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ALLIANZ FUNDS PROFILE 
All data as of 10.31.09, unless otherwise indicated. 
Allianz RCM Technology Fund
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Allianz RCM Technology Review
Management Firm Commentary
09/30/2009
Market Review

After a brief correction in early July, technology stocks continued their strong climb throughout the third quarter. The increase began as several companies commented on their second quarter conference calls that their business was stabilizing and in many cases improved as the second quarter ended. Even though many companies continued to report uninspiring revenues, earnings generally met or exceeded expectations. As the quarter continued, several companies that have later quarter ends than June, such as Hewlett-Packard and Cisco, also talked about order strength or stability. As we entered September, back to school purchases of computers were better than expected, and several CIO studies also showed improvement. These inputs helped the market to continue to rise.
Performance Commentary

The Allianz RCM Technology Fund underperformed the S&P North America Technology Sector Index during the third quarter of 2009.

 

Strong stock selection during the quarter helped performance, specifically in semiconductors and software. Top contributors to the Fund included Samsung Electronics, Infineon Technologies and Cognizant Technology, whose stocks all posted strong returns for the quarter. However, communications and alternative energy stocks detracted from performance. Riverbed Technology and China Telecom disappointed second quarter expectations, and as a result the companies stocks declined.

 

First Solar’s stock was also down during the quarter. Despite First Solar’s announcement of being awarded the 2 GW solar power plant project in China, the alternative energy sector is struggling due to lack of financing. Though solar prices have come down dramatically and returns are high for new projects, financing constraints on systems have held back the demand surge we expected.
Outlook
Since mid-August we have positioned the Fund for a recovery in enterprise spending beginning in the fourth quarter of 2009 and continuing into 2010. We believe this recovery will be led by the storage and server sectors, and as a result we have increased our holdings in Hewlett-Packard, Microsoft, and EMC Corp. We are beginning to reduce our holdings in semiconductors, as we believe that the pace of price increases, inventory restocking, and production improvements will soon moderate. We see many estimates that seem to be extending recent trendlines. We continue to have a large part of the Fund in selected mid cap companies that we believe can show accelerating growth as the economy recovers.

Investors should consider the investment objectives, risks, charges and expenses of this Fund carefully before investing. This and other information is contained in the Fund´s prospectus and summary prospectus, if available, which may be obtained by contacting your financial advisor, or by calling 888-877-4626. Click here for the Fund´s prospectus or summary prospectus. Please read them carefully before you invest or send money.

Past performance is no guarantee of future results. Current and future portfolio holdings are subject to risk. This article contains the current opinions of the manager, which are subject to change without notice. It should not be considered investment advice. Statements concerning financial market trends are based on current market conditions, which will fluctuate. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. There is no guarantee that these investment strategies will work under all market conditions, and each investor should evaluate their ability to invest for the long-term.

 

This Fund may invest its assets in common stocks of technology companies; the portfolio will normally represent at least three countries. The Fund may invest in non-U.S. companies and in emerging market companies. Concentrating assets in the technology sector, which tends to be more volatile than the overall stock market, may add additional risk compared to a diversified portfolio. Investing in non-U.S. securities may entail greater risk due to foreign economic and political developments; this risk may be enhanced when investing in emerging markets. This Fund may invest in IPOs and smaller companies, which may be more volatile than larger companies. IPOs are subject to risk in that the securities have no trading history and the price may be volatile. This Fund may use derivative instruments for hedging purposes or as part of its investment strategy. Use of these instruments may involve certain costs and risks such as liquidity risk, interest rate risk, market risk, credit risk, management risk and the risk that a fund could not close out a position when it would be most advantageous to do so. Portfolios investing in derivatives could lose more than the principal amount invested in those instruments.

 

The NASDAQ Composite Index is a market-value-weighted, technology-oriented index composed of approximately 5,000 domestic and foreign securities. The S&P North American Technology Sector Index Composite Index (formerly Goldman Sachs Technology Index) is a modified capitalization-weighted index of selected technology stocks. 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.

 

Allianz Funds are distributed by Allianz Global Investors Distributors LLC, 1345 Avenue of the Americas, New York, NY, 10105-4800, www.allianzinvestors.com . © 2009.

 

NOT FDIC INSURED / MAY LOSE VALUE / NOT BANK GUARANTEED

 

Click here to view the Fund's top ten holdings and current sector weightings. All holdings are subject to change.

 

Click here to view the Fund's currentmonth-end performance.
CLICK TO VIEW OUR BUSINESS CONTINUITY PLAN, PROXY POLICIES & VOTING RECORDS, OR OUR PRIVACY POLICY.
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