LifePoints® Funds quarterly commentary JUMP AHEAD TO Moderate Strategy Fund Balanced Strategy Fund Growth Strategy Fund Equity Growth Strategy Fund September 30, 2009 Review the primary contributing and detracting factors to LifePoints Funds Target Portfolio Series performance during the last 3-month and 12-month periods. Conservative Strategy Fund 3-month Contributors: Within fixed income, the portfolio benefited from an overweight to investment-grade financials and commercial mortgage-backed securities (CMBS). Exposure to high-yield corporates, auto and credit card asset-backed securities (ABS), and non-agency mortgage backed securities also contributed. Short-duration fixed income securities outperformed because out-of-benchmark exposure to non-agency mortgage-backed securities (MBS), high-yield corporates, CMBS and investment-grade financials added value. Stock selection in energy and an underweight position to utilities, particularly in the United States and Japan, added significant value. Stock selection in information technology, materials and telecommunication services contributed to excess returns. 3-month Detractors: At the overall sector level, stock selection within financials, particularly in North America, detracted from performance. Stock selection within industrials and consumer discretionary detracted from the portfolio's excess returns. Although securities were up in all regions on an absolute basis, stock selection in both U.S. and non-U.S. equities weighed on performance, particularly in North America, Europe (excluding the United Kingdom), and Asia/ Pacific (excluding Japan). In real estate, stock selection adversely affected performance. This was due to weak selection in the shopping centers, apartments and office sectors. 12-month Contributors: An increased appetite for risk spurred interest in investment-grade financials, asset-backed securities (ABS), and high yield, which was beneficial to performance. Long-duration positioning also added value as credit spreads over U.S. Treasuries contracted. Short-duration fixed income securities outperformed because out-of-benchmark exposure to high-yield corporates and investment-grade financials added value. During the past twelve months, this asset class has been the third-best performer on an absolute basis. Investments in real estate securities outperformed versus their respective Morningstar US OE Real Estate peer group category, with defensive positions and stock selections in the specialty, apartments, shopping centers and health care sectors adding value. 12-month Detractors: Performance in large-cap U.S. equities lagged because a focus on stock fundamentals was detractive. Stocks with weak balance sheets and high debt-to-capital ratios outperformed. As a result, positioning in high-quality stocks and stock selection within consumer discretionary detracted. Underweight positioning and poor stock selection in non-U.S. developed market industrials detracted during the past twelve months, which contributed to an underperformance in international equities. Exposure to electrical equipment stocks within industrials had the largest negative impact. Moderate Strategy Fund 3-month Contributors: Within fixed income, the portfolio benefited from an overweight to investment-grade financials and commercial mortgage-backed securities (CMBS). Exposure to high-yield corporates, auto and credit card asset–backed securities (ABS), and non-agency mortgage-backed securities also contributed. Emerging markets outperformed all other equities and contributed to portfolio excess returns. An overweight toward the financials sector, coupled with strong stock selection within commercial banks boosted returns. Stock selection in energy and an underweight position to utilities, particularly in the United States and Japan, added significant value. Stock selection in information technology, materials and telecommunication services contributed to excess returns. 3-month Detractors: At the overall sector level, stock selection within financials, particularly in North America, detracted from performance. Stock selection within industrials and consumer discretionary detracted from the portfolio's excess returns. Although securities were up in all regions on an absolute basis, stock selection in both U.S. and non-U.S. equities weighed on performance, particularly in North America, Europe (excluding the United Kingdom) and Asia/ Pacific (excluding Japan). In real estate, stock selection adversely affected performance. This was due to weak selection in the shopping centers, apartments and office sectors. 12-month Contributors: An increased appetite for risk spurred interest in investment-grade financials, asset-backed securities (ABS), and high yield, which was beneficial to performance. Long-duration positioning also added value as credit spreads over U.S. Treasuries contracted. Within equities, exposure to emerging markets added value as strong government reserves and stimulus spending attracted investors. The portfolio's sector positioning and stock selection within energy contributed to performance, specifically an underweight to stocks in commodity exploration. Investments in real estate securities outperformed versus their respective Morningstar US OE Real Estate peer group category, with defensive positions and stock selections in the specialty, apartments, shopping centers and health care sectors adding value. 12-month Detractors: Performance in large-cap U.S. equities lagged because a focus on stock fundamentals was detractive. Stocks with weak balance sheets and high debt-to-capital ratios outperformed. As a result, positioning in high-quality stocks and stock selection within consumer discretionary detracted. Small- and mid-cap stocks underperformed based on poor stock selection within consumer discretionary and health care. Specifically, positions in retailers detracted as consumers continued to constrain spending amid high unemployment. Underweight positioning and poor stock selection in non-U.S. developed market industrials detracted during the past twelve months, which contributed to an underperformance in international equities. Exposure to electrical equipment stocks within industrials had the largest negative impact. Balanced Strategy Fund 3-month Contributors: Emerging markets outperformed all other equities and contributed to portfolio excess returns. An overweight toward the financials sector, coupled with strong stock selection within commercial banks boosted returns. Stock selection in energy and an underweight position to utilities, particularly in the United States and Japan, added significant value. Stock selection in information technology, materials and telecommunication services contributed to excess returns. Within fixed income, the portfolio benefited from an overweight to investment-grade financials and commercial mortgage-backed securities (CMBS). Exposure to high-yield corporates, auto and credit card asset–backed securities (ABS), and non-agency mortgage-backed securities also contributed. 3-month Detractors: At the overall sector level, stock selection within financials, particularly in North America, detracted from performance. Stock selection within industrials and consumer discretionary detracted from the portfolio's excess returns. Although securities were up in all regions on an absolute basis, stock selection in both U.S. and non-U.S. equities weighed on performance, particularly in North America, Europe (excluding the United Kingdom) and Asia/ Pacific (excluding Japan). In real estate, stock selection adversely affected performance. This was due to weak selection in the shopping centers, apartments and office sectors. 12-month Contributors: An increased appetite for risk spurred interest in investment-grade financials, asset-backed securities (ABS), and high yield, which was beneficial to performance. Long-duration positioning also added value as credit spreads over U.S. Treasuries contracted. Within equities, exposure to emerging markets added value as strong government reserves and stimulus spending attracted investors. The portfolio's sector positioning and stock selection within energy contributed to performance, specifically an underweight to stocks in commodity exploration. Investments in real estate securities outperformed versus their respective Morningstar US OE Real Estate peer group category, with defensive positions and stock selections in the specialty, apartments, shopping centers and health care sectors adding value. 12-month Detractors: Performance in large-cap U.S. equities lagged because a focus on stock fundamentals was detractive. Stocks with weak balance sheets and high debt-to-capital ratios outperformed. As a result, positioning in high-quality stocks and stock selection within consumer discretionary detracted. Small- and mid-cap stocks underperformed based on poor stock selection within consumer discretionary and health care. Specifically, positions in retailers detracted as consumers continued to constrain spending amid high unemployment. Underweight positioning and poor stock selection in non-U.S. developed market industrials detracted during the past twelve months, which contributed to an underperformance in international equities. Exposure to electrical equipment stocks within industrials had the largest negative impact. Growth Strategy Fund 3-month Contributors: Emerging markets outperformed all other equities and contributed to portfolio excess returns. An overweight toward the financials sector, coupled with strong stock selection within commercial banks boosted returns. Stock selection in energy and an underweight position to utilities, particularly in the United States and Japan, added significant value. Stock selection in information technology, materials and telecommunication services contributed to excess returns. Within fixed income, the portfolio benefited from an overweight to investment-grade financials and commercial mortgage-backed securities (CMBS). Exposure to high-yield corporates, auto and credit card asset-backed securities (ABS), and non-agency mortgage-backed securities also contributed. 3-month Detractors: At the overall sector level, stock selection within financials, particularly in North America, detracted from performance. Stock selection within industrials and consumer discretionary detracted from the portfolio's excess returns. Although securities were up in all regions on an absolute basis, stock selection in both U.S. and non-U.S. equities weighed on performance, particularly in North America, Europe (excluding the United Kingdom) and Asia/ Pacific (excluding Japan). In real estate, stock selection adversely affected performance. This was due to weak selection in the shopping centers, apartments and office sectors. 12-month Contributors: An increased appetite for risk spurred interest in investment-grade financials, asset-backed securities (ABS), and high yield, which was beneficial to performance. Long-duration positioning also added value as credit spreads over U.S. Treasuries contracted. Within equities, exposure to emerging markets added value as strong government reserves and stimulus spending attracted investors. The portfolio's sector positioning and stock selection within energy contributed to performance, specifically an underweight to stocks in commodity exploration. Investments in real estate securities outperformed versus their respective Morningstar US OE Real Estate peer group category, with defensive positions and stock selections in the specialty, apartments, shopping centers and health care sectors adding value. 12-month Detractors: Performance in large-cap U.S. equities lagged because a focus on stock fundamentals was detractive. Stocks with weak balance sheets and high debt-to-capital ratios outperformed. As a result, positioning in high-quality stocks and stock selection within consumer discretionary detracted. Small- and mid-cap stocks underperformed based on poor stock selection within consumer discretionary and health care. Specifically, positions in retailers detracted as consumers continued to constrain spending amid high unemployment. Underweight positioning and poor stock selection in non-U.S. developed market industrials detracted during the past twelve months, which contributed to an underperformance in international equities. Exposure to electrical equipment stocks within industrials had the largest negative impact. Equity Growth Strategy Fund 3-month Contributors: Emerging markets outperformed all other equities and contributed to portfolio excess returns. An overweight toward the financials sector, coupled with strong stock selection within commercial banks boosted returns. Stock selection in energy and an underweight position to utilities, particularly in the United States and Japan, added significant value. Stock selection in information technology, materials and telecommunication services contributed to excess returns. Non-U.S. developed market equities outperformed through positive stock selection in consumer discretionary and information technology. Positioning in autos had a notable impact, as the portfolio's specific holdings and industry underweight contributed to positive excess returns. 3-month Detractors: At the overall sector level, stock selection within financials, particularly in North America, detracted from performance. Stock selection within industrials and consumer discretionary detracted from the portfolio's excess returns. Although securities were up in all regions on an absolute basis, stock selection in both U.S. and non-U.S. equities weighed on performance, particularly in North America, Europe (excluding the United Kingdom) and Asia/ Pacific (excluding Japan). In real estate, stock selection adversely affected performance. This was due to weak selection in the shopping centers, apartments and office sectors. 12-month Contributors: Within equities, exposure to emerging markets added value as strong government reserves and stimulus spending attracted investors. The portfolio's sector positioning and stock selection within energy contributed to performance, specifically an underweight to stocks in commodity exploration. Investments in real estate securities outperformed versus their respective Morningstar US OE Real Estate peer group category, with defensive positions and stock selections in the specialty, apartments, shopping centers and health care sectors adding value. 12-month Detractors: Performance in large-cap U.S. equities lagged because a focus on stock fundamentals was detractive. Stocks with weak balance sheets and high debt-to-capital ratios outperformed. As a result, positioning in high-quality stocks and stock selection within consumer discretionary detracted. Small- and mid-cap stocks underperformed based on poor stock selection within consumer discretionary and health care. Specifically, positions in retailers detracted as consumers continued to constrain spending amid high unemployment. Underweight positioning and poor stock selection in non-U.S. developed market industrials detracted during the past twelve months, which contributed to an underperformance in international equities. Exposure to electrical equipment stocks within industrials had the largest negative impact. 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. Asset Classes The underlying funds of LifePoints® Target Portfolio 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 subprime mortgages. Real Estate: Specific sector investing such as real estate 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. Non-U.S.: Non-U.S. markets entail different risks than those typically associated with 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 markets 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. Copyright © Russell Investments 2008. 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. Russell Investments and Standard & Poor's Corporation are the owners of the trademarks, service marks and copyrights related to their respective indexes. LifePoints® and the Russell logo are trademarks and service marks of Russell Investments. Each of the LifePoints® Funds, Target Portfolio Series, invests its assets in shares of a number of underlying Russell Funds. From time to time, the fund’s adviser may modify the target asset allocation for any fund and/or the underlying funds in which a fund invests. In addition, the funds may in the future invest in other funds which are not currently underlying funds. 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. 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. 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. 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. RFS-2463 First used October 2009			Learn more about Russell's LifePoints funds   LifePoints quarterly commentary Download the complete quarterly investment reviews (PDFs) Class S commentary Class E commentary Printer friendly version of this page Send feedback or comments

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