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, 2011

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 Variable 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, 2010 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	3/07/2011	811-03990
Fidelity VIP Mid Cap Portfolio	0000927384	2/22/2011	811-07205
Russell Investment Funds	0000824036	3/08/2011	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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December 31, 2010

Annual Reports

Optimized to contain one or more of the following:* Northwestern Mutual Series Fund, Inc.

Fidelity® VIP Mid Cap Portfolio Russell Investment Funds

* See Table of Contents for more information and a list of Prospectus supplements included herein.

90-1899 (0786) (REV 0111)

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The Northwestern Mutual Life Insurance Company (Northwestern Mutual)

How To Get More Information

Northwestern Mutual Express:

1-800-519-4665

Get up-to-date information about your policy at your convenience with your policy number and your Personal Identification Number (PIN). Call toll-free to review policy values, fund performance information, and request a change to the allocations of your existing assets or future premiums/dividends.

Information on the Internet:

Northwestern Mutual Financial Network www.northwesternmutual.com

To obtain current performance information and information about Northwestern Mutual, visit us on our website. You can also visit us at our customer service section from our Web site for information on policy values and current fund performance. This site also allows you to view past confirmation and policy statements, as well as transfer funds online.

To sign up for this service please call 1-866-424-2609 between 7 a.m. - 6 p.m. Central Time Monday - Friday. Your Northwestern Mutual Financial Representative is also available to answer any questions you have about your variable life insurance policy or any of our products.

For inforce policy service on Variable CompLife, Custom Variable Universal Life, and Variable Whole Life, please call 1-866-424-2609, between 7 a.m. - 6 p.m. Central Time Monday – Friday.

For inforce policy service on Variable Executive Life, Variable Joint Life, Executive Variable Universal Life, and Survivorship Variable Universal Life, please call 1-866-464-3800, between 7:30 a.m. and 5:00 p.m. Central Time Monday - Friday.

Contents



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. report)

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, 2010

Variable Life—Policies Issued Before October 11, 1995


Total return (as of December 31, 2010)	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
1 year		11.76	%		8.73	%		12.29	%		14.27	%		13.99	%		14.70	%		23.18	%
5 years		9.70	%		20.95	%		5.89	%		8.61	%		(3.00	%)		10.40	%		20.19	%
Annualized		1.87	%		3.88	%		1.15	%		1.67	%		(0.61	%)		2.00	%		3.75	%
10 years		(1.68	%)		—			(1.46	%)		7.24	%		—			—			10.83	%
Annualized		(0.17	%)		—			(0.15	%)		0.70	%		—			—			1.03	%
Since division inception in Variable Life Account(b)		—			99.31	%(c)		—			—			22.95	%(d)		60.74	%(c)		—
Annualized		—			9.41	%		—			—			2.22	%		6.39	%		—
Current yield(f)

Variable Complife—Policies Issued Between October 11, 1995 and December 31, 2008
1 year		11.87	%		8.84	%		12.41	%		14.38	%		14.11	%		14.81	%		23.30	%
5 years		10.25	%		21.55	%		6.42	%		9.15	%		(2.52	%)		10.95	%		20.78	%
Annualized		1.97	%		3.98	%		1.25	%		1.77	%		(0.51	%)		2.10	%		3.85	%
10 years		(0.69	%)		—			(0.47	%)		8.31	%		—			—			11.94	%
Annualized		(0.07	%)		—			(0.05	%)		0.80	%		—			—			1.13	%
Since division inception in Variable Life Account(b)		—			100.83	%(c)		—			—			24.11	%(d)		61.98	%(c)		—
Annualized		—			9.52	%		—			—			2.32	%		6.49	%		—
Current yield(f)

Variable Executive Life & Variable Joint Life(a)
1 year		12.37	%		9.33	%		12.91	%		14.89	%		14.62	%		15.33	%		23.86	%
5 years		12.75	%		24.31	%		8.84	%		11.63	%		(0.30	%)		13.47	%		23.53	%
Annualized		2.43	%		4.45	%		1.71	%		2.22	%		(0.06	%)		2.56	%		4.32	%
10 years		4.65	%		—			4.88	%		14.14	%		—			—			17.97	%
Annualized		0.46	%		—			0.48	%		1.33	%		—			—			1.67	%
Since division inception in Variable Life Account(b)		—			108.70	%(c)		—			—			30.33	%(d)		68.32	%(c)		—
Annualized		—			10.07	%		—			—			2.85	%		7.03	%		—
Current yield(f)

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 and portfolio inception dates.

(c)	Division and portfolio inception on May 1, 2003.

(d)	Division and portfolio inception on July 31, 2001.

(e)	Division inception on May 1, 2003.

(f)

For the seven-day period ended December 31, 2010, the Money Market Portfolio’s yield was 0.25% and was equivalent to a compound effective yield of 0.25%. 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. Effective December 31, 2008, the management fee of 0.30% for the Money Market Portfolio has been voluntarily waived. The performance shown for this division would have been lower without the fee waiver. This fee waiver is voluntary and may be revised or terminated at any time.


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
	25.60	%		19.27	%		25.16	%		21.28	%		15.79	%		7.08	%		(0.25	%)		6.00	%		13.93	%		11.34	%
	27.40	%		6.72	%		5.35	%		26.33	%		2.71	%		21.14	%		11.54	%		29.26	%		43.24	%		19.80	%
	4.96	%		1.31	%		1.05	%		4.79	%		0.54	%		3.91	%		2.21	%		5.27	%		7.45	%		3.68	%
	84.24	%		—			40.37	%		—			—			55.33	%		20.32	%		74.41	%		108.16	%		36.63	%
	6.30	%		—			3.45	%		—			—			4.50	%		1.87	%		5.72	%		7.61	%		3.17	%
	—			74.57	%(c)		—			112.45	%(d)		57.74	%(d)		—			—			—			—			—
	—			7.54	%		—			8.33	%		4.96	%		—			—			—			—			—
																			0.25	%


	25.72	%		19.39	%		25.29	%		21.40	%		15.91	%		7.19	%		(0.15	%)		6.11	%		14.04	%		11.45	%
	28.04	%		7.26	%		5.88	%		26.97	%		3.23	%		21.75	%		12.09	%		29.91	%		43.95	%		20.40	%
	5.07	%		1.41	%		1.15	%		4.89	%		0.64	%		4.01	%		2.31	%		5.37	%		7.56	%		3.78	%
	86.09	%		—			41.78	%		—			—			56.89	%		21.53	%		76.16	%		110.25	%		38.00	%
	6.41	%		—			3.55	%		—			—			4.61	%		1.97	%		5.83	%		7.71	%		3.27	%
	—			75.90	%(c)		—			114.45	%(d)		59.23	%(d)		—			—			—			—			—
	—			7.64	%		—			8.44	%		5.06	%		—			—			—			—			—
																			0.25	%


	26.29	%		19.93	%		25.85	%		21.95	%		16.43	%		7.67	%		0.29	%		6.59	%		14.56	%		11.96	%
	30.95	%		9.70	%		8.29	%		29.85	%		5.57	%		24.52	%		14.64	%		32.86	%		47.22	%		23.14	%
	5.54	%		1.87	%		1.60	%		5.36	%		1.09	%		4.48	%		2.77	%		5.85	%		8.04	%		4.25	%
	96.10	%		—			49.41	%		—			—			65.33	%		28.07	%		85.64	%		121.55	%		45.42	%
	6.97	%		—			4.10	%		—			—			5.16	%		2.50	%		6.38	%		8.28	%		3.82	%
	—			82.80	%(c)		—			125.20	%(d)		67.21	%(d)		—			—			—			—			—
	—			8.18	%		—			9.00	%		5.61	%		—			—			—			—			—
																			0.25	%

Performance Summary, continued as of December 31, 2010

Variable Life—Policies Issued Before October 11, 1995


Total return (as of December 31, 2010)	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		12.39	%		27.87	%		15.82	%		24.20	%		10.81	%		22.25	%		9.42	%
5 years		17.41	%		36.87	%		10.10	%		8.18	%		7.51	%		11.59	%		32.97	%
Annualized		3.26	%		6.48	%		1.94	%		1.58	%		1.46	%		2.22	%		5.86	%
10 years		—			133.36	%		6.35	%		46.68	%		28.21	%		152.16	%		70.12	%
Annualized		—			8.84	%		0.62	%		3.91	%		2.52	%		9.69	%		5.46	%
Since division inception in Variable Life Account(b)		42.02	%(d)		178.03	%(e)		—			—			—			—			—
Annualized		3.79	%		14.26	%		—			—			—			—			—
Current yield(f)

Variable Complife—Policies Issued Between October 11, 1995 and December 31, 2008
1 year		12.50	%		28.00	%		15.94	%		24.32	%		10.92	%		22.37	%		9.53	%
5 years		17.99	%		37.56	%		10.65	%		8.72	%		8.05	%		12.15	%		33.63	%
Annualized		3.36	%		6.59	%		2.05	%		1.69	%		1.56	%		2.32	%		5.97	%
10 years		—			135.71	%		7.42	%		48.16	%		29.49	%		154.69	%		71.83	%
Annualized		—			8.95	%		0.72	%		4.01	%		2.62	%		9.80	%		5.56	%
Since division inception in Variable Life Account(b)		43.36	%(d)		180.16	%(e)		—			—			—			—			—
Annualized		3.90	%		14.38	%		—			—			—			—			—
Current yield(f)

Variable Executive Life & Variable Joint Life(a)
1 year		13.01	%		28.57	%		16.46	%		24.88	%		11.42	%		22.92	%		10.02	%
5 years		20.67	%		40.68	%		13.17	%		11.19	%		10.50	%		14.70	%		36.67	%
Annualized		3.83	%		7.07	%		2.51	%		2.14	%		2.02	%		2.78	%		6.45	%
10 years		—			148.40	%		13.20	%		56.13	%		36.46	%		168.40	%		81.07	%
Annualized		—			9.53	%		1.25	%		4.56	%		3.16	%		10.38	%		6.12	%
Since division inception in Variable Life Account(b)		50.54	%(d)		191.13	%(e)		—			—			—			—			—
Annualized		4.44	%		14.95	%		—			—			—			—			—
Current yield(f)

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 and portfolio inception dates.

(c)	Division and portfolio inception on May 1, 2003.

(d)	Division and portfolio inception on July 31, 2001.

(e)	Division inception on May 1, 2003.

(f)

iii

Performance Summary, continued as of December 31, 2010

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


Total return (as of December 31, 2010)	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
1 year		12.37	%		9.33	%		12.91	%		14.89	%		14.62	%		15.33	%		23.86	%
5 years		12.75	%		24.31	%		8.84	%		11.63	%		(0.30	%)		13.47	%		23.53	%
Annualized		2.43	%		4.45	%		1.71	%		2.22	%		(0.06	%)		2.56	%		4.32	%
10 years		4.65	%		—			4.88	%		14.14	%		—			—			17.97	%
Annualized		0.46	%		—			0.48	%		1.33	%		—			—			1.67	%
Since division inception in Variable Life Account II		0.80	%		16.65	%		(4.02	%)		(4.85	%)		(15.31	%)		(6.12	%)		13.76	%
Annualized		0.20	%		4.01	%		(1.04	%)		(1.26	%)		(4.16	%)		(1.60	%)		3.35	%
Since portfolio inception (a)		—			108.70	%(b)		—			—			30.33	%(c)		68.32	%(b)		—
Annualized		—			10.07	%		—			—			2.85	%		7.03	%		—
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)

Performance Summary, continued as of December 31, 2010

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


Total return (as of December 31, 2010)	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
1 year		26.29	%		19.93	%		25.85	%		21.95	%		16.43	%		7.67	%		0.29	%
5 years		30.95	%		9.70	%		8.29	%		29.85	%		5.57	%		24.52	%		14.64	%
Annualized		5.54	%		1.87	%		1.60	%		5.36	%		1.09	%		4.48	%		2.77	%
10 years		96.10	%		—			49.41	%		—			—			65.33	%		28.07	%
Annualized		6.97	%		—			4.10	%		—			—			5.16	%		2.50	%
Since division inception in Variable Life Account II		14.87	%		(6.34	%)		(0.62	%)		8.69	%		(13.78	%)		(6.32	%)		8.86	%
Annualized		3.60	%		(1.66	%)		(0.16	%)		2.15	%		(3.72	%)		(1.65	%)		2.19	%
Since portfolio inception (a)		—			82.80	%(b)		—			125.20	%(c)		67.21	%(c)		—			—
Annualized		—			8.18	%		—			9.00	%		5.61	%		—			—
Current yield (d)																				0.25	%

(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)


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
	6.59	%		14.56	%		11.96	%		13.01	%		28.57	%		16.46	%		24.88	%		11.42	%		22.92	%		10.02	%
	32.86	%		47.22	%		23.14	%		20.67	%		40.68	%		13.17	%		11.19	%		10.50	%		14.70	%		36.67	%
	5.85	%		8.04	%		4.25	%		3.83	%		7.07	%		2.51	%		2.14	%		2.02	%		2.78	%		6.45	%
	85.64	%		121.55	%		45.42	%		—			148.40	%		13.20	%		56.13	%		36.46	%		168.40	%		81.07	%
	6.38	%		8.28	%		3.82	%		—			9.53	%		1.25	%		4.56	%		3.16	%		10.38	%		6.12	%
	27.96	%		33.03	%		10.56	%		8.63	%		23.22	%		(1.28	%)		(5.10	%)		(11.39	%)		(22.36	%)		31.90	%
	6.50	%		7.56	%		2.60	%		2.14	%		5.48	%		(0.33	%)		(1.33	%)		(3.04	%)		(6.26	%)		7.33	%
	—			—			—			50.54	%(c)		—			—			—			—			—			—
	—			—			—			4.44	%		—			—			—			—			—			—

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Annual Report December 31, 2010

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, 2010

(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)
Northwestern Mutual Series Fund, Inc.	$	288,688	$	97,870	$	193,012	$	730,891	$	134,537	$	73,855	$	404,120
Fidelity Variable Insurance Products		—		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		13		—		—		—		95		—		—

Total Assets		288,701		97,870		193,012		730,891		134,632		73,855		404,120

Liabilities:
Due to Northwestern Mutual Life Insurance Company		—		7		16		—		—		15		46

Total Liabilities		—		7		16		—		—		15		46

Total Net Assets	$	288,701	$	97,863	$	192,996	$	730,891	$	134,632	$	73,840	$	404,074

Net Assets:
Variable Life Policies Issued
Before October 11, 1995
Policyowners’ Equity	$	26,089	$	6,931	$	21,509	$	104,930	$	12,385	$	6,048	$	57,061
Northwestern Mutual’s Equity		628		128		563		2,221		291		122		1,278
Variable CompLife Policies Issued Between October 11, 1995 and December 31, 2008 (2)
Policyowners’ Equity		235,722		77,603		151,191		544,305		104,901		59,557		320,416
Northwestern Mutual’s Equity		11,522		4,326		7,448		27,273		6,205		3,098		14,808
Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (3)
Policyowners’ Equity		8,317		5,022		7,715		20,483		5,303		1,490		3,878
Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (4)
Policyowners’ Equity		6,423		3,853		4,570		31,679		5,547		3,525		6,633

Total Net Assets	$	288,701	$	97,863	$	192,996	$	730,891	$	134,632	$	73,840	$	404,074


(1) Investments, at cost	$	258,411	$	89,990	$	179,003	$	745,803	$	155,558	$	78,268	$	377,379
Mutual Fund Shares Held		135,280		52,534		155,279		281,004		152,019		61,907		129,650
(2) Accumulation Unit Value	$	2.434967	$	2.008299	$	1.972165	$	2.602259	$	1.241092	$	1.619759	$	2.625759
Units Outstanding		101,540		40,795		80,440		219,648		89,523		38,682		127,668
(3) Accumulation Unit Value	$	32.998214	$	20.869750	$	26.477036	$	58.583796	$	13.033112	$	16.832155	$	71.778944
Units Outstanding		252		241		291		350		407		89		54
(4) Accumulation Unit Value	$	32.998214	$	20.869750	$	26.477036	$	58.583796	$	13.033112	$	16.832155	$	71.778944
Units Outstanding		195		185		173		541		425		209		92

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

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account

December 31, 2010

(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)
Northwestern Mutual Series Fund, Inc.	$	208,550	$	39,839	$	201,117	$	144,066	$	94,949	$	508,646	$	169,089
Fidelity Variable Insurance Products		—		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		—		—		—		25		77		27

Total Assets		208,550		39,839		201,117		144,066		94,974		508,723		169,116

Liabilities:
Due to Northwestern Mutual Life Insurance Company		29		—		5		57		—		—		—

Total Liabilities		29		—		5		57		—		—		—

Total Net Assets	$	208,521	$	39,839	$	201,112	$	144,009	$	94,974	$	508,723	$	169,116

Net Assets:
Variable Life Policies Issued
Before October 11, 1995
Policyowners’ Equity	$	10,476	$	2,433	$	9,192	$	10,946	$	5,357	$	61,627	$	12,024
Northwestern Mutual’s Equity		183		51		186		213		105		1,364		256
Variable CompLife Policies Issued Between October 11, 1995 and December 31, 2008 (2)
Policyowners’ Equity		176,595		31,215		170,705		116,227		73,844		393,542		125,701
Northwestern Mutual’s Equity		8,771		1,820		9,160		6,430		4,308		19,776		9,041
Variable Executive Life Policies Issued Between March 2, 1998 and December 31, 2008 (3)
Policyowners’ Equity		6,071		3,045		4,783		4,301		7,486		18,646		13,329
Variable Joint Life Policies Issued Between December 10, 1998 and December 31, 2008 (4)
Policyowners’ Equity		6,425		1,275		7,086		5,892		3,874		13,768		8,765

Total Net Assets	$	208,521	$	39,839	$	201,112	$	144,009	$	94,974	$	508,723	$	169,116


(1) Investments, at cost	$	181,571	$	43,848	$	209,856	$	129,771	$	109,928	$	481,510	$	169,089
Mutual Fund Shares Held		142,161		34,285		113,306		85,499		78,470		294,697		169,089
(2) Accumulation Unit Value	$	2.311836	$	1.759035	$	2.308077	$	2.144514	$	1.592294	$	2.718891	$	1.559508
Units Outstanding		80,182		18,781		77,929		57,196		49,082		152,018		86,400
(3) Accumulation Unit Value	$	25.934506	$	18.279525	$	29.671998	$	22.519799	$	16.720938	$	4.095847	$	41.380226
Units Outstanding		234		167		161		191		448		4,552		322
(4) Accumulation Unit Value	$	25.934506	$	18.279525	$	29.671998	$	22.519799	$	16.720938	$	4.095847	$	41.380226
Units Outstanding		248		70		238		262		232		3,361		212

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


$	238,702	$	92,377	$	323,296	$	40,865	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		140,650		—		—		—		—		—
	—		—		—		—		—		173,425		85,266		131,849		139,684		98,089
	103		4		—		—		16		83		—		12		26		60

	238,805		92,381		323,296		40,865		140,666		173,508		85,266		131,861		139,710		98,149


	—		—		47		5		—		—		13		—		—		—

	—		—		47		5		—		—		13		—		—		—

$	238,805	$	92,381	$	323,249	$	40,860	$	140,666	$	173,508	$	85,253	$	131,861	$	139,710	$	98,149




$	22,616	$	7,258	$	146,492	$	5,343	$	13,347	$	7,632	$	5,029	$	7,799	$	8,195	$	7,114
	436		144		2,094		103		242		162		93		174		161		191


	173,304		74,389		153,813		30,899		108,602		132,240		69,073		99,384		112,547		59,226
	9,254		3,547		7,586		1,604		6,310		7,688		3,959		5,552		6,296		3,235


	23,316		3,470		7,934		1,166		7,095		18,143		4,176		12,744		7,500		23,958


	9,879		3,573		5,330		1,745		5,070		7,643		2,923		6,208		5,011		4,425

$	238,805	$	92,381	$	323,249	$	40,860	$	140,666	$	173,508	$	85,253	$	131,861	$	139,710	$	98,149


$	227,759	$	85,475	$	360,142	$	41,336	$	128,705	$	152,638	$	90,580	$	146,274	$	150,161	$	94,282
	185,616		127,592		230,761		38,956		4,378		12,771		7,153		12,914		10,035		9,333
$	2.341027	$	2.662698	$	2.557927	$	1.433617	$	2.801620	$	0.975990	$	1.531783	$	1.368210	$	3.023867	$	1.882787
	77,982		29,270		63,098		22,672		41,016		143,371		47,678		76,697		39,302		33,175
$	181.992325	$	34.475967	$	137.200077	$	15.054442	$	29.113348	$	10.686543	$	17.202203	$	14.635995	$	31.671345	$	19.746605
	128		101		58		77		244		1,698		243		871		237		1,213
$	181.992325	$	34.475967	$	137.200077	$	15.054442	$	29.113348	$	10.686543	$	17.202203	$	14.635995	$	31.671345	$	19.746605
	54		104		39		116		174		715		170		424		158		224

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, 2010

(in thousands)


	Growth Stock Division			Focused Appreciation Division			Large Cap Core Stock Division			Index 500 Stock Division
Income:
Dividend income	$	2,172		$	—		$	2,096		$	13,302
Expenses:
Mortality and expense risk charges		1,137			372			752			2,831
Taxes		12			3			10			49

Net investment income (loss)		1,023			(375	)		1,334			10,422

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		(2,545	)		263			(4,215	)		(9,877	)
Realized gain distributions		—			—			—			5,003

Realized gains (losses)		(2,545	)		263			(4,215	)		(4,874	)

Change in unrealized appreciation/depreciation of investments during the period		31,797			7,977			24,055			87,360

Net increase (decrease) in net assets resulting from operations	$	30,275		$	7,865		$	21,174		$	92,908


	International Equity Division			Money Market Division			Select Bond Division			High Yield Bond Division
Income:
Dividend income	$	14,029		$	520		$	8,842		$	6,285
Expenses:
Mortality and expense risk charges		2,018			705			920			368
Taxes		30			7			11			4

Net investment income (loss)		11,981			(192	)		7,911			5,913

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		(104	)		—			1,130			965
Realized gain distributions		—			12			654			—

Realized gains (losses)		(104	)		12			1,784			965

Change in unrealized appreciation/depreciation of investments during the period		21,731			—			4,063			4,752

Net increase (decrease) in net assets resulting from operations	$	33,608		$	(180	)	$	13,758		$	11,630

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

$	2,770		$	1,108		$	982		$	2,017		$	488		$	1,287		$	1,372		$	758

	507			275			1,586			780			142			733			533			331
	6			3			26			5			1			4			5			2

	2,257			830			(630	)		1,232			345			550			834			425


	(2,430	)		(1,589	)		(9,482	)		66			(2,078	)		(3,440	)		2,044			(2,650	)
	—			—			—			665			—			—			—			—

	(2,430	)		(1,589	)		(9,482	)		731			(2,078	)		(3,440	)		2,044			(2,650	)

	16,855			10,104			87,530			41,347			8,178			43,682			22,606			15,011

$	16,682		$	9,345		$	77,418		$	43,310		$	6,445		$	40,792		$	25,484		$	12,786


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

$	6,464		$	1,113		$	152		$	1,443		$	346		$	1,105		$	2,825		$	3,618

	1,388			162			496			614			307			465			519			301
	71			3			6			4			2			4			4			3

	5,005			948			(350	)		825			37			636			2,302			3,314


	(8,343	)		(552	)		(1,162	)		(13	)		(2,233	)		(516	)		(1,911	)		334
	—			—			391			—			—			—			—			2,607

	(8,343	)		(552	)		(771	)		(13	)		(2,233	)		(516	)		(1,911	)		2,941

	36,783			4,214			31,307			22,970			18,893			12,472			25,100			2,261

$	33,445		$	4,610		$	30,186		$	23,782		$	16,697		$	12,592		$	25,491		$	8,516

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
	Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009

Operations:
Net investment income (loss)	$	1,023		$	1,713		$	(375	)	$	(303	)
Net realized gains (losses)		(2,545	)		(5,105	)		263			(678	)
Net change in unrealized appreciation/ depreciation		31,797			78,579			7,977			26,775

Net increase (decrease) in net assets resulting from operations		30,275			75,187			7,865			25,794


Policy Transactions:
Policyowners’ net payments		23,120			26,445			8,658			8,380
Policy loans, surrenders and death benefits		(25,375	)		(15,891	)		(8,371	)		(6,942	)
Mortality and other (net)		(7,279	)		(8,044	)		(2,520	)		(2,628	)
Transfers from other divisions		34,677			15,890			19,667			18,714
Transfers to other divisions		(41,784	)		(17,336	)		(15,264	)		(14,625	)

Net increase (decrease) in net assets resulting from policy transactions		(16,641	)		1,064			2,170			2,899

Net increase (decrease) in net assets		13,634			76,251			10,035			28,693

Net Assets:
Beginning of period		275,067			198,816			87,828			59,135

End of period	$	288,701		$	275,067		$	97,863		$	87,828

Units issued during the period		16,675			21,331			11,635			14,596
Units redeemed during the period		(21,336	)		(22,754	)		(11,029	)		(12,408	)

Net units issued (redeemed) during period		(4,661	)		(1,423	)		606			2,188


	Mid Cap Growth Stock Division						Index 400 Stock Division
	Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009

Operations:
Net investment income (loss)	$	(630	)	$	(505	)	$	1,232		$	2,094
Net realized gains (losses)		(9,482	)		(11,271	)		731			2,365
Net change in unrealized appreciation/ depreciation		87,530			96,475			41,347			44,192

Net increase (decrease) in net assets resulting from operations		77,418			84,699			43,310			48,651


Policy Transactions:
Policyowners’ net payments		28,654			32,786			14,339			16,167
Policy loans, surrenders and death benefits		(33,072	)		(25,144	)		(17,053	)		(11,985	)
Mortality and other (net)		(10,140	)		(9,844	)		(4,990	)		(5,033	)
Transfers from other divisions		13,707			14,572			13,812			10,778
Transfers to other divisions		(21,347	)		(17,344	)		(18,442	)		(15,433	)

Net increase (decrease) in net assets resulting from policy transactions		(22,198	)		(4,974	)		(12,334	)		(5,506	)

Net increase (decrease) in net assets		55,220			79,725			30,976			43,145

Net Assets:
Beginning of period		348,854			269,129			177,545			134,400

End of period	$	404,074		$	348,854		$	208,521		$	177,545

Units issued during the period		17,240			24,197			13,194			17,990
Units redeemed during the period		(24,850	)		(26,722	)		(17,376	)		(20,353	)

Net units issued (redeemed) during period		(7,610	)		(2,525	)		(4,182	)		(2,363	)

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						Equity Income Division
Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009


$	1,334		$	2,159		$	10,422		$	13,360		$	2,257		$	3,061		$	830		$	1,284
	(4,215	)		(5,497	)		(4,874	)		1,397			(2,430	)		(2,436	)		(1,589	)		(1,799	)
	24,055			43,709			87,360			121,808			16,855			26,412			10,104			12,873

	21,174			40,371			92,908			136,565			16,682			27,037			9,345			12,358



	16,425			18,357			57,023			63,278			12,739			13,892			5,885			6,281
	(17,828	)		(12,684	)		(58,092	)		(49,959	)		(11,192	)		(7,976	)		(5,900	)		(4,531	)
	(4,893	)		(5,325	)		(18,730	)		(19,116	)		(3,368	)		(3,426	)		(1,790	)		(1,667	)
	17,200			14,344			78,450			38,264			12,165			9,926			13,421			9,838
	(17,037	)		(15,344	)		(75,786	)		(39,587	)		(12,333	)		(10,822	)		(8,693	)		(6,917	)

	(6,133	)		(652	)		(17,135	)		(7,120	)		(1,989	)		1,594			2,923			3,004

	15,041			39,719			75,773			129,445			14,693			28,631			12,268			15,362


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

$	192,996		$	177,955		$	730,891		$	655,118		$	134,632		$	119,939		$	73,840		$	61,572

	13,698			18,085			35,185			46,549			18,344			24,059			10,630			12,506
	(16,697	)		(19,256	)		(42,103	)		(48,585	)		(18,787	)		(22,203	)		(8,664	)		(10,053	)

	(2,999	)		(1,171	)		(6,918	)		(2,036	)		(443	)		1,856			1,966			2,453


Mid Cap Value Division						Small Cap Growth Stock Division						Small Cap Value Division						International Growth Division
Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009


$	345		$	203		$	550		$	(200	)	$	834		$	439		$	425		$	166
	(2,078	)		(2,307	)		(3,440	)		(7,560	)		2,044			4,101			(2,650	)		(3,032	)
	8,178			8,079			43,682			47,360			22,606			22,271			15,011			16,621

	6,445			5,975			40,792			39,600			25,484			26,811			12,786			13,755



	3,548			3,823			16,158			18,114			11,182			12,433			8,726			9,603
	(3,608	)		(2,264	)		(17,623	)		(14,215	)		(11,199	)		(9,260	)		(8,176	)		(5,674	)
	(1,052	)		(984	)		(4,903	)		(4,888	)		(3,644	)		(3,617	)		(2,311	)		(2,314	)
	22,432			4,520			27,102			20,416			19,361			12,950			42,439			11,030
	(19,751	)		(4,711	)		(26,756	)		(21,580	)		(19,225	)		(14,624	)		(35,251	)		(11,229	)

	1,569			384			(6,022	)		(2,153	)		(3,525	)		(2,118	)		5,427			1,416

	8,014			6,359			34,770			37,447			21,959			24,693			18,213			15,171


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

$	39,839		$	31,825		$	201,112		$	166,342		$	144,009		$	122,050		$	94,974		$	76,761

	6,141			5,901			14,559			20,471			11,528			15,421			15,822			15,210
	(5,802	)		(5,599	)		(17,602	)		(21,800	)		(12,778	)		(16,262	)		(13,844	)		(14,371	)

	339			302			(3,043	)		(1,329	)		(1,250	)		(841	)		1,978			839

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						Money Market Division
	Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009

Operations:
Net investment income (loss)	$	11,981		$	17,187		$	(192	)	$	654
Net realized gains (losses)		(104	)		6,202			12			1
Net change in unrealized appreciation/ depreciation		21,731			97,116			—			—

Net increase (decrease) in net assets resulting from operations		33,608			120,505			(180	)		655


Policy Transactions:
Policyowners’ net payments		38,680			42,672			95,869			106,083
Policy loans, surrenders and death benefits		(43,462	)		(32,299	)		(63,659	)		(53,664	)
Mortality and other (net)		(13,032	)		(14,802	)		(7,410	)		(8,938	)
Transfers from other divisions		70,724			37,452			126,490			124,543
Transfers to other divisions		(67,040	)		(32,325	)		(170,742	)		(157,865	)

Net increase (decrease) in net assets resulting from policy transactions		(14,130	)		698			(19,452	)		10,159

Net increase (decrease) in net assets		19,478			121,203			(19,632	)		10,814

Net Assets:
Beginning of period		489,245			368,042			188,748			177,934

End of period	$	508,723		$	489,245		$	169,116		$	188,748

Units issued during the period		38,456			37,372			112,514			121,314
Units redeemed during the period		(43,028	)		(36,196	)		(121,911	)		(119,541	)

Net units issued (redeemed) during period		(4,572	)		1,176			(9,397	)		1,773


	Fidelity VIP Mid Cap Division						Russell Multi-Style Equity Division
	Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009

Operations:
Net investment income (loss)	$	(350	)	$	44		$	825		$	1,328
Net realized gains (losses)		(771	)		(2,185	)		(13	)		(4,646	)
Net change in unrealized appreciation/ depreciation		31,307			31,097			22,970			41,785

Net increase (decrease) in net assets resulting from operations		30,186			28,956			23,782			38,467


Policy Transactions:
Policyowners’ net payments		10,250			10,937			13,002			15,320
Policy loans, surrenders and death benefits		(10,880	)		(6,273	)		(13,998	)		(12,051	)
Mortality and other (net)		(3,658	)		(3,224	)		(4,447	)		(4,711	)
Transfers from other divisions		36,589			14,658			22,938			67,051
Transfers to other divisions		(27,176	)		(11,938	)		(29,231	)		(70,621	)

Net increase (decrease) in net assets resulting from policy transactions		5,125			4,160			(11,736	)		(5,012	)

Net increase (decrease) in net assets		35,311			33,116			12,046			33,455

Net Assets:
Beginning of period		105,355			72,239			161,462			128,007

End of period	$	140,666		$	105,355		$	173,508		$	161,462

Units issued during the period		10,845			11,830			28,038			42,139
Units redeemed during the period		(9,673	)		(9,821	)		(37,957	)		(44,493	)

Net units issued (redeemed) during period		1,172			2,009			(9,919	)		(2,354	)

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, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009


$	7,911		$	9,817		$	5,913		$	6,056		$	5,005		$	11,082		$	948		$	841
	1,784			651			965			(53	)		(8,343	)		(11,202	)		(552	)		(1,064	)
	4,063			7,342			4,752			19,567			36,783			52,539			4,214			7,965

	13,758			17,810			11,630			25,570			33,445			52,419			4,610			7,742



	17,938			18,551			5,907			6,167			21,634			22,112			2,842			3,168
	(28,609	)		(19,175	)		(9,199	)		(5,595	)		(22,250	)		(19,889	)		(4,027	)		(3,159	)
	(6,029	)		(7,285	)		(2,538	)		(2,459	)		(8,557	)		(8,680	)		(1,123	)		(1,123	)
	60,450			61,681			15,844			16,685			13,278			12,282			3,993			5,096
	(42,155	)		(39,230	)		(13,535	)		(11,299	)		(13,315	)		(14,051	)		(2,780	)		(3,328	)

	1,595			14,542			(3,521	)		3,499			(9,210	)		(8,226	)		(1,095	)		654

	15,353			32,352			8,109			29,069			24,235			44,193			3,515			8,396


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

$	238,805		$	223,452		$	92,381		$	84,272		$	323,249		$	299,014		$	40,860		$	37,345

	21,882			26,321			6,977			9,817			10,022			12,984			5,079			6,464
	(21,931	)		(20,798	)		(7,946	)		(8,658	)		(12,085	)		(14,735	)		(5,733	)		(6,463	)

	(49	)		5,523			(969	)		1,159			(2,063	)		(1,751	)		(654	)		1


Russell Aggressive Equity Division						Russell Non-US Division						Russell Real Estate Securities Division						Russell Core Bond Division
Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009


$	37		$	70		$	636		$	2,694		$	2,302		$	3,707		$	3,314		$	3,301
	(2,233	)		(2,180	)		(516	)		(1,670	)		(1,911	)		(4,264	)		2,941			(44	)
	18,893			18,956			12,472			25,120			25,100			26,150			2,261			7,467

	16,697			16,846			12,592			26,144			25,491			25,593			8,516			10,724



	6,862			7,866			10,391			12,178			10,990			11,966			5,744			6,235
	(6,989	)		(5,417	)		(10,726	)		(8,973	)		(12,273	)		(7,970	)		(9,825	)		(5,821	)
	(2,134	)		(2,128	)		(3,289	)		(3,679	)		(3,591	)		(2,979	)		(2,329	)		(2,415	)
	9,527			13,006			19,087			40,245			31,929			31,672			46,009			73,600
	(9,845	)		(13,500	)		(20,573	)		(44,630	)		(26,714	)		(30,354	)		(36,378	)		(60,658	)

	(2,579	)		(173	)		(5,110	)		(4,859	)		341			2,335			3,221			10,941

	14,118			16,673			7,482			21,285			25,832			27,928			11,737			21,665


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

$	85,253		$	71,135		$	131,861		$	124,379		$	139,710		$	113,878		$	98,149		$	86,412

	10,147			13,102			16,644			21,650			9,674			12,614			13,823			15,373
	(11,139	)		(13,059	)		(19,400	)		(23,210	)		(9,091	)		(11,143	)		(12,275	)		(13,797	)

	(992	)		43			(2,756	)		(1,560	)		583			1,471			1,548			1,576

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, 2010

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.

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, 2010, 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 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, 2010 were as follows: (in thousands)


Division	Purchases		Sales
Growth Stock	$	13,338	$	28,889
Focused Appreciation		11,710		9,923
Large Cap Core Stock		15,377		20,101
Index 500 Stock		64,825		66,434
Domestic Equity		13,529		13,291
Equity Income		10,624		6,854
Mid Cap Growth Stock		14,721		37,521
Index 400 Stock		9,088		19,518
Mid Cap Value		6,019		4,101
Small Cap Growth Stock		14,782		20,253
Small Cap Value		10,450		13,227
International Growth		15,492		9,655
International Equity		47,546		49,992
Money Market		51,820		71,492
Select Bond		42,694		32,620
High Yield Bond		12,948		10,625
Balanced		21,391		25,559
Asset Allocation		4,403		4,549
Fidelity VIP Mid Cap		18,136		12,998
Russell Multi-Style Equity		6,175		17,157
Russell Aggressive Equity		5,854		8,396
Russell Non-U.S.		8,459		12,948
Russell Real Estate Securities		17,172		14,567
Russell Core Bond		20,364		11,439

Notes to Financial Statements

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 — No events have occurred subsequent to December 31, 2010 that require disclosure or adjustment to the financial statements at that date or through the date of issuance.

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 12/31/10		101,987		$ 2.434967 to $ 32.998214	$	288,701		0.82%		0.10% to 0.60%		11.76% to 12.37%
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%
Focused Appreciation
Year Ended 12/31/10		41,221		$ 2.008299 to $ 20.869750	$	97,863		0.00%		0.10% to 0.60%		8.73% to 9.33%
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%
Large Cap Core Stock
Year Ended 12/31/10		80,904		$ 1.972165 to $ 26.477036	$	192,996		1.20%		0.10% to 0.60%		12.29% to 12.91%
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%

(1)	Total Return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges.

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)
Index 500 Stock
Year Ended 12/31/10		220,539		$ 2.602259 to $ 58.583796	$	730,891		2.02%		0.10% to 0.60%		14.27% to 14.89%
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%
Domestic Equity
Year Ended 12/31/10		90,355		$ 1.241092 to $ 13.033112	$	134,632		2.28%		0.10% to 0.60%		13.99% to 14.62%
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%
Equity Income
Year Ended 12/31/10		38,980		$ 1.619759 to $ 16.832155	$	73,840		1.70%		0.10% to 0.60%		14.70% to 15.33%
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%
Mid Cap Growth Stock
Year Ended 12/31/10		127,814		$ 2.625759 to $ 71.778944	$	404,074		0.28%		0.10% to 0.60%		23.18% to 23.86%
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%
Index 400 Stock
Year Ended 12/31/10		80,664		$ 2.311836 to $ 25.934506	$	208,521		1.09%		0.10% to 0.60%		25.60% to 26.29%
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%
Mid Cap Value
Year Ended 12/31/10		19,018		$ 1.759035 to $ 18.279525	$	39,839		1.41%		0.10% to 0.60%		19.27% to 19.93%
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%
Small Cap Growth Stock
Year Ended 12/31/10		78,328		$ 2.308077 to $ 29.671998	$	201,112		0.75%		0.10% to 0.60%		25.16% to 25.85%
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%
Small Cap Value
Year Ended 12/31/10		57,649		$ 2.144514 to $ 22.519799	$	144,009		1.09%		0.10% to 0.60%		21.28% to 21.95%
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%
International Growth
Year Ended 12/31/10		49,762		$ 1.592294 to $ 16.720938	$	94,974		0.92%		0.10% to 0.60%		15.79% to 16.43%
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%

(1)	Total Return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges.

(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)
International Equity
Year Ended 12/31/10		159,931		$ 2.718891 to $ 4.095847	$	508,723		3.01%		0.10% to 0.60%		7.08% to 7.67%
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%
Money Market
Year Ended 12/31/10		86,934		$1.559508 to $ 41.380226		$169,116		0.29%		0.10% to 0.60%		(0.25%) to 0.29%
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%
Select Bond
Year Ended 12/31/10		78,164		$2.341027 to $181.992325		$238,805		3.75%		0.10% to 0.60%		6.00% to 6.59%
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%
High Yield Bond
Year Ended 12/31/10		29,475		$2.662698 to $ 34.475967		$ 92,381		7.13%		0.10% to 0.60%		13.93% to 14.56%
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%
Balanced
Year Ended 12/31/10		63,195		$2.557927 to $137.200077		$323,249		2.12%		0.10% to 0.60%		11.34% to 11.96%
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%
Asset Allocation
Year Ended 12/31/10		22,865		$1.433617 to $ 15.054442		$ 40,860		2.92%		0.10% to 0.60%		12.39% to 13.01%
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%
Fidelity VIP Mid Cap
Year Ended 12/31/10		41,434		$2.801620 to $ 29.113348		$140,666		0.13%		0.10% to 0.60%		27.87% to 28.57%
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%
Russell Multi-Style Equity
Year Ended 12/31/10		145,784		$0.975990 to $ 10.686543		$173,508		0.91%		0.10% to 0.60%		15.82% to 16.46%
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%
Russell Aggressive Equity
Year Ended 12/31/10		48,091		$1.531783 to $ 17.202203		$ 85,253		0.47%		0.10% to 0.60%		24.20% to 24.88%
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%

(1)	Total Return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges.

(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)

Russell Non-U.S.

Year Ended 12/31/10

77,992

$1.368210 to $ 14.635995

$131,861

0.93%

0.10% to 0.60%

10.81% to 11.42%

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%

Russell Real Estate Securities

Year Ended 12/31/10

39,697

$3.023867 to $ 31.671345

$139,710

2.23%

0.10% to 0.60%

22.25% to 22.92%

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%

Russell Core Bond

Year Ended 12/31/10

34,612

$1.882787 to $ 19.746605

$ 98,149

3.79%

0.10% to 0.60%

9.42% to 10.02%

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%

(1)	Total Return includes deductions for management and other expenses; it excludes deductions for sales loads and other charges.

Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

To The Northwestern Mutual Life Insurance Company and

Policyowners 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, 2010, 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, 2010 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, 2011

Report of Independent Registered Public Accounting Firm

Annual Report December 31, 2010

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, 2010

(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)
Northwestern Mutual Series Fund, Inc.	$	1,627	$	3,505	$	1,330	$	4,938	$	1,965	$	1,944	$	2,001
Fidelity Variable Insurance Products		—		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		1		11		1		—		14		—		1

Total Assets		1,628		3,516		1,331		4,938		1,979		1,944		2,002

Liabilities:
Due to Northwestern Mutual Life Insurance Company		—		—		—		1		—		1		—
Due to Policyowners		—		—		—		—		—		—		—

Total Liabilities		—		—		—		1		—		1		—

Total Net Assets	$	1,628	$	3,516	$	1,331	$	4,937	$	1,979	$	1,943	$	2,002

Net Assets:
Custom Variable Universal Life Policies Issued On or After January 31, 2007 (2)
Policyowners’ Equity	$	1,262	$	2,329	$	885	$	2,775	$	1,894	$	1,138	$	934
Executive Variable Universal Life Policies Issued On or After January 31, 2007 (3)
Policyowners’ Equity		273		1,114		403		2,118		57		751		1,031
Survivorship Variable Universal Life Policies Issued On or After January 31, 2007 (4)
Policyowners’ Equity		93		73		43		44		28		54		37

Total Net Assets	$	1,628	$	3,516	$	1,331	$	4,937	$	1,979	$	1,943	$	2,002


(1) Investments, at cost	$	1,412	$	2,931	$	1,147	$	4,079	$	1,632	$	1,612	$	1,542
Mutual Fund Shares Held		763		1,881		1,070		1,898		2,221		1,629		642
(2) Accumulation Unit Value	$	32.998214	$	20.869750	$	26.477036	$	58.583796	$	13.033112	$	16.832155	$	71.778944
Units Outstanding		38		112		33		47		145		68		13
(3) Accumulation Unit Value	$	32.998214	$	20.869750	$	26.477036	$	58.583796	$	13.033112	$	16.832155	$	71.778944
Units Outstanding		8		53		15		36		5		45		14
(4) Accumulation Unit Value	$	32.998214	$	20.869750	$	26.477036	$	58.583796	$	13.033112	$	16.832155	$	71.778944
Units Outstanding		3		4		2		1		2		3		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, 2010

(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)
Northwestern Mutual Series Fund, Inc.	$	2,488	$	780	$	1,707	$	2,323	$	1,568	$	5,929	$	2,841
Fidelity Variable Insurance Products		—		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		—		1		—		7		8		—

Total Assets		2,488		780		1,708		2,323		1,575		5,937		2,841

Liabilities:
Due to Northwestern Mutual Life Insurance Company		—		2		—		—		—		—		8
Due to Policyowners		—		—		—		—		—		—		39

Total Liabilities		—		2		—		—		—		—		47

Total Net Assets	$	2,488	$	778	$	1,708	$	2,323	$	1,575	$	5,937	$	2,794

Net Assets:
Custom Variable Universal Life Policies Issued On or After January 31, 2007 (2)
Policyowners’ Equity	$	1,516	$	413	$	1,419	$	1,348	$	1,454	$	4,192	$	1,266
Executive Variable Universal Life Policies Issued On or After January 31, 2007 (3)
Policyowners’ Equity		928		356		227		958		75		1,589		1,384
Survivorship Variable Universal Life Policies Issued On or After January 31, 2007 (4)
Policyowners’ Equity		44		9		62		17		46		156		144

Total Net Assets	$	2,488	$	778	$	1,708	$	2,323	$	1,575	$	5,937	$	2,794


(1) Investments, at cost	$	1,995	$	684	$	1,310	$	1,807	$	1,297	$	5,288	$	2,840
Mutual Fund Shares Held		1,696		671		962		1,379		1,296		3,435		2,840
(2) Accumulation Unit Value	$	25.934506	$	18.279525	$	29.671998	$	22.519799	$	16.720938	$	4.095847	$	41.380226
Units Outstanding		58		23		48		60		87		1,023		31
(3) Accumulation Unit Value	$	25.934506	$	18.279525	$	29.671998	$	22.519799	$	16.720938	$	4.095847	$	41.380226
Units Outstanding		36		20		8		43		4		388		34
(4) Accumulation Unit Value	$	25.934506	$	18.279525	$	29.671998	$	22.519799	$	16.720938	$	4.095847	$	41.380226
Units Outstanding		2		—		2		1		3		38		3

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


$	4,262	$	1,557	$	1,084	$	386	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		2,603		—		—		—		—		—
	—		—		—		—		—		1,416		798		1,543		1,909		1,277

	15		1		1		—		13		—		5		6		1		—

	4,277		1,558		1,085		386		2,616		1,416		803		1,549		1,910		1,277



	—		—		—		—		—		—		—		—		—		—
	—		—		—		—		—		—		—		—		—		—

	—		—		—		—		—		—		—		—		—		—

$	4,277	$	1,558	$	1,085	$	386	$	2,616	$	1,416	$	803	$	1,549	$	1,910	$	1,277



$	3,155	$	929	$	574	$	330	$	2,223	$	1,249	$	685	$	1,349	$	1,741	$	958


	997		609		478		33		332		160		107		174		93		299


	125		20		33		23		61		7		11		26		76		20

$	4,277	$	1,558	$	1,085	$	386	$	2,616	$	1,416	$	803	$	1,549	$	1,910	$	1,277


$	4,205	$	1,445	$	988	$	334	$	1,969	$	1,149	$	618	$	1,321	$	1,483	$	1,279
	3,315		2,151		774		368		81		104		67		151		137		122
$	181.992325	$	34.475967	$	137.200077	$	15.054442	$	29.113348	$	10.686543	$	17.202203	$	14.635995	$	31.671345	$	19.746605
	17		27		4		22		76		117		40		92		55		49
$	181.992325	$	34.475967	$	137.200077	$	15.054442	$	29.113348	$	10.686543	$	17.202203	$	14.635995	$	31.671345	$	19.746605
	5		18		3		2		11		15		6		12		3		15
$	181.992325	$	34.475967	$	137.200077	$	15.054442	$	29.113348	$	10.686543	$	17.202203	$	14.635995	$	31.671345	$	19.746605
	1		1		—		2		2		1		1		2		2		1

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, 2010

(in thousands)


	Growth Stock Division			Focused Appreciation Division		Large Cap Core Stock Division			Index 500 Stock Division
Income:
Dividend income	$	11		$	—	$	11		$	78

Net investment income		11			—		11			78

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		20			171		(5	)		(81	)
Realized gain distributions		—			—		—			30

Realized gains (losses)		20			171		(5	)		(51	)

Change in unrealized appreciation/depreciation of investments during the period		149			58		143			566

Net increase (decrease) in net assets resulting from operations	$	180		$	229	$	149		$	593


	International Equity Division			Money Market Division		Select Bond Division			High Yield Bond Division
Income:
Dividend income	$	146		$	9	$	143		$	93

Net investment income		146			9		143			93

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		(276	)		—		31			64
Realized gain distributions		—			—		11			—

Realized gains (losses)		(276	)		—		42			64

Change in unrealized appreciation/depreciation of investments during the period		577			—		14			9

Net increase (decrease) in net assets resulting from operations	$	447		$	9	$	199		$	166

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

$	39		$	25		$	5		$	22		$	6		$	10		$	20		$	12

	39			25			5			22			6			10			20			12


	(58	)		(43	)		(62	)		4			48			(15	)		(48	)		(20	)
	—			—			—			7			—			—			—			—

	(58	)		(43	)		(62	)		11			48			(15	)		(48	)		(20	)

	268			246			421			439			54			337			421			215

$	249		$	228		$	364		$	472		$	108		$	332		$	393		$	207


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

$	21		$	10		$	3		$	10		$	3		$	8		$	33		$	35

	21			10			3			10			3			8			33			35


	22			(3	)		14			(43	)		(6	)		(23	)		(21	)		26
	—			—			6			—			—			—			—			31

	22			(3	)		20			(43	)		(6	)		(23	)		(21	)		57

	62			36			494			230			151			185			305			(17	)

$	105		$	43		$	517		$	197		$	148		$	170		$	317		$	75

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
	Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009

Operations:
Net investment income (loss)	$	11		$	8		$	—		$	—
Net realized gains (losses)		20			(33	)		171			(525	)
Net change in unrealized appreciation/ depreciation		149			241			58			1,221

Net increase (decrease) in net assets resulting from operations		180			216			229			696


Policy Transactions:
Policyowners’ net payments		471			339			856			1,495
Policy loans, surrenders and death benefits		(19	)		(22	)		(1,181	)		(45	)
Mortality and other (net)		(123	)		(89	)		(279	)		(224	)
Transfers from other divisions		3,331			1,516			10,643			8,233
Transfers to other divisions		(3,150	)		(1,416	)		(10,202	)		(8,083	)

Net increase (decrease) in net assets resulting from policy transactions		510			328			(163	)		1,376

Net increase (decrease) in net assets		690			544			66			2,072

Net Assets:
Beginning of period		938			394			3,450			1,378

End of period	$	1,628		$	938		$	3,516		$	3,450

Units issued during the period		155			80			604			621
Units redeemed during the period		(137	)		(67	)		(616	)		(543	)

Net units issued (redeemed) during period		18			13			(12	)		78


	Mid Cap Growth Stock Division						Index 400 Stock Division
	Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009

Operations:
Net investment income (loss)	$	5		$	3		$	22		$	19
Net realized gains (losses)		(62	)		(134	)		11			(68	)
Net change in unrealized appreciation/ depreciation		421			410			439			416

Net increase (decrease) in net assets resulting from operations		364			279			472			367


Policy Transactions:
Policyowners’ net payments		298			223			503			249
Policy loans, surrenders and death benefits		(15	)		(11	)		(50	)		(47	)
Mortality and other (net)		(108	)		(75	)		(135	)		(86	)
Transfers from other divisions		7,369			6,221			7,715			5,945
Transfers to other divisions		(7,077	)		(6,085	)		(7,337	)		(5,761	)

Net increase (decrease) in net assets resulting from policy transactions		467			273			696			300

Net increase (decrease) in net assets		831			552			1,168			667

Net Assets:
Beginning of period		1,171			619			1,320			653

End of period	$	2,002		$	1,171		$	2,488		$	1,320

Units issued during the period		123			137			374			385
Units redeemed during the period		(116	)		(130	)		(343	)		(363	)

Net units issued (redeemed) during period		7			7			31			22

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						Equity Income Division
Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009


$	11		$	8		$	78		$	58		$	39		$	34		$	25		$	28
	(5	)		(29	)		(51	)		(113	)		(58	)		(80	)		(43	)		(53	)
	143			138			566			654			268			338			246			302

	149			117			593			599			249			292			228			277



	316			170			1,318			793			483			433			331			277
	(34	)		(16	)		(93	)		(78	)		(98	)		(27	)		(55	)		(26	)
	(93	)		(56	)		(277	)		(175	)		(155	)		(125	)		(88	)		(68	)
	1,995			702			17,076			11,001			2,447			1,311			6,512			4,885
	(1,590	)		(623	)		(16,487	)		(10,411	)		(2,309	)		(1,103	)		(6,201	)		(4,670	)

	594			177			1,537			1,130			368			489			499			398

	743			294			2,130			1,729			617			781			727			675


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

$	1,331		$	588		$	4,937		$	2,807		$	1,979		$	1,362		$	1,943		$	1,216

	103			45			374			294			257			199			457			429
	(78	)		(37	)		(345	)		(265	)		(225	)		(145	)		(424	)		(392	)

	25			8			29			29			32			54			33			37


Mid Cap Value Division						Small Cap Growth Stock Division						Small Cap Value Division						International Growth Division
Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009


$	6		$	4		$	10		$	1		$	20		$	10		$	12		$	4
	48			(10	)		(15	)		(59	)		(48	)		(67	)		(20	)		(140	)
	54			88			337			229			421			391			215			270

	108			82			332			171			393			334			207			134



	288			132			480			309			500			295			403			275
	(57	)		(30	)		(94	)		(25	)		(81	)		(50	)		(61	)		(28	)
	(44	)		(30	)		(121	)		(72	)		(129	)		(96	)		(112	)		(83	)
	2,770			1,509			2,976			1,168			8,073			6,343			2,488			989
	(2,721	)		(1,466	)		(2,674	)		(1,058	)		(7,864	)		(6,169	)		(2,220	)		(846	)

	236			115			567			322			499			323			498			307

	344			197			899			493			892			657			705			441


	434			237			809			316			1,431			774			870			429

$	778		$	434		$	1,708		$	809		$	2,323		$	1,431		$	1,575		$	870

	195			133			157			81			440			451			206			104
	(180	)		(124	)		(133	)		(64	)		(414	)		(427	)		(173	)		(80	)

	15			9			24			17			26			24			33			24

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						Money Market Division
	Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009

Operations:
Net investment income (loss)	$	146		$	136		$	9		$	18
Net realized gains (losses)		(276	)		(349	)		—			—
Net change in unrealized appreciation/ depreciation		577			1,131			—			—

Net increase (decrease) in net assets resulting from operations		447			918			9			18


Policy Transactions:
Policyowners’ net payments		1,379			1,062			7,707			6,827
Policy loans, surrenders and death benefits		(217	)		(66	)		(220	)		(809	)
Mortality and other (net)		(406	)		(327	)		(340	)		(390	)
Transfers from other divisions		13,947			10,046			10,344			9,902
Transfers to other divisions		(13,014	)		(9,750	)		(17,426	)		(14,445	)

Net increase (decrease) in net assets resulting from policy transactions		1,689			965			65			1,085

Net increase (decrease) in net assets		2,136			1,883			74			1,103

Net Assets:
Beginning of period		3,801			1,918			2,720			1,617

End of period	$	5,937		$	3,801		$	2,794		$	2,720

Units issued during the period		4,335			3,660			509			445
Units redeemed during the period		(3,886	)		(3,331	)		(507	)		(418	)

Net units issued (redeemed) during period		449			329			2			27


	Fidelity VIP Mid Cap Division						Russell Multi-Style Equity Division
	Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009

Operations:
Net investment income (loss)	$	3		$	5		$	10		$	8
Net realized gains (losses)		20			(22	)		(43	)		(37	)
Net change in unrealized appreciation/ depreciation		494			342			230			241

Net increase (decrease) in net assets resulting from operations		517			325			197			212


Policy Transactions:
Policyowners’ net payments		622			516			351			276
Policy loans, surrenders and death benefits		(152	)		(27	)		(47	)		(8	)
Mortality and other (net)		(174	)		(113	)		(108	)		(90	)
Transfers from other divisions		5,025			1,836			1,916			1,224
Transfers to other divisions		(4,592	)		(1,645	)		(1,884	)		(1,047	)

Net increase (decrease) in net assets resulting from policy transactions		729			567			228			355

Net increase (decrease) in net assets		1,246			892			425			567

Net Assets:
Beginning of period		1,370			478			991			424

End of period	$	2,616		$	1,370		$	1,416		$	991

Units issued during the period		281			133			251			214
Units redeemed during the period		(253	)		(101	)		(225	)		(167	)

Net units issued (redeemed) during period		28			32			26			47

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, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009


$	143		$	109		$	93		$	60		$	21		$	20		$	10		$	6
	42			2			64			(17	)		22			(36	)		(3	)		(5	)
	14			49			9			207			62			104			36			52

	199			160			166			250			105			88			43			53



	1,212			972			307			102			324			195			56			67
	(158	)		(95	)		(26	)		(13	)		(105	)		(14	)		(9	)		(2	)
	(293	)		(212	)		(91	)		(46	)		(68	)		(40	)		(22	)		(18	)
	10,185			3,833			5,413			3,897			2,715			1,609			382			169
	(9,456	)		(3,220	)		(5,227	)		(3,575	)		(2,428	)		(1,463	)		(318	)		(127	)

	1,490			1,278			376			365			438			287			89			89

	1,689			1,438			542			615			543			375			132			142


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

$	4,277		$	2,588		$	1,558		$	1,016		$	1,085		$	542		$	386		$	254

	77			30			188			161			24			16			33			23
	(69	)		(23	)		(176	)		(146	)		(21	)		(14	)		(27	)		(13	)

	8			7			12			15			3			2			6			10


Russell Aggressive Equity Division						Russell Non-US Division						Russell Real Estate Securities Division						Russell Core Bond Division
Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009			Year Ended December 31, 2010			Year Ended December 31, 2009


$	3		$	1		$	8		$	18		$	33		$	30		$	35		$	19
	(6	)		(22	)		(23	)		(48	)		(21	)		(46	)		57			(1	)
	151			109			185			204			305			305			(17	)		34

	148			88			170			174			317			289			75			52



	206			118			495			268			510			313			264			127
	(24	)		(4	)		(28	)		(42	)		(106	)		(17	)		(24	)		(12	)
	(60	)		(37	)		(109	)		(77	)		(145	)		(93	)		(81	)		(45	)
	1,010			447			2,772			1,391			2,585			1,101			2,438			1,082
	(895	)		(401	)		(2,627	)		(1,262	)		(2,308	)		(936	)		(2,125	)		(799	)

	237			123			503			278			536			368			472			353

	385			211			673			452			853			657			547			405


	418			207			876			424			1,057			400			730			325

$	803		$	418		$	1,549		$	876		$	1,910		$	1,057		$	1,277		$	730

	90			51			272			157			118			77			146			74
	(72	)		(42	)		(232	)		(132	)		(99	)		(56	)		(122	)		(54	)

	18			9			40			25			19			21			24			20

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, 2010

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.

2. Significant Accounting Policies

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 dividends from Northwestern Mutual. Any dividends reinvested in the Account are reflected in Policyowners’ net payments in the accompanying financial statements.

3. Purchases and Sales of Investments — Purchases and sales of the Funds’ shares for the year ended December 31, 2010 were as follows: (in thousands)


Division	Purchases		Sales
Growth Stock	$	700	$	178
Focused Appreciation		1,458		1,636
Large Cap Core Stock		755		149
Index 500 Stock		2,116		470
Domestic Equity		667		282
Equity Income		683		166
Mid Cap Growth Stock		619		153
Index 400 Stock		936		214
Mid Cap Value		354		110
Small Cap Growth Stock		818		245
Small Cap Value		761		246
International Growth		700		201
International Equity		2,531		708
Money Market		9,108		8,983
Select Bond		2,134		514
High Yield Bond		593		125
Balanced		651		193
Asset Allocation		138		40
Fidelity VIP Mid Cap		1,082		358
Russell Multi-Style Equity		420		178
Russell Aggressive Equity		338		103
Russell Non-U.S.		672		167
Russell Real Estate Securities		845		276
Russell Core Bond		659		120

4. Expenses and Related Party Transactions — A deduction for mortality and expense risks is determined monthly and 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.

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

Notes to Financial Statements

Universal Life Policies is determined at an annual rate of 0.10% of the amount invested in the Account for the Policy for the first twenty Policy years, and 0.05% thereafter. 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

No events have occurred subsequent to December 31, 2010 that require disclosure or adjustment to the financial statements at that date or through the date of issuance.

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 12/31/10		49		$ 32.998214	$	1,628		0.86	%		0.05% to 0.35%		12.37%
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 12/31/10		169		$ 20.869750	$	3,516		0.00	%		0.05% to 0.35%		9.33%
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 12/31/10		50		$ 26.477036	$	1,331		1.26	%		0.05% to 0.35%		12.91%
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 12/31/10		84		$ 58.583796	$	4,937		2.07	%		0.05% to 0.35%		14.89%
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 12/31/10		152		$ 13.033112	$	1,979		2.36	%		0.05% to 0.35%		14.62%
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 12/31/10		116		$ 16.832155	$	1,943		1.69	%		0.05% to 0.35%		15.33%
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 12/31/10		28		$ 71.778944	$	2,002		0.30	%		0.05% to 0.35%		23.86%
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 12/31/10		96		$ 25.934506	$	2,488		1.18	%		0.05% to 0.35%		26.29%
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 12/31/10		43		$ 18.279525	$	778		1.29	%		0.05% to 0.35%		19.93%
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 12/31/10		58		$ 29.671998	$	1,708		0.84	%		0.05% to 0.35%		25.85%
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 12/31/10		104		$ 22.519799	$	2,323		1.11	%		0.05% to 0.35%		21.95%
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 12/31/10		94		$ 16.720938	$	1,575		0.97	%		0.05% to 0.35%		16.43%
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 12/31/10		1,449		$ 4.095847	$	5,937		3.12	%		0.05% to 0.35%		7.67%
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 12/31/10		68		$ 41.380226	$	2,794		0.29	%		0.05% to 0.35%		0.29%
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 12/31/10		23		$181.992325	$	4,277		3.93	%		0.05% to 0.35%		6.59%
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 12/31/10		46		$ 34.475967	$	1,558		7.29	%		0.05% to 0.35%		14.56%
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%

(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)
Balanced
Year Ended 12/31/10		7		$137.200077	$	1,085		2.32	%		0.05% to 0.35%		11.96%
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 12/31/10		26		$ 15.054442	$	386		3.10	%		0.05% to 0.35%		13.01%
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%
Fidelity VIP Mid Cap
Year Ended 12/31/10		89		$ 29.113348	$	2,616		0.14	%		0.05% to 0.35%		28.57%
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 12/31/10		133		$ 10.686543	$	1,416		0.88	%		0.05% to 0.35%		16.46%
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 12/31/10		47		$ 17.202203	$	803		0.47	%		0.05% to 0.35%		24.88%
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 12/31/10		106		$ 14.635995	$	1,549		0.71	%		0.05% to 0.35%		11.42%
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 12/31/10		60		$ 31.671345	$	1,910		2.28	%		0.05% to 0.35%		22.92%
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 12/31/10		65		$ 19.746605	$	1,277		3.73	%		0.05% to 0.35%		10.02%
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

To The Northwestern Mutual Life Insurance Company and

Policyowners 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, 2010, 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, 2010 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, 2011

Report of Independent Registered Public Accounting Firm

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P.O. Box 3095

Milwaukee, WI 53201-3095

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NORTHWESTERN MUTUAL

This booklet contains information about the Northwestern Mutual variable insurance products and the mutual funds identified on the front cover. The mutual funds correspond with the investment divisions available under the variable insurance product (“Product”). The information is prepared for Product owners and does not represent an offer of the Product, nor should it be used in connection with any offer, except when accompanied or preceded by the current Product prospectus and the mutual fund prospectuses, which contain detailed information about mutual fund investment objectives and operations, applicable fees, expenses and sales charges. Prospectuses may be obtained by calling the telephone number or visiting the website address listed below. You should read and carefully consider this information before you invest or send money. The mutual fund reports are prepared from the books and records of the funds. Discussions of investment performance in the reports represent the views of the funds’ portfolio managers as of the dates of the reports. They are not guarantees of investment results, nor should they be relied upon as investment advice or indications of current or future trading strategies of the portfolio managers. Portfolio manager views and security holdings are subject to change at any time.

NMIS is a member of Financial Industry Regulatory Authority (FINRA) and in accordance with the Investor Education and Protection Rule, we are providing our clients information regarding FINRA BrokerCheck, a free resource available to investors. An investor brochure describing FINRA BrokerCheck may be obtained online from FINRA’s Web site at www.finra.org or by contacting the FINRA BrokerCheck Hotline at 800-289-9999. The Northwestern Mutual Life Insurance Company (Northwestern Mutual), 1-866-424-2609, www.northwesternmutual.com Product Distributor: Northwestern Mutual Investment Services, LLC (NMIS), Suite 600, 611 East Wisconsin Avenue, Milwaukee, WI 53202-4797, 1-866-664-7737, member FINRA and SIPC

The Northwestern Mutual

Life Insurance Company Milwaukee, WI www.northwesternmutual.com

90-1899 (0786) (REV 0111)