Ford 2009 Annual Report Download - page 123

Notes to the Financial Statements
Ford Motor Company | 2009 Annual Report 121
NOTE 18. RETIREMENT BENEFITS (Continued)
Estimated Future Benefit Payments
The following table presents estimated future gross benefit payments and subsidy receipts related to the Medicare
Prescription Drug Improvement and Modernization Act of 2003 (in millions):

3HQVLRQ%HQHILWV
3HQVLRQ%HQHILWV3HQVLRQ%HQHILWV
3HQVLRQ%HQHILWV



863ODQV
863ODQV863ODQV
863ODQV

1RQ
1RQ1RQ
1RQ
86 8686
86
3ODQV
3ODQV3ODQV
3ODQV
:RUOGZLGH23(%
:RUOGZLGH23(%:RUOGZLGH23(%
:RUOGZLGH23(%



*URVV%HQHILW
*URVV%HQHILW*URVV%HQHILW
*URVV%HQHILW
3D\PHQWV
3D\PHQWV3D\PHQWV
3D\PHQWV

*URVV%HQHILW
*URVV%HQHILW*URVV%HQHILW
*URVV%HQHILW
3D\PHQWV
3D\PHQWV3D\PHQWV
3D\PHQWV

*URVV%HQHILW
*URVV%HQHILW*URVV%HQHILW
*URVV%HQHILW
3D\PHQWV
3D\PHQWV3D\PHQWV
3D\PHQWV

6XEVLG\
6XEVLG\6XEVLG\
6XEVLG\
5HFHLSWV
5HFHLSWV5HFHLSWV
5HFHLSWV



       


       ಧ


       ಧ


       ಧ


       ಧ


       ಧ
BBBBBBB
([FOXGHV9ROYR
Pension Plan Asset Information
Investment Objective and Strategies. Our investment objectives are to minimize the volatility of the value of our
U.S. pension assets relative to U.S. pension liabilities and to ensure assets are sufficient to pay plan benefits. Target
asset allocations, which were established in 2007 and which we expect to reach over the next several years, are about
30% public equity investments, 45% fixed income investments, and up to 25% alternative investments (e.g., private
equity, real estate, and hedge funds). Our largest non-U.S. plans (Ford U.K. and Ford Canada) have similar target asset
allocations and investment objectives and strategies.
Investment strategies and policies for the U.S. plans and the largest non-U.S. plans reflect a balance of risk-reducing
and return-seeking considerations. The objective of minimizing the volatility of assets relative to liabilities is addressed
primarily through asset diversification, partial asset – liability matching, and hedging. Assets are broadly diversified
across many asset classes to achieve risk-adjusted returns that in total lower asset volatility relative to the liabilities. Our
policy to rebalance our investments regularly ensures actual allocations are in line with target allocations as appropriate.
The fixed income target asset allocation partially matches the bond-like and long-dated nature of the pension liabilities.
Strategies to address the goal of ensuring sufficient assets to pay benefits include target allocations to a broad array of
asset classes that provide adequate return, diversification and liquidity.
All assets are externally managed and most assets are actively managed. Managers are not permitted to invest
outside of the asset class (e.g., fixed income, equity, alternatives) or strategy for which they have been appointed. We
use investment guidelines and recurring audits as tools to ensure investment managers invest solely within the investment
strategy they have been provided.
Derivatives are permitted for public equity and fixed income investment managers to use as efficient substitutes for
traditional securities and to manage exposure to foreign exchange and interest rate risks. Interest rate and foreign
currency derivative instruments are used for the purpose of hedging changes in the fair value of assets that result from
interest rate changes and currency fluctuations. Interest rate derivatives also are used to adjust portfolio duration.
Derivatives may not be used to leverage or to alter the economic exposure to an asset class outside the scope of the
mandate an investment manager has been given. Alternative investment managers are permitted to employ leverage
(including through the use of derivatives or other tools) that may alter economic exposure.