Investor Guide RiverSource Strategic Allocation Fund

Transcription

1 Investor Guide RiverSource Strategic Allocation Fund Professional asset allocation, disciplined investment approach.

2 Insightful Solutions for Today s Investor. Your life shouldn t revolve around your investments. That s why we ve created a family of funds that revolves around you. RiverSource Investments develops and manages asset growth, preservation and income solutions that revolve around the needs of today s investor. Our specialized investment platform provides access to investment and research professionals located in strategic investment centers in the United States and overseas. As a leading source of investment insight and innovation, RiverSource Investments delivers a full range of solutions across the risk/return spectrum to individuals and institutions. What this means for you: Access and service from professionals focused on your needs who deliver investment solutions designed to meet your goals. Experience and insight of our investment teams to help you better navigate financial markets and make informed investment decisions. Innovation in products, solutions and tools that help you and your financial professional better plan for your future. Performance and quality with a focus on consistent, long-term performance through disciplined investing. RiverSource Investments, LLC is an SEC-registered investment advisor that offers investment products and services under the names RiverSource Institutional Advisors, RiverSource Alternative Investments, RiverSource Capital Management and RiverSource Insurance Assets.

3 The key to smart investing. When choosing a mutual fund, what is the most important factor? If past performance is not an indicator of future results, what is? A key factor is something called asset allocation: the process of strategically distributing your investment dollars among several types of investments including stocks and bonds. In fact, academic research has demonstrated that upwards of 90% of portfolio return variability may be explained by which types of assets you invest in. Return variation based upon asset allocation vs. individual stock selection 10% Approximately 90% of investment return variation may come from asset allocation while less than 10% is the result of specific asset selection or picking winning stocks. 90% Asset Allocation Stock selection Source: L. Randolph Hood, Determinants of Portfolio Performance 20 Years Later. Financial Analysts Journal, vol. 61, no. 5 (September/October). For an individual investor, building a diversified portfolio can be a difficult task. With the increasing number of investment choices available today, it is hard to know where to begin. That s why choosing a single mutual fund with a broad range of investments can be a smart and simple way to achieve diversification. And a mutual fund that is also focused on delivering value through asset allocation may be an even better way to diversify your portfolio. While trying to decide what to invest in may be difficult, trying to decide when to invest may be even harder. A disciplined approach to asset allocation can help remove some of the guesswork from investing. 1

4 Why RiverSource Strategic Allocation Fund? The next generation of asset allocation. Positioning, not timing, is everything. Many believe that buying low and selling high is the best strategy. But doing so requires discipline. That s why we rely on computer models, rather than emotion or intuition, to help us get it right. RiverSource Strategic Allocation Fund utilizes sophisticated technology developed by our team of researchers from the fields of finance, science and technology. Using approximately 100 years of asset class performance, our team has built models that signal when asset classes are over- or undervalued. These models are combined with company-specific investment models to create a disciplined approach to both asset allocation and security selection. Why these various models? Each model acts as a single engine on a multi-engine plane. At various times, the engines alternate turns one of them always working to deliver a smoother ride over time. Allocation is so important to us that we ve made it part of our name. RiverSource Strategic Allocation Fund offers a competitive approach to asset allocation, providing you with instant diversification across a broad range of asset categories, including domestic and international equities, emerging markets, U.S. and global fixed income, and high yield bonds. Fund Objective Investing broadly can increase opportunity and reduce risks 40% Morningstar: Moderate Allocation Lipper: Flexible Portfolio Drawing on the broad range of stocks and bonds available within the U.S. and overseas, our disciplined asset allocation process focuses on where the best opportunities may exist. 60% Stocks Bonds U.S. Large Cap Stocks U.S. Small/Mid Cap Stocks International Stocks Tactically invests in a combination of stocks and bonds from the U.S. and overseas. Seeks a maximum total return. Emerging Markets Stocks Cash Investment Grade U.S. Bonds The pie chart represents a neutral, or target, allocation for the Fund. Actual asset allocation may vary over time depending upon market conditions. Emerging Markets Bonds High Yield Bonds International Bonds 2

5 RiverSource Strategic Allocation Fund s goal is to outperform traditional balanced funds by holding larger positions in underpriced asset classes. At the same time, the Fund decreases exposure to those investment styles that are believed to be overpriced or carry a larger-than-usual amount of risk. As market conditions change, the level of stock and bond holdings may vary in the Fund. The Fund is built to perform in any market environment. As markets evolve, some asset classes present greater opportunity or even carry more risk than they do at other times. Growth stocks are a good example. At the height of the market bubble in the late 1990s, growth stocks involved significantly more risk with less opportunity than they had just a few years earlier. The bottom line. RiverSource Strategic Allocation Fund s approach provides multiple sources of investment return combining disciplined asset allocation with strength in security selection and a strong risk management overlay. Diversification helps you spread risk throughout your portfolio, so investments that do poorly may be balanced by others that do relatively better. Diversification is not a guarantee of overall portfolio profit and does not protect against loss. Asset allocation does not assure a profit or protect against loss in declining markets. Retirement investing with RiverSource Strategic Allocation Fund RiverSource Strategic Allocation Fund provides built-in diversification and broad market exposure within a single investment, making it well suited to long-term growth of retirement assets. Because the Fund is not concentrated in terms of asset category or investment style, it also offers short-term flexibility to investors who may have a variety of investment goals. 3

6 Taking the emotion out of investing. Investing should be an analytical process not an emotional one. Individual and professional investors often become so attached to their investments that they hold them too long, or sell them before their potential has been realized. RiverSource Strategic Allocation Fund removes emotion from the investment process by using cutting-edge mathematics and computer technology to achieve consistent, logical, measured decision-making. Called quantitative investing, this comprehensive investment methodology is used to select appropriate stocks and asset allocation classes for the Fund s portfolio, as well as create the diversification necessary to help deliver consistent performance over time. Every security or asset class in RiverSource Strategic Allocation Fund is evaluated using the same rigorous process. Employing quantitative investing methods ensures a disciplined investment process that remains consistent, day in and day out. Investment returns vary over time. RiverSource Strategic Allocation Fund is intended for investors with a long time horizon and some tolerance for risk. Your financial advisor can help determine if RiverSource Strategic Allocation Fund may be the right choice for you. The Investment process: Asset allocation strategies Value Increases the portfolio s exposure to asset classes that have underperformed and decreases exposure to asset classes that outperformed their historical averages. Momentum Looks for stocks with improving investor sentiment and the potential for short-term outperformance. Stock selection strategies Value Seeks to identify undervalued stocks. Quality Focuses on companies with solid indicators of quality, such as stable earnings and low debt. Momentum Looks for stocks with improving investor sentiment. Portfolio management and construction Broadly diversified portfolio 4

7 We believe very strongly in a disciplined and rational approach to investing. The Cambridge process is just that. Dimitris Bertsimas Senior Portfolio Manager Gina Mourtzinou Portfolio Manager Alexander Sauer-Budge Portfolio Manager The Disciplined Equity and Asset Allocation Team Our Disciplined Equity and Asset Allocation Team, located in Cambridge, is comprised of a team of experienced investment professionals and researchers from finance, science and technology. Working together, this team employs a unique investment and trading methodology as well as sophisticated analysis to manage a global range of assets. The team is led by senior portfolio manager Dr. Dimitris Bertsimas, who is also a professor at the Massachusetts Institute of Technology, and includes portfolio managers Dr. Gina Mourtzinou and Dr. Alexander Sauer-Budge. Investments managed by the Disciplined Equity and Asset Allocation Team include: > RiverSource Disciplined Equity Fund > RiverSource Disciplined International Equity Fund > RiverSource Disciplined Small and Mid Cap Equity Fund > RiverSource Disciplined Small Cap Value Fund > RiverSource Income Builder Series > RiverSource Retirement Plus Series > RiverSource Strategic Allocation Fund 5

8 We understand the importance of a balanced por investment teams work together to deliver a ran Focused on investor goals. We understand the importance of having the right mix of investments to achieve your financial goals. Whether you are seeking to accumulate and grow your assets, develop a retirement plan or need to generate a steady stream of income in retirement, our specialized investment teams work together to deliver the solutions that help you get there. With more than 60 single-strategy mutual funds and a full range of goal-based solutions, which include built-in investment advice, you can work with your financial advisor to create a well balanced and diversified portfolio that s right for you. Experienced teams, disciplined approach. Our investment professionals understand the need for a balanced approach to asset and risk management when investing for the long-term. They apply this understanding with their knowledge of financial markets and extensive investment experience to all of our investment activities. Each team uses proven investment processes focused on achieving style clarity and stated portfolio goals, while adhering to the six core principles that make up our investment philosophy. Our objective is to help you reach multiple goals over your lifetime, by seeking to achieve consistent, competitive investment performance. Disciplined investment management guided by six core principles Client Focus Over 300 top-tier investment professionals located in strategic centers in the United States and overseas apply their knowledge and insight to each investment we develop and manage for you. Disciplined Investing Each specialized investment team uses a proven investment process that focuses on style clarity and stated portfolio goals, while adhering to six core principles that comprise our investment philosophy. Product Innovation We design products around investor goals. Our specialized investment teams collaborate to develop single strategy mutual funds and innovative goal-based solutions with built-in asset allocation, security selection, risk management and re-balancing. 6

9 tfolio in achieving financial goals. Our specialized ge of solutions designed to help get you there. Proprietary Research Each investment team has quantitative and qualitative research analysts who gather and interpret data utilizing proprietary models. Working hand-inhand with portfolio managers, they provide a constant stream of financial analysis and insight. Risk Management Our integrated risk management approach is driven by extensive research, advanced analytical measures and sophisticated allocation strategies. This, combined with our years of experience and knowledge, guides us toward solid portfolio construction and execution. Performance We believe that strong investment performance is built on talent, insight, integrity and discipline. For over 60 years, these principles have driven our focus on delivering consistent, competitive investment performance, product quality and superior customer service. 7

10 We can help you build a diversified portfolio Working with your financial professional you can: > Establish or update your investment strategy Your financial professional can help you identify your near- and long-term financial goals, map out a time horizon for meeting those goals and determine a level of risk that is appropriate for you. Once you have a better understanding of what it takes to get where you want to go, you can work together to design and maintain a portfolio that is right for you. > Build a balanced portfolio Based on your investment strategy, you and your financial professional can determine the best approach to maintaining a well balanced portfolio. Single-strategy funds are a good way to target sectors or specific asset classes you want to invest in. Advice-Built Solutions SM have been designed to help meet specific investment goals such as asset growth, preservation and income, while providing you with portfolio diversification, asset allocation and rebalancing. You may decide that a combination of both is the best approach to achieving a diversified portfolio designed to meet your needs. > Stay on track with your goals Meeting your financial needs throughout your lifetime requires a disciplined, long-term approach to investing and the advice and guidance of a financial professional who knows you and your goals. Once you ve built a portfolio, it is important to keep that portfolio on track. Meeting regularly with your financial professional to discuss changes in your financial situation and needs is an important part of achieving your goals throughout your lifetime. You should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. For a free prospectus of any of the funds listed above, which contains this and other important information about the funds, contact your financial institution or visit riversource.com/funds. Read the prospectus carefully before investing. Portfolio Builder funds are funds of funds comprised of holdings in several different RiverSource funds, which may include small-cap, mid-cap, large-cap, money market, international, bond and/or sector funds. Each of the underlying funds in which the portfolio invests has its own investment risks, and those risks can affect the value of each portfolio s shares and investments. There are risks associated with fixed income investments, including credit risk, interest rate risk, and prepayment and extension risk. Non-investment grade securities generally have more volatile prices and carry more risk to principal and 8

11 centered on your financial goals. Take the next step. Investing with confidence requires access to information, experience and insight that can help you make smart decisions. Working with your financial professional, you can learn more about how RiverSource Investments can help you get from accumulation to preservation to income in retirement. income than investment grade securities. International investing involves increased risk and volatility due to potential political and economic instability, currency fluctuations, and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging markets. Investments in small- and midcapitalization companies often involve greater risks and potential volatility than investments in larger, more established companies. See the funds prospectuses for more information on these and other risks that may be associated with the underlying funds. Investment products, including shares of mutual funds, involve risks including possible loss of principal and fluctuation in value. Investing in certain funds involves special risks, such as those related to investments in foreign securities, small- and mid-capitalization stocks, fixed income securities (especially high-yield securities) and funds which focus their investments in a particular sector, such as real estate, technology and precious metals. See each fund s prospectus for specific risks associated with the fund. 9

12 Investor Guide RiverSource Strategic Allocation Fund The RiverSource Story Life has many twists and turns and we understand the importance of balancing the need to protect what is important to you while you invest toward your financial goals. RiverSource, made up of RiverSource Investments, RiverSource Annuities and RiverSource Insurance, creates and manages innovative growth, income and insurance protection solutions designed with you and your life in mind. Through a balance of asset and risk management and built on a heritage of more than 110 years, we work with you and your advisor to help grow your assets, manage your income and protect what matters most today and tomorrow. RiverSource Investments, Ameriprise Financial Center, Minneapolis, MN RiverSource mutual funds are distributed by RiverSource Distributors, Inc. and Ameriprise Financial Services, Inc., Members FINRA, and managed by RiverSource Investments, LLC. These companies are part of Ameriprise Financial, Inc Ameriprise Financial, Inc. All rights reserved E (9/07)