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86
(Millions)
Fair Value
At Dec. 31,
Fair Value Measurements
Using Inputs Considered as
Asset Class
2009
Level 1
Level 2
Level 3
Equities ...............................................................
$
1,619
$
1,330
$
275
$
14
Fixed Income
Domestic fixed income ....................................
$
928
$
283
$
623
$
22
Foreign fixed income ......................................
622
222
400
—
Total Fixed Income .............................................
$
1,550
$
505
$
1,023
$
22
Private Equity
Private equity funds ........................................
$
8
—
$
—
$
8
Real estate ......................................................
54
—
3
51
Total Private Equity ............................................
$
62
—
$
3
$
59
Absolute Return
Insurance ........................................................
$
375
$
—
$
—
$
375
Other ...............................................................
104
—
104
—
Total Absolute Return..........................................
$
479
$
—
$
104
$
375
Cash and Cash Equivalents ...............................
$
208
$
208
$
—
$
—
Total ............................................................
$
3,918
$
2,043
$
1,405
$
470
Other items to reconcile to fair value of plan
assets .............................................................
$
(21
)
Fair value of plan assets ....................................
$
3,897
Equities consist primarily of mandates in public equity securities managed to the Morgan Stanley Capital All Country
World Index. Publicly traded equities are valued at the closing price reported in the active market in which the
individual securities are traded. Domestic and foreign government, corporate debt, mortgage backed, other debt,
hedge funds and private equity consists of both active and passive mandates. Derivative instruments consist of
interest rate swaps that are used to help manage risks. Governments, corporate bonds and notes and mortgage
backed securities are valued at either the closing price reported if traded on an active market or at 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. Hedge funds are valued at the NAV as
determined by the independent administrator or custodian of the fund.
Real estate consists of property funds and REITS (Real Estate Investment Trusts). Property funds are valued using
the most recent partnership statement of fair value, updated for any subsequent partnership interests’ cash flows.
REITS are valued at the closing price reported in the active market in which it is traded.
Insurance consists of insurance contracts, which are valued using cash surrender values which is the amount the
plan would receive if the contract was cashed out at year end.
Other items to reconcile to fair value of plan assets is the net of interest receivable, amounts due for securities sold,
amounts payable for securities purchased and interest payable.