Halliburton 2011 Annual Report Download - page 129
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114
Fair value measurements of plan assets
The following table sets forth by level within the fair value hierarchy the fair value of assets held
by our international pension plans.
Quoted Prices
Significant
in Active
Observable
Significant
Markets for
Inputs for
Unobs
ervable
Millions of dollars
Identical Assets
Similar Assets
Inputs
Total
Common/collective trust funds (a)
Equity funds $ – $ 241 $ – $ 241
Bond funds – 110 – 110
Balanced funds – 12 – 12
Corporate bonds – 89 – 89
United States equity securities 67 – – 67
Non-United States equity securities 64 – – 64
Other assets 15 16 91 122
Fair value of plan assets at December 31, 2011 $ 146 $ 468 $ 91 $ 705
Common/collective trust funds (a)
Equity funds $ – $ 155 $ – $ 155
Bond funds – 97 – 97
Balanced funds – 14 – 14
Non-United States equity securities 133 – – 133
Corporate bonds – 84 – 84
United States equity securities 41 – – 41
Other assets 82 6 79 167
Fair value of plan assets at December 31, 2010 $ 256 $ 356 $ 79 $ 691
(a) Strategies are generally to invest in equity or debt securities, or a combination thereof, that match or outperform certain predefined
indices.
Equity securities are traded in active markets and valued based on their quoted fair value by
independent pricing vendors. Government bonds and corporate bonds are valued using quotes from
independent pricing vendors based on recent trading activity and other relevant information, including
market interest rate curves, referenced credit spreads, and estimated prepayment rates. Common/collective
trust funds are valued at the net asset value of units held by the plans at year-end.
Our investment strategy varies by country depending on the circumstances of the underlying plan.
Typically, less mature plan benefit obligations are funded by using more equity securities, as they are
expected to achieve long-term growth while exceeding inflation. More mature plan benefit obligations are
funded using more fixed income securities, as they are expected to produce current income with limited
volatility. The fixed income allocation is generally invested with a similar maturity profile to that of the
benefit obligations to ensure that changes in interest rates are adequately reflected in the assets of the plan.
Risk management practices include diversification by issuer, industry, and geography, as well as the use of
multiple asset classes and investment managers within each asset class.
For our United Kingdom pension plan, which constituted 74% of our international pension plans’
projected benefit obligations at December 31, 2011, the target asset allocation is 65% equity securities and
35% fixed income securities.