diversification, assessment of risk and targeting the optimal expected returns for given levels of risk are applied. The
target asset allocation is reviewed periodically and is determined based on a long-term projection of capital market
outcomes, inflation rates, fixed income yields, returns, volatilities and correlation relationships. The inclusion of any
given asset class in the target asset allocation is considered in relation to its impact on the overall risk/return
characteristics as well as its impact on the overall investment return. As part of its strategy, Schlumberger may utilize
certain derivative instruments, such as options, futures, swaps and forwards, within the plans to manage risks (currency,
interest rate, etc.) or as a substitute for physical securities or to obtain exposure to different markets.
Asset performance is monitored frequently with an overall expectation that plan assets will meet or exceed the
weighted index of its target asset allocation and component benchmark over rolling five year periods.
The expected long-term rate of return on assets assumptions reflect the average rate of earnings expected on funds
invested or to be invested. The assumptions have been determined by reflecting expectations regarding future rates of
return for the portfolio considering the asset allocation and related historical rates of return. The appropriateness of the
assumptions is reviewed annually.
The fair value of Schlumberger’s pension plan assets at December 31, 2010, by asset category, was as follows:
The fair values presented below were determined based on valuation techniques categorized as follows:
k
Level one: The use of quoted prices in active markets for identical instruments.
k
Level two: The use of quoted prices for similar instruments in active markets or quoted prices for identical or
similar instruments in markets that are not active or other inputs that are observable in the market or can be
corroborated by observable market data.
k
Level three: The use of significantly unobservable inputs that typically require the use of management’s
estimates of assumptions that market participants would use in pricing.
Total
Level
One
Level
Two
Level
Three
Total
Level
One
Level
Two
Level
Three
2010
2009
US Plan Assets
(Stated in millions)
Asset Category:
Cash and Cash Equivalents
$ 67 $ 35 $ 32
$ – $ 191 $ 191 $ – $ –
Equity Securities:
US
(a)
885
885
710
710
International
(b)
473
370
103
355
280
75
Debt securities:
Corporate bonds
(c)
220
220
193
193
Government and government-related debt securities
(d)
554
148
406
462
161 301
Government agency collateralized mortgage obligations and
mortgage backed securities
(e)
201
201
136
136
Other collateralized mortgage obligations and mortgage-backed
securities
(f)
67
67
71
71
Other Investments:
Private equity
(g)
128
128
99
99
Real estate
(h)
40
40
37
37
Total
$2,635 $1,438 $1,029 $168
$2,254 $1,342 $776 $136
68
Part II, Item 8
