Short Duration Bond Fund Return opportunities for short-term goals Class S March 31, 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, we've built in some biases relative to the fund's benchmark because our 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, we try to better manage some of the risk normally associated with more aggressive investment styles." – Mike Ruff, CFA 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; 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         Pacific Investment Management Company, LLC (PIMCO)   34%   2000 Sector rotation         Logan Circle Partners, L.P.   33%   2007 STW Fixed Income Management   33%   1996 Money managers listed are current as of 03/31/2008. 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. 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. 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   13 AAA   58 AA   9 A   15 BBB   4 BB   1 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. 2 Due to rounding totals may not equal 100%. Sector weightings   % of total market value Asset-Backed Corporate Emerging Markets Debt US Government High Yield International Mortgage-Backed Non-US Dollar   21.6 23.5 0.6 23.1 1.3 4.5 25.4 0.0 Due to rounding totals may not equal 100%. Characteristics Total market value   Weighted average duration1   30-day SEC yield2 $518.32 million   2.0 years   3.91% 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 March 31, 2008 Performance review | as of March 31, 2008 Short Duration Bond Fund - Class S         Annualized returns QTR   YTD   1 yr   3 yrs   5 yrs   10 yrs   Since inception 10/30/81 1.00   1.00   5.59   4.23   2.96   4.56   7.44 Fund Fees and Expenses Annual Fund Operating Expenses Total Net 0.68% 0.68% Net annual operating expense ratio reflects the actual expenses expected to be borne by shareholders. The fund's adviser has contractually agreed to waive, at least until February 28, 2009, up to the full amount of its advisory fee and then to reimburse the Fund for other direct Fund-level expenses to the extent those expenses exceed a specific percentage of the average daily net assets. The expense threshold to trigger this waiver has not yet been reached. Please see the current prospectus for complete details. 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.     Class C   Class E   Class S Cusip   782493340   782493332   782493506 Ticker   RSBCX   RSBEX   RFBSX 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 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. 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 April 2007. RFD 07-6567 (0326) 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.			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