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

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1 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)

2 Stable Value Fund Change On Friday, August 27, 2010, 4 p.m. Eastern Time, the Kohler Co. 401(k) Savings Plan will replace the current stable value fund, the SSgA PAR Stable Value Fund, with the Wells Fargo Stable Value Fund, managed by Galliard Capital Management. This change is necessary because State Street Global Advisors (SSgA) announced it is leaving the stable value fund management business and will be closing the PAR Stable Value Fund on September 1, In preparation for closing the fund, SSgA has converted assets in the SSgA PAR Stable Value Fund to a fund that will operate in accordance with the same investment guidelines as a money market fund registered with the Securities and Exchange Commission (although the fund will not be registered.) Kohler Associates with assets in the Stable Value fund on July 30th, 2010 saw their account balance increase due to the gains realized on the sale of securities sold in the conversion process. Galliard Capital Management is a wholly owned subsidiary of Wells Fargo and is considered a specialist in stable value and fixed income management. The company currently manages more than $58 billion in assets for institutional investors. The Wells Fargo Stable Value Fund is one of the oldest and largest stable value collective funds in the nation. It has generally outperformed its benchmark over the past ten years, and has been guided by the same portfolio management team since 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 be a great time to review all your fund options, including their objectives, investment styles, expense ratios, and historical returns. Then make sure your portfolio includes a diversified mix of funds. To learn why that s so important, and how to get help with your investment mix, please read on. 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 investment dollars are spread over a variety of investment classes. When markets shift unpredictably, the good performance of some investments may offset the not as good performance of others. To maximize the benefits of diversification, consider selecting a combination of funds across several asset classes, such as stocks, bonds, fixed-income, and cash equivalents. Stock Investments Compared with other investments, history shows that stocks have 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 are several ways to diversify your stock holdings through the mutual 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, typically more 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 diversification strategy. Many foreign companies are market leaders today, and these stocks can reduce the impact of economic downturns in any one country or region. The Plan offers three 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 expected to grow at above-average rates. Value stocks are companies whose shares are thought to be selling at bargain prices. Here again, the better-performing category can vary from year 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.

3 There is no such thing as a risk-free investment so in essence, investing is all about choosing the risks you feel most comfortable taking. A diversified portfolio is the best way to manage the big swings as the market rises and falls. Kohler Co. 401(k) Stock Funds Kohler Co. 401(k) Bond or Fixed-Income Funds Fund Type Fund Name Fund Type Fund Name Domestic Stock Bond Delaware Diversified Income Collective Trust 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 bond values vary based on interest rates and other factors, bonds typically do not fluctuate as much as stocks. In fact, most fixed-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 to principal risk; you could lose some or all of your investment based on the solvency or liquidity of the issuer. Fixed-income investments include U.S. Treasuries, Corporate bonds, Agency bonds, Global bonds, and High Yield bonds. Different levels of safety and risk are associated with each type. The Plans bond fund is considered a total return composite bond fund. It is invested in U.S. Treasuries and Agency Bonds, investment-grade corporate bonds, along with complementary high-yield and global fixed-income securities, providing diversification across all these sectors. Stable Value To provide stability and limit volatility, the Plan offers a Stable Value fund. Effective Monday, August 30, 2010, this Stable Value option will be the Wells Fargo Stable Value Fund. It invests in investment contracts issued by highly rated companies, including Guaranteed Investment Contracts (GICs), Security Backed Investment Contracts, Separate Account GICs, short term bonds, and cash equivalents. Typically, stable value funds do not fluctuate as much as bonds or stocks. Protection of principal is the goal. Some investors use stable value as a parking spot for their investment money while they decide how to best invest in stocks 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. For details, 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, which can 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.

4 Need Help Evaluating Your Investment Mix? 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 Advisor Representative can provide: Savings forecasts and investment recommendations Assistance with making account changes Assistance with setting up automatic account maintenance features Call weekdays during the hours of 8:00 a.m. to 8:00 p.m. Eastern Time (except Stock Market holidays) to speak with an ING Investment Advisor Representative. Personal Online Advisor Take advantage of 24/7 access to easy-to-use retirement planning software, powered by Financial Engines through the Kohler Co. 401(k) Savings Plan 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 strategies might affect your forecast A Personalized Plan with clear step-by-step instructions on how to put your strategy to work, including how much to save, where to invest, and when to sell, at no additional cost to you Professional Account Manager This full-service option is perfect if you would rather have an investment professional pro-actively managing your Plan account. With this option, you can speak directly with a licensed ING 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 decide whether to use the advice you receive, and can start or stop the service at any time. If you decide to enroll in the Professional Account Manager program, your Kohler Co. 401(k) Savings Plan account will be charged monthly, based on a discounted annual fee negotiated for you by Kohler. Fee information is available online or by asking for an Investment Advisor Representative at ** 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 consult your lawyer. For more information, please read the ING Investment Advisors Disclosure Statement. A Disclosure Statement may be viewed online by accessing the ING Advisor Service link through the plan s web site at KOHLER.ingplans.com. You may also request from an ING Investment Advisor by calling Information Line at Financial Engines is a registered trademark of Financial Engines, Inc. Diver Ed

5 Galliard Second Quarter 2010 / Wells Fargo Stable Value Fund for Kohler Fund Overview as of 6/30/10 Fund Facts Cusip 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% Fund Characteristics Lower Risk Conservative Moderate Aggressive Money Markets Stable Value Blended Yield (after fees) 2.77% Effective Duration 2.37 Years Average Holdings* Aa3/AA- Average Holdings Quality* (underlying assets) Aa1/AA+ Portfolio Allocation 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 Sector Allocation Bond Funds Top Five Contract Issuers Stock Funds Higher Risk Issuer Moody s Rating S&P Rating J.P. Morgan Chase Bank N.A. Aa1 AA- Monumental Life Ins. Co. A1 AA- Pacific Life Ins. Co. A1 A+ Metropolitan Life Ins. Co. Aa3 AA- Bank of America N.A. Aa3 A+ 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 Fund Overview 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 Performance Recap 1 The Wells Fargo Stable Return Fund outperformed its benchmark for the quarter, YTD, 1, 3, 5 and 10 year periods ending June 30, Annualized Investment Performance as of June 30, % 4.0% 3.0% 2.0% 1.0% 0.0% Returns 2Q'10** YTD** 1 Year 3 Year 5 Year 10 Year Wells Fargo Stable Return (after fees) Benchmark: 50% Citigroup 3-Month T-Bill plus 50% ML 1-3 Year Treasury Index Annualized Performance 2Q 10** YTD** 1 Year 3 Year 5 Year 10 Year Stable Return Fund (after fees) Benchmark*** Calendar Year Performance Stable Return Fund (after fees) Benchmark*** Consumer Price Index *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 rounding 1 Disclosure: 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. SRF-Kohler

6 Second Quarter 2010 / Wells Fargo Stable Value Fund for Kohler Performance Highlights About Galliard 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. 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. Growth of $10,000 + Growth of $10,000 As of December 31, 2009 $17,000 $16,000 $15,000 $14,000 $13,000 $12,000 $15,646 + $14,378 $13,313 $12,918 For More Information $11,000 Contact your plan administrator $10, Wells Fargo Stable Return Fund Benchmark: 50% Citigroup 3-Month T-Bill plus 50% ML 1-3 Year Treasury Index 90 Day T-Bills Consumer Price Index + After fees Glossary of Investment Terms Blended Yield: The weighted average yield of the portfolio s holdings Duration: 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. SRF-Kohler