DuPont 2013 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 of the 2013 DuPont annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 102

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102

E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
F-38
Plan Assets
All pension plan assets in the U.S. are invested through a single master trust fund. The strategic asset allocation for this trust fund
is selected by management, reflecting the results of comprehensive asset liability modeling. The general principles guiding U.S.
pension asset investment policies are those embodied in the Employee Retirement Income Security Act of 1974 (ERISA). These
principles include discharging the company's investment responsibilities for the exclusive benefit of plan participants and in
accordance with the "prudent expert" standard and other ERISA rules and regulations. The company establishes strategic asset
allocation percentage targets and appropriate benchmarks for significant asset classes with the aim of achieving a prudent balance
between return and risk. Strategic asset allocations in other countries are selected in accordance with the laws and practices of
those countries. Where appropriate, asset liability studies are utilized in this process. U.S. plan assets and a portion of non-U.S.
plan assets are managed by investment professionals employed by the company. The remaining assets are managed by professional
investment firms unrelated to the company. The company's pension investment professionals have discretion to manage the assets
within established asset allocation ranges approved by senior management of the company. Additionally, pension trust funds are
permitted to enter into certain contractual arrangements generally described as "derivatives." Derivatives are primarily used to
reduce specific market risks, hedge currency and adjust portfolio duration and asset allocation in a cost-effective manner.
The weighted-average target allocation for plan assets of the company's U.S. and non-U.S. pension plan is summarized as follows:
Target allocation for plan assets at December 31, 2013 2012
U.S. equity securities 27% 28%
Non-U.S. equity securities 21 21
Fixed income securities 32 29
Hedge funds 2 2
Private market securities 11 13
Real estate 7 7
Total 100% 100%
Equity securities include varying market capitalization levels. U.S. equity investments are primarily large-cap companies. Fixed
income investments include corporate-issued, government-issued and asset-backed securities. Corporate debt investments include
a range of credit risk and industry diversification. U.S. fixed income investments are weighted heavier than non-U.S fixed income
securities. Other investments include hedge funds, real estate and private market securities such as interests in private equity and
venture capital partnerships.
Fair value calculations may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the
company believes its valuation methods are appropriate and consistent with other market participants, the use of different
methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value
measurement at the reporting date.