<PAGE>
June 30, 1998
NORTHWESTERN
MUTUAL LIFE
The Quiet Company-Registered Trademark-
Northwestern Mutual Variable Life Account
SEMI-ANNUAL REPORT
[GRAPHIC]
Northwestern Mutual
Series Fund, Inc.
The Northwestern Mutual
Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
<PAGE>
CONTENTS
<TABLE>
<S> <C>
HOW TO GET MORE INFORMATION
ON YOUR VARIABLE COMPLIFE &
VARIABLE LIFE POLICY
NML Express provides 24 hour telephone access to
your account information by dialing
1-800-519-4NML (1-800-519-4665)
Policyowners must provide a policy number plus a
Personal Identification Number (PIN) to utilize
this service. Call toll-free to review policy
values and portfolio performance. If a signed
authorization has been returned to the Home
Office, policyowners may also transfer among
portfolios by phone.
For more information about Northwestern Mutual
Life, visit us on our Website at
WWW.NORTHWESTERNMUTUAL.COM
</TABLE>
CONTENTS
Letter to Policyowners 1
Performance Summary for Separate
Accounts 2
Overview and Outlook 3
Series Fund Objectives and Schedule of
Investments 4
Aggressive Growth Stock Portfolio 4
International Equity Portfolio 7
Growth Stock Portfolio 11
Growth and Income Stock
Portfolio 14
Index 500 Stock Portfolio 17
Balanced Portfolio 24
High Yield Bond Portfolio 37
Select Bond Portfolio 41
Money Market Portfolio 46
Series Fund Financial Statements 48
Aggressive Growth Stock
Portfolio 48
International Equity Portfolio 51
Growth Stock Portfolio 54
Growth and Income Stock
Portfolio 57
Index 500 Stock Portfolio 60
Balanced Portfolio 63
High Yield Bond Portfolio 66
Select Bond Portfolio 69
Money Market Portfolio 72
Notes to Series Fund Financial
Statements 75
Variable Life Financial Statements 78
Notes to Financial Statements 82
Directors and Officers 89
<PAGE>
LETTER TO POLICYOWNERS
July 31, 1998
During the first half of 1998, stock and bond markets, as well as the economy as
a whole, continued their positive trends. The portfolios underlying Northwestern
Mutual's life insurance products continued to performed in line with their
stated objectives, providing policyowners returns that will contribute to
achieving long-term financial goals.
In thinking about the economy and markets at mid-year 1998, it is striking to
note how very global our environment has become. Today some of the major factors
determining U.S. economic trends and policies in this country are events halfway
around the world.
After little news from Asia early this year, every day seems to bring some new
business or political crisis. It has now been a year since the problems in Asia
became apparent, and their reverberations are being felt throughout the world.
Our belief from the beginning has been that some time would elapse before the
effects of problems in Asia would impact the United States. In recent months,
sharply reduced exports to Asia are being felt in the form of a drop in demand
for manufactured goods from the United States and other countries and lower
prices for a wide variety of commodities. Weaker foreign orders contributed to
an inventory buildup in the first quarter, and manufacturers are reducing
production to work off excess inventory. It is estimated that the foreign trade
deficit subtracted more than two percentage points from real gross domestic
product growth in the first six months of 1998.
Despite weakness in the industrial sector, the U.S. economy continues to grow,
led by free-spending consumers, whose confidence is at a 29-year high. They have
good reasons to feel positive: with low inflation, modest raises translate to
significant real wage gains; a low rate of unemployment creates good job
prospects; and investors in stocks and mutual funds are seeing their net worth
increase. At some point, it seems inevitable that a weakening industrial sector,
which inevitably means lost jobs, will begin to affect consumers. But, as yet,
there is no sign that consumer spending is slowing.
A slowdown in manufacturing, though painful for the companies involved, is not
necessarily bad for the economy as a whole. In the spring, the Federal Reserve
expressed concern that the U.S. economy was overheating and hinted that an
increase in interest rates might be necessary in order to avoid a pickup in
inflation. It now appears that reduced demand from Asia will cause the economy
to slow on its own, without action by the Fed. A spontaneous slowdown,
accompanied by continued responsible monetary policies, could enable the economy
to cool without going into recession.
Consideration of the ongoing problems in Asia leads naturally to the question of
when the situation will begin to improve. Japan is the key to the entire region,
simply because its economy is by far the largest. In addition, Japan is the
leading trading partner of the other Southeast Asian nations. Further,
especially after the plummeting stock prices of the last year, the Japanese
market is the only one in the region with adequate liquidity to attract foreign
investors. In order for recovery to begin in Japan, banking reforms and massive
corporate restructurings will be necessary, including layoffs to eliminate
layers of redundancy. Such actions are foreign to the Japanese mentality,
especially at a time when unemployment, though low by U.S. standards, is
unusually high for Japan. Even if the remedies now under discussion to cure
Japan's ills are successful, it could be many months before stability is
restored. But we are encouraged by signs that the Japanese authorities are
considering fairly dramatic measures to resolve the country's problems.
We continue to keep a close watch on the economies and markets in the U.S. and
abroad. As always, we are investing for the long term, taking current events
into account, but basing decisions on long-range prospects. We at Northwestern
Mutual appreciate the confidence you have shown in our organization by selecting
us to help plan for a secure financial future.
The Northwestern Mutual Life Insurance Company
[SIGNATURE]
James D. Ericson, President and
Chief Executive Officer
--
1
<PAGE>
PERFORMANCE SUMMARY as of June 30, 1998
VARIABLE LIFE--POLICIES ISSUED BEFORE OCTOBER 11, 1995
<TABLE>
<CAPTION>
Aggressive Growth &
Growth International Growth Income Index 500 High Yield Select Money
Net Investment Rates of Stock Equity Stock Stock Stock Balanced Bond Bond Market
Return (as of 6/30/98) Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year................. 18.04% 9.71% 31.28% 24.06% 29.13% 19.46% 11.65% 8.08% 4.80%
5 years................ - - - - 170.19% 94.67% - 34.83% 23.00%
Annualized........... - - - - 21.99% 14.25% - 6.16% 4.23%
10 years............... - - - - 313.33% 202.30% - 123.97% 62.34%
Annualized........... - - - - 15.25% 11.70% - 8.40% 4.96%
Since inception........ 108.49%* 70.40%* 140.20%* 126.19%* - - 71.29%* - -
Annualized........... 19.32% 13.67% 23.45% 21.68% - - 13.82% - -
</TABLE>
VARIABLE COMPLIFE--POLICIES ISSUED ON OR AFTER OCTOBER 11, 1995**
<TABLE>
<CAPTION>
Aggressive Growth &
Net Investment Growth International Growth Income Index 500 High Yield Select Money
Rates of Return Stock Equity Stock Stock Stock Balanced Bond Bond Market
(as of 6/30/98) Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year........... 18.16% 9.82% 31.41% 24.19% 29.27% 19.58% 11.77% 8.19% 4.91%
5 years.......... - - - - 171.58% 95.67% - 35.52% 23.63%
Annualized..... - - - - 22.12% 14.37% - 6.27% 4.33%
10 years......... - - - - 317.59% 205.42% - 126.27% 64.00%
Annualized..... - - - - 15.37% 11.81% - 8.51% 5.07%
Since
inception........ 109.37%* 71.12%* 141.22%* 127.16%* - - 72.01%* - -
Annualized..... 19.44% 13.79% 23.58% 21.81% - - 13.93% - -
</TABLE>
VARIABLE EXECUTIVE LIFE--POLICIES FIRST OFFERED ON MARCH 2, 1998***
<TABLE>
<CAPTION>
Aggressive Growth &
Net Investment Growth International Growth Income Index 500 High Yield Select Money
Rates of Return Stock Equity Stock Stock Stock Balanced Bond Bond Market
(as of 6/30/98) Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year........... 18.87% 10.48% 32.20% 24.93% 30.04% 20.30% 12.44% 8.84% 5.54%
5 years.......... - - - - 179.83% 101.63% - 39.66% 27.39%
Annualized..... - - - - 22.85% 15.06% - 6.91% 4.96%
10 years......... - - - - 343.71% 224.53% - 140.48% 72.51%
Annualized..... - - - - 16.07% 12.49% - 9.17% 5.60%
Since
inception........ 114.66%* 75.43%* 147.30%* 132.88%* - - 76.35%* - -
Annualized..... 20.16% 14.47% 24.32% 22.54% - - 14.61% - -
</TABLE>
The net investment rates of return shown above should not be considered a
representation of investment results which may be anticipated in the future. The
net investment rates of return include investment income, capital gains and all
common fees of the divisions of the Variable Life Account, but not the
additional charges that are unique to your policy. See the prospectus for a
description of the effect of investment performance on policy benefits. Policy
benefits reflect the investment rates of return of the divisions in which the
policy is invested, and will vary depending on the fees and expenses associated
with your policy.
* Inception date of 5/3/94.
** Product inception date of 10/11/95. Returns prior to 10/11/95 were reflected
using the actual investment experience of each division, adjusted for the
expenses of the product. These returns are not a guarantee of future
performance.
***Policy first offered March 2, 1998 (For use with non-tax qualified executive
benefit plans). As of the date of this report no policies were in force.
Returns prior to 3/2/98 were reflected using the actual investment experience
of each division. These returns are not a guarantee of future performance.
Note: "Standard and Poor's 500" and "S&P 500" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by The Northwestern Mutual
Life Insurance Company. The Series Fund and its Portfolios are not
sponsored, endorsed, sold or promoted by Standard & Poor's, and Standard
& Poor's makes no representation regarding the advisability of investing
in them.
IMPORTANT NOTE:
The average annual total returns shown with the graphs on the following pages
are not an estimate or a guarantee of future performance. These average annual
total returns reflect reinvestment of investment income and capital gain
distributions, and deduction of investment management fees and fund expenses,
but not product charges. See the prospectus for a description of the effect of
investment performance on policy benefits. Policy benefits reflect the
investment rates of return of the divisions in which the policy is invested, and
will vary depending on the insurance and administrative charges, applicable
sales charges, and the mortality and expense risk charge associated with the
product. These product charges effectively reduce the dollar amount of any net
gains and increase the dollar amount of any net losses. The net investment rates
of return shown above reflect the product charges borne by each division of the
Variable Life Account, but not the additional charges that are unique to your
policy. Your Northwestern Mutual Life agent/registered representative of
Northwestern Mutual Investment Service ("NMIS") can provide you with actual
rates of return for your variable life insurance policy, showing the effect of
all of the applicable charges.
--
2
<PAGE>
OVERVIEW AND OUTLOOK
- --------------------------------------------------------------------------------
THE ECONOMY
In the first quarter of 1998, the economy expanded at a very rapid 5.4% annual
rate, with continuing strength in both consumer and industrial sectors. It
appears that economic growth slackened considerably in the second quarter; data
released so far place real growth below 2 percent. For the full year, most
economists are forecasting real growth between 2 and 3 percent, with inflation
just under 2 percent.
The continued overall growth partially masks a major split that has developed
between the consumer and industrial sectors of the economy. While consumers
continued to spend enthusiastically, especially on housing and autos, there has
been a pronounced softening in the manufacturing sector, which has begun to feel
the effects of an inventory buildup and Asia's economic crisis. It seems
inevitable that a slowdown in manufacturing will eventually affect consumers, as
layoffs become necessary. If consumers become less confident and reduce spending
moderately, the overall economy may slow spontaneously, easing pressure on the
Federal Reserve to raise interest rates as a means of curbing inflation.
Economic Growth
and Inflation
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
REAL ECONOMIC
GROWTH INFLATION
<S> <C> <C>
1988 3.8% 4.4%
1989 3.4% 4.6%
1990 1.3% 6.1%
1991 -1.0% 3.1%
1992 2.7% 2.9%
1993 2.3% 2.7%
1994 3.5% 2.7%
1995 2.0% 2.5%
1996 2.2% 3.3%
1997 3.7% 1.7%
1998 2.9% 1.8%
</TABLE>
Source: U.S. Department of Commerce. Year-to-year percentage change in
Real Gross Domestic Product is used for real economic growth.
December-to-December percentage change in the Consumer Price Index --
Urban is used for the inflation rate. 1998 is the consensus forecast of a
group of 55 economists surveyed by the WALL STREET JOURNAL.
- --------------------------------------------------------------------------------
THE EQUITY MARKET
The domestic equity market continued its long-term upward trend during the first
half of 1998, but with dramatic differences among returns from various groups of
stocks. The large companies that make up the S&P 500 Index were generally
strong, while stocks of many smaller companies languished. Within the large-cap
and smaller-cap categories, the best performers were stocks of consumer-oriented
companies, whose earnings benefited from buoyant spending by U.S. households. In
the technology sector, stocks of software companies, especially those with an
orientation to the Internet, soared, while producers of semiconductors suffered
from slackened Asian demand. Weak commodity prices and indications of a slowdown
in the manufacturing sector hurt earnings and stock prices of companies in a
broad range of industries including steel, paper and energy.
Annual Total Returns
from S&P 500 Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
6/30/89 20.2%
6/30/90 16.2%
6/30/91 7.3%
6/30/92 13.4%
6/30/93 13.6%
6/30/94 1.3%
6/30/95 25.9%
6/30/96 25.9%
6/30/97 34.6%
6/30/98 30.0%
</TABLE>
Source: Standard & Poor's
- --------------------------------------------------------------------------------
THE BOND MARKET
In recent months the U.S. bond market has been affected by powerful but opposing
circumstances. Lower inflation than was widely anticipated has been accompanied
by a flight to quality, as investors flee Asian markets and seek the safety of
dollar-denominated assets, exerting upward pressure on U.S. bond prices. At the
same time, continued strength in the domestic economy and stock markets has been
a negative for the bond market. The result of these two countervailing forces
has been unusually low volatility of bond prices. The Asian-inspired flight to
quality cannot be regarded as a permanent condition. But if inflation remains
low, the bond market could continue to perform well.
Annual Total Returns from
Merrill Lynch Domestic Master Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
6/30/89 12.4%
6/30/90 7.3%
6/30/91 10.9%
6/30/92 14.1%
6/30/93 11.9%
6/30/94 -1.0%
6/30/95 12.6%
6/30/96 5.0%
6/30/97 8.2%
6/30/98 10.7%
</TABLE>
Source: Merrill Lynch. The Merrill Lynch Domestic Master Index is an
unmanaged market value weighted index comprised of U.S. Government,
mortgage and investment-grade corporate bonds.
--
3
<PAGE>
AGGRESSIVE GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Objective: Portfolio Strategy: Net Assets:
Maximum long-term appreciation of Strive for the highest possible rate of capital $1,168,800,557
capital appreciation by investing in companies with potential
for rapid growth.
</TABLE>
AGGRESSIVE GROWTH STOCK PORTFOLIO
The Aggressive Growth Stock Portfolio owns the stocks of emerging growth
companies, generally with market capitalizations of less than $3 billion. Since
growth stock portfolios tend to react strongly to changes in financial and
economic markets, as well as to changes in the prospects for individual
companies, returns of this Portfolio can vary considerably from time to time. A
higher level of risk (with risk defined as variability of returns over time) is
accepted for the potential of greater long-term returns. The focus in stock
selection is on the individual companies' ability to generate revenue, expanding
profit margins and solid balance sheets; industry sector selection is of
secondary importance.
The first half of 1998, particularly the second quarter, was a difficult period
for managers that concentrate on the stocks of small to mid-sized companies, as
the very largest companies accounted for most of the market's gains. Within the
small-cap category, performance varied widely among industry groups, with health
care and energy very weak; the Portfolio's holdings of oil stocks have been
selectively reduced. A strategic decision not to emphasize high-tech shares hurt
this fund's performance relative to the indexes with which it is compared. The
best-performing holdings in the Portfolio continued to be consumer cyclical
stocks, particularly retailers, and service providers that benefit from the
trend to outsourcing by businesses.
Sector Allocation
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Technology 24%
Consumer Cyclical 15%
Business Services 15%
Industrial & Transportation 12%
Health Care 10%
Consumer Staples 9%
Finance 5%
Energy 4%
Short-Term Investments 6%
</TABLE>
Top 10 Holdings
6/30/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Robert Half International, Inc. 2.8%
CBT Group Public Limited Company 2.1%
Peoplesoft, Incl 2.1%
HBO & Company 2.1%
Saville Systems PLC - ADR 2.0%
Cambridge Technology Partners, Inc. 2.0%
Paychex, Inc. 1.9%
Tellabs, Inc. 1.7%
O'Reilly Automotive, Inc. 1.6%
Administaff, Inc. 1.6%
</TABLE>
Performance Relative
to Relevant Indices
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH STOCK WILSHIRE SMALL WILSHIRE NEXT
PORTFOLIO CAP INDEX 1750 INDEX
<S> <C> <C> <C>
11/90 $10,000 $10,000 $10,000
6/91 12,593 13,189 13,186
6/92 13,994 15,522 15,086
6/93 17,133 19,336 19,108
6/94 19,354 20,012 19,670
6/95 24,448 23,034 23,986
6/96 35,003 28,918 30,256
6/97 36,545 36,061 35,344
6/98 43,439 43,871 42,070
Average Annual Total Return
For Periods Ended June 30, 1998
One Year Five Years Since Inception
Aggressive Growth
Stock Portfolio 18.87% 20.45% 21.38%
Wilshire Small Cap Index 21.66% 17.81% 21.54%
Wilshire Next 1750 Index 19.03% 17.10% 20.87%
</TABLE>
Since the Portfolio invests primarily in small capitalization issues, the
indices that best reflect the Portfolio's performance are the Wilshire Next 1750
Index and Wilshire Small Cap Index.
The Wilshire Next 1750 is an unmanaged, equally weighted index. Included in
this index are those stocks which are ranked 750 to 2500 by market
capitalization in the Wilshire 5000. The largest sectors represented in this
index are technology, financial services and consumer services. Market
capitalization ranges from $1.8 billion to $244 million.
The Wilshire Small Cap Index is a subset of the Wilshire Next 1750 and
includes 250 stocks chosen based upon their size, sector and liquidity
characteristics. Each stock is equally weighted in this unmanaged index. The
average market capitalization is approximately $930 million. The largest sector
weightings include technology, financial services, and consumer services.
On May 3, 1994, the Northwestern Mutual Aggressive Growth Stock Fund, Inc.
(the "Fund") merged into the Northwestern Mutual Series Fund, Inc. Aggressive
Growth Stock Portfolio (the "Portfolio"). The Portfolio had no assets prior to
the merger. After the merger, the assets of the Portfolio were those of the
Fund. The investment objectives, policies, management and expenses of the
Portfolio are identical to those of the Fund. Accordingly, the performance of
the Fund prior to the merger is included with the performance of the Portfolio
in the graph and total return figures above.
This chart assumes an initial investment of $10,000 made on 11/30/90
(commencement of the Fund's operations). Returns shown include deductions for
management and other fund expenses, and reinvestment of all dividends. Returns
exclude deductions for separate account sales loads and account fees. Past
performance is not predictive of future performance. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be worth
more or less than their original cost. Accumulation unit values, which reflect
deduction of charges for the separate account, are shown on page 2.
--
4
<PAGE>
AGGRESSIVE GROWTH STOCK PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (94.2%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
BASIC MATERIALS (1.6%)
*Cambrex Corporation 426,700 $ 11,201
*Ivex Packaging Corporation 297,200 6,910
-----------
TOTAL 18,111
-----------
BUSINESS SERVICES (11.4%)
*ABR Information Services, Inc. 290,100 6,890
*Administaff, Inc. 409,100 18,870
*Billing Information Concepts 464,600 7,201
Cintas Corp. 366,500 18,692
*Interim Services, Inc. 481,800 15,478
*Metzler Group, Inc. 422,550 15,476
*Robert Half International, Inc. 586,550 32,773
*Steiner Leisure, Ltd. 350,250 10,595
Stewart Enterprises, Inc. 275,100 7,325
-----------
TOTAL 133,300
-----------
CAPITAL GOODS (6.5%)
*Jabil Circuit, Inc. 139,800 4,622
Kaydon Corporation 375,100 13,246
#,*Kaynar Technologies, Inc. 304,700 7,160
*Kellstrom Industries, Inc. 156,300 4,528
Molex Incorporated 366,346 8,563
*Qlogic Corporation 218,800 7,808
*Tetra Tech, Inc. 527,875 12,801
*Tristar Aerospace, Co. 517,600 8,023
*Triumph Group, Inc. 226,500 9,513
-----------
TOTAL 76,264
-----------
COMMUNICATION SERVICES (3.6%)
*IDT Corporation 287,200 8,634
*Pacific Gateway Exchange, Inc. 242,000 9,695
*Saville Systems PLC - ADR 476,400 23,880
-----------
TOTAL 42,209
-----------
CONSUMER CYCLICAL (14.8%)
*99 Cents Only Stores 188,900 7,839
*Catalina Marketing Corporation 251,200 13,047
*Concord EFS, Inc. 474,950 12,408
*CSG Systems International, Inc. 226,800 10,631
*Dollar Tree Stores, Inc. 414,300 16,831
Fastenal Co. 225,700 10,481
General Cable Corporation 408,600 11,798
*Jones Apparel Group, Inc. 486,400 17,784
#,*K&G Men's Center, Inc. 529,150 11,972
*Kohl's Corporation 314,900 16,335
*Lamar Advertising, Co. 127,600 4,578
*Michaels Stores, Inc. 276,700 9,762
*O'Reilly Automotive, Inc. 531,600 19,138
*Tower Automotive, Inc. 252,300 10,817
Watsco, Inc. 100 4
-----------
TOTAL 173,425
-----------
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (94.2%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES (8.7%)
*American Italian Pasta Co. - CL A 344,300 $ 12,825
*Blyth Industries, Inc. 322,800 10,733
Cardinal Health, Inc. 197,218 18,489
*Chancellor Media Corp. 344,900 17,126
*Clear Channel Communications, Inc. 134,300 14,655
*Gemstar International Group Limited 293,600 10,992
*Heftel Broadcasting Corporation 57,200 2,560
*Patterson Dental Company 378,125 13,849
-----------
TOTAL 101,229
-----------
ENERGY (4.6%)
*Barrett Resources Corporation 303,900 11,377
*BJ Services Company 307,100 8,925
*EVI, Inc. 229,200 8,509
*Global Industries, Ltd. 650,600 10,979
Tosco Corporation 178,900 5,255
Transocean Offshore Inc. 202,400 9,007
-----------
TOTAL 54,052
-----------
FINANCE (5.6%)
*Affiliated Managers Group 257,000 9,541
CMAC Investment Corp. 162,300 9,981
*ESG Re Limited 251,900 5,447
*Headlands Mortgage Company 494,600 9,274
Investors Financial Services Corp. 205,400 10,886
Life Re Corporation 104,200 8,544
*Trammell Crow Company 360,000 12,038
-----------
TOTAL 65,711
-----------
HEALTHCARE (9.8%)
*Concentra Managed Care, Inc. 392,261 10,199
*Lincare Holdings, Inc. 368,900 15,517
*NCS Healthcare, Inc. 307,500 8,764
*Pediatrix Medical Group, Inc. 196,900 7,322
*Pharmerica, Inc. 652,800 7,874
*PhyCor, Inc. 304,900 5,050
*PSS World Medical, Inc. 504,600 7,380
*Quintiles Transnational Corp. 261,200 12,848
*Quorum Health Group, Inc. 352,300 9,336
*Sybron International Corporation 509,000 12,852
*VWR Scientific Products Corporation 306,500 7,548
*Wesley Jessen VisionCare, Inc. 418,600 9,680
-----------
TOTAL 114,370
-----------
TECHNOLOGY (24.0%)
*Cambridge Technology Partners, Inc. 433,300 23,669
*CBT Group Public Limited Company 457,500 24,476
*Ciena Corp. 179,100 12,470
*Computer Horizons Corp. 315,950 11,710
</TABLE>
--
5
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (94.2%) PAR (000'S)
- ---------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
<S> <C> <C>
*DST Systems, Inc. 258,700 $ 14,487
*Evolving Systems, Inc. 159,200 1,761
Galileo International, Inc. 345,000 15,547
*Gasonics International Corporation 439,800 3,079
*Getty Images, Inc. 463,800 10,320
HBO & Company 681,200 24,012
*Hyperion Software Corporation 328,000 9,348
*Integrated Process Equipment Corp. 321,700 3,619
Paychex, Inc. 534,032 21,728
Peoplesoft, Inc. 511,800 24,055
*PMC-Sierra, Inc. 225,700 10,580
*Semtech Corporation 362,800 6,417
*Sterling Software, Inc. 539,000 15,934
*Tellabs, Inc. 274,700 19,675
*Transaction Systems Architects, Inc. 195,700 7,534
*Uniphase Corporation 209,600 13,159
*World Access, Inc. 211,600 6,348
-----------
TOTAL 279,928
-----------
TRANSPORTATION (3.6%)
*Coach USA, Inc. 410,900 18,747
*Heartland Express, Inc. 415,600 8,416
*Knight Transportation, Inc. 467,900 8,949
*Swift Transportation Co., Inc. 328,400 6,506
-----------
TOTAL 42,618
-----------
TOTAL COMMON STOCK 1,101,217
-----------
<CAPTION>
MARKET
SHARES/ VALUE
MONEY MARKET INVESTMENTS (6.3%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOBILE REPAIR, SERVICES & PARKING (0.6%)
PHH Corporation, 6.35%, 7/1/98 7,400,000 $ 7,400
-----------
FINANCE (1.7%)
CXC Incorporated, 5.52%, 7/15/1998 20,200,000 20,157
-----------
<CAPTION>
MARKET
SHARES/ VALUE
MONEY MARKET INVESTMENTS (6.3%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
PERSONAL CREDIT INSTITUTIONS (3.8%)
Commercial Credit Corporation, 5.55%, 7/29/98 20,000,000 $ 19,914
General Electric Capital Corporation, 5.52%, 7/8/98 25,000,000 24,973
-----------
TOTAL 44,887
-----------
FEDERAL GOVERNMENT AND AGENCIES (0.2%)
Federal Home Loan Mortgage Association, 5.43%,
8/21/98 2,000,000 1,985
-----------
TOTAL 1,985
-----------
TOTAL MONEY MARKET INVESTMENTS 74,429
-----------
TOTAL INVESTMENTS (100.5%) (COST $763,563,226)^ 1,175,646
OTHER ASSETS, LESS LIABILITIES (-0.5%) (6,845)
-----------
TOTAL NET ASSETS (100.0%) $1,168,801
-----------
</TABLE>
* Non-Income Producing
ADR--American Depository Receipt
^At June 30, 1998, the aggregate cost of securities for federal income tax
purposes was $763,563,226 and the net unrealized appreciation of investments
based on that cost was $412,082,982 which is comprised of $434,544,520
aggregate gross unrealized appreciation and $22,461,538 aggregate gross
unrealized depreciation.
#Affiliated Company. The fund has ownership of at least 5% of the outstanding
voting shares. Affiliated transactions during the six months ended June 30,
1998, include:
<TABLE>
<CAPTION>
PURCHASES SALES
--------------------- --------------------
SHARES COST SHARES AMOUNT
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Kaynar Technologies, Inc. 72,500 $1,819,638 -- $--
K&G Men's Center, Inc. 11,000 278,438 -- --
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
--
6
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Objective: Portfolio Strategy: Net Assets:
Long-term appreciation of Participate in the growth of foreign economies $741,889,395
capital through diversification by investing in securities with high long-term
into markets outside the United earnings potential relative to current market
States values.
</TABLE>
INTERNATIONAL EQUITY PORTFOLIO
The International Equity Portfolio offers contract owners the opportunity to
participate in the growth of companies in countries throughout the world,
particularly those with expanding economies. In selecting investments, the
principal focus is on identifying undervalued stocks of companies with strong
finances and good long-term growth opportunities, rather than on choosing
regions of the world in which to invest. The Portfolio is normally fully
invested in equity securities.
The Portfolio is concentrated in Europe, where equity markets have been quite
strong in recent months. In Europe, as in the U.S. markets, the largest and most
favored companies continue to exhibit the strongest performance. Restructurings
and consolidation in many industries are contributing to higher stock prices.
Investments in Mediterranean markets such as Italy and Spain have performed
well, as these economies have responded to the positive implications of a
unified European currency, which is scheduled for implementation in January
1999. Modest exposure to Asian markets helped the Portfolio to perform far
better than the Europe-Australasia-Far East Index, with which it is compared.
With equity prices throughout the region having dropped substantially, there are
now opportunities to make selective investments in high quality Asian companies
with strong balance sheets.
The International Equity Portfolio is managed for Northwestern Mutual by
Templeton Investment Counsel, Inc.
Asset Allocation
6/30/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Europe 69%
Latin America 9%
Asia 6%
Australia/New Zealand 5%
North America 3%
Non-equity holdings 8%
</TABLE>
Top 10 Holdings
6/30/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Aegon NV Netherlands 2.5%
Philips Electronic, Inc. Netherlands 2.4%
Deutsche Bank AG Germany 2.2%
Rhone Poulenc SA, Series "A" France 2.2%
AXA-UAP SA France 2.0%
Telefonica de Espania Spain 2.0%
Courtaulds PLC U.K. 1.9%
BTR, PLC "A" U.K. 1.8%
Volvo Aktiebolaget, B Free Sweden 1.7%
YPF S.A., ADR Argentina 1.7%
</TABLE>
Performance Relative to the EAFE Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
PORTFOLIO EAFE INDEX
<S> <C> <C> <C>
4/93 $10,000 $10,000
6/93 $10,118 $10,202
6/94 $12,155 $11,936
6/95 $13,487 $12,175
6/96 $15,569 $13,831
6/97 $19,751 $15,650
6/98 $ 21,822 $16,651
Average Annual Total Return
For Periods Ended June 30,
1998
One Year Since Inception
International Equity
Portfolio 10.48% 16.30%
EAFE Index 6.40% 10.37%
</TABLE>
As depicted in the graph, the International Equity Portfolio is compared against
the Morgan Stanley Capital International EAFE ("Europe-Australasia-Far East")
Index. The index is composed of approximately 1100 companies in 20 countries in
Europe and the Pacific Basin. The objective of the index is to reflect the
movements of stock markets in these countries by representing an unmanaged
(indexed) portfolio within each country. The indices are constructed so that
companies chosen represent about 60% of market capitalization in each market;
industry composition of the market is reflected; and a cross section of large,
medium, and small capitalization stocks is included, taking into account
liquidity concerns. The index is calculated in U. S. dollars.
On May 3, 1994, the Northwestern Mutual International Equity Fund, Inc. (the
"Fund") merged into the Northwestern Mutual Series Fund, Inc., International
Equity Portfolio (the "Portfolio"). The Portfolio had no assets prior to the
merger. After the merger, the assets of the Portfolio were those of the Fund.
The investment objectives, policies, management and expenses of the Portfolio
are identical to those of the Fund. Accordingly, the performance of the Fund
prior to the merger is included with the performance of the Portfolio in the
graph and total return figures above.
This chart assumes an initial investment of $10,000 made on 4/30/93
(commencement of the Fund's operations). Returns shown include deductions for
management and other fund expenses, and reinvestment of all dividends. Returns
exclude deductions for separate account sales loads and account fees. Past
performance is not predictive of future performance. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be worth
more or less than their original cost. Accumulation unit values, which reflect
deduction of charges for the separate account, are shown on page 2.
--
7
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (92.5%) COUNTRY PAR (000'S)
- ----------------------------------------------------------------
<S> <C> <C> <C>
CAPITAL EQUIPMENT (8.7%)
ABB AG Baden Bearer Swtz. 4,730 $ 6,985
Alcatel Alsthom DG Fr. 58,519 11,915
BICC PLC U.K. 1,450,345 3,170
BTR PLC U.K. 202,312 546
BTR, PLC "A" U.K. 4,610,531 13,077
Granges AB Swe. 188,100 3,444
Hong Kong Aircraft &
Engineering H.K. 257,900 399
Kyudenko Corp. Jpn. 33,000 216
Philips Electronic, Inc. Neth. 208,400 17,519
Sirti SPA Italy 643,000 3,498
VA Technologies AG
Bearer Aus. 30,000 3,732
-----------
TOTAL 64,501
-----------
CONSUMER GOODS (11.5%)
#Autoliv, Inc., IDR Swe. 65,000 2,078
Autoliv, Inc. Swe. 279,100 8,827
Cafe de Coral Holdings,
Ltd. H.K. 7,672,000 2,624
CP Feedmill Public
Company Limited Thai. 2,609,900 96
Electrolux A B Free Swe. 241,000 4,140
Fiat SPA Ord. Italy 1,527,900 6,687
Fisher & Paykel
Industries Ltd. N.Z. 6,734,996 2,472
Hillsdown Holdings U.K. 1,800,892 4,898
Medeva PLC U.K. 4,250,000 12,055
Nycomed Amersham PLC U.K. 1,336,860 9,930
Tate & Lyle, PLC U.K. 762,600 6,047
+Teva Pharmaceutical
Industries Ltd., ADR Israel 178,200 6,270
The Oshawa Group Ltd.,
Class "A" Can. 187,300 3,375
Vitro SA NPV Mex. 768,400 1,628
Volvo Aktiebolaget, B
Free Swe. 433,000 12,895
Yizheng Chemical Fibre
Company China 12,469,200 1,400
-----------
TOTAL 85,422
-----------
ENERGY (12.7%)
BG PLC U.K. 701,752 4,057
*Centrica PLC U.K. 1,913,200 3,224
*CEZ Ceske Energeticke
Zavody Chez. 101,990 2,819
Electricidad de Caracas Venz. 10,543 5
Endseta National de
Electric Sp. 252,000 5,523
EVN Energie Versorgung Aus. 38,400 5,746
+Gazprom, ADR (144A) Rus. 142,100 1,574
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (92.5%) COUNTRY PAR (000'S)
- ----------------------------------------------------------------
<S> <C> <C> <C>
ENERGY (CONTINUED)
+Gener S.A., ADR Chile 95,400 $ 1,741
Hong Kong Electric H.K 1,790,000 5,544
Iberdrola S.A. Sp. 587,500 9,556
Korea Electric Power
Corp. Kor. 33,000 352
+Korea Electric Power
Corp., ADR Kor. 35,425 252
National Power U.K. 493,764 4,646
Petroleo Brasileiro SA -
Petrobras Braz. 32,500,000 6,041
*Ranger Oil Limited Can. 821,200 6,005
Repsol S.A. Sp. 122,000 6,718
Saga Petroleum Norw. 260,000 3,998
Societe Nationale Elf
Aquitaine Fr. 66,801 9,391
Thames Water U.K. 251,023 4,569
+YPF S.A., ADR Arg. 418,500 12,581
-----------
TOTAL 94,342
-----------
FINANCE (24.2%)
Aegon NV Neth. 212,384 18,480
Australia & New Zealand
Bank Group Austrl. 926,097 6,389
AXA-UAP SA Fr. 131,063 14,741
Banco Bradesco SA Braz. 623,750,000 5,204
Banco de Andulucia Sp. 30,000 6,349
Banco Itau S.A. Braz. 2,079,000 1,186
Bangkok Bank Public
Company Ltd Thai. 3,193,000 3,925
Banque Nationale de
Paris Fr. 135,400 11,063
+Banque Nationale de
Paris, ADR (144A) Fr. 146,500 11,970
Barclay's Bank, PLC U.K. 245,016 7,081
BPI SGPS SA Port. 201,963 6,517
Canadian Imperial Bank
of Commerce Can. 113,200 3,641
+Corproacion Bancaria de
Espana S.A., ADR Sp. 195,000 8,799
Credit Commercial de
France Fr. 25,500 2,147
Deutsche Bank AG Ger. 193,600 16,394
HSBC Holdings U.K. 214,979 5,271
India Fund, Series "B" U.K. 1,256,515 1,614
ING Groep NV Neth. 190,000 12,441
#Korea International
Trust, IDR Kor. 52 475
Korea Long Term Credit
Bank Kor. 170,050 316
Merita Limited "A" Fin. 1,800,000 11,877
*Panin Bank - Warrants Indo. 763,714 2
</TABLE>
--
8
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (92.5%) COUNTRY PAR (000'S)
- ----------------------------------------------------------------
FINANCE (CONTINUED)
<S> <C> <C> <C>
Peregrine Investments
Holdings , Ltd. H.K. 262,000 $ --
Suisse Group Credit Swtz. 55,725 12,399
Svenska Handelsbanken
S.A. Swe. 230,000 10,671
Unibanco Uniao de Bancos Braz. 14,033,500 830
-----------
TOTAL 179,782
-----------
GOLD MINES (0.1%)
Anglo American Platinum
Corporation So. Africa 35,700 391
-----------
MATERIALS (12.7%)
Agrium, Inc. Can. 473,300 5,975
Bayer AG Ger. 157,000 8,098
British Steel PLC U.K. 5,270,900 11,587
Carte Holt Harvey Ltd. N.Z. 3,929,357 3,427
Courtaulds PLC U.K. 1,851,700 13,733
Elkem A S Oslo ord "A" Norw. 192,000 2,302
European Vinyls Corp.
EVC International Neth. 68,985 1,204
Grupo Mexico, B Shares Mex. 1,320,000 3,614
Hepworth PLC U.K. 607,200 2,173
Korea Chemical Company,
Ltd. Kor. 16,700 238
Metsa Serla OY "B" Fin. 277,500 2,681
+Minorco SA, ADR Lux. 318,150 3,798
P.T. Barito Pacific
Timber Indo. 637,000 11
+Pechiney "A", ADR Fr. 48,183 969
Pechiney SA "A" Fr. 19,000 765
Pioneer International
Ltd. Austrl. 3,197,946 7,624
Rhone Poulenc SA, Series
A Fr. 283,108 15,967
Siam City Cement Public
Co., Ltd. Thai. 240,039 170
Stora Kapparbergs,
Series "B" Swe. 350,000 5,530
Union Minerie, NPV Bel. 65,171 4,028
-----------
TOTAL 93,894
-----------
MULTI-INDUSTRY (4.0%)
Amer Group Ltd., "A" Fin. 175,000 3,381
Comp Gen de Industrieset
de Partec Fr. 4,500 2,378
Elementis PLC U.K. 1,494,000 3,839
Hutchinson Whampoa H.K. 798,000 4,202
Jardine Matheson
Holdings Sing. 1,212,301 3,273
Jardine Strategic
Holdings Sing. 1,019,055 1,936
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (92.5%) COUNTRY PAR (000'S)
- ----------------------------------------------------------------
<S> <C> <C> <C>
MULTI-INDUSTRY (CONTINUED)
Marine Wendel SA Fr. 11,490 $ 2,115
Nokia Corp., "A" Fin. 67,000 4,928
Swire Pacific Class "A" H.K. 472,500 1,784
Swire Pacific Limited
"B" H.K. 3,534,200 2,127
-----------
TOTAL 29,963
-----------
SERVICES (18.6%)
Air New Zealand Ltd. "B" N.Z. 1,150,000 1,236
Brierley Investments
Ltd. N.Z. 5,716,091 2,848
British Telecom U.K. 608,000 7,497
+Compania Anonima
Nacional, ADR Venz. 226,700 5,668
+Compania de
Telecommunicaciones,
ADR Chile 155,125 3,151
David Jones Ltd. Austrl. 742,100 850
Esselte AB, Series "A"
Free Swe. 269,900 5,990
Hitachi Zosen
Corporation Jpn. 192,000 310
Hong Kong
Telecommunications Ltd. H.K. 6,100,000 11,415
Hyder PLC U.K. 371,666 5,842
Hyder PLC Cum. Red. Pfd. U.K. 401,400 807
Koninklijke Bijenkorf
Beheer Neth. 44,098 3,089
Mayne Nickless Ltd. Austrl. 1,336,500 7,076
Moebel Walther AG PFD Ger. 25,270 1,190
+Phillipine Long
Distance Telephone, ADR Phil. 127,000 2,873
+PT Indosat, ADR Indo. 146,600 1,631
+Quantas Airways (144A)
ADR Austrl. 165,000 2,483
SBC Communications,
(DECS) U.S 99,350 4,508
Singapore Airlines Ltd. Sing. 105,000 491
Societe Generale de Surv
Holdings Swtz. 885 1,500
Somerfield PLC U.K. 860,766 5,501
South China Morning Post
Ltd. H.K. 2,554,000 1,228
Telebras Braz. 17,646,200 1,404
+Telebras, ADR Braz. 81,900 8,942
Telecom Italia SPA Italy 2,490,000 12,054
</TABLE>
--
9
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (92.5%) COUNTRY PAR (000'S)
- ----------------------------------------------------------------
SERVICES (CONTINUED)
<S> <C> <C> <C>
+Telefonica de Argentina
SA, ADR Argentina 146,300 $ 4,746
+Telefonica de Espania Sp. 315,000 14,588
+Telefonica del Peru SA
"B", ADR Peru 115,300 2,356
Telefonos de Mexico SA Mex. 117,802 5,662
Thorn PLC U.K. 1,816,599 7,335
+*Waste Management
International PLC, ADR U.K. 168,000 1,827
*Waste Management
International, PLC U.K. 310,700 1,726
-----------
TOTAL 137,824
-----------
TOTAL COMMON STOCK 686,119
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
BONDS (0.0%) COUNTRY PAR (000'S)
- -------------------------------------------------------------------
<S> <C> <C> <C>
PIV Financial Investments,
Ltd., 4.5%, 12/01/00 H.K. 2,750,000 $ 316
-----------
TOTAL BONDS 316
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
MONEY MARKET INVESTMENTS VALUE
(7.1%) COUNTRY PAR (000'S)
- -------------------------------------------------------------------
<S> <C> <C> <C>
AUTOMOBILE REPAIR, SERVICES & PARKING (2.3%)
PHH Corporation, 6.35%, 7/1/98 U.S. 16,800,000 $ 16,800
-----------
PERSONAL CREDIT INSTITUTIONS (2.5%)
Beneficial Corp, 5.52%,
7/10/98 U.S. 7,000,000 6,990
Commercial Credit Company,
5.55%, 7/29/98 U.S. 7,000,000 6,970
General Electric Capital,
5.53%, 7/08/98 U.S. 4,700,000 4,695
-----------
TOTAL 18,655
-----------
PETROLEUM AND COAL PRODUCTS (2.3%)
E. I. Dupont De Nemours,
5.55%, 8/7/98 U.S. 12,000,000 11,932
<CAPTION>
MARKET
MONEY MARKET INVESTMENTS VALUE
(7.1%) COUNTRY PAR (000'S)
- -------------------------------------------------------------------
<S> <C> <C> <C>
PETROLEUM AND COAL PRODUCTS (CONTINUED)
E. I. Dupont De Nemours,
5.52%, 7/22/98 U.S. 5,000,000 $ 4,984
-----------
TOTAL 16,916
-----------
TOTAL MONEY MARKET
INVESTMENTS 52,371
-----------
TOTAL INVESTMENTS (99.6%)
(COST $592,403,304)^ 738,806
OTHER ASSETS, LESS
LIABILITIES (0.4%) 3,083
-----------
TOTAL NET ASSETS (100.00%) $ 741,889
-----------
</TABLE>
* Non-Income Producing
** GDR-Global Depository Receipt
+ ADR-American Depository Receipt
# IDR-International Depository Receipt
144A after the name of a security represents a security exempt from
registration under Rule 144A of the Securities Act of 1933. These securities
may be resold as transactions exempt from registration, normally to qualified
institutional buyers.
Investment Percentages by Country:
19.46% United Kingdom
11.23 France
8.85 United States
7.10 Netherlands
6.94 Spain
6.03 Sweden
40.39 Other
100.00% Total
^At June 30, 1998, the aggregate cost of securities for federal income tax
purposes was $592,403,304 and the net unrealized appreciation of investments
based on that cost was $146,402,294 which is comprised of $223,715,744
aggregate gross unrealized appreciation and $77,313,450 aggregate gross
unrealized depreciation.
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
--
10
<PAGE>
GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Objective: Portfolio Strategy: Net Assets:
Long-term appreciation of Hold a diversified mix of high quality growth $349,284,394
capital with moderate risk stocks of medium and large companies with
above-average potential for earnings growth.
</TABLE>
GROWTH STOCK PORTFOLIO
The Growth Stock Portfolio is invested in high quality companies of large to
medium capitalization with strong financial characteristics and the ability to
generate internal growth. A key factor in stock selection is the choice of
industries with good earnings potential, based on analysis of economic trends to
determine their impact on various sectors of the economy. Stock selection is
made through "top down" analysis: first industry and market sector choices are
made based on the economic environment, and then the most promising companies
within each sector are selected as holdings. A strategy of this portfolio is to
go beyond the most familiar "blue chip" names to seek out medium-sized companies
with stock prices that do not yet reflect their potential for growth.
Diversification across 70 to 90 stocks in a wide range of industry groups
reduces the Portfolio's risk profile.
For the first half of 1998 the Portfolio performed very well, benefiting from
both industry and individual stock selection. An overweighting of consumer
cyclical stocks, especially retailers, was advantageous, as buoyant consumer
spending pushed earnings and stock prices up in this sector. Continued market
leadership by very large companies such as General Electric and Microsoft, which
are among the Portfolio's major holdings, also contributed to performance. In
addition to these familiar names, mid-sized companies selected for favorable
fundamentals such as Harley-Davidson and ServiceMaster, registered significant
gains. An underweighting of basic industries proved to be a good decision, as
the industrial sector of the economy weakened.
Sector Allocation
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Consumer Staples 16%
Consumer Cyclicals 15%
Finance 13%
Basic Materials/Capital Goods 11%
Technology 11%
Health Care 8%
Other Industries 7%
Energy 6%
Index Futures 6%
Cash Equivalents 7%
</TABLE>
Top 10 Holdings
6/30/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPANY % OF NET ASSETS
<S> <C>
General Electric Company 3.1%
Kohls Department Stores 2.1%
Pfizer, Inc. 2.0%
Microsoft Corporation 1.9%
Fiserv 1.9%
Harley Davidson, Inc. 1.9%
PepsiCo, Inc. 1.9%
Wal-Mart Stores, Inc. 1.8%
Tyco International, Ltd. 1.8%
Morgan Stanley Dean Witter & Co. 1.8%
</TABLE>
Performance Relative to S&P 500 Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH STOCK PORTFOLIO S&P 500 INDEX
<S> <C> <C>
5/94 $10,000 $10,000
6/94 $9,884 $9,845
6/95 $11,626 $12,394
6/96 $14,694 $15,604
6/97 $18,707 $21,000
6/98 $24,730 $27,306
Average Annual Total Return
For Periods Ended June 30,
1998
One Year Since Inception
Growth Stock Portfolio 32.20% 24.32%
S&P 500 Index 30.03% 27.32%
</TABLE>
The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index of
500 selected common stocks, most of which are listed on the New York Stock
Exchange. The index is heavily weighted toward stocks with large market
capitalizations and represents approximately two-thirds of the total market
value of all domestic common stocks.
This chart assumes an initial investment of $10,000 made on 5/3/94
(commencement of operations). Returns shown include deductions for management
and other fund expenses, and reinvestment of all dividends. Returns exclude
deductions for separate account sales loads and account fees. Past performance
is not predictive of future performance. Investment return and principal value
will fluctuate, so that your shares, when redeemed, may be worth more or less
than their original cost. Accumulation unit values, which reflect deduction of
charges for the separate account, are shown on page 2.
--
11
<PAGE>
GROWTH STOCK PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30,1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (87.5%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
BASIC MATERIALS (2.7%)
Ecolab, Inc. 181,900 $ 5,639
Monsanto Company 68,600 3,833
---------
TOTAL 9,472
---------
CAPITAL GOODS (8.2%)
AlliedSignal, Inc. 70,500 3,128
Avery Dennison Corporation 72,500 3,897
Emerson Electric Co. 49,300 2,976
General Electric Company 118,300 10,765
Tyco International Ltd. 100,600 6,338
*USA Waste Services, Inc. 32,300 1,595
---------
TOTAL 28,699
---------
COMMUNICATION SERVICES (3.6%)
AT&T Corp. 30,700 1,754
MCI Communications Corporation 89,900 5,225
*Teleport Communications Group, Inc. 36,700 1,991
*WorldCom, Inc. 73,900 3,580
---------
TOTAL 12,550
---------
CONSUMER CYCLICAL (15.8%)
*Barnes & Noble, Inc. 71,000 2,658
Borg-Warner Automotive, Inc. 48,900 2,350
*Federated Department Stores, Inc. 40,100 2,158
Ford Motor Company 62,000 3,658
Harley-Davidson, Inc. 171,500 6,646
Home Depot, Inc. 59,750 4,963
*Kohl's Corporation 140,600 7,294
Mattel, Inc. 91,081 3,854
McGraw-Hill Companies Inc. 26,600 2,170
The New York Times Company 55,800 4,422
Servicemaster Co. 163,500 6,223
Tribune Company 36,000 2,477
Wal-Mart Stores, Inc. 105,900 6,433
---------
TOTAL 55,306
---------
CONSUMER STAPLES (15.9%)
*Benckiser N.V. 77,300 4,768
Campbell Soup Company 52,800 2,805
Dial Corp. 131,000 3,398
Gillette Company 39,600 2,245
Hershey Foods Corporation 77,300 5,334
McDonald's Corporation 43,200 2,981
Newell Co. 101,600 5,061
PepsiCo, Inc. 157,100 6,471
Philip Morris Companies, Inc. 45,500 1,792
Procter & Gamble Company 52,700 4,799
The Quaker Oats Company 52,800 2,901
Unilever NV 51,100 4,034
Walgreen Co. 131,200 5,420
Walt Disney Company 34,300 3,604
---------
TOTAL 55,613
---------
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (87.5%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
ENERGY (5.8%)
British Petroleum Company PLC 39,000 $ 3,442
Chevron Corporation 14,800 1,229
Diamond Offshore Drilling, Inc. 50,000 2,000
Exxon Corporation 26,800 1,911
Mobil Corporation 38,600 2,958
*R&B Falcon Corporation 60,900 1,378
Schlumberger Limited 44,600 3,047
Tosco Corporation 80,400 2,362
Transocean Offshore Inc. 39,600 1,762
---------
TOTAL 20,089
---------
FINANCE (12.8%)
Associates First Capital Corporation 76,104 5,851
Banc One Corporation 58,100 3,243
BankAmerica Corporation 57,000 4,927
The Bank New York Company, Inc. 27,700 1,681
Chase Manhattan Corporation 46,680 3,524
Citicorp 17,300 2,582
First Union Corporation 65,100 3,792
Franklin Resources, Inc. 84,800 4,579
Merrill Lynch & Co. 42,300 3,902
Morgan Stanley Dean Witter & Co. 68,700 6,277
Travelers Group, Inc. 71,200 4,317
---------
TOTAL 44,675
---------
HEALTHCARE (7.7%)
Bristol-Myers Squibb Company 46,100 5,299
Eli Lilly and Company 46,900 3,098
Guidant Corporation 18,300 1,305
*HEALTHSOUTH Corporation 94,224 2,515
Johnson & Johnson 37,100 2,736
Medtronic, Inc. 10,500 669
Merck & Co., Inc. 31,400 4,200
Pfizer, Inc. 65,400 7,108
---------
TOTAL 26,930
---------
TECHNOLOGY (10.7%)
*Cisco Systems, Inc. 49,000 4,511
Compaq Computer Corporation 69,400 1,969
*DST Systems, Inc. 55,200 3,091
*Fiserv, Inc. 157,650 6,695
Hewlett-Packard Company 37,400 2,239
Intel Corporation 42,300 3,135
International Business Machines Corporation 38,400 4,409
Lucent Technologies, Inc. 36,342 3,023
*Microsoft Corporation 61,900 6,708
W.W. Grainger, Inc. 30,000 1,494
---------
TOTAL 37,274
---------
TRANSPORTATION (4.3%)
*AMR Corporation 34,800 2,897
Canadian National Railway Company 61,500 3,267
</TABLE>
--
12
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30,1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (87.5%) PAR (000'S)
- ---------------------------------------------------------------------------------
TRANSPORTATION (CONTINUED)
<S> <C> <C>
*FDX Corporation 36,400 $ 2,284
*Midwest Express Holdings, Inc. 103,500 3,745
Southwest Airlines Co. 95,900 2,841
---------
TOTAL 15,034
---------
TOTAL COMMON STOCK 305,642
---------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
MONEY MARKET INVESTMENTS (12.6%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOBILE REPAIR, SERVICES & PARKING (1.1%)
PHH Corporation, 6.35%, 7/01/98 4,000,000 $ 4,000
---------
BASIC MATERIALS (2.9%)
E.I. du Pont de Nemours & Company, 5.55%, 08/07/98 10,000,000 9,943
---------
FINANCE (2.7%)
+CXC Incorporated, 5.52%, 07/15/98 9,300,000 9,280
---------
GOVERNMENT (0.2%)
+Federal Home Loan Mortgage Corp., 5.43%, 08/21/98 800,000 794
---------
PERSONAL CREDIT INSTITUTIONS (5.7%)
+Commercial Credit, 5.55%, 07/29/98 10,000,000 9,957
<CAPTION>
MARKET
VALUE
MONEY MARKET INVESTMENTS (12.6%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
PERSONAL CREDIT INSTITUTIONS (CONTINUED)
General Electric Capital Corp., 5.52%, 07/08/98 10,000,000 $ 9,989
---------
TOTAL 19,946
---------
TOTAL MONEY MARKET INVESTMENTS 43,963
---------
TOTAL INVESTMENTS (100.1%) (COST $234,781,821)^ 349,606
OTHER ASSETS, LESS LIABILITIES (-0.1%) (322)
---------
TOTAL NET ASSETS (100.0%) $349,284
---------
</TABLE>
* Non-Income Producing
+Partially held by the custodian in a segregated account as collateral for open
futures positions. Information regarding open futures contracts as of June 30,
1998 is summarized below:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF EXPIRATION APPRECIATION
ISSUER CONTRACTS DATE (000'S)
- ----------------------- ---------- ---------- -------------
<S> <C> <C> <C>
S&P 500 Stock Index
(Total Market Value at
6/30/98, $20,288,250) 71 9/98 $532
</TABLE>
^At June 30, 1998, the aggregate cost of securities for federal tax purposes was
$234,781,821 and the net unrealized appreciation of investments based on that
cost was $114,823,823, which is comprised of $116,555,674 aggregate gross
unrealized appreciation and $1,731,851 aggregate gross unrealized depreciation.
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
--
13
<PAGE>
GROWTH AND INCOME STOCK PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Objective: Portfolio Strategy: Net Assets:
Long-term growth of capital and Actively manage a portfolio of equity securities with $498,812,712
income, consistent with moderate a goal of exceeding the total return of the S&P 500
investment risk Index.
</TABLE>
GROWTH AND INCOME STOCK PORTFOLIO
The Growth and Income Portfolio invests mainly in large-capitalization stocks,
with a focus on seeking the best values in the market based on long-term
earnings forecasts. A sector balance similar to that of the S&P 500 Index is
normally maintained, with the emphasis on undervalued stocks within each
industry group; a valuation discipline mandates the sale of stocks regarded as
overvalued. More focus is placed on capital appreciation and dividend growth
than on current dividends. The Portfolio is normally fully invested in equity
securities.
The last year has been an extraordinarily difficult time for the value-oriented
investment style that guides the Growth and Income Portfolio, as a few favorite
names have driven the market's strength, while other stocks have languished.
This situation became even more pronounced in the second quarter, when the 50
largest companies in the S&P 500 Index were up 7.1%, while the remaining 450
companies lost 0.4% of their value. These numbers represent only market prices;
the Portfolio's orientation to stocks with significant and reliable dividends
has helped to maintain total return well above 20% for the last 12 months,
though below returns for the S&P 500 Index.
At June 30, the Portfolio's largest holding was Procter & Gamble, a large
consumer-oriented company that represents a good value. The next largest,
Monsanto, is in the process of combining with American Home Products to create a
powerful technology-driven strategic force in consumer products, drugs and crop
sciences. Other major holdings are SBC Communications, which is participating in
the consolidation of the telecommunications industry, and Fannie Mae, a quality
growth company that provides exposure to the current strong housing environment.
The Growth and Income Stock Portfolio is managed for Northwestern Mutual by J.
P. Morgan Investment Management, Inc.
Sector Allocation
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Finance 18%
Basic Materials/Capital Goods 14%
Consumer Staples 13%
Other Industries 13%
Technology 12%
Consumer Cyclicals 12%
Health Care 11%
Energy 6%
Cash Equivalents 1%
</TABLE>
Top 10 Holdings
6/30/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Procter & Gamble Company 3.5%
Monsanto Company 3.1%
SBC Communications, Inc. 2.9%
Fannie Mae 2.8%
Starwood Hotels & Resorts 2.7%
Union Pacific Corporation 2.6%
Bristol-Myers Squibb Company 2.5%
Humana, Inc. 2.5%
Anheuser Busch Companies, Inc. 2.4%
Cisco Systems, Inc. 2.4%
</TABLE>
Performance Relative to S&P 500 Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH & INCOME
STOCK PORTFOLIO S&P 500 INDEX
<S> <C> <C> <C>
5/94 $10,000 $10,000
6/94 $9,784 $9,845
6/95 $11,754 $12,394
6/96 $14,099 $15,604
6/97 $18,641 $21,000
6/98 $23,288 $27,306
Average Annual
Total Return
For Periods Ended
June 30, 1998
One Year Since Inception
Growth & Income Stock Portfolio 24.93% 22.54%
S&P 500 Index 30.03% 27.32%
</TABLE>
The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index of
500 selected common stocks, most of which are listed on the New York Stock
Exchange. The index is heavily weighted toward stocks with large market
capitalizations and represents approximately two-thirds of the total market
value of all domestic common stocks.
This chart assumes an initial investment of $10,000 made on 5/3/94
(commencement of operations). Returns shown include deductions for management
and other fund expenses, and reinvestment of all dividends. Returns exclude
deductions for separate account sales loads and account fees. Past performance
is not predictive of future performance. Investment return and principal value
will fluctuate, so that your shares, when redeemed, may be worth more or less
than their original cost. Accumulation unit values, which reflect deduction of
charges for the separate account, are shown on page 2.
--
14
<PAGE>
GROWTH AND INCOME STOCK PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (98.8%) PAR (000'S)
- --------------------------------------------------------------
<S> <C> <C>
BASIC MATERIALS (6.6%)
Allegheny Teledyne, Inc. 800 $ 18
E. I. du Pont de Nemours & Company 71,900 5,366
Monsanto Company 273,400 15,276
Rohm and Haas Company 73,400 7,629
*Stone Container Corporation 300,800 4,700
-----------
TOTAL 32,989
-----------
CAPITAL GOODS (7.1%)
AlliedSignal, Inc. 231,000 10,251
*Coltec Industries, Inc. 261,600 5,199
Cooper Industries, Inc. 129,500 7,114
Johnson Controls Inc. 42,000 2,402
Waste Management, Inc. 302,900 10,602
-----------
TOTAL 35,568
-----------
COMMUNICATION SERVICES (7.8%)
BellSouth Corporation 100 7
Cincinnati Bell, Inc. 25,700 736
Frontier Corporation 111,100 3,500
GTE Corporation 13,800 7,726
MCI Communications Corporation 97,600 5,673
SBC Communications, Inc. 362,700 14,508
*Worldcom, Inc. 143,400 6,946
-----------
TOTAL 39,096
-----------
CONSUMER CYCLICAL (11.6%)
Circuit City Stores, Inc. 96,200 4,509
*CompUSA, Inc. 144,500 2,610
*Federated Department Stores, Inc. 78,800 4,240
*Fruit of the Loom, Inc. 68,400 2,270
Goodyear Tire & Rubber Company 98,900 6,373
International Game Technology 260,500 6,317
*Kmart Corporation 443,400 8,536
Mattel, Inc. 96,100 4,066
*Mirage Resorts, Incorporated 230,000 4,902
Sears, Roebuck and Co. 63,800 3,896
Service Corporation International 180,700 7,748
The TJX Companies, Inc. 97,200 2,345
-----------
TOTAL 57,812
-----------
CONSUMER STAPLES (12.8%)
Anheuser-Busch Companies, Inc. 254,600 12,014
Comcast Corporation 208,800 8,476
PepsiCo, Inc. 225,400 9,284
Philip Morris Companies, Inc. 237,800 9,363
Procter & Gamble Company 191,200 17,411
Ralston Purina Group 38,900 4,544
The Seagram Company Ltd. 57,100 2,338
*Tele Communications, Inc. 14,778 296
-----------
TOTAL 63,726
-----------
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (98.8%) PAR (000'S)
- --------------------------------------------------------------
<S> <C> <C>
ENERGY (6.4%)
Atlantic Richfield Company 52,200 $ 4,078
British Petroleum Company PLC 65,598 5,789
*Input/Output, Inc. 232,500 4,141
Schlumberger Limited 28,900 1,974
Tosco Corporation 407,100 11,959
Valero Energy Corporation 125,700 4,180
-----------
TOTAL 32,121
-----------
FINANCE (18.2%)
The Allstate Corporation 25,900 2,371
Associates First Capital Corporation 65,000 4,997
Astoria Financial Corporation 40,800 2,183
Chase Manhattan Corporation 600 45
Citicorp 22,400 3,343
Fannie Mae 226,900 13,784
First Union Corporation 179,988 10,484
KeyCorp 18,700 666
Long Island Bancorp, Inc. 32,500 1,974
Marsh & McLennan Companies, Inc. 154,950 9,365
MBIA, Inc. 97,400 7,293
Norwest Corporation 158,100 5,909
Simon Debartolo Group, Inc. 72,000 2,340
Starwood Hotels & Resorts 274,196 13,247
Travelers Group, Inc. 170,000 10,306
Washington Mutual, Inc. 56,000 2,433
-----------
TOTAL 90,740
-----------
HEALTHCARE (11.2%)
*Alza Corporation 142,800 6,176
American Home Products Corporation 64,100 3,317
Bristol-Myers Squibb Company 110,300 12,678
Eli Lilly and Company 65,500 4,327
*Humana, Inc. 391,100 12,197
Pfizer, Inc. 60,000 6,521
United States Surgical Corporation 106,700 4,868
Warner-Lambert Company 80,200 5,564
-----------
TOTAL 55,648
-----------
TECHNOLOGY (11.7%)
AutoDesk, Inc. 76,700 2,963
*Cisco Systems, Inc. 130,050 11,973
Computer Associates International,
Inc. 102,400 5,690
*EMC Corporation 219,400 9,832
First Data Corporation 106,500 3,548
International Business Machines
Corporation 50,500 5,798
*Oracle Corporation 78,600 1,931
Quantum Corporation 121,100 2,513
*Sun Microsystems, Inc. 227,900 9,899
Texas Instruments, Incorporated 71,000 4,140
-----------
TOTAL 58,287
-----------
</TABLE>
--
15
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK (98.8%) PAR (000'S)
- --------------------------------------------------------------
TRANSPORTATION (2.6%)
<S> <C> <C>
Union Pacific Corporation 289,000 $ 12,752
-----------
UTILITIES (2.8%)
New England Electric Systems 130,200 5,631
Northern States Power Company 112,500 3,220
PP & L Resources, Inc. 93,400 2,119
Wisconsin Energy Corporation 99,500 3,022
-----------
TOTAL 13,992
-----------
TOTAL COMMON STOCK 492,731
-----------
<CAPTION>
MARKET
VALUE
MONEY MARKET INVESTMENTS (.8%) PAR (000'S)
- --------------------------------------------------------------
<S> <C> <C>
AUTOMOBILE REPAIR, SERVICES & PARKING (0.5%)
PHH Corporation, 6.35%, 7/1/98 2,700,000 $ 2,700
-----------
PERSONAL CREDIT INSTITUTIONS (0.3%)
General Electric Capital Corporation,
5.519%, 7/8/98 1,300,000 1,299
-----------
TOTAL MONEY MARKET INVESTMENTS 3,999
-----------
TOTAL INVESTMENTS (99.6%) (COST
$479,787,131)^ 496,730
OTHER ASSETS, LESS LIABILITIES
(0.4%) 2,083
-----------
TOTAL NET ASSETS (100.0%) $ 498,813
-----------
</TABLE>
* Non-Income Producing
^ At June 30, 1998, the aggregate cost of securities for federal income tax
purposes was $479,787,131 and the net unrealized appreciation of investments
based on that cost was $16,942,514 which is comprised of $33,055,417 aggregate
gross unrealized appreciation and $16,112,903 aggregate gross unrealized
depreciation.
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
--
16
<PAGE>
INDEX 500 STOCK PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Objective: Portfolio Strategy: Net Assets:
Long-term capital appreciation Invest in a portfolio designed to approximate $1,480,895,351
through cost-effective the composition and returns of the S&P 500
participation in broad market Index.
performance
</TABLE>
INDEX 500 STOCK PORTFOLIO
The Index 500 Stock Portfolio is designed to achieve results that approximate
the performance of the Standard & Poor's 500 Composite Stock Price Index. This
composite of 500 stocks of large U.S.-based companies, compiled by Standard &
Poor's Corporation, is generally regarded as a good proxy for the overall U.S.
equity market; the Portfolio therefore enables contract owners to participate in
overall performance of the U.S. equity market. The Portfolio continues to
achieve the objective of matching the results of the S&P 500 before expenses.
Sector Allocation
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Finance 18%
Consumer Staples 15%
Technology 15%
Basic Materials/Capital Goods 12%
Health Care 12%
Other Industries 11%
Consumer Cyclical 9%
Energy 7%
Money Market Instruments 1%
</TABLE>
Top 10 Holdings
6/30/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPANY % OF NET ASSETS
<S> <C>
General Electric Company 3.3%
Microsoft Corporation 2.9%
The Coca-Cola Company 2.3%
Exxon Corporation 2.0%
Merck & Co., Inc. 1.8%
Pfizer, Inc. 1.6%
Wal-Mart Stores, Inc. 1.5%
Procter & Gamble Company 1.4%
Intel Corp. 1.3%
Royal Dutch Petroleum Co., ADR 1.3%
</TABLE>
Performance Relative to S&P 500 Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INDEX 500 PORTFOLIO S&P 500 INDEX
<S> <C> <C> <C>
6/88 $10,000 $10,000
6/89 $10,953 $12,020
6/90 $11,753 $13,967
6/91 $12,869 $14,987
6/92 $14,105 $16,995
6/93 $15,856 $19,306
6/94 $16,011 $19,557
6/95 $20,160 $24,623
6/96 $25,380 $31,000
6/97 $34,120 $41,717
6/98 $44,371 $54,244
Actively managed prior to
4/30/93
Indexed on 4/30/93
Average Annual Total Return
For Periods Ended June 30, 1998
One Year Five Years Ten Years
Index 500 Portfolio 30.04% 22.85% 16.07%
S&P 500 Index 30.03% 22.95% 18.42%
</TABLE>
On April 30, 1993, the Portfolio was indexed to approximate the performance of
the Standard & Poor's 500 Composite Stock Price Index. Before that date, the
Portfolio was actively managed.
The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of 500 selected common stocks, most of which are listed on the New York Stock
Exchange. The index is heavily weighted toward stocks with large market
capitalizations and represents approximately two-thirds of the total market
value of all domestic common stocks.
This chart assumes an initial investment of $10,000 made on 6/30/88. Returns
shown include deductions for management and other fund expenses, and
reinvestment of all dividends. Returns exclude deductions for separate account
sales loads and account fees. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
Accumulation unit values, which reflect deduction of charges for the separate
account, are shown on page 2.
--
17
<PAGE>
INDEX 500 STOCK PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET VALUE
COMMON STOCK (98.9%) SHARES (000'S)
- -------------------------------------------------------------
<S> <C> <C>
BASIC MATERIALS (4.0%)
Air Products & Chemicals, Inc. 38,600 $ 1,544
Alcan Aluminum Limited 37,300 1,030
Allegheny Teledyne, Inc. 32,135 735
Aluminum Co. of America 28,300 1,866
Archer Daniels Midland Company 93,748 1,816
*Armco, Inc. 17,700 113
ASARCO, Inc. 6,600 147
B.F. Goodrich Company 11,800 586
Barrick Gold Corporation 61,100 1,172
Battle Mountain Gold Company 37,700 224
Bemis Company, Inc. 8,700 356
*Bethlehem Steel Corporation 21,000 261
Boise Cascade Corporation 9,200 301
Champion International 15,800 777
Cyprus Amax Minerals Co. 15,350 203
Dow Chemical Company 37,200 3,597
E.I. du Pont de Nemours & Company 185,600 13,850
Eastman Chemical Company 12,825 798
Ecolab, Inc. 21,200 657
Engelhard Corp. 23,700 480
*FMC Corporation 5,700 389
Freeport-McMoRan Copper & Gold,
Inc. 31,700 481
Georgia-Pacific Group 15,200 896
Great Lakes Chemical 9,800 386
Hercules, Inc. 15,800 650
Homestake Mining Company 34,600 359
Inco Limited 27,400 373
Inland Steel Industries, Inc. 8,000 226
International Flavors & Fragrances,
Inc. 17,900 778
International Paper Company 49,600 2,133
Louisiana Pacific Corporation 18,000 329
Mead Corp. 17,200 546
Monsanto Company 97,200 5,431
Morton International, Inc. 21,400 535
Nalco Chemical Company 10,900 383
Newmont Mining Corporation 25,680 607
Nucor Corp. 14,400 662
Phelps Dodge Corporation 9,600 549
Pioneer Hi-Bred International 40,100 1,659
Placer Dome, Inc. 40,500 476
Potlatch Corporation 4,700 197
PPG Industries, Inc. 29,200 2,031
Praxair 25,900 1,212
Reynolds Metals Company 12,100 677
Rohm and Haas Company 10,000 1,039
Sigma-Aldrich Corp. 16,500 580
*Stone Container Corporation 16,300 255
Temple-Inland, Inc. 9,300 501
Union Camp Corporation 11,400 566
<CAPTION>
MARKET VALUE
COMMON STOCK (98.9%) SHARES (000'S)
- -------------------------------------------------------------
<S> <C> <C>
BASIC MATERIALS (CONTINUED)
Union Carbide Corporation 20,200 $ 1,078
USX - U.S. Steel Group, Inc. 14,100 465
*W.R. Grace & Co. 12,200 208
Westvaco Corporation 16,750 473
Weyerhaeuser Company 32,700 1,510
Willamette Industries Inc. 18,200 582
Worthington Industries 15,850 239
------------
TOTAL 59,974
------------
CAPITAL GOODS (8.5%)
Aeroquip-Vickers, Inc. 4,600 269
AlliedSignal, Inc. 92,500 4,105
AMP, Inc. 36,072 1,240
Avery Dennison Corporation 16,800 903
Ball Corporation 4,900 197
Boeing Company 163,876 7,303
Briggs & Stratton Corporation 4,100 153
Browning-Ferris Industries, Inc. 30,200 1,049
Case Corporation 12,300 593
Caterpillar, Inc. 61,100 3,231
Cincinnati Milacron, Inc. 6,500 158
Cooper Industries, Inc. 19,800 1,088
Corning, Inc. 37,900 1,317
Crane Co. 7,550 367
Crown Cork & Seal Company, Inc. 21,000 998
Cummins Engine Company, Inc. 6,300 323
Deere & Company 40,900 2,163
Dover Corporation 36,500 1,250
Eaton Corporation 11,800 917
Emerson Electric Co. 72,700 4,389
Fluor Corporation 13,700 699
Foster Wheeler Corporation 6,700 144
General Dynamics Corporation 20,600 958
General Electric Company 536,700 48,840
General Signal Corporation 7,200 259
Harnischfeger Industries, Inc. 7,800 221
Honeywell, Inc. 20,900 1,746
Illinois Tool Works, Inc. 40,900 2,728
Ingersoll-Rand Company 27,100 1,194
Johnson Controls, Inc. 13,800 789
Lockheed Martin Corporation 31,854 3,373
McDermott International, Inc. 9,900 341
Millipore Corp. 7,100 193
Minnesota Mining & Manufacturing
Co. 67,000 5,507
Moore Corporation Ltd. 14,510 192
NACCO Industries, Inc. 1,300 168
National Service Industries, Inc. 7,100 361
*Navistar International Corp. 11,900 344
Northrop Grumman Corporation 11,000 1,134
*Owens-Illinois, Inc. 25,300 1,132
PACCAR, Inc. 12,770 667
</TABLE>
--
18
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET VALUE
COMMON STOCK (98.9%) SHARES (000'S)
- -------------------------------------------------------------
CAPITAL GOODS (CONTINUED)
<S> <C> <C>
Pall Corporation 20,500 $ 420
Parker-Hannifin Corporation 18,175 693
Pitney Bowes, Inc. 44,900 2,161
Raychem Corp. 13,900 411
Rockwell International Corporation 32,900 1,581
*Sealed Air Corporation 13,471 495
Tenneco, Inc. 27,900 1,062
Textron, Inc. 26,900 1,928
*Thermo Electron Corporation 26,100 892
Thomas & Betts Corporation 9,000 443
Timken Company 10,300 317
Tyco International Ltd. 93,800 5,909
United Technologies Corp. 38,200 3,534
Waste Management, Inc. 74,600 2,611
------------
TOTAL 125,460
------------
COMMUNICATION SERVICES (6.7%)
*Airtouch Communications, Inc. 92,500 5,405
ALLTEL Corporation 30,200 1,404
Ameritech Corporation 179,500 8,055
AT&T Corp. 266,400 15,218
Bell Atlantic Corporation 254,684 11,620
BellSouth Corporation 162,600 10,915
Frontier Corporation 26,900 847
GTE Corporation 157,000 8,733
MCI Communications Corporation 114,200 6,638
*Nextel Communications, Inc. 43,100 1,072
SBC Communications, Inc. 300,598 12,024
Sprint Corporation 70,500 4,970
US WEST, Inc. 81,808 3,845
*WorldCom, Inc. 166,100 8,045
------------
TOTAL 98,791
------------
CONSUMER CYCLICAL (9.5%)
American Greetings Corp. 11,900 606
Armstrong World Industries, Inc. 6,700 451
*AutoZone, Inc. 24,900 795
Black & Decker Corporation 15,600 952
Brunswick Corporation 16,400 406
*Cendant Corporation 132,854 2,773
Centex Corporation 9,700 366
Chrysler Corporation 106,300 5,993
Circuit City Stores, Inc. 16,200 759
Cognizant Corp. 26,600 1,676
*Consolidated Stores Corporation 17,700 642
Cooper Tire & Rubber Company 12,900 266
*Costco Companies, Inc. 35,107 2,214
Dana Corporation 17,200 920
Dayton Hudson Corporation 71,700 3,477
Dillard's, Inc. 18,200 754
Dow Jones & Company, Inc. 15,800 881
Dun & Bradstreet Corporation 27,900 1,008
Echlin, Inc. 9,900 486
<CAPTION>
MARKET VALUE
COMMON STOCK (98.9%) SHARES (000'S)
- -------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICAL (CONTINUED)
*Federated Department Stores, Inc. 34,400 $ 1,851
Fleetwood Enterprises, Inc. 6,000 240
Ford Motor Company 196,800 11,611
*Fruit of the Loom, Inc. 12,000 398
Gannet Company, Inc. 46,500 3,304
General Motors Corp. 116,000 7,750
Genuine Parts Company 29,300 1,013
Goodyear Tire & Rubber Company 25,600 1,650
H & R Block, Inc. 17,200 725
Harcourt General 11,600 690
*Harrahs Entertainment 16,600 386
Hasbro, Inc. 21,850 859
Hilton Hotels Corporation 41,000 1,169
Home Depot, Inc. 119,998 9,967
Interpublic Group of Cos., Inc. 20,700 1,256
ITT Industries, Inc. 19,400 725
J.C. Penney Company, Inc. 41,000 2,965
Jostens, Inc. 6,400 154
*Kmart Corporation 80,000 1,540
Kaufman & Broad Home Corp. 6,400 203
Knight-Ridder, Inc. 13,000 716
Laidlaw Transportation Limited 53,900 657
Liz Claiborne, Inc. 11,000 575
Lowe's Companies, Inc. 57,400 2,328
Marriott International, Inc. 41,900 1,357
Masco Corporation 27,100 1,640
Mattel, Inc. 47,688 2,018
May Department Stores Company 37,900 2,482
Maytag Corporation 15,600 770
McGraw-Hill Companies Inc. 16,200 1,321
Mercantile Stores Company 5,800 458
Meredith Corporation 8,700 408
*Mirage Resorts, Inc. 29,400 627
Nike, Inc. 47,700 2,322
Nordstrom, Inc. 12,700 981
Omnicom Group 26,600 1,327
Owens Corning 8,800 359
Pep Boys - Manny, Moe & Jack 10,400 197
Pulte Corporation 7,000 209
*Reebok International Ltd. 9,200 255
Russell Corp. 6,000 181
Sears, Roebuck and Co. 64,300 3,926
Service Corporation International 41,300 1,771
Sherwin-Williams Company 28,300 937
Snap-On, Inc. 9,950 361
Springs Industries, Inc. 3,300 152
Tandy Corporation 17,000 902
The Gap, Inc. 64,900 3,999
The Limited, Inc. 37,000 1,226
The New York Times Company 15,700 1,244
The Stanley Works 14,600 607
Times Mirror Company 14,500 912
</TABLE>
--
19
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET VALUE
COMMON STOCK (98.9%) SHARES (000'S)
- -------------------------------------------------------------
CONSUMER CYCLICAL (CONTINUED)
<S> <C> <C>
TJX Companies, Inc. 53,000 $ 1,279
*Toys R Us 46,600 1,098
Tribune Company 20,200 1,390
TRW, Inc. 20,200 1,103
VF Corporation 20,000 1,030
*Venator Group, Inc. 22,100 423
Wal-Mart Stores, Inc. 368,300 22,374
Whirlpool Corporation 12,300 846
------------
TOTAL 140,649
------------
CONSUMER STAPLES (14.9%)
Adolph Coors Co. 6,100 207
Alberto-Culver Company 9,300 270
Albertson's, Inc. 40,300 2,088
American Stores Co. 44,800 1,084
Anheuser-Busch Companies, Inc. 80,300 3,789
Avon Products, Inc. 21,600 1,674
BESTFOODS 47,200 2,741
Brown-Forman Corp. 11,300 726
Campbell Soup Company 74,900 3,979
Cardinal Health, Inc. 18,000 1,688
CBS Corporation 116,600 3,702
*Clear Channel Communications, Inc. 20,200 2,204
Clorox Company 17,000 1,621
Colgate-Palmolive Co. 48,500 4,268
Comcast Corp. 57,250 2,324
Conagra, Inc. 78,000 2,472
CVS Corporation 62,700 2,441
Darden Restaurant, Inc. 24,400 387
Deluxe Corp. 13,300 476
Fort James Corporation 34,200 1,522
Fortune Brands, Inc. 28,100 1,080
General Mills, Inc. 25,900 1,771
Giant Food, Inc. 9,400 405
Great Atlantic & Pacific Tea Co.,
Inc. 6,300 208
H.J. Heinz Company 59,950 3,365
Hershey Foods Corporation 23,400 1,615
Kellogg Company 67,400 2,532
Kimberly-Clark Corporation 91,144 4,181
*King World Productions, Inc. 12,100 309
Longs Drug Stores Corp. 6,300 182
McDonald's Corporation 113,000 7,797
*MediaOne Group Inc. 99,500 4,372
Newell Co. 26,100 1,300
PepsiCo, Inc. 248,800 10,247
Philip Morris Companies, Inc. 397,600 15,656
Procter & Gamble Company 220,100 20,043
R.R. Donnelley & Sons Company 23,900 1,093
Ralston Purina Group 17,600 2,056
Rite Aid Corporation 42,300 1,589
<CAPTION>
MARKET VALUE
COMMON STOCK (98.9%) SHARES (000'S)
- -------------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES (CONTINUED)
Rubbermaid, Inc. 24,600 $ 816
Sara Lee Corporation 77,600 4,341
Supervalu, Inc. 9,900 439
Sysco Corporation 55,800 1,430
*Tele Communications, Inc. 83,176 3,197
The Coca-Cola Company 405,600 34,679
The Gillette Company 183,700 10,413
*The Kroger Company 41,800 1,792
The Quaker Oats Company 22,700 1,247
The Seagram Company Ltd. 58,500 2,395
Time Warner, Inc. 94,800 8,099
*Tricon Global Restaurants, Inc. 24,890 789
Tupperware 10,000 281
Unilever NV 105,000 8,288
UST, Inc. 30,200 815
*Viacom, Inc. 57,956 3,376
Walgreen Co. 81,200 3,355
Walt Disney Company 110,669 11,627
Wendy's International, Inc. 21,700 510
Winn-Dixie Stores, Inc. 24,400 1,249
Wm. Wrigley Jr. Company 19,000 1,862
------------
TOTAL 220,464
------------
ENERGY (7.2%)
Amerada Hess Corporation 15,000 815
Amoco Company 159,700 6,648
Anadarko Petroleum Corporation 9,800 658
Apache Corporation 15,700 495
Ashland, Inc. 12,300 635
Atlantic Richfield Company 52,600 4,109
Baker Hughes, Inc. 27,800 961
Burlington Resource, Inc. 28,920 1,245
Chevron Corp. 107,700 8,946
Dresser Industries, Inc. 28,800 1,269
Exxon Corporation 404,400 28,839
Halliburton Company 43,000 1,916
Helmerich & Payne, Inc. 8,200 182
Kerr-McGee Corporation 7,800 451
Mobil Corporation 128,600 9,854
Occidental Petroleum Corporation 55,600 1,501
*ORYX Energy Company 17,300 383
Pennzoil Company 7,800 395
Phillips Petroleum Company 43,200 2,082
*Rowan Companies, Inc. 14,200 276
Royal Dutch Petroleum Co., ADR 351,600 19,272
Schlumberger Limited 81,600 5,574
Sun Company, Inc. 15,500 602
Texaco, Inc. 89,900 5,366
Union Pacific Resource Group 41,592 730
Unocal Corp. 40,400 1,444
USX-Marathon Group 47,300 1,623
</TABLE>
--
20
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET VALUE
COMMON STOCK (98.9%) SHARES (000'S)
- -------------------------------------------------------------
ENERGY (CONTINUED)
<S> <C> <C>
*Western Atlas International, Inc. 8,900 $ 755
------------
TOTAL 107,026
------------
FINANCE (17.6%)
Aetna, Inc. 24,363 1,855
Allstate Corporation 70,314 6,438
American Express Company 76,200 8,687
American General Corporation 41,625 2,963
American International Group, Inc. 115,025 16,794
Aon Corporation 27,500 1,932
Associates First Capital
Corporation 56,855 4,371
Banc One Corporation 115,129 6,426
BankAmerica Corporation 113,700 9,828
BankBoston Corporation 47,600 2,648
Bankers Trust New York Corporation 16,100 1,869
BB&T Corporation 23,400 1,582
Beneficial Corporation 8,700 1,333
Charles Schwab Corporation 43,600 1,417
Chase Manhattan Corporation 138,212 10,435
CIGNA Corporation 36,400 2,512
Cincinnati Financial Corporation 27,000 1,036
Citicorp 74,900 11,179
Comerica, Inc. 25,850 1,713
Conseco, Inc. 30,900 1,445
Countrywide Credit Industries, Inc. 17,800 903
Fannie Mae 174,000 10,571
Federal Home Loan Mortgage Corp. 114,000 5,365
Fifth Third Bancorp 38,175 2,405
First Chicago NBD Corporation 47,728 4,230
First Union Corporation 158,552 9,236
Fleet Financial Group, Inc. 44,730 3,735
Franklin Resources, Inc. 41,500 2,241
General Re Corporation 12,900 3,270
Golden West Financial Corporation 9,300 989
Green Tree Financial Corporation 22,300 955
H.F. Ahmanson & Company 18,000 1,278
Hartford Financial Services Group,
Inc. 19,400 2,219
Household International, Inc. 52,600 2,617
Huntington Bancshares, Inc. 31,400 1,052
J.P. Morgan & Company, Inc. 29,100 3,408
Jefferson-Pilot Corp. 17,450 1,011
KeyCorp 72,100 2,569
Lehman Bros Holdings, Inc. 16,700 1,295
Lincoln National Corporation 16,800 1,535
Loews Corp. 18,900 1,647
Marsh & McLennan Companies, Inc. 41,850 2,529
MBIA, Inc. 16,100 1,205
<CAPTION>
MARKET VALUE
COMMON STOCK (98.9%) SHARES (000'S)
- -------------------------------------------------------------
<S> <C> <C>
FINANCE (CONTINUED)
MBNA Corp. 82,150 $ 2,711
Mellon Bank Corporation 41,700 2,903
Mercantile Bancorp 21,500 1,083
Merrill Lynch & Co. 54,600 5,037
MGIC Investment Corp. 18,700 1,067
Morgan Stanley Dean Witter & Co. 97,105 8,873
National City Corp. 53,900 3,827
NationsBank Corp. 154,193 11,796
Northern Trust Corp. 18,300 1,395
Norwest Corporation 123,900 4,631
PNC Bank Corp. 50,000 2,691
Progressive Corporation 11,800 1,664
Providian Financial Corporation 15,600 1,226
Republic New York Corporation 17,900 1,127
SAFECO, Inc. 23,100 1,050
St. Paul Companies, Inc. 37,886 1,594
State Street Corporation 26,400 1,835
Summit Bancorp 28,900 1,373
SunAmerica, Inc. 32,000 1,838
Suntrust Banks, Inc. 34,600 2,813
Synovus Financial Corp. 43,050 1,022
The Bank of New York Company, Inc. 61,800 3,750
The Chubb Corporation 27,900 2,242
Torchmark Corporation 23,000 1,052
Transamerica Corporation 10,300 1,186
Travelers Group, Inc. 188,041 11,400
UNUM Corporation 22,800 1,265
U.S. Bancorp 120,731 5,191
Wachovia Corporation 33,800 2,856
Washington Mutual, Inc. 63,260 2,748
Wells Fargo & Company 14,233 5,252
------------
TOTAL 261,226
------------
HEALTHCARE (11.6%)
Abbott Laboratories, Inc. 250,900 10,256
Allergan, Inc. 10,700 496
*Alza Corporation 14,000 606
American Home Products Corporation 213,100 11,028
*Amgen, Inc. 43,200 2,824
Bausch & Lomb, Inc. 9,100 456
Baxter International, Inc. 45,900 2,470
Becton, Dickinson & Company 20,000 1,553
Biomet, Inc. 18,300 605
*Boston Scientific Corp. 31,900 2,285
Bristol-Myers Squibb Company 163,000 18,735
C.R. Bard, Inc. 9,300 354
Columbia/HCA Healthcare Corporation 106,200 3,093
Eli Lilly and Company 181,900 12,017
Guidant Corporation 24,700 1,761
</TABLE>
--
21
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET VALUE
COMMON STOCK (98.9%) SHARES (000'S)
- -------------------------------------------------------------
HEALTHCARE (CONTINUED)
<S> <C> <C>
*HEALTHSOUTH Corporation 64,600 $ 1,724
*Humana, Inc. 26,900 839
Johnson & Johnson 220,500 16,262
Mallinckrodt, Inc. 12,000 356
Manor Care, Inc. 10,400 400
Medtronic, Inc. 76,900 4,902
Merck & Co., Inc. 196,500 26,282
Pfizer, Inc. 212,100 23,053
Pharmacia & Upjohn, Inc. 83,205 3,838
Schering-Plough Corporation 120,100 11,004
*St. Jude Medical, Inc. 13,800 508
*Tenet Healthcare Corp. 50,200 1,569
U.S. Surgical Corporation 12,400 566
*United Healthcare Corp. 30,900 1,962
Warner-Lambert Company 134,000 9,296
------------
TOTAL 171,100
------------
TECHNOLOGY (14.8%)
*3COM Corporation 58,100 1,783
Adobe Systems, Inc. 11,300 480
*Advanced Micro Devices, Inc. 23,200 396
*Andrew Corporation 14,537 263
*Apple Computer, Inc. 21,800 625
*Applied Materials, Inc. 60,000 1,770
*Ascend Communications, Inc. 31,600 1,566
Autodesk, Inc. 7,600 294
Automatic Data Processing, Inc. 49,000 3,571
*Bay Networks 36,000 1,161
*Cabletron Systems, Inc. 25,900 348
*Ceridian Corp. 11,900 699
*Cisco Systems, Inc. 166,850 15,361
Compaq Computer Corporation 271,009 7,690
Computer Associates International,
Inc. 89,512 4,974
*Computer Sciences Corp. 25,600 1,638
*Data General Corporation 8,000 120
*Dell Computer Corp. 107,100 9,940
*DSC Communications Corporation 19,300 579
Eastman Kodak Company 53,300 3,894
EG&G, Inc. 7,400 222
*EMC Corporation 81,300 3,643
Equifax, Inc. 24,600 893
First Data Corporation 70,200 2,339
*Gateway 2000, Inc. 25,400 1,286
*General Instrument Corporation 24,300 661
Harris Corporation 13,100 585
HBO & Company 69,100 2,436
Hewlett-Packard Company 170,600 10,215
Ikon Office Solutions 22,100 322
Intel Corporation 268,300 19,888
<CAPTION>
MARKET VALUE
COMMON STOCK (98.9%) SHARES (000'S)
- -------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
International Business Machines
Corporation 159,400 $ 18,301
*KLA-Tencor Corporation 13,800 382
*LSI Logic Corp. 23,200 535
Lucent Technologies, Inc. 213,380 17,751
*Micron Technology 34,700 861
*Microsoft Corporation 399,300 43,274
Motorola, Inc. 97,900 5,146
*National Semiconductor Corporation 26,900 355
Northern Telecom Limited 85,400 4,846
*Novell, Inc. 57,500 733
*Oracle Corporation 161,400 3,964
*Parametric Technology Company 42,100 1,142
Perkin-Elmer Corporation 8,000 498
Polaroid Corporation 7,400 263
Raytheon Company Class B 55,600 3,287
Scientific-Atlanta, Inc. 13,000 330
*Seagate Technology Inc. 39,700 945
Shared Medical Systems Corp. 4,300 316
*Silicon Graphics 30,800 373
*Sun Microsystems, Inc. 61,900 2,689
Tektronix, Inc. 8,250 292
*Tellabs, Inc. 29,800 2,134
Texas Instruments, Inc. 64,000 3,732
*Unisys Corporation 40,900 1,155
W.W. Grainger, Inc. 16,300 812
Xerox Corporation 53,400 5,427
------------
TOTAL 219,185
------------
TRANSPORTATION (1.1%)
*AMR Corporation 29,900 2,489
Burlington Northern Santa Fe 25,607 2,514
CSX Corporation 35,800 1,629
Delta Air Lines, Inc. 12,200 1,577
*FDX Corporation 24,060 1,510
Norfolk Southern Corporation 61,800 1,842
Ryder System, Inc. 12,500 395
Southwest Airlines Co. 36,200 1,072
Union Pacific Corporation 40,500 1,787
*US Airways Group, Inc. 15,000 1,189
------------
TOTAL 16,004
------------
UTILITIES (3.0%)
Ameren Corporation 22,500 894
American Electric Power Company,
Inc. 31,100 1,411
Baltimore Gas & Electric Co. 24,200 752
Carolina Power & Light Company 24,700 1,071
Central & South West Corporation 34,800 935
Cinergy Corporation 25,817 904
Coastal Corp. 17,400 1,215
Columbia Energy Group 13,650 759
</TABLE>
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22
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET VALUE
COMMON STOCK (98.9%) SHARES (000'S)
- -------------------------------------------------------------
UTILITIES (CONTINUED)
<S> <C> <C>
Consolidated Edison Co. of New York 38,500 $ 1,773
Consolidated Natural Gas Company 15,700 924
Dominion Resources, Inc. 31,700 1,292
DTE Energy Company 23,800 961
Duke Energy Corp. 58,965 3,494
Eastern Enterprises 3,300 141
Edison International 62,600 1,851
Enron Corp. 53,900 2,914
Entergy Corporation 40,000 1,150
FirstEnergy Corp. 37,800 1,162
FPL Group, Inc. 29,800 1,877
GPU, Inc. 20,800 787
Houston Industries, Inc. 46,362 1,431
*Niagara Mohawk Power Corporation 23,700 354
Nicor, Inc. 7,900 317
Northern States Power Company 24,400 698
ONEOK, Inc. 5,100 203
P P & L Resources, Inc. 27,200 617
PacifiCorp 48,600 1,100
PECO Energy Company 36,500 1,065
Peoples Energy Corporation 5,800 224
PG&E Corp. 62,500 1,973
Public Service Enterprise Group,
Inc. 38,000 1,309
*Sempra Energy 20,602 572
Sonat Inc. 18,000 695
Southern Company 113,200 3,134
Texas Utilities Company 40,415 1,682
UNICOM Corp. 35,500 1,245
Williams Companies, Inc. 67,400 2,276
------------
TOTAL 45,162
------------
TOTAL COMMON STOCK 1,465,041
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET VALUE
MONEY MARKET INVESTMENTS (1.0%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
AUTOMOBILE REPAIR, SERVICES & PARKING (0.2%)
PHH Corporation, 6.349%, 7/01/98 3,300,000 $ 3,300
FINANCE (.2%)
+CXC Incorporated, 5.52%, 7/15/98 3,600,000 3,592
GOVERNMENT (0.4%)
+Federal Home Loan Mortgage
Corporation, 5.43%, 8/21/98 5,500,000 5,458
PERSONAL CREDIT INSTITUTIONS (0.2%)
+General Electric Capital
Corporation, 5.52%, 7/08/98 3,000,000 2,997
------------
TOTAL MONEY MARKET INVESTMENTS 15,347
------------
TOTAL INVESTMENTS (99.9%) (COST
$853,089,400)^ 1,480,388
OTHER ASSETS, LESS LIABILITIES
(0.1%) 507
------------
TOTAL NET ASSETS (100.0%) $ 1,480,895
------------
</TABLE>
* Non-Income Producing
+Partially held by the custodian in a segregated account as collateral for open
futures positions. Information regarding open futures contracts as of June 30,
1998 is summarized below:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF EXPIRATION APPRECIATION
ISSUER CONTRACTS DATE (000'S)
- ------------------------------------------------------------------------
<S> <C> <C> <C>
S&P 500 Stock Index
(Total market value at
6/30/98, $12,573,000) 44 9/98 $ 205
</TABLE>
^ At June 30,1998, the aggregate cost of securities for federal income tax
purposes was $853,089,400 and the net unrealized appreciation of investments
based on that cost was $627,298,671 which is comprised of $637,615,077
aggregate gross unrealized appreciation and $10,316,406 aggregate gross
unrealized depreciation.
The Accompanying Notes are an Integral Part of the Finanacial Statements
(Prepared from Unaudited Figures)
--
23
<PAGE>
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Objective: Portfolio Strategy: Net Assets:
A high level of current income Achieve consistent returns and low volatility $3,093,149,475
and capital growth with a low by diversifying among assets
risk profile
</TABLE>
BALANCED PORTFOLIO
In order to capitalize on changing financial market and economic conditions, the
Balanced Portfolio's asset allocation is adjusted as appropriate among three
investment classes: stocks, bonds and money market instruments. The equity
portion of the Portfolio is indexed, meaning that the Portfolio is designed to
achieve results that approximate the performance of the Standard & Poor's 500
Composite Stock Price Index, which is generally regarded as a good proxy for the
overall U.S. equity market. The bond portion of the Portfolio is actively
managed, with investments in high quality bonds adjusted frequently as to
maturity, market sectors and duration. Liquidity is maintained by holding a
portion of the Portfolio in money market investments, which are high quality
short-term debt securities.
The Portfolio benefited from continued emphasis on equities during the first
half of 1998, as the stock market's upward trend continued. Because the equity
portion of the Portfolio is indexed to the S&P 500, performance was helped by
the continued market leadership by the large companies that dominate this index.
In the bond portion of the Portfolio, the positive effects of an overweighting
in commercial mortgage-backed securities and favorable industry selection of
corporate bonds were offset by two major negatives: a defensive interest rate
posture and a loss in one Asian bond. A moderate cash position at mid-year will
make it possible to increase investments in equities or bonds, as market
conditions indicate.
Percentage Holdings
6/30/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equities (including
futures) 59%
Bonds 32%
Short-Term Investments 9%
</TABLE>
Performance Relative
to Relevant Indices
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BALANCED PORTFOLIO S&P 500 INDEX MERRILL LYNCH DOMESTIC MASTER INDEX ML 91-DAY T-BILL
<S> <C> <C> <C> <C>
6/88 $10,000 $10,000 $10,000 $10,000
6/89 $13,333 $12,020 $11,243 $10,847
6/90 $14,267 $13,967 $12,067 $11,768
6/91 $15,711 $14,987 $13,380 $12,658
6/92 $17,487 $16,995 $15,273 $13,313
6/93 $19,635 $19,306 $17,095 $13,763
6/94 $19,802 $19,557 $16,918 $14,226
6/95 $23,400 $24,623 $19,048 $15,011
6/96 $27,122 $31,000 $19,992 $15,841
6/97 $32,907 $41,717 $21,627 $16,701
6/98 $39,589 $54,244 $23,934 $17,584
Average Annual Total Return
For Periods Ended June 30,
1998
One Year Five Years Ten Years
Balanced Portfolio 20.30% 15.06% 14.75%
S&P 500 Index 30.03% 22.95% 18.42%
MLDM Index 10.67% 6.96% 9.12%
ML 91-Day T-bill 5.29% 5.02% 5.81%
</TABLE>
In the graph, the Portfolio is compared against three indices representing the
three major components of the Portfolio: equities, fixed income, and cash
equivalent investments.
The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of 500 selected common stocks, most of which are listed on the New York Stock
Exchange. The index is heavily weighted toward stocks with large market
capitalizations and represents approximately two-thirds of the total market
value of all domestic common stocks.
The Merrill Lynch Domestic Master Index is an unmanaged market value
weighted index comprised of U.S. Government, mortgage and investment-grade
corporate bonds. The index measures the income provided by, and the price
changes of, the underlying securities.
This chart assumes an initial investment of $10,000 made on 6/30/88. Returns
shown include deductions for management and other fund expenses, and
reinvestment of all dividends. Returns exclude deductions for separate account
sales loads and account fees. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
Accumulation unit values, which reflect deduction of charges for the separate
account, are shown on page 2.
--
24
<PAGE>
BALANCED PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
BONDS (32.4%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (7.7%)
AEROSPACE AND DEFENSE (0.1%)
Lockheed Corporation, 6.75%,
3/15/03 3,000,000 $ 3,079
------------
AUTO-RELATED (0.1%)
Hertz Corp., 9.04%, 6/14/00 4,100,000 4,335
------------
BANK HOLDING COMPANIES (0.7%)
Banco Montevideo, 8.4%,
04/30/08 (144A) 6,250,000 5,961
BT Institutional Capital Trust,
7.75%, 12/01/26 (144A) 1,000,000 1,046
First Union Institutional
Capital II, 7.85%, 1/1/27 3,750,000 4,024
J.P. Morgan Capital Trust,
7.54%, 01/15/27 1,315,000 1,366
NationsBank Lease Pass Thru
Trust - Class 1, 7.442%,
1/10/11 (144A) 2,000,000 2,110
Security Capital Industrial
Trust, 7.3%, 5/15/01 8,000,000 8,207
------------
TOTAL 22,714
------------
CHEMICALS AND ALLIED PRODUCTS (0.3%)
Dow Cap B.V., 8.5%, 6/8/10 8,200,000 9,647
------------
COMERCIAL BANKS (0.2%)
Wachovia Capital Trust V,
7.965%, 06/01/27 (144A) 5,000,000 5,449
------------
COMMUNICATIONS (0.3%)
#Panamasat, 11.375%, 08/01/03 2,100,000 2,174
Tele Communications, Inc.,
7.375%, 2/15/00 8,000,000 8,156
------------
TOTAL 10,330
------------
DURABLE GOODS (0.2%)
Tata Engineering & Locomotive,
7.875%, 07/15/07 (144A) 6,500,000 5,540
------------
ELECTRIC SERVICES (1.9%)
Columbia Gas System Inc.,
7.32%, 11/28/10 7,571,000 7,984
Comed Financing II, 8.5%,
01/15/27 3,000,000 3,317
Dayton Power & Light Company,
8.15%, 1/15/26 5,750,000 6,245
Niagra Mohawk Power, 7.0%,
10/01/00 3,000,000 3,000
Niagra Mohawk Power, 7.25%,
10/01/02 1,500,000 1,498
Ohio Edison Company, 7.375%,
9/15/02 3,665,000 3,806
PECO Energy Company, 7.75%,
3/1/23 8,850,000 9,294
<CAPTION>
SHARES/ MARKET VALUE
BONDS (32.4%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
ELECTRIC SERVICES (CONTINUED)
Public Service Electric & Gas
Co., 6.875%, 1/1/03 9,000,000 $ 9,258
Southern California Edison Co.,
7.25%, 3/1/26 10,000,000 10,330
Texas Utilities Electric Co.,
7.875%, 3/1/23 4,000,000 4,234
------------
TOTAL 58,966
------------
ENERGY (0.2%)
Barrett Resources Corporation,
7.55%, 2/01/07 5,000,000 5,232
------------
FINANCE (0.6%)
Associates Corp. of North
America, 7.95%, 2/15/10 5,550,000 6,251
Crown Cork & Seal Finance Plc,
6.75%, 12/15/03 8,000,000 8,181
Industrial Credit & Investment
Corporation of India, 7.55%,
08/15/07 (144A) 5,600,000 4,885
------------
TOTAL 19,317
------------
FOREIGN BANKS - BRANCHES & AGENCIES (0.4%)
Fuji Bank, Ltd., 9.87%,
12/31/49 (144A) 13,000,000 11,424
------------
FOOD AND BEVERAGE (0.4%)
Coca Cola Enterprises, Inc.,
8%, 1/4/05 10,000,000 11,125
------------
GENERAL MERCHANDISE STORES (0.5%)
LB Commercial Conduit Mortgage
Trust - Class A3, 8.396%,
01/20/17 8,791,824 10,399
May Department Stores Company,
7.45%, 10/15/16 4,000,000 4,356
------------
TOTAL 14,755
------------
INSTRUMENTS AND RELATED PRODUCTS (0.1%)
Raytheon Company, 7.2%,
08/15/27 1,500,000 1,625
------------
MOTION PICTURE (0.6%)
News America Holdings Inc.,
8.45%, 8/1/34 10,000,000 12,650
Time Warner Entertainment Inc.,
8.375%, 3/15/23 3,000,000 3,512
Time Warner Entertainment Inc.,
8.375%, 7/15/33 1,500,000 1,790
------------
TOTAL 17,952
------------
MOTOR VEHICLES (0.4%)
General Motors Acceptance
Corp., 6.625%, 10/1/02 5,000,000 5,100
</TABLE>
--
25
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
BONDS (32.4%) PAR (000'S)
- -------------------------------------------------------------
MOTOR VEHICLES (CONTINUED)
<S> <C> <C>
General Motors Corporation,
8.8%, 3/1/21 6,500,000 $ 8,268
------------
TOTAL 13,368
------------
TECHNOLOGY (0.1%)
International Business
Machines, 6.22%, 08/01/27 3,000,000 3,089
------------
TELEPHONE COMMUNICATIONS (0.2%)
Comcast Cellular Holdings,
9.5%, 05/01/07 2,500,000 2,606
GTE Corporation, 6.94%,
04/15/28 3,000,000 3,061
------------
TOTAL 5,667
------------
TEXTILES (0.1%)
Polysindo International
Finance, 11.375%, 06/15/06 6,500,000 2,535
------------
TOBACCO (0.2%)
Philip Morris Companies, 9.25%,
2/15/00 1,000,000 1,046
RJR Nabisco Inc., 8.625%,
12/1/02 4,000,000 4,145
------------
TOTAL 5,191
------------
UTILITY (0.1%)
Atlantic City Electric Company,
6.625%, 8/1/13 4,000,000 4,057
------------
TOTAL CORPORATE BONDS 235,397
------------
GOVERNMENT (DOMESTIC AND FOREIGN) AND AGENCY BONDS (17.4%)
FOREIGN GOVERNMENT BONDS (1.2%)
**Hellenic Republic, 8.80%,
06/19/2007 2,000,000,000 6,934
Province of Quebec, 6.5%,
1/17/06 7,500,000 7,607
Republic of Brazil, 8.0%,
04/15/14 3,502,094 2,570
Republic of Indonesia, 7.75%,
08/01/06 2,000,000 1,453
Republic of Korea, 8.875%,
04/15/08 17,400,000 15,791
Vnesheconombank, 6.625%,
12/15/15 (144A) 3,000,000 1,661
------------
TOTAL 36,016
------------
FEDERAL GOVERNMENT AND AGENCIES (16.2%)
Federal Farm Credit, 6.51%,
01/07/08 8,000,000 8,010
Federal Home Loan Mortgage
Corporation, 7%, 06/15/03 7,250,000 7,440
Federal Home Loan Mortgage
Corporation, 6.5%, 10/01/02 19,324,382 19,469
Federal National Mortgage
Assoc., 6.240%, 02/01/06 4,933,612 4,991
<CAPTION>
SHARES/ MARKET VALUE
BONDS (32.4%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
FEDERAL GOVERNMENT AND AGENCIES (CONTINUED)
Federal National Mortgage
Assoc., 6.315%, 03/01/06 5,207,413 $ 5,291
Federal National Mortgage
Assoc., 6.500%, 09/25/05 6,021,293 6,062
Federal National Mortgage
Assoc., 6.750% 11/01/07 3,108,491 3,259
Federal National Mortgage
Assoc., 6.750%, 04/25/18 5,696,392 5,838
Federal National Mortgage
Assoc., 6.750%, 12/25/23 6,500,000 6,578
Federal National Mortgage
Assoc., 6.834%, 07/01/03 3,232,340 3,308
Federal National Mortgage
Assoc., 6.895%, 05/01/06 6,083,936 6,379
Federal National Mortgage
Assoc., 6.900%, 04/01/06 2,452,322 2,571
Federal National Mortgage
Assoc., 6.960%, 10/01/07 4,474,573 4,716
Federal National Mortgage
Assoc., 7.000%, 06/01/03 5,579,595 5,661
Federal National Mortgage
Assoc., 7.000%, 06/25/10 8,070,000 8,209
Federal National Mortgage
Assoc., 7.000%, 04/01/26 22,705,481 23,031
Federal National Mortgage
Assoc., 7.025%, 08/01/05 1,951,576 2,059
Federal National Mortgage
Assoc., 7.045%, 08/01/05 7,685,826 8,076
Federal National Mortgage
Assoc., 7.120%, 11/01/03 986,964 1,028
Federal National Mortgage
Assoc., 7.250%, 05/01/04 1,574,980 1,657
Federal National Mortgage
Assoc., 8.400%, 02/25/09 10,910,000 12,032
Federal National Mortgage
Assoc., 11.000%, 12/01/12 284,087 315
Federal National Mortgage
Assoc., 11.000%, 09/01/17 2,194,488 2,449
Federal National Mortgage
Assoc., 11.000%, 12/01/17 397,955 445
Federal National Mortgage
Assoc., 11.000%, 02/01/18 850,581 949
Federal National Mortgage
Assoc., 11.500%, 04/01/18 1,533,285 1,736
Federal National Mortgage
Assoc., 12.000%, 09/01/12 2,295,368 2,606
Federal National Mortgage
Assoc., 12.000%, 12/01/12 442,884 504
Federal National Mortgage
Assoc., 12.000%, 09/01/17 750,974 861
Federal National Mortgage
Assoc., 12.000%, 10/01/17 1,089,889 1,250
</TABLE>
--
26
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
BONDS (32.4%) PAR (000'S)
- -------------------------------------------------------------
FEDERAL GOVERNMENT AND AGENCIES (CONTINUED)
<S> <C> <C>
Federal National Mortgage
Assoc., 12.000%, 12/01/17 622,730 $ 715
Federal National Mortgage
Assoc., 12.000%, 02/01/18 829,819 952
Federal National Mortgage
Assoc., 12.500%, 04/01/18 742,528 864
Federal National Mortgage
Assoc., 13.000%, 11/01/12 375,850 437
Federal National Mortgage
Assoc., 13.000%, 11/01/17 785,075 921
Federal National Mortgage
Assoc., 13.000%, 12/01/17 468,169 546
Federal National Mortgage
Assoc., 13.000%, 02/01/18 1,105,089 1,288
Federal National Mortgage
Assoc., 14.000%, 12/01/17 311,046 371
Government National Mortgage
Assoc., 7.00%, 05/15/23 12,642,186 12,872
Government National Mortgage
Assoc., 7.00%, 06/15/23 839,324 855
Government National Mortgage
Assoc., 7.00%, 07/15/23 1,293,346 1,316
Government National Mortgage
Assoc., 7.00%, 08/15/23 21,858 22
Government National Mortgage
Assoc., 7.00%, 09/15/23 647,704 660
Government National Mortgage
Assoc., 7.00%, 10/15/23 487,576 496
Government National Mortgage
Assoc., 7.00%, 11/15/23 1,717,154 1,749
Government National Mortgage
Assoc., 7.00%, 12/15/26 14,000,000 14,255
Government National Mortgage
Assoc., 7.50%, 11/01/04 13,000,000 13,362
Government National Mortgage
Assoc., 8.50%, 07/15/21 102,693 109
Government National Mortgage
Assoc., 8.50%, 09/15/21 105,049 111
Government National Mortgage
Assoc., 8.50%, 05/15/22 5,419 6
<CAPTION>
SHARES/ MARKET VALUE
BONDS (32.4%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
FEDERAL GOVERNMENT AND AGENCIES (CONTINUED)
Government National Mortgage
Assoc., 8.50%, 09/15/22 134,921 $ 143
Government National Mortgage
Assoc., 8.50%, 10/15/22 198,424 210
Government National Mortgage
Assoc., 8.50%, 12/15/22 39,700 42
Government National Mortgage
Assoc., 8.50%, 06/15/24 17,443 18
Government National Mortgage
Assoc., 8.50%, 07/15/24 226,145 238
Government National Mortgage
Assoc., 8.50%, 08/15/24 94,464 100
Government National Mortgage
Assoc., 8.50%, 09/15/24 189,741 200
Government National Mortgage
Assoc., 8.50%, 11/15/24 146,395 154
Government National Mortgage
Assoc., 8.50%, 12/15/24 15,628 16
Government National Mortgage
Assoc., 8.50%, 01/15/25 116,252 123
Government National Mortgage
Assoc., 8.50%, 02/15/25 126,473 133
Government National Mortgage
Assoc., 8.50%, 11/15/25 15,849 17
Government National Mortgage
Assoc., 8.50%, 01/15/26 426,193 450
Government National Mortgage
Assoc., 8.50%, 02/15/26 17,447 18
Government National Mortgage
Assoc., 8.50%, 03/15/26 35,297 37
Government National Mortgage
Assoc., 8.50%, 04/15/26 1,598,317 1,686
Government National Mortgage
Assoc., 8.50%, 05/15/26 2,415,422 2,548
Rural Housing Trust - Class D,
6.33%, 4/1/26 6,384,704 6,384
</TABLE>
--
27
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
BONDS (32.4%) PAR (000'S)
- -------------------------------------------------------------
FEDERAL GOVERNMENT AND AGENCIES (CONTINUED)
<S> <C> <C>
U.S. Treasury, 3.625%, 04/15/28 6,500,000 $ 6,455
U.S. Treasury, 5.375%, 01/31/00 3,000,000 2,993
U.S. Treasury, 5.500%, 02/29/00 150,000,000 149,953
U.S. Treasury, 5.500%, 01/31/03 2,500,000 3,497
U.S. Treasury, 5.500%, 03/31/03 35,500,000 35,478
U.S. Treasury, 5.500%, 02/15/08 175,000 175
U.S. Treasury, 5.625%, 04/30/00 10,500,000 10,520
U.S. Treasury, 5.625%, 12/31/99 5,000,000 5,006
U.S. Treasury, 5.625%, 12/31/02 2,300,000 2,309
U.S. Treasury, 6.000%, 07/31/02 4,000,000 4,068
U.S. Treasury, 6.125%, 08/15/07 7,000,000 7,287
U.S. Treasury, 6.125%, 11/15/27 1,000,000 1,072
U.S. Treasury, 6.375%, 05/15/99 45,600,000 45,914
U.S. Treasury, 7.250%, 08/15/04 6,000,000 6,531
------------
TOTAL 502,462
------------
TOTAL GOVERNMENT BONDS 538,478
------------
MORTGAGE/ASSET BACKED SECURITIES (7.1%)
AUTO-RELATED (0.8%)
CIT RV Trust - Class A, 6.25%,
1/15/11 2,472,808 2,480
Daimler-Benz Vehicle Trust -
Class A, 5.85%, 7/20/03 1,711,105 1,712
Eaglemark Trust - Class A,
6.75%, 11/15/02 3,841,254 3,874
Fleetwood Credit Corporation
Grantor Trust - Class A, 6.4%,
05/15/13 2,834,250 2,866
Team Fleet Financing
Corporation - Class A, 6.65%,
12/15/02 (144A) 11,800,000 11,894
Team Fleet Financing
Corporation - Class A, 7.35%,
5/15/03 (144A) 3,000,000 3,108
------------
TOTAL 25,934
------------
CREDIT CARD (0.8%)
Charming Shoppes Master Trust -
Class A, 7%, 4/15/03 5,000,000 5,042
Iroquis Trust - Class A, 6.68%,
11/10/03 (144A) 15,000,000 15,117
Iroquis Trust - Class A,
6.752%, 06/25/07 (144A) 4,750,000 4,796
------------
TOTAL 24,955
------------
COMMERCIAL MORTGAGES (4.1%)
Asset Securitization
Corporation - Class CS1,
1.257%, 11/13/26 IO 26,132,306 1,033
Asset Securitization
Corporation - Class PS1,
1.367%, 02/14/41 IO 22,576,780 2,439
<CAPTION>
SHARES/ MARKET VALUE
BONDS (32.4%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
COMMERCIAL MORTGAGES (CONTINUED)
BankBoston Marine Asset Backed
Trust - Class A6, 6.64%,
08/15/10 7,000,000 $ 7,200
Chase Commercial Mortgage
Securities Corp. - Class B,
6.6%, 12/12/29 2,500,000 2,546
Chase Commercial Mortgage
Securities Corp. - Class A2,
6.6%, 12/12/29 8,500,000 8,754
Citibank Credit Card Master
Trust I - Class A, 0%,
08/15/06 17,000,000 11,786
Commercial Mortgage Acceptance
Corporation - Class B, 6.647%,
12/15/30 2,500,000 2,559
Credit Suisse First Boston
Mortgage Securities Corp. -
Class D, 9.5464%, 4/25/25
(144A) 2,047,000 2,408
Credit Suisse First Boston
Mortgage Securities Corp. -
Class B, 9.5914%, 4/25/25
(144A) 3,000,000 3,575
Credit Suisse First Boston
Mortgage Securities Corp. -
Class A2, 7.26%, 6/20/29
(144A) 3,197,493 3,386
Credit Suisse First Boston
Mortgage Securities Corp. -
Class B, 7.28%, 6/20/29 (144A) 3,250,000 3,428
Credit Suisse First Boston
Mortgage Securities Corp. -
Class D, 7.46%, 06/20/29
(144A) 6,000,000 6,264
Crumi Mae Commercial Mortgage
Trust, 7.0%, 12/01/06 6,500,000 6,518
DLJ Mortgage Acceptance
Corporation - Class S, 0.357%,
10/15/17 (144A) IO 18,880,945 508
DLJ Mortgage Acceptance
Corporation - Class CF1,
0.718%, 02/18/31 IO 189,547,217 8,363
First Union-Lehman Brothers
Commerical Mortgage Trust -
Class C, 7.44%, 04/18/07 2,500,000 2,646
GMAC Commerical Mortgage
Securities, Inc. - Class C,
7.81%, 10/15/11 (144A) 7,000,000 7,337
Kmart CMBS Financing, Inc. -
Class D, 6.7875%, 03/01/07
(144A) 4,500,000 4,500
</TABLE>
--
28
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
BONDS (32.4%) PAR (000'S)
- -------------------------------------------------------------
COMMERCIAL MORTGAGES (CONTINUED)
<S> <C> <C>
Kmart CMBS Financing, Inc. -
Class C, 6.3875%, 03/01/07
(144A) 3,500,000 $ 3,501
Merrill Lynch Mortgage
Investors, Inc. - Class C,
7.12%, 06/18/29 6,000,000 6,273
Merrill Lynch Mortgage
Investors, Inc. - Class E,
8.1606% , 06/25/22 (144A) 2,000,000 2,098
Merrill Lynch Mortgage
Investors, Inc. - Class C,
8.9223%, 11/25/20 5,845,000 6,021
Midland Realty Acceptance Corp.
- Class AEC, 1.389%, 1/25/29
(144A) IO 28,148,529 2,107
Nomura Asset Securities Corp. -
Class A2, 7.014%, 03/17/28 15,000,000 15,561
Nomura Asset Securities Corp. -
Class A4, 7.594%, 03/17/28 2,200,000 2,258
Red Mountain Funding LLC -
Class E, 7.365%, 01/15/19
(144A) 1,500,000 1,498
Red Mountain Funding LLC -
Class F, 7.471%, 01/15/19
(144A) 1,800,000 1,707
------------
TOTAL 126,274
------------
FRANCHISE LOAN RECEIVABLES (0.3%)
EMAC Owner Trust, 1.378%,
01/15/25 IO (144A) 40,000,000 3,031
EMAC Owner Trust - Class A2,
6.38%, 01/15/25 (144A) 6,000,000 5,999
------------
TOTAL 9,030
------------
HOME EQUITY LOAN (0.1%)
Amresco Residential Securities
- Class A2, 6.245%, 4/25/22 2,500,000 2,501
------------
MANUFACTURED HOUSING (0.1%)
Vanderbilt Mortgage and
Finance, Inc. - Class 1A4,
7.19%, 02/07/14 2,500,000 2,618
------------
OTHER ASSET BACKED (0.6%)
FMAC Loan Receivables Trust -
Class A, 6.20%, 09/15/20
(144A) 5,823,032 5,818
Heilig-Meyers Master Trust -
Class A, 6.125%, 01/20/07
(144A) 6,500,000 6,469
Nations Credit Grantor Trust -
Class A1, 6.35%, 12/15/04 2,454,211 2,473
<CAPTION>
SHARES/ MARKET VALUE
BONDS (32.4%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
OTHER ASSET BACKED (CONTINUED)
Newcourt Equipment - Class B,
6.764%, 09/20/04 (144A) 1,795,912 $ 1,806
Newcourt Equipment - Class C,
7.734%, 09/20/04 (144A) 1,436,730 1,444
------------
TOTAL 18,010
------------
RESIDENTIAL MORTGAGES (0.3%)
BCF L L C Mortgage Pass Thru
Certificate - Class B3, 7.75%,
3/25/37 (144A) 4,911,132 5,043
Blackrock Capital Finance LP,
Class B3, 7.25%, 11/25/28
(144A) 5,947,865 5,714
------------
TOTAL 10,757
------------
TOTAL MORTGAGE/ASSET BACKED
SECURITIES 220,079
------------
MUNICIPAL BONDS(0.2%)
New Jersey Economic Development
Authority, 0.00%, 2/15/25 17,000,000 3,169
New Jersey Economic Development
Authority, 0.00%, 2/15/26 11,000,000 1,920
New Jersey Economic Development
Authority, 7.425%, 2/15/29 2,250,000 2,556
------------
TOTAL MUNICIPAL BONDS 7,645
------------
TOTAL BONDS 1,001,599
------------
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
BASIC MATERIALS (2.2%)
Air Products & Chemicals, Inc. 44,000 $ 1,760
Alcan Aluminum Limited 42,500 1,174
Allegheny Teledyne, Inc. 36,662 839
Aluminum Co. of America 32,300 2,130
Archer Daniels Midland Company 106,873 2,071
*Armco, Inc. 20,200 129
ASARCO, Inc. 7,500 167
B.F. Goodrich Company 13,400 665
Barrick Gold Corporation 69,700 1,337
Battle Mountain Gold Company 43,000 255
Bemis Company, Inc. 9,900 405
*Bethlehem Steel Corporation 23,900 297
Boise Cascade Corporation 10,500 344
Champion International 18,000 885
Cyprus Amax Minerals Co. 17,500 232
Dow Chemical Company 42,400 4,100
E.I. du Pont de Nemours &
Company 211,700 15,798
</TABLE>
--
29
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
BASIC MATERIALS (CONTINUED)
<S> <C> <C>
Eastman Chemical Company 14,675 $ 914
Ecolab, Inc. 24,100 747
Engelhard Corp. 27,000 547
*FMC Corporation 6,500 443
Freeport-McMoRan Copper & Gold,
Inc. 36,200 550
Georgia Pacific Group 17,300 1,020
Great Lakes Chemical 11,200 442
Hercules, Inc. 18,100 744
Homestake Mining Company 39,500 410
Inco Limited 31,200 425
Inland Steel Industries, Inc. 9,200 259
International Flavors &
Fragrances, Inc. 20,400 886
International Paper Company 56,500 2,430
Louisiana Pacific Corporation 20,500 374
Mead Corp. 19,600 622
Monsanto Company 110,900 6,197
Morton International, Inc. 24,400 610
Nalco Chemical Company 12,500 439
Newmont Mining Corporation 29,230 691
Nucor Corp. 16,400 754
Phelps Dodge Corporation 11,000 629
Pioneer Hi-Bred International 45,700 1,891
Placer Dome, Inc. 46,200 543
Potlatch Corporation 5,400 227
PPG Industries, Inc. 33,300 2,316
Praxair 29,500 1,381
Reynolds Metals Company 13,800 772
Rohm and Haas Company 11,400 1,185
Sigma-Aldrich Corp. 18,800 660
*Stone Container Corporation 18,600 291
Temple-Inland Inc. 10,600 571
Union Camp Corporation 13,000 645
Union Carbide Corporation 23,000 1,228
USX-U.S. Steel Group, Inc. 16,100 531
*W.R. Grace & Co. 13,900 237
Westvaco Corporation 19,050 538
Weyerhaeuser Company 37,300 1,723
Willamette Industries, Inc. 20,800 666
Worthington Industries 18,100 273
------------
TOTAL 68,399
------------
CAPITAL GOODS (4.6%)
Aeroquip-Vickers, Inc. 5,300 309
AlliedSignal, Inc. 105,500 4,682
AMP, Inc. 41,136 1,414
Avery Dennison Corporation 19,200 1,032
Ball Corporation 5,600 225
Boeing Company 187,018 8,334
Briggs & Stratton Corporation 4,600 172
Browning-Ferris Industries,
Inc. 34,400 1,195
Case Corporation 14,000 676
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS (CONTINUED)
Caterpillar, Inc. 69,600 $ 3,680
Cincinnati Milacron, Inc. 7,500 182
Cooper Industries, Inc. 22,600 1,242
Corning, Inc. 43,200 1,501
Crane Co. 8,550 415
Crown Cork & Seal Company, Inc. 24,000 1,140
Cummins Engine Company, Inc. 7,100 364
Deere & Company 46,700 2,469
Dover Corporation 41,600 1,425
Eaton Corporation 13,400 1,042
Emerson Electric Co. 82,900 5,005
Fluor Corporation 15,700 801
Foster Wheeler Corporation 7,600 163
General Dynamics Corporation 23,500 1,093
General Electric Company 612,100 55,701
General Signal Corporation 8,200 295
Harnischfeger Industries, Inc. 8,900 252
Honeywell, Inc. 23,800 1,989
Illinois Tool Works, Inc. 46,700 3,114
Ingersoll-Rand Company 30,950 1,364
Johnson Controls, Inc. 15,700 898
Lockheed Martin Corporation 36,361 3,850
McDermott International, Inc. 11,300 389
Millipore Corp. 8,200 223
Minnesota Mining &
Manufacturing Co. 76,400 6,279
Moore Corporation Ltd. 16,573 220
NACCO Industries, Inc. 1,500 194
National Service Industries,
Inc. 8,000 407
*Navistar International Corp. 13,570 392
Northrop Grumman Corporation 12,500 1,289
*Owens-Illinois, Inc. 28,900 1,293
PACCAR, Inc. 14,590 762
Pall Corporation 23,366 479
Parker-Hannifin Corporation 20,700 789
Pitney Bowes, Inc. 51,200 2,464
Raychem Corp. 15,900 470
Rockwell International
Corporation 37,600 1,807
*Sealed Air Corporation 15,386 565
Tenneco, Inc. 31,800 1,210
Textron, Inc. 30,700 2,201
*Thermo Electron Corporation 29,800 1,019
Thomas & Betts Corporation 10,300 507
Timken Company 11,800 364
Tyco International Ltd. 107,000 6,741
United Technologies Corp. 43,600 4,033
</TABLE>
--
30
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
CAPITAL GOODS (CONTINUED)
<S> <C> <C>
Waste Management, Inc. 85,100 $ 2,979
------------
TOTAL 143,100
------------
COMMUNICATION SERVICES (3.7%)
*Airtouch Communications, Inc. 105,500 6,165
ALLTEL Corporation 34,400 1,600
Ameritech Corporation 204,700 9,186
AT&T Corporation 303,800 17,355
Bell Atlantic Corporation 290,580 13,258
BellSouth Corporation 185,500 12,452
Frontier Corporation 30,700 967
GTE Corporation 179,100 9,962
MCI Communications Corporation 130,300 7,574
*Nextel Communications, Inc. 49,100 1,221
SBC Communications, Inc. 342,874 13,715
Sprint Corporation 80,400 5,668
US WEST, Inc. 93,505 4,395
*WorldCom, Inc. 189,500 9,179
------------
TOTAL 112,697
------------
CONSUMER CYCLICAL (5.2%)
American Greetings Corp. 13,600 693
Armstrong World Industries,
Inc. 7,600 512
*AutoZone, Inc. 28,400 907
Black & Decker Corporation 17,800 1,086
Brunswick Corporation 18,600 460
*Cendant Corporation 151,554 3,164
Centex Corporation 11,100 419
Chrysler Corporation 121,300 6,838
Circuit City Stores, Inc. 18,500 867
Cognizant Corp. 30,300 1,909
*Consolidated Stores
Corporation 20,200 732
Cooper Tire & Rubber Company 14,700 303
*Costco Companies, Inc. 40,051 2,526
Dana Corporation 19,600 1,049
Dayton Hudson Corporation 81,800 3,967
Dillard's, Inc. 20,800 862
Dow Jones & Company, Inc. 18,000 1,004
Dun & Bradstreet Corporation 31,800 1,149
Echlin, Inc. 11,800 579
*Federated Department Stores,
Inc. 39,200 2,109
Fleetwood Enterprises, Inc. 6,800 272
Ford Motor Company 224,500 13,246
*Fruit of the Loom, Inc. 13,700 455
Gannett Company, Inc. 53,100 3,773
General Motors Corp. 132,300 8,839
Genuine Parts Company 33,375 1,154
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICAL (CONTINUED)
Goodyear Tire & Rubber Company 29,300 $ 1,888
H & R Block, Inc. 19,600 826
Harcourt General 13,200 785
*Harrahs Entertainment 18,900 439
Hasbro, Inc. 24,850 977
Hilton Hotels Corporation 46,800 1,334
Home Depot, Inc. 136,799 11,363
Interpublic Group of Cos., Inc. 23,600 1,432
ITT Industries, Inc. 22,200 830
J.C. Penney Company, Inc. 46,800 3,384
Jostens, Inc. 7,300 176
Kaufman & Broad Home Corp. 7,300 232
*Kmart Corporation 91,300 1,758
Knight-Ridder, Inc. 14,800 815
Laidlaw Transportation Limited 61,500 750
Liz Claiborne, Inc. 12,500 653
Lowe's Companies, Inc. 65,400 2,653
Marriott International, Inc. 47,700 1,544
Masco Corporation 30,900 1,869
Mattel, Inc. 54,360 2,300
May Department Stores Company 43,300 2,836
Maytag Corporation 17,800 879
McGraw-Hill Companies, Inc. 18,500 1,509
Mercantile Stores Company 6,900 545
Meredith Corporation 9,900 465
*Mirage Resorts, Inc. 33,600 716
Nike, Inc. 54,400 2,649
Nordstrom, Inc. 14,500 1,120
Omnicom Group 30,300 1,511
Owens Corning 10,000 408
Pep Boys-Manny, Moe & Jack 11,900 225
Pulte Corporation 7,900 236
*Reebok International Ltd. 10,500 291
Russell Corp. 6,800 205
Sears, Roebuck & Co. 73,300 4,476
Service Corporation
International 47,100 2,019
Sherwin-Williams Company 32,300 1,070
Snap-On, Inc. 11,350 411
Springs Industries, Inc. 3,800 175
Tandy Corporation 19,300 1,024
The Gap, Inc. 74,000 4,560
The Limited, Inc. 42,200 1,398
The New York Times Company 18,000 1,427
The Stanley Works 16,700 694
Times Mirror Company 16,600 1,044
TJX Companies, Inc. 60,400 1,457
*Toys R Us 53,100 1,251
Tribune Company 23,000 1,583
TRW, Inc. 23,000 1,256
</TABLE>
--
31
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
CONSUMER CYCLICAL (CONTINUED)
<S> <C> <C>
Venator Group, Inc. 25,200 $ 482
VF Corporation 22,900 1,179
Wal-Mart Stores, Inc. 420,100 25,521
Whirlpool Corporation 14,000 963
------------
TOTAL 160,467
------------
CONSUMER STAPLES (8.1%)
Adolph Coors Co. 6,900 235
Alberto-Culver Company 10,600 307
Albertson's, Inc. 45,900 2,378
American Stores Co. 51,100 1,236
Anheuser-Busch Companies, Inc. 91,600 4,322
Avon Products, Inc. 24,700 1,914
BESTFOODS 53,800 3,124
Brown-Forman Corp. 12,900 829
Campbell Soup Company 85,400 4,537
Cardinal Health, Inc. 20,500 1,922
CBS Corporation 133,000 4,223
*Clear Channel Communications,
Inc. 23,100 2,521
Clorox Company 19,300 1,841
Colgate-Palmolive Co. 55,300 4,866
Comcast Corp. 65,250 2,649
Conagra, Inc. 88,900 2,817
CVS Corporation 71,500 2,784
Darden Restaurant, Inc. 27,800 441
Deluxe Corp. 15,200 544
Fort James Corporation 39,100 1,740
Fortune Brands, Inc. 32,100 1,234
General Mills, Inc. 29,600 2,024
Giant Food, Inc. 11,200 482
Gillette Company 209,500 11,876
Great Atlantic & Pacific Tea
Co., Inc. 7,200 238
H.J. Heinz Company 68,350 3,836
Hershey Foods Corporation 26,700 1,842
Kellogg Company 76,900 2,889
Kimberly-Clark Corporation 103,932 4,768
*King World Productions, Inc. 13,800 352
Longs Drug Stores Corp. 7,200 208
Mc Donald's Corporation 128,800 8,887
*MediaOne Group, Inc. 113,500 4,987
Newell Co. 29,800 1,484
Pepsico, Inc. 283,800 11,689
Philip Morris Companies, Inc. 453,500 17,857
Procter & Gamble Company 251,100 22,866
R.R. Donnelley & Sons Company 27,300 1,249
Ralston Purina Group 20,000 2,336
Rite Aid Corporation 48,200 1,811
Rubbermaid, Inc. 28,000 929
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES (CONTINUED)
Safety-Kleen Corp. 88,500 $ 4,950
Supervalu, Inc. 11,200 497
Sysco Corporation 63,600 1,630
*Tele Communications, Inc. 94,914 3,648
The Coca-Cola Company 462,600 39,552
*The Kroger Company 47,700 2,045
The Quaker Oats Company 25,900 1,423
The Seagram Company Ltd. 66,700 2,731
Time Warner, Inc. 108,200 9,244
*Tricon Global Restaurants,
Inc. 28,390 900
Tupperware 11,400 321
Unilever, N.V. 119,700 9,449
UST, Inc. 34,500 932
*Viacom, Inc. 66,056 3,848
Walgreen Co. 92,600 3,825
Walt Disney Company 126,236 13,263
Wendy's International, Inc. 24,700 580
Winn-Dixie Stores, Inc. 27,800 1,423
Wm. Wrigley Jr. Company 21,700 2,126
------------
TOTAL 251,461
------------
ENERGY (3.9%)
Amerada Hess Corporation 17,100 929
Amoco Company 182,200 7,584
Anadarko Petroleum Corporation 11,200 753
Apache Corporation 17,900 564
Ashland, Inc. 14,100 728
Atlantic Richfield Company 60,000 4,688
Baker Hughes, Inc. 31,700 1,096
Burlington Resource, Inc. 32,975 1,420
Chevron Corp. 122,800 10,200
Dresser Industries, Inc. 32,800 1,445
Exxon Corporation 461,200 32,889
Halliburton Company 49,000 2,184
Helmerich & Payne, Inc. 9,400 209
Kerr-McGee Corporation 8,900 515
Mobil Corporation 146,700 11,241
Occidental Petroleum
Corporation 63,400 1,712
*ORYX Energy Company 19,800 438
Pennzoil Company 8,900 450
Phillips Petroleum Company 49,200 2,371
*Rowan Companies, inc. 16,200 315
Royal Dutch Petroleum Co., ADR 401,100 21,985
Schlumberger Limited 93,100 6,360
Sun Company, Inc. 17,700 687
Texaco, Inc. 102,500 6,118
Union Pacific Resource Group 47,458 833
Unocal Corp. 46,100 1,648
USX-Marathon Group 53,900 1,849
</TABLE>
--
32
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
ENERGY (CONTINUED)
<S> <C> <C>
*Western Atlas International,
Inc. 10,200 $ 865
------------
TOTAL 122,076
------------
FINANCE (9.6%)
Aetna, Inc. 27,793 2,116
Allstate Corporation 80,247 7,348
American Express Company 86,900 9,907
American General Corporation 47,503 3,382
American International Group,
Inc. 131,175 19,152
Aon Corporation 31,350 2,202
Associates First Capital
Corporation 64,819 4,983
Banc One Corporation 131,301 7,328
BankAmerica Corporation 129,700 11,211
BankBoston Corporation 54,400 3,026
Bankers Trust New York
Corporation 18,300 2,124
BB&T Corporation 26,700 1,806
Beneficial Corporation 9,900 1,517
Charles Schwab Corporation 49,650 1,614
Chase Manhattan Corporation 157,648 11,902
CIGNA Corporation 41,600 2,870
Cincinnati Financial
Corporation 30,800 1,182
Citicorp 85,400 12,746
Comerica, Inc. 29,500 1,954
Conseco, Inc. 35,200 1,646
Countrywide Credit Industries,
Inc. 20,300 1,030
Fannie Mae 198,500 12,059
Federal Home Loan Mortgage
Corp. 130,000 6,118
Fifth Third Bancorp 43,575 2,745
First Chicago NBD Corporation 54,405 4,822
First Union Corporation 180,886 10,537
Fleet Financial Group, Inc. 51,019 4,260
Franklin Resources, Inc. 47,300 2,554
General Re Corporation 14,700 3,726
Golden West Financial
Corporation 10,600 1,127
Green Tree Financial
Corporation 25,500 1,092
H.F. Ahmanson & Company 20,500 1,456
Hartford Financial Services
Group, Inc. 22,100 2,528
Household International, Inc. 60,000 2,985
Huntington Bancshares, Inc. 35,800 1,199
J.P. Morgan & Company, Inc. 33,200 3,889
Jefferson-Pilot Corp. 19,875 1,152
KeyCorp 82,200 2,928
Lehman Bros Holdings, Inc. 19,100 1,481
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
FINANCE (CONTINUED)
Lincoln National Corporation 19,100 $ 1,745
Loews Corp. 21,500 1,873
Marsh & McLennan Companies,
Inc. 47,700 2,883
MBIA, Inc. 18,300 1,370
MBNA Corp. 93,755 3,094
Mellon Bank Corporation 47,600 3,314
Mercantile Bancorp 24,500 1,234
Merrill Lynch & Co. 62,300 5,747
MGIC Investment Corp. 21,400 1,221
Morgan Stanley, Dean Witter &
Co. 110,780 10,123
National City Corp. 61,400 4,359
NationsBank Corp. 175,859 13,453
Northern Trust Corp. 20,900 1,594
Norwest Corporation 141,300 5,281
PNC Bank Corp. 57,100 3,073
Progressive Corporation 13,500 1,904
Providian Financial Corporation 17,800 1,398
Republic New York Corporation 20,400 1,284
SAFECO, Inc. 26,400 1,200
St. Paul Companies, Inc. 43,206 1,817
State Street Corporation 30,100 2,092
Summit Bancorp 32,900 1,563
SunAmerica, Inc. 36,500 2,096
Suntrust Banks, Inc. 39,400 3,204
Synovus Financial Corp. 49,150 1,167
The Bank of New York Company,
Inc. 70,500 4,278
The Chubb Corporation 31,800 2,556
Torchmark Corporation 26,200 1,199
Transamerica Corporation 11,800 1,358
Travelers Group, Inc. 214,538 13,006
U.S. Bancorp 137,787 5,924
UNUM Corporation 26,000 1,443
Wachovia Corporation 38,500 3,253
Washington Mutual, Inc. 72,170 3,135
Wells Fargo & Company 16,266 6,002
------------
TOTAL 297,947
------------
HEALTHCARE (6.3%)
Abbott Laboratories, Inc. 286,100 11,694
Allergan, Inc. 12,200 566
*Alza Corporation 16,000 692
American Home Products
Corporation 243,000 12,575
*Amgen, Inc. 49,200 3,216
Bausch & Lomb, Inc. 10,300 515
Baxter International, Inc. 52,400 2,820
Becton, Dickinson & Company 22,900 1,778
Biomet, Inc. 20,900 691
</TABLE>
--
33
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
HEALTHCARE (CONTINUED)
<S> <C> <C>
*Boston Scientific Corp. 36,400 $ 2,607
Bristol-Myers Squibb Company 186,000 21,378
C.R. Bard, Inc. 10,600 403
Columbia/HCA Healthcare
Corporation 121,150 3,528
Eli Lilly & Company 207,500 13,708
Guidant Corporation 28,200 2,011
*HEALTHSOUTH Corporation 73,600 1,964
*Humana, Inc. 30,600 954
Johnson & Johnson 251,500 18,548
Mallinckrodt, Inc. 13,700 407
Manor Care, Inc. 11,900 457
Medtronic, Inc. 87,700 5,591
Merck & Co., Inc. 224,100 29,973
Pfizer, Inc. 241,900 26,292
Pharmacia & Upjohn, Inc. 94,930 4,379
Schering-Plough Corporation 136,900 12,543
*St. Jude Medical, Inc. 15,650 576
*Tenet Healthcare Corp. 57,300 1,791
U.S. Surgical Corporation 14,200 648
*United Healthcare Corp. 35,200 2,235
Warner-Lambert Company 152,800 10,601
------------
TOTAL 195,141
------------
TECHNOLOGY (8.1%)
*3COM Corporation 66,300 2,035
Adobe Systems, Inc. 12,800 543
*Advanced Micro Devices, Inc. 26,500 452
*Andrew Corporation 16,562 299
*Apple Computer, Inc. 24,800 711
*Applied Materials, Inc. 68,500 2,021
*Ascend Communications, Inc. 36,100 1,789
Autodesk, Inc. 8,700 336
Automatic Data Processing, Inc. 55,900 4,074
*Bay Networks 41,100 1,325
*Cabletron Systems, Inc. 29,600 398
*Ceridian Corp. 13,500 793
*Cisco Systems, Inc. 190,400 17,529
Compaq Computer Corporation 309,167 8,773
Computer Associates
International, Inc. 102,112 5,674
*Computer Sciences Corp. 29,200 1,869
*Data General Corporation 9,100 136
*Dell Computer Corp. 122,100 11,332
*DSC Communications Corporation 22,100 663
Eastman Kodak Company 60,800 4,442
EG&G, Inc. 8,500 255
*EMC Corporation 92,800 4,159
Equifax, Inc. 28,100 1,020
First Data Corporation 80,100 2,668
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
*Gateway 2000, Inc. 29,000 $ 1,468
*General Instrument Corporation 27,700 753
Harris Corporation 14,900 666
HBO & Company 78,900 2,781
Hewlett-Packard Company 194,500 11,646
Ikon Office Solutions 25,200 367
Intel Corporation 306,000 22,682
International Business Machines
Corporation 181,800 20,873
*KLA-Tencor Corporation 15,700 435
*LSI Logic Corp. 26,500 611
Lucent Technologies, Inc. 243,386 20,247
*Micron Technology 39,600 983
*Microsoft Corporation 455,400 49,354
Motorola, Inc. 111,700 5,871
*National Semiconductor
Corporation 30,700 405
Northern Telecom Limited 97,400 5,527
*Novell, Inc. 65,600 836
*Oracle Corporation 184,050 4,521
*Parametric Technology Company 48,000 1,302
Perkin-Elmer Corporation 9,100 566
Polaroid Corporation 8,400 299
Raytheon Company Class B 63,400 3,749
Scientific-Atlanta, Inc. 14,800 375
*Seagate Technology, Inc. 45,300 1,079
Shared Medical Systems Corp. 4,900 360
*Silicon Graphics 35,100 425
*Sun Microsystems, Inc. 70,600 3,066
Tektronix, Inc. 9,400 333
*Tellabs, Inc. 33,900 2,428
Texas Instruments, Inc. 73,000 4,257
*Unisys Corporation 46,700 1,319
W.W. Grainger, Inc. 18,600 927
Xerox Corporation 61,000 6,199
------------
TOTAL 250,006
------------
TRANSPORTATION (0.6%)
*AMR Corporation 34,100 2,839
Burlington Northern Santa Fe 29,233 2,870
CSX Corporation 40,800 1,856
Delta Air Lines, Inc. 14,000 1,809
*FDX Corporation 27,420 1,721
Norfolk Southern Corporation 70,500 2,102
Ryder System, Inc. 14,300 451
Southwest Airlines Co. 41,300 1,224
Union Pacific Corporation 46,200 2,039
*US Airways Group, Inc. 17,100 1,355
------------
TOTAL 18,266
------------
</TABLE>
--
34
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
COMMON STOCK (54.0%) PAR (000'S)
- -------------------------------------------------------------
UTILITIES (1.7%)
<S> <C> <C>
Ameren Corporation 25,700 $ 1,022
American Electric Power
Company, Inc. 35,500 1,611
Baltimore Gas & Electric Co. 27,600 857
Carolina Power & Light Company 28,100 1,219
Central & South West
Corporation 39,700 1,067
Cinergy Corporation 29,505 1,033
Coastal Corp. 19,800 1,382
Columbia Energy Group 15,600 868
Consolidated Edison Co. of New
York 44,000 2,027
Consolidated Natural Gas
Company 17,900 1,054
Dominion Resources, Inc. 36,200 1,475
DTE Energy Company 27,100 1,094
Duke Energy Corp. 67,271 3,986
Eastern Enterprises 3,800 163
Edison International 71,300 2,108
Enron Corp. 61,400 3,319
Entergy Corporation 45,600 1,311
FirstEnergy Corp. 43,100 1,325
FPL Group, Inc. 34,000 2,142
GPU, Inc. 23,700 896
Houston Industries, Inc. 52,826 1,631
*Niagara Mohawk Power
Corporation 27,000 403
Nicor, Inc. 9,000 361
Northern States Power Company 27,900 799
ONEOK, Inc. 5,800 231
P P & L Resources, Inc. 31,000 703
PacifiCorp 55,500 1,256
PECO Energy Company 41,600 1,214
Peoples Energy Corporation 6,600 255
PG&E Corp. 71,300 2,250
Public Service Enterprise
Group, Inc. 43,400 1,495
*Sempra Energy 23,459 651
Sonat, Inc. 20,600 796
Southern Company 129,100 3,574
Texas Utilities Company 46,095 1,919
UNICOM Corp. 40,500 1,420
Williams Companies, Inc. 76,900 2,595
------------
TOTAL 51,512
------------
TOTAL COMMON STOCK 1,671,072
------------
<CAPTION>
SHARES/ MARKET VALUE
SHORT TERM INVESTMENTS (13.0%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
MONEY MARKET INVESTMENTS (12.9%)
AUTOMOBILE REPAIR, SERVICES, & PARKING (1.4%)
PHH Corporation, 6.349%,
07/01/98 17,700,000 $ 17,700
+PHH Corporation, 5.65%,
07/15/98 25,000,000 24,945
------------
TOTAL 42,645
------------
BANK HOLDING COMPANIES (0.8%)
Cargill Incorporated, 5.73%,
07/10/98 25,000,000 24,964
------------
ELECTRIC SERVICES (0.2%)
Pacific Gas & Electric Co.,
5.375%, 8/1/98 5,000,000 4,998
------------
ENERGY (0.0%)
Petroleos Mexicanos, 8%, 7/1/98
(144A) 1,000,000 1,000
------------
FOREIGN GOVERNMENT (0.1%)
Bonos Del Tesoro, 8%, 12/13/98 3,500,000 3,514
------------
FINANCE (4.1%)
+American General Finance,
5.55%, 08/18/98 25,000,000 24,815
+Asset Securitization, 5.55%,
07/30/98 25,000,000 24,888
BAT Capital Corporation, 5.65%,
07/31/98 27,000,000 26,873
+CIT Group Holdings, 5.52%,
07/08/98 25,000,000 24,973
+International Securitization
Corp., 5.55%, 07/15/98 25,000,000 24,946
------------
TOTAL 126,495
------------
GOVERNMENT (0.7%)
+Federal Home Loan Mortgage
Corporation, 5.43%, 08/07/98 10,000,000 9,923
U.S. Treasury Bill, 5.11%,
06/24/99 12,000,000 11,395
------------
TOTAL 21,318
------------
PERSONAL CREDIT INSTITUTIONS (4.0%)
+Associates Corporation of
N.A., 5.53%, 08/20/98 25,000,000 24,808
+Ford Motor Credit Company,
5.52%, 07/15/98 25,000,000 24,946
+General Electric Capital
Corp., 5.53%, 08/26/98 25,000,000 24,785
General Motors Acceptance
Corp., 5.53%, 08/11/98 25,000,000 24,843
Variable Funding Capital Corp.,
5.57%, 07/24/98 25,000,000 24,911
------------
TOTAL 124,293
------------
</TABLE>
--
35
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES/ MARKET VALUE
SHORT TERM INVESTMENTS (13.0%) PAR (000'S)
- -------------------------------------------------------------
PETROLEUM AND COAL PRODUCTS (0.8%)
<S> <C> <C>
E.I. Du Pont de Nemours and
Company, 5.55%, 08/07/98 25,000,000 $ 24,857
------------
SHORT TERM BUSINESS CREDIT (0.8%)
+Sears Roebuck Acceptance
Corp., 5.53%, 08/12/98 25,000,000 24,839
------------
TOTAL MONEY MARKET
INVESTMENTS 398,923
------------
<CAPTION>
SHARES/ MARKET VALUE
ASSET-BACKED SECURITIES (0.1%) PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
COMMERCIAL MORTGAGES (0.1%)
BTC Mortgage Investors Trust -
Class A, 6.255%, 12/31/09 2,276,401 $ 2,271
------------
TOTAL ASSET-BACKED
SECURITIES 2,271
------------
TOTAL SHORT TERM
INVESTMENTS 401,194
------------
TOTAL BALANCED PORTFOLIO
(99.4%) (COST
$2,096,981,447)^ 3,073,865
OTHER ASSETS, LESS
LIABILITIES (0.6%) 19,284
------------
TOTAL NET ASSETS (100.0%) $ 3,093,149
------------
</TABLE>
IO-Interest Only Security
144A after the name of a security represents a security exempt from registration
under Rule 144A of the Securities Act of 1933. These securities may be resold
as transactions exempt from registration, normally to qualified institutional
buyers.
* Non-Income Producing
#Deferred interest security that presently receives no coupon payments. At a
predetermined date the stated coupon rate becomes effective.
+ Partially held by the custodian in a segregated account as collateral for open
futures postions. Information regarding open futures contracts as of June 30,
1998 is summarized below:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF EXPIRATION APPRECIATION
ISSUER CONTRACTS DATE (000'S)
- -------------------- ---------- ------------ -------------
<S> <C> <C> <C>
S&P 500 Stock Index 533 9/98 $3,602
</TABLE>
(Total Market Value at
6/30/98, $152,304,750)
Foreign forward currency contracts outstanding at June 30, 1998:
<TABLE>
<CAPTION>
UNREALIZED
PRINCIPAL AMT. COVERED EXPIRATION APPRECIATION
TYPE CURRENCY BY CONTRACT MONTH (000'S)
- --------- --------- ---------------------- ---------- -------------
<S> <C> <C> <C> <C>
Sell DEM 11,782,980 09/98 $36
</TABLE>
DEM-German Deutschmark
** Foreign security denominated in Greek Drachma.
^ At June 30, 1998, the aggregate cost of securities for federal income tax
purposes was $2,096,981,447 and the net unrealized appreciation of investments
based on that cost was $976,883,843 which is comprised of $1,000,501,525
aggregate gross unrealized appreciation and $23,617,682 aggregate gross
unrealized depreciation.
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
--
36
<PAGE>
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Objective: Portfolio Strategy: Net Assets:
High current income and capital Generate superior performance by investing in a $190,372,755
appreciation with moderate risk diversified mix of fixed income securities rated
below investment grade.
</TABLE>
HIGH YIELD BOND PORTFOLIO
Investing in a portfolio of high yield bonds provides investors who can accept a
moderate level of risk with a high level of current income, coupled with the
opportunity for capital gains. Holdings of particular interest include solid
investments in entities that have the possibility of a positive event, such as a
significant improvement in credit rating or earnings or a change in ownership.
In a high-yield portfolio, some credit losses over time are inevitable; high
coupons and diversification across many holdings mitigate the impact of
individual securities on the performance of the total Portfolio.
During the first half of 1998, the Portfolio significantly outperformed the
Lehman Brothers High Yield Intermediate Market Index. This strong performance
can be attributed largely to careful selection of market sectors and individual
securities, the selective inclusion of undervalued preferred stocks, and the
relatively high proportion of positive to negative credit developments.
During the first quarter of the year, a major theme was the adoption of a more
conservative credit posture by reducing exposure to debt in emerging markets,
particularly in Southeast Asia. This action was beneficial in two respects: it
limited exposure to subsequent Asian weakness, and it created the flexibility to
opportunistically take advantage of trading weakness in Latin America during the
second quarter as quality credits from this region dropped to bargain levels.
Exposure to the telecommunications and cable television industries was also
increased, in order to take advantage of the strong prospects and merger
activity in these industries.
In the first six months of 1998, new issuance of high-yield securities was very
heavy, with total volume just below the record level for the full year 1997.
Because the market had difficulty absorbing this heavy supply of new bonds, the
spread between high-yield and investment-grade bonds moved to the widest level
in more than two years. The Portfolio's managers took advantage of this
opportunity to buy medium-quality high-yield bonds. The Portfolio's focus on
current yield and medium quality should position it well to participate in a
credit rally but also provides a strong yield buffer should interest rates rise
unexpectedly.
Percentage Holdings by Industry Sector
6/30/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Telecommunications 19%
Broadcasting/Media 14%
Leisure 12%
Cable Television 11%
Consumer Related/Health Care 14%
Basic Materials/Energy 8%
Transportation 7%
Finance 5%
Services 3%
Other Industries 5%
Cash Equivalents 2%
</TABLE>
Performance Relative to
Lehman Brothers High Yield Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS HIGH YIELD
HIGH YIELD BOND PORTFOLIO INTERMEDIATE MARKET INDEX
<S> <C> <C>
5/94 $10,000 $10,000
6/94 $10,110 $10,061
6/95 $11,490 $11,330
6/96 $12,836 $12,465
6/97 $15,684 $14,158
6/98 $17,635 $15,680
Average Annual Total Return
For Periods Ended June 30, 1998
One Year Since Inception
High Yield Bond Portfolio 12.44% 14.62%
Lehman Brothers Index 10.75% 11.42%
</TABLE>
The total return performance for the High Yield Bond Portfolio is shown in
comparison with the Lehman Brothers High Yield Intermediate Market Index. The
Lehman Brothers index is an appropriate measure of portfolio performance since
it has a quality and maturity profile that resembles the High Yield Bond
Portfolio.
The Lehman Brothers High Yield Intermediate Market Index is made up of
dollar-denominated, nonconvertible, SEC publicly registered fixed rate
noninvestment grade issues. The bonds will have remaining maturities of between
one and ten years and have an outstanding par value of at least $100 million.
Yankee and global bonds (SEC registered) of issuers in G-7 countries are
included. Original issue zero coupon bonds and step-up coupon structures are
also included; however, the index excludes pay-in-kind (PIK) bonds. Each bond
must be rated Ba1 or lower by Moody's Investor Service. If a Moody's rating is
unavailable, the bonds must be rated BB+ or lower by Standard & Poor's, or by
Fitch if an S&P rating is unavailable. A few unrated bonds are included in the
index; to be eligible they must have previously held a high yield rating or have
been associated with a high yield issuer. The index is an unmanaged market value
weighted index and measures the income provided by, and the price changes of,
the underlying securities.
This chart assumes an initial investment of $10,000 made on 5/3/94
(commencement of operations). Returns shown include deductions for management
and other fund expenses, and reinvestment of all dividends. Returns exclude
deductions for separate account sales loads and account fees. Past performance
is not predictive of future performance. Investment return and principal value
will fluctuate, so that your shares, when redeemed, may be worth more or less
than their original cost. Accumulation unit values, which reflect deduction of
charges for the separate account, are shown on page 2.
--
37
<PAGE>
HIGH YIELD BOND PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (82.8%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
BASIC MATERIALS (1.8%)
PAPER (1.3%)
Indah Kiat Fin Mauritius Ltd., 10.00%, 07/01/07 1,000,000 $ 708
Pindo Deli Fin Mauritius, 10.75%, 10/01/07 2,500,000 1,750
---------
TOTAL 2,458
---------
STEEL (0.5%)
Renco Steel Holdings, Inc., 10.875%, 2/01/05 (144A) 1,000,000 1,000
---------
TOTAL BASIC MATERIALS 3,458
---------
BROADCASTING/MEDIA (5.9%)
BROADCASTING (5.1%)
+Big City Radio, Inc., 11.25%, 3/15/05 (144A) 4,900,000 3,724
+Fox Family Worldwide, Inc., 10.25%, 11/01/07 4,600,000 2,990
Fox Family Worldwide, Inc., 9.25%, 11/01/07 1,900,000 1,900
+Fox/Liberty Network, 9.75%, 08/15/07 1,650,000 1,138
---------
TOTAL 9,752
---------
PRINTING AND PUBLISHING (0.8%)
+Diva System Corp., 12.625%, 3/01/08 3,375,000 1,553
---------
TOTAL BROADCASTING/MEDIA 11,305
---------
CABLE TELEVISION (7.5%)
CTI Holdings, S A, 11.50%, 04/15/08 (144A) 2,000,000 1,110
+International Cabletel, Inc., 11.50%, 02/01/06 3,000,000 2,475
+NTL, Inc.,9.75%, 4/01/08 (144A) 3,950,000 2,568
Rogers Communications, 8.875%, 7/15/07 3,250,000 3,274
Supercanal Holdings S A, 11.50%, 05/15/05 (144A) 2,500,000 2,400
+Telewest PLC, 11.00%, 10/1/07 3,000,000 2,490
---------
TOTAL CABLE TELEVISION 14,317
---------
CONSUMER RELATED (11.0%)
CONSUMER STAPLES (2.1%)
North Atlantic Trading, Inc., 11.00%, 6/15/04 2,250,000 2,250
+SF Holdings Group, Inc., 12.75%, 3/15/08 3,250,000 1,739
---------
TOTAL 3,989
---------
FOODS/FOOD SERVICES (6.6%)
Favorite Brands Int'l, Inc., 10.75%, 05/15/06 (144A) 4,500,000 4,545
Global Health Sciences, Inc., 11.0%, 05/01/08 (144A) 2,500,000 2,469
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (82.8%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
FOODS/FOOD SERVICES (CONTINUED)
Iowa Select Farms L.P., 10.75%, 12/01/05 (144A) 3,700,000 $ 3,719
Planet Hollywood, 12.00%, 4/01/05 (144A) 2,100,000 1,901
---------
TOTAL 12,634
---------
HOUSEHOLD PRODUCTS (0.4%)
+Diamond Brands, 12.875%, 04/15/09 (144A) 1,250,000 668
---------
SOAPS & TOILETRIES (1.9%)
AKI, Inc., 10.50%, 07/01/08 (144A) 1,250,000 1,256
Styling Technologies, 10.875%, 07/01/08 (144A) 2,300,000 2,335
---------
TOTAL 3,591
---------
TOTAL CONSUMER RELATED 20,882
---------
ENERGY RELATED (5.8%)
OIL AND GAS INDEPENDENT (4.3%)
Belden & Blake Corp., 9.875%, 6/15/07 2,250,000 2,199
Chesapeake Energy, 9.625%, 05/01/05 (144A) 1,750,000 1,754
Gothic Production Corp., 11.125%, 05/01/05 (144A) 4,500,000 4,309
---------
TOTAL 8,262
---------
OIL FIELD SERVICES (1.5%)
Bayard Drilling Technologies, 11.00%, 06/30/05 (144A) 2,800,000 2,814
---------
TOTAL ENERGY RELATED 11,076
---------
FINANCE (4.1%)
FINANCE COMPANIES (2.9%)
Arcadia Financial, Ltd., 11.50%, 3/15/07 4,000,000 4,010
BF Saul Real Estate, 9.75%, 4/01/08 1,500,000 1,481
---------
TOTAL 5,491
---------
INSURANCE (1.2%)
Superior Nat'l Capital Trust I, 10.75%, 12/01/17 2,000,000 2,150
---------
TOTAL FINANCE 7,641
---------
HEALTHCARE (2.5%)
HEALTHCARE (1.1%)
Vencor, Inc., 9.875%, 05/01/05 (144A) 2,100,000 2,066
---------
HOSPITAL SUPPLIES (1.4%)
Medaphis Corp., 9.50%, 2/15/05 (144A) 2,750,000 2,723
---------
TOTAL HEALTHCARE 4,789
---------
</TABLE>
--
38
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (82.8%) PAR (000'S)
- ---------------------------------------------------------------------------------
LEISURE (11.6%)
<S> <C> <C>
GAMING (5.2%)
Trump Atlantic, 11.25%, 5/1/06 2,500,000 $ 2,425
Trump Hotels & Casino Resorts, 15.50%, 6/15/05 2,000,000 2,250
Venetian Casino/LV Sands, 12.25%, 11/15/04 5,000,000 5,163
---------
TOTAL 9,838
---------
LEISURE RELATED (2.7%)
+Hedstrom Holdings Inc., 12.00%, 6/1/09 3,325,000 2,128
Samsonite Corp., 10.75%, 06/15/08 3,000,000 2,978
---------
TOTAL 5,106
---------
MOVIE THEATERS (3.7%)
Clearview Cinemas, 10.875%, 06/01/08 2,500,000 2,543
Hollywood Theaters, Inc., 10.625%, 08/01/07 1,350,000 1,397
Silver Cinemas, 10.50%, 04/15/05 (144A) 3,000,000 3,015
---------
TOTAL 6,955
---------
TOTAL LEISURE 21,899
---------
OTHER INDUSTRIES (4.5%)
APPAREL, TEXTILE (0.4%)
PT Polysindo, 13.00%, 6/15/01 2,000,000 800
---------
AUTO RELATED (1.0%)
Exide Corporation, 2.90%, 12/15/05 (144A) 3,000,000 1,853
---------
HOUSEHOLD FURNISHINGS, APPLIANCES (3.1%)
Corning Consumer Products Co., 9.625%, 05/01/08 (144A) 1,100,000 1,091
Home Interiors & Gifts, Inc., 10.125%, 06/01/08 (144A) 1,500,000 1,532
Imperial Home, 11.00%, 3/15/08 3,200,000 3,312
---------
TOTAL 5,935
---------
TOTAL OTHER INDUSTRIES 8,588
---------
SERVICES (3.0%)
PROFESSIONAL SERVICES (3.0%)
+AP Holdings Inc., 11.25%, 3/15/08 (144A) 1,000,000 605
+Decisionone Holdings, 11.50%, 8/1/08 3,875,000 2,344
Decisionone Holdings, 9.75%, 8/1/07 1,800,000 1,737
Federal Data Corp., 10.125%, 8/01/05 1,000,000 1,015
---------
TOTAL SERVICES 5,701
---------
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (82.8%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS (18.0%)
Arch Communications, 12.75%, 07/01/07 (144A) 4,000,000 $ 4,025
+Bestel S A de CV, 12.75%, 05/15/05 3,750,000 2,531
+Call-Net Enterprises, 9.27%, 8/15/07 1,000,000 700
Comtel Brasileira Ltda., 10.75%, 9/26/04 (144A) 500,000 461
+Firstworld Communications, 13.00%, 04/15/08 2,500,000 1,100
+GST USA, Inc., 13.875%, 12/15/05 2,100,000 1,701
+GST Network Funding, Inc., 10.50%, 05/01/08 (144A) 3,200,000 1,920
+Hyperion Telecommunications, 13.00%, 4/15/03 3,450,000 2,570
Hyperion Telecommunications, 12.25%, 9/01/04 900,000 970
+KMC Telecommunication Hldgs, 12.50%, 2/15/08 6,250,000 3,625
+Metronet Communications, 10.75%, 11/01/07 4,825,000 3,166
+Metronet Communications, 9.95%, 06/15/08 (144A) 3,900,000 2,413
++Mobilemedia Communications Inc., 10.50%, 12/01/03 2,000,000 540
+Nextel Communications, Inc., 9.75%, 10/31/07 2,000,000 1,300
+Nextel Communications, Inc., 9.75%, 2/15/08 (144A) 2,500,000 1,597
+Pinnacle Hldgs., Inc., 10.00%, 3/15/08 (144A) 3,250,000 2,129
+21st Century Telecom, 12.25%, 2/15/08 (144A) 1,750,000 980
Viatel, Inc., 12.50%, 04/15/08 2,500,000 1,513
Winstar Communications, 10.00%, 3/15/08 (144A) 1,000,000 993
---------
TOTAL TELECOMMUNICATIONS 34,234
---------
TRANSPORTATION (6.6%)
TRUCKING AND SHIPPING (6.6%)
Greyhound Lines, Inc., 11.50%, 4/15/07 3,000,000 3,330
Navigator Gas Trans PLC, 12.00%, 06/30/07 900,000 1,017
Navigator Gas Trans PLC, 10.50%, 06/30/07 (144A) 3,600,000 3,753
Stena Line AB, 10.625%, 06/01/08 4,500,000 4,556
---------
TOTAL TRANSPORTATION 12,656
---------
UTILITIES (0.5%)
Companhia De Saneamento Basico, 10%, 7/28/05 (144A) 500,000 435
</TABLE>
--
39
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (82.8%) PAR (000'S)
- ---------------------------------------------------------------------------------
UTILITIES (CONTINUED)
<S> <C> <C>
Espirito Santo Centrais Electricad, 10%, 7/15/07 (144A) 500,000 $ 423
---------
TOTAL UTILITIES 858
---------
TOTAL BONDS 157,404
---------
<CAPTION>
MARKET
SHARES/ VALUE
PREFERRED STOCK (14.7%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
BROADCASTING MEDIA (8.6%)
BROADCASTING (6.1%)
**CBS Radio Inc. (PIK) 18,769 $ 2,173
**Citadel Broadcasting Co. (PIK) 14,200 1,676
Cumulus Media, Inc. 30,000 3,075
Sinclair Capital 43,500 4,822
---------
TOTAL 11,746
---------
PRINTING AND PUBLISHING (2.5%)
Primedia, Inc. 45,000 4,708
---------
TOTAL BROADCASTING/MEDIA 16,454
---------
CABLE TELEVISION (3.4%)
**CSC Holdings, Inc. (PIK) 55,942 6,531
---------
ENERGY RELATED (0.4%)
GAS UTILITY (0.4%)
Petroleum Heat & Power Inc. 48,750 780
---------
FINANCE (0.9%)
BANKS (0.9%)
California Fed Pfd Capital 60,000 1,639
---------
LEISURE RELATED (0.3%)
**Samsonite Corp. (PIK) 6,250 625
---------
TELECOMMUNICATIONS (1.1%)
**21st Century Telecom (PIK) 8,790 887
**Hyperion Telecommunications (PIK) 11,219 1,166
---------
TOTAL TELECOMMUNICATIONS 2,053
---------
TOTAL PREFERRED STOCK 28,082
---------
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK AND WARRANTS (0.6%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
APPAREL AND TEXTILE (0.3%)
*Ithaca Industries Inc. 136,000 $ 510
---------
FINANCE (0.0%)
FINANCE COMPANIES (0.0%)
*Arcadia Financial, Ltd. 4,000 40
---------
<CAPTION>
MARKET
SHARES/ VALUE
COMMON STOCK & WARRANTS (0.6%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
LEISURE (0.3%)
LEISURE RELATED (0.3%)
*Hedstrom Holdings, Inc. (144A) 201,674 $ 252
Meditrust Corp. 11,117 311
---------
TOTAL LEISURE 563
---------
TELECOMMUNICATIONS (0.0%)
*21st Century Telecom 8,500 76
---------
TOTAL COMMON STOCK
AND WARRANTS 1,189
---------
<CAPTION>
MARKET
SHARES/ VALUE
MONEY MARKET INVESTMENTS (2.6%) PAR (000'S)
- ---------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOBILE REPAIR, SERVICES & PARKING (1.5%)
PHH Corporation, 6.35%, 07/01/98 2,900,000 $ 2,900
---------
FINANCE SERVICES (0.6%)
CXC Incorporated, 5.52%, 07/15/98 1,100,000 1,097
---------
PERSONAL CREDIT INSTITUTIONS (0.5%)
General Electric Capital Corporation, 5.52%, 07/08/98 1,000,000 999
---------
TOTAL MONEY MARKET INVESTMENTS 4,996
---------
TOTAL INVESTMENTS (100.7%) (COST $193,372,085)^ 191,671
OTHER ASSETS, LESS LIABILITIES (-0.7%) (1,298)
---------
TOTAL NET ASSETS (100.0%) $190,373
---------
</TABLE>
* Non-Income Producing
+ Deferred interest security that presently receives no coupon payments. At
a predetermined date the stated coupon rate becomes effective.
++ Defaulted Security
**PIK-Payment in Kind
144A after the name of a security represents a security exempt from
registration under Rule 144A of the Securities Act of 1933. These
securites may be resold as transactions exempt from registration,
normally to qualified institutional buyers.
^ At June 30, 1998, the aggregate cost of securities for federal income tax
purposes was $193,372,085 and the net unrealized depreciation of
investments based on that cost was $1,700,747, which is comprised of
$6,255,707 aggregate gross unrealized appreciation and $7,956,454 aggregate
gross unrealized depreciation.
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
--
40
<PAGE>
SELECT BOND PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Objective: Portfolio Strategy: Net Assets:
A stable and relatively high Invest in high grade corporate bonds, U.S. $265,498,531
level of long-term total return government bonds and bonds of government
and preservation of capital agencies.
</TABLE>
SELECT BOND PORTFOLIO
The Select Bond Portfolio invests in high quality debt securities, primarily
government bonds, corporate bonds and mortgage-backed securities. Exposure to
market sectors is adjusted as yield spreads change among the various classes of
securities. Duration and maturities are altered with moderate adjustments in
recognition or anticipation of interest rate changes.
In recent months the Select Bond Portfolio has underperformed its benchmark for
two reasons. Early in 1998, a defensive posture on interest rates was adopted,
in the belief that rates were likely to increase; however, interest rates have
continued to decline. A larger negative impact on performance was the default of
one bond purchased before the economic crisis in Asia began, PT Polysindo, an
Indonesian textile manufacturer. When the company defaulted, the bond lost
approximately 80% of its market value, and coupon payments ceased as well. These
two negative factors offset several positive decisions, including an
overweighting in commercial mortgage-backed securities and favorable industry
selection within the corporate bond sector.
Percentage Holdings
6/30/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Corporate Bonds 22%
Mortgage-Backed and Asset-Backed Securities 42%
Government and Government Agencies 31%
Short-Term Investments 5%
</TABLE>
The Corporate Bonds sector includes bonds of companies headquartered outside the
United States. The Government and Government Agencies category includes taxable
bonds of domestic and foreign governments. Consistent with the Portfolio's
stated parameters, no more than 10% of the Portfolio is invested in foreign
securities, and no more than 10% is invested in high-yield securities.
Performance Relative to
Merrill Lynch Domestic Master Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SELECT BOND PORTFOLIO MLDM INDEX
<S> <C> <C> <C> <C>
6/30/88 $ 10,000 $ 10,000
6/30/89 $ 12,263 $ 11,243
6/30/90 $ 13,046 $ 12,067
6/30/91 $ 14,457 $ 13,380
6/30/92 $ 16,639 $ 15,273
6/30/93 $ 18,766 $ 17,095
6/30/94 $ 18,722 $ 16,918
6/30/95 $ 21,114 $ 19,048
6/30/96 $ 22,170 $ 19,992
6/30/97 $ 24,076 $ 21,627
6/30/98 $ 26,208 $ 23,934
Average Annual Total Return
For Periods Ended June 30,
1998
One Year Five Years Ten Years
Select Bond Portfolio 8.84% 6.91% 10.11%
MLDM Index 10.67% 6.96% 9.12%
</TABLE>
Since the Portfolio invests broadly in U.S. Government, mortgage and corporate
bonds, a useful basis for comparing returns is the Merrill Lynch Domestic Master
Index. The index is an unmanaged market value weighted index comprised of U.S.
Government, mortgage and investment-grade corporate bonds. The index measures
the income provided by, and the price changes of, the underlying securities.
This chart assumes an initial investment of $10,000 made on 6/30/88. Returns
shown include deductions for management and other fund expenses, and
reinvestment of all dividends. Returns exclude deductions for separate account
sales loads and account fees. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
Accumulation unit values, which reflect deduction of charges for the separate
account, are shown on page 2.
--
41
<PAGE>
SELECT BOND PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (95.0%) PAR (000'S)
- --------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (21.9%)
AUTO-RELATED (0.4%)
Hertz Corp., 9.04%, 6/14/00 900,000 $ 952
-----------
COMMERCIAL BANKS (2.0%)
Wachovia Capital Trust V, 7.965%,
6/1/27 (144A) 5,000,000 5,449
-----------
BANK HOLDING COMPANIES (2.8%)
BT Institutional Capital Trust,
7.75%, 12/1/26 (144A) 4,000,000 4,184
NationsBank Lease Pass Thru
Trust, Class 1, 7.442%, 1/10/11
(144A) 3,000,000 3,165
-----------
TOTAL 7,349
-----------
CHEMICALS AND ALLIED PRODUCTS (0.8%)
Dow Capital B.V., 8.5%, 6/8/10 1,800,000 2,117
-----------
COMMUNICATIONS (1.2%)
+Panamsat, 11.375%, 8/1/03 3,000,000 3,105
-----------
ELECTRIC SERVICES (4.1%)
Comed Financing II, 8.5%, 1/15/27 1,750,000 1,935
Niagra Mohawk Power, 7.0%,
10/1/00 2,000,000 2,000
Niagra Mohawk Power, 7.25%,
10/1/02 1,300,000 1,299
Ohio Edison Company, 7.375%,
9/15/02 1,000,000 1,039
PECO Energy Company, 7.75%,
3/1/23 1,150,000 1,208
Public Service Electric & Gas
Co., 6.875%, 1/1/03 2,250,000 2,314
Texas Utilities Electric Co.,
7.875%, 3/1/23 1,000,000 1,058
-----------
TOTAL 10,853
-----------
FINANCE (2.1%)
Associates Corp. of North
America, 7.95%, 2/15/10 1,500,000 1,690
Industrial Credit and Investment
Corp of India, 7.55%, 8/15/07
(144A) 4,400,000 3,838
-----------
TOTAL 5,528
-----------
FOREIGN BANKS - BRANCHES & AGENCIES (2.0%)
Fuji Bank, Ltd., 9.87%, 12/31/49
(144A) 6,000,000 5,273
-----------
GENERAL MERCHANDISE STORES (2.6%)
LB Commercial Conduit Mortgage
Trust, Class A3, 8.396%, 1/20/17 4,963,126 5,870
May Dept Stores Company, 7.45%,
10/15/16 1,000,000 1,089
-----------
TOTAL 6,959
-----------
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (95.0%) PAR (000'S)
- --------------------------------------------------------------
<S> <C> <C>
MOTION PICTURE (0.4%)
News America Holdings Inc.,
8.25%, 8/10/18 1,000,000 $ 1,133
-----------
MOTOR VEHICLES (0.6%)
General Motors Corporation, 8.8%,
3/1/21 1,250,000 1,590
-----------
TELEPHONE COMMUNICATIONS (1.7%)
Comcast Cellular Holdings, 9.5%,
5/1/07 2,000,000 2,085
GTE Corporation, 6.94%, 4/15/28 2,500,000 2,551
-----------
TOTAL 4,636
-----------
TEXTILES (0.6%)
Polysindo International Finance,
11.375%, 6/15/06 4,200,000 1,638
-----------
TOBACCO (0.6%)
Philip Morris Companies, 9.25%,
2/15/00 500,000 523
RJR Nabisco Inc., 8.625%, 12/1/02 1,000,000 1,036
-----------
TOTAL 1,559
-----------
TOTAL CORPORATE BONDS 58,141
-----------
GOVERNMENT BONDS (DOMESTIC AND FOREIGN)
AND AGENCY BONDS (31.2%)
FOREIGN GOVERNMENT BONDS (5.5%)
*Hellenic Republic, 8.6%, 3/26/08 220,000,000 762
*Hellenic Republic, 8.8%, 6/19/07 1,700,000,000 5,894
Republic of Brazil, 8.0%, 4/15/14 1,867,783 1,370
Republic of Indonesia, 7.75%,
8/1/06 2,000,000 1,453
Republic of Korea, 8.875%,
4/15/08 4,600,000 4,175
Vnesheconombank, 6.625%, 12/15/15
(144A) 1,600,000 886
-----------
TOTAL 14,540
-----------
FEDERAL GOVERNMENT AND AGENCIES (25.7%)
Federal Farm Credit, 6.51%,
1/7/08 2,000,000 2,003
Federal Home Loan Bank Bond,
6.5%, 1/7/08 1,925,000 1,911
Federal National Mortgage Assoc.,
6.22%, 2/1/06 1,928,166 1,949
Federal National Mortgage Assoc.,
6.24%, 1/1/06 5,436,652 5,499
Federal National Mortgage Assoc.,
6.32%, 2/1/06 3,907,663 3,971
Federal National Mortgage Assoc.,
6.500%, 09/25/05 2,581,063 2,598
</TABLE>
--
42
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (95.0%) PAR (000'S)
- --------------------------------------------------------------
FEDERAL GOVERNMENT AND AGENCIES (CONTINUED)
<S> <C> <C>
Federal National Mortgage Assoc.,
6.750%, 04/25/18 2,441,311 $ 2,502
Federal National Mortgage Assoc.,
6.750%, 12/25/23 3,500,000 3,542
Federal National Mortgage Assoc.,
6.960%, 10/01/07 3,281,353 3,458
Federal National Mortgage Assoc.,
7.0%, 6/1/03 722,951 734
Federal National Mortgage Assoc.,
7.360%, 4/1/11 3,408,505 3,701
Federal National Mortgage Assoc.,
8.400%, 02/25/09 2,500,000 2,757
Federal National Mortgage Assoc.,
10%, 10/1/17 117,284 127
Federal National Mortgage Assoc.,
11.000%, 12/01/12 226,057 250
Federal National Mortgage Assoc.,
11.000%, 09/01/17 1,753,528 1,957
Federal National Mortgage Assoc.,
11.000%, 12/01/17 571,387 639
Federal National Mortgage Assoc.,
11.000%, 02/01/18 679,249 758
Federal National Mortgage Assoc.,
11.500%, 04/01/18 766,856 868
Federal National Mortgage Assoc.,
12.000%, 09/01/12 1,838,610 2,089
Federal National Mortgage Assoc.,
12.000%, 12/01/12 354,567 403
Federal National Mortgage Assoc.,
12.000%, 09/01/17 600,779 689
Federal National Mortgage Assoc.,
12.000%, 10/01/17 869,297 997
Federal National Mortgage Assoc.,
12.000%, 12/01/17 498,081 572
Federal National Mortgage Assoc.,
12.000%, 02/01/18 663,452 761
Federal National Mortgage Assoc.,
12.25%, 12/1/17 438,710 508
Federal National Mortgage Assoc.,
12.500%, 04/01/18 370,348 431
Federal National Mortgage Assoc.,
13.000%, 11/01/12 300,209 349
Federal National Mortgage Assoc.,
13.000%, 11/01/17 628,281 737
Federal National Mortgage Assoc.,
13.000%, 12/01/17 374,938 437
Federal National Mortgage Assoc.,
13.000%, 02/01/18 884,057 1,031
Federal National Mortgage Assoc.,
14.000%, 12/01/17 248,828 297
Government National Mortgage
Assoc., 7%, 5/15/23 385,272 392
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (95.0%) PAR (000'S)
- --------------------------------------------------------------
<S> <C> <C>
FEDERAL GOVERNMENT AND AGENCIES (CONTINUED)
Government National Mortgage
Assoc., 7.5%, 11/01/04 3,600,000 $ 3,700
Government National Mortgage
Assoc., 8.5%, 6/15/01 64,230 68
Government National Mortgage
Assoc., 8.5%, 11/15/24 703,990 742
Government National Mortgage
Assoc., 8.5%, 2/15/25 9,413 10
Government National Mortgage
Assoc., 8.5%, 3/15/23 6,876 7
Government National Mortgage
Assoc., 8.5%, 6/15/23 14,373 15
Government National Mortgage
Assoc., 8.5%, 6/15/24 160,199 169
Government National Mortgage
Assoc., 8.5%, 7/15/24 64,620 68
Government National Mortgage
Assoc., 8.5%, 9/15/21 137,558 146
Government National Mortgage
Assoc., 8.5%, 9/15/24 9,865 10
Rural Housing Trust, Class D,
6.33%, 4/1/26 17,228,857 1,723
U.S. Treasury, 3.625%, 4/15/28 3,000,000 2,979
U.S. Treasury, 5.5%, 2/15/08 1,700,000 1,699
U.S. Treasury, 5.5%, 3/31/03 2,650,000 2,648
U.S. Treasury, 5.625%, 4/30/00 5,500,000 5,510
-----------
TOTAL 68,411
-----------
TOTAL GOVERNMENT BONDS 82,951
-----------
MORTGAGE BACKED AND ASSET BACKED SECURITIES (41.9%)
AUTO-RELATED (3.0%)
CIT RV Owner Trust, Class A,
6.25%, 1/15/11 824,026 827
Daimler-Benz Vehicle Trust, Class
A, 5.85%, 7/20/03 712,960 713
Eaglemark Trust, Class A, 6.75%,
11/15/02 768,251 775
Fleetwood Credit Corporation
Grantor Trust, Class A, 6.4%,
5/15/13 1,214,679 1,228
Team Fleet Financing Corporation,
Class A, 6.65%, 12/15/02 (144A) 3,200,000 3,225
Team Fleet Financing Corporation,
Class A, 7.35%, 5/15/03 (144A) 1,125,000 1,166
-----------
TOTAL 7,934
-----------
COMMERCIAL MORTGAGES (27.4%)
Asset Securitization Corporation,
Class CS1, 1.257%, 11/13/26 IO 20,690,663 818
Asset Securitization Corporation,
Class CS2, 1.097%, 11/13/26 IO 52,000,000 3,269
</TABLE>
--
43
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (95.0%) PAR (000'S)
- --------------------------------------------------------------
COMMERCIAL MORTGAGES (CONTINUED)
<S> <C> <C>
Asset Securitization Corporation,
Class PS1, 1.367%, 2/14/41 IO 12,156,728 $ 1,313
BTC Mortgage Investors Trust 97 -
S1 A, 6.255%, 12/31/09 910,561 909
Chase Commercial Mortgage
Securities Corp., Class B, 6.6%,
12/12/29 2,000,000 2,037
Chase Commercial Mortgage
Securities Corp., Class A2,
6.6%, 12/12/29 5,000,000 5,149
Chase Commercial Mortgage
Securities Corp., Class B,
7.37%, 6/19/29 1,000,000 1,062
Commercial Mortgage Acceptance
Corporation, Class B, 6.647%,
12/15/30 2,000,000 2,047
Credit Suisse First Boston
Mortgage Securities Corp.,
Class D, 7.46%, 6/20/29 (144A) 3,500,000 3,654
Credit Suisse First Boston
Mortgage Securities Corp.,
Class B, 9.546%, 4/25/25 (144A) 682,000 802
Credit Suisse First Boston
Mortgage Securities Corp.,
Class C1, 7.26%, 6/20/29 (144A) 1,477,643 1,565
Credit Suisse First Boston
Mortgage Securities Corp.,
Class C1, 7.28%, 6/20/29 (144A) 1,500,000 1,582
Credit Suisse First Boston
Mortgage Securities Corp.,
Class D, 9.546%, 4/25/25 (144A) 2,000,000 2,383
Crumi Mae Commercial Mortgage
Trust, 7.0%, 12/01/06 3,000,000 3,008
DLJ Mortgage Acceptance
Corporation, Class S, .3571%,
10/15/17 (144A) IO 105,349,575 2,835
DLJ Mortgage Acceptance
Corporation,Class S, .718%,
2/18/31 IO 69,833,185 3,081
First Union-Lehman Brothers
Commercial Mortgage Trust, Class
C, 7.44%, 4/18/07 2,500,000 2,647
GMAC Commercial Mortgage
Securities, Inc., Class C,
7.81%, 10/15/11 (144A) 5,000,000 5,241
Kmart CMBS Financing, Inc., Class
D, 6.7875%, 03/01/07 (144A) 2,000,000 2,000
Kmart CMBS Financing, Inc., Class
C, 6.3875%, 03/01/07 (144A) 1,500,000 1,501
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (95.0%) PAR (000'S)
- --------------------------------------------------------------
<S> <C> <C>
COMMERCIAL MORTGAGES (CONTINUED)
Malan Mortgage Securities Trust,
Class A3, 7.8%, 8/15/05 (144A) 3,000,000 $ 3,077
Merrill Lynch Mortgage Investors,
Inc., Class C, 7.12%, 6/18/29 2,500,000 2,614
Merrill Lynch Mortgage Investors,
Inc., Class E, 7.12%, 6/18/29 4,500,000 4,511
Merrill Lynch Mortgage Investors,
Inc., Class E, 8.1606%, 6/25/22
(144A) 2,000,000 2,098
Merrill Lynch Mortgage Investors,
Inc., Class C, 8.9223%, 11/25/20 1,950,000 2,009
Midland Realty Acceptance Corp.,
Class AEC, 1.389%, 1/25/29
(144A) IO 14,074,265 1,054
Nomura Asset Securities Corp. -
Class A2, 7.014%, 3/17/28 2,800,000 2,905
Nomura Asset Securities Corp. -
Class A4, 7.594%, 3/17/28 2,200,000 2,258
Red Mountain Funding LLC, Class
E, 7.365%, 1/15/19 (144A) 1,500,000 1,498
Red Mountain Funding LLC, Class
F, 7.471%, 1/15/19 (144A) 1,800,000 1,707
The Equitable Life Insurance
Society of the U S, Class C1,
7.52%, 5/15/06 2,000,000 2,131
-----------
TOTAL 72,765
-----------
CREDIT CARD ASSET BACKED (0.8%)
Iroquois Trust, Class A, 6.752%,
6/25/07 (144A) 2,000,000 2,019
-----------
FRANCHISE LOAN RECEIVABLES (2.1%)
EMAC Owner Trust, 1.378%, 1/15/25
(144A) IO 31,361,688 2,376
EMAC Owner Trust, Class A2,
6.38%, 1/15/25 (144A) 3,100,000 3,100
-----------
TOTAL 5,476
-----------
HOME EQUITY LOAN (0.8%)
Amresco Residential Securities,
Class A2, 6.245%, 04/25/22 2,200,000 2,201
-----------
MANUFACTURED HOUSING (1.5%)
Mid-State Trust VI, Class A3,
7.54%, 7/1/35 1,200,972 1,244
Vanderbilt Mortgage and Finance,
Inc., Class 1A4, 7.19%, 2/7/14 2,500,000 2,618
-----------
TOTAL 3,862
-----------
</TABLE>
--
44
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
SHARES/ VALUE
BONDS (95.0%) PAR (000'S)
- --------------------------------------------------------------
OTHER ASSET BACKED (3.2%)
<S> <C> <C>
FMAC Loan Receivables Trust 98 -
A, 6.2%, 9/15/20 (144A) 1,649,859 $ 1,648
Heilig-Meyers Master Trust,
6.125%, 1/20/07 (144A) 3,000,000 2,986
Nations Credit Grantor
Trust,Class A1, 6.35%, 12/15/04 2,454,211 2,473
Newcourt Equipment, Class B,
6.764%, 9/20/04 (144A) 1,436,729 1,445
-----------
TOTAL 8,552
-----------
RESIDENTIAL MORTGAGES (3.1%)
BCF L L C Mortgage Pass Thru
Certificate, Class B3, 7.75%,
3/25/37 (144A) 3,928,905 4,034
Blackrock Capital Finance, Class
B3, 7.25%, 11/25/28 (144A) 4,474,079 4,298
-----------
TOTAL 8,332
-----------
TOTAL MORTGAGE BACKED AND
ASSET BACKED SECURITIES 111,141
-----------
TOTAL BONDS 252,233
-----------
<CAPTION>
MARKET
SHARES/ VALUE
MONEY MARKET INVESTMENTS (4.6%) PAR (000'S)
- --------------------------------------------------------------
<S> <C> <C>
AUTOMOBILE REPAIR, SERVICES & PARKING (1.1%)
PHH Corporation, 6.35%, 7/1/98 3,000,000 $ 3,000
-----------
GOVERNMENT (0.6%)
Federal Home Loan Mortgage
Company, 5.43%, 8/21/98 1,500,000 1,488
-----------
FINANCE SERVICES (0.7%)
CXC, Inc., 5.52%, 7/15/98 1,850,000 1,846
-----------
<CAPTION>
MARKET
SHARES/ VALUE
MONEY MARKET INVESTMENTS (4.6%) PAR (000'S)
- --------------------------------------------------------------
<S> <C> <C>
PERSONAL CREDIT INSTITUTIONS (1.1%)
Beneficial Corp., 5.719%, 7/10/98 3,000,000 $ 2,996
-----------
PETROLEUM AND COAL PRODUCTS (1.1%)
E.I. Du Pont de Nemours and
Company, 5.55%, 8/7/98 3,000,000 2,983
-----------
TOTAL MONEY MARKET
INVESTMENTS 12,313
-----------
TOTAL INVESTMENTS (99.6%)
(COST $262,080,245)^ 264,546
OTHER ASSETS, LESS
LIABILITIES (0.4%) 953
-----------
TOTAL NET ASSETS (100.00%) $ 265,499
-----------
</TABLE>
IO- Interest Only Security
144A after the name of a security represents a security exempt from registration
under Rule 144A of the Securities Act of 1933. These securities may be
resold as transactions exempt from registration, normally to qualified
institutional buyers.
+ Deferred interest security that presently receives no coupon payments. At a
predetermined date the stated coupon rate becomes effective.
Foreign forward currency contracts outstanding at June 30, 1998:
<TABLE>
<CAPTION>
PRINCIPAL AMT. COVERED EXPIRATION UNREALIZED
TYPE CURRENCY BY CONTRACT MONTH APPRECIATION
- --------- --------- ---------------------- ---------- -------------
<S> <C> <C> <C> <C>
Sell DEM 11,247,390 09/98 $34,091
</TABLE>
DEM-German Deutschmark
* Foreign securities denominated in Greek Drachma.
^ At June 30, 1998, the aggregate cost of securities for federal income tax
purposes was $262,080,245 and the net unrealized appreciation of investments
based on that cost was $2,465,628 which is comprised of $6,169,395 aggregate
gross unrealized appreciation and $3,703,767 aggregate gross unrealized
depreciation.
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
--
45
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Objective: Portfolio Strategy: Net Assets:
Maximum current income Achieve stability of capital by investing in $212,528,490
consistent with liquidity and short- term debt securities.
stability of capital
</TABLE>
MONEY MARKET PORTFOLIO
The Money Market Portfolio, which invests only in high quality commercial paper
and other short-term debt securities with maturities generally not exceeding one
year, is the least risky of the Portfolios.
During the first half of 1998, money market rates were relatively stable, as the
Federal Reserve held interest rates steady, apparently considering the negative
impact on weak Asian markets of a rate increase a greater risk than signs of
incipient inflation in the United States. Because little premium has been
available for longer maturities of short-term instruments, the term of
securities held in the Portfolio has been kept fairly short.
Total returns, which reflect the deduction of charges for the separate account,
are shown on page 2.
AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE PORTFOLIO WILL
BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
--
46
<PAGE>
MONEY MARKET PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET
VALUE
MONEY MARKET INVESTMENTS (76.1%) PAR (000'S)
- ---------------------------------------------------------------
<S> <C> <C>
AUTOMOBILE REPAIR, SERVICES & PARKING (5.3%)
PHH Corporation, 6.00%, 10/27/98 9,000,000 $ 8,999
PHH Corporation, 5.62%, 08/26/98 1,500,000 1,487
PHH Corporation, 5.99%, 08/18/98 700,000 700
-----------
TOTAL 11,186
-----------
BANK HOLDING COMPANIES (4.9%)
Cargill Incorporated, 5.63%,
07/17/98 10,500,000 10,474
-----------
CHEMICALS & ALLIED PRODUCTS (4.6%)
American Home Product Co., 6.10%,
07/01/98 9,800,000 9,800
-----------
DEPARTMENT STORES (2.0%)
J.C. Penny Company, Inc., 5.58%,
07/29/98 4,272,000 4,253
-----------
FINANCE (13.0%)
Ciesco LP, 5.55%, 07/15/1998 8,000,000 7,983
CXC Incorporated, 5.54%, 08/26/98 10,500,000 10,410
Paccar Financial Corporation, 5.52%,
07/07/98 9,300,000 9,291
-----------
TOTAL 27,684
-----------
GOVERNMENT (7.1%)
U.S. Treasury Bill, 5.14%,
04/29/1999 5,675,000 5,430
U.S. Treasury Bill, 5.16%,
04/29/1999 5,000,000 4,784
U.S. Treasury Bill, 5.175%,
04/29/1999 5,000,000 4,783
-----------
TOTAL 14,997
-----------
PERSONAL CREDIT INSTITUTIONS (29.4%)
Associates Corp of NA, 5.53%,
08/20/98 10,500,000 10,419
Beneficial Corp, 5.72%, 07/10/98 10,500,000 10,485
Ford Motor Credit Company, 5.52%,
07/15/98 10,500,000 10,477
General Electric Capital Corp.,
5.53%, 08/26/98 10,400,000 10,311
General Motors Acceptance Corp.,
5.53%, 07/24/98 5,300,000 5,281
General Motors Acceptance Corp.,
5.55%, 08/06/98 5,200,000 5,171
Variable Funding Capital Corp.,
5.52%, 08/17/98 10,500,000 10,424
-----------
TOTAL 62,568
-----------
<CAPTION>
MARKET
VALUE
MONEY MARKET INVESTMENTS (76.1%) PAR (000'S)
- ---------------------------------------------------------------
<S> <C> <C>
PETROLEUM AND COAL PRODUCTS (4.9%)
E. I. Dupont De Nemours, 5.55%,
08/07/98 10,500,000 $ 10,440
-----------
SHORT TERM BUSINESS CREDIT (4.9%)
Sears Roebuck Acceptance Corp.,
5.53%, 08/12/98 10,500,000 10,432
-----------
TOTAL MONEY MARKET INVESTMENTS 161,834
-----------
<CAPTION>
MARKET
VALUE
ASSET-BACKED SECURITIES (23.2%) PAR (000'S)
- ---------------------------------------------------------------
<S> <C> <C>
AUTO RELATED (2.1%)
Carco Auto Loan Master Trust,
5.605%, 11/15/98 (Variable rate;
putable; coupon indexed to one
month Commercial Paper rate plus
7.5 basis points; reset monthly) 4,550,000 $ 4,550
-----------
FINANCE LESSORS (21.1%)
Asset Securitization, 5.519%,
07/14/1998 4,000,000 3,992
Preferred Receivable Funding, 5.56%,
07/21/98 6,900,000 6,879
Preferred Receivable Funding, 5.57%,
07/30/98 3,000,000 2,987
Receivable Capital Trust, 5.589%,
07/14/98 1,401,000 1,398
Receivable Capital Trust, 5.54%,
07/27/98 9,066,000 9,030
Short Term Repackage Asset Trust,
5.686%, 8/12/1998 10,100,000 10,099
Triple A One Funding, 5.65%,
07/28/98 3,500,000 3,485
Triple A One Funding, 5.649%,
08/07/98 6,870,000 6,830
-----------
TOTAL 44,700
-----------
TOTAL ASSET-BACKED SECURITIES 49,250
-----------
TOTAL INVESTMENTS (99.3%) (COST
$211,083,727)^ 211,084
-----------
OTHER ASSETS, LESS LIABILITIES
(0.7%) 1,444
-----------
TOTAL NET ASSETS (100.0%) $ 212,528
-----------
</TABLE>
^ Also represents cost for Federal Income Tax Purposes.
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
--
47
<PAGE>
AGGRESSIVE GROWTH STOCK PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Aggressive Growth Stock Portfolio
Financial Statements
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C>
ASSETS
Common Stocks (cost $689,135)................................................. $1,101,218
Money Market Investments (cost $74,428)....................................... 74,428
-----------
1,175,646
Cash.......................................................................... 18,248
Due from Sale of Securities................................................... 3,515
Due from Sale of Fund Shares.................................................. 708
Dividends and Interest Receivable............................................. 73
-----------
Total Assets................................................................ 1,198,190
-----------
LIABILITIES
Due on Purchase of Securities................................................. 27,516
Due on Redemption of Fund Shares.............................................. 1,319
Due to Investment Advisor..................................................... 511
Accrued Expenses.............................................................. 43
-----------
Total Liabilities........................................................... 29,389
-----------
NET ASSETS...................................................................... $1,168,801
-----------
-----------
REPRESENTED BY:
Aggregate Paid in Capital (2,000,000 shares authorized, $.01 par value;
329,734 shares outstanding).................................................. $ 740,473
Undistributed Net Investment Income........................................... 193
Undistributed Accumulated Net Realized Gain on Investments.................... 16,052
Net Unrealized Appreciation of Investment Securities.......................... 412,083
-----------
Net Assets for 329,734 Shares Outstanding..................................... $1,168,801
-----------
-----------
Net Asset Value, Offering and Redemption Price per Share...................... $ 3.54
-----------
-----------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest.................................................................... $ 2,651
Dividends................................................................... 469
---------
Total Income.............................................................. 3,120
---------
Expenses
Management Fees............................................................. 2,917
Custodian Expenses.......................................................... 10
Other Expenses.............................................................. 10
---------
Total Expenses............................................................ 2,937
---------
Less Custodian Fees:
Paid by Affiliate.................................................... (8)
Paid Indirectly...................................................... (2)
---------
Total Net Expenses........................................................ 2,927
---------
Net Investment Income......................................................... 193
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain on Investments:
Investment Securities....................................................... 15,472
Index Futures Contracts..................................................... 591
---------
Net Realized Gain on Investments for the Period........................... 16,063
---------
Net Change in Unrealized Appreciation of:
Investment Securities....................................................... 90,340
Index Futures Contracts..................................................... 382
---------
Net Change in Unrealized Appreciation of Investments for the Period....... 90,722
---------
Net Gain on Investments....................................................... 106,785
---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...................................................... $106,978
---------
---------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
---
48
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Aggressive Growth Stock Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED FOR THE
JUNE 30, YEAR ENDED
1998 DECEMBER 31,
(UNAUDITED) 1997
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............... $ 193 $ 600
Net Realized Gain on Investments.... 16,063 44,968
Net Change in Unrealized
Appreciation of Investments for the
Period............................. 90,722 82,701
----------------- -----------------
Net Increase in Net Assets
Resulting from Operations......... 106,978 128,269
----------------- -----------------
Distributions to Shareholders from:
Net Investment Income............... (390) 0
Net Realized Gain on Investments.... (39,790) (57,365)
----------------- -----------------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (40,180) (57,365)
----------------- -----------------
Fund Share Transactions
Proceeds from Sale of 10,491 and
35,663 Shares...................... 36,831 110,666
Proceeds from Shares Issued on
Reinvestment of Distributions Paid
(11,431 and 20,913 shares,
respectively)...................... 40,180 57,365
Payments for 11,928 and 3,953 Shares
Redeemed........................... (42,076) (43,793)
----------------- -----------------
Net Increase in Net Assets
Resulting from Fund Share
Transactions
(9,994 and 42,517 shares,
respectively)..................... 34,935 124,238
----------------- -----------------
Total Increase in Net Assets.......... 101,733 195,142
NET ASSETS
Beginning of Period................... 1,067,068 871,926
----------------- -----------------
End of Period (includes undistributed
net investment income of $193 and
$390, respectively).................. $1,168,801 $1,067,068
----------------- -----------------
----------------- -----------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
---
49
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Aggressive Growth Stock Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS PERIOD MAY 3,
ENDED JUNE 30, FOR THE YEAR ENDED DECEMBER 31, 1994* THROUGH
1998 ----------------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
-------------- ----------- --------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 3.34 $ 3.15 $ 2.77 $ 2.00 $ 1.91
Income from Investment Operations:
Net Investment Income............... -- -- -- -- --
Net Realized and Unrealized Gains on
Investments........................ 0.32 0.39 0.49 0.78 0.09
-------------- ----------- --------- --------------- ---------------
Total from Investment
Operations....................... 0.32 0.39 0.49 0.78 0.09
-------------- ----------- --------- --------------- ---------------
Less Distributions:
Distributions from Net Investment
Income............................. -- -- -- -- --
Distributions from Realized Gains on
Investments........................ (0.12) (0.20) (0.11) (0.01) --
-------------- ----------- --------- --------------- ---------------
Total Distributions............... (0.12) (0.20) (0.11) (0.01) --
-------------- ----------- --------- --------------- ---------------
Net Asset Value, End of Period.......... $ 3.54 $ 3.34 $ 3.15 $ 2.77 $ 2.00
-------------- ----------- --------- --------------- ---------------
-------------- ----------- --------- --------------- ---------------
Total Return+........................... 10.07%++ 13.86% 17.70% 39.29% 4.47%++
-------------- ----------- --------- --------------- ---------------
-------------- ----------- --------- --------------- ---------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $1,168,801 $1,067,068 $871,926 $577,014 $327,096
-------------- ----------- --------- --------------- ---------------
-------------- ----------- --------- --------------- ---------------
Ratio of Expenses to Average Net
Assets................................. 0.52%** 0.53% 0.54% 0.56% 0.58%**
-------------- ----------- --------- --------------- ---------------
-------------- ----------- --------- --------------- ---------------
Ratio of Net Investment Income/(Loss) to
Average Net Assets..................... 0.03%** 0.06% (0.03%) 0.13% 0.29%**
-------------- ----------- --------- --------------- ---------------
-------------- ----------- --------- --------------- ---------------
Portfolio Turnover Rate................. 21.32% 57.27% 47.25% 37.84% 21.54%
-------------- ----------- --------- --------------- ---------------
-------------- ----------- --------- --------------- ---------------
Average Commission Rate #............... $ 0.0581 $ 0.0499 $ 0.0513
-------------- ----------- ---------
-------------- ----------- ---------
</TABLE>
* Commencement of Operations.
** Computed on an annualized basis.
+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.
++ Reflects total return for the period; not annualized.
# Disclosure required for fiscal years beginning after September 1, 1995.
The Accompanying Notes are an Integral Part of the Financial Statements
---
50
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
International Equity Portfolio
Financial Statements
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C>
ASSETS
Common Stocks (cost $537,731)................................................. $686,120
Money Market Investments (cost $52,370)....................................... 52,370
Bonds (cost $2,302)........................................................... 316
---------
738,806
Cash.......................................................................... 54
Due from Sale of Securities................................................... 28,227
Due from Foreign Currency Contracts........................................... 21,548
Dividends and Interest Receivable............................................. 4,456
Due from Sale of Fund Shares.................................................. 516
---------
Total Assets................................................................ 793,607
---------
LIABILITIES
Due on Purchase of Securities................................................. 28,936
Due on Foreign Currency Contracts............................................. 21,230
Due on Redemption of Fund Shares.............................................. 816
Due to Investment Advisor..................................................... 404
Accrued Expenses.............................................................. 332
---------
Total Liabilities........................................................... 51,718
---------
NET ASSETS...................................................................... $741,889
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital (2,000,000 shares authorized, $.01 par value;
411,970 shares outstanding).................................................. $546,797
Undistributed Net Investment Income........................................... 10,735
Undistributed Accumulated Net Realized Gain on Investments.................... 37,998
Net Unrealized Appreciation (Depreciation) of:
Investment Securities....................................................... 146,403
Foreign Currency Transactions............................................... (44)
---------
Net Assets for 411,970 Shares Outstanding..................................... $741,889
---------
---------
Net Asset Value, Offering and Redemption Price per Share...................... $ 1.80
---------
---------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividends (less foreign dividend tax of $1,253)............................. $ 12,702
Interest.................................................................... 774
---------
Total Income.............................................................. 13,476
---------
Expenses
Management Fees............................................................. 2,363
Custodian Fees.............................................................. 243
Other Expenses.............................................................. 168
---------
Total Expenses............................................................ 2,774
---------
Net Investment Income......................................................... 10,702
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES
Net Realized Gain (Loss) on:
Investment Securities....................................................... 38,782
Foreign Currency Transactions............................................... (181)
---------
Net Realized Gain for the Period.......................................... 38,601
Net Change in Unrealized Appreciation of:
Investment Securities....................................................... 32,426
Foreign Currency Transactions............................................... 1
---------
Net Change in Unrealized Appreciation for the Period...................... 32,427
---------
Net Gain on Investments....................................................... 71,028
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 81,730
---------
---------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
---
51
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
International Equity Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED FOR THE
JUNE 30, YEAR ENDED
1998 DECEMBER 31,
(UNAUDITED) 1997
----------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............................ $ 10,702 $ 16,845
Net Realized Gain on Investments................. 38,601 22,636
Net Unrealized Appreciation of Investments for
the Period...................................... 32,427 25,359
----------- ------------
Net Increase in Net Assets Resulting from
Operations..................................... 81,730 64,840
----------- ------------
Distributions to Shareholders from:
Net Investment Income............................ (16,649) (12,704)
Net Realized Gain on Investments................. (22,793) (7,542)
----------- ------------
Net Decrease in Net Assets Resulting from
Distributions to Shareholders.................. (39,442) (20,246)
----------- ------------
Fund Share Transactions
Proceeds from Sale of 17,602 and 66,307 Shares... 32,331 110,618
Proceeds from Shares Issued on Reinvestment of
Dividends Paid
(21,530 and 12,598 shares, respectively)........ 39,442 20,246
Payments for 17,951 and 12,361 Shares Redeemed... (32,022) (20,797)
----------- ------------
Net Increase in Net Assets Resulting from Fund
Share Transactions
(21,181 and 66,544 shares, respectively)........ 39,751 110,067
----------- ------------
Total Increase in Net Assets....................... 82,039 154,661
NET ASSETS
Beginning of Period................................ 659,850 505,189
----------- ------------
End of Period (includes undistributed net
investment income of $10,735 and $16,682,
respectively)..................................... $741,889 $659,850
----------- ------------
----------- ------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
---
52
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
International Equity Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS MAY 3, 1994*
ENDED JUNE FOR THE YEAR ENDED DECEMBER 31, THROUGH
30, 1998 --------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
----------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 1.69 $ 1.56 $ 1.35 $ 1.19 $ 1.22
Income from Investment Operations:
Net Investment Income............... 0.03 0.04 0.04 0.04 0.02
Net Realized and Unrealized Gains
(Losses) on Investments............ 0.17 0.15 0.24 0.13 (0.02)
----------- --------- --------- --------- ---------------
Total from Investment
Operations....................... 0.20 0.19 0.28 0.17 0.00
----------- --------- --------- --------- ---------------
Less Distributions:
Distributions from Net Investment
Income............................. (0.04) (0.04) (0.03) -- (0.02)
Distributions from Realized Gains on
Investments........................ (0.05) (0.02) (0.04) (0.01) (0.01)
----------- --------- --------- --------- ---------------
Total Distributions............... (0.09) (0.06) (0.07) (0.01) (0.03)
----------- --------- --------- --------- ---------------
Net Asset Value, End of Period.......... $ 1.80 $ 1.69 $ 1.56 $ 1.35 $ 1.19
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
Total Return+........................... 12.57%++ 12.28% 21.01% 14.57% 0.11%++
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $741,889 $659,850 $170,482 $342,127 $292,533
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
Ratio of Expenses to Average Net
Assets................................. 0.77%** 0.77% 0.81% 0.85% 0.87%**
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
Ratio of Net Investment Income to
Average Net Assets..................... 2.99%** 2.75% 3.02% 2.68% 2.28%**
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
Portfolio Turnover Rate................. 15.56% 16.74% 17.07% 26.71% 10.97%
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
Average Commission Rate #............... $ 0.0073 $ 0.0009 $ 0.0151
----------- --------- ---------
----------- --------- ---------
</TABLE>
* Commencement of Operations.
** Computed on an annualized basis.
+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.
++ Reflects total return for the period; not annualized.
# Disclosure required for fiscal years beginning after September 1, 1995.
The Accompanying Notes are an Integral Part of the Financial Statements
---
53
<PAGE>
GROWTH STOCK PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Growth Stock Portfolio
Financial Statements
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C>
ASSETS
Common Stocks (cost $190,819)................................................. $305,643
Money Market Investments (cost $43,963)....................................... 43,963
---------
349,606
Due from Sale of Fund Shares.................................................. 763
Dividends and Interest Receivable............................................. 235
---------
Total Assets................................................................ 350,604
---------
LIABILITIES
Due on Purchase of Securities................................................. 994
Futures Variation Margin...................................................... 151
Due to Investment Advisor..................................................... 130
Accrued Expenses.............................................................. 27
Due on Redemption of Fund Shares.............................................. 18
---------
Total Liabilities........................................................... 1,320
---------
NET ASSETS...................................................................... $349,284
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital (2,000,000 shares authorized, $.01 par value;
164,874 shares outstanding).................................................. $227,200
Undistributed Net Investment Income........................................... 1,449
Undistributed Accumulated Net Realized Gain on Investments.................... 5,279
Net Unrealized Appreciation of:
Investment Securities....................................................... 114,824
Index Futures Contracts..................................................... 532
---------
Net Assets for 164,874 Shares Outstanding..................................... $349,284
---------
---------
Net Asset Value, Offering and Redemption Price per Share...................... $ 2.12
---------
---------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividends (less foreign dividend tax of $17)................................ $ 1,292
Interest.................................................................... 835
--------
Total Income.............................................................. 2,127
--------
Expenses
Management Fees............................................................. 660
Other Expenses.............................................................. 10
Custodian Expenses.......................................................... 8
--------
Total Expenses............................................................ 678
--------
Less Custodian Fees:
Paid by Affiliate....................................................... (7)
Paid Indirectly......................................................... (1)
--------
Total Net Expenses........................................................ 670
--------
Net Investment Income......................................................... 1,457
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain on Investments:
Investment Securities....................................................... 4,478
Index Futures Contracts..................................................... 801
--------
Net Realized Gain on Investments for the Period........................... 5,279
--------
Net Change in Unrealized Appreciation of:
Investments Securities...................................................... 42,327
Index Futures Contracts..................................................... 532
--------
Net Change in Unrealized Appreciation of Investments for the Period....... 42,859
--------
Net Gain on Investments..................................................... 48,138
--------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...................................................... $49,595
--------
--------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
---
54
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Growth Stock Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED JUNE YEAR ENDED
30, 1998 DECEMBER 31,
(UNAUDITED) 1997
----------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income................................ $ 1,457 $ 2,669
Net Realized Gain on Investments..................... 5,279 11,942
Net Change in Unrealized Appreciation of Investments
for the Period...................................... 42,859 42,501
----------- ------------
Net Increase in Net Assets Resulting from
Operations......................................... 49,595 57,112
----------- ------------
Distributions to Shareholders from:
Net Investment Income................................ (4,068) (2,685)
Net Realized Gain on Investments..................... -- (8,527)
----------- ------------
Net Decrease in Net Assets Resulting from
Distributions to Shareholders...................... (4,068) (11,212)
----------- ------------
Fund Share Transactions
Proceeds from Sale of 30,401 and 42,594 Shares....... 60,291 70,967
Proceeds from Shares Issued on Reinvestment of
Distributions Paid
(2,035 and 6,422 shares, respectively).............. 4,068 11,212
Payments for 1,836 and 31,206 Shares Redeemed........ (3,673) (55,490)
----------- ------------
Net Increase in Net Assets Resulting from Fund Share
Transactions
(30,601 and 17,810 shares, respectively)............ 60,686 26,689
----------- ------------
Total Increase in Net Assets........................... 106,213 72,589
NET ASSETS
Beginning of Period.................................... 243,071 170,482
----------- ------------
End of Period (includes undistributed net
investment income of $1,449 and $0, respectively)..... $349,284 $243,071
----------- ------------
----------- ------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
---
55
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Growth Stock Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
SIX MONTHS MAY 3, 1994*
ENDED JUNE FOR THE YEAR ENDED DECEMBER 31, THROUGH
30, 1998 -------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
----------- --------- --------- -------- --------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period............ $ 1.81 $ 1.46 $ 1.26 $ 1.00 $ 1.00
Income from Investment Operations:
Net Investment Income....................... 0.02 0.02 0.02 0.02 0.01
Net Realized and Unrealized Gains on
Investments................................ 0.31 0.42 0.25 0.28 --
----------- --------- --------- -------- --------------
Total from Investment Operations.......... 0.33 0.44 0.27 0.30 0.01
----------- --------- --------- -------- --------------
Less Distributions:
Distributions from Net Investment Income.... (0.02) (0.02) (0.02) (0.02) (0.01)
Distributions from Realized Gains on
Investments................................ -- (0.07) (0.05) (0.02) --
----------- --------- --------- -------- --------------
Total Distributions....................... (0.02) (0.09) (0.07) (0.04) (0.01)
----------- --------- --------- -------- --------------
Net Asset Value, End of Period.................... $ 2.12 $ 1.81 $ 1.46 $ 1.26 $ 1.00
----------- --------- --------- -------- --------------
----------- --------- --------- -------- --------------
Total Return+..................................... 18.56%++ 29.85% 20.91% 30.82% 1.55%++
----------- --------- --------- -------- --------------
----------- --------- --------- -------- --------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in thousands).......... $349,284 $243,071 $170,482 $85,557 $41,868
----------- --------- --------- -------- --------------
----------- --------- --------- -------- --------------
Ratio of Expenses to Average Net Assets........... 0.46%** 0.49% 0.57% 0.61% 0.71%**
----------- --------- --------- -------- --------------
----------- --------- --------- -------- --------------
Ratio of Net Investment Income to Average Net
Assets........................................... 1.00%** 1.24% 1.41% 1.77% 2.30%**
----------- --------- --------- -------- --------------
----------- --------- --------- -------- --------------
Portfolio Turnover Rate........................... 11.50% 33.20% 37.61% 46.83% 16.51%
----------- --------- --------- -------- --------------
----------- --------- --------- -------- --------------
Average Commission Rate #......................... $ 0.0488 $ 0.0559 $ 0.0629
----------- --------- ---------
----------- --------- ---------
</TABLE>
* Commencement of Operations.
** Computed on an annualized basis.
+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.
++ Reflects total return for the period; not annualized.
# Disclosure required for fiscal years beginning after September 1, 1995.
The Accompanying Notes are an Integral Part of the Financial Statements
---
56
<PAGE>
GROWTH AND INCOME STOCK PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Growth and Income Stock Portfolio
Financial Statements
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C>
ASSETS
Common Stocks (cost $475,788)................................................. $492,731
Money Market Investments (cost $3,999)........................................ 3,999
---------
496,730
Cash.......................................................................... 772
Due from Sale of Securities................................................... 9,791
Due from Sale of Fund Shares.................................................. 950
Dividends and Interest Receivable............................................. 561
---------
Total Assets................................................................ 508,804
---------
LIABILITIES
Due on Purchase of Securities................................................. 9,584
Due to Investment Advisor..................................................... 245
Due on Redemption of Fund Shares.............................................. 144
Accrued Expenses.............................................................. 18
---------
Total Liabilities........................................................... 9,991
---------
NET ASSETS...................................................................... $498,813
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital (2,000,000 shares authorized, $.01 par value;
330,859 shares outstanding).................................................. $419,055
Undistributed Net Investment Income........................................... 2,571
Undistributed Accumulated Net Realized Gain on Investments.................... 60,244
Net Unrealized Appreciation of Investments.................................... 16,943
---------
Net Assets for 330,859 Shares Outstanding..................................... $498,813
---------
---------
Net Asset Value, Offering and Redemption Price per Share...................... $ 1.51
---------
---------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividends (less foreign dividend tax of $17)................................ $ 2,981
Interest.................................................................... 863
---------
Total Income.............................................................. 3,844
---------
Expenses
Management Fees............................................................. 1,262
Custodian Fees.............................................................. 17
Other Expenses.............................................................. 11
---------
Total Expenses............................................................ 1,290
---------
Less Custodian Fees:
Paid by Affiliate.................................................... (15)
Paid Indirectly...................................................... (2)
---------
Total Net Expenses........................................................ 1,273
---------
Net Investment Income......................................................... 2,571
---------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net Realized Gain on Investments.............................................. 60,460
Net Change in Unrealized Depreciation of Investments for the Period........... (10,232)
---------
Net Gain on Investments....................................................... 50,228
---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...................................................... $ 52,799
---------
---------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
---
57
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Growth and Income Stock Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED FOR THE
JUNE 30, YEAR ENDED
1998 DECEMBER 31,
(UNAUDITED) 1997
----------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income................................ $ 2,571 $ 3,174
Net Realized Gain on Investments..................... 60,460 72,633
Net Change in Unrealized Appreciation (Depreciation)
of Investments for the Period....................... (10,232) 2,850
----------- ------------
Net Increase in Net Assets Resulting from
Operations......................................... 52,799 78,657
----------- ------------
Distributions to Shareholders from:
Net Investment Income................................ (731) (3,199)
Net Realized Gain on Investments..................... -- (78,180)
----------- ------------
Net Decrease in Net Assets Resulting from
Distributions to Shareholders...................... (731) (81,379)
----------- ------------
Fund Share Transactions
Proceeds from Sale of 53,928 and 75,470 Shares....... 78,560 116,134
Proceeds from Shares Issued on Reinvestment of
Distributions Paid (493 and 61,873 shares,
respectively)....................................... 731 81,380
Payments for 3,097 and 35,535 Shares Redeemed........ (4,482) (57,040)
----------- ------------
Net Increase in Net Assets Resulting from Fund
Share Transactions (51,324 and 101,808 shares,
respectively)...................................... 74,809 140,474
----------- ------------
Total Increase in Net Assets........................... 126,877 137,752
NET ASSETS
Beginning of Period.................................... 371,936 234,184
----------- ------------
End of Period (includes undistributed net investment
income of $2,571 and $0, respectively)................ $498,813 $371,936
----------- ------------
----------- ------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
---
58
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Growth and Income Stock Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS MAY 3, 1994*
ENDED JUNE FOR THE YEAR ENDED DECEMBER 31, THROUGH
30, 1998 --------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
----------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period............ $ 1.33 $ 1.32 $ 1.21 $ 0.98 $ 1.00
Income from Investment Operations:
Net Investment Income......................... 0.01 0.01 0.02 0.02 0.01
Net Realized and Unrealized Gains on
Investments.................................. 0.17 0.37 0.23 0.29 (0.01)
----------- --------- --------- --------- ---------------
Total from Investment Operations............ 0.18 0.38 0.25 0.31 (0.00)
----------- --------- --------- --------- ---------------
Less Distributions:
Distributions from Net Investment Income...... -- (0.01) (0.02) (0.02) (0.01)
Distributions from Realized Gains on
Investments.................................. -- (0.36) (0.12) (0.06) (0.01)
----------- --------- --------- --------- ---------------
Total Distributions......................... -- (0.37) (0.14) (0.08) (0.02)
----------- --------- --------- --------- ---------------
Net Asset Value, End of Period.................... $ 1.51 $ 1.33 $ 1.32 $ 1.21 $ 0.98
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
Total Return+..................................... 13.48%++ 30.03% 19.97% 31.12% 0.34%++
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in thousands).......... $498,813 $371,936 $234,184 $136,923 $ 64,700
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
Ratio of Expenses to Average Net Assets........... 0.58%** 0.60% 0.62% 0.69% 0.78%**
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
Ratio of Net Investment Income to Average Net
Assets........................................... 1.16%** 1.04% 1.44% 1.68% 1.93%**
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
Portfolio Turnover Rate........................... 90.89% 144.52% 93.92% 80.00% 54.18%
----------- --------- --------- --------- ---------------
----------- --------- --------- --------- ---------------
Average Commission Rate #......................... $ 0.0427 $ 0.0453 $ 0.0515
----------- --------- ---------
----------- --------- ---------
</TABLE>
* Commencement of Operations.
** Computed on an annualized basis.
+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.
++ Reflects total return for the period; not annualized.
# Disclosure required for fiscal years beginning after September 1, 1995.
The Accompanying Notes are an Integral Part of the Financial Statements
---
59
<PAGE>
INDEX 500 STOCK PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Index 500 Stock Portfolio
Financial Statements
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C>
ASSETS
Common Stocks (cost $837,742)................................................. $1,465,041
Money Market Investments (cost $15,347)....................................... 15,347
-----------
1,480,388
Due from Sale of Fund Shares.................................................. 2,411
Dividends and Interest Receivable............................................. 1,659
-----------
Total Assets................................................................ 1,484,458
-----------
LIABILITIES
Due on Redemption of Fund Shares.............................................. 3,182
Due to Investment Advisor..................................................... 251
Futures Variation Margin...................................................... 94
Accrued Expenses.............................................................. 36
-----------
Total Liabilities........................................................... 3,563
-----------
NET ASSETS...................................................................... $1,480,895
-----------
-----------
REPRESENTED BY:
Aggregate Paid in Capital (2,000,000 shares authorized, $.01 par value;
492,572 shares outstanding).................................................. $ 830,143
Undistributed Net Investment Income........................................... 19,789
Undistributed Accumulated Net Realized Gain on Investments.................... 3,459
Net Unrealized Appreciation of:
Investment Securities....................................................... 627,299
Index Futures Contracts..................................................... 205
-----------
Net Assets for 492,572 Shares Outstanding..................................... $1,480,895
-----------
-----------
Net Asset Value, Offering and Redemption Price per Share...................... $ 3.01
-----------
-----------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividends (less foreign dividend tax of $66)................................ $ 9,431
Interest.................................................................... 1,680
---------
Total Income.............................................................. 11,111
---------
Expenses
Management Fees............................................................. 1,319
Other Expenses.............................................................. 21
Custodian Fees.............................................................. 20
---------
Total Expenses............................................................ 1,360
---------
Less Custodian Fees:
Paid by Affiliate.................................................... (18)
Paid Indirectly...................................................... (2)
---------
Total Net Expenses........................................................ 1,340
---------
Net Investment Income......................................................... 9,771
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain on Investments:
Investment Securities....................................................... 4,556
Index Futures Contracts..................................................... 10,142
---------
Net Realized Gain on Investments for the Period........................... 14,698
---------
Net Change in Unrealized Appreciation (Depreciation) of:
Investment Securities....................................................... 187,557
Index Futures Contracts..................................................... (464)
---------
Net Change in Unrealized Appreciation of Investments for the Period....... 187,093
---------
Net Gain on Investments..................................................... 201,791
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $211,562
---------
---------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
---
60
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Index 500 Stock Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED FOR THE
JUNE 30, YEAR ENDED
1998 DECEMBER 31,
(UNAUDITED) 1997
----------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............................ $ 9,771 $ 17,811
Net Realized Gain on Investments................. 14,698 27,640
Net Change in Unrealized Appreciation of
Investments for the Period...................... 187,093 219,972
----------- ------------
Net Increase in Net Assets Resulting from
Operations..................................... 211,562 265,423
----------- ------------
Disributions to Shareholders from:
Net Investment Income............................ (17,811) (13,866)
Net Realized Gain on Investments................. (28,519) (16,994)
----------- ------------
Net Decrease in Net Assets Resulting from
Distributions to Shareholders.................. (46,330) (30,860)
----------- ------------
Fund Share Transactions
Proceeds from Sale of 45,859 and 75,307 Shares... 132,404 178,554
Proceeds from Shares Issued on Reinvestment of
Distributions Paid (16,132 and 13,655 shares,
respectively)................................... 46,330 30,860
Payments for 5,523 and 12,917 Shares Redeemed.... (15,928) (31,186)
----------- ------------
Net Increase in Net Assets Resulting from Fund
Share Transactions (56,468 and 76,045 shares,
respectively)................................... 162,806 178,228
----------- ------------
Total Increase in Net Assets....................... 328,038 412,791
NET ASSETS
Beginning of Period................................ 1,152,857 740,066
----------- ------------
End of Period (includes undistributed net
investment income of $19,789 and $17,811,
respectively)..................................... $1,480,895 $1,152,857
----------- ------------
----------- ------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
---
61
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Index 500 Stock Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED JUNE FOR THE YEAR
30, ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period....... $ 2.64 $ 2.06 $ 1.72 $ 1.27 $ 1.29 $ 1.33
Income from Investment Operations:
Net Investment Income.................. 0.03 0.04 0.04 0.04 0.03 0.04
Net Realized and Unrealized Gain (Loss)
on Investments........................ 0.42 0.62 0.35 0.42 (0.01) 0.09
----------- ----------- --------- --------- --------- --------
Total from Investment Operations..... 0.45 0.66 0.39 0.46 0.02 0.13
----------- ----------- --------- --------- --------- --------
Less Distributions:
Distributions from Net Investment
Income................................ (0.03) (0.04) (0.02) (0.01) (0.03) (0.03)
Distributions from Realized Gains on
Investments........................... (0.05) (0.04) (0.03) -- (0.01) (0.14)
----------- ----------- --------- --------- --------- --------
Total Distributions.................. (0.08) (0.08) (0.05) (0.01) (0.04) (0.17)
----------- ----------- --------- --------- --------- --------
Net Asset Value, End of Period............... $ 3.01 $ 2.64 $ 2.06 $ 1.72 $ 1.27 $ 1.29
----------- ----------- --------- --------- --------- --------
----------- ----------- --------- --------- --------- --------
Total Return+................................ 17.65%++ 33.20% 22.75% 37.25% 1.21% 9.90%
----------- ----------- --------- --------- --------- --------
----------- ----------- --------- --------- --------- --------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in thousands)..... $1,480,895 $1,152,857 $740,066 $495,133 $316,123 $25,479
----------- ----------- --------- --------- --------- --------
----------- ----------- --------- --------- --------- --------
Ratio of Expenses to Average Net Assets...... 0.20%* 0.21% 0.21% 0.21% 0.24% 0.30%
----------- ----------- --------- --------- --------- --------
----------- ----------- --------- --------- --------- --------
Ratio of Net Investment Income to Average Net
Assets...................................... 1.48%* 1.86% 2.27% 2.51% 3.10% 2.55%
----------- ----------- --------- --------- --------- --------
----------- ----------- --------- --------- --------- --------
Portfolio Turnover Rate...................... 0.89% 3.15% 3.45% 3.19% 5.59% 62.69%
----------- ----------- --------- --------- --------- --------
----------- ----------- --------- --------- --------- --------
Average Commission Rate#..................... $ 0.0217 $ 0.0304 $ 0.0306
----------- ----------- ---------
----------- ----------- ---------
</TABLE>
* Computed on an annualized basis.
+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.
++ Reflects total return for the period; not annualized.
# Disclosure required for fiscal years beginning after September 1, 1995.
The Accompanying Notes are an Integral Part of the Financial Statements
---
62
<PAGE>
BALANCED PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Balanced Portfolio
Financial Statements
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C>
ASSETS
Common Stock (cost $711,084).................................................. $1,671,072
Bonds (cost $996,490)......................................................... 1,013,382
Money Market Investments (cost $389,407)...................................... 389,411
-----------
3,073,865
Cash.......................................................................... 6,527
Due from Sale of Securities................................................... 50,590
Dividends and Interest Receivable............................................. 16,005
Due from Sale of Foreign Currency............................................. 6,600
Due from Sale of Fund Shares.................................................. 174
-----------
Total Assets................................................................ 3,153,761
-----------
LIABILITIES
Due on Purchase of Securities................................................. 48,155
Due on Purchase of Foreign Currency........................................... 6,564
Due on Redemption of Fund Shares.............................................. 3,958
Due on Futures Variation Margin............................................... 1,133
Due to Investment Advisor..................................................... 802
-----------
Total Liabilities........................................................... 60,612
-----------
NET ASSETS...................................................................... $3,093,149
-----------
-----------
REPRESENTED BY:
Aggregate Paid in Capital
(3,000,000 shares authorized, $.01 par value; 1,486,055 shares
outstanding)................................................................. $1,965,612
Undistributed Net Investment Income........................................... 50,581
Undistributed Accumulated Net Realized Gain on Investments.................... 96,434
Net Unrealized Appreciation of:
Investment Securities....................................................... 976,884
Index Futures Contracts..................................................... 3,602
Foreign Currency Transactions............................................... 36
-----------
Net Assets for 1,486,055 Shares Outstanding................................... $3,093,149
-----------
-----------
Net Asset Value, Offering and Redemption Price per Share...................... $ 2.08
-----------
-----------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest.................................................................... $ 43,011
Dividends (less foreign dividend tax of $73)................................ 12,121
---------
Total Income.............................................................. 55,132
---------
Expenses
Management Fees............................................................. 4,407
---------
Net Investment Income......................................................... 50,725
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Investments:
Investment Securities....................................................... 93,377
Index Futures Contracts..................................................... 4,298
Foreign Currency Transactions............................................... (963)
---------
Net Realized Gain on Investments for the Period........................... 96,712
---------
Net Change In Unrealized Appreciation of:
Investment Securities....................................................... 162,570
Index Futures Contracts..................................................... 4,081
Foreign Currency Transactions............................................... 160
---------
Net Change in Unrealized Appreciation of Investments for the Period....... 166,811
---------
Net Gain on Investments....................................................... 263,523
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $314,248
---------
---------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
---
63
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Balanced Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED FOR THE
JUNE 30, YEAR ENDED
1998 DECEMBER 31,
(UNAUDITED) 1997
----------- ------------
INCREASE IN NET ASSETS
<S> <C> <C>
Operations
Net Investment Income............... $ 50,725 $ 94,986
Net Realized Gain on Investments.... 96,712 83,356
Net Change in Unrealized
Appreciation of Investments for the
Period............................. 166,811 318,351
----------- ------------
Net Increase in Net Assets
Resulting from Operations......... 314,248 496,693
----------- ------------
Distributions to Shareholders from:
Net Investment Income............... (95,131) (86,698)
Net Realized Gain on Investments.... (85,841) (29,228)
----------- ------------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (180,972) (115,926)
----------- ------------
Fund Share Transactions
Proceeds from Sale of 27,361 and
42,694 Shares...................... 56,599 79,608
Proceeds from Shares Issued on
Reinvestment of Distributions Paid
(89,901 and 65,384 shares,
respectively)...................... 180,972 115,926
Payments for 31,953 and 61,284
Shares Redeemed.................... (66,192) (114,041)
----------- ------------
Net Increase in Net Assets Resulting
from Fund Share Transactions
(85,309 and 46,794 shares,
respectively)...................... 171,379 81,493
----------- ------------
Total Increase in Net Assets.......... 304,655 462,260
NET ASSETS
Beginning of Period................... 2,788,494 2,326,234
----------- ------------
End of Period (includes undistributed
net investment income of
$50,581 and $94,962, respectively)... $3,093,149 $2,788,494
----------- ------------
----------- ------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
---
64
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Balanced Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS FOR THE YEAR
ENDED JUNE ENDED DECEMBER 31,
30, 1998 ----------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 1.99 $ 1.72 $ 1.60 $ 1.31 $ 1.33 $ 1.39
Income from Investment Operations:
Net Investment Income............. 0.03 0.07 0.06 0.07 0.04 0.06
Net Realized and Unrealized Gain
(Loss) on Investments............ 0.18 0.28 0.15 0.27 (0.05) 0.09
----------- ----------- ----------- ----------- ----------- --------
Total from Investment
Operations..................... 0.21 0.35 0.21 0.34 (0.01) 0.15
----------- ----------- ----------- ----------- ----------- --------
Less Distributions:
Distributions from Net Investment
Income........................... (0.06) (0.06) (0.06) (0.04) -- (0.07)
Distributions from Realized Gains
on Investments................... (0.06) (0.02) (0.03) (0.01) (0.01) (0.14)
----------- ----------- ----------- ----------- ----------- --------
Total Distributions............. (0.12) (0.08) (0.09) (0.05) (0.01) (0.21)
----------- ----------- ----------- ----------- ----------- --------
Net Asset Value, End of Period.......... $ 2.08 $ 1.99 $ 1.72 $ 1.60 $ 1.31 $ 1.33
----------- ----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- ----------- --------
Total Return+........................... 11.23%++ 21.52% 13.45% 26.39% 0.16% 9.91%
----------- ----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- ----------- --------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $3,093,149 $2,788,494 $2,326,234 $2,083,289 $1,727,127 $68,910
----------- ----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- ----------- --------
Ratio of Expenses to Average Net
Assets................................. 0.30%* 0.30% 0.30% 0.30% 0.30% 0.30%
----------- ----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- ----------- --------
Ratio of Net Investment Income to
Average Net Assets..................... 3.43%* 3.70% 3.95% 4.40% 4.78% 4.24%
----------- ----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- ----------- --------
Portfolio Turnover Rate................. 25.27% 29.94% 67.66% 37.28% 42.35% 70.91%
----------- ----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- ----------- --------
Average Comminssion Rate #.............. $ 0.0240 $ 0.0310 $ 0.0320
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
* Computed on an annualized basis.
+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.
++ Reflects total return for the period; not annualized.
# Disclosure required for fiscal years beginning after September 1, 1995.
The Accompanying Notes are an Integral Part of the Financial Statements
---
65
<PAGE>
HIGH YIELD BOND PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
High Yield Bond Portfolio
Financial Statements
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C>
ASSETS
Bonds (cost $159,696)......................................................... $157,404
Preferred Stock (cost $26,511)................................................ 28,082
Money Market Investments (cost $4,997)........................................ 4,997
Common Stock (cost $2,168).................................................... 1,189
---------
191,672
Cash.......................................................................... 1,002
Dividends and Interest Receivable............................................. 2,732
Due from Sale of Securities................................................... 567
Due from Sale of Fund Shares.................................................. 558
---------
Total Assets................................................................ 196,531
---------
LIABILITIES
Due on Purchase of Securities................................................. 5,268
Due on Redemption of Fund Shares.............................................. 785
Due to Investment Advisor..................................................... 79
Accrued Expenses.............................................................. 26
---------
Total Liabilities........................................................... 6,158
---------
NET ASSETS...................................................................... $190,373
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital (2,000,000 shares authorized, $.01 par value;
169,505 shares outstanding).................................................. $179,878
Undistributed Net Investment Income........................................... 8,232
Undistributed Accumulated Net Realized Gain on Investments.................... 3,964
Net Unrealized Depreciation of Investments.................................... (1,701)
---------
Net Assets for 169,505 Shares Outstanding..................................... $190,373
---------
---------
Net Asset Value, Offering and Redemption Price per Share...................... $ 1.12
---------
---------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest.................................................................... $ 7,172
Dividends................................................................... 1,480
--------
Total Income.............................................................. 8,652
--------
Expenses
Management Fees............................................................. 409
Custodian Fees.............................................................. 10
Other Expenses.............................................................. 11
--------
Total Expenses............................................................ 430
--------
Less Custodian Fees:
Paid Indirectly...................................................... (7)
Paid by Affiliate.................................................... (3)
--------
Total Net Expenses........................................................ 420
--------
Net Investment Income......................................................... 8,232
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain on Investments.............................................. 3,964
Net Change in Unrealized Depreciation of Investments for the Period........... (3,314)
--------
Net Gain on Investments....................................................... 650
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 8,882
--------
--------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
--
66
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
High Yield Bond Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE YEAR
ENDED JUNE ENDED
30, 1998 DECEMBER 31,
(UNAUDITED) 1997
----------- ------------
INCREASE IN NET ASSETS
<S> <C> <C>
Operations
Net Investment Income................................ $ 8,232 $ 12,561
Net Realized Gain on Investments..................... 3,964 7,437
Net Change in Unrealized Depreciation of Investments
for the Period...................................... (3,314) (1,416)
----------- ------------
Net Increase in Net Assets Resulting from
Operations......................................... 8,882 18,582
----------- ------------
Distributions to Shareholders from:
Net Investment Income................................ -- (16,554)
Net Realized Gain on Investments..................... -- (8,429)
----------- ------------
Net Decrease in Net Assets Resulting from
Distributions to Shareholders...................... -- (24,983)
----------- ------------
Fund Share Transactions
Proceeds from Sale of 40,132 and 48,820 Shares....... 44,227 56,788
Proceeds from Shares Issued on Reinvestment of
Distributions Paid
(0 and 23,165 shares, respectively)................. -- 24,983
Payments for 14,543 and 13,489 Shares Redeemed....... (15,774) (16,210)
----------- ------------
Net Increase in Net Assets Resulting from Fund
Share Transactions
(25,589 and 58,496 shares, respectively).......... 28,453 65,561
----------- ------------
Total Increase in Net Assets........................... 37,335 59,160
NET ASSETS
Beginning of Period.................................... 153,038 93,878
----------- ------------
End of Period (includes undistributed (overdistributed)
net investment income of
$8,232 and ($143), respectively)...................... $190,373 $153,038
----------- ------------
----------- ------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
--
67
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
High Yield Bond Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE
FOR THE SIX PERIOD MAY
MONTHS FOR THE YEAR ENDED 3, 1994*
ENDED JUNE 30, DECEMBER 31, THROUGH
1998 ------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
-------------- --------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 1.06 $ 1.10 $ 1.03 $ 0.97 $ 1.00
Income from Investment Operations:
Net Investment Income............. 0.04 0.11 0.09 0.10 0.06
Net Realized and Unrealized Gains
(Losses) on Investments.......... 0.02 0.06 0.10 0.07 (0.03)
-------------- --------- -------- -------- ------------
Total from Investment
Operations..................... 0.06 0.17 0.19 0.17 0.03
-------------- --------- -------- -------- ------------
Less Distributions:
Distributions from Net Investment
Income........................... -- (0.14) (0.09) (0.10) (0.06)
Distributions from Realized Gains
on Investments................... -- (0.07) (0.03) (0.01) --
-------------- --------- -------- -------- ------------
Total Distributions............. -- (0.21) (0.12) (0.11) (0.06)
-------------- --------- -------- -------- ------------
Net Asset Value, End of Period.......... $ 1.12 $ 1.06 $ 1.10 $ 1.03 $ 0.97
-------------- --------- -------- -------- ------------
-------------- --------- -------- -------- ------------
Total Return+........................... 5.64%++ 15.85% 19.77% 16.78% 3.02%++
-------------- --------- -------- -------- ------------
-------------- --------- -------- -------- ------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $190,373 $153,038 $93,878 $55,974 $35,537
-------------- --------- -------- -------- ------------
-------------- --------- -------- -------- ------------
Ratio of Expenses to Average Net
Assets................................. 0.50%** 0.55% 0.60% 0.65% 0.73%**
-------------- --------- -------- -------- ------------
-------------- --------- -------- -------- ------------
Ratio of Net Investment Income to
Average Net Assets..................... 9.73%** 9.95% 9.54% 9.90% 9.40%**
-------------- --------- -------- -------- ------------
-------------- --------- -------- -------- ------------
Portfolio Turnover Rate................. 98.54% 129.49% 143.91% 116.57% 119.48%
-------------- --------- -------- -------- ------------
-------------- --------- -------- -------- ------------
</TABLE>
* Commencement of Operations.
** Computed on an annualized basis.
+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.
++ Reflects total return for the period; not annualized.
The Accompanying Notes are an Integral Part of the Financial Statements
--
68
<PAGE>
SELECT BOND PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Select Bond Portfolio
Financial Statements
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C>
ASSETS
Bonds (cost $249,767)......................................................... $252,233
Money Market Investments (cost $12,313)....................................... 12,313
---------
264,546
Cash.......................................................................... 4,453
Due from Sale of Securities................................................... 10,901
Due on Foreign Currency Contracts............................................. 6,300
Interest Receivable........................................................... 2,912
Due from Sale of Fund Shares.................................................. 130
---------
Total Assets................................................................ 289,242
---------
LIABILITIES
Due on Purchase of Securities................................................. 17,407
Due on Foreign Currency Contracts............................................. 6,266
Due to Investment Advisor..................................................... 69
Accrued Expenses.............................................................. 1
---------
Total Liabilities........................................................... 23,743
---------
NET ASSETS...................................................................... $265,499
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital (1,000,000 shares authorized, $.01 par value;
220,840 shares outstanding).................................................. $254,971
Undistributed Net Investment Income........................................... 9,036
Undistributed Accumulated Net Realized Loss on Investments.................... (1,008)
NET UNREALIZED APPRECIATION OF:
Investments Securities........................................................ 2,466
Foreign Currency Transactions................................................. 34
---------
Net Assets for 220,840 Shares Outstanding..................................... $265,499
---------
---------
Net Asset Value, Offering and Redemption Price per Share...................... $ 1.20
---------
---------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest.................................................................... $ 9,506
--------
Expenses
Management Fees............................................................. 379
Other Expenses.............................................................. 12
--------
Net Investment Income......................................................... 9,115
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Investments:
Investment Securities....................................................... 2,856
Foreign Currency Transactions............................................... (888)
Futures Contracts........................................................... (2,380)
--------
Net Realized Loss on Investments for the Period............................... (412)
--------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investment Securities......................................................... (1,581)
Foreign Currency Transactions................................................. 128
Futures Contracts............................................................. 431
--------
Net Change in Unrealized Depreciation for the Period........................ (1,022)
--------
Net Loss on Investments....................................................... (1,434)
--------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...................................................... $ 7,681
--------
--------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
--
69
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Select Bond Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE YEAR
ENDED JUNE ENDED
30, 1998 DECEMBER 31,
(UNAUDITED) 1997
----------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............... $ 9,115 $ 15,676
Net Realized Gain (Loss) on
Investments........................ (412) 2,865
Net Change in Unrealized
Appreciation (Depreciation) of
Investments for the Period......... (1,022) 1,736
----------- ------------
Net Increase in Net Assets
Resulting from Operations......... 7,681 20,277
----------- ------------
Distributions to Shareholders from:
Net Investment Income............... (15,746) (13,300)
Net Realized Gain on Investments.... (2,700) --
----------- ------------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (18,446) (13,300)
----------- ------------
Fund Share Transactions
Proceeds from Sale of 19,252 and
26,095 Shares...................... 23,939 32,098
Proceeds from Shares Issued on
Reinvestment of Distributions Paid
(15,606 and 11,396 shares,
respectively)...................... 18,446 13,300
Payments for 8,791 and 17,885 Shares
Redeemed........................... (10,956) (21,873)
----------- ------------
Net Increase in Net Assets Resulting
from Fund Share Transactions
(26,067 and 19,606 shares,
respectively)........................ 31,429 23,525
----------- ------------
Total Increase in Net Assets.......... 20,664 30,502
NET ASSETS
Beginning of Period................... 244,835 214,333
----------- ------------
End of Period (includes undistributed
net investment income of
$9,036 and $15,722, respectively).... $265,499 $244,835
----------- ------------
----------- ------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
--
70
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Select Bond Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED DECEMBER 31,
JUNE 30, 1998 --------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
-------------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 1.26 $ 1.22 $ 1.23 $ 1.06 $ 1.15 $ 1.14
Income from Investment Operations:
Net Investment Income............. 0.04 0.08 0.07 0.07 0.06 0.08
Net Realized and Unrealized Gain
(Loss) on Investments............ (0.01) 0.04 (0.04) 0.13 (0.08) 0.05
-------------- --------- --------- --------- --------- --------
Total from Investment
Operations..................... 0.03 0.12 0.03 0.20 (0.03) 0.13
-------------- --------- --------- --------- --------- --------
Less Distributions:
Dividends from Net Investment
Income........................... (0.08) (0.08) (0.04) (0.03) (0.06) (0.08)
Distributions from Realized Gains
on Investments................... (0.01) -- -- -- -- (0.04)
-------------- --------- --------- --------- --------- --------
Total Distributions............. (0.09) (0.08) (0.04) (0.03) (0.06) (0.12)
-------------- --------- --------- --------- --------- --------
Net Asset Value, End of Period.......... $ 1.20 $ 1.26 $ 1.22 $ 1.23 $ 1.06 $ 1.15
-------------- --------- --------- --------- --------- --------
-------------- --------- --------- --------- --------- --------
Total Return+........................... 3.04%++ 9.46% 3.31% 19.10% (2.28%) 10.81%
-------------- --------- --------- --------- --------- --------
-------------- --------- --------- --------- --------- --------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $265,499 $244,835 $214,333 $198,142 $158,508 $17,485
-------------- --------- --------- --------- --------- --------
-------------- --------- --------- --------- --------- --------
Ratio of Expenses to Average Net
Assets................................. 0.30%* 0.30% 0.30% 0.30% 0.30% 0.30%
-------------- --------- --------- --------- --------- --------
-------------- --------- --------- --------- --------- --------
Ratio of Net Investment Income to
Average Net Assets..................... 7.15%* 7.03% 6.48% 6.61% 7.02% 6.40%
-------------- --------- --------- --------- --------- --------
-------------- --------- --------- --------- --------- --------
Portfolio Turnover Rate................. 61.77% 184.93% 195.98% 69.06% 108.00% 67.69%
-------------- --------- --------- --------- --------- --------
-------------- --------- --------- --------- --------- --------
</TABLE>
* Computed on an annualized basis.
+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.
++ Reflects total return for the period; not annualized.
The Accompanying Notes are an Integral Part of the Financial Statements
--
71
<PAGE>
MONEY MARKET PORTFOLIO
NORTHWESTERN MUTUAL SERIES FUND, INC.
Money Market Portfolio
Financial Statements
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C>
ASSETS
Money Market Investments
(cost $211,084).............................................................. $211,084
Cash.......................................................................... 1,525
Due from Sale of Fund Shares.................................................. 1,361
Interest Receivable........................................................... 174
---------
Total Assets................................................................ 214,144
---------
LIABILITIES
Due on Purchase of Fund Shares................................................ 1,561
Due to Investment Advisor..................................................... 55
---------
Total Liabilities........................................................... 1,616
---------
NET ASSETS $212,528
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital (1,000,000 shares authorized, $.01 par value;
212,552 shares outstanding).................................................. $212,528
---------
Net Assets for 212,552 Shares Outstanding..................................... $212,528
---------
---------
Net Asset Value, Offering and Redemption Price per Share...................... $ 1.00
---------
---------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest.................................................................... $ 5,631
---------
Expenses
Management Fees............................................................. 297
---------
Net Investment Income......................................................... 5,334
---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...................................................... $ 5,334
---------
---------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
---
72
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Money Market Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS FOR THE YEAR
ENDED JUNE ENDED
30, 1998 DECEMBER 31,
(UNAUDITED) 1997
----------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income................................ $ 5,334 $ 9,878
----------- ------------
Net Increase in Net Assets Resulting from
Operations......................................... 5,334 9,878
----------- ------------
Distributions to Shareholders from:
Net Investment Income................................ (5,334) (9,885)
----------- ------------
Net Decrease in Net Assets Resulting from
Distributions to Shareholders...................... (5,334) (9,885)
----------- ------------
Fund Share Transactions
Proceeds from Sale of 76,552 and 130,864 Shares...... 76,552 130,863
Proceeds from Shares Issued on Reinvestment of
Distributions Paid ( 5,334 and 9,878 shares,
respectively)....................................... 5,334 9,878
Payments for 63,828 and 122,562 Shares Redeemed...... (63,828) (122,562)
----------- ------------
Net Increase in Net Assets Resulting from Fund
Share Transactions (18,058 and 18,180 shares,
respectively)...................................... 18,058 18,179
----------- ------------
Total Increase in Net Assets........................... 18,058 18,172
NET ASSETS
Beginning of Period.................................... 194,470 176,298
----------- ------------
End of Period (includes no undistributed net investment
income)............................................... $212,528 $194,470
----------- ------------
----------- ------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
---
73
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Money Market Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED DECEMBER 31,
JUNE 30, 1998 --------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
-------------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period.. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income............... 0.03 0.05 0.05 0.06 0.05 0.03
Less Distributions from Net
Investment Income.................. (0.03) (0.05) (0.05) (0.06) (0.05) (0.03)
-------------- --------- --------- --------- --------- --------
Net Asset Value, End of Period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------- --------- --------- --------- --------- --------
-------------- --------- --------- --------- --------- --------
Total Return+......................... 2.70%++ 5.47% 5.29% 5.82% 4.03% 2.88%
-------------- --------- --------- --------- --------- --------
-------------- --------- --------- --------- --------- --------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $212,528 $194,470 $176,298 $132,572 $104,217 $12,657
-------------- --------- --------- --------- --------- --------
-------------- --------- --------- --------- --------- --------
Ratio of Expenses to Average Net
Assets................................. 0.30%* 0.30% 0.30% 0.30% 0.30% 0.30%
-------------- --------- --------- --------- --------- --------
-------------- --------- --------- --------- --------- --------
Ratio of Net Investment Income to
Average Net Assets..................... 5.31%* 5.33% 5.13% 5.61% 4.64% 2.87%
-------------- --------- --------- --------- --------- --------
-------------- --------- --------- --------- --------- --------
</TABLE>
* Computed on an annualized basis.
+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.
++ Reflects total return for the period; not annualized.
The Accompanying Notes are an Integral Part of the Financial Statements
---
74
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NORTHWESTERN MUTUAL SERIES FUND, INC.
Notes to Financial Statements
JUNE 30, 1998
NOTE 1 -- Northwestern Mutual Series Fund, Inc. (the "Series Fund"), is
registered as a diversified open-end investment company under the Investment
Company Act of 1940. The Series Fund consists of the Aggressive Growth Stock
Portfolio, International Equity Portfolio, Growth Stock Portfolio, Growth and
Income Stock Portfolio, Index 500 Stock Portfolio, Balanced Portfolio, High
Yield Bond Portfolio, Select Bond Portfolio and the Money Market Portfolio (the
"Portfolios"). Shares are presently offered only to The Northwestern Mutual Life
Insurance Company ("Northwestern Mutual") and its segregated asset accounts.
NOTE 2 -- The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of 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.
Principal accounting policies are summarized below.
NOTE 3 -- Bonds are valued on the basis of prices furnished by a service which
determines prices for normal institutional size trading units of bonds, without
regard to exchange or over-the-counter prices. When quotations are not readily
available, bonds are valued at fair market value determined by procedures
approved by the Board of Directors. Stocks listed on a national or foreign stock
exchange are valued at the final sale price, or final bid price in absence of a
sale. Stocks not listed on a national or foreign stock exchange are valued at
the closing bid price on the over-the-counter market. Money market investments,
other than in the Money Market Portfolio, with maturities exceeding sixty days
but generally not exceeding one year are valued by marking to market on the
basis of an average of the most recent bid prices or yields. Money market
investments with maturities of sixty days or less and all securities in the
Money Market Portfolio are valued on an amortized cost basis or, if the current
market value differs substantially from the amortized cost, by marking to
market.
NOTE 4 -- Securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts on the date of valuation.
Purchases and sales of securities and income items denominated in foreign
currencies are translated in U.S. dollar amounts on the respective dates of such
transactions. When the International Equity Portfolio, Balanced Portfolio and
Select Bond Portfolio purchases or sells a foreign security they may enter into
a foreign exchange currency contract to minimize market risk from the trade date
to the settlement date of such transaction. Such foreign exchange currency
contracts are marked to market daily.
The Portfolios may enter into forward foreign currency contracts to hedge
against exchange rate risk arising from investments in securities denominated in
foreign currencies. Contracts are valued at the contractual forward rate and are
marked to market daily, with the change in market value recorded as an
unrealized gain or loss. When the contracts are closed, a realized gain or loss
is incurred. Risks may arise from changes in market value of the underlying
instruments and from the possible inability of counter parties to meet the terms
of their contracts.
The International Equity Portfolio, Balanced Portfolio and Select Bond Portfolio
do not separately report the results of operations due to changes in foreign
exchange rates on investments from the fluctuations arising from changes in
market prices of securities held. Such fluctuations are included with the net
realized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade date and the
settlement date on security transactions, the differences between the amounts of
dividends and foreign withholding taxes recorded on the portfolio's books, and
the U.S. dollar equivalent of the amounts actually received or paid.
NOTE 5 -- The Aggressive Growth Stock, Growth Stock, Index 500 Stock, Balanced
and Select Bond Portfolios invest in futures contracts as an alternative to
investing in individual securities. The Aggressive Growth Stock, Growth Stock,
Index 500 Stock, Balanced and Select Bond Portfolios could be exposed to market
risk due to changes in the value of the underlying securities or due to an
illiquid secondary market. Futures contracts are marked to market daily based
upon quoted settlement prices. The Portfolios receive from or pay to brokers an
amount of cash equal to the daily fluctuation in the value of the contracts.
Such receipts or payments, known as the "variation margin," are recorded by the
Portfolios as unrealized gains or losses. When the contract is closed, the
Portfolios record a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed.
--
75
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Notes to Financial Statements
JUNE 30, 1998
NOTE 6 -- Interest income and discounts earned are recorded daily on the accrual
basis and dividend income is recorded on the ex-dividend date or as soon as
information from foreign issuers is available. Where applicable, dividends are
recorded net of foreign dividend tax. Discounts and premiums on securities
purchased are amortized over the life of the respective securities when required
for federal income tax purposes using the effective interest method. Securities
transactions are accounted for on trade date. The basis for determining cost on
sale of securities is identified cost. For the period ended June 30, 1998,
transactions in securities other than money market investments were:
<TABLE>
<CAPTION>
U.S. GOVT
U.S. GOVT TOTAL SECURITY SECURITY
TOTAL SECURITY SECURITY SALES/ SALES/
PORTFOLIOS PURCHASES PURCHASES MATURITIES MATURITIES
- ------------------------------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Aggressive Growth Stock...................................... $ 245,056,559 $ -- $ 222,660,984 $ --
International Equity......................................... 121,529,979 -- 106,563,649 2,756,569
Growth Stock................................................. 56,526,125 -- 30,603,616 --
Growth and Income Stock...................................... 470,732,466 -- 392,626,312 --
Index 500 Stock.............................................. 185,458,409 -- 11,518,035 --
Balanced..................................................... 664,102,196 366,812,575 677,013,604 258,232,496
High Yield Bond.............................................. 200,656,448 -- 159,302,734 --
Select Bond.................................................. 174,590,898 55,365,099 150,448,368 40,483,800
</TABLE>
--
76
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Notes to Financial Statements
JUNE 30, 1998
NOTE 7 -- The Series Fund and its Portfolios are parties to annually renewable
contracts pursuant to which each Portfolio pays a charge for investment
management and administrative services. Each Portfolio pays a monthly fee for
these investment advisory services at an annual rate based on the average daily
net asset values of each Portfolio. For the Index 500 Stock Portfolio the rate
is .20%, and for the Balanced, Select Bond and Money Market Portfolios the rate
is .30%. For the other Portfolios the rate for the investment advisory fee is
graded by the asset size of the Portfolio according to the following schedule:
<TABLE>
<CAPTION>
FIRST $50 NEXT $50
PORTFOLIOS MILLION MILLION EXCESS
- --------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Aggressive Growth Stock.......... .80% .65% .50%
International Equity............. .85% .65% .65%
Growth Stock..................... .60% .50% .40%
Growth and Income Stock.......... .70% .60% .55%
High Yield Bond.................. .60% .50% .40%
</TABLE>
These amounts are paid to Northwestern Mutual Investment Services, LLP ("NMIS")
a wholly-owned subsidiary of Northwestern Mutual, which is the manager and
investment adviser of the Fund. Northwestern Mutual is also a party to the
agreement. Other costs for each Portfolio are paid either by the Portfolios,
Northwestern Mutual, or NMIS depending upon the applicable agreement in place.
Certain Portfolios pay a portion of their custodian fees indirectly through
expense offset arrangements. Custodian fees are reduced for Portfolios that
maintain compensating balances in non-interest bearing accounts. The Portfolios
could have invested the assets used to pay for the custodian fees, had the
assets not been used in the expense offset arrangements. As of June 30, 1998,
the amounts paid through expense offset arrangements are $1,969 in the
Aggressive Growth Stock Portfolio, $1,399 in the Growth Stock Portfolio, $1,916
in the Growth and Income Stock Portfolio, $1,830 in the Index 500 Portfolio and
$6,602 in the High Yield Bond Portfolio.
J. P. Morgan Investment Management, Inc. ("J. P. Morgan") and Templeton
Investment Counsel, Inc. ("Templeton Counsel") have been retained under an
investment sub-advisory agreement to provide investment advice and, in general,
to conduct the management investment program of the Growth and Income Stock
Portfolio and the International Equity Portfolio, respectively. NMIS pays J. P.
Morgan .45% on the first $100 million of the combined net assets for all funds
managed for Northwestern Mutual by J. P. Morgan, .40% on the next $100 million,
.35% on the next $200 million and .30% in excess of $400 million. NMIS pays
Templeton Counsel .50% on the first $100 million of the combined net assets for
all funds managed for Northwestern Mutual by Templeton Counsel and .40% in
excess of $100 million.
NOTE 8 -- The Series Fund has elected to be taxed as a regulated investment
company meeting certain requirements under the Internal Revenue Code. Since it
expects to distribute all net investment income and net realized capital gains,
the Series Fund anticipates incurring no federal income taxes.
Taxable distributions from net investment income and realized capital gains in
the Portfolios differ from book amounts earned during the period due to
differences in the timing of capital recognition and due to the reclassification
of certain gains or losses from capital to income.
For Federal income tax purposes, net unrealized appreciation (depreciation) on
open futures contracts is required to be treated as realized gains (losses).
NOTE 9 -- Dividends from net investment income and net realized capital gains
are declared each year for the Aggressive Growth Stock, International Equity,
Growth Stock, Growth and Income Stock, Index 500 Stock, Balanced, High Yield
Bond and Select Bond Portfolios and each business day for the Money Market
Portfolio.
NOTE 10 -- Effective April 1, 1996, Northwestern Mutual voluntarily reimburses
the International Equity Portfolio for the benefit Northwestern Mutual receives
from foreign dividend taxes charged against the Portfolio. The amount reimbursed
represents approximately 65% of the foreign dividend tax withheld from the
Portfolio. Reimbursements are recorded when foreign dividend taxes are accrued.
This voluntary reimbursement as of June 30, 1998 was $835,678 and for the year
ended December 31, 1997 was $1,313,579.
--
77
<PAGE>
VARIABLE LIFE FINANCIAL STATEMENTS
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Financial Statements
JUNE 30, 1998
STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)
<TABLE>
<S> <C> <C>
ASSETS
Investments at Market Value:
Northwestern Mutual Series Fund, Inc.
Aggressive Growth Stock
28,579 shares (cost $84,608)............... $ 101,314
International Equity
39,752 shares (cost $61,619)............... 71,594
Growth Stock
23,260 shares (cost $36,826)............... 49,265
Growth and Income Stock
35,191 shares (cost $47,941)............... 53,068
Index 500 Stock
49,997 shares (cost $101,517).............. 150,290
Balanced
69,006 shares (cost $103,112).............. 143,602
High Yield Bond
10,788 shares (cost $12,049)............... 12,115
Select Bond
9,210 shares (cost $10,993)................ 11,070
Money Market
25,131 shares (cost $25,131)............... 25,131 $ 617,449
---------
Due from Sale of Fund Shares.................................. 275
Due from Northwestern Mutual Life Insurance Company........... 82
---------
Total Assets.................................................. $ 617,806
---------
---------
LIABILITIES
Due to Northwestern Mutual Life Insurance Company........... $ 82
Due on Purchase of Fund Shares.............................. 275
---------
Total Liabilities....................................... 357
---------
EQUITY (NOTE 8)
Policies Issued Before October 11, 1995..................... 366,284
Policies Issued On or After October 11, 1995................ 251,165
---------
Total Equity............................................ 617,449
---------
Total Liabilities and Equity............................ $ 617,806
---------
---------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
--
78
<PAGE>
VARIABLE LIFE FINANCIAL STATEMENTS
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Statement of Operations and Changes in Equity
(IN THOUSANDS)
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH INTERNATIONAL EQUITY
COMBINED STOCK DIVISION DIVISION
----------------------------- ----------------------------- -----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1998 1997 1998 1997 1998 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income............... $ 21,748 $ 24,262 $ 3,287 $3,345 $ 3,591 $ 1,286
Mortality and Expense Risks... 1,266 1,788 204 271 146 197
Taxes......................... 543 767 87 116 63 85
------------- ------------- ------------- ------------- ------------- -------------
Net Investment Income
(Loss)...................... 19,939 21,707 2,996 2,958 3,382 1,004
------------- ------------- ------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Realized Gain on
Investments............... 2,174 4,871 291 231 151 203
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... 39,981 42,532 4,809 5,109 3,297 2,358
------------- ------------- ------------- ------------- ------------- -------------
Net Gain (Loss) on
Investments............... 42,155 47,403 5,100 5,340 3,448 2,561
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Investment
Activity.................. 62,094 69,110 8,096 8,298 6,830 3,565
------------- ------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS
Policyowners' Net
Payments.................. 115,491 170,672 13,476 21,502 9,660 12,656
Policy Loans, Surrenders,
and Death Benefits........ (16,411) (23,728) (3,139) (4,003) (2,028) (2,787)
Mortality and Other (net)... (17,922) (28,427) (2,481) (3,791) (1,841) (2,368)
Transfers from Other
Divisions................. 59,661 86,366 9,477 19,008 7,840 14,866
Transfers to Other
Divisions................. (59,662) (86,366) (2,762) (4,091) (1,983) (2,149)
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Equity Transactions.... 81,157 118,517 14,571 28,625 11,648 20,218
------------- ------------- ------------- ------------- ------------- -------------
Net Increase in Equity........ 143,251 187,627 22,667 36,923 18,478 23,783
EQUITY
Beginning of Period......... 474,198 286,571 78,647 41,724 53,116 29,333
------------- ------------- ------------- ------------- ------------- -------------
End of Period............... $617,449 $474,198 $101,314 $78,647 $71,594 $53,116
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
---
79
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Statement of Operations and Changes in Equity
(IN THOUSANDS)
<TABLE>
<CAPTION>
GROWTH & INCOME INDEX 500
GROWTH STOCK DIVISION STOCK DIVISION STOCK DIVISION
----------------------------- ----------------------------- -----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1998 1997 1998 1997 1998 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income............... $ 555 $ 1,413 $ 74 $ 7,776 $ 4,530 $ 2,579
Mortality and Expense Risks... 91 105 103 120 298 395
Taxes......................... 39 45 44 52 128 169
------------- ------------- ------------- ------------- ------------- -------------
Net Investment Income
(Loss)...................... 425 1,263 (73) 7,604 4,104 2,015
------------- ------------- ------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Realized Gain on
Investments............... 83 172 49 173 461 2,375
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... 6,214 4,151 5,256 (1,823) 15,433 17,772
------------- ------------- ------------- ------------- ------------- -------------
Net Gain (Loss) on
Investments............... 6,297 4,323 5,305 (1,650) 15,894 20,147
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Investment
Activity.................. 6,722 5,586 5,232 5,954 19,998 22,162
------------- ------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS
Policyowners' Net
Payments.................. 5,898 7,334 6,455 7,537 13,696 19,733
Policy Loans, Surrenders,
and Death Benefits........ (1,238) (1,314) (1,380) (1,842) (3,643) (5,039)
Mortality and Other (net)... (1,113) (1,329) (1,177) (1,457) (2,406) (4,127)
Transfers from Other
Divisions................. 7,409 8,851 8,580 10,673 16,722 20,024
Transfers to Other
Divisions................. (646) (1,341) (1,031) (1,104) (1,776) (3,783)
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Equity Transactions.... 10,310 12,201 11,447 13,807 22,593 26,808
------------- ------------- ------------- ------------- ------------- -------------
Net Increase in Equity........ 17,032 17,787 16,679 19,761 42,591 48,970
EQUITY
Beginning of Period......... 32,233 14,446 36,389 16,628 107,699 58,729
------------- ------------- ------------- ------------- ------------- -------------
End of Period............... $49,265 $32,233 $53,068 $36,389 $150,290 $107,699
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
---
80
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Statement of Operations and Changes in Equity
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCED DIVISION HIGH YIELD BOND DIVISION SELECT BOND DIVISION
----------------------------- ----------------------------- -----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1998 1997 1998 1997 1998 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income............... $ 8,345 $ 5,105 $ 0 $1,370 $ 743 $ 436
Mortality and Expense Risks... 327 558 24 29 23 35
Taxes......................... 140 239 10 12 10 15
------------- ------------- ------------- ------------- ------------- -------------
Net Investment Income
(Loss)...................... 7,878 4,308 (34) 1,329 710 386
------------- ------------- ------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Realized Gain on
Investments............... 1,086 1,655 24 26 29 36
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... 4,915 15,262 526 (531) (469) 234
------------- ------------- ------------- ------------- ------------- -------------
Net Gain (Loss) on
Investments............... 6,001 16,917 550 (505) (440) 270
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Investment
Activity.................. 13,879 21,225 516 824 270 656
------------- ------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS
Policyowners' Net
Payments.................. 8,521 15,394 1,549 1,922 854 1,820
Policy Loans, Surrenders,
and Death Benefits........ (3,721) (7,260) (300) (349) (247) (311)
Mortality and Other (net)... (1,419) (3,395) (287) (339) 8 (560)
Transfers from Other
Divisions................. 3,575 4,266 2,477 3,276 1,527 2,000
Transfers to Other
Divisions................. (3,555) (4,734) (641) (425) (434) (756)
------------- ------------- ------------- ------------- ------------- -------------
Increase in Equity Derived
from Equity Transactions.... 3,401 4,271 2,798 4,085 1,708 2,193
------------- ------------- ------------- ------------- ------------- -------------
Net Increase in Equity........ 17,280 25,496 3,314 4,909 1,978 2,849
EQUITY
Beginning of Period......... 126,322 100,826 8,801 3,892 9,092 6,243
------------- ------------- ------------- ------------- ------------- -------------
End of Period............... $143,602 $126,322 $12,115 $8,801 $11,070 $9,092
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
<CAPTION>
MONEY MARKET DIVISION
-----------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1998 1997
------------- -------------
<S> <C> <C>
INVESTMENT INCOME
Dividend Income............... $ 623 $ 952
Mortality and Expense Risks... 50 78
Taxes......................... 22 34
------------- -------------
Net Investment Income
(Loss)...................... 551 840
------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Realized Gain on
Investments............... -- --
Unrealized Appreciation
(Depreciation) of
Investments During the
Period.................... -- --
------------- -------------
Net Gain (Loss) on
Investments............... 0 0
------------- -------------
Increase in Equity Derived
from Investment
Activity.................. 551 840
------------- -------------
EQUITY TRANSACTIONS
Policyowners' Net
Payments.................. 55,382 82,774
Policy Loans, Surrenders,
and Death Benefits........ (715) (823)
Mortality and Other (net)... (7,206) (11,061)
Transfers from Other
Divisions................. 2,054 3,402
Transfers to Other
Divisions................. (46,834) (67,983)
------------- -------------
Increase in Equity Derived
from Equity Transactions.... 2,681 6,309
------------- -------------
Net Increase in Equity........ 3,232 7,149
EQUITY
Beginning of Period......... 21,899 14,750
------------- -------------
End of Period............... $25,131 $21,899
------------- -------------
------------- -------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
(Prepared from Unaudited Figures)
---
81
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Notes to Financial Statements
JUNE 30, 1998
NOTE 1 -- 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.
NOTE 2 -- The preparation of the financial statements in conformity with
generally accepted accounting principles 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. Principal
accounting policies are summarized below.
NOTE 3 -- All assets of each Division of the Account are invested in shares of
the corresponding Portfolio of Northwestern Mutual Series Fund, Inc. (the
"Fund"). The shares are valued at the Fund's offering and redemption price per
share. The Fund is a diversified open-end investment company registered under
the Investment Company Act of 1940.
NOTE 4 -- Dividend income from the Fund is recorded on the record date of the
dividends. Transactions in Fund shares are accounted for on the trade date. The
basis for determining cost on sale of Fund shares is identified cost. Purchases
and sales of Fund shares for the year ended June 30, 1998 by each Division are
shown below:
<TABLE>
<CAPTION>
PURCHASES SALES
--------------- ---------------
<S> <C> <C>
Aggressive Growth Division...... $ 18,215,224 $ 645,737
International Equity Division... 15,497,107 469,287
Growth Stock Division........... 10,899,252 165,195
Growth & Income Stock
Division........................ 11,524,835 149,995
Index 500 Stock Division........ 27,514,959 817,406
Balanced Division............... 14,161,024 2,880,464
High Yield Bond Division........ 3,016,062 253,125
Select Bond Division............ 2,809,891 391,881
Money Market Division........... 18,743,714 15,512,312
</TABLE>
NOTE 5 -- A deduction for mortality and expense risks is determined daily and
paid to Northwestern Mutual. Generally, for policies issued before October 11,
1995, and policies issued on or after October 11, 1995 the deduction is at an
annual rate of .50% and .60%, respectively, of the net assets of the Account.
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.
Certain deductions are also made from the annual or single premiums before
accounts are allocated to the Account. These deductions are for (1) sales load,
(2) administrative expenses, (3) taxes and (4) a risk charge for the guaranteed
minimum death benefit.
Additional mortality costs are deducted from the policy annually and are paid to
Northwestern Mutual to cover the cost of providing insurance protection. 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.
NOTE 6 -- 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 policies issued before October 11, 1995, Northwestern Mutual
charges the Account at an annual rate of .20% of the Account's net assets and
reserves the right to increase, decrease or eliminate the charge for taxes in
the future. Generally, for policies issued on or after October 11, 1995, 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.
NOTE 7 -- The Account is credited for the policyowners' net annual premiums at
the respective policy anniversary dates regardless of when policyowners actually
paid their premiums. Northwestern Mutual's equity represents any unpaid portion
of net annual premiums.
--
82
<PAGE>
NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT
Notes to Financial Statements
JUNE 30, 1998
NOTE 8 -- Equity Values by Division are shown below:
<TABLE>
<CAPTION>
POLICIES ISSUED BEFORE
OCTOBER 11, 1995
EQUITY OF:
------------------------ TOTAL
POLICYOWNERS NML EQUITY
------------- --------- ---------
<S> <C> <C> <C>
Aggressive Growth Stock Division......................................................... $ 41,059 $ 3,669 $ 44,728
International Equity Division............................................................ 33,752 3,096 36,848
Growth Stock Division.................................................................... 19,421 1,369 20,790
Growth and Income Stock Division......................................................... 23,601 1,756 25,357
Index 500 Stock Division................................................................. 84,688 5,036 89,724
Balanced Division........................................................................ 125,568 5,147 130,715
High Yield Bond Division................................................................. 5,018 395 5,413
Select Bond Division..................................................................... 6,886 464 7,350
Money Market Division.................................................................... 5,114 245 5,359
------------- --------- ---------
$ 345,107 $ 21,177 $ 366,284
------------- --------- ---------
------------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
POLICIES ISSUED ON OR
AFTER OCTOBER 11, 1995
EQUITY OF:
------------------------ TOTAL
POLICYOWNERS NML EQUITY
------------- --------- ---------
<S> <C> <C> <C>
Aggressive Growth Stock Division......................................................... $ 40,904 $ 15,683 $ 56,587
International Equity Division............................................................ 24,567 10,178 34,745
Growth Stock Division.................................................................... 20,080 8,395 28,475
Growth and Income Stock Division......................................................... 19,027 8,684 27,711
Index 500 Stock Division................................................................. 41,970 18,597 60,567
Balanced Division........................................................................ 9,313 3,574 12,887
High Yield Bond Division................................................................. 4,633 2,069 6,702
Select Bond Division..................................................................... 2,928 792 3,720
Money Market Division.................................................................... 6,987 12,784 19,771
------------- --------- ---------
$ 170,409 $ 80,756 $ 251,165
------------- --------- ---------
------------- --------- ---------
</TABLE>
--
83
<PAGE>
NOTES
--
84
<PAGE>
NORTHWESTERN
MUTUAL
LIFE-REGISTERED TRADEMARK-
P. O. Box 3220
Milwaukee, Wisconsin
53201-3220
Fax: (414) 299-4268
APPLICABLE ONLY FOR VARIABLE COMPLIFE, VARIABLE WHOLE LIFE,
VARIABLE EXTRA ORDINARY LIFE & VARIABLE SINGLE PREMIUM LIFE
VARIABLE LIFE TRANSFER / ALLOCATION / DOLLAR COST AVERAGING
POLICYOWNER SERVICES
<TABLE>
<S> <C> <C>
Insured Policy Number Date
GA# SA# Business Number:
Home Number:
</TABLE>
A TOTAL OF SIX DIVISIONS MAY BE ELECTED WITH A MINIMUM OF 10% IN EACH DIVISION.
THIS APPLIES TO EXISTING ASSETS, FUTURE ALLOCATIONS AND DOLLAR COST AVERAGING.
<TABLE>
<S><C> <C>
1. REDISTRIBUTION OF EXISTING ASSETS:
Complete this section if you want to redistribute the money already
invested. Future investments will continue to be allocated as they were
prior to the transfer, unless section 2 is completed.
INVESTMENT DIVISIONS CHANGE TO
Select Bond ------------%
International Equity ------------%
Money Market ------------%
Balanced ------------%
Index 500 Stock ------------%
Aggressive Growth Stock ------------%
High Yield Bond ------------%
Growth Stock ------------%
Growth and Income Stock ------------%
Total ----100 ----%
2. ALLOCATION OF FUTURE PREMIUM/DIVIDENDS:
Complete this section to change where your future Premium/ Dividends are
invested. Allocations of future investments will be effective with the next
Premium/Dividend deposit.
ALLOCATION OF
FUTURE
INVESTMENT DIVISIONS PREMIUMS/DIVIDENDS
Select Bond ------------%
International Equity ------------%
Money Market ------------%
Balanced ------------%
Index 500 Stock ------------%
Aggressive Growth Stock ------------%
High Yield Bond ------------%
Growth Stock ------------%
Growth and Income Stock ------------%
Total ----100 ----%
3. DOLLAR COST AVERAGING (DCA): FOR VCL ONLY
Effective date for the first DCA transfer.
/ / The month following the date this form is signed. Must have assets in
Money Market on that date. Choose Money Market in section 1 and Money
Market in section 2
/ / With the next Premium/Dividend deposit, choose Money Market in section
2.
How would you like the fund transferred? Choose one:
Option One:
/ / Transfer in monthly installments so that at year end, Money Market
valance will be zero.
Option Two:
/ / Specified amount to be transferred monthly of $ ----------------.
Select Bond ------------%
International Equity ------------%
Balanced ------------%
Index 500 Stock ------------%
Aggressive Growth Stock ------------%
High Yield Bond ------------%
Growth Stock ------------%
Growth and Income Stock ------------%
Total ----100 ----%
4. TERMINATION OF DOLLAR COST AVERAGING:
/ / IMMEDIATELY / / NEXT POLICY ANNIVERSARY
Any existing funds will remain in the Money Market Division unless you elect
to transfer assets. Future premium and dividends will be allocated on the
policy anniversary date according to your allocation instructions.
</TABLE>
5. SPECIAL INSTRUCTIONS:
- --------------------------------------------------------------------------------
------------------------------------------------------------------------------
6. EFFECTIVE DATE:
This asset transfer and/or allocation of future investments shall be
effective on the date it is received (complete and signed) at NML's Home
Office. Forms received prior to 3:00 p.m. Central time will be effective on
the day of receipt.
7. SIGNATURE OF OWNER(S)/TRUSTEE REQUIRED (TITLE MUST BE INCLUDED):
- ------------------------------ Date signed ------------------------------
- ------------------------------- Date signed ------------------------------
18-1425 (2/96) WORD 6
-
85
<PAGE>
ADDITIONAL INFORMATION
1. REDISTRIBUTION OF EXISTING ASSETS: The Owner may transfer the assets invested
for a Variable Life or Variable CompLife policy to any of the Divisions, as
long as these assets, following the transfer, are allocated among not more
than six Divisions. Transfers may be made as often as twelve times in a
policy year.
2. ALLOCATION OF FUTURE PREMIUM/DIVIDENDS: Allocation of the first net annual
premium will be allocated to the Money Market Division until the Initial
Allocation Date. On the Initial Allocation Date, amounts in the Money Market
Division will be allocated in accordance with the application.
3. DOLLAR COST AVERAGING (DCA): If DCA is chosen, Money Market must be one of
the Divisions elected for future premium/dividend allocation. A total of six
Divisions may be elected between current and future assets and DCA.
4. TERMINATION OF DOLLAR COST AVERAGING (DCA): Any assets still in the Money
Market Division will remain, unless YOU elect to transfer them.
HOW TO SUBMIT THIS FORM
FIRST CLASS MAIL
Please mail form to Northwestern Mutual Life, P.O. Box 3220, Milwaukee, WI
53201-3220.
FAX
The properly completed and signed form may be FAXed to the Home Office at
414-299-4268.
The original form is NOT needed. Please keep it for your records.
SIGNATURE INSTRUCTIONS
SIGNATURE BY OWNER
All Owners must sign their name as it appears in the policy contract. If the
Owner's name has changed since the policy was issued, he/she should add his/her
present surname to his/her name as it appears in the policy contract.
SIGNATURE BY ASSIGNEE
If the policy is assigned, the assignee must sign the form. See rules below if
the assignee is a corporation, partnership or trust.
SIGNATURE ON BEHALF OF CORPORATION
If the policyowner is a corporation, an officer of the corporation must sign on
behalf of the corporation with his/her title. The name of the corporation must
appear above the signature.
SIGNATURE ON BEHALF OF PARTNERSHIP
If the policyowner is a partnership, the name of the partnership must appear
above the signature. A partner other than the Insured must sign.
SIGNATURE ON BEHALF OF TRUST
If the partnership is a trust, the authorized Trustee must sign his/her name,
followed by the word "Trustee." The name of the trust must appear above the
signature.
-
86
<PAGE>
<TABLE>
<S> <C> <C>
APPLICABLE ONLY FOR SEND TO: ADVANCED BUSINESS SERVICES
VARIABLE EXECUTIVE LIFE Northwestern Mutual Life
720 E. Wisconsin Ave.
Milwaukee, WI 53202
FAX TO: (414) 299-5735
PHONE: (414) 299-5282
</TABLE>
ASSET TRANSFER / PREMIUM ALLOCATION / DOLLAR COST AVERAGING
<TABLE>
<S> <C>
Group No: GA #: Agent #:
Group Name: Agent Name:
Agent Phone:
</TABLE>
<TABLE>
<S> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
REQUESTED CHANGE - OPTION MUST BE INDICATED: INSTRUCTIONS - PLEASE PROVIDE:
OPTION
1. / / The SAME change for ALL policies in the group 1. One completed and signed form for the group change.
2. / / The SAME change for MULTIPLE policies in the group 2. One completed and signed form, AND an attached listing
of Policy Numbers & Insured names for the policies to
be INCLUDED in the change.
3. / / a) A DIFFERENT change for MULTIPLE policies 3. A) OR B)
in the group One completed and signed form for each policy. Apply
b) A change to an INDIVIDUAL policy the requested change to:
Policy No.
Insured
</TABLE>
- --------------------------------------------------------------------------------
SECTION 1 - ASSET TRANSFER:
To transfer the entire amount in a division, indicate "ALL".
This transfer does not impact the allocation of any future premiums. To change
how future premiums are invested, complete SECTION 2 on the reverse side of this
form.
<TABLE>
<S> <C> <C> <C> <C> <C>
---------------------------------------------------- -----------------------------------
TRANSFER FROM: TRANSFER TO:
---------------------------------------------------- -----------------------------------
(SELECT ONE COLUMN OPTION ONLY) (SELECT ONE COLUMN OPTION ONLY)
DOLLAR PERCENT NUMBER DOLLAR PERCENT
INVESTMENT DIVISION AMOUNT (WHOLE % ONLY) OF UNITS AMOUNT (WHOLE % ONLY)
(ONLY INDIVIDUAL (ONLY IF TRANSFER
CONTRACT CHANGES) IS FROM DOLLARS)
1. Money Market $ % $ %
2. Aggressive Growth Stock $ % $ %
3. Balanced $ % $ %
4. Growth & Income Stock $ % $ %
5. Growth Stock $ % $ %
6. High Yield Bond $ % $ %
7. Index 500 Stock $ % $ %
8. International Equity $ % $ %
9. Select Bond $ % $ %
TOTAL $ N/A $ 100%
TOTAL DOLLARS MUST BE EQUAL
</TABLE>
-
87
<PAGE>
<TABLE>
<S> <C>
- -------------------------------------------------------- --------------------------------------------------------
SECTION 2 - ALLOCATION OF FUTURE PREMIUM SECTION 3 - DOLLAR COST AVERAGING (DCA):
Complete this section to change where future Amount to be transferred montly:
premiums are invested. $
(THE FIRST DCA TRANSFER WILL OCCUR ON THE NEXT MONTHLY
PROCESSING DATE OF THE POLICY. YOU MUST HAVE ASSETS IN
THE MONEY MARKET DIVISION BY THAT DATE. DCA IS
AVAILABLE ONLY FROM THE MONEY MARKET DIVISION.)
</TABLE>
<TABLE>
<S> <C> <C> <C>
--------------------- ---------------------
PERCENT PERCENT
--------------------- ---------------------
INVESTMENT DIVISION (WHOLE % ONLY) INVESTMENT DIVISION (WHOLE % ONLY)
---------------------
Money Market % Money Market N/A
Aggressive Growth Stock % Aggressive Growth Stock %
Balanced % Balanced %
Growth & Income Stock % Growth & Income Stock %
Growth Stock % Growth Stock %
High Yield Bond % High Yield Bond %
Index 500 Stock % Index 500 Stock %
International Equity % International Equity %
Select Bond % Select Bond %
TOTAL 100% TOTAL 100%
(MUST ADD UP TO 100%) (MUST ADD UP TO 100%)
</TABLE>
- --------------------------------------------------------------------------------
SECTION 4 - TERMINATION OF DOLLAR COST AVERAGING:
<TABLE>
<S> <C>
/ / IMMEDIATELY / / SPECIFIED DATE / /
(THE NEXT MONTHLY PROCESSING DATE ON OR FOLLOWING THE (THE NEXT MONTHLY PROCESSING DATE ON OR FOLLOWING
RECEIPT OF THIS REQUEST IN NML'S HOME OFFICE.) THE SPECIFIED DATE.)
</TABLE>
At termination of Dollar Cost Averaging, any existing funds will remain in the
Money Market Division.
- --------------------------------------------------------------------------------
SECTION 5 - SPECIFIED DATE FOR ASSET TRANSFERS/ALLOCATION CHANGES:
This asset transfer and/or allocation of future premiums shall be effective on
_____________ (INSERT SPECIFIED FUTURE DATE IF DESIRED). If no date is
specified, or if this form is not received at NML's Home Office on or prior to
the close of the New York Stock Exchange on the specified date, this transfer
shall be effective on the date this form is received (complete and signed) at
NML's Home Office.
- --------------------------------------------------------------------------------
SECTION 6 - SPECIAL INSTRUCTIONS:
- --------------------------------------------------------------------------------
SECTION 7 - SIGNATURE OF OWNER(S)/TRUSTEE REQUIRED (TITLE MUST BE INCLUDED):
<TABLE>
<S> <C> <C>
SIGNATURE: DATE SIGNED:
PRINT OR TYPE NAME
SIGNATURE: DATE SIGNED:
PRINT OR TYPE NAME
DAYTIME
COMPANY CONTACT PERSON: PHONE NO.
( )
PRINT OR TYPE NAME
</TABLE>
-
88
<PAGE>
DIRECTORS AND OFFICERS
NORTHWESTERN MUTUAL SERIES FUND, INC.
DIRECTORS
JAMES D. ERICSON .... PRESIDENT AND CHIEF EXECUTIVE OFFICER, NORTHWESTERN MUTUAL
LIFE,
..................................................................... MILWAUKEE
MARTIN F. STEIN ................ CHAIRMAN OF THE BOARD, EYECARE ONE CORPORATION,
..................................................................... MILWAUKEE
JOHN K. MACIVER ........... PARTNER, MICHAEL BEST & FRIEDRICH, ATTORNEYS AT LAW,
..................................................................... MILWAUKEE
STEPHEN N. GRAFF ......................... RETIRED PARTNER, ARTHUR ANDERSEN, LLP
..................................................................... MILWAUKEE
WILLIAM J. BLAKE ............................. CHAIRMAN, BLAKE INVESTMENT CORP.,
..................................................................... MILWAUKEE
WILLIAM A. MCINTOSH .......... RETIRED DIVISION HEAD--U.S. FIXED INCOME, SALOMON
BROTHERS,
....................................................................... CHICAGO
OFFICERS
JAMES D. ERICSON ..................................................... PRESIDENT
MARK G. DOLL ........................................ VICE PRESIDENT & TREASURER
MERRILL C. LUNDBERG .................................................. SECRETARY
BARBARA E. COURTNEY ................................................. CONTROLLER
---
89
<PAGE>
This report is submitted for the general information of owners of
Northwestern Mutual Variable Life policies. This report is not authorized
for distribution to prospective purchasers of variable life policies unless
it is accompanied by an effective prospectus. Northwestern Mutual Variable
Life policies are sold through individuals who, in addition to being licensed
life insurance agents of Northwestern Mutual Life, are registered
representatives of Northwestern Mutual Investment Services, LLC, a
wholly-owned subsidiary of Northwestern Mutual Life and a registered
broker-dealer under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc.
90-1899 (6-98)
NORTHWESTERN --------------
MUTUAL LIFE-Registered Trademark- BULK RATE
U.S. POSTAGE
PO Box 3095 PAID
Milwaukee WI 53201-3095 MILWAUKEE, WI
PERMIT NO. 426
--------------
Change Service Requested
