recent trade data for identical or similar obligations. Other investments valued based upon net asset value are included as a reconciling item to the fair value table. Equities —  Common stocks and preferred stocks are classified as Level 1 and are valued using quoted market prices in active markets. Corporate bonds —  These investments are valued based on quoted market prices, yield curves and pricing models using current market rates. Government and agency bonds —  These investments are generally valued based on bid quotations and recent trade data for identical or similar obligations. Municipal bonds —  These investments are valued based on quoted market prices, yield curves and pricing models using current market rates. Mortgage and asset backed securities —  These investments are valued based on prices obtained from third party pricing sources. The prices from third party pricing sources may be based on bid quotes from dealers and recent trade data. Mortgage backed securities are traded in the over-the- counter market. Real estate —  Real estate investments consist of real estate investment trusts, property funds and limited partnerships. Real estate investment trusts are classified as Level 1 and are valued based on quoted market prices. Property funds are classified as either Level 2 or Level 3 depending upon whether liquidity is limited or there are few observable market participant transactions. Property funds are valued based on third party appraisals. Limited partnerships are valued based upon valuations provided by the general partners of the funds. The values of limited partnerships are based upon an assessment of each underlying investment, incorporating valuations that consider the evaluation of financing and sales transactions with third parties, expected cash flows, and market-based information, including comparable transactions and performance multiples among other factors. The investments are classified as Level 3 since the valuation is determined using unobservable inputs. Real estate investments valued at net asset value are included as a reconciling item to the fair value table. Hedge funds —  Hedge fund investments include hedge funds valued based upon a net asset value derived from the fair value of underlying securities. Hedge fund investments that are subject to liquidity restrictions or that are based on unobservable inputs are classified as Level 3. Hedge fund investments may include long and short positions in equity and fixed income securities, derivative instruments such as futures and options, commodities and other types of securities. Hedge fund investments valued at net asset value are included as a reconciling item to the fair value table. Derivatives —  Derivative financial instruments include forward currency contracts, futures contracts, options contracts, interest rate swaps and credit default swaps. Derivative financial instruments are classified as Level 2 and are valued based on observable market transactions or prices. Commingled funds —  Investments in commingled funds are not traded in active markets. Blended commingled funds are invested in both equities and fixed income securities. Commingled funds are valued based on the net asset values of such funds and are included as a reconciling item to the fair value table. Other items to reconcile to fair value of plan assets included amounts due for securities sold, amounts payable for securities purchased, and other payables. The following table summarizes the changes in fair value of Level 3 investments for the years ended August 2, 2020, and July 28, 2019: Real Estate Hedge Funds Total Fair value at July 28, 2019 $ 4  $ 32  $ 36  Actual return on plan assets — — — Purchases, sales and settlements, net (1) (1) (2) Transfers out of Level 3 — — — Fair value at August 2, 2020 $ 3 $ 31 $ 34 Real Estate Hedge Funds Total Fair value at July 29, 2018 $ 6  $ 34  $ 40  Actual return on plan assets 1  —  1  Purchases, sales and settlements, net (3) (2) (5) Transfers out of Level 3 —  —  —  Fair value at July 28, 2019 $ 4  $ 32  $ 36  63