Boeing 2009 Annual Report Download - page 104

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investment manager or sponsor of the fund and have daily or monthly liquidity. Active currency
managers, through an overlay program, invest in a broad set of currency derivatives. Derivatives
leveled in the table above are over-the-counter and are primarily valued using an income approach
with inputs that include benchmark yields, swap curves, cash flow analysis, rating agency data and
interdealer broker rates. Exchange-traded derivative positions are reported in accordance with
changes in daily variation margin which is settled daily and therefore reflected in the payables and
receivables portion of the table.
Private equity LP valuations are reported by the fund manager and are based on the valuation of the
underlying investments, which include inputs such as cost, operating results, discounted future cash
flows and market based comparable data.
Real estate and real asset fund values are primarily reported by the fund manager and are based on
valuation of the underlying investments, which include inputs such as cost, discounted future cash
flows, independent appraisals and market based comparable data. Publically traded REITs are valued
using a market approach based on quoted market prices of identical instruments.
Global strategies are primarily limited liability company (LLC) or mutual fund structures. The LLCs are
primarily valued based on NAVs calculated by the fund and have monthly liquidity. Global strategies
mutual funds are valued using a market approach based on the quoted market prices of identical
instruments.
Hedge funds consist of fund-of-fund LLC or commingled fund structures. The LLCs are primarily valued
based on NAVs calculated by the fund and are not publicly available. Liquidity for the LLCs is monthly
and is subject to liquidity of the underlying funds. The commingled fund NAV is calculated by the
manager on a daily basis and has monthly liquidity.
Some of our assets, primarily our private equity, real estate and real assets, hedge funds and global
strategies, do not have readily determinable market values given the specific investment structures
involved and the nature of the underlying investments. For the December 31, 2009 plan asset
reporting, publicly traded asset pricing was used where possible. For assets without readily
determinable values, estimates were derived from investment manager discussions focusing on
underlying fundamentals and significant events. For those investments reported on a one-quarter
lagged basis (primarily LPs) we use net asset values, adjusted for subsequent cash flows and
significant events.
The following table presents a reconciliation of Level 3 assets held during the year ended
December 31, 2009.
January 1,
2009
Balance
Net
Realized and
Unrealized
Gains/
(Losses)
Net
Purchases,
Issuances and
Settlements
Net
Transfers
Into/(Out of)
Level 3
December 31,
2009 Balance
Fixed income securities
Corporate $ 9 $ (4) $ 5
Mortgage backed and asset
backed securities 49 $ 1 (32) $5 23
Private equity 2,020 142 129 2,291
Real estate and real assets 1,629 (505) 213 1,337
Hedge funds 885 126 1,011
Total $4,592 $(236) $306 $5 $4,667
92