Russell Investment Grade Bond Fund A core bond investment Class S September 30, 2008 About the fund For this fund, Russell chooses money managers with expertise in selecting bonds across the maturity spectrum. By combining firms that have differing investment approaches within this arena, our goal is to manage risk and increase the fund's potential to outperform its benchmark. For example, we may include one manager whose approach helps manage sources of risk. Another manager may provide added diversification to the portfolio through evaluating both broad economic factors and security-specific issues. This broad view helps the manager determine which market sectors to emphasize, while issue-specific research helps them determine which securities to purchase. – Mike Ruff, CFA Investment strategy   Seeks to provide current income and the preservation of capital Core fixed income exposure emphasizes intermediate and longer term securities. Emphasis on broad market sector rotation/issue selection. Investment-grade quality. Fund highlights   Offers a diversified portfolio of high quality bonds, including U.S. and non-U.S. securities. Blends some of the largest and most experienced bond fund managers. Helps manage risk through diversification among managers and investment styles. Managers employ sector rotation and modest interest-rate anticipation strategies to help enhance return. Managing money differently The Russell approach has been trusted for decades by many of the world's largest investors; our mutual funds allow you to employ that same approach. We identify investment managers we believe have exceptional capabilities, blend them to help manage risk through diversification, and constantly monitor them. Regardless of market conditions, Russell's investment approach remains constant. Allocation of fund assets     % Allocated   Year assigned Sector rotation         Metropolitan West Asset Management, LLC   22.5%   2008 Enhanced core         Lehman Brothers Asset Management LLC   25%   1989 Fully discretionary         Pacific Investment Management Company, LLC   30%   1984 Western Asset Management and Western Asset Management Company, Ltd.   22.5%   2004 Money managers listed are current as of 09/30/08. 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 an 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, 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. Quality rating1 As a % of market value2     U.S. Govt & Agency   55 AAA   23 AA   6 A   8 BBB   7 BB   0 B   1 Other   1 1 Moody's Investors Service Inc. and Standard & Poor's Corporation. For additional information on quality ratings, see the Statement of Additional Information. Due to rounding totals may not equal 100%. Sector weightings   % of total market value Asset-Backed Emerging Markets Debt US Government High Yield Investment Grade Credit Mortgage-Backed Non-US Dollar Other   5.0 0.5 8.0 1.3 18.8 59.6 0.1 6.7 Due to rounding totals may not equal 100%. Characteristics Total net assets   Weighted average duration1   30-day SEC yield2 $1.2 billion   4.9 years   4.9% 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 September 30, 2008     Cusip   Ticker Class C   782494827   RFACX Class E   782493183   RFAEX Class I   782493407   RFASX Class S   782494835   RFATX Class Y   782493175   RFAYX Performance review | as of September 30, 2008 Russell Investment Grade Bond Fund - Class S         Annualized returns QTR   YTD   1 yr   3 yrs   5 yrs   10 yrs   Since inception 10/15/81 -2.82   -3.88   -1.49   2.22   2.55   4.47   8.73 Fund Fees and Expenses Annual Fund Operating Expenses Total Net 0.55% 0.55% View the recent 30-day SEC yield report 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. Current to the most recent month-end performance for Russell mutual funds is available by visiting: www.russell.com/us/fundperformance. The fund offers other classes of shares with higher fees and expenses. These other classes may charge up to 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. 1 The fund first issued class S shares on October 19, 2007. The returns shown for class S shares are those of the fund's class I shares through October 19, 2007. Annual returns will differ only the extent that class S shares do not have the same expenses as the class I shares. Fund objectives, risks, charges and expenses should be carefully considered before investing. For a prospectus containing this and other important information call Russell at 1-866-676-7680 or go to the prospectus and reports page to download one. Please read the prospectus carefully before investing. On September 2, 2008, the name of the Fixed Income I Fund changed to Russell Investment Grade Bond Fund. For periods prior to April 1, 1995, fund performance results are reported gross of fund advisory and administrative fees. For periods thereafter, performance results are reported net of investment advisory and administrative fees, but gross of financial intermediary fees. Had these fees been reflected, the fund's performance would have been negatively affected (lower). Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. For more information on Russell Funds, contact your investment professional or plan administrator for assistance. Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company. The Russell logo is a trademark and service mark of Russell Investments. Securities products and services offered through Russell Financial Services, Inc. (formerly Russell Fund Distributors, Inc.), member FINRA, part of Russell Investments. For information on the Financial Industry Regulatory Authority, go to www.finra.org. Copyright © Russell Investments 2008. All rights reserved. First used October 2008. RFD 08-0665 Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.			Select a Russell fund Emerging Markets Global Equity International Developed Markets Investment Grade Bond Money Market Real Estate Securities Short Duration Bond Strategic Bond Tax Exempt Bond Tax-Managed Global Equity Tax-Managed U.S. Large Cap Tax-Managed U.S. Mid & Small Cap U.S. Core Equity U.S. Growth U.S. Quantitative Equity U.S. Small & Mid Cap U.S. Value Daily prices & performance   Download fund documents Prospectus Annual report Statement of additional information Tax information Month end holdings Subprime analysis 30-day SEC yield report Printable fact sheet   Printer friendly version of this page Send feedback or comments Site Search

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