3M 2014 Annual Report Download - page 92

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86
The fair values of the assets held by the international pension plans by asset class are as follows:
Fair Value Measurements Using Inputs Considered as
Fair Value at
(Millions)
Level 1
Level 2
Level 3
Dec. 31,
Asset Class
2014
2013
2014
2013
2014
2013
2014
2013
Equities
Growth equities
$
672
$ 733
$
176
$ 190
$
―
$ ―
$
848
$
923
Value equities
595
653
23
14
―
―
618
667
Core equities
19
19
642
668
4
5
665
692
Total Equities
$
1,286
$ 1,405
$
841
$ 872
$
4
$ 5
$
2,131
$
2,282
Fixed Income
Domestic government debt
$
87
$ 199
$
542
$ 539
$
3
$ 3
$
632
$
741
Foreign government debt
45
28
816
657
―
1
861
686
Corporate debt securities
1
1
615
638
5
20
621
659
Mortgage backed debt
―
―
82
75
―
―
82
75
Other debt obligations
―
―
708
391
11
13
719
404
Total Fixed Income
$
133
$ 228
$
2,763
$ 2,300
$
19
$ 37
$
2,915
$
2,565
Private Equity
Private equity funds
$
―
$ ―
$
―
$ ―
$
23
$ 22
$
23
$
22
Real estate
3
3
73
87
55
53
131
143
Total Private Equity
$
3
$ 3
$
73
$ 87
$
78
$ 75
$
154
$
165
Absolute Return
Hedge funds
$
―
$ ―
$
95
$ 62
$
22
$ 56
$
117
$
118
Insurance
―
―
―
―
476
492
476
492
Derivatives
―
2
(4)
3
―
―
(4)
5
Other
―
―
13
2
3
2
16
4
Total Absolute Return
$
―
$ 2
$
104
$ 67
$
501
$ 550
$
605
$
619
Cash and Cash Equivalents
$
161
$ 112
$
32
$ 14
$
―
$ ―
$
193
$
126
Total
$
1,583
$ 1,750
$
3,813
$ 3,340
$
602
$ 667
$
5,998
$
5,757
Other items to reconcile to fair
value of plan assets
$
(41)
$
1
Fair value of plan assets
$
5,957
$
5,758
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.
Fixed Income investments include domestic and foreign government, corporate, mortgage backed and other debt.
Governments, corporate bonds and notes and mortgage backed securities are valued at 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 flow 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.
Private equity funds consist of both active and passive mandates. Partnership interests are valued using the most recent
general partner statement of fair value, updated for any subsequent partnership interests’ cash flows or expected changes
in fair value. 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.
Absolute return consists of private partnership interests in hedge funds, insurance contracts, derivative instruments,
hedge fund of funds, and bank loan funds. 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. Derivative
instruments consist of interest rate swaps that are used to help manage risks. Hedge funds are valued at the NAV as
determined by the independent administrator or custodian of the fund. Generally, hedge fund partnership interests, which
have a redemption right in the near term and are past any lock-up redemption period, are classified as level 2. In 2014, a
hedge fund investment was moved to level 3 after the investment was transferred to a new share class with a longer lock-
up period. Another hedge fund was moved from level 3 to level 2 during 2014 because the lock-up redemption period had
expired.