Recreation Equipment Inc. 401(k)

Risky portion allocation:

• Calamos Growth (CGRIX)
  9%
• Lord Abbett Mid-Cap Value (LMCYX)
  43%
• Harbor Small-Cap Value (HASCX)
  16%
• Fidelity Diversified International Fund (FDIVX)
  8%
• PIMCO Total Return (PTTRX)
  24%

Please let us know if your retirement plan has any changes in the available investments. So we can make changes accordingly.

1. In your 401(k), you break up your total investment into 2 portions: riskless and risky.
   • Riskless - based on the information I have, I could not identify a mutual fund investing in riskless asset. If you have one, please let me know.
   • Risky - if you want to take some risks, then you should invest some in risky portion. The optimal risk portion allocation is shown above.

   Based on your risk level, you decide how much to invest in riskless and risky portion. However, the allocation within the risky portion should not be changed regardless of your risk level. In other words, the amount investing in riskless mutual fund already reflects your risk tolerance.

   Example: Let’s assume you want to invest $6,000 in your 401(k) investing in risky assets. Your allocation in risky portion.

   • Calamos Growth (CGRIX)
     $360 (9%)
   • Lord Abbett Mid-Cap Value (LMCYX)
     $2,580 (43%)
   • Harbor Small-Cap Value (HASCX)
     $960 (16%)
   • Fidelity Diversified International Fund (FDIVX)
     $480 (8%)
   • PIMCO Total Return (PTTRX)
     $1,440 (24%)
   • Total Risky Portion
     $6,000

   Bottom line: The only thing you need to do is to decide how much to invest in the risky portion and in the riskless portion. Once you have decided how much you want to invest in risky portion, then you can follow our suggested allocation for your risky portion. Or if you wish, you can modify to fit your financial objectives.

2. Adjust the allocation if needed. The model portfolio for the risky portion is for your reference only. You can adjust the allocation percentage if you wish. For example, if you believe the foreign stock markets will be doing better than US, then you can allocate more in Fidelity Diversified International Fund (FDIVX).
3. Monitoring and portfolio changes. We will monitor the model portfolio and post any changes as needed. Please check back often for updates.
4. Available investment changes. Please let us know if the available investments have been changed, so we can modify the model portfolio as needed.

For more questions, please see the FAQs. If you cannot find your answers, you can ask your questions in the question form.

Revised Oct 8, 2008

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