Raytheon 2012 Annual Report Download - page 121

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
113
monitored frequently against appropriate benchmarks and tracked to compliance guidelines with the assistance of third party
performance evaluation tools and metrics.
Consistent with the objective of maximizing return while minimizing risk, multiple investment strategies are employed to
diversify risk such that no single investment or manager holding presents a significant exposure to the total investment
portfolio. Plan assets are invested in numerous diversified strategies with the intent to minimize correlations. This allows for
diversification of returns. Plan assets can be invested in funds that track an index and are designed to achieve diversification
across the related indices. The Plan had $3 billion invested in such funds across 3 indices as of December 31, 2012. Other
than funds that track an index, no individual investment strategy represented more than 10% of the Plan as of December 31,
2012. Further, within each separate account strategy, guidelines are established which set forth the list of authorized
investments, the typical portfolio characteristics and diversification required by limiting the amount that can be invested by
sector, country and issuer.
The Plan’s investments are stated at fair value. Investments in equity securities (common and preferred) are valued at the last
reported sales price when an active market exists. Investments in fixed-income securities are generally valued using methods
based upon market transactions for comparable securities and various relationships between securities which are generally
recognized by institutional traders. Investments in private equity funds and private real estate funds are estimated at fair market
value which primarily utilizes net asset values reported by the investment manager or fund administrator. We review
independently appraised values, audited financial statements and additional pricing information to evaluate the net asset
values. For the very limited group of securities and other assets for which market quotations are not readily available or for
which the above valuation procedures are deemed not to reflect fair value, additional information is obtained from the
investment manager and evaluated internally to determine whether any adjustments are required to reflect fair value.