Mercedes 2003 Annual Report Download - page 151
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Please find page 151 of the 2003 Mercedes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Investment Policies and Strategies. At December 31, 2003, plan
assets were invested in diversified portfolios that consisted primar-
ily of debt and equity securities, including 2,505,604 shares of
DaimlerChrysler Ordinary Shares in a Canadian plan (14,855 shares)
and in a German Plan (2,490,749 shares) with a market value of
€0.4 million and of €92 million, respectively. Assets and income
accruing on all pension trust and relief funds are used solely to pay
pension benefits and administer the plans. The Group’s pension
asset allocation at December 31, 2003 and 2002, and target allo-
cation for the year 2004, are as follows:
Every 3-5 years, or more frequently if appropriate, DaimlerChrysler
conducts asset-liability studies for the major pension funds.
DaimlerChrysler will use the expertise of external investment and
actuarial advisors. These studies are intended to determine the
optimal long-term asset allocation with regard to the liability struc-
ture. The resulting Model Portfolio allocation aims at minimizing
the economic cost of defined benefit schemes. At the same time
the risks should be limited to an appropriate level.
The Model Portfolio is then expanded to a Benchmark Portfolio.
The Benchmark Portfolio matches the asset class weights in the
Model portfolio and expands the asset class by adding of sub-asset-
classes with corresponding weights to implement an actual
portfolio. By application of Modern Portfolio Theory an optimal
one year target allocation is determined. This target allocation is
then implemented and the performance in the current year is
tracked against the benchmark portfolio.
The entire process is overseen by investment committees which
consist of senior financial management especially from treasury
and other appropriate executives. The Investment Committees meet
regularly to approve the asset allocations, and review the risks
and results of the major pension funds and approve the selection
and retention of external managers of specific portfolios.
The majority of investments are in international blue chip equities
on the one hand and high quality government and corporate bonds
on the other hand. To maintain a wide range of diversification and
to improve return opportunities, up to approximately 20% of assets
are allocated to highly promising markets such as Private Equity,
High Yield Debt, Convertibles and Emerging Markets. Internal
controlling units monitor all investments. External depositary
banks provide safekeeping of securities as well as reporting of
transactions and assets.
57
36
5
2
64
30
5
1
65
30
4
1
Plan Assets
2003
German Plans
2002 2004
planned
2003
Plan Assets Non-German Plans
20022004
planned
58
36
3
3
57
37
3
3
48
41
3
8
Equity securities
Debt securities
Real estate
Other
(in % of plan assets)
10,483
–
226
629
(1)
45
–
63
2
(506)
10,941
7,503
–
(1,101)
807
–
–
–
(420)
6,789
(in millions of €)
At December 31,
German
Plans
At December 31,
2003
Non-
German
Plans
German
Plans
2002
Non-
German
Plans
24,139
(3,829)
384
1,622
16
1,199
–
37
292
(1,852)
22,008
24,125
(3,465)
(1,756)
621
21
–
36
(1,827)
17,755
22,008
(3,287)
344
1,397
652
1,200
(16)
240
28
(1,599)
20,967
17,755
(2,692)
3,256
1,201
18
(11)
128
(1,510)
18,145
10,941
–
256
632
5
124
(361)
94
1
(527)
11,16 5
6,789
–
983
855
–
(7)
–
(437)
8,183
Change in projected
benefit obligations:
Projected benefit obligations
at beginning of year
Foreign currency exchange
rate changes
Service cost
Interest cost
Plan amendments
Actuarial losses
Dispositions
Acquisitions and other
Settlement/curtailment loss
Benefits paid
Projected benefit obligations
at end of year
Change in plan assets:
Fair value of plan assets
at beginning of year
Foreign currency exchange
rate changes
Actual return on plan assets
Employer contributions
Plan participant contributions
Dispositions
Acquisitions and other
Benefits paid
Fair value of plan assets
at end of year
| 147
146
Funded Status. The following information with respect to the
Group’s pension plans is presented by German Plans and
non-German Plans (principally comprised of plans in the U.S.):