GE 2009 Annual Report Download - page 89

GE 2009 ANNUAL REPORT 87
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PLAN ASSETS
The fair value of the major categories of the pension plans’ invest-
ments are presented below. The inputs and valuation techniques
used to measure the fair value of the assets are consistently applied
and described in Note 1.
FAIR VALUE OF PLAN ASSETS
Principal pension plans Other pension plans
(In millions) 2009 2008 2009 2008
Balance at January 1 $40,730 $ 59,700 $5,374 $ 7,411
Actual gain (loss) on
plan assets 3,859 (16,569) 935 (1,743)
Employer contributions 168 153 676 627
Participant contributions 167 169 35 40
Benefits paid (2,827) (2,723) (398) (383)
Acquisitions
(dispositions) — net ——(142) 565
Exchange rate adjustments ——439 (1,143)
Balance at December 31 $42,097 $ 40,730 $6,919 $ 5,374
ASSET ALLOCATION
2009 Target allocation
December 31
Principal
pension
plans
Other
pension
plans
(weighted
average)
Equity securities 34–74% (a) 60 %
Debt securities (including cash equivalents) 10–40 30
Private equities 5–15 1
Real estate 4–14 4
Other 1–14 5
(a) Target allocations were 17–37% for U.S. equity securities and 17–37% for non-U.S.
equity securities.
Plan fiduciaries of the GE Pension Plan set investment policies and
strategies for the GE Pension Trust and oversee its investment
allocation, which includes selecting investment managers, com-
missioning periodic asset-liability studies and setting long-term
strategic targets. Long-term strategic investment objectives
include preserving the funded status of the plan and balancing
risk and return. Target allocation percentages are established at
an asset class level by plan fiduciaries. Target allocation ranges
are guidelines, not limitations, and occasionally plan fiduciaries
will approve allocations above or below a target range.
GE Pension Trust assets are invested subject to the following
additional guidelines:
• Short-term securities must generally be rated A1/P1 or better,
except for 15% of such securities that may be rated A2/P2.
• Real estate investments may not exceed 25% of total assets.
• Investments in restricted securities (excluding real estate invest-
ments) that are not freely tradable may not exceed 30% of total
assets (actual was 17% of trust assets at December 31, 2009).
According to statute, the aggregate holdings of all qualifying
employer securities (e.g., GE common stock) and qualifying
employer real property may not exceed 10% of the fair value of
trust assets at the time of purchase. GE securities represented
3.3% and 3.5% of trust assets at year-end 2009 and 2008,
respectively.
The GE Pension Plan has a broadly diversified portfolio of
investments in equities, fixed income, private equities, real estate
and hedge funds; these investments are both U.S. and non-U.S. in
nature. As of December 31, 2009, no one sector concentration
of assets exceeded 15% of total GE Pension Plan assets.
The following table presents GE Pension Plan investments
measured at fair value.
December 31, 2009 (In millions) Level 1 Level 2 Level 3 Total
EQUITY SECURITIES
U.S. equity securities $12,216 $ 383 $ — $12,599
Non-U.S. equity
securities 8,120 323 — 8,443
DEBT SECURITIES
Fixed income and cash
investment funds — 2,769 46 2,815
U.S. corporate (a) — 2,945 97 3,042
Residential mortgage-
backed — 1,053 298 1,351
U.S. government and
federal agency — 2,564 — 2,564
Other debt securities (b) — 1,527 62 1,589
PRIVATE EQUITIES (c) — — 5,339 5,339
REAL ESTATE (c) — — 2,775 2,775
OTHER INVESTMENTS (d) — — 1,537 1,537
TOTAL INVESTMENTS $20,336 $11,564 $10,154 $42,054
CASH AND OTHER $ 43
TOTAL ASSETS $42,097
(a) Primarily represented investment-grade bonds of U.S. issuers from diverse industries.
(b) Primarily represented investments in non-U.S. corporate bonds and commercial
mortgage-backed securities.
(c) Included direct investments and investment funds.
(d) Substantially all represented hedge funds.