James A. Hixon

Executive Vice President – Law and

 Corporate Relations

Norfolk Southern Corporation

Mary S. Jones

Vice President & Treasurer

Union Pacific Corporation

John W. MacMurray

Independent Trustee

C. Alec Vincent

AVP Finance & Treasurer

Burlington Northern Santa Fe, LLC

TRUSTEES:

Chair Joel Parker

Special Assistant to the President

 and International Vice President

Transportation Communications

International Union

(TCU/IAM)

Walter A. Barrows

International Secretary-Treasurer

Brotherhood of Railroad Signalmen

George J. Francisco, Jr.

President

National Conference of

 Firemen and Oilers - SEIU

JANUARY 2011

QUARTERLY UPDATE

FOR THE PERIOD ENDING DECEMBER 31, 2010

The National Railroad Retirement Investment Trust (the "Trust") issues a Quarterly Update to 

provide current information on the Trust’s operations and activities relating to its investment operations. 

This update reports on the Trust’s activities for the quarter ending December 31, 2010. Copies of the 

Trust's Annual Management Report and each Quarterly Update are available on the website of the 

Railroad Retirement Board ("RRB"), http://www.rrb.gov.

As of December 31, 2010, the Trust had received a total of $21.3 billion from the Treasury for 

investment. Most of this amount was transferred to the Trust periodically during the first six months of 

its 2003 fiscal year beginning in October 2002. No transfers were received in the fiscal quarter just 

ended. In the quarter ended December 31, 2010, the Trust continued to transfer monies to the Treasury to 

help fund benefit payments and administrative expenses of the Railroad Retirement Account (“RRA”). 

Transfers to the Treasury during the quarter amounted to $429 million. Since the Trust’s inception, it has 

transferred a total of $10.3 billion to the Treasury.

Investment Objectives 

The Trust’s primary investment objectives are to establish a portfolio that will achieve a longterm rate-of-return on assets sufficient to enhance the financial strength of the railroad retirement system 

and to do so in a diversified manner that minimizes the risk of large losses. Achievement of these 

objectives will facilitate the payment of benefits by the Railroad Retirement Board and the United States

Treasury. To further these objectives the Trust has established an asset allocation policy and will seek to 

add value by obtaining returns that are in the aggregate greater than the returns of its strategic policy 

benchmark for this asset allocation. In addition, the Trust takes other appropriate steps to manage 

investment risk and volatility effectively.

In 2002, the Trust conducted its first comprehensive asset allocation study for the purpose of 

analyzing alternative asset allocation strategies for the Trust. The study analyzed the long-term expected 

return, risk, and return correlation of various asset classes, as well as the expected return and risk of 

various portfolios of these asset classes. In 2004, 2006, 2008, and 2009 the Trust took steps to review and 

update its asset allocation. As a result of these reviews, the Trustees have refined periodically the Trust’s 

asset allocation policy and strategic policy benchmark.

National Railroad Retirement Investment Trust
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The Trust's current asset allocation policy and strategic policy benchmark are contained in its 

Investment Guidelines which are included as Appendix B of the Annual Management Report for Fiscal 

Year 2009.

The investment performance for the Trust, and the change in market value of Trust-managed and 

RRB-held assets for the most recent quarter are summarized below.

Investment Performance – Net of Fees

for the Quarter ended December 31, 2010

Trust-Managed Assets: 6.54%

Strategic Policy Benchmark: 7.01%

Market Value of Assets

(Asset values are in billions of dollars)

Trust-managed assets

As of September 30, 2010 $23.8

As of December 31, 2010 $24.9

Change for quarter ended December 31, 2010 $ 1.1

Trust-managed assets and RRB assets held in reserve

As of September 30, 2010 $25.1

As of December 31, 2010 $26.2

Change for quarter ended December 31, 2010 $ 1.1

As of February 1, 2002 (Trust inception) $20.7

Transfers to the Treasury $-10.3

Total change in assets since inception $15.8

As of December 31, 2010 $26.2

Financial Market Volatility

The Trust originally deployed assets received from Treasury into a diversified and balanced 

portfolio of US and non-US equity and US fixed income securities. Over time, the Trust has furthered that 

diversification by allocating a percentage of the portfolio to non-US fixed income securities, private 

equity, real estate, and commodities. As mandated by its statute, the Trust has avoided undue 

concentration of investment in any asset class, type of security, or market sector. This policy of broad 

diversification is intended to serve the Trust well in strong markets and to protect its assets from 

disproportionate market shocks in volatile periods such as have been experienced in recent years. As part 

of this diversification process, the Trust holds tens of thousands of different securities selected by its 

investment managers for its portfolio.

In this volatile investment environment, Trustees and investment staff continue to monitor 

carefully the Trust’s existing investments, and examine ways to refine its strategies to invest Trust assets 

in the most effective and prudent manner. The Board of Trustees will continue to manage the assets of 

the Trust as a patient, long-term investor, recognizing its responsibilities to the railroad retirement system, 

its workers and retirees. As a long-term investor, the Trust expects to benefit from the long-term recovery 

of financial markets.
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Annual Report

The Trust’s Annual Management Report for Fiscal Year 2009, contains additional information 

regarding the Trust’s investment activities as well as other financial information. This report can be 

found on the Railroad Retirement Board’s website at http://www.rrb.gov.