Northwestern Mutual Variable Life Accounts

N-30B-2 1 dn30b2.htm NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNTS Northwestern Mutual Variable Life Accounts

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March 11, 2010

VIA EDGAR

Securities and Exchange Commission

Division of Investment Management

100 F Street, NE

Washington, DC 20549

RE:

Northwestern Mutual Variable Life Account I

EDGAR CIK No. 0000742277; File No. 811-3989

Northwestern Mutual Variable Life Account II

EDGAR CIK No. 0001359314; File No. 811-21933

Dear Sir or Madam:

On behalf of Northwestern Mutual Life Insurance Company and Northwestern Mutual Variable Life Account and Northwestern Mutual Life Account II (“Registrants” or the “Accounts”) we hereby submit, pursuant to Rule 30b2-1 under the Investment Company Act of 1940 (the “1940 Act”), that the Accounts’ annual report for the period ending December 31, 2009 has been transmitted to policy owners as required by Rule 30e-2 under the 1940 Act.

The following annual reports were filed with the Commission via EDGAR on the date indicated below and are incorporated herein by reference:


Underlying Investment Company	CIK No.	Date Filed	Registration No.
Northwestern Mutual Series Fund, Inc.	0000742212	3/10/2010	811-03990
Fidelity VIP Mid Cap Portfolio	0000927384	2/26/2010	811-07205
Russell Investment Funds	0000824036	3/10/2010	811-05371

Some of the investment companies above (or series thereof) may not be available under every policy offered by a Registrant.

In addition, performance summaries and financial statements for the Accounts are filed herewith. This filing will also include any other materials required to be filed, if any.

Please direct any questions or comments regarding this filing to the undersigned at 414-665-2418.

Sincerely,

/s/ Barbara Courtney

Barbara Courtney

Director – Mutual Fund Accounting

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Contents


Notice Regarding Delivery of Policyowner Documents

Performance Summaries for the Northwestern Mutual Variable Life Accounts

Northwestern Mutual Series Fund, Inc. - Annual Report

Fidelity^® VIP Mid Cap Portfolio - Annual Report (This report follows the end of the Northwestern Mutual Series Fund, Inc.)

Russell Investment Funds - Annual Report (This report follows the end of the Fidelity^® VIP Mid Cap Portfolio)

Northwestern Mutual Variable Life Account Financial Statements

Northwestern Mutual Variable Life Account II Financial Statements

Prospectus Supplements

The performance data quoted represents past performance. Past performance is historical and does not guarantee future performance. Investment return and principal value will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For the most recent month-end performance information visit www.northwesternmutual.com.

Performance Summary as of December 31, 2009

Variable Life—Policies Issued Before October 11, 1995


Total return (as of December 31, 2009)	Growth Stock Division		Focused Appreciation Division		Large Cap Core Stock Division		Index 500 Stock Division		Domestic Equity Division		Equity Income Division		Mid Cap Growth Stock Division(f)
1 year	36.42	%	41.70	%	28.63	%	25.71	%	28.81	%	23.90	%	31.37	%
5 years	5.00	%	29.24	%	1.56	%	(1.15	%)	(8.70	%)	(0.42	%)	2.84	%
Annualized	0.98	%	5.26	%	0.31	%	(0.23	%)	(1.80	%)	(0.08	%)	0.56	%
10 years	(14.81	%)	—		(18.93	%)	(14.97	%)	—		—		(5.13	%)
Annualized	(1.59	%)	—		(2.08	%)	(1.61	%)	—		—		(0.53	%)
Since division inception in Variable Life Account(b)	—		83.30	%(c)	—		—		7.86	%(d)	40.15	%(c)	—
Annualized	—		9.51	%	—		—		0.90	%	5.19	%	—
Current yield(e)

Variable Complife—Policies Issued Between October 11, 1995 and December 31, 2008
1 year	36.55	%	41.84	%	28.75	%	25.83	%	28.94	%	24.02	%	31.50	%
5 years	5.52	%	29.88	%	2.07	%	(0.66	%)	(8.24	%)	0.08	%	3.35	%
Annualized	1.08	%	5.37	%	0.41	%	(0.13	%)	(1.71	%)	0.02	%	0.66	%
10 years	(13.95	%)	—		(18.12	%)	(14.11	%)	—		—		(4.18	%)
Annualized	(1.49	%)	—		(1.98	%)	(1.51	%)	—		—		(0.43	%)
Since division inception in Variable Life Account(b)	—		84.52	%(c)	—		—		8.77	%(d)	41.08	%(c)	—
Annualized	—		9.62	%	—		—		1.00	%	5.30	%	—
Current yield(e)

Variable Executive Life & Variable Joint Life(a)
1 year	37.17	%	42.47	%	29.33	%	26.40	%	29.52	%	24.58	%	32.09	%
5 years	8.08	%	33.03	%	4.54	%	1.75	%	(6.02	%)	2.51	%	5.86	%
Annualized	1.57	%	5.87	%	0.89	%	0.35	%	(1.23	%)	0.50	%	1.14	%
10 years	(9.19	%)	—		(13.58	%)	(9.35	%)	—		—		1.13	%
Annualized	(0.96	%)	—		(1.45	%)	(0.98	%)	—		—		0.11	%
Since division inception in Variable Life Account(b)	—		90.89	%(c)	—		—		13.71	%(d)	45.95	%(c)	—
Annualized	—		10.18	%	—		—		1.54	%	5.83	%	—
Current yield(e)

All total return figures shown above reflect the deduction of portfolio expenses. Returns do not reflect premium deductions such as sales charges, premium taxes, surrender charges or cost of insurance charges. The returns shown would be lower if excluded contract charges were included and/or if underlying portfolio expense reimbursements and fee waivers were not reflected.

Performance quoted for periods prior to each product’s inception date is based on the actual investment experience of the portfolio, adjusted for the expenses of the product and premium charges.

(a)	Variable Executive Life policies were offered from March 2, 1998 to December 31, 2008. Variable Joint Life policies were offered from December 28, 1998 to December 31, 2008.

(b)	See the following footnotes for division inception dates.

(c)	Division inception on May 1, 2003.

(d)	Division inception on July 31, 2001.

(e)

For the seven-day period ended December 31, 2009, the Money Market Portfolio’s yield was 0.26% and was equivalent to a compound effective yield of 0.26%. The seven-day yield does not include deductions that are included in the separate account. The yield quotation more closely reflects the current earnings of the Money Market Portfolio than the total return quotation.

(f)	Total return reflects the effect of a one-time class action settlement received on June 18, 2009. Absent the payment, returns would have been lower.


Index 400 Stock Division		Mid Cap Value Division		Small Cap Growth Stock Division		Small Cap Value Division		International Growth Division		International Equity Division(f)		Money Market Division(f)		Select Bond Division		High Yield Bond Division		Balanced Division
36.25	%	22.56	%	30.46	%	27.48	%	22.49	%	32.38	%	0.21	%	8.77	%	44.60	%	20.77	%
13.19	%	(6.29	%)	(7.07	%)	10.91	%	3.94	%	25.29	%	14.36	%	23.78	%	26.59	%	10.69	%
2.51	%	(1.29	%)	(1.45	%)	2.09	%	0.78	%	4.61	%	2.72	%	4.36	%	4.83	%	2.05	%
70.73	%	—		18.84	%	—		—		42.90	%	27.33	%	80.07	%	73.10	%	21.65	%
5.49	%	—		1.74	%	—		—		3.63	%	2.45	%	6.06	%	5.64	%	1.98	%
—		46.36	%(c)	—		75.17	%(d)	36.23	%(d)	—		—		—		—		—
—		5.88	%	—		6.88	%	3.74	%	—		—		—		—		—
												0.26	%


36.39	%	22.69	%	30.58	%	27.61	%	22.61	%	32.52	%	0.31	%	8.88	%	44.74	%	20.89	%
13.76	%	(5.82	%)	(6.60	%)	11.46	%	4.47	%	25.91	%	14.93	%	24.40	%	27.22	%	11.24	%
2.61	%	(1.19	%)	(1.36	%)	2.19	%	0.88	%	4.72	%	2.82	%	4.46	%	4.93	%	2.15	%
72.45	%	—		20.04	%	—		—		44.34	%	28.61	%	81.88	%	74.84	%	22.87	%
5.60	%	—		1.84	%	—		—		3.74	%	2.55	%	6.16	%	5.75	%	2.08	%
—		47.33	%(c)	—		76.64	%(d)	37.38	%(d)	—		—		—		—		—
—		5.98	%	—		6.99	%	3.84	%	—		—		—		—		—
												0.26	%


37.00	%	23.24	%	31.17	%	28.18	%	23.16	%	33.11	%	0.76	%	9.37	%	45.39	%	21.43	%
16.52	%	(3.54	%)	(4.34	%)	14.16	%	7.00	%	28.96	%	17.72	%	27.41	%	30.30	%	13.94	%
3.10	%	(0.72	%)	(0.88	%)	2.68	%	1.36	%	5.22	%	3.32	%	4.96	%	5.44	%	2.64	%
82.00	%	—		26.69	%	—		—		52.33	%	35.73	%	91.95	%	84.51	%	29.67	%
6.17	%	—		2.39	%	—		—		4.30	%	3.10	%	6.74	%	6.32	%	2.63	%
—		52.42	%(c)	—		84.67	%(d)	43.62	%(d)	—		—		—		—		—
—		6.52	%	—		7.56	%	4.39	%	—		—		—		—		—
												0.26	%

Performance Summary, continued as of December 31, 2009

Variable Life—Policies Issued Before October 11, 1995


Total return (as of December 31, 2009)	Asset Allocation Division		Fidelity VIP Mid Cap Division		Russell Multi-Style Equity Division		Russell Aggressive Equity Division		Russell Non-U.S. Division		Russell Real Estate Securities Division		Russell Core Bond Division
1 year	26.40	%	38.99	%	30.68	%	30.68	%	25.80	%	28.24	%	15.18	%
5 years	10.99	%	25.45	%	1.27	%	(8.00	%)	9.53	%	2.40	%	23.11	%
Annualized	2.11	%	4.64	%	0.25	%	(1.65	%)	1.84	%	0.48	%	4.25	%
10 years	—		141.65	%	(20.00	%)	16.50	%	(1.69	%)	160.62	%	69.83	%
Annualized	—		9.22	%	(2.21	%)	1.54	%	(0.17	%)	10.05	%	5.44	%
Since division inception in Variable Life Account(b)	26.36	%(d)	—		—		—		—		—		—
Annualized	2.82	%	—		—		—		—		—		—
Current yield(e)

Variable Complife—Policies Issued Between October 11, 1995 and December 31, 2008
1 year	26.52	%	39.13	%	30.81	%	30.81	%	25.92	%	28.37	%	15.29	%
5 years	11.55	%	26.08	%	1.77	%	(7.54	%)	10.08	%	2.91	%	23.73	%
Annualized	2.21	%	4.74	%	0.35	%	(1.56	%)	1.94	%	0.58	%	4.35	%
10 years	—		144.09	%	(19.20	%)	17.68	%	(0.70	%)	163.25	%	71.54	%
Annualized	—		9.33	%	(2.11	%)	1.64	%	(0.07	%)	10.16	%	5.54	%
Since division inception in Variable Life Account(b)	27.43	%(d)	—		—		—		—		—		—
Annualized	2.92	%	—		—		—		—		—		—
Current yield(e)

Variable Executive Life & Variable Joint Life(a)
1 year	27.09	%	39.75	%	31.40	%	31.39	%	26.49	%	28.94	%	15.81	%
5 years	14.25	%	29.13	%	4.24	%	(5.30	%)	12.75	%	5.41	%	26.72	%
Annualized	2.70	%	5.25	%	0.83	%	(1.08	%)	2.43	%	1.06	%	4.85	%
10 years	—		157.61	%	(14.72	%)	24.20	%	4.80	%	177.82	%	81.03	%
Annualized	—		9.92	%	(1.58	%)	2.19	%	0.47	%	10.76	%	6.11	%
Since division inception in Variable Life Account(b)	33.22	%(d)	—		—		—		—		—		—
Annualized	3.47	%	—		—		—		—		—		—
Current yield(e)

Performance quoted for periods prior to each product’s inception date is based on the actual investment experience of the portfolio, adjusted for the expenses of the product and premium charges.

(a)	Variable Executive Life policies were offered from March 2, 1998 to December 31, 2008. Variable Joint Life policies were offered from December 28, 1998 to December 31, 2008.

(b)	See the following footnotes for division inception dates.

(c)	Division inception on May 1, 2003.

(d)	Division inception on July 31, 2001.

(e)

Performance Summary, continued as of December 31, 2009

Custom Variable Universal Life, Executive Variable Universal Life & Survivorship Variable Universal Life


Total return (as of December 31, 2009)	Growth Stock Division		Focused Appreciation Division		Large Cap Core Stock Division		Index 500 Stock Division		Domestic Equity Division		Equity Income Division		Mid Cap Growth Stock Division(e)
1 year	37.17	%	42.47	%	29.33	%	26.40	%	29.52	%	24.58	%	32.09	%
5 years	8.08	%	33.03	%	4.54	%	1.75	%	(6.02	%)	2.51	%	5.86	%
Annualized	1.57	%	5.87	%	0.89	%	0.35	%	(1.23	%)	0.50	%	1.14	%
10 years	(9.19	%)	—		(13.58	%)	(9.35	%)	—		—		1.13	%
Annualized	(0.96	%)	—		(1.45	%)	(0.98	%)	—		—		0.11	%
Since division inception in Variable Life Account II	(10.29	%)	6.70	%	(15.00	%)	(17.19	%)	(26.11	%)	(18.60	%)	(8.15	%)
Annualized	(3.66	%)	2.25	%	(5.42	%)	(6.27	%)	(9.86	%)	(6.81	%)	(2.87	%)
Since portfolio inception(a)	—		90.89	%(b)	—		—		13.71	%(c)	45.95	%(b)	—
Annualized	—		10.18	%	—		—		1.54	%	5.83	%	—
Current yield(d)

All policies were first offered and all divisions of the Variable Life Account II began on January 31, 2007. Performance quoted for periods prior to January 31, 2007 is based on the actual investment experience of the portfolio, adjusted for the expenses of the product and premium charges.

(a)	Returns are stated as of the inception date of the portfolio, which precedes the inception date of the division. See the following footnotes for portfolio inception dates.

(b)	Portfolio inception on May 1, 2003.

(c)	Portfolio inception on July 31, 2001.

(d)

(e)	Total return reflects the effect of a one-time class action settlement received on June 18, 2009. Absent the payment, returns would have been lower.

vii

Performance Summary, continued as of December 31, 2009

Custom Variable Universal Life, Executive Variable Universal Life & Survivorship Variable Universal Life


Total return (as of December 31, 2009)	Index 400 Stock Division		Mid Cap Value Division		Small Cap Growth Stock Division		Small Cap Value Division		International Growth Division		International Equity Division(e)		Money Market Division(e)
1 year	37.00	%	23.24	%	31.17	%	28.18	%	23.16	%	33.11	%	0.76	%
5 years	16.52	%	(3.54	%)	(4.34	%)	14.16	%	7.00	%	28.96	%	17.72	%
Annualized	3.10	%	(0.72	%)	(0.88	%)	2.68	%	1.36	%	5.22	%	3.32	%
10 years	82.00	%	—		26.69	%	—		—		52.33	%	35.73	%
Annualized	6.17	%	—		2.39	%	—		—		4.30	%	3.10	%
Since division inception in Variable Life Account II	(9.04	%)	(21.90	%)	(21.04	%)	(10.87	%)	(25.94	%)	(13.00	%)	8.54	%
Annualized	(3.20	%)	(8.13	%)	(7.78	%)	(3.87	%)	(9.79	%)	(4.66	%)	2.85	%
Since portfolio inception(a)	—		52.42	%(b)	—		84.67	%(c)	43.62	%(c)	—		—
Annualized	—		6.52	%	—		7.56	%	4.39	%	—		—
Current yield(d)													0.26	%

(a)	Returns are stated as of the inception date of the portfolio, which precedes the inception date of the division. See the following footnotes for portfolio inception dates.

(b)	Portfolio inception on May 1, 2003.

(c)	Portfolio inception on July 31, 2001.

(d)

(e)	Total return reflects the effect of a one-time class action settlement received on June 18, 2009. Absent the payment, returns would have been lower.

viii


Select Bond Division		High Yield Bond Division		Balanced Division		Asset Allocation Division		Fidelity VIP Mid Cap Division		Russell Multi-Style Equity Division		Russell Aggressive Equity Division		Russell Non-U.S. Division		Russell Real Estate Securities Division		Russell Core Bond Division
9.37	%	45.39	%	21.43	%	27.09	%	39.75	%	31.40	%	31.39	%	26.49	%	28.94	%	15.81	%
27.41	%	30.30	%	13.94	%	14.25	%	29.13	%	4.24	%	(5.30	%)	12.75	%	5.41	%	26.72	%
4.96	%	5.44	%	2.64	%	2.70	%	5.25	%	0.83	%	(1.08	%)	2.43	%	1.06	%	4.85	%
91.95	%	84.51	%	29.67	%	—		157.61	%	(14.72	%)	24.20	%	4.80	%	177.82	%	81.03	%
6.74	%	6.32	%	2.63	%	—		9.92	%	(1.58	%)	2.19	%	0.47	%	10.76	%	6.11	%
20.05	%	16.12	%	(1.24	%)	(3.87	%)	(4.16	%)	(15.23	%)	(24.01	%)	(20.48	%)	(36.84	%)	19.89	%
6.47	%	5.26	%	(0.43	%)	(1.35	%)	(1.45	%)	(5.51	%)	(8.99	%)	(7.56	%)	(14.58	%)	6.42	%
—		—		—		33.22	%(c)	—		—		—		—		—		—
—		—		—		3.47	%	—		—		—		—		—		—

LOGO

Annual Report December 31, 2009

Northwestern Mutual Variable Life Account

Financial Statements

Northwestern Mutual Variable Life Account Financial Statements

Table of Contents



Northwestern Mutual Variable Life Account

Statements of Assets and Liabilities		1

Statements of Operations		4

Statements of Changes in Net Assets		6

Notes to Financial Statements		10

Report of Independent Registered Public Accounting Firm		15

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account

December 31, 2009

(in thousands, except accumulation unit values)


	Growth Stock Division		Focused Appreciation Division		Large Cap Core Stock Division		Index 500 Stock Division		Domestic Equity Division		Equity Income Division		Mid Cap Growth Stock Division
Assets:
Investments, at Value (1)(2)
Northwestern Mutual Series Fund, Inc.	$	274,987	$	87,842	$	177,897	$	655,016	$	119,874	$	61,570	$	348,872
Fidelity Variable Insurance Products		—		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		97		—		62		135		71		3		63

Total Assets		275,084		87,842		177,959		655,151		119,945		61,573		348,935

Liabilities:
Due to Northwestern Mutual Life Insurance Company		17		14		4		33		6		1		81

Total Liabilities		17		14		4		33		6		1		81

Total Net Assets	$	275,067	$	87,828	$	177,955	$	655,118	$	119,939	$	61,572	$	348,854

Net Assets:
Variable Life Policies Issued
Before October 11, 1995
Policyowners’ Equity	$	24,123	$	6,456	$	19,560	$	94,789	$	11,059	$	5,455	$	48,787
Northwestern Mutual’s Equity		685		132		612		2,385		311		124		1,405
Variable Complife Policies Issued Between October 11, 1995 and December 31, 2008 (3)
Policyowners’ Equity		217,244		69,399		137,846		485,186		90,817		48,617		272,127
Northwestern Mutual’s Equity		13,443		4,867		8,509		30,407		6,902		3,198		15,867
Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (4)
Policyowners’ Equity		13,175		3,716		7,621		13,972		5,380		912		5,170
Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (5)
Policyowners’ Equity		6,397		3,258		3,807		28,379		5,470		3,266		5,498

Total Net Assets	$	275,067	$	87,828	$	177,955	$	655,118	$	119,939	$	61,572	$	348,854


(1) Investments, at cost	$	276,506	$	87,938	$	187,942	$	757,289	$	157,750	$	76,087	$	409,661
(2) Shares Outstanding		143,521		51,551		159,548		281,002		151,548		58,471		138,222
(3) Accumulation Unit Value	$	2.176678	$	1.845162	$	1.754516	$	2.275083	$	1.087659	$	1.410806	$	2.129518
Units Outstanding		105,981		40,249		83,416		226,626		89,844		36,727		135,240
(4) Accumulation Unit Value	$	29.365924	$	19.088595	$	23.449551	$	50.989051	$	11.370681	$	14.595160	$	57.953082
Units Outstanding		449		195		325		274		473		63		89
(5) Accumulation Unit Value	$	29.365924	$	19.088595	$	23.449551	$	50.989051	$	11.370681	$	14.595160	$	57.953082
Units Outstanding		218		171		162		557		481		224		95

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account

December 31, 2009

(in thousands, except accumulation unit values)


	Index 400 Stock Division		Mid Cap Value Division		Small Cap Growth Stock Division		Small Cap Value Division		International Growth Division		International Equity Division		Money Market Division
Assets:
Investments, at Value (1)(2)
Northwestern Mutual Series Fund, Inc.	$	177,566	$	31,820	$	166,347	$	122,194	$	76,751	$	489,465	$	188,761
Fidelity Variable Insurance Products		—		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		7		10		—		12		1		32

Total Assets		177,566		31,827		166,357		122,194		76,763		489,466		188,793

Liabilities:
Due to Northwestern Mutual Life Insurance Company		21		2		15		144		2		221		45

Total Liabilities		21		2		15		144		2		221		45

Total Net Assets	$	177,545	$	31,825	$	166,342	$	122,050	$	76,761	$	489,245	$	188,748

Net Assets:
Variable Life Policies Issued
Before October 11, 1995
Policyowners’ Equity	$	8,970	$	2,416	$	7,679	$	9,388	$	4,331	$	61,292	$	11,267
Northwestern Mutual’s Equity		193		55		199		219		108		1,466		263
Variable Complife Policies Issued Between October 11, 1995 and December 31, 2008 (3)
Policyowners’ Equity		145,426		25,390		139,549		96,266		60,323		375,392		137,917
Northwestern Mutual’s Equity		9,371		1,935		9,626		6,884		4,614		23,396		11,491
Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (4)
Policyowners’ Equity		7,921		569		3,220		3,811		3,309		14,416		18,858
Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (5)
Policyowners’ Equity		5,664		1,460		6,069		5,482		4,076		13,283		8,952

Total Net Assets	$	177,545	$	31,825	$	166,342	$	122,050	$	76,761	$	489,245	$	188,748


(1) Investments, at cost	$	191,934	$	44,007	$	218,768	$	130,506	$	106,740	$	484,060	$	188,761
(2) Shares Outstanding		150,480		32,370		116,981		87,406		73,166		295,928		188,761
(3) Accumulation Unit Value	$	1.838809	$	1.473346	$	1.842237	$	1.766442	$	1.373759	$	2.536491	$	1.561917
Units Outstanding		84,184		18,546		80,977		58,396		47,270		157,221		95,657
(4) Accumulation Unit Value	$	20.535699	$	15.242180	$	23.577314	$	18.466637	$	14.361577	$	3.803991	$	41.258586
Units Outstanding		386		37		137		206		230		3,790		457
(5) Accumulation Unit Value	$	20.535699	$	15.242180	$	23.577314	$	18.466637	$	14.361577	$	3.803991	$	41.258586
Units Outstanding		276		96		257		297		284		3,492		217

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Assets and Liabilities


Select Bond Division		High Yield Bond Division		Balanced Division		Asset Allocation Division		Fidelity VIP Mid Cap Division		Russell Multi-Style Equity Division		Russell Aggressive Equity Division		Russell Non-US Division		Russell Real Estate Securities Division		Russell Core Bond Division


$	223,436	$	84,337	$	299,024	$	37,348	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		105,367		—		—		—		—		—
	—		—		—		—		—		161,449		71,148		124,381		113,892		86,568

	16		—		9		—		—		19		—		—		1		—

	223,452		84,337		299,033		37,348		105,367		161,468		71,148		124,381		113,893		86,568



	—		65		19		3		12		6		13		2		15		156

	—		65		19		3		12		6		13		2		15		156

$	223,452	$	84,272	$	299,014	$	37,345	$	105,355	$	161,462	$	71,135	$	124,379	$	113,878	$	86,412




$	20,437	$	6,869	$	137,186	$	4,741	$	10,454	$	6,849	$	4,065	$	7,173	$	6,943	$	5,496
	430		156		2,266		101		227		174		93		178		160		152


	161,553		66,668		141,054		27,920		81,174		120,180		55,708		91,397		89,094		50,782
	10,610		3,896		8,528		1,782		6,252		8,533		4,130		6,397		6,487		3,521


	21,567		3,869		4,997		1,028		3,217		18,237		4,688		13,521		7,012		22,036


	8,855		2,814		4,983		1,773		4,031		7,489		2,451		5,713		4,182		4,425

$	223,452	$	84,272	$	299,014	$	37,345	$	105,355	$	161,462	$	71,135	$	124,379	$	113,878	$	86,412


$	216,555	$	82,188	$	372,653	$	42,034	$	124,729	$	163,633	$	95,356	$	151,279	$	149,468	$	85,023
	177,895		123,844		233,796		39,026		4,198		13,717		7,419		13,447		9,835		8,487
$	2.206231	$	2.334783	$	2.295052	$	1.274289	$	2.188843	$	0.841815	$	1.232123	$	1.233456	$	2.471078	$	1.719005
	78,035		30,223		65,176		23,309		39,942		152,900		48,565		79,284		38,680		31,590
$	170.745431	$	30.094875	$	122.549243	$	13.321541	$	22.643898	$	9.176223	$	13.775086	$	13.135524	$	25.765834	$	17.948158
	126		128		41		77		142		1,987		340		1,029		272		1,228
$	170.745431	$	30.094875	$	122.549243	$	13.321541	$	22.643898	$	9.176223	$	13.775086	$	13.135524	$	25.765834	$	17.948158
	52		93		41		133		178		816		178		435		162		246

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Assets and Liabilities

Statements of Operations

Northwestern Mutual Variable Life Account

For the Year Ended December 31, 2009

(in thousands)


	Growth Stock Division			Focused Appreciation Division			Large Cap Core Stock Division			Index 500 Stock Division
Investment income:
Income:
Dividend income	$	2,702		$	—		$	2,818		$	15,788
Expenses:
Mortality and expense risk charges		979			301			650			2,387
Taxes		10			2			9			41

Net investment income (loss)		1,713			(303	)		2,159			13,360

Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		(5,105	)		(678	)		(5,497	)		(14,465	)
Realized gain distributions		—			—			—			15,862

Realized gains (losses)		(5,105	)		(678	)		(5,497	)		1,397

Change in unrealized appreciation/depreciation of investments		78,579			26,775			43,709			121,808

Net increase (decrease) in net assets resulting from operations	$	75,187		$	25,794		$	40,371		$	136,565


	International Equity Division			Money Market Division			Select Bond Division			High Yield Bond Division
Investment income:
Income:
Dividend income	$	18,952		$	1,412		$	10,644		$	6,352
Expenses:
Mortality and expense risk charges		1,739			752			817			293
Taxes		26			6			10			3

Net investment income (loss)		17,187			654			9,817			6,056

Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		(2,171	)		—			651			(53	)
Realized gain distributions		8,373			1			—			—

Realized gains (losses)		6,202			1			651			(53	)

Change in unrealized appreciation/depreciation of investments		97,116			—			7,342			19,567

Net increase (decrease) in net assets resulting from operations	$	120,505		$	655		$	17,810		$	25,570

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Operations


Domestic Equity Division			Equity Income Division			Mid Cap Growth Stock Division			Index 400 Stock Division			Mid Cap Value Division			Small Cap Growth Stock Division			Small Cap Value Division			International Growth Division

$	3,474		$	1,502		$	838		$	2,717		$	314		$	397		$	871		$	431

	408			216			1,322			619			110			594			428			263
	5			2			21			4			1			3			4			2

	3,061			1,284			(505	)		2,094			203			(200	)		439			166


	(2,436	)		(1,799	)		(11,655	)		(2,609	)		(2,598	)		(7,560	)		420			(3,032	)
	—			—			384			4,974			291			—			3,681			—

	(2,436	)		(1,799	)		(11,271	)		2,365			(2,307	)		(7,560	)		4,101			(3,032	)


	26,412			12,873			96,475			44,192			8,079			47,360			22,271			16,621

$	27,037		$	12,358		$	84,699		$	48,651		$	5,975		$	39,600		$	26,811		$	13,755


Balanced Division			Asset Allocation Division			Fidelity VIP Mid Cap Division			Russell Multi-Style Equity Division			Russell Aggressive Equity Division			Russell Non-US Division			Russell Real Estate Securities Division			Russell Core Bond Division

$	12,379		$	978		$	410		$	1,848		$	310		$	3,106		$	4,060		$	3,543

	1,234			135			362			517			238			409			350			240
	63			2			4			3			2			3			3			2

	11,082			841			44			1,328			70			2,694			3,707			3,301


	(11,202	)		(1,064	)		(2,664	)		(4,646	)		(2,180	)		(1,670	)		(4,264	)		(1,019	)
	—			—			479			—			—			—			—			975

	(11,202	)		(1,064	)		(2,185	)		(4,646	)		(2,180	)		(1,670	)		(4,264	)		(44	)


	52,539			7,965			31,097			41,785			18,956			25,120			26,150			7,467

$	52,419		$	7,742		$	28,956		$	38,467		$	16,846		$	26,144		$	25,593		$	10,724

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Operations

Statements of Changes in Net Assets

Northwestern Mutual Variable Life Account

(in thousands)


	Growth Stock Division						Focused Appreciation Division (a)
	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008

Operations:
Net investment income (loss)	$	1,713		$	1,748		$	(303	)	$	(57	)
Net realized gains (losses)		(5,105	)		14,727			(678	)		2,546
Net change in unrealized appreciation/depreciation		78,579			(148,186	)		26,775			(42,472	)

Net increase (decrease) in net assets resulting from operations		75,187			(131,711	)		25,794			(39,983	)


Policy Transactions:
Policyowners’ Net Payments		26,445			29,593			8,380			8,639
Policy Loans, Surrenders and Death Benefits		(15,891	)		(27,071	)		(6,942	)		(5,444	)
Mortality and other (net)		(8,044	)		(8,098	)		(2,628	)		(2,353	)
Transfers from other divisions		15,890			18,462			18,714			34,334
Transfers to other divisions		(17,336	)		(21,042	)		(14,625	)		(17,332	)

Net increase (decrease) in net assets resulting from policy transactions		1,064			(8,156	)		2,899			17,844

Net increase (decrease) in net assets		76,251			(139,867	)		28,693			(22,139	)

Net Assets:
Beginning of Period		198,816			338,683			59,135			81,274

End of Period	$	275,067		$	198,816		$	87,828		$	59,135

Units issued during the period		21,331			20,386			14,596			19,278
Units redeemed during the period		(22,754	)		(21,616	)		(12,408	)		(12,094	)

Net units issued (redeemed) during period		(1,423	)		(1,230	)		2,188			7,184


	Mid Cap Growth Stock Division						Index 400 Stock Division
	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008

Operations:
Net investment income (loss)	$	(505	)	$	(592	)	$	2,094		$	2,104
Net realized gains (losses)		(11,271	)		44,411			2,365			20,283
Net change in unrealized appreciation/depreciation		96,475			(227,780	)		44,192			(101,475	)

Net increase (decrease) in net assets resulting from operations		84,699			(183,961	)		48,651			(79,088	)


Policy Transactions:
Policyowners’ Net Payments		32,786			37,125			16,167			18,654
Policy Loans, Surrenders and Death Benefits		(25,144	)		(30,270	)		(11,985	)		(16,781	)
Mortality and other (net)		(9,844	)		(10,613	)		(5,033	)		(5,103	)
Transfers from other divisions		14,572			18,232			10,778			16,038
Transfers to other divisions		(17,344	)		(25,685	)		(15,433	)		(17,976	)

Net increase (decrease) in net assets resulting from policy transactions		(4,974	)		(11,211	)		(5,506	)		(5,168	)

Net increase (decrease) in net assets		79,725			(195,172	)		43,145			(84,256	)

Net Assets:
Beginning of Period		269,129			464,301			134,400			218,656

End of Period	$	348,854		$	269,129		$	177,545		$	134,400

Units issued during the period		24,197			22,890			17,990			17,831
Units redeemed during the period		(26,722	)		(25,943	)		(20,353	)		(19,303	)

Net units issued (redeemed) during period		(2,525	)		(3,053	)		(2,363	)		(1,472	)

(a)	Division was renamed effective April 30, 2008. See note 1.

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Changes in Net Assets


Large Cap Core Stock Division						Index 500 Stock Division						Domestic Equity Division (a)						Equity Income Division (a)
Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008


$	2,159		$	2,233		$	13,360		$	12,633		$	3,061		$	3,035		$	1,284		$	(232	)
	(5,497	)		(2,228	)		1,397			18,632			(2,436	)		9,617			(1,799	)		877
	43,709			(89,197	)		121,808			(340,532	)		26,412			(70,544	)		12,873			(25,366	)

	40,371			(89,192	)		136,565			(309,267	)		27,037			(57,892	)		12,358			(24,721	)



	18,357			20,838			63,278			70,545			13,892			16,481			6,281			6,547
	(12,684	)		(17,883	)		(49,959	)		(51,292	)		(7,976	)		(9,153	)		(4,531	)		(3,552	)
	(5,325	)		(5,656	)		(19,116	)		(19,781	)		(3,426	)		(3,480	)		(1,667	)		(1,625	)
	14,344			17,653			38,264			45,705			9,926			16,621			9,838			12,616
	(15,344	)		(15,169	)		(39,587	)		(47,205	)		(10,822	)		(16,883	)		(6,917	)		(7,125	)

	(652	)		(217	)		(7,120	)		(2,028	)		1,594			3,586			3,004			6,861

	39,719			(89,409	)		129,445			(311,295	)		28,631			(54,306	)		15,362			(17,860	)


	138,236			227,645			525,673			836,968			91,308			145,614			46,210			64,070

$	177,955		$	138,236		$	655,118		$	525,673		$	119,939		$	91,308		$	61,572		$	46,210

	18,085			17,095			46,549			42,685			24,059			25,310			12,506			11,363
	(19,256	)		(16,100	)		(48,585	)		(41,348	)		(22,203	)		(22,492	)		(10,053	)		(7,258	)

	(1,171	)		995			(2,036	)		1,337			1,856			2,818			2,453			4,105


Mid Cap Value Division (a)						Small Cap Growth Stock Division						Small Cap Value Division (a)						International Growth Division
Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008


$	203		$	(147	)	$	(200	)	$	(456	)	$	439		$	(91	)	$	166		$	985
	(2,307	)		(566	)		(7,560	)		33,187			4,101			12,319			(3,032	)		11,648
	8,079			(12,984	)		47,360			(134,208	)		22,271			(51,023	)		16,621			(65,655	)

	5,975			(13,697	)		39,600			(101,477	)		26,811			(38,795	)		13,755			(53,022	)



	3,823			4,325			18,114			21,318			12,433			14,351			9,603			11,155
	(2,264	)		(2,634	)		(14,215	)		(15,175	)		(9,260	)		(9,639	)		(5,674	)		(6,966	)
	(984	)		(1,010	)		(4,888	)		(5,100	)		(3,617	)		(3,634	)		(2,314	)		(2,549	)
	4,520			5,724			20,416			16,171			12,950			16,412			11,030			16,514
	(4,711	)		(7,586	)		(21,580	)		(18,594	)		(14,624	)		(17,185	)		(11,229	)		(14,301	)

	384			(1,181	)		(2,153	)		(1,380	)		(2,118	)		305			1,416			3,853

	6,359			(14,878	)		37,447			(102,857	)		24,693			(38,490	)		15,171			(49,169	)


	25,466			40,344			128,895			231,752			97,357			135,847			61,590			110,759

$	31,825		$	25,466		$	166,342		$	128,895		$	122,050		$	97,357		$	76,761		$	61,590

	5,901			5,811			20,471			17,812			15,421			15,592			15,210			14,733
	(5,599	)		(6,359	)		(21,800	)		(17,304	)		(16,262	)		(14,339	)		(14,371	)		(12,804	)

	302			(548	)		(1,329	)		508			(841	)		1,253			839			1,929

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Changes in Net Assets

Northwestern Mutual Variable Life Account

(in thousands)


	International Equity Division (a)						Money Market Division
	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008

Operations:
Net investment income (loss)	$	17,187		$	11,542		$	654		$	3,556
Net realized gains (losses)		6,202			56,323			1			33
Net change in unrealized appreciation/depreciation		97,116			(359,106	)		—			—

Net increase (decrease) in net assets resulting from operations		120,505			(291,241	)		655			3,589


Policy Transactions:
Policyowners’ Net Payments		42,672			47,261			106,083			127,153
Policy Loans, Surrenders and Death Benefits		(32,299	)		(39,886	)		(53,664	)		(32,703	)
Mortality and other (net)		(14,802	)		(14,184	)		(8,938	)		(9,181	)
Transfers from other divisions		37,452			43,550			124,543			118,140
Transfers to other divisions		(32,325	)		(39,554	)		(157,865	)		(172,012	)

Net increase (decrease) in net assets resulting from policy transactions		698			(2,813	)		10,159			31,397

Net increase (decrease) in net assets		121,203			(294,054	)		10,814			34,986

Net Assets:
Beginning of Period		368,042			662,096			177,934			142,948

End of Period	$	489,245		$	368,042		$	188,748		$	177,934

Units issued during the period		37,372			32,894			121,314			138,287
Units redeemed during the period		(36,196	)		(33,011	)		(119,541	)		(121,020	)

Net units issued (redeemed) during period		1,176			(117	)		1,773			17,267


	Fidelity VIP Mid Cap Division						Russell Multi-Style Equity Division
	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008

Operations:
Net investment income (loss)	$	44		$	(177	)	$	1,328		$	1,795
Net realized gains (losses)		(2,185	)		15,136			(4,646	)		275
Net change in unrealized appreciation/depreciation		31,097			(61,619	)		41,785			(86,477	)

Net increase (decrease) in net assets resulting from operations		28,956			(46,660	)		38,467			(84,407	)


Policy Transactions:
Policyowners’ Net Payments		10,937			11,389			15,320			17,990
Policy Loans, Surrenders and Death Benefits		(6,273	)		(6,285	)		(12,051	)		(14,512	)
Mortality and other (net)		(3,224	)		(2,884	)		(4,711	)		(4,628	)
Transfers from other divisions		14,658			17,833			67,051			31,224
Transfers to other divisions		(11,938	)		(12,686	)		(70,621	)		(23,142	)

Net increase (decrease) in net assets resulting from policy transactions		4,160			7,367			(5,012	)		6,932

Net increase (decrease) in net assets		33,116			(39,293	)		33,455			(77,475	)

Net Assets:
Beginning of Period		72,239			111,532			128,007			205,482

End of Period	$	105,355		$	72,239		$	161,462		$	128,007

Units issued during the period		11,830			11,896			42,139			35,184
Units redeemed during the period		(9,821	)		(8,750	)		(44,493	)		(32,499	)

Net units issued (redeemed) during period		2,009			3,146			(2,354	)		2,685

(a)	Division was renamed effective April 30, 2008. See note 1.

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Changes in Net Assets


Select Bond Division						High Yield Bond Division						Balanced Division						Asset Allocation Division
Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008


$	9,817		$	7,598		$	6,056		$	5,080		$	11,082		$	2,464		$	841		$	918
	651			(253	)		(53	)		(739	)		(11,202	)		81,432			(1,064	)		3,162
	7,342			(2,394	)		19,567			(19,755	)		52,539			(161,197	)		7,965			(16,799	)

	17,810			4,951			25,570			(15,414	)		52,419			(77,301	)		7,742			(12,719	)



	18,551			17,523			6,167			6,771			22,112			24,927			3,168			3,388
	(19,175	)		(15,323	)		(5,595	)		(6,206	)		(19,889	)		(23,106	)		(3,159	)		(2,942	)
	(7,285	)		(5,877	)		(2,459	)		(1,929	)		(8,680	)		(9,174	)		(1,123	)		(1,076	)
	61,681			53,414			16,685			10,024			12,282			13,352			5,096			6,249
	(39,230	)		(28,297	)		(11,299	)		(10,441	)		(14,051	)		(13,724	)		(3,328	)		(4,127	)

	14,542			21,440			3,499			(1,781	)		(8,226	)		(7,725	)		654			1,492

	32,352			26,391			29,069			(17,195	)		44,193			(85,026	)		8,396			(11,227	)


	191,100			164,709			55,203			72,398			254,821			339,847			28,949			40,176

$	223,452		$	191,100		$	84,272		$	55,203		$	299,014		$	254,821		$	37,345		$	28,949

	26,321			26,079			9,817			7,697			12,984			12,855			6,464			6,845
	(20,798	)		(15,095	)		(8,658	)		(8,071	)		(14,735	)		(12,189	)		(6,463	)		(5,875	)

	5,523			10,984			1,159			(374	)		(1,751	)		666			1			970


Russell Aggressive Equity Division						Russell Non-US Division						Russell Real Estate Securities Division						Russell Core Bond Division
Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008


$	70		$	363		$	2,694		$	(551	)	$	3,707		$	1,821		$	3,301		$	2,750
	(2,180	)		153			(1,670	)		2,569			(4,264	)		420			(44	)		(530	)
	18,956			(42,383	)		25,120			(78,201	)		26,150			(51,294	)		7,467			(5,710	)

	16,846			(41,867	)		26,144			(76,183	)		25,593			(49,053	)		10,724			(3,490	)



	7,866			8,815			12,178			13,977			11,966			13,989			6,235			6,092
	(5,417	)		(6,922	)		(8,973	)		(11,977	)		(7,970	)		(10,246	)		(5,821	)		(6,647	)
	(2,128	)		(2,333	)		(3,679	)		(3,886	)		(2,979	)		(3,466	)		(2,415	)		(2,286	)
	13,006			9,828			40,245			24,117			31,672			22,210			73,600			31,539
	(13,500	)		(11,796	)		(44,630	)		(23,724	)		(30,354	)		(18,679	)		(60,658	)		(31,697	)

	(173	)		(2,408	)		(4,859	)		(1,493	)		2,335			3,808			10,941			(2,999	)

	16,673			(44,275	)		21,285			(77,676	)		27,928			(45,245	)		21,665			(6,489	)


	54,462			98,737			103,094			180,770			85,950			131,195			64,747			71,236

$	71,135		$	54,462		$	124,379		$	103,094		$	113,878		$	85,950		$	86,412		$	64,747

	13,102			11,216			21,650			18,272			12,614			10,829			15,373			14,007
	(13,059	)		(11,908	)		(23,210	)		(19,643	)		(11,143	)		(9,633	)		(13,797	)		(10,388	)

	43			(692	)		(1,560	)		(1,371	)		1,471			1,196			1,576			3,619

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Changes in Net Assets

Notes to Financial Statements

Northwestern Mutual Variable Life Account

December 31, 2009

1. Organization — Northwestern Mutual Variable Life Account (“the Account”) is registered as a unit investment trust under the Investment Company Act of 1940 and is a segregated asset account of The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”) used to fund variable life insurance policies.

All assets of each Division of the Account are invested in shares of the corresponding Portfolio of Northwestern Mutual Series Fund, Inc., Fidelity Variable Insurance Products and the Russell Investment Funds (collectively known as “the Funds”). The Funds are open-end investment companies registered under the Investment Company Act of 1940.

Effective April 30, 2008, the following Divisions of the Account were renamed:


Old Name		New Name
Janus Capital Appreciation Division		Focused Appreciation Division
Capital Guardian Domestic Equity Division		Domestic Equity Division
T. Rowe Price Equity Income Division		Equity Income Division
AllianceBernstein Mid Cap Value Division		Mid Cap Value Division
T. Rowe Price Small Cap Value Division		Small Cap Value Division
Franklin Templeton International Equity Division		International Equity Division

2. Significant Accounting Policies

Use of Estimates — The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Investment Valuation — The shares are valued at the Funds’ offering and redemption prices per share. As of December 31, 2009, all of the Account’s investments are identified as Level 1 securities for valuation purposes under the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification. Level 1 securities are valued at fair value as determined by unadjusted quoted prices in active markets for identical securities.

Investment Income, Securities Transactions and Policy Dividends — Transactions in the Funds’ shares are accounted for on the trade date. The basis for determining cost on sale of the Funds’ shares is identified cost. Dividend income and distributions of net realized gains from the Funds are recorded on the ex–date of the dividends. Dividends and distributions received are reinvested in additional shares of the respective portfolios of the Funds. The policies are eligible to receive policy dividends from Northwestern Mutual. Any policy dividends reinvested in the Account are reflected in Policyowners’ net payments in the accompanying financial statements.

Taxes — Northwestern Mutual is taxed as a “life insurance company” under the Internal Revenue Code. The variable life insurance policies, which are funded in the Account, are taxed as part of the operations of Northwestern Mutual. Policies provide that a charge for taxes may be made against the assets of the Account. Generally, for Variable Life policies issued before October 11, 1995, Northwestern Mutual charges the Account at an annual rate of 0.05% of the Account’s net assets and reserves the right to increase, decrease or eliminate the charge for taxes in the future. Generally, for Variable CompLife policies issued on or after October 11, 1995, Variable Executive Life policies issued on or after March 2, 1998, and Variable Joint Life policies issued on or after December 10, 1998, there is no charge being made against the assets of the Account for federal income taxes, but Northwestern Mutual reserves the right to charge for taxes in the future.

Premium Payments — For Variable Life and Variable CompLife policies, the Account is credited for the policyowners’ net annual premiums at the respective policy anniversary dates regardless of when policyowners actually pay their premiums. Northwestern Mutual’s equity represents any unpaid portion of net annual premiums.

3. Purchases and Sales of Investments — Purchases and sales of the Funds’ shares for the year ended December 31, 2009 were as follows: (in thousands)


Division	Purchases		Sales
Growth Stock	$	27,446	$	24,509
Focused Appreciation		10,991		8,369
Large Cap Core Stock		17,537		15,947
Index 500 Stock		79,878		57,645
Domestic Equity		14,941		10,281
Equity Income		9,641		5,343
Mid Cap Growth Stock		25,395		30,274

Notes to Financial Statements


Division	Purchases		Sales
Index 400 Stock	$	17,216	$	15,616
Mid Cap Value		3,621		2,746
Small Cap Growth Stock		14,492		16,934
Small Cap Value		13,359		11,180
International Growth		8,719		7,112
International Equity		65,505		38,932
Money Market		71,546		60,643
Select Bond		47,474		23,335
High Yield Bond		16,721		7,090
Balanced		27,469		24,651
Asset Allocation		5,047		3,541
Fidelity VIP Mid Cap		12,466		7,746
Russell Multi-Style Equity		10,365		14,049
Russell Aggressive Equity		6,420		6,493
Russell Non-U.S.		8,861		11,049
Russell Real Estate Securities		15,752		9,637
Russell Core Bond		23,660		8,280

4. Expenses and Related Party Transactions — A deduction for mortality and expense risks is paid to Northwestern Mutual. The mortality risk is that insureds may not live as long as estimated. The expense risk is that expenses of issuing and administering the policies may exceed the estimated costs.

For Variable Life and Variable CompLife policies, the deduction is determined daily at an annual rate of 0.50% and 0.45%, respectively, of the net assets of the Account.

A deduction for the mortality and expense risks for Variable Executive Life policies is determined monthly at an annual rate of 0.60% of the amount invested in the Account for the Policy for the first ten Policy years, and 0.17% thereafter for policies with the Cash Value Amendment, or 0.15% thereafter for policies without the Cash Value Amendment. A deduction for the mortality and expense risks for Variable Joint Life policies is determined monthly at an annual rate of 0.10% of the amounts invested in the Account for the Policy. These charges are reflected as a reduction in units and are included in Mortality and Other in the accompanying financial statements.

Additional mortality costs are deducted from the policy annually for Variable Life and Variable CompLife policies, and monthly for Variable Executive Life and Variable Joint Life policies, and are paid to Northwestern Mutual to cover the cost of providing insurance protection. For Variable Life and Variable CompLife policies this cost is actuarially calculated based upon the insured’s age, the 1980 Commissioners Standard Ordinary Mortality Table and the amount of insurance provided under the policy. For Variable Executive Life and Variable Joint Life policies the cost reflects expected mortality costs based upon actual experience.

Certain deductions are also made from the annual, single or other premiums before amounts are allocated to the Account. These deductions are for sales load, administrative expenses, taxes and a risk charge for the guaranteed minimum death benefit.

5. Subsequent Events

Management has evaluated events subsequent to December 31, 2009 through February 18, 2010, the date these financial statements were available to be issued. Based on this evaluation, no events have occurred subsequent to December 31, 2009 that require disclosure or adjustment to the financial statements at that date or for the period then ended.

6. Financial Highlights

(For a unit outstanding during the period)


	As of the respective period end date:				For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value, Lowest to Highest	Net Assets (000’s)		Dividend Income as a % of Average Net Assets	Expense Ratio, Lowest to Highest	Total Return Lowest to Highest (1)
Growth Stock
Year Ended 12/31/09	106,648	$2.176678 to $29.365924	$	275,067	1.16%	0.10% to 0.60%	36.42% to 37.17%
Year Ended 12/31/08	108,071	$1.594004 to $21.408736	$	198,816	1.06%	0.10% to 0.60%	(39.19%) to (38.86%)
Year Ended 12/31/07	109,301	$2.618873 to $35.015115	$	338,683	0.89%	0.10% to 0.60%	8.60% to 9.20%
Year Ended 12/31/06	112,452	$2.409175 to $32.066403	$	318,840	0.75%	0.10% to 0.60%	8.97% to 9.57%
Year Ended 12/31/05	112,012	$2.208643 to $29.265983	$	292,545	1.03%	0.20% to 0.75%	6.96% to 7.71%

(1)	Total Return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

Notes to Financial Statements


	As of the respective period end date:				For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value, Lowest to Highest	Net Assets (000’s)		Dividend Income as a % of Average Net Assets	Expense Ratio, Lowest to Highest	Total Return Lowest to Highest (1)
Focused Appreciation
Year Ended 12/31/09	40,615	$1.845162 to $19.088595	$	87,828	0.00%	0.10% to 0.60%	41.70% to 42.47%
Year Ended 12/31/08	38,427	$1.300904 to $13.397864	$	59,135	0.35%	0.10% to 0.60%	(40.34%) to (40.01%)
Year Ended 12/31/07	31,243	$2.178331 to $22.333276	$	81,274	0.04%	0.10% to 0.60%	26.14% to 26.84%
Year Ended 12/31/06	24,065	$1.725184 to $17.607745	$	48,864	0.42%	0.10% to 0.60%	4.31% to 4.88%
Year Ended 12/31/05	16,935	$1.647885 to $16.788069	$	33,152	0.20%	0.20% to 0.75%	16.19% to 17.00%
Large Cap Core Stock
Year Ended 12/31/09	83,903	$1.754516 to $23.449551	$	177,955	1.84%	0.10% to 0.60%	28.63% to 29.33%
Year Ended 12/31/08	85,074	$1.362693 to $18.131181	$	138,236	1.62%	0.10% to 0.60%	(39.08%) to (38.74%)
Year Ended 12/31/07	84,079	$2.234518 to $29.597322	$	227,645	1.15%	0.10% to 0.60%	8.52% to 9.12%
Year Ended 12/31/06	85,650	$2.057029 to $27.123722	$	212,813	1.06%	0.10% to 0.60%	10.89% to 11.49%
Year Ended 12/31/05	84,325	$1.853229 to $24.327323	$	189,924	1.27%	0.20% to 0.75%	7.71% to 8.46%
Index 500 Stock
Year Ended 12/31/09	227,457	$2.275083 to $50.989051	$	655,118	2.82%	0.10% to 0.60%	25.71% to 26.40%
Year Ended 12/31/08	229,493	$1.808068 to $40.340674	$	525,673	2.26%	0.10% to 0.60%	(37.29%) to (36.94%)
Year Ended 12/31/07	228,156	$2.880226 to $63.972521	$	836,968	1.62%	0.10% to 0.60%	4.85% to 5.43%
Year Ended 12/31/06	229,219	$2.744303 to $60.678957	$	805,187	1.57%	0.10% to 0.60%	14.99% to 15.62%
Year Ended 12/31/05	227,890	$2.384129 to $52.479807	$	702,148	1.72%	0.20% to 0.75%	4.00% to 4.72%
Domestic Equity
Year Ended 12/31/09	90,798	$1.087659 to $11.370681	$	119,939	3.49%	0.10% to 0.60%	28.81% to 29.52%
Year Ended 12/31/08	88,942	$0.843525 to $ 8.778981	$	91,308	2.91%	0.10% to 0.60%	(38.83%) to (38.49%)
Year Ended 12/31/07	86,124	$1.377664 to $14.273423	$	145,614	1.44%	0.10% to 0.60%	(6.84%) to (6.33%)
Year Ended 12/31/06	75,043	$1.477394 to $15.237722	$	136,676	0.00%	0.10% to 0.60%	15.93% to 16.56%
Year Ended 12/31/05	60,708	$1.267542 to $13.072390	$	95,767	1.87%	0.20% to 0.75%	7.30% to 8.04%
Equity Income
Year Ended 12/31/09	37,014	$1.410806 to $14.595160	$	61,572	2.93%	0.10% to 0.60%	23.90% to 24.58%
Year Ended 12/31/08	34,561	$1.137525 to $11.715261	$	46,210	0.03%	0.10% to 0.60%	(36.16%) to (35.81%)
Year Ended 12/31/07	30,456	$1.780093 to $18.250431	$	64,070	2.10%	0.10% to 0.60%	2.69% to 3.26%
Year Ended 12/31/06	23,010	$1.731741 to $17.674755	$	48,241	1.82%	0.10% to 0.60%	18.50% to 19.15%
Year Ended 12/31/05	17,221	$1.456050 to $14.833915	$	31,366	1.74%	0.20% to 0.75%	3.46% to 4.19%
Mid Cap Growth Stock
Year Ended 12/31/09	135,424	$2.129518 to $57.953082	$	348,854	0.28%	0.10% to 0.60%	31.37% to 32.09% (2)
Year Ended 12/31/08	137,949	$1.619377 to $43.872392	$	269,129	0.30%	0.10% to 0.60%	(40.41%) to (40.08%)
Year Ended 12/31/07	141,002	$2.714862 to $73.219863	$	464,301	0.76%	0.10% to 0.60%	20.04% to 20.70%
Year Ended 12/31/06	147,324	$2.259482 to $60.663705	$	404,081	0.12%	0.10% to 0.60%	3.83% to 4.40%
Year Ended 12/31/05	151,330	$2.173946 to $58.106257	$	402,632	0.05%	0.20% to 0.75%	5.40% to 6.14%
Index 400 Stock
Year Ended 12/31/09	84,846	$1.838809 to $20.535699	$	177,545	1.82%	0.10% to 0.60%	36.25% to 37.00%
Year Ended 12/31/08	87,209	$1.348229 to $14.989442	$	134,400	1.54%	0.10% to 0.60%	(36.63%) to (36.28%)
Year Ended 12/31/07	88,681	$2.125280 to $23.522236	$	218,656	1.23%	0.10% to 0.60%	7.34% to 7.93%
Year Ended 12/31/06	89,766	$1.978080 to $21.794434	$	206,352	1.06%	0.10% to 0.60%	9.44% to 10.04%
Year Ended 12/31/05	87,671	$1.793842 to $19.805364	$	184,510	0.76%	0.20% to 0.75%	11.59% to 12.37%
Mid Cap Value
Year Ended 12/31/09	18,679	$1.473346 to $15.242180	$	31,825	1.20%	0.10% to 0.60%	22.56% to 23.24%
Year Ended 12/31/08	18,377	$1.200893 to $12.367958	$	25,466	0.00%	0.10% to 0.60%	(35.43%) to (35.07%)
Year Ended 12/31/07	18,925	$1.857847 to $19.047672	$	40,344	0.83%	0.10% to 0.60%	(0.71%) to (0.16%)
Year Ended 12/31/06	12,958	$1.869298 to $19.078717	$	28,186	1.30%	0.10% to 0.60%	13.87% to 14.49%
Year Ended 12/31/05	9,445	$1.635691 to $16.663892	$	18,620	0.67%	0.20% to 0.75%	4.73% to 5.46%

(1)	Total Return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

(2)

Total return reflects the effect of a one-time class action settlement received on June 18, 2009. Absent the payment, the returns would have ranged from 31.27% to 31.99% for the Mid Cap Growth Stock Division, from 31.66% to 32.39% for the International Equity Division and from 0.06% to 0.61% for the Money Market Division.

Notes to Financial Statements


	As of the respective period end date:				For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value, Lowest to Highest	Net Assets (000’s)		Dividend Income as a % of Average Net Assets	Expense Ratio, Lowest to Highest	Total Return Lowest to Highest (1)
Small Cap Growth Stock
Year Ended 12/31/09	81,371	$1.842237 to $23.577314		$166,342	0.28%	0.10% to 0.60%	30.46% to 31.17%
Year Ended 12/31/08	82,700	$1.410759 to $17.974245		$128,895	0.17%	0.10% to 0.60%	(44.18%) to (43.87%)
Year Ended 12/31/07	82,192	$2.524707 to $32.021844		$231,752	0.08%	0.10% to 0.60%	8.94% to 9.54%
Year Ended 12/31/06	84,660	$2.315230 to $29.232653		$220,095	0.00%	0.10% to 0.60%	6.10% to 6.68%
Year Ended 12/31/05	84,275	$2.165726 to $27.401692		$207,501	0.00%	0.20% to 0.75%	10.41% to 11.18%
Small Cap Value
Year Ended 12/31/09	58,899	$1.766442 to $18.466637		$122,050	0.85%	0.10% to 0.60%	27.48% to 28.18%
Year Ended 12/31/08	59,740	$1.384260 to $14.406429		$ 97,357	0.34%	0.10% to 0.60%	(28.53%) to (28.13%)
Year Ended 12/31/07	58,487	$1.934849 to $20.045927		$135,847	0.41%	0.10% to 0.60%	(1.37%) to (0.83%)
Year Ended 12/31/06	54,770	$1.959847 to $20.213417		$131,093	0.23%	0.10% to 0.60%	15.92% to 16.55%
Year Ended 12/31/05	48,270	$1.681621 to $17.342719		$ 99,801	0.31%	0.20% to 0.75%	6.47% to 7.21%
International Growth
Year Ended 12/31/09	47,784	$1.373759 to $ 14.361577		$ 76,761	0.66%	0.10% to 0.60%	22.49% to 23.16%
Year Ended 12/31/08	46,945	$1.120404 to $ 11.660588		$ 61,590	1.52%	0.10% to 0.60%	(46.48%) to (46.19%)
Year Ended 12/31/07	45,016	$2.091399 to $ 21.668250		$110,759	0.81%	0.10% to 0.60%	12.00% to 12.62%
Year Ended 12/31/06	36,920	$1.865431 to $ 19.240066		$ 81,194	0.20%	0.10% to 0.60%	20.81% to 21.48%
Year Ended 12/31/05	27,233	$1.535755 to $ 15.838526		$ 49,444	1.23%	0.20% to 0.75%	17.18% to 18.00%
International Equity
Year Ended 12/31/09	164,503	$2.536491 to $ 3.803991		$489,245	4.66%	0.10% to 0.60%	32.38% to 33.11% (2)
Year Ended 12/31/08	163,327	$1.914107 to $ 2.857743		$368,042	2.67%	0.10% to 0.60%	(44.09%) to (43.78%)
Year Ended 12/31/07	163,444	$3.420279 to $ 5.083451		$662,096	1.83%	0.10% to 0.60%	17.42% to 18.06%
Year Ended 12/31/06	156,118	$2.910111 to $ 4.305729		$541,364	1.70%	0.10% to 0.60%	30.18% to 30.90%
Year Ended 12/31/05	148,008	$2.233185 to $ 3.289423		$398,833	1.73%	0.20% to 0.75%	10.75% to 11.52%
Money Market
Year Ended 12/31/09	96,331	$1.561917 to $ 41.258586		$188,748	0.75%	0.10% to 0.60%	0.21% to 0.76% (2)
Year Ended 12/31/08	94,558	$1.557129 to $ 40.947848		$177,934	2.65%	0.10% to 0.60%	2.20% to 2.76%
Year Ended 12/31/07	77,291	$1.522145 to $ 39.847990		$142,948	5.13%	0.10% to 0.60%	4.70% to 5.28%
Year Ended 12/31/06	74,505	$1.452309 to $ 37.848488	$	131,778	4.74%	0.10% to 0.60%	4.29% to 4.86%
Year Ended 12/31/05	70,482	$1.391250 to $ 36.095241		$119,666	2.95%	0.20% to 0.75%	2.27% to 2.98%
Select Bond
Year Ended 12/31/09	78,213	$2.206231 to $170.745431		$223,452	5.05%	0.10% to 0.60%	8.77% to 9.37%
Year Ended 12/31/08	72,690	$2.026282 to $156.116892		$191,100	4.60%	0.10% to 0.60%	2.69% to 3.26%
Year Ended 12/31/07	61,706	$1.971244 to $151.194364		$164,709	3.96%	0.10% to 0.60%	5.81% to 6.39%
Year Ended 12/31/06	54,043	$1.861181 to $142.110273		$134,698	3.64%	0.10% to 0.60%	3.18% to 3.74%
Year Ended 12/31/05	47,940	$1.802101 to $136.984725		$118,086	3.47%	0.20% to 0.75%	1.51% to 2.22%
High Yield Bond
Year Ended 12/31/09	30,444	$2.334783 to $ 30.094875		$ 84,272	8.96%	0.10% to 0.60%	44.60% to 45.39%
Year Ended 12/31/08	29,285	$1.613065 to $ 20.699102		$ 55,203	8.18%	0.10% to 0.60%	(21.78%) to (21.35%)
Year Ended 12/31/07	29,659	$2.060165 to $ 26.317469		$ 72,398	6.14%	0.10% to 0.60%	1.82% to 2.38%
Year Ended 12/31/06	28,367	$2.021433 to $ 25.706496		$ 68,410	6.61%	0.10% to 0.60%	9.18% to 9.77%
Year Ended 12/31/05	27,480	$1.849698 to $ 23.417544		$ 61,087	6.61%	0.20% to 0.75%	0.69% to 1.39%
Balanced
Year Ended 12/31/09	65,258	$2.295052 to $122.549243		$299,014	4.56%	0.10% to 0.60%	20.77% to 21.43%
Year Ended 12/31/08	67,009	$1.898456 to $100.918470		$254,821	1.30%	0.10% to 0.60%	(23.15%) to (22.72%)
Year Ended 12/31/07	66,343	$2.467848 to $130.596514		$339,847	3.04%	0.10% to 0.60%	5.57% to 6.15%
Year Ended 12/31/06	67,095	$2.335417 to $123.031604		$327,176	2.81%	0.10% to 0.60%	9.82% to 10.42%
Year Ended 12/31/05	67,338	$2.124518 to $111.421574		$304,390	2.61%	0.20% to 0.75%	2.88% to 3.59%

(1)	Total Return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

(2)

Notes to Financial Statements


	As of the respective period end date:			For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value, Lowest to Highest	Net Assets (000’s)	Dividend Income as a % of Average Net Assets	Expense Ratio, Lowest to Highest	Total Return Lowest to Highest (1)
Asset Allocation
Year Ended 12/31/09	23,519	$1.274289 to $ 13.321541	$ 37,345	3.04%	0.10% to 0.60%	26.40% to 27.09%
Year Ended 12/31/08	23,518	$1.007179 to $ 10.482012	$ 28,949	2.95%	0.10% to 0.60%	(30.51%) to (30.13%)
Year Ended 12/31/07	22,548	$1.447923 to $ 15.001132	$ 40,176	2.21%	0.10% to 0.60%	8.80% to 9.40%
Year Ended 12/31/06	21,975	$1.329516 to $ 13.712349	$ 36,382	1.83%	0.10% to 0.60%	9.32% to 9.91%
Year Ended 12/31/05	20,083	$1.209657 to $ 12.475450	$ 31,500	1.41%	0.20% to 0.75%	6.25% to 6.99%
Fidelity VIP Mid Cap
Year Ended 12/31/09	40,262	$2.188843 to $ 22.643898	$105,355	0.47%	0.10% to 0.60%	38.99% to 39.75%
Year Ended 12/31/08	38,253	$1.573285 to $ 16.202990	$ 72,239	0.24%	0.10% to 0.60%	(39.94%) to (39.61%)
Year Ended 12/31/07	35,107	$2.616815 to $ 26.828755	$111,532	0.49%	0.10% to 0.60%	14.71% to 15.34%
Year Ended 12/31/06	30,673	$2.279082 to $ 23.260937	$ 84,535	0.15%	0.10% to 0.60%	11.79% to 12.40%
Year Ended 12/31/05	22,174	$2.031293 to $ 20.694231	$ 54,896	0.00%	0.20% to 0.75%	17.20% to 18.02%
Russell Multi-Style Equity
Year Ended 12/31/09	155,703	$0.841815 to $ 9.176223	$161,462	1.34%	0.10% to 0.60%	30.68% to 31.40%
Year Ended 12/31/08	158,057	$0.643528 to $ 6.983334	$128,007	1.44%	0.10% to 0.60%	(40.89%) to (40.56%)
Year Ended 12/31/07	155,372	$1.087639 to $ 11.749485	$205,482	0.97%	0.10% to 0.60%	9.76% to 10.36%
Year Ended 12/31/06	150,286	$0.989999 to $ 10.646608	$181,626	0.94%	0.10% to 0.60%	12.13% to 12.75%
Year Ended 12/31/05	139,639	$0.876252 to $ 9.442962	$150,906	1.05%	0.20% to 0.75%	6.53% to 7.27%
Russell Aggressive Equity
Year Ended 12/31/09	49,083	$1.232123 to $13.775086	$ 71,135	0.53%	0.10% to 0.60%	30.68% to 31.39%
Year Ended 12/31/08	49,040	$0.941939 to $10.483725	$ 54,462	0.87%	0.10% to 0.60%	(43.23%) to (42.92%)
Year Ended 12/31/07	49,732	$1.657613 to $18.365962	$ 98,737	0.37%	0.10% to 0.60%	2.85% to 3.42%
Year Ended 12/31/06	49,892	$1.610065 to $17.758799	$ 96,874	0.19%	0.10% to 0.60%	14.16% to 14.79%
Year Ended 12/31/05	46,877	$1.399687 to $15.470599	$ 80,521	0.18%	0.20% to 0.75%	5.62% to 6.36%
Russell Non-U.S.
Year Ended 12/31/09	80,748	$1.233456 to $13.135524	$124,379	2.86%	0.10% to 0.60%	25.80% to 26.49%
Year Ended 12/31/08	82,308	$0.979547 to $10.384851	$103,094	0.00%	0.10% to 0.60%	(42.73%) to (42.41%)
Year Ended 12/31/07	83,679	$1.708615 to $18.032632	$180,770	2.59%	0.10% to 0.60%	9.52% to 10.12%
Year Ended 12/31/06	80,347	$1.558635 to $16.375774	$158,005	2.54%	0.10% to 0.60%	22.97% to 23.64%
Year Ended 12/31/05	71,637	$1.258058 to $13.244730	$114,343	1.59%	0.20% to 0.75%	12.90% to 13.69%
Russell Real Estate Securities
Year Ended 12/31/09	39,114	$2.471078 to $25.765834	$113,878	4.65%	0.10% to 0.60%	28.24% to 28.94%
Year Ended 12/31/08	37,643	$1.925035 to $19.982226	$ 85,950	1.92%	0.10% to 0.60%	(37.03%) to (36.68%)
Year Ended 12/31/07	36,447	$3.054156 to $31.559603	$131,195	2.29%	0.10% to 0.60%	(16.32%) to (15.86%)
Year Ended 12/31/06	38,227	$3.646143 to $37.506853	$165,271	1.96%	0.10% to 0.60%	35.10% to 35.84%
Year Ended 12/31/05	35,074	$2.678661 to $27.611672	$112,364	2.13%	0.20% to 0.75%	12.17% to 12.96%
Russell Core Bond
Year Ended 12/31/09	33,064	$1.719005 to $17.948158	$86,412	4.70%	0.10% to 0.60%	15.18% to 15.81%
Year Ended 12/31/08	31,488	$1.490991 to $15.497865	$64,747	4.06%	0.10% to 0.60%	(4.09%) to (3.57%)
Year Ended 12/31/07	27,869	$1.553099 to $16.070912	$71,236	5.27%	0.10% to 0.60%	6.66% to 7.24%
Year Ended 12/31/06	24,720	$1.454770 to $14.985609	$61,015	4.53%	0.10% to 0.60%	3.15% to 3.72%
Year Ended 12/31/05	21,286	$1.399759 to $14.448349	$53,033	3.62%	0.20% to 0.75%	1.31% to 2.01%

(1)	Total Return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

LOGO

To The Northwestern Mutual Life Insurance Company and

Policy Owners of Northwestern Mutual Variable Life Account

In our opinion, the accompanying statements of assets and liabilities, the related statements of operations, and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the Northwestern Mutual Variable Life Account and its Growth Stock Division, Focused Appreciation Division, Large Cap Core Stock Division, Index 500 Stock Division, Domestic Equity Division, Equity Income Division, Mid Cap Growth Stock Division, Index 400 Stock Division, Mid Cap Value Division, Small Cap Growth Stock Division, Small Cap Value Division, International Growth Division, International Equity Division, Money Market Division, Select Bond Division, High Yield Bond Division, Balanced Division, Asset Allocation Division, Fidelity VIP Mid Cap Division, Russell Multi-Style Equity Division, Russell Aggressive Equity Division, Russell Non-US Division, Russell Real Estate Securities Division, and Russell Core Bond Division at December 31, 2009, and the results of each of their operations, the changes in each of their net assets and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of The Northwestern Mutual Life Insurance Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included direct confirmation of securities owned at December 31, 2009 with Northwestern Mutual Series Fund, Inc., Fidelity Variable Insurance Products Fund III and the Russell Investment Funds, provide a reasonable basis for our opinion.

LOGO

February 18, 2010

Report of Independent Registered Public Accounting Firm

Annual Report December 31, 2009

Northwestern Mutual Variable Life Account II

Financial Statements

LOGO

Northwestern Mutual Variable Life Account II Financial Statements

Table of Contents



Northwestern Mutual Variable Life Account II

Statements of Assets and Liabilities		1

Statements of Operations		4

Statements of Changes in Net Assets		6

Notes to Financial Statements		10

Report of Independent Registered Public Accounting Firm		14

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account II

December 31, 2009

(in thousands, except accumulation unit values)


	Growth Stock Division		Focused Appreciation Division		Large Cap Core Stock Division		Index 500 Stock Division		Domestic Equity Division		Equity Income Division		Mid Cap Growth Stock Division
Assets:
Investments, at Value (1)(2)
Northwestern Mutual Series Fund, Inc.	$	936	$	3,454	$	586	$	2,807	$	1,370	$	1,223	$	1,175
Fidelity Variable Insurance Products		—		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		2		—		2		—		—		—		—

Total Assets		938		3,454		588		2,807		1,370		1,223		1,175

Liabilities:
Due to Northwestern Mutual Life Insurance Company		—		4		—		—		8		7		4

Total Liabilities		—		4		—		—		8		7		4

Total Net Assets	$	938	$	3,450	$	588	$	2,807	$	1,362	$	1,216	$	1,171

Net Assets:
Custom Variable Universal Life Policies Issued On or After January 31, 2007 (3)
Policyowners’ Equity	$	716	$	2,645	$	528	$	1,519	$	1,317	$	675	$	464
Executive Variable Universal Life Policies Issued On or After January 31, 2007 (4)
Policyowners’ Equity		148		753		21		1,276		24		505		677
Survivorship Variable Universal Life Policies Issued On or After January 31, 2007 (5)
Policyowners’ Equity		74		52		39		12		21		36		30

Total Net Assets	$	938	$	3,450	$	588	$	2,807	$	1,362	$	1,216	$	1,171


(1) Investments, at cost	$	869	$	2,939	$	546	$	2,514	$	1,305	$	1,139	$	1,138
(2) Shares Outstanding		488		2,027		526		1,204		1,733		1,162		465
(3) Accumulation Unit Value	$	29.365924	$	19.088595	$	23.449551	$	50.989051	$	11.370681	$	14.595160	$	57.953082
Units Outstanding		24		139		22		30		116		46		8
(4) Accumulation Unit Value	$	29.365924	$	19.088595	$	23.449551	$	50.989051	$	11.370681	$	14.595160	$	57.953082
Units Outstanding		5		39		1		25		2		35		12
(5) Accumulation Unit Value	$	29.365924	$	19.088595	$	23.449551	$	50.989051	$	11.370681	$	14.595160	$	57.953082
Units Outstanding		2		3		2		—		2		2		1

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account II

December 31, 2009

(in thousands, except accumulation unit values)


	Index 400 Stock Division		Mid Cap Value Division		Small Cap Growth Stock Division		Small Cap Value Division		International Growth Division		International Equity Division		Money Market Division
Assets:
Investments, at Value (1)(2)
Northwestern Mutual Series Fund, Inc.	$	1,322	$	434	$	811	$	1,434	$	875	$	3,805	$	2,716
Fidelity Variable Insurance Products		—		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		—		—		—		—		—		4

Total Assets		1,322		434		811		1,434		875		3,805		2,720

Liabilities:
Due to Northwestern Mutual Life Insurance Company		2		—		2		3		5		4		—

Total Liabilities		2		—		2		3		5		4		—

Total Net Assets	$	1,320	$	434	$	809	$	1,431	$	870	$	3,801	$	2,720

Net Assets:
Custom Variable Universal Life Policies Issued On or After January 31, 2007 (3)
Policyowners’ Equity	$	666	$	293	$	675	$	772	$	803	$	2,742	$	1,390
Executive Variable Universal Life Policies Issued On or After January 31, 2007 (4)
Policyowners’ Equity		635		135		102		649		45		942		986
Survivorship Variable Universal Life Policies Issued On or After January 31, 2007 (5)
Policyowners’ Equity		19		6		32		10		22		117		344

Total Net Assets	$	1,320	$	434	$	809	$	1,431	$	870	$	3,801	$	2,720


(1) Investments, at cost	$	1,268	$	392	$	751	$	1,339	$	818	$	3,742	$	2,716
(2) Shares Outstanding		1,120		442		571		1,026		834		2,301		2,716
(3) Accumulation Unit Value	$	20.535699	$	15.242180	$	23.577314	$	18.466637	$	14.361577	$	3.803991	$	41.258586
Units Outstanding		33		19		29		42		56		721		34
(4) Accumulation Unit Value	$	20.535699	$	15.242180	$	23.577314	$	18.466637	$	14.361577	$	3.803991	$	41.258586
Units Outstanding		31		9		4		35		3		248		24
(5) Accumulation Unit Value	$	20.535699	$	15.242180	$	23.577314	$	18.466637	$	14.361577	$	3.803991	$	41.258586
Units Outstanding		1		—		1		1		2		31		8

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Assets and Liabilities


Select Bond Division		High Yield Bond Division		Balanced Division		Asset Allocation Division		Fidelity VIP Mid Cap Division		Russell Multi-Style Equity Division		Russell Aggressive Equity Division		Russell Non-US Division		Russell Real Estate Securities Division		Russell Core Bond Division


$	2,597	$	1,016	$	542	$	254	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		1,370		—		—		—		—		—
	—		—		—		—		—		988		418		875		1,057		729

	—		—		—		—		—		3		—		1		—		1

	2,597		1,016		542		254		1,370		991		418		876		1,057		730



	9		—		—		—		—		—		—		—		—		—

	9		—		—		—		—		—		—		—		—		—

$	2,588	$	1,016	$	542	$	254	$	1,370	$	991	$	418	$	876	$	1,057	$	730



$	2,070	$	565	$	284	$	237	$	1,169	$	888	$	379	$	775	$	978	$	658


	420		437		258		7		172		103		34		84		27		63


	98		14		—		10		29		—		5		17		52		9

$	2,588	$	1,016	$	542	$	254	$	1,370	$	991	$	418	$	876	$	1,057	$	730


$	2,553	$	913	$	508	$	238	$	1,231	$	951	$	390	$	838	$	935	$	714
	2,068		1,492		424		266		55		84		44		95		91		72
$	170.745431	$	30.094875	$	122.549243	$	13.321541	$	22.643898	$	9.176223	$	13.775086	$	13.135524	$	25.765834	$	17.948158
	12		19		2		18		52		96		27		59		38		37
$	170.745431	$	30.094875	$	122.549243	$	13.321541	$	22.643898	$	9.176223	$	13.775086	$	13.135524	$	25.765834	$	17.948158
	2		15		2		1		8		11		2		6		1		4
$	170.745431	$	30.094875	$	122.549243	$	13.321541	$	22.643898	$	9.176223	$	13.775086	$	13.135524	$	25.765834	$	17.948158
	1		—		—		1		1		—		—		1		2		—

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Assets and Liabilities

Statements of Operations

Northwestern Mutual Variable Life Account II

For the Year Ended December 31, 2009

(in thousands)


	Growth Stock Division			Focused Appreciation Division			Large Cap Core Stock Division			Index 500 Stock Division
Investment income:
Income:
Dividend income	$	8		$	—		$	8		$	58

Net investment income		8			—			8			58

Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		(33	)		(525	)		(29	)		(171	)
Realized gain distributions		—			—			—			58

Realized gains (losses)		(33	)		(525	)		(29	)		(113	)

Change in unrealized appreciation/depreciation of investments		241			1,221			138			654

Net increase (decrease) in net assets resulting from operations	$	216		$	696		$	117		$	599


	International Equity Division			Money Market Division			Select Bond Division			High Yield Bond Division
Investment income:
Income:
Dividend income	$	136		$	18		$	109		$	60

Net investment income		136			18			109			60

Realized gains (losses) on investments:
Realized gain (loss) on sale of fund shares		(409	)		—			2			(17	)
Realized gain distributions		60			—			—			—

Realized gains (losses)		(349	)		—			2			(17	)

Change in unrealized appreciation/depreciation of investments		1,131			—			49			207

Net increase (decrease) in net assets resulting from operations	$	918		$	18		$	160		$	250

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Operations


Domestic Equity Division			Equity Income Division			Mid Cap Growth Stock Division			Index 400 Stock Division			Mid Cap Value Division			Small Cap Growth Stock Division			Small Cap Value Division			International Growth Division

$	34		$	28		$	3		$	19		$	4		$	1		$	10		$	4

	34			28			3			19			4			1			10			4


	(80	)		(53	)		(135	)		(102	)		(13	)		(59	)		(107	)		(140	)
	—			—			1			34			3			—			40			—

	(80	)		(53	)		(134	)		(68	)		(10	)		(59	)		(67	)		(140	)


	338			302			410			416			88			229			391			270

$	292		$	277		$	279		$	367		$	82		$	171		$	334		$	134


Balanced Division			Asset Allocation Division			Fidelity VIP Mid Cap Division			Russell Multi-Style Equity Division			Russell Aggressive Equity Division			Russell Non-US Division			Russell Real Estate Securities Division			Russell Core Bond Division

$	20		$	6		$	5		$	8		$	1		$	18		$	30		$	19

	20			6			5			8			1			18			30			19


	(36	)		(5	)		(28	)		(37	)		(22	)		(48	)		(46	)		(7	)
	—			—			6			—			—			—			—			6

	(36	)		(5	)		(22	)		(37	)		(22	)		(48	)		(46	)		(1	)


	104			52			342			241			109			204			305			34

$	88		$	53		$	325		$	212		$	88		$	174		$	289		$	52

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Operations

Statements of Changes in Net Assets

Northwestern Mutual Variable Life Account II

(in thousands)


	Growth Stock Division						Focused Appreciation Division (a)
	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008

Operations:
Net investment income (loss)	$	8		$	4		$	—		$	5
Net realized gains (losses)		(33	)		14			(525	)		(31	)
Net change in unrealized appreciation/ depreciation		241			(175	)		1,221			(722	)

Net increase (decrease) in net assets resulting from operations		216			(157	)		696			(748	)


Policy Transactions:
Policyowners’ net payments		339			246			1,495			548
Policy loans, surrenders and death benefits		(22	)		(2	)		(45	)		—
Mortality and other (net)		(89	)		(54	)		(224	)		(122	)
Transfers from other divisions		1,516			685			8,233			4,185
Transfers to other divisions		(1,416	)		(484	)		(8,083	)		(2,714	)

Net increase (decrease) in net assets resulting from policy transactions		328			391			1,376			1,897

Net increase (decrease) in net assets		544			234			2,072			1,149

Net Assets:
Beginning of period		394			160			1,378			229

End of period	$	938		$	394		$	3,450		$	1,378

Units issued during the period		80			35			621			260
Units redeemed during the period		(67	)		(22	)		(543	)		(168	)

Net units issued (redeemed) during period		13			13			78			92


	Mid Cap Growth Stock Division						Index 400 Stock Division
	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008

Operations:
Net investment income (loss)	$	3		$	2		$	19		$	13
Net realized gains (losses)		(134	)		74			(68	)		53
Net change in unrealized appreciation/ depreciation		410			(376	)		416			(359	)

Net increase (decrease) in net assets resulting from operations		279			(300	)		367			(293	)


Policy Transactions:
Policyowners’ net payments		223			310			249			238
Policy loans, surrenders and death benefits		(11	)		(1	)		(47	)		—
Mortality and other (net)		(75	)		(55	)		(86	)		(52	)
Transfers from other divisions		6,221			2,917			5,945			3,278
Transfers to other divisions		(6,085	)		(2,417	)		(5,761	)		(2,698	)

Net increase (decrease) in net assets resulting from policy transactions		273			754			300			766

Net increase (decrease) in net assets		552			454			667			473

Net Assets:
Beginning of period		619			165			653			180

End of period	$	1,171		$	619		$	1,320		$	653

Units issued during the period		137			57			385			189
Units redeemed during the period		(130	)		(46	)		(363	)		(154	)

Net units issued (redeemed) during period		7			11			22			35

(a)	Division was renamed effective April 30, 2008. See note 1.

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Changes in Net Assets


Large Cap Core Stock Division						Index 500 Stock Division						Domestic Equity Division (a)						Equity Income Division (a)
Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008


$	8		$	4		$	58		$	23		$	34		$	15		$	28		$	—
	(29	)		(9	)		(113	)		(65	)		(80	)		16			(53	)		(24	)
	138			(99	)		654			(351	)		338			(249	)		302			(191	)

	117			(104	)		599			(393	)		292			(218	)		277			(215	)



	170			145			793			503			433			261			277			251
	(16	)		(3	)		(78	)		—			(27	)		(11	)		(26	)		(2	)
	(56	)		(33	)		(175	)		(89	)		(125	)		(66	)		(68	)		(46	)
	702			420			11,001			5,095			1,311			805			4,885			3,255
	(623	)		(240	)		(10,411	)		(4,472	)		(1,103	)		(464	)		(4,670	)		(2,927	)

	177			289			1,130			1,037			489			525			398			531

	294			185			1,729			644			781			307			675			316


	294			109			1,078			434			581			274			541			225

$	588		$	294		$	2,807		$	1,078		$	1,362		$	581		$	1,216		$	541

	45			28			294			114			199			100			429			233
	(37	)		(14	)		(265	)		(95	)		(145	)		(53	)		(392	)		(200	)

	8			14			29			19			54			47			37			33


Mid Cap Value Division (a)						Small Cap Growth Stock Division						Small Cap Value Division (a)						International Growth Division
Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008


$	4		$	—		$	1		$	—		$	10		$	3		$	4		$	6
	(10	)		(68	)		(59	)		31			(67	)		38			(140	)		(17	)
	88			12			229			(167	)		391			(286	)		270			(210	)

	82			(56	)		171			(136	)		334			(245	)		134			(221	)



	132			76			309			203			295			246			275			147
	(30	)		(1	)		(25	)		(2	)		(50	)		(4	)		(28	)		(6	)
	(30	)		(17	)		(72	)		(40	)		(96	)		(57	)		(83	)		(66	)
	1,509			822			1,168			661			6,343			3,618			989			695
	(1,466	)		(848	)		(1,058	)		(509	)		(6,169	)		(2,954	)		(846	)		(285	)

	115			32			322			313			323			849			307			485

	197			(24	)		493			177			657			604			441			264


	237			261			316			139			774			170			429			165

$	434		$	237		$	809		$	316		$	1,431		$	774		$	870		$	429

	133			62			81			38			451			227			104			55
	(124	)		(56	)		(64	)		(25	)		(427	)		(181	)		(80	)		(25	)

	9			6			17			13			24			46			24			30

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Changes in Net Assets

Northwestern Mutual Variable Life Account II

(in thousands)


	International Equity Division (a)						Money Market Division
	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008

Operations:
Net investment income (loss)	$	136		$	58		$	18		$	54
Net realized gains (losses)		(349	)		24			—			—
Net change in unrealized appreciation/ depreciation		1,131			(1,068	)		—			—

Net increase (decrease) in net assets resulting from operations		918			(986	)		18			54


Policy Transactions:
Policyowners’ net payments		1,062			990			6,827			10,226
Policy loans, surrenders and death benefits		(66	)		—			(809	)		(1	)
Mortality and other (net)		(327	)		(248	)		(390	)		(254	)
Transfers from other divisions		10,046			5,634			9,902			2,577
Transfers to other divisions		(9,750	)		(4,207	)		(14,445	)		(11,691	)

Net increase (decrease) in net assets resulting from policy transactions		965			2,169			1,085			857

Net increase (decrease) in net assets		1,883			1,183			1,103			911

Net Assets:
Beginning of period		1,918			735			1,617			706

End of period	$	3,801		$	1,918		$	2,720		$	1,617

Units issued during the period		3,660			1,835			445			362
Units redeemed during the period		(3,331	)		(1,308	)		(418	)		(341	)

Net units issued (redeemed) during period		329			527			27			21


	Fidelity VIP Mid Cap Division						Russell Multi-Style Equity Division
	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008

Operations:
Net investment income (loss)	$	5		$	1		$	8		$	5
Net realized gains (losses)		(22	)		20			(37	)		(5	)
Net change in unrealized appreciation/ depreciation		342			(206	)		241			(203	)

Net increase (decrease) in net assets resulting from operations		325			(185	)		212			(203	)


Policy Transactions:
Policyowners’ net payments		516			280			276			168
Policy loans, surrenders and death benefits		(27	)		(5	)		(8	)		(5	)
Mortality and other (net)		(113	)		(56	)		(90	)		(56	)
Transfers from other divisions		1,836			584			1,224			933
Transfers to other divisions		(1,645	)		(333	)		(1,047	)		(609	)

Net increase (decrease) in net assets resulting from policy transactions		567			470			355			431

Net increase (decrease) in net assets		892			285			567			228

Net Assets:
Beginning of period		478			193			424			196

End of period	$	1,370		$	478		$	991		$	424

Units issued during the period		133			42			214			121
Units redeemed during the period		(101	)		(20	)		(167	)		(78	)

Net units issued (redeemed) during period		32			22			47			43

(a)	Division was renamed effective April 30, 2008. See note 1.

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Changes in Net Assets


Select Bond Division						High Yield Bond Division						Balanced Division						Asset Allocation Division
Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008


$	109		$	36		$	60		$	32		$	20		$	2		$	6		$	2
	2			(1	)		(17	)		(18	)		(36	)		34			(5	)		5
	49			(9	)		207			(104	)		104			(70	)		52			(36	)

	160			26			250			(90	)		88			(34	)		53			(29	)



	972			481			102			117			195			60			67			79
	(95	)		(5	)		(13	)		(3	)		(14	)		—			(2	)		—
	(212	)		(111	)		(46	)		(24	)		(40	)		(20	)		(18	)		(10	)
	3,833			1,318			3,897			1,782			1,609			417			169			124
	(3,220	)		(813	)		(3,575	)		(1,431	)		(1,463	)		(287	)		(127	)		(62	)

	1,278			870			365			441			287			170			89			131

	1,438			896			615			351			375			136			142			102


	1,150			254			401			50			167			31			112			10

$	2,588		$	1,150		$	1,016		$	401		$	542		$	167		$	254		$	112

	30			13			161			82			16			4			23			15
	(23	)		(7	)		(146	)		(65	)		(14	)		(3	)		(13	)		(6	)

	7			6			15			17			2			1			10			9


Russell Aggressive Equity Division						Russell Non-US Division						Russell Real Estate Securities Division						Russell Core Bond Division
Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2009			Year Ended December 31, 2008


$	1		$	2		$	18		$	—		$	30		$	7		$	19		$	8
	(22	)		(30	)		(48	)		(52	)		(46	)		(76	)		(1	)		3
	109			(74	)		204			(147	)		305			(89	)		34			(18	)

	88			(102	)		174			(199	)		289			(158	)		52			(7	)



	118			94			268			245			313			212			127			101
	(4	)		—			(42	)		(1	)		(17	)		(5	)		(12	)		(1	)
	(37	)		(22	)		(77	)		(49	)		(93	)		(58	)		(45	)		(28	)
	447			486			1,391			1,276			1,101			601			1,082			918
	(401	)		(336	)		(1,262	)		(1,053	)		(936	)		(538	)		(799	)		(714	)

	123			222			278			418			368			212			353			276

	211			120			452			219			657			54			405			269


	207			87			424			205			400			346			325			56

$	418		$	207		$	876		$	424		$	1,057		$	400		$	730		$	325

	51			43			157			113			77			31			74			67
	(42	)		(27	)		(132	)		(83	)		(56	)		(22	)		(54	)		(49	)

	9			16			25			30			21			9			20			18

The Accompanying Notes are an Integral Part of the Financial Statements.

Statements of Changes in Net Assets

Notes to Financial Statements

Northwestern Mutual Variable Life Account II

December 31, 2009

1. Organization — Northwestern Mutual Variable Life Account II (“the Account”) is registered as a unit investment trust under the Investment Company Act of 1940 and is a segregated asset account of The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”) used to fund variable life insurance policies. The Account began operations on January 31, 2007.

Effective April 30, 2008, the following Divisions of the Account were renamed:


Old Name		New Name
Janus Capital Appreciation Division		Focused Appreciation Division
Capital Guardian Domestic Equity Division		Domestic Equity Division
T. Rowe Price Equity Income Division		Equity Income Division
AllianceBernstein Mid Cap Value Division		Mid Cap Value Division
T. Rowe Price Small Cap Value Division		Small Cap Value Division
Franklin Templeton International Equity Division		International Equity Division

2. Significant Accounting Policies

3. Purchases and Sales of Investments — Purchases and sales of the Funds’ shares for the year ended December 31, 2009 were as follows: (in thousands)


Division	Purchases		Sales
Growth Stock	$	468	$	135
Focused Appreciation		1,703		324
Large Cap Core Stock		286		103
Index 500 Stock		1,534		290
Domestic Equity		715		184
Equity Income		530		96
Mid Cap Growth Stock		378		98
Index 400 Stock		502		147
Mid Cap Value		186		62
Small Cap Growth Stock		436		110
Small Cap Value		536		158
International Growth		436		121
International Equity		1,623		456
Money Market		7,406		6,306
Select Bond		1,718		322
High Yield Bond		495		70
Balanced		377		69
Asset Allocation		115		20
Fidelity VIP Mid Cap		731		153
Russell Multi-Style Equity		479		118
Russell Aggressive Equity		172		47
Russell Non-U.S.		425		129
Russell Real Estate Securities		534		135
Russell Core Bond		438		60

4. Expenses and Related Party Transactions — A deduction for mortality and expense risks is determined monthly and paid to Northwestern Mutual. The mortality

Notes to Financial Statements

risk is that insureds may not live as long as estimated. The expense risk is that expenses of issuing and administering the policies may exceed the estimated costs.

A deduction for the mortality and expense risks for Custom Variable Universal Life policies is determined at an annual rate of 0.35% of the amount invested in the Account for the Policy for the first ten Policy years, 0.20% for the next ten Policy years and 0.05% thereafter. A deduction for the mortality and expense risks for Executive Variable Universal Life policies is determined at an annual rate of 0.20% of the amounts invested in the Account for the Policy for the first ten Policy years, and 0.10% thereafter. A deduction for the mortality and expense risks for Survivorship Variable Universal Life Policies is determined at an annual rate of 0.05% of the amount invested in the Account for the Policy. These charges are reflected as a reduction in units and are included in Mortality and Other in the accompanying financial statements.

Additional mortality costs are determined monthly and are paid to Northwestern Mutual to cover the cost of providing insurance protection for the first ten Policy years on all Survivorship Variable Universal Life policies based on the age of the insured individuals at the time the policy is issued.

Certain deductions are also made from the annual, single or other premiums before amounts are allocated to the Account. These deductions are for sales load, administrative expenses and taxes.

5. Subsequent Events

6. Financial Highlights

(For a unit outstanding during the period)


	As of the respective period end date:				For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value	Net Assets (000’s)		Dividend Income as a % of Average Net Assets		Expense Ratio, Lowest to Highest	Total Return (1)
Growth Stock
Year Ended 12/31/09	31	$29.365924	$	938	1.18	%	0.05% to 0.35%	37.17%
Year Ended 12/31/08	18	$21.408736	$	394	1.25	%	0.05% to 0.35%	(38.86%)
Period Ended 12/31/07	5	$35.015115	$	160	0.56	%	0.05% to 0.35%	6.96%
Focused Appreciation
Year Ended 12/31/09	181	$19.088595	$	3,450	0.00	%	0.05% to 0.35%	42.47%
Year Ended 12/31/08	103	$13.397864	$	1,378	0.44	%	0.05% to 0.35%	(40.01%)
Period Ended 12/31/07	11	$22.333276	$	229	0.03	%	0.05% to 0.35%	24.83%
Large Cap Core Stock
Year Ended 12/31/09	25	$23.449551	$	588	1.89	%	0.05% to 0.35%	29.33%
Year Ended 12/31/08	17	$18.131181	$	294	1.79	%	0.05% to 0.35%	(38.74%)
Period Ended 12/31/07	3	$29.597322	$	109	0.68	%	0.05% to 0.35%	7.29%
Index 500 Stock
Year Ended 12/31/09	55	$50.989051	$	2,807	2.95	%	0.05% to 0.35%	26.40%
Year Ended 12/31/08	26	$40.340674	$	1,078	2.36	%	0.05% to 0.35%	(36.94%)
Period Ended 12/31/07	7	$63.972521	$	434	0.79	%	0.05% to 0.35%	3.90%
Domestic Equity
Year Ended 12/31/09	120	$11.370681	$	1,362	3.63	%	0.05% to 0.35%	29.52%
Year Ended 12/31/08	66	$ 8.778981	$	581	3.27	%	0.05% to 0.35%	(38.49%)
Period Ended 12/31/07	19	$14.273423	$	274	1.30	%	0.05% to 0.35%	(7.25%)
Equity Income
Year Ended 12/31/09	83	$14.595160	$	1,216	3.12	%	0.05% to 0.35%	24.58%
Year Ended 12/31/08	46	$11.715261	$	541	0.03	%	0.05% to 0.35%	(35.81%)
Period Ended 12/31/07	13	$18.250431	$	225	3.74	%	0.05% to 0.35%	1.79%

(1)	Total Return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

Notes to Financial Statements


	As of the respective period end date:				For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value	Net Assets (000’s)		Dividend Income as a % of Average Net Assets		Expense Ratio, Lowest to Highest	Total Return (1)
Mid Cap Growth Stock
Year Ended 12/31/09	21	$57.953082	$	1,171	0.28	%	0.05% to 0.35%	32.09% (2)
Year Ended 12/31/08	14	$43.872392	$	619	0.36	%	0.05% to 0.35%	(40.08%)
Period Ended 12/31/07	3	$73.219863	$	165	0.70	%	0.05% to 0.35%	16.04%
Index 400 Stock
Year Ended 12/31/09	65	$ 20.535699	$	1,320	1.86	%	0.05% to 0.35%	37.00%
Year Ended 12/31/08	43	$ 14.989442	$	653	1.84	%	0.05% to 0.35%	(36.28%)
Period Ended 12/31/07	8	$ 23.522236	$	180	1.15	%	0.05% to 0.35%	4.18%
Mid Cap Value
Year Ended 12/31/09	28	$ 15.242180	$	434	1.23	%	0.05% to 0.35%	23.24%
Year Ended 12/31/08	19	$ 12.367958	$	237	0.00	%	0.05% to 0.35%	(35.07%)
Period Ended 12/31/07	13	$ 19.047672	$	261	2.24	%	0.05% to 0.35%	(2.40%)
Small Cap Growth Stock
Year Ended 12/31/09	34	$ 23.577314	$	809	0.30	%	0.05% to 0.35%	31.17%
Year Ended 12/31/08	17	$ 17.974245	$	316	0.20	%	0.05% to 0.35%	(43.87%)
Period Ended 12/31/07	4	$ 32.021844	$	139	0.05	%	0.05% to 0.35%	7.25%
Small Cap Value
Year Ended 12/31/09	78	$ 18.466637	$	1,431	0.88	%	0.05% to 0.35%	28.18%
Year Ended 12/31/08	54	$ 14.406429	$	774	0.41	%	0.05% to 0.35%	(28.13%)
Period Ended 12/31/07	8	$ 20.045927	$	170	0.44	%	0.05% to 0.35%	(3.25%)
International Growth
Year Ended 12/31/09	61	$ 14.361577	$	870	0.67	%	0.05% to 0.35%	23.16%
Year Ended 12/31/08	37	$ 11.660588	$	429	1.92	%	0.05% to 0.35%	(46.19%)
Period Ended 12/31/07	7	$ 21.668250	$	165	0.80	%	0.05% to 0.35%	11.73%
International Equity
Year Ended 12/31/09	1,000	$ 3.803991	$	3,801	4.86	%	0.05% to 0.35%	33.11% (2)
Year Ended 12/31/08	671	$ 2.857743	$	1,918	3.21	%	0.05% to 0.35%	(43.78%)
Period Ended 12/31/07	144	$ 5.083451	$	735	1.28	%	0.05% to 0.35%	16.27%
Money Market
Year Ended 12/31/09	66	$ 41.258586	$	2,720	0.70	%	0.05% to 0.35%	0.76% (2)
Year Ended 12/31/08	39	$ 40.947848	$	1,617	2.64	%	0.05% to 0.35%	2.76%
Period Ended 12/31/07	18	$ 39.847990	$	706	4.37	%	0.05% to 0.35%	4.83%
Select Bond
Year Ended 12/31/09	15	$170.745431	$	2,588	5.68	%	0.05% to 0.35%	9.37%
Year Ended 12/31/08	8	$156.116892	$	1,150	4.95	%	0.05% to 0.35%	3.26%
Period Ended 12/31/07	2	$151.194364	$	254	2.93	%	0.05% to 0.35%	6.30%
High Yield Bond
Year Ended 12/31/09	34	$ 30.094875	$	1,016	8.52	%	0.05% to 0.35%	45.39%
Year Ended 12/31/08	19	$ 20.699102	$	401	9.45	%	0.05% to 0.35%	(21.35%)
Period Ended 12/31/07	2	$ 26.317469	$	50	3.22	%	0.05% to 0.35%	1.55%
Balanced
Year Ended 12/31/09	4	$122.549243	$	542	5.28	%	0.05% to 0.35%	21.43%
Year Ended 12/31/08	2	$100.918470	$	167	1.48	%	0.05% to 0.35%	(22.72%)
Period Ended 12/31/07	1	$130.596514	$	31	3.37	%	0.05% to 0.35%	5.24%
Asset Allocation
Year Ended 12/31/09	20	$ 13.321541	$	254	3.15	%	0.05% to 0.35%	27.09%
Year Ended 12/31/08	10	$ 10.482012	$	112	2.90	%	0.05% to 0.35%	(30.13%)
Period Ended 12/31/07	1	$ 15.001132	$	10	1.00	%	0.05% to 0.35%	8.25%

(1)	Total Return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

(2)	Total return reflects the effect of a one-time class action settlement received on June 18, 2009. Absent the payment, the returns would have been 31.99% for the Mid Cap Growth Stock Division, 32.39% for the International Equity Division and 0.61% for the Money Market Division.

Notes to Financial Statements


	As of the respective period end date:				For the respective period ended:
Division	Units Outstanding (000’s)	Unit Value	Net Assets (000’s)		Dividend Income as a % of Average Net Assets		Expense Ratio, Lowest to Highest	Total Return (1)
Fidelity VIP Mid Cap
Year Ended 12/31/09	61	$ 22.643898	$	1,370	0.54	%	0.05% to 0.35%	39.75%
Year Ended 12/31/08	29	$ 16.202990	$	478	0.26	%	0.05% to 0.35%	(39.61%)
Period Ended 12/31/07	7	$ 26.828755	$	193	0.61	%	0.05% to 0.35%	13.55%
Russell Multi-Style Equity
Year Ended 12/31/09	107	$ 9.176223	$	991	1.17	%	0.05% to 0.35%	31.40%
Year Ended 12/31/08	60	$ 6.983334	$	424	1.27	%	0.05% to 0.35%	(40.56%)
Period Ended 12/31/07	17	$ 11.749485	$	196	0.66	%	0.05% to 0.35%	8.54%
Russell Aggressive Equity
Year Ended 12/31/09	29	$13.775086	$	418	0.50	%	0.05% to 0.35%	31.39%
Year Ended 12/31/08	20	$10.483725	$	207	1.09	%	0.05% to 0.35%	(42.92%)
Period Ended 12/31/07	4	$18.365962	$	87	0.38	%	0.05% to 0.35%	1.32%
Russell Non-U.S.
Year Ended 12/31/09	66	$13.135524	$	876	2.83	%	0.05% to 0.35%	26.49%
Year Ended 12/31/08	41	$10.384851	$	424	0.00	%	0.05% to 0.35%	(42.41%)
Period Ended 12/31/07	11	$18.032632	$	205	4.62	%	0.05% to 0.35%	9.17%
Russell Real Estate Securities
Year Ended 12/31/09	41	$25.765834	$	1,057	4.34	%	0.05% to 0.35%	28.94%
Year Ended 12/31/08	20	$19.982226	$	400	1.85	%	0.05% to 0.35%	(36.68%)
Period Ended 12/31/07	11	$31.559603	$	346	3.89	%	0.05% to 0.35%	(22.64%)
Russell Core Bond
Year Ended 12/31/09	41	$17.948158	$	730	4.73	%	0.05% to 0.35%	15.81%
Year Ended 12/31/08	21	$15.497865	$	325	3.63	%	0.05% to 0.35%	(3.57%)
Period Ended 12/31/07	3	$16.070912	$	56	6.26	%	0.05% to 0.35%	7.35%

(1)	Total Return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges. Returns are not annualized for periods less than one year.

Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

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To The Northwestern Mutual Life Insurance Company and

Policy Owners of Northwestern Mutual Variable Life Account II

In our opinion, the accompanying statements of assets and liabilities, the related statements of operations, and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the Northwestern Mutual Variable Life Account II and its Growth Stock Division, Focused Appreciation Division, Large Cap Core Stock Division, Index 500 Stock Division, Domestic Equity Division, Equity Income Division, Mid Cap Growth Stock Division, Index 400 Stock Division, Mid Cap Value Division, Small Cap Growth Stock Division, Small Cap Value Division, International Growth Division, International Equity Division, Money Market Division, Select Bond Division, High Yield Bond Division, Balanced Division, Asset Allocation Division, Fidelity VIP Mid Cap Division, Russell Multi-Style Equity Division, Russell Aggressive Equity Division, Russell Non-US Division, Russell Real Estate Securities Division, and Russell Core Bond Division at December 31, 2009, and the results of each of their operations, the changes in each of their net assets and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of The Northwestern Mutual Life Insurance Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included direct confirmation of securities owned at December 31, 2009 with Northwestern Mutual Series Fund, Inc., Fidelity Variable Insurance Products Fund III and the Russell Investment Funds, provide a reasonable basis for our opinion.

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February 18, 2010

Report of Independent Registered Public Accounting Firm

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