• As a reaction to the plunging stock market, the overall transfer activity in the Hewitt 401(k) Index™ was significantly higher in 2008 than that of previous years. Throughout the year, 5.7% of balances were transferred, which is the highest level since the inception of the index in 1997. On average, only 3.3% of balances were transferred annually. The year with the second highest transfer activity level was 2002 — with 4.1% of balances being transferred — when the stock market had a significant downturn.
  
• Another historical record set by the transfer activities in 2008 was the amount of equity transfers. A total of $6.3 billion was moved out of equity investments during 2008, more than twice the second highest annual equity outflow ($2.9 billion in 2002). In addition, 11 out of 12 months in 2008 experienced equity outflows. The highest outflows occurred in January and September, as participants reacted to the dismal economic and market news.
  
• International funds were the biggest losers in 2008, with $1.9 billion shifting out of this asset class. This reverses the trend of inflows into these funds seen from 2003 to 2007. During this five-year period, more than $4.2 billion flowed into this asset class. As a result of poor market performance and significant outflows in 2008, the asset allocation in international funds dropped for the first time in several years, from 9.8% at the end of 2007 to 6.1% at the end of 2008.
  
• Large U.S. equities experienced the second largest outflow of $1.7 billion in 2008, which is also the largest annual outflow for this asset class since the beginning of the index. The holdings in this asset class declined by nearly 5% to 15.7% by the end of the year.
  
• Interestingly, both balanced and lifestyle funds had large outflows as well. Balanced funds lost approximately $1 billion in transfers. Lifestyle fund saw $529 million in outflows. Similar to international funds, lifestyle funds had experienced inflows between 2003 and 2007, with $1.6 billion flowing into this asset class during the period. However, 2008 has definitely reversed that trend.
  
• As expected, the three fixed income asset classes received the largest inflows. GIC/stable value funds saw $5.3 billion in inflows during 2008, which are the largest inflows ever into this asset class. As a result, the holdings in this asset class went up more than 11.6% to 32.3% by the end of 2008. Bond funds also received $1.2 billion in inflows in 2008, followed by money market funds with $459 million.
  
• Because of both transfers and market returns, participants' overall equity allocation decreased by 14%, from 66.9% at the end of 2007 to a historical low level of 52.9% at the end of 2008. It is the largest decline during a one-year period, since the beginning of the 401(k) index.
  
• Employee-only equity contributions (excluding employer contributions from total contributions) also dropped significantly by 11% to 57.4% by the end of 2008.
  
• For the month of December 2008, transfer activities were very modest. Only 0.04% of balances were transferred on a net daily basis. The direction of the monthly transfer was slightly equity oriented, with $187 million moving out of equity investments.

*A "normal" level of relative transfer activity is when the net daily movement of participants' balances as a percent of total 401(k) balances within the Hewitt 401(k) Index equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months. A "high" relative transfer activity day is when the net daily movement exceeds two times the average daily net activity. A "moderate" relative transfer activity day is when the net daily movement is between 1.5 and two times the average daily net activity of the preceding 12 months.

The following tables show Hewitt 401(k) Index statistics and the returns of major market indices for the month of December 2008:

Dow Jones IA	-0.39%
Russell 2000	5.80%
Barclays Capital Aggregate Bond Index	3.73%
S&P 500	1.06%
MSCI EAFE	6.01%
NASDAQ	2.70%

Number of Fixed Income Days	11
Number of Equity Days	11
Percent of Equity Days	50%