AT&T Wireless 2015 Annual Report Download - page 73

AT&T INC. | 71
The plans’ weighted-average asset targets and actual allocations as a percentage of plan assets, including the notional exposure
of future contracts by asset categories at December 31, are as follows:
Pension Assets Postretirement (VEBA) Assets
Target 2015 2014 Target 2015 2014
Equity securities:
Domestic 20% – 30% 22% 23% 21% – 31% 26% 29%
International 10% – 20% 15 14 9% – 19% 14 20
Fixed income securities 35% – 45% 40 38 29% – 39% 34 29
Real assets 6% – 16% 10 11 0% – 6% 1 1
Private equity 4% – 14% 12 12 0% – 7% 2 3
Other 0% – 5% 1 2 17% – 27% 23 18
Total 100% 100% 100% 100%
had a ready market for these investments existed, and such
differences could be material. Alternative investments not
having an established market are valued at fair value as
determined by the investment managers. Private equity,
mezzanine and distressed investments are often valued
initially by the investment managers based upon cost.
Thereafter, investment managers may use available market
data to determine adjustments to carrying value based upon
observations of the trading multiples of public companies
considered comparable to the private companies being
valued. Such market data used to determine adjustments to
accounts for cash flows and company-specified issues include
current operating performance and future expectations of the
investments, changes in market outlook, and the third-party
financing environment. Private equity partnership holdings
may also include publicly held equity investments in liquid
markets that are marked-to-market at quoted public values,
subject to adjustments for large positions held. Real estate
and natural resource direct investments are valued either
at amounts based upon appraisal reports prepared by
independent third-party appraisers or at amounts as
determined by internal appraisals performed by the
investment manager, which are reasonable as determined by
the review of an external valuation consultant. Fixed income
securities valuation is based upon pricing provided by an
external pricing service when such pricing is available. In the
event a security is too thinly traded or narrowly held to be
priced by such a pricing service, or the price furnished by
such external pricing services is deemed inaccurate, the
managers will then solicit broker/dealer quotes (spreads or
prices). In cases where such quotes are available, fair value
will be determined based solely upon such quotes provided.
Managers will typically use a pricing matrix for determining
fair value in cases where an approved pricing service or a
broker/dealer is unable to provide a fair valuation for specific
fixed-rate securities such as many private placements. New
fixed-rate securities will be initially valued at cost at the time
of purchase. Thereafter, each bond will be assigned a spread
from a pricing matrix that will be added to current Treasury
rates. The pricing matrix derives spreads for each bond based
on external market data, including the current credit rating
for the bonds, credit spreads to Treasuries for each credit
At December 31, 2015, AT&T securities represented less
than 0.5% of assets held by our pension plans and 6% of
assets (primarily common stock) held by our VEBA trusts
included in these financial statements.
Investment Valuation
Investments are stated at fair value. Fair value is the price
that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market
participants at the measurement date. See “Fair Value
Measurements” for further discussion.
Investments in securities traded on a national securities
exchange are valued at the last reported sales price on the
last business day of the year. If no sale was reported on
that date, they are valued at the last reported bid price.
Investments in securities not traded on a national securities
exchange are valued using pricing models, quoted prices of
securities with similar characteristics or discounted cash
flows. Shares of registered investment companies are valued
based on quoted market prices, which represent the net
asset value of shares held at year-end. Over-the-counter
(OTC) securities are valued at the bid price or the average
of the bid and asked price on the last business day of the
year from published sources where available and, if not
available, from other sources considered reliable. Depending
on the types and contractual terms of OTC derivatives, fair
value is measured using valuation techniques, such as the
Black-Scholes option pricing model, simulation models or
a combination of various models.
Common/collective trust funds, pooled separate accounts
and other commingled (103-12) investment entities are
valued at quoted redemption values that represent the net
asset values of units held at year-end which management
has determined approximates fair value.
Alternative investments, including investments in private
equity, real estate, natural resources (included in real assets),
mezzanine and distressed debt (included in partnerships/joint
ventures), limited partnership interests, certain fixed income
securities and hedge funds do not have readily available
market values. These estimated fair values may differ
significantly from the values that would have been used