Fannie Mae 2009 Annual Report Download - page 350

Level 2 have been determined based on the net asset value per share of the investments as of year end. None
of the fair values for plan assets were determined by using significant unobservable inputs, or Level 3.
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2) Total
Fair Value Measurements as of
December 31, 2009
(Dollars in millions)
Cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $—$14 $14
Equity securities:
U.S. large-cap
(1)
................................................ 408 — 408
U.S. mid/small blend
(2)
........................................... 116 — 116
International large/mid blend
(3)
...................................... — 115 115
Fixed income securities:
Corporate bonds
(4)
.............................................. — 146 146
Total plan assets at fair value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $524 $275 $799
(1)
Consists of a publicly traded low-cost equity index fund that tracks to the S&P 500.
(2)
Consists of a publicly traded low-cost equity index fund that tracks to all regularly traded U.S. stocks except those in
the S&P 500.
(3)
Consists of a single equity fund that tracks to an index that consists of approximately 4,000 securities across over 40
countries with not more than 15% in any single country.
(4)
Consists of a single bond fund that tracks to an index that consists of approximately 2,400 issuances of investment
grade bonds from diverse industries within international markets representing approximately 19%.
Our investment strategy is to diversify our plan assets in order to reduce our concentration risk, reflect the
plan’s profile over time, and maintain an asset allocation that allows us to meet current and future benefit
obligations. The assets of the qualified pension plan consist primarily of exchange-listed stocks, held in
broadly diversified index funds. We also invest in a broadly diversified indexed fixed income account. In
addition, the plan holds liquid short-term investments that provide for monthly pension payments, plan
expenses and, from time to time, may represent uninvested contributions or reallocation of plan assets. The
target allocations for plan assets are from 75% to 85% for equity securities, 12% to 20% for fixed income
securities and 0% to 2% for all other types of investments. Our 2009 asset allocation policy provided for a
larger equity weighting than many companies because our active employee base is relatively young, and we
have a relatively small number of retirees currently receiving benefits, both of which suggest a longer
investment horizon and consequently a higher risk tolerance level. The plan fiduciary periodically assesses our
asset allocation to assure it is consistent with our plan objective.
F-92
FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)