NMFN: IV, MF, Russell, RF, Russell Tax Exempt Bond Fund

Russell Tax Exempt Bond Fund

Offering Tax-Sensitive Diversification

June 30, 2008

About the Fund
For this fund, Russell selects managers they believe are experts in municipal and federal tax-exempt bonds and combines them to complement each other. One may place an emphasis on specific security research and another may focus on identifying complex, unique and misunderstood bond structures not readily identified by other analysts.

Investment Strategy

Seeks to provide federal tax-exempt current income consistent with the preservation of capital. The Fund will invest, under normal circumstances, at least 80% of the value of its assets in investments the income from which is exempt from federal income tax.
Invests in tax-exempt securities of state and local government entities.
Targets intermediate maturities.

Fund Highlights

Provides a diversified portfolio of high-quality tax-exempt bonds to help manage an investor's tax load.
Adds stability to a diversified portfolio because bonds historically have been less volatile than equities.

Managing Money Differently
The Russell approach has been trusted for decades by many of the world's largest investors; Russell's mutual funds allow you to employ that same approach. Russell identifies investment 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.

Allocation of Fund Assets


	% Allocated	Year Assigned

*Fully Discretionary*


Delaware Management Company (a series of Delaware Management Business Trust)	50%	2005


Standish Mellon Asset Management Company, LLC	50%	1988


Money managers listed are current as of 06/30/08. Subject to the fund's Board approval, Russell has the right to engage or terminate a money manager at any time and without a shareholder vote, based on exemptive order from the Securities and Exchange Commission. The investment strategies are the goals of the individual money managers; there is no assurance that the exact objective will always be met.

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 risk, credit risk, inflation, securities lending, repurchase and reverse repurchase transaction risk. Bond funds have the same risks that are associated with the underlying bonds owed by the fund. In contrast to owning individual bonds, there are ongoing fees and expenses associated with owning shares of bond funds. Portfolios that invest primarily in high yield bonds are subject to additional risks such as limited liquidity and increased volatility.

Income from funds managed for tax efficiency may be subject to an alternative minimum tax, and/or any applicable state and local taxes.

Quality Rating as a % of market value*

U.S. Govt & Agency	0
AAA	28
AA	38
A	21
BBB	11
BB	1
Other	1

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

²Due to rounding totals may not equal 100%.

	Sector Weightings				% of Total Market Value

	General Obligation				36.7
	Utility Revenue				13.0
	Other Revenue				11.9
	Industrial Revenue				10.2
	Health Care Revenue				8.9
	Cash Equivalents				7.1
	Education Revenue				7.0
	Pollution Control Revenue				1.9
	Leasing Revenue				1.7
	Housing Revenue				1.3
	Refunded and Special Obligations				0.2

Due to rounding totals may not equal 100%.

Characteristics

Total Market Value	$417.2 million
Weighted Average Duration¹	4.9 years
30-Day SEC Yield²	3.44%
Tax Equivalent Yield³	5.29%

¹ Duration 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.

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

³ The tax equivalent yield is based on a tax rate of 35%.

Performance Review

Annualized Returns in Percentages as of June 30, 2008



Fund	QTR	YTD	1 yr	3 yrs	5 yrs	10 yrs	Since Inception 09/05/85

Tax Exempt Bond Fund Class S	-0.18	0.54	3.09	2.40	2.39	3.76	4.69

	Fund Fees and Expenses


	Annual Fund Operating Expenses

	Total		Net


	0.56%		0.56%

Growth of $10,000 — Class S Shares

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.



	Class C	Class S

Cusip	782493324	782493837


Ticker	RTECX	RLVSX

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.

Consult the Prospectus.
Consult the Statement of Additional Information.

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