NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following is a description of the valuation methodologies  used for instruments measured at fair value, as well as the general  classification of such instruments pursuant to the valuation  hierarchy.  The plan measures common stock using quoted prices which are  available in an active market and classifies these investments  within Level 1 of the valuation hierarchy.  (including federal agency obligations, corporate bonds and notes)  and cash. The following table provides the Bancorp’s targeted and  actual weighted-average asset allocations by asset category for  years ended December 31:  All of the plan’s mutual and exchange traded funds are publicly  traded. The plan measures the value of these investments using  the fund’s quoted prices that are available in an active market and  classifies these investments within Level 1 of the valuation  hierarchy. The risk tolerance for the plan is determined by management  to be “moderate to aggressive”, recognizing that higher returns  involve some volatility and that periodic declines in the portfolio’s  value are tolerated in an effort to achieve real capital growth.  There were no significant concentrations of risk associated with  the investments of the Bancorp’s benefit and retirement plans at  December 31, 2010 and 2009.  Permitted asset classes of the plan include cash and cash  equivalents, fixed income (domestic and non-U.S. bonds), equities  (U.S., non-U.S., emerging markets and REITS), equipment leasing  precious metals, commodity transactions and mortgages. The plan  utilizes derivative instruments including puts, calls, straddles or  other option strategies, as approved by management. For certain U.S. Treasury and federal agency and non-agency  obligations, the plan measures the fair value based on quoted  prices, which are available in an active market and classifies these  investments within Level 1 of the valuation hierarchy. Where  quoted prices are not available, the plan measures the fair value of  these investments based on matrix pricing models that include the  bid price, which factors in the yield curve and other characteristics  of the security including the interest rate, prepayment speeds and  length of maturity. Therefore, these investments are classified  within Level 2 of the valuation hierarchy. Prohibited asset classes of the plan include venture capital,  short sales, limited partnerships and leveraged transactions. Per  ERISA, the Bancorp’s common stock cannot exceed ten percent  of the fair value of plan assets. Fifth Third Bank, as Trustee, is expected to manage the plan  assets in a manner consistent with the plan agreement and other  regulatory, federal and state laws. The Fifth Third Bank Pension,  Profit Sharing and Medical Plan Committee (the “Committee”) is  the plan administrator. The Trustee is required to provide to the  Committee monthly and quarterly reports covering a list of plan  assets, portfolio performance, transactions and asset allocation.  The Trustee is also required to keep the Committee apprised of  any material changes in the Trustee’s outlook and recommended  investment policy.  The plan assumptions are evaluated annually and are updated as  necessary. The discount rate assumption reflects the yield on a  portfolio of high quality fixed-income instruments that have a  similar duration to the plan’s liabilities. The expected long-term  rate of return assumption reflects the average return expected on  the assets invested to provide for the plan’s liabilities. In  determining the expected long-term rate of return, the Bancorp  evaluated actuarial and economic inputs, including long-term  inflation rate assumptions and broad equity and bond indices  long-term return projections, as well as actual long-term historical  plan performance.   The following table summarizes the plan assumptions for  the years ended December 31:  The accumulated benefit obligation for all defined benefit plans  was $227 million and $217 million at December 31, 2010 and  2009, respectively. Amounts relating to the Bancorp’s defined  benefit plans with assets exceeding benefit obligations were as  follows at December 31: Amounts relating to the Bancorp’s defined benefit plans with  benefit obligations exceeding assets were as follows at December  31: Lowering both the expected rate of return on the plan and the  discount rate by 0.25% would have increased the 2010 pension  expense by approximately $1 million.  Based on the actuarial assumptions, the Bancorp does not  expect to contribute to the plan in 2011. Estimated pension  benefit payments, which reflect expected future service, are $19  million in 2011, $20 million in 2012, $17 million in 2013, $17  million in 2014 and $16 million in 2015. The total estimated  payments for the years 2016 through 2020 is $70 million.  As of December 31, 2010 and 2009, $172 million and $160  million, respectively, of plan assets were managed through mutual  funds by Fifth Third Bank, a subsidiary of the Bancorp. Plan  assets included $5 million and $3 million of Bancorp common  stock as of December 31, 2010 and 2009, respectively. Plan assets  are not expected to be returned to the Bancorp during 2011.  The Bancorp’s policy for the investment of plan assets is to  employ investment strategies that achieve a range of weighted- average target asset allocations relating to equity securities  (including the Bancorp’s common stock), fixed income securities   Fifth ThirdBancorp 109 ($ in millions)  2010  2009  Projected benefit obligation   $34  217 Accumulated benefit obligation  34  217 Fair value of plan assets  -  182 ($ in millions)  2010  2009  Projected benefit obligation   $193   - Accumulated benefit obligation  193  - Fair value of plan assets  197  - Weighted-average asset  allocation  Targeted  range  2010 2009 Equity securities 72% 71 Bancorp common stock   2 2 Total equity securities  (a) 70 – 80% 74 73 Total fixed income securities  20 – 25 23 24 Cash  0 - 5 3 3 Total 100% 100 (a) Includes mutual and exchange traded funds. Equity securities Mutual and exchange traded funds  Debt securities  Plan Assumptions  Other Information on Retirement and Benefit Plans  Weighted-average assumptions  2010  2009 2008 For measuring benefit obligations  at year end:  Discount rate 5.39 %  5.88 6.11 Rate of compensation increase   5.00   5.00  5.00 Expected return on plan assets  8.25  8.50 8.53 For measuring net periodic benefit cost:  Discount rate 5.88  6.11 6.45 Rate of compensation increase  5.00  5.00 5.00 Expected return on plan assets  8.25  8.50 8.50 Investment Policies and Strategies 