The Kohler Co. 401(k) Savings Plan - Voya Financial … · The Kohler Co. 401(k) Savings Plan ......

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New Stable Value Fund Coming Soon to Your 401(k) Plan. The Kohler Co. 401(k) Savings Plan Announcing an important change to the Kohler Co. 401(k) Savings Plan fund lineup. • Take time to understand the change to the stable value fund • Learn about diversification and why it should be an important part of your retirement savings strategy • Learn about professional advice available through the ING Advisor Service ! Take Charge of your 401(k)

Transcript of The Kohler Co. 401(k) Savings Plan - Voya Financial … · The Kohler Co. 401(k) Savings Plan ......

New Stable Value Fund ComingSoon to Your 401(k) Plan.

The Kohler Co. 401(k) Savings Plan

Announcing an important change to the Kohler Co. 401(k) Savings Plan fund lineup.

• Take time to understand the change to the stable value fund

• Learn about diversification and why it should be an important part of your retirement savings strategy

• Learn about professional advice available through the ING Advisor Service

!Take Charge of your 401(k)

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Diversification: Why It Is an Important Part of Your Investment Strategy

Diversification is an essential part of successful investing.When you properly diversify your portfolio, your investmentdollars are spread over a variety of investment classes. When markets shift unpredictably, the good performance ofsome investments may offset the not as good performanceof others. To maximize the benefits of diversification, consider selecting a combination of funds across severalasset classes, such as stocks, bonds, fixed-income, and cash equivalents.

Stock Investments

Compared with other investments, history shows that stockshave the greatest potential for growth over time. However,this growth potential also brings volatility. To reduce volatility,you can combine stocks that offer greater price stability with others that may offer better long-term returns. There areseveral ways to diversify your stock holdings through themutual funds offered in the Kohler Co. 401(k) Savings Plan.

Diversify across company size. You can select mutual funds that invest in companies of various sizes. For example,small-cap stocks are shares in smaller, often emerging companies. Large-cap stocks are shares in larger, typicallymore stable companies. Depending on market conditions,one type may outperform the other at any given time.

Diversify across countries. Investing in stocks from a number of different countries can strengthen your diversificationstrategy. Many foreign companies are market leaders today, and these stocks can reduce the impact of economicdownturns in any one country or region. The Plan offersthree global/foreign stock funds.

Diversify across investment styles. Some Plan funds specialize in growth investing, others in value investing.Growth stocks are companies whose earnings are expectedto grow at above-average rates. Value stocks are companieswhose shares are thought to be selling at bargain prices.Here again, the better-performing category can vary fromyear to year.

Bottom line: a mix that includes growth, value, large-cap,mid-cap, small-cap and international stocks can enhance long-term growth potential and help limit volatility.

Stable Value Fund Change

On Friday, August 27, 2010, 4 p.m. Eastern Time, the KohlerCo. 401(k) Savings Plan will replace the current stable value fund, the SSgA PAR Stable Value Fund, with the WellsFargo Stable Value Fund, managed by Galliard CapitalManagement. This change is necessary because StateStreet Global Advisors (SSgA) announced it is leaving thestable value fund management business and will be closing the PAR Stable Value Fund on September 1, 2010.In preparation for closing the fund, SSgA has convertedassets in the SSgA PAR Stable Value Fund to a fund thatwill operate in accordance with the same investment guide-lines as a money market fund registered with the Securitiesand Exchange Commission (although the fund will not be registered.) Kohler Associates with assets in the StableValue fund on July 30th, 2010 saw their account balanceincrease due to the gains realized on the sale of securitiessold in the conversion process.

Galliard Capital Management is a wholly owned subsidiary of Wells Fargo and is considered a specialist in stable valueand fixed income management. The company currentlymanages more than $58 billion in assets for institutionalinvestors. The Wells Fargo Stable Value Fund is one of the oldest and largest stable value collective funds in thenation. It has generally outperformed its benchmark over thepast ten years, and has been guided by the same portfoliomanagement team since 1988. For details on your new Stable Value fund, refer to the fund fact sheet or visit the Plan Web site at KOHLER.ingplans.com.

This latest change follows the replacement of four other Plan funds in May. With this new fund lineup, now would bea great time to review all your fund options, including theirobjectives, investment styles, expense ratios, and historicalreturns. Then make sure your portfolio includes a diversifiedmix of funds. To learn why that’s so important, and how to get help with your investment mix, please read on.

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Kohler Co. 401(k) Stock Funds

Fund Type Fund Name

Domestic Stock • Hartford Capital Appreciation Fund• Mainstay ICAP Select Equity Fund• Columbia Marisco 21st Century Fund• Rydex/SGI Mid-Cap Value Fund• Columbia Acorn Select Fund• Royce Low-Priced Stock Fund• Royce Opportunity Fund• William Blair Small Cap Growth Fund

Global • Oakmark Global Fund

Foreign • Thornburg International Value Fund

Emerging Markets • DFA Emerging Markets Value Fund

Balanced • Dodge & Cox Balanced Fund

Bond and Other Fixed-Income Investments

Bonds and other fixed-income investments also offer a number of ways to diversify your holdings. Although bondvalues vary based on interest rates and other factors, bondstypically do not fluctuate as much as stocks. In fact, mostfixed-income investments tend to be less risky than stocks.However, they are subject to interest rate risk, meaning values may fall as interest rates rise. They are also subject toprincipal risk; you could lose some or all of your investmentbased on the solvency or liquidity of the issuer.

Fixed-income investments include U.S. Treasuries, Corporate bonds, Agency bonds, Global bonds, and HighYield bonds. Different levels of safety and risk are associatedwith each type.

The Plans’ bond fund is considered a total return composite bond fund. It is invested in U.S. Treasuries andAgency Bonds, investment-grade corporate bonds, alongwith complementary high-yield and global fixed-incomesecurities, providing diversification across all these sectors.

Kohler Co. 401(k) Bond or Fixed-Income Funds

Fund Type Fund Name

Bond • Delaware Diversified Income Collective Trust

Stable Value

To provide stability and limit volatility, the Plan offers a Stable Value fund. Effective Monday, August 30, 2010, thisStable Value option will be the Wells Fargo Stable Value Fund. It invests in investment contracts issued by highly ratedcompanies, including Guaranteed Investment Contracts(GICs), Security Backed Investment Contracts, SeparateAccount GICs, short term bonds, and cash equivalents.

Typically, stable value funds do not fluctuate as much asbonds or stocks. Protection of principal is the goal. Someinvestors use stable value as a “parking spot” for their investment money while they decide how to best invest instocks or bonds, which have higher growth potential.

Kohler Co. 401(k) Stable Value Funds

Fund Type Fund Name

Stable Value • Effective Monday, August 30, 2010, the Wells Fargo Stable Value Fund. Fordetails, see story on page 1.

Timing is important

A person who is 30 years from retirement will probably have more high risk/high return potential investments than a person who is just five to ten years from retirement. By including investments from a variety of asset classes, you will have varying levels of risk and potential return, whichcan help make your portfolio’s performance less volatile.When you diversify this way, you also improve your ability to weather short-term market ups and downs.

There is no such thing as a risk-free investment so in essence, investing is all about choosing the risks youfeel most comfortable taking. A diversified portfolio is the best way to manage the big swings as the marketrises and falls.

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Diver Ed

ING Advisor Service**If you want help diversifying your Kohler Co. 401(k) Savings

Plan consider the ING Advisor Service. The ING Advisor

Service offers personalized objective investment and retirement

planning advice, and managed account services—either

over the phone or online.

Investment Assistance—You can call and speak to an ING Investment Advisor Representative if you have a question or need help with making investment decisions at no additional cost to you. Your Investment AdvisorRepresentative can provide:

• Savings forecasts and investment recommendations

• Assistance with making account changes

• Assistance with setting up automatic account maintenancefeatures

Call 888-401-5722 weekdays during the hours of 8:00 a.m.to 8:00 p.m. Eastern Time (except Stock Market holidays) tospeak with an ING Investment Advisor Representative.

Personal Online Advisor—Take advantage of 24/7 access to easy-to-use retirement planning software, powered byFinancial Engines® through the Kohler Co. 401(k) SavingsPlan’s Web site at KOHLER.ingplans.com and get:

• Personalized retirement goal forecasts

• Investment guidance using all of the Plan's investment fund options

• Interactive tools that let you see how different strategiesmight affect your forecast

• A Personalized Plan with clear step-by-step instructions on how to put your strategy to work, including how muchto save, where to invest, and when to sell, at no additionalcost to you

Professional Account Manager—This full-service option is perfect if you would rather have an investmentprofessional pro-actively managing your Plan account.With this option, you can speak directly with a licensedING Investment Advisor Representative over the telephone, Monday - Friday, from 8:00 a.m. to 8:00 p.m.Eastern Time, except Stock Market Holidays. Your advisor can provide:

• Personalized planning advice, forecasts, and one-on-one support

• Automatic account monitoring and management

• Quarterly progress reports and forecast updates

You can call as often as needed and if you want you can ask to speak with the same Advisor each time. There is no charge for an initial consultation. You decidewhether to use the advice you receive, and can start or stop the service at any time. If you decide to enroll inthe Professional Account Manager program, your KohlerCo. 401(k) Savings Plan account will be charged monthly,based on a discounted annual fee negotiated for you byKohler. Fee information is available online or by asking foran Investment Advisor Representative at 888-401-5722.

** Advisory Services provided by ING Investment Advisors, LLC.

ING Investment Advisors does not give tax or legal advice. If you need tax advice, consult your accountant or if you need legal advice consultyour lawyer. For more information, please read the ING InvestmentAdvisors Disclosure Statement. A Disclosure Statement may be viewedonline by accessing the ING Advisor Service link through the plan’s web site at KOHLER.ingplans.com. You may also request from an INGInvestment Advisor by calling Information Line at 888-401-5722.

Financial Engines is a registered trademark of Financial Engines, Inc.

Need Help Evaluating Your Investment Mix?

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Portfolio Allocation

Sector Allocation

Fund Characteristics

Fund Facts

Fund Overview

Performance Recap1

Fund Overview as of 6/30/10

Second Quarter 2010 / Wells Fargo Stable Value Fund for Kohler

Cusip 949907109

Inception Date October 1, 1985

Fund Assets $17,642,348,265

Fund Advisor Galliard Capital Management, Inc.

Fund Trustee Wells Fargo Bank, N.A.

Fund Managers Karl Tourville & John Caswell

Valuation Frequency Daily

Expense Ratio 0.45%

Blended Yield (after fees) 2.77%

Effective Duration 2.37 Years

Average Holdings* Aa3/AA-

Average Holdings Quality* (underlying assets) Aa1/AA+

Fund (%)

Security Backed Investment Contracts 76.4

Short Portfolios 31.1%

Int. & Brd. Mkt. Portfolios 45.3%

Guaranteed Investment Contracts (GICs) 3.0

Separate Account GICs 9.4

Cash Equivalents 11.2

Total 100.0+

SRF-Kohler

Fund (%)

U.S. Government Securities 21.4

Corporate/Taxable Municipal Securities 18.8

Mortgage Backed Securities (MBS) 32.8

Asset Backed Securities (ABS) 4.2

Guaranteed Investment Contracts (GICs) 3.0

International Gov’t/Agency Securities 4.0

Cash/Equivalents 15.9

Total 100.0+

Conservative Moderate Aggressive

Stock FundsBond FundsMoney Markets Stable Value

Lower Risk

Higher Risk

Top Five Contract Issuers

Issuer Moody’s Rating S&P Rating

J.P. Morgan Chase Bank N.A. Aa1 AA-

Monumental Life Ins. Co. A1 AA-

Pacifi c Life Ins. Co. A1 A+

Metropolitan Life Ins. Co. Aa3 AA-

Bank of America N.A. Aa3 A+

The Fund seeks safety of principal and consistency of returns with minimal volatility.The Fund is for conservative investors seeking more income than money market funds without the price fl uctuation of stock or bond funds.The Fund invests in investment contracts issued by highly rated companies. These include Guaranteed Investment Contracts (GICs), Security Backed Investment Contracts, Separate Account GICs, and cash equivalents.The Fund is one of the oldest and largest stable value collective funds in the nation and has been managed by the same portfolio management team since 1988.

••

The Wells Fargo Stable Return Fund outperformed its benchmark for the quarter, YTD, 1, 3, 5 and 10 year periods ending June 30, 2010.

Annualized Performance 2Q’10** YTD** 1 Year 3 Year 5 Year 10 Year

Stable Return Fund (after fees) 0.67 1.31 2.77 3.58 3.88 4.40

Benchmark*** 0.60 0.96 1.40 3.08 3.44 3.46

Calendar Year Performance 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Stable Return Fund (after fees) 6.00 6.07 5.40 4.28 3.89 3.97 4.32 4.52 4.23 2.94

Benchmark*** 7.02 5.81 3.72 1.49 1.29 2.60 4.45 6.04 4.18 0.48

Consumer Price Index 3.39 1.55 2.38 1.88 3.26 3.42 2.54 4.08 0.09 2.90

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

10 Year5 Year3 Year1 YearYTD**2Q'10**Returns

Wells Fargo Stable Return (after fees)

Benchmark: 50% Citigroup 3-Month T-Bill plus 50% ML 1-3 Year Treasury Index

Annualized Investment Performance as of June 30, 2010

*The Average Holdings Quality has not been assessed by a nationally recognized statistical rating organization. The Moody’s/S&P ratings shown represent the average quality of the individual holdings as rated by S&P and Moody’s.**2Q’10 and YTD returns are not annualized***50% Citigroup 3-Month T-Bill plus 50% ML 1-3 Year Treasury Index. Prior to 2007, the benchmark for the fund was 50% 90 day T-bill plus 50% Merrill Lynch 1-3 Year Treasury Index.+ Totals may not add to 100% due to rounding1Disclosure:The Wells Fargo Stable Return Fund is a collective trust fund trusteed by Wells Fargo Bank and advised by Galliard. Wells Fargo charges a total annualized fee for investment and administrative services equivalent to .45% of assets invested in the Fund. The fee will be calculated and accrued daily in the Fund’s net asset value and will be paid from the Fund’s assets monthly or quarterly as determined by Wells Fargo. From this total fee, Wells Fargo will pay a fee to the Administrator for administrative and recordkeeping services performed by it, or its agents, related to the purchase, sale and holdings of fund units by all participants. These charges are reflected in the above returns. Returns also include all income, realized and unrealized capital gains and losses, and all transactional and contract execution costs. Fees for book value investment contracts currently are 0.12% of Fund assets. In addition, returns also include non-Wells Fargo subadvisor fees, audit, administration, and valuation fees which currently are less than .02% of Fund assets. The Stable Return Fund is not FDIC insured and is not guaranteed by Wells Fargo Bank. Past performance is no guarantee of future results.

Galliard

Grow

th o

f $10

,000

$10,000

$11,000

$12,000

$13,000

$14,000

$15,000

$16,000

$17,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Second Quarter 2010 / Wells Fargo Stable Value Fund for Kohler

Wells Fargo Stable Return FundBenchmark: 50% Citigroup 3-Month T-Bill plus 50% ML 1-3 Year Treasury Index90 Day T-BillsConsumer Price Index+After fees

$12,918 $13,313

$14,378

Performance Highlights

Glossary of Investment Terms

Growth of $10,000+

The Stable Return Fund posted a total return of 0.67% after fees for the second quarter. Over the last 12 months, the Fund produced a total return of 2.77%.The blended yield of the Fund is currently 2.77% (after fees), decreasing slightly during the quarter primarily due to lower investment rates.

Blended Yield: The weighted average yield of the portfolio’s holdingsDuration: A measure expressed in years that captures the price sensitivity of a fi xed income instrument. The longer the duration, the larger the change in value will be, for a given change in interest rate. Unlike maturity, which only shows how much time will elapse until fi nal payment of principal, duration is a more useful type of maturity measure because it incorporates the timing and size of all cash fl ows.Guaranteed Investment Contract (GIC): Issued by insurance companies and guarantee the return of principal and a stated rate of interest. The guarantee is backed by the General Account of the insurance company issuing the GIC contract. Separate Account GICs: Issued by insurance companies and guarantee the return of principal and a stated rate of interest. The guarantee is backed by a marketable portfolio of fi xed income securities (i.e. bonds).Security Backed Investment Contracts (book value wrappers): Comprised of two components: 1) a book value wrap contract issued by a financial institution and 2) an underlying portfolio of high quality fixed income securities (i.e. bonds) backing the contract whose market prices fluctuate. The wrap contract ensures that participants can transact at book value (principal plus accrued interest) without experiencing the price fluctuations of the underlying securities.

As of December 31, 2009

••

About Galliard

For More Information

Contact your plan administrator

Galliard is a specialist in stable value and fixed income management and currently manages more than $58.2 billion in assets for institutional investors. The firm is headquartered in Minneapolis. Galliard is a wholly owned subsidiary of Wells Fargo & Company. Galliard’s parent, Wells Fargo, is one of the nation’s largest diversified financial services companies. Galliard’s investment team has been managing stable value assets for more than 20 years and is a recognized leader in managing stable value and fixed income strategies.

$15,646+

SRF-Kohler