2. Choose an asset that guarantees financial security
PEOPLE WHO OWN LIFE INSURANCE KNOW IT HAS NO EqUAL when it comes to guaranteeing financial security
for those they care about after they die. Those among them who own a permanent life insurance policy can take
advantage of an accumulation feature that contributes to their financial independence. Those who have owned a
permanent policy from The Northwestern Mutual Life Insurance Company (Northwestern Mutual) have benefited
from a unique investment approach that has contributed to the company’s industry-leading dividend performance.
Our unique investment approach Portfolio ComPosition
The investment portfolio that supports Northwestern December 31, 2009
Mutual’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
MONEY
equities, as well as real estate developments, leveraged PUBLIC
COMMON
EQUITIES MARKET
buyouts and mezzanine investments. And we achieve STOCK 5% INVESTMENTS
REAL
3% 2%
even greater diversification by carefully selecting a large ESTATE
EQUITIES
number of investments within each of them. 4%
Because our policyowners tend to live long lives, are
loyal to the company, and pay premiums consistently, COMMERCIAL
MORTGAGE LOANS
compared 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 recent
investments with those on long-term investments made
years ago, we establish a portfolio that rounds off the Source: 2009 Northwestern Mutual Investment Report
peaks and valleys. Our policyowners benefit from all of our
investments, regardless of when they actually purchase Following this approach, Northwestern Mutual has demonstrated over
their policies. This portfolio approach helps to shelter them an extended period that it can increase the company’s total investment
from the day-to-day volatility of the market. return while reducing the variability of those returns.
3. 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 mean
RETURN
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.
4. 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.” The
Company’s dividend scale interest rate for unborrowed funds for most traditional life insurance policies reflects the investment performance of the managed assets
net 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 the
mortality 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 the
underlying interest rates are reviewed annually and are subject to change. Future dividends are not guaranteed, although Northwestern Mutual has paid a dividend
every 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 and
business 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 it
is 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 in
this 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 loan
activity 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 the
company’s Consolidated Financial Statement (CFS). PricewaterhouseCoopers LLP is the company’s independent accountant. A copy of Northwestern Mutual’s CFS
is 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) and
its 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)
