Return Opportunities for Short-Term Goals

Class S
September 30, 2008

About the Fund
Russell constructed this fund to seek risk-managed, consistent returns for investors' short-term assets. In choosing the managers for the fund, Russell's built in some biases relative to the fund's benchmark because their research indicates that this construction may help enhance returns and reduce volatility. The biases include de-emphasizing interest-rate timing, allowing some tactical bets in sectors such as high-yield and non-U.S. bonds, and sector rotation based on manager assessment of relative value.

By combining managers, Russell tries to better manage some of the risk normally associated with more aggressive investment styles.

Investment Strategy

• Seeks to provide current income and preservation of capital with a focus on short-duration securities.
• Core fixed income exposure emphasizes short-term securities.
• Invests in investment-grade market sectors with tactical investments in non-investment grade sectors.

Fund Highlights

• Focuses on bonds with durations of one to two years, on average.
• Provides exposure to bonds with more return potential than money market securities and less volatility than long-term bonds.
• Aims for higher yields by allowing managers to explore potentially higher returning sectors of the short-duration bond market.
• To seek increased return, managers may employ aggressive sector rotation.

Managing Money Differently
The Russell approach has been trusted for decades by many of the world's largest investors; their mutual funds allow you to employ that same approach. Russell identifies managers they believe have exceptional capabilities, blending them to help manage risk through diversification, and constantly monitoring them. Regardless of market conditions, Russell's investment approach remains constant.

In general, when interest rates rise, the value of bonds held in the fund will decline. 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.

Non-U.S. markets and emerging or developing markets entail different risks than those typically associated with U.S. markets, including currency fluctuations, political and economic instability, accounting changes and foreign taxation. Non-U.S. securities may be less liquid and more volatile than the U.S., and emerging markets securities may be less liquid and more volatile than U.S. and longer-established non-U.S. markets.

¹Moody's Investors Service Inc. and Standard & Poor's Corporation. For additional information on quality ratings, see the Statement of Addtional Information.

²Due to rounding totals may not equal 100%

Due to rounding totals may not equal 100%.

¹Duration approximates the percentage change in the price of a bond or the value of a portfolio of bonds for every one percentage point shift in interest rates.

²The fund's current yield for the 30-day period ending Septmeber 30, 2008.

Annualized Returns in Percentages as of September 30, 2008

The Net Annual Operating Expense Ratio may be less than the Total Operating Expense Ratio and represents the actual expenses to be borne by shareholders after application of a contractual transfer agency fee waiver through February 28, 2010, a contractual advisory fee waiver and/or reimbursement through February 28, 2009 and a contractual cap on expenses through February 28, 2009. These contractual agreements may not be terminated during the relevant periods except at the Board of Trustees discretion. Details of these agreements are in the current prospectus. Absent these reductions, the funds return would have been lower.

Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Month-end performance for Russell mutual funds is available by choosing fund performance from the left-hand navigation.

The fund offers other classes of shares with higher fees and expenses. These other classes may charge up to a 0.75% distribution fee and a 0.25% shareholder servicing fee which will result in a higher expense ratio and lower performance than that shown above. For a full description of other available classes, please see the prospectus.

Fund objectives, risks, charges, and expenses should be carefully considered before investing.

For more complete information, including a contract and fund prospectus that gives investment objectives, risks, charges, expenses, and other information about the investment company, contact a Northwestern Mutual Financial Network Representative, who is a Registered Representative of Northwestern Mutual Investment Services, LLC (NMIS). Read the prospectuses carefully before you invest or send money.

Prospectus — Russell Funds Classes A, C, E and S Shares
Prospectus — Russell Fund Class Y Shares

Consult the Statement of Additional Information.

View the Russell Short Duration Bond Fund in pdf format.

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