NOTES TO THE FINANCIAL STATEMENTS 92

Note 7. Securities and Investments

Securities and Investments as of September 30, 2020, and 2019

2020 2019

Book Book 

(In billions of dollars) Cost Adjustment Value Cost Adjustment Value

Held-to-Maturity

Debt securities: 0.1 - 0.1 0.1 - 0.1

Equity securities: 3.5 - 3.5 3.6 - 3.6

Total held-to-maturity (net investment) 3.6 - 3.6 3.7 - 3.7

Available-for-Sale:

Debt securities: 1.3 0.2 1.5 2.4 0.1 2.5

Total available-for-sale (fair value) 1.3 0.2 1.5 2.4 0.1 2.5

Trading Securities:

Debt securities:

Non-U.S. government.......................... 9.4 0.1 9.5 13.0 0.4 13.4

Commercial ....................................... 0.4 - 0.4 0.3 - 0.3

Mortgage/asset backed ....................... 5.7 0.2 5.9 5.1 0.2 5.3

Corporate and other bonds.................. 23.2 2.9 26.1 16.5 1.5 18.0

All other debt securities ....................... 1.7 6.4 8.1 6.2 4.8 11.0

Equity securities:

Unit trust ............................................ 13.8 7.9 21.7 13.6 7.8 21.4

Common stocks.................................. 2.1 0.2 2.3 2.3 0.1 2.4

All other equity securities..................... 18.1 1.1 19.2 15.3 0.2 15.5

Total trading securities (fair value) 74.4 18.8 93.2 72.3 15.0 87.3

Total Total

2020 2019

Total securities and investments categorized as 

held-to-maturity, available-for-sale or trading ............................ 98.3 93.5

Total NRRIT securities and investments (fair value) .................. 23.6 24.8

Total securities and investments .............................................. 121.9 118.3

Certain significant consolidated entities apply financial accounting and reporting standards issued by FASB and such 

entities, as permitted by SFFAS No. 47, Reporting Entity are consolidated into the U.S. government’s consolidated financial 

statements without conversion to financial and reporting standards issued by the FASAB. PBGC, NRRIT, TVA, and 

Smithsonian Institution securities and investments are recorded at fair value and have been categorized based upon a fair 

value hierarchy, in accordance with FASB ASC Section 820, Fair Value Measurement.
 93 NOTES TO THE FINANCIAL STATEMENTS

Fair Value Measurement

Fair value is a market-based measurement. For some assets, observable market transactions or market information might 

be available. For other assets, observable market transactions and market information might not be available. However, the 

objective of a fair value measurement in both cases is the same to estimate the price at which an orderly transaction to sell the 

asset between market participants at the measurement date under current market conditions.

When a price for an identical asset is not observable, a reporting entity measures fair value using another valuation 

technique that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. Because fair 

value is a market-based measurement, it is measured using the assumptions that market participants would use when pricing 

the asset, including assumptions about risk. As a result, a reporting entity’s intention to hold an asset is not relevant when 

measuring fair value. 

The measurement of fair value of an asset is categorized with different levels of fair value hierarchy as follows:

• Level 1—Unadjusted quoted prices in active markets for identical assets that the reporting entity can access at the 

measurement date.

• Level 2—Inputs other than quoted prices included with Level 1 that are observable for the asset, either directly or 

indirectly.

• Level 3—Unobservable inputs for the asset.

• Other —The category contains certain investments that are measured at fair value using NAV per share useful 

method and have not been categorized in the fair value hierarchy. Investments in “other” represent certain 

commingled funds, partnerships, real estate and real estate investment trusts which are considered trading securities.

Securities and Investments as of September 30, 2020

(In billions of dollars) Level 1 Level 2 Level 3 Other Total

Fair Value:

Pension Benefit Guaranty Corporation .............. 4.4 46.3 - 24.7 75.4

National Railroad Retirement Investment Trust .. 13.0 3.6 - 7.0 23.6

Tennessee Valley Authority .............................. 2.8 2.9 0.1 5.2 11.0

Smithsonian Institution ..................................... 0.4 - - 1.8 2.2

Total fair value measurements........................ 20.6 52.8 0.1 38.7 112.2

All other*:

Total all other ................................................ - - - 9.7 9.7

Total securities and investments ................ 20.6 52.8 0.1 48.4 121.9

*Levels not applicable due to entities in this category being FASAB reporters.
NOTES TO THE FINANCIAL STATEMENTS 94

Securities and Investments as of September 30, 2019

(In billions of dollars) Level 1 Level 2 Level 3 Other Total

Fair Value:

Pension Benefit Guaranty Corporation .............. 3.7 39.7 - 27.0 70.4

National Railroad Retirement Investment Trust .. 13.6 4.7 - 6.5 24.8

Tennessee Valley Authority .............................. 2.8 3.1 - 4.7 10.6

Smithsonian Institution ..................................... 0.4 - - 1.5 1.9

Total fair value measurements........................ 20.5 47.5 - 39.7 107.7

All other*:

Total all other ................................................ - - - 10.6 10.6

Total securities and investments ................ 20.5 47.5 - 50.3 118.3

*Levels not applicable due to entities in this category being FASAB reporters.

PBGC‘s “other” investments measured at NAV consists of real estate, private equity and pooled funds. PBGC’s

investments are primarily categorized in the hierarchy of Level 2. PBGC’s Level 2 investments consist of securities lending

collateral, fixed maturity, commercial paper, asset backed, pooled funds, corporate bonds and domestic equity securities. 

NRRIT on behalf of the RRB, manages and invests railroad retirement assets that are to be used to pay retirement

benefits to the nation’s railroad workers under the RRP. As an investment company, NRRIT is subject to different accounting

standards that do not require the classifications presented in the Securities and Investments table above. NRRIT’s

investments consists of certain U.S. Equity, Non-U.S. Equity and Global Fixed Income securities.

TVA’s investments consist of amounts held in the Nuclear Decommissioning Trust, Asset Retirement Trust,

Supplemental Executive Retirement Plan, and Deferred Compensation Plan. These investments are primarily U.S. and

international equities, real estate investment trusts, fixed income investments, high-yield fixed income investments,

commodities, currencies, derivative instruments, and other investments. TVA’s qualified benefit pension plan is funded with

qualified plan assets. These investments include global public equities, private equities, fixed income securities, public real

assets, and private real assets.

 Please refer to PBGC, NRRIT, TVA and Smithsonian Institution’s financial statements for additional information on

these investments and fair value measurement.