Extended Strategy Descriptions for The Boeing Company Voluntary Investment Plan (VIP)

Transcription

1 Extended Strategy Descriptions for The Boeing Company Voluntary Investment Plan (VIP) Strategy descriptions are effective December 12, 2014, unless otherwise noted. U.S. Large Companies Fund The fund invests primarily in a diversified portfolio of equity securities of large companies with market caps exceeding $10 billion. The fund may also invest, to a limited extent, in midsize companies and in foreign securities, including depositary receipts and foreign stocks traded on US exchanges. The fund invests in both growth and value stocks across various industries and sectors. Value-style investing seeks to identify companies whose improving businesses are not fully recognized by the market and whose securities are thus selling at valuations less than should be expected. Growth-style investing seeks to identify companies that are exhibiting rapid growth in their businesses. The fund is actively managed by multiple managers, who are allocated a portion of the fund s assets. Each manager operates independently, using individual investment styles and fundamental stock analysis; however, each manager must operate within the constraints of the fund s objectives and guidelines. To facilitate daily liquidity, the fund holds equity index futures contracts. U.S. Small/Mid Companies Fund The fund invests primarily in a diversified portfolio of equity securities of small and midsize companies with market caps under $8 billion. The fund may invest, to a limited extent, in initial public offerings (IPO). The fund invests in both growth and value stocks across various industries and sectors. Value-style investing seeks to identify companies whose improving businesses are not fully recognized by the market and whose securities are thus selling at valuations less than should be expected. Growth-style investing seeks to identify companies that are exhibiting rapid growth in their businesses. The fund is actively managed by multiple managers, who are allocated a portion of the fund s assets. Each manager operates independently, using individual investment styles and fundamental stock analysis; however, each manager must operate within the constraints of the fund s objectives and guidelines. To facilitate daily liquidity, the fund holds equity index futures contracts. International Companies Fund The fund invests primarily in a wide variety of international equity securities, including depositary receipts, of companies in developed and emerging markets outside the United States. The fund is diversified and may invest in large, midsize, and small companies. The fund invests in both growth and value stocks across various industries and sectors. Value-style investing seeks to identify companies whose improving businesses are not fully recognized by the market and whose securities are thus selling at valuations less than should be expected. Growth-style investing seeks to identify companies that are exhibiting rapid growth in their businesses. The fund is actively managed by multiple managers, who are allocated a portion of the fund s assets. Each manager operates independently, using individual investment styles and fundamental stock analysis; however, each manager must operate within the constraints of the fund s objectives and guidelines. Some managers have a quantitative investment process using stock selection models. The fund invests in derivative instruments, such as swaps, forward contracts, and futures and options, and may invest in other funds, such as ETFs and ETNs. Forward currency contracts and currency options are permitted to manage currency exposures. The fund may also invest in IPOs. Copyright 2014 Boeing. All rights reserved. Updated on December 12,

2 Science and Technology Fund The fund invests primarily in equity securities of technology, technology-related, health care, and health care related companies worldwide. The fund seeks to invest in companies that use technology in an innovative way to gain a competitive advantage and attempts to identify those subsectors likely to benefit from the current and expected future economic and market environment and individual opportunities within each science and technology subsector. The fund also seeks to exploit favorable macro trends in the health care sector. The fund may invest in large-, mid-, and small-cap companies. The fund may invest in IPOs and may invest more than 25 percent of its assets in companies domiciled in foreign developed and emerging markets, including depositary receipts. The fund invests in both growth and value stocks. Value-style investing seeks to identify companies whose improving businesses are not fully recognized by the market and whose securities are thus selling at valuations less than should be expected. Growth-style investing seeks to identify companies that are exhibiting rapid growth in their businesses. The fund is actively managed by multiple investment managers, who are allocated a portion of the fund s assets. Each manager operates independently, using individual investment styles; however, each manager must operate within the constraints of the fund s objectives and guidelines. This fund is concentrated in the technology sector. To facilitate daily liquidity, the fund holds equity index futures contracts. Boeing Stock Fund no extended description Global Equity Fund The fund uses risk management techniques to combine complementary, independent equity subportfolios managed by individual portfolio managers into a single portfolio. The resulting fund provides global equity exposure with risk characteristics similar to the broader, global equity markets. The fund typically invests in common stock and may invest in other permissible investments (real estate securities, preferred stock, rights, warrants, exchange-traded funds, other pooled investment vehicles [managed by Wellington Trust], private placements, and other restricted securities). When selecting subportfolios to include in the fund, the investment manager seeks subportfolio managers who may significantly deviate from the benchmark. The manager also attempts to select, monitor, and rebalance the fund regularly to ensure a consistent profile. Strategies may be added to or deleted from the mix periodically Updated on December 12, 2014

3 Global Bond Fund The fund seeks to achieve its investment objective by investing, under normal circumstances, at least 80 percent of its assets in fixed-income instruments that are economically tied to at least three countries (one of which may be the United States), which may be represented by forwards or derivatives such as options, futures contracts, or swap agreements. Fixed-income instruments include bonds, debt securities, and other similar instruments issued by various US and non-us public or private sector entities. Pacific Investment Management Company LLC (PIMCO) selects the fund s foreign country and currency compositions based on an evaluation of various factors, including, but not limited to, relative interest rates, exchange rates, monetary and fiscal policies, and trade and current account balances. The fund may invest, without limitation, in securities denominated in foreign currencies and in US dollar-denominated securities of foreign issuers. The fund may invest, without limitation, in securities and instruments that are economically tied to emerging market countries. The fund may also invest up to 10 percent of its total assets in preferred stocks. In addition, the fund may invest in both investment-grade securities and high-yield securities (junk bonds) subject to a maximum of 15 percent of its total assets in securities rated below B by Moody s Investors Service, Inc. or equivalently rated by Standard & Poor s Rating Services or Fitch, Inc., or if unrated, determined by PIMCO to be of comparable quality. The average portfolio duration of this fund varies based on PIMCO s forecast for interest rates, and, under normal market conditions, is not expected to exceed eight years. Duration is a measure used to determine the sensitivity of a security s price to changes in interest rates. The longer a security s duration, the more sensitive it will be to changes in interest rates. The fund is nondiversified, which means that it may invest its assets in a smaller number of issuers than a diversified fund. The fund may invest, without limitation, in derivative instruments, such as options, futures contracts, or swap agreements, or in mortgage or asset-backed securities, subject to applicable laws or the fund s other restrictions. The fund may purchase or sell securities on a when-issued, delayed-delivery, or forwardcommitment basis and may engage in short sales. The fund may, without limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buybacks or dollar rolls). The total return sought by the fund consists of income earned on the fund s investments, plus capital appreciation, if any, which generally arises from decreases in interest rates, foreign currency appreciation, or improving credit fundamentals for a particular sector or security. Diversified Real Asset Fund The fund s strategy is to invest in a mix of Treasury Inflation Protected Securities (TIPS), commodities, and inflation-sensitive equities to attempt to provide strong relative performance in rising inflationary environments. The fund s typical investment range is equities (20 to 60 percent, with no market cap, sector, or country limits), commodities (0 to 30 percent), fixed income (35 to 70 percent), and currencies (no limit). The fund invests in derivatives and may take long and short positions in exchange-traded and over-the-counter derivatives, and/or hold-short positions in debt securities and derivatives. Securities in the fund may be less marketable than those securities typically held in a more diversified fund. The fund may hold concentrated positions in specific issuers, currencies, sectors, or regions. Average debt quality is expected to be investment grade but may include highyield securities (junk bonds) and emerging market debt. The fund may invest in REITs, ETFs, and other investment pools. The fund has the ability to invest up to 10 percent of assets in private placements and other restricted securities. Updated on December 12,

4 Stable Value Fund The fund primarily invests in high-quality (investment-grade), short-to-intermediate-duration debt securities. These may include commercial paper and money market instruments; debt obligations issued or guaranteed by the US Government, US federal agencies, US Government-sponsored corporations, and agencies; debt denominated in US dollars of US and non-us corporations; mortgage-backed and asset-backed securities, including commercial mortgage-backed securities and collateralized mortgage obligations; debt denominated in US dollars of foreign governments and international or supranational agencies; repurchase agreements, reverse repurchase agreements, and dollar rolls; and cash equivalents. The current duration of the fund is approximately three years, although it is permitted to be up to four and a half years. The fund s average credit quality as of March 31, 2014, was AA. Securities must be rated at least investment grade at time of purchase, and in most cases, a manager can continue to hold a security when it falls below investment grade, as long as the total of assets below investment grade is not more than 5 percent of the assets overseen by that manager. The yield of the fund will fluctuate. In addition to the fixed-income investments above, the fund invests in contracts called wrap agreements issued by banks and insurance companies. These contracts are linked to the fund s fixed-income investments and are generally intended to allow for plan participant transactions to be effected at book value and the amortization of underlying fixed-income gain and losses over a specified period of time, through adjustments to the future contract interest crediting rate (which is the rate earned by investors in the fund). Through the use of book value accounting, there is no immediate recognition of investment gains and losses on the fund s securities. These contracts are intended to help stabilize the short-term value of the fund. However, the circumstances under which payments are made and the timing of payments between the fund and the wrap agreement issuer may vary based on the terms of the wrap agreements, and the wrap-agreement issuer s obligation to pay is subject to significant conditions relating to, among other things, the types and frequency of redemptions from or by the fund. The fund is actively managed by multiple investment managers, all of whom are allocated a portion of the fund s assets. Each manager operates independently and uses individual investment styles in selecting securities, although each manager must operate within the constraints of the fund s investment objectives and strategies. Russell 2000 Index Fund no extended strategy S&P 500 Index Fund no extended strategy International Index Fund no extended strategy Bond Index Fund no extended strategy Balanced Index Fund The fund seeks to achieve its objective by making investments in three other unregistered investment funds managed by State Street Global Advisers (SSgA): SSgA S&P 500 Index Fund, SSgA Global All Cap Equity ex-u.s. Index Fund, and SSgA U.S. Aggregate Bond Index Fund. The S&P 500 Index comprises securities of 500 US companies and is a widely recognized common measure of the performance of the overall US stock market. The MSCI ACWI ex-u.s. IMI includes equity securities of companies located in developed and emerging markets, excluding the United States. The Barclays U.S. Aggregate Bond Index measures the investment-grade, US dollar-denominated, fixed-rate, taxable bond market in the United States. Each underlying fund is managed using a passive or indexing investment approach, by which SSgA attempts to match or replicate, before expenses, the performance of the respective fund s index. Portfolio weights will be rebalanced periodically Updated on December 12, 2014

5 Lifecycle Retirement Fund funds according to an asset allocation strategy designed for investors withdrawing or planning to withdraw their investment for retirement. The asset allocation will likely remain fairly static throughout retirement. The lifecycle sovereign foreign countries; money-market instruments; municipal bonds; futures and forward contracts; options, caps and floors, swaps, and credit default swaps; currency-forward contracts; and derivatives, the value of which Lifecycle 2020 Fund retirement in or around The asset allocation may change periodically depending on the market environment, and over time the fund is expected to become slightly more conservative before retirement. The lifecycle funds have been customized for Boeing and assume that most participants have larger savings plan balances, hold Boeing stock, retire earlier than the average retiree, and receive or will be receiving a benefit from a pension plan (and that the funds equity allocations are thus complemented by other retirement income, i.e., pension retirement benefits). Participants not eligible for a pension benefit should be aware of these underlying investment allocations made in the lifecycle funds to accommodate the pension benefit and determine if these funds are appropriate investment vehicles for their individual situation. For a listing of this fund s asset allocation, please click the following link: Certain underlying funds invest in foreign and emerging markets equity and debt securities, including depositary receipts; commodities and commodity-linked securities; mortgage-backed and other asset-backed securities; other unregistered investment pools; structured notes; below-investment-grade (junk bond) securities; debt of sovereign foreign countries; money market instruments; municipal bonds; futures and forward contracts; options, caps and floors, swaps, and credit default swaps; currency forward contracts; and derivatives, the value of which is linked to or derived from another security, commodity, currency, or index. Updated on December 12,

6 Lifecycle 2025 Fund retirement in or around The asset allocation may change periodically depending on the market Lifecycle 2030 Fund retirement in or around The asset allocation may change periodically depending on the market Updated on December 12, 2014

7 Lifecycle 2035 Fund retirement in or around The asset allocation may change periodically depending on the market Lifecycle 2040 Fund retirement in or around The asset allocation may change periodically depending on the market environment, and over time the fund is expected to become more conservative before retirement. The lifecycle funds have been customized for Boeing and assume that most participants have larger savings plan balances, hold Boeing stock, retire earlier than the average retiree, and receive or will be receiving a benefit from a pension plan (and that the funds equity allocations are thus complemented by other retirement income, i.e., pension retirement benefits). Participants not eligible for a pension benefit should be aware of these underlying investment allocations made in the lifecycle funds to accommodate the pension benefit and determine if these funds are appropriate investment vehicles for their individual situation. For a listing of this fund s asset allocation, please click the following link: companyoffices/empinfo/benefits/lifecycle_fund_asset_allocation.pdf. Certain underlying funds invest in foreign and emerging markets equity and debt securities, including depositary receipts; commodities and commodity-linked securities; mortgage-backed and other asset-backed securities; other unregistered investment pools; structured notes; below-investment-grade (junk bond) securities; debt of sovereign foreign countries; money market instruments; municipal bonds; futures and forward contracts; options, caps and floors, swaps, and credit default swaps; currency forward contracts; and derivatives, the value of which is linked to or derived from another security, commodity, currency, or index. Updated on December 12,

8 Lifecycle 2045 Fund retirement in or around The asset allocation may change periodically depending on the market Lifecycle 2050 Fund The fund invests all its assets in a broad mix of passively (index) and actively managed underlying investment retirement in or around The asset allocation may change periodically depending on the market Updated on December 12, 2014

9 Lifecycle 2055 Fund (effective December 12, 2014) VIP Strategy Glossary (continued) retirement in or around 2055 The asset allocation may change periodically depending on the market environment, and over time the fund is expected to become slightly more conservative before retirement. The lifecycle funds have been customized for Boeing and assume that most participants have larger savings plan balances, hold Boeing stock, retire earlier than the average retiree, and receive or will be receiving a benefit from a pension plan (and that the funds equity allocations are thus complemented by other retirement income, i.e., pension retirement benefits). Participants not eligible for a pension benefit should be aware of these underlying investment allocations made in the lifecycle funds to accommodate the pension benefit and determine if these funds are appropriate investment vehicles for their individual situation. For a listing of this fund s asset allocation, please click the following: companyoffices/empinfo/benefits/lifecycle_fund_asset_allocation.pdf. Certain underlying funds invest in foreign and emerging markets equity and debt securities, including depositary receipts; commodities and commodity-linked securities; mortgage-backed and other asset-backed securities; other unregistered investment pools; structured notes; below-investment-grade (junk bond) securities; debt of Updated on December 12,