Wells Fargo 2015 Annual Report Download - page 252

Note 20: Employee Benefits and Other Expenses (continued)
Table 20.9 presents the changes in Level 3 pension plan and
other benefit plan assets measured at fair value.
Table 20.9: Fair Value Level 3 Pension and Other Benefit Plan Assets
Gains (losses) Purchases,
sales Transfers
(in millions)
Balance
beginning
of year Realized
Unrealized
(1)
and
settlements
(net)
Into/
(Out of)
Level 3
Balance
end of
year
Year ended December 31, 2015
Pension plan assets:
Long duration fixed income $ 12 — — 1 3 16
High-yield fixed income 5 — — 2 (3) 4
Real estate/timber 265 10 8 (38) — 245
Hedge funds 84 4 (5) (21) 9 71
Private equity 155 19 (5) (21) — 148
Other 52 9 (7) (27) — 27
$ 573 42 (9) (104) 9 511
Other benefits plan assets:
Other $ 22 — — 1 — 23
$ 22 — — 1 — 23
Year ended December 31, 2014
Pension plan assets:
Long duration fixed income $ 1 — — 1 10 12
High-yield fixed income — — — 3 2 5
International stocks 1 — — (1) — —
Real estate/timber 294 9 34 (72) — 265
Hedge funds 152 1 4 (9) (64) 84
Private equity 158 12 (3) (12) — 155
Other 52 2 1 (3) — 52
$ 658 24 36 (93) (52) 573
Other benefits plan assets:
Other $ 22 — — — — 22
$ 22 — — — — 22
(1) All unrealized gains (losses) relate to instruments held at period end.
VALUATION METHODOLOGIES Following is a description of
the valuation methodologies used for assets measured at fair
value.
Cash and Cash Equivalents – includes investments in collective
investment funds valued at fair value based upon the quoted
market values of the underlying net assets. The unit price is
quoted on a private market that is not active; however, the unit
price is based on underlying investments traded on an active
market. This group of assets also includes investments in
registered investment companies valued at the NAV of shares
held at year end and in interest-bearing bank accounts.
Long Duration, Intermediate (Core), High-Yield, and
International Fixed Income – includes investments traded on
the secondary markets; prices are measured by using quoted
market prices for similar securities, pricing models, and
discounted cash flow analyses using significant inputs
observable in the market where available, or a combination of
multiple valuation techniques. This group of assets also includes
highly liquid government securities such as U.S. Treasuries,
limited partnerships valued at the NAV provided by the fund
sponsor and registered investment companies and collective
investment funds described above.
Domestic, Global, International and Emerging Market Stocks –
investments in exchange-traded equity securities are valued at
quoted market values. This group of assets also includes
investments in registered investment companies, collective
investment funds and limited partnerships described above.
Real Estate and Timber – the fair value of real estate and timber
is estimated based primarily on appraisals prepared by third-
party appraisers. Market values are estimates and the actual
market price of the real estate can only be determined by
negotiation between independent third parties in a sales
transaction. This group of assets also includes investments in
exchange-traded equity securities and collective investment
funds described above.
Hedge Funds and Private Equity – the fair values of hedge funds
are valued based on the proportionate share of the underlying
net assets of the investment funds that comprise the fund, based
on valuations supplied by the underlying investment funds.
Investments in private equity funds are valued at the NAV
provided by the fund sponsor. Market values are estimates and
the actual market price of the investments can only be
determined by negotiation between independent third parties in
a sales transaction.
Wells Fargo & Company
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