First Data 2009 Annual Report Download - page 165

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company employs a total return investment approach whereby a mix of equities and fixed income
investments are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is
established through careful consideration of plan liabilities and plan funded status. The investment portfolio
contains a diversified blend of equity and fixed-income investments. Furthermore, equity investments are
diversified across U.S. and non-U.S. stocks, as well as growth, value, and small, mid and large capitalizations. In
addition, private equity securities comprise a very small part of the equity allocation. The fixed income allocation
is a combination of fixed income investment strategies designed to contribute to the total rate of return of all plan
assets while minimizing risk and supporting the duration of plan liabilities.
Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio
reviews, annual liability measurements, and periodic asset and liability studies. The general philosophy of the
Investment Council in setting the allocation percentages for the domestic plan shown above is to adhere to the
appropriate allocation mix necessary to support the underlying plan liabilities as influenced significantly by the
demographics of the participants and the frozen nature of the plan.
The goal of the Board of Trustees of the United Kingdom plan is the acquisition of secure assets of
appropriate liquidity which are expected to generate income and capital growth to meet, together with new
contributions from the Company, the cost of current and future benefits, as set out in the Trust Deed and Rules.
The Trustees, together with the plan’s consultants and actuaries further design the asset allocation shown above
to limit the risk of the assets failing to meet the liabilities over the long term. Currently the equity allocation is
diversified amongst both United Kingdom and non-United Kingdom equities from North America, Europe, Japan
and Asia Pacific. A small portion is allocated to other global emerging market equity securities. Fixed income is
allocated primarily to United Kingdom government bond securities with the remaining portion in investment-
grade corporate bonds.
Fair Value Measurements
Financial instruments included in plan assets carried at fair value as of December 31, 2009 and measured at
fair value on a recurring basis are classified in the table below according to the hierarchy described in Note 18:
Fair Value Measurement Using
As of December 31, 2009
(in millions)
Quoted prices in
active markets
for identical assets
(Level 1)
Significant other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) Total
Investments:
Cash and cash equivalents (a) ................ $ 8.5 — — $ 8.5
Registered investment companies (b) .......... 7.0 — — 7.0
Private investment funds—redeemable (c) ...... — $577.2 — 577.2
Private investment funds—non-redeemable (d) . . — — $ 0.4 0.4
Insurance annuity contracts (e) ............... — — 5.3 5.3
Total investments at fair value .................... $15.5 $577.2 $ 5.7 $598.4
(a) Includes 94% of cash held in demand deposits and 6% of short-term money market accounts.
(b) Comprised of small and mid-cap equity funds.
(c) Includes 52% of equity index funds and 48% of fixed income investments.
(d) Comprised of limited liability corporations and limited partnership interests.
(e) Comprised of assets held under insurance annuity contracts.
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