3M 2009 Annual Report Download - page 96

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The fair values of the assets held by the postretirement benefits plans by asset category are as follows:
(Millions)
Fair Value
At Dec. 31,
Fair Value Measurements
Using Inputs Considered as
Asset Category 2009 Level 1 Level 2 Level 3
Global equity ....................................................... $ 470 $ 417 $ 53 $ —
Fixed income ....................................................... 268 50 212 6
Private equity....................................................... 246 1 — 245
Absolute return .................................................... 53
—
31 22
Commodities ....................................................... 12
—
5 7
Cash .................................................................... 42 42 —
—
Total................................................................. $ 1,091 $ 510 $ 301 $ 280
Other items to reconcile to fair value of plan
assets .................................................................. $ (16)
Fair value of plan assets ..................................... $ 1,075
Global equity consists primarily of publicly traded U.S. and non-U.S. equities, EAFE index funds, equity private
placement funds and some cash and cash equivalents. Publicly traded equities are valued at the closing price
reported in the active market in which the individual securities are traded. Index funds are valued at the NAV as
determined by the custodian of the fund. The NAV is based on the fair value of the underlying assets owned by the
fund, minus its liabilities then divided by the number of units outstanding. Private placement funds are valued using
the most recent general partner statement of fair value, updated for any subsequent partnership interests’ cash flows.
Fixed income consists of U.S. treasuries, municipal bonds, preferred securities, convertible securities, U.S. and non-
U.S. corporate bonds, asset backed securities, collateralized mortgage obligations, agencies, private placements and
cash and cash equivalents. Included in fixed income are derivative investments such as credit default swaps, interest
rate swaps and futures contracts that are used to help manage risks. U.S. government and government agency
bonds and notes are valued at the closing price reported in the active market in which the individual security is
traded. Corporate and other bonds and notes are valued at either the yields currently available on comparable
securities of issuers with similar credit ratings or valued under a discounted cash flows approach that maximizes
observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may
not be observable such as credit and liquidity risks. Swaps and derivative instruments are valued by the custodian
using market swap curves and market derived inputs.
Private equity consists of interests in partnerships that invest in U.S. and non-U.S. debt and equity securities. The
portfolio is a diversified mix of partnership interests including buyouts, distressed debt, growth equity, mezzanine,
real estate and venture capital investments. Partnership interests are valued using the most recent general partner
statement of fair value, updated for any subsequent partnership interests’ cash flows.
Absolute return primarily consists of private partnership interests in hedge funds, hedge fund of funds and bank loan
funds. Partnership interests are valued using the NAV as determined by the independent administrator or custodian
of the fund.
Commodities consist of commodity-linked notes and commodity-linked derivative contracts designed to deliver
investment returns similar to the GSCI or Dow Jones UBS Commodity index returns. Commodities are valued at
closing prices determined by calculation agents for outstanding transactions.
Other items to reconcile to fair value of plan assets is the net of interest receivable, amounts due for securities sold,
foreign currency fluctuations, amounts payable for securities purchased and interest payable.