SunTrust 2010 Annual Report Download - page 162

SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
There are currently no redemption restrictions on these investments. Fund units are issued and redeemed based upon
the net asset value per unit determined on the valuation date.
The primary objective of the Short-Term Bond Fund is to provide a high level of total return through current income
and capital preservation primarily through the investment in short to intermediate term investment grade fixed income
securities. The Fund invests in U.S. Treasury notes and federal agency bonds, quality corporate issues, foreign bonds,
and ABS. The net asset value of the Fund is determined semi-monthly on the close of the 15th and last calendar day
(“valuation date”). There are currently no redemption restrictions on these investments. Fund units are issued and
redeemed based upon the net asset value per unit determined on the valuation date.
The SunTrust Benefits Plan Committee, which includes several members of senior management, establishes investment
policies and strategies and formally monitors the performance of the funds on a quarterly basis. The Company’s investment
strategy with respect to pension assets is to invest the assets in accordance with ERISA and related fiduciary standards. The
long-term primary investment objectives for the Pension Plans are to provide for a reasonable amount of long-term growth of
capital (both principal and income), without undue exposure to risk in any single asset class or investment category and to
enable the plans to provide their specific benefits to participants thereof. The objectives are accomplished utilizing a strategy
of equities, fixed income and cash equivalents in a mix that is conducive to participation in a rising market while allowing for
protection in a declining market. The portfolio is viewed as long-term in its entirety, avoiding decisions based solely on
short-term concerns and individual investments. The objective in the allocation of assets is diversification of investments
among asset classes that are not similarly affected by economic, political, or social developments. The diversification does
not necessarily depend upon the number of industries or companies in a portfolio or their particular location, but rather upon
the broad nature of such investments and of the factors that may influence them. To ensure broad diversification in the long-
term investment portfolios among the major categories of investments, asset allocation, as a percent of the total market value
of the total long-term portfolio, is set with the target percentages and ranges presented in the investment policy statement.
Rebalancing occurs on a periodic basis to maintain the target allocation, but normal market activity may result in deviations.
At December 31, 2010 and 2009, there was no SunTrust common stock held in the Pension Plans, nor were there any
purchases during 2010 or 2009.
The basis for determining the overall expected long-term rate of return on plan assets considers past experience, current
market conditions and expectations on future trends. A building block approach is used that considers long-term inflation,
real returns, equity risk premiums, target asset allocations, market corrections (for example, narrowing of fixed income
spreads between corporate bonds and U.S. Treasuries) and expenses. Capital market simulations from internal and external
sources, survey data, economic forecasts and actuarial judgment are all used in this process.
The expected long-term rate of return on plan assets was 8.00% in 2010 and 2009. The expected long-term rate of return is
7.75% for 2011. The asset allocation for the Pension Plans and the target allocation, by asset category, are as follows:
Target
Allocation1
Percentage of Plan Assets
at December 312
Asset Category 2011 2010 2009
Equity securities 50-75 % 60 % 61 %
Debt securities 25-50 39 37
Cash equivalents 0-5 1 2
Total 100 % 100 %
1SunTrust Pension Plan only.
2SunTrust and NCF Pension Plans.
The investment strategy for the Other Postretirement Benefit Plans is maintained separately from the strategy for the Pension
Plans. The Company’s investment strategy is to create a stream of investment returns sufficient to provide for current and
future liabilities at a reasonable level of risk. Assets are diversified among equity and fixed income investments according to
the asset mix approved by the SunTrust Benefits Plan Committee which is presented in the target allocation table. The
pre-tax expected long-term rate of return on these plan assets was 6.75% in 2010 and 7.25% in 2009. The 2011 pre-tax
expected long-term rate of return is 6.75%. At December 31, 2010 and 2009, there was no common stock held in the Other
Postretirement Benefit Plans, nor were there any purchases during 2010 or 2009.
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