Sears 2008 Annual Report Download - page 73

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
The Investment Committee, made up of select members of senior management, has appointed a
non-affiliated third party professional to advise the Committee with respect to the SHC domestic pension plan
assets. The plan’s overall investment objective is to provide a long-term return that, along with Company
contributions, is expected to meet future benefit payment requirements. A long-term horizon has been adopted in
establishing investment policy such that the likelihood and duration of investment losses are carefully weighed
against the long-term potential for appreciation of assets. The plan’s investment policy requires investments to be
diversified across individual securities, industries, market capitalization and valuation characteristics. In addition,
various techniques are utilized to monitor, measure and manage risk.
Plan assets were invested in the following classes of securities (none of which were securities of the
Company):
Plan Assets as of
January 31,
2009
February 2,
2008
Equity securities ......................................................... 33% 43%
Fixed income and other debt securities ........................................ 61 50
Other .................................................................. 6 7
Total .................................................................. 100% 100%
The plan’s target allocation is determined by taking into consideration the amounts and timing of projected
liabilities, our funding policies and expected returns on various asset classes. At January 31, 2009, the plan’s
target asset allocation was 43% equity, 50% fixed income, and 7% other, which is comprised of alternative
investments that incorporate absolute return investment strategies. To develop the expected long-term rate of
return on assets assumption, we considered the historical returns and the future expectations for returns for each
asset class, as well as the target asset allocation of the pension portfolio.
73