PIMCO GIS Emerging Markets Bond ESG Fund

For professional use only

Q2 2021

POSITIONING PERFORMANCE

What we like: Performance (% net of fees) YTD 3-mon 3-yrs 5-yrs SI* • Best-in-class green/social/sustainable Fund -0.50 4.53 7.20 5.55 5.39 corporate bonds (South Korea, Benchmark -1.07 4.06 6.74 4.59 5.81 Brazil, India) • Strong SDG/green Excess returns (bps) 57 47 46 96 -42 frameworks (Chile, Mexico, Performance for the GIS Emerging Markets Bond ESG Fund, institutional accumulation USD-share class (ISIN: IE00B61N1B75) Benchmark: Inception to August 1, 2019, JPMorgan Emerging Markets Bond Index (EMBI) Global adjusted for Socially Responsible Egypt) Investment (SRI) filter. August 2, 2019 onwards JPM ESG Emerging Markets Bond Index (EMBI) Global Diversified. Performance quoted represents past performance. Past performance is not a guarantee or a reliable indicator of future results. • Higher quality, investment- The fund is actively managed in reference to the JPMorgan Emerging Markets Bond Index (EMBI) ESG Global Diversified as further grade (Israel, Indonesia outlined in the prospectus and key investor information document. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed. Current performance may be lower or higher than corporates and quasi- performance shown. For performance current to the most recent month-end, visit www.pimco.com sovereigns)

• Credible reform stories/IMF ATTRIBUTION Q2 2021 backstop (Jordan, Ivory Coast) Contributors Detractors • Harvest premia outside of • Overweight to Ecuador, which • U.S. duration positioning index universe (Basket of outperformed the index on the back of a EUR-denom. paper from positive electoral surprise of market • Exposure to select Chinese quasi- Romania and Serbia) friendly Guillermo Lasso in the country’s sovereign issuers, which underperformed the presidential run-off index due to credit concerns • Select BB-rated names (Guatemala, South Africa) • Security selection in Ukraine, as the country benefitted from the approval of a World Bank loan in support of reforms What we do not like: and to aid the economic recovery • Void fossil fuels • Underweight to Colombia, which underperformed the index on the back • Social and governance of disputes over the government’s controversies (Exclude Saudi attempt to raise taxes Arabia, Tajikistan, Belarus) • Fully priced-in good stories KEY STATISTICS (Philippines, Qatar, UAE) Fund Benchmark • Sanctions/trade war risk (Russia) Market Value (USD mm) 2,380.2 Duration (Years) 7.97 8.35 • Fundamentally weak credits (Bolivia, Honduras, Lebanon) Avg. Maturity (Years) 13.07 Estimated YTM (%) 5.01 4.08 EM Spread (Years) 7.60 7.94

NOTE: Portfolio structure is subject to change without notice and may not be representative of current or future allocations. Spread compares U.S. treasuries with a given security type, such as mortgages, corporate credit, swaps, etc. SOURCE FOR ALL GRAPHS (UNLESS OTHERWISE STATED): PIMCO. As of 31 December 2020 unless otherwise stated

* Account inception date: 16 April 2010

Past performance is not a guarantee or a reliable indicator of future results.

For illustrative purposes only. For professional use only

ESG STATISTICS COMPARISON GIS EM Index EM ESG GIS EM Bond ESG (JESG Improvement Bond Fund Fund EMBI GD)* Relative to Index Average MSCI ESG score (all) 4.56 3.96 4.23 +8% Average MSCI ESG score (corp) 4.90 2.91 3.57 +37% Average PIMCO ESG score (corp) 3.17 2.43 2.73 +16% Average MSCI ESG score (EM sovereigns) 4.10 3.33 4.10 +0% Average PIMCO ESG score (EM sovereigns) 2.80 2.40 2.72 +3% Green/social/sustainable bond exposure (% MV) 23.0% 1.5% 3.1% 7.4x Carbon intensity (corp) ((Scope 1, 2 tCO2 e)/Revenues USD m) 243 1,276 268 -9% Absolute carbon emissions (corp) (Scope 1 tCO2 e) 1,037,497 40,836,492 2,426,184 -57% Absolute carbon emissions (corp) (Scope 2 tCO2 e) 306,868 2,933,455 19,535,437 -98%

Exposure to energy sector GIS EM Bond ESG Fund Green / social / sustainable bond Benchmark* exposure (% MV) GIS EM Bond Fund** 8% 30 6.5% 23.0 25 6% 5.3% 20 4% 15 10 2% 0.4% 0.4% 5 Zero0.0% Zero ZeroZero ZeroZero0.0% 0% 0 Independent E&PIntegrated Oil Oilfield Services Refining Dec '18 Jun '19 Dec '19 Jun '20 Dec '20 Jun '21

Green / social / sustainable exposure by country (% MV) Total: 23.0% Social/Sustainable Green 5 4.1

4 3.2

1.6 1.5 1.5 2 1.2 1.0 1.0 1.0 0.7 0.7 1 0.6

As of 30 June 2021. *Benchmark: JP Morgan ESG EMBI Global Diversified The Average MSCI ESG Score is calculated as the weighted average of all the rated corporates and EM sovereign securities in the portfolio, using MSCI rating data. MSCI ESG scores are based on a 1-10 score with 1 being poor and 10 being excellent. These scores correspond to a rating between best (AAA) and worst (CCC) of the underlying MSCI rated corporate portfolio holdings. This number may differ from ESG scores calculated by other providers. The PIMCO Rating is based on corporate exposure only. PIMCO ESG scores are based on a 1-5 scale with 1 being poor and 5 being excellent. This number may differ from ESG scores calculated by other providers. The PIMCO Rating is based on corporate exposure only. PIMCO ESG scores are based on a 1-5 scale with 1 being poor and 5 being excellent. This number may differ from ESG scores calculated by other providers. For professional use only SUSTAINABLE INVESTMENT EXAMPLES: SOVEREIGNS

Strong green bond framework Engagement on sustainability trajectory

Issuer Egypt government Issuer Asia sovereign Yield at Yield at 5.25% 2.30% issuance issuance Green • Target of generating 42% of Green • No noted deficiencies in green bond energy from renewables by bond bond framework framework 2035 framework • New legislation passed to cut • Green Financing Framework red tape, attract investment aligns with ICMA Green Bond Country from domestic and global Principles, and management view investors of proceeds follows • One provision weakens earmarking in the Green environmental protections (e.g., Financing Register removes need to conduct environmental impact assessment for projects) PIMCO • Analyzed and deemed green PIMCO • Participated in new issue, but, approach framework strong, approved approach in parallel, engaging with and value- for ESG portfolios and value- government to discuss add • Participated as anchor add implications of new legislation investor, harvested significant on deforestation, proper new issuance premium practices and oversight to implement

Bond yield comparison at green bond Bond yield comparison at green bond issuance (%) issuance (%) 15bps cheap to 16bps cheap to 6.00 secondary 2.50 2.30 secondary 5.25 5.10 2.14 5.00 2.00 4.00 1.50

3.00 Yield Yield 1.00 2.00 0.50 1.00

0.00 0.00 Green Government* Green Government*

For illustrative purposes only. As of 31 December 2020. SOURCE: PIMCO, Bloomberg, Maplecroft, Environmental Finance. *Bond of similar rating, maturity, and spread duration shown as non-ESG comparison The above is presented for illustrative purposes only, as a general example of PIMCO’s ESG research capability and is not intended to represent any specific portfolio's performance or how a portfolio will be invested or allocated at any particular time. PIMCO’s ESG processes may yield different results than other investment managers and a company’s ESG rankings and factors may change over time. Past performance is not indicative of future results. For professional use only

COUNTRY EXPOSURE

GIS EM Bond ESG Fund Benchmark Variance

BOND % SPREAD yrs BOND % SPREAD yrs BOND % SPREAD yrs

Brazil 6.09 0.36 3.28 0.25 2.81 0.11

Ukraine 4.70 0.19 2.81 0.14 1.89 0.05

South Africa 3.78 0.27 2.51 0.19 1.28 0.08 Egypt 3.66 0.17 2.04 0.14 1.62 0.04

Indonesia 3.16 0.39 3.78 0.33 -0.62 0.06

India 3.14 0.17 0.00 0.00 3.14 0.17

Oman 3.13 0.25 4.10 0.25 -0.98 0.00 China 3.12 0.20 1.05 0.06 2.07 0.14

Peru 2.93 0.26 2.78 0.31 0.15 -0.05 Panama 2.91 0.50 4.11 0.46 -1.20 0.04

Mexico 2.68 0.29 2.77 0.32 -0.10 -0.03 Turkey 2.49 0.17 2.73 0.14 -0.23 0.03

Dominican Republic 2.48 0.26 3.02 0.27 -0.54 -0.01

South Korea 2.44 0.19 0.00 0.00 2.44 0.19 Ghana 2.20 0.20 2.69 0.16 -0.49 0.03

NOTE: Portfolio structure is subject to change without notice and may not be representative of current or future allocations. PIMCO ESG PHILOSOPHY & PROCESS

At PIMCO our approach to ESG investing rests on supplemented by a dynamic list of issuers that we two pillars. First, we fully integrate ESG analysis in have identified as having business practices our firm wide investment process. We do this misaligned with ESG principles or which have failed because we believe it makes good investment sense, to demonstrate a willingness to improve or respond to consistent with our goal of generating strong risk- PIMCO’s engagement efforts. adjusted returns for clients. Second, our dedicated investment platform, PIMCO ESG, includes a range of portfolios designed for investors who wish to target Evaluation positive social and environmental change. As well as excluding “worst-in-class” companies, PIMCO ESG portfolios emphasize “best-in-class” companies. These are identified through a proprietary PIMCO ESG ESG scoring system which considers how an issuer PIMCO ESG portfolios are founded on the belief that currently fares relative to its peers in the industry, and investors can achieve both financial returns and whether its ESG practices are on an improving or positive impact. Our ESG portfolios are managed in deteriorating trajectory. The result of this is that an effort to outperform their benchmarks (e.g., BBG issuers already incorporating sound ESG practices Barclays Global Aggregate index) by tapping into are more likely to be held in our ESG portfolios. PIMCO’s time-tested investment process, utilizing our global resources and incorporating consistent macro risk factors, like duration, yield curve and credit Engagement positioning, as other PIMCO portfolios. In addition, The final building block of PIMCO ESG is PIMCO ESG portfolios utilize the three building constructive and collaborative engagement with blocks of exclusions, evaluation and engagement to issuers to influence ESG practices over time. We influence positive change believe that allocating capital toward issuers willing to improve the sustainability of their business practices can generate a greater impact than simply excluding Exclusions those issuers with poor ESG metrics and favouring PIMCO ESG portfolios exclude issuers deemed to be those with strong metrics. As such, PIMCO ESG fundamentally misaligned with sustainability portfolios will overweight issuers that demonstrate a principles. Core exclusions include issuers focused clear willingness to move toward better ESG-related on tobacco manufacturing, the production of practices, consistent with meeting the UN controversial weapons, pornographic material and the Sustainable Development Goals (SDGs). production or distribution of coal. These are

Exclude Evaluate Engage

Restrict investment in issuers Emphasize best-in-class ESG Engage collaboratively with fundamentally misaligned with issuers and prime ESG issuers to change ESG-related sustainability practices – by engagement candidates in business practices prospectus and in practice portfolio construction

Exclusions Attributes of best- Engagement questions • Civilian weapons in-class issuers • Have you set a science-based and net zero emissions targets? • Military weapons • Formal, ambitious By when? If not, why? climate strategy • Coal manufacturing • How are sustainability outcomes • Measurable progress • Oil-related industry embedded in executive in reducing resource compensation? • Tobacco intensity and physical • Alcohol risks • Have you analyzed your firm’s gender pay gap? What changes • Ability to attract/retain • Gambling have resulted? the right employees • Adult content • Is your customer data certified to • Strong record on ISO 27001 security standards? • UN Global Compact product safety and Violation customer suitability • UN Human Rights • Diverse, independent Violation board oversight

For illustrative purposes only SOVEREIGN ESG EVALUATION For professional use only

Framework

Sovereign ESG Score Trend • ESG score from equal weighted E, • Short and middle term trend/momentum S, and G sub pillars each covering a indicators: vast number of indicators o Improving • Rank and assign into one of the following groups: o Stable o 5 – Leading practice o Deteriorating o 4 – Better than peers o 3 – In line with peers o 2 – Weaker than peers o 1 – Significant concerns

Bottom-up Analysis Flags • Detailed assessments of a country’s • ESG controversies e.g. human rights ESG outlook and policy violations commitments generated through • Policy reversals not captured in data PIMCO’s sovereign research • Indicators of issues e.g. protests process

Scoring

E S G

Climate risks Civil, Political, Labor Rights Institutional framework 1/3 weight 1/3 weight 1/3 weight

Dependence on fossil fuels, Human Capital and Poverty, Living Democratic governance, Judicial Air quality, Biodiversity (marine & Wage, Child / Forced / Informal Labor, effectiveness and independence, terrestrial), Deforestation, Unlawful killings / torture, Arbitrary Government effectiveness, Regulatory Recycling, Water pollution and arrest and detention, Freedom of framework and efficacy, Criminality stress, Carbon policy, assembly / opinion, Gender / Minority / and corruption, Property rights and Environmental regulation, Climate Sexual Rights, Discrimination, Health contract enforcement, Government agreements, Climate change and safety rules, Collective action stability, Conflict / Terrorism / Regional vulnerability unrest

DATA SOURCES: Third party specialist data sources, International Financial Institutions e.g. UN, ILO, World Bank, and not- for-profit organizations offering ESG and climate-risk assessments

Engagement

Multilateral PIMCO Bilateral Engagement: Engagement: PIMCO’s edge • Collaboration • Frequent with IFIs, contact and PIMCO’s longstanding relationships enable raising ESG question with C- development candid suite and senior government officials agencies and dialogue with bilateral lenders Government Coverage Themes Influence e.g. IMF/World and Central Bank Bank officials Country and Climate change Influence on • Interaction with sector-specific policy budget • Peer group initiatives and engagement key (e.g. Brazilian Governance and financing with asset stakeholders meat packing political plans for e.g. unions, industry, representation achieving the managers and business Mexican SDGs and owners via groups, NGOs, financial Social safety green projects industry bodies sector) systems and journalists e.g. PRI, One safe guards for Planet initiative the vulnerable

SOURCE: PIMCO. For illustrative purposes only. Refer to Appendix for additional investment strategy and risk information ESG In Depth: Does ESG Matter for Sovereign Debt Investing?

PIMCO research shows that ESG (environmental, social, and governance) factors are important drivers of sovereign credit spreads and that an ESG-based trading strategy should not detract from investment return potential.

ESG has become a hot topic in investment circles, and taking a closer look at sovereign debt, we assess whether environmental, social, and governance factors drive pricing and investment returns of the asset class.

This study was motivated by well-established findings that ESG factors affect a company’s cost of borrowing (Barclays). In principle, we believe that similar considerations which drive corporate sensitivity to ESG could be at play for sovereigns, albeit with a different expression. Countries with more stable and representative political systems, higher levels of social inclusion and civil rights, and greater focus on climate change risk mitigation are likely to be more resilient in the medium-term and potentially better credits relative to their less ESG-compliant peers. This would then be reflected in their cost of borrowing or spread levels.

To this hypothesis, we examined historical data on sovereign external bond spreads and assessed the following questions:

• Is there a relationship between ESG scores and spreads over and above macroeconomic, financial, and credit factors?

• Are some ESG pillars more important for sovereign spreads than others?

• Do these relationships vary across developed and emerging markets?

• Does an ESG-aware approach to sovereign debt investing penalize returns relative to a more traditional approach?

We concluded that ESG considerations matter for sovereign bond investing, even after relevant macroeconomic and credit variables are taken into consideration.

We also discovered statistically significant relationships between the S and G sub- pillars and sovereign spreads in both absolute and relative terms. This is particularly the case for emerging markets, where we found evidence of additional ESG risk premium relative to developed markets.

By testing an ESG-focused investment strategy, we further examined the hypothesis that ESG could potentially detract from investment returns. However, there was no evidence over our historical time frame that indicated an ESG-focused investment strategy results in any investment disadvantage. One important implication of our results is the greater need for active management in ESG-focused portfolios and sovereign credit analysis that incorporates ESG factors on an ongoing basis.

To view our full blog post, please see Does ESG Matter for Sovereign Debt Investing? After fees (%) Performance Benchmark (%)* 14 12 10 8 6 4

Returns(%) 2 0 -2 -4 30 Jun '16 - 30 30 Jun '17 - 30 30 Jun '18 - 30 30 Jun '19 - 30 30 Jun '20 - 30 Jun '17 Jun '18 Jun '19 Jun '20 Jun '21

30 Jun '16 - 30 30 Jun '17 - 30 30 Jun '18 - 30 30 Jun '19 - 30 30 Jun '20 - 30 London Jun '17 Jun '18 Jun '19 Jun '20 Jun '21 PIMCO Europe Ltd Before fees (%) 7.64 0.55 11.93 3.07 9.66 11 Baker Street After fees (%) 6.69 -0.34 10.94 2.16 8.69 London W1U 3AH England Benchmark (%)* 4.84 -1.83 11.61 2.13 6.70 Before fees alpha (bps) 280 238 32 94 296 +44 20 3640 1000 After fees alpha (bps) 185 149 -67 3 199 HongKong

FOR PROFESSIONAL USE ONLY Milan All data as at 30 June 2021 unless otherwise specified.

Investors should note that, relative to the expectations of the Autorité des Marchés Financiers, this Fund presents disproportionate Munich communication on the consideration of non-financial criteria in its investment policy.

Past performance is not a guarantee or a reliable indicator of future results. This material contains Newport Beach Headquarters the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be NewYork reproduced in any form, or referred to in any other publication, without express written permission of PIMCO Europe Ltd (Registered in England and Wales, Company No. 2604517), Registered Office 11 Baker Street London, W1U 3AH. Rio deJaneiro

A word about risk: Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, and inflation risk; investments may be worth more or less than the original cost when redeemed. Singapore The strategy may invest all of its assets in high-yield, lower-rated, securities which involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Income from municipal Sydney bonds may be subject to state and local taxes and at times the alternative minimum tax. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee there is no assurance Tokyo that private guarantors will meet their obligations. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Credit default swap (CDS) is an over-the- counter (OTC) agreement between two parties to transfer the credit exposure Toronto of fixed income securities; CDS is the most widely used credit derivative instrument. Swaps are a type of privately negotiated derivative; there is no central exchange or market for swap transactions and therefore they are less liquid than exchange-traded instruments. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position Zurich could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. Diversification does not insure against loss.

PIMCO GIS Funds: Global Investors Series plc is an umbrella type open-ended investment company with variable capital and is incorporated with limited liability under the laws of Ireland with registered number 276928. The information is not for use within any country or with respect to any person(s) where such use could constitute a violation of the applicable law. The information contained in this communication is intended to supplement information contained in the prospectus for this Fund and must Pimco.com be read in conjunction therewith. Investors should consider the investment objectives, risks, charges and expenses of these Funds carefully before investing. This and other information is contained in the Fund’s prospectus. Please read the prospectus carefully before you invest or send money. Past performance is not a guarantee or a reliable indicator of future results and no guarantee is being made that similar returns will be achieved in the future. Returns are net of fees and other expenses and include reinvestment of dividends. The performance data represents past performance and investment return and principal value will fluctuate so that the PIMCO GIS Funds shares, when redeemed, may be worth more or less than the original cost. Potential differences in performance figures are due to rounding. The Fund may invest in non-U.S. or non-Eurozone securities which involves potentially higher risks including non-U.S. or non-Euro currency fluctuations and political or economic uncertainty. For informational purposes only. Please note that not all Funds are registered for sale in every jurisdiction. Please contact PIMCO Europe Ltd for more information. For additional information and/ or a copy of the Fund’s prospectus, please contact the Administrator: State Street Fund Services (Ireland) Limited, Telephone +353-1-776- 0142, Fax +353-1-562-5517. © 2021.

Benchmark: Unless referenced in the prospectus and relevant key investor information document, a benchmark or index in this material is not used in the active management of the Fund, in particular for performance comparison purposes. Where referenced in the prospectus and relevant key investor information document a benchmark may be used as part of the active management of the Fund including, but not limited to, for duration measurement, as a benchmark which the Fund seeks to outperform, performance comparison purposes and/or relative VaR measurement. Any reference to an index or benchmark in this material, and which is not referenced in the prospectus and relevant key investor information document, is purely for illustrative or informational purposes (such as to provide general financial information or market context) and is not for performance comparison purposes. Please contact your PIMCO representative for further details..

Correlation: As outlined under “Benchmark”, where referenced in the prospectus and relevant key investor information document, a benchmark may be used as part of the active management of the Fund. In such instances, certain of the Fund’s securities may be components of and may have similar weightings to the benchmark and the Fund may from time to time show a high degree of correlation with the performance of any such benchmark. However the benchmark is not used to define the portfolio composition of the Fund and the Fund may be wholly invested in securities which are not constituents of the benchmark. Investors should note that a Fund may from time to time show a high degree of correlation with the performance of one or more financial indices not referenced in the prospectus and relevant key investor information document. Such correlation may be coincidental or may arise because any such financial index may be representative of the asset class, market sector or geographic location in which the Fund is invested or uses a similar investment methodology to that used in managing the Fund.

PIMCO Europe Ltd (Company No. 2604517) is authorised and regulated by the Financial Conduct Authority (12 Endeavour Square, London E20 1JN) in the UK. The services provided by PIMCO Europe Ltd are not available to retail investors, who should not rely on this communication but contact their financial adviser. PIMCO Europe GmbH (Company No. 192083, Seidlstr. 24-24a, 80335 Munich, Germany), PIMCO Europe GmbH Italian Branch (Company No. 10005170963), PIMCO Europe GmbH Spanish Branch (N.I.F. W2765338E) and PIMCO Europe GmbH Irish Branch (Company No. 909462) are authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie- Curie-Str. 24-28, 60439 Frankfurt am Main) in Germany in accordance with Section 32 of the German Banking Act (KWG). The Italian Branch, Irish Branch and Spanish Branch are additionally supervised by: (1) Italian Branch: the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act; (2) Irish Branch: the Central Bank of Ireland in accordance with Regulation 43 of the European Union (Markets in Financial Instruments) Regulations 2017, as amended; and (3) Spanish Branch: the Comisión Nacional del Mercado de Valores (CNMV) in accordance with obligations stipulated in articles 168 and 203 to 224, as well as obligations contained in Tile V, Section I of the Law on the Securities Market (LSM) and in articles 111, 114 and 117 of Royal Decree 217/2008, respectively. The services provided by PIMCO Europe GmbH are available only to professional clients as defined in Section 67 para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication.| PIMCO (Schweiz) GmbH (registered in Switzerland, Company No. CH-020.4.038.582-2) . The services provided by PIMCO (Schweiz) GmbH are not available to retail investors, who should not rely on this communication but contact their financial adviser.