SunTrust 2012 Annual Report Download - page 168

Notes to Consolidated Financial Statements (Continued)
152
The following tables set forth by level, within the fair value hierarchy, plan assets at fair value related to Other Postretirement
Benefits as of December 31, 2012 and 2011:
(Dollars in millions)
Fair Value
Measurements as of
December 31, 2012 1
Assets Measured
at Fair Value as
of December 31,
2012
Quoted Prices In
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Mutual funds:
Equity index fund $49 $49 $— $—
Tax exempt municipal bond funds 86 86 — —
Taxable fixed income index funds 14 14 — —
Money market funds 15 15 — —
Total plan assets $164 $164 $— $—
1 Schedule does not include accrued income.
Fair Value
Measurements as of
December 31, 2011 1
(Dollars in millions)
Assets Measured
at Fair Value as
of December 31,
2011
Quoted Prices In
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Mutual funds:
Large cap fund $37 $37 $— $—
Investment grade tax-exempt bond 25 25 — —
International fund 6 6 — —
Common and collective funds:
SunTrust Reserve Fund 1 — 1 —
SunTrust Equity Fund 37 — 37 —
SunTrust Georgia Tax-Free Fund 26 — 26 —
SunTrust National Tax-Free Fund 17 — 17 —
SunTrust Aggregate Fixed Income Fund 7 — 7 —
SunTrust Short-Term Bond Fund 5 — 5 —
Total plan assets $161 $68 $93 $—
1 Schedule does not include accrued income.
The SunTrust Benefits Finance Committee, which includes several members of senior management, establishes investment policies
and strategies and formally monitors the performance of the investments 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 Pension
Plan to provide specific benefits to participants thereof. The objectives are accomplished by utilizing 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 regarding short-term concerns and any single investment.
The objective in the allocation of assets is to diversify 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. During 2012 and 2011, there was no SunTrust common stock held in the Pension Plans.
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