AbbVie 2012 Annual Report Download - page 92

(c) Primarily separate actively managed pooled investment accounts that are benchmarked to the
MSCI emerging market and various local indices.
(d) Index funds (50 percent in 2012 and 45 percent in 2011) and separate actively managed accounts
(50 percent in 2012 and 55 percent in 2011).
(e) Index funds (20 percent in 2012 and 40 percent in 2011) and separate actively managed accounts
(80 percent in 2012 and 60 percent in 2011).
(f) Primarily funds invested by managers that have a global mandate with the flexibility to allocate
capital broadly across a wide range of asset classes and strategies including, but not limited to
equities, fixed income, commodities, interest rate futures, currencies and other securities to
outperform an agreed upon benchmark with specific return and volatility targets.
(g) Primarily investments in liquid commodity future contracts, private energy funds, cash and cash
equivalents.
Equities that are valued using quoted prices are valued at the published market prices. Equities in a
common collective trust or a registered investment company that are valued using significant other
observable inputs are valued at the net asset value (NAV) provided by the fund administrator. The
NAV is based on the value of the underlying assets owned by the fund minus its liabilities. Fixed
income securities that are valued using significant other observable inputs are valued at prices obtained
from independent financial service industry-recognized vendors. Absolute return funds and commodities
are valued at the NAV provided by the fund administrator.
The following table summarizes the change in the value of plan assets that are measured using
significant unobservable inputs (Level 3).
(in millions) 2012 2011
January 1 $27 $22
Transfers in from other categories — 3
Actual return on plan assets on hand at year end 3 (1)
Purchases, sales and settlements, net 3 3
December 31 $33 $27
The investment mix of equity securities, fixed income and other asset allocation strategies is based
upon achieving a desired return, balancing higher return, more volatile equity securities, and lower
return, less volatile fixed income securities. Investment allocations are made across a range of markets,
industry sectors, capitalization sizes, and in the case of fixed income securities, maturities and credit
quality. There are no known significant concentrations of risk in the plans’ assets.
The plans’ expected return on assets, as shown above is based on management’s expectations of
long-term average rates of return to be achieved by the underlying investment portfolios. In establishing
this assumption, management considers historical and expected returns for the asset classes in which
the plans are invested, as well as current economic and capital market conditions.
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