LifeCycle Concept changes as your investment needs change throughout your life

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International Agricultural Research Centers Retirement Plan

Active is:Growing your retirement pot

This brochure will help you determine whether the LifeCycle Concept of investing for retirement suits you. As with any potential investment, you should assess your personal financial circumstances, risk preferences, and time horizon.

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Content

4 Investing in challenging times: The danger hidden in “safe” investments

4 How much money do I need to have at retirement ...

4 Preserving your purchasing power

4 Inflation’s erosion of your savings

5 Money “under the mattress” loses value

5 What alternatives are there to traditional “safe” investments?

6 The LifeCycle Concept

6 What is the LifeCycle Concept?

6 The key benefits of the LifeCycle Concept include

7 What are the key benefits of the LifeCycle Concept?

7 How does the LifeCycle Concept invest my money?

8 Moderate Option

8 Growth Option

9 How could the LifeCycle Concept work for a situation like yours?

10 Case Scenario - Ananya

11 Case Scenario - Anne-Marie

12 Case Scenario - Kwame

13 Case Scenario - Samir

IARC Offshore Retirement Plan LifeCycle Brochure 2018

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Investing in challenging times: The danger hidden in “safe” investments

Putting money in money market funds, bank deposits or “under the mattress” all seem like good options for avoiding unforeseen losses. But a hidden danger overshadows all these otherwise “safe” options – inflation.

Inflation refers to the generally gradual, but ev-er-present rise in prices year after year. In many mature economies, the effects of inflation may escape your notice from one year to the next. But, accumulated over a number of years, inflation can put a real strain on your future purchasing power, hence your standard of living in retirement.

How much money do I need to have at retirement to keep my current standard of living?

A well-known rule of thumb says that we need to have at least 70% of what we currently earn in order to maintain our current standard of living while in retirement.

Preserving your purchasing power

For many of us, keeping assets safe by investing in lower-risk assets or investing in assets that gen-erate a more secure return is particularly important. However, a longer life expectancy may require riskier investments with higher return chances to aim for higher total savings at the start of retirement.

It is also important to note that risk is not just about your assets being safe, but also the risk that the growth of your assets does not keep up with inflation, which may impact your standard of living during retirement.

In today’s market environment, money market returns are close to 0% or even negative. Earning 0% return on an investment is equivalent to stuff-ing your money “under your mattress”.

Inflation’s erosion of your savings

The following is an example of how inflation will literally “eat” away your savings. A simple meal that cost USD 11.20 in 1985 subsequently cost USD 25.00 in 2015 (in the USA). Given the same overall rate of inflation, this very same meal might cost USD 55.60 in 2045. (See Chart 1.)

IARC Offshore Retirement Plan LifeCycle Brochure 2018

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Dummy Image

Money “under the mattress” loses value

Needless to say, in the future, we cannot keep up the same level of consumption with the amount of cash we have put “under the mattress”. In other words, preserving money by putting it into a cash account or money market fund does not automati-cally preserve the purchasing power of that money. On the contrary, inflation may cause a significant loss in value.

To give the money that you set aside today the same buying power tomorrow, you may benefit from re-thinking your portfolio. However, as we veer away from these “safe” investments, we inherently

introduce some level of risk into our portfolios. Diversifying your investments across a broad range of asset classes (bonds, equities, money markets) and regions (global, Europe, North America, Asia) may help reduce these risks.

What alternatives are there to traditional “safe” investments?

The LifeCycle Concept can be considered as a prudent option for those individuals who want to have the potential for their investments to grow while strategically diversifying risk. The next section explains the benefits of the LifeCycle Concept and how it works.

Data source: Bureau of Labor Statistics http://www.bls.gov. Figures 2045 projected by Allianz Global Investors. The hypothetical inflation simulations shown are for illustrative purposes only; they are not an indicator for future results.

Chart 1

Basket of goods 1985 2015 Exp. 2045

Bottle of water 0,33ml USD 0.60 USD 1.40 USD 3.10

Ticket in local transport USD 1.00 USD 2.30 USD 5.00

Meal in mid-range restaurant USD 11.20 USD 25.00 USD 55.60

Monthly fee for fitness club USD 17.10 USD 38.10 USD 84.70

Monthly apartment rent (3 bedroom) USD 777 USD 1,728 USD 3,842

Typical compact car (Ford Focus) USD 8,993 USD 20,000 USD 44,477

30Y 30Y

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The LifeCycle Concept

The LifeCycle Concept helps you to get started now investing for your future, without demanding a lot of your time. The LifeCycle is designed for your convenience. It establishes and maintains a “glidepath” to guide your portfolio from now up to retirement – and even beyond.

The “glidepath” refers to the planned way that the allocation of the LifeCycle holdings among its eight component funds will change from the time you start investing to when you retire.

What is the LifeCycle Concept?

The LifeCycle Concept is a ready-made, diversi-fied basket of funds that automatically allocates asset class holdings over a designated invest-ment time horizon. Your initial investments are weighted towards equities and gradually move towards bonds as you get nearer to retirement. The LifeCycle Concept incorporates com-mon-sense approaches to investment such as:

– Do not put all of your eggs in one basket. It is a common belief that spreading money over a number of investments can reduce risk. (The general idea is that if the return of some investments is positive and the return of other investments is negative, the positive returns can (partly or fully) offset the nega-tive returns. On average this should yield higher returns and pose a lower risk than if you invest in only one asset.) Consequently, the LifeCycle Concept diversifies your portfo-lio by spreading your money, and therefore spreading your risk, across a broad range of investments. A diversified portfolio, on average, should yield a higher return and pose a lower risk than any individual invest-ment found within the portfolio.

– Reduce risk as you approach retirement. The risk-return relationship is the greater the risk, the greater the expected return. Thus, when you are younger, you may take more risk as you have a longer time to recover from any investment losses. A higher risk level and longer investment time-horizon provide you with the chance for greater return. Generally, riskier assets such as equities are more suita-ble for investors with a longer investment time-horizon. As the investment time-horizon shortens, less risky assets such as bonds account for a larger part of an investor’s portfolio.

The key benefits of the LifeCycle Concept include

– Professional management from experienced individuals with the aim to enhance returns and to keep risks low

– Diversification across asset classes and regions

– Automatic gradual movement of investments from riskier to safer assets as you approach retirement

– Automatic rebalancing of investments (at least two times per year)

IARC Offshore Retirement Plan LifeCycle Brochure 2018

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What are the key benefits of the LifeCycle Concept?

Selecting your own investments can be time-con-suming and very overwhelming if you do not feel that you have sufficient knowledge. The LifeCycle Concept provides you with professional oversight of your LifeCycle portfolio that will diversify your in-vestments across various asset classes and geographic regions and will gradually move your investments from equities to bonds, as you get closer to retirement.

This professional oversight of your LifeCycle hold-ings also includes periodic review to ensure that your portfolio stays invested in line with the program of rules-based investing.

In all, the LifeCycle Concept is a convenient way of investing in a broad range of investments while gradually reducing risk as you approach retirement.

Data source: Allianz Global Investors 2018

Asset Class Fund

Global Equities Allianz Best Styles Global Equity

US Equities Allianz Best Styles US Equity

European Equities Allianz Europe Equity Growth

Japanese Equities Allianz Japan Equity

Asian Emerging Market Equities Allianz Emerging Asia Equity

US Core Bonds PIMCO Total Return Bond Fund

Global Bonds PIMCO Global Bond Fund

Global BondsAllianz Advanced Fixed Income Global Aggregate

Chart 2

How does the LifeCycle Concept invest my money?The LifeCycle Concept invests your money over the eight funds listed in chart 2.

IARC Offshore Retirement Plan LifeCycle Brochure 2018

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Data source: Allianz Global Investors 2018

The LifeCycle Concept now offers two options: Moderate and Growth. The key difference between the two options is the percentage of eq-uities versus bonds held in the portfolio.

The Moderate option can allocate up to 60% of your investments towards equities versus up to 90% for the Growth option.

In theory, the growth option should have greater returns, over time, due to the greater exposure to risk, albeit at the expense of accepting a higher risk of the investments fluctuating in value. (Note: “Fixed Income” refers to bonds.)

Equities Bonds

Approximately 90% Equity allocation at start of the LifeCycle.

Approximately 25% Equity allocation at retirement.

Moderate Option Growth Option

Approximately 60% Equity allocation at start of the LifeCycle.

Approximately 15% Equity allocation at retirement.

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0%45 40 35 30 25 20 15 10 5 0Years to retirement

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Chart 3

0%10%20%30%40%50%60%70%80%90%

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IARC Offshore Retirement Plan LifeCycle Brochure 2018

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How could the LifeCycle Concept work for a situation like yours?

On the next few pages, there are several sample scenarios for people at different stages in their careers, with different needs and priorities. These case studies are fictional and illustrate some of the considerations involved in selecting the LifeCycle Concept. If you are unsure which invest-ment option is correct for you, we recommend you take independent financial advice.

IARC Offshore Retirement Plan LifeCycle Brochure 2018

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Due to her young age, Ananya is willing to accept more risk (how much the value of in-vestments can go up and down over time) because she has a long investment horizon, where she is more likely to recover from any short-term losses. She also does not know a lot about investing and does not want to think about it that much. Because Ananya is willing to accept more risk, she chose the LifeCycle Growth option five years ago when she started investing.

Case Scenario - AnanyaAge 30Retirement: 65 (35 years till retirement)

LifeCycle Choice: Growth option

Growth Option

Age 3035 years till retirement

90% Equities10% Bonds

Age 4025 years till retirement

90% Equities10% Bonds

Age 50

15 years till retirement

70% Equities30% Bonds

Age 65at retirement

25% Equities75% Bonds Backtesting Factsheet

Click to have a closer look at Ananya´s:

Growth Option

IARC Offshore Retirement Plan LifeCycle Brochure 2018

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Case Scenario - Anne-MarieAge 40Retirement: 65 (25 years till retirement)

LifeCycle Choice: Growth option

Anne-Marie concluded five years ago that the money-market option was not delivering sufficient returns that she needed to maintain her standard of living while in retirement. With the interest rates so low, inflation would most likely shrink the real value of her savings as the rate of inflation exceed-ed what she could earn in a money market fund. Because she felt that she did not earn enough in-vestment return in her first ten years, she decided to invest in the LifeCycle Growth option. While she appreciates this could be a riskier option and have more ups and downs along the way than money market funds or the LifeCycle Moderate option, the additional potential investment return is key for Anne-Marie.

Age 4025 years till retirement

90% Equities10% Bonds

Age 5015 years till retirement

70% Equities30% Bonds

Age 60

5 years till retirement

40% Equities60% Bonds

Age 65

at retirement

25% Equities75% Bonds

Growth Option

Backtesting FactsheetClick to have a closer look at Anne-Marie´s:

Growth Option

IARC Offshore Retirement Plan LifeCycle Brochure 2018

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Case Scenario - Kwame

Age 55Retirement: 65 (10 years till retirement)

LifeCycle Choice: Moderate option

Kwame has been saving into the Plan for a number of years and has built up a reasona-ble-sized pension pot. He considers himself a conservative investor, and wants to avoid any potential sharp falls that might leave his portfo-lio short by the time he retires. However, he would still like to see some growth come through. Because Kwame is a conservative in-vestor, he has chosen the LifeCycle Moderate Option.

Moderate Option

Age 5510 years till retirement

35% Equities65% Bonds

Age 60

5 years till retirement

25% Equities75% Bonds

Age 65

at retirement

15% Equities85% Bonds

Backtesting FactsheetClick to have a closer look at Kwame´s:

Moderate Option

IARC Offshore Retirement Plan LifeCycle Brochure 2018

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Case Scenario - Samir

Age 45Retirement: 70 (25 years till retirement)

LifeCycle Choice: Moderate option

Samir knows that he has a relatively long time until retirement. However, he cannot stomach any extreme ups and downs that may play out over the next 25 years. He knows he has to open himself up to some risk for potential returns but values the idea of a smoother journey. These con-siderations lead him to select the LifeCycle Moderate Option.

Backtesting FactsheetClick to have a closer look at Samir´s:

Moderate Option

Moderate Option

Age 4525 years till retirement

60% Equities40% Bonds

Age 5515 years till retirement

45% Equities55% Bonds

Age 655 years till retirement

25% Equities75% Bonds

Age 70at retirement

15% Equities85% Bonds

IARC Offshore Retirement Plan LifeCycle Brochure 2018

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June

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Important information

Investing involves risk. The value of an investment and the income from it could fall as well as rise and investors might not get back the full amount invested. The volatility of fund unit prices may be increased or even strongly increased. Past performance is not a reliable indicator of future results. If the currency in which past performance is displayed differs from the currency of the country in which the investor resides, then the investor should be aware that due to the exchange rate fluctuations the performance shown may be higher or lower if converted into the investor’s local currency. Unlike actual performance data, simulations are not based on actual transactions; thus, their significance underlies inherent limitations. Simulations are not able to account for the impact of actual portfolio trading as it may have been affected by economic and market factors, such as a lack of liquidity. Any front-end load charged at the acquisition of the fund units/shares may accrue in full to the sales partner. The exact amount shall be mentioned by the sales partner during the investment advice talks on request. This also applies to any trail fees paid by the Management Company to the sales partner from the management fee. The information contained herein is of general application and does not take into consideration the legal and / or tax situation of any individuals or entities. The tax treatment depends on the individual circumstances of each taxpayer and may be subject to change in the future. There is no guarantee that the information will be kept up-to-date at any time or that the information contained herein may be indicative of the legal and tax consequences of a current or future situation. The information contained herein may and should not replace a thorough evaluation and a professional consultation by the personal legal and / or tax advisor as basis for a decision or action. This is for information only and not to be construed as a solicitation or an invitation to make an offer, to conclude a contract, or to buy or sell any securities. The products or securities described herein may not be available for sale in all jurisdictions or to certain categories of investors. This is for distribution only as permitted by applicable law and in particular not available to residents and/or nationals of the USA. The investment opportunities described herein do not take into account the specific investment objectives, financial situation, knowledge, experience or specific needs of any particular person and are not guaranteed. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable, but it has not been independently verified; its accuracy or completeness is not guaranteed and no liability is assumed for any direct or consequential losses arising from its use, unless caused by gross negligence or wilful misconduct. The conditions of any underlying offer or contract that may have been, or will be, made or concluded, shall prevail. For a free copy of the sales prospectus, incorporation documents, daily fund prices, key investor information, latest annual and semi-annual financial reports, contact the management company at the address indicated below or www.allianzgi-regulatory.eu. Please read these documents, which are solely binding carefully, before investing. This is a marketing communica-tion issued by Allianz Global Investors GmbH, www.allianzgi.com, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Land-strasse 42-44, 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). The duplication, publication, or transmission of the contents, irrespective of the form, is not permitted.