Choose an asset that guarantees financial securityPEOPLE WHO OWN LIFE INSURANCE KNOW IT HAS NO EqUAL when it comes to guaranteeing financial securityfor those they care about after they die. Those among them who own a permanent life insurance policy can takeadvantage of an accumulation feature that contributes to their financial independence. Those who have owned apermanent policy from The Northwestern Mutual Life Insurance Company (Northwestern Mutual) have benefitedfrom a unique investment approach that has contributed to the company’s industry-leading dividend performance.Our unique investment approach Portfolio ComPositionThe investment portfolio that supports Northwestern December 31, 2009Mutual’s permanent life insurance policies includes all the Total Managed Assets: $131.6 Billion (Statement Value)major asset classes and market sectors – fixed income and PRIVATE MONEYequities, as well as real estate developments, leveraged PUBLIC COMMON EQUITIES MARKETbuyouts and mezzanine investments. And we achieve STOCK 5% INVESTMENTS REAL 3% 2%even greater diversification by carefully selecting a large ESTATE EQUITIESnumber of investments within each of them. 4%Because our policyowners tend to live long lives, areloyal to the company, and pay premiums consistently, COMMERCIAL MORTGAGE LOANScompared to our competitors, Northwestern Mutual 15% PUBLIC BONDS &has the latitude to not only invest long-term, but also to PREFERRED STOCK PRIVATE BONDS &allocate a higher percentage of assets to those classes PREFERRED STOCK 54%that generally offer higher yields. 17%Additionally, by combining the returns on more recentinvestments with those on long-term investments madeyears ago, we establish a portfolio that rounds off the Source: 2009 Northwestern Mutual Investment Reportpeaks and valleys. Our policyowners benefit from all of ourinvestments, regardless of when they actually purchase Following this approach, Northwestern Mutual has demonstrated overtheir policies. This portfolio approach helps to shelter them an extended period that it can increase the company’s total investmentfrom the day-to-day volatility of the market. return while reducing the variability of those returns.
Competitive returns with low volatility ACtuAl results 1990 - 2009 ANNUAL RATES OF RETURN Under the variety of economic conditions of a recent 20 year period, for example, highest lowest average the returns on a portfolio comprised solely of bonds averaged 7.12%. The returns on Northwestern Mutual’s overall portfolio contributed to a dividend interest rate that COMMON STOCKS 37.43 -37.00 10.10 averaged 112 basis points more. And that superior result was achieved while subjecting CORP BONDS 18.48 -2.92 7.12 the assets to less risk of loss. Certainly, a 100% investment in stocks would have yielded LT MUNICIPALS 21.99 -11.30 6.98 a higher rate of return – 10.1% during the same period – but it was earned with a risk factor much greater than the Northwestern Mutual’s more balanced portfolio. IT TREASURY BONDS 16.80 -5.14 6.86 U.S. 30-DAY T-BILLS 7.81 .10 3.85 DIVIDEND INTEREST RATE* high return / less safe high return / more safe NORTHWESTERN MUTUAL 10.00 6.15 8.24 COMMON The investment results we have achieved are STOCKS NOrthwesterN Mutual significant. The dividends paid out reflect the DiviDeND sCale iNterest rate* substantial contribution the investment results have on the ever-increasing values Northwestern Mutual policyowners receive. This does not meanRETURN CORPORATE LONg-TERM BONDS that Northwestern Mutual cash values have MUNICIPALS U.S. INTERMEDIATE grown at an average rate of 8.24% over the last TREASURY 20 years; the cost, and associated value, of the BONDS protection a life insurance policy provides has to be taken into consideration. Similarly, the rates of U.S. 30-DAY return quoted for other investments do not take T-BILLS into account taxes that may be due or investment fees that may be charged. low return / less safe low return / more safe SAFETY Create a lifelong foundation for your financial security. The relative placement of the various portfolios on the diagram is determined by two factors: the average return for each portfolio for the period 1990-2009, and the volatility experienced by those portfolios. Those investments with the greatest swings are the highest risk portfolios. *Rate for unborrowed funds for most traditional permanent life insurance policies (see description on back cover). The dividend scale consists of more than the dividend interest rate.
This material describes the investment strategy for the managed assets in Northwestern Mutual’s general account and the investment performance of these assets.For more details on the concepts discussed in this brochure ask your Financial Representative to see “The Power of the Portfolio” and/or “Mutual Advantage.” TheCompany’s dividend scale interest rate for unborrowed funds for most traditional life insurance policies reflects the investment performance of the managed assetsnet of taxes and any contribution to surplus. This rate is used for crediting interest on policy values after deducting mortality and expense charges. Because of themortality and expense charges, the dividend scale interest rate should not be used as a measure of the policy’s internal rate of return. The dividend scale and theunderlying interest rates are reviewed annually and are subject to change. Future dividends are not guaranteed, although Northwestern Mutual has paid a dividendevery year since 1872.Decisions with respect to the amount and appropriate allocation of divisible surplus for participating policies of Northwestern Mutual are left to the discretion andbusiness judgment of the Board of Trustees. There is no guaranteed approach or formula for determining the amount of divisible surplus or the manner in which itis allocated as dividends. Further, there is no guarantee that any dividend will be paid on an individual policy in any given year. Therefore, the approach described inthis brochure for determining dividends, the dividend interest rate and other dividend factors is subject to change without notice.The dividend scale interest rate for a particular policy is the interest rate used for crediting interest on policy values after deducting mortality and expense charges.It reflects investment performance of both managed assets and policy loans. Depending on the type of policy, either individual policy loan activity or average loanactivity of all policies in the dividend class is reflected.Northwestern Mutual Life Insurance Company’s operational results, investment holdings and financial position for the year ending 12/31/2009 are reported in thecompany’s Consolidated Financial Statement (CFS). PricewaterhouseCoopers LLP is the company’s independent accountant. A copy of Northwestern Mutual’s CFSis available online at www.northwesternmutual.com | About Us | Financial Information or by written request to: Northwestern Mutual, Corporate Relations, N04NE,720 E. Wisconsin Avenue, Milwaukee, WI 53202.Northwestern Mutual is the marketing name of The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life and disability insurance, annuities) andits subsidiaries. Securities offered through Northwestern Mutual Investment Sevices, LLC (NMIS), a subsidiary of NM, broker-dealer, registered investment advisor,and member of FINRA and SIPC. The Northwestern Mutual Life Insurance Company • Milwaukee, WI www.northwesternmutual.com 29-5156 (0510)