v3.26.1
Master Trust
 12 Months Ended
Dec. 31, 2025
Rail  
EBP, Master Trust [Line Items]  
Master Trust Master Trust
The Master Trust was established for the investment of the Plan and other Caterpillar Inc. sponsored retirement plans. The Northern Trust Company is the Trustee of the Master Trust and the custodian for funds invested through the core investments and the TRFs (the funds invested through the core investments and the TRFs are referred to as the Master Trust herein). Caterpillar Inc. sponsored retirement plans (including 401(k) SIP) pool their investments in the Master Trust in exchange for a percentage of participation in the Master Trust. Effective December 31, 2025, the Plan's investments merged with and into 401(k) SIP.
The following table presents the net assets of the Master Trust and the Plan's interest in the net assets of the Master Trust as of December 31, 2025 and 2024.
(in thousands of dollars)Master TrustPlan’s Interest in Master Trust
2025202420252024
ASSETS
Investments, at fair value
Caterpillar Inc. common stock$5,495,510 $3,784,230 $— $290 
Common stocks3,921,926 3,360,443 — 2,920 
Preferred stocks23,527 16,468 — 22 
Preferred corporate bonds and notes5,481 7,570 — 15 
Other corporate bonds and notes1,116,507 899,155 — 1,773 
U.S. government securities917,546 847,015 — 1,620 
Common collective trusts10,071,355 8,473,155 — 9,456 
Registered investment companies24,181 8,351 — 10 
Other investments, net161,077 162,359 — 193 
21,737,110 17,558,746 — 16,299 
Investments, at contract value
Fully benefit-responsive synthetic guaranteed investment contracts745,342 780,302 — 387 
Other assets
Cash5,609 12,700 — 13 
Receivables for securities sold10,745 113,787 — 232 
Accrued income39,453 31,300 — 48 
55,807 157,787 — 293 
Total Master Trust assets22,538,259 18,496,835 — 16,979 
LIABILITIES
Payables for securities purchased(26,413)(151,488)— (291)
Net Master Trust assets$22,511,846 $18,345,347 $— $16,688 

The fully benefit-responsive synthetic guaranteed investment contracts are valued at contract value as described in the Investment Contracts section of Note 4. All other investments are stated at fair value and are valued as described below:

•Common and preferred stocks: Primarily valued at quoted market prices.
•Preferred and other corporate bonds and notes: Valued based on matrices or models from reputable pricing vendors and may be determined by factors which include, but are not limited to market quotations, yields, maturities, call features, ratings, institutional size trading in similar groups of securities and developments related to specific securities.
•U.S. government securities: Valued based on matrices or models from reputable pricing vendors.
•Common collective trusts: Stated at net asset value ("NAV") of units held. The Plan's management elected the practical expedient to use NAV in measuring the fair value of the underlying investments.
•Registered investment companies: Valued at quoted market prices that represent the value of shares held by the Master Trust.
•Other investments, net: Primarily valued at quoted market prices, when available, or valued based on matrices or models from reputable pricing vendors.

The preceding methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although Progress Rail believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables summarize Master Trust investments measured at fair value based on NAV per share using the practical expedient, the unfunded commitments and redemption restrictions as of December 31, 2025 and 2024.

(in thousands of dollars)
December 31, 2025Fair ValueUnfunded CommitmentsRedemption RestrictionsRedemption Frequency (if currently eligible)Redemption Notice Period
Common collective trusts:
Stocks$8,052,916 — NoneDailyNone
Short-term investments$856,792 — NoneDailyNone
U.S. Government securities$1,061,721 — NoneDailyNone
Core fixed income bonds$99,926 — NoneDailyNone


(in thousands of dollars)
December 31, 2024Fair ValueUnfunded CommitmentsRedemption RestrictionsRedemption Frequency (if currently eligible)Redemption Notice Period
Common collective trusts:
Stocks$6,770,665 — NoneDailyNone
Short-term investments$776,283 — NoneDailyNone
U.S. Government securities$926,207 — NoneDailyNone
The following table presents the changes in net assets for the Master Trust for the year ended December 31, 2025.

(in thousands of dollars)2025
Changes in Net Assets:
Caterpillar Inc. common stock net appreciation (depreciation) in fair value of investments$2,130,526 
Net appreciation (depreciation) in fair value of investments2,259,604 
Interest113,520 
Caterpillar Inc. common stock dividends60,066 
Dividends73,519 
Other income7,243 
Net investment income (loss)4,644,478 
Transfers, net 1
(460,114)
Administrative expenses not directly allocated to the plans and other expenses 2
(17,865)
Increase (decrease) in net assets4,166,499 
Net assets
Beginning of the year18,345,347 
End of the year$22,511,846 
1 Represents items recorded at the plan level such as contributions, benefit payments, plan transfers and plan specific administrative expenses.
2 Primarily related to fees and expenses paid to professional money managers who manage the investment funds.

Investment Contracts
The Master Trust holds fixed income fully benefit-responsive investment contracts, referred to as synthetic guaranteed investment contracts (“synthetic GICs”), in which an investment contract is issued by an insurance company (Metropolitan Tower Life Insurance Company, Transamerica Life Insurance Company, The Prudential Insurance Company of America and Nationwide Life Insurance Company). The Plan measures the synthetic GICs at contract value in the Plan's Interest in the Master Trust in the Statements of Net Assets Available for Benefits. The synthetic GICs, which are designed to help preserve principal and provide a stable crediting rate of interest, are fully benefit-responsive and the issuers guarantee that qualified participant initiated withdrawals will be paid at contract value. The synthetic GICs are primarily backed by a portfolio of fixed income investments, which are effectively owned by the Plan. The assets underlying the synthetic GICs are maintained by a third party custodian, separate from the contract issuer's general assets. The synthetic GICs are obligated to provide an interest rate not less than zero. The Plan’s ability to receive amounts due in accordance with the contract is dependent on the issuer’s ability to meet its financial obligations which may be affected by future economic and regulatory developments. These contracts provide that realized and unrealized gains and losses of the underlying assets are not reflected immediately in the assets of the fund, but rather are amortized, usually over the duration of the underlying assets, through adjustments to the future interest crediting rate. The future interest crediting rate can be adjusted periodically and is primarily based on the current yield-to-maturity of the covered investments, plus or minus amortization of the difference between the market value and contract value of the covered investments over the duration of the covered investments at the time of computation. There are no reserves against contract value for credit risks of the contract issuers.

Employer initiated events, if material, may affect the underlying economics of the investment contracts. These events include plant closings, layoffs, plan termination, bankruptcy or reorganization, merger, early retirement incentive programs, tax disqualification of a trust or other events. The occurrence of one or more employer initiated events could limit the Plan's ability to transact at contract value with the issuers. Except for the employer initiated events above, the synthetic GICs do not permit the issuers to terminate the agreement at an amount different from contract value. As of
December 31, 2025, Progress Rail does not believe that the occurrence of an event that would limit the ability of the Plan to transact at contract value with the issuers is probable.

Fair Value Measurements
The guidance on fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. This guidance also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally-developed market assumptions. In accordance with this guidance, fair value measurements are classified under the following hierarchy:

•Level 1 - Quoted prices for identical instruments in active markets.    
•Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.    
•Level 3 - Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.

When available, quoted market prices are used to determine fair value and such measurements are classified within Level 1. In some cases where market prices are not available, observable market-based inputs are used to calculate fair value, in which case the measurements are classified within Level 2. If quoted or observable market prices are not available, fair value is based upon valuations in which one or more significant inputs are unobservable, including internally developed models that use, where possible, current market-based parameters such as interest rates, yield curves and currency rates. These measurements are classified within Level 3.

Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.

The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the end of the reporting period.

The significance of transfers between levels was evaluated based upon the nature of the financial instrument and size of the transfer relative to total net Master Trust assets. For the year ended December 31, 2025, there were no significant transfers into or out of Levels 1, 2 or 3.
Master Trust assets that are measured at fair value as of December 31, 2025 and 2024 are summarized below. Investments measured at net asset value per share using the practical expedient have not been classified in the fair value hierarchy, but are presented in order to permit reconciliation to the table that presents the net assets of the Master Trust.

 Fair Value Measurements as of December 31, 2025
(in thousands of dollars)Level 1Level 2Measured at NAVTotal
   
Stocks$9,428,200 $12,763 $— $9,440,963 
Corporate bonds and notes— 1,121,988 — 1,121,988 
U.S. government securities— 917,546 — 917,546 
Common collective trusts— — 10,071,355 10,071,355 
Registered investment companies24,181 — — 24,181 
Other investments, net122,160 38,917 — 161,077 
Total investments, at fair value$9,574,541 $2,091,214 $10,071,355 $21,737,110 

 Fair Value Measurements as of December 31, 2024
(in thousands of dollars)Level 1Level 2Measured at NAVTotal
   
Stocks$7,158,198 $2,943 $— $7,161,141 
Corporate bonds and notes— 906,725 — 906,725 
U.S. government securities— 847,015 — 847,015 
Common collective trusts— — 8,473,155 8,473,155 
Registered investment companies8,351 — — 8,351 
Other investments, net117,251 45,108 — 162,359 
Total investments, at fair value$7,283,800 $1,801,791 $8,473,155 $17,558,746 

Within the Master Trust, certain investment managers may use derivative financial instruments to meet fund objectives and manage exposure to foreign currency, interest rate and market fluctuations. The following is a description of the types of derivative contracts the Master Trust may use:

•Credit contracts: Credit default swaps are used to manage exposure to credit risk. A credit default swap is a contract in which, for a fee, a protection seller agrees to pay a protection buyer an amount resulting from a credit event on a reference entity. If there is no credit default event or settlement trigger, as defined by the contract, then the protection seller makes no payment to the protection buyer and receives only the contractually specified fee. However, if a credit event occurs, the protection seller will be required to make a payment to the protection buyer.
•Equity contracts: Equity index futures contracts are used by investment managers to invest excess cash into equity benchmarks, such as the S&P 500 and MSCI EAFE (developing countries). These contracts are settled in cash daily. Investment managers may also invest in equity rights and warrants which gives the holder the right to purchase securities from the issuer at a specific price within a certain time frame.
•Foreign exchange contracts: Foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of instruments denominated in foreign currencies. Forward contracts are used by investment managers to manage foreign exchange rate risks associated with certain investments. These contracts are presented gross (buy side of the contract as a receivable and sell side of the contract as a payable) in the table that presents the net assets of the Master Trust.
•Interest rate contracts: Interest rate movements create a degree of risk by affecting the amount of interest payments and the value of debt instruments. Investment managers use interest rate swaps, total return swaps, futures contracts, options and swaptions to manage interest rate risk.

The fair value of these derivative contracts are included in Other investments, net, Receivables for securities sold and Payables for securities purchased in the tabular presentation of the Net Master Trust assets. The related appreciation (depreciation) is included in Net appreciation (depreciation) in fair value of investments in the tabular presentation of the Net investment income (loss) of the Master Trust. As of December 31, 2025 and 2024, the fair value of these derivative financial instruments, net was $10.1 thousand and $(295.4) thousand, respectively. In 2025, the effect of these derivatives on Net investment income (loss) of the Master Trust was a net gain of $15.0 million, which is primarily related to gains in equity contracts.