Individual investors

LifePoints® Funds quarterly commentary Target Date Series JUMP AHEAD TO 2015 Strategy Fund 2020 Strategy Fund 2025 Strategy Fund 2030 - 2055 Strategy Funds December 31, 2011 Review the primary contributing and detracting factors to LifePoints Funds Target Date Series performance during the last 3-month and 12-month periods. In Retirement Fund 3-month contributors: Quantitative equity strategies contributed positively to performance mainly due to strong stock selection within the financials, consumer staples, health care and materials sectors. Global real estate securities contributed to performance. The primary drivers of success were strong stock selection within EMEA ex-UK, Asia/Pacific ex-Japan and North America. Out-of-benchmark positions to the emerging markets region and an underweight to Japan also contributed to returns. Fixed income strategies were positive for the quarter, driven by exposure to credit spread sectors such as corporate credit and global high yield. 3-month detractors: Commodity strategies detracted from performance for the period largely because of weighting differences. Due to its diversified allocation to various commodity sectors, the strategy can underperform individual sector products, such as gold exchange traded funds (ETFs), at times. U.S. core equity investments detracted from portfolio performance, despite positive absolute performance. A heavy underweight to the more defensive utility sector drove underperformance. Global equity strategies detracted from performance. The underweight to, and stock selection within the energy sector was the main performance driver; as was an underweight to North America. 12-month contributors: Quantitative equity strategy posted strong performance during the year. This strategy provided positive absolute returns, reflective of improving market conditions for quantitative managers. This can be attributed to improved breadth of factor payoffs, as beta no longer dominated returns. Opportunistic credit strategies, such as global high yield and emerging market debt were positive contributors due to strong security selection within those sectors. Infrastructure investments were positive contributors for the year due to security selection and underweights to continental Europe. 12-month detractors: Global equity underperformed during the year. While reasonably well positioned across sectors, overweights to financials and technology helped, but poor stock selection hurt performance. The main areas of weak stock selection were energy, consumer discretionary, financials and North America. U.S. core equity investments detracted from performance. A heavy underweight to the more defensive utility sector drove underperformance. Fixed income strategies struggled due to the treasury rally that occurred during the year, and the underweight to that sector. 2015 Strategy Fund 3-month contributors: Quantitative equity strategies contributed positively to performance mainly due to strong stock selection within the financials, consumer staples, health care and materials sectors. Global real estate securities contributed to performance. The primary drivers of success were strong stock selection within EMEA ex-UK, Asia/Pacific ex-Japan and North America. Out-of-benchmark positions to the emerging markets region and an underweight to Japan also contributed to returns. Fixed income strategies were positive for the quarter, driven by exposure to credit spread sectors such as corporate credit and global high yield. 3-month detractors: Commodity strategies detracted from performance for the period largely because of weighting differences. Due to its diversified allocation to various commodity sectors, the strategy can underperform individual sector products, such as gold exchange traded funds (ETFs), at times. U.S. core equity investments detracted from portfolio performance, despite positive absolute performance. A heavy underweight to the more defensive utility sector drove underperformance. Global equity strategies detracted from performance. The underweight to, and stock selection within the energy sector was the main performance driver; as was an underweight to North America. 12-month contributors: Quantitative equity strategy posted strong performance during the year. This strategy provided positive absolute returns, reflective of improving market conditions for quantitative managers. This can be attributed to improved breadth of factor payoffs, as beta no longer dominated returns. Opportunistic credit strategies, such as global high yield and emerging market debt were positive contributors due to strong security selection within those sectors. Infrastructure investments were positive contributors for the year due to security selection and underweights to continental Europe. 12-month detractors: Global equity underperformed during the year. While reasonably well positioned across sectors, overweights to financials and technology helped, but poor stock selection hurt performance. The main areas of weak stock selection were energy, consumer discretionary, financials and North America. U.S. core equity investments detracted from performance. A heavy underweight to the more defensive utility sector drove underperformance. Fixed income strategies struggled due to the treasury rally that occurred during the year, and the underweight to that sector. 2020 Strategy Fund 3-month contributors: Quantitative equity strategies contributed positively to performance mainly due to strong stock selection within the financials, consumer staples, health care and materials sectors. Global real estate securities contributed to performance. The primary drivers of success were strong stock selection within EMEA ex-UK, Asia/Pacific ex-Japan and North America. Out-of-benchmark positions to the emerging markets region and an underweight to Japan also contributed to returns. Fixed income strategies were positive for the quarter, driven by exposure to credit spread sectors such as corporate credit and global high yield. 3-month detractors: Commodity strategies detracted from performance for the period largely because of weighting differences. Due to its diversified allocation to various commodity sectors, the strategy can underperform individual sector products, such as gold exchange traded funds (ETFs), at times. U.S. core equity investments detracted from portfolio performance, despite positive absolute performance. A heavy underweight to the more defensive utility sector drove underperformance. Global equity strategies detracted from performance. The underweight to, and stock selection within the energy sector was the main performance driver; as was an underweight to North America. 12-month contributors: Quantitative equity strategy posted strong performance during the year. This strategy provided positive absolute returns, reflective of improving market conditions for quantitative managers. This can be attributed to improved breadth of factor payoffs, as beta no longer dominated returns. Opportunistic credit strategies, such as global high yield and emerging market debt were positive contributors due to strong security selection within those sectors. Infrastructure investments were positive contributors for the year due to security selection and underweights to continental Europe. 12-month detractors: Global equity underperformed during the year. While reasonably well positioned across sectors, overweights to financials and technology helped, but poor stock selection hurt performance. The main areas of weak stock selection were energy, consumer discretionary, financials and North America. U.S. core equity investments detracted from performance. A heavy underweight to the more defensive utility sector drove underperformance. Fixed income strategies struggled due to the treasury rally that occurred during the year, and the underweight to that sector. 2025 Strategy Fund 3-month contributors: Quantitative equity strategies contributed positively to performance mainly due to strong stock selection within the financials, consumer staples, health care and materials sectors. Global real estate securities contributed to performance. The primary drivers of success were strong stock selection within EMEA ex-UK, Asia/Pacific ex-Japan and North America. Out-of-benchmark positions to the emerging markets region and an underweight to Japan also contributed to returns. Fixed income strategies were positive for the quarter, driven by exposure to credit spread sectors such as corporate credit and global high yield. 3-month detractors: Commodity strategies detracted from performance for the period largely because of weighting differences. Due to its diversified allocation to various commodity sectors, the strategy can underperform individual sector products, such as gold exchange traded funds (ETFs), at times. U.S. core equity investments detracted from portfolio performance, despite positive absolute performance. A heavy underweight to the more defensive utility sector drove underperformance. Global equity strategies detracted from performance. The underweight to, and stock selection within the energy sector was the main performance driver; as was an underweight to North America. 12-month contributors: Quantitative equity strategy posted strong performance during the year. This strategy provided positive absolute returns, reflective of improving market conditions for quantitative managers. This can be attributed to improved breadth of factor payoffs, as beta no longer dominated returns. Opportunistic credit strategies, such as global high yield and emerging market debt were positive contributors due to strong security selection within those sectors. Infrastructure investments were positive contributors for the year due to security selection and underweights to continental Europe. 12-month detractors: Global equity underperformed during the year. While reasonably well positioned across sectors, overweights to financials and technology helped, but poor stock selection hurt performance. The main areas of weak stock selection were energy, consumer discretionary, financials and North America. U.S. core equity investments detracted from performance. A heavy underweight to the more defensive utility sector drove underperformance. Fixed income strategies struggled due to the treasury rally that occurred during the year, and the underweight to that sector. 2030 - 2055 Strategy Funds 3-month contributors: Quantitative equity strategies contributed positively to performance mainly due to strong stock selection within the financials, consumer staples, health care and materials sectors. Global real estate securities contributed to performance. The primary drivers of success were strong stock selection within EMEA ex-UK, Asia/Pacific ex-Japan and North America. Out-of-benchmark positions to the emerging markets region and an underweight to Japan also contributed to returns. Opportunistic credit strategies such as global high yield and emerging market debt were beneficial to performance. Exposure to local currency emerging market debt was positive for performance. 3-month detractors: Commodity strategies detracted from performance for the period largely because of weighting differences. Due to its diversified allocation to various commodity sectors, the strategy can underperform individual sector products, such as gold exchange traded funds (ETFs), at times. Global equity strategies detracted from performance. The underweight to, and stock selection within the energy sector was the main performance driver; as was an underweight to North America. U.S. core equity investments detracted from portfolio performance, despite positive absolute performance. A heavy underweight to the more defensive utility sector drove underperformance. 12-month contributors: Quantitative equity strategy posted strong performance during the year. This strategy provided positive absolute returns, reflective of improving market conditions for quantitative managers. This can be attributed to improved breadth of factor payoffs, as beta no longer dominated returns. Opportunistic credit strategies, such as global high yield and emerging market debt were positive contributors due to strong security selection within those sectors. Infrastructure investments were positive contributors for the year due to security selection and underweights to continental Europe. 12-month detractors: Global equity underperformed during the year. While reasonably well positioned across sectors, overweights to financials and technology helped, but poor stock selection hurt performance. The main areas of weak stock selection were energy, consumer discretionary, financials and North America. U.S. core equity investments detracted from performance. A heavy underweight to the more defensive utility sector drove underperformance. International developed markets strategies underperformed during the year, driven by the exposure to emerging market companies as emerging markets underperformed developed markets due to increasing inflationary pressures, weak economic data and a declining risk appetite from investors. Significant changes None Fund objectives, risks, charges and expenses should be carefully considered before investing. For a prospectus containing this and other important information call Russell at 1-866-676-7680 or go to the prospectus and reports page to download one. Please read the prospectus carefully before investing. The LifePoints® Funds are a series of fund of funds which expose an investor to the risks of the underlying funds proportionate to their allocation. Investment in LifePoints Funds involves direct expenses of each fund and indirect expenses of the underlying funds, which together can be higher than those incurred when investing directly in an underlying fund. Each of the LifePoints® Funds, Target Date Series funds, invests its assets in shares of a number of underlying Russell Funds. The allocation of each Strategy Fund's assets is based solely on time horizon and will become more conservative over time until approximately the year indicated in the Fund's name, at which time the allocation will remain fixed. The asset allocation of the In Retirement Fund is fixed. From time to time, the fund's adviser expects to modify the target strategic asset allocation for any fund and/or the underlying funds in which a fund invests including the addition of new underlying funds. In addition, the fund's adviser may also manage assets of the underlying funds directly for a variety of purposes. Please note that with target date funds, the date in each fund name represents the approximate retirement year. The principal value of the fund is not guaranteed at the target date, nor at any time. Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns. Investments that are allocated across multiple types of securities may be exposed to a variety of risks based on the asset classes, investment styles, market sectors, and size of companies preferred by the investment managers. Investors should consider how the combined risks impact their total investment portfolio and understand that different risks can lead to varying financial consequences, including loss of principal. Please see a prospectus for further details. The underlying funds of LifePoints® Target Date Series consist of the following asset classes: Stocks: Although stocks have historically outperformed bonds, they also have historically been more volatile. Investors should carefully consider their ability to invest during volatile periods in the market. Bonds: Bond investors should carefully consider risks such as interest rate, credit, repurchase and reverse repurchase transaction risks. Greater risk, such as increased volatility, limited liquidity, prepayment, non-payment and increased default risk, is inherent in portfolios that invest in high yield ("junk") bonds or mortgage backed securities, especially mortgage backed securities with exposure to sub-prime mortgages. Investment in non-U.S. and emerging market securities is subject to the risk of currency fluctuations and to economic and political risks associated with such foreign countries. Real estate: Specific sector investing can be subject to different and greater risks than more diversified investments. Declines in the value of real estate, economic conditions, property taxes, tax laws and interest rates all present potential risks to real estate investments. Fund investments in non-U.S. markets can involve risks of currency fluctuation, political and economic instability, different accounting standards and foreign taxation. Small cap: Small capitalization (small cap) investments involve stocks of companies with smaller levels of market capitalization (generally less than $2 billion) than larger company stocks (large cap). Small cap investments are subject to considerable price fluctuations and are more volatile than large company stocks. Investors should consider the additional risks involved in small cap investments. Large cap: Large capitalization (large cap) investments involve stocks of companies generally having a market capitalization between $10 billion and $200 billion. The value of securities will rise and fall in response to the activities of the company that issued them, general market conditions and/or economic conditions. Mid cap: Middle capitalization (mid cap) investments involve stocks of companies generally having a market capitalization between $2 billion and $10 billion and considered more volatile than large cap companies. Mid cap investments are often considered to offer more growth potential than larger caps (but less than small caps) and less risk than small caps (but more than large caps). Non-U.S.: Non-U.S. markets entail different risks than those typically associated with the U.S. markets, including currency fluctuations, political and economic instability, accounting changes, and foreign taxation. Securities may be less liquid and more volatile. Emerging markets: Investments in emerging or developing markets involve exposure to economic structures that are generally less diverse and mature, and to political systems which can be expected to have less stability than those of more developed countries. Securities may be less liquid and more volatile than U.S. and longer-established non-U.S. markets. Global equity: Global equity involves risk associated with investments primarily in equity securities of companies located around the world, including the United States. International securities can involve risks relating to political and economic instability or regulatory conditions. Investments in emerging or developing markets involve exposure to economic structures that are generally less diverse and mature, and to political systems which have less stability than those of more developed countries. Commodities: Exposure to the commodities markets may subject the fund to greater volatility than investments in traditional securities, particularly if the investments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or sectors affecting a particular industry or commodity and international economic, political and regulatory developments. The use of leveraged commodity-linked derivatives creates an opportunity for increased return, but also creates the possibility for a greater loss. Copyright © Russell Investments 2011. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an "as is" basis without warranty. LifePoints® and the Russell logo are trademarks and service marks of Russell Investments. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company. Securities products and services offered through Russell Financial Services, Inc., member FINRA, part of Russell Investments. For information on the Financial Industry Regulatory Authority, go to www.finra.org. First used January 2012 RFS-7469			Learn more about Russell's LifePoints Target Date funds Printer friendly version of this page

WWW.RUSSELL.COM     INSTITUTIONAL INVESTORS     FINANCIAL PROFESSIONALS     INDEXES     SITE MAP    

© Russell Investments 1995-2012. All rights reserved.
Legal information.    Privacy statement.