Hess 2011 Annual Report Download - page 94

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HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(a) Includes securities issued and guaranteed by U.S. and non-U.S. governments.
(b) Primarily consists of securities issued by governmental agencies and municipalities.
(c) Comprised of U.S. residential and commercial mortgage-backed securities.
Cash and short-term investment funds consist of cash on hand and short-term investment funds. The short-
term investment funds provide for daily investments and redemptions and are valued and carried at a $1 net asset
value (NAV) per fund share. Cash on hand is classified as Level 1 and short-term investment funds are classified
as Level 2.
Equities consist of equity securities issued by U.S. and non-U.S. corporations as well as commingled
investment funds that invest in equity securities. Individually held equity securities are traded actively on
exchanges and price quotes for these shares are readily available. Individual equity securities are classified as
Level 1. Commingled fund values reflect the NAV per fund share, derived from the quoted prices in active
markets of the underlying securities. Equity commingled funds are classified as Level 2.
Fixed income investments consist of securities issued by the U.S. government, non-U.S. governments,
governmental agencies, municipalities and corporations, and agency and non-agency mortgage-backed securities.
This investment category also includes commingled investment funds that invest in fixed income securities.
Individual fixed income securities are generally priced on the basis of evaluated prices from independent pricing
services. Such prices are monitored and provided by an independent, third-party custodial firm responsible for
safekeeping plan assets. Individual fixed income securities are classified as Level 2 or 3. Commingled fund
values reflect the NAV per fund share, derived indirectly from observable inputs or from quoted prices in less
liquid markets of the underlying securities. Fixed income commingled funds are classified as Level 2.
Other investments consist of exchange-traded real estate investment trust securities as well as commingled
fund and limited partnership investments in hedge funds, private equity, real estate and diversified commodities.
Exchange-traded securities are classified as Level 1. Commingled fund values reflect the NAV per fund share
and are classified as Level 2 or 3. Private equity and real estate limited partnership values reflect information
reported by the fund managers, which include inputs such as cost, operating results, discounted future cash flows,
market based comparable data and independent appraisals from third-party sources with professional
qualifications. Hedge funds, private equity and non-exchange-traded real estate investments are classified as
Level 3.
The following tables provide changes in financial assets that are measured at fair value based on Level 3
inputs that are held by institutional funds classified as:
Fixed
Income*
Hedge
Funds
Private
Equity
Funds
Real
Estate
Funds Total
(Millions of dollars)
Balance at January 1, 2010 .................................... $ 8 $143 $ 29 $ 14 $194
Actual return on plan assets:
Related to assets held at December 31, 2010 .................... — 6 1 1 8
Related to assets sold during 2010 ............................ — — — — —
Purchases, sales or other settlements ............................ 1 38 10 17 66
Net transfers in (out) of Level 3 ................................ (2) — — — (2)
Balance at December 31, 2010 ................................. 7 187 40 32 266
Actual return on plan assets:
Related to assets held at December 31, 2011 .................... — (5) 9 2 6
Related to assets sold during 2011 ............................ —2——2
Purchases, sales or other settlements ............................ (3) 27 9 10 43
Net transfers in (out) of Level 3 ................................ —————
Balance at December 31, 2011 ................................. $ 4 $211 $ 58 $ 44 $317
*Fixed Income includes treasury and government issued, government related, mortgage-backed and corporate securities.
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