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Baker Hughes Incorporated
Notes to Consolidated Financial Statements
74
The majority of investments are held in the form of units of funds. The funds hold underlying securities and are
redeemable as of the measurement date. Investments in equities and fixed-income funds are generally measured
at fair value based on daily closing prices provided by active exchanges or on the basis of observable, market-
based inputs. Investments in hedge funds are generally measured at fair value on the basis of their net asset
values, which are provided by the investment sponsor or third party administrator. The fair values of private equity
investments and real estate funds are based on appraised values developed using comparable market transactions
or discounted cash flows.
U.S. Pension Plan
The investment policy of the U.S. Pension Plan was developed after examining the historical relationships of
risk and return among asset classes and the relationship between the expected behavior of the U.S. Plan’s assets
and liabilities. The investment policy of the U.S. Plan is designed to provide the greatest probability of meeting or
exceeding the U.S. Plan’s objectives at the lowest possible risk. In evaluating risk, the investment committee for the
U.S. Pension Plan (“U.S. Committee”) reviews the long-term characteristics of various asset classes, focusing on
balancing risk with expected return. Accordingly, the U.S. Committee selected the following six asset classes as
allowable investments for the assets of the U.S. Pension Plan: U.S. equities, non-U.S. equities, global fixed-income
securities, real estate, hedge funds and private equity.
The table below presents the fair value of the assets in the U.S. Pension Plan by asset category and by
valuation technique at December 31:
2015 2014
Asset Category
Total
Asset
Value Level
One Level
Two Level
Three
Total
Asset
Value Level
One Level
Two Level
Three
Cash and Cash Equivalents $16 $ 12 $ 4 $ — $ 3 $ — $ 3 $ —
Fixed Income (1) 109 — 109 — 125 — 125 —
Non-U.S. Equity (2) 129 31 98 — 148 30 118 —
U.S. Equity (3) 129 — 129 — 169 — 169 —
Hedge Funds (4) 152 — — 152 164 — — 164
Real Estate Funds (5) 10 — — 10 10 — — 10
Real Estate Investment Trust Equity 9— 9 — 8 — 8 —
Private Equity Fund (6) 41 — — 41 21 — — 21
Total $ 595 $ 43 $ 349 $ 203 $ 648 $ 30 $ 423 $ 195
(1) A multi-manager strategy investing in fixed income securities and funds. The current allocation includes:
29% in government bonds; 24% in government agencies; 20% in unconstrained bond funds; 11% in
corporate bonds; 11% in government mortgage-backed securities; 3% in asset-backed securities; and 2% in
cash and other securities.
(2) Multi-manager strategy investing in common stocks of non-U.S. listed companies using both value and
growth approaches.
(3) Multi-manager strategy investing in common stocks of U.S. listed companies using value and growth
approaches.
(4) Strategies taking long and short positions in equities, fixed income securities, currencies and derivative
contracts.
(5) Strategy investing in the global private real estate secondary market using a value-based investment
approach.
(6) Partnership making opportunistic investments on a global basis across asset classes, capital structures and
geographies.