Northwestern Mutual Variable Life Accounts

N-30B-2 1 d262073dn30b2.htm NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNTS Northwestern Mutual Variable Life Accounts

LOGO

March 9, 2012

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 I and 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, 2011 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	3/9/2012		811-03990
Fidelity VIP Mid Cap Portfolio		0000927384	2/23/2012		811-07205
Fidelity VIP Contrafund Portfolio		0000831016	2/23/2012		811-05511
Neuberger Berman Socially Responsive Portfolio		0000736913	3/1/2012		811-04255
Russell Investment Funds		0000824036	2/27/2012		811-05371
Russell Investment Funds – Life Points Variable Target Portfolio Series		0000824036	2/27/2012		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

The Northwestern Mutual Life Insurance Company^. 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202-4797^. 414 271 1444

LOGO

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.)

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

Neuberger Berman Socially Responsive Portfolio - Annual Report (This report follows the end of the Fidelity^® VIP Contrafund^® Portfolio)

Russell Investment Funds - Annual Report (This report follows the end of the Neuberger Berman Socially Responsive Portfolio)

Russell Investment Funds - LifePoints^® Variable Target Portfolio Series - Annual Report (This report follows the end of the Russell Investment Funds Portfolio and includes a report for the Conservative Strategy Fund, which is not available under your policy)

Northwestern Mutual Variable Life Account Financial Statements

Northwestern Mutual Variable Life Account II Financial Statements

Prospectus Supplements and Shareholder Documents

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 (unaudited) as of December 31, 2011

Variable Life — Policies Issued Before October 11, 1995


Total return (as of December 31, 2011)	Growth Stock Division			Focused Appreciation Division			Large Cap Core Stock Division			Large Cap Blend Division			Index 500 Stock Division			Large Company Value Division			Domestic Equity Division
1 year		(1.84	%)		(6.61	%)		(1.75	%)		(2.83	%)		1.39	%		0.93	%		0.36	%
5 years		(1.18	%)		8.28	%		(6.18	%)		—			(4.24	%)		—			(16.03	%)
Annualized		(0.24	%)		1.60	%		(1.27	%)		—			(0.86	%)		—			(3.43	%)
10 years		13.30	%		—			5.72	%		—			24.26	%		—			26.52	%
Annualized		1.26	%		—			0.56	%		—			2.20	%		—			2.38	%
Since division inception in Variable Life Account(b)		—			86.13	%(f)		—			(5.82	%)(c)		—			(3.38	%)(c)		—
Annualized		—			7.43	%		—			(11.21	%)		—			(6.60	%)		—
Since portfolio inception(b)		—			86.13	%(f)		—			(22.54	%)(e)		—			(21.81	%)(e)		—
Annualized		—			7.43	%		—			(5.32	%)		—			(5.13	%)		—
Current Yield(g)

Variable Complife — Policies Issued Between October 11, 1995 and December 31, 2008
1 year		(1.74	%)		(6.52	%)		(1.65	%)		(2.73	%)		1.49	%		1.04	%		0.46	%
5 years		(0.69	%)		8.82	%		(5.71	%)		—			(3.76	%)		—			(15.61	%)
Annualized		(0.14	%)		1.70	%		(1.17	%)		—			(0.76	%)		—			(3.34	%)
10 years		14.44	%		—			6.77	%		—			25.50	%		—			27.78	%
Annualized		1.36	%		—			0.66	%		—			2.30	%		—			2.48	%
Since division inception in Variable Life Account(b)		—			87.74	%(f)		—			(5.77	%)(c)		—			(3.34	%)(c)		—
Annualized		—			7.54	%		—			(11.12	%)		—			(6.51	%)		—
Since portfolio inception(b)		—			87.74	%(f)		—			(22.18	%)(e)		—			(21.45	%)(e)		—
Annualized		—			7.54	%		—			(5.23	%)		—			(5.04	%)		—
Current Yield(g)

Variable Executive Life & Variable Joint Life(a)
1 year		(1.30	%)		(6.10	%)		(1.21	%)		(2.29	%)		1.95	%		1.49	%		0.91	%
5 years		1.57	%		11.30	%		(3.57	%)		—			(1.57	%)		—			(13.69	%)
Annualized		0.31	%		2.16	%		(0.72	%)		—			(0.32	%)		—			(2.90	%)
10 years		20.41	%		—			12.35	%		—			32.05	%		—			34.45	%
Annualized		1.87	%		—			1.17	%		—			2.82	%		—			3.00	%
Since division inception in Variable Life Account(b)		—			95.97	%(f)		—			(5.56	%)(c)		—			(3.12	%)(c)		—
Annualized		—			8.07	%		—			(10.72	%)		—			(6.09	%)		—
Since portfolio inception(b)		—			95.97	%(f)		—			(20.53	%)(e)		—			(19.78	%)(e)		—
Annualized		—			8.07	%		—			(4.80	%)		—			(4.61	%)		—
Current Yield(g)

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.

(a)	Variable Executive Life policies were offered from March 2, 1998 to December 31, 2008. Variable Joint Life policies were offered from December 10, 1998 to December 31, 2008.

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

(c)	Division inception on June 30, 2011.

(d)	Portfolio inception on April 30, 2011.

(e)	Portfolio inception on April 30, 2007.

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

(g)

For the seven-day period ended December 31, 2011, the Money Market Portfolio’s yield was 0.08% and was equivalent to a compound effective yield of 0.08%. 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.

(h)	Returns are less than .005%.

(i)	Effective May 1, 2011, the Russell Real Estate Securities Division was renamed the Russell Global Real Estate Securities Division.


Equity Income Division			Mid Cap Growth Stock Division			Index 400 Stock Division			Mid Cap Value Division			Small Cap Growth Stock Division			Index 600 Stock Division			Small Cap Value Division			International Growth Division
	(1.46	%)		(6.69	%)		(2.46	%)		(1.15	%)		(3.31	%)		0.35	%		(1.90	%)		(13.64	%)
	(8.20	%)		8.01	%		13.55	%		(7.35	%)		(3.99	%)		—			6.91	%		(26.58	%)
	(1.70	%)		1.55	%		2.57	%		(1.52	%)		(0.81	%)		—			1.35	%		(5.99	%)
	—			29.98	%		82.17	%		—			42.03	%		—			105.41	%		50.80	%
	—			2.66	%		6.18	%		—			3.57	%		—			7.46	%		4.19	%
	58.40	%(f)		—			—			72.56	%(f)		—			(6.27	%)(c)		—			—
	5.45	%		—			—			6.50	%		—			(12.06	%)		—			—
	58.40	%(f)		—			—			72.56	%(f)		—			0.20	%(e)		—			—
	5.45	%		—			—			6.50	%		—			0.04	%		—			—



	(1.36	%)		(6.60	%)		(2.36	%)		(1.05	%)		(3.21	%)		0.45	%		(1.80	%)		(13.56	%)
	(7.74	%)		8.54	%		14.11	%		(6.89	%)		(3.51	%)		—			7.45	%		(26.21	%)
	(1.60	%)		1.65	%		2.68	%		(1.42	%)		(0.71	%)		—			1.45	%		(5.90	%)
	—			31.28	%		83.99	%		—			43.45	%		—			107.46	%		52.31	%
	—			2.76	%		6.29	%		—			3.67	%		—			7.57	%		4.30	%
	59.77	%(f)		—			—			74.06	%(f)		—			(6.22	%)(c)		—			—
	5.55	%		—			—			6.60	%		—			(11.97	%)		—			—
	59.77	%(f)		—			—			74.06	%(f)		—			0.67	%(e)		—			—
	5.55	%		—			—			6.60	%		—			0.14	%		—			—



	(0.92	%)		(6.18	%)		(1.92	%)		(0.61	%)		(2.78	%)		0.90	%		(1.36	%)		(13.17	%)
	(5.64	%)		11.01	%		16.71	%		(4.77	%)		(1.32	%)		—			9.89	%		(24.54	%)
	(1.16	%)		2.11	%		3.14	%		(0.97	%)		(0.26	%)		—			1.90	%		(5.47	%)
	—			38.13	%		93.60	%		—			50.93	%		—			118.29	%		60.26	%
	—			3.28	%		6.83	%		—			4.20	%		—			8.12	%		4.83	%
	66.77	%(f)		—			—			81.69	%(f)		—			(6.01	%)(c)		—			—
	6.08	%		—			—			7.13	%		—			(11.57	%)		—			—
	66.77	%(f)		—			—			81.69	%(f)		—			2.80	%(e)		—			—
	6.08	%		—			—			7.13	%		—			0.59	%		—			—

Performance Summary (unaudited), continued as of December 31, 2011

Variable Life — Policies Issued Before October 11, 1995


Total return (as of December 31, 2011)	Research International Core Division			International Equity Division			Emerging Markets Equity Division			Money Market Division			Short-Term Bond Division			Select Bond Division			Long-Term U.S. Government Bond Division
1 year		(10.97	%)		(10.59	%)		(19.10	%)		(0.41	%)		0.00	%(h)		6.58	%		28.22	%
5 years		—			(16.80	%)		—			6.52	%		—			33.52	%		—
Annualized		—			(3.61	%)		—			1.27	%		—			5.95	%		—
10 years		—			62.64	%		—			16.13	%		—			69.61	%		—
Annualized		—			4.98	%		—			1.51	%		—			5.43	%		—
Since division inception in Variable Life Account(b)		(16.16	%)(c)		—			(18.59	%)(c)		—			(0.69	%)(c)		—			24.80	%(c)
Annualized		(29.50	%)		—			(33.50	%)		—			(1.36	%)		—			55.20	%
Since portfolio inception(b)		(23.15	%)(e)		—			(6.74	%)(e)		—			15.33	%(e)		—			67.93	%(e)
Annualized		(5.48	%)		—			(1.48	%)		—			3.10	%		—			11.74	%
Current Yield(g)											0.08	%

Variable Complife — Policies Issued Between October 11, 1995 and December 31, 2008
1 year		(10.88	%)		(10.50	%)		(19.02	%)		(0.31	%)		0.11	%		6.68	%		28.34	%
5 years		—			(16.38	%)		—			7.05	%		—			34.18	%		—
Annualized		—			(3.51	%)		—			1.37	%		—			6.06	%		—
10 years		—			64.26	%		—			17.29	%		—			71.31	%		—
Annualized		—			5.09	%		—			1.61	%		—			5.53	%		—
Since division inception in Variable Life Account(b)		(16.11	%)(c)		—			(18.55	%)(c)		—			(0.64	%)(c)		—			24.86	%(c)
Annualized		(29.43	%)		—			(33.43	%)		—			(1.26	%)		—			55.35	%
Since portfolio inception(b)		(22.79	%)(e)		—			(6.31	%)(e)		—			15.87	%(e)		—			68.71	%(e)
Annualized		(5.39	%)		—			(1.39	%)		—			3.20	%		—			11.85	%
Current Yield(g)											0.08	%

Variable Executive Life & Variable Joint Life(a)
1 year		(10.48	%)		(10.10	%)		(18.66	%)		0.14	%		0.55	%		7.16	%		28.92	%
5 years		—			(14.48	%)		—			9.48	%		—			37.23	%		—
Annualized		—			(3.08	%)		—			1.83	%		—			6.53	%		—
10 years		—			72.83	%		—			23.41	%		—			80.24	%		—
Annualized		—			5.62	%		—			2.13	%		—			6.07	%		—
Since division inception in Variable Life Account(b)		(15.93	%)(c)		—			(18.36	%)(c)		—			(0.42	%)(c)		—			25.15	%(c)
Annualized		(29.11	%)		—			(33.13	%)		—			(0.82	%)		—			56.04	%
Since portfolio inception(b)		(21.16	%)(e)		—			(4.32	%)(e)		—			18.32	%(e)		—			72.29	%(e)
Annualized		(4.96	%)		—			(0.94	%)		—			3.67	%		—			12.35	%
Current Yield(g)											0.08	%

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.

(a)	Variable Executive Life policies were offered from March 2, 1998 to December 31, 2008. Variable Joint Life policies were offered from December 10, 1998 to December 31, 2008.

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

(c)	Division inception on June 30, 2011.

(d)	Portfolio inception on April 30, 2011.

(e)	Portfolio inception on April 30, 2007.

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

(g)

(h)	Returns are less than .005%.

(i)	Effective May 1, 2011, the Russell Real Estate Securities Division was renamed the Russell Global Real Estate Securities Division.


Inflation Protection Division			High Yield Bond Division			Multi-Sector Bond Division			Commodities Return Strategy Division			Balanced Division			Asset Allocation Division			Fidelity VIP Mid Cap Division
	11.32	%		4.02	%		4.41	%		—			1.55	%		(0.62	%)		(11.34	%)
	—			36.48	%		—			—			10.79	%		6.73	%		8.56	%
	—			6.42	%		—			—			2.07	%		1.31	%		1.66	%
	—			107.62	%		—			—			44.28	%		44.59	%		115.96	%
	—			7.58	%		—			—			3.73	%		3.76	%		8.00	%

	6.30	%(c)		—			1.44	%(c)		(11.27	%)(c)		—			—			—
	12.89	%		—			2.87	%		(21.11	%)		—			—			—
	33.49	%(e)		—			33.12	%(e)		(19.59	%)(d)		—			—			—
	6.38	%		—			6.32	%		(27.64	%)		—			—			—



	11.43	%		4.13	%		4.52	%		—			1.66	%		(0.52	%)		(11.25	%)
	—			37.16	%		—			—			11.34	%		7.27	%		9.10	%
	—			6.52	%		—			—			2.17	%		1.41	%		1.76	%
	—			109.69	%		—			—			45.72	%		46.04	%		118.12	%
	—			7.69	%		—			—			3.84	%		3.86	%		8.11	%

	6.36	%(c)		—			1.49	%(c)		(11.22	%)(c)		—			—			—
	13.00	%		—			2.97	%		(21.03	%)		—			—			—
	34.11	%(e)		—			33.74	%(e)		(19.54	%)(d)		—			—			—
	6.48	%		—			6.42	%		(27.57	%)		—			—			—



	11.93	%		4.59	%		4.99	%		—			2.11	%		(0.08	%)		(10.85	%)
	—			40.28	%		—			—			13.87	%		9.70	%		11.58	%
	—			7.00	%		—			—			2.63	%		1.87	%		2.22	%
	—			120.63	%		—			—			53.32	%		53.66	%		129.51	%
	—			8.23	%		—			—			4.37	%		4.39	%		8.66	%

	6.60	%(c)		—			1.71	%(c)		(11.02	%)(c)		—			—			—
	13.51	%		—			3.43	%		(20.68	%)		—			—			—
	36.95	%(e)		—			36.57	%(e)		(19.30	%)(d)		—			—			—
	6.96	%		—			6.90	%		(27.25	%)		—			—			—

vii

Performance Summary (unaudited), continued as of December 31, 2011

Variable Life — Policies Issued Before October 11, 1995


Total return (as of December 31, 2011)	Fidelity VIP Contrafund Division			Neuberger Berman AMT Socially Responsive Division			Russell Multi-Style Equity Division			Russell Aggressive Equity Division			Russell Non- U.S. Division			Russell Core Bond Division
1 year		(3.32	%)		(3.61	%)		(2.08	%)		(4.72	%)		(13.36	%)		4.11	%
5 years		0.71	%		(0.78	%)		(3.86	%)		(9.72	%)		(24.25	%)		34.21	%
Annualized		0.14	%		(0.16	%)		(0.78	%)		(2.02	%)		(5.40	%)		6.06	%
10 years		70.01	%		52.22	%		22.23	%		44.15	%		43.48	%		66.07	%
Annualized		5.45	%		4.29	%		2.03	%		3.72	%		3.68	%		5.20	%
Since division inception in Variable Life Account(b)		—			—			—			—			—			—
Annualized		—			—			—			—			—			—
Since portfolio inception(b)		—			—			—			—			—			—
Annualized		—			—			—			—			—			—
Current Yield(g)

Variable Complife — Policies Issued Between October 11, 1995 and December 31, 2008
1 year		(3.22	%)		(3.51	%)		(1.99	%)		(4.63	%)		(13.27	%)		4.22	%
5 years		1.22	%		(0.28	%)		(3.37	%)		(9.27	%)		(23.87	%)		34.88	%
Annualized		0.24	%		(0.06	%)		(0.68	%)		(1.93	%)		(5.31	%)		6.17	%
10 years		71.71	%		53.74	%		23.46	%		45.59	%		44.91	%		67.73	%
Annualized		5.56	%		4.39	%		2.13	%		3.83	%		3.78	%		5.31	%
Since division inception in Variable Life Account(b)		—			—			—			—			—			—
Annualized		—			—			—			—			—			—
Since portfolio inception(b)		—			—			—			—			—			—
Annualized		—			—			—			—			—			—
Current Yield(g)

Variable Executive Life & Variable Joint Life(a)
1 year		(2.78	%)		(3.08	%)		(1.55	%)		(4.20	%)		(12.88	%)		4.68	%
5 years		4.45	%		2.73	%		(1.18	%)		(7.20	%)		(22.14	%)		37.94	%
Annualized		0.87	%		0.54	%		(0.24	%)		(1.48	%)		(4.88	%)		6.64	%
10 years		81.22	%		61.99	%		29.90	%		53.19	%		52.48	%		76.48	%
Annualized		6.13	%		4.94	%		2.65	%		4.36	%		4.31	%		5.84	%
Since division inception in Variable Life Account(b)		—			—			—			—			—			—
Annualized		—			—			—			—			—			—
Since portfolio inception(b)		—			—			—			—			—			—
Annualized		—			—			—			—			—			—
Current Yield(g)

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.

(a)	Variable Executive Life policies were offered from March 2, 1998 to December 31, 2008. Variable Joint Life policies were offered from December 10, 1998 to December 31, 2008.

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

(c)	Division inception on June 30, 2011.

(d)	Portfolio inception on April 30, 2011.

(e)	Portfolio inception on April 30, 2007.

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

(g)

(h)	Returns are less than .005%.

(i)	Effective May 1, 2011, the Russell Real Estate Securities Division was renamed the Russell Global Real Estate Securities Division.

viii


Russell Global Real Estate Securities Division(i)			Russell LifePoints Moderate Strategy Division			Russell LifePoints Balanced Strategy Division			Russell LifePoints Growth Strategy Division			Russell LifePoints Equity Growth Strategy Division
	(7.56	%)		(0.42	%)		(2.93	%)		(5.47	%)		(6.74	%)
	(23.64	%)		—			—			—			—
	(5.25	%)		—			—			—			—
	117.69	%		—			—			—			—
	8.09	%		—			—			—			—
	—			(3.94	%)(c)		(6.79	%)(c)		(9.41	%)(c)		(11.12	%)(c)
	—			(7.66	%)		(13.02	%)		(17.81	%)		(20.86	%)
	—			11.51	%(e)		1.73	%(e)		(8.02	%)(e)		(17.43	%)(e)
	—			2.36	%		0.37	%		(1.77	%)		(4.02	%)



	(7.47	%)		(0.33	%)		(2.83	%)		(5.37	%)		(6.64	%)
	(23.26	%)		—			—			—			—
	(5.16	%)		—			—			—			—
	119.87	%		—			—			—			—
	8.20	%		—			—			—			—
	—			(3.89	%)(c)		(6.75	%)(c)		(9.37	%)(c)		(11.08	%)(c)
	—			(7.57	%)		(12.94	%)		(17.72	%)		(20.78	%)
	—			12.03	%(e)		2.21	%(e)		(7.59	%)(e)		(17.05	%)(e)
	—			2.46	%		0.47	%		(1.68	%)		(3.92	%)



	(7.05	%)		0.12	%		(2.40	%)		(4.73	%)		(6.22	%)
	(21.51	%)		—			—			—			—
	(4.73	%)		—			—			—			—
	131.34	%		—			—			—			—
	8.75	%		—			—			—			—
	—			(3.67	%)(c)		(6.53	%)(c)		(9.16	%)(c)		(10.88	%)(c)
	—			(7.16	%)		(12.55	%)		(17.36	%)		(20.43	%)
	—			14.40	%(e)		4.38	%(e)		(5.42	%)(e)		(15.29	%)(e)
	—			2.92	%		0.92	%		(1.19	%)		(3.49	%)

Performance Summary (unaudited), continued as of December 31, 2011

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


Total return (as of December 31, 2011)	Growth Stock Division			Focused Appreciation Division			Large Cap Core Stock Division			Large Cap Blend Division			Index 500 Stock Division			Large Company Value Division			Domestic Equity Division
1 year		(1.30	%)		(6.10	%)		(1.21	%)		(2.29	%)		1.95	%		1.49	%		0.91	%
5 years		1.57	%		11.30	%		(3.57	%)		—			(1.57	%)		—			(13.69	%)
Annualized		0.31	%		2.16	%		(0.72	%)		—			(0.32	%)		—			(2.90	%)
10 years		20.41	%		—			12.35	%		—			32.05	%		—			34.45	%
Annualized		1.87	%		—			1.17	%		—			2.82	%		—			3.00	%
Since division inception in Variable Life Account II		—			9.54	%		—			(5.56	%)(b)		—			(3.12	%)(b)		—
Annualized		—			1.87	%		—			(10.72	%)		—			(6.09	%)		—
Since portfolio inception(a)		—			95.97	%(e)		—			(20.53	%)(d)		—			(19.78	%)(d)		—
Annualized		—			8.07	%		—			(4.80	%)		—			(4.61	%)		—
Current Yield(f)

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.

(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 division and portfolio inception dates.

(b)	Division inception on June 30, 2011.

(c)	Portfolio inception on April 30, 2011.

(d)	Portfolio inception on April 30, 2007.

(e)	Portfolio inception on May 1, 2003.

(f)

(g)	Effective May 1, 2011, the Russell Real Estate Securities Division was renamed the Russell Global Real Estate Securities Division.


Equity Income Division			Mid Cap Growth Stock Division			Index 400 Stock Division			Mid Cap Value Division			Small Cap Growth Stock Division			Index 600 Stock Division			Small Cap Value Division
	(0.92	%)		(6.18	%)		(1.92	%)		(0.61	%)		(2.78	%)		0.90	%		(1.36	%)
	(5.64	%)		11.01	%		16.71	%		(4.77	%)		(1.32	%)		—			9.89	%
	(1.16	%)		2.11	%		3.14	%		(0.97	%)		(0.26	%)		—			1.90	%
	—			38.13	%		93.60	%		—			50.93	%		—			118.29	%
	—			3.28	%		6.83	%		—			4.20	%		—			8.12	%
	(6.98	%)		—			—			(6.90	%)		—			(6.01	%)(b)		—
	(1.46	%)		—			—			(1.44	%)		—			(11.57	%)		—
	66.77	%(e)		—			—			81.69	%(e)		—			2.80	%(d)		—
	6.08	%		—			—			7.13	%		—			0.59	%		—

Performance Summary (unaudited), continued as of December 31, 2011

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


Total return (as of December 31, 2011)	International Growth Division			Research International Core Division			International Equity Division			Emerging Markets Equity Division			Money Market Division			Short-Term Bond Division			Select Bond Division
1 year		(13.17	%)		(10.48	%)		(10.10	%)		(18.66	%)		0.14	%		0.55	%		7.16	%
5 years		(24.54	%)		—			(14.48	%)		—			9.48	%		—			37.23	%
Annualized		(5.47	%)		—			(3.08	%)		—			1.83	%		—			6.53	%
10 years		60.26	%		—			72.83	%		—			23.41	%		—			80.24	%
Annualized		4.83	%		—			5.62	%		—			2.13	%		—			6.07	%
Since division inception in Variable Life Account II		—			(15.93	%)(b)		—			(18.36	%)(b)		—			(0.42	%)(b)		—
Annualized		—			(29.11	%)		—			(33.13	%)		—			(0.82	%)		—
Since portfolio inception(a)		—			(21.16	%)(d)		—			(4.32	%)(d)		—			18.32	%(d)		—
Annualized		—			(4.96	%)		—			(0.94	%)		—			3.67	%		—
Current Yield(f)														0.08	%

(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 division and portfolio inception dates.

(b)	Division inception on June 30, 2011.

(c)	Portfolio inception on April 30, 2011.

(d)	Portfolio inception on April 30, 2007.

(e)	Portfolio inception on May 1, 2003.

(f)

(g)	Effective May 1, 2011, the Russell Real Estate Securities Division was renamed the Russell Global Real Estate Securities Division.

xii


Long-Term U.S. Government Bond Division			Inflation Protection Division			High Yield Bond Division			Multi-Sector Bond Division			Commodities Return Strategy Division			Balanced Division			Asset Allocation Division
	28.92	%		11.93	%		4.59	%		4.99	%		—			2.11	%		(0.08	%)
	—			—			40.28	%		—			—			13.87	%		9.70	%
	—			—			7.00	%		—			—			2.63	%		1.87	%
	—			—			120.63	%		—			—			53.32	%		53.66	%
	—			—			8.23	%		—			—			4.37	%		4.39	%
	25.15	%(b)		6.60	%(b)		—			1.71	%(b)		(11.02	%)(b)		—			—
	56.04	%		13.51	%		—			3.43	%		(20.68	%)		—			—
	72.29	%(d)		36.95	%(d)		—			36.57	%(d)		(19.30	%)(c)		—			—
	12.35	%		6.96	%		—			6.90	%		(27.25	%)		—			—

xiii

Performance Summary (unaudited), continued as of December 31, 2011

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


Total return (as of December 31, 2011)	Fidelity VIP Mid Cap Division			Fidelity VIP Contrafund Division			Neuberger Berman AMT Socially Responsive Division			Russell Multi-Style Equity Division			Russell Aggressive Equity Division			Russell Non- U.S. Division			Russell Core Bond Division
1 year		(10.85	%)		(2.78	%)		(3.08	%)		(1.55	%)		(4.20	%)		(12.88	%)		4.68	%
5 years		11.58	%		4.45	%		2.73	%		(1.18	%)		(7.20	%)		(22.14	%)		37.94	%
Annualized		2.22	%		0.87	%		0.54	%		(0.24	%)		(1.48	%)		(4.88	%)		6.64	%
10 years		129.51	%		81.22	%		61.99	%		29.90	%		53.19	%		52.48	%		76.48	%
Annualized		8.66	%		6.13	%		4.94	%		2.65	%		4.36	%		4.31	%		5.84	%
Since division inception in Variable Life Account II		—			—			—			—			—			—			—
Annualized		—			—			—			—			—			—			—
Since portfolio inception(a)		—			—			—			—			—			—			—
Annualized		—			—			—			—			—			—			—
Current Yield(f)

(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 division and portfolio inception dates.

(b)	Division inception on June 30, 2011.

(c)	Portfolio inception on April 30, 2011.

(d)	Portfolio inception on April 30, 2007.

(e)	Portfolio inception on May 1, 2003.

(f)

(g)	Effective May 1, 2011, the Russell Real Estate Securities Division was renamed the Russell Global Real Estate Securities Division.

xiv


Russell Global Real Estate Securities Division(g)			Russell LifePoints Moderate Strategy Division			Russell LifePoints Balanced Strategy Division			Russell LifePoints Growth Strategy Division			Russell LifePoints Equity Growth Strategy Division
	(7.05	%)		0.12	%		(2.40	%)		(4.73	%)		(6.22	%)
	(21.51	%)		—			—			—			—
	(4.73	%)		—			—			—			—
	131.34	%		—			—			—			—
	8.75	%		—			—			—			—
	—			(3.67	%)(b)		(6.53	%)(b)		(9.16	%)(b)		(10.88	%)(b)
	—			(7.16	%)		(12.55	%)		(17.36	%)		(20.43	%)
	—			14.40	%(d)		4.38	%(d)		(5.42	%)(d)		(15.29	%)(d)
	—			2.92	%		0.92	%		(1.19	%)		(3.49	%)

LOGO

Annual Report December 31, 2011

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			7

Statements of Changes in Net Assets			11

Notes to Financial Statements			17

Report of Independent Registered Public Accounting Firm			23

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account

December 31, 2011

(in thousands, except accumulation unit values)


	Growth Stock Division		Focused Appreciation Division		Large Cap Core Stock Division		Large Cap Blend Division		Index 500 Stock Division		Large Company Value Division
Assets:
Investments, at value (1)
Northwestern Mutual Series Fund, Inc	$	269,297	$	85,946	$	182,620	$	3,111	$	713,748	$	2,594
Fidelity Variable Insurance Products		—		—		—		—		—		—
Neuberger Berman Advisers Master Trust		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		8		—		—		2		52		—

Total Assets		269,305		85,946		182,620		3,113		713,800		2,594

Liabilities:
Due to Northwestern Mutual Life Insurance Company		—		8		15		—		—		1

Total Liabilities		—		8		15		—		—		1

Total Net Assets	$	269,305	$	85,938	$	182,605	$	3,113	$	713,800	$	2,593

Net Assets:
Variable Life Policies Issued
Before October 11, 1995
Policyowners’ Equity	$	24,041	$	5,774	$	20,345	$	48	$	102,537	$	58
Northwestern Mutual Equity		579		116		526		2		2,100		1
Variable CompLife Policies Issued Between
October 11, 1995 and December 31, 2008 (2)
Policyowners’ Equity		222,978		69,236		144,810		2,914		538,887		2,429
Northwestern Mutual Equity		10,408		3,750		6,799		100		25,243		105
Variable Executive Life Policies Issued Between
March 2, 1998 and December 31, 2008 (3)
Policyowners’ Equity		5,640		3,730		5,577		49		13,092		—
Variable Joint Life Policies Issued Between
December 10, 1998 and December 31, 2008 (4)
Policyowners’ Equity		5,659		3,332		4,548		—		31,941		—

Total Net Assets	$	269,305	$	85,938	$	182,605	$	3,113	$	713,800	$	2,593


(1) Investments, at cost	$	246,001	$	84,707	$	171,841	$	3,000	$	738,099	$	2,414
Mutual Fund Shares Held		128,912		49,225		150,552		4,110		280,893		3,534
(2) Accumulation Unit Value	$	2.392591	$	1.877354	$	1.939589	$	0.942304	$	2.641136	$	0.966635
Units Outstanding		97,546		38,877		78,166		3,198		213,597		2,622
(3) Accumulation Unit Value	$	32.569595	$	19.596705	$	26.156583	$	7.947227	$	59.726031	$	8.021755
Units Outstanding		173		190		213		6		219		—
(4) Accumulation Unit Value	$	32.569595	$	19.596705	$	26.156583	$	7.947227	$	59.726031	$	8.021755
Units Outstanding		174		170		174		—		535		—

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

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account

December 31, 2011

(in thousands, except accumulation unit values)


	Domestic Equity Division		Equity Income Division		Mid Cap Growth Stock Division		Index 400 Stock Division		Mid Cap Value Division		Small Cap Growth Stock Division
Assets:
Investments, at value (1)
Northwestern Mutual Series Fund, Inc	$	131,134	$	76,889	$	358,482	$	195,643	$	37,336	$	183,642
Fidelity Variable Insurance Products		—		—		—		—		—		—
Neuberger Berman Advisers Master Trust		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		—		15		—		—		—

Total Assets		131,134		76,889		358,497		195,643		37,336		183,642

Liabilities:
Due to Northwestern Mutual Life Insurance Company		4		36		—		8		2		18

Total Liabilities		4		36		—		8		2		18

Total Net Assets	$	131,130	$	76,853	$	358,497	$	195,635	$	37,334	$	183,624

Net Assets:
Variable Life Policies Issued
Before October 11, 1995
Policyowners’ Equity	$	11,692	$	6,241	$	50,270	$	9,679	$	2,268	$	8,281
Northwestern Mutual Equity		272		125		1,194		175		48		171
Variable CompLife Policies Issued Between
October 11, 1995 and December 31, 2008 (2)
Policyowners’ Equity		103,990		61,374		284,836		166,282		30,112		157,250
Northwestern Mutual Equity		5,785		3,002		12,794		7,789		1,652		8,111
Variable Executive Life Policies Issued Between
March 2, 1998 and December 31, 2008 (3)
Policyowners’ Equity		4,275		2,676		3,255		5,327		2,088		3,145
Variable Joint Life Policies Issued Between
December 10, 1998 and December 31, 2008 (4)
Policyowners’ Equity		5,116		3,435		6,148		6,383		1,166		6,666

Total Net Assets	$	131,130	$	76,853	$	358,497	$	195,635	$	37,334	$	183,624


(1) Investments, at cost	$	151,268	$	81,977	$	352,989	$	190,321	$	41,107	$	197,749
Mutual Fund Shares Held		150,211		66,113		122,894		146,111		32,954		106,831
(2) Accumulation Unit Value	$	1.246743	$	1.597678	$	2.452507	$	2.257202	$	1.740555	$	2.233915
Units Outstanding		88,050		40,293		121,359		77,120		18,251		74,023
(3) Accumulation Unit Value	$	13.151218	$	16.677245	$	67.344023	$	25.435391	$	18.168731	$	28.847575
Units Outstanding		325		161		48		209		115		109
(4) Accumulation Unit Value	$	13.151218	$	16.677245	$	67.344023	$	25.435391	$	18.168731	$	28.847575
Units Outstanding		389		206		91		251		64		231

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

Statements of Assets and Liabilities


Index 600 Stock Division		Small Cap Value Division		International Growth Division		Research International Core Division		International Equity Division		Emerging Markets Equity Division		Money Market Division		Short-Term Bond Division


$	1,718	$	135,035	$	76,111	$	3,688	$	438,537	$	7,493	$	166,968	$	3,690
	—		—		—		—		—		—		—		—
	—		—		—		—		—		—		—		—
	—		—		—		—		—		—		—		—

	1		—		29		—		223		5		—		—

	1,719		135,035		76,140		3,688		438,760		7,498		166,968		3,690



	—		55		—		—		—		—		60		9

	—		55		—		—		—		—		60		9

$	1,719	$	134,980	$	76,140	$	3,688	$	438,760	$	7,498	$	166,908	$	3,681




$	114	$	10,297	$	3,727	$	156	$	52,022	$	266	$	13,517	$	473
	2		198		82		4		1,273		7		273		8


	1,205		109,720		62,501		2,794		342,299		6,179		124,105		3,012
	62		5,830		3,511		126		16,632		267		7,897		121


	316		3,612		3,203		580		14,149		698		16,632		14


	20		5,323		3,116		28		12,385		81		4,484		53

$	1,719	$	134,980	$	76,140	$	3,688	$	438,760	$	7,498	$	166,908	$	3,681


$	1,672	$	126,555	$	102,115	$	3,858	$	471,157	$	7,987	$	166,968	$	3,746
	1,882		81,790		73,325		5,115		289,272		8,401		166,968		3,624
$	0.937768	$	2.105813	$	1.376437	$	0.838851	$	2.433405	$	0.814525	$	1.554696	$	0.993622
	1,351		54,874		47,958		3,481		147,503		7,914		84,906		3,153
$	10.280016	$	22.212770	$	14.519220	$	7.884380	$	3.682261	$	9.567929	$	41,437528	$	11.832025
	31		163		221		74		3,843		73		401		1
$	10.280016	$	22.212770	$	14.519220	$	7.884380	$	3.682261	$	9.567929	$	41,437528	$	11.832025
	2		240		215		4		3,363		8		108		5

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

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account

December 31, 2011

(in thousands, except accumulation unit values)


	Select Bond Division		Long-Term U.S. Government Bond Division		Inflation Protection Division		High Yield Bond Division		Multi- Sector Bond Division		Commodities Return Strategy Division
Assets:
Investments, at value (1)
Northwestern Mutual Series Fund, Inc	$	251,474	$	6,779	$	4,808	$	94,738	$	4,842	$	5,100
Fidelity Variable Insurance Products		—		—		—		—		—		—
Neuberger Berman Advisers Master Trust		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		—		7		—		8		—

Total Assets		251,474		6,779		4,815		94,738		4,850		5,100

Liabilities:
Due to Northwestern Mutual Life Insurance Company		56		3		—		10		—		—

Total Liabilities		56		3		—		10		—		—

Total Net Assets	$	251,418	$	6,776	$	4,815	$	94,728	$	4,850	$	5,100

Net Assets:
Variable Life Policies Issued
Before October 11, 1995
Policyowners’ Equity	$	24,079	$	2,044	$	422	$	7,064	$	503	$	207
Northwestern Mutual Equity		430		16		6		136		7		5
Variable CompLife Policies Issued Between
October 11, 1995 and December 31, 2008 (2)
Policyowners’ Equity		183,230		4,216		3,679		76,774		4,029		4,084
Northwestern Mutual Equity		8,850		178		149		3,407		171		200
Variable Executive Life Policies Issued Between
March 2, 1998 and December 31, 2008 (3)
Policyowners’ Equity		24,192		67		550		3,965		82		540
Variable Joint Life Policies Issued Between
December 10, 1998 and December 31, 2008 (4)
Policyowners’ Equity		10,637		255		9		3,382		58		64

Total Net Assets	$	251,418	$	6,776	$	4,815	$	94,728	$	4,850	$	5,100


(1) Investments, at cost	$	237,671	$	7,308	$	4,747	$	90,549	$	5,064	$	5,486
Mutual Fund Shares Held		192,553		5,988		4,085		134,765		4,823		6,320
(2) Accumulation Unit Value	$	2.497424	$	1.248644	$	1.063572	$	2.772582	$	1.014872	$	8.877726
Units Outstanding		76,912		3,518		3,600		28,920		4,140		482
(3) Accumulation Unit Value	$	195.021673	$	17.228764	$	13.694886	$	36.059875	$	13.657358	$	8.070260
Units Outstanding		124		4		40		110		6		67
(4) Accumulation Unit Value	$	195.021673	$	17.228764	$	13.694886	$	36.059875	$	13.657358	$	8.070260
Units Outstanding		55		15		1		94		4		8

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

Statements of Assets and Liabilities


Balanced Division		Asset Allocation Division		Fidelity VIP Mid Cap Division		Fidelity VIP Contrafund Division		Neuberger Berman AMT Socially Responsive Division		Russell Multi-Style Equity Division		Russell Aggressive Equity Division		Russell Non-U.S. Division


$	318,798	$	39,571	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		120,922		6,529		—		—		—		—
	—		—		—		—		688		—		—		—
	—		—		—		—				157,940		77,900		107,032
	27		6		12		1		—		—		—		18

	318,825		39,577		120,934		6,530		688		157,940		77,900		107,050


	—		—		—		—		—		17		15		—

	—		—		—		—		—		17		15		—

$	318,825	$	39,577	$	120,934	$	6,530	$	688	$	157,923	$	77,885	$	107,050




$	141,410	$	4,970	$	10,517	$	241	$	16	$	6,569	$	4,323	$	6,328
	1,947		95		211		4		1		140		84		156


	152,488		30,271		94,749		5,168		507		124,766		63,949		83,369
	7,014		1,469		5,371		217		32		6,881		3,511		4,441


	10,003		1,200		5,649		781		61		12,142		3,262		7,482


	5,963		1,572		4,437		119		71		7,425		2,756		5,274

$	318,825	$	39,577	$	120,934	$	6,530	$	688	$	157,923	$	77,885	$	107,050


$	353,046	$	40,710	$	124,618	$	6,534	$	672	$	144,481	$	86,174	$	138,665
	229,351		38,718		4,231		288		48		11,929		6,857		12,232
$	2.600265	$	1.426114	$	2.486413	$	0.923581	$	0.910063	$	0.956587	$	1.460862	$	1.186647
	61,342		22,256		40,267		5,831		593		137,623		46,179		73,998
$	140.096515	$	15.042893	$	25.953961	$	9.866342	$	9.655117	$	10.521100	$	16.479338	$	12.750860
	71		80		218		79		6		1,154		198		587
$	140.096515	$	15.042893	$	25.953961	$	9.866342	$	9.655117	$	10.521100	$	16.479338	$	12.750860
	43		105		171		12		7		706		167		414

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

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account

December 31, 2011

(in thousands, except accumulation unit values)


	Russell Core Bond Division		Russell Global Real Estate Securities Division		Russell LifePoints Moderate Strategy Division		Russell LifePoints Balanced Strategy Division		Russell LifePoints Growth Strategy Division		Russell LifePoints Equity Growth Strategy Division
Assets:
Investments, at value (1)
Northwestern Mutual Series Fund, Inc	$	—	$	—	$	—	$	—	$	—	$	—
Fidelity Variable Insurance Products		—		—		—		—		—		—
Neuberger Berman Advisers Master Trust		—		—		—		—		—		—
Russell Investment Funds		97,112		124,859		332		4,084		3,033		1,454
Due from Northwestern Mutual Life Insurance Company		—		2		—		—		1		—

Total Assets		97,112		124,861		332		4,084		3,034		1,454

Liabilities:
Due to Northwestern Mutual Life Insurance Company		192		—		—		2		—		1

Total Liabilities		192		—		—		2		—		1

Total Net Assets	$	96,920	$	124,861	$	332	$	4,082	$	3,034	$	1,453

Net Assets:
Variable Life Policies Issued
Before October 11, 1995
Policyowners’ Equity	$	6,949	$	7,317	$	—	$	866	$	1,257	$	439
Northwestern Mutual Equity		177		148		—		16		27		8
Variable CompLife Policies Issued Between
October 11, 1995 and December 31, 2008 (2)
Policyowners’ Equity		63,122		102,133		287		2,959		1,655		958
Northwestern Mutual Equity		3,149		5,504		18		102		95		48
Variable Executive Life Policies Issued Between
March 2, 1998 and December 31, 2008 (3)
Policyowners’ Equity		18,814		5,068		27		38		—		—
Variable Joint Life Policies Issued Between
December 10, 1998 and December 31, 2008 (4)
Policyowners’ Equity		4,709		4,691		—		101		—		—

Total Net Assets	$	96,920	$	124,861	$	332	$	4,082	$	3,034	$	1,453


(1) Investments, at cost	$	94,404	$	147,192	$	336	$	4,072	$	3,095	$	1,468
Mutual Fund Shares Held		9,275		9,870		35		472		379		201
(2) Accumulation Unit Value	$	1.962151	$	2.798128	$	0.961095	$	0.932549	$	0.906329	$	0.889198
Units Outstanding		33,775		38,468		318		3,282		1,932		1,131
(3) Accumulation Unit Value	$	20.671320	$	29.438654	$	11.440046	$	10.437591	$	9.458077	$	8.471141
Units Outstanding		910		172		2		4		—		—
(4) Accumulation Unit Value	$	20.671320	$	29.438654	$	11.440046	$	10.437591	$	9.458077	$	8.471141
Units Outstanding		228		159		—		10		—		—

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, 2011

(in thousands)


	Growth Stock Division			Focused Appreciation Division			Large Cap Core Stock Division			Large Cap Blend Division			Index 500 Stock Division
Income:
Dividend income	$	2,234		$	169		$	2,170		$	25		$	12,207
Expenses:
Mortality and expense risk charges		1,222			386			808			5			3,088
Taxes		13			3			11			—			53

Net investment income (loss)		999			(220	)		1,351			20			9,066

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		1,424			824			(1,127	)		(20	)		(4,287	)
Realized gain distributions		—			—			—			—			16,329

Realized gains (losses)		1,424			824			(1,127	)		(20	)		12,042

Change in unrealized appreciation/ depreciation of investments during the period		(6,980	)		(6,641	)		(3,230	)		111			(9,438	)

Net increase (decrease) in net assets resulting from operations	$	(4,557	)	$	(6,037	)	$	(3,006	)	$	111		$	11,670


	Large Company Value Division			Domestic Equity Division			Equity Income Division			Mid Cap Growth Stock Division			Index 400 Stock Division
Income:
Dividend income	$	43		$	2,840		$	1,146		$	912		$	1,821
Expenses:
Mortality and expense risk charges		4			560			317			1,726			882
Taxes		—			6			3			28			5

Net investment income (loss)		39			2,274			826			(842	)		934

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		(5	)		(2,543	)		(1,190	)		(3,274	)		4,550
Realized gain distributions		—			—			—			—			11,662

Realized gains (losses)		(5	)		(2,543	)		(1,190	)		(3,274	)		16,212

Change in unrealized appreciation/ depreciation of investments during the period		180			886			(675	)		(21,248	)		(21,657	)

Net increase (decrease) in net assets resulting from operations	$	214		$	617		$	(1,039	)	$	(25,364	)	$	(4,511	)

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

Statements of Operations

Northwestern Mutual Variable Life Account

For the Year Ended December 31, 2011

(in thousands)


	Mid Cap Value Division			Small Cap Growth Stock Division			Index 600 Stock Division			Small Cap Value Division
Income:
Dividend income	$	678		$	703		$	11		$	857
Expenses:
Mortality and expense risk charges		158			844			2			595
Taxes		1			5			—			5

Net investment income (loss)		519			(146	)		9			257

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		(1,096	)		(591	)		(21	)		2,993
Realized gain distributions		—			—			48			—

Realized gains (losses)		(1,096	)		(591	)		27			2,993

Change in unrealized appreciation/ depreciation of investments during the period		238			(5,368	)		46			(5,814	)

Net increase (decrease) in net assets resulting from operations	$	(339	)	$	(6,105	)	$	82		$	(2,564	)


	Long-Term U.S. Government Bond Division			Inflation Protection Division			High Yield Bond Division			Multi-Sector Bond Division
Income:
Dividend income	$	121		$	—		$	6,639		$	233
Expenses:
Mortality and expense risk charges		5			4			397			5
Taxes		—			—			4			—

Net investment income (loss)		116			(4	)		6,238			228

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		37			11			268			(6	)
Realized gain distributions		667			8			—			61

Realized gains (losses)		704			19			268			55

Change in unrealized appreciation/ depreciation of investments during the period		(529	)		61			(2,712	)		(222	)

Net increase (decrease) in net assets resulting from operations	$	291		$	76		$	3,794		$	61

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

Statements of Operations


International Growth Division			Research International Core Division			International Equity Division			Emerging Markets Equity Division			Money Market Division			Short-Term Bond Division			Select Bond Division

$	1,038		$	43		$	10,449		$	56		$	226		$	48		$	8,127

	367			3			2,103			8			660			4			955
	3			—			30			—			7			—			12

	668			40			8,316			48			(441	)		44			7,160


	(2,274	)		(33	)		(226	)		(32	)		—			(1	)		1,096
	—			—			—			—			—			2			4,881

	(2,274	)		(33	)		(226	)		(32	)		—			1			5,977

	(11,026	)		(170	)		(59,757	)		(493	)		—			(56	)		2,859

$	(12,632	)	$	(163	)	$	(51,667	)	$	(477	)	$	(441	)	$	(11	)	$	15,996


Commodities Return Strategy Division			Balanced Division			Asset Allocation Division			Fidelity VIP Mid Cap Division			Fidelity VIP Contrafund Division			Neuberger Berman AMT Socially Responsive Division			Russell Multi- Style Equity Division

$	—		$	8,919		$	991		$	30		$	50		$	2		$	1,630

	6			1,451			172			561			6			1			653
	—			73			3			6			—			—			4

	(6	)		7,395			816			(537	)		44			1			973


	(17	)		(4,806	)		(388	)		397			3			(5	)		3,439
	—			—			—			233			—			—			—

	(17	)		(4,806	)		(388	)		630			3			(5	)		3,439

	(386	)		2,597			(668	)		(15,640	)		(5	)		16			(7,328	)

$	(409	)	$	5,186		$	(240	)	$	(15,547	)	$	42		$	12		$	(2,916	)

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

Statements of Operations

Northwestern Mutual Variable Life Account

For the Year Ended December 31, 2011

(in thousands)


	Russell Aggressive Equity Division			Russell Non-U.S. Division			Russell Core Bond Division			Russell Global Real Estate Securities Division
Income:
Dividend income	$	414		$	2,083		$	3,117		$	3,096
Expenses:
Mortality and expense risk charges		345			490			330			565
Taxes		2			4			4			4

Net investment income (loss)		67			1,589			2,783			2,527

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		(767	)		(1,013	)		797			(846	)
Realized gain distributions		—			—			1,678			—

Realized gains (losses)		(767	)		(1,013	)		2,475			(846	)

Change in unrealized appreciation/ depreciation of investments during the period		(2,959	)		(17,209	)		(1,098	)		(11,857	)

Net increase (decrease) in net assets resulting from operations	$	(3,659	)	$	(16,633	)	$	4,160		$	(10,176	)


	Russell LifePoints Moderate Strategy Division			Russell LifePoints Balanced Strategy Division			Russell LifePoints Growth Strategy Division			Russell LifePoints Equity Growth Strategy Division
Income:
Dividend income	$	4		$	44		$	33		$	14
Expenses:
Mortality and expense risk charges		—			5			4			2
Taxes		—			—			—			—

Net investment income (loss)		4			39			29			12

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		(6	)		(18	)		(34	)		(10	)
Realized gain distributions		—			—			—			—

Realized gains (losses)		(6	)		(18	)		(34	)		(10	)

Change in unrealized appreciation/ depreciation of investments during the period		(4	)		12			(62	)		(14	)

Net increase (decrease) in net assets resulting from operations	$	(6	)	$	33		$	(67	)	$	(12	)

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, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010

Operations:
Net investment income (loss)	$	999		$	1,023		$	(220	)	$	(375	)
Net realized gains (losses)		1,424			(2,545	)		824			263
Net change in unrealized appreciation/depreciation		(6,980	)		31,797			(6,641	)		7,977

Net increase (decrease) in net assets resulting from operations		(4,557	)		30,275			(6,037	)		7,865


Policy Transactions:
Policyowners’ net payments		21,162			23,120			7,535			8,658
Policy loans, surrenders and death benefits		(23,482	)		(25,375	)		(6,377	)		(8,371	)
Mortality and other (net)		(7,489	)		(7,279	)		(2,392	)		(2,520	)
Transfers from other divisions		52,311			34,677			14,189			19,667
Transfers to other divisions		(57,341	)		(41,784	)		(18,843	)		(15,264	)

Net increase (decrease) in net assets resulting from policy transactions		(14,839	)		(16,641	)		(5,888	)		2,170

Net increase (decrease) in net assets		(19,396	)		13,634			(11,925	)		10,035

Net Assets:
Beginning of period		288,701			275,067			97,863			87,828

End of period	$	269,305		$	288,701		$	85,938		$	97,863

Units issued during the period		15,047			16,675			8,098			11,635
Units redeemed during the period		(19,141	)		(21,336	)		(10,082	)		(11,029	)

Net units issued (redeemed) during period		(4,094	)		(4,661	)		(1,984	)		606


	Large Cap Core Stock Division						Large Cap Blend Division			Index 500 Stock Division
	Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010

Operations:
Net investment income (loss)	$	1,351		$	1,334		$	20		$	9,066		$	10,422
Net realized gains (losses)		(1,127	)		(4,215	)		(20	)		12,042			(4,874	)
Net change in unrealized appreciation/depreciation		(3,230	)		24,055			111			(9,438	)		87,360

Net increase (decrease) in net assets resulting from operations		(3,006	)		21,174			111			11,670			92,908


Policy Transactions:
Policyowners’ net payments		14,918			16,425			13			52,024			57,023
Policy loans, surrenders and death benefits		(14,770	)		(17,828	)		(53	)		(56,552	)		(58,092	)
Mortality and other (net)		(5,030	)		(4,893	)		(10	)		(18,584	)		(18,730	)
Transfers from other divisions		10,296			17,200			3,300			98,356			78,450
Transfers to other divisions		(12,799	)		(17,037	)		(248	)		(104,005	)		(75,786	)

Net increase (decrease) in net assets resulting from policy transactions		(7,385	)		(6,133	)		3,002			(28,761	)		(17,135	)

Net increase (decrease) in net assets		(10,391	)		15,041			3,113			(17,091	)		75,773

Net Assets:
Beginning of period		192,996			177,955			—			730,891			655,118

End of period	$	182,605		$	192,996		$	3,113		$	713,800		$	730,891

Units issued during the period		11,623			13,698			3,387			30,791			35,185
Units redeemed during the period		(13,974	)		(16,697	)		(183	)		(36,979	)		(42,103	)

Net units issued (redeemed) during period		(2,351	)		(2,999	)		3,204			(6,188	)		(6,918	)

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

Statements of Changes in Net Assets

Northwestern Mutual Variable Life Account

(in thousands)


	Large Company Value Division			Domestic Equity Division						Equity Income Division
	Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010

Operations:
Net investment income (loss)	$	39		$	2,274		$	2,257		$	826		$	830
Net realized gains (losses)		(5	)		(2,543	)		(2,430	)		(1,190	)		(1,589	)
Net change in unrealized appreciation/depreciation		180			886			16,855			(675	)		10,104

Net increase (decrease) in net assets resulting from operations		214			617			16,682			(1,039	)		9,345


Policy Transactions:
Policyowners’ net payments		12			11,271			12,739			5,408			5,885
Policy loans, surrenders and death benefits		(4	)		(9,263	)		(11,192	)		(5,061	)		(5,900	)
Mortality and other (net)		(10	)		(3,477	)		(3,368	)		(1,885	)		(1,790	)
Transfers from other divisions		2,606			15,874			12,165			21,711			13,421
Transfers to other divisions		(225	)		(18,524	)		(12,333	)		(16,121	)		(8,693	)

Net increase (decrease) in net assets resulting from policy transactions		2,379			(4,119	)		(1,989	)		4,052			2,923

Net increase (decrease) in net assets		2,593			(3,502	)		14,693			3,013			12,268

Net Assets:
Beginning of period		—			134,632			119,939			73,840			61,572

End of period	$	2,593		$	131,130		$	134,632		$	76,853		$	73,840

Units issued during the period		2,728			17,257			18,344			11,385			10,630
Units redeemed during the period		(106	)		(18,848	)		(18,787	)		(9,705	)		(8,664	)

Net units issued (redeemed) during period		2,622			(1,591	)		(443	)		1,680			1,966



	Index 600 Stock Division			Small Cap Value Division						International Growth Division
	Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010

Operations:
Net investment income (loss)	$	9		$	257		$	834		$	668		$	425
Net realized gains (losses)		27			2,993			2,044			(2,274	)		(2,650	)
Net change in unrealized appreciation/depreciation		46			(5,814	)		22,606			(11,026	)		15,011

Net increase (decrease) in net assets resulting from operations		82			(2,564	)		25,484			(12,632	)		12,786


Policy Transactions:
Policyowners’ net payments		35			10,251			11,182			8,100			8,726
Policy loans, surrenders and death benefits		(30	)		(11,020	)		(11,199	)		(8,991	)		(8,176	)
Mortality and other (net)		(14	)		(3,602	)		(3,644	)		(2,216	)		(2,311	)
Transfers from other divisions		2,184			27,569			19,361			55,545			42,439
Transfers to other divisions		(538	)		(29,663	)		(19,225	)		(58,640	)		(35,251	)

Net increase (decrease) in net assets resulting from policy transactions		1,637			(6,465	)		(3,525	)		(6,202	)		5,427

Net increase (decrease) in net assets		1,719			(9,029	)		21,959			(18,834	)		18,213

Net Assets:
Beginning of period		—			144,009			122,050			94,974			76,761

End of period	$	1,719		$	134,980		$	144,009		$	76,140		$	94,974

Units issued during the period		1,613			10,510			11,528			13,075			15,822
Units redeemed during the period		(229	)		(12,882	)		(12,778	)		(14,443	)		(13,844	)

Net units issued (redeemed) during period		1,384			(2,372	)		(1,250	)		(1,368	)		1,978

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

Statements of Changes in Net Assets


Mid Cap Growth Stock Division						Index 400 Stock Division						Mid Cap Value Division						Small Cap Growth Stock Division
Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010


$	(842	)	$	(630	)	$	934		$	1,232		$	519		$	345		$	(146	)	$	550
	(3,274	)		(9,482	)		16,212			731			(1,096	)		(2,078	)		(591	)		(3,440	)
	(21,248	)		87,530			(21,657	)		41,347			238			8,178			(5,368	)		43,682


	(25,364	)		77,418			(4,511	)		43,310			(339	)		6,445			(6,105	)		40,792



	26,627			28,654			13,583			14,339			3,025			3,548			14,969			16,158
	(30,326	)		(33,072	)		(16,422	)		(17,053	)		(4,695	)		(3,608	)		(17,477	)		(17,623	)
	(9,977	)		(10,140	)		(4,919	)		(4,990	)		(1,037	)		(1,052	)		(4,963	)		(4,903	)
	12,173			13,707			25,722			13,812			35,955			22,432			37,633			27,102
	(18,710	)		(21,347	)		(26,339	)		(18,442	)		(35,414	)		(19,751	)		(41,545	)		(26,756	)


	(20,213	)		(22,198	)		(8,375	)		(12,334	)		(2,166	)		1,569			(11,383	)		(6,022	)

	(45,577	)		55,220			(12,886	)		30,976			(2,505	)		8,014			(17,488	)		34,770


	404,074			348,854			208,521			177,545			39,839			31,825			201,112			166,342

$	358,497		$	404,074		$	195,635		$	208,521		$	37,334		$	39,839		$	183,624		$	201,112

	14,362			17,240			12,107			13,194			5,869			6,141			12,966			14,559
	(20,678	)		(24,850	)		(15,191	)		(17,376	)		(6,457	)		(5,802	)		(16,931	)		(17,602	)

	(6,316	)		(7,610	)		(3,084	)		(4,182	)		(588	)		339			(3,965	)		(3,043	)



Research International Core Division			International Equity Division						Emerging Markets Equity Division			Money Market Division						Short-Term Bond Division
Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011


$	40		$	8,316		$	11,981		$	48		$	(441	)	$	(192	)	$	44
	(33	)		(226	)		(104	)		(32	)		—			12			1
	(170	)		(59,757	)		21,731			(493	)		—			—			(56	)


	(163	)		(51,667	)		33,608			(477	)		(441	)		(180	)		(11	)



	(27	)		35,844			38,680			16			87,004			95,869			(92	)
	(68	)		(37,992	)		(43,462	)		(98	)		(46,782	)		(63,659	)		(60	)
	(17	)		(11,663	)		(13,032	)		(38	)		(6,659	)		(7,410	)		(21	)
	4,491			105,190			70,724			8,736			155,964			126,490			4,315
	(528	)		(109,675	)		(67,040	)		(641	)		(191,294	)		(170,742	)		(450	)


	3,851			(18,296	)		(14,130	)		7,975			(1,767	)		(19,452	)		3,692

	3,688			(69,963	)		19,478			7,498			(2,208	)		(19,632	)		3,681


	—			508,723			489,245			—			169,116			188,748			—

$	3,688		$	438,760		$	508,723		$	7,498		$	166,908		$	169,116		$	3,681

	4,002			43,234			38,456			8,626			101,014			112,514			3,774
	(443	)		(48,456	)		(43,028	)		(631	)		(102,533	)		(121,911	)		(615	)

	3,559			(5,222	)		(4,572	)		7,995			(1,519	)		(9,397	)		3,159

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

Statements of Changes in Net Assets

Northwestern Mutual Variable Life Account

(in thousands)


	Select Bond Division						Long-Term U.S. Government Bond Division			Inflation Protection Division
	Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011			Period June 30 to December 31, 2011

Operations:
Net investment income (loss)	$	7,160		$	7,911		$	116		$	(4	)
Net realized gains (losses)		5,977			1,784			704			19
Net change in unrealized appreciation/depreciation		2,859			4,063			(529	)		61

Net increase (decrease) in net assets resulting from operations		15,996			13,758			291			76


Policy Transactions:
Policyowners’ net payments		15,162			17,938			142			66
Policy loans, surrenders and death benefits		(21,106	)		(28,609	)		(49	)		(196	)
Mortality and other (net)		(5,987	)		(6,029	)		(31	)		(26	)
Transfers from other divisions		79,175			60,450			7,135			5,479
Transfers to other divisions		(70,627	)		(42,155	)		(712	)		(584	)

Net increase (decrease) in net assets resulting from policy transactions		(3,383	)		1,595			6,485			4,739

Net increase (decrease) in net assets		12,613			15,353			6,776			4,815

Net Assets:
Beginning of period		238,805			223,452			—			—

End of period	$	251,418		$	238,805		$	6,776		$	4,815

Units issued during the period		17,708			21,882			3,822			4,139
Units redeemed during the period		(18,781	)		(21,931	)		(285	)		(498	)

Net units issued (redeemed) during period		(1,073	)		(49	)		3,537			3,641


	Fidelity VIP Mid Cap Division						Fidelity VIP Contrafund Division			Neuberger Berman AMT Socially Responsive Division
	Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011			Period June 30 to December 31, 2011

Operations:
Net investment income (loss)	$	(537	)	$	(350	)	$	44		$	1
Net realized gains (losses)		630			(771	)		3			(5	)
Net change in unrealized appreciation/depreciation		(15,640	)		31,307			(5	)		16

Net increase (decrease) in net assets resulting from operations		(15,547	)		30,186			42			12


Policy Transactions:
Policyowners’ net payments		10,060			10,250			(21	)		(20	)
Policy loans, surrenders and death benefits		(11,123	)		(10,880	)		(30	)		(26	)
Mortality and other (net)		(3,408	)		(3,658	)		(23	)		(6	)
Transfers from other divisions		49,251			36,589			7,127			790
Transfers to other divisions		(48,965	)		(27,176	)		(565	)		(62	)

Net increase (decrease) in net assets resulting from policy transactions		(4,185	)		5,125			6,488			676

Net increase (decrease) in net assets		(19,732	)		35,311			6,530			688

Net Assets:
Beginning of period		140,666			105,355			—			—

End of period	$	120,934		$	140,666		$	6,530		$	688

Units issued during the period		9,506			10,845			6,326			701
Units redeemed during the period		(10,284	)		(9,673	)		(404	)		(95	)

Net units issued (redeemed) during period		(778	)		1,172			5,922			606

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

Statements of Changes in Net Assets


High Yield Bond Division						Multi-Sector Bond Division			Commodities Return Strategy Division			Balanced Division						Asset Allocation Division
Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011			Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010




$	6,238		$	5,913		$	228		$	(6	)	$	7,395		$	5,005		$	816		$	948
	268			965			55			(17	)		(4,806	)		(8,343	)		(388	)		(552	)
	(2,712	)		4,752			(222	)		(386	)		2,597			36,783			(668	)		4,214

	3,794			11,630			61			(409	)		5,186			33,445			(240	)		4,610



	5,718			5,907			(23	)		71			19,521			21,634			2,910			2,842
	(7,736	)		(9,199	)		(157	)		(134	)		(22,410	)		(22,250	)		(2,372	)		(4,027	)
	(2,327	)		(2,538	)		(30	)		(59	)		(8,560	)		(8,557	)		(1,121	)		(1,123	)
	17,350			15,844			5,418			6,229			28,307			13,278			3,498			3,993
	(14,452	)		(13,535	)		(419	)		(598	)		(26,468	)		(13,315	)		(3,958	)		(2,780	)

	(1,447	)		(3,521	)		4,789			5,509			(9,610	)		(9,210	)		(1,043	)		(1,095	)

	2,347			8,109			4,850			5,100			(4,424	)		24,235			(1,283	)		3,515


	92,381			84,272			—			—			323,249			299,014			40,860			37,345

$	94,728		$	92,381		$	4,850		$	5,100		$	318,825		$	323,249		$	39,577		$	40,860

	6,259			6,977			4,785			671			9,337			10,022			4,296			5,079
	(6,610	)		(7,946	)		(635	)		(114	)		(11,076	)		(12,085	)		(4,720	)		(5,733	)

	(351	)		(969	)		4,150			557			(1,739	)		(2,063	)		(424	)		(654	)


Russell Multi-Style Equity Division						Russell Aggressive Equity Division						Russell Non-U.S. Division						Russell Core Bond Division
Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010


$	973		$	825		$	67		$	37		$	1,589		$	636		$	2,783		$	3,314
	3,439			(13	)		(767	)		(2,233	)		(1,013	)		(516	)		2,475			2,941
	(7,328	)		22,970			(2,959	)		18,893			(17,209	)		12,472			(1,098	)		2,261


	(2,916	)		23,782			(3,659	)		16,697			(16,633	)		12,592			4,160			8,516



	12,264			13,002			6,612			6,862			9,406			10,391			3,858			5,744
	(16,304	)		(13,998	)		(7,090	)		(6,989	)		(11,850	)		(10,726	)		(11,170	)		(9,825	)
	(4,095	)		(4,447	)		(2,096	)		(2,134	)		(2,905	)		(3,289	)		(2,336	)		(2,329	)
	14,425			22,938			8,913			9,527			14,220			19,087			36,957			46,009
	(18,959	)		(29,231	)		(10,048	)		(9,845	)		(17,049	)		(20,573	)		(32,698	)		(36,378	)


	(12,669	)		(11,736	)		(3,709	)		(2,579	)		(8,178	)		(5,110	)		(5,389	)		3,221

	(15,585	)		12,046			(7,368	)		14,118			(24,811	)		7,482			(1,229	)		11,737


	173,508			161,462			85,253			71,135			131,861			124,379			98,149			86,412

$	157,923		$	173,508		$	77,885		$	85,253		$	107,050		$	131,861		$	96,920		$	98,149

	21,757			28,038			8,306			10,147			13,814			16,644			10,383			13,823
	(28,058	)		(37,957	)		(9,853	)		(11,139	)		(16,807	)		(19,400	)		(10,082	)		(12,275	)

	(6,301	)		(9,919	)		(1,547	)		(992	)		(2,993	)		(2,756	)		301			1,548

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

Statements of Changes in Net Assets

Northwestern Mutual Variable Life Account

(in thousands)


	Russell Global Real Estate Securities Division						Russell LifePoints Moderate Strategy Division			Russell LifePoints Balanced Strategy Division			Russell LifePoints Growth Strategy Division			Russell LifePoints Equity Growth Strategy Division
	Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011			Period June 30 to December 31, 2011			Period June 30 to December 31, 2011			Period June 30 to December 31, 2011

Operations:
Net investment income (loss)	$	2,527		$	2,302		$	4		$	39		$	29		$	12
Net realized gains (losses)		(846	)		(1,911	)		(6	)		(18	)		(34	)		(10	)
Net change in unrealized appreciation/depreciation		(11,857	)		25,100			(4	)		12			(62	)		(14	)

Net increase (decrease) in net assets resulting from operations		(10,176	)		25,491			(6	)		33			(67	)		(12	)


Policy Transactions:
Policyowners’ net payments		10,408			10,990			22			(28	)		(400	)		30
Policy loans, surrenders and death benefits		(11,413	)		(12,273	)		(1	)		(186	)		(85	)		92
Mortality and other (net)		(3,374	)		(3,591	)		(6	)		(30	)		(36	)		(29	)
Transfers from other divisions		29,977			31,929			432			4,348			3,676			1,431
Transfers to other divisions		(30,271	)		(26,714	)		(109	)		(55	)		(54	)		(59	)

Net increase (decrease) in net assets resulting from policy transactions		(4,673	)		341			338			4,049			3,101			1,465

Net increase (decrease) in net assets		(14,849	)		25,832			332			4,082			3,034			1,453

Net Assets:
Beginning of period		139,710			113,878			—			—			—			—

End of period	$	124,861		$	139,710		$	332		$	4,082		$	3,034		$	1,453

Units issued during the period		7,879			9,674			440			3,685			2,341			1,145
Units redeemed during the period		(8,777	)		(9,091	)		(120	)		(389	)		(409	)		(14	)

Net units issued (redeemed) during period		(898	)		583			320			3,296			1,932			1,131

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, 2011

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, Neuberger Berman Advisers Management Trust and the Russell Investment Funds (collectively known as “the Funds”). The Funds are open-end investment companies registered under the Investment Company Act of 1940.

Effective May 1, 2011, the Russell Real Estate Securities Division of the Account was renamed the Russell Global Real Estate Securities Division.

Effective June 30, 2011 the following sixteen Divisions commenced operations in the Account: Large Cap Blend, Large Company Value, Index 600 Stock, Research International Core, Emerging Markets, Short-Term Bond, Long-Term U.S. Government Bond, Inflation Protection, Multi-Sector Bond, Commodities Return Strategy, Fidelity VIP Contrafund, Neuberger Berman AMT Socially Responsive, Russell LifePoints Moderate Strategy, Russell LifePoints Balanced Strategy, Russell LifePoints Growth Strategy, and Russell LifePoints Equity Growth Strategy.

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, 2011, 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, 2011 were as follows: (in thousands)


Division	Purchases		Sales
Growth Stock	$	14,055	$	27,889
Focused Appreciation		2,000		8,107
Large Cap Core Stock		11,000		17,035
Large Cap Blend		3,083		63
Index 500 Stock		61,678		65,097
Large Company Value		2,423		4
Domestic Equity		9,541		11,288
Equity Income		11,337		6,438
Mid Cap Growth Stock		14,270		35,385
Index 400 Stock		23,450		19,250
Mid Cap Value		3,730		5,375

Notes to Financial Statements


Division	Purchases		Sales
Small Cap Growth Stock	$	8,676	$	20,192
Index 600 Stock		1,729		36
Small Cap Value		7,138		13,347
International Growth		4,969		10,508
Research International Core		3,998		107
International Equity		34,625		44,751
Emerging Markets Equity		8,158		139
Money Market		49,544		51,665
Short-Term Bond		3,805		58
Select Bond		33,664		24,847
Long-Term U.S. Government Bond		7,323		52
Inflation Protection		4,976		241
High Yield Bond		13,905		9,098
Multi-Sector Bond		5,248		178
Commodities Return Strategy		5,662		159
Balanced		24,159		26,449
Asset Allocation		2,724		2,963
Fidelity VIP Mid Cap		8,812		13,297
Fidelity VIP Contrafund		6,599		68
Neuberger Berman AMT Socially Responsive		718		40
Russell Multi-Style Equity		7,161		18,757
Russell Aggressive Equity		4,668		8,308
Russell Non-U.S.		7,536		14,132
Russell Core Bond		12,511		13,185
Russell Global Real Estate Securities		11,331		13,454
Russell LifePoints Moderate Strategy		343		1
Russell LifePoints Balanced Strategy		4,327		237
Russell LifePoints Growth Strategy		3,222		93
Russell LifePoints Equity Growth Strategy		1,479		1

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. 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 12/31/11

97,893

$2.392591 to $32.569595

$269,305

0.78%

0.10% to 0.60%

(1.84%) to (1.30%)

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)

Period 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

Focused Appreciation

Year Ended 12/31/11

39,237

$1.877354 to $19.596705

$ 85,938

0.18%

0.10% to 0.60%

(6.61%) to (6.10%)

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)

Period 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

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

Notes to Financial Statements


	As of the respective period end date:				For the respective period ended:
Division	Units Outstanding (000’s)		Unit Value, Lowest to Highest	Net Assets (000’s)	Dividend Income as a % of Average Net Assets	Expense Ratio, Lowest to Highest	Total Return Lowest to Highest (1)
Large Cap Core Stock
Year Ended 12/31/11		78,553	$1.939589 to $26.156583	$182,605	1.14%	0.10% to 0.60%		(1.75%) to (1.21%)
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)
Period 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
Large Cap Blend (3)
Period Ended 12/31/11		3,204	$0.942304 to $7.947227	$ 3,113	2.05%	0.10% to 0.60%		(5.82%) to (5.56%)
Index 500 Stock
Year Ended 12/31/11		214,351	$2.641136 to $59.726031	$713,800	1.66%	0.10% to 0.60%		1.39% to 1.95%
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)
Period 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
Large Company Value (3)
Period Ended 12/31/11		2,622	$0.966635 to $8.021755	$ 2,593	4.57%	0.10% to 0.60%		(3.38%) to (3.12%)
Domestic Equity
Year Ended 12/31/11		88,764	$1.246743 to $13.151218	$131,130	2.09%	0.10% to 0.60%		0.36% to 0.91%
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)
Period 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)
Equity Income
Year Ended 12/31/11		40,660	$1.597678 to $16.677245	$ 76,853	1.50%	0.10% to 0.60%		(1.46%) to (0.92%)
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)
Period 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
Mid Cap Growth Stock
Year Ended 12/31/11		121,498	$2.452507 to $67.344023	$358,497	0.23%	0.10% to 0.60%		(6.69%) to (6.18%)
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)
Period 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
Index 400 Stock
Year Ended 12/31/11		77,580	$2.257202 to $25.435391	$195,635	0.86%	0.10% to 0.60%		(2.46%) to (1.92%)
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)
Period 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
Mid Cap Value
Year Ended 12/31/11		18,430	$1.740555 to $18.168731	$ 37,334	1.74%	0.10% to 0.60%		(1.15%) to (0.61%)
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)
Period 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)

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

(2)

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

(3)	Divisions commenced operations on June 30, 2011.

Notes to Financial Statements

As of the respective period end date:

For the respective period ended:

Division

Units

Outstanding
(000’s)

Unit Value,

Lowest to Highest

Net

Assets

(000’s)

Dividend

Income

as a % of

Average

Net

Assets

Expense Ratio,

Lowest to Highest

Total Return

Lowest to Highest (1)

Small Cap Growth Stock

Year Ended 12/31/11

74,363

$2.233915 to $ 28.847575

$183,624

0.35%

0.10% to 0.60%

(3.31%) to (2.78%)

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)

Period 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

Index 600 Stock (3)

Period Ended 12/31/11

1,384

$0.937768 to $ 10.280016

$ 1,719

2.07%

0.10% to 0.60%

(6.27%) to (6.01%)

Small Cap Value

Year Ended 12/31/11

55,277

$2.105813 to $ 22.212770

$134,980

0.60%

0.10% to 0.60%

(1.90%) to (1.36%)

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)

Period 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)

International Growth

Year Ended 12/31/11

48,394

$1.376437 to $ 14.519220

$ 76,140

1.13%

0.10% to 0.60%

(13.64%) to (13.17%)

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)

Period 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

Research International Core (3)

Period Ended 12/31/11

3,559

$0.838851 to $ 7.884380

$ 3,688

4.07%

0.10% to 0.60%

(16.16%) to (15.93%)

International Equity

Year Ended 12/31/11

154,709

$2.433405 to $ 3.682261

$438,760

2.10%

0.10% to 0.60%

(10.59%) to (10.10%)

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)

Period 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

Emerging Markets Equity (3)

Period Ended 12/31/11

7,995

$0.814525 to $ 9.567929

$ 7,498

2.54%

0.10% to 0.60%

(18.59%) to (18.36%)

Money Market

Year Ended 12/31/11

85,415

$1.554696 to $ 41.437528

$166,908

0.14%

0.10% to 0.60%

(0.41%) to 0.14%

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

Period 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

Short-Term Bond (3)

Period Ended 12/31/11

3,159

$0.993622 to $ 11.832025

$ 3,681

4.36%

0.10% to 0.60%

(0.69%) to (0.42%)

Select Bond

Year Ended 12/31/11

77,091

$2.497424 to $195.021673

$251,418

3.32%

0.10% to 0.60%

6.58% to 7.16%

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

Period 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

Long-Term U.S. Government Bond (3)

Period Ended 12/31/11

3,537

$1.248644 to $ 17.228764

$ 6,776

8.82%

0.10% to 0.60%

24.80% to 25.15%

(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)

(3)	Divisions commenced operations on June 30, 2011.

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)

Inflation Protection (3)

Period Ended 12/31/11

3,641

$1.063572 to $ 13.694886

$ 4,815

0.03%

0.10% to 0.60%

6.30% to 6.60%

High Yield Bond

Year Ended 12/31/11

29,124

$2.772582 to $ 36.059875

$ 94,728

6.97%

0.10% to 0.60%

4.02% to 4.59%

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)

Period 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

Multi-Sector Bond (3)

Period Ended 12/31/11

4,150

$1.014872 to $ 13.657358

$ 4,850

16.21%

0.10% to 0.60%

1.44% to 1.71%

Commodities Return Strategy (3)

Period Ended 12/31/11

557

$8.070260 to $ 8.877726

$ 5,100

0.00%

0.10% to 0.60%

(11.27%) to (11.02%)

Balanced

Year Ended 12/31/11

61,456

$2.600265 to $140.096515

$318,825

2.75%

0.10% to 0.60%

1.55% to 2.11%

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)

Period 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

Asset Allocation

Year Ended 12/31/11

22,441

$1.426114 to $ 15.042893

$ 39,577

2.41%

0.10% to 0.60%

(0.62%) to (0.08%)

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)

Period 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

Fidelity VIP Mid Cap

Year Ended 12/31/11

40,656

$2.486413 to $ 25.953961

$120,934

0.02%

0.10% to 0.60%

(11.34%) to (10.85%)

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)

Period 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

Fidelity VIP Contrafund (3)

Period Ended 12/31/11

5,922

$0.923581 to $ 9.866342

$ 6,530

2.81%

0.10% to 0.60%

(7.69%) to (7.43%)

Neuberger Berman AMT Socially Responsive (3)

Period Ended 12/31/11

606

$0.910063 to $ 9.655117

$ 688

0.90%

0.10% to 0.60%

(9.04%) to (8.79%)

Russell Multi-Style Equity

Year Ended 12/31/11

139,483

$0.956587 to $ 10.521100

$157,923

0.97%

0.10% to 0.60%

(2.08%) to (1.55%)

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)

Period 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

Russell Aggressive Equity

Year Ended 12/31/11

46,544

$1.460862 to $ 16.479338

$ 77,885

0.49%

0.10% to 0.60%

(4.72%) to (4.20%)

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)

Period 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

(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.

(3)	Divisions commenced operations on June 30, 2011.

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 12/31/11

74,999

$1.186647 to $12.750860

$107,050

1.66%

0.10% to 0.60%

(13.36%) to (12.88%)

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)

Period 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

Russell Core Bond

Year Ended 12/31/11

34,913

$1.962151 to $20.671320

$ 96,920

3.19%

0.10% to 0.60%

4.11% to 4.68%

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)

Period 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

Russell Global Real Estate Securities (4)

Year Ended 12/31/11

38,799

$2.798128 to $29.438654

$124,861

2.25%

0.10% to 0.60%

(7.56%) to (7.05%)

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)

Period 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)

Russell LifePoints Moderate Strategy (3)

Period Ended 12/31/11

320

$0.961095 to $11.440046

$ 332

3.14%

0.10% to 0.60%

(3.94%) to (3.67%)

Russell LifePoints Balanced Strategy (3)

Period Ended 12/31/11

3,296

$0.932549 to $10.437591

$ 4,082

3.47%

0.10% to 0.60%

(6.79%) to (6.53%)

Russell LifePoints Growth Strategy (3)

Period Ended 12/31/11

1,932

$0.906329 to $9.458077

$ 3,034

3.58%

0.10% to 0.60%

(9.41%) to (9.16%)

Russell LifePoints Equity Growth Strategy (3)

Period Ended 12/31/11

1,131

$0.889198 to $8.471141

$ 1,453

3.08%

0.10% to 0.60%

(11.12%) to (10.88%)

(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.

(3)	Divisions commenced operations on June 30, 2011.

(4)	Effective May 1, 2011, the Russell Real Estate Securities was renamed the Russell Global Real Estate Securities.

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 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, Large Cap Blend Division, Index 500 Stock Division, Large Company Value 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, Index 600 Stock Division, Small Cap Value Division, International Growth Division, Research International Core Division, International Equity Division, Emerging Markets Equity Division, Money Market Division, Short-Term Bond Division, Select Bond Division, Long-Term U.S. Government Bond Division, Inflation Protection Division, High Yield Bond Division, Multi-Sector Bond Division, Commodities Return Strategy Division, Balanced Division, Asset Allocation Division, Fidelity VIP Mid Cap Division, Fidelity VIP Contrafund Division, Neuberger Berman AMT Socially Responsive Division, Russell Multi-Style Equity Division, Russell Aggressive Equity Division, Russell Non-US Division, Russell Core Bond Division, Russell Global Real Estate Securities Division, Russell LifePoints Moderate Strategy Division, Russell LifePoints Balanced Strategy Division, Russell LifePoints Growth Strategy Division, Russell LifePoints Equity Growth Strategy Division at December 31, 2011, and the results of each of their operations, the changes in each of their net assets for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These 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, 2011 with Northwestern Mutual Series Fund, Inc., Neuberger Berman Advisers Management Trust, Fidelity Variable Insurance Products and the Russell Investment Funds, provide a reasonable basis for our opinion.

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February 20, 2012

Report of Independent Registered Public Accounting Firm

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Annual Report December 31, 2011

Northwestern Mutual Variable Life Account II

Financial Statements

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			7

Statements of Changes in Net Assets			11

Notes to Financial Statements			17

Report of Independent Registered Public Accounting Firm			23

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account II

December 31, 2011

(in thousands, except accumulation unit values)


	Growth Stock Division		Focused Appreciation Division		Large Cap Core Stock Division		Large Cap Blend Division		Index 500 Stock Division		Large Company Value Division
Assets:
Investments, at value (1)
Northwestern Mutual Series Fund, Inc	$	1,953	$	3,782	$	1,456	$	110	$	7,036	$	9
Fidelity Variable Insurance Products		—		—		—		—		—		—
Neuberger Berman Advisers Master Trust		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		—		—		1		—		1

Total Assets		1,953		3,782		1,456		111		7,036		10

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

Total Liabilities		—		—		—		—		—		—

Total Net Assets	$	1,953	$	3,782	$	1,456	$	111	$	7,036	$	10

Net Assets:
Custom Variable Universal Life Policies Issued On or After January 31, 2007 (2)
Policyowners’ Equity	$	1,466	$	2,510	$	1,133	$	111	$	4,563	$	10
Executive Variable Universal Life Policies Issued On or After January 31, 2007 (3)
Policyowners’ Equity		386		1,201		273		—		2,371		—
Survivorship Variable Universal Life Policies Issued On or After January 31, 2007 (4)
Policyowners’ Equity		101		71		50		—		102		—

Total Net Assets	$	1,953	$	3,782	$	1,456	$	111	$	7,036	$	10


(1) Investments, at cost	$	1,806	$	3,677	$	1,376	$	113	$	6,800	$	9
Mutual Fund Shares Held		935		2,166		1,200		146		2,769		13
(2) Accumulation Unit Value	$	32.569595	$	19.596705	$	26.156583	$	7.947227	$	59.726031	$	8.021755
Units Outstanding		45		128		43		14		76		1
(3) Accumulation Unit Value	$	32.569595	$	19.596705	$	26.156583	$	7.947227	$	59.726031	$	8.021755
Units Outstanding		12		61		10		—		40		—
(4) Accumulation Unit Value	$	32.569595	$	19.596705	$	26.156583	$	7.947227	$	59.726031	$	8.021755
Units Outstanding		3		4		2		—		2		—

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

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account II

December 31, 2011

(in thousands, except accumulation unit values)


	Domestic Equity Division		Equity Income Division		Mid Cap Growth Stock Division		Index 400 Stock Division		Mid Cap Value Division		Small Cap Growth Stock Division
Assets:
Investments, at value (1)
Northwestern Mutual Series Fund, Inc	$	2,548	$	2,540	$	2,086	$	3,453	$	902	$	2,054
Fidelity Variable Insurance Products		—		—		—		—		—		—
Neuberger Berman Advisers Master Trust		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		—		1		—		—		—

Total Assets		2,548		2,540		2,087		3,453		902		2,054

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

Total Liabilities		—		—		—		—		—		—

Total Net Assets	$	2,548	$	2,540	$	2,087	$	3,453	$	902	$	2,054

Net Assets:
Custom Variable Universal Life Policies Issued On or After January 31, 2007 (2)
Policyowners’ Equity	$	2,288	$	1,659	$	976	$	2,135	$	553	$	1,693
Executive Variable Universal Life Policies Issued On or After January 31, 2007 (3)
Policyowners’ Equity		224		806		1,076		1,230		337		283
Survivorship Variable Universal Life Policies Issued On or After January 31, 2007 (4)
Policyowners’ Equity		36		75		35		88		12		78

Total Net Assets	$	2,548	$	2,540	$	2,087	$	3,453	$	902	$	2,054


(1) Investments, at cost	$	2,280	$	2,470	$	2,020	$	3,527	$	933	$	1,900
Mutual Fund Shares Held		2,918		2,184		715		2,579		797		1,195
(2) Accumulation Unit Value	$	13.151218	$	16.677245	$	67.344023	$	25.435391	$	18.168731	$	28.847575
Units Outstanding		174		100		14		84		30		59
(3) Accumulation Unit Value	$	13.151218	$	16.677245	$	67.344023	$	25.435391	$	18.168731	$	28.847575
Units Outstanding		17		48		16		48		19		10
(4) Accumulation Unit Value	$	13.151218	$	16.677245	$	67.344023	$	25.435391	$	18.168731	$	28.847575
Units Outstanding		3		4		1		3		1		3

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

Statements of Assets and Liabilities


Index 600 Stock Division		Small Cap Value Division		International Growth Division		Research International Core Division		International Equity Division		Emerging Markets Equity Division		Money Market Division		Short-Term Bond Division


$	20	$	2,780	$	2,006	$	135	$	6,827	$	353	$	3,710	$	176
	—		—		—		—		—		—		—		—
	—		—		—		—		—		—		—		—
	—		—		—		—		—		—		—		—
	1		—		—		—		—		2		5		—

	21		2,780		2,006		135		6,827		355		3,715		176


	—		1		—		—		—		—		—		—

	—		1		—		—		—		—		—		—

$	21	$	2,779	$	2,006	$	135	$	6,827	$	355	$	3,715	$	176




$	21	$	1,733	$	1,752	$	135	$	4,720	$	355	$	1,790	$	176


	—		1,026		182		—		1,924		—		1,924		—


	—		20		72		—		183		—		1		—

$	21	$	2,779	$	2,006	$	135	$	6,827	$	355	$	3,715	$	176


$	21	$	2,581	$	2,066	$	140	$	7,080	$	380	$	3,710	$	179
	22		1,684		1,931		187		4,503		396		3,710		173
$	10.280016	$	22.212770	$	14.519220	$	7.884380	$	3.682261	$	9.567929	$	41.437528	$	11.832025
	2		78		121		17		1,282		37		43		15
$	10.280016	$	22.212770	$	14.519220	$	7.884380	$	3.682261	$	9.567929	$	41.437528	$	11.832025
	—		46		13		—		522		—		46		—
$	10.280016	$	22.212770	$	14.519220	$	7.884380	$	3.682261	$	9.567929	$	41.437528	$	11.832025
	—		1		5		—		50		—		—		—

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

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account II

December 31, 2011

(in thousands, except accumulation unit values)


	Select Bond Division		Long-Term U.S. Government Bond Division		Inflation Protection Division		High Yield Bond Division		Multi-Sector Bond Division		Commodities Return Strategy Division
Assets:
Investments, at value (1)
Northwestern Mutual Series Fund, Inc	$	5,127	$	7	$	332	$	2,226	$	238	$	318
Fidelity Variable Insurance Products		—		—		—		—		—		—
Neuberger Berman Advisers Master Trust		—		—		—		—		—		—
Russell Investment Funds		—		—		—		—		—		—
Due from Northwestern Mutual Life Insurance Company		—		—		—		—		—		1

Total Assets		5,127		7		332		2,226		238		319

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

Total Liabilities		—		—		—		—		—		—

Total Net Assets	$	5,127	$	7	$	332	$	2,226	$	238	$	319

Net Assets:
Custom Variable Universal Life Policies Issued On or After January 31, 2007 (2)
Policyowners’ Equity	$	3,592	$	7	$	233	$	1,614	$	238	$	319
Executive Variable Universal Life Policies Issued On or After January 31, 2007 (3)
Policyowners’ Equity		1,360		—		99		560		—		—
Survivorship Variable Universal Life Policies Issued On or After January 31, 2007 (4)
Policyowners’ Equity		175		—		—		52		—		—

Total Net Assets	$	5,127	$	7	$	332	$	2,226	$	238	$	319


(1) Investments, at cost	$	5,076	$	7	$	323	$	2,293	$	251	$	349
Mutual Fund Shares Held		3,926		6		282		3,166		237		394
(2) Accumulation Unit Value	$	195.021673	$	17.228764	$	13.694886	$	36.059875	$	13.657358	$	8.070260
Units Outstanding		18		—		17		45		17		40
(3) Accumulation Unit Value	$	195.021673	$	17.228764	$	13.694886	$	36.059875	$	13.657358	$	8.070260
Units Outstanding		7		—		7		16		—		—
(4) Accumulation Unit Value	$	195.021673	$	17.228764	$	13.694886	$	36.059875	$	13.657358	$	8.070260
Units Outstanding		1		—		—		1		—		—

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

Statements of Assets and Liabilities


Balanced Division		Asset Allocation Division		Fidelity VIP Mid Cap Division		Fidelity VIP Contrafund Division		Neuberger Berman AMT Socially Responsive Division		Russell Multi-Style Equity Division		Russell Aggressive Equity Division		Russell Non-U.S. Division


$	1,413	$	344	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		2,965		76		—		—		—		—
	—		—		—		—		56		—		—		—
	—		—		—		—		—		1,616		1,047		1,917
	—		—		5		—		—		—		—		—

	1,413		344		2,970		76		56		1,616		1,047		1,917


	—		—		—		—		—		—		—		—

	—		—		—		—		—		—		—		—

$	1,413	$	344	$	2,970	$	76	$	56	$	1,616	$	1,047	$	1,917




$	586	$	276	$	2,506	$	76	$	56	$	1,443	$	829	$	1,642


	770		39		359		—		—		162		204		246


	57		29		105		—		—		11		14		29

$	1,413	$	344	$	2,970	$	76	$	56	$	1,616	$	1,047	$	1,917


$	1,401	$	328	$	3,005	$	74	$	53	$	1,491	$	981	$	2,025
	1,017		336		104		3		4		122		92		219
$	140.096515	$	15.042893	$	25.953961	$	9.866342	$	9.655117	$	10.521100	$	16.479338	$	12.750860
	4		18		97		8		6		137		50		129
$	140.096515	$	15.042893	$	25.953961	$	9.866342	$	9.655117	$	10.521100	$	16.479338	$	12.750860
	5		3		14		—		—		15		12		19
$	140.096515	$	15.042893	$	25.953961	$	9.866342	$	9.655117	$	10.521100	$	16.479338	$	12.750860
	—		2		4		—		—		1		1		2

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

Statements of Assets and Liabilities

Northwestern Mutual Variable Life Account II

December 31, 2011

(in thousands, except accumulation unit values)


	Russell Core Bond Division		Russell Global Real Estate Securities Division		Russell LifePoints Moderate Strategy Division		Russell LifePoints Balanced Strategy Division		Russell LifePoints Growth Strategy Division		Russell LifePoints Equity Growth Strategy Division
Assets:
Investments, at value (1)
Northwestern Mutual Series Fund, Inc	$	—	$	—	$	—	$	—	$	—	$	—
Fidelity Variable Insurance Products		—		—		—		—		—		—
Neuberger Berman Advisers Master Trust		—		—		—		—		—		—
Russell Investment Funds		1,945		2,450		20		40		32		8
Due from Northwestern Mutual Life Insurance Company		—		—		—		—		—		—

Total Assets		1,945		2,450		20		40		32		8

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

Total Liabilities		—		—		—		—		—		—

Total Net Assets	$	1,945	$	2,450	$	20	$	40	$	32	$	8

Net Assets:
Custom Variable Universal Life Policies Issued On or After January 31, 2007 (2)
Policyowners’ Equity	$	1,282	$	2,214	$	20	$	40	$	32	$	8
Executive Variable Universal Life Policies Issued On or After January 31, 2007 (3)
Policyowners’ Equity		629		146		—		—		—		—
Survivorship Variable Universal Life Policies Issued On or After January 31, 2007 (4)
Policyowners’ Equity		34		90		—		—		—		—

Total Net Assets	$	1,945	$	2,450	$	20	$	40	$	32	$	8


(1) Investments, at cost	$	1,977	$	2,238	$	20	$	41	$	33	$	8
Mutual Fund Shares Held		186		194		2		5		4		1
(2) Accumulation Unit Value	$	20.671320	$	29.438654	$	11.440046	$	10.437591	$	9.458077	$	8.471141
Units Outstanding		62		75		2		4		3		1
(3) Accumulation Unit Value	$	20.671320	$	29.438654	$	11.440046	$	10.437591	$	9.458077	$	8.471141
Units Outstanding		30		5		—		—		—		—
(4) Accumulation Unit Value	$	20.671320	$	29.438654	$	11.440046	$	10.437591	$	9.458077	$	8.471141
Units Outstanding		2		3		—		—		—		—

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, 2011

(in thousands)


	Growth Stock Division			Focused Appreciation Division			Large Cap Core Stock Division			Large Cap Blend Division
Income:
Dividend income	$	15		$	7		$	15		$	1

Net investment income (loss)		15			7			15			1

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		27			235			76			—
Realized gain distributions		—			—			—			—

Realized gains (losses)		27			235			76			—

Change in unrealized appreciation/ depreciation of investments during the period		(67	)		(469	)		(103	)		(3	)

Net increase (decrease) in net assets resulting from operations	$	(25	)	$	(227	)	$	(12	)	$	(2	)



	Index 500 Stock Division			Large Company Value Division			Domestic Equity Division			Equity Income Division
Income:
Dividend income	$	120		$	—		$	51		$	38

Net investment income (loss)		120			—			51			38

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		410			—			20			196
Realized gain distributions		160			—			—			—

Realized gains (losses)		570			—			20			196

Change in unrealized appreciation/ depreciation of investments during the period		(622	)		1			(65	)		(261	)

Net increase (decrease) in net assets resulting from operations	$	68		$	1		$	6		$	(27	)

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

Statements of Operations

Northwestern Mutual Variable Life Account II

For the Year Ended December 31, 2011

(in thousands)


	Mid Cap Growth Stock Division			Index 400 Stock Division			Mid Cap Value Division			Small Cap Growth Stock Division			Index 600 Stock Division			Small Cap Value Division
Income:
Dividend income	$	5		$	28		$	20		$	7		$	—		$	17

Net investment income (loss)		5			28			20			7			—			17

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		251			322			64			170			—			245
Realized gain distributions		—			179			—			—			1			—

Realized gains (losses)		251			501			64			170			1			245

Change in unrealized appreciation/ depreciation of investments during the period		(393	)		(566	)		(126	)		(242	)		(1	)		(317	)

Net increase (decrease) in net assets resulting from operations	$	(137	)	$	(37	)	$	(42	)	$	(65	)	$	—		$	(55	)


	Select Bond Division			Long-Term U.S. Government Bond Division			Inflation Protection Division			High Yield Bond Division			Multi-Sector Bond Division			Commodities Return Strategy Division
Income:
Dividend income	$	159		$	—		$	—		$	125		$	12		$	—

Net investment income (loss)		159			—			—			125			12			—

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		80			—			1			137			(1	)		(4	)
Realized gain distributions		95			1			1			—			4			—

Realized gains (losses)		175			1			2			137			3			(4	)

Change in unrealized appreciation/ depreciation of investments during the period		(7	)		—			8			(180	)		(12	)		(31	)

Net increase (decrease) in net assets resulting from operations	$	327		$	1		$	10		$	82		$	3		$	(35	)

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

Statements of Operations


International Growth Division			Research International Core Division			International Equity Division			Emerging Markets Equity Division			Money Market Division			Short-Term Bond Division

$	23		$	2		$	146		$	3		$	4		$	2

	23			2			146			3			4			2


	37			(5	)		10			(11	)		—			—
	—			—			—			—			—			—

	37			(5	)		10			(11	)		—			—

	(333	)		(5	)		(895	)		(27	)		—			(3	)

$	(273	)	$	(8	)	$	(739	)	$	(35	)	$	4		$	(1	)


Balanced Division			Asset Allocation Division			Fidelity VIP Mid Cap Division			Fidelity VIP Contrafund Division			Neuberger Berman AMT Socially Responsive Division			Russell Multi-Style Equity Division

$	37		$	8		$	1		$	1		$	—		$	15

	37			8			1			1			—			15


	71			29			335			—			(1	)		82
	—			—			6			—			—			—

	71			29			341			—			(1	)		82

	(84	)		(36	)		(673	)		2			2			(142	)

$	24		$	1		$	(331	)	$	3		$	1		$	(45	)

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

Statements of Operations

Northwestern Mutual Variable Life Account II

For the Year Ended December 31, 2011

(in thousands)


	Russell Aggressive Equity Division			Russell Non-U.S. Division			Russell Core Bond Division			Russell Global Real Estate Securities Division
Income:
Dividend income	$	5		$	29		$	50		$	51

Net investment income (loss)		5			29			50			51

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		52			27			16			(20	)
Realized gain distributions		—			—			31			—

Realized gains (losses)		52			27			47			(20	)

Change in unrealized appreciation/ depreciation of investments during the period		(113	)		(330	)		(31	)		(216	)

Net increase (decrease) in net assets resulting from operations	$	(56	)	$	(274	)	$	66		$	(185	)


	Russell LifePoints Moderate Strategy Division			Russell LifePoints Balanced Strategy Division			Russell LifePoints Growth Strategy Division			Russell LifePoints Equity Growth Strategy Division
Income:
Dividend income	$	—		$	—		$	—		$	—

Net investment income (loss)		—			—			—			—

Realized gain (loss) on investments:
Realized gain (loss) on sale of fund shares		—			—			—			—
Realized gain distributions		—			—			—			—

Realized gains (losses)		—			—			—			—

Change in unrealized appreciation/ depreciation of investments during the period		—			(1	)		(1	)		—

Net increase (decrease) in net assets resulting from operations	$	—		$	(1	)	$	(1	)	$	—

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, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010

Operations:
Net investment income (loss)	$	15		$	11		$	7		$	—
Net realized gains (losses)		27			20			235			171
Net change in unrealized appreciation/depreciation		(67	)		149			(469	)		58

Net increase (decrease) in net assets resulting from operations		(25	)		180			(227	)		229


Policy Transactions:
Policyowners’ net payments		601			471			947			856
Policy loans, surrenders and death benefits		(41	)		(19	)		(280	)		(1,181	)
Mortality and other (net)		(153	)		(123	)		(220	)		(279	)
Transfers from other divisions		4,059			3,331			14,114			10,643
Transfers to other divisions		(4,116	)		(3,150	)		(14,068	)		(10,202	)

Net increase (decrease) in net assets resulting from policy transactions		350			510			493			(163	)

Net increase (decrease) in net assets		325			690			266			66

Net Assets:
Beginning of period		1,628			938			3,516			3,450

End of period	$	1,953		$	1,628		$	3,782		$	3,516

Units issued during the period		157			155			846			604
Units redeemed during the period		(146	)		(137	)		(822	)		(616	)

Net units issued (redeemed) during period		11			18			24			(12	)



	Large Cap Core Stock Division						Large Cap Blend Division			Index 500 Stock Division
	Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010

Operations:
Net investment income (loss)	$	15		$	11		$	1		$	120		$	78
Net realized gains (losses)		76			(5	)		—			570			(51	)
Net change in unrealized appreciation/depreciation		(103	)		143			(3	)		(622	)		566

Net increase (decrease) in net assets resulting from operations		(12	)		149			(2	)		68			593


Policy Transactions:
Policyowners’ net payments		511			316			11			1,887			1,318
Policy loans, surrenders and death benefits		(103	)		(34	)		—			(283	)		(93	)
Mortality and other (net)		(120	)		(93	)		(2	)		(378	)		(277	)
Transfers from other divisions		1,940			1,995			145			24,516			17,076
Transfers to other divisions		(2,091	)		(1,590	)		(41	)		(23,711	)		(16,487	)

Net increase (decrease) in net assets resulting from policy transactions		137			594			113			2,031			1,537

Net increase (decrease) in net assets		125			743			111			2,099			2,130

Net Assets:
Beginning of period		1,331			588			—			4,937			2,807

End of period	$	1,456		$	1,331		$	111		$	7,036		$	4,937

Units issued during the period		102			103			19			525			374
Units redeemed during the period		(97	)		(78	)		(5	)		(491	)		(345	)

Net units issued (redeemed) during period		5			25			14			34			29

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)


	Large Company Value Division			Domestic Equity Division						Equity Income Division
	Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010

Operations:
Net investment income (loss)	$	—		$	51		$	39		$	38		$	25
Net realized gains (losses)		—			20			(58	)		196			(43	)
Net change in unrealized appreciation/depreciation		1			(65	)		268			(261	)		246

Net increase (decrease) in net assets resulting from operations		1			6			249			(27	)		228


Policy Transactions:
Policyowners’ net payments		2			743			483			532			331
Policy loans, surrenders and death benefits		—			(160	)		(98	)		(179	)		(55	)
Mortality and other (net)		—			(172	)		(155	)		(121	)		(88	)
Transfers from other divisions		8			3,798			2,447			10,159			6,512
Transfers to other divisions		(1	)		(3,646	)		(2,309	)		(9,767	)		(6,201	)

Net increase (decrease) in net assets resulting from policy transactions		9			563			368			624			499

Net increase (decrease) in net assets		10			569			617			597			727

Net Assets:
Beginning of period		—			1,979			1,362			1,943			1,216

End of period	$	10		$	2,548		$	1,979		$	2,540		$	1,943

Units issued during the period		2			365			257			704			457
Units redeemed during the period		(1	)		(323	)		(225	)		(668	)		(424	)

Net units issued (redeemed) during period		1			42			32			36			33



	Index 600 Stock Division			Small Cap Value Division						International Growth Division
	Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010

Operations:
Net investment income (loss)	$	—		$	17		$	20		$	23		$	12
Net realized gains (losses)		1			245			(48	)		37			(20	)
Net change in unrealized appreciation/depreciation		(1	)		(317	)		421			(333	)		215

Net increase (decrease) in net assets resulting from operations		—			(55	)		393			(273	)		207


Policy Transactions:
Policyowners’ net payments		3			685			500			718			403
Policy loans, surrenders and death benefits		—			(253	)		(81	)		(104	)		(61	)
Mortality and other (net)		(1	)		(166	)		(129	)		(153	)		(112	)
Transfers from other divisions		27			11,138			8,073			3,891			2,488
Transfers to other divisions		(8	)		(10,893	)		(7,864	)		(3,648	)		(2,220	)

Net increase (decrease) in net assets resulting from policy transactions		21			511			499			704			498

Net increase (decrease) in net assets		21			456			892			431			705

Net Assets:
Beginning of period		—			2,323			1,431			1,575			870

End of period	$	21		$	2,779		$	2,323		$	2,006		$	1,575

Units issued during the period		3			576			440			300			206
Units redeemed during the period		(1	)		(555	)		(414	)		(255	)		(173	)

Net units issued (redeemed) during period		2			21			26			45			33

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

Statements of Changes in Net Assets


Mid Cap Growth Stock Division						Index 400 Stock Division						Mid Cap Value Division						Small Cap Growth Stock Division
Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010


$	5		$	5		$	28		$	22		$	20		$	6		$	7		$	10
	251			(62	)		501			11			64			48			170			(15	)
	(393	)		421			(566	)		439			(126	)		54			(242	)		337

	(137	)		364			(37	)		472			(42	)		108			(65	)		332



	477			298			942			503			223			288			712			480
	(172	)		(15	)		(259	)		(50	)		(33	)		(57	)		(137	)		(94	)
	(125	)		(108	)		(201	)		(135	)		(48	)		(44	)		(161	)		(121	)
	11,246			7,369			12,938			7,715			2,279			2,770			3,829			2,976
	(11,204	)		(7,077	)		(12,418	)		(7,337	)		(2,255	)		(2,721	)		(3,832	)		(2,674	)


	222			467			1,002			696			166			236			411			567

	85			831			965			1,168			124			344			346			899


	2,002			1,171			2,488			1,320			778			434			1,708			809

$	2,087		$	2,002		$	3,453		$	2,488		$	902		$	778		$	2,054		$	1,708

	173			123			554			374			190			195			181			157
	(170	)		(116	)		(515	)		(343	)		(183	)		(180	)		(167	)		(133	)

	3			7			39			31			7			15			14			24



Research International Core Division			International Equity Division						Emerging Markets Equity Division			Money Market Division						Short-Term Bond Division
Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011


$	2		$	146		$	146		$	3		$	4		$	9		$	2
	(5	)		10			(276	)		(11	)		—			—			—
	(5	)		(895	)		577			(27	)		—			—			(3	)

	(8	)		(739	)		447			(35	)		4			9			(1	)



	19			2,023			1,379			48			7,398			7,707			19
	(3	)		(553	)		(217	)		(2	)		(448	)		(220	)		(1	)
	(4	)		(473	)		(406	)		(7	)		(316	)		(340	)		(2	)
	232			21,325			13,947			509			8,619			10,344			187
	(101	)		(20,693	)		(13,014	)		(158	)		(14,336	)		(17,426	)		(26	)


	143			1,629			1,689			390			917			65			177

	135			890			2,136			355			921			74			176


	—			5,937			3,801			—			2,794			2,720			—

$	135		$	6,827		$	5,937		$	355		$	3,715		$	2,794		$	176

	30			5,879			4,335			65			438			509			38
	(13	)		(5,474	)		(3,886	)		(28	)		(417	)		(507	)		(23	)

	17			405			449			37			21			2			15

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)


	Select Bond Division						Long-Term U.S. Government Bond Division			Inflation Protection Division
	Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011			Period June 30 to December 31, 2011

Operations:
Net investment income (loss)	$	159		$	143		$	—		$	—
Net realized gains (losses)		175			42			1			2
Net change in unrealized appreciation/depreciation		(7	)		14			—			8

Net increase (decrease) in net assets resulting from operations		327			199			1			10


Policy Transactions:
Policyowners’ net payments		1,427			1,212			1			41
Policy loans, surrenders and death benefits		(278	)		(158	)		(1	)		(1	)
Mortality and other (net)		(359	)		(293	)		(1	)		(4	)
Transfers from other divisions		12,516			10,185			7			503
Transfers to other divisions		(12,783	)		(9,456	)		—			(217	)

Net increase (decrease) in net assets resulting from policy transactions		523			1,490			6			322

Net increase (decrease) in net assets		850			1,689			7			332

Net Assets:
Beginning of period		4,277			2,588			—			—

End of period	$	5,127		$	4,277		$	7		$	332

Units issued during the period		91			77			—			59
Units redeemed during the period		(88	)		(69	)		—			(35	)

Net units issued (redeemed) during period		3			8			—			24



	Fidelity VIP Mid Cap Division						Fidelity VIP Contrafund Division			Neuberger Berman AMT Socially Responsive Division
	Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011			Period June 30 to December 31, 2011

Operations:
Net investment income (loss)	$	1		$	3		$	1		$	—
Net realized gains (losses)		341			20			—			(1	)
Net change in unrealized appreciation/depreciation		(673	)		494			2			2

Net increase (decrease) in net assets resulting from operations		(331	)		517			3			1


Policy Transactions:
Policyowners’ net payments		1,058			622			13			11
Policy loans, surrenders and death benefits		(169	)		(152	)		(2	)		(2	)
Mortality and other (net)		(239	)		(174	)		(3	)		(2	)
Transfers from other divisions		7,121			5,025			132			111
Transfers to other divisions		(7,086	)		(4,592	)		(67	)		(63	)

Net increase (decrease) in net assets resulting from policy transactions		685			729			73			55

Net increase (decrease) in net assets		354			1,246			76			56

Net Assets:
Beginning of period		2,616			1,370			—			—

End of period	$	2,970		$	2,616		$	76		$	56

Units issued during the period		318			281			16			13
Units redeemed during the period		(292	)		(253	)		(8	)		(7	)

Net units issued (redeemed) during period		26			28			8			6

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

Statements of Changes in Net Assets


High Yield Bond Division						Multi-Sector Bond Division			Commodities Return Strategy Division			Balanced Division						Asset Allocation Division
Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011			Period June 30 to December 31, 2011			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010


$	125		$	93		$	12		$	—		$	37		$	21		$	8		$	10
	137			64			3			(4	)		71			22			29			(3	)
	(180	)		9			(12	)		(31	)		(84	)		62			(36	)		36

	82			166			3			(35	)		24			105			1			43



	511			307			22			62			449			324			69			56
	(121	)		(26	)		(1	)		(2	)		(46	)		(105	)		(37	)		(9	)
	(126	)		(91	)		(4	)		(8	)		(79	)		(68	)		(26	)		(22	)
	5,423			5,413			295			428			5,435			2,715			508			382
	(5,101	)		(5,227	)		(77	)		(126	)		(5,455	)		(2,428	)		(557	)		(318	)


	586			376			235			354			304			438			(43	)		89

	668			542			238			319			328			543			(42	)		132


	1,558			1,016			—			—			1,085			542			386			254

$	2,226		$	1,558		$	238		$	319		$	1,413		$	1,085		$	344		$	386

	189			188			42			69			45			24			47			33
	(173	)		(176	)		(25	)		(29	)		(43	)		(21	)		(50	)		(27	)

	16			12			17			40			2			3			(3	)		6



Russell Multi-Style Equity Division						Russell Aggressive Equity Division						Russell Non-U.S. Division						Russell Core Bond Division
Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2011			Year Ended December 31, 2010


$	15		$	10		$	5		$	3		$	29		$	8		$	50		$	35
	82			(43	)		52			(6	)		27			(23	)		47			57
	(142	)		230			(113	)		151			(330	)		185			(31	)		(17	)

	(45	)		197			(56	)		148			(274	)		170			66			75



	517			351			403			206			628			495			480			264
	(150	)		(47	)		(71	)		(24	)		(165	)		(28	)		(84	)		(24	)
	(125	)		(108	)		(81	)		(60	)		(133	)		(109	)		(126	)		(81	)
	2,603			1,916			1,557			1,010			3,640			2,772			3,469			2,438
	(2,600	)		(1,884	)		(1,508	)		(895	)		(3,328	)		(2,627	)		(3,137	)		(2,125	)


	245			228			300			237			642			503			602			472

	200			425			244			385			368			673			668			547


	1,416			991			803			418			1,549			876			1,277			730

$	1,616		$	1,416		$	1,047		$	803		$	1,917		$	1,549		$	1,945		$	1,277

	321			251			130			90			349			272			222			146
	(301	)		(225	)		(114	)		(72	)		(305	)		(232	)		(193	)		(122	)

	20			26			16			18			44			40			29			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)


	Russell Global Real Estate Securities Division						Russell LifePoints Moderate Strategy Division
	Year Ended December 31, 2011			Year Ended December 31, 2010			Period June 30 to December 31, 2011

Operations:
Net investment income (loss)	$	51		$	33		$	—
Net realized gains (losses)		(20	)		(21	)		—
Net change in unrealized appreciation/depreciation		(216	)		305			—

Net increase (decrease) in net assets resulting from operations		(185	)		317			—


Policy Transactions:
Policyowners’ net payments		784			510			2
Policy loans, surrenders and death benefits		(182	)		(106	)		(1	)
Mortality and other (net)		(198	)		(145	)		—
Transfers from other divisions		4,047			2,585			38
Transfers to other divisions		(3,726	)		(2,308	)		(19	)

Net increase (decrease) in net assets resulting from policy transactions		725			536			20

Net increase (decrease) in net assets		540			853			20

Net Assets:
Beginning of period		1,910			1,057			—

End of period	$	2,450		$	1,910		$	20

Units issued during the period		191			118			4
Units redeemed during the period		(168	)		(99	)		(2	)

Net units issued (redeemed) during period		23			19			2


	Russell LifePoints Balanced Strategy Division			Russell LifePoints Growth Strategy Division			Russell LifePoints Equity Growth Strategy Division
	Period June 30 to December 31, 2011			Period June 30 to December 31, 2011			Period June 30 to December 31, 2011

Operations:
Net investment income (loss)	$	—		$	—		$	—
Net realized gains (losses)		—			—			—
Net change in unrealized appreciation/depreciation		(1	)		(1	)		—

Net increase (decrease) in net assets resulting from operations		(1	)		(1	)		—


Policy Transactions:
Policyowners’ net payments		2			6			3
Policy loans, surrenders and death benefits		(1	)		(1	)		(1	)
Mortality and other (net)		—			(1	)		—
Transfers from other divisions		59			36			8
Transfers to other divisions		(19	)		(7	)		(2	)

Net increase (decrease) in net assets resulting from policy transactions		41			33			8

Net increase (decrease) in net assets		40			32			8

Net Assets:
Beginning of period		—			—			—

End of period	$	40		$	32		$	8

Units issued during the period		6			4			1
Units redeemed during the period		(2	)		(1	)		—

Net units issued (redeemed) during period		4			3			1

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, 2011

1. Organization

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

Effective May 1, 2011, the Russell Real Estate Securities Division of the Account was renamed the Russell Global Real Estate Securities Division.

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 as 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, 2011 were as follows: (in thousands)


Division	Purchases		Sales
Growth Stock	$	669	$	301
Focused Appreciation		1,081		570
Large Cap Core Stock		570		417
Large Cap Blend		117		3
Index 500 Stock		3,056		746
Large Company Value		10		1
Domestic Equity		1,010		382
Equity Income		1,011		350
Mid Cap Growth Stock		569		342
Index 400 Stock		1,776		565
Mid Cap Value		286		101
Small Cap Growth Stock		808		387
Index 600 Stock		22		1
Small Cap Value		1,004		475
International Growth		1,038		306
Research International Core		152		6
International Equity		2,946		1,164
Emerging Markets Equity		407		16
Money Market		7,739		6,869
Short-Term Bond		187		8
Select Bond		1,803		1,011
Long-Term U.S. Government Bond		9		2
Inflation Protection		333		10

Notes to Financial Statements


Division	Purchases		Sales
High Yield Bond	$	976	$	265
Multi-Sector Bond		262		10
Commodities Return Strategy		367		14
Balanced		506		164
Asset Allocation		84		120
Fidelity VIP Mid Cap		1,134		433
Fidelity VIP Contrafund		80		5
Neuberger Berman AMT Socially Responsive		58		4
Russell Multi-Style Equity		546		285
Russell Aggressive Equity		480		169
Russell Non-U.S.		1,016		340
Russell Core Bond		919		237
Russell Global Real Estate Securities		1,226		450
Russell LifePoints Moderate Strategy		22		1
Russell LifePoints Balanced Strategy		42		2
Russell LifePoints Growth Strategy		36		2
Russell LifePoints Equity Growth Strategy		10		1

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 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. 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 12/31/11		60	$ 32.569595	$	1,953		0.80%	0.05% to 0.35%	(1.30%)
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 12/31/11		193	$ 19.596705	$	3,782		0.18%	0.05% to 0.35%	(6.10%)
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 12/31/11		55	$ 26.156583	$	1,456		1.15%	0.05% to 0.35%	(1.21%)
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
Large Cap Blend (3)
Period Ended 12/31/11		14	$ 7.947227	$	111		2.27%	0.05% to 0.35%	(5.56%)

(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.

(3)	Divisions commenced operations on June 30, 2011.

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)
Index 500 Stock
Year Ended 12/31/11		118	$ 59.726031	$	7,036		1.84%	0.05% to 0.35%	1.95%
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
Large Company Value (3)
Period Ended 12/31/11		1	$ 8.021755	$	10		5.34%	0.05% to 0.35%	(3.12%)
Domestic Equity
Year Ended 12/31/11		194	$ 13.151218	$	2,548		2.12%	0.05% to 0.35%	0.91%
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 12/31/11		152	$ 16.677245	$	2,540		1.64%	0.05% to 0.35%	(0.92%)
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
Mid Cap Growth Stock
Year Ended 12/31/11		31	$ 67.344023	$	2,087		0.24%	0.05% to 0.35%	(6.18%)
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 12/31/11		135	$ 25.435391	$	3,453		0.86%	0.05% to 0.35%	(1.92%)
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 12/31/11		50	$ 18.168731	$	902		2.35%	0.05% to 0.35%	(0.61%)
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 12/31/11		72	$ 28.847575	$	2,054		0.36%	0.05% to 0.35%	(2.78%)
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
Index 600 Stock (3)
Period Ended 12/31/11		2	$ 10.280016	$	21		1.82%	0.05% to 0.35%	(6.01%)

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

(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 Division and from 0.06% to 0.61% for the Money Market Division.

(3)	Divisions commenced operations on June 30, 2011.

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)
Small Cap Value
Year Ended 12/31/11		125	$ 22.212770	$	2,779		0.63%	0.05% to 0.35%	(1.36%)
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 12/31/11		139	$ 14.519220	$	2,006		1.18%	0.05% to 0.35%	(13.17%)
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
Research International Core (3)
Period Ended 12/31/11		17	$ 7.884380	$	135		3.54%	0.05% to 0.35%	(15.93%)
International Equity
Year Ended 12/31/11		1,854	$ 3.682261	$	6,827		2.17%	0.05% to 0.35%	(10.10%)
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
Emerging Markets Equity (3)
Period Ended 12/31/11		37	$ 9.567929	$	355		2.16%	0.05% to 0.35%	(18.36%)
Money Market
Year Ended 12/31/11		89	$ 41.437528	$	3,715		0.12%	0.05% to 0.35%	0.14%
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
Short-Term Bond (3)
Period Ended 12/31/11		15	$ 11.832025	$	176		3.05%	0.05% to 0.35%	(0.42%)
Select Bond
Year Ended 12/31/11		26	$195.021673	$	5,127		3.36%	0.05% to 0.35%	7.16%
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
Long-Term U.S. Government Bond (3)
Period Ended 12/31/11		—	$ 17.228764	$	7		5.68%	0.05% to 0.35%	25.15%
Inflation Protection (3)
Period Ended 12/31/11		24	$ 13.694886	$	332		0.04%	0.05% to 0.35%	6.60%
High Yield Bond
Year Ended 12/31/11		62	$ 36.059875	$	2,226		6.99%	0.05% to 0.35%	4.59%
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
Multi-Sector Bond (3)
Period Ended 12/31/11		17	$ 13.657358	$	238		11.64%	0.05% to 0.35%	1.71%

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

(2)

(3)	Divisions commenced operations on June 30, 2011.

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)
Commodities Return Strategy (3)
Period Ended 12/31/11		40	$ 8.070260	$	319		0.00%	0.05% to 0.35%	(11.02%)
Balanced
Year Ended 12/31/11		9	$140.096515	$	1,413		2.94%	0.05% to 0.35%	2.11%
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 12/31/11		23	$ 15.042893	$	344		2.25%	0.05% to 0.35%	(0.08%)
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 12/31/11		115	$ 25.953961	$	2,970		0.02%	0.05% to 0.35%	(10.85%)
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
Fidelity VIP Contrafund (3)
Period Ended 12/31/11		8	$ 9.866342	$	76		2.07%	0.05% to 0.35%	(7.43%)
Neuberger Berman AMT Socially Responsive (3)
Period Ended 12/31/11		6	$ 9.655117	$	56		1.00%	0.05% to 0.35%	(8.79%)
Russell Multi-Style Equity
Year Ended 12/31/11		153	$ 10.521100	$	1,616		0.94%	0.05% to 0.35%	(1.55%)
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 12/31/11		63	$ 16.479338	$	1,047		0.49%	0.05% to 0.35%	(4.20%)
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 12/31/11		150	$ 12.750860	$	1,917		1.54%	0.05% to 0.35%	(12.88%)
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 Core Bond
Year Ended 12/31/11		94	$ 20.671320	$	1,945		3.17%	0.05% to 0.35%	4.68%
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.

(3)	Divisions commenced operations on June 30, 2011.

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)
Russell Global Real Estate Securities (4)
Year Ended 12/31/11		83	$ 29.438654	$	2,450		2.18%	0.05% to 0.35%	(7.05%)
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 LifePoints Moderate Strategy (3)
Period Ended 12/31/11		2	$ 11.440046	$	20		5.02%	0.05% to 0.35%	(3.67%)
Russell LifePoints Balanced Strategy (3)
Period Ended 12/31/11		4	$ 10.437591	$	40		5.54%	0.05% to 0.35%	(6.53%)
Russell LifePoints Growth Strategy (3)
Period Ended 12/31/11		3	$ 9.458077	$	32		4.23%	0.05% to 0.35%	(9.16%)
Russell LifePoints Equity Growth Strategy (3)
Period Ended 12/31/11		1	$ 8.471141	$	8		3.99%	0.05% to 0.35%	(10.88%)

(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.

(3)	Divisions commenced operations on June 30, 2011.

(4)	Effective May 1, 2011, the Russell Real Estate Securities was renamed the Russell Global Real Estate Securities.

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 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, Large Cap Blend Division, Index 500 Stock Division, Large Company Value 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, Index 600 Stock Division, Small Cap Value Division, International Growth Division, Research International Core Division, International Equity Division, Emerging Markets Equity Division, Money Market Division, Short-Term Bond Division, Select Bond Division, Long-Term U.S. Government Bond Division, Inflation Protection Division, High Yield Bond Division, Multi-Sector Bond Division, Commodities Return Strategy Division, Balanced Division, Asset Allocation Division, Fidelity VIP Mid Cap Division, Fidelity VIP Contrafund Division, Neuberger Berman AMT Socially Responsive Division, Russell Multi-Style Equity Division, Russell Aggressive Equity Division, Russell Non-US Division, Russell Core Bond Division, Russell Global Real Estate Securities Division, Russell LifePoints Moderate Strategy Division, Russell LifePoints Balanced Strategy Division, Russell LifePoints Growth Strategy Division, Russell LifePoints Equity Growth Strategy Division at December 31, 2011, and the results of each of their operations, the changes in each of their net assets for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These 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, 2011 with Northwestern Mutual Series Fund, Inc., Neuberger Berman Advisers Management Trust, Fidelity Variable Insurance Products and the Russell Investment Funds, provide a reasonable basis for our opinion.

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February 20, 2012

Report of Independent Registered Public Accounting Firm

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