MasterCard 2009 Annual Report Download - page 80

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to reduce our exposure to transaction gains and losses resulting from fluctuations of foreign currencies against
our functional currencies, principally the U.S. dollar and euro. The terms of the forward currency contracts are
generally less than 18 months.
U.S. Dollar Functional Currency
(In millions) December 31, 2009 December 31, 2008
Notional
Estimated
Fair Value Notional
Estimated
Fair Value
Commitments to purchase foreign currency ..................... $38 $— $293 $22
Commitments to sell foreign currency .......................... 50 (1) 154 12
Euro Functional Currency
(In millions) December 31, 2009 December 31, 2008
Notional
Estimated
Fair Value Notional
Estimated
Fair Value
Commitments to purchase foreign currency ..................... $16 $— $— $—
Commitments to sell foreign currency .......................... 45 — 66 —
Our settlement activities are subject to foreign exchange risk resulting from foreign exchange rate
fluctuations. This risk is limited to the typical one business day timeframe between setting the foreign exchange
rates and clearing the financial transactions and by confining the supported settlement currencies to the U.S.
dollar or one of 16 other transaction currencies. The remaining 136 transaction currencies are settled in one of the
supported settlement currencies or require local settlement netting arrangements that minimize our foreign
exchange exposure.
Interest Rate Risk
Our interest rate sensitive assets are our debt instruments, which we hold as available-for-sale investments.
With respect to fixed maturities, our general policy is to invest in high quality securities, while providing
adequate liquidity and maintaining diversification to avoid significant exposure. The fair value and maturity
distribution of the Company’s available for sale investments as of December 31 was as follows:
Maturity
(In millions)
Financial Instrument Summary Terms
Fair Market
Value at
December 31,
2009
No
Contractual
Maturity 2010 2011 2012 2013 2014
2015 and
thereafter
Municipal bonds ........ fixed interest $ 514 $— $ 28 $ 97 $ 96 $120 $ 80 $ 93
Short-term bond funds .... fixed/variable
interest 310 310 ————— —
Auction rate securities .... variable interest 180 — ————— 180
Total .................. $1,004 $310 $ 28 $ 97 $ 96 $120 $ 80 $273
70