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82
U.S. Pension Plans Assets
In order to achieve the investment objectives in the U.S. pension plans, the investment policy includes a target
strategic asset allocation. The investment policy allows some tolerance around the target in recognition that market
fluctuations and illiquidity of some investments may cause the allocation to a specific asset class to stray from the
target allocation, potentially for long periods of time. Acceptable ranges have been designed to allow for deviation
from long-term targets and to allow for the opportunity for tactical over- and under-weights. The portfolio will normally
be rebalanced when the quarter-end asset allocation deviates from acceptable ranges. The allocation is reviewed
regularly by the named fiduciary of the plans.
The fair values of the assets held by the U.S. pension plans by asset class are as follows:
(Millions)
Fair Value
At Dec. 31,
Fair Value Measurements
Using Inputs Considered as
Asset Class
2010
Level 1
Level 2
Level 3
Equities
U.S. equities ...................................................
$
1,202
$
1,190
$
5
$
7
Non-U.S. equities ............................................
1,244
1,244
—
—
EAFE index funds ...........................................
684
—
684
—
Index funds .....................................................
253
—
253
—
Long/short equity ............................................
499
—
—
499
Total Equities ......................................................
$
3,882
$
2,434
$
942
$
506
Fixed Income
U.S. government securities ............................
$
1,035
$
562
$
473
$
—
Non-U.S. government securities .....................
289
—
289
—
Preferred and convertible securities ...............
28
20
8
—
U.S. corporate bonds ......................................
1,042
168
874
—
Non-U.S. corporate bonds ..............................
205
—
205
—
Asset backed securities ..................................
16
—
16
—
Collateralized mortgage obligations ...............
31
—
31
—
Private placements .........................................
279
—
135
144
Derivative instruments ....................................
(55
)
(2
)
(53
)
—
Other ...............................................................
34
—
34
—
Total Fixed Income .............................................
$
2,904
$
748
$
2,012
$
144
Private Equity
Buyouts ...........................................................
$
613
$
—
$
—
$
613
Distressed debt ...............................................
376
—
—
376
Growth equity ..................................................
23
4
—
19
Mezzanine ......................................................
93
—
—
93
Real estate ......................................................
159
—
—
159
Secondary .......................................................
165
—
—
165
Other ...............................................................
67
—
—
67
Venture capital ................................................
583
—
—
583
Total Private Equity ............................................
$
2,079
$
4
$
—
$
2,075
Absolute Return
Hedge funds and hedge fund of funds ...........
$
1,201
$
—
$
1,142
$
59
Bank loan funds ..............................................
564
—
—
564
Total Absolute Return .........................................
$
1,765
$
—
$
1,142
$
623
Commodities ......................................................
$
449
$
—
$
338
$
111
Cash and Cash Equivalents ...............................
$
644
$
35
$
609
$
—
Total ....................................................................
$
11,723
$
3,221
$
5,043
$
3,459
Other items to reconcile to fair value of plan
assets ..............................................................
$
(148
)
Fair value of plan assets ....................................
$
11,575