Freddie Mac 2004 Annual Report Download - page 81
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making and support activities of our Securities Sales & Trading Group business unit and the discontinuation
of our external Money Manager program. In contrast, our balances of Cash and cash equivalents and
Securities purchased under agreements to resell and Federal funds sold increased by a combined $23.7 billion
during 2004 because of the investment of a portion of the proceeds realized from liquidating the securities held
by our Securities Sales & Trading Group.
During 2004, we adjusted the investment strategy for the Cash and investments portfolio and as a result
this portfolio did not hold corporate debt securities or preferred stock at December 31, 2004.
Derivative Assets and Liabilities, at Fair Value
All derivatives are reported at fair value. For derivatives that are in cash Öow hedge accounting
relationships, the change in fair value is recorded to AOCI for the eÅective portion of the hedge and to Hedge
accounting gains (losses) for the ineÅective portion of the hedge. For derivatives that are in fair value hedge
accounting relationships, the change in fair value is recorded to Hedge accounting gains (losses), along with
the change in fair value of the hedged item. Changes in fair value of derivatives not accounted for in hedge
accounting relationships are recorded to Derivative gains (losses). We use derivatives to manage our interest-
rate and other market risk exposures. However, hedge accounting has not been applied to many derivative
transactions since a signiÑcant number of transactions did not meet hedge accounting requirements or we
elected not to pursue hedge accounting.
Freddie Mac
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