Ameriprise 2010 Annual Report Download - page 165

The Company’s pension plans’ assets are invested in an aggregate diversified portfolio to minimize the impact of any
adverse or unexpected results from a security class on the entire portfolio. Diversification is interpreted to include
diversification by asset type, performance and risk characteristics and number of investments. When appropriate and
consistent with the objectives of the plans, derivative instruments may be used to mitigate risk or provide further
diversification, subject to the investment policies of the plans. Asset classes and ranges considered appropriate for
investment of the plans’ assets are determined by each plan’s investment committee. The target allocations are 70%
equity securities, 20% debt securities and 10% all other types of investments, except for the assets in pooled pension
funds which are 80% equity securities, 13% debt securities, and 7% all other types of investments. Actual allocations will
generally be within 5% of these targets. At December 31, 2010, there were no significant holdings of any single issuer and
the exposure to derivative instruments was not significant.
The following tables present the Company’s pension plan assets measured at fair value on a recurring basis:
December 31, 2010
Asset Category Level 1 Level 2 Level 3 Total
(in millions)
Equity securities:
U.S. large cap stocks $ 72 $ 3 $ — $ 75
U.S. small cap stocks 33 1 — 34
Non-U.S. large cap stocks 12 18 — 30
Emerging markets 15 14 — 29
Debt securities:
U.S. investment grade bonds 13 9 — 22
U.S. high yield bonds — 11 — 11
Non-U.S. investment grade bonds — 12 — 12
Private real estate investment trust — — 8 8
Hedge funds — — 9 9
Pooled pension funds — 79 — 79
Cash equivalents 18 — — 18
Total $ 163 $ 147 $ 17 $ 327
December 31, 2009
Asset Category Level 1 Level 2 Level 3 Total
(in millions)
Equity securities:
U.S. large cap stocks $ 56 $ — $ — $ 56
U.S. small cap stocks 22 — — 22
Non-U.S. large cap stocks 10 17 — 27
Emerging markets 13 11 — 24
Debt securities:
U.S. investment grade bonds 15 10 — 25
U.S. high yield bonds — 11 — 11
Non-U.S. investment grade bonds — 14 — 14
Private real estate investment trust — — 5 5
Pooled pension funds — 63 — 63
Cash equivalents 9 — — 9
Total $ 125 $ 126 $ 5 $ 256
Equity securities are managed to track the performance of common market indices for both U.S. and non-U.S. securities,
primarily across large cap, small cap and emerging market asset classes. Debt securities are managed to track the
performance of common market indices for both U.S. and non-U.S. investment grade bonds as well as a pool of U.S. high
yield bonds. The private real estate investment trust consists of a single trust which is managed to track the performance
of a broad population of investment grade non-agricultural income producing properties. The Company’s investments in
hedge funds include investments in a multi-strategy fund and an off-shore fund managed to track the performance of
broad fund of fund indices. Pooled pension funds are managed to return 1.5% in excess of a common index of similar
pooled pension funds on a rolling three year basis. Cash equivalents consist of holdings in a money market fund that
seeks to equal the return of the three month U.S. Treasury bill.
The fair value of the private real estate investment trust is based primarily on the underlying cash flows of the properties
within the trust which are significant unobservable inputs and classified as Level 3. The fair value of the hedge funds is
based on the proportionate share of the underlying net assets of the funds, which are significant unobservable inputs and
classified as Level 3. The fair value of pooled pension funds and equity securities held in collective trust funds is based on
the fund’s NAV and classified as Level 2 as they trade in principal-to-principal markets. Equity securities and mutual funds
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