NORTHWESTERN MUTUAL SERIES FUND INC, 485BPOS, 1998-04-28

NORTHWESTERN MUTUAL SERIES FUND INC
485BPOS, 1998-04-28

Previous: FIRST FRANKLIN CORP, 8-K, 1998-04-28

Next: NORTHWESTERN MUTUAL VARIABLE LIFE ACCOUNT, 485BPOS, 1998-04-28

<PAGE>

REGISTRATION Nos. 2-89971
811-3990
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---
PRE-EFFECTIVE AMENDMENT NO.
---- ---
POST-EFFECTIVE AMENDMENT NO. 15 X
---- ---
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 ---
AMENDMENT NO. 16 X
---- ---

NORTHWESTERN MUTUAL SERIES FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
720 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(414) 271-1444
(REGISTRANT'S TELEPHONE NUMBER)

MERRILL C. LUNDBERG, SECRETARY
720 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202
(NAME AND ADDRESS OF AGENT FOR SERVICE)

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)

[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b)
[X ] ON APRIL 30, 1998 PURSUANT TO PARAGRAPH (b)
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (a)(1)
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(2)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (a)(2) OF RULE 485
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

<PAGE>

NORTHWESTERN MUTUAL
SERIES FUND, INC.

-----------------------------------------------

CROSS REFERENCE SHEET

Cross reference sheet showing location in Prospectus of information
required by the Items in Part A of Form N-1A.

ITEM NUMBER HEADING IN PROSPECTUS

1 Cover Page

2 Synopsis

3 Condensed Financial
Information

4 Investment Objectives
and Policies,
Capital Stock

5 Management of the Fund

5A *

6 Capital Stock, Taxes
and Dividends

7 Offering and Redemption of
Shares

8 Offering and Redemption of
Shares

9 *

- -----------------------------------------------------------------------

* Indicates inapplicable or negative

<PAGE>

[LOGO]

- ------------------------------------------------------------------------------

NORTHWESTERN MUTUAL SERIES FUND, INC.
(Formerly Northwestern Mutual Variable Life Series Fund, Inc.)

A Series Fund Offering Nine Portfolios

AGGRESSIVE GROWTH STOCK PORTFOLIO INDEX 500 STOCK PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO BALANCED PORTFOLIO
GROWTH STOCK PORTFOLIO HIGH YIELD BOND PORTFOLIO
GROWTH AND INCOME STOCK PORTFOLIO SELECT BOND PORTFOLIO
MONEY MARKET PORTFOLIO

- ------------------------------------------------------------------------------

THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE FUND THAT A
PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVESTING. ADDITIONAL INFORMATION
ABOUT THE FUND HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN A
STATEMENT OF ADDITIONAL INFORMATION WHICH IS INCORPORATED HEREIN BY REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST AND WITHOUT
CHARGE FROM THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, 720 EAST WISCONSIN
AVENUE, MILWAUKEE, WISCONSIN 53202, TELEPHONE NUMBER (414) 271-1444.

SHARES OF THE FUND ARE OFFERED WITHOUT FEES OR CHARGES FOR SALES EXPENSES, BUT
THE SHARES ARE AVAILABLE ONLY FOR PURCHASE BY VARIABLE ANNUITY AND VARIABLE LIFE
INSURANCE SEPARATE ACCOUNTS OF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.
ALL FEES AND CHARGES ASSOCIATED WITH THE VARIABLE ANNUITY CONTRACTS OR VARIABLE
LIFE INSURANCE POLICIES, INCLUDING CHARGES FOR SALES EXPENSES, ARE DESCRIBED IN
THE ATTACHED SEPARATE ACCOUNT PROSPECTUS.

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.

THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Date of this Prospectus is April 30, 1998.

The Date of the Statement of Additional Information is April 30, 1998.

<PAGE>

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION.

CONTENTS
<TABLE>
<CAPTION>

PAGE
<S> <C>
Synopsis . . . . . . . . . . . . . . . . . . . . 2
Condensed Financial Information. . . . . . . . . 3
Financial Highlights. . . . . . . . . . . . . . 4
Investment Objectives and Policies . . . . . . . 5
Aggressive Growth Stock Portfolio. . . . . . . 6
International Equity Portfolio . . . . . . . . 6
Growth Stock Portfolio . . . . . . . . . . . . 6
Growth and Income Stock Portfolio. . . . . . . 7
Index 500 Stock Portfolio. . . . . . . . . . . 8
Balanced Portfolio . . . . . . . . . . . . . . 8
High Yield Bond Portfolio. . . . . . . . . . . 9
Select Bond Portfolio. . . . . . . . . . . . .10
Money Market Portfolio . . . . . . . . . . . .11
Financial Futures Contracts. . . . . . . . . . .12
Eurodollar Certificates of Deposit. . . . . . .12
Repurchase Agreements and Warrants. . . . . . .12
Investment Restrictions. . . . . . . . . . . . .13
Management of the Fund . . . . . . . . . . . . .13
Portfolio Managers. . . . . . . . . . . . . . .13
Investment Advisory Fees and Other Expenses . .14
Portfolio Transactions. . . . . . . . . . . . .15
Capital Stock. . . . . . . . . . . . . . . . . .15
Taxes and Dividends. . . . . . . . . . . . . . .15
Offering and Redemption of Shares. . . . . . . .16

</TABLE>

- -------------------------------------------------------------------------------
SYNOPSIS

Northwestern Mutual Series Fund, Inc. ("Fund") is an open-end diversified
management investment company. The Fund is composed of nine separate portfolios
which operate as separate mutual funds. The portfolios are the Aggressive Growth
Stock Portfolio, the International Equity Portfolio, the Growth Stock Portfolio,
the Growth and Income Stock Portfolio, the Index 500 Stock Portfolio, the
Balanced Portfolio, the High Yield Bond Portfolio, the Select Bond Portfolio and
the Money Market Portfolio ("Portfolios").

The investment objective of the Aggressive Growth Stock Portfolio is to achieve
long-term appreciation of capital primarily by investing in the common stocks of
companies which can reasonably be expected to increase their sales and earnings
at a pace which will exceed the growth rate of the nation's economy over an
extended period.

The investment objective of the International Equity Portfolio is long-term
capital growth. It pursues its objective through a flexible policy of investing
in stocks and debt securities of companies and governments outside the United
States.

The investment objective of the Growth Stock Portfolio is long-term growth of
capital; current income is secondary. The Portfolio will seek to achieve this
objective by selecting investments in companies which have above average
earnings growth potential.

The investment objectives of the Growth and Income Stock Portfolio are long-term
growth of capital and income. Ordinarily the Portfolio pursues its investment
objectives by investing primarily in dividend-paying common stock.

The investment objective of the Index 500 Stock Portfolio is to achieve
investment results that approximate the performance of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index"). The Portfolio will attempt to
meet this objective by investing in stocks included in the S&P 500 Index.

The investment objective of the Balanced Portfolio is to realize as high a level
of long-term total rate of return as is consistent with prudent investment risk.
Total rate of return consists of current income, including dividends, interest
and discount accruals, and capital appreciation. The assets of the Balanced
Portfolio will be invested in the stock, bond and money market sectors as
described for the Index 500 Stock, Select Bond and Money Market Portfolios,
respectively. The mix of investments among the three market sectors will be
adjusted continuously.

The investment objective of the High Yield Bond Portfolio is to achieve high
current income and capital appreciation by investing primarily in fixed income
securities that are rated below investment grade by the major rating agencies.
High yield fixed income securities are commonly known as "junk bonds".

2
<PAGE>

The primary investment objective of the Select Bond Portfolio is to provide as
high a level of long-term total rate of return as is consistent with prudent
investment risk. Total rate of return consists of current income, including
interest and discount accruals, and capital appreciation. A secondary objective
is to seek preservation of shareholders' capital. The Select Bond Portfolio's
assets will be invested primarily in bonds and other debt securities with
maturities generally exceeding one year.

The investment objective of the Money Market Portfolio is to realize maximum
current income consistent with liquidity and stability of capital. The assets of
the Money Market Portfolio will be invested in money market instruments and
other debt securities with maturities generally not exceeding one year.

There can be no assurance that the investment objectives of any of the
Portfolios will be realized. See "Investment Objectives and Policies", p. 5.

The Fund issues a separate class of common stock for each Portfolio. Shares of
the Fund are presently offered only to The Northwestern Mutual Life Insurance
Company ("Northwestern Mutual Life") and its separate investment accounts
created (or to be created in the future) pursuant to Wisconsin insurance laws.
Shares of each Portfolio are both offered and redeemed at their net asset value
without the addition of any sales load or redemption charge. See "Offering and
Redemption of Shares", p. 16.

The investment adviser to the Fund is Northwestern Mutual Investment Services,
Inc. ("NMIS"), a wholly-owned subsidiary of Northwestern Mutual Life.
Northwestern Mutual Life provides personnel and facilities utilized by NMIS in
performing its investment advisory functions, and is a party to the investment
advisory agreement between NMIS and the Fund. NMIS is paid a monthly investment
advisory fee based on the average daily net asset value of each Portfolio. The
Fund also pays all interest charges, brokerage commissions, taxes, and
extraordinary expenses incurred in connection with the operation of the Fund.
Six of the Portfolios bear their own expenses for audit and custodial services.
See "Management of the Fund", p. 13.

- -------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION

The following information on financial highlights as it relates to each of the
years in the five-year period ended December 31, 1997 has been audited by Price
Waterhouse LLP, independent accountants. This information should be read in
conjunction with the financial statements and notes thereto which appear in the
Statement of Additional Information. Further information about the performance
of the Fund is contained in the Fund's annual report to shareholders which may
be obtained without charge.

3
<PAGE>

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR)

NET REALIZED
NET AND DISTRIBUTIONS
ASSET UNREALIZED TOTAL DIVIDENDS FROM NET
VALUE, NET GAIN FROM FROM NET REALIZED
BEGINNING INVESTMENT (LOSS) ON INVESTMENT INVESTMENT GAIN ON
OF YEAR INCOME INVESTMENTS OPERATIONS INCOME INVESTMENTS
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Stock Portfolio
*1990 . . . $1.00 $ .01 $ .01 $ .02 $(.01) $ --
*1991 . . . 1.01 .01 .56 .57 (.01) (.02)
*1992 . . . 1.55 .01 .09 .10 (.01) --
*1993 . . . 1.64 -- .31 .31 -- (.03)
**1994 . . . 1.91 -- .09 .09 -- --
1995 . . . 2.00 -- .78 .78 -- (.01)
1996 . . . 2.77 -- .49 .49 -- (.11)
1997 . . . 3.15 -- .39 .39 -- (.20)
- ------------------------------------------------------------------------------------------
International Equity Portfolio
*1993 . . . $1.00 $ .01 $ .23 $ .24 $(.01) $ --
**1994 . . . 1.22 .02 (.02) -- (.02) (.01)
1995 . . . 1.19 .04 .13 .17 -- (.01)
1996 . . . 1.35 .04 .24 .28 (.03) (.04)
1997 . . . 1.56 .04 .15 .19 (.04) (.02)
- ------------------------------------------------------------------------------------------
Growth Stock Portfolio
**1994 . . . $1.00 $ .01 $ -- $ .01 $(.01) $ --
1995 . . . 1.00 .02 .28 .30 (.02) (.02)
1996 . . . 1.26 .02 .25 .27 (.02) (.05)
1997 . . . 1.46 .02 .42 .44 (.02) (.07)
- ------------------------------------------------------------------------------------------
Growth and Income Stock Portfolio
**1994 . . . $1.00 $ .01 $ (.01) $ -- $(.01) $(.01)
1995 . . . 0.98 .02 .29 .31 (.02) (.06)
1996 . . . 1.21 .02 .23 .25 (.02) (.12)
1997 . . . 1.32 .01 .37 .38 (.01) (.36)
- ------------------------------------------------------------------------------------------
Index 500 Stock Portfolio
*1988 . . . $1.00 $.04 $.05 $.09 $(.04) $ --
*1989 . . . 1.05 .04 .14 .18 (.04) (.07)
*1990 . . . 1.12 .04 (.08) (.04) (.04) --
*1991 . . . 1.04 .03 .27 .30 (.03) --
*1992 . . . 1.31 .03 .03 .06 (.03) (.01)
1993 . . . 1.33 .04 .09 .13 (.03) (.14)
1994 . . . 1.29 .03 (.01) .02 (.03) (.01)
1995 . . . 1.27 .04 .42 .46 (.01) --
1996 . . . 1.72 .04 .35 .39 (.02) (.03)
1997 . . . 2.06 .04 .62 .66 (.04) (.04)
- ------------------------------------------------------------------------------------------
Balanced Portfolio
*1988 . . . $1.15 $.07 $.02 $ .09 $(.07) $ --
*1989 . . . 1.17 .07 .12 .19 (.08) (.04)
*1990 . . . 1.24 .07 (.05) .02 (.07) --
*1991 . . . 1.19 .07 .21 .28 (.07) --
*1992 . . . 1.40 .06 .01 .07 (.06) (.02)
1993 . . . 1.39 .06 .09 .15 (.07) (.14)
1994 . . . 1.33 .04 (.05) (.01) -- (.01)
1995 . . . 1.31 .07 .27 .34 (.04) (.01)
1996 . . . 1.60 .06 .15 .21 (.06) (.03)
1997 . . . 1.72 .07 .28 .35 (.06) (.02)
- ------------------------------------------------------------------------------------------
High Yield Bond Portfolio
**1994 . . . $1.00 $ .06 $(.03) $ .03 $(.06) $ --
1995 . . . 0.97 .10 .07 .17 (.10) (.01)
1996 . . . 1.03 .09 .10 .19 (.09) (.03)
1997 . . . 1.10 .11 .06 .17 (.14) (.07)

- ------------------------------------------------------------------------------------------
<CAPTION>

RATIO
OF NET
NET RATIO OF INVESTMENT
ASSET EXPENSES INCOME NET
VALUE, TO (LOSS) TO PORTFOLIO ASSETS, AVERAGE
END TOTAL AVERAGE AVERAGE TURNOVER END OF YEAR COMMISSION
OF YEAR RETURN + NET ASSETS NET ASSETS RATE (THOUSANDS) RATE #
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Stock Portfolio
*1990 . . . $1.01 1.89%++ 0.07% 0.50% -- % $ 10,516 $ --
*1991 . . . 1.55 56.00 0.84 0.69 44.28 53,828 --
*1992 . . . 1.64 5.95 0.75 0.39 81.96 127,964 --
*1993 . . . 1.92 19.11 0.66 0.05 63.63 195,810 --
**1994 . . . 2.00 4.47++ 0.58^ 0.29^ 21.54 327,096 --
1995 . . . 2.77 39.29 0.56 0.13 37.84 577,014 --
1996 . . . 3.15 17.70 0.54 (0.03) 47.25 871,926 .0513
1997 . . . 3.34 13.86 0.53 0.06 57.27 1,067,068 .0499
- ------------------------------------------------------------------------------------------
International Equity Portfolio
*1993 . . . $1.23 24.64%++ 0.70% 1.14% 3.62% $140,410 $ --
**1994 . . . 1.19 0.11++ 0.87^ 2.28^ 10.97 292,533 --
1995 . . . 1.35 14.57 0.85 2.68 26.71 342,127 --
1996 . . . 1.56 21.01 0.81 3.02 17.07 505,189 .0151
1997 . . . 1.69 12.28 0.77 2.75 16.74 659,850 .00009
- ------------------------------------------------------------------------------------------
Growth Stock Portfolio
**1994 . . . $1.00 1.55%++ 0.71%^ 2.30%^ 16.51% $ 41,868 $ --
1995 . . . 1.26 30.82 0.61 1.77 46.83 85,557 --
1996 . . . 1.46 20.91 0.57 1.41 37.61 170,482 .0629
1997 . . . 1.81 29.85 0.49 1.24 33.20 243,071 .0559
- ------------------------------------------------------------------------------------------
Growth and Income Stock Portfolio
**1994 . . . $0.98 0.34%++ 0.78%^ 1.93%^ 54.18% $ 64,700 $ --
1995 . . . 1.21 31.12 0.69 1.68 80.00 136,923 --
1996 . . . 1.32 19.97 0.62 1.44 93.92 234,184 .0515
1997 . . . 1.33 30.03 0.60 1.04 144.52 371,935 .0453
- ------------------------------------------------------------------------------------------
Index 500 Stock Portfolio
*1988 . . . $1.05 8.83 0.30 3.76 106.31 $11,414 $ --
*1989 . . . 1.12 18.39 0.30 3.34 152.13 9,833 --
*1990 . . . 1.04 (4.32) 0.30 3.70 80.07 9,516 --
*1991 . . . 1.31 29.78 0.30 2.88 40.16 14,115 --
*1992 . . . 1.33 4.54 0.30 2.61 39.93 17,288 --
1993 . . . 1.29 9.90 0.30 2.55 62.69 25,479 --
1994 . . . 1.27 1.21 0.24 3.10 5.59 316,123 --
1995 . . . 1.72 37.25 0.21 2.51 3.19 495,133 --
1996 . . . 2.06 22.75 0.21 2.27 3.45 740,066 .0306
1997 . . . 2.64 33.20 0.21 1.86 3.15 1,152,857 .0304
- ------------------------------------------------------------------------------------------
Balanced Portfolio
*1988 . . . $1.17 8.08 0.30 5.80 74.51 $ 39,156 $ --
*1989 . . . 1.24 15.66 0.30 5.87 140.55 41,226 --
*1990 . . . 1.19 1.53 0.30 6.07 72.89 42,839 --
*1991 . . . 1.40 23.33 0.30 5.11 55.46 57,269 --
*1992 . . . 1.39 5.61 0.30 4.45 43.28 66,006 --
1993 . . . 1.33 9.91 0.30 4.24 70.91 68,910 --
1994 . . . 1.31 0.16 0.30 4.78 42.35 1,727,127 --
1995 . . . 1.60 26.39 0.30 4.40 37.28 2,083,289 --
1996 . . . 1.72 13.45 0.30 3.95 67.66 2,326,234 .0320
1997 . . . 1.99 21.52 0.30 3.70 29.94 2,788,494 .0310
- ------------------------------------------------------------------------------------------
High Yield Bond Portfolio
**1994 . . . $0.97 3.02%++ 0.73%^ 9.40%^ 119.48% $ 35,537 $ --
1995 . . . 1.03 16.78 0.65 9.90 116.57 55,974 --
1996 . . . 1.10 19.77 0.60 9.54 143.92 93,878 --
1997 . . . 1.06 15.85 0.55 9.95 129.49 153,038 --
- ------------------------------------------------------------------------------------------
</TABLE>

* Not covered by current report of independent accountants.
** For the period of May 3, 1994 (commencement of operations) through
December 31, 1994.
+ 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.
^ Computed on an annualized basis.
# Disclosure required for fiscal years beginning after September 1, 1995.

4
<PAGE>

FINANCIAL HIGHLIGHTS . . . CONTINUED
(FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR)

<TABLE>
<CAPTION>
NET REALIZED
NET AND DISTRIBUTIONS
ASSET UNREALIZED TOTAL DIVIDENDS FROM NET
VALUE, NET GAIN FROM FROM NET REALIZED
BEGINNING INVESTMENT (LOSS) ON INVESTMENT INVESTMENT GAIN ON
OF YEAR INCOME INVESTMENTS OPERATIONS INCOME INVESTMENTS
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Select Bond Portfolio
*1988 . . . $1.07 $.09 $ -- $.09 $(.09) $ --
*1989 . . . 1.07 .10 .05 .15 (.09) (.02)
*1990 . . . 1.11 .09 (.01) .08 (.09) (.01)
*1991 . . . 1.09 .09 .09 .18 (.09) --
*1992 . . . 1.18 .09 -- .09 (.09) (.04)
1993 . . . 1.14 .08 .05 .13 (.08) (.04)
1994 . . . 1.15 .06 (.09) (.03) (.06) --
1995 . . . 1.06 .07 .13 .20 (.03) --
1996 . . . 1.23 .07 (.04) .03 (.04) --
1997 . . . 1.22 .08 .04 .12 (.08) --
- ------------------------------------------------------------------------------------------
Money Market Portfolio
*1988 . . . $ 1.00 $ .07 $ -- $ .07 $(.07) $ --
*1989 . . . 1.00 .09 -- .09 (.09) --
*1990 . . . 1.00 .08 -- .08 (.08) --
*1991 . . . 1.00 .06 -- .06 (.06) --
*1992 . . . 1.00 .03 -- .03 (.03) --
1993 . . . 1.00 .03 -- .03 (.03) --
1994 . . . 1.00 .05 -- .05 (.05) --
1995 . . . 1.00 .06 -- .06 (.06) --
1996 . . . 1.00 .05 -- .05 (.05) --
1997 . . . 1.00 .05 -- .05 (.05) --
- ------------------------------------------------------------------------------------------
<CAPTION>

</TABLE>

For the seven-day period ended on March 31, 1998, the Money Market Portfolio's
yield was 5.36% and was equivalent to a compound effective yield of 5.51%. This
yield does not reflect charges imposed by Northwestern Mutual Life under
variable annuity contracts and variable life insurance policies and, therefore,
may be of limited comparative value. An explanation of the calculation of the
yield is included in the Statement of Additional Information.

- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES

The investment objectives and policies of each Portfolio are described below.
The investment objective of a Portfolio may be changed only with the approval of
the majority of the Portfolio's shares outstanding. The details of the
investment policies of a Portfolio may be changed by the Fund's Board of
Directors without a vote of the shareholders. For example, such details include
investments in new types of debt instruments which may be devised in the future
or which are presently in disuse but may become more prominent in the future and
minor changes in investment policies which may be made in response to changes in
regulatory requirements which are reflected in the Portfolio's present policies.

There can be no assurance that the objectives of the Portfolios will be
realized. Investment in equity securities inherently involves the risks
associated with the affairs of each issuer of the securities as well as general
market risks. The same is true of investment in debt securities. Debt securities
tend to decline in value when interest rates rise; this effect is greater for
longer term bonds and relatively minor for short term cash instruments which are
about to mature. Investment in the Balanced Portfolio necessarily involves the
risks inherent in stocks and debt securities of varying maturities, including
the risk that the Balanced Portfolio may invest too much or too little of its
assets in each type of security at any particular time. Investment in the
International Portfolio involves an array of special risk considerations. Some
of these are briefly described below. A longer description is included in the
Statement of Additional Information.

AGGRESSIVE GROWTH STOCK PORTFOLIO

The investment objective of the Aggressive Growth Stock Portfolio is to achieve
long-term appreciation of capital primarily by investing in the common stocks
of

5
<PAGE>

companies which can reasonably be expected to increase their sales and earnings
at a pace which will exceed the growth rate of the nation's economy over an
extended period.

The assets of the Aggressive Growth Stock Portfolio will be invested primarily
in common stocks and other equity securities such as preferred stocks and debt
securities with conversion privileges or warrants. From time to time assets may
be invested in investment grade debt securities, short-term commercial paper and
United States Treasury obligations, or temporarily held in cash uninvested for
periods when the manager determines that economic conditions call for such
action. The Aggressive Growth Stock Portfolio may also invest in covered call
option contracts, stock index futures contracts, including indexes on specific
industries, repurchase agreements and warrants. See "Financial Futures
Contracts", p. 12 and "Repurchase Agreements and Warrants", p. 12. A
description of covered call options is included in the Statement of Additional
Information. Because the Aggressive Growth Stock Portfolio will, for the most
part, be investing in stocks which possess substantial price volatility, an
investment in the Aggressive Growth Stock Portfolio will present more risk than
an investment in the Growth Stock Portfolio.

INTERNATIONAL EQUITY PORTFOLIO

The International Equity Portfolio seeks long-term capital growth through a
flexible policy of investing in stocks and debt obligations of companies and
governments outside the United States. In pursuit of its investment objective,
the Portfolio will invest at least 65% of its assets in securities of issuers in
at least three countries outside the United States. Any income realized will be
incidental. Although the Portfolio generally invests in common stocks, it may
also invest in preferred stocks and certain debt securities such as convertible
bonds which are rated in any category by Moody's Investors Service, Inc. or
Standard & Poor's or which are unrated by any rating agency. See Appendix in
the Statement of Additional Information for a description of the ratings
presented by Moody's Investors Service, Inc. and Standard & Poor's.

For temporary defensive purposes, the Portfolio may invest without limit in
commercial paper, certificates of deposit, bank time deposits in the currency of
any nation, bankers acceptances, U.S. Government securities, corporate debt
obligations, and repurchase agreements with respect to these securities.

The International Equity Portfolio may purchase and sell financial futures
contracts, stock index futures contracts, and foreign currency futures contracts
for hedging purposes only and not for speculation. It may engage in such
transactions only if the total contract value of the futures contracts does not
exceed 20% of the Portfolio's total assets. See "Financial Futures Contracts",
below.

The International Equity Portfolio has an unlimited right to purchase securities
in any foreign country, developed or underdeveloped. An investor should
consider carefully the risks involved in investing in securities issued by
companies and governments of foreign nations, which are in addition to the usual
risks inherent in domestic investments. There is the possibility of
expropriation, nationalization or confiscatory taxation, taxation of income
earned in foreign nations (including withholding taxes) or other taxes imposed
with respect to investments in foreign nations, foreign exchange controls (which
may include suspension of the ability to transfer currency from a given
country), default in foreign government securities, political or social
instability or diplomatic developments which could affect investments in
securities or issuers in those nations. These considerations generally are more
of a concern in developing countries, where the possibility of political
instability (including revolution) and dependence on foreign economic assistance
may be greater than in developed countries. Investments in companies domiciled
in developing countries therefore may be subject to potentially higher risks
than investments in developed countries.

In many countries there is less publicly available information about issuers
than is available in reports about companies in the United States. Foreign
companies are not generally subject to uniform accounting and auditing and
financial reporting standards, and auditing practices and requirements may not
be comparable to those applicable to United States companies. It may be more
difficult to obtain or enforce judgments obtained against foreign entities.
Commission rates in foreign countries, which are generally fixed rather than
subject to negotiation as in the United States, are likely to be higher.
Further, the settlement period of securities transactions in foreign markets may
be longer than in domestic markets. In many foreign countries there is less
government supervision and regulation of business and industry practices, stock
exchanges, brokers and listed companies than in the United States. Foreign
securities transactions may be subject to higher brokerage costs than domestic
securities transactions. Foreign securities often trade with less frequency and
volume than domestic securities and are therefore less liquid and more volatile
than securities of comparable domestic issuers. The International Equity
Portfolio may invest in Eastern Europe. This involves special

6
<PAGE>

risks that are described in the Statement of Additional Information.

GROWTH STOCK PORTFOLIO

The Growth Stock Portfolio invests primarily in common stocks of
well-established companies, with emphasis placed on high quality companies with
strong financial characteristics. The investment process is initiated with a
fundamental economic outlook. Further study of economic sectors leads to the
identification of growth-oriented industries, and to detailed studies of
individual companies. In evaluating individual companies, factors such as the
company management team, product outlook, global exposure, industry leadership
position, and financial characteristics are important variables used in the
analysis.

The market capitalization of companies the Portfolio may invest in is not
limited by size, but the Portfolio will generally invest in large- and
medium-sized companies. The aim of the Portfolio is to seek to reduce overall
risk by diversifying its assets in an appropriate manner. This diversification
will span economic sectors, industry groups, and companies, while emphasizing
high quality investments.

The Portfolio may invest in any of the securities in which the Growth and Income
Stock Portfolio or the Aggressive Growth Stock Portfolio may invest, including,
but not limited to, preferred stock, convertible bonds, short-term commercial
paper, and covered call options.

Portfolios emphasizing growth-oriented investments may experience above average
price volatility. An investment in the Growth Stock Portfolio can present more
risk than an investment in the Index 500 Stock Portfolio. The Growth Stock
Portfolio is designed for long-term investors seeking capital appreciation.

GROWTH AND INCOME STOCK PORTFOLIO

The investment objectives of the Growth and Income Stock Portfolio are long-term
growth of capital and income. The Portfolio seeks to achieve these objectives
consistent with reasonable investment risk. Ordinarily, the Portfolio pursues
its investment objectives by investing primarily in dividend-paying common
stock. The Portfolio may also invest in other equity securities, consisting of,
among other things, nondividend-paying common stock, preferred stock, and
securities convertible into common stock, such as convertible preferred stock
and convertible bonds, and warrants. The Portfolio may also invest in American
Depository Receipts (ADRs).

The Portfolio is not subject to any limit on the size of companies in which it
may invest, but intends, under normal circumstances, to be fully invested to the
extent practicable in the large- and medium-sized companies primarily included
in the S&P 500 Index. The Portfolio is designed for investors who want an
actively managed equity portfolio of selected equity securities that seeks to
outperform the total return of the S&P 500 Index. In managing the Portfolio,
the potential for appreciation and dividend growth is given more weight than
current dividends. Nonetheless, the manager of the Portfolio will normally
strive for gross income for the Portfolio at a level not less than 75% of the
dividend income generated on the stocks included in the S&P 500 Index, although
this income level is merely a guideline and there can be no certainty that this
income level will be achieved.

The Portfolio does not seek to achieve its objective with any individual
investment security, but rather it aims to manage all of its assets in such a
way as to achieve its objective. The Portfolio attempts to reduce risk by
investing in many different economic sectors, industries and companies. The
manager of the Portfolio may under- or over-weight selected economic sectors
against the sector weightings of the S&P 500 Index to seek to enhance the
Portfolio's total return or reduce fluctuations in market value relative to the
S&P 500 Index. In selecting securities, the manager may emphasize securities
that it believes to be undervalued. Securities of a company may be undervalued
for a variety of reasons such as an overreaction by investors to unfavorable
news about a company, an industry or the stock markets in general; or as a
result of a market decline, poor economic conditions, tax-loss selling, or
actual or anticipated unfavorable developments affecting a company.

During ordinary market conditions, the Portfolio will be as fully invested as
practicable in the equity securities described above. The Portfolio may enter
into firm commitment agreements, purchase securities on a "when-issued" basis,
and invest in various foreign securities if U.S. exchange-listed. The Portfolio
may also invest in money market instruments, including U.S. Government
securities, short term bank obligations that are rated in the highest two rating
categories by Moody's Investors Service, Inc. or Standard & Poor's, or, if
unrated, are determined to be of equal quality by the manager of the Portfolio,
certificates of deposit, time deposits and banker's

7
<PAGE>

acceptances issued by U.S. and foreign banks and savings and loan institutions
with assets of at least $500 million as of the end of their most recent fiscal
year; and commercial paper and corporate obligations, including variable rate
demand notes, that are issued by U.S. and foreign issuers and that are rated in
the highest two rating categories by Moody's Investors Service, Inc. or Standard
& Poor's, or if unrated, are determined to be of equal quality by the manager of
the Portfolio. A description of these ratings is included in the Statement of
Additional Information. Under normal circumstances, the Portfolio will invest
in such money market instruments to invest temporary cash balances or to
maintain liquidity to meet redemptions or expenses. The Portfolio may also,
however, invest in these instruments, without limitation, as a temporary
defensive measure taken during, or in anticipation of, adverse market
conditions.

Convertible bonds and other fixed income securities (other than money market
instruments) in which the Portfolio may invest will, at the time of investment,
be rated Baa or better by Moody's Investors Service, Inc. or BBB or better by
Standard & Poor's or, if not so rated, will be of comparable quality as
determined by the manager of the Portfolio. A description of these ratings is
included in the Statement of Additional Information. In the event that an
existing holding is downgraded below these ratings, the Portfolio may
nonetheless retain the security.

In pursuing its investment objective, the Portfolio may engage in the purchase
and writing of put and call options on securities and stock indexes and may
purchase or sell stock index futures contracts and options thereon. These
investment techniques may involve a greater degree of risk than those inherent
in more conservative investment approaches. See "Financial Futures Contracts",
p. 12 and the Statement of Additional Information for a description of these
techniques and their attendant risks.

INDEX 500 STOCK PORTFOLIO

The S&P 500 Index is composed of 500 common stocks representing more than 70% of
the total market value of all publicly-traded common stocks. "Standard &
Poor's-Registered Trademark-", "S&P-Registered Trademark-", "S&P 500-Registered
Trademark-", "Standard & Poor's 500", and "500" are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Northwestern
Mutual Life. The Fund is not sponsored, endorsed, sold or promoted by Standard
& Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Fund.

The Index 500 Stock Portfolio will not be managed in the traditional sense using
economic, financial and market analysis. A computer program will be used to
determine which stocks are to be purchased or sold to achieve the Portfolio's
objective. The Portfolio will, to the extent feasible, remain fully invested
and will normally hold at least 450 of the 500 issues that comprise the S&P 500
Index.

The Index 500 Stock Portfolio's ability to match the performance of the S&P 500
Index will be affected to some extent by the size and timing of cash flows into
and out of the Index 500 Stock Portfolio. The Portfolio will be managed with a
view to reducing such effects. A portion of the assets may at times be invested
in investment grade debt securities, short term commercial paper and United
States Treasury obligations, as well as option contracts, stock index futures
contracts, and repurchase agreements. See "Financial Futures Contracts", p. 12
and "Repurchase Agreements and Warrants", p. 12.

BALANCED PORTFOLIO

The assets of the Balanced Portfolio will be invested in the following three
market sectors:

1. Common stock and other equity securities including the securities in which
the Index 500 Stock Portfolio invests.

2. Bonds and other debt securities with maturities generally exceeding one
year including the securities in which the Select Bond Portfolio invests.

3. Money market instruments and other debt securities with maturities
generally not exceeding one year including the securities in which the
Money Market Portfolio invests.

The Balanced Portfolio will continuously adjust the mix of investments among the
three market sectors to capitalize on perceived variations in return potential
produced by the interaction of changing financial

8
<PAGE>

markets and economic conditions. Not more than 75% of the Balanced Portfolio's
net assets may be invested in either the stock sector or the bond sector. Up to
100% of the Balanced Portfolio's net assets may be invested in money market
instruments. No minimum percentage has been established for any of the sectors.
Major changes in investment mix may occur several times within a year or over
several years depending upon market and economic conditions. The Balanced
Portfolio's investment objective is supplemented by investment objectives and
policies for the stock, bond and money market sectors. These are presently
substantially identical to those which have been established for the Index 500
Stock, Select Bond and Money Market Portfolios.

HIGH YIELD BOND PORTFOLIO

The investment objective of the High Yield Bond Portfolio is to achieve high
current income and capital appreciation.

The High Yield Bond Portfolio seeks to achieve its objective by investing
primarily in a diversified selection of fixed income securities rated Ba1 or
lower by Moody's Investors Service, Inc. or BB+ or lower by Standard & Poor's.
A description of the ratings provided by the major rating agencies is included
in the Statement of Additional Information. The Portfolio may also invest in
nonrated securities.

The securities in which the High Yield Bond Portfolio will invest are considered
speculative and are sometimes known as "junk bonds". These securities tend to
offer higher yields than higher rated securities of comparable maturities
because the historical financial condition of the issuers of these securities is
usually not so strong as that of other issuers. High yield fixed income
securities usually present greater risk of loss of income and principal than
higher rated securities. Investors in these securities should carefully
consider these risks and should understand that high yield fixed income
securities are not appropriate for short-term investment purposes.

The primary investment strategy of the High Yield Bond Portfolio is to invest in
industries or individual companies which have stable or improving fundamental
financial characteristics. The success of this strategy depends on the
manager's analytical and portfolio management skills. These skills are more
important in the selection of high yield/high risk securities than would be the
case with a portfolio of high quality bonds. In selecting securities for the
High Yield Bond Portfolio the manager will consider the ratings assigned by the
major rating agencies, but primary reliance will be placed on the manager's
evaluation of credit and market risk in relationship to the expected rate of
return.

The risk that the issuer of a fixed income security may fail to pay principal
and interest when due is referred to as "credit risk". Price volatility
caused by such factors as interest rate fluctuation, market perceptions of an
issuer's creditworthiness and general liquidity in the financial market is
"market risk". The value of the securities held by the High Yield Bond
Portfolio will be directly affected by the market perception of the
creditworthiness of the securities' issuers and will fluctuate inversely with
changes in interest rates. Lower rated securities are more likely to react to
developments affecting market and credit risk than are more highly rated
securities, which react primarily to movements in the general level of
interest rates. For example, because investors generally perceive that there
are greater risks associated with investing in medium or lower rated
securities, the yields and prices of such securities may tend to fluctuate
more than those of higher rated securities. Moreover, in the lower quality
segments of the fixed income securities market, changes in perception of the
creditworthiness of individual issuers tend to occur more frequently and in a
more pronounced manner than do changes in higher quality segments of the
fixed income securities market. The yield and price of medium to lower rated
securities therefore may experience greater volatility than is the case with
higher rated securities. The manager of the Portfolio seeks to reduce
volatility through careful evaluation of credit risk and market risk and
diversification of the Portfolio's investments.

The secondary market for high yield/high risk securities, which is concentrated
in relatively few market makers, may not be as liquid as the secondary market
for more highly rated securities. Under adverse market or economic conditions,
the secondary market for high yield/high risk securities could contract further,
independent of any specific adverse changes in the condition of a particular
issuer. As a result, the High Yield Bond Portfolio could find it more difficult
to sell such securities or may be able to sell the securities only at prices
lower than if such securities were widely traded. Prices realized upon the
sale of such lower rated securities therefore may be less than the prices used
in calculating the Portfolio's net asset value. In the absence of readily
available market quotations, high yield/high risk securities will be valued by
the Fund's Directors using a method that, in the good faith belief of the
Directors, accurately reflects fair value. Valuing such securities in an
illiquid market is a difficult task. The Directors' judgment plays a more
significant role in valuing such securities than those securities for which more
objective market data are available.

9
<PAGE>

In addition to notes and bonds, the High Yield Bond Portfolio may invest in
preferred stocks and convertible securities, including warrants or other equity
securities issued as part of a fixed income offering. The Portfolio may
purchase put and call options, on individual securities as well as indexes, and
may write covered call and secured put options. A description of put and call
options is included in the Statement of Additional Information. The Portfolio
may invest available temporary cash in short-term obligations, including those
in which the Money Market Portfolio may invest. The Portfolio may invest more
substantially in such short-term obligations or in investment grade securities
(rated Baa3 or higher by Moody's Investors Service, Inc. or BBB- or higher by
Standard & Poor's) when market conditions warrant a more defensive investment
posture.

The High Yield Bond Portfolio may invest in foreign securities consistent
with its investment objective. Some of the risks associated with investments
in foreign securities are briefly set forth in the description of the
International Equity Portfolio above. Such investments may be in United
States currency denominated debt issues or in debt securities in the
currency of other nations. The Portfolio may, but will not necessarily,
attempt to hedge its exposures by engaging in transactions in foreign
currency futures contracts. For a discussion of the risks involved in these
contracts see "Financial Futures Contracts", p. 12.

SELECT BOND PORTFOLIO

The Select Bond Portfolio's assets will be invested in the following types of
securities:

1. publicly offered straight debt securities having a rating within the four
highest grades as determined by Moody's Investors Service, Inc. (Aaa, Aa, A
or Baa) or Standard & Poor's (AAA, AA, A or BBB);

2. obligations of or guaranteed by the United States Government or its
agencies;

3. obligations (payable in U.S. dollars) of or guaranteed by the Government of
Canada or of a Province of Canada or any instrumentality or political
subdivision thereof, provided such obligations have a rating within the
three highest grades as determined by Moody's Investors Service, Inc. or
Standard & Poor's and do not exceed 10% of the Portfolio's total assets;

4. publicly offered straight debt securities issued or guaranteed by a
national or state bank or bank holding company (as defined in the Federal
Bank Holding Company Act, as amended) having a rating within the two
highest grades as determined by Fitch's Investor's Service, Inc. (AAA or
AA), and certificates of deposit of such banks or bank holding companies;

5. commercial paper having a rating within the two highest investment grades,
as determined by Moody's Investors Service, Inc. (P-1 or P-2) or Standard &
Poor's (A-1 or A-2);

6. straight debt securities acquired directly from the issuers in private
placement transactions, which securities, in the judgment of the Fund's
Board of Directors, are of investment quality comparable to publicly
offered straight debt securities rated Baa by Moody's Investors Service,
Inc. or BBB by Standard & Poor's, or better;

7. cash or cash equivalents; and

8. preferred stocks and obligations not described above, including convertible
securities, securities carrying warrants to purchase equity securities and
securities acquired directly from the issuers in private placement
transactions other than those securities described above.

A description of the ratings provided by Moody's Investors Service, Inc.,
Standard & Poor's and Fitch's Investor's Service, Inc. is included in the
Statement of Additional Information.

The Select Bond Portfolio will not invest in common stocks directly, but may
retain up to 10% of its total assets in common stocks acquired upon conversion
of debt securities or upon exercise of warrants acquired with debt securities.

At least 70% of the Select Bond Portfolio's total assets will normally be
invested in bonds and debentures which have maturities of at least one year.
However, during periods of particular volatility or when an unusual decline in
the value of long-term obligations is anticipated, for temporary defensive
purposes the Select Bond Portfolio may place a larger portion of its assets in
cash and short-term obligations. During such periods the Select Bond Portfolio's
holdings of short-term obligations and equity securities may

10
<PAGE>

temporarily exceed an aggregate total of 30% of the Select Bond Portfolio's
total assets.

The Select Bond Portfolio invests in obligations of a number of U.S. Government
agencies. Obligations of some agencies are supported by the full faith and
credit of the U.S. Treasury, others are supported only by the credit of the
agency. No assurance can be given that the U.S. Government would provide
financial support to any agency if it is not obligated to do so by law. The
Select Bond Portfolio will invest in the securities of a particular agency only
when the investment adviser is satisfied that the credit risk with respect to
such agency is minimal.

The Select Bond Portfolio may invest up to 10% of its total assets in high
yield/high risk securities and up to 10% of its total assets in foreign
securities, consistent with its investment objectives. See the description of
the High Yield Bond Portfolio, p. 9, for a discussion of high yield/high risk
securities. Some of the risks associated with investments in foreign securities
are briefly set forth in the description of the International Equity Portfolio,
p. 6.

The Select Bond Portfolio may also invest in interest rate futures contracts and
repurchase agreements. See "Financial Futures Contracts", p. 12 and "Repurchase
Agreements and Warrants", p. 12.

MONEY MARKET PORTFOLIO

The investment objective of the Money Market Portfolio is to realize maximum
current income to the extent consistent with liquidity and stability of capital.

The assets of the Money Market Portfolio will be invested in money market
instruments and other debt securities with maturities generally not exceeding
one year. Such instruments may include the following:

1. U.S. Treasury Bills and other obligations of or guaranteed by the U.S.
Government or its agencies;

2. obligations of or guaranteed by the Government of Canada or of a Province
of Canada or any instrumentality or political subdivision thereof, provided
such obligations do not exceed 10% of the Money Market Portfolio's total
assets;

3. obligations (including certificates of deposit, time deposits, or bankers'
acceptances) of U.S. or Canadian chartered banks having total assets in
excess of $1,000,000,000, U.S. branches of foreign banks where said foreign
banks have total assets in excess of $10,000,000,000, and U.S. savings and
loan associations having total assets in excess of $1,000,000,000, and
Eurodollar certificates of deposit issued by foreign branches of U.S. banks
where said banks have total assets in excess of $1,000,000,000 (see
"Eurodollar Certificates of Deposit");

4. commercial paper, including variable amount master notes, having a rating
at the time of purchase within the two highest grades as determined by
Moody's Investors Service, Inc. (P-1 or P-2) or Standard & Poor's (A-1 or
A-2), or commercial paper or notes issued by companies with an unsecured
debt issue outstanding having a rating at the time of purchase within the
three highest grades as determined by Moody's Investors Service, Inc. (Aaa,
Aa, or A) or Standard & Poor's (AAA, AA or A); and

5. publicly traded bonds, debentures and notes having a rating within the four
highest grades as determined by Moody's Investors Service, Inc. (Aaa, Aa, A
or Baa) or Standard & Poor's (AAA, AA, A or BBB).

A glossary of the following terms is included in the Statement of Additional
Information: certificates of deposit, Eurodollar certificates of deposit, time
deposits, bankers' acceptances, variable amount master notes and commercial
paper. A description of the ratings provided by Moody's Investors Service, Inc.
and Standard & Poor's is also included in the Statement of Additional
Information.

The Money Market Portfolio will attempt to maximize its return by trading to
take advantage of changing money market conditions and trends. The Money Market
Portfolio will also trade to take advantage of what are believed to be
disparities in yield relationships between different money market instruments.
This procedure may increase or decrease the Portfolio's yield depending upon
management's ability to correctly time and execute such transactions. The Money
Market Portfolio intends to purchase only securities that mature within a year
except for securities which are subject to repurchase agreements. Accordingly,
the level of purchases will be relatively high. However, as transaction costs on
Money Market Portfolio investments are generally not substantial, the high level
of purchases will not adversely affect the Portfolio's net asset value or net
income.

U.S. Government and agency obligations held by the Money Market Portfolio
consist primarily of discounted or interest-bearing notes with average
maturities of ninety days or less. The Money Market Portfolio invests most
frequently in obligations of the following agencies of the U.S. Government: Farm
Credit System, Federal Home Loan Banks, Federal

11
<PAGE>

Home Loan Mortgage Corporation and Federal National Mortgage Association.
Obligations of some agencies are supported by the full faith and credit of
the U.S. Treasury, others are supported by the right of the issuer to borrow
from the Treasury, others, such as those of the Federal National Mortgage
Association, a private corporation, are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations and
others are supported only by the credit of the agency. No assurance can be
given that the U.S. Government would provide financial support to any agency
if it is not obligated to do so by law. The Money Market Portfolio will
invest in the securities of a particular agency only when the investment
adviser is satisfied that the credit risk with respect to such agency is
minimal.

The Money Market Portfolio may also invest in repurchase agreements. See
"Repurchase Agreements and Warrants", below.

FINANCIAL FUTURES CONTRACTS

Each of the Portfolios (except the Select Bond, High Yield Bond and Money Market
Portfolios) may enter into stock index futures contracts, including indexes on
specific securities, as a hedge against changes in the market values of common
stocks. The Select Bond, High Yield Bond, Balanced and International Equity
Portfolios may enter into interest rate futures contracts as a hedge against
changes in prevailing levels of interest rates. In both cases, the purpose is to
establish more definitely the effective return on securities held or intended to
be acquired by the Portfolios. The Portfolios' hedging may include sales of
futures as an offset against the effect of expected decreases in stock values or
increases in interest rates, and purchases of futures as an offset against the
effect of expected increases in stock values or decreases in interest rates.

A Portfolio will not enter into a futures contract if, as a result thereof, (i)
the aggregate market value of all open futures positions would exceed one-third
of the Portfolio's total assets or (ii) the sum of the initial margin deposits
of all open futures positions (other than an offsetting transaction) would be
more than 5% of the Portfolio's total assets. More than 5% of the Portfolio's
total assets may be committed to the aggregate of initial and variation margin
payments however. Furthermore, in order to be certain that the Portfolio has
sufficient assets to satisfy its obligations under a futures contract, the
Portfolio deposits cash or cash equivalents equal in value to the market value
of the futures contract in a segregated account for the Portfolio with the
Fund's custodian.

Financial futures prices are volatile and difficult to forecast and the
correlation between changes in prices of futures contracts and the securities
being hedged can be only approximate. A decision of whether, when and how to
hedge involves the exercise of skill and judgment, and even a well-conceived
hedge may be unsuccessful to some degree because of market behavior or
unexpected stock market or interest rate trends.

Because of the low margin deposits required, futures trading involves an
extremely high degree of leverage. A relatively small price movement in a
futures contract may result in immediate and substantial loss, as well as gain,
to the investor. Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the futures contract.

A description of financial futures contracts is included in the Statement of
Additional Information.

EURODOLLAR CERTIFICATES OF DEPOSIT

The Money Market, Balanced, Growth and Income Stock, Growth Stock and High Yield
Bond Portfolios may purchase Eurodollar certificates of deposit issued by
foreign branches of U.S. banks, but consideration will be given to their
marketability and possible restrictions on the flow of international currency
transactions. Investment in such securities involves considerations which are
not ordinarily associated with investing in domestic instruments, including
currency exchange control regulations, the possibility of expropriation,
seizure, or nationalization of foreign deposits, less liquidity and increased
volatility in foreign securities markets, and the impact of political, social or
diplomatic developments or the adoption of other foreign government restrictions
that might adversely affect the payment of principal and interest. If the Fund
were to invoke legal processes, it might encounter greater difficulties abroad
than in the United States.

REPURCHASE AGREEMENTS AND WARRANTS

Certain securities of each Portfolio may be subject to repurchase agreements.
Each of the Portfolios (except the Select Bond and Money Market Portfolios) may
also invest in warrants. A description of repurchase agreements and warrants is
included in the Statement of Additional Information.

12
<PAGE>

INVESTMENT RESTRICTIONS

The significant investment restrictions common to all the Portfolios are
described below. The investment restrictions of a Portfolio may be changed only
with the approval of the majority of the Portfolio's shares outstanding. These
investment restrictions provide that each Portfolio will not:

1. Acquire more than 25% of any class of equity securities of any one issuer.

2. With respect to at least 75% of the value of the total assets of the
Portfolio, invest more than 5% of the value of such assets in the
securities of any one issuer (except securities issued or guaranteed by the
U.S. Government or its agencies), or invest in more than 10% of the
outstanding voting securities of any one issuer.

3. Purchase the securities of any other investment company, except in
open-market transactions involving no commission or profit to a dealer
(other than the customary broker's commission) or in connection with
mergers, consolidations or acquisitions of assets, in amounts not exceeding
10% of the total assets of the Portfolio.

4. Invest more than 15% of the value of the total assets of the Portfolio in
securities which are restricted as to disposition under federal securities
laws and in other illiquid assets. For the Money Market Portfolio the
limit is 10%.

5. Invest more than 25% of the value of the total assets of the Portfolio in
securities of issuers in any one industry except for investments by the
Money Market Portfolio and the Balanced Portfolio in U.S. Treasury Bills,
other obligations of or guaranteed by the U.S. Government or its agencies,
certificates of deposit or bankers' acceptances.

6. Make loans aggregating more than 10% of the total assets of the Portfolio
at any one time, provided that neither the purchase of a portion of an
issue of publicly distributed bonds, debentures, or other debt securities,
nor the purchase of short-term debt securities, is to be considered as a
loan.

Additional investment restrictions are included in the Statement of Additional
Information.

- -------------------------------------------------------------------------------
MANAGEMENT OF THE FUND

The Board of Directors of the Fund is responsible for the administration of the
affairs of the Fund. The Fund's investment adviser is NMIS, a wholly-owned
subsidiary of Northwestern Mutual Life. NMIS' address is 720 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202. NMIS has served as investment adviser to
each of the mutual funds sponsored by Northwestern Mutual Life, subject to the
supervision and control of the boards of directors of the funds, since their
incorporation. NMIS provides investment advice and recommendations regarding the
purchase and sale of securities for the Fund's Portfolios.

Northwestern Mutual Life and its wholly-owned subsidiary, Northwestern
Investment Management Company, employ a full staff of investment personnel.
Northwestern Investment Management Company was formed in 1997. The personnel
and related facilities of Northwestern Mutual Life and its subsidiary are
utilized by NMIS in performing its investment advisory functions.

J. P. Morgan Investment Management Inc. ("J. P. Morgan Investment"), a Delaware
corporation with principal offices at 522 Fifth Avenue, New York, New York
10036, a wholly-owned subsidiary of J. P. Morgan & Co., is the sub-adviser for
the Growth and Income Stock Portfolio. Templeton Investment Counsel, Inc., a
Florida corporation with principal offices at 500 East Broward Boulevard, Ft.
Lauderdale, Florida 33394, a wholly-owned indirect subsidiary of Franklin
Resources, Inc., is the sub-adviser for the International Equity Portfolio.
Each of the sub-advisers has been retained by Northwestern Mutual Life and the
Fund pursuant to an investment sub-advisory agreement to provide investment
advice and, in general, to conduct the management investment program of the
Portfolio, subject to the general control of the Board of Directors of the Fund.

PORTFOLIO MANAGERS

Mark G. Doll, Vice President and Assistant Treasurer - Public Markets of
Northwestern Investment Management Company, and Senior Vice President of
Northwestern Mutual Life, joined Northwestern Mutual Life in 1972 and holds B.A.
and M.B.A. degrees from the University of Wisconsin-Milwaukee. He is a
Chartered Financial Analyst. Mr. Doll is responsible for the publicly traded
investments of Northwestern Mutual Life and for investment management of the
Balanced Portfolio.

Patricia L. Van Kampen, Managing Director of Northwestern Investment Management
Company, joined Northwestern Mutual Life in 1974. She holds a

13
<PAGE>

B.A. degree from St. Norbert College and an M.B.A. from Marquette University,
and is a Chartered Financial Analyst. Ms. Van Kampen is responsible for all
common stock investments of Northwestern Mutual Life, and for investment
management of the Balanced Portfolio.

William R. Walker, Managing Director of Northwestern Investment Management
Company, joined Northwestern Mutual Life in 1984. Prior to this, he worked for
the Chicago Board Options Exchange, the Milwaukee Company, and Armco Insurance.
Mr. Walker is a Chartered Financial Analyst, and holds a B.S. degree from
Marquette University and an M.B.A. from Miami of Ohio. He has primary
responsibility for the management of the Aggressive Growth Stock Portfolio, as
well as the small company portfolio of Northwestern Mutual Life.

Julie M. Van Cleave, Managing Director of Northwestern Investment Management
Company, joined Northwestern Mutual Life in 1984 and holds B.A. and M.B.A.
degrees from the University of Wisconsin-Madison. Ms. Van Cleave is a Chartered
Financial Analyst and has primary responsibility for the Growth Stock Portfolio
and the large company portfolio of Northwestern Mutual Life.

Timothy S. Collins, Director of Northwestern Investment Management Company,
joined Northwestern Mutual Life in 1986. He received a B.A. degree from St.
Norbert College and an M.B.A. from the University of Wisconsin-Madison. Mr.
Collins manages the High Yield Bond Portfolio and also manages high yield fixed
income securities of Northwestern Mutual Life. Mr. Collins is a Chartered
Financial Analyst.

Varun Mehta, Director of Northwestern Investment Management Company, joined
Northwestern Mutual Life in March, 1997. From 1993 through March 1997, Mr.
Mehta was with the Ameritech Investment Management Department serving as
Portfolio Research Manager - Fixed Income and Portfolio Manager - Fixed Income.
Mr. Mehta has his undergraduate degree from the University of Bombay. He
received a Masters degree in Business Management from the Indian Institute of
Management and an M.B.A. from the University of Chicago Graduate School of
Business. Mr. Mehta is a Chartered Financial Analyst. He has primary
responsibility for the Select Bond Portfolio and the fixed income securities of
the Balanced Portfolio.

Henry D. Cavanna, Managing Director of J.P. Morgan Investment, joined J.P.
Morgan in 1971. Mr. Cavanna is a senior U.S. equity portfolio manager in the
U.S. Equity and Balanced Accounts Group. He received his B.A. degree from
Boston College and L.L.B. degree from the University of Pennsylvania. Mr.
Cavanna is responsible for the Growth and Income Stock Portfolio.

Michael J. Kelly, Vice President of J.P. Morgan Investment, joined J.P. Morgan
in 1985. Mr. Kelly has an undergraduate degree from Gettysburg College and an
M.B.A. from The Wharton School. Mr. Kelly is a Chartered Financial Analyst.
Mr. Kelly shares responsibility for the Growth and Income Stock Portfolio with
Mr. Cavanna.

Gary R. Clemons, Senior Vice President, Portfolio Management/Research of
Templeton Investment Counsel, Inc., manages the International Equity Portfolio.
Prior to joining Templeton Investment Counsel in 1993, Mr. Clemons worked as a
portfolio manager/research analyst for Templeton Quantitative Advisers in New
York, a subsidiary of Templeton International. Mr. Clemons holds an M.B.A. with
emphasis in finance from the University of Wisconsin-Madison and a B.S. degree
from the University of Nevada-Reno.

INVESTMENT ADVISORY FEES AND OTHER EXPENSES

Each Portfolio pays a monthly fee for investment advisory services at an annual
rate based on the aggregate average daily net asset values of the Portfolio.
For the Index 500 Stock Portfolio the rate is .20%, and for the Select Bond,
Money Market and Balanced 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:

FIRST $50 NEXT $50
PORTFOLIO MILLION MILLION EXCESS
- --------- --------- ------- ------
<S> <C> <C> <C>
Growth and Income
Stock. . . . . . . . .70% .60% .55%
Growth Stock . . . . . .60% .50% .40%
Aggressive Growth
Stock. . . . . . . . .80% .65% .50%
High Yield Bond. . . . .60% .50% .40%
International Equity . .85% .65% .65%

</TABLE>

Of the amounts received by NMIS from the Fund, the sub-adviser for the Growth
and Income Stock Portfolio will be paid by NMIS at the annual rate of .45% on
the first $100 million of the Portfolio's assets, .40% on the next $100 million,
.35% on the next $200 million and .30% on assets in excess of $400 million. For
the International Equity Portfolio the sub-adviser will be paid by NMIS at the
annual rate of .50% of the Portfolio's assets, reduced to .40% on assets in
excess of $100 million.

14
<PAGE>

The following table shows the annual expenses for each of the Portfolios, as a
percentage of the average net assets of the Portfolio, based on 1997 operations
for the Portfolios and their predecessors:

INVESTMENT
ADVISORY OTHER TOTAL
PORTFOLIO FEE EXPENSES EXPENSES
- ---------- --------- -------- --------
<S> <C> <C> <C>
Aggressive Growth
Stock. . . . . . . . .52% .01% .53%
International Equity . .67% .10% .77%
Growth Stock . . . . . .47% .02% .49%
Growth and Income
Stock. . . . . . . . .59% .01% .60%
Index 500 Stock. . . . .20% .01% .21%
Balanced . . . . . . . .30% .00% .30%
High Yield Bond. . . . .52% .03% .55%
Select Bond. . . . . . .30% .00% .30%
Money Market . . . . . .30% .00% .30%

</TABLE>

PORTFOLIO TRANSACTIONS

The investment adviser and the sub-advisers place all orders for the purchase
and sale of securities, options and futures contracts for the Portfolios.
Orders may be placed with Robert W. Baird & Co. Incorporated, a broker-dealer
firm which is a corporate affiliate of Northwestern Mutual Life, subject to all
applicable legal requirements, when the investment adviser or sub-adviser
believes that the combination of price and execution are comparable to that of
other broker-dealers. Additional information about portfolio transactions and
brokerage allocation is included in the Statement of Additional Information.

- -------------------------------------------------------------------------------
CAPITAL STOCK

The Fund was incorporated in Maryland on December 22, 1983.

The Fund issues a separate class of capital stock for each Portfolio. Each share
of capital stock issued with respect to a Portfolio has a pro rata interest in
the assets of that Portfolio and has no interest in the assets of any other
Portfolio. Each share of capital stock is entitled to one vote on all matters
submitted to a vote of shareholders. Shares of a Portfolio will be voted
separately, however, on matters affecting only that Portfolio, including
approval of the Investment Advisory Agreement and changes in fundamental
investment policies of a Portfolio. The assets of each Portfolio are charged
with the liabilities of the Portfolio and their proportionate share of the
general liabilities of the Fund based on the relative asset size of the
Portfolios at the time the liabilities are incurred. All shares may be redeemed
for cash at any time.

All of the outstanding shares of each Portfolio are owned of record by
Northwestern Mutual Life. Shares of each Portfolio are presently being offered
only to Northwestern Mutual Life and its separate investment accounts used for
variable annuity contracts and variable life insurance policies. The shares
held in connection with certain of the separate investment accounts are voted by
Northwestern Mutual Life in accordance with instructions received from the
owners of the variable annuity contracts and variable life insurance policies.
The shares held by Northwestern Mutual Life as general assets are voted by
Northwestern Mutual Life in the same proportions as the shares held in
connection with these separate investment accounts. If applicable laws,
regulations or interpretations change so as to permit Northwestern Mutual Life
to vote the Fund shares in its own discretion, it may elect to do so.

As stated above, the shares of the Fund are offered to separate investment
accounts to fund both variable life insurance policies and variable annuity
contracts. Because of differences in tax treatment or other considerations it
is possible that the interests of variable life insurance policyowners, owners
of variable annuity contracts or owners of other contracts that may participate
in the Fund in the future might at some time be in conflict. The Board of
Directors of the Fund will monitor for any material conflicts and determine what
action, if any, should be taken. Northwestern Mutual Life has agreed to be
responsible, at its cost, to remedy or eliminate any irreconcilable material
conflict up to and including establishing a new registered management investment
company and segregating the assets underlying the variable annuity contracts and
variable life insurance policies.

There are no material pending legal proceedings to which the Fund is a party.

- -------------------------------------------------------------------------------
TAXES AND DIVIDENDS

Each Portfolio is qualified or intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. It is the Fund's policy
to comply with the provisions of the Code regarding

15
<PAGE>

distribution of investment income and capital gains so as to relieve each
Portfolio from all, or substantially all, Federal taxes. Each Portfolio expects
to distribute all or substantially all net investment income and net capital
gains, if any, from the sale of investments.

Shareholders of each Portfolio are entitled to receive such dividends from net
investment income and distributions of net capital gains as the Directors of the
Fund may declare. Dividends from net investment income and net capital gains
will be declared for Aggressive Growth Stock, International Equity, Growth
Stock, Growth and Income Stock, Index 500 Stock, Balanced, High Yield Bond and
Select Bond Portfolios annually, and for the Money Market Portfolio on each
business day.

Net investment income of each Portfolio will be determined at the close of
trading on the New York Stock Exchange on each day during which the Exchange is
open for trading. Net investment income of each Portfolio consists of:

1. all dividends, interest income and discount earned by the Portfolio
(including original issue and market discount) and

2. net short-term capital gain less

3. all expenses of the Portfolio.

- -------------------------------------------------------------------------------
OFFERING AND REDEMPTION OF SHARES

Shares of capital stock of each Portfolio of the Fund are offered and redeemed
at their net asset value as next determined following receipt of a purchase
order or tender for redemption without the addition of any selling commission or
"sales load" or any redemption charge. The redemption price may be more or less
than the shareholder's cost.

Equity securities listed on a stock exchange are valued at the closing sale
price or, if no sale took place, the closing bid price. Stock index futures
contracts and interest rate futures contracts are valued at the closing
settlement price on the commodities exchange. Debt securities with maturities
generally exceeding one year are valued on the basis of valuations furnished by
Interactive Data Corporation. Money market instruments with maturities
exceeding 60 days but generally not exceeding one year are valued by marking to
market, except for the Money Market Portfolio. Debt securities with remaining
maturities of 60 days or less, and all debt securities of 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. All other
assets are valued at their fair value as determined in good faith by the
Directors. Net asset value is determined as of the close of trading on the New
York Stock Exchange on each day during which the Exchange is open for trading.
In accordance with the requirements of the Investment Company Act of 1940 the
Portfolios will also determine the net asset value of their shares on any other
day on which there is sufficient trading to materially affect the value of their
securities.

A more detailed discussion of asset valuation methods is included in the
Statement of Additional Information.

<PAGE>

NORTHWESTERN MUTUAL
SERIES FUND, INC.

----------------------------------

CROSS REFERENCE SHEET

Cross reference sheet showing location in Statement of Additional
Information required by the Items in Part B of Form N-1A.
<TABLE>
<CAPTION>

Heading in Statement
Item Number of Additional Information
------------ --------------------------
<C> <S>
10 Cover Page

11 Table of Contents

12 Name Change of the Fund

13 Investment Policies

14 Management of the Fund

15 Ownership of Shares of the Fund

16 Investment Advisory and
Other Services

17 Portfolio Transactions and
Brokerage Allocation and Other
Practices

18 Capital Stock

19 Purchase, Redemption and
Pricing of Shares

20 Taxes and Dividends

21 *

22 Calculation of Yield Quota-
tions of Money Market Portfolio

23 Report of Independent Accountants,
Financial Statements and
Schedules of Investments
</TABLE>
- ---------------------------------------------------------
* Indicates inapplicable or negative

<PAGE>

- --------------------------------------------------------------------------------

NORTHWESTERN MUTUAL
SERIES FUND, INC.
Consisting of
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
Money Market Portfolio

This Statement of Additional Information is not a prospectus
but supplements and should be read in conjunction with the Prospectus
for the Fund. A copy of the Prospectus may be obtained from The
Northwestern Mutual Life Insurance Company, 720 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202, telephone number (414) 271-1444.

- --------------------------------------------------------------------------------

The date of the Prospectus to which this Statement of
Additional Information relates is April 30, 1998.

The date of this Statement of Additional Information is
April 30, 1998.

B-1

<PAGE>

TABLE OF CONTENTS

CROSS-REFERENCE TO
PAGE PAGE IN PROSPECTUS
---- ------------------
<S> <C> <C>
Investment Policies B-3 5

Investment Restrictions B-3 13

Repurchase Agreements B-4 13

Financial Futures Contracts B-4 12

Covered Call Option Contracts B-12 -

Reverse Repurchase Agreements B-12 -

Warrants B-13 13

Asset-Backed and Variable Rate Securities B-13 -

Short-Term Trading B-13 -

Firm Commitment Agreements and "When-Issued" B-14 -
Securities

Private Placement Transactions B-14 13
and Illiquid Assets

Risk Factors for the International B-15 11
Equity Portfolio

Portfolio Turnover B-17 -

Management of the Fund B-18 13

Ownership of Shares of the Fund B-21 15

Investment Advisory and Other Services B-23 13

Portfolio Transactions and B-26 15
Brokerage Allocation and Other Practices

Capital Stock B-28 15

Purchase, Redemption and Pricing of B-28 16
Shares

Taxes and Dividends B-31 16

Calculation of Yield Quotations of B-31 5
the Money Market Portfolio

Name Change of the Fund B-32 -

Appendix A B-33 5

Appendix B B-39 7

Report of Independent Accountants B-40 3

Financial Statements and Schedules B-41 3
of Investments

</TABLE>

B-2
<PAGE>

INVESTMENT POLICIES

INVESTMENT RESTRICTIONS

The investment restrictions not listed in the Prospectus and generally
common to the Aggressive Growth Stock, International Equity, Growth Stock,
Growth and Income Stock, Index 500 Stock, Balanced, High Yield Bond, Select
Bond, and Money Market Portfolios of the Fund ("Portfolios") are described
below. The investment restrictions of the Portfolios numbered 1-8 below are
"fundamental policies" and may be changed only with the approval of the majority
of the Portfolio's shares outstanding. These investment restrictions provide
that each Portfolio will not:

1. Invest for the purpose of influencing management or exercising
control, but freedom of action is reserved with respect to exercise of
voting rights in respect of each Portfolio's securities.

2. Purchase any security on margin, but each Portfolio may obtain such
short-term credits as are necessary for the clearance of purchases and
sales of securities.

3. Make short sales of securities.

4. Act as a securities underwriter for other issuers, but each Portfolio
may purchase securities under circumstances where, if the securities
are later publicly offered or sold by the Portfolio, it might be
deemed to be an underwriter for purposes of the Securities Act of
1933.

5. Purchase or sell real estate. However, each Portfolio may invest in
securities issued by companies, including real estate investment
trusts, which invest in real estate or interests therein.

6. Invest in commodities or commodity contracts. However, each Portfolio
(except the Select Bond, Money Market and High Yield Bond Portfolios)
may invest in stock index futures contracts, including indexes on
specific industries, and the Select Bond, High Yield Bond,
International Equity and Balanced Portfolios may invest in interest
rate futures contracts in accordance with their investment objectives
and policies. The International Equity and High Yield Bond Portfolios
may invest in foreign currency futures contracts.

7. Issue senior securities or borrow money except for short-term credits
as may be necessary for the clearing of transactions and except for
temporary purposes to the extent of 5% of the total assets of the
Portfolio. Reverse repurchase agreements and financial futures
contracts are not considered to be "senior securities" or "borrowing
money" for the purpose of this restriction.

8. Make loans to persons who intend to use the proceeds for non-business
purposes or to companies which (including predecessors) have been in
business for less than three years. Repurchase agreements are not
considered to be "loans" for the purpose of this restriction.

B-3
<PAGE>

As a non-fundamental investment policy, which may be changed by the Board
of Directors without shareholder approval, the International Equity Portfolio
will not invest more than 15% of its total assets in securities of foreign
issuers which are not listed on a recognized United States or foreign securities
exchange.

REPURCHASE AGREEMENTS

Each of the Portfolios may invest in repurchase agreements. A repurchase
agreement customarily obligates the seller at the time it sells securities to
the Portfolio to repurchase the securities at a mutually agreed upon time and
price. The total amount received on repurchase would be calculated to exceed
the price paid by the Portfolio, reflecting an agreed upon market rate of
interest for the period from the time of the repurchase agreement to the
settlement date, and would not necessarily be related to the interest rate on
the underlying securities. The differences between the total amount to be
received upon repurchase of the securities and the price which was paid by the
Portfolio upon their acquisition is accrued as interest and is included in the
Portfolio's net income declared as dividends. Each Portfolio intends to limit
repurchase agreements to transactions with financial institutions having total
assets in excess of $1,000,000,000 and with broker-dealers. Securities subject
to repurchase agreements shall be limited to obligations of or guaranteed by the
U.S. Government or its agencies or by the Government of Canada or of a Province
of Canada or any instrumentality or political subdivision thereof, certificates
of deposit of banks or commercial paper which meets the criteria for other
commercial paper in which the Portfolio may invest. A Portfolio will not invest
more than 10% of its total assets in repurchase agreements which have maturities
of more than seven days and will not invest in repurchase agreements with
maturities of over 30 days. Under no circumstances will a Portfolio enter into a
repurchase agreement with The Northwestern Mutual Life Insurance Company
("Northwestern Mutual Life").

Each Portfolio has the right to sell securities subject to repurchase
agreements but would be required to deliver identical securities upon
maturity of the repurchase agreement unless the seller fails to pay the
repurchase price. It is each Portfolio's intention not to sell securities
subject to repurchase agreements prior to the agreement's maturity. To the
extent that the proceeds from any sale upon a default in the obligation to
repurchase were less than the repurchase price, the Portfolio would suffer a
loss. The Portfolio might also incur disposition costs in connection with
liquidating its collateral and, if bankruptcy proceedings are commenced with
respect to the seller, realization upon the collateral by the Portfolio may
be delayed or limited and a loss may be incurred if the collateral securing
the repurchase agreement declines in value during the bankruptcy proceedings.
To minimize the possibility of losses due to the default or bankruptcy of
the seller, the Fund has adopted standards of creditworthiness for all
broker-dealers with which the Fund enters into repurchase agreements and will
review compliance by such broker-dealers periodically.

FINANCIAL FUTURES CONTRACTS

The Index 500 Stock, Balanced, Growth and Income Stock, Growth Stock,
Aggressive Growth Stock, and International Equity Portfolios may invest in stock
index futures contracts, including indexes on specific industries, and the
Select Bond, High Yield Bond, International Equity and Balanced Portfolios may
invest in interest rate futures contracts. The following describes the

B-4
<PAGE>

stock index and interest rate futures markets and the manner in which the
Portfolios will implement the policy.

USE. The Portfolios, as identified above, may enter into stock index
futures contracts as a hedge against changes in the market values of common
stocks and may enter into interest rate futures contracts as a hedge against
changes in prevailing levels of interest rates. In both cases, the purpose is
to establish more definitely the effective return on securities held or intended
to be acquired by the Portfolios. The Portfolios' hedging may include sales of
futures as an offset against the effect of expected decreases in stock values or
increases in interest rates, and purchases of futures as an offset against the
effect of expected increases in stock values or decreases in interest rates.

The Portfolios will not enter into financial futures contracts for
speculation, and will only enter into futures contracts that are traded on
national futures exchanges and are standardized as to maturity date and
underlying securities. Currently, stock index futures contracts can be
purchased or sold with respect to the Standard and Poor's 500 Stock Index on the
Chicago Mercantile Exchange, the New York Stock Exchange Composite Index on the
New York Futures Exchange and the Value Line Stock Index on the Kansas City
Board of Trade. The principal interest rate futures exchanges in the United
States are the Chicago Board of Trade, the Chicago Mercantile Exchange and the
New York Futures Exchange. Futures exchanges and trading are regulated under
the Commodity Exchange Act by the Commodity Futures Trading Commission.

The Portfolios will incur brokerage commissions in connection with
transactions in futures contracts.

DESCRIPTION. A stock index futures contract is an agreement whereby one
party agrees to take and another party agrees to make delivery of an amount of
cash equal to a specified dollar amount times the difference between the stock
index value at the close of the last trading day of the contract and the price
at which the futures contract is originally struck. A stock index assigns
relative values to the common stocks included in the index, and the index
fluctuates with changes in the market values of the common stocks included. No
physical delivery of the underlying stocks in the index is made.

Currently, stock index futures contracts covering the stock market as a
whole and covering certain industries are being traded. It is expected that
futures contracts covering stock indexes of additional industries will
eventually be traded.

An interest rate futures contract is an agreement whereby one party agrees
to sell and another party agrees to purchase a specified amount of a specified
financial instrument (debt security) at a specified price at a specified date,
time and place. Although interest rate futures contracts typically require
actual future delivery of and payment for financial instruments, the contracts
are usually closed out before the delivery date.

B-5
<PAGE>

A public market exists in interest rate futures contracts covering
primarily the following financial instruments: U.S. Treasury bonds; U.S.
Treasury notes; Government National Mortgage Association (GNMA) modified
pass-through mortgage-backed securities; three-month U.S. Treasury bills; 90-day
commercial paper; bank certificates of deposit; and Eurodollar certificates of
deposit. It is expected that futures contracts trading in additional financial
instruments will be authorized. The standard contract size is $100,000 for
futures contracts in U.S. Treasury bonds, U.S. Treasury notes and GNMA
pass-through securities and $1,000,000 for the other designated contracts.

It is each Portfolio's policy to close out open futures contracts before
delivery. Closing out an open futures contract sale or purchase is effected by
entering into an offsetting futures contract purchase or sale, respectively, for
the same aggregate amount of the stock index or the financial instrument and the
same delivery date. If the offsetting purchase price is less than the original
sale price, the Portfolio realizes a gain, and if it is more, the Portfolio
realizes a loss. Conversely, if the offsetting sale price is more than the
original purchase price, the Portfolio realizes a gain, and if it is less, the
Portfolio realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Portfolio will be
able to enter into an offsetting transaction with respect to a particular
contract at a particular time. If the Portfolio is not able to enter into an
offsetting transaction, the Portfolio will continue to be required to maintain
the margin deposits on the contract.

As an example of an offsetting transaction, the contractual obligations
arising from the sale of one contract of September Treasury Bills on an exchange
may be fulfilled at any time before delivery of the contract is required (i.e.,
on a specified date in September, the "delivery month") by the purchase of one
contract of September Treasury Bills on the same exchange. In such instance the
difference between the price at which the futures contract was sold and the
price paid for the offsetting purchase, after allowance for transaction costs,
represents the profit or loss to the Portfolio.

Persons who trade in futures contracts may be broadly classified as
"hedgers" and "speculators." Hedgers, such as the Portfolios, whose business
activity involves investment or other commitment in equity and debt securities
or other obligations, use the financial futures markets primarily to offset
unfavorable changes in value that may occur because of fluctuations in the value
of the securities or obligations held or expected to be acquired by them.

The speculator, like the hedger, generally expects neither to deliver nor
to receive the security underlying the futures contract, but unlike the hedger,
hopes to profit from fluctuations in prevailing stock market values or interest
rates.

Each Portfolio's futures transactions will be entered into for traditional
hedging purposes--that is, futures contracts will be sold to protect against a
decline in the price of securities that the Portfolio owns, or futures contracts
will be purchased to protect the Portfolio against an increase in the price of
securities it intends to purchase. As evidence of this hedging intent, each
Portfolio expects that approximately 75% of such futures contract purchases will
be "completed"; that is, upon sale (offsetting) of these long contracts,
equivalent amounts of related securities

B-6
<PAGE>

will have been or are then being purchased by the Portfolio in the cash market.

MARGIN. Initial margin is the amount of funds that must be deposited by a
Portfolio with its broker in order to initiate futures trading. An initial
margin deposit is intended to assure the Portfolio's performance of the futures
contract. The margin required for a particular futures contract is set by the
exchange on which the contract is traded and may range upward from less than 5%
of the value of the contract being traded.

Variation margin is the amount of subsequent payments that must be made to
and from the broker to maintain the Portfolio's open position in the futures
contracts. Variation margin payments are made on a daily basis as the price of
the underlying stock index or financial instrument fluctuates. If the value of
the open futures position changes (by increase, in the case of a sale, or by
decrease, in the case of a purchase) so that the loss on the futures contract
reaches a point at which the margin on deposit does not satisfy margin
requirements, the broker will require the Portfolio to make a variation margin
payment in the amount of the insufficiency. However, if the value of a position
increases because of favorable price changes in the futures contract so that the
margin deposit exceeds the required margin, the Portfolio will promptly demand
payment by the broker of variation margin in the amount of the excess. All
variation margin payments received by the Portfolio will be held by the Fund's
custodian in a separate account for the Portfolio.

In computing net asset value daily each Portfolio will mark to market the
current value of its open futures contracts. Each Portfolio expects to earn
interest income on its initial margin deposits.

EXAMPLE OF PURCHASE OF STOCK INDEX FUTURES CONTRACT. A Portfolio might
purchase a stock index futures contract when it anticipates a significant market
or market sector advance and wishes to participate in such advance at a time
when the Portfolio is not fully invested, for example, because the Portfolio has
not selected the individual stocks which it wishes to purchase. The Portfolio
would be endeavoring to eliminate the effect of all or part of an expected
increase in the market price of the stocks that the Portfolio may purchase at a
later date.

For example, assume that the prices of certain stocks that the Portfolio
may later purchase tend to move in concert with the Standard and Poor's 500
Stock Index. The Portfolio wishes to attempt to fix the purchase price of its
anticipated stock investment until the time (three months in this example) when
it may purchase the stock. Assume the stock has a market price of 125 and the
Portfolio believes that, because of an anticipated advance in the stock market,
the price will have risen in three months. The Portfolio might enter into
futures contract purchases of the Standard and Poor's 500 Stock Index for a
price of 125. If the market price of the stock should increase from 125 to 130,
the futures market price for the Standard and Poor's 500 Stock Index might also
increase, e.g., from 125 to 130. In that case, the five-point increase in the
price that the Portfolio would have to pay for the stock would be offset by the
five-point gain realized by closing out the futures contract purchase.

If the Portfolio should be mistaken in its forecast of market values, and
the stock index should decline below 125, the market value of the stocks being
hedged would presumably decline. Unless the Portfolio would purchase

B-7
<PAGE>

the stocks for the decreased price, the Portfolio would realize a loss on the
sale of the futures contract which would not be offset by the price decrease.

EXAMPLE OF SALE OF STOCK INDEX FUTURES CONTRACT. The Portfolio might sell
stock index futures contracts in anticipation of a general market or market
sector decline that may adversely affect the market values of the stocks held by
the Portfolio. The Portfolio would be endeavoring to substantially reduce the
risk of a decline in the value of its stocks without selling the stocks with
resultant transaction costs.

For example, assume that the market price of certain stocks held by the
Portfolio tend to move in concert with the Standard and Poor's 500 Stock Index.
The stock currently has a market value of 125, which the Portfolio believes will
decline because of an anticipated decline in the stock market. The Portfolio
wishes to attempt to fix the current market value of the stock until some time
in the future. The Portfolio might enter into a futures contract sale of the
Standard and Poor's 500 Stock Index at a price of 125. If the market price of
the stock should decline from 125 to 120, the futures market price of the
Standard and Poor's 500 Stock Index might also decline, e.g. from 125 to 120.
In that case the five-point loss in the market value of the stock would be
offset by the five-point gain realized by closing out the futures contract. The
futures market price of the Standard and Poor's 500 Stock Index might decline to
more or less than 120 because of the imperfect correlation with the prices of
the stocks hedged.

If the Portfolio should be mistaken in its forecast of the stock market,
and the futures market price of the Standard and Poor's 500 Stock Index should
increase above 125, the market price of the stock would increase. The benefit
of this increase would be offset by the loss realized on closing out the futures
contract sale.

EXAMPLE OF PURCHASE OF INTEREST RATE FUTURES CONTRACT. The Portfolio might
purchase an interest rate futures contract when it wishes to defer for a time a
fully invested position in longer term securities, for example, in order to
continue holding shorter term securities with higher yields. The Portfolio
would be endeavoring to eliminate the effect of all or part of an expected
increase in market price of the longer term bonds that the Portfolio may wish to
purchase at a later date.

For example, assume that the market price of a type of longer term bonds
that the Portfolio may later purchase, currently yielding 10%, tends to move
in concert with futures market prices of long-term U.S. Treasury bonds. The
Portfolio wishes to attempt to fix the purchase price (and thus the 10%
yield) of its anticipated longer term bond investment until the time (four
months away in this example) when it may purchase the bond. Assume the
longer term bond has a market price of 100, and the Portfolio believes that,
because of an anticipated decline in interest rates, the price will have
risen (and correspondingly the yield will have declined) in four months. The
Portfolio might enter into futures contract purchases of Treasury bonds for a
price of 98. At the same time, the Portfolio would purchase, for example at
100, or continue to hold, shorter term securities that are either maturing in
four months or are earmarked by the Portfolio for sale in four months.
Assume these short-term securities are yielding 15%. If the market price of
the longer term bond should increase from 100 to 105, the futures market
price for Treasury bonds might also increase, e.g., from 98 to 103. In that
case, the five-point increase in the price that the Portfolio would have to
pay for the longer term bond would be offset by the five-point gain realized
by closing out the futures contract purchase.

B-8
<PAGE>

If the Portfolio should be mistaken in its forecast of interest rates, and
the futures market price of the U.S. Treasury obligation should decline below
98, the market price of the security being hedged would presumably decline. If
short-term rates at the same time fall to 10% or below, it is likely that the
Portfolio would follow through with its anticipated purchases of longer term
bonds, as the market price of available longer term bonds would have decreased.
The benefit of this price decrease, and thus the yield increase, would be offset
by the loss realized on closing out the futures contract purchase.

EXAMPLE OF SALE OF INTEREST RATE FUTURES CONTRACT. The Portfolio might
sell an interest rate futures contract in order to maintain the income derived
from its continued holding of a long-term security while endeavoring to avoid
part or all of the loss in market value that would otherwise accompany a decline
in prices of longer term securities because of an increase in prevailing
interest rates.

For example, assume that the market price of a certain longer term security
held by the Portfolio tends to move in concert with the futures market prices of
long-term U.S. Treasury bonds. The security has a current market price of 100,
which the Portfolio believes will decline because of an anticipated rise in
interest rates. The Portfolio wishes to attempt to fix the current market value
of this security until some point in the future. The Portfolio might enter into
a futures contract sale of Treasury bonds at a price of 98. If the market value
of the security should decline from 100 to 95, the futures market price of
Treasury bonds might also decline, e.g., from 98 to 93. In that case, the
five-point loss in the market value of the security would be offset by the
five-point gain realized by closing out the futures contract sale. The futures
market price of Treasury bonds might decline to more or less than 93 because of
the imperfect correlation with the prices of the securities hedged.

If the Portfolio should be mistaken in its forecast of interest rates, and
the futures market price of the U.S. Treasury obligation should increase above
98, the market price of the securities, including the security being hedged,
would increase. The benefit of this increase would be offset by the loss
realized on closing out the futures contract sale.

RISKS. Financial futures prices are volatile and difficult to forecast.
Stock index futures prices reflect the market values of the stocks included in
the index, while interest rate futures contracts are influenced, among other
things, by changes in prevailing interest rates and anticipation of future
interest rate changes. The factors influencing interest rate futures prices are
in turn affected by government fiscal and monetary policies and actions, and
national and international political and economic events, while stock market
values are also influenced by corporate management policies, consumer demand,
competition, sources of raw materials and supplies and government regulation.

At best, the correlation between changes in prices of futures contracts and
the securities being hedged can be only approximate. The degree of imperfection
of correlation depends upon circumstances, such as: variations in speculative
market demand for futures and for equity or debt securities, including technical
influences in futures trading, and differences between the securities being
hedged and the instruments underlying the standard futures contracts available
for trading. A decision of whether, when and how to hedge involves the exercise
of skill and judgment, and even a well-conceived hedge

B-9
<PAGE>

may be unsuccessful to some degree because of market behavior or unexpected
stock market or interest rate trends.

Because of the low margin deposits required, futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the futures contract is deposited as initial margin, a 10% decrease
in the value of the futures contract would result in a total loss of the initial
margin deposit before any deduction for the transaction costs, if the account
were then closed out, and 15% decrease would result in a loss equal to 150% of
the initial margin deposit. Thus, a purchase or sale of a futures contract may
result in losses in excess of the amount invested in the futures contract.
However, the Portfolio would presumably have sustained comparable losses if,
instead of the futures contract, it had invested in the underlying security.
Furthermore, in order to be certain that the Portfolio has sufficient assets to
satisfy its obligations when it purchases a futures contract, the Portfolio
deposits cash or cash equivalents equal in value to the market value of the
futures contract in a segregated account for the Portfolio with the Fund's
custodian.

Most United States interest rate futures exchanges and the Chicago
Mercantile Exchange limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and therefore does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting some futures
traders to substantial losses.

FOREIGN CURRENCY FUTURES. The International Equity and High Yield Bond
Portfolios have the authority to deal in forward foreign exchange between
currencies of the different countries in which the Portfolio will invest as a
hedge against possible variations in the foreign exchange rate between these
currencies. This is accomplished through contractual agreements to purchase or
sell a specified currency at a specified future date and price set at the time
of the contract. The Portfolios' dealings in forward foreign exchange will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is the purchase or sale of forward foreign
currency with respect to specific receivables or payables of the Portfolio
arising from the purchase and sale of portfolio securities, the sale and
redemption of shares of the Portfolio, or the payment of dividends and
distributions by the Portfolio. Position hedging is the sale of forward foreign
currency with respect to portfolio security positions denominated or quoted in
such foreign currency. The International Equity and High Yield Bond Portfolios
will not speculate in forward foreign exchange.

B-10
<PAGE>

and national and international political and economic events, while stock market
values are also influenced by corporate management policies, consumer demand,
competition, sources of raw materials and supplies and government regulation.

Because of the low margin deposits required, futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the futures contract is deposited as initial margin, a 10% decrease
in the value of the futures contract would result in a total loss of the initial
margin deposit before any deduction for the transaction costs, if the account
were then closed out, and a 15% decrease would result in a loss equal to 150% of
the initial margin deposit. Thus, a purchase or sale of a futures contract may
result in losses in excess of the amount invested in the futures contract.
However, the Portfolio would presumably have sustained comparable losses if,
instead of the futures contract, it had invested in the underlying security.
Furthermore, in order to be certain that the Portfolio has sufficient assets to
satisfy its obligations when it purchases a futures contract, the Portfolio
deposits cash or cash equivalents equal in value to the market value of the
futures contract in a segregated account with the Fund's custodian.

FEDERAL INCOME TAX TREATMENT. For Federal income tax purposes, each
Portfolio is required to recognize as income for each taxable year its net
unrealized gains and losses on futures contracts as of the end of the year as
well as those actually realized during the year. Any gain or loss recognized
with respect to a futures contract is considered to be 60% long-term and 40%
short-term, without regard to the holding period of the contract. In the case
of a futures transaction classified as a "mixed straddle," the recognition of
losses may be deferred to a later taxable year.

B-11
<PAGE>

In order for each Portfolio to continue to qualify for Federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income, i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities. Any net gain realized from the closing out of futures contracts,
for purposes of the 90% requirement, is considered gain from the sale of
securities and therefore is qualifying income. In addition, gains realized on
the sale or other disposition of securities held for less than three months must
be limited to less than 30% of the Portfolio's annual gross income.
Consequently, in order for the Portfolio to avoid realizing a gain within a
three-month period, the Portfolio may be required to defer the closing out of a
contract beyond the time when it would otherwise be advantageous to do so.

COVERED CALL OPTION CONTRACTS

The Index 500 Stock, Balanced, Growth and Income Stock, Growth Stock,
Aggressive Growth Stock and High Yield Bond Portfolios may engage in writing
covered call option contracts--options on securities owned by the
Portfolios--and may purchase call options only to close out a position acquired
through the writing of such options. Any option written or purchased by a
Portfolio must be listed on a domestic exchange. A covered call option gives
the purchaser of the option the right to purchase the underlying security at a
fixed exercise price at any time prior to the expiration of the option,
regardless of the market price of the security during the option period. As
consideration for the option the purchaser pays the Portfolio a premium which
the Portfolio retains whether or not the option is exercised. A covered call
option will benefit a Portfolio if, over the option period, the underlying
security declines in value or does not appreciate above the aggregate value of
the exercise price and the premium. However, a Portfolio risks a loss of
profits if the underlying security appreciates above the aggregate value of the
exercise price and the premium.

The Portfolios may also close out a position acquired through writing a
call option by purchasing a call option on the same security with the same
exercise price and expiration date as the call option which it has previously
written on the security. Thus, when a security subject to a call option is sold
from a Portfolio (i.e., to protect the Portfolio from possible depreciation of
the security), the Portfolio will purchase a call option on the security to
close out the existing call option. Depending on the premium of the contract, a
Portfolio will realize a profit or a loss on the transaction. Option
transactions may increase a Portfolio's transaction costs and turnover rate and
will be initiated only where appropriate to achieve a Portfolio's investment
objectives.

REVERSE REPURCHASE AGREEMENTS

The Money Market and Balanced Portfolios may enter into reverse repurchase
agreements with banks and broker-dealers. Such agreements involve the sale of
money market securities held by a Portfolio pursuant to an agreement to
repurchase the securities at an agreed upon price, date and interest payment.
The Portfolio will use the proceeds of reverse repurchase agreements to purchase
other money market securities which either mature, or can be sold under an
agreement to resell, at or prior to the expiration of the reverse repurchase
agreement. A Portfolio will utilize reverse repurchase agreements when the
interest income to be earned from the investment of proceeds from the
transaction is greater than the interest expense of the reverse repurchase
transaction. When effecting reverse repurchase

B-12
<PAGE>

transactions, a Portfolio will hold securities of a dollar amount equal in value
to the securities subject to the reverse repurchase agreement in a segregated
account. Amounts subject to reverse repurchase agreements are also subject to a
300% asset coverage requirement. If such amounts in the aggregate exceed this
asset coverage requirement, the Portfolio would be obligated within three days
to reduce such amounts to meet the requirement. Under no circumstances will a
Portfolio enter into a reverse repurchase agreement with Northwestern Mutual
Life.

WARRANTS

The Index 500 Stock, Balanced, Growth and Income Stock, Growth Stock,
Aggressive Growth Stock and High Yield Bond Portfolios may invest in warrants.
No Portfolio intends to invest more than 2% of its net assets in warrants that
are not listed on a national securities exchange. In no event will a
Portfolio's investment in warrants exceed 5% of its net assets. (A warrant is a
right to buy a certain security at a set price during a certain time period.)

ASSET-BACKED AND VARIABLE RATE SECURITIES

Consistent with its investment objectives and policies, the Money Market
Portfolio may invest in asset-backed and variable rate securities.

Asset-backed securities represent fractional interests in pools of retail
installment loans or revolving credit receivables. These assets are generally
held by a special purpose trust and payments of principal and interest, or
interest only, are passed through or paid through monthly or quarterly to
certificate holders. Payments may be guaranteed up to certain amounts by
letters of credit issued by a financial institution affiliated or unaffiliated
with the trustee or originator of the trust. Underlying receivables are
generally subject to prepayment, which may reduce the overall return to
certificate holders. Nevertheless, for asset-backed securities, principal
repayment rates tend not to vary much with interest rates and the short-term
nature of the underlying loans or other receivables tends to dampen the impact
of any change in the prepayment level. Certificate holders may also experience
delays in payment on the certificates if the full amounts due on underlying
sales contracts or other receivables are not realized by the trust because of
unanticipated legal or administrative costs of enforcing the contracts, or
because of depreciation or damage to the collateral securing certain contracts,
or other factors.

Variable rate securities bear rates of interest that are adjusted
periodically or which "float" continuously according to formulae intended to
minimize fluctuations in values of the instruments. For the Money Market
Portfolio, the Fund determines the maturity of variable rate securities in
accordance with Securities and Exchange Commission rules that allow the Fund to
consider certain of such instruments as having maturities less than the maturity
date on the instrument.

SHORT-TERM TRADING

Each Portfolio will generally not engage in short-term trading (purchases
and sales within seven days).

B-13
<PAGE>

FIRM COMMITMENT AGREEMENTS AND "WHEN-ISSUED" SECURITIES

Each Portfolio may enter into firm commitment agreements for the purchase
of securities at an agreed upon price on a specified future date. A Portfolio
may purchase new issues of securities on a "when-issued" basis, whereby the
payment obligation and interest rate on the instruments are fixed at the time of
the transaction. Such transactions might be entered into, for example, when the
manager of a Portfolio anticipates a decline in the yield of securities of a
given issuer and is able to obtain a more advantageous yield by committing
currently to purchase securities to be issued or delivered later.

A Portfolio will not enter into such a transaction for the purpose of
investment leverage. Liability for the purchase price - and all the rights and
risks of ownership of the securities - accrue to the Portfolio at the time it
becomes obligated to purchase such securities, although delivery and payment
occur at a later date. Accordingly, if the market price of the security should
decline, the effect of the agreement would be to obligate the Portfolio to
purchase the security at a price above the current market price on the date of
delivery and payment. During the time the Portfolio is obligated to purchase
such securities it will maintain in a segregated account U.S. Government
securities, high-grade debt obligations, or cash or cash equivalents of an
aggregate current value sufficient to make payment for the securities.

PRIVATE PLACEMENT TRANSACTIONS AND ILLIQUID ASSETS

Each Portfolio may invest up to 15% of its total assets in securities
acquired in private placement transactions and other illiquid assets. For the
Money Market Portfolio the limit is 10%. For the purpose of determining each
Portfolio's net asset value, these assets will be valued at their fair value as
determined in good faith by the Fund's Directors. If a Portfolio should have
occasion to sell an investment in restricted securities at a time when the
market for such investments is unfavorable, a considerable period may elapse
between the time when the decision to sell it is made and the time when the
Portfolio will be able to sell the investment, with a possible adverse effect
upon the amount to be realized from the sale.

Notwithstanding these limitations a Portfolio may purchase securities
which, though not registered under the Securities Act of 1933 (the "1933 Act"),
are eligible for purchase and sale pursuant to Rule 144A under the 1933 Act.
Rule 144A permits unregistered securities to be traded among qualified
institutional investors, including the Portfolios. Rule 144A securities that
are determined to be liquid are not subject to the limitations on illiquid
assets. The Fund's investment adviser, Northwestern Mutual Investment Services,
Inc., determines and monitors the liquidity status of each Rule 144A security in
which a Portfolio invests, subject to supervision and oversight by the Board of
Directors of the Fund. The investment adviser takes into account all of the
factors which may have a material bearing on the ability of the Portfolio to
dispose of the security in seven days or less, at a price reasonably consistent
with the value used to determine the Portfolio's net asset value per share,
including the following factors: (1) the frequency and volume of trades, (2)
the number and sources of price quotes, (3) the number, and identity, of dealers
willing to purchase or sell the issue, and the number and identity of other
potential purchasers, (4) any dealer undertakings to make a market in the
security, (5) the nature of the security, and (6) the nature of the market in
which the issue is traded, including the time

B-14
<PAGE>

typically required to make trades, the methods of soliciting offers and the
mechanics of transfer.

RISK FACTORS FOR THE INTERNATIONAL EQUITY PORTFOLIO

The International Equity Portfolio has an unlimited right to purchase
securities in any foreign country, developed or developing, if they are listed
on an exchange, as well as a limited right to purchase such securities if they
are unlisted. Investors should consider carefully the risks involved in
securities of companies and governments of foreign nations, which are in
addition to the usual risks inherent in domestic investments.

Investments in companies domiciled in developing countries may be subject
to potentially higher risks than investments in developed countries. These
risks include (i) less social, political and economic stability; (ii) the small
current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) certain national policies which may restrict the
Portfolio's investment opportunities, including restrictions on investment in
issuers or industries deemed sensitive to national interests; (iv) foreign
taxation; (v) the absence of developed structures governing private or foreign
investment or allowing for judicial redress for injury to private property; (vi)
the absence, until recently in certain Eastern European countries, of a capital
market structure or market-oriented economy; and (vii) the possibility that
recent favorable economic developments in Eastern Europe may be slowed or
reversed by unanticipated political or social events in such countries.

Despite the dissolution of the Soviet Union, the Communist Party may
continue to exercise a significant role in certain Eastern European countries.
To the extent of the Communist Party's influence, investments in such countries
may involve risks of nationalization, expropriation and confiscatory taxation.
The communist governments of a number of Eastern European countries expropriated
a large amount of private property in the past, in many cases without adequate
compensation, and there can be no assurance that such expropriation will not
occur in the future. In the event of such expropriation, the International
Equity Portfolio could lose a substantial portion of any investments it has made
in the affected countries. Further, no accounting standards exist in Eastern
European countries. Finally, even though certain Eastern European currencies
may be convertible into U.S. dollars, the conversion rates may be artificial to
the actual market values and may be adverse to the Portfolio's shareholders.

There may be less publicly available information about foreign companies
comparable to the reports and ratings published about companies in the United
States. Foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards, and auditing practices and
requirements may not be comparable to those applicable to United States
companies. Foreign markets have substantially less volume than the New York
Stock Exchange, and securities of some foreign companies are less liquid and
more volatile than securities of comparable United States companies. Commission
rates in foreign countries, which are generally fixed rather than subject to
negotiation as in the United States, are likely to be higher. In many foreign
countries there is less government supervision and regulation of stock
exchanges, brokers and listed companies than in the United States.

The International Equity Portfolio endeavors to buy and sell foreign
currencies on as favorable a basis as practicable. Some price spread on

B-15
<PAGE>

currency exchange (to cover service charges) may be incurred, particularly when
the Portfolio changes investment from one country to another or when proceeds of
the sale of shares in U.S. dollars are used for the purchase of securities in
foreign countries. Also, some countries may adopt policies which would prevent
the Portfolio from transferring cash out of the country or withhold portions of
interest and dividends at the source, or impose other taxes with respect to the
Portfolio's investments in securities of issuers of that country. There is the
possibility of expropriation, nationalization or confiscatory taxation, foreign
exchange controls (which may include suspension of the ability to transfer
currency from a given country), default in foreign government securities,
political or social instability or diplomatic developments which could affect
investments in securities of issuers in those nations.

The International Equity Portfolio may be affected either unfavorably or
favorably by fluctuations in the relative rates of exchange between the
currencies of different nations, by exchange control regulations and by
indigenous economic and political developments. Through the Portfolio's
flexible policy, the Portfolio's manager endeavors to avoid unfavorable
consequences and to take advantage of favorable developments in particular
nations where from time to time it places the Portfolio's investments. The
exercise of this flexible policy may include decisions to purchase securities
with substantial risk characteristics and other decisions such as changing the
emphasis on investments from one nation to another and from one type of security
to another. Some of these decisions may later prove profitable and others may
not. No assurance can be given that profits, if any, will exceed losses.

The Directors of the Fund consider at least annually the likelihood of the
imposition by any foreign government of exchange control restrictions which
would affect the liquidity of the Portfolio's assets maintained with custodians
in foreign countries, as well as the degree of risk from political acts of
foreign governments to which such assets may be exposed. They also consider the
degree of risk involved through the holding of portfolio securities in domestic
and foreign securities depositories. However, in the absence of willful
misfeasance, bad faith or gross negligence on the part of the Portfolio's
investment adviser, or reckless disregard of its obligations and duties under
the Investment Advisory Agreement, any losses resulting from the holding of the
Portfolio's portfolio securities in foreign countries and/or with securities
depositories will be at risk of the shareholders. No assurance can be given
that the Directors' appraisal of the risks will always be correct or that such
exchange control restrictions or political acts of foreign governments might not
occur.

The International Equity Portfolio may enter into a contract for the
purchase or sale of a security denominated in a foreign currency and may enter
into a forward foreign currency contract ("forward contract") in order to "lock
in" the U.S. dollar price of the security. In addition, when the Portfolio's
manager believes that the currency of a particular foreign country may suffer or
enjoy a substantial movement against another currency, it may enter into a
forward contract to sell or buy the amount of the former foreign currency,
approximating the value of some or all of the Portfolio's portfolio securities
denominated in such foreign currency. The projection of short-term currency
market movement is extremely difficult, and the successful execution of a
short-term hedging strategy is highly uncertain.

It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of the contract. Accordingly, it may

B-16
<PAGE>

be necessary for the Portfolio to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Portfolio is obligated
to deliver and if a decision is made to sell the security and make delivery of
the foreign currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the
Portfolio is obligated to deliver.

If the Portfolio retains the portfolio security and engages in an
offsetting transaction, the Portfolio will incur a gain or a loss to the extent
that there has been movement in forward contract prices. If the Portfolio
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Portfolio entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Portfolio will realize a gain to
the extent the price of the currency it has agreed to sell exceeds the price of
the currency it has agreed to purchase. Should forward prices increase, the
Portfolio will suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.

PORTFOLIO TURNOVER

Portfolio turnover may vary from year to year or within a year depending
upon economic, market and business conditions. The annual portfolio turnover
rates of the Portfolios cannot be accurately predicted. It is anticipated that
the annual portfolio turnover rate for the Index 500 Stock Portfolio will not
exceed 4%, that the rate for the High Yield Bond Portfolio will generally not
exceed 140% and that the rate for the Select Bond Portfolio will generally not
exceed 185%. For the other Portfolios, it is anticipated that the rate will
generally not exceed 100%. In 1997 the portfolio turnover rate for the Growth
and Income Stock Portfolio was higher than usual because of market conditions
over the course of the year. The portfolio turnover rate for the Select Bond
Portfolio was higher than anticipated in 1997 because of a change in the
portfolio manager and adoption of a more active trading style. Short-term debt
securities are excluded in the calculation of portfolio turnover rates. U.S.
Government securities are included in the calculation of portfolio turnover
rates.

For years 1996 and 1997, the portfolio turnover rates were:

Portfolio Turnover Rate 1997 1996
----------------------- ---- ----
<S> <C> <C>
Aggressive Growth Stock Portfolio 57.27% 47.25%
International Equity Portfolio 16.74% 17.07%
Growth Stock Portfolio 33.20% 37.61%
Growth and Income Stock Portfolio 144.52% 93.92%
Index 500 Stock Portfolio 3.15% 3.45%
Balanced Portfolio 29.94% 67.66%
High Yield Bond Portfolio 129.49% 143.92%
Select Bond Portfolio 184.93% 195.98%

</TABLE>

The annual portfolio turnover rate of each Portfolio is the lesser of
purchases or sales of the Portfolio's securities for the year stated as a
percentage of the average value of the Portfolio's assets.

B-17
<PAGE>

MANAGEMENT OF THE FUND

The following is a list of the Directors and Officers of the Fund together
with a brief description of their principal occupations during the past five
years.

James D. Ericson (62), President and Director*
720 East Wisconsin Avenue
Milwaukee, WI 53202

Trustee of Northwestern Mutual Life; President and Chief Executive
Officer of Northwestern Mutual

Stephen N. Graff (63), Director*
805 Lone Tree Road
Elm Grove, WI 53122

Retired Partner, Arthur Andersen LLP (Public Accountants) since 1994;
Senior Partner, 1993-1994; prior thereto, Managing Partner -
Milwaukee, WI office; Trustee of Northwestern Mutual Life since 1996

Martin F. Stein (61), Director
1800 East Capitol Drive
Milwaukee, WI 53211

Chairman of the Board of EyeCare One Corporation (retail sales of
eyewear)

John K. MacIver (67), Director
100 East Wisconsin Avenue
Milwaukee, WI 53202

Partner, Michael Best & Friedrich, Attorneys at Law

William J. Blake (65), Director
1105 North Waverly Place
Milwaukee, WI 53202

Chairman, Blake Financial Corporation (real estate investments and
venture capital)

William A. McIntosh (58), Director
525 Sheridan Road
Kenilworth, IL 60043

Retired Division Head, U.S. Fixed Income of Salomon Brothers
(investment securities) since 1995; prior thereto; Division Head, U.S.
Fixed Income

B-18
<PAGE>

Mark G. Doll (48), Vice President and Treasurer
720 East Wisconsin Avenue
Milwaukee, WI 53202

Vice President and Assistant Treasurer-Public Markets of Northwestern
Investment Management Company since 1998; Senior Vice President of
Northwestern Mutual Life since 1996; Senior Vice President and
Treasurer, 1995; prior thereto, Vice President and Treasurer.
Executive Vice President, Investment Advisory Services of Northwestern
Mutual Investment Services, Inc. since 1996; prior thereto, President

Patricia L. Van Kampen (46), Vice President-Investments
720 East Wisconsin Avenue
Milwaukee, WI 53202

Managing Director of Northwestern Investment Management Company since
1998; prior thereto, Vice President-Common Stocks of Northwestern
Mutual Life; Vice President-Common Stocks of Northwestern Mutual
Investment Services, Inc.

William R. Walker (41), Vice President-Investments
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

Managing Director of Northwestern Investment Management Company since
1998; prior thereto, Director of Common Stocks of Northwestern Mutual
Life; Vice President of Northwestern Mutual Investment Services, Inc.

Julie M. Van Cleave (39), Vice President-Investments
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

Managing Director of Northwestern Investment Management Company since
1998; prior thereto, Director of Common Stocks of Northwestern Mutual
Life; Vice President-Common Stocks of Northwestern Mutual Investment
Services, Inc.

Steven P. Swanson (44), Vice President-Investments
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

Managing Director of Northwestern Investment Management Company since
1998; Vice President-Securities of Northwestern Mutual Life from 1994
to 1997; prior thereto, Director-Securities; Vice President of
Northwestern Mutual Investment Services, Inc. since 1994

Varun Mehta (30), Vice President-Investments
720 East Wisconsin Avenue
Milwaukee, WI 53202

Director of Northwestern Investment Management Company since 1998;
Investment Officer-Public Fixed Income of Northwestern Mutual Life
from March of 1997 to December of 1997; Portfolio Research
Manager-Fixed Income and Portfolio Manager-Fixed Income of the

B-19
<PAGE>

Ameritech Investment Management Department from 1993 to March of 1997.

Jefferson V. DeAngelis (40), Vice President-Investments
720 East Wisconsin Avenue
Milwaukee, WI 53202

Managing Director of Northwestern Investment Management Company since
1998; prior thereto, Vice President-Fixed Income Securities of
Northwestern Mutual Life; Vice President-Fixed Income Securities of
Northwestern Mutual Investment Services, Inc.

Timothy S. Collins (37), Vice President-Investments
720 East Wisconsin Avenue
Milwaukee, WI 53202

Director of Northwestern Investment Management Company since 1998;
Director of Investments for Northwestern Mutual Life from October of
1996 to December of 1997; Associate Director - Investments from 1993
to 1996; prior thereto, Investment Officer.

Merrill C. Lundberg (58), Secretary
720 East Wisconsin Avenue
Milwaukee, WI 53202

Assistant General Counsel of Northwestern Mutual Life; Secretary of
Northwestern Mutual Investment Services, Inc.

Barbara E. Courtney (40), Controller
720 East Wisconsin Avenue
Milwaukee, WI 53202

Associate Director of Mutual Fund Accounting of Northwestern Mutual
Life since 1996; prior thereto, Assistant Director of Investment
Accounting; Assistant Treasurer of Northwestern Mutual Investment
Services, Inc.

* Directors identified with an asterisk are "interested persons" as defined
in Section 2(a)(19) of the Investment Company Act of 1940.

John K. MacIver has served as a Director since February 2, 1984. William J.
Blake has served as a Director since March 9, 1988. James D. Ericson has served
as a Director since April 27, 1994. Stephen N. Graff and Martin F. Stein have
served as Directors since March 29, 1995. William A. McIntosh has served as a
Director since May 8, 1997.

An Audit Committee and Nominating Committee have been established for the
Fund. Each Committee is made up of those Directors who are not "interested
persons" of the Fund within the meaning of the Investment Company Act.

All Board members and officers of the Fund are also board members or
officers of Mason Street Funds, Inc. ("MSF"), a registered investment company.
Each of the Directors and principal officers of the Fund who is also an
affiliated person of Northwestern Mutual Investment Services, Inc. ("NMIS") or
Northwestern Mutual Life is named above, together with the capacity in which
such person is affiliated with NMIS or Northwestern Mutual Life.

B-20
<PAGE>

COMPENSATION OF OFFICERS AND DIRECTORS. The Fund pays no salaries or
compensation to any of its officers or Directors employed by Northwestern Mutual
Life. NMIS, the investment advisor to the Fund, pays each of the other
Directors of the Fund a total of up to $15,000 per year, consisting of a $5,000
retainer paid in January and $2,500 per meeting of the board of the Fund
attended. MSF pays other Directors fees totaling $9,000 per year, consisting of
a $5,000 retainer paid in April and $1,000 per meeting of the Board of Directors
of MSF attended. The Fund neither pays nor accrues any pension or retirement
benefits to any of the Directors.

COMPENSATION TABLE

(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Total
Person, Compensation Retirement Annual Compensation
Position From Benefits Accrued Benefits From
Registrant as Part of Fund Upon Registrant and
Expenses Retirement Fund Complex
Paid to
Directors
<S> <C> <C> <C> <C>
James D. Ericson, None None None None
Director

William Blake, None None None $20,500
Director

Stephen N. Graff, None None None $24,000
Director

John K. MacIver, None None None $24,000
Director

Martin F. Stein, None None None $24,000
Director

William A. McIntosh, None None None $19,250
Director

</TABLE>

OWNERSHIP OF SHARES OF THE FUND

All of the outstanding shares of the Fund are held by Northwestern
Mutual Life for its General Account and for its separate investment accounts
used for variable annuity contracts and variable life income policies.
Additional shares are being offered only to Northwestern Mutual Life and the
separate investment accounts.

The following tables show the allocation of shares of the Portfolios of
the Fund among the General Account and the separate investment accounts as of
March 31, 1998.

B-21
<PAGE>

AGGRESSIVE GROWTH STOCK PORTFOLIO

<S> <C> <C>
NML Variable Annuity Account A 25,994,791 shares ( 8.20%)
NML Variable Annuity Account B 231,786,117 shares ( 73.40%)
NML Variable Annuity Account C 32,792,465 shares ( 10.40%)
Northwestern Mutual Variable Life Account 25,397,033 shares ( 8.00%)
General Account 0 shares ( 0.00%)
Total 315,970,406 shares (100.00%)

INTERNATIONAL EQUITY PORTFOLIO

NML Variable Annuity Account A 27,462,293 shares ( 7.20%)
NML Variable Annuity Account B 285,650,901 shares ( 74.30%)
NML Variable Annuity Account C 36,293,742 shares ( 9.50%)
Northwestern Mutual Variable Life Account 34,533,499 shares ( 9.00%)
General Account 0 shares ( 0.00%)
Total 383,940,435 shares (100.00%)

GROWTH STOCK PORTFOLIO

NML Variable Annuity Account A 10,323,280 shares ( 6.90%)
NML Variable Annuity Account B 108,712,317 shares ( 72.70%)
NML Variable Annuity Account C 9,829,407 shares ( 6.60%)
Northwestern Mutual Variable Life Account 20,570,358 shares ( 13.80%)
General Account 0 shares ( 0.00%)
Total 149,435,362 shares (100.00%)

GROWTH AND INCOME STOCK PORTFOLIO

NML Variable Annuity Account A 18,954,190 shares ( 6.20%)
NML Variable Annuity Account B 233,390,327 shares ( 76.20%)
NML Variable Annuity Account C 22,856,998 shares ( 7.50%)
Northwestern Mutual Variable Life Account 31,087,179 shares ( 10.10%)
General Account 0 shares ( 0.00%)
Total 306,288,694 shares (100.00%)

INDEX 500 STOCK PORTFOLIO

NML Variable Annuity Account A 42,433,104 shares ( 9.30%)
NML Variable Annuity Account B 318,485,718 shares ( 69.50%)
NML Variable Annuity Account C 52,652,041 shares ( 11.50%)
Northwestern Mutual Variable Life Account 44,468,288 shares ( 9.70%)
General Account 0 shares ( 0.00%)
Total 458,039,151 shares (100.00%)

BALANCED PORTFOLIO

NML Variable Annuity Account A 148,280,643 shares ( 10.60%)
NML Variable Annuity Account B 1,109,601,693 shares ( 79.30%)
NML Variable Annuity Account C 76,941,705 shares ( 5.50%)
Northwestern Mutual Variable Life Account 64,232,243 shares ( 4.60%)
General Account 0 shares ( 0.00%)
Total 1,399,056,284 shares (100.00%)
</TABLE>

B-22
<PAGE>

HIGH YIELD PORTFOLIO

<TABLE>
<CAPTION>
<S> <C>
NML Variable Annuity Account A 8,944,589 shares ( 5.90%)
NML Variable Annuity Account B 111,741,954 shares ( 73.00%)
NML Variable Annuity Account C 7,256,608 shares ( 4.70%)
Northwestern Mutual Variable Life Account 9,498,510 shares ( 6.20%)
General Account 15,600,144 shares ( 10.20%)
Total 153,041,805 shares (100.00%)

SELECT BOND PORTFOLIO

NML Variable Annuity Account A 19,397,766 shares ( 9.70%)
NML Variable Annuity Account B 157,504,367 shares ( 79.00%)
NML Variable Annuity Account C 14,426,173 shares ( 7.30%)
Northwestern Mutual Variable Life Account 7,956,169 shares ( 4.00%)
General Account 0 shares ( 0.00%)
Total 199,284,475 shares (100.00%)

MONEY MARKET PORTFOLIO

NML Variable Annuity Account A 24,400,347 shares ( 12.50%)
NML Variable Annuity Account B 133,525,969 shares ( 68.60%)
NML Variable Annuity Account C 13,206,137 shares ( 6.80%)
Northwestern Mutual Variable Life Account 23,475,603 shares ( 12.10%)
General Account 0 shares ( 0.00%)
Total 194,608,056 shares (100.00%)

</TABLE>

The shares held in connection with certain of the separate investment
accounts are voted by Northwestern Mutual Life in accordance with instructions
received from owners of variable annuity contracts and variable life insurance
policies. The shares held in its General Account are voted by Northwestern
Mutual Life in the same proportions as the shares held in connection with these
separate investment accounts. If applicable laws or regulations change so as to
permit Northwestern Mutual Life to vote the Fund shares in its own discretion,
it may elect to do so.

INVESTMENT ADVISORY AND OTHER SERVICES

The Fund's investment adviser, Northwestern Mutual Investment Services,
Inc. ("NMIS"), is a wholly-owned subsidiary of Northwestern Mutual Life. The
adviser provides investment advice and recommendations regarding the purchase
and sale of securities for the Portfolios and the selection of brokers pursuant
to Investment Advisory Agreements (the "Agreements"). Each Agreement provides
that the adviser will also provide certain services and pay the expenses of the
Fund for certain other administrative services, office space and facilities and
the services of all directors, officers and employees of the Fund. Each
Portfolio (except the Select Bond, Money Market and Balanced Portfolios) pays
its own expenses for fees for services rendered by the custodian, legal counsel
and auditors; costs of Federal registrations of Fund shares; expenses of
meetings and reports; taxes; and brokerage and other expenses directly related
to portfolio transactions.

For acting as investment adviser and for providing such services and paying
such expenses the adviser is paid a monthly fee at the annual rates set forth in
the prospectus for the respective Portfolios. The Fund also pays all interest
charges, brokerage commissions, taxes and extraordinary expenses incurred in
connection with the operation of the Fund. Expenses paid by the Fund are
charged to the Portfolios to which the expenses relate.

B-23
<PAGE>

For the fiscal years ended December 31, 1996 and 1997, NMIS received
$17,368,648 and $23,423,272, respectively, for its services as investment
adviser to the Fund.

Northwestern Mutual Life employs a full staff of investment personnel to
manage its investment assets. Northwestern Mutual Life's personnel and related
facilities are utilized by NMIS in performing its obligations under the
Agreements and Northwestern Mutual Life is a party to each Agreement.

"Northwestern Mutual Life" is the name and service mark of The Northwestern
Mutual Life Insurance Company and the right of the Fund to use the name and mark
is subject to the consent of Northwestern Mutual Life. Under the Agreement
providing such consent, the Fund recognizes the prior rights of Northwestern
Mutual Life in the name and mark, agrees that use of the name and mark by the
Fund will inure to the benefit of Northwestern Mutual Life and agrees that its
right to use the name and mark can be terminated by Northwestern Mutual Life and
will automatically be terminated if at any time NMIS ceases to be the investment
adviser to the Fund or if NMIS ceases to be a subsidiary of Northwestern Mutual
Life.

Templeton Investment Counsel, Inc. ("Templeton Counsel"), a Florida
corporation with principal offices at 500 East Broward Boulevard, Ft.
Lauderdale, Florida 33394 has been retained under an investment sub-advisory
agreement to provide investment advice and, in general, to conduct the
management investment program of the International Equity Portfolio, subject to
the general control of the Board of Directors of the Fund. Templeton Counsel is
a wholly-owned indirect subsidiary of Franklin Resources, Inc. Certain clients
of Templeton Counsel may have investment objectives and policies similar to
those of the International Equity Portfolio. Templeton Counsel may, from time
to time, make recommendations which result in the purchase or sale of a
particular security by its other clients simultaneously with the International
Equity Portfolio. If transactions on behalf of more than one client during the
same period increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price. It is the
policy of Templeton Counsel to allocate advisory recommendations and the placing
of orders in a manner which is deemed equitable by Templeton Counsel to the
accounts involved, including the International Equity Portfolio. When two or
more of the clients of Templeton Counsel (including the International Equity
Portfolio) are purchasing the same security on a given day from the same
broker-dealer, such transactions may be averaged as to price. For its services
pursuant to the sub-advisory agreement, Templeton Counsel is paid, by NMIS,
compensation at the annual rate of .50% of the average net assets of the
International Equity Portfolio, reduced to .40% on assets in excess of $100
million.

J.P. Morgan Investment Management Inc. ("J.P. Morgan Investment"), 522
Fifth Avenue, New York, New York 10036, provides investment advisory services to
the Growth and Income Stock Portfolio, pursuant to an investment sub-advisory
agreement. For the services provided, NMIS pays J.P. Morgan Investment a fee at
the annual rate of .45% on the first $100 million of the Portfolio's assets,
.40% on the next $100 million, .35% on the next $200 million and .30% on assets
in excess of $400 million.

J.P. Morgan Investment is an investment manager for corporate, public, and
union employee benefit funds, foundations, endowments, insurance companies,
government agencies and the accounts of other institutional investors. A wholly
owned subsidiary of J.P. Morgan & Co. Inc., J.P. Morgan Investment was
incorporated in the state of Delaware on February 7, 1984 and

B-24
<PAGE>

commenced operations on July 2, 1984. It was formed from the Institutional
Investment Group of Morgan Guaranty Trust Company of New York, also a subsidiary
of J.P. Morgan & Co. Inc.

Morgan acquired its first tax-exempt client in 1913 and its first pension
account in 1940. Assets under management have grown to over $112 billion. With
offices in London and Singapore, J.P. Morgan Investment draws from a worldwide
resources base to provide comprehensive service to an international group of
clients. Investment management activities in Japan, Australia, and Germany are
carried out by affiliates, Morgan Trust Bank in Tokyo, J.P. Morgan Investment
Management Australia Limited in Melbourne, and J.P. Morgan Investment GmbH in
Frankfurt.

J.P. Morgan Investment currently provides investment advisory services
to the following investment companies: the J.P. Morgan Treasury Money Market
Portfolio, the J.P. Morgan Bond Portfolio, the J.P. Morgan Equity Portfolio,
the J.P. Morgan Small Company Portfolio, and the J.P. Morgan International
Opportunity Portfolio, which are portfolios of the J.P. Morgan Series Trust
II, an open-end diversified investment company registered under the
Investment Company Act of 1940. Morgan Guaranty provides or arranges for the
provision of certain financial and administrative services and oversees fund
accounting for the Trust. J.P. Morgan Investment also acts as the subadviser
to the following U.S. registered investment companies which are otherwise
unaffiliated with J.P. Morgan Investments: Advantus Series Fund, Inc. -
Macro-Cap Value Portfolio, American Century - Benham International Bond Fund,
American Skandia Master Trust - ASMT JPM Money Market Portfolio, American
Skandia Trust - AST Money Market Portfolio, COVA Series Trust - International
Equity Portfolio, COVA Series Trust - Large Capital Stock Portfolio, COVA
Series Trust - Quality Bond Portfolio, COVA Series Trust - Select Equity
Portfolio, COVA Series Trust - Small Capital Stock Portfolio, Endeavor Series
Trust - Enhanced Index Portfolio, EQ Advisors Trust - JPM Core Bond
Portfolio, Frank Russell Emerging Markets Fund, Frank Russell Equity Q Fund,
Frank Russell Equity T Fund, Frank Russell International Fund, Frank Russell
International Securities Fund, Frank Russell Quantitative Equity Fund,
Jefferson Pilot Variable Fund, Inc. - Balanced Portfolio, JNL Series Trust -
JNL/JPM International & Emerging Markets Series, John Hancock Variable Series
Trust I - Strategic Bond Portfolio, Liberty ALL-STAR Equity Fund, Liberty
ALL-STAR Equity Fund Variable Series, Manufacturers Investment Trust -
International Growth and Income Trust, Mason Street Funds, Inc. - Growth and
Income Stock Fund, Mutual Investment Fund of Connecticut, Nationwide Separate
Account Trust - Nationwide Global Equity Fund, North American Funds
- - International Growth and Income Fund, Northwestern Mutual Series Fund, Inc.
- - Growth and Income Stock Portfolio, Pacific Select Fund - The Equity Income
Portfolio, Pacific Select Fund - The Multi-Strategy Portfolio, Phoenix Edge
Series Fund - JPM Research Enhanced Index Series, Preferred Fixed Income
Fund, Preferred Money Market Fund, Preferred Short-Term Government Securities
Fund, Sierra Trust Funds - Global Money Fund, Sierra Trust Funds - Growth and
Income Fund, The Sierra Variable Trust - Global Money Fund, The Sierra
Variable Trust - Growth and Income Fund, Tridan Corporation, WRL Series Fund,
Inc. - Money Market Portfolio.

Northwestern Mutual Life is the licensee under a License Agreement with
Standard & Poor's, dated as of November 30, 1990, relating to the Fund as well
as certain other mutual funds sponsored by Northwestern Mutual Life. The
following disclaimers and limitations are included in accordance with the
requirements of the License Agreement:

The Fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's ("S&P"), a division of The McGraw-Hill Companies, Inc., and none of
the Portfolios of the Fund is so sponsored, endorsed, sold or promoted.
S&P makes no representation or warranty, express or implied, to the owners
of the Fund or any of its Portfolios or any member of the public regarding
the advisability of investing in securities generally or in the Fund or any
of its Portfolios particularly or the ability of the S&P 500 Index to track
general stock market performance. S&P's only relationship to the Licensee
is the licensing of certain trademarks and trade names of S&P and of the
S&P 500 Index which is determined, composed and calculated by S&P without
regard to the Licensee or the Fund. S&P has no obligation to take the
needs of the Licensee or the owners of the Fund or any of its Portfolios
into consideration in determining, composing or calculating the S&P 500
Index. S&P is not responsible for and has not participated in the
determination of the timing of, prices at, or quantities of the Fund or any
of its Portfolio to be issued or in the determination or calculation of the
equation by which the Fund or any of its Portfolios is to be converted into
cash. S&P has no obligation or liability in connection with the
administration, marketing or trading of the Fund.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR
ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY,
EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE
FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR
ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OR MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE OR USE WITH RESPECT

B-25
<PAGE>

TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF
THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN
IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

The custodian for the Index 500 Stock, Aggressive Growth Stock and Balanced
Portf`olio is The Chase Manhattan Bank, N.A., One Chase Manhattan Plaza, New
York, New York 10081. The custodian for the Select Bond, High Yield Bond, Money
Market, Growth Stock and Growth and Income Stock Portfolios is Bankers Trust
Company, 16 Wall Street, New York, New York 10015. The custodian for the
International Equity Portfolio is Brown Brothers Harriman & Co., 40 Water
Street, Boston, Massachusetts 02109. The custodians maintain custody of
securities and other assets of the respective Portfolios and perform certain
services in connection with the purchase, sale, exchange and pledge of
securities of the Portfolios. Canadian Imperial Bank of Commerce, Commerce
Court, Ontario, Canada M5L 1A2 provides custodial services for the Fund in
Canada.

Price Waterhouse LLP, 100 East Wisconsin Avenue, Suite 1500, Milwaukee,
Wisconsin 53202, is the independent public accountant of the Fund and performs
auditing services for the Fund.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION AND OTHER PRACTICES

There is generally no stated commission in the case of fixed-income
securities, which are traded in the over-the-counter markets, but the price paid
by the Fund usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Fund includes a disclosed, fixed
commission or discount retained by the underwriter or dealer. Transactions on
U.S. stock exchanges and other agency transactions involve the payment by the
Fund of negotiated brokerage commissions. Such commissions vary among different
brokers. Also, a particular broker may charge different commissions according
to such factors as the difficulty and size of the transaction. In the case of
securities traded on some foreign stock exchanges, brokerage commissions may be
fixed and the investment adviser or sub-adviser may be unable to negotiate
commission rates for these transactions.

The investment adviser, or sub-adviser in the case of the Growth and Income
Stock and International Equity Portfolios, places all orders for the purchase
and sale of portfolio securities, options, and futures contracts for each
Portfolio through a substantial number of brokers and dealers or futures
commission merchants. In executing transactions, the investment adviser or
sub-adviser will attempt to obtain the best net results for the Portfolio,
taking into account such factors as price (including the applicable brokerage
commission or dollar spread), size of order, the nature of the market for the
security, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer involved, the quality of the service,
the difficulty of execution and operational facilities of the firms involved,
and the firm's risk in positioning a block of securities. In transactions on
stock exchanges in the United States, payments of brokerage commissions are
negotiated. In effecting purchases and sales of portfolio securities in
transactions on United States stock exchanges for the account of the Fund, the
investment adviser or sub-adviser may pay higher commission rates than the
lowest available when the investment adviser or sub-adviser believes it is
reasonable to do so in light of the value of the brokerage and research

B-26
<PAGE>

services provided by the broker effecting the transaction, as described below.
In the case of securities traded on some foreign stock exchanges, brokerage
commissions may be fixed and the investment adviser or sub-adviser may be unable
to negotiate commission rates for these transactions. In the case of securities
traded on the over-the-counter markets, there is generally no stated commission,
but the price includes an undisclosed commission or markup.

Some securities considered for investment by the Fund's Portfolios may also
be appropriate for other clients served by the investment adviser or
sub-adviser. If a purchase or sale of securities consistent with the investment
policies of a Portfolio and one or more of these clients served by the
investment adviser or sub-adviser is considered at or about the same time,
transactions in such securities will be allocated among the Portfolios and
clients in a manner deemed fair and reasonable by the investment adviser or
sub-adviser. Although there is no specified formula for allocating such
transactions, the various allocation methods used by the investment adviser or
sub-adviser, and the results of such allocations, are subject to periodic review
by the Fund's investment adviser and directors.

It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive research services from broker-dealers which execute portfolio
transactions for the clients of such advisers. Consistent with this practice,
the investment adviser or sub-adviser may receive research services from many
broker-dealers with which the investment adviser or sub-adviser places portfolio
transactions. These services, which in some cases may also be purchased for
cash, include such matters as general economic and security market reviews,
industry and company reviews, evaluations of securities and recommendations as
to the purchase and sale of securities. Some of these services may be of value
to the investment adviser or sub-adviser in advising its various clients
(including the Portfolios), although not all of these services are necessarily
useful and of value in managing a Portfolio.

As permitted by Section 28(e) of the Securities Exchange Act of 1934, the
investment adviser or sub-adviser may cause a Portfolio to pay a broker-dealer,
which provides "brokerage and research services" (as defined in the Act) to the
investment adviser or sub-adviser, an amount of disclosed commission for
effecting a securities transaction for the Portfolio in excess of the commission
which another broker-dealer would have charged for effecting that transaction.

There are no arrangements whatsoever, written or oral, relating to the
allocation to specific brokers of orders for Portfolio transactions.
Consideration is given to those firms providing statistical and research
services to the investment adviser or sub-adviser, but it is not the policy of
any Portfolio to pay higher brokerage commissions to a firm solely because it
has provided such services. In 1997 all brokerage business was allocated to
firms which provided these services. Statistical and research services
furnished by brokers typically include: analysts' reports on companies and
industries, market forecasts, economic analyses and the like. Such services may
tend to reduce the expenses of the adviser or sub-adviser and this has been
considered in setting the advisory fee paid by each Portfolio. During the years
ended December 31, 1995, 1996, and 1997, the Fund paid brokerage commissions of
$1,174,651, $1,859,133 and $3,985,791, respectively.

The Directors of the Fund have recently authorized the investment adviser
and sub-advisers to place portfolio orders for the Fund with Robert W. Baird &
Co. Incorporated ("Baird"), a broker-dealer which is a corporate

B-27
<PAGE>

affiliate of Northwestern Mutual Life. This authorization is subject to all
applicable legal requirements, including procedures adopted by the Directors.
During 1997, the Fund paid $21,869 in commissions to Baird. This represents .5%
of the aggregate brokerage commissions paid during 1997 and .6% of aggregate
Fund transactions. No orders were placed with an affilate broker during 1995 or
1996.

CAPITAL STOCK

The capital stock of the Fund is divided into nine classes corresponding to
the nine Portfolios of the Fund.

Each class is preferred over the other classes with respect to the assets
of the Portfolio to which the class relates. Dividends and distributions,
including distributions in the event of liquidation, are payable only out of
assets of the Portfolio to which the class relates. All shares of the Fund are
entitled to vote on all matters submitted to a vote of the shareholders except
that shares shall be voted by class on matters concerning only that class, to
approve an investment advisory agreement, to approve changes in fundamental
policies with respect to that class and when otherwise required by the
Investment Company Act of 1940. Shares may be redeemed only for cash, except
that capital stock of any class may be redeemed in kind with assets of the
Portfolio to which the class relates if the Directors deem such action
desirable. Each share is nonassessable and shareholders have no preemptive or
conversion rights.

PURCHASE, REDEMPTION AND PRICING OF SHARES

Shares of each Portfolio are offered and redeemed at their net asset value
as next determined following receipt of a purchase order or tender for
redemption without the addition of any selling commission or "sales load" or any
redemption charge. The redemption price may be more or less than the
shareholder's cost.

The net asset value of each share of each Portfolio is the net asset value
of the entire Portfolio divided by the number of shares of the Portfolio
outstanding. The net asset value of an entire Portfolio is determined by
computing the value of all assets of the Portfolio and deducting all
liabilities, including reserves and accrued liabilities of the Portfolio.
Portfolio securities for which market quotations are readily available are
valued at current market value.

Equity securities listed on a stock exchange and all call options are
valued at the closing sale price on the stock or options exchange or, if there
has been no such sale, at the closing bid price; stock index futures contracts
and interest rate futures contracts are valued at the closing settlement price
on the commodities exchange; unlisted equity securities are valued at the
closing bid price on the over-the-counter market.

Debt securities with maturities generally exceeding one year are valued on
the basis of valuations furnished by Interactive Data Corporation, a facility
which utilizes electronic data processing techniques to report valuations for
normal institutional size trading units of debt securities, without regard to
exchange or over-the-counter prices, unless the Directors of the Fund determine
that in the case of a particular security some other value is fair.

B-28
<PAGE>

Money market instruments and debt securities with maturities exceeding
sixty days but generally not exceeding one year are valued by marking to market,
except for the Money Market Portfolio. Marking to market is based on an average
(provided by a communication network) of the most recent bid prices or yields.
The marking to market method takes into account unrealized appreciation or
depreciation due to changes in interest rates or other factors which would
influence the current fair values of such securities.

Securities with remaining maturities of sixty days or less, and all debt
securities of 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. Under the amortized cost method of valuation, the
security will initially be valued at the cost on the date of purchase (or, in
the case of securities purchased with more than 60 days remaining to maturity
the market value on the 61st day prior to maturity); and thereafter the
Portfolio will assume a constant proportionate amortization in value until
maturity of any discount or premium.

The value of a foreign security held by the International Equity Portfolio
is determined in its national currency as of the close of trading on the foreign
exchange on which it is traded, or as of 4:00 p.m., New York time, if that is
earlier, and that value is then converted into its U.S. dollar equivalent at
foreign exchange rates in effect at 11:00 a.m., New York time, on the day the
value of the foreign security is determined. If no sale is reported at that
time, the mean between the current bid and asked price is used. Occasionally,
events which affect the values of such securities and such exchange rates may
occur between the times at which they are determined and the close of the New
York Stock Exchange, and will therefore not be reflected in the computation of
the Portfolio's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be valued
at fair value as determined by the management and approved in good faith by the
Directors of the Fund. Trading in securities on European and Far Eastern
securities exchanges and over-the-counter markets is normally completed well
before the close of business in New York on each day on which the New York Stock
Exchange is open. Trading in European or Far Eastern securities generally, or in
a particular country or countries, may not take place on every New York business
day. Furthermore, trading takes place in various foreign markets on days which
are not business days in New York and on which the Fund's net asset value is not
calculated. The International Equity Portfolio calculates net asset value per
share, and therefore effects sales and redemptions of its shares, as of the
close of the New York Stock Exchange once on each day on which that Exchange is
open. Such calculation does not take place contemporaneously with the
determination of the prices of many of the portfolio securities used in such
calculation and if events occur which materially affect the value of these
foreign securities, they will be valued at fair market value as determined by
the management and approved in good faith by the Directors of the Fund.

All other assets, including any securities for which market quotations are
not readily available, will be valued at their fair value as determined in good
faith by the Directors of the Fund. The net asset value is determined as of the
close of trading on the New York Stock Exchange on each day during which the
Exchange is open for trading. In accordance with the requirements of the
Investment Company Act of 1940 the Portfolios will also determine the net asset
value of their shares on any other day on which there is sufficient trading to
materially affect the value of their securities.

B-29
<PAGE>

The Money Market Portfolio will use its best efforts to maintain a constant
net asset value per share of $1.00 (computed to an accuracy of $.005); however,
the net asset value is subject to fluctuation based upon changes in the value of
the Portfolio's securities. Accordingly, if net losses on the Portfolio's
securities for a given period exceed income after expenses, the net asset value
per share of Money Market Portfolio capital stock will decline. The Board of
Directors of the Fund will take such action as it considers appropriate to
maintain the stability of the net asset value per share. For example, the
Directors may reduce or suspend the payment of dividends if the net asset value
per share should decline below $.995 and the Directors may supplement such
dividends with other distributions if the net asset value per share should rise
above $1.005.

The total offering price per share for each Portfolio is computed as
follows:

SPECIMEN PRICE-MAKE-UP SHEET
(as of December 31, 1997)

AGGRESSIVE INTERNATIONAL GROWTH AND
GROWTH STOCK EQUITY GROWTH STOCK INCOME STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET ASSETS $1,067,067,678 $659,850,126 $243,070,670 $371,935,645

NUMBER OF SHARES
OUTSTANDING 319,739,340 390,790,022 134,273,285 279,535,628

NET ASSET VALUE
PER SHARE
(NET ASSETS
NUMBER OF SHARES
(OUTSTANDING) $3.337 $1.689 $1.810 $1.331

OFFERING AND
REDEMPTION
PRICE PER SHARE $3.34 $1.69 $1.81 $1.33
</TABLE>

INDEX 500 BALANCED HIGH YIELD
STOCK PORTFOLIO PORTFOLIO BOND PORTFOLIO
--------------- ---------- ---------------
<S> <C> <C> <C>
NET ASSETS $1,152,857,360 $2,788,493,793 $153,038,242

NUMBER OF SHARES
OUTSTANDING 436,103,758 1,400,746,105 143,916,814

NET ASSET VALUE
PER SHARE
(NET ASSETS

NUMBER OF SHARES
OUTSTANDING) $2.644 $1.991 $1.063

OFFERING AND
REDEMPTION PRICE
PER SHARE $2.64 $1.99 $1.06
</TABLE>

B-30
<PAGE>

SELECT BOND MONEY MARKET
PORTFOLIO PORTFOLIO
---------- ----------
<S> <C> <C>
NET ASSETS $244,835,132 $194,469,976

NUMBER OF SHARES
OUTSTANDING 194,772,223 194,493,703

NET ASSET VALUE
PER SHARE
(NET ASSETS

NUMBER OF SHARES
OUTSTANDING) $1.257 $1.000

OFFERING AND
REDEMPTION PRICE
PER SHARE $1.26 $1.00

</TABLE>

Payment for the shares redeemed must be made within seven days after the
evidence of ownership of such shares is tendered to the Fund; however, the
right to redeem Fund shares may be suspended, or payment of the redemption
value postponed, during any period in which the New York Stock Exchange is
closed or trading thereon is restricted, or any period during which an
emergency exists, or as otherwise permitted by the Investment Company Act
of 1940.

TAXES AND DIVIDENDS

Each Portfolio is qualified or intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. In order to avoid
taxation of capital gains under Subchapter M of the Code, each Portfolio, except
the Money Market Portfolio, will distribute net capital gains annually. Net
capital gains from the sale of investments will be calculated by subtracting any
unused capital loss carryforward from net realized gain for the year, as
prescribed by the Internal Revenue Code. No distribution of realized capital
gains will be made until any capital loss carryforward has been exhausted or
expired. At the end of its last fiscal year, none of the Portfolios experienced
a capital loss carryforward.

CALCULATION OF YIELD QUOTATIONS OF THE MONEY MARKET PORTFOLIO

The Money Market Portfolio's yield is its current investment income
expressed in annualized terms. The Portfolio's yield is calculated by
determining the net change in the value of a pre-existing account having a
balance of one share at the beginning of a seven-day base period. The net
change in the value of the account is divided by the value of the account at the
beginning of the period to obtain the base period return. The result is then
multiplied by 365 and divided by seven, with the resulting annualized yield
carried to the nearest hundredth of one percent. For purposes of this
calculation the net change in the value of the account reflects the value of
additional Portfolio shares purchased with dividends from the original share and
dividends declared on both the original share and any such additional shares.
The calculation reflects net investment income of the Portfolio for the period,
including accrued interest income plus or minus amortized purchase discount or
premium, less all accrued expenses, but does not include realized or unrealized
gains or losses.

- -------------------------------------------------------------------------------

B-31
<PAGE>

NAME CHANGE OF THE FUND

The name of Northwestern Mutual Series Fund, Inc. was changed from
Northwestern Mutual Variable Life Series Fund, Inc. on May 1, 1994.

- -------------------------------------------------------------------------------

B-32
<PAGE>

APPENDIX A

Description of Ratings as Provided by the Rating Services

CORPORATE BONDS

MOODY'S INVESTORS SERVICE, INC.

Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they compromise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and, thereby, not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the security over any long period of time may be small.

Caa--Bonds which are rated Caa are of poor standing. Such securities may
be in default or there may be present elements of danger with respect to
principal or interest.

Ca--Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

B-33
<PAGE>

C--Bonds which are rated C are the lowest rated class of bonds and are
regarded as having extremely poor prospects of ever attaining any real
investment standing.

Absence of Rating: Where no rating has been assigned or where a rating has
been suspended or withdrawn, it may be for reasons unrelated to the quality of
the issue.

Should no rating be assigned, the reason may be one of the following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities that are not
rated as a matter of policy.

3. There is a lack of essential data pertaining to the issue or issuer.

4. The issue was privately placed, in which case the rating is not
published in Moody's publications.

Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic
ratings classification from Aa through B in its corporate bond rating system.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.

STANDARD & POOR'S

AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.

A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB, B, CCC, CC, C--Debt is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal in
accordance with the terms of this obligation. "BB" indicates the least degree
of speculation and "C" the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are

B-34
<PAGE>

outweighed by large uncertainties or major risk exposures to adverse conditions.

BB--Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.

B--Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.

CCC--Debt rated "CCC" has a currently indefinable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The "CCC" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"B" or "B-" rating.

CC--The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.

C--The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.

CI--The rating "CI" is reserved for income bonds on which no interest is
being paid.

D--Debt rated "D" is in payment default. The "D" rating is used when
interest payments or principal are not made on the date due even if the
applicable grace period has not expired, unless S&P believe that such payments
will be made during such grace period. The "D" rating also will be used upon
the filing of a bankruptcy petition if debt service payments are jeopardized.

Plus (+) or Minus (-)--The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.

NR--Not rated.

PREFERRED STOCKS

MOODY'S INVESTORS SERVICE, INC.

aaa--considered to be a top-quality preferred stock. This rating indicates
good asset protection and the least risk of dividend impairment within the
universe of preferred stocks.

B-35
<PAGE>

aa--considered a high-grade preferred stock. This rating indicates that
there is a reasonable assurance that earnings and asset protection will remain
relatively well maintained in the foreseeable future.

a--considered to be an upper-medium-grade preferred stock. While risks are
judged to be somewhat greater than in the aaa and aa classifications, earnings
and asset protection are, nevertheless, expected to be maintained at adequate
levels.

baa--considered to be medium-grade, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but may be
questionable over any great length of time.

ba--considered to have speculative elements and its future cannot be
considered well assured. Earnings and asset protection may be very moderate and
not well safeguarded during adverse periods. Uncertainty of position
characterizes preferred stocks in this class.

b--generally lacks the characteristics of a desirable investment.
Assurance of dividend payments and maintenance of other terms of the issue over
any long period of time may be small.

caa--likely to be in arrears on dividend payments. This rating designation
does not purport to indicate the future status of payments.

ca--speculative in a high degree and is likely to be in arrears on
dividends with little likelihood of eventual payments.

c--lowest rated class of preferred or preference stock. Issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification: the modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.

STANDARD & POOR'S

"AAA"--This is the highest rating that may be assigned by S&P to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.

"AA"--A preferred stock issue rated "AA" also qualifies as a high-quality
fixed-income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated "AAA".

"A"--An issued rated "A" is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.

"BBB"--An issue rated "BBB" is regarded as backed by an adequate capacity
to pay the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for preferred stock
in this category than for issues in the "A" category.

B-36
<PAGE>

"BB", "B", "CCC"--Preferred stock rated "BB", "B", and "CCC" are regarded,
on balance, as predominantly speculative with respect to the issuer's capacity
to pay preferred stock obligations. "BB" indicates the lowest degree of
speculation and "CCC" the highest degree of speculation. While such issues will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.

"CC"--The rating "CC" is reserved for a preferred stock issue in arrears on
dividends or sinking fund payments but that is currently paying.

"C"--The preferred stock rated "C" is a non-paying issue.

"D"--A preferred stock rated "D" is a non-paying issue with the issuer in
default on debt instruments.

NR indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.

Plus(+) or Minus(-)--To provide more detailed indications of preferred
stock quality, the ratings from "AA" to "CCC" may be modified by the addition of
a plus or minus sign to show relative standing within the major rating
categories.

COMMERCIAL PAPER

MOODY'S INVESTORS SERVICE

The term "commercial paper" as used by Moody's means promissory obligations
not having an original maturity in excess of one year.

Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of rated issuers:

Issuers rated PRIME-1 (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. PRIME-1 repayment ability
will often be evidenced by the following characteristics:

-- Leading market positions in well-established industries.

-- High rates of return on funds employed.

-- Conservative capitalization structures with moderate reliance on debt
and ample asset protection.

-- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

-- Well-established access to a range of financial markets and assured
sources of alternate liquidity.

Issuers rated PRIME-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to

B-37
<PAGE>

variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Issuers rated PRIME-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term debt obligations. The effect of
industry characteristics and market composition may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.

Issuers rated NOT PRIME do not fall within any of the Prime rating
categories.

STANDARD & POOR'S

S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded into several categories ranging from "A-1" for the highest
quality obligations to "D" for the lowest. These categories are as follows:

A-1 Commercial paper rated "A-1" is regarded as having a very strong
degree of safety regarding timely payment. A "+" designation is
applied to those issues which possess extremely strong safety
characteristics.

A-2 Commercial paper rated "A-2" is regarded as having a satisfactory
capacity for timely payment. However, the relative degree of safety
is not as high as for issues designated "A-1"

A-3 Commercial paper rated "A-3" is regarded as having an adequate
capacity for timely payment. They are, however, more vulnerable to
the adverse effects of changes in circumstances than obligations
carrying the higher designations.

B Commercial paper rated "B" is regarded as having only speculative
capacity for timely payment.

C Commercial paper rated "C" is regarded as having a doubtful capacity
for repayment.

D Commercial paper rated "D" is in payment default. The "D" rating is
used when interest payments or principal payments are not made on the
date due even if the applicable grace period has not expired, unless
S&P believes that such payments will be made during such grace period.

B-38
<PAGE>

APPENDIX B

Glossary of Terms

CERTIFICATE OF DEPOSIT
A certificate of deposit is a short term obligation of a commercial bank.

EURODOLLAR CERTIFICATE OF DEPOSIT
A Eurodollar certificate of deposit is a short term obligation of a foreign
subsidiary of a U.S. bank payable in U.S. dollars.

TIME DEPOSIT
A time deposit is a deposit in a commercial bank for a specified period of
time at a fixed interest rate for which a negotiable certificate is not
received.

BANKERS' ACCEPTANCE
A bankers' acceptance is a time draft drawn on a commercial bank by a
borrower, usually in connection with international commercial transactions.

VARIABLE AMOUNT MASTER NOTE
A variable amount master note is a note which fixes a minimum and maximum
amount of credit and provides for lending and repayment within those limits at
the discretion of the lender.

COMMERCIAL PAPER
Commercial paper is a short term promissory note issued by a corporation
primarily to finance short term credit needs.

B-39

<PAGE>
Accountants' Letter

[LOGO]

Report of Independent Accountants

To The Shareholders and Board of Directors of
Northwestern Mutual Series Fund, Inc.

In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the 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 Money Market Portfolio
(constituting Northwestern Mutual Series Fund, Inc., hereafter referred to as
the "Fund") at December 31, 1997, the results of each of their operations for
the year then ended, the changes in each of their net assets for the two years
in the period ended December 31, 1997, and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentations. We believe that our audits, which included confirmations of the
securities at December 31, 1997 by correspondence with the custodian and brokers
and the application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion expressed
above.

/s/ PRICE WATERHOUSE LLP

Milwaukee, Wisconsin
January 27, 1998

B-40
<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
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS
Common Stocks (cost $651,278)......... $973,021
Money Market Investments (cost
$93,922)............................. 93,922
---------
1,066,943
Cash.................................. 94
Due from Sale of Securities........... 2,631
Dividends and Interest Receivable..... 89
Due from Sale of Fund Shares.......... 7
---------
Total Assets........................ 1,069,764
---------
LIABILITIES
Due on Redemption of Fund Shares...... 2,147
Due to Investment Advisor............. 484
Accrued Expenses...................... 60
Futures Variation Margin.............. 5
---------
Total Liabilities................... 2,696
---------
NET ASSETS.............................. $1,067,068
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital (700,000
shares authorized, $.01 par value;
319,739 shares outstanding).......... $ 705,539
Undistributed Net Investment Income... 390
Undistributed Accumulated Net Realized
Gain on Investments.................. 39,778
Net Unrealized Appreciation
(Depreciation) of:
Investment Securities................ 321,743
Index Futures Contracts.............. (382)
---------
Net Assets for 319,739 Shares
Outstanding.......................... $1,067,068
---------
---------
Net Asset Value, Offering and
Redemption Price per Share........... $ 3.34
---------
---------
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest $ 4,707
Dividends (less foreign dividend tax
of $9)............................. 897
---------
Total Income...................... 5,604
---------
Expenses
Management Fees..................... 4,963
Custodian Fees...................... 30
Other Expenses...................... 41
---------
Total Expenses.................... 5,034
---------
Less Custodian Fees:
Paid by Affiliate............ (26)
Paid Indirectly.............. (4)
---------
Total Net Expenses................ 5,004
---------
Net Investment Income................. 600
---------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net Realized Gain on Investments:
Investment Securities............... 42,777
Index Futures Contracts............. 2,191
---------
Net Realized Gain on Investments
for the Period................... 44,968
---------
Net Change in Unrealized Appreciation
(Depreciation) of:
Investment Securities............... 83,083
Index Futures Contracts............. (382)
---------
Net Change in Unrealized
Appreciation of Investments for
the Period 82,701
---------
Net Gain on Investments............... 127,669
---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.............. $ 128,269
---------
---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-41
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Aggressive Growth Stock Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
----------------------
1997 1996
---------- ---------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income (Loss)........ $ 600 $ (210)
Net Realized Gain on Investments.... 44,968 52,175
Net Change in Unrealized
Appreciation of Investments for the
Period............................. 82,701 56,387
---------- ---------
Net Increase in Net Assets
Resulting from Operations......... 128,269 108,352
---------- ---------
Distributions to Shareholders from:
Net Investment Income............... 0 (572)
Net Realized Gain on Investments.... (57,365) (24,986)
---------- ---------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (57,365) (25,558)
---------- ---------
Fund Share Transactions
Proceeds from Sale of 35,663 and
64,691 Shares...................... 110,666 198,427
Proceeds from Shares Issued on
Reinvestment of Distributions Paid
(20,913 and 8,276 shares,
respectively)...................... 57,365 25,558
Payments for 14,059 and 3,953 Shares
Redeemed........................... (43,793) (11,867)
---------- ---------
Net Increase in Net Assets
Resulting from Fund Share
Transactions
(42,517 and 69,014 shares,
respectively)..................... 124,238 212,118
---------- ---------
Total Increase in Net Assets.......... 195,142 294,912
NET ASSETS
Beginning of Period................... 871,926 577,014
---------- ---------
End of Period (includes undistributed
net investment
income/(loss) of $390 and $(210),
respectively)........................ $1,067,068 $871,926
---------- ---------
---------- ---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-42
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Aggressive Growth Stock Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
FOR THE
PERIOD MAY 3,
1994*
FOR THE YEAR THROUGH
ENDED DECEMBER 31, DECEMBER 31,
---------------------------------- ---------------
1997 1996 1995 1994
---------- --------- --------- ---------------
<S> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 3.15 $ 2.77 $ 2.00 $ 1.91
Income from Investment Operations:
Net Investment Income............... -- -- -- --
Net Realized and Unrealized Gain on
Investments........................ 0.39 0.49 0.78 0.09
---------- --------- --------- ---------------
Total from Investment
Operations....................... 0.39 0.49 0.78 0.09
---------- --------- --------- ---------------
Less Distributions:
Distributions from Net Investment
Income............................. -- -- -- --
Distributions from Realized Gains on
Investments........................ (0.20) (0.11) (0.01) --
---------- --------- --------- ---------------
Total Distributions............... (0.20) (0.11) (0.01) --
---------- --------- --------- ---------------
Net Asset Value, End of Period.......... $ 3.34 $ 3.15 $ 2.77 $ 2.00
---------- --------- --------- ---------------
---------- --------- --------- ---------------
Total Return+........................... 13.86% 17.70% 39.29% 4.47%++
---------- --------- --------- ---------------
---------- --------- --------- ---------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $1,067,068 $871,926 $577,014 $327,096
---------- --------- --------- ---------------
---------- --------- --------- ---------------
Ratio of Expenses to Average Net
Assets................................. 0.53% 0.54% 0.56% 0.58%**
---------- --------- --------- ---------------
---------- --------- --------- ---------------
Ratio of Net Investment Income/(Loss) to
Average Net Assets..................... 0.06% (0.03%) 0.13% 0.29%**
---------- --------- --------- ---------------
---------- --------- --------- ---------------
Portfolio Turnover Rate................. 57.27% 47.25% 37.84% 21.54%
---------- --------- --------- ---------------
---------- --------- --------- ---------------
Average Commission Rate #............... $ 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

B-43
<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
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS
Common Stocks (cost $519,145)......... $631,175
Money Market Investments (cost
$22,294)............................. 24,439
Bonds (cost $2,302)................... 2,104
---------
657,718
Cash.................................. 1,814
Dividends and Interest Receivable..... 2,684
Due from Sale of Securities........... 47
---------
Total Assets........................ 662,263
---------
LIABILITIES
Due on Sale of Fund Shares............ 1,048
Due on Purchase of Securities......... 802
Due to Investment Advisor............. 372
Accrued Expenses...................... 191
---------
Total Liabilities................... 2,413
---------
NET ASSETS.............................. $659,850
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital (700,000
shares authorized, $.01 par value;
390,790 shares outstanding).......... $507,045
Undistributed Net Investment Income... 16,682
Undistributed Accumulated Net Realized
Gain on Investments.................. 22,191
Net Unrealized Appreciation
(Depreciation) of:
Investment Securities............... 113,977
Foreign Currency Transactions....... (45)
---------
Net Assets for 390,790 Shares
Outstanding.......................... $659,850
---------
---------
Net Asset Value, Offering and
Redemption Price per Share........... $ 1.69
---------
---------
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividends (less foreign dividend tax
of $707)........................... $ 18,717
Interest............................ 2,883
---------
Total Income...................... 21,600
---------
Expenses
Management Fees..................... 4,108
Custodian Fees...................... 494
Other Expenses...................... 153
---------
Total Expenses.................... 4,755
---------
Net Investment Income................. 16,845
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES
Net Realized Gain (Loss) on:
Investment Securities............... 23,527
Foreign Currency Transactions....... (891)
---------
Net Realized Gain For the
Period........................... 22,636
Net Change in Unrealized Appreciation
(Depreciation) of:
Investment Securities............... 25,407
Foreign Currency Transactions....... (48)
---------
Net Change in Unrealized
Appreciation for the Period...... 25,359
---------
Net Gain on Investments............... 47,995
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $ 64,840
---------
---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-44
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
International Equity Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............... $ 16,845 $ 12,614
Net Realized Gain on Investments.... 22,636 7,391
Net Unrealized Appreciation of
Investments for the Period......... 25,359 61,490
--------- ---------
Net Increase in Net Assets
Resulting from Operations......... 64,840 81,495
--------- ---------
Distributions to Shareholders from:
Net Investment Income............... (12,704) (8,311)
Net Realized Gain on Investments.... (7,542) (11,653)
--------- ---------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (20,246) (19,964)
--------- ---------
Fund Share Transactions
Proceeds from Sale of 66,307 and
64,977 Shares...................... 110,618 92,514
Proceeds from Shares Issued on
Reinvestment of Dividends Paid
(12,598 and 14,362 shares,
respectively)...................... 20,246 19,964
Payments for 12,361 and 7,589 Shares
Redeemed........................... (20,797) (10,947)
--------- ---------
Net Increase in Net Assets
Resulting from Fund Share
Transactions (66,544 and 71,750
shares, respectively)............. 110,067 101,531
--------- ---------
Total Increase in Net Assets.......... 154,661 163,062
NET ASSETS
Beginning of Period................... 505,189 342,127
--------- ---------
End of Period (includes undistributed
net investment income of $16,682 and
$12,699 respectively)................ $659,850 $505,189
--------- ---------
--------- ---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-45
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
International Equity Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR)

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR MAY 3, 1994*
ENDED DECEMBER 31, THROUGH
--------------------------------- DECEMBER 31,
1997 1996 1995 1994
--------- --------- --------- ---------------
<S> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 1.56 $ 1.35 $ 1.19 $ 1.22
Income from Investment Operations:
Net Investment Income............. 0.04 0.04 0.04 0.02
Net Realized and Unrealized Gains
on Investments................... 0.15 0.24 0.13 (0.02)
--------- --------- --------- ---------------
Total from Investment
Operations..................... 0.19 0.28 0.17 0.00
--------- --------- --------- ---------------
Less Distributions:
Distributions from Net Investment
Income........................... (0.04) (0.03) -- (0.02)
Distributions from Realized Gains
on Investments................... (0.02) (0.04) (0.01) (0.01)
--------- --------- --------- ---------------
Total Distributions............. (0.06) (0.07) (0.01) (0.03)
--------- --------- --------- ---------------
Net Asset Value, End of Period.......... $ 1.69 $ 1.56 $ 1.35 $ 1.19
--------- --------- --------- ---------------
--------- --------- --------- ---------------
Total Return+........................... 12.28% 21.01% 14.57% 0.11%++
--------- --------- --------- ---------------
--------- --------- --------- ---------------

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $659,850 $505,189 $342,127 $292,533
--------- --------- --------- ---------------
--------- --------- --------- ---------------
Ratio of Expenses to Average Net
Assets................................. 0.77% 0.81% 0.85% 0.87%**
--------- --------- --------- ---------------
--------- --------- --------- ---------------
Ratio of Net Investment Income to
Average Net Assets..................... 2.75% 3.02% 2.68% 2.28%**
--------- --------- --------- ---------------
--------- --------- --------- ---------------
Portfolio Turnover Rate................. 16.74% 17.07% 26.71% 10.97%
--------- --------- --------- ---------------
--------- --------- --------- ---------------
Average Commission Rate #............... $ 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

B-46
<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
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS
Common Stocks (cost $160,419)......... $232,915
Money Market Investments (cost
$9,771).............................. 9,771
---------
242,686
Cash.................................. 51
Due from Sale of Securities........... 447
Dividends and Interest Receivable..... 244
Due from Sale of Fund Shares.......... 239
---------
Total Assets........................ 243,667
---------
LIABILITIES
Due on Purchase of Securities......... 446
Due to Investment Advisor............. 102
Accrued Expenses...................... 33
Due on Redemption of Fund Shares...... 15
---------
Total Liabilities................... 596
---------
NET ASSETS.............................. $243,071
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital (400,000
shares authorized, $.01 par value;
134,273 shares outstanding).......... $166,515
Undistributed Accumulated Net Realized
Gain on Investments.................. 4,060
Net Unrealized Appreciation of:
Investment Securities............... 72,496
---------
Net Assets for 134,273 Shares
Outstanding.......................... $243,071
---------
---------
Net Asset Value, Offering and
Redemption Price per Share........... $ 1.81
---------
---------
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividends (less foreign dividend tax
of $30)............................ $ 2,558
Interest............................ 1,160
--------
Total Income...................... 3,718
--------
Expenses
Management Fees..................... 1,022
Other Expenses...................... 27
Custodian Fees...................... 17
--------
Total Expenses.................... 1,066
--------
Less Custodian Fees:
Paid by Affiliate............ (12)
Paid Indirectly.............. (5)
--------
Total Net Expenses................ 1,049
--------
Net Investment Income................. 2,669
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain on Investments:
Investment Securities............... 9,290
Index Futures Contracts............. 2,652
--------
Net Realized Gain on Investments
for the Period................... 11,942
--------
Net Change in Unrealized Appreciation
(Depreciation) of:
Investments Securities.............. 42,658
Index Futures Contracts............. (157)
--------
Net Change in Unrealized
Appreciation of Investments for
the Period....................... 42,501
--------
Net Gain on Investments............... 54,443
--------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.............. $57,112
--------
--------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-47
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Growth Stock Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............... $ 2,669 $ 1,767
Net Realized Gain on Investments.... 11,942 5,039
Net Change in Unrealized
Appreciation of Investments for the
Period............................. 42,501 17,013
--------- ---------
Net Increase in Net Assets
Resulting from Operations......... 57,112 23,819
--------- ---------
Distributions to Shareholders from:
Net Investment Income............... (2,685) (1,749)
Net Realized Gain on Investments.... (8,527) (5,031)
--------- ---------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (11,212) (6,780)
--------- ---------
Fund Share Transactions
Proceeds from Sale of 42,594 and
45,246 Shares...................... 70,967 62,709
Proceeds from Shares Issued on
Reinvestment of Distributions Paid
(6,422 and 4,630 shares,
respectively)...................... 11,212 6,780
Payments for 31,206 and 1,147 Shares
Redeemed........................... (55,490) (1,603)
--------- ---------
Net Increase in Net Assets
Resulting from Fund Share
Transactions (17,810 and 48,729
shares, respectively)............. 26,689 67,886
--------- ---------
Total Increase in Net Assets.......... 72,589 84,925
NET ASSETS
Beginning of Period................... 170,482 85,557
--------- ---------
End of Period (includes undistributed
net investment income of $0 and $32,
respectively)........................ $243,071 $170,482
--------- ---------
--------- ---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-48
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Growth Stock Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR)

<TABLE>
<CAPTION>
FOR THE
PERIOD
MAY 3,
FOR THE YEAR 1994*
ENDED DECEMBER 31, THROUGH
--------------------------------- DECEMBER
1997 1996 1995 31, 1994
--------- --------- --------- --------
<S> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 1.46 $ 1.26 $ 1.00 $ 1.00
Income from Investment Operations:
Net Investment Income............. 0.02 0.02 0.02 0.01
Net Realized and Unrealized Gain
on Investments................... 0.42 0.25 0.28 --
--------- --------- --------- --------
Total from Investment
Operations..................... 0.44 0.27 0.30 0.01
--------- --------- --------- --------
Less Distributions:
Distributions from Net Investment
Income........................... (0.02) (0.02) (0.02) (0.01)
Distributions from Realized Gains
on Investments................... (0.07) (0.05) (0.02) --
--------- --------- --------- --------
Total Distributions............. (0.09) (0.07) (0.04) (0.01)
--------- --------- --------- --------
Net Asset Value, End of Period.......... $ 1.81 $ 1.46 $ 1.26 $ 1.00
--------- --------- --------- --------
--------- --------- --------- --------
Total Return+........................... 29.85% 20.91% 30.82% 1.55%++
--------- --------- --------- --------
--------- --------- --------- --------

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $243,071 $170,482 $ 85,557 $41,868
--------- --------- --------- --------
--------- --------- --------- --------
Ratio of Expenses to Average Net
Assets................................. 0.49% 0.57% 0.61% 0.71%**
--------- --------- --------- --------
--------- --------- --------- --------
Ratio of Net Investment Income to
Average Net Assets..................... 1.24% 1.41% 1.77% 2.30%**
--------- --------- --------- --------
--------- --------- --------- --------
Portfolio Turnover Rate................. 33.20% 37.61% 46.83% 16.51%
--------- --------- --------- --------
--------- --------- --------- --------
Average Commission Rate #............... $ 0.0559 $ 0.0629
--------- ---------
--------- ---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-49
<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
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS
Common Stocks (cost $337,350)......... $364,525
Money Market Investments (cost
$5,489).............................. 5,489
---------
370,014
Cash.................................. 82
Due from Sale of Securities........... 4,763
Dividends and Interest Receivable..... 563
Due from Sale of Fund Shares.......... 174
---------
Total Assets........................ 375,596
---------
LIABILITIES
Due on Purchase of Securities......... 3,215
Due on Redemption of Fund Shares...... 226
Due to Investment Advisor............. 186
Accrued Expenses...................... 34
---------
Total Liabilities................... 3,661
---------
NET ASSETS.............................. $371,935
---------
---------

REPRESENTED BY:
Aggregate Paid in Capital (400,000
shares authorized, $.01 par value;
279,536 shares outstanding).......... $344,245
Undistributed Accumulated Net Realized
Gain on Investments.................. 515
Net Unrealized Appreciation of
Investments.......................... 27,175
---------
Net Assets for 279,536 Shares
Outstanding.......................... $371,935
---------
---------
Net Asset Value, Offering and
Redemption Price per Share........... $ 1.33
---------
---------
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividends (less foreign dividend tax
of $19)............................ $ 4,542
Interest............................ 450
---------
Total Income...................... 4,992
---------
Expenses
Management Fees..................... 1,799
Custodian Fees...................... 31
Other Expenses...................... 19
---------
Total Expenses.................... 1,849
---------
Less Custodian Fees:
Paid by Affiliate............ (24)
Paid Indirectly.............. (7)
---------
Total Net Expenses................ 1,818
---------
Net Investment Income................. 3,174
---------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net Realized Gain on Investments...... 72,633
Net Change in Unrealized Appreciation
of Investments for the Period........ 2,850
---------
Net Gain on Investments............... 75,483
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $ 78,657
---------
---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-50
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Growth and Income Stock Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............... $ 3,174 $ 2,654
Net Realized Gain on Investments.... 72,633 21,066
Net Change in Unrealized
Appreciation of Investments for the
Period............................. 2,850 11,131
--------- ---------
Net Increase in Net Assets
Resulting from Operations......... 78,657 34,851
--------- ---------
Distributions to Shareholders from:
Net Investment Income............... (3,200) (2,646)
Net Realized Gain on Investments.... (78,180) (18,392)
--------- ---------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (81,380) (21,038)
--------- ---------
Fund Share Transactions
Proceeds from Sale of 75,470 and
51,364 Shares...................... 116,134 65,912
Proceeds from Shares Issued on
Reinvestment of Distributions Paid
(61,873 and 15,944 shares,
respectively)...................... 81,380 21,038
Payments for 35,535 and 2,670 Shares
Redeemed........................... (57,040) (3,502)
--------- ---------
Net Increase in Net Assets
Resulting from Fund Share
Transactions (101,808 and 64,638
shares, respectively)............. 140,474 83,448
--------- ---------
Total Increase in Net Assets.......... 137,751 97,261
NET ASSETS
Beginning of Period................... 234,184 136,923
--------- ---------
End of Period (includes undistributed
net investment income of $0 and $25,
respectively)........................ $371,935 $234,184
--------- ---------
--------- ---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-51
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Growth and Income Stock Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR)

<TABLE>
<CAPTION>
FOR THE
PERIOD MAY 3,
FOR THE YEAR 1994*
ENDED DECEMBER 31, THROUGH
--------------------------------- DECEMBER 31,
1997 1996 1995 1994
--------- --------- --------- ---------------
<S> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 1.32 $ 1.21 $ 0.98 $ 1.00
Income from Investment Operations:
Net Investment Income............... 0.01 0.02 0.02 0.01
Net Realized and Unrealized Gain
(Loss) on Investments.............. 0.37 0.23 0.29 (0.01)
--------- --------- --------- ---------------
Total from Investment
Operations....................... 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.......... $ 1.33 $ 1.32 $ 1.21 $ 0.98
--------- --------- --------- ---------------
--------- --------- --------- ---------------
Total Return+........................... 30.03% 19.97% 31.12% 0.34%++
--------- --------- --------- ---------------
--------- --------- --------- ---------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $371,935 $234,184 $136,923 $ 64,700
--------- --------- --------- ---------------
--------- --------- --------- ---------------
Ratio of Expenses to Average Net
Assets................................. 0.60% 0.62% 0.69% 0.78%**
--------- --------- --------- ---------------
--------- --------- --------- ---------------
Ratio of Net Investment Income to
Average Net Assets..................... 1.04% 1.44% 1.68% 1.93%**
--------- --------- --------- ---------------
--------- --------- --------- ---------------
Portfolio Turnover Rate................. 144.52% 93.92% 80.00% 54.18%
--------- --------- --------- ---------------
--------- --------- --------- ---------------
Average Commission Rate #............... $ 0.0453 $ 0.0515
--------- ---------
--------- ---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-52
<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
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS
Common Stocks (cost $659,244)............................. $1,098,986
Money Market Investments (cost $53,795)................... 53,795
-----------
1,152,781
Cash...................................................... 50
Dividends and Interest Receivable......................... 1,559
Due from Sale of Fund Shares.............................. 167
-----------
Total Assets............................................ 1,154,557
-----------
LIABILITIES
Due on Redemption of Fund Shares.......................... 1,416
Due to Investment Advisor................................. 204
Accrued Expenses.......................................... 69
Futures Variation Margin.................................. 11
-----------
Total Liabilities......................................... 1,700
-----------
NET ASSETS.................................................. $1,152,857
-----------
-----------
REPRESENTED BY:
Aggregate Paid in Capital (600,000 shares authorized, $.01
par value; 436,104 shares outstanding)................... $ 667,337
Undistributed Net Investment Income....................... 17,811
Undistributed Accumulated Net Realized Gain on
Investments.............................................. 27,298
Net Unrealized Appreciation of:
Investment Securities................................... 439,742
Index Futures Contracts................................. 669
-----------
Net Assets for 436,104 Shares Outstanding................. $1,152,857
-----------
-----------
Net Asset Value, Offering and Redemption Price per
Share.................................................... $ 2.64
-----------
-----------
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividends (less foreign dividend tax of $129)........... $ 16,013
Interest................................................ 3,795
---------
Total Income.......................................... 19,808
---------
Expenses
Management Fees......................................... 1,927
Custodian Fees.......................................... 48
Other Expenses.......................................... 70
---------
Total Expenses........................................ 2,045
---------
Less Custodian Fees:
Paid by Affiliate................................ (44)
Paid Indirectly.................................. (4)
---------
Total Net Expenses.................................... 1,997
---------
Net Investment Income..................................... 17,811
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain on Investments:
Investment Securities................................... 11,844
Index Futures Contracts................................. 15,796
---------
Net Realized Gain on Investments for the Period....... 27,640
---------
Net Change in Unrealized Appreciation
(Depreciation) of:
Investment Securities................................... 220,032
Index Futures Contracts................................. (60)
---------
Net Change in Unrealized Appreciation of Investments
for the Period....................................... 219,972
---------
Net Gain on Investments................................. 247,612
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $265,423
---------
---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-53
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Index 500 Stock Porttfolio
Statement of Changes in Net Assets
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............... $ 17,811 $ 13,866
Net Realized Gain on Investments.... 27,640 17,014
Net Change in Unrealized
Appreciation of Investments for the
Period............................. 219,972 96,274
--------- ---------
Net Increase in Net Assets
Resulting from Operations......... 265,423 127,154
--------- ---------
Disributions to Shareholders from:
Net Investment Income............... (13,866) (6,192)
Net Realized Gain on Investments.... (16,994) (9,632)
--------- ---------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (30,860) (15,824)
--------- ---------
Fund Share Transactions
Proceeds from Sale of 75,307 and
72,277 Shares...................... 178,554 134,034
Proceeds from Shares Issued on
Reinvestment of Distributions Paid
(13,655 and 9,021 shares,
respectively)...................... 30,860 15,824
Payments for 12,917 and 8,757 Shares
Redeemed........................... (31,186) (16,255)
--------- ---------
Net Increase in Net Assets
Resulting from Fund Share
Transactions (76,045 and 72,541
shares, respectively)............. 178,228 133,603
--------- ---------
Total Increase in Net Assets.......... 412,791 244,933
NET ASSETS
Beginning of Period................... 740,066 495,133
--------- ---------
End of Period (includes undistributed
net investment income of $17,811 and
$13,866 respectively)................ $1,152,857 $740,066
--------- ---------
--------- ---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-54
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Index 500 Stock Porttfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 1995 1994 1993
----------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 2.06 $ 1.72 $ 1.27 $ 1.29 $ 1.33
Income from Investment Operations:
Net Investment Income............. 0.04 0.04 0.04 0.03 0.04
Net Realized and Unrealized Gain
(Loss) on Investments............ 0.62 0.35 0.42 (0.01) 0.09
----------- --------- --------- --------- --------
Total from Investment
Operations..................... 0.66 0.39 0.46 0.02 0.13
----------- --------- --------- --------- --------
Less Distributions:
Distributions from Net Investment
Income........................... (0.04) (0.02) (0.01) (0.03) (0.03)
Distributions from Realized Gains
on Investments................... (0.04) (0.03) -- (0.01) (0.14)
----------- --------- --------- --------- --------
Total Distributions............. (0.08) (0.05) (0.01) (0.04) (0.17)
----------- --------- --------- --------- --------
Net Asset Value, End of Period.......... $ 2.64 $ 2.06 $ 1.72 $ 1.27 $ 1.29
----------- --------- --------- --------- --------
----------- --------- --------- --------- --------
Total Return+........................... 33.20% 22.75% 37.25% 1.21% 9.90%
----------- --------- --------- --------- --------
----------- --------- --------- --------- --------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $1,152,857 $740,066 $495,133 $316,123 $25,479
----------- --------- --------- --------- --------
----------- --------- --------- --------- --------
Ratio of Expenses to Average Net
Assets................................. 0.21% 0.21% 0.21% 0.24% 0.30%
----------- --------- --------- --------- --------
----------- --------- --------- --------- --------
Ratio of Net Investment Income to
Average Net Assets..................... 1.86% 2.27% 2.51% 3.10% 2.55%
----------- --------- --------- --------- --------
----------- --------- --------- --------- --------
Portfolio Turnover Rate................. 3.15% 3.45% 3.19% 5.59% 62.69%
----------- --------- --------- --------- --------
----------- --------- --------- --------- --------
Average Commission Rate #............... $ 0.0304 $ 0.0306
----------- ---------
----------- ---------
</TABLE>

+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.
# Disclosure required for fiscal years beginning after September 1, 1995.

The Accompanying Notes are an Integral Part of the Financial Statements

B-55
<PAGE>
Balanced Portfolio
NORTHWESTERN MUTUAL SERIES FUND, INC.
Balanced Portfolio
Financial Statements
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS
Common Stock (cost $740,139).............................. $1,527,031
Bonds (cost $899,185)..................................... 926,377
Money Market Investments (cost $320,981).................. 321,211
-----------
2,774,619
Cash...................................................... 3,616
Dividends and Interest Receivable......................... 15,005
Due from Sale of Foreign Currency......................... 14,425
Due from Sale of Securities............................... 6,000
-----------
Total Assets............................................ 2,813,665
-----------
LIABILITIES
Due on Purchase of Foreign Currency....................... 14,842
Due on Purchase of Securities............................. 6,648
Due on Redemption of Fund Shares.......................... 2,728
Due to Investment Advisor................................. 750
Due on Futures Variation Margin........................... 203
-----------
Total Liabilities....................................... 25,171
-----------
NET ASSETS.................................................. $2,788,494
-----------
REPRESENTED BY:
Aggregate Paid in Capital
(2,000,000 shares authorized, $.01 par value; 1,400,746
shares outstanding)...................................... $1,794,233
Undistributed Net Investment Income....................... 94,962
Undistributed Accumulated Net Realized Gain on
Investments.............................................. 85,588
Net Unrealized Appreciation (Depreciation) of:
Investment Securities................................... 814,314
Index Futures Contracts................................. (479)
Foreign Currency Transactions........................... (124)
-----------
Net Assets for 1,400,746 Shares Outstanding............. $2,788,494
-----------
-----------
Net Asset Value, Offering and Redemption Price per
Share.................................................... $ 1.99
-----------
-----------
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest................................................ $ 77,592
Dividends (less foreign dividend tax of $205)........... 25,121
-----------
Total Income.......................................... 102,713
-----------
Expenses
Management Fees......................................... 7,727
-----------
Net Investment Income..................................... 94,986
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Investments:
Investment Securities................................... 67,229
Index Futures Contracts................................. 16,153
Foreign Currency Transactions........................... (26)
-----------
Net Realized Gain on Investments for the Period....... 83,356
-----------
Net Change In Unrealized Appreciation (Depreciation) of:
Investment Securities................................... 318,955
Index Futures Contracts................................. (480)
Foreign Currency Transactions........................... (124)
-----------
Net Change in Unrealized Appreciation of Investments
for the Period....................................... 318,351
-----------
Net Gain on Investments................................... 401,707
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 496,693
-----------
-----------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-56
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Balanced Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............... $ 94,986 $ 86,649
Net Realized Gain on Investments.... 83,356 27,969
Net Change in Unrealized
Appreciation of Investments for the
Period............................. 318,351 164,495
----------- -----------
Net Increase in Net Assets
Resulting from Operations......... 496,693 279,113
----------- -----------
Distributions to Shareholders from:
Net Investment Income............... (86,698) (83,501)
Net Realized Gain on Investments.... (29,228) (35,154)
----------- -----------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (115,926) (118,655)

Fund Share Transactions
Proceeds from Sale of 42,694 and
51,923 Shares...................... 79,608 84,008
Proceeds from Shares Issued on
Reinvestment of Distributions Paid
(65,384 and 77,149 shares,
respectively)...................... 115,926 118,655
Payments for 61,284 and 73,638
Shares Redeemed.................... (114,041) (120,176)
----------- -----------
Net Increase in Net Assets
Resulting from Fund Share
Transactions
(46,794 and 55,434 shares,
respectively)..................... 81,493 82,487
----------- -----------
Total Increase in Net Assets.......... 462,260 242,945
----------- -----------
NET ASSETS
Beginning of Period................. 2,326,234 2,083,289
----------- -----------
End of Period (includes
undistributed net investment income
of $94,962 and $86,699
respectively)...................... $2,788,494 $2,326,234
----------- -----------
----------- -----------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-57
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Balanced Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 1.72 $ 1.60 $ 1.31 $ 1.33 $ 1.39
Income from Investment Operations:
Net Investment Income............. 0.07 0.06 0.07 0.04 0.06
Net Realized and Unrealized
Gain(Loss) on Investments........ 0.28 0.15 0.27 (0.05) 0.09
----------- ----------- ----------- ----------- --------
Total from Investment
Operations..................... 0.35 0.21 0.34 (0.01) 0.15
----------- ----------- ----------- ----------- --------
Less Distributions:
Distributions from Net Investment
Income........................... (0.06) (0.06) (0.04) (0.00) (0.07)
Distributions from Realized Gains
on Investments................... (0.02) (0.03) (0.01) (0.01) (0.14)
----------- ----------- ----------- ----------- --------
Total Distributions............. (0.08) (0.09) (0.05) (0.01) (0.21)
----------- ----------- ----------- ----------- --------
Net Asset Value, End of Period.......... $ 1.99 $ 1.72 $ 1.60 $ 1.31 $ 1.33
----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- --------
Total Return+........................... 21.52% 13.45% 26.39% 0.16% 9.91%
----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- --------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $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%
----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- --------
Ratio of Net Investment Income to
Average Net Assets..................... 3.70% 3.95% 4.40% 4.78% 4.24%
----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- --------
Portfolio Turnover Rate................. 29.94% 67.66% 37.28% 42.35% 70.91%
----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- --------
Average Commission Rate #............... $ 0.0310 $ 0.0320
----------- -----------
----------- -----------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-58
<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
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS
Bonds (cost $109,759)..................................... $109,825
Preferred Stock (cost $27,457)............................ 29,647
Money Market Investments (cost $10,587)................... 10,587
Common Stock (cost $1,449)................................ 806
---------
150,865
Dividends and Interest Receivable......................... 2,647
Due from Sale of Fund Shares.............................. 74
---------
Total Assets............................................ 153,586
---------
LIABILITIES
Due on Purchase of Securities............................. 440
Due to Investment Advisor................................. 68
Accrued Expenses.......................................... 40
---------
Total Liabilities....................................... 548
---------
NET ASSETS.................................................. $153,038
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital (400,000 shares authorized, $.01
par value; 143,917 shares outstanding)................... $151,568
Overdistributed Net Investment Income..................... (143)
Net Unrealized Appreciation of Investments................ 1,613
---------
Net Assets for 143,917 Shares Outstanding................. $153,038
---------
---------
Net Asset Value, Offering and Redemption Price per
Share.................................................... $ 1.06
---------
---------
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest................................................ $ 10,660
Dividends............................................... 2,593
---------
Total Income.......................................... 13,253
---------
Expenses
Management Fees......................................... 658
Other Expenses.......................................... 34
Custodian Fees.......................................... 14
---------
Total Expenses........................................ 706
---------
Less Custodian Fees:
Paid Indirectly.................................. (14)
---------
Total Net Expenses.................................... 692
---------
Net Investment Income..................................... 12,561
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain on Investments.......................... 7,437
Net Change in Unrealized Depreciation of Investments for
the Period............................................... (1,416)
---------
Net Gain on Investments................................... 6,021
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 18,582
---------
---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-59
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
High Yield Bond Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
-------------------
1997 1996
-------- --------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............... $12,561 $ 6,867
Net Realized Gain on Investments.... 7,437 3,638
Net Change in Unrealized
Appreciation (Depreciation) of
Investments for the Period......... (1,416) 2,795
-------- --------
Net Increase in Net Assets
Resulting from Operations......... 18,582 13,300
-------- --------
Distributions to Shareholders from:
Net Investment Income............... (16,554) (7,126)
Net Realized Gain on Investments and
Capital............................ (8,429) (2,541)
-------- --------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (24,983) (9,667)
-------- --------
Fund Share Transactions
Proceeds from Sale of 48,820 and
23,742 Shares...................... 56,788 26,454
Proceeds from Shares Issued on
Reinvestment of Distributions Paid
(23,165 and 8,840 shares,
respectively)...................... 24,983 9,667
Payments for 13,489 and 1,697 Shares
Redeemed........................... (16,210) (1,850)
-------- --------
Net Increase in Net Assets
Resulting from Fund Share
Transactions (58,496 and 30,885
shares, respectively)............. 65,561 34,271
-------- --------
Total Increase in Net Assets.......... 59,160 37,904
NET ASSETS
Beginning of Period................... 93,878 55,974
-------- --------
End of Period (includes
overdistributed net investment income
of ($143) and ($297),
respectively)........................ $153,038 $93,878
-------- --------
-------- --------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-60
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
High Yield Bond Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR MAY 3, 1994*
ENDED DECEMBER 31, THROUGH
------------------------------- DECEMBER 31,
1997 1996 1995 1994
--------- -------- -------- ---------------
<S> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 1.10 $ 1.03 $ 0.97 $ 1.00
Income from Investment Operations:
Net Investment Income............. 0.11 0.09 0.10 0.06
Net Realized and Unrealized Gain
(Loss) on Investments............ 0.06 0.10 0.07 (0.03)
--------- -------- -------- ---------------
Total from Investment
Operations..................... 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 and Capital....... (0.07) (0.03) (0.01) --
--------- -------- -------- ---------------
Total Distributions............. (0.21) (0.12) (0.11) (0.06)
--------- -------- -------- ---------------
Net Asset Value, End of Period.......... $ 1.06 $ 1.10 $ 1.03 $ 0.97
--------- -------- -------- ---------------
--------- -------- -------- ---------------
Total Return+........................... 15.85% 19.77% 16.78% 3.02%++
--------- -------- -------- ---------------
--------- -------- -------- ---------------

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $153,038 $93,878 $55,974 $35,537
--------- -------- -------- ---------------
--------- -------- -------- ---------------
Ratio of Expenses to Average Net
Assets................................. 0.55% 0.60% 0.65% 0.73%**
--------- -------- -------- ---------------
--------- -------- -------- ---------------
Ratio of Net Investment Income to
Average Net Assets..................... 9.95% 9.54% 9.90% 9.40%**
--------- -------- -------- ---------------
--------- -------- -------- ---------------
Portfolio Turnover Rate................. 129.49% 143.91% 116.57% 119.48%
--------- -------- -------- ---------------
--------- -------- -------- ---------------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-61
<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
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS
Bonds (cost $226,607)................. $230,648
Money Market Investments (cost
$7,558).............................. 7,562
---------
238,210
Cash.................................. 786
Due from Foreign Currency Contracts... 11,015
Due from Sale of Fund Shares.......... 5,276
Interest Receivable................... 2,806
---------
Total Assets........................ 258,093
---------
LIABILITIES
Due on Foreign Currency Contracts..... 11,262
Due on Purchase of Securities......... 1,171
Due on Redemption of Fund Shares...... 566
Futures Variation Margin.............. 193
Due to Investment Advisor............. 66
---------
Total Liabilities................... 13,258
---------
NET ASSETS.............................. $244,835
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital
(400,000 shares authorized, $.01 par
value; 194,772 shares outstanding)... $223,542
Undistributed Net Investment Income... 15,722
Undistributed Accumulated Net Realized
Gain on Investments.................. 2,050
Net Unrealized
Appreciation(Depreciation) of:
Investments Securities.............. 4,046
Futures Contracts................... (431)
Foreign Currency Transactions....... (94)
---------
Net Assets for 194,772 Shares
Outstanding.......................... $244,835
---------
---------
Net Asset Value, Offering and
Redemption Price per Share........... $ 1.26
---------
---------
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest............................ $16,343
--------
Expenses
Management Fees..................... 667
--------
Net Investment Income................. 15,676
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) on
Investments:
Investment Securities............... 2,945
Foreign Currency Transactions....... 46
Futures Contracts................... (126)
--------
Net Realized Gain on Investments
for the Period................... 2,865
--------
Net Change in Unrealized Appreciation
(Depreciation) of:
Investment Securities............... 2,261
Futures Contracts................... (431)
Foreign Currency Transactions....... (94)
--------
Net Change in Unrealized
Appreciation for the Period...... 1,736
--------
Net Gain on Investments............... 4,601
--------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $20,277
--------
--------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-62
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Select Bond Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............... $ 15,676 $ 13,288
Net Realized Gain on Investments.... 2,865 569
Net Change in Unrealized
Appreciation (Depreciation) of
Investments for the Period......... 1,736 (6,987)
--------- ---------
Net Increase in Net Assets
Resulting from Operations......... 20,277 6,870
--------- ---------
Distributions to Shareholders from:
Net Investment Income............... (13,300) (7,025)
Net Realized Gain on Investments.... -- --
--------- ---------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (13,300) (7,025)
--------- ---------
Fund Share Transactions
Proceeds from Sale of 26,095 and
23,808 Shares...................... 32,098 28,507
Proceeds from Shares Issued on
Reinvestment of Distributions Paid
(11,396 and 6,130 shares,
respectively)...................... 13,300 7,025
Payments for 17,885 and 16,109
Shares Redeemed.................... (21,873) (19,186)
--------- ---------
Net Increase in Net Assets
Resulting from Fund Share
Transactions (19,606 and 13,829
shares, respectively)............. 23,526 16,346
--------- ---------
Total Increase in Net Assets.......... 30,502 16,191
NET ASSETS
Beginning of Period................... 214,333 198,142
--------- ---------
End of Period (includes undistributed
net investment income of $15,722 and
$13,300 respectively)................ $244,835 $214,333
--------- ---------
--------- ---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-63
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Select Bond Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
-------------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of
Period............................... $ 1.22 $ 1.23 $ 1.06 $ 1.15 $ 1.14
Income from Investment Operations:
Net Investment Income............. 0.08 0.07 0.07 0.06 0.08
Net Realized and Unrealized Gain
(Loss) on Investments............ 0.04 (0.04) 0.13 (0.09) 0.05
--------- --------- --------- -------- --------
Total from Investment
Operations..................... 0.12 0.03 0.20 (0.03) 0.13
--------- --------- --------- -------- --------
Less Distributions:
Dividends from Net Investment
Income........................... (0.08) (0.04) (0.03) (0.06) (0.08)
Distributions from Realized Gains
on Investments................... -- -- -- -- (0.04)
--------- --------- --------- -------- --------
Total Distributions............. (0.08) (0.04) (0.03) (0.06) (0.12)
--------- --------- --------- -------- --------
Net Asset Value, End of Period.......... $ 1.26 $ 1.22 $ 1.23 $ 1.06 $ 1.15
--------- --------- --------- -------- --------
--------- --------- --------- -------- --------
Total Return+........................... 9.46% 3.31% 19.10% (2.28%) 10.81%
--------- --------- --------- -------- --------
--------- --------- --------- -------- --------

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $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%
--------- --------- --------- -------- --------
--------- --------- --------- -------- --------
Ratio of Net Investment Income to
Average Net Assets..................... 7.03% 6.48% 6.61% 7.02% 6.40%
--------- --------- --------- -------- --------
--------- --------- --------- -------- --------
Portfolio Turnover Rate................. 184.93% 195.98% 69.06% 108.00% 67.69%
--------- --------- --------- -------- --------
--------- --------- --------- -------- --------
</TABLE>

+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.

The Accompanying Notes are an Integral Part of the Financial Statements

B-64
<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
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS
Money Market Investments
(cost $193,630)...................... $193,630
Cash.................................. 2
Due from Sale of Fund Shares.......... 582
Interest Receivable................... 424
---------
Total Assets........................ 194,638
---------
LIABILITIES
Due on Redemption of Fund Shares...... 116
Due to Investment Advisor............. 52
---------
Total Liabilities................... 168
---------
NET ASSETS.............................. $194,470
---------
---------
REPRESENTED BY:
Aggregate Paid in Capital (400,000
shares authorized, $.01 par value;
194,494 shares outstanding).......... $194,470
---------
Net Assets for 194,494 Shares
Outstanding.......................... $194,470
---------
---------
Net Asset Value, Offering and
Redemption Price per Share........... $ 1.00
---------
---------
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Interest............................ $ 10,433
---------
Expenses
Management Fees..................... 555
---------
Net Investment Income................. 9,878
---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.............. $ 9,878
---------
---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-65
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Money Market Portfolio
Statement of Changes in Net Assets
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net Investment Income............... $ 9,878 $ 7,576
--------- ---------
Net Increase in Net Assets
Resulting from Operations......... 9,878 7,576
--------- ---------
Distributions to Shareholders from:
Net Investment Income............... (9,885) (7,576)
--------- ---------
Net Decrease in Net Assets
Resulting from Distributions to
Shareholders...................... (9,885) (7,576)
--------- ---------
Fund Share Transactions
Proceeds from Sale of 130,864 and
122,068 Shares..................... 130,863 122,068
Proceeds from Shares Issued on
Reinvestment of Distributions Paid
(9,878 and 7,576 shares,
respectively)...................... 9,878 7,576
Payments for 122,562 and 85,918
Shares Redeemed.................... (122,562) (85,918)
--------- ---------
Net Increase in Net Assets
Resulting from Fund Share
Transactions
18,180 and 43,726) shares,
respectively)..................... 18,179 43,726
--------- ---------
Total Increase in Net Assets.......... 18,172 43,726
NET ASSETS
Beginning of Period................... 176,298 132,572
--------- ---------
End of Period (includes no
undistributed net investment
income).............................. $194,470 $176,298
--------- ---------
--------- ---------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-66
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Money Market Portfolio
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
---------------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <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
Net Investment Income............... 0.05 0.05 0.06 0.05 0.03
Less Distributions from Net
Investment Income.................. (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
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Total Return+........................... 5.47% 5.29% 5.82% 4.06% 2.88%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands)............................. $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%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Ratio of Net Investment Income to
Average Net Assets..................... 5.33% 5.13% 5.61% 4.64% 2.87%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

+ Total Return includes deductions for management and other fund expenses;
excludes deductions for sales loads and account fees.

The Accompanying Notes are an Integral Part of the Financial Statements

B-67
<PAGE>
Notes to Financial Statements
NORTHWESTERN MUTUAL SERIES FUND, INC.
Notes to Financial Statements
DECEMBER 31, 1997

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 Life") 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 it 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 International Equity Portfolio, Balanced Portfolio, and the 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 and unrealized 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, could be exposed to market risk due
to charges 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.

B-68
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Notes to Financial Statements
DECEMBER 31, 1997

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 year ended
December 31, 1997, transactions in securities other than money market
investments were:

<TABLE>
<CAPTION>
TOTAL U.S. GOVT U.S. GOVT
SECURITY SECURITY TOTAL SECURITY SECURITY SALES/
PORTFOLIOS PURCHASES PURCHASES SALES/MATURITIES MATURITIES
- --------------------------------------------------------- ------------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Aggressive Growth Stock.................................. $ 546,707,728 $ -- $ 493,422,739 $ --
International Equity..................................... 222,548,513 21,296,687 94,881,656 31,300,000
Growth Stock............................................. 94,826,433 -- 64,993,295 --
Growth and Income Stock.................................. 490,930,645 -- 431,230,508 --
Index 500 Stock.......................................... 199,135,836 -- 28,135,152 --
Balanced................................................. 782,098,926 490,678,618 661,481,224 435,901,340
High Yield Bond.......................................... 197,495,897 -- 153,093,698 --
Select Bond.............................................. 417,760,490 155,767,760 391,615,427 212,654,062
</TABLE>

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 Select Bond, Money Market and Balanced 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 NEXT
$50 $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, Inc. ("NMIS")
a wholly-owned subsidiary of Northwestern Mutual Life, which is the manager and
investment adviser of the Fund. Northwestern Mutual Life is also a party
to the agreement. Other costs for each Portfolio are paid either by the
Portfolios, Northwestern Mutual Life, 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
December 31, 1997, the amounts paid through expense offset arrangements are
$4,119 in the Aggressive Growth Stock Portfolio, $4,529 in the Growth Stock
Portfolio, $6,985 in the Growth and Income Stock Portfolio, $3,641 in the Index
500 Stock Portfolio, and $14,005 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 Life 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 Life by Templeton Counsel and .40% in excess of
$100 million.

The Aggressive Growth Stock Portfolio paid commissions on Portfolio transactions
to an affiliated broker in the amount of $21,869.

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.

B-69
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Notes to Financial Statements
DECEMBER 31, 1997

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 Portfolios, International
Equity, Growth Stock, Growth and Income Stock, Index 500 Stock, Balanced, High
Yield Bond, Select Bond, and each business day for the Money Market Portfolio.
Dividend distributions are described below.

A dividend was declared on May 12, 1997, payable to shareholders of record on
May 12, 1997. Dividends paid from 1996 net investment income and 1996 net
capital gains were as follows:

<TABLE>
<CAPTION>
NET
INVESTMENT NET CAPITAL
PORTFOLIOS INCOME GAINS
- -------------------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Aggressive Growth Stock........................................................................... $ -- $57,364,645
International Equity.............................................................................. 12,704,098 7,541,567
Growth Stock...................................................................................... 14,615 799,017
Growth and Income Stock........................................................................... 26,286 6,062,555
Index 500 Stock................................................................................... 13,865,506 16,994,473
Balanced.......................................................................................... 86,698,498 29,228,140
High Yield Bond................................................................................... 160,082 992,215
Select Bond....................................................................................... 13,298,619 --
</TABLE>

A dividend was declared on June 26, 1997, payable to shareholders of record on
June 26, 1997. Dividends paid from 1997 net investment income:

<TABLE>
<CAPTION>
NET
INVESTMENT
PORTFOLIOS INCOME
- --------------------------------------------------------------------------------------------------------------- -----------
<S> <C>
Growth Stock................................................................................................... $1,203,768
Growth and Income Stock........................................................................................ 1,262,918
High Yield Bond................................................................................................ 3,943,225
</TABLE>

A dividend was declared on December 29, 1997, payable to shareholders of record
on December 29, 1997. Dividends paid from 1997 net investment income and 1997
net capital gains were as follows:

A tax return of capital in the amount of $3,716,193 was paid in the High Yield
Bond Portfolio for the year ended December 31, 1997.

Note 10 -- Effective April 1, 1996, NML voluntarily reimburses the International
Equity Portfolio for the income tax benefit NML receives from foreign dividend
taxes paid by the Portfolio and passed through to NML as tax credits. 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 December 31, 1997 was $1,313,579 and
for the period April 1, 1996 through December 31, 1996 was $921,386.

B-70
<PAGE>
Aggressive Growth Stock Portfolio
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
COMMON STOCK (91.20%) SHARES (000'S)
<S> <C> <C>
- -------------------------------------------------------------
BASIC MATERIALS (0.88%)
*Cambrex Corporation 203,000 $ 9,338
------------
CAPITAL GOODS (4.42%)
*Brooks Automation, Inc. 105,200 1,933
*CTB International Corp. 168,600 2,402
*Jabil Circuit, Inc. 246,000 9,778
Kaydon Corporation 360,000 11,745
*Kaynar Technologies, Inc. 232,200 6,618
*Tetra Tech, Inc. 503,375 10,068
*Triumph Group, Inc.-new 138,400 4,602
------------
TOTAL 47,146
------------
COMMUNICATION SERVICES ( 2.85%)
*LCI International, Inc. 387,500 11,916
*Pacific Gateway Exchange, Inc. 228,000 12,269
*Premiere Technologies, Inc. 225,400 6,227
------------
TOTAL 30,412
------------
CONSUMER CYCLICAL (15.15%)
*Blyth Industries, Inc. 437,100 13,086
*Catalina Marketing Corporation 238,600 11,035
*Cendant Corp. 610,557 20,988
*Dollar Tree Stores, Inc. 251,300 10,397
*Dura Automotive Systems, Inc. 206,900 5,120
Fastenal Co. 214,100 8,189
Galileo International, Inc. 331,200 9,149
*Getty Communications
PLC-ADR 454,900 6,767
*Jones Apparel Group, Inc. 234,800 10,096
*K & G Mens' Center, Inc. 518,150 10,752
*Kohls Department Stores 239,500 16,316
*O'Reilly Automotive, Inc. 517,400 13,582
*Signature Resorts, Inc. 400,000 8,750
*Tower Automotive, Inc. 239,800 10,086
*VWR Scientific Products Corp. 258,400 7,300
------------
TOTAL 161,613
------------
CONSUMER STAPLES (5.86%)
*American Italian Pasta Co.-Cl A 270,600 6,765
Cardinal Health, Inc. 198,418 14,906
*Chancellor Media Corp. 208,000 15,522
*Clear Channel Communications 179,000 14,219
*Ivex Packaging Corp. Del 52,500 1,260
*Robert Mondavi Corporation 202,000 9,848
------------
TOTAL 62,520
------------
ENERGY (7.57%)
*Barrett Resources Corporation 122,500 3,706
*BJ Services Company 149,200 10,733
*EVI, Inc. 216,000 11,178
*Global Industries, Ltd. 816,600 13,882
*Marine Drilling Co's, Inc. 352,000 7,304
*Nabors Industries, Inc. 276,700 8,699
*Pride International, Inc. 370,300 9,350

<CAPTION>
MARKET VALUE
COMMON STOCK (91.20%) SHARES (000'S)
<S> <C> <C>
- -------------------------------------------------------------
ENERGY (CONTINUED)
Tosco Corporation 170,200 $ 6,436
Transocean Offshore, Inc. 196,800 9,483
------------
TOTAL 80,771
------------
FINANCE (4.00%)
*Affiliated Managers Group 241,500 7,003
CMAC Investment Corp. 152,800 9,225
*ESG RE Ltd. 251,900 5,920
Investors Financial Services 200,000 9,200
Money Store, Inc. 171,850 3,609
*Trammel Crow Co. 300,400 7,735
------------
TOTAL 42,692
------------
HEALTHCARE (11.72%)
*Advanced Health Corp. 283,000 4,493
*Concentra Managed Care, Inc. 350,061 11,814
*Lincare Holdings, Inc. 177,400 10,112
*Medcath, Inc. 288,800 4,368
*NCS Healthcare, Inc.-Cl A 287,800 7,591
*Patterson Dental Co. 243,350 11,011
*Pediatrix Med Group, Inc. 215,900 9,230
*Pharmerica, Inc. 626,300 6,498
*PhyCor, Inc. 289,000 7,803
*Physician Sales & Services, Inc. 250,000 5,375
*Quorum Health Group, Inc. 452,700 11,827
*Spine-Tech, Inc. 147,300 7,577
*Sybron Intl Corp.-Wisconsin 300,200 14,091
*Wesley Jessen Visioncare 340,000 13,260
------------
TOTAL 125,050
------------
MISCELLANEOUS (8.73%)
*ABR Information Services, Inc. 266,700 6,367
*Administaff, Inc. 439,100 11,362
*Billing Information Concepts 222,300 10,670
Cintas Corp. 355,200 13,853
*Corrections Corp. of America 136,900 5,074
*Interim Services, Inc. 463,200 11,985
*Metzler Group, Inc. 269,500 10,814
*Robert Half International, Inc. 576,450 23,058
------------
TOTAL 93,183
------------
TECHNOLOGY (25.64%)
*ADC Telecommunications 329,900 13,773
AVX Corp. 125,600 2,316
Cambridge Technology Partners 422,100 17,570
*CBT Group PLC-ADR 223,400 18,347
*Ciena Corp. 164,400 10,049
*Computer Horizons Corp. 299,350 13,471
*Concord EFS, Inc. 303,100 7,540
*DST Systems, Inc. 248,300 10,599
*Gasonics Intl Corp. 439,800 4,343
HBO & Co. 331,600 15,917
*Hyperion Software 309,400 11,061
</TABLE>

B-71
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
COMMON STOCK (91.20%) SHARES (000'S)
- -------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
*Integrated Process Equipment
Corp. 303,200 $ 4,775
*Kent Electronics Corp. 186,100 4,676
*Komag, Inc. 465,000 6,917
*Microchip Technology, Inc. 228,100 6,843
*Molex, Inc. 342,846 9,857
National Data Corporation 163,500 5,906
*Pairgain Technologies, Inc. 237,200 4,596
Paychex, Inc. 346,555 17,544
*Peoplesoft, Inc. 499,800 19,492
*PMC-Sierra, Inc. 158,000 4,898
*QLogic Corp. 175,500 5,177
*Saville Systems PLC-ADR 463,400 19,231
*Sterling Software, Inc. 259,500 10,640
*Sykes Enterprises, Inc. 358,300 6,987
*Tellabs, Inc. 266,400 14,086
*Transaction Systems Architects 181,600 6,901
------------
TOTAL 273,512
------------
TRANSPORTATION (4.38%)
*Coach USA, Inc. 398,300 13,343
*Heartland Express Incorporated 389,500 10,468
*Hub Group, Inc. 151,100 4,495
*Knight Transportation, Inc. 291,600 8,092
*Swift Transportation Co., Inc. 320,800 10,386
------------
TOTAL 46,784
------------
TOTAL COMMON STOCK 973,021
------------
<CAPTION>

MARKET VALUE
MONEY MARKET INVESTMENTS (8.80%) PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
GOVERNMENT (0.18%)
+Federal Home Loan Mortgage,
5.61%, 02/13/98 $ 2,000,000 $ 1,987
------------
FINANCE (1.87%)
Chrysler Financial Corp., 5.74%,
01/23/98 20,000,000 19,930
------------
PERSONAL CREDIT INSTITUTIONS (6.75%)
Associates Corp. of N A, 6.74%,
01/02/98 12,200,000 12,198
Commercial Credit Corp., 5.65%,
01/28/98 20,000,000 19,915
General Electric Capital, 5.88%,
01/21/98 20,000,000 19,934
General Motors Acceptance Corp.,
5.84%, 01/14/98 20,000,000 19,958
------------
TOTAL 72,005
------------
TOTAL MONEY MARKET
INSTRUMENTS 93,922
------------
TOTAL AGGRESSIVE GROWTH
PORTFOLIO (COST $745,200)^ $ 1,066,943
------------
</TABLE>

ADR-American Depository Receipt
* 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 December
31, 1997 is summarized below:

<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF EXPIRATION DEPRECIATION
ISSUER CONTRACTS DATE (000'S)
- -------------------- ---------- ------------ -------------
<S> <C> <C> <C>
S&P 500 Stock Index 100 March 1998 (382)
</TABLE>

^At December 31, 1997, the aggregate cost of securities for federal income tax
purposes was $745,593 and the net unrealized appreciation of investments based
on that cost was $321,350 which is comprised of $354,153 aggregate gross
unrealized appreciation and $32,803 aggregate gross unrealized depreciation.

The Accompanying Notes are an Integral Part of the Financial Statements

B-72
<PAGE>
International Equity Portfolio
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.96%) COUNTRY SHARES (000'S)
<S> <C> <C> <C>
- -----------------------------------------------------------------
AEROSPACE & MILITARY TECHNOLOGY (0.10%)
Hong Kong Aircraft &
Engineering H.K. 257,900 $ 649
-----------
APPLIANCES & HOUSEHOLD DURABLES (1.21%)
Electrolux AB B Free Swe. 48,200 3,347
Thorn PLC U.K. 1,557,085 4,048
Thorn PLC , B Shares U.K. 1,816,600 568
-----------
TOTAL 7,963
-----------
AUTOMOBILES (5.95%)
Autoliv, Inc. Swe. 279,100 9,141
#Autoliv, Inc., IDR Swe. 65,000 2,118
Bertrand Faure SA Fr. 5,642 401
Fiat SPA Ord. Italy 1,527,900 4,446
Renault SA Fr. 405,775 11,419
Volvo Aktiebolaget, B Free Swe. 433,000 11,624
-----------
TOTAL 39,149
-----------
BANKING & CREDIT (18.53%)
Australia & New Zealand
Bank Group Austrl. 926,097 6,118
Banco Bradesco SA Braz. 623,750,000 6,148
*Banco Bradesco SA -
Rights Braz. 26,668,540 96
Banco de Andulucia Sp. 30,000 5,019
Banco Itau S.A. Braz. 2,079,000 1,118
Banque Nationale de Paris Fr. 135,400 7,200
+Banque Nationale de
Paris, ADR (144A) Fr. 146,500 7,790
Barclay's Bank, PLC U.K. 245,016 6,534
BCO BilboaVizcaya Sp. 177,000 5,725
BPI SGPS SA Port. 201,963 4,916
Canadian Imperial Bank of
Commerce Can. 309,200 9,637
+Corporacion Bancaria de
Espana S.A., ADR Sp. 195,000 5,960
Credit Commercial de
France Fr. 25,500 1,748
Deutsche Bank AG Ger. 193,600 13,545
HSBC Holdings U.K. 214,979 5,299
Korea Long Term Credit
Bank Kor. 161,953 994
Merita Limited "A" Fin. 1,800,000 9,850
National Bank of Canada
Montreal Can. 360,000 5,937
Panin Bank Indo. 5,346,000 657
*Panin Bank - Warrants Indo. 763,714 7
Suisse Group Credit Swtz. 55,725 8,634
Svenska Handelsbanken S.A. Swe. 230,000 7,957

<CAPTION>
MARKET
VALUE
COMMON STOCK (95.96%) COUNTRY SHARES (000'S)
<S> <C> <C> <C>
- -----------------------------------------------------------------
BANKING & CREDIT (CONTINUED)
*Unibanco Uniao de Bancos Braz. 14,033,500 $ 956
-----------
TOTAL 121,845
-----------
BROADCAST ADVERTISING PUBLISHING (0.40%)
Marieberg Tidings "A" Free Swe. 35,000 820
South China Morning Post
Ltd. H.K. 2,554,000 1,796
-----------
TOTAL 2,616
-----------
BUILDING MATERIALS AND COMPONENTS (1.70%)
Hepworth PLC U.K. 607,200 2,218
Pioneer International Ltd. Austrl. 3,197,946 8,730
Siam City Cement Public
Co, Ltd. Thai. 240,039 249
-----------
TOTAL 11,197
-----------
BUSINESS & PUBLIC SERVICE (2.35%)
Esselte AB, Series "A"
Free Swe. 269,900 5,102
Hyder PLC U.K. 371,666 5,920
Hyder PLC Cum. Red. Pfd. U.K. 401,400 789
Societe Generale de Surv
Holdings Swtz. 885 1,699
*Waste Management
International, PLC U.K. 310,700 900
*+Waste Management PLC,
ADR U.K. 168,000 1,050
-----------
TOTAL 15,460
-----------
CHEMICALS (4.47%)
Bayer AG Ger. 157,000 5,828
Courtaulds PLC U.K. 1,851,700 9,049
European Vinyls Corp. EVC
International Neth. 68,985 1,531
Imperial Chemical
Industries, PLC U.K. 19,000 297
Rhone Poulenc SA, Series
"A" Fr. 283,108 12,687
-----------
TOTAL 29,392
-----------
CONSTRUCTION & HOUSING (0.62%)
Kyudenko Corp. Jpn. 33,000 167
Sirti SPA Italy 643,000 3,891
-----------
TOTAL 4,058
-----------
ELECTRICAL & ELECTRONICS (3.21%)
ABB AG Baden Bearer Swtz. 4,730 5,951
Alcatel Alsthom DG Fr. 58,519 7,441
Philips Electronic Neth. 128,400 7,702
-----------
TOTAL 21,094
-----------
</TABLE>

B-73
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.96%) COUNTRY SHARES (000'S)
- -----------------------------------------------------------------
<S> <C> <C> <C>
ELECTRICAL COMPONENTS, INSTRUMENTS (0.62%)
BICC PLC U.K. 1,450,345 $ 4,093
-----------
ENERGY SOURCES (6.66%)
+Gazprom, ADR (144a) Rus. 142,100 3,428
Hafslund Nycomed "A" Norw. 170,000 1,038
Petroleo Brasileiro S.A.-
Petrobras Braz. 32,500,000 7,600
Repsol SA Sp. 122,000 5,203
Saga Petroleum Norw. 260,000 4,479
Societe Nationale Elf
Aquitaine Fr. 66,801 7,773
+YPF S.A., ADR Arg. 418,500 14,307
-----------
TOTAL 43,828
-----------
FINANCIAL SERVICES (2.94%)
AXA-UAP SA Fr. 218,313 16,900
India Fund, Series "B" U.K. 1,256,515 1,861
#Korea International Trust
IDR Kor. 52 410
Peregrine Investments
Holdings, Ltd. H.K. 262,000 186
-----------
TOTAL 19,357
-----------
FOOD & HOUSEHOLD PRODUCTS (3.56%)
Albert Fisher Group PLC U.K. 6,734,996 3,989
Cafe de Coral Holdings,
Ltd. H.K. 7,672,000 1,683
CP Pokphand Co. H.K. 2,609,900 411
Hillsdown Holdings U.K. 1,800,892 4,385
Tate & Lyle, PLC U.K. 762,600 6,286
The Oshawa Group Ltd. Can. 187,300 3,272
Vitro SA NPV Mex. 768,400 3,388
-----------
TOTAL 23,414
-----------
FOREST PRODUCTS & PAPER (1.95%)
Carter Holt Harvey Ltd. N.Z. 3,929,357 6,069
Metsa Serla OY "B" Fin. 277,500 2,166
P.T. Barito Pacific Timber Indo. 937,000 269
Stora Kapparbergs, Series
"B" Swe. 350,000 4,345
-----------
TOTAL 12,849
-----------
HEALTH & PERSONAL CARE (4.27%)
Astra AB Series "A" Free Swe. 373,333 6,470
Medeva PLC U.K. 4,250,000 11,328
Nycomed Amersham PLC U.K. 191,276 7,239
Nycomed Amersham PLC, B
Shares U.K. 83,406 3,032
-----------
TOTAL 28,069
-----------
INDUSTRIAL COMPONENTS (3.17%)
BTR PLC U.K. 5,674,500 17,179
BTR, PLC "A" Austrl. 249,000 737
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.96%) COUNTRY SHARES (000'S)
<S> <C> <C> <C>
- -----------------------------------------------------------------
INDUSTRIAL COMPONENTS (CONTINUED)
Granges AB Swe. 188,100 $ 2,951
-----------
TOTAL 20,867
-----------
INSURANCE (2.65%)
Aegon NV Neth. 106,192 9,455
ING Groep NV Neth. 190,000 8,004
-----------
TOTAL 17,459
-----------
MACHINERY & ENGINEERING (0.69%)
VA Technologies AG Bearer Aus. 30,000 4,548
-----------
MERCHANDISING (1.06%)
David Jones Ltd. Austrl. 742,100 836
Koninklijke Bijenkorf
Beheer Neth. 44,098 2,763
Kwik Save Group U.K. 465,057 2,242
Somerfield PLC U.K. 318,200 1,099
-----------
TOTAL 6,940
-----------
METALS & MINING (4.69%)
Anglo American Platinum So.
Corporation Africa 35,700 477
British Steel PLC U.K. 5,270,900 11,361
Elkem A S Oslo ord "A" Norw. 192,000 2,552
Grupo Mexico "B" Mex. 1,320,000 4,912
+Minorco SA, ADR Lux. 318,150 5,329
+Pechiney ADR "A" Fr. 48,183 928
Pechiney SA "A" Fr. 19,000 750
*Union Minerie, NPV Bel. 65,171 4,521
-----------
TOTAL 30,830
-----------
MISCELLANEOUS MATERIAL/COMMODITIES (0.04%)
Korea Chemical Company,
Ltd. Kor. 16,700 278
-----------
MULTI-INDUSTRY (5.65%)
Amer Group "A" Fin. 175,000 3,358
Comp Gen de Industrieset
de Partec Fr. 4,500 1,616
Harrisons & Crossfield U.K. 2,490,000 5,777
Hutchinson Whampoa H.K. 798,000 4,995
Jardine Matheson Holdings Sing. 1,212,301 6,183
Jardine Strategic Holdings Sing. 1,019,055 2,690
Marine Wendel SA Fr. 11,490 1,306
Nokia Corp., "A" Fin. 71,000 5,042
Swire Pacific Class "A" H.K. 472,500 2,604
Swire Pacific Limited B H.K. 3,534,200 3,580
-----------
TOTAL 37,151
-----------
TELECOMMUNICATIONS (8.25%)
British Telecom U.K. 608,000 4,799
Cointel CONV Pfd. Arg. 73,150 5,121
</TABLE>

B-74
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.96%) COUNTRY SHARES (000'S)
- -----------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS (CONTINUED)
+Compania de
Telecomunicaciones, ADR Chile 155,125 $ 4,634
+Phillipine Long Distance
Telephone, ADR Phil. 127,000 2,858
+PT Indosat, ADR Indo. 146,600 2,831
Telecom Italia SPA Italy 2,490,000 10,985
+Telebras ADR Braz. 81,900 9,536
Telebras Braz. 17,646,200 1,795
Telefonica de Espania Sp. 315,000 8,990
+Telefonica del Peru S "A"
B, ADR Peru 115,300 2,688
-----------
TOTAL 54,237
-----------
TEXTILES-APPAREL (0.34%)
Yizheng Chemical Fibre
Company China 12,469,200 2,253
-----------
TRANSPORTATION - AIRLINES (0.90%)
Air New Zealand Ltd. "B" N.Z. 1,150,000 2,304
+Quantas Airways (144A)
ADR Austrl. 165,000 2,920
Singapore Airlines Ltd. Sing. 105,000 685
-----------
TOTAL 5,909
-----------
TRANSPORTATION - RAILROAD (1.07%)
Mayne Nickless Limited Austrl. 1,336,500 7,062
-----------
UTILITIES-ELECTRIC & GAS (8.29%)
BG PLC U.K. 3,330,352 15,014
*Centrica PLC U.K. 1,913,200 2,817
*CEZ Ceske Energeticke
Zavody Chez. 101,990 3,339
Electricidad de Caracas Venz. 8,690 10
Endesa National de
Electric Sp. 252,000 4,472
EVN Energie Versorgung Aus. 38,400 5,039
Hong Kong Electric H.K. 1,790,000 6,826
Iberdrola SA Sp. 587,500 7,728
Korea Electric Power Corp. Kor. 33,000 306
+Korea Electric Power
Corp. , ADR Kor. 35,425 356
National Power U.K. 493,764 4,874
Thames Water U.K. 251,023 $ 3,744
-----------
TOTAL 54,525
-----------
WHOLESALE & INTERNATIONAL TRADE (0.62%)
Brierley Investments Ltd. N.Z. 5,716,091 4,083
-----------
TOTAL COMMON STOCK 631,175
-----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
VALUE
BONDS (0.32%) COUNTRY PAR (000'S)
<S> <C> <C> <C>
- ----------------------------------------------------------------
FINANCIAL SERVICES (0.32%)
PIV Financial Investments,
Ltd., 4.5%, 12/01/00 H.K 2,750,000 $ 2,104
-----------
TOTAL BONDS 2,104
-----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
MONEY MARKET VALUE
INVESTMENTS (3.72%) COUNTRY PAR (000'S)
<S> <C> <C> <C>
- ----------------------------------------------------------------
GOVERNMENT (0.42%)
U.S. Treasury, 5.125%,
4/30/98 U.S. $ 2,757,000 $ 2,753
-----------
PERSONAL CREDIT INSTITUTIONS (1.61%)
Associates Corporation of
N.A., 6.74%, 1/02/98 U.S. 5,600,000 5,599
General Electric Capital,
5.649%, 1/28/98 U.S. 5,000,000 4,979
-----------
TOTAL 10,578
-----------
TELECOMMUNICATIONS (0.93%)
Nacional Financiera CNV,
11.25%, 5/15/98 Mex. 117,802 6,126
-----------
FINANCE (0.76%)
Chrysler Financial
Corporation, 5.8%, 1/23/98 U.S. 5,000,000 4,982
-----------
TOTAL MONEY MARKET
INVESTMENTS 24,439
-----------
TOTAL INTERNATIONAL
EQUITY PORTFOLIO
(COST $543,741)^ $ 657,718
-----------
</TABLE>

* Non-Incoming Producing.
+ ADR-American Depository Receipt.
# IDR-International Depository Receipt.
^At December 31, 1997, the aggregate cost of securities for federal income tax
purposes was $545,315 and the net unrealized appreciation of investments based
on that cost was $112,403 which is comprised of $161,863 aggregate gross
unrealized appreciation and $49,460 aggregate gross unrealized depreciation.

Investment Percentage by Country:

<TABLE>
<C> <S>
22.58% United Kingdom
11.85 France
6.80 Sweden
6.55 Spain
4.48 Netherlands
4.17 United States
4.14 Brazil
39.43 Other
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-75
<PAGE>
Growth Stock Portfolio
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.98%) SHARES (000'S)
<S> <C> <C>
- --------------------------------------------------------------
BASIC MATERIALS (3.60%)
E.I. du Pont de Nemours & Co. 32,000 $ 1,922
Ecolab, Inc. 82,700 4,585
Monsanto Co. 53,000 2,226
-----------
TOTAL 8,733
-----------
CAPITAL GOODS (10.28%)
Allied Signal, Inc. 89,200 3,473
Avery Dennison Corporation 56,200 2,515
Boeing Company 56,400 2,760
Deere & Company 47,000 2,741
Emerson Electric Co. 37,400 2,111
General Electric Company 105,000 7,704
*Gulfstream Aerospace 60,000 1,755
Tyco International, Ltd. 42,000 1,893
-----------
TOTAL 24,952
-----------
COMMUNICATION SERVICES (2.25%)
MCI Communications Corporation 62,000 2,654
*Teleport Communications 10,700 587
*WorldCom, Inc. 73,200 2,214
-----------
TOTAL 5,455
-----------
CONSUMER CYCLICAL (12.97%)
*Barnes & Noble, Inc. 70,000 2,336
Borg Warner Automotive 48,200 2,506
*Federated Department Stores, Inc. 39,500 1,701
Ford Motor Company 41,100 2,001
Harley Davidson, Inc. 96,400 2,639
Home Depot, Inc. 47,550 2,800
*Kohls Department Stores 72,800 4,960
Mattel, Inc. 63,281 2,357
McGraw-Hill Companies, Inc. 26,200 1,939
New York Times Company 51,100 3,379
*Promus Hotels 6,612 278
Tribune Company 27,600 1,718
Wal-Mart Stores, Inc. 72,400 2,855
-----------
TOTAL 31,469
-----------
CONSUMER STAPLES (17.29%)
*Benckiser N V 77,300 3,179
Campbell Soup Company 52,000 3,023
Dial Corp. 131,000 2,727
Walt Disney Company 28,900 2,863
Gillette Company 19,500 1,959
Hershey Foods Corp. 57,000 3,530
McDonald's Corporation 24,400 1,165
Nabisco Holdings Corp. 39,700 1,923
Newell Co. 84,500 3,591
Pepsico, Inc. 90,000 3,279
Philip Morris Companies 85,500 3,874
Procter & Gamble Company 48,400 3,863
Unilever N.V. 50,400 3,147

<CAPTION>
MARKET
VALUE
COMMON STOCK (95.98%) SHARES (000'S)
<S> <C> <C>
- --------------------------------------------------------------
CONSUMER STAPLES (CONTINUED)
Walgreen Company 122,200 $ 3,834
-----------
TOTAL 41,957
-----------
ENERGY (10.28%)
Amoco Company 30,200 2,571
British Petroleum Co. Ltd. 36,900 2,940
Diamond Offshore Drilling, Inc. 50,000 2,406
Exxon Corporation 26,400 1,615
*Falcon Drilling, Inc. 34,600 1,213
Mobil Corporation 38,000 2,743
Schlumberger Limited 44,000 3,542
Tosco Corporation 79,200 2,995
Transocean Offshore, Inc. 39,600 1,908
Unocal Corp. 48,600 1,886
*Western Atlas International, Inc. 15,300 1,132
-----------
TOTAL 24,951
-----------
FINANCE (13.52%)
Associates First Capital Corporation 55,000 3,912
Banc One Corporation 52,000 2,824
Bank New York, Inc. 23,200 1,341
BankAmerica Corporation 52,800 3,855
Chase Manhattan Corporation 23,040 2,523
Citicorp 25,000 3,161
First Union Corporation 55,000 2,819
Franklin Resources 39,400 3,425
Merrill Lynch & Co. 28,000 2,042
Morgan Stanley, Dean Witter, Discover
& Co. 64,900 3,837
Travelers Group, Inc. 57,000 3,071
-----------
TOTAL 32,810
-----------
HEALTHCARE (8.72%)
Bristol Myers Squibb Co. 37,700 3,567
Guidant Corp. 18,300 1,139
*Healthsouth Corp. 109,924 3,050
Johnson & Johnson 36,500 2,404
Eli Lilly & Company 57,400 3,996
Merck & Co., Inc. 24,800 2,635
Pfizer, Inc. 58,500 4,362
-----------
TOTAL 21,153
-----------
TECHNOLOGY (12.39%)
*Cisco Systems Incorporated 45,000 2,509
Compaq Computer Corp. 44,200 2,495
*DST Systems, Inc. 54,400 2,322
First Data Corporation 51,100 1,495
*Fiserv 95,100 4,672
W.W. Grainger, Inc. 14,700 1,429
Hewlett-Packard Company 36,800 2,300
Intel Corp. 30,000 2,108
International Business Machines 35,200 3,681
Lucent Technologies, Inc. 15,171 1,212
*Microsoft Corporation 29,400 3,800
</TABLE>

B-76
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.98%) SHARES (000'S)
- --------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Motorola, Inc. 26,800 $ 1,529
*Quantum Corp. 26,400 530
-----------
TOTAL 30,082
-----------
TRANSPORTATION (3.70%)
*AMR Corporation 19,400 2,493
Canadian National Railway Co. 70,500 3,331
*Midwest Express Holdings, Inc. 21,200 823
Southwest Airlines Co. 94,500 2,327
-----------
TOTAL 8,974
-----------
UTILITIES (0.98%)
Sonat, Inc. 52,000 2,379
-----------
TOTAL COMMON STOCK 232,915
-----------
<CAPTION>

MARKET
VALUE
MONEY MARKET INVESTMENTS (4.02%) PAR (000'S)
<S> <C> <C>
- --------------------------------------------------------------
GOVERNMENT (0.28%)
Federal Home Loan Mortgage Corp.,
5.61%, 02/13/98 $ 700,000 $ 695
-----------
PERSONAL CREDIT INSTITUTIONS (3.74%)
Associates Corp. of N A, 6.74%,
01/02/98 1,100,000 1,099
Commercial Credit Corp., 5.65%,
01/28/98 2,000,000 1,992
General Electric Capital, 5.88%,
01/21/98 3,000,000 2,990
General Motors Acceptance Corp.,
5.84%, 01/14/98 3,000,000 2,995
-----------
TOTAL 9,076
-----------
TOTAL MONEY MARKET INVESTMENTS 9,771
-----------
TOTAL GROWTH STOCK PORTFOLIO
(COST $170,190)^ $ 242,686
-----------
</TABLE>

*Non-Income Producing.

^At December 31, 1997, the aggregate cost of securities for federal income tax
purposes was $170,202 and the net unrealized appreciation of investments based
on that cost was $72,484 which is comprised of $74,074 aggregate gross
unrealized appreciation and $1,590 aggregate gross unrealized depreciation.

The Accompanying Notes are an Integral Part of the Financial Statements

B-77
<PAGE>
Growth and Income Stock Portfolio
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (98.52%) SHARES (000'S)
<S> <C> <C>
- --------------------------------------------------------------
BASIC MATERIALS (3.10%)
Albemarle Corporation 50,400 $ 1,203
Allegheny Teledyne, Inc. 62,000 1,604
Dow Chemical Company 34,700 3,522
Temple-Inland, Inc. 98,400 5,148
-----------
TOTAL 11,477
-----------
CAPITAL GOODS (11.47%)
AlliedSignal, Inc. 176,800 6,884
Boeing Company 31,100 1,522
*Coltec Industries, Inc. 159,100 3,689
Cooper Industries, Inc. 167,000 8,183
Emerson Electric Co. 67,800 3,826
Johnson Controls, Inc. 75,000 3,581
Tenneco, Inc. 114,100 4,507
Tyco International Ltd. 100,748 4,540
Waste Management, Inc. 207,800 5,715
-----------
TOTAL 42,447
-----------
COMMUNICATION SERVICES (6.48%)
GTE Corporation 148,800 7,775
MCI Communications Corporation 232,800 9,967
Sprint Corp. 106,300 6,232
-----------
TOTAL 23,974
-----------
CONSUMER CYCLICAL (9.22%)
Circuit City Stores-Circuit City
Group 82,200 2,923
*Federated Department Stores, Inc. 74,100 3,191
*Fruit Of The Loom, Incorporated 214,400 5,494
Goodyear Tire & Rubber Company 104,900 6,674
International Game Technology 139,000 3,510
*ITT Corp. 28,400 2,354
*Toys "R" Us, Inc. 190,400 5,986
*Westpoint Stevens, Inc. 84,200 3,978
-----------
TOTAL 34,110
-----------
CONSUMER STAPLES (13.01%)
Anheuser Busch Companies, Inc. 196,400 8,642
Pepsico, Inc. 114,500 4,172
Philip Morris Companies, Inc. 155,500 7,046
Procter & Gamble Company 99,500 7,941
Ralston Purina Group 56,800 5,279
*Tele Communications, Inc. 300,289 8,502
Time Warner, Inc. 34,100 2,114
*U S West Inc. 154,100 4,450
-----------
TOTAL 48,146
-----------
ENERGY (10.07%)
Atlantic Richfield Co. 42,400 3,397
British Petroleum Co. Ltd 395 31
Exxon Corporation 82,300 5,036
*Input/Output, Inc. 216,800 6,436
Mobil Corporation 96,400 6,959
Occidental Petroleum, Inc. 123,300 3,614

<CAPTION>
MARKET
VALUE
COMMON STOCK (98.52%) SHARES (000'S)
<S> <C> <C>
- --------------------------------------------------------------
ENERGY (CONTINUED)
Tosco Corporation 311,300 $ 11,771
-----------
TOTAL 37,244
-----------
FINANCE (14.75%)
Ambac, Inc. 41,600 1,914
American Express Corporation 40,600 3,624
Chase Manhattan Corporation 31,900 3,493
First Union Corporation 157,130 8,053
Fleet Financial Group Inc. 52,500 3,934
Marsh & McLennan Companies, Inc. 99,700 7,434
MBIA, Inc. 14,500 969
Morgan Stanley, Dean Witter, Discover
& Co. 74,400 4,399
Nationsbank Corp. 88,700 5,394
Providian Financial Corp. 99,300 4,487
Simon Debartolo Group, Inc. 123,200 4,027
Southtrust, Inc. 28,300 1,795
Washington Mutual, Inc. 79,300 5,060
-----------
TOTAL 54,583
-----------
HEALTHCARE (11.11%)
*Alza Corporation 84,100 2,675
*Crescendo Pharmaceuticals 4,605 53
*Humana, Inc. 128,600 2,669
Merck & Company, Inc. 97,400 10,349
Pfizer, Inc. 102,500 7,643
United Healthcare Corp. 164,500 8,174
Warner-Lambert Company 77,000 9,548
-----------
TOTAL 41,111
-----------
REAL ESTATE INVESTMENT TRUSTS (2.19%)
Starwood Lodging Trust 140,100 8,108
-----------
TECHNOLOGY (11.34%)
Autodesk, Inc. 75,700 2,801
*Bay Networks, Inc. 91,400 2,336
*Cisco Systems, Inc. 49,150 2,740
*EMC Corporation 274,400 7,529
First Data Corporation 212,600 6,219
International Business Machines
Corporation 71,800 7,508
*Learning, Inc. 2,000 32
Motorola, Inc. 44,600 2,545
Perkin Elmer Corporation 31,200 2,217
*Quantum Corporation 175,100 3,513
*Sun Microsystems, Inc. 113,200 4,514
-----------
TOTAL 41,954
-----------
TRANSPORTATION (2.60%)
*Consolidated Freightways Corp. 800 11
Union Pacific Corporation 108,400 6,768
*Wisconsin Central Transportation 121,000 2,828
-----------
TOTAL 9,607
-----------
</TABLE>

B-78
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (98.52%) SHARES (000'S)
- --------------------------------------------------------------
<S> <C> <C>
UTILITIES (3.18%)
Dominion Resources, Inc. 69,300 $ 2,950
Enron Corp. 116,000 4,821
New England Electric Systems 47,900 2,048
Northern States Power Company 33,400 1,945
-----------
TOTAL 11,764
-----------
TOTAL COMMON STOCK 364,525
-----------
<CAPTION>

MARKET
VALUE
MONEY MARKET INSTRUMENT (1.48%) SHARES (000'S)
<S> <C> <C>
- --------------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS (1.48%)
Associates Corporation of N.A.,
6.74%, 1/2/98 1,500,000 $ 1,500
General Electric Capital Corp.,
5.649%, 1/28/98 1,000,000 996
General Motors Acceptance Corp.,
5.839%, 1/14/98 3,000,000 2,993
-----------
TOTAL 5,489
-----------
TOTAL MONEY MARKET
INSTRUMENTS 5,489
-----------
TOTAL GROWTH & INCOME
PORTFOLIO (COST $342,839)^ $ 370,014
-----------
</TABLE>

* Non-Income Producing.

^At December 31, 1997, the aggregate cost of securities for federal income tax
purposes was $343,055 and the net unrealized appreciation of investments based
on that cost was $26,959 which is comprised of $37,245 aggregate gross
unrealized appreciation and $10,286 aggregate gross unrealized depreciation.

The Accompanying Notes are an Integral Part of the Financial Statements

B-79
<PAGE>
Index 500 Stock Portfolio
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.34%) SHARES (000'S)
<S> <C> <C>
- --------------------------------------------------------------
BASIC MATERIALS (4.37%)
Air Products & Chemicals, Inc. 16,000 $ 1,316
Alcan Aluminum Limited 33,100 914
Allegheny Teledyne Inc. 25,635 663
Aluminum Co. of America 25,300 1,780
Archer-Daniels-Midland Company 81,548 1,769
*Armco Inc. 15,600 77
ASARCO, Inc. 6,100 137
Barrick Gold Corporation 54,300 1,011
Battle Mountain Gold Company 33,500 197
Bemis Company, Inc. 7,700 339
*Bethlehem Steel Corporation 16,400 141
B. F. Goodrich Company 7,900 327
Boise Cascade Corporation 8,100 245
Champion International 14,000 634
Cyprus Amax Minerals Co. 13,650 210
Dow Chemical Company 33,200 3,370
E.I. du Pont de Nemours & Co. 164,700 9,892
Eastman Chemical Company 11,425 681
*Echo Bay Mines Limited Co. 20,300 49
Ecolab, Inc. 9,400 521
Engelhard Corp. 21,000 365
*FMC Corporation 5,400 363
Freeport-McMoRan Copper & Gold, Inc. 29,000 457
Georgia Pacific Corp. 13,300 808
*Georgia Pacific Corp. (Timber
Group) 12,900 293
Great Lakes Chemical 8,700 390
Hercules Incorporated 14,400 721
Homestake Mining Company 21,400 190
Inco Limited 24,300 413
Inland Steel Industries, Inc. 7,100 122
International Flavors & Fragrances,
Inc. 15,900 819
International Paper Company 44,000 1,898
Louisiana Pacific Corporation 15,900 302
Mead Corp. 15,200 426
Monsanto Company 85,800 3,604
Morton International, Inc. 19,400 667
Nalco Chemical Company 9,700 384
Newmont Mining Corporation 22,780 669
Nucor Corp. 12,800 618
Phelps Dodge Corporation 8,800 548
Pioneer Hi-Bred International 9,600 1,030
Placer Dome Incorporated 34,900 443
Potlatch Corporation 4,200 181
PPG Industries Inc. 26,100 1,491
Praxair 23,000 1,035
Reynolds Metals Company 10,700 642
Rohm & Haas Company 9,000 862
Sigma-Aldrich Corp. 14,600 580
*Stone Container Corporation 14,500 151

<CAPTION>
MARKET
VALUE
COMMON STOCK (95.34%) SHARES (000'S)
<S> <C> <C>
- --------------------------------------------------------------
BASIC MATERIALS (CONTINUED)
Temple-Inland Inc. 8,300 $ 434
Union Camp Corporation 10,100 542
Union Carbide Corporation 18,100 777
USX-U.S. Steel Group, Inc. 12,500 391
W.R. Grace & Co. 10,600 853
Westvaco Corporation 14,850 467
Weyerhaeuser Company 29,000 1,423
Willamette Industries Inc. 16,200 521
Worthington Industries 14,050 232
-------------
TOTAL 50,385
-------------
CAPITAL GOODS (8.84%)
Aeroquip-Vickers Inc. 4,100 201
Allied Signal Inc. 82,400 3,208
AMP Incorporated 31,972 1,343
Avery Dennison Corporation 15,000 671
Ball Corporation 4,400 155
Boeing Company 145,776 7,134
Briggs & Stratton Corporation 3,700 180
Browning-Ferris Industries Inc. 28,800 1,066
Case Corporation 10,900 659
Caterpillar Inc. 54,800 2,661
Cincinnati Milacron Inc. 5,800 150
Cooper Industries, Inc. 17,800 872
Corning Inc. 33,600 1,247
Crane Co. 6,650 288
Crown Cork & Seal Company, Inc. 18,700 937
Cummins Engine Company, Inc. 5,600 331
Deere & Company 36,700 2,140
Dover Corporation 32,400 1,170
Eaton Corporation 11,300 1,009
Emerson Electric Co. 64,600 3,646
Fluor Corporation 12,200 456
Foster Wheeler Corporation 5,900 160
General Dynamics Corporation 9,100 787
General Electric Company 476,800 34,985
General Signal Corporation 7,300 308
Harnischfeger Industries, Inc. 7,200 254
Honeywell Inc. 18,600 1,274
Illinois Tool Works Inc. 36,300 2,183
Ingersoll-Rand Company 24,200 980
Johnson Controls Inc. 12,200 583
Lockheed Martin Corporation 28,254 2,783
McDermott International, Inc. 8,100 297
Millipore Corp. 6,300 214
Minnesota Mining & Manufacturing Co. 60,500 4,965
Moore Corporation Ltd. 12,910 195
NACCO Industries, Inc. 1,200 129
National Service Industries, Inc. 6,600 327
*Navistar International Corporation 10,600 263
Northrop Grumman Corporation 9,700 1,116
</TABLE>

B-80
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.34%) SHARES (000'S)
- --------------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS (CONTINUED)
*Owens-Illinois, Inc. 20,400 $ 774
Paccar Incorporated 11,370 597
*Pall Corporation 18,500 383
Parker-Hannifin Corporation 16,275 747
Pitney Bowes Inc. 21,000 1,889
Raychem Corp. 12,700 547
Raytheon Company--Class A 6,549 323
Raytheon Company--Class B 34,400 1,737
Rockwell International Corporation 30,400 1,588
Tenneco Inc. 24,800 980
Textron Inc. 24,000 1,500
*Thermo Electron Corporation 21,900 975
Thomas & Betts Corporation 8,000 378
Timken Company 9,200 316
Tyco International Ltd. 77,600 3,497
United Technologies Corp. 34,300 2,497
Waste Management Inc. 66,000 1,815
-------------
TOTAL 101,870
-------------
COMMUNICATION SERVICES (6.61%)
*Airtouch Communications Inc. 73,400 3,051
ALLTEL Corporation 27,200 1,117
Ameritech Corporation 80,100 6,448
AT&T Corporation 236,600 14,492
Bell Atlantic Corporation 113,042 10,287
Bellsouth Corporation 144,400 8,132
Frontier Corporation 23,900 575
GTE Corporation 139,200 7,273
MCI Communications Corporation 100,800 4,316
SBC Communications Incorporated 133,049 9,746
Sprint Corporation 62,700 3,676
U S WEST Communications Group 69,800 3,150
*WorldCom Inc. 131,400 3,975
-------------
TOTAL 76,238
-------------
CONSUMER CYCLICAL (8.98%)
American Greetings Corp. 11,000 430
Armstrong World Industries Inc. 5,900 441
*Autozone, Inc. 22,000 638
Black & Decker Corporation 13,700 535
Brunswick Corporation 14,500 440
*Cendant Corporation 113,454 3,900
Centex Corporation 4,200 264
*Charming Shoppes Incorporated 15,400 72
Chrysler Corporation 98,200 3,455
Circuit City Stores, Inc. 14,300 509
Cognizant Corporation 23,900 1,065
Cooper Tire & Rubber Company 11,500 280
*Costco Companies, Inc. 30,907 1,379
Dana Corporation 15,200 722
Dayton Hudson Corporation 31,700 2,140
Dillard Department Stores, Inc. 16,300 575
Dow Jones & Company, Inc. 14,000 752
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.34%) SHARES (000'S)
<S> <C> <C>
- --------------------------------------------------------------
CONSUMER CYCLICAL (CONTINUED)
Dun & Bradstreet Corporation 24,800 $ 767
Echlin Inc. 9,200 333
*Federated Department Stores, Inc. 30,500 1,313
Fleetwood Enterprises, Inc. 5,200 221
Ford Motor Company 173,900 8,467
*Fruit of the Loom, Incorporated 10,700 274
Gannet Company Inc. 41,300 2,553
Gap, Inc. 58,500 2,073
General Motors Corp. 106,200 6,438
Genuine Parts Company 26,200 889
Giant Food Inc. 8,700 293
Goodyear Tire & Rubber Company 22,700 1,444
H & R Block, Inc. 15,200 681
Harcourt General 10,300 564
*Harrahs Entertainment 14,700 277
Hasbro Inc. 18,450 581
Hilton Hotels Corporation 36,400 1,083
Home Depot, Inc. 106,298 6,258
Interpublic Group of Cos. Inc. 18,100 902
*ITT Corp. 17,000 1,409
ITT Industries Inc. 17,200 540
J.C. Penney Company, Inc. 36,200 2,183
Jostens, Inc. 5,700 131
*K Mart Corporation 70,900 820
Kaufman & Broad Home Corp. 5,700 128
Knight-Ridder Inc. 12,700 660
Laidlaw Transportation Limited 47,900 653
The Limited Inc. 39,500 1,007
Liz Claiborne, Inc. 10,200 426
Lowe's Companies, Inc. 25,300 1,206
Marriott International 18,500 1,281
Masco Corporation 24,000 1,221
Mattel, Inc. 42,288 1,575
May Department Stores Company 33,900 1,786
Maytag Corporation 14,400 537
McGraw-Hill Companies Inc. 14,400 1,066
Mercantile Stores Company 5,400 329
Meredith Corporation 7,800 278
*Mirage Resorts, Incorporated 26,000 592
New York Times Company 14,000 926
Nike, Inc. 42,000 1,649
Nordstrom, Inc. 11,200 676
Owens Corning Fiberglass Corp. 7,800 266
Pep Boys - Manny, Moe & Jack 9,200 220
Pulte Corporation 3,100 130
*Reebok International Ltd. 8,200 236
Russell Corp. 5,300 141
Sears Roebuck & Co. 57,000 2,579
Service Corporation International 36,600 1,352
Sherwin-Williams Company 25,100 697
Snap-On Incorporated 8,950 390
Springs Industries, Inc. 2,900 151
</TABLE>

B-81
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.34%) SHARES (000'S)
- --------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICAL (CONTINUED)
Stanley Works 13,000 $ 613
Tandy Corporation 15,400 594
Times Mirror Company 13,900 855
TJX Companies, Inc. 23,800 818
*Toys R Us 41,500 1,305
Tribune Company 17,900 1,114
TRW, Inc. 17,900 955
VF Corporation 18,300 841
*Viacom Incorporated 51,356 2,128
Wal-Mart Stores Inc. 329,800 13,006
Whirlpool Corporation 10,900 600
*Woolworth Corp. 19,600 399
-------------
TOTAL 103,477
-------------
CONSUMER STAPLES (14.64%)
Adolph Coors Co. 5,400 180
Alberto-Culver Company 8,200 263
Albertson's, Inc. 35,800 1,696
American Stores Co. 39,700 816
Anheuser-Busch Companies, Inc. 71,600 3,150
Avon Products, Inc. 19,300 1,185
Campbell Soup Company 67,000 3,894
Cardinal Health Inc. 15,800 1,187
CBS Corporation 102,800 3,026
*Clear Channel Communications, Inc. 14,300 1,136
Clorox Company 15,100 1,194
The Coca-Cola Company 361,200 24,065
Colgate-Palmolive Co. 43,100 3,168
Comcast Corp. 50,850 1,605
Conagra Inc. 68,900 2,261
CPC International, Inc. 20,900 2,252
CVS Corporation 25,000 1,602
Darden Restaurant, Inc. 22,300 279
Deluxe Corp. 12,000 414
Fleming Companies, Inc. 5,500 74
Fort James Corporation 27,500 1,052
Fortune Brands, Inc. 25,000 927
General Mills, Inc. 23,300 1,669
Gillette Company 81,500 8,186
Great Atlantic & Pacific Tea Co.,
Inc. 5,600 166
H.J. Heinz Company 53,750 2,731
Hershey Foods Corp. 20,800 1,288
John H. Harland Company 4,500 95
Kellogg Company 60,100 2,982
Kimberly-Clark Corporation 81,044 3,996
*King World Productions, Inc. 5,400 312
*Kroger Company 37,000 1,367
Longs Drug Stores Corp. 5,700 183
McDonald's Corporation 100,200 4,785
Newell Company 23,200 986
Pepsico Inc. 222,900 8,122
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.34%) SHARES (000'S)
<S> <C> <C>
- --------------------------------------------------------------
CONSUMER STAPLES (CONTINUED)
Philip Morris Companies, Inc. 352,900 $ 15,991
Procter & Gamble Company 196,700 15,699
Quaker Oats Company 20,000 1,055
R.R. Donnelley & Sons Company 21,300 793
Ralston Purina Group 15,500 1,441
Rite Aid Corporation 17,900 1,051
Rubbermaid, Inc. 21,800 545
Safety-Kleen Corp. 8,500 233
Sara Lee Corporation 69,900 3,936
Seagram Company Ltd. 54,000 1,745
Supervalue Inc. 8,800 369
Sysco Corporation 25,400 1,157
*Tele Communications, Inc. 73,776 2,061
Time Warner Inc. 81,500 5,053
*Tricon Global Restaurants, Inc. 22,290 648
Tupperware 8,900 248
*U S West Media Group 88,300 2,550
Unilever, N.V. 93,200 5,819
UST Incorporated 26,800 990
Walgreen Company 71,700 2,250
Walt Disney Company 98,269 9,735
Wendy's International, Inc. 19,200 462
Whitman Corp. 14,800 386
Winn-Dixie Stores, Inc. 21,700 948
Wm. Wrigley Jr. Company 16,900 1,345
-------------
TOTAL 168,804
-------------
ENERGY (7.97%)
Amerada Hess Corporation 13,400 735
Amoco Company 71,500 6,086
Anadarko Petroleum Corporation 8,700 528
Apache Corporation 13,200 463
Ashland, Inc. 10,900 585
Atlantic Richfield Company 46,700 3,742
Baker Hughes Inc. 24,600 1,073
Burlington Resource Inc. 25,720 1,153
Chevron Corp. 95,300 7,338
Dresser Industries, Inc. 25,500 1,069
Exxon Corporation 360,300 22,046
Halliburton Company 36,900 1,916
Helmerich & Payne, Inc. 3,600 244
Kerr-McGee Corporation 6,900 437
Mobil Corporation 114,400 8,258
Occidental Petroleum Corporation 48,200 1,413
*ORYX Energy Company 15,400 393
Pennzoil Company 6,900 461
Phillips Petroleum Company 38,400 1,867
*Rowan Companies, Inc. 12,600 384
Royal Dutch Petroleum Co., ADR 312,300 16,923
Schlumberger Limited 72,100 5,804
Sun Company, Inc. 10,600 446
Texaco Inc. 76,900 4,181
</TABLE>

B-82
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.34%) SHARES (000'S)
- --------------------------------------------------------------
<S> <C> <C>
ENERGY (CONTINUED)
Union Pacific Resource Group 36,992 $ 897
Unocal Corp. 36,000 1,397
USX-Marathon Group 41,900 1,414
*Western Atlas International Inc. 7,900 585
-------------
TOTAL 91,838
-------------
FINANCE (16.37%)
Aetna, Inc. 21,863 1,543
Allstate Corporation 63,314 5,754
American Express Company 68,300 6,096
American General Corporation 36,125 1,953
American International Group, Inc. 102,125 11,106
Aon Corporation 24,400 1,430
Banc One Corporation 84,845 4,608
Bank of New York Company, Inc. 55,300 3,197
BankAmerica Corporation 101,700 7,424
BankBoston Corporation 21,200 1,991
Bankers Trust New York Corporation 14,500 1,630
Barnett Banks Inc. 29,000 2,084
BB&T Corporation 11,900 762
Beneficial Corporation 7,700 640
Charles Schwab Corporation 38,500 1,615
Chase Manhattan Corporation 61,656 6,751
The Chubb Corporation 25,100 1,898
CIGNA Corporation 10,800 1,869
Cincinnati Financial Corporation 4,000 563
Citicorp 66,700 8,433
Comerica, Inc. 15,400 1,390
Conseco Inc. 27,400 1,245
Corestates Financial Corp. 29,500 2,362
Countrywide Credit Industries, Inc. 15,600 669
Federal Home Loan Mortgage Corp. 101,200 4,244
Federal National Mortgage
Association 154,500 8,816
Fifth Third Bankcorp 22,450 1,835
First Chicago NBD Corporation 43,028 3,593
First Union Corporation 91,470 4,688
Fleet Financial Group Inc. 36,430 2,730
General Re Corporation 11,600 2,459
Golden West Financial Corporation 8,300 812
Green Tree Financial Corporation 19,800 519
H.F. Ahmanson & Company 14,200 951
Hartford Financial Services Group
Inc. 17,200 1,609
Household International Inc. 15,600 1,990
Huntington Bancshares, Inc. 27,800 1,001
J.P. Morgan & Company, Inc. 26,100 2,946
Jefferson-Pilot Corp. 10,300 802
KeyCorp 31,600 2,238
Lincoln National Corporation 14,800 1,156
Loews Corp. 16,700 1,772
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.34%) SHARES (000'S)
<S> <C> <C>
- --------------------------------------------------------------
FINANCE (CONTINUED)
Marsh & McLennan Companies Inc. 24,500 $ 1,827
MBIA Incorporated 13,000 869
MBNA Corp. 72,950 1,992
Mellon Bank Corporation 36,600 2,219
Merrill Lynch & Co. 48,300 3,523
MGIC Investment Corp. 16,600 1,104
Morgan Stanley, Dean Witter,
Discover & Co. 85,505 5,055
National City Corp. 31,300 2,058
NationsBank Corp. 103,656 6,304
Norwest Corporation 109,200 4,218
PNC Bank Corp. 44,700 2,551
Progressive Corporation 10,500 1,259
Providian Financial Corporation 13,700 619
Republic New York Corporation 8,000 914
SAFECO Inc. 20,300 990
St. Paul Companies, Inc. 12,200 1,001
State Street Corporation 23,400 1,362
SunAmerica, Inc. 28,400 1,214
Suntrust Banks Inc. 31,100 2,220
Synovus Financial Corp. 25,500 835
Torchmark Corporation 20,200 850
Transamerica Corporation 9,200 980
Travelers Group Inc. 166,641 8,978
UNUM Corporation 20,300 1,104
US Bancorp of Oregon 35,677 3,994
USF&G Corp. 16,200 357
Wachovia Corporation 29,700 2,409
Washington Mutual, Inc. 36,440 2,325
Wells Fargo & Company 12,833 4,356
-------------
TOTAL 188,661
-------------
HEALTHCARE (10.60%)
Abbott Laboratories Inc. 112,100 7,350
Allergan Incorporated 9,400 315
*Alza Corp. 12,400 394
American Home Products Corporation 94,500 7,229
*Amgen Inc. 38,600 2,089
Bausch & Lomb Inc. 8,100 321
Baxter International Inc. 40,700 2,053
Becton, Dickinson & Company 17,800 890
*Beverly Enterprises, Inc. 15,500 202
Biomet, Inc. 16,200 415
*Boston Scientific Corp. 28,300 1,298
Bristol-Myers Squibb Company 145,200 13,740
Brown-Forman Corporation 10,000 553
C.R. Bard, Inc. 8,400 263
Columbia/HCA Healthcare Corporation 95,200 2,820
Eli Lilly & Company 162,000 11,279
Guidant Corp. 21,600 1,345
</TABLE>

B-83
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.34%) SHARES (000'S)
- --------------------------------------------------------------
<S> <C> <C>
HEALTHCARE (CONTINUED)
*Healthsouth Corporation 56,400 $ 1,565
*Humana, Inc. 23,800 494
Johnson & Johnson 193,800 12,767
Mallinckrodt, Inc. 10,700 407
Manor Care, Inc. 9,300 326
Medtronic, Inc. 68,100 3,562
Merck & Co., Inc. 175,900 18,689
Pfizer Inc. 188,200 14,033
Pharmacia & Upjohn Inc. 73,905 2,707
*Pharmerica, Inc. 7,054 73
Schering-Plough Corporation 106,700 6,629
*St. Jude Medical, Inc. 13,400 409
*Tenet Healthcare Corp. 44,100 1,461
United Healthcare Corp. 27,300 1,356
U.S. Surgical Corporation 10,700 314
Warner-Lambert Company 39,500 4,898
-------------
TOTAL 122,246
-------------
TECHNOLOGY (12.49%)
*3COM Corporation 50,200 1,754
Adobe Systems, Inc. 10,600 437
*Advanced Micro Devices, Inc. 20,500 368
*Andrew Corporation 13,137 315
*Apple Computer, Inc. 18,500 243
*Applied Materials Inc. 53,100 1,600
Autodesk, Inc. 7,000 259
Automatic Data Processing, Inc. 42,600 2,615
*Bay Networks 30,700 785
*Cabletron Systems Inc. 23,000 345
*Ceridian Corp. 11,100 509
*Cisco Systems Incorporated 146,150 8,148
Compaq Computer Corporation 110,140 6,216
Computer Associates International
Inc. 79,512 4,204
*Computer Sciences Corp. 11,200 935
*Data General Corporation 7,000 122
*Dell Computer Corp. 48,200 4,049
*Digital Equipment Corporation 22,300 825
*DSC Communications Corp. 17,100 410
Eastman Kodak Company 47,400 2,883
EG&G, Inc. 6,700 139
*EMC Corporation 71,900 1,973
Equifax, Inc. 22,000 780
First Data Corporation 64,600 1,890
Harris Corporation 11,600 532
HBO & Company 28,800 1,382
Hewlett-Packard Company 151,500 9,469
Ikon Office Solutions 19,300 543
Intel Corp. 237,800 16,705
International Business Machines
Corp. 143,000 14,952
*KLA-Tencor Corporation 12,200 471
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.34%) SHARES (000'S)
<S> <C> <C>
- --------------------------------------------------------------
TECHNOLOGY (CONTINUED)
*LSI Logic Corp. 20,700 $ 409
Lucent Technologies Inc. 93,440 7,464
*Micron Technology 30,700 798
*Microsoft Corporation 174,500 22,554
Motorola, Inc. 86,700 4,947
*National Semiconductor Corporation 23,500 610
*NextLevel Systems, Inc. 21,500 384
Northern Telecom Limited 38,200 3,400
*Novell, Inc. 50,800 381
*Oracle Corporation 142,700 3,184
*Parametric Technology Company 18,500 876
Perkin-Elmer Corporation 6,400 455
Polaroid Corporation 6,600 321
Scientific-Atlanta, Inc. 11,300 189
*Seagate Technology Inc. 35,600 685
Shared Medical Systems Corp. 3,600 238
*Silicon Graphics 25,800 321
*Sun Microsystems Inc. 53,700 2,141
Tektronix, Inc. 7,250 288
*Tellabs Inc. 26,400 1,396
Texas Instruments Incorporated 55,800 2,511
*Unisys Corporation 25,500 354
W.W. Grainger, Inc. 7,200 700
Xerox Corporation 47,300 3,491
-------------
TOTAL 143,955
-------------
TRANSPORTATION (1.22%)
*AMR Corporation 13,400 1,722
Burlington Northern Santa Fe 22,607 2,101
Caliber System, Inc. 5,700 278
CSX Corporation 31,700 1,712
Delta Air Lines Inc. 10,700 1,273
*Federal Express Corp. 16,700 1,020
Norfolk Southern Corporation 54,900 1,692
Ryder System, Inc. 11,300 370
Southwest Airlines Co. 31,900 786
Union Pacific Corporation 36,000 2,248
*USAir Group, Inc. 13,200 825
-------------
TOTAL 14,027
-------------
UTILITIES (3.25%)
American Electric Power Co. Inc. 27,600 1,425
Baltimore Gas & Electric Co. 21,500 732
Carolina Power & Light Company 22,000 934
Central & South West Corporation 30,900 836
Cinergy Corporation 22,917 878
Coastal Corp. 15,400 954
Columbia Gas System Inc. 8,100 636
Consolidated Edison Co. of New York 34,200 1,402
Consolidated Natural Gas Company 13,900 841
</TABLE>

B-84
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (95.34%) SHARES (000'S)
- --------------------------------------------------------------
<S> <C> <C>
UTILITIES (CONTINUED)
Dominion Resources Inc. 27,100 $ 1,153
DTE Energy Company 21,100 732
Duke Energy Corp. 52,365 2,900
Eastern Enterprises 3,000 135
Edison International 57,800 1,571
Enron Corp 44,600 1,854
Entergy Corporation 35,100 1,051
Firstenergy Corporation 33,500 972
FPL Group, Inc. 26,500 1,568
GPU, Inc. 17,600 741
Houston Industries Incorporated 41,562 1,109
*Niagara Mohawk Power Corporation 21,000 221
Nicor Inc. 7,100 300
Northern States Power Company 10,700 623
ONEOK, Inc. 4,600 186
P P & L Resources, Inc. 24,000 575
Pacific Enterprises 12,100 455
PacifiCorp 43,100 1,177
PECO Energy Company 32,400 786
Peoples Energy Corporation 5,100 201
PG&E Corp. 63,900 1,945
Public Service Enterprise Group,
Inc. 33,800 1,071
Sonat Inc. 12,500 572
Southern Company 99,700 2,580
Texas Utilities Company 35,015 1,455
UNICOM Corp. 31,500 969
Union Electric Company 14,900 644
Williams Companies Inc. 46,200 1,301
-------------
TOTAL 37,485
-------------
TOTAL COMMON STOCK $ 1,098,986
-------------
</TABLE>

<TABLE>
<CAPTION>
MARKET
VALUE
MONEY MARKET INSTRUMENT (4.66%) PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
GOVERNMENT (0.46%)
+FHLMC Discount Note, 5.61%,
2/13/98 $ 5,500,000 $ 5,463
------------
FINANCE (1.30%)
+Chrysler Financial Corporation,
5.74%, 1/23/98 15,000,000 14,948
------------
PERSONAL CREDIT INSTITUTIONS (2.90%)
+General Electric Capital Corp.,
5.88%, 1/21/98 20,000,000 19,935
+General Electric Capital Corp.,
5.65%, 1/28/98 10,300,000 10,256
+General Motors Acceptance Corp.,
5.84%, 1/14/98 3,200,000 3,193
------------
TOTAL 33,384
------------
TOTAL MONEY MARKET
INVESTMENTS 53,795
------------
TOTAL INDEX 500 STOCK
PORTFOLIO (COST $713,039)^ $ 1,152,781
------------
</TABLE>

ADR-American Depository Receipt
*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 December
31, 1997 is summarized below:

<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF EXPIRATION APPRECIATION
ISSUER CONTRACTS DATE (000'S)
- -------------------- ---------- ------------ -------------
<S> <C> <C> <C>
S&P 500 Stock Index 214 March 1998 669
</TABLE>

^At December 31, 1997, the aggregate cost of securities for federal income tax
purposes was $713,085 and the net unrealized appreciation of investments based
on that cost was $439,696 which is comprised of $449,824 aggregate gross
unrealized appreciation and $10,128 aggregate gross unrealized depreciation.

The Accompanying Notes are an Integral Part of the Financial Statements

B-85
<PAGE>
Balanced Portfolio
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
BONDS (33.39%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
CORPORATE BONDS (9.52%)
AEROSPACE AND DEFENSE (0.27%)
Lockheed Corporation, 6.75%,
3/15/03 3,000,000 $ 3,055
Northrop Grumman Corporation,
7.75%, 3/1/16 4,000,000 4,385
------------
TOTAL 7,440
------------
AUTO-RELATED (0.16%)
Hertz Corp., 9.04%, 6/14/00 4,100,000 4,373
------------
BANK HOLDING COMPANIES (0.74%)
BT Institutional Capital Trust,
7.75%, 12/01/26 1,000,000 1,020
BT Preferred Capital Trust II,
7.875%, 2/25/27 6,000,000 6,228
First Union Institutional Capital
II, 7.85%, 1/1/27 3,750,000 3,950
J.P. Morgan Capital Trust, 7.54%,
01/15/27 1,315,000 1,363
Security Capital Industrial Trust,
7.3%, 5/15/01 8,000,000 8,007
------------
TOTAL 20,568
------------
CHEMICALS AND ALLIED PRODUCTS (0.46%)
Dow Cap B.V., 8.5%, 6/8/10 8,200,000 9,489
Nova Chemicals Ltd., 7.25%,
8/15/28 3,000,000 3,246
------------
TOTAL 12,735
------------
COMMUNICATIONS (0.75%)
Panamasat, 0%, 08/01/03 2,100,000 2,119
Tele Communications, Inc., 7.375%,
2/15/00 8,000,000 8,155
U.S. West Capital Funding Inc.,
7.9%, 2/1/27 4,000,000 4,335
WorldCom, Inc., 7.75%, 4/1/07 5,500,000 6,074
------------
TOTAL 20,683
------------
CONSTRUCTION MACHINERY (0.09%)
Bufete Industrial SA ADS, 11.375%,
7/15/99 (144a) 2,500,000 2,575
------------
DIVERSIFIED/CONGLOMERATE (0.15%)
Hutchison Whampoa Finance (C)
Limited, 6.988%, 08/01/37 (144A) 4,500,000 4,185
------------
DURABLE GOODS (0.23%)
Tata Engineering & Locomotive,
7.875%, 07/15/07 6,500,000 6,463
------------
ELECTRIC SERVICES (2.48%)
Columbia Gas System Inc., 7.32%,
11/28/10 7,571,000 7,864
Commonwealth Edison Co., 6.5%,
4/15/00 4,000,000 4,021

<CAPTION>
MARKET VALUE
BONDS (33.39%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
ELECTRIC SERVICES (CONTINUED)
Dayton Power & Light Company,
8.15%, 1/15/26 5,750,000 $ 6,368
Long Island Lighting Co., 8.625%,
4/15/04 2,700,000 2,726
Long Island Lighting Co., 9.625%,
7/1/24 1,500,000 1,544
Ohio Edison Company, 7.375%,
9/15/02 3,665,000 3,795
Pacific Gas & Electric Co., 7.25%,
3/1/26 9,050,000 9,413
PECO Energy Company, 7.75%, 3/1/23 8,850,000 9,225
Public Service Electric And Gas
Co., 6.875%, 1/1/03 9,000,000 9,235
Southern California Edison Co.,
7.25%, 3/1/26 10,000,000 10,334
Texas Utilities Electric Co.,
7.875%, 3/1/23 4,000,000 4,272
------------
TOTAL 68,797
------------
ENERGY (0.47%)
Barrett Resources Corporation,
7.55%, 2/01/07 5,000,000 5,186
Camuzzi Gas, 9.25%, 12/15/01 3,750,000 3,797
YPF Sociedad , 7.75%, 08/27/07 4,000,000 4,081
------------
TOTAL 13,064
------------
FINANCE (0.68%)
Associates Corp. of North America,
7.95%, 2/15/10 5,550,000 6,267
Crown Cork & Seal Finance Plc,
6.75%, 12/15/03 8,000,000 8,180
Industrial Credit & Investment
Corporation (144A), 7.55%,
08/15/07 5,000,000 4,450
------------
TOTAL 18,897
------------
FOOD AND BEVERAGE (0.40%)
Coca Cola Enterprises, Inc., 8%,
1/4/05 10,000,000 11,003
------------
GENERAL MERCHANDISE STORES (0.35%)
May Department Stores Company,
7.45%, 10/15/16 4,000,000 4,286
Polysindo International, 11.375%,
06/15/06 6,500,000 5,330
------------
TOTAL 9,616
------------
INSTRUMENTS AND RELATED PRODUCTS (0.06%)
Raytheon Company, 7.2%, 08/15/27 1,500,000 1,550
------------
MOTION PICTURE (1.01%)
News America Holdings Inc., 7.5%,
3/1/00 6,500,000 6,651
</TABLE>

B-86
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
BONDS (33.39%) SHARES/PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
MOTION PICTURE (CONTINUED)
News America Holdings Inc., 8.45%,
8/1/34 10,000,000 $ 12,120
Time Warner Entertainment Inc.,
7.25%, 9/1/08 4,000,000 4,157
Time Warner Entertainment Inc.,
8.375%, 3/15/23 3,000,000 3,422
Time Warner Entertainment Inc.,
8.375%, 7/15/33 1,500,000 1,717
------------
TOTAL 28,067
------------
MOTOR VEHICLES (0.47%)
General Motors Acceptance Corp.,
6.625%, 10/1/02 5,000,000 5,075
General Motors Corporation, 8.8%,
3/1/21 6,500,000 8,058
------------
TOTAL 13,133
------------
PAPER AND ALLIED PRODUCTS (0.12%)
Grupo Industrial Durango, 12.625%,
8/1/03 3,000,000 3,368
------------
TECHNOLOGY (0.11%)
International Business Machines,
6.22%, 08/01/27 3,000,000 3,051
------------
TOBACCO(0.38%)
Philip Morris Companies, 9.25%,
2/15/00 1,000,000 1,059
Philip Morris Companies, 7.25%,
1/15/03 5,000,000 5,161
RJR Nabisco Inc., 8.625%, 12/1/02 4,000,000 4,255
------------
TOTAL 10,475
------------
UTILITY (0.14%)
Atlantic City Electric Company,
6.625%, 8/1/13 4,000,000 3,974
------------
TOTAL CORPORATE BONDS 264,017
------------
GOVERNMENT AND AGENCY RELATED BONDS (15.96%)
FOREIGN GOVERNMENT BONDS (1.55%)
Bonos Del Tesoro, 8.75%, 05/09/02 1,000,000 948
Federal Home Loan Mortgage
Corporation, 7%, 06/15/03 7,250,000 7,403
Fidiecomisco Petacalco, 10.16%,
12/23/09 5,000,000 5,113
Ministry Finance Russia, 10%,
06/26/07 5,000,000 4,633
Peru Flirb Reduction Bond, 3.25%,
03/07/17 2,100,000 1,244
Poland, 12%, 10/12/01 23,000,000 4,857
Poland, 12%, 02/12/03 11,000,000 2,264
Poland, 14%, 02/12/00 9,500,000 2,286
Poland - Bear- PDI, 4%, 10/27/14 3,000,000 2,591
<CAPTION>
MARKET VALUE
BONDS (33.39%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
FOREIGN GOVERNMENT BONDS (CONTINUED)
Province of Quebec, 6.5%, 1/17/06 7,500,000 $ 7,534
Russian Interest Notes, 6.718%,
12/02/15 5,800,000 4,075
------------
TOTAL 42,948
------------
FEDERAL GOVERNMENT AND AGENCIES (14.41%)
Federal Home Loan Mortgage Corp.,
6.5%, 04/01/11 20,988,207 21,040
Federal Home Loan Mortgage Corp.,
7.5%, 10/01/26 32,418,032 33,212
Federal National Mortgage Assoc.,
6.24%, 02/01/06 4,960,703 4,936
Federal National Mortgage Assoc.,
6.315%, 03/01/06 5,235,418 5,232
Federal National Mortgage Assoc.,
6.5%, 09/25/05 6,342,982 6,402
Federal National Mortgage Assoc.,
6.75%, 12/25/23 6,500,000 6,508
Federal National Mortgage Assoc.,
6.75%, 11/01/07 3,122,685 3,206
Federal National Mortgage Assoc.,
6.834%, 07/01/03 3,250,147 3,330
Federal National Mortgage Assoc.,
6.895%, 05/01/06 6,113,540 6,334
Federal National Mortgage Assoc.,
6.9%, 04/01/06 2,464,064 2,553
Federal National Mortgage Assoc.,
6.96%, 10/01/07 4,493,767 4,678
Federal National Mortgage Assoc.,
7%, 4/1/26 25,426,394 25,662
Federal National Mortgage Assoc.,
7%, 6/1/03 6,054,193 6,141
Federal National Mortgage Assoc.,
7%, 6/25/10 8,070,000 8,224
Federal National Mortgage Assoc.,
7.025%, 09/01/05 1,961,198 2,035
Federal National Mortgage Assoc.,
7.045%, 08/01/05 7,746,629 8,037
Federal National Mortgage Assoc.,
7.12%, 11/01/03 991,264 1,031
Federal National Mortgage Assoc.,
7.23%, 01/25/22 8,000,000 8,324
Federal National Mortgage Assoc.,
7.25%, 05/01/04 1,581,604 1,659
Federal National Mortgage Assoc.,
8.4%, 05/01/04 10,910,000 12,028
Federal National Mortgage Assoc.,
11%, 09/01/17 2,631,261 2,987
Federal National Mortgage Assoc.,
11%, 12/01/12 320,460 359
</TABLE>

B-87
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
BONDS (33.39%) SHARES/PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
FEDERAL GOVERNMENT AND AGENCIES (CONTINUED)
Federal National Mortgage Assoc.,
11%, 12/01/17 427,702 $ 486
Federal National Mortgage Assoc.,
12%, 09/01/17 886,015 1,031
Federal National Mortgage Assoc.,
12%, 09/01/12 2,822,655 3,250
Federal National Mortgage Assoc.,
12%, 10/01/17 1,304,464 1,518
Federal National Mortgage Assoc.,
12%, 12/01/12 465,908 537
Federal National Mortgage Assoc.,
12%, 12/01/17 665,138 774
Federal National Mortgage Assoc.,
13%, 11/01/12 480,018 562
Federal National Mortgage Assoc.,
13%, 11/01/17 901,559 1,067
Federal National Mortgage Assoc.,
13%, 12/01/17 503,209 593
Federal National Mortgage Assoc.,
14%, 12/01/17 353,763 420
Government National Mortgage
Assoc., 7%, 10/15/23 502,565 509
Government National Mortgage
Assoc., 7%, 11/15/23 1,799,663 1,820
Government National Mortgage
Assoc., 7%, 5/15/23 13,915,346 14,069
Government National Mortgage
Assoc., 7%, 6/15/23 912,800 923
Government National Mortgage
Assoc., 7%, 7/15/23 1,373,633 1,389
Government National Mortgage
Assoc., 7%, 8/15/23 25,972 26
Government National Mortgage
Assoc., 7%, 9/15/23 693,574 701
Government National Mortgage
Assoc., 7.5%, 1/15/24 1,080,658 1,109
Government National Mortgage
Assoc., 7.5%, 11/15/24 890,253 914
Government National Mortgage
Assoc., 7.5%, 2/15/24 1,366,102 1,402
Government National Mortgage
Assoc., 7.5%, 3/15/24 1,348,240 1,384
Government National Mortgage
Assoc., 7.5%, 4/15/24 799,316 821
Government National Mortgage
Assoc., 7.5%, 5/15/24 3,099,297 3,182
Government National Mortgage
Assoc., 7.5%, 6/15/24 1,321,928 1,357
Government National Mortgage
Assoc., 7.5%, 8/15/24 3,545,164 3,640
Government National Mortgage
Assoc., 8.5%, 1/15/25 163,742 173
<CAPTION>
MARKET VALUE
BONDS (33.39%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
FEDERAL GOVERNMENT AND AGENCIES (CONTINUED)
Government National Mortgage
Assoc., 8.5%, 12/15/22 42,227 $ 48
Government National Mortgage
Assoc., 8.5%, 12/15/24 20,974 22
Government National Mortgage
Assoc., 8.5%, 11/15/25 20,178 22
Government National Mortgage
Assoc., 8.5%, 1/15/26 630,722 662
Government National Mortgage
Assoc., 8.5%, 10/15/22 234,286 249
Government National Mortgage
Assoc., 8.5%, 11/15/24 181,746 192
Government National Mortgage
Assoc., 8.5%, 2/15/25 162,822 173
Government National Mortgage
Assoc., 8.5%, 2/15/26 37,406 39
Government National Mortgage
Assoc., 8.5%, 3/15/26 33,693 34
Government National Mortgage
Assoc., 8.5%, 4/15/26 2,222,633 2,337
Government National Mortgage
Assoc., 8.5%, 5/15/22 7,200 8
Government National Mortgage
Assoc., 8.5%, 5/15/26 2,984,211 3,135
Government National Mortgage
Assoc., 8.5%, 6/15/24 19,823 21
Government National Mortgage
Assoc., 8.5%, 7/15/21 127,832 136
Government National Mortgage
Assoc., 8.5%, 7/15/24 304,738 322
Government National Mortgage
Assoc., 8.5%, 8/15/24 117,792 125
Government National Mortgage
Assoc., 8.5%, 9/15/21 143,829 153
Government National Mortgage
Assoc., 8.5%, 9/15/22 187,022 199
Government National Mortgage
Assoc., 8.5%, 9/15/24 239,149 253
U.S. Treasury, 7.25%, 08/15/04 6,000,000 6,486
U.S. Treasury, 6.375%, 5/15/99 45,600,000 46,013
U.S. Treasury, 6.375%, 8/15/27 8,500,000 8,962
U.S. Treasury, 6.625%, 2/15/27 23,000,000 24,962
U.S. Treasury, 6.625%, 5/15/07 45,000,000 47,644
U.S. Treasury, 6.75%, 8/15/26 24,850,000 27,358
U.S. Treasury, 6.125%, 8/15/07 3,500,000 3,597
U.S. Treasury, 6%, 7/31/02 9,000,000 9,096
------------
TOTAL 399,823
------------
TOTAL GOVERNMENT BONDS 442,771
------------
</TABLE>

B-88
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
BONDS (33.39%) SHARES/PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
MORTGAGE/ASSET BACKED SECURITIES (7.66%)
AUTO-RELATED (0.93%)
Eaglemark Trust, 6.75%, 11/15/02
(144a) 5,093,956 $ 5,136
Team Fleet Financing Corporation,
6.65%, 12/15/02 (144a) 11,800,000 11,945
Team Fleet Financing Corporation,
7.35%, 5/15/03 (144a) 3,000,000 3,118
CIT RV Trust, 6.25%, 1/15/11 3,009,955 3,016
Daimler-Benz Vehicle Trust, 5.85%,
7/20/03 2,554,960 2,552
------------
25,767
------------
CREDIT CARD (0.90%)
Charming Shoppes Master Trust, 7%,
4/15/03 5,000,000 5,056
Iroquis Trust, 6.68%, 11/10/03 15,000,000 15,028
Iroquis Trust, 6.752%, 06/25/07 4,750,000 4,766
------------
24,850
------------
MANUFACTURED HOUSING (0.09%)
Vanderbilt Mortgage and Finance,
Inc., 7.19%, 02/07/14 2,500,000 2,596
------------
COMMERCIAL MORTGAGES (5.03%)
Asset Securitization Corporation -
Class CS1, 1.257%, 11/13/26 IO 28,051,849 1,162
Asset Securitization Corporation -
Class PS1, 1.367%, 02/14/41 IO 22,708,826 2,466
BankBoston Marine Asset Backed
Trust - Class A6, 6.64%, 08/15/10 7,000,000 7,127
Chase Commercial Mortgage
Securities Corp. - Class B, 6.6%,
12/12/29 8,500,000 8,563
Chase Commercial Mortgage
Securities Corp. - Class A2,
6.6%, 12/12/29 2,500,000 2,500
Chase Commercial Mortgage
Securities Corp. - Class D,
7.37%, 6/19/29 2,000,000 2,053
Citibank Credit Card Master Trust
I - Class A, 0%, 08/15/06 17,000,000 11,219
Commercial Mortgage Acceptance
Corporation - Class B, 6.647%,
12/15/30 2,500,000 2,495
Credit Suisse First Boston
Mortgage Securities Corp. - Class
D, 9.5914%, 4/25/25 (144a) 2,047,000 2,368
Credit Suisse First Boston
Mortgage Securities Corp. - Class
B, 9.5914%, 4/25/25 (144a) 3,000,000 3,550
Credit Suisse First Boston
Mortgage Securities Corp. - Class
A2, 7.26%, 6/20/29 (144a) 3,224,865 3,340
<CAPTION>
MARKET VALUE
BONDS (33.39%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
COMMERCIAL MORTGAGES (CONTINUED)
Credit Suisse First Boston
Mortgage Securities Corp. - Class
B, 7.28%, 6/20/29 (144a) 3,250,000 $ 3,304
Credit Suisse First Boston
Mortgage Securities Corp. - Class
D, 7.46%, 6/20/29 (144a) 6,000,000 6,015
DLJ Mortgage Acceptance
Corporation - Class A1B, 7.29%,
11/12/21 5,500,000 5,760
First Union-Lehman Brothers
Commercial Mortgage Trust - Class
C2, 7.02%, 11/18/29 10,500,000 10,591
First Union-Lehman Brothers
Commercial Mortgage Trust - Class
C1, 7.44%, 4/18/29 2,500,000 2,657
First Union-Lehman Brothers
Commercial Mortgage Trust - Class
IO, 1.307%, 4/18/29 IO 37,374,508 2,920
Fleetwood Credit Corporation
Grantor Trust - Class A, 6.4%,
05/15/13 3,305,852 3,330
GMAC Commercial Mortgage
Securities, Inc. - Class C,
7.81%, 10/15/11 (144a) 7,000,000 7,346
Kmart CMBS Financing, Inc. - Class
D, 6.725%, 03/01/07 (144a) 4,500,000 4,500
Kmart CMBS Financing, Inc. - Class
C, 6.325%, 03/01/07 (144a) 3,500,000 3,491
LB Commercial Conduit Mortgage
Trust, 1.248%, 10/25/26 IO 127,014,625 8,108
LB Commercial Conduit Mortgage
Trust - Class A3, 8.396%,
01/20/17 8,575,201 9,809
Merrill Lynch Mortgage Investors,
Inc. - Class C, 7.12%, 06/18/29 6,000,000 6,198
Merrill Lynch Mortgage Investors,
Inc. - Class E, 8.097%, 06/25/22 2,000,000 2,110
Merrill Lynch Mortgage Investors,
Inc. - Class C, 8.879%, 11/25/20 5,845,000 6,023
Midland Realty Acceptance Corp. -
Class AEC, 1.389%, 1/25/29 (144a)
IO 29,304,058 2,289
NationsBank Lease Pass Thru Trust
- Class 1, 7.442%, 1/10/11 (144a) 2,000,000 2,089
Nations Credit Grantor Trust -
Class A1, 6.35%, 12/15/04 2,859,385 2,865
Red Mountain Funding LLC - Class
E, 7.365%, 01/15/19 1,500,000 1,533
</TABLE>

B-89
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
BONDS (33.39%) SHARES/PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
COMMERCIAL MORTGAGES (CONTINUED)
Red Mountain Funding LLC - Class
F, 7.471%, 01/15/19 1,800,000 $ 1,771
------------
139,552
------------
OTHER ASSET BACKED (0.28%)
Greentree Recreation & Consumer
Trust, 6.49%, 05/15/00 3,733,988 3,750
Newcourt Equipment, 6.764%,
09/20/04 2,238,561 2,248
Newcourt Equipment, 7.734%,
09/20/04 1,790,849 1,798
------------
7,796
------------
RESIDENTIAL MORTGAGES(0.43%)
BCF L L C Mortgage Pass Thru
Certificate, 7.75%, 3/25/37
(144a) 4,946,885 4,993
Rural Housing Trust, 6.33%, 4/1/26 7,054,500 6,993
------------
11,986
------------
TOTAL MORTGAGE/ASSET BACKED
SECURITIES 212,547
------------
MUNICIPAL BONDS(0.25%)
New Jersey Economic Development
Authority, 0.00%, 2/15/25 17,000,000 2,853
New Jersey Economic Development
Authority, 0.00%, 2/15/26 11,000,000 1,724
New Jersey Economic Development
Authority, 7.425%, 2/15/29 2,250,000 2,465
------------
TOTAL MUNICIPAL BONDS 7,042
------------
TOTAL BONDS 926,377
------------
<CAPTION>
COMMON STOCK (55.04%)
<S> <C> <C>
- -------------------------------------------------------------
BASIC MATERIALS (2.52%)
Air Products & Chemicals, Inc. 22,200 $ 1,826
Alcan Aluminum Limited 45,900 1,268
Allegheny Teledyne, Inc 35,562 920
Aluminum Co. of America 35,200 2,477
Archer Daniels Midland Company 113,273 2,456
*Armco, Inc. 21,700 107
ASARCO, Inc. 8,500 191
B.F. Goodrich Company 10,900 452
Barrick Gold Corporation 75,400 1,404
Battle Mountain Gold Company 46,500 273
Bemis Company, Inc. 10,700 471
*Bethlehem Steel Corporation 22,800 196
Boise Cascade Corporation 11,300 342
Champion International 19,400 879
Cyprus Minerals Co. 18,900 291
Dow Chemical Company 46,100 4,679
<CAPTION>
MARKET
VALUE
COMMON STOCK (55.04%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
BASIC MATERIALS (CONTINUED)
E.I. du Pont de Nemours & Co. 228,800 $ 13,742
Eastman Chemical Company 15,875 945
*Echo Bay Mines Limited Co. 28,200 69
Ecolab, Inc. 13,100 726
Engelhard Corp. 29,200 507
*FMC Corporation 7,500 505
Freeport-McMoRan Copper & Gold,
Inc. 40,200 633
*Georgia Pac Corp.(Timber Group) 18,600 422
Georgia Pacific Corp. 18,500 1,124
Great Lakes Chemical 12,100 543
Hercules, Inc. 20,000 1,001
Homestake Mining Company 29,700 264
Inco Limited 33,800 575
Inland Steel Industries, Inc. 9,900 170
International Flavors &
Fragrances, Inc. 22,100 1,138
International Paper Company 61,200 2,639
Louisiana Pacific Corporation 22,100 420
Mead Corp. 21,200 594
Monsanto Company 119,300 5,011
Morton International, Inc. 26,900 925
Nalco Chemical Company 13,500 534
Newmont Mining Corporation 31,630 929
Nucor Corp. 17,800 860
Phelps Dodge Corporation 12,200 759
Pioneer Hi-Bred International 13,300 1,426
Placer Dome, Inc. 48,500 615
Potlatch Corporation 5,800 249
PPG Industries, Inc. 36,300 2,074
Praxair 32,000 1,440
Reynolds Metals Company 14,900 894
Rohm & Haas Company 12,500 1,197
Sigma-Aldrich Corp. 20,300 807
*Stone Container Corporation 20,100 210
Temple-Inland Inc. 11,500 602
Union Camp Corporation 14,000 752
Union Carbide Corporation 25,100 1,078
USX-US Steel, Inc. 17,300 541
W.R. Grace & Co. 14,700 1,182
Westvaco Corporation 20,650 649
Weyerhaeuser Company 40,300 1,977
Willamette Industries, Inc. 22,500 724
Worthington Industries 19,600 323
------------
TOTAL 70,007
------------
CAPITAL GOODS (5.10%)
Aeroquip-Vickers, Inc. 5,700 280
AlliedSignal, Inc. 114,500 4,458
AMP, Inc. 44,436 1,866
Avery Dennison Corp. 20,900 935
Ball Corporation 6,100 215
</TABLE>

B-90
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (55.04%) SHARES/PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS (CONTINUED)
Boeing Company 202,618 $ 9,916
Briggs & Stratton Corporation 5,100 248
Browning-Ferris Industries, Inc. 40,000 1,480
Case Corporation 15,100 913
Caterpillar, Inc. 76,200 3,700
Cincinnati Milacron, Inc. 8,100 210
Cooper Industries, Inc. 24,700 1,210
Corning, Inc. 46,700 1,734
Crane Co. 9,250 401
Crown Cork & Seal, Inc. 26,000 1,303
Cummins Engine Company, Inc. 7,700 455
Deere & Company 51,000 2,974
Dover Corporation 45,000 1,626
Eaton Corporation 15,600 1,392
Emerson Electric Company 89,700 5,062
Fluor Corporation 17,000 635
Foster Wheeler Corporation 8,200 222
General Dynamics Corporation 12,600 1,089
General Electric Company 662,400 48,604
General Signal Corporation 10,200 430
Harnischfeger Industries, Inc. 10,000 353
Honeywell, Inc. 25,800 1,767
Illinois Tool Works, Inc. 50,500 3,036
Ingersoll-Rand Company 33,550 1,359
Johnson Controls, Inc. 16,900 807
Lockheed Martin Corporation 39,261 3,867
McDermott International, Inc. 11,200 410
Millipore Corp. 8,800 299
Minnesota Mining & Manufacturing
Co. 84,100 6,901
Moore Corporation Ltd. 17,873 270
NACCO Industries, Inc. 1,600 172
National Service Industries, Inc. 9,100 451
*Navistar International Corp. 14,770 366
Northrop Grumman Corporation 13,500 1,553
*Owens-Illinois, Inc. 28,400 1,077
PACCAR, Inc. 15,790 829
Pall Corporation 25,766 533
Parker-Hannifin Corporation 22,600 1,037
Pitney Bowes, Inc. 29,200 2,626
Raychem Corp. 17,700 762
Raytheon Company-Class A 9,437 465
Raytheon Company-Class B 47,800 2,414
Rockwell International Corporation 42,200 2,205
Tenneco, Inc. 34,400 1,359
Textron, Inc. 33,400 2,088
*Thermo Electron Corporation 30,400 1,353
Thomas & Betts Corporation 11,100 524
Timken Company 12,700 437
Tyco International Ltd. 107,800 4,858
United Technologies Corp. 47,600 3,466
<CAPTION>
MARKET
VALUE
COMMON STOCK (55.04%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
CAPITAL GOODS (CONTINUED)
Waste Management, Inc. 91,700 $ 2,522
------------
TOTAL 141,524
------------
COMMUNICATION SERVICES (3.82%)
*Airtouch Communications, Inc. 101,900 4,235
ALLTEL Corporation 37,800 1,552
Ameritech Corporation 111,300 8,960
AT&T Corporation 328,700 20,133
Bell Atlantic Corporation 157,090 14,295
Bellsouth Corporation 200,600 11,296
Frontier Corporation 33,200 799
GTE Corporation 193,500 10,110
MCI Communications Corporation 140,000 5,994
SBC Communications, Inc. 184,887 13,543
Sprint Corporation 87,100 5,106
U S WEST Communications Group 97,000 4,377
*WorldCom, Inc. 182,500 5,521
------------
TOTAL 105,921
------------
CONSUMER CYCLICAL (5.19%)
American Greetings Corp. 15,200 595
Armstrong World Industries, Inc. 8,200 613
*AutoZone, Inc. 30,600 887
Black & Decker Corporation 19,100 746
Brunswick Corporation 20,100 609
*Cendant Corporation 160,254 5,509
Centex Corporation 5,900 371
*Charming Shoppes, Inc. 21,400 100
Chrysler Corporation 136,500 4,803
Circuit City Stores, Inc. 19,900 708
Cognizant Corp. 33,200 1,479
Cooper Tire & Rubber Company 15,900 388
*Costco Companies, Inc. 42,951 1,917
Dana Corporation 21,100 1,002
Dayton Hudson Corporation 44,000 2,970
Dillard's, Inc. 22,600 797
Dow Jones & Company, Inc. 19,400 1,042
Dun & Bradstreet Corporation 34,500 1,067
Echlin, Inc. 12,800 463
*Federated Department Stores, Inc. 42,300 1,822
Fleetwood Enterprises, Inc. 7,300 310
Ford Motor Company 241,700 11,768
*Fruit of the Loom, Inc. 14,800 379
Gannett Company, Inc. 57,300 3,542
General Motors Corp. 147,500 8,942
Genuine Parts Company 36,475 1,238
Giant Food, Inc. 12,100 408
Goodyear Tire & Rubber Company 31,600 2,011
H & R Block, Inc. 21,100 946
Harcourt General 14,300 783
</TABLE>

B-91
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (55.04%) SHARES/PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICAL (CONTINUED)
*Harrahs Entertainment 20,400 $ 385
Hasbro, Inc. 25,650 808
Hilton Hotels Corporation 50,600 1,505
Home Depot, Inc. 147,699 8,696
Interpublic Group of Cos., Inc. 25,200 1,255
*ITT Corp. 23,600 1,956
ITT Industries, Inc. 24,000 753
J.C. Penney Company, Inc. 50,400 3,040
Jostens, Inc. 7,900 182
*K Mart Corporation 98,500 1,139
Kaufman & Broad Home Corp. 7,900 177
Knight-Ridder, Inc. 17,700 920
Laidlaw Transportation Limited 66,500 906
Liz Claiborne, Inc. 14,200 594
Lowe's Companies, Inc. 35,200 1,679
Marriott International 25,700 1,780
Masco Corporation 33,400 1,699
Mattel, Inc. 58,760 2,189
May Department Stores Company 47,100 2,482
Maytag Corporation 19,900 743
McGraw-Hill Companies, Inc. 20,000 1,480
Mercantile Stores Company 7,400 450
Meredith Corporation 10,800 385
*Mirage Resorts, Inc. 36,200 824
New York Times Company 19,400 1,283
Nike, Inc. 58,400 2,292
Nordstrom, Inc. 15,600 942
Owens Corning Fiberglass Corp. 10,800 369
Pep Boys - Manny, Moe & Jack 12,800 306
Pulte Corporation 4,300 180
*Reebok International Ltd. 11,400 328
Russell Corp. 7,400 197
Sears Roebuck & Co. 79,200 3,584
Service Corporation International 50,900 1,880
Sherwin-Williams Company 34,900 968
Snap-On, Inc. 12,350 539
Springs Industries, Inc. 4,100 213
Tandy Corporation 21,400 825
The Gap, Inc. 81,300 2,881
The Limited, Inc. 54,900 1,400
The Stanley Works 18,000 849
Times Mirror Company 19,400 1,193
TJX Companies, Inc. 33,000 1,134
*Toys R Us, Inc. 57,700 1,814
Tribune Company 24,800 1,544
TRW, Inc. 24,900 1,329
VF Corporation 25,400 1,166
Viacom Incorporated 71,356 2,956
Wal-Mart Stores, Inc. 458,200 18,070
Whirlpool Corporation 15,100 830
<CAPTION>
MARKET
VALUE
COMMON STOCK (55.04%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
CONSUMER CYCLICAL (CONTINUED)
*Woolworth Corp. 27,300 $ 556
------------
TOTAL 143,870
------------
CONSUMER STAPLES (8.45%)
Adolph Coors Co. 7,500 249
Alberto-Culver Company 11,400 366
Albertson's, Inc. 49,700 2,355
American Stores Co. 55,100 1,133
Anheuser-Busch Companies, Inc. 99,500 4,378
Avon Products, Inc. 26,800 1,645
Campbell Soup Company 93,100 5,411
Cardinal Health, Inc. 22,000 1,653
CBS Corp. 142,800 4,204
*Clear Channel Communications,
Inc. 19,800 1,573
Clorox Company 20,900 1,652
Colgate-Palmolive Co. 59,900 4,403
Comcast Corp. 70,550 2,227
Conagra, Inc. 95,700 3,140
CPC International Corp. 29,100 3,136
CVS Corporation 34,800 2,229
Darden Restaurant, Inc. 31,000 388
Deluxe Corp. 16,700 576
Fleming Companies, Inc. 7,600 102
Fort James Corporation 38,200 1,461
Fortune Brands, Inc. 34,700 1,286
General Mills, Inc. 32,400 2,321
Gillette Company 113,300 11,380
Great Atlantic & Pacific Tea Co.,
Inc. 7,700 229
H.J. Heinz Company 74,750 3,798
Hershey Foods Corp. 28,900 1,790
John H. Harland Company 6,300 132
Kellogg Company 83,500 4,144
Kimberly-Clark Corporation 112,632 5,554
*King World Productions, Inc. 7,400 427
Longs Drug Stores Corp. 7,900 254
McDonald's Corporation 139,200 6,647
Newell Co. 32,200 1,369
PepsiCo, Inc. 309,700 11,285
Philip Morris Companies, Inc. 490,200 22,212
Procter & Gamble Company 273,300 21,813
Quaker Oats Company 27,800 1,466
R.R. Donnelley & Sons Company 29,600 1,103
Ralston Purina Group 21,600 2,007
Rite Aid Corporation 24,900 1,461
Rubbermaid, Inc. 30,300 758
Safety-Kleen Corp. 11,800 324
Sara Lee Corporation 97,200 5,474
Seagram Company Ltd. 75,000 2,423
Supervalue, Inc. 12,300 515
Sysco Corporation 35,300 1,608
</TABLE>

B-92
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (55.04%) SHARES/PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES (CONTINUED)
*Tele Communications, Inc. 102,414 $ 2,861
The Coca Cola Company 501,800 33,432
*The Kroger Company 51,500 1,902
Time Warner, Inc. 113,300 7,025
*Tricon Global Restaurants 30,990 901
Tupperware 12,400 345
*U S West Media Group 122,700 3,543
Unilever N.V. 129,500 8,085
UST, Inc. 37,200 1,374
Walgreen Company 99,600 3,125
Walt Disney Company 136,636 13,536
Wendy's International, Inc. 26,600 640
Whitman Corp. 20,500 534
Winn-Dixie Stores, Inc. 30,100 1,315
Wm. Wrigley Jr. Company 23,500 1,869
------------
TOTAL 234,548
------------
ENERGY (4.60%)
Amerada Hess Corporation 18,600 1,021
Amoco Company 99,300 8,453
Anadarko Petroleum Corporation 12,100 734
Apache Corporation 18,300 642
Ashland, Inc. 15,100 811
Atlantic Richfield Company 64,900 5,200
Baker Hughes, Inc. 34,100 1,488
Burlington Resource, Inc. 35,675 1,599
Chevron Corp. 132,500 10,203
Dresser Industries, Inc. 35,400 1,485
Exxon Corporation 500,600 30,630
Halliburton Company 51,300 2,664
Helmerich & Payne, Inc. 5,100 346
Kerr-McGee Corporation 9,600 608
Mobil Corporation 159,000 11,478
Occidental Petroleum Corporation 67,000 1,964
*ORYX Energy Company 21,300 543
Pennzoil Company 9,500 635
Phillips Petroleum Company 53,300 2,592
*Rowan Companies, Inc. 17,500 534
Royal Dutch Petroleum Co., ADR 433,800 23,507
Schlumberger Limited 100,200 8,066
Sun Company, Inc. 14,700 618
Texaco, Inc. 106,900 5,812
Union Pacific Resource Group 51,358 1,245
Unocal Corp. 50,000 1,940
USX-Marathon Group 58,300 1,967
*Western Atlas International, Inc. 10,900 806
------------
TOTAL 127,591
------------
FINANCE (9.45%)
Aetna, Inc. 30,293 2,138
Allstate Corporation 88,047 8,001
American Express Company 94,900 8,470
American General Corporation 50,203 2,714
<CAPTION>
MARKET
VALUE
COMMON STOCK (55.04%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
FINANCE (CONTINUED)
American International Group, Inc. 141,875 $ 15,429
Aon Corporation 33,850 1,984
Banc One Corporation 117,910 6,404
Bank of New York Company, Inc. 76,800 4,440
BankAmerica Corporation 141,300 10,315
BankBoston Corporation 29,500 2,771
Bankers Trust New York Corporation 20,100 2,260
Barnett Banks, Inc. 40,200 2,889
BB&T Corporation 15,700 1,006
Beneficial Corporation 10,800 898
Charles Schwab Corporation 53,550 2,246
Chase Manhattan Corporation 85,724 9,387
CIGNA Corporation 15,000 2,596
Cincinnati Financial Corp. 6,100 859
Citicorp 92,700 11,721
Comerica, Inc. 21,300 1,922
Conseco, Inc. 38,000 1,727
Corestates Financial Corp. 41,000 3,283
Countrywide Credit Industries,
Inc. 21,700 930
Fannie Mae 214,700 12,251
Federal Home Loan Mortgage Corp. 140,600 5,896
Fifth Third Bancorp 31,150 2,547
First Chicago NBD Corporation 59,805 4,994
First Union Corporation 127,010 6,509
Fleet Finl Group, Inc. 50,619 3,793
General Re Corporation 16,100 3,413
Golden West Financial Corporation 11,500 1,125
Green Tree Financial Corporation 27,500 720
H.F. Ahmanson & Company 19,700 1,319
Hartford Financial Services Group,
Inc. 23,900 2,236
Household International, Inc. 21,600 2,755
Huntington Bancshares, Inc. 38,700 1,393
J.P. Morgan & Company, Inc. 36,200 4,086
Jefferson-Pilot Corp. 14,350 1,118
KeyCorp 43,900 3,109
Lincoln National Corporation 20,600 1,609
Loews Corp. 23,300 2,473
Marsh & McLennan Companies, Inc. 34,100 2,543
MBIA, Inc. 18,100 1,209
MBNA Corp. 101,355 2,768
Mellon Bank Corporation 50,900 3,086
Merrill Lynch & Co. 67,000 4,887
MGIC Investment Corp. 23,100 1,536
Morgan Stanley, Dean Witter,
Discover & Co. 118,780 7,023
</TABLE>

B-93
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (55.04%) SHARES/PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
FINANCE (CONTINUED)
National City Corp. 43,500 $ 2,860
NationsBank Corp. 144,022 8,758
Norwest Corporation 151,700 5,859
PNC Bank Corp. 62,100 3,544
Progressive Corporation 14,600 1,750
Providian Financial Corporation 19,000 859
Republic New York Corporation 11,100 1,267
SAFECO Corp. 28,200 1,375
St. Paul Companies, Inc. 17,000 1,395
State Street Corporation 32,500 1,891
SunAmerica, Inc. 39,500 1,689
SunTrust Banks, Inc. 43,300 3,091
Synovus Financial Corporation 35,400 1,159
The Chubb Corporation 34,900 2,639
Torchmark Corporation 28,000 1,178
Transamerica Corporation 12,800 1,363
Travelers Group, Inc. 231,438 12,469
U.S. Bancorp 49,529 5,544
UNUM Corporation 28,200 1,533
USF&G Corp. 22,400 494
Wachovia Corporation 41,300 3,350
Washington Mutual, Inc. 50,680 3,234
Wells Fargo & Company 17,766 6,030
------------
TOTAL 262,119
------------
HEALTHCARE (6.12%)
Abbott Laboratories 155,700 10,208
Allergan, Inc. 13,100 440
*ALZA Corporation 17,200 547
American Home Products Corporation 131,200 10,037
*Amgen, Inc. 53,600 2,901
Bausch & Lomb, Inc. 11,200 444
Baxter International, Inc. 56,500 2,850
Becton, Dickinson & Company 24,700 1,235
*Beverly Enterprises, Inc. 22,400 291
Biomet, Inc. 22,500 577
*Boston Scientific Corp. 39,300 1,803
Bristol-Meyers Squibb Company 201,700 19,086
Brown-Forman Corp. 14,000 774
C.R. Bard, Inc. 11,600 363
Columbia/HCA Healthcare
Corporation 132,350 3,921
Eli Lilly and Company 225,100 15,673
Guidant Corp. 30,000 1,868
*HEALTHSOUTH Corporation 78,400 2,176
*Humana, Inc. 33,100 687
Johnson & Johnson 269,200 17,734
Mallinckrodt, Inc. 14,800 562
Manor Care, Inc. 12,900 452
Medtronic, Inc. 94,600 4,949
Merck & Co., Inc. 244,400 25,967
<CAPTION>
MARKET
VALUE
COMMON STOCK (55.04%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
HEALTHCARE (CONTINUED)
Pfizer, Inc. 261,500 $ 19,498
Pharmacia & Upjohn, Inc. 102,730 3,762
*Pharmerica, Inc. 10,194 105
Schering-Plough Corporation 148,200 9,207
*St. Jude Medical, Inc. 18,550 566
*Tenet Healthcare Corp. 61,300 2,031
U.S. Surgical Corporation 14,800 433
United Healthcare Corp. 37,900 1,883
Warner-Lambert Company 54,900 6,808
------------
TOTAL 169,838
------------
TECHNOLOGY (7.21%)
*3COM Corporation 69,700 2,435
Adobe Systems, Inc. 14,700 606
*Advanced Micro Devices, Inc. 28,500 511
*Andrew Corporation 18,262 438
*Apple Computer, Inc. 25,800 339
*Applied Materials, Inc. 73,800 2,223
Autodesk, Inc. 9,700 359
Automatic Data Processing, Inc. 59,200 3,633
*Bay Networks 42,600 1,089
*Cabletron Systems, Inc. 31,900 479
*Ceridian Corp. 15,500 710
*Cisco Systems, Inc. 203,100 11,323
Compaq Computer Corporation 152,990 8,634
Computer Associates International,
Inc. 110,412 5,838
*Computer Sciences Corp. 15,600 1,303
*Data General Corporation 9,700 169
*Dell Computer Corp. 66,900 5,620
*Digital Equipment Corporation 30,900 1,143
*DSC Communications Corp. 23,800 571
Eastman Kodak Company 65,900 4,008
EG&G, Inc. 9,300 194
*EMC Corporation 99,800 2,738
Equifax, Inc. 30,500 1,081
First Data Corporation 89,800 2,627
Harris Corporation 16,100 739
HBO & Company 40,100 1,925
Hewlett-Packard Company 210,500 13,156
Ikon Office Solutions 26,900 757
Intel Corp. 330,400 23,211
International Business Machines
Corporation 198,700 20,777
*KLA-Tencor Corporation 16,900 653
*LSI Logic Corp. 28,700 567
Lucent Technologies, Inc. 129,843 10,371
*Micron Technology 42,600 1,108
*Microsoft Corporation 242,500 31,343
Motorola, Inc. 120,400 6,870
*National Semiconductor
Corporation 32,700 848
</TABLE>

B-94
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
COMMON STOCK (55.04%) SHARES/PAR (000'S)
- -------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
*NextLevel Systems, inc. 29,800 $ 533
Northern Telecom Limited 53,000 4,717
*Novell, Inc. 70,600 530
*Oracle Corporation 198,250 4,423
*Parametric Technology Company 25,800 1,222
Perkin-Elmer Corporation 8,900 632
Polaroid Corporation 9,200 448
Scientific-Atlanta, Inc. 15,700 263
*Seagate Technology, Inc. 49,500 953
Shared Medical Systems Corp. 5,000 330
*Silicon Graphics 35,800 445
*Sun Microsystems, Inc. 74,600 2,975
Tektronix, Inc. 10,100 401
*Tellabs, Inc. 36,600 1,935
Texas Instruments, Inc. 77,600 3,492
*Unisys Corporation 35,400 491
W.W. Grainger, Inc. 10,100 982
Xerox Corporation 65,800 4,857
------------
TOTAL 200,025
------------
TRANSPORTATION (0.70%)
*AMR Corporation 18,600 2,390
Burlington Northern Santa Fe 31,433 2,921
Caliber System, Inc. 7,900 385
CSX Corporation 44,100 2,381
Delta Air Lines, Inc. 14,900 1,773
*Federal Express Corp. 23,300 1,423
Norfolk Southern Corporation 76,300 2,351
Ryder System, Inc. 15,700 514
Southwest Airlines Co. 44,300 1,091
Union Pacific Corporation 50,000 3,122
*US Airways Group, Inc. 18,400 1,150
------------
TOTAL 19,501
------------
UTILITIES (1.88%)
American Electric Power Co., Inc. 38,300 1,977
Baltimore Gas & Electric Co. 29,900 1,018
Carolina Power & Light Company 30,600 1,299
Central & South West Corporation 42,900 1,161
Cinergy Corporation 31,905 1,222
Coastal Corp. 21,400 1,325
Columbia Gas System, Inc. 11,200 880
Consolidated Edison Co. of New
York 47,600 1,952
Consolidated Natural Gas Company 19,300 1,168
Dominion Resources, Inc. 37,600 1,600
DTE Energy Company 29,400 1,020
Duke Energy Corp. 72,771 4,030
Eastern Enterprises 4,100 185
Edison International 80,300 2,183
Enron Corp. 61,900 2,573
Entergy Corporation 48,800 1,461
<CAPTION>
MARKET
VALUE
COMMON STOCK (55.04%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
UTILITIES (CONTINUED)
Firstenergy Corporation 46,600 $ 1,351
FPL Group, Inc. 36,800 2,178
GPU, Inc. 24,400 1,028
Houston Industries, Inc. 57,726 1,541
*Niagara Mohawk Power Corporation 29,200 307
NICOR, Inc. 9,800 413
Northern States Power Company 14,900 868
ONEOK, Inc. 6,200 250
Pacific Enterprises 16,900 636
PacifiCorp 59,900 1,636
PECO Energy Company 45,000 1,091
Peoples Energy Corporation 7,100 280
PG&E Corp. 88,700 2,700
PP&L Resources, Inc. 33,400 800
Public Service Enterprise Group,
Inc. 46,900 1,486
Sonat, Inc. 17,300 791
Southern Company 138,600 3,586
Texas Utilities Company 48,695 2,024
UNICOM Corp. 43,800 1,347
Union Electric Company 20,700 895
Williams Companies, Inc. 64,300 1,825
------------
TOTAL 52,087
------------
TOTAL COMMON STOCK 1,527,031
------------
SHORT TERM INVESTMENTS (11.57%)
- -------------------------------------------------------------
MONEY MARKET INVESTMENTS (7.81%)
ELECTRIC SERVICES (0.18%)
Pacific Gas & Electric Co.,
5.375%, 8/1/98 5,000,000 $ 4,987
------------
ENERGY (0.04%)
Petroleos Mexicanos, 8%, 7/1/98
(144a) 1,000,000 1,005
------------
FOREIGN GOVERNMENT (0.32%)
Bonos Del Tesoro, 8%, 12/13/98 3,500,000 3,465
Lukoil, Moscow, 8.4125%, 01/21/98 5,000,000 4,974
Government Trust Credit of Greece,
8%, 05/15/98 308,940 311
------------
TOTAL 8,750
------------
FINANCE (1.79%)
Chrysler Financial Corp., 5.8%,
02/13/98 25,000,000 24,827
CIT Group Holdings, 5.85%,
01/29/98 25,000,000 24,886
------------
TOTAL 49,713
------------
GOVERNMENT (0.18%)
+FHLMC Discount Note, 5.61%,
02/13/98 5,000,000 4,966
------------
</TABLE>

B-95
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
SHORT-TERM INVESTMENTS (11.57%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS (3.69%)
Associates Corporation N/A, 6.74%,
01/02/98 $ 2,900,000 $ 2,899
Beneficial Corporation, 5.83%,
01/30/98 25,000,000 24,883
+Ford Motor Credit Company, 5.68%,
01/28/98 25,000,000 24,894
+General Electric Capital Corp.,
5.6%, 02/11/98 25,000,000 24,841
+General Motors Acceptance Corp.,
5.72%, 02/25/98 25,000,000 24,782
------------
TOTAL 102,299
------------
SHORT TERM BUSINESS CREDIT (1.61%)
IBM Credit Corporation, 5.72%,
01/14/98 20,200,000 20,158
+Sears Roebuck Acceptance Corp.,
5.88%, 01/28/98 25,000,000 24,890
------------
TOTAL 45,048
------------
TOTAL MONEY MARKET INVESTMENTS 216,768
------------
ASSET-BACKED SECURITIES (3.76%)
COMMERCIAL MORTGAGES (0.18%)
BTC Mortgage Investors Trust -
Class A, 6.255%, 09/01/98 5,000,000 5,000
------------
FINANCE LESSORS (3.58%)
Asset Securitization Corporation,
5.74%, 02/11/98 25,000,000 24,837
+CIESCO LP, 5.75%, 02/11/98 25,000,000 24,836
Preferred Receivable Fund, 5.93%,
01/28/98 25,000,000 24,889

<CAPTION>
MARKET
VALUE
SHORT-TERM INVESTMENTS (11.57%) SHARES/PAR (000'S)
<S> <C> <C>
- -------------------------------------------------------------
FINANCE LESSORS (CONTINUED)

Receivable Capital Trust, 5.91%,
01/30/98 $25,000,000 $ 24,881
------------
TOTAL 99,443
------------
TOTAL ASSET-BACKED SECURITIES 104,443
------------
TOTAL SHORT TERM INVESTMENTS 321,211
------------
TOTAL BALANCED PORTFOLIO
(COST $1,960,305)^ $ 2,774,619
------------
ADR-American Depository Receipts
IO-Interest Only Security
*Non-Income Producing.
+Partially held by the custodian in segregated account as
collateral for open futures postions. Information regarding
open futures contracts as of December 31, 1997 is summarized
below:
</TABLE>

<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF EXPIRATION (DEPRECIATION)
ISSUERS CONTRACTS DATE (000'S)
- -------------------- ---------- ------------ --------------
<S> <C> <C> <C>
U.S. Treasury Bond 325 March 1998 (198)
S&P 500 Stock Index 194 March 1998 (281)
--------------
Total (479)
</TABLE>

^At December 31, 1997, the aggregate cost of securities for federal income tax
purposes was $1,960,613 and the net unrealized appreciation of investments
based on that cost was $814,006 which is comprised of $836,528 aggregate gross
unrealized appreciation and $22,522 aggregate gross unrealized depreciation.

The Accompanying Notes are an Integral Part of the Financial Statements

B-96
<PAGE>
High Yield Bond Portfolio
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
BONDS (72.80%) SHARES/PAR (000'S)
<S> <C> <C>
- ---------------------------------------------------------------
AIRLINES (1.50%)
Kitty Hawks Inc., 9.95%, 11/15/04
(144a) $2,250,000 $ 2,261
-----------
BANKS (0.57%)
First Nationwide Parent Holdings,
12.50%, 4/15/03 750,000 853
-----------
BROADCASTING (4.69%)
Azteca Hldgs S.A. De C.V., 11.00%,
6/15/02 (144a) 2,250,000 2,318
+Fox Kids Worldwide, 10.25%, 11/1/07,
(144a) 3,250,000 1,934
+Fox/Liberty Networks LLC, 9.75%,
8/15/07 (144a) 2,000,000 1,280
TV Azteca S.A. De C.V., 10.50%,
2/15/07 1,500,000 1,549
-----------
TOTAL 7,081
-----------
CABLE TELEVISION (10.55%)
Adelphia Communications Corp., 9.50%,
2/15/04 (PIK) 2,668,506 2,709
Adelphia Communications Corp.,
9.875%, 3/01/07 1,000,000 1,058
Falcon Holdings Group, 11%, 9/15/03
(PIK) 1,500,000 1,620
+Frontiervision Holdings Corp., LP
11.875%, 9/15/07 (144a) 4,625,000 3,399
+Marcus Cable, 14.25%, 12/15/05 3,750,000 3,244
+NTL Inc., 11.50%, 2/01/06 3,000,000 2,329
+Telewest PLC, 11.00%, 10/01/07 2,000,000 1,553
-----------
TOTAL 15,912
-----------
CHEMICALS (1.18%)
Tri Polyta Finance B V, 11.375%,
12/01/03 3,250,000 1,788
-----------
CONSUMER PRODUCTS (1.02%)
+Hedstrom Holdings Inc., 12.00%,
6/01/09 2,575,000 1,545
-----------
CONSUMER STAPLES (3.09%)
Iowa Select Farms, 10.75%, 12/1/05
(144a) 2,250,000 2,309
North Atlantic Trading Inc., 11.00%,
6/15/04 2,250,000 2,351
-----------
TOTAL 4,660
-----------
FINANCE COMPANIES (2.68%)
Olympic Financial Ltd., 11.50%,
3/15/07 4,000,000 4,040
-----------
INSURANCE (1.19%)
Superior National Capital Inc.,
10.75%, 12/1/17 (144a) 1,750,000 1,794
-----------
LEISURE RELATED (13.95%)
Alliance Gaming Corp., 10.00%, 8/1/07
(144a) 2,250,000 2,253
Casino America Inc., 12.50%, 8/01/03 2,000,000 2,173
Cobblestone Holdings, Inc., 0.00%,
6/01/04 2,875,000 1,380
Hollywood Theatres, Inc., 10.625%,
8/1/07 (144a) 1,350,000 1,434

<CAPTION>
MARKET
VALUE
BONDS (72.80%) SHARES/PAR (000'S)
<S> <C> <C>
- ---------------------------------------------------------------
LEISURE RELATED (CONTINUED)
Riviera Holdings, Inc., 10.00%,
8/15/04 (144a) $2,250,000 $ 2,233
Station Casinos Inc., 10.125%,
3/15/06 500,000 528
Station Casinos Inc., 9.75%, 4/15/07 2,500,000 2,588
Town Sport, 9.75%, 10/15/04 (144a) 1,000,000 1,000
Trump Atlantic, 11.25%, 5/01/06 3,000,000 2,925
Trump Hotels & Casino Resorts,
15.50%, 6/15/05 2,000,000 2,280
Venetain Casino, 12.25%, 11/15/04
(144a) 2,250,000 2,253
-----------
TOTAL 21,047
-----------
MISCELLANEOUS-BASIC MATERIALS (1.59%)
Cemex S. A., 12.75%, 7/15/06 2,000,000 2,395
-----------
OIL-GAS PRODUCERS (1.51%)
Belden & Blake Corp., 9.875%, 6/15/07 2,250,000 2,273
-----------
PAPER (4.53%)
APP International Finance Company
B.V. 11.75%, 10/1/05 2,250,000 2,070
Grupo Indl Durango S.A. De C.V.,
12.625%, 8/01/03 2,000,000 2,245
Pindo Deli Fin Mauritius, 10.75%,
10/1/07 (144a) 2,925,000 2,516
-----------
TOTAL 6,831
-----------
PROFESSIONAL SERVICES (1.65%)
+Decisionone Holdings Corp., 11.50%,
8/1/08 775,000 496
Kinder-care Learn Center, 9.50%,
2/15/09 2,000,000 1,990
-----------
TOTAL 2,486
-----------
RAILROAD (1.47%)
+TFM S.A. De C. V., 11.75%, 6/15/09
(144a) 3,500,000 2,223
-----------
RETAIL-FOOD (3.49%)
Fleming Companies, Inc., 10.625%,
7/31/07 (144a) 2,250,000 2,374
Jitney - Jungle Stores America, Inc.,
10.375%, 9/15/07 2,000,000 2,075
+Pathmark Stores, Inc., 11.625%,
6/15/02 1,000,000 810
-----------
TOTAL 5,259
-----------
RETAIL-GENERAL (1.46%)
Hollywood Entertainment Corp.,
10.625%, 8/15/04 2,250,000 2,205
-----------
SOAPS AND TOILETRIES (2.52%)
Revlon Worldwide Corp., 0.00%,
3/15/01 5,500,000 3,795
-----------
TELECOMMUNICATIONS (7.32%)
Comtel Brasileira Ltda., 10.75%,
9/26/04 (144a) 2,000,000 1,960
ITC Deltacom Inc., 11.00%, 6/01/07 2,875,000 3,163
++Mobilemedia Communications Inc.,
10.50%, 12/01/03 2,000,000 175
</TABLE>

B-97
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
BONDS (72.80%) SHARES/PAR (000'S)
- ---------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS (CONTINUED)
+Nextel Communications, Inc., 10.65%,
9/15/07 (144a) $2,375,000 $ 1,496
+Nextel Communications, Inc., 9.75%,
10/31/07 (144a) 4,000,000 2,440
Paging Network Inc., 10.00%, 10/15/08 1,750,000 1,813
-----------
TOTAL 11,047
-----------
TRUCKING AND SHIPPING (5.37%)
Greyhound Lines Inc., 11.50%, 4/15/07 3,875,000 4,282
Navigator Gas Transport PLC, 10.50%,
6/30/07 (144a) 1,000,000 1,060
Navigator Gas Transport PLC, 12%,
6/30/07 (144a) 900,000 1,013
Ryder Trucks, Inc., 10.00%, 12/01/06 1,750,000 1,750
-----------
TOTAL 8,105
-----------
UTILITIES (1.47%)
Companhia De Saneamento Basico, 10%,
7/28/05 (144a) 1,250,000 1,113
Espirito Santo Centrais Electricad,
10%, 7/15/07 (144a) 1,250,000 1,112
-----------
TOTAL 2,225
-----------
TOTAL BONDS 109,825
-----------
<CAPTION>

MARKET
VALUE
PREFERRED STOCK (19.65%) SHARES/PAR (000'S)
<S> <C> <C>
- ---------------------------------------------------------------
BANKS (2.19%)
California Federated Capital Corp. 126,000 $ 3,308
-----------
BROADCASTING (7.39%)
American Radio Systems Corp. (PIK) 18,769 2,231
Citadel Broadcasting Co. (144a) 13,331 1,553
Chancellor Radio (144a) 22,253 2,559
Sinclair Capital 43,500 4,807
-----------
TOTAL 11,150
-----------
CABLE TELEVISION (5.59%)
Cablevision Systems Corp. (PIK) 52,798 $ 6,257
NTL Inc. (PIK) 18,823 2,174
-----------
TOTAL 8,431
-----------
PRINTING AND PUBLISHING (3.10%)
Primedia Inc. 35,000 3,684
Primedia Inc. (PIK) 10,000 1,000
-----------
TOTAL 4,684
-----------
<CAPTION>
MARKET
VALUE
PREFERRED STOCK (19.65%) SHARES/PAR (000'S)
<S> <C> <C>
- ---------------------------------------------------------------
UTILITY-GAS (1.38%)
Petroleum Heat & Power Inc. (144a) $ 103,750 $ 2,074
-----------
TOTAL PREFERRED STOCK 29,647
-----------
<CAPTION>

MARKET
VALUE
MONEY MARKET INVESTMENTS (7.02%) SHARES/PAR (000'S)
<S> <C> <C>
- ---------------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS (7.02%)
Associates Corp of N. A., 6.74%,
1/2/98 7,100,000 $ 7,099
Commerical Credit Company, 5.65%,
1/28/98 2,000,000 1,992
General Motors Acceptance Corp.,
5.84, 1/14/98 1,500,000 1,496
-----------
TOTAL 10,587
-----------
TOTAL MONEY MARKET
INVESTMENTS 10,587
-----------
<CAPTION>

MARKET
VALUE
COMMON STOCK AND WARRANTS (0.53%) SHARES/PAR (000'S)
<S> <C> <C>
- ---------------------------------------------------------------
APPAREL AND TEXTILE (0.30%)
*Ithaca Industries Inc. 136,000 $ 451
-----------
FINANCE COMPANIES (0.04%)
Olympic Financial Ltd., warrants 4,000 60
-----------
LEISURE RELATED (0.20%)
Hedstrom Holdings 156,184 195
*Cobblestone Holdings Inc. 2,875 100
-----------
TOTAL 295
-----------
TOTAL COMMON STOCK 806
-----------
TOTAL HIGH YIELD BOND PORTFOLIO
(COST $149,252)^ $ 150,865
-----------
</TABLE>

*Non-Income Producing.
+Deferred interest security that receives no coupon payments until a
predetermined date at which the stated coupon rate becomes effective.
++Defaulted Security.
PIK-Payment in Kind.

^At December 31, 1997, the aggregate cost of securities for federal income tax
purposes was $149,252 and the net unrealized appreciation of investments based
on that cost was $1,613 which is comprised of $7,108 aggregate gross
unrealized appreciation and $5,495 aggregate gross unrealized depreciation.

The Accompanying Notes are an Integral Part of the Financial Statements

B-98
<PAGE>
Select Bond Portfolio
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
BONDS (96.82%) PAR (000'S)
<S> <C> <C>
- --------------------------------------------------------------
CORPORATE BONDS (23.39%)
AUTO-RELATED (0.40%)
Hertz Corp., 9.04%, 6/14/00 $ 900,000 $ 960
-----------
BANK HOLDING COMPANIES (4.33%)
BT Institutional Capital Trust,
7.75%, 12/1/26 4,000,000 4,079
BT Preferred Capital Trust II,
7.875%, 2/25/27 6,000,000 6,228
-----------
TOTAL 10,307
-----------
CHEMICALS AND ALLIED PRODUCTS (0.87%)
Dow Capital B.V., 8.5%, 6/8/10 1,800,000 2,083
-----------
COMMUNICATIONS (3.58%)
Panamsat, 0%, 8/1/03 3,000,000 3,027
U.S. West Capital Funding Inc., 7.9%,
2/1/27 1,000,000 1,084
WorldCom, Inc., 7.75%, 4/1/27 4,000,000 4,417
-----------
TOTAL 8,528
-----------
CONSTRUCTION MACHINERY (0.43%)
Bufete Industrial SA ADS, 11.375%,
7/15/99 (144a) 1,000,000 1,030
-----------
ENERGY (1.06%)
Camuzzi Gas, 9.25%, 12/15/01 2,500,000 2,531
-----------
ELECTRIC SERVICES (5.38%)
Commonwealth Edison Co., 6.5%,
4/15/00 1,000,000 1,005
Long Island Lighting Co., 8.625%,
4/15/04 1,000,000 1,009
Long Island Lighting Co., 9.625%,
7/1/24 1,500,000 1,544
Ohio Edison Company, 7.375%, 9/15/02 1,000,000 1,036
++Pacific Gas & Electric Co., 7.25%,
3/1/26 3,500,000 3,641
Peco Energy Company, 7.75%, 3/1/23 1,150,000 1,199
++Public Service Electric And Gas
Co., 6.875%, 1/1/03 2,250,000 2,309
Texas Utilities Electric Co., 7.875%,
3/1/23 1,000,000 1,068
-----------
TOTAL 12,811
-----------
FINANCE (1.83%)
Associates Corp. of North America,
7.95%, 2/15/10 1,500,000 1,694
Industrial Credit and Investment Corp
of India, 7.55%, 8/15/07, (144a) 3,000,000 2,670
-----------
4,364
-----------
GENERAL MERCHANDISE STORES (0.45%)
May Dept Stores Company, 7.45%,
10/15/16 1,000,000 1,072
-----------
MOTION PICTURE (1.33%)
News America Holdings Inc., 8.25%,
8/10/18 1,000,000 1,085

<CAPTION>
MARKET
VALUE
BONDS (96.82%) PAR (000'S)
<S> <C> <C>
- --------------------------------------------------------------
MOTION PICTURE (CONTINUED)
Time Warner Entertainment Inc.,
7.25%, 9/1/08 $2,000,000 $ 2,078
-----------
TOTAL 3,163
-----------
MOTOR VEHICLES (0.65%)
General Motors Corporation, 8.8%,
3/1/21 1,250,000 1,550
-----------
PAPER AND ALLIED PRODUCTS (0.94%)
Grupo Industrial Durango, 12.625%,
8/1/03 2,000,000 2,245
-----------
TEXTILES (1.03%)
Polysindo International Finance,
11.375%, 6/15/06 3,000,000 2,460
-----------
TOBACCO (1.11%)
Philip Morris Companies, 7.25%,
1/15/03 1,000,000 1,032
Philip Morris Companies, 9.25%,
2/15/00 500,000 529
++RJR Nabisco Inc., 8.625%, 12/1/02 1,000,000 1,064
-----------
TOTAL 2,625
-----------
TOTAL CORPORATE BONDS 55,729
-----------
GOVERNMENT BONDS (DOMESTIC AND FOREIGN) AND AGENCY BONDS
(26.33%)
FOREIGN GOVERNMENT BONDS (5.11%)
Peru Flirb Reduction, 3.25%, 3/7/17 2,100,000 1,244
Poland - Bear - PDI, 4%, 10/27/14 1,500,000 1,296
+Poland Government, 12%, 10/12/01 15,000,000 3,168
+Poland Government, 12%, 2/12/03 10,000,000 2,058
Poland Government, 14%, 2/12/00 9,000,000 2,166
Vnesheconomban, 6.718%, 12/2/15 3,200,000 2,248
-----------
TOTAL 12,180
-----------
FEDERAL GOVERNMENT AND AGENCIES (21.22%)
Federal National Mortgage Assoc.,
6.22%, 2/1/06 1,938,793 1,927
Federal National Mortgage Assoc.,
6.24%, 1/1/06 5,467,070 5,440
Federal National Mortgage Assoc.,
6.32%, 2/1/06 3,928,808 3,936
Federal National Mortgage Assoc.,
6.5%, 9/25/05 2,718,958 2,744
Federal National Mortgage Assoc.,
6.75%, 12/25/23 3,500,000 3,505
Federal National Mortgage Assoc.,
6.96%, 10/1/07 3,295,429 3,431
Federal National Mortgage Assoc.,
7.0%, 6/1/03 788,654 800
Federal National Mortgage Assoc.,
7.23%, 1/25/22 5,000,000 5,202
Federal National Mortgage Assoc.,
7.36%, 4/1/11 3,444,763 3,690
Federal National Mortgage Assoc.,
8.4%, 2/25/09 2,500,000 2,756
Federal National Mortgage Assoc.,
10%, 10/1/17 141,853 156
Federal National Mortgage Assoc.,
11%, 9/1/17 $2,102,536 $ 2,387
</TABLE>

B-99
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
BONDS (96.82%) PAR (000'S)
- --------------------------------------------------------------
<S> <C> <C>
FEDERAL GOVERNMENT AND AGENCIES (CONTINUED)
Federal National Mortgage Assoc.,
11%, 12/1/12 $ 255,000 $ 285
Federal National Mortgage Assoc.,
11%, 12/1/17 614,098 698
Federal National Mortgage Assoc.,
12%, 9/1/17 708,812 825
Federal National Mortgage Assoc.,
12%, 9/1/12 2,260,972 2,603
Federal National Mortgage Assoc.,
12%, 10/1/17 1,040,443 1,211
Federal National Mortgage Assoc.,
12%, 12/1/12 373,000 430
Federal National Mortgage Assoc.,
12%, 12/1/17 532,000 619
Federal National Mortgage Assoc.,
12.25%, 12/01/17 442,000 523
Federal National Mortgage Assoc.,
13%, 11/1/12 383,414 449
Federal National Mortgage Assoc.,
13%, 11/1/17 721,502 854
Federal National Mortgage Assoc.,
13%, 12/1/17 403,000 475
Federal National Mortgage Assoc.,
14%, 12/1/17 283,000 336
Government National Mortgage Assoc.,
7%, 5/15/23 422,708 427
Government National Mortgage Assoc.,
7.5%, 1/15/24 1,508,484 1,549
Government National Mortgage Assoc.,
7.5%, 2/15/24 1,602,195 1,645
Government National Mortgage Assoc.,
8.5%, 11/15/24 923,811 977
Government National Mortgage Assoc.,
8.5%, 2/15/25 118,027 124
Government National Mortgage Assoc.,
8.5%, 3/15/23 10,367 11
Government National Mortgage Assoc.,
8.5%, 6/15/23 14,456 15
Government National Mortgage Assoc.,
8.5%, 6/15/24 260,063 275
Government National Mortgage Assoc.,
8.5%, 7/15/24 64,949 69
Government National Mortgage Assoc.,
8.5%, 9/15/21 148,346 158
Government National Mortgage Assoc.,
8.5%, 9/15/24 12,523 13
-----------
TOTAL 50,545
-----------
TOTAL GOVERNMENT BONDS 62,725
-----------
MORTGAGE BACKED AND ASSET BACKED SECURITIES (47.10%)
AUTO-RELATED (3.15%)
Daimler-Benz Vehicle Trust, Class A,
5.85%, 7/20/03 1,064,567 1,063
CIT RV Owner Trust, Class A, 6.25%,
1/15/11 1,003,318 1,005
Eaglemark Trust,Class A,6.75%,
11/15/02 (144a) 1,018,791 1,027
<CAPTION>
MARKET
VALUE
BONDS (96.82%) PAR (000'S)
<S> <C> <C>
- --------------------------------------------------------------
AUTO-RELATED (CONTINUED)
Team Fleet Financing
Corporation,Class A, 6.65%, 12/15/02
(144a) $3,200,000 $ 3,239
Team Fleet Financing Corporation,
Class A, 7.35%, 5/15/03 (144a) 1,125,000 1,169
-----------
TOTAL 7,503
-----------
COMMERCIAL MORTGAGES (37.16%)
+Kmart CMBS Financing, Inc.,Class C,
6.391%, 03/01/07 (144a) 1,500,000 1,496
+Kmart CMBS Financing, Inc., Class D,
6.791%, 03/01/07 (144a) 2,000,000 2,000
Asset Securitization Corporation,
Class CS2, 1.097%, 11/13/26 IO 52,000,000 3,429
Asset Securitization Corporation,
Class CS1, 1.257%, 11/13/26 IO 22,210,492 920
Asset Securitization Corporation,
Class PS1, 1.36707%, 2/14/41 IO 12,227,830 1,328
Chase Commercial Mortgage Securities
Corp., Class B, 6.6%, 12/12/29 5,000,000 5,037
Chase Commercial Mortgage Securities
Corp., Class A2, 6.6%, 12/12/29 2,000,000 2,000
Chase Commercial Mortgage Securities
Corp., Class B,7.37%, 6/19/29 1,000,000 1,058
Chase Commercial Mortgage Securities
Corp., Class D, 7.37%, 6/19/29 1,750,000 1,796
Commercial Mortgage Acceptance
Corporation, Class B, 6.647%,
12/15/30 2,000,000 1,996
Credit Suisse First Boston Mortgage
Securities Corp., Class D, 9.5914%,
4/25/25 (144a) 682,000 789
Credit Suisse First Boston Mortgage
Securities Corp., Class B, 9.5914%,
4/25/25 (144a) 2,000,000 2,367
Credit Suisse First Boston Mortgage
Securities Corp., Class C1, 7.26%,
6/20/29 (144a) 1,488,399 1,542
Credit Suisse First Boston Mortgage
Securities Corp., Class C1, 7.28%,
6/20/29 (144a) 1,500,000 1,525
Credit Suisse First Boston Mortgage
Securities Corp., Class D, 7.46%,
6/20/29 (144a) 3,500,000 3,509
DLJ Mortgage Acceptance Corporation,
Class S,.3751%, 10/15/17 IO 89,862,718 2,408
DLJ Mortgage Acceptance Corporation,
Class A1B, 7.29%, 11/12/21 2,250,000 2,356
The Equitable Life Insurance Society
of the U S, Class C1, 7.52%, 5/15/06 2,000,000 2,100
</TABLE>

B-100
<PAGE>
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
BONDS (96.82%) PAR (000'S)
- --------------------------------------------------------------
<S> <C> <C>
COMMERCIAL MORTGAGES (CONTINUED)
First Union-Lehman Brothers
Commercial Mortgage Trust, Class C2,
7.02%, 11/18/29 4,000,000 4,035
First Union-Lehman Brothers
Commercial Mortgage Trust, Class C1,
7.44%, 4/18/07 2,500,000 2,657
First Union-Lehman Brothers
Commercial Mortgage Trust, IO,
1.307%, 4/18/27 36,440,146 2,847
Fleetwood Credit Corporation Grantor
Trust, Class A, 6.4%, 5/15/13 1,416,794 1,427
GMAC Commercial Mortgage Securities,
Inc., Class C2, 7.81%, 10/15/06
(144a) 5,000,000 5,247
LB Commercial Conduit Mortgage Trust,
Class IO, 1.248%, 10/25/26 68,392,491 4,366
LB Commercial Conduit Mortgage Trust,
Class A3, 8.396%, 1/20/17 4,840,838 5,538
Malan Mortgage Securities Trust,
Class A3, 7.8%, 8/15/05 (144a) 3,000,000 3,076
Merrill Lynch Mortgage Investors,
Inc., Class C1, 7.12%, 6/18/29 2,500,000 2,583
Merrill Lynch Mortgage Investors,
Inc., Class E, 7.12%, 6/18/29 4,500,000 4,519
Merrill Lynch Mortgage Investors,
Inc., Class C, 8.154% , 6/18/29 1,950,000 2,009
Merrill Lynch Mortgage Investors,
Inc., Class E, 8.858%, 6/18/29 2,000,000 2,110
Midland Realty Acceptance Corp.,
Class AEC, 1.389%, 1/25/29 (144a) IO 14,652,029 1,145
NationsBank Lease Pass Thru Trust,
Class 1, 7.442%, 1/10/11 (144a) 3,000,000 3,133
Nations Credit Grantor Trust, Class
A1, 6.35%, 4/15/14 2,859,386 2,865
Red Mountain Funding LLC, Class E,
7.365%, 1/15/19 1,500,000 1,533
Red Mountain Funding LLC, Class F,
7.471%, 1/15/19 1,800,000 1,771
-----------
TOTAL 88,517
-----------
CREDIT CARD ASSET BACKED (0.84%)
Iroquois Trust, Class A, 6.752%,
6/25/07 2,000,000 2,007
-----------
MANUFACTURED HOUSING (1.64%)
Mid-State Trust VI, Class A3, 7.54%,
7/1/35 $1,256,650 $ 1,317
Vanderbilt Mortgage and Finance,
Inc., Class 1A4, 7.19%, 2/7/14 2,500,000 2,596
-----------
TOTAL 3,913
-----------
<CAPTION>
MARKET
VALUE
BONDS (96.82%) PAR (000'S)
<S> <C> <C>
- --------------------------------------------------------------
OTHER ASSET BACKED (1.84%)
Greentree Recreation & Consumer
Trust, Class A1, 6.49%, 2/15/18 2,567,117 2,578
Newcourt Equipment, Class B, 6.764%,
9/20/04 1,790,849 1,798
-----------
TOTAL 4,376
-----------
RESIDENTIAL MORTGAGES (2.47%)
BCF L L C Mortgage Pass Thru
Certificate, Class B3, 7.75%,
3/25/37 (144a) 3,957,508 3,995
Rural Housing Trust, Class D, 6.33%,
4/1/26 1,903,595 1,883
-----------
TOTAL 5,878
-----------
TOTAL MORTGAGE BACKED AND
ASSET BACKED SECURITIES 112,194
-----------
TOTAL BONDS 230,648
-----------
<CAPTION>
MARKET
VALUE
MONEY MARKET INVESTMENTS (3.18%) PAR (000'S)
<S> <C> <C>
- --------------------------------------------------------------
GOVERNMENT (0.29%)
++Federal Home Loan Mortgage Company,
5.610%, 2/13/98 $ 700,000 $ 695
-----------
PERSONAL CREDIT INSTITUTIONS (1.30%)
Associates Corporation of N A, 6.74%,
1/02/98 3,100,000 3,099
-----------
TOBACCO (0.74%)
Phillip Morris Companies, 9.00%,
5/15/98 1,750,000 1,767
-----------
TOTAL MONEY MARKET INSTRUMENTS 5,561
-----------
COMMERCIAL MORTGAGES (0.85%)
BTC Mortgage Investors Trust, Class
A, 6.255%, 9/1/98 2,000,000 2,001
-----------
TOTAL SHORT TERM
INVESTMENTS 7,562
-----------
TOTAL SELECT BOND PORTFOLIO
(COST $234,165)^ $ 238,210
-----------
IO-Interest Only Security
+Floating rate security.
++Partially held by the custodian in segregated account as
collateral for open futures postions. Information regarding
open futures contracts as of December 31, 1997 is summarized
below:
</TABLE>

<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF EXPIRATION (DEPRECIATION)
ISSUER CONTRACTS DATE (000'S)
- -------------------------------- ---------- ------------ --------------
<S> <C> <C> <C>
U.S. Treasury Bond Future 325 March 1998 (431)
</TABLE>

^At December 31, 1997, the aggregate cost of securities for federal income tax
purposes was $234,165 and the net unrealized appreciation of investments based
on that cost was $4,046 which is comprised of $5,873 aggregate gross unrealized
appreciation and $1,827 aggregate gross unrealized depreciation.

The Accompanying Notes are an Integral Part of the Financial Statements

B-101
<PAGE>
Money Market Portfolio
NORTHWESTERN MUTUAL SERIES FUND, INC.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
MONEY MARKET INVESTMENTS (77.05%) PAR (000'S)
<S> <C> <C>
- --------------------------------------------------------------
AUTOMOBILE REPAIR, SERVICES & PARKING (4.65%)
PHH Corporation, 6.00%, 10/27/1998 $9,000,000 $ 8,997
-----------
CHEMICALS & ALLIED PRODUCTS (4.80%)
American Home Product Co, 5.55%,
01/23/1998 9,300,000 9,268
-----------
COMMUNICATIONS (10.53%)
Ameritech Corporation, 5.85%,
01/28/1998 10,000,000 9,956
Southern California Edison Co.,
6.250%, 01/13/1998 3,800,000 3,792
U.S. West Communications, 6.07%,
01/08/1998 6,655,000 6,647
-----------
TOTAL 20,395
-----------
GOVERNMENT (2.54%)
Federal National Mortgage Assoc.,
5.750%, 01/26/1998 2,700,000 2,689
Federal National Mortgage Assoc.,
5.730%, 01/30/1998 2,248,000 2,238
-----------
TOTAL 4,927
-----------
FINANCE (9.76%)
Chrysler Financial Corp., 5.85%,
01/28/1998 9,600,000 9,558
CIT Group, 5.56%, 02/11/1998 9,400,000 9,341
-----------
TOTAL 18,899
-----------
PERSONAL CREDIT INSTITUTIONS (19.93%)
Beneficial Corp, 5.74%, 02/25/1998 10,000,000 9,912
Ford Motor Credit Company, 5.74%,
01/28/1998 9,600,000 9,559
General Electric Capital Corp.,
5.60%, 2/25/1998 9,600,000 9,518
General Motors Acceptance Corp.,
5.85%, 01/16/1998 5,000,000 4,988
GMAC, 7.125%, 05/11/1998 4,600,000 4,611
-----------
TOTAL 38,588
-----------
PETROLEUM AND COAL PRODUCTS (1.64%)
E. I. Dupont De Nemours, 6.250%,
01/14/1998 3,189,000 3,182
-----------
SHORT TERM BUSINESS CREDIT (14.76%)
IBM Credit Corporation, 5.77%,
01/14/1998 6,100,000 6,087
IBM Credit Corporation, 5.779%,
01/14/1998 3,400,000 3,393

<CAPTION>
MARKET
VALUE
MONEY MARKET INVESTMENTS (77.05%) PAR (000'S)
<S> <C> <C>
- --------------------------------------------------------------
SHORT TERM BUSINESS CREDIT (CONTINUED)

Sears Roebuck Acceptance Corp.,
5.79%, 02/06/1998 $9,700,000 $ 9,644
Transamerica Financial Corp., 5.70%,
01/28/1998 9,500,000 9,459
-----------
TOTAL 28,583
-----------
TOBACCO PRODUCTS (4.84%)
Phillip Morris Companies Inc, 6.375%,
01/15/1998 6,850,000 6,850
Phillip Morris Companies Inc, 9.00%,
05/15/1998 2,500,000 2,528
-----------
TOTAL 9,378
-----------
UTILITY-ELECTRIC (3.60%)
National Rural Utility Co., 5.55%,
01/22/1998 7,000,000 6,977
-----------
TOTAL MONEY MARKET
INVESTMENTS $ 149,194
-----------
<CAPTION>

MARKET
VALUE
ASSET-BACKED SECURITIES (22.95%) PAR (000'S)
<S> <C> <C>
- --------------------------------------------------------------
AUTO RELATED (2.35%)
Carco Auto Loan Master Trust, 5.625%,
11/15/1998 (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 (20.60%)
Asset Securitization, 5.74%,
02/11/1998 9,600,000 9,537
Receivable Capital Trust, 5.75%,
01/05/1998 9,500,000 9,494
Receivable Capital Trust, 5.76%,
01/23/1998 1,885,000 1,879
Ciesco LP, 5.75%, 02/11/1998 9,500,000 9,438
Preferred Receivable Funding, 5.82%,
02/10/1998 9,600,000 9,538
-----------
TOTAL 39,886
-----------
TOTAL ASSET-BACKED SECURITIES 44,436
-----------
TOTAL MONEY MARKET PORTFOLIO
(COST $193,630)^ $ 193,630
-----------

^Also represents cost for federal income tax purposes.
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

B-102
<PAGE>

PART C
OTHER INFORMATION

Item 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements

FINANCIAL STATEMENTS INCLUDED IN THE PROSPECTUS:
Financial Highlights

1997 FINANCIAL STATEMENTS FOR NORTHWESTERN MUTUAL
SERIES FUND, INC. INCLUDED IN THE STATEMENT OF
ADDITIONAL INFORMATION:
Report of Independent Accountants
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Schedules of Investments

(b) Exhibits

Exhibit B(2) Amendment to By-Laws.

Exhibit B(11) Consent of Price Waterhouse LLP.

Exhibit B(16) Schedule of computation for the Money Market
Portfolio's yield quotation for the seven-day period
ended March 31, 1998, as provided in the Registration
Statement.

Exhibit 27 Financial Data Schedule for period ended December 31,
1997.

Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Shares of the Registrant have been offered and sold only to The
Northwestern Mutual Life Insurance Company ("Northwestern Mutual
Life"), a mutual insurance company organized by a special act of the
Wisconsin Legislature, and its separate investment accounts created
pursuant to Wisconsin insurance laws. Certain of the separate
investment accounts are registered under the Investment Company Act of
1940 as unit investment trusts, and the purchasers of variable annuity
contracts and variable life insurance policies issued in connection
with such accounts have the right to instruct Northwestern Mutual Life
with respect to the voting of the Registrant's shares held by those
accounts. Subject to such voting instruction rights, Northwestern
Mutual Life and its separate investment accounts directly control the
Registrant. However, the present practice of Northwestern Mutual
Life, as disclosed elsewhere in this Amended Registration Statement,
is to vote the shares of the Registrant held as general assets in the
same proportions as the shares for which voting instructions are
reserved. Subsidiaries of Northwestern Mutual Life when

C-1
<PAGE>

considered in the aggregate as a single subsidiary would not
constitute a significant subsidiary.

Item 26. NUMBER OF HOLDERS OF SECURITIES

All of the outstanding shares of the Registrant are owned by
Northwestern Mutual Life and are allocated among the general assets
and four separate investment accounts.

Item 27. INDEMNIFICATION

Article IX of Registrant's by-laws is included as Exhibit 2 to the
Registration Statement under the Securities Act of 1933 and the
Investment Company Act of 1940. The by-laws of Northwestern Mutual
Life permit indemnification by Northwestern Mutual Life of persons who
are serving as directors of another corporation at the request of
Northwestern Mutual Life. Pursuant to the by-law provision, the
Trustees of Northwestern Mutual Life have adopted a resolution
extending to all of the directors of the Registrant the benefits of
the indemnification arrangements for employees, officers and Trustees
of Northwestern Mutual Life. Directors' and officers' liability
insurance which covers the directors and officers of the Registrant as
well as Trustees and officers of Northwestern Mutual Life is also in
force. The amount of coverage is $15 million. The deductible amount
is $5,000 per person and $50,000 in the aggregate, except that the
deductible amount is $1,000,000 ($1 million) for claims covered by
corporate indemnification. The cost of this insurance is allocated
among Northwestern Mutual Life and its subsidiaries and no part of the
premium has been paid by the Registrant.

Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

In addition to its investment advisory function, Northwestern Mutual
Investment Services, Inc. ("NMIS"), the Registrant's investment
adviser, is responsible for the selection, training and supervision of
life insurance agents of Northwestern Mutual Life who engage in the
distribution of variable life insurance policies and variable annuity
contracts issued by Northwestern Mutual Life. The directors and
officers of NMIS also serve as officers of Northwestern Mutual Life.

Item 29. PRINCIPAL UNDERWRITERS

Not applicable.

Item 30. LOCATION OF ACCOUNTS AND RECORDS

Pursuant to the investment advisory agreement, NMIS, the Registrant's
adviser, provides facilities and personnel for maintaining the
Registrant's books and records. Northwestern Mutual Life is also a
party to the agreement and provides space, facilities and personnel
used in carrying out this function. Documents are kept at 720 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202, the address of NMIS and
of Northwestern Mutual Life.

C-2
<PAGE>

Item 31. MANAGEMENT SERVICES

Not applicable.

Item 32. UNDERTAKINGS

Not applicable.

C-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amended Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Amended Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Milwaukee, and State of
Wisconsin, on the 28th day of April, 1998.

NORTHWESTERN MUTUAL SERIES FUND, INC.
(Registrant)

By: JAMES D. ERICSON
------------------------------------------
James D. Ericson, President

Pursuant to the requirements of the Securities Act of 1933, this Amended
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

Signature Title
--------- -----

/s/ JAMES D. ERICSON President, Director
- ------------------------------ and Principal Executive
James D. Ericson Officer

/s/ MARK G. DOLL Vice President,
- ------------------------------ Treasurer and Principal
Mark G. Doll Financial Officer

/s/ BARBARA E. COURTNEY Controller and
- ------------------------------ Principal Accounting
Barbara E. Courtney Officer Dated
April 28,
1998
/s/ WILLIAM J. BLAKE* Director
- ------------------------------
William J. Blake

/s/ STEPHEN N. GRAFF* Director
- ------------------------------
Stephen N. Graff

/s/ MARTIN F. STEIN* Director
- ------------------------------
Martin F. Stein

/s/ JOHN K. MACIVER* Director
- ------------------------------
John K. MacIver*

/s/ WILLIAM A. MCINTOSH* Director
- ------------------------------
William A. McIntosh

* By /s/ JAMES D. ERICSON
-----------------------------------
James D. Ericson, Attorney
in fact, pursuant to the Power
of Attorney attached hereto

C-4
<PAGE>

POWER OF ATTORNEY

The undersigned Directors of Northwestern Mutual Series Fund, Inc. (the
"Company"), hereby constitute and appoint James D. Ericson and Edward J. Zore,
or either of them, their true and lawful attorneys and agents, to sign the names
of the undersigned Directors to any instruments or documents filed as part of or
in connection with or in any way related to the registration statement or
statements and any and all amendments thereto, to be filed under the Securities
Act of 1933 in connection with shares of the common stock of the Company offered
to the public; and each of the undersigned hereby ratifies and confirms all that
said attorneys and agents shall do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has subscribed these presents,
as indicated, February 5, 1998.

/s/ STEPHEN N. GRAFF Director
--------------------------
Stephen N. Graff

/s/ WILLIAM J. BLAKE Director
--------------------------
William J. Blake

/s/ JOHN K. MACIVER Director
--------------------------
John K. MacIver

/s/ MARTIN F. STEIN Director
--------------------------
Martin F. Stein

/s/ JAMES D. ERICSON Director
--------------------------
James D. Ericson

/s/ WILLIAM A. MCINTOSH Director
--------------------------
William A. McIntosh

C-5
<PAGE>

EXHIBIT INDEX
EXHIBITS FILED WITH FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 15 TO
REGISTRATION STATEMENT UNDER SECTION 6 OF
THE SECURITIES ACT OF 1933
AND SECTION 8(b) OF THE INVESTMENT COMPANY ACT OF 1940
FOR
NORTHWESTERN MUTUAL SERIES FUND, INC.

Exhibit Number Exhibit Name
- -------------- ------------

Exhibit B(2) Amendment to the By-Laws of Northwestern Mutual Series
Fund, Inc.

Exhibit B(11) Consent of Price Waterhouse LLP.

Exhibit B(16) Schedule of computation for the Money Market
Portfolio's yield quotation for the seven-day period
ended March 31, 1998, as provided in the Registration
Statement.

Exhibit 27 Financial Data Schedule for period ended December 31,
1997 for each Portfolio of Northwestern Mutual Series
Fund, Inc.

<PAGE>

Exhibit B(2)

AMENDMENT TO THE BY-LAWS ADOPTED AT A MEETING OF THE DIRECTORS
OF NORTHWESTERN MUTUAL SERIES FUND, INC. ON NOVEMBER 6, 1997

AMENDMENT: RESOLVED, that the second sentence of subsection 2.01 of the By-laws
of the corporation is hereby amended to read as follows, effective May 8, 1997:

"The number of directors of the corporation shall be six."

<PAGE>

Exhibit B(11)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 15 to the Registration
Statement on Form N-1A (the "Registration Statement") of our report dated
January 27, 1998, relating to the financial statements and financial highlights
of Northwestern Mutual Series Fund, Inc., which appears in such Statement of
Additional Information, and to the incorporation by reference of our report into
the Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Condensed Financial
Information" in such Prospectus and to the reference to us under the heading
"Investment Advisory and Other Services" in such Statement of Additional
Information.

PRICE WATERHOUSE LLP

Milwaukee, Wisconsin
April 28, 1998

<PAGE>
Exhibit B(16)

MONEY MARKET PORTFOLIO
YIELD
3/31/98
<TABLE>
<CAPTION>
DATE NET ASSETS DIVIDENDS
---- ----------- ----------
<S> <C> <C>
3/25/98 $193,730,079.56 $ 28,418.03
3/26/98 $193,783,651.64 $ 28,491.66
3/27/98 $194,469,024.66 $ 28,504.04
3/28/98 $194,469,024.66 $ 28,555.30
3/29/98 $194,469,024.66 $ 28,555.30
3/30/98 $194,487,348.95 $ 28,555.30
3/31/98 $194,665,126.42 $ 28,761.54

$1,360,073,280.55 $199,841.17
----------------- -----------
-----------

AVG. NET ASSETS $194,296,182.94
---------------

YIELD 5.36%
----

COMPOUNDED YIELD 5.51%
----

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORTHWESTERN
MUTUAL SERIES FUND, INC., AGGRESSIVE GROWTH STOCK FUND, 12/31/97 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 745,200
<INVESTMENTS-AT-VALUE> 1,066,943
<RECEIVABLES> 2,727
<ASSETS-OTHER> 94
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,069,764
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,696
<TOTAL-LIABILITIES> 2,696
<SENIOR-EQUITY> 705,539
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 319,739
<SHARES-COMMON-PRIOR> 277,222
<ACCUMULATED-NII-CURRENT> 390
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 39,778
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 321,361
<NET-ASSETS> 1,067,068
<DIVIDEND-INCOME> 897
<INTEREST-INCOME> 4,707
<OTHER-INCOME> 0
<EXPENSES-NET> 5,004
<NET-INVESTMENT-INCOME> 600
<REALIZED-GAINS-CURRENT> 44,968
<APPREC-INCREASE-CURRENT> 82,701
<NET-CHANGE-FROM-OPS> 128,269
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 57,365
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,663
<NUMBER-OF-SHARES-REDEEMED> 14,059
<SHARES-REINVESTED> 20,913
<NET-CHANGE-IN-ASSETS> 195,142
<ACCUMULATED-NII-PRIOR> (210)
<ACCUMULATED-GAINS-PRIOR> 52,175
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,034
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 3.15
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> .39
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .20
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 3.34
<EXPENSE-RATIO> .53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORTHWESTERN
MUTUAL SERIES FUND, INC., INTERNATIONAL EQUITY FUND, 12/31/97 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 543,741
<INVESTMENTS-AT-VALUE> 657,718
<RECEIVABLES> 2,731
<ASSETS-OTHER> 1,814
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 662,263
<PAYABLE-FOR-SECURITIES> 802
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,611
<TOTAL-LIABILITIES> 2,413
<SENIOR-EQUITY> 507,045
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 390,790
<SHARES-COMMON-PRIOR> 324,246
<ACCUMULATED-NII-CURRENT> 16,682
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 22,191
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 113,152
<NET-ASSETS> 659,850
<DIVIDEND-INCOME> 18,717
<INTEREST-INCOME> 2,883
<OTHER-INCOME> 0
<EXPENSES-NET> 4,755
<NET-INVESTMENT-INCOME> 16,845
<REALIZED-GAINS-CURRENT> 22,636
<APPREC-INCREASE-CURRENT> 25,359
<NET-CHANGE-FROM-OPS> 64,840
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,704
<DISTRIBUTIONS-OF-GAINS> 7,542
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 66,307
<NUMBER-OF-SHARES-REDEEMED> 12,361
<SHARES-REINVESTED> 12,598
<NET-CHANGE-IN-ASSETS> 54,661
<ACCUMULATED-NII-PRIOR> 12,614
<ACCUMULATED-GAINS-PRIOR> 7,391
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,755
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.56
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> .15
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> .02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.69
<EXPENSE-RATIO> .77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORTHWESTERN
MUTUAL SERIES FUND, INC., GROWTH STOCK FUND, 12/31/97 FINANCIAL STATEMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANICAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 170,190
<INVESTMENTS-AT-VALUE> 242,686
<RECEIVABLES> 930
<ASSETS-OTHER> 51
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 243,667
<PAYABLE-FOR-SECURITIES> 446
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 150
<TOTAL-LIABILITIES> 596
<SENIOR-EQUITY> 166,515
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 134,273
<SHARES-COMMON-PRIOR> 116,463
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,060
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 72,496
<NET-ASSETS> 243,071
<DIVIDEND-INCOME> 2,558
<INTEREST-INCOME> 1,160
<OTHER-INCOME> 0
<EXPENSES-NET> 1,049
<NET-INVESTMENT-INCOME> 2,669
<REALIZED-GAINS-CURRENT> 11,942
<APPREC-INCREASE-CURRENT> 42,501
<NET-CHANGE-FROM-OPS> 57,112
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,685
<DISTRIBUTIONS-OF-GAINS> 8,527
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 42,594
<NUMBER-OF-SHARES-REDEEMED> 31,206
<SHARES-REINVESTED> 6,422
<NET-CHANGE-IN-ASSETS> 72,589
<ACCUMULATED-NII-PRIOR> 1,067
<ACCUMULATED-GAINS-PRIOR> 5,039
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,066
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.46
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> .42
<PER-SHARE-DIVIDEND> .02
<PER-SHARE-DISTRIBUTIONS> .07
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.81
<EXPENSE-RATIO> .49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
NORTHWESTERN MUTUAL SERIES FUND, INC., GROWTH AND INCOME STOCK FUND,
12/31/97 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 342,839
<INVESTMENTS-AT-VALUE> 370,014
<RECEIVABLES> 5,500
<ASSETS-OTHER> 82
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 375,596
<PAYABLE-FOR-SECURITIES> 3,215
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 446
<TOTAL-LIABILITIES> 3,661
<SENIOR-EQUITY> 344,245
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 279,536
<SHARES-COMMON-PRIOR> 177,728
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 515
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27,175
<NET-ASSETS> 371,935
<DIVIDEND-INCOME> 4,542
<INTEREST-INCOME> 450
<OTHER-INCOME> 0
<EXPENSES-NET> 1,818
<NET-INVESTMENT-INCOME> 3,174
<REALIZED-GAINS-CURRENT> 72,633
<APPREC-INCREASE-CURRENT> 2,850
<NET-CHANGE-FROM-OPS> 78,651
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,200
<DISTRIBUTIONS-OF-GAINS> 78,180
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 75,470
<NUMBER-OF-SHARES-REDEEMED> 35,535
<SHARES-REINVESTED> 61,873
<NET-CHANGE-IN-ASSETS> 137,751
<ACCUMULATED-NII-PRIOR> 2,654
<ACCUMULATED-GAINS-PRIOR> 21,066
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,849
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> .32
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> .37
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> .36
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.33
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORTHWESTERN
MUTUAL SERIES FUND, INC., INDEX 500 STOCK FUND, 12/31/97 FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 713,039
<INVESTMENTS-AT-VALUE> 1,152,781
<RECEIVABLES> 1,726
<ASSETS-OTHER> 50
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,154,557
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,700
<TOTAL-LIABILITIES> 1,700
<SENIOR-EQUITY> 667,337
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 436,104
<SHARES-COMMON-PRIOR> 360,059
<ACCUMULATED-NII-CURRENT> 17,811
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 27,298
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 440,411
<NET-ASSETS> 1,152,857
<DIVIDEND-INCOME> 16,013
<INTEREST-INCOME> 3,795
<OTHER-INCOME> 0
<EXPENSES-NET> 1,997
<NET-INVESTMENT-INCOME> 17,811
<REALIZED-GAINS-CURRENT> 27,640
<APPREC-INCREASE-CURRENT> 219,972
<NET-CHANGE-FROM-OPS> 265,423
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13,866
<DISTRIBUTIONS-OF-GAINS> 16,994
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 75,307
<NUMBER-OF-SHARES-REDEEMED> 12,917
<SHARES-REINVESTED> 13,655
<NET-CHANGE-IN-ASSETS> 412,791
<ACCUMULATED-NII-PRIOR> 13,866
<ACCUMULATED-GAINS-PRIOR> 17,014
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,045
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 2.06
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> .62
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> .04
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.64
<EXPENSE-RATIO> 1.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANICIAL INFORMATION EXTRACTED FROM
NORTHWESTERN MUTUAL SERIES FUND, INC., BALANCED FUND, 12/31/97 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,960,305
<INVESTMENTS-AT-VALUE> 2,774,619
<RECEIVABLES> 35,430
<ASSETS-OTHER> 3,616
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,813,665
<PAYABLE-FOR-SECURITIES> 6,648
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18,523
<TOTAL-LIABILITIES> 25,171
<SENIOR-EQUITY> 1,794,233
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,400,746
<SHARES-COMMON-PRIOR> 1,353,952
<ACCUMULATED-NII-CURRENT> 94,962
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 85,588
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 813,711
<NET-ASSETS> 2,788,494
<DIVIDEND-INCOME> 25,121
<INTEREST-INCOME> 77,592
<OTHER-INCOME> 0
<EXPENSES-NET> 7,727
<NET-INVESTMENT-INCOME> 94,986
<REALIZED-GAINS-CURRENT> 83,356
<APPREC-INCREASE-CURRENT> 318,351
<NET-CHANGE-FROM-OPS> 496,693
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 86,698
<DISTRIBUTIONS-OF-GAINS> 29,228
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 42,694
<NUMBER-OF-SHARES-REDEEMED> 61,284
<SHARES-REINVESTED> 65,384
<NET-CHANGE-IN-ASSETS> 462,260
<ACCUMULATED-NII-PRIOR> 86,649
<ACCUMULATED-GAINS-PRIOR> 27,969
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,727
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.72
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> .28
<PER-SHARE-DIVIDEND> .06
<PER-SHARE-DISTRIBUTIONS> .02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.99
<EXPENSE-RATIO> .30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORTHWESTERN
MUTUAL SERIES FUND, INC., HIGH YIELD BOND FUND, 12/31/97 FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 149,252
<INVESTMENTS-AT-VALUE> 150,865
<RECEIVABLES> 2,721
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 153,586
<PAYABLE-FOR-SECURITIES> 440
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 108
<TOTAL-LIABILITIES> 548
<SENIOR-EQUITY> 151,568
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 143,917
<SHARES-COMMON-PRIOR> 85,421
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 143
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,613
<NET-ASSETS> 153,038
<DIVIDEND-INCOME> 2,593
<INTEREST-INCOME> 10,660
<OTHER-INCOME> 0
<EXPENSES-NET> 692
<NET-INVESTMENT-INCOME> 12,561
<REALIZED-GAINS-CURRENT> 7,437
<APPREC-INCREASE-CURRENT> (1,416)
<NET-CHANGE-FROM-OPS> 18,582
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16,554
<DISTRIBUTIONS-OF-GAINS> 8,429
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 48,820
<NUMBER-OF-SHARES-REDEEMED> 13,489
<SHARES-REINVESTED> 23,165
<NET-CHANGE-IN-ASSETS> 59,160
<ACCUMULATED-NII-PRIOR> 6,867
<ACCUMULATED-GAINS-PRIOR> 3,638
<OVERDISTRIB-NII-PRIOR> 297
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 706
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.10
<PER-SHARE-NII> .11
<PER-SHARE-GAIN-APPREC> .06
<PER-SHARE-DIVIDEND> .14
<PER-SHARE-DISTRIBUTIONS> .07
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.06
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORTHWESTERN
MUTUAL SERIES FUND, INC., SELECT BOND FUND, 12/31/97 FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 234,165
<INVESTMENTS-AT-VALUE> 238,210
<RECEIVABLES> 19,097
<ASSETS-OTHER> 786
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 258,093
<PAYABLE-FOR-SECURITIES> 1,171
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,087
<TOTAL-LIABILITIES> 13,258
<SENIOR-EQUITY> 223,542
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 194,772
<SHARES-COMMON-PRIOR> 175,166
<ACCUMULATED-NII-CURRENT> 15,722
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,050
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,521
<NET-ASSETS> 244,835
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16,343
<OTHER-INCOME> 0
<EXPENSES-NET> 667
<NET-INVESTMENT-INCOME> 15,676
<REALIZED-GAINS-CURRENT> 2,865
<APPREC-INCREASE-CURRENT> 1,736
<NET-CHANGE-FROM-OPS> 20,277
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13,300
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 26,095
<NUMBER-OF-SHARES-REDEEMED> 17,885
<SHARES-REINVESTED> 11,396
<NET-CHANGE-IN-ASSETS> 30,502
<ACCUMULATED-NII-PRIOR> 13,288
<ACCUMULATED-GAINS-PRIOR> 569
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 667
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.22
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> .04
<PER-SHARE-DIVIDEND> .08
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.26
<EXPENSE-RATIO> .30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORTHWESTERN
MUTUAL SERIES FUND, INC., MONEY MARKET FUND, 12/31/97 FINANCIAL STATEMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 193,630
<INVESTMENTS-AT-VALUE> 193,630
<RECEIVABLES> 1,006
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 194,638
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 168
<TOTAL-LIABILITIES> 168
<SENIOR-EQUITY> 194,470
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 194,494
<SHARES-COMMON-PRIOR> 176,314
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 194,470
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,433
<OTHER-INCOME> 0
<EXPENSES-NET> 555
<NET-INVESTMENT-INCOME> 9,878
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9,878
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9,885
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 130,864
<NUMBER-OF-SHARES-REDEEMED> 122,562
<SHARES-REINVESTED> 9,878
<NET-CHANGE-IN-ASSETS> 18,172
<ACCUMULATED-NII-PRIOR> 7,576
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 555
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>