Amtrak 2014 Annual Report Download - page 62

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National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
1509-1694994 54
12. Postretirement Employee Benefits (continued)
Assets are strategically allocated among equity, fixed income, real estate and global asset
allocation managers who have the ability to invest in stocks, bonds, and other assets in the U.S.
and abroad in order to achieve diversification of investments and to reduce volatility in
investment returns as well as maintain flexibility for the managers to allocate assets to areas of
the market they believe have greater upside potential while avoiding areas of the market that they
believe are likely to underperform. The asset allocation is evaluated and rebalanced to return
each of the asset classes back to the target range percentage within six to eight weeks following
the end of each quarter, unless the Retirement Investment Committee determines otherwise. As a
result of the asset allocation diversification strategies, there are no significant concentrations of
risk within the portfolio of investments.
The accounting guidance on fair value measurements specifies a fair value hierarchy based on
the ability to observe inputs used in valuation techniques (Level 1, 2 and 3 – see Note 8). The
following is a description of the valuation methodologies used for the investments measured at
fair value, including the general classification of such instruments pursuant to the valuation
hierarchy. Further, upon adoption of the provisions of the ASU No. 2009-12, Investments in
Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), the Company
expanded disclosures for those assets whose fair value is estimated using the net asset value
(NAV) per share or its equivalent for which fair value is not readily determinable. The Company
does not intend to sell any of the funds at an amount different from NAV per share at
September 30, 2014, nor does the Company have any unfunded commitments related to these
funds.
Domestic Equity Securities
This investment category consists of common stock issued by U.S. corporations and American
Depository Receipts (ADRs) issued by U.S. banks. Common stock and ADRs are traded actively
on exchanges and price quotes for these shares are readily available. These assets are classified
as Level 1 investments.
Fixed Income Securities
This investment category consists of U.S. Treasuries, U.S. Government bonds, corporate bonds,
agency-backed bonds, municipal bonds, asset-back securities and mortgage-backed securities.
These assets are valued based on a compilation of primary observable market information or a
broker quote in a non-active market. These assets are classified as Level 2 investments.