© 2008 riversource distributors, inc. all rights reserved. securities products are distributed by...

© 2008 RiverSource Distributors, Inc. All rights reserved.

Securities products are distributed by RiverSource Distributors, Inc., Member FINRA. RiverSource Investments, LLC is an SEC-registered investment adviser that offers investment products and services. These companies are part of Ameriprise Financial, Inc.

2nd Quarter 2008

Stocks retreat, bond markets strong

Capital Markets Outlook

© 2008 RiverSource Distributors, Inc. All rights reserved

Today’s Agenda

Markets Outlook

Questions & Answers

Economic Outlook


Why is the Capital Markets Outlook Important?

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.

• Explains the relationships between economies and investing• Puts current market conditions in perspective• Helps you become a better informed investor• Provides context for the importance of a diversified investment portfolio


No One Can Predict the Future

• Markets may react immediately to good and bad news and events

• Stock and bond market returns vary from year to year

• Different investment “styles” take turns producing the best results


A Market Barometer

The Capital Markets Committee:• Reviews recent economic and market activity• Discusses potential short- and long-term trends• Provides a Market Outlook based on likely scenarios


Market Outlook Overview

What’s happening now?• U.S. and International Economies• Equities: U.S. and International Stocks

and Real Estate• Fixed Income: U.S. and International

Bond markets


U.S. and International Economies


Major Economic Indicators

• Inflation• Interest rates• Employment• Economic growth


Source: Bureau of Labor Statistics and National Bureau of Economic Research.

Inflation Remains at High-end of Range

4.1% 4.3%4.0%

2.4% 2.5% 2.4%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

January 2007 -December 2007

February 2007 -January 2008

March 2007 -February 2008

CPI

"Core" Inflation(CPI ex food andenergy)

Consumer Price Index


3.41%4.03%

4.59%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

10-year Treasury Note3/31/08



The Long and Short of Interest Rates

Source: Bloomberg, 3/31/08

Long-term interest rates declined


Job Growth Turned Negative

Source: Bureau of Labor Statistics and National Bureau of Economic Research

Change in Non-Farm Payroll Employment


Economic Growth Revived

Source: U.S. Commerce Department, Bureau of Labor Statistics ; Estimate reflects opinion of economics unit of Ameriprise Financial

3.0%3.8%

4.9%

0.6% 0.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

HistoricalGDP Growth;i.e., "Trend"

Growth

Q2 2007 Q3 2007 Q4 2007 Q1 2008 EST

Gross domestic product, % change


International Developed and Emerging Economies:• We expect slower growth in Europe, Japan and the United Kingdom.• In emerging markets, we expect robust growth to continue.• Inflation is likely to increase across developed and emerging

market economies.

International Economic Outlook


Equities Outlook


Positive Outlook on U.S. Stock Market

Favor Stocks Over Bonds• Continue to favor large over small/mid cap names, but not by as much

as prior quarters• See equal opportunities in growth and value• Plan to exploit opportunities in cyclical sectors, selected financials and

technology• Expect lower quality stocks to outperform higher quality in an

economic rebound


Major Stock Market Indexes

Source: Lipper Inc. Past performance does not guarantee future results. Each index shown above is unmanaged and is not available for direct investment. The Standard & Poor’s 500 Index (S&P 500 Index), an index of primarily large cap stocks, is frequently used as a general measure of market performance. The index reflects reinvestment of all distributions and changes in market prices, but excludes brokerage commissions or other fees. The S&P MidCap 400 Index is a group of mid-sized company stocks. The Russell 2000 Index measures the performance of 2,000 small companies. Investments in small- and mid-capitalization companies often involve greater risks and potential volatility than investments in larger, more established companies.

Average Annual Total Returns Through March 31, 2008 1-Year 3-Year 5-Year 10-Year

Return Return Return Return

Large company stocksS&P 500 Index -5.08% 5.85% 11.32% 3.50%Mid-size company stocksRussell MidCap Index -8.92% 7.36% 16.31% 7.65% Small company stocksRussell 2000 Index -13.00% 5.06% 14.90% 4.96%


International Stock Markets Lost Ground

• International stock markets lost ground during the first quarter 2008 • Generally positive outlook on international markets• Positive on long-term potential for emerging markets, especially after

recent correction

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 due to the dramatic pace of economic, social, and political change.


Risks for Stocks

• Inflationary pressures• Geo-political events• Energy prices• Currency fluctuations• Interest rates and debt serviceability


Fixed Income Outlook


U.S. Fixed Income

There are risks associated with fixed income investments, including credit risk, interest rate risk and prepayment and extension risk. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities.

Seeking Opportunity within Undervalued Fixed Income Sectors• Treasuries led the fixed income market in the first quarter of 2008• Valuations have become attractive in other spread sectors• Remain focused on high-quality issues with some opportunity occurring in lower

quality segments of the market• Maintain a slightly shorter than benchmark duration profile


Market Outlook Recap

• Economy: Slower growth around the world, but no recession for U.S. in 2008.

• Stocks: Positive outlook on stocks, both domestic and foreign, with slight emphasis on foreign over domestic stocks and large-caps over small/mid stocks.

• Bonds: Prefer higher-quality issues where spreads have widened beyond fair value estimates. Maintained a slightly shorter than benchmark duration expecting yields to rise over the spring/summer months.


Action Steps

• Be an informed investor• Review life circumstances and goals• Schedule a personal financial meeting


Questions and Answers


Thank You


Capital Markets Outlook Seminar is published by RiverSource Investments to provide professional guidance only on the current state of the capital markets. The views expressed in this seminar reflect the views of RiverSource Investments as of the date the seminar is issued. This view may change as market or other conditions change or various events occur. It is a tool used by RiverSource Investments to assist in the development of asset allocation models and portfolio investment strategies. Actual investments or investment decisions made by the firm and its affiliates, whether for its own account or on behalf of clients, will not necessarily reflect the views expressed in this seminar. Investment products, including shares of mutual funds, involve risks including possible loss of principal and fluctuation in value. This seminar is not intended as and should not be used to provide investment advice and does not address or account for individual investor circumstances. Investment decisions should always be made based on the client’s specific financial needs and objectives, goals, time horizon and risk tolerance. Asset classes described in this seminar may not be suitable for all investors. Past performance is no guarantee of future results. No forecast should be considered a guarantee either. Consult your financial advisor or call for more information.

© 2008 RiverSource Distributors, Inc. All rights reserved.

Securities products are distributed by RiverSource Distributors, Inc., Member FINRA. RiverSource Investments, LLC is an SEC-registered investment adviser that offers investment products and services. These companies are part of Ameriprise Financial, Inc.

2nd Quarter 2008

Stocks retreat, bond markets strong

Capital Markets Outlook

© 2008 riversource distributors, inc. all rights reserved. securities products are distributed by...

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