharmaceutical Industries Ltd., ADR (i)

   

585,697

   
 

33,600

   

Zoetis, Inc.

   

4,509,456

   
             

17,660,479

   
   

Road & Rail – 0.6%

 
 

25,000

   

Union Pacific Corp. (g)

   

4,485,500

   
   

Semiconductors & Semiconductor Equipment – 6.8%

 
 

119,700

   

Advanced Micro Devices, Inc. (g)(i)

   

5,625,900

   
 

16,400

   

Broadcom, Inc. (g)

   

5,004,624

   
 

26,900

   

Lam Research Corp. (g)

   

8,021,849

   
 

183,500

   

Marvell Technology Group Ltd.

   

4,411,340

   
 

139,000

   

Micron Technology, Inc. (i)

   

7,379,510

   
 

33,800

   

NVIDIA Corp.

   

7,991,334

   
 

53,400

   

QUALCOMM, Inc.

   

4,555,554

   
 

34,800

   

Texas Instruments, Inc. (g)

   

4,198,620

   
             

47,188,731

   
   

Software – 7.6%

 
 

15,700

   

Adobe, Inc. (g)(i)

   

5,512,898

   
 

16,000

   

Atlassian Corp. PLC, Class A (i)

   

2,352,000

   
 

16,400

   

Intuit, Inc. (g)

   

4,598,232

   
 

93,700

   

Microsoft Corp.

   

15,950,551

   
 

55,521

   

Salesforce.com, Inc. (g)(i)

   

10,122,033

   
 

23,800

   

ServiceNow, Inc. (g)(i)

   

8,049,874

   
 

31,000

   

Workday, Inc., Class A (i)

   

5,723,530

   
             

52,309,118

   
   

Specialty Retail – 1.2%

 
 

36,700

   

Home Depot, Inc.

   

8,371,270

   
   

Technology Hardware, Storage & Peripherals – 2.9%

 
 

56,000

   

Apple, Inc.

   

17,332,560

   
 

56,900

   

NetApp, Inc.

   

3,038,460

   
             

20,371,020

   
   

Textiles, Apparel & Luxury Goods – 1.1%

 
 

77,900

   

NIKE, Inc., Class B

   

7,501,770

   
 

Total Common Stock (cost-$439,513,355)

         

436,177,993