Tax-Efficient Management For Mid-Cap and Smaller Stocks

Class S
September 30, 2008

About the Fund
Russell chooses managers that use many different investment styles based on Russell's confidence in their stock-selection capabilities and the level of tax-efficiency of their approaches. For example, Russell may have a growth manager that selects higher quality growth companies, focusing on longer-term economic, geo-political, and business trends. Another growth manager may focus on security selection with the belief that earnings expectations and momentum drive stock prices. One value manager may be selected for its strong value-based, bottom-up research, while another may focus on attractively priced value stocks with clear drivers of profit growth and price appreciation. Russell may also include a tax-focused, enhanced index manager that is expected to help harvest taxable losses to enhance post-tax returns. These managers' different approaches should reduce the overlap in holdings and the incidence of wash sales, as should the fact that all the fund's managers are informed of sales.

Investment Strategy

• Seeks to provide long-term capital growth on an after-tax basis.
• Emphasis on mid- and small-capitalization stocks.
• Uses managers with tax-sensitive investment approaches.
• Equity exposure is through a passive, tax-friendly strategy that focuses on generating taxable losses to the fullest extent possible to offset potential taxable gains by managers with growth and value investment styles.

Fund Highlights

• Provides broad exposure to small-cap stocks by blending managers that invest in diverse styles across the mid- and small-capitalization spectrum without the tax impact of a fund that buys and sells with no regard for taxes.
• Helps tax-sensitive investors by seeking to maximize after-tax returns.

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.

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.

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

Due to rounding totals may not equal 100%.

The top ten holdings list does not reflect the investment of cash reserves and cash collateral received in securities lending transactions in one or more of RIC's money market funds.

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.

¹Return after taxes on distributions. If the fund has realized capital losses, the return after taxes on distributions and sale of fund shares may be higher than the return before taxes and the return after taxes on distributions. The calculation of return after taxes on distributions and sale of fund share assumes that a shareholder has sufficient capital gains of the same character to offset any capital losses on a sale of fund shares and that the shareholder may therefore deduct the entire capital loss.

²After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

³Return after taxes on distributions and sales of fund shares. Returns after taxes on distributions may be the same as returns before taxes for the same period if there were no distributions for that period.

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.

Consult the  Prospectus.
Consult the Statement of Additional Information.

View  Tax Managed Mid & Small Cap Fund in PDF format.

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