Boeing 2010 Annual Report Download - page 100

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The actual allocations for the pension assets at December 31 and target allocations by asset class, are
as follows:
Percentage of Plan Assets Target Allocations
Asset Class 2010 2009 2010 2009
Fixed income 49% 50% 45% 45%
Global equity 33 34 28 28
Private equity 5566
Real estate and real assets 5410 10
Global strategies 4455
Hedge funds 4366
Total 100% 100% 100% 100%
Fixed income securities are invested broadly and primarily in long duration instruments. Global equity
securities are invested broadly in U.S. and non-U.S. companies which are in various industries and
countries and through a range of market capitalizations.
Real estate and real assets include global private investments and publicly traded investments (such
as REITs in the case of real estate). Real estate includes but is not limited to investments in office,
retail, apartment and industrial properties. Real assets include but are not limited to investments in
natural resources (such as energy, farmland and timber) and infrastructure. Private equity investment
vehicles are primarily limited partnerships (LPs) and fund-of-funds that mainly invest in U.S. and
non-U.S. leveraged buyout, venture capital and special situation strategies.
Global strategies seek to capitalize on inefficiencies identified across different asset classes or
markets, primarily using long-short positions in derivatives and physical securities. Hedge fund strategy
types include, but are not limited to event driven, relative value, long-short and market neutral. A well-
diversified number of hedge funds are held.
Investment managers are retained for explicit investment roles specified by contractual investment
guidelines. Certain investment managers are authorized to invest in derivatives, such as equity or bond
futures, swaps, options and currency futures or forwards. Derivatives are used to achieve the desired
market exposure of a security or an index, transfer value-added performance between asset classes,
achieve the desired currency exposure, adjust portfolio duration or rebalance the total portfolio to the
target asset allocation.
As a percentage of total plan assets, derivative net notional amounts were 9.8% and 6.0% for fixed
income, including to-be-announced mortgage-backed securities and treasury forwards, and negative
0.2% and 0.0% for global equity and currency overlay at December 31, 2010 and 2009.
In November 2009, the Company elected to contribute $1,500 of our common stock to the pension
fund. An independent fiduciary was retained to manage and liquidate the stock over time at its
discretion. Plan assets included $1,498 and $1,581 of our common stock as of December 31, 2010
and 2009.
Risk Management In managing the plan assets, we review and manage risk associated with funded
status risk, interest rate risk, market risk, counterparty risk, liquidity risk and operational risk. Liability
management and asset class diversification are central to our risk management approach and are
integral to the overall investment strategy. Further, asset classes are constructed to achieve
diversification by investment strategy, by investment manager, by industry or sector and by holding.
Investment manager guidelines for publicly traded assets are specified and are monitored regularly
through the custodian. Credit parameters for counterparties have been established for managers
permitted to trade over-the-counter derivatives.
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