Russell Strategic Bond Fund Broadening bond exposure Class S September 30, 2008 About the fund Russell constructed this fund to provide access to a broad universe of fixed income securities, including a small allocation to lower quality debt. Using multiple managers with different investment styles helps manage risk while increasing the fund's potential to outperform. One manager's approach may provide for security selection in less liquid sectors, using a large team of traders and analysts focused on finding attractive opportunities in corporate and hig-yield markets. Another may provide added diversification to the portfolio by evaluating both broad economic factors and security-specific issues. This view helps them determine the overall interest-rate exposure and which market sectors to emphasize. – Mike Ruff, CFA Investment strategy   Seeks to provide current income, and as a secondary objective, capital appreciation. Offers more aggressive fixed income exposure than other Russell fixed income mutual funds. Broad market exposure with non-U.S. component. Utilized a variety of total return strategies. Fund highlights   Aims for higher returns from the bond market by investing in a broader universe of bonds. Seeks returns by investing a small portion of assets in high-yield bonds with lower credit ratings. Helps manage volatility by diversifying among managers and styles. 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 Fully discretionary         Drake Capital Management, LLC   15%   2007 Goldman Sachs Asset Management, L.P.   21%   2006 Pacific Investment Management Company, LLC   21%   1994 Sector rotation         Hyperion Brookfield Asset Management, Inc.   5%   2007 Logan Circle Partners, L.P.   23%   2007 Metropolitan West Asset Management   15%   2008 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   45 AAA   27 AA   7 A   8 BBB   7 BB   2 B   2 Other   2 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   9.0 0.7 2.8 3.5 17.0 54.9 0.8 11.3 Due to rounding totals may not equal 100%. Characteristics Total net assets   Weighted average duration1   30-day SEC yield2 $6.7 billion   5.0 years   N/A 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 This share class of the fund has not been in existence for 30 days as of September 30, 2008     Cusip   Ticker Class A   782494470   RFDAX Class C   782494462   RFCCX Class E   782493167   RFCEX Class I   782493738   RFCSX Class S   782494454   RFCTX Class Y   782493159   RFCYX Performance review | as of September 30, 2008 Russell Strategic Bond Fund - Class S         Annualized returns QTR   YTD   1 yr   3 yrs   5 yrs   10 yrs   Since inception 01/29/93 -4.16   -5.01   -2.79   1.89   2.67   4.64   5.74 Fund Fees and Expenses Annual Fund Operating Expenses Total Net 0.79% 0.70% 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. 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. 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 075% 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. The fund first issued class S shares on September 2, 2008. The returns shown for class S shares prior to that date are the returns of the fund’s 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 III Fund changed to Russell Strategic Bond Fund. Fund performance is reported net of fund advisory and administrative fees, and gross of financial intermediary fees. 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 2007-2008. All rights reserved. First used October 2008. RFD 08-0670 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 Semiannual report Annual report Statement of additional 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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