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Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Pension Assets — The Company employs a total return investment approach whereby a mix of equity and fixed income securities are
used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful
consideration of plan liabilities, plan funded status and corporate financial condition. The investment portfolio contains a diversified
blend of equity and fixed income securities. Furthermore, equity securities are diversified across United States and non-United States
stocks, as well as growth, value, and small and large capitalizations. Other assets, such as real estate and cash, are used judiciously to
enhance long-term returns while improving portfolio diversification. The Company strives to maintain an equity and fixed income
securities allocation mix of approximately 60 percent and 40 percent, respectively. Investment risk is measured and monitored on an
ongoing basis through quarterly investment portfolio reviews and annual liability measurements.
The Company's weighted-average asset allocation for the defined benefit pension plan by asset category at the measurement date of
December 31 is as follows:
2010 2009
Equity securities 59.8% 55.6%
Fixed income securities 34.4% 35.0%
Real estate 3.9% 5.5%
Other 1.9% 3.9%
Total 100.0% 100.0%
The Company records its pension assets at fair value as described in Note 4 — Fair Value Measurement. Following is a description of the
Plan's investments at fair value and valuation methodologies:
• Short-term investment fund — This fund is comprised of interest-bearing cash accounts and time deposits with original maturities of
less than three months, and is valued at historical cost, which approximates fair value. Amounts in these investments are typically
the result of temporary timing differences between receipts from other investments and reinvestment of those funds or benefit
payments to plan participants.
• Common collective trusts issued and held by the trustee — These investments in equity and fixed income securities comprise the
substantial portion of the pension plan trust and are held in various common/collective trusts that are maintained by the trustee, who
is regulated, supervised and subject to periodic examination by a state or federal agency. Common collective trusts are held by the
trustee for the collective investment and reinvestment of assets contributed from employee benefit plans maintained by more than
one employer or a controlled group of corporations. The fair value of the common collective trust is determined based on the price
per unit held as of the end of a period as determined by the trustee in accordance with their valuation methodology.
• Real estate — The pension plan trust holds an investment in a real estate development project. The fair value of this investment
represents the estimated market value of the plan's related ownership percentage of the project based upon an appraisal as of each
balance sheet date. As of December 31, 2010 and 2009, there is no unfunded commitment or potential redemptions related to this
asset. The fund strategy for this asset is long-term capital appreciation.
• Experience fund investment contracts — These investments are actuarially determined annuity reserves for certain participants for
whom annuities were purchased under a group annuity contract and were superseded and converted into an investment contract. The
fair value is determined by multiplying their balances at cost times a discount factor, which is intended to recognize the difference
between the investment yield at cost and the investment yield which prevailed generally at the balance sheet date for new
investments of similar nature. The Company liquidated all but one of these investments in 2010 and invested the proceeds into
common collective trusts. The remaining balance at December 31, 2010 relates to one contract which was in the process of being
liquidated at period-end.
F-34