JACKSON NATIONAL LIFE(R) DEFINED STRATEGIES
VARIABLE ANNUITY(SM)
ISSUED BY JACKSON NATIONAL LIFE INSURANCE COMPANY AND JACKSON NATIONAL SEPARATE
ACCOUNT - I
o Individual, flexible premium deferred annuity
o 4 guaranteed accounts which offer an interest rate that is guaranteed by
Jackson National Life Insurance Company (Jackson National)
o Investment portfolios which purchase shares of the following series of
mutual funds:
JNL Series Trust
PPM America/JNL Money Market Series
JNL Variable Fund LLC
JNL/First Trust The Dow(SM) Target 5 Series
JNL/First Trust The Dow(SM) Target 10 Series
JNL/First Trust The S&P(R) Target 10 Series
JNL/First Trust Global Target 15 Series
JNL/First Trust Target 25 Series
JNL/First Trust Target Small-Cap Series
JNL/First Trust Technology Sector Series
JNL/First Trust Pharmaceutical/Healthcare Sector Series
JNL/First Trust Financial Sector Series
JNL/First Trust Energy Sector Series
JNL/First Trust Leading Brands Sector Series
JNL/First Trust Communications Sector Series
Please read this prospectus before you purchase a Jackson National Life Defined
Strategies Variable Annuity. It contains important information about the
contract that you ought to know before investing. You should keep this
prospectus on file for future reference.
To learn more about the Jackson National Life Defined Strategies Variable
Annuity contract, you can obtain a free copy of the Statement of Additional
Information (SAI) dated July 6, 1999, by calling Jackson National at (800)
766-4683 or by writing Jackson National at: Annuity Service Center, P.O. Box
378002, Denver, Colorado 80237-8002. The SAI has been filed with the Securities
and Exchange Commission (SEC) and is legally a part of this prospectus. The
Table of Contents of the SAI appears at the end of this prospectus. The SEC
maintains a website (http://www.sec.gov) that contains the SAI, material
incorporated by reference and other information regarding registrants that file
electronically with the SEC.
THE SEC HAS NOT APPROVED OR DISAPPROVED THE JACKSON NATIONAL LIFE DEFINED
STRATEGIES VARIABLE ANNUITY OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. IT
IS A CRIMINAL OFFENSE TO REPRESENT OTHERWISE.
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
JULY 6, 1999
<PAGE>
"Dow Jones", "Dow Jones Industrial Average(SM)", "DJIA(SM)", "The Dow 10(SM)",
and "The Dow 5(SM)" are service marks of Dow Jones & Company, Inc. (Dow Jones).
Dow Jones has no relationship to the annuity, other than the licensing of the
Dow Jones Industrial Average (DJIA) and its service marks for use in connection
with the JNL/First Trust The Dow Target 5 Series and the JNL/First Trust The Dow
Target 10 Series.
DOW JONES DOES NOT:
o Sponsor, endorse, sell or promote the JNL/First Trust The Dow Target 5
Series or the JNL/First Trust The Dow Target 10 Series.
o Recommend that any person invest in the JNL/First Trust The Dow Target 5
Series, the JNL/First Trust The Dow Target 10 Series or any other
securities.
o Have any responsibility or liability for or make any decisions about the
timing, amount or pricing of the JNL/First Trust The Dow Target 5 Series or
the JNL/First Trust The Dow Target 10 Series.
o Have any responsibility or liability for the administration, management or
marketing of the JNL/First Trust The Dow Target 5 Series or the JNL/First
Trust The Dow Target 10 Series.
o Consider the needs of the JNL/First Trust The Dow Target 5 Series or the
JNL/First Trust The Dow Target 10 Series or the owners of the JNL/First
Trust The Dow Target 5 Series or the JNL/First Trust The Dow Target 10
Series in determining, composing or calculating the DJIA or have any
obligation to do so.
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DOW JONES WILL NOT HAVE ANY LIABILITY IN CONNECTION WITH THE JNL/FIRST TRUST THE
DOW TARGET 5 SERIES OR THE JNL/FIRST TRUST THE DOW TARGET 10 SERIES.
SPECIFICALLY,
o DOW JONES DOES NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED, AND DOW JONES
DISCLAIMS ANY WARRANTY ABOUT:
o THE RESULTS TO BE OBTAINED BY THE JNL/FIRST TRUST THE DOW TARGET 5
SERIES OR THE JNL/FIRST TRUST THE DOW TARGET 10 SERIES, THE OWNERS OF
THE JNL/FIRST TRUST THE DOW TARGET 5 SERIES OR THE JNL/FIRST TRUST THE
DOW TARGET 10 SERIES OR ANY OTHER PERSON IN CONNECTION WITH THE USE OF
THE DJIA AND THE DATA INCLUDED IN THE DJIA;
o THE ACCURACY OR COMPLETENESS OF THE DJIA AND ITS DATA;
o THE MERCHANTABILITY AND THE FITNESS FOR A PARTICULAR PURPOSE OR USE OF
THE DJIA AND ITS DATA; o DOW JONES WILL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS OR INTERRUPTIONS IN THE DJIA OR ITS DATA;
o UNDER NO CIRCUMSTANCES WILL DOW JONES BE LIABLE FOR ANY LOST PROFITS OR
INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES OR LOSSES, EVEN IF DOW
JONES KNOWS THAT THEY MIGHT OCCUR.
THE LICENSING AGREEMENT BETWEEN FIRST TRUST ADVISORS L.P. (SUB-ADVISER TO THE
JNL VARIABLE FUND LLC) AND DOW JONES IS SOLELY FOR THEIR BENEFIT AND NOT FOR THE
BENEFIT OF THE OWNERS OF THE JNL/FIRST TRUST THE DOW TARGET 5 SERIES OR THE
JNL/FIRST TRUST THE DOW TARGET 10 SERIES OR ANY OTHER THIRD PARTIES.
- --------------------------------------------------------------------------------
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500", and
"500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed
for use by Jackson National Life Insurance Company. The JNL/First Trust The
S&P(R) Target 10 Series 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 Series. Please see the Statement of Additional
Information which sets forth certain additional disclaimers and limitations of
liabilities on behalf of S&P.
"JNL(R)", "Jackson National(R)" and "Jackson National Life(R)" are trademarks of
Jackson National Life Insurance Company.
<PAGE>
TABLE OF CONTENTS
Key Facts
Fee Table
The Annuity Contract
The Company
The Guaranteed Accounts
The Separate Account
Investment Portfolios
Contract Charges
Purchases
Transfers
Access to Your Money
Income Payments (The Income Phase)
Death Benefit
Taxes
Other Information
Table of Contents of the Statement of Additional Information
Appendix A
<PAGE>
KEY FACTS
ANNUITY SERVICE CENTER: 1 (800) 766-4683
Mail Address: P.O. Box 378002, Denver, Colorado 80237-8002
Delivery Address: 8055 East Tufts Avenue, Second Floor,
Denver, Colorado 80237
INSTITUTIONAL MARKETING
GROUP SERVICE CENTER: 1 (800) 777-7779
Mail Address: P.O. Box 30386, Lansing, Michigan 48909-9692
Delivery Address: 5901 Executive Drive, Lansing, Michigan
48911 Attn: IMG
HOME OFFICE: 5901 Executive Drive, Lansing, Michigan
48911
THE ANNUITY CONTRACT The fixed and variable annuity contract
offered by Jackson National provides a means
for investing on a tax-deferred basis in the
guaranteed accounts of Jackson National and
the investment portfolios. The contract is
intended for retirement savings or other
long-term investment purposes and provides
for a death benefit and income options.
INVESTMENT OPTIONS You can put money into any of the guaranteed
accounts and/or the investment portfolios
but you may not put your money in more than
eighteen of the investment options during
the life of your contract.
EXPENSES The contract has insurance features and
investment features, and there are costs
related to each.
Jackson National makes a deduction for its
insurance charges which is equal to 1.40% of
the daily value of the contracts invested in
the investment portfolios. During the
accumulation phase, Jackson National deducts
a $35 annual contract maintenance charge
from your contract.
If you take your money out of the contract,
Jackson National may assess a withdrawal
charge. The withdrawal charge starts at 7%
in the first year and declines 1% a year to
0% after 7 years.
Jackson National may assess a state premium
tax charge which ranges from 0-4%, depending
upon the state, when you begin receiving
regular income payments from your contract,
when you make a withdrawal or, in states
where required, at the time premium payments
are made.
There are also investment charges which
range from .70% to .90%, on an annual basis,
of the average daily value of the series,
depending on the series.
PURCHASES Under most circumstances, you can buy a
contract for $5,000 or more ($2,000 or more
for a qualified plan contract). You can add
$500 ($50 under the automatic payment plan)
or more at any time during the accumulation
phase.
ACCESS TO YOUR MONEY You can take money out of your contract
during the accumulation phase. Withdrawals
may be subject to a withdrawal charge. You
may also have to pay income tax and a tax
penalty on any money you take out.
INCOME PAYMENTS You may choose to receive regular income
from your annuity. During the income phase,
you have the same investment choices you had
during the accumulation phase.
DEATH BENEFIT If you die before moving to the income
phase, the person you have chosen as your
beneficiary will receive a death benefit.
FREE LOOK If you cancel your contract within twenty
days after receiving it (or whatever period
is required in your state), Jackson National
will return the amount your contract is
worth on the day we receive your request.
This may be more or less than your original
payment. If required by law, Jackson
National will return your premium.
TAXES The Internal Revenue Code provides that you
will not be taxed on the earnings on the
money held in your contract until you take
money out (this is referred to as
tax-deferral). There are different rules as
to how you will be taxed depending on how
you take the money out and the type of
contract you have (non-qualified or
qualified).
<PAGE>
FEE TABLE
OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of premium payments):
Years Since Premium Payment 0 1 2 3 4 5 6 7+
Charge 7% 6% 5% 4% 3% 2% 1% 0%
Transfer Fee:
$25 for each transfer in excess of 15 in a contract year
Contract Maintenance Charge:
$35 per contract per year
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average account value)
Mortality and Expense Risk Charges 1.25%
Administration Charge .15%
Total Separate Account Annual Expenses 1.40%
SERIES ANNUAL EXPENSES
(as a percentage of the series average net assets)
<TABLE>
<CAPTION>
Management
and Total Series
Administrative Other Annual
Fee Expenses Expenses
- ----------------------------------------------------------------- -------------- -------- ------------
<S> <C> <C> <C>
PPM America/JNL Money Market Series .70% 0% .70%
JNL/First Trust The Dow(SM) Target 5 Series .85% 0% .85%
JNL/First Trust The Dow(SM) Target 10 Series .85% 0% .85%
JNL/First Trust The S&P(R)Target 10 Series .85% 0% .85%
JNL/First Trust Global Target 15 Series .90% 0% .90%
JNL/First Trust Target 25 Series .85% 0% .85%
JNL/First Trust Target Small-Cap Series .85% 0% .85%
JNL/First Trust Technology Sector Series .85% 0% .85%
JNL/First Trust Pharmaceutical/Healthcare Sector Series .85% 0% .85%
JNL/First Trust Financial Sector Series .85% 0% .85%
JNL/First Trust Energy Sector Series .85% 0% .85%
JNL/First Trust Leading Brands Sector Series .85% 0% .85%
JNL/First Trust Communications Sector Series .85% 0% .85%
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</TABLE>
Effective January 1, 1999, certain Series pay Jackson National Financial
Services, LLC, the adviser, an Administrative Fee of .10% for certain services
provided to the Trust by Jackson National Financial Services, LLC. The JNL/First
Trust Global Target 15 Series pays an Administrative Fee of .15%. The Total
Series Annual Expenses have been restated to reflect the Administrative Fee.
<PAGE>
EXAMPLES. You would pay the following expenses on a $1,000 investment, assuming
a 5% annual return on assets:
(a) if you surrender your contract at the end of each time period;
(b) if you do not surrender your contract or if you begin receiving income
payments from your contract after the first year.
<TABLE>
<CAPTION>
Time Periods
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1 3 5 10
year years years years
- -------------------------------------------------------------------------------- ------- --------- -------- ---------
<S> <C> <C> <C> <C>
PPM America/JNL Money Market Portfolio (a) 92 116 144 245
(b) 22 66 114 245
JNL/First Trust The Dow(SM) Target 5 Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
JNL/First Trust The Dow(SM) Target 10 Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
JNL/First Trust The S&P(R)Target 10 Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
JNL/First Trust Global Target 15 Portfolio (a) 94 122 N/A N/A
(b) 24 72 N/A N/A
JNL/First Trust Target 25 Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
JNL/First Trust Target Small-Cap Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
JNL/First Trust Technology Sector Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
JNL/First Trust Pharmaceutical/Healthcare Sector Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
JNL/First Trust Financial Sector Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
JNL/First Trust Energy Sector Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
JNL/First Trust Leading Brands Sector Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
JNL/First Trust Communications Sector Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
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</TABLE>
EXPLANATION OF FEE TABLE AND EXAMPLES. The purpose of the Fee Table and Examples
is to assist you in understanding the various costs and expenses that you will
bear directly or indirectly. The Fee Table reflects the expenses of the separate
account and the series. Premium taxes may also apply.
The Examples reflect the contract maintenance charge which is determined by
dividing the total amount of such charges expected to be collected during the
year by the total estimated average net assets of the investment portfolios.
A withdrawal charge is imposed on income payments which occur within one year of
the date the contract is issued.
THE EXAMPLE DOES NOT REPRESENT PAST OR FUTURE EXPENSES. THE ACTUAL EXPENSES THAT
YOU INCUR MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL STATEMENTS. An accumulation unit value history is contained in
Appendix A.
You can find the following financial statements in the SAI:
o the unaudited financial statements of the Separate Account for the period
from January 1, 1999 through March 31, 1999
o the financial statements of the Separate Account for the year ended
December 31, 1998
o the financial statements of Jackson National for the year ended December
31, 1998
The Separate Account's financial statements for the year ended December 31,
1998, and the financial statements of Jackson National for the year ended
December 31, 1998, have been audited by PricewaterhouseCoopers LLP, independent
accountants.
<PAGE>
THE ANNUITY CONTRACT
The fixed and variable annuity contract offered by Jackson National is a
contract between you, the owner, and Jackson National, an insurance company. The
contract provides a means for investing on a tax-deferred basis in guaranteed
accounts and investment portfolios. The contract is intended for retirement
savings or other long-term investment purposes and provides for a death benefit
and guaranteed income options.
The contract, like all deferred annuity contracts, has two phases: (1) the
accumulation phase, and (2) the income phase. During the accumulation phase,
earnings accumulate on a tax-deferred basis and are taxed as income when you
make a withdrawal.
The contract offers guaranteed accounts. The guaranteed accounts offer an
interest rate that is guaranteed by Jackson National for the duration of the
guaranteed account period. While your money is in a guaranteed account, the
interest your money earns and your principal are guaranteed by Jackson National.
The value of a guaranteed account may be reduced if you make a withdrawal prior
to the end of the guaranteed account period, but will never be less than the
premium payments accumulated at 3% per year. If you choose to have your annuity
payments come from the guaranteed accounts, your payments will remain level
throughout the entire income phase.
The contract also offers investment portfolios. The investment portfolios are
designed to offer a higher return than the guaranteed accounts. HOWEVER, THIS IS
NOT GUARANTEED. IT IS POSSIBLE FOR YOU TO LOSE YOUR MONEY. If you put money in
the investment portfolios, the amount of money you are able to accumulate in
your contract during the accumulation phase depends upon the performance of the
investment portfolios you select. The amount of the income payments you receive
during the income phase also will depend, in part, on the performance of the
investment portfolios you choose for the income phase.
As the owner, you can exercise all the rights under the contract. You and your
spouse can be joint owners. You can assign the contract at any time during your
lifetime but Jackson National will not be bound until it receives written notice
of the assignment.
THE COMPANY
Jackson National is a stock life insurance company organized under the laws of
the state of Michigan in June 1961. Its legal domicile and principal business
address is 5901 Executive Drive, Lansing, Michigan 48911. Jackson National is
admitted to conduct life insurance and annuity business in the District of
Columbia and all states except New York. Jackson National is ultimately a
wholly-owned subsidiary of Prudential Corporation plc (London, England).
Jackson National has responsibility for administration of the contracts and the
Separate Account. We maintain records of the name, address, taxpayer
identification number and other pertinent information for each contract owner
and the number and type of contracts issued to each contract owner, and records
with respect to the value of each contract.
THE GUARANTEED ACCOUNTS
If you select a guaranteed account, your money will be placed with Jackson
National's other assets. The guaranteed accounts are not registered with the SEC
and the SEC does not review the information we provide to you about the
guaranteed accounts. Your contract contains a more complete description of the
guaranteed accounts.
THE SEPARATE ACCOUNT
The Jackson National Separate Account - I was established by Jackson National on
June 14, 1993, pursuant to the provisions of Michigan law, as a segregated asset
account of the company. The separate account meets the definition of a "separate
account" under the federal securities laws and is registered with the SEC as a
unit investment trust under the Investment Company Act of 1940, as amended.
The assets of the separate account legally belong to Jackson National and the
obligations under the contracts are obligations of Jackson National. However,
the contract assets in the separate account are not chargeable with liabilities
arising out of any other business Jackson National may conduct. All of the
income, gains and losses resulting from these assets are credited to or charged
against the contracts and not against any other contracts Jackson National may
issue.
The separate account is divided into investment portfolios. Jackson National
does not guarantee the investment performance of the separate account or the
investment portfolios.
INVESTMENT PORTFOLIOS
You can put money in any or all of the investment portfolios; however, you may
not allocate your money to more than eighteen investment options during the life
of your contract. The investment portfolios purchase shares of the following
series of mutual funds:
JNL Series Trust
PPM America/JNL Money Market Series
JNL Variable Fund LLC
JNL/First Trust The Dow(SM) Target 5 Series - seeks a high total return
through a combination of capital appreciation and dividend income by investing
approximately equal amounts in the common stock of the five companies included
in the Dow Jones Industrial Average(SM) which have the lowest per share price of
the companies with the ten highest dividend yields on a pre-determined selection
date.
JNL/First Trust The Dow(SM) Target 10 Series - seeks a high total return
through a combination of capital appreciation and dividend income by investing
approximately equal amounts in the common stock of the ten companies included in
the Dow Jones Industrial Average(SM) which have the highest dividend yields on a
pre-determined selection date.
JNL/First Trust The S&P(R) Target 10 Series - seeks a high total return
through a combination of capital appreciation and dividend income by investing
approximately equal amounts in the common stocks of 10 companies selected from a
pre-screened subset of the stocks listed in The S&P 500 Index on a
pre-determined selection date.
JNL/First Trust Global Target 15 Series - seeks a high total return through
a combination of capital appreciation and dividend income by investing in the
common stocks of the five companies with the lowest per share stock price of the
ten companies in each of The Dow Jones Industrial Average(SM) the Financial
Times Industrial Ordinary Share Index and the Hang Seng Index, respectively,
that have the highest dividend yields in the respective index on a
pre-determined selection date. JNL/First Trust Target 25 Series - seeks a high
total return through a combination of capital appreciation and dividend income
by investing approximately equal amounts in the common stocks of 25 companies
selected from a pre-screened subset of the stocks listed on the New York Stock
Exchange on a pre-determined selection date. JNL/First Trust Target Small-Cap
Series - seeks a high total return through capital appreciation by investing
approximately equal amounts in a portfolio of common stocks of 40 small
capitalization companies selected from a pre-screened subset of the common
stocks listed on the New York Stock Exchange, the American Stock Exchange or The
Nasdaq Stock Market on a pre-determined selection date. JNL/First Trust
Technology Sector Series JNL/First Trust Pharmaceutical/Healthcare Sector Series
JNL/First Trust Financial Sector Series JNL/First Trust Energy Sector Series
JNL/First Trust Leading Brands Sector Series JNL/First Trust Communications
Sector Series
The series are described in the attached prospectuses for the JNL Series Trust
and the JNL Variable Fund LLC. Jackson National Financial Services, LLC serves
as investment adviser for all of the series. The sub-adviser for each series is
listed in the following table:
Sub-Adviser Series
- ----------- ------
PPM America, Inc. PPM America/JNL Money Market Series
First Trust Advisors L.P. JNL/First Trust The Dow(SM) Target 5 Series
JNL/First Trust The Dow(SM) Target 10 Series
JNL/First Trust The S&P(R)Target 10 Series
JNL/First Trust Global Target 15 Series
JNL/First Trust Target 25 Series
JNL/First Trust Target Small-Cap Series
JNL/First Trust Technology Sector Series
JNL/First Trust Pharmaceutical/Healthcare
Sector Series
JNL/First Trust Financial Sector Series
JNL/First Trust Energy Sector Series
JNL/First Trust Leading Brands Sector Series
JNL/First Trust Communications Sector Series
Depending on market conditions, you can make or lose money in any of the
investment portfolios. You should read the prospectuses for the JNL Series Trust
and the JNL Variable Fund LLC carefully before investing. Additional investment
portfolios may be available in the future.
VOTING RIGHTS. To the extent required by law, Jackson National will obtain from
you and other owners of the contracts instructions as to how to vote when the
series solicits proxies in conjunction with a vote of shareholders. When Jackson
National receives instructions, we will vote all the shares Jackson National
owns in proportion to those instructions.
SUBSTITUTION. Jackson National may be required to substitute an investment
portfolio with another portfolio. We will not do this without the prior approval
of the SEC. Jackson National will give you notice of our intent to do this.
CONTRACT CHARGES
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges may be a lesser
amount where required by state law or as described below, but will not be
increased. These charges and expenses are:
INSURANCE CHARGES. Each day Jackson National makes a deduction for its insurance
charges. We do this as part of our calculation of the value of the accumulation
units and annuity units. On an annual basis, this charge equals 1.40% of the
daily value of the contracts invested in an investment portfolio, after expenses
have been deducted.
This charge is for the mortality risks, expense risks and administrative
expenses assumed by Jackson National. The mortality risks that Jackson National
assumes arise from our obligations under the contracts:
o to make income payments for the life of the annuitant during the income phase;
o to waive the withdrawal charge in the event of your death; and o to provide
both a standard and an enhanced death benefit prior to the income date.
The expense risk that Jackson National assumes is the risk that our actual cost
of administering the contracts and the investment portfolios will exceed the
amount that we receive from the administration charge and the contract
maintenance charge.
CONTRACT MAINTENANCE CHARGE. During the accumulation phase, Jackson National
deducts a $35 ($30 in Washington) annual contract maintenance charge on each
anniversary of the date on which your contract was issued. If you make a
complete withdrawal from your contract, the contract maintenance charge will
also be deducted. This charge is for administrative expenses.
Jackson National will not deduct this charge, if when the deduction is to be
made, the value of your contract is $50,000 or more. Jackson National may
discontinue this practice at any time.
TRANSFER FEE. A transfer fee of $25 will apply to transfers in excess of 15 in a
contract year. Jackson National may waive the transfer fee in connection with
pre-authorized automatic transfer programs, or may charge a lesser fee where
required by state law.
WITHDRAWAL CHARGE. During the accumulation phase, you can make withdrawals from
your contract.
o At any time during the accumulation phase, you may withdraw premiums which
are not subject to a withdrawal charge (premiums in your annuity for seven
years or longer and not previously withdrawn).
o Once every year, you may withdraw the greater of earnings or 10% of
premiums paid (not yet withdrawn).
Withdrawals in excess of that will be charged a withdrawal charge starting at 7%
in the first year and declining 1% a year to 0% after 7 years. The withdrawal
charge compensates us for costs associated with selling the contracts.
For purposes of the withdrawal charge, Jackson National treats withdrawals as
coming from the oldest premium payment first. If you make a full withdrawal, the
withdrawal charge is based on premiums remaining in the contract. If you
withdraw only part of the value of your contract, we deduct the withdrawal
charge from the remaining value in your contract.
Note: For tax purposes, withdrawals are considered to have come from the last
money into the contract. Thus, for tax purposes, earnings are considered to come
out first.
Jackson National does not assess the withdrawal charge on any payments paid out
as (1) income payments after the first year, (2) death benefits, or (3)
withdrawals necessary to satisfy the minimum distribution requirements of the
Internal Revenue Code. Withdrawals for terminal illness or other specified
conditions as defined by Jackson National may not be subject to a withdrawal
charge. These provisions are not available in all states.
Jackson National may reduce or eliminate the amount of the withdrawal charge
when the contract is sold under circumstances which reduce its sales expense.
Some examples are: the purchase of a contract by a large group of individuals or
an existing relationship between Jackson National and a prospective purchaser.
Jackson National may not deduct a withdrawal charge under a contract issued to
an officer, director, agent or employee of Jackson National or any of its
affiliates.
OTHER EXPENSES. Jackson National pays the operating expenses of the Separate
Account.
There are deductions from and expenses paid out of the assets of the series.
These expenses are described in the attached prospectuses for the JNL Series
Trust and the JNL Variable Fund LLC.
PREMIUM TAXES. Some states and other governmental entities charge premium taxes
or other similar taxes. Jackson National is responsible for the payment of these
taxes and may make a deduction from the value of the contract for them. Premium
taxes generally range from 0% to 4% depending on the state.
INCOME TAXES. Jackson National will make a deduction from the contract for any
income taxes which it incurs because of the contract. Currently, we are not
making any such deduction.
DISTRIBUTION OF CONTRACTS. Jackson National Life Distributors, Inc., located at
401 Wilshire Boulevard, Suite 1200, Santa Monica, California 90401, serves as
the distributor of the contracts. Jackson National Life Distributors, Inc. is a
wholly-owned subsidiary of Jackson National.
Commissions will be paid to broker-dealers who sell the contracts. While
commissions may vary, they are not expected to exceed 8% of any premium payment.
Under certain circumstances, Jackson National may pay bonuses, overrides, and
marketing allowances, in addition to the standard commissions. Jackson National
may under certain circumstances where permitted by applicable law, pay a bonus
to a contract purchaser to the extent the broker-dealer waives its commission.
Jackson National may use any of its corporate assets to cover the cost of
distribution, including any profit from the contract insurance charges.
PURCHASES
MINIMUM INITIAL PREMIUM:
o $5,000 under most circumstances
o $2,000 for a qualified plan contract
The maximum we accept without our prior approval is $1 million.
MINIMUM ADDITIONAL PREMIUMS:
o $500
o $50 under the automatic payment plan
You can pay additional premiums at any time during the accumulation phase.
The minimum that you may allocate to a guaranteed account or investment
portfolio is $100. There is a $100 minimum balance requirement for each
guaranteed account and investment portfolio.
When you purchase a contract, Jackson National will allocate your premium to one
or more of the guaranteed accounts and/or the investment portfolios you have
selected. Your allocations must be in whole percentages ranging from 0% to 100%.
Jackson National will allocate additional premiums in the same way unless you
tell us otherwise.
There may be more than eighteen investment options available under the contract;
however, you may not allocate your money to more than eighteen investment
options during the life of your contract.
Jackson National will issue your contract and allocate your first premium within
2 business days after we receive your first premium and all information that we
require for the purchase of a contract. If we do not receive all of the
information that we require, we will contact you to get the necessary
information. If for some reason Jackson National is unable to complete this
process within 5 business days, we will either return your money or get your
permission to keep it until we receive all of the required information.
The Jackson National business day closes when the New York Stock Exchange
closes, usually 4:00 p.m. Eastern time.
ACCUMULATION UNITS. The contract value allocated to the investment portfolios
will go up or down depending on the performance of the portfolios. In order to
keep track of the value of your contract, Jackson National uses a unit of
measure called an accumulation unit. (An accumulation unit is similar to a share
of a mutual fund.)
During the income phase it is called an annuity unit.
Every business day Jackson National determines the value of an accumulation unit
for each of the investment portfolios. This is done by:
1. determining the total amount of money invested in the particular
investment portfolio;
2. subtracting any insurance charges;
3. dividing this amount by the number of outstanding accumulation units.
The value of an accumulation unit may go up or down from day to day.
When you make a premium payment, Jackson National credits your contract with
accumulation units. The number of accumulation units credited is determined at
the close of Jackson National's business day by dividing the amount of the
premium allocated to any investment portfolio by the value of the accumulation
unit for that investment portfolio.
TRANSFERS
You can transfer money between guaranteed accounts and investment portfolios
during the accumulation phase. During the income phase, you can transfer money
between investment portfolios.
You can make 15 transfers every year during the accumulation phase without
charge. The minimum amount that you can transfer is $100 (unless the transfer is
made under a pre-authorized automatic transfer program). If the remaining value
in a guaranteed account or investment portfolio would be less than $100 after a
transfer, you must transfer the entire value or you may not make the transfer.
TELEPHONE TRANSACTIONS. You may make transfers by telephone, unless you elect
not to have this privilege. When authorizing a transfer, you must complete your
telephone call by the close of Jackson National's business day (usually 4:00
p.m. Eastern time) in order to receive that day's accumulation unit value for an
investment portfolio.
Jackson National has procedures which are designed to provide reasonable
assurance that telephone authorizations are genuine. Our procedures include
requesting identifying information and tape recording telephone communications.
Jackson National and its affiliates disclaim all liability for any claim, loss
or expense resulting from any alleged error or mistake in connection with a
telephone transfer which was not properly authorized by you. However, if Jackson
National fails to employ reasonable procedures to ensure that all telephone
transfers are properly authorized, we may be held liable for such losses.
Jackson National reserves the right to modify or discontinue at any time and
without notice the acceptance of instructions from someone other than you and/or
the telephone transfer privilege.
ACCESS TO YOUR MONEY
You can have access to the money in your contract:
o by making either a partial or complete withdrawal, or
o by electing to receive income payments.
Your beneficiary can have access to the money in your contract when a death
benefit is paid.
When you make a complete withdrawal you will receive:
1. the value of the contract on the day you made the withdrawal;
2. less any premium tax;
3. less any contract maintenance charge; and
4. less any withdrawal charge.
Except in connection with the systematic withdrawal program, you must withdraw
at least $500 or, if less, the entire amount in the guaranteed account or
investment portfolio from which you are making the withdrawal. After your
withdrawal, you must have at least $100 left in the guaranteed account or
investment portfolio.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL
YOU MAKE.
There are limitations on withdrawals from a qualified plan referred to as a
403(b) annuity. See "Taxes."
SYSTEMATIC WITHDRAWAL PROGRAM. You can arrange to have money automatically sent
to you periodically while your contract is still in the accumulation phase. You
will have to pay taxes on money you receive and withdrawals you make before you
reach 59 1/2 may be subject to a 10% tax penalty.
We reserve the right to charge a fee for participation or to discontinue
offering this program in the future.
SUSPENSION OF WITHDRAWALS OR TRANSFERS. Jackson National may be required to
suspend or delay withdrawals or transfers from an investment portfolio when:
o the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
o trading on the New York Stock Exchange is restricted;
o an emergency exists so that it is not reasonably practicable to dispose of
shares of the investment portfolios or determine investment portfolio
values;
o the SEC, by order, may permit for the protection of owners.
Jackson National has reserved the right to defer payment for a withdrawal or
transfer from the guaranteed accounts for the period permitted by law, but not
more than six months.
INCOME PAYMENTS (THE INCOME PHASE)
The income phase occurs when you begin receiving regular payments from your
contract. The income date is the month and year in which those payments begin.
The income date must be at least one year after your contract is issued. You can
choose the income date and an income option. The income options are described
below.
If you do not choose an income option, we will assume that you selected Option 3
which provides a life annuity with 120 months of guaranteed payments.
You can change the income date or income option at any time before the income
date. You must give us 7 days notice. Income payments must begin by your 90th
birthday under a non-qualified contract (or an earlier date under a qualified
contract if required by law).
At the income date, you can choose whether payments will come from the
guaranteed accounts, the investment portfolios or both. Unless you tell us
otherwise, your income payments will be based on the investment allocations that
were in place on the income date.
You can choose to have income payments made monthly, quarterly, semi-annually,
or annually. However, if you have less than $5,000 to apply toward an income
option and state law permits, Jackson National may provide your payment in a
single lump sum. Likewise, if your first income payment would be less than $50
and state law permits, Jackson National may set the frequency of payments so
that the first payment would be at least $50.
INCOME PAYMENTS FROM INVESTMENT PORTFOLIOS. If you choose to have any portion of
your income payments come from the investment portfolio(s), the dollar amount of
your payment will depend upon three things:
1. the value of your contract in the investment portfolio(s) on the
income date;
2. the 3% assumed investment rate used in the annuity table for the
contract; and
3. the performance of the investment portfolios you selected.
Jackson National calculates the dollar amount of the first income payment that
you receive from the investment portfolios. We then use that amount to determine
the number of annuity units that you hold in each investment portfolio. The
amount of each subsequent income payment is determined by multiplying the number
of annuity units that you hold in an investment portfolio by the annuity unit
value for that investment portfolio.
The number of annuity units that you hold in each investment portfolio does not
change unless you reallocate your contract value among the investment
portfolios. The annuity unit value of each investment portfolio will vary based
on the investment performance of the series. If the actual investment
performance exactly matches the assumed rate at all times, the amount of each
income payment will remain equal. If the actual investment performance exceeds
the assumed rate, your income payments will increase. Similarly, if the actual
investment performance is less than the assumed rate, your income payments will
decrease.
INCOME OPTIONS. The annuitant is the person whose life we look to when we make
income payments. (Each description assumes that you are the owner and
annuitant.) The following income options may not be available in all states.
Option 1 - Life Income. This income option provides monthly payments for
your life.
Option 2 - Joint and Survivor Annuity. This income option provides monthly
payments for your life and for the life of another person (usually your spouse)
selected by you.
Option 3 - Life Annuity With 120 or 240 Monthly Payments Guaranteed. This
income option provides monthly payments for the annuitant's life, but with
payments continuing to the beneficiary for the remainder of 10 or 20 years (as
you select) if the annuitant dies before the end of the selected period.
Option 4 - Income for a Specified Period. This income option provides
monthly payments for any number of years from 5 to 30.
Additional Options - Other income options may be made available by Jackson
National.
If you choose Option 1, 2 or 3, you cannot make a withdrawal during the income
phase.
DEATH BENEFIT
The death benefit is calculated as of the date we receive complete claim forms
and proof of death from the beneficiary of record.
DEATH OF OWNER BEFORE THE INCOME DATE. If you die before moving to the income
phase, the person you have chosen as your beneficiary will receive a death
benefit. If you have a joint owner, the death benefit will be paid when the
first joint owner dies. Joint owners must be spouses (unless otherwise permitted
by state law). The surviving joint owner will be treated as the beneficiary. Any
other beneficiary designated will be treated as a contingent beneficiary.
The death benefit equals:
1. current contract value; OR
2. the total premiums (less withdrawals, withdrawal charges and premium
taxes) compounded at 5%*; OR
3. the contract value at the end of the 7th contract year PLUS all
premiums made since the 7th year (less withdrawals, withdrawal charges
and premium taxes) compounded at 5%*
-- whichever is GREATEST.
The death benefit under 3 will never exceed 250% of premiums paid, less partial
withdrawals. The death benefit under 2 and 3 may not be available in all states.
- --------
* (4% if the owner is age 70 or older at the date of issue)
<PAGE>
The entire death benefit must be paid within 5 years of the date of death unless
the beneficiary elects to have the death benefit payable under an income option.
The death benefit payable under an income option must be paid over the
beneficiary's lifetime or for a period not extending beyond the beneficiary's
life expectancy. Payments must begin within one year of the date of death.
Unless the beneficiary chooses to receive the death benefit in a single sum, the
beneficiary must elect an income option within the 60 day period beginning with
the date Jackson National receives proof of death. If the beneficiary chooses to
receive the death benefit in a single sum and all the necessary requirements are
met, Jackson National will pay the death benefit within 7 days. If the
beneficiary is your spouse, he/she can continue the contract in his/her own name
at the then current contract value.
DEATH OF OWNER ON OR AFTER THE INCOME DATE. If you or a joint owner die on or
after the income date, any remaining payments under the income option elected
will continue at least as rapidly as under the method of distribution in effect
at the date of death. If you die, the beneficiary becomes the owner. If the
joint owner dies, the surviving joint owner, if any, will be the designated
beneficiary. Any other beneficiary designation on record at the time of death
will be treated as a contingent beneficiary. A contingent beneficiary is
entitled to receive payment only after the beneficiary dies.
DEATH OF ANNUITANT. If the annuitant is not an owner or joint owner and the
annuitant dies before the income date, you can name a new annuitant. If you do
not name a new annuitant within 30 days of the death of the annuitant, you will
become the annuitant. However, if the owner is a non-natural person (for
example, a corporation), then the death of the annuitant will be treated as the
death of the owner, and a new annuitant may not be named.
If the annuitant dies on or after the income date, any remaining payments will
be as provided for in the income option selected. Any remaining payments will be
paid at least as rapidly as under the method of distribution in effect at the
annuitant's death.
TAXES
THE FOLLOWING IS GENERAL INFORMATION AND IS NOT INTENDED AS TAX ADVICE TO ANY
INDIVIDUAL. YOU SHOULD CONSULT YOUR OWN TAX ADVISER. A FURTHER DISCUSSION
REGARDING TAXES IS INCLUDED IN THE SAI.
The Internal Revenue Code (Code) provides that you will not be taxed on the
earnings on the money held in your contract until you take money out (this is
referred to as tax-deferral). There are different rules as to how you will be
taxed depending on how you take the money out and the type of contract you have
(non-qualified or qualified).
NON-QUALIFIED CONTRACTS - GENERAL TAXATION. You will not be taxed on increases
in the value of your contract until a distribution (either as a withdrawal or as
an income payment) occurs. When you make a withdrawal you are taxed on the
amount of the withdrawal that is earnings. For income payments, a portion of
each income payment is treated as a partial return of your premium and will not
be taxed. The remaining portion of the income payment will be treated as
ordinary income. How the income payment is divided between taxable and
non-taxable portions depends on the period over which income payments are
expected to be made. Income payments received after you have received all of
your premium are treated as income.
If a non-qualified contract is owned by a non-natural person (e.g., corporation
or certain other entities other than a trust holding the contract as an agent
for a natural person), the contract will generally not be treated as an annuity
for tax purposes.
QUALIFIED AND NON-QUALIFIED CONTRACTS. If you purchase the contract as an
individual and not under any pension plan, specially sponsored program or an
individual retirement annuity, your contract is referred to as a non-qualified
contract.
If you purchase the contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your contract is referred to as a qualified
contract. Examples of qualified plans are: Individual Retirement Annuities
(IRAs), Tax-Sheltered Annuities (sometimes referred to as 403(b) contracts), and
pension and profit-sharing plans, which include 401(k) plans and H.R. 10 Plans.
WITHDRAWALS - NON-QUALIFIED CONTRACTS. If you make a withdrawal from your
contract, the Code treats the withdrawal as first coming from earnings and then
from your premium payments. Withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a 10% penalty. Some withdrawals will be
exempt from the penalty. They include any amounts: (1) paid on or after the
taxpayer reaches age 59 1/2; (2) paid after you die; (3) paid if the taxpayer
becomes totally disabled (as that term is defined in the Code); (4) paid in a
series of substantially equal payments made annually (or more frequently) for
life or a period not exceeding life expectancy; (5) paid under an immediate
annuity; or (6) which come from premiums made prior to August 14, 1982.
WITHDRAWALS - QUALIFIED CONTRACTS. There are special rules that govern qualified
contracts. We have provided an additional discussion in the SAI.
WITHDRAWALS - TAX-SHELTERED ANNUITIES. The Code limits the withdrawal of amounts
attributable to purchase payments made under a salary reduction agreement from
Tax-Sheltered Annuities. Withdrawals can only be made when an owner: (1) reaches
age 59 1/2; (2) leaves his/her job; (3) dies; (4) becomes disabled (as that term
is defined in the Code); or (5) in the case of hardship. However, in the case of
hardship, the owner can only withdraw the premium and not any earnings.
WITHDRAWALS - ROTH IRAS. Beginning in 1998, individuals may purchase a new type
of non-deductible IRA, known as a Roth IRA. Qualified distributions from Roth
IRAs are entirely federal income tax free. A qualified distribution requires
that the individual has held the Roth IRA for at least five years and, in
addition, that the distribution is made either after the individual reaches age
59 1/2, on account of the individual's death or disability, or as qualified
first-time home purchase, subject to $10,000 lifetime maximum, for the
individual, or for a spouse, child, grandchild, or ancestor.
WITHDRAWALS - INVESTMENT ADVISER FEES. The Internal Revenue Service has, through
a series of Private Letter Rulings, held that the payment of investment adviser
fees from an IRA or a Tax-Sheltered Annuity is permissible under certain
circumstances and will not be considered a distribution for income tax purposes.
The Rulings require that in order to receive this favorable tax treatment, the
annuity contract must, under a written agreement, be solely liable (not jointly
with the contract owner) for payment of the adviser's fee and the fee must
actually be paid from the annuity contract to the adviser. Withdrawals from
non-qualified contracts for the payment of investment adviser fees will be
considered taxable distributions from the contract.
DEATH BENEFITS. Any death benefits paid under the contract are taxable to the
beneficiary. The rules governing the taxation of payments from an annuity
contract, as discussed above, generally apply to the payment of death benefits
and depend on whether the death benefits are paid as a lump sum or as annuity
payments. Estate taxes may also apply.
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM (ORP). Contracts issued
to participants in ORP contain restrictions required under the Texas
Administrative Code. In accordance with those restrictions, a participant in ORP
will not be permitted to make withdrawals prior to such participant's
retirement, death, attainment of age 70 1/2 or termination of employment in a
Texas public institution of higher education. The restrictions on withdrawal do
not apply in the event a participant in ORP transfers the contract value to
another approved contract or vendor during the period of ORP participation.
ASSIGNMENT. An assignment may be a taxable event. If the contract is issued
pursuant to a qualified plan, there may be limitations on your ability to assign
the contract.
DIVERSIFICATION. The Code provides that the underlying investments for a
variable annuity must satisfy certain diversification requirements in order to
be treated as an annuity contract. Jackson National believes that the underlying
investments are being managed so as to comply with these requirements.
OWNER CONTROL. Neither the Code nor the Internal Revenue Service Regulations
issued to date provide guidance as to the circumstances under which you, because
of the degree of control you exercise over the underlying investments, and not
Jackson National would be considered the owner of the shares of the investment
portfolios. If you are considered to be the owner of the shares, it will result
in the loss of the favorable tax treatment for the contract.
It is unknown to what extent owners are permitted to select investment
portfolios, to make transfers among the investment portfolios or the number and
type of investment portfolios owners may select from without being considered
the owner of the shares.
Furthermore, under the Contract you may invest in the JNL Variable Fund LLC,
including one or more of the following Series: JNL/First Trust The Dow(SM)
Target 5 Series, JNL/First Trust the Dow(SM) Target 10 Series, JNL/First Trust
the S&P(R) Target 10 Series, JNL/First Trust Global Target 15 Series, JNL/First
Trust Target 25 Series and JNL/First Trust Target Small-Cap Series (Target
Series).
The investment strategy employed by one or more of the Series in the Target
Series involves the purchase on a pre-determined selection date of the common
stock of a limited number of companies meeting certain criteria. Such criteria
consist of pre-set objective standards such as highest dividend yield, price per
share and market capitalization. A pre-set number of stocks meeting such
criteria (ranging from five in one series to forty in another) are purchased in
equal amounts. The Series will purchase and sell stocks on an on-going basis
according to the pre-set criteria and percentage relationships and will
generally follow a buy and hold strategy. (See the JNL Variable Fund LLC
prospectus.)
It is unknown what level of investment management must be exercised by a manager
of a Target Series and what amount of investment diversification of a Target
Series is required in order to preclude the existence of an unacceptable level
of owner control. As discussed above, if you are deemed to possess too much
control over the assets of the Separate Account, the Contract would not be given
tax-deferred treatment and therefore the earnings allocable to the Contract
would be subject to federal income tax prior to receipt by you.
If any guidance is provided which is considered a new position, then the
guidance would generally be applied prospectively. However, if such guidance is
considered not to be a new position, it may be applied retroactively. This would
mean that you, as the owner of the contract, could be treated as the owner of
the investment portfolios. Due to the uncertainty in this area, Jackson National
reserves the right to modify the contract in an attempt to maintain favorable
tax treatment.
OTHER INFORMATION
DOLLAR COST AVERAGING. You can arrange to automatically have a regular amount of
money periodically transferred into the investment portfolios. This
theoretically gives you a lower average cost per unit over time than you would
receive if you made a one time purchase. Certain restrictions may apply.
Jackson National does not currently charge for participation in this program. We
may do so in the future.
REBALANCING. You can arrange to have Jackson National automatically reallocate
money between investment portfolios periodically to keep the blend you select.
Jackson National does not currently charge for participation in this program. We
may do so in the future.
FREE LOOK. If you cancel the contract within twenty days after receiving it (or
whatever period is required in your state), Jackson National will return the
amount your contract is worth on the day we receive your request. This may be
more or less than your original payment. If required by law, Jackson National
will return your premium.
ADVERTISING. From time to time, Jackson National may advertise several types of
performance for the investment portfolios.
o Total return is the overall change in the value of an investment in an
investment portfolio over a given period of time.
o Standardized average annual total return is calculated in accordance with
SEC guidelines.
o Non-standardized total return may be for periods other than those required
or may otherwise differ from standardized average annual total return. For
example, if a series has been in existence longer than the investment
portfolio, we may show non-standardized performance for periods that begin
on the inception date of the series, rather than the inception date of the
investment portfolio. o Yield refers to the income generated by an
investment over a given period of time.
Performance will be calculated by determining the percentage change in the value
of an accumulation unit by dividing the increase (decrease) for that unit by the
value of the accumulation unit at the beginning of the period. Performance will
reflect the deduction of the insurance charges and may reflect the deduction of
the contract maintenance charge and withdrawal charge. The deduction of the
contract maintenance and/or the withdrawal charge would reduce the percentage
increase or make greater any percentage decrease.
MARKET TIMING AND ASSET ALLOCATION SERVICES. Market timing and asset allocation
services must comply with Jackson National's administrative systems, rules and
procedures.
MODIFICATION OF THE CONTRACT. Only the President, Vice President, Secretary or
Assistant Secretary of Jackson National may approve a change to or waive a
provision of the contract. Any change or waiver must be in writing. Jackson
National may change the terms of the contract in order to comply with changes in
applicable law, or otherwise as deemed necessary by Jackson National.
YEAR 2000 MATTERS. Jackson National initiated a project in 1994 to review and
analyze its computer systems to determine if they are Year 2000 compatible. This
project includes a written plan which provides for a process which ensures that
when a particular system, or software application, is determined to be
"non-compliant" the proper steps are in place to either remedy the
"non-compliance" or cease using the particular system or software.
Jackson National's plan provides for an inventory of all critical computer
systems, testing of such systems and resolution of Year 2000 issues. Jackson
National anticipates that all compliance issues will be resolved by December 31,
1999.
As of the date of this Prospectus, Jackson National has identified and made
available what it believes are the appropriate resources of hardware, people,
and dollars to ensure that the plan will be completed.
Jackson National will not conclusively know the success of its plan until the
Year 2000. Even with appropriate and diligent pursuit of a well-conceived
response plan, including testing procedures, there is no certainty that any
company will achieve complete success. Further, Jackson National's ability to
function unaffected to and through the Year 2000 may be adversely affected by
actions (or inactions) of third parties beyond its knowledge or control.
LEGAL PROCEEDINGS. There are no material legal proceedings, other than ordinary
routine litigation incidental to the business, to which Jackson National Life
Insurance Company, Jackson National Life Distributors, Inc., and the Jackson
National Separate Account - I are parties.
QUESTIONS. If you have questions about your contract, you may call or write to
us at:
o Jackson National Life Annuity Service Center: (800) 766-4683, P.O. Box
378002, Denver, Colorado 80237-8002
o Institutional Marketing Group Service Center: (800) 777-7779, P.O. Box
30386, Lansing, Michigan 48909-9692.
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
General Information and History .......................................... 2
Services ................................................................. 2
Purchase of Securities Being Offered ..................................... 3
Underwriters ............................................................. 3
Calculation of Performance ............................................... 3
Additional Tax Information ............................................... 9
Income Payments; Net Investment Factor ...................................17
Financial Statements .....................................................19
<PAGE>
APPENDIX A
CONDENSED FINANCIAL INFORMATION
Accumulation Unit Values
The following table shows accumulation unit values at the beginning and end of
the periods indicated as well as the number of accumulation units outstanding
for each portfolio as of the end of the periods indicated. This information has
been taken from the Separate Account's financial statements. The Separate
Account's financial statements for the periods ended December 31, 1998, 1997,
and 1996, have been audited by PricewaterhouseCoopers LLP, independent
accountants. This information should be read together with the Separate
Account's financial statements and related notes which are in the SAI.
<TABLE>
<CAPTION>
Investment Portfolios March 31, December 31, December 31, December 31, December 31,
1999 (unaudited) 1998 1997 1996 1995(a)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PPM America/JNL Money Market Portfolio
Accumulation unit value:
Beginning of period $11.12 $10.74 $10.37 $10.03 $10.00
End of period $11.20 $11.12 $10.74 $10.37 $10.03
Accumulation units outstanding
at the end of period 6,469,664 4,713,958 3,855,123 2,193,176 14,608
JNL/First Trust The Dow(SM) Target 5
Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust The Dow(SM) Target 10
Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust The S&P(R) Target 10
Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Global Target 15
Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Target 25 Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Target Small-Cap
Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Technology Sector
Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Pharmaceutical/Healthcare
Sector Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Financial Sector
Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Energy Sector Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Leading Brands Sector
Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Communications Sector
Portfolio
Accumulation unit value:
Beginning of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
End of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period N/A(b) N/A(b) N/A(b) N/A(b) N/A(b)
=================================================================================================================
</TABLE>
(a) The Separate Account commenced operations on October 16, 1995. (b) These
Portfolios had not commenced operations as of March 31, 1999.
<PAGE>
THE PERSPECTIVE
FIXED AND VARIABLE ANNUITY
ISSUED BY JACKSON NATIONAL LIFE INSURANCE COMPANY AND JACKSON NATIONAL SEPARATE
ACCOUNT - I
o Individual, flexible premium deferred annuity
o 4 guaranteed accounts which offer an interest rate that is guaranteed by
Jackson National Life Insurance Company (Jackson National)
o Investment portfolios which purchase shares of the following series of the
JNL Series Trust:
JNL Series Trust
JNL/Alger Growth Series
JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
JNL/Janus Aggressive Growth Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series
JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
JNL/S&P Conservative Growth Series I
JNL/S&P Moderate Growth Series I
JNL/S&P Aggressive Growth Series I
JNL/S&P Very Aggressive Growth Series I
JNL/S&P Equity Growth Series I
JNL/S&P Equity Aggressive Growth Series I
PPM America/JNL Balanced Series
PPM America/JNL High Yield Bond Series
PPM America/JNL Money Market Series
Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL U.S. Government & Quality Bond Series
T. Rowe Price/JNL Established Growth Series
T. Rowe Price/JNL International Equity Investment Series
T. Rowe Price/JNL Mid-Cap Growth Series
Please read this prospectus before you purchase a Perspective Fixed and Variable
Annuity. It contains important information about the contract that you ought to
know before investing. You should keep this prospectus on file for future
reference.
To learn more about the Perspective Fixed and Variable Annuity contract, you can
obtain a free copy of the Statement of Additional Information (SAI) dated July
6, 1999, by calling Jackson National at (800) 766-4683 or by writing Jackson
National at: Annuity Service Center, P.O. Box 378002, Denver, Colorado
80237-8002. The SAI has been filed with the Securities and Exchange Commission
(SEC) and is legally a part of this prospectus. The Table of Contents of the SAI
appears at the end of this prospectus. The SEC maintains a website
(http://www.sec.gov) that contains the SAI, material incorporated by reference
and other information regarding registrants that file electronically with the
SEC.
THE SEC HAS NOT APPROVED OR DISAPPROVED THE PERSPECTIVE FIXED AND VARIABLE
ANNUITY OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. IT IS A CRIMINAL OFFENSE
TO REPRESENT OTHERWISE.
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
JULY 6, 1999
<PAGE>
"JNL(R)", "Jackson National(R)" and "Jackson National Life(R)" are trademarks of
Jackson National Life InsuRANCE Company.
<PAGE>
TABLE OF CONTENTS
Key Facts
Fee Table
The Annuity Contract
The Company
The Guaranteed Accounts
The Separate Account
Investment Portfolios
Contract Charges
Purchases
Transfers
Access to Your Money
Income Payments (The Income Phase)
Death Benefit
Taxes
Other Information
Table of Contents of the Statement of Additional Information
Appendix A
<PAGE>
KEY FACTS
ANNUITY SERVICE CENTER: 1 (800) 766-4683
Mail Address: P.O. Box 378002, Denver, Colorado 80237-8002
Delivery Address: 8055 East Tufts Avenue, Second Floor,
Denver, Colorado 80237
INSTITUTIONAL MARKETING
GROUP SERVICE CENTER: 1 (800) 777-7779
Mail Address: P.O. Box 30386, Lansing, Michigan 48909-9692
Delivery Address: 5901 Executive Drive, Lansing, Michigan
48911 Attn: IMG
HOME OFFICE: 5901 Executive Drive, Lansing, Michigan
48911
THE ANNUITY CONTRACT The fixed and variable annuity contract
offered by Jackson National provides a means
for investing on a tax-deferred basis in the
guaranteed accounts of Jackson National and
the investment portfolios. The contract is
intended for retirement savings or other
long-term investment purposes and provides
for a death benefit and income options.
INVESTMENT OPTIONS You can put money into any of the guaranteed
accounts and/or the investment portfolios
but you may not put your money in more than
eighteen of the investment options during
the life of your contract.
EXPENSES The contract has insurance features and
investment features, and there are costs
related to each.
Jackson National makes a deduction for its
insurance charges which is equal to 1.40% of
the daily value of the contracts invested in
the investment portfolios. During the
accumulation phase, Jackson National deducts
a $35 annual contract maintenance charge
from your contract.
If you take your money out of the contract,
Jackson National may assess a withdrawal
charge. The withdrawal charge starts at 7%
in the first year and declines 1% a year to
0% after 7 years.
Jackson National may assess a state premium
tax charge which ranges from 0-4%, depending
upon the state, when you begin receiving
regular income payments from your contract,
when you make a withdrawal or, in states
where required, at the time premium payments
are made.
There are also investment charges which
range from .20% to 1.18%, on an annual
basis, of the average daily value of the
series, depending on the series.
PURCHASES Under most circumstances, you can buy a
contract for $5,000 or more ($2,000 or more
for a qualified plan contract). You can add
$500 ($50 under the automatic payment plan)
or more at any time during the accumulation
phase.
ACCESS TO YOUR MONEY You can take money out of your contract
during the accumulation phase. Withdrawals
may be subject to a withdrawal charge. You
may also have to pay income tax and a tax
penalty on any money you take out.
INCOME PAYMENTS You may choose to receive regular income
from your annuity. During the income phase,
you have the same investment choices you had
during the accumulation phase.
DEATH BENEFIT If you die before moving to the income
phase, the person you have chosen as your
beneficiary will receive a death benefit.
FREE LOOK If you cancel your contract within twenty
days after receiving it (or whatever period
is required in your state), Jackson National
will return the amount your contract is
worth on the day we receive your request.
This may be more or less than your original
payment. If required by law, Jackson
National will return your premium.
TAXES The Internal Revenue Code provides that you
will not be taxed on the earnings on the
money held in your contract until you take
money out (this is referred to as
tax-deferral). There are different rules as
to how you will be taxed depending on how
you take the money out and the type of
contract you have (non-qualified or
qualified).
<PAGE>
FEE TABLE
OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of premium payments):
Years Since Premium Payment 0 1 2 3 4 5 6 7+
Charge 7% 6% 5% 4% 3% 2% 1% 0%
Transfer Fee:
$25 for each transfer in excess of 15 in a contract year
Contract Maintenance Charge:
$35 per contract per year
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average account value)
Mortality and Expense Risk Charges 1.25%
Administration Charge .15%
Total Separate Account Annual Expenses 1.40%
SERIES ANNUAL EXPENSES
(as a percentage of the series average net assets)
<TABLE>
<CAPTION>
Management
and Total Series
Administrative Other Annual
Fee Expenses Expenses
- ----------------------------------------------------------------- --------------- ------------- --------------
<S> <C> <C> <C>
JNL/Alger Growth Series 1.075% 0% 1.075%
JNL/Eagle Core Equity Series 1.00% 0% 1.00%
JNL/Eagle SmallCap Equity Series 1.05% 0% 1.05%
JNL/Janus Aggressive Growth Series 1.05% 0% 1.05%
JNL/Janus Capital Growth Series 1.05% 0% 1.05%
JNL/Janus Global Equities Series 1.09% 0% 1.09%
JNL/Putnam Growth Series 1.00% 0% 1.00%
JNL/Putnam Value Equity Series 1.00% 0% 1.00%
JNL/S&P Conservative Growth Series I* .20% 0% .20%
JNL/S&P Moderate Growth Series I* .20% 0% .20%
JNL/S&P Aggressive Growth Series I* .20% 0% .20%
JNL/S&P Very Aggressive Growth Series I* .20% 0% .20%
JNL/S&P Equity Growth Series I* .20% 0% .20%
JNL/S&P Equity Aggressive Growth Series I* .20% 0% .20%
PPM America/JNL Balanced Series .83% 0% .83%
PPM America/JNL High Yield Bond Series .83% 0% .83%
PPM America/JNL Money Market Series .70% 0% .70%
Salomon Brothers/JNL Global Bond Series .95% 0% .95%
Salomon Brothers/JNL U.S. Government & Quality Bond Series .80% 0% .80%
T. Rowe Price/JNL Established Growth Series .94% 0% .94%
T. Rowe Price/JNL International Equity Investment Series 1.18% 0% 1.18%
T. Rowe Price/JNL Mid-Cap Growth Series 1.05% 0% 1.05%
</TABLE>
Effective January 1, 1999, certain Series pay Jackson National Financial
Services, LLC, the adviser, an Administrative Fee of .10% for certain services
provided to the Trust by Jackson National Financial Services, LLC. The JNL/S&P
Series do not pay an Administrative Fee. The Total Series Annual Expenses have
been restated to reflect the Administrative Fee.
* Underlying Series Expenses. The expenses shown above are the annual operating
expenses for the JNL/S&P Series. Because the JNL/S&P Series invest in other
Series of the JNL Series Trust, the JNL/S&P Series will indirectly bear their
pro rata share of fees and expenses of the underlying Series in addition to the
expenses shown.
The table below shows the pro rata share of expenses that the JNL/S&P Series
would bear if they invested in a hypothetical mix of underlying Series. The
table below includes the annual operating expenses for the JNL/S&P Series, which
are shown above. The actual expenses of each JNL/S&P Series will be based on the
actual mix of underlying Series in which it invests. The actual expenses may be
greater or less than those shown.
JNL/S&P Conservative Growth Series I..................... 1.162%
JNL/S&P Moderate Growth Series I......................... 1.199%
JNL/S&P Aggressive Growth Series I....................... 1.242%
JNL/S&P Very Aggressive Growth Series I.................. 1.259%
JNL/S&P Equity Growth Series I........................... 1.251%
JNL/S&P Equity Aggressive Growth Series I................ 1.252%
<PAGE>
EXAMPLES. You would pay the following expenses on a $1,000 investment, assuming
a 5% annual return on assets:
(a) if you surrender your contract at the end of each time period;
(b) if you do not surrender your contract or if you begin receiving income
payments from your contract after the first year.
<TABLE>
<CAPTION>
Time Periods
- ---------------------------------------------------------------------------------------------------------------------
1 3 5 10
year years years years
- -------------------------------------------------------------------------------- ------- --------- -------- ---------
<S> <C> <C> <C> <C>
JNL/Alger Growth Portfolio (a) $95 $128 $163 $283
(b) 25 78 133 283
JNL/Eagle Core Equity Portfolio (a) 95 125 159 276
(b) 25 75 129 276
JNL/Eagle SmallCap Equity Portfolio (a) 95 127 162 281
(b) 25 77 132 281
JNL/Janus Aggressive Growth Portfolio (a) 95 127 162 281
(b) 25 77 132 281
JNL/Janus Capital Growth Portfolio (a) 95 127 162 281
(b) 25 77 132 281
JNL/Janus Global Equities Portfolio (a) 95 128 164 285
(b) 25 78 134 285
JNL/Putnam Growth Portfolio (a) 95 125 159 276
(b) 25 75 129 276
JNL/Putnam Value Equity Portfolio (a) 95 125 159 276
(b) 25 75 129 276
JNL/S&P Conservative Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
JNL/S&P Moderate Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
JNL/S&P Aggressive Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
JNL/S&P Very Aggressive Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
JNL/S&P Equity Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
JNL/S&P Equity Aggressive Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
PPM America/JNL Balanced Portfolio (a) 93 120 150 258
(b) 23 70 120 258
PPM America/JNL High Yield Bond Portfolio (a) 93 120 150 258
(b) 23 70 120 258
PPM America/JNL Money Market Portfolio (a) 92 116 144 245
(b) 22 66 114 245
Salomon Brothers/JNL Global Bond Portfolio (a) 94 124 157 271
(b) 24 74 127 271
Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio (a) 93 119 149 255
(b) 23 69 119 255
T. Rowe Price/JNL Established Growth Portfolio (a) 94 124 156 270
(b) 24 74 126 270
T. Rowe Price/JNL International Equity Investment Portfolio (a) 96 131 168 293
(b) 26 81 138 293
T. Rowe Price/JNL Mid-Cap Growth Portfolio (a) 95 127 162 281
(b) 25 77 132 281
</TABLE>
EXPLANATION OF FEE TABLE AND EXAMPLES. The purpose of the Fee Table and Examples
is to assist you in understanding the various costs and expenses that you will
bear directly or indirectly. The Fee Table reflects the expenses of the separate
account and the series. Premium taxes may also apply.
The Examples reflect the contract maintenance charge which is determined by
dividing the total amount of such charges expected to be collected during the
year by the total estimated average net assets of the investment portfolios.
A withdrawal charge is imposed on income payments which occur within one year of
the date the contract is issued.
THE EXAMPLE DOES NOT REPRESENT PAST OR FUTURE EXPENSES. THE ACTUAL EXPENSES THAT
YOU INCUR MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL STATEMENTS. An accumulation unit value history is contained in
Appendix A.
You can find the following financial statements in the SAI:
o the unaudited financial statements of the Separate Account for the period
from January 1, 1999 through March 31, 1999
o the financial statements of the Separate Account for the year ended
December 31, 1998
o the financial statements of Jackson National for the year ended December
31, 1998
The Separate Account's financial statements for the year ended December 31,
1998, and the financial statements of Jackson National for the year ended
December 31, 1998, have been audited by PricewaterhouseCoopers LLP, independent
accountants.
<PAGE>
THE ANNUITY CONTRACT
The fixed and variable annuity contract offered by Jackson National is a
contract between you, the owner, and Jackson National, an insurance company. The
contract provides a means for investing on a tax-deferred basis in guaranteed
accounts and investment portfolios. The contract is intended for retirement
savings or other long-term investment purposes and provides for a death benefit
and guaranteed income options.
The contract, like all deferred annuity contracts, has two phases: (1) the
accumulation phase, and (2) the income phase. During the accumulation phase,
earnings accumulate on a tax-deferred basis and are taxed as income when you
make a withdrawal.
The contract offers guaranteed accounts. The guaranteed accounts offer an
interest rate that is guaranteed by Jackson National for the duration of the
guaranteed account period. While your money is in a guaranteed account, the
interest your money earns and your principal are guaranteed by Jackson National.
The value of a guaranteed account may be reduced if you make a withdrawal prior
to the end of the guaranteed account period, but will never be less than the
premium payments accumulated at 3% per year. If you choose to have your annuity
payments come from the guaranteed accounts, your payments will remain level
throughout the entire income phase.
The contract also offers investment portfolios. The investment portfolios are
designed to offer a higher return than the guaranteed accounts. HOWEVER, THIS IS
NOT GUARANTEED. IT IS POSSIBLE FOR YOU TO LOSE YOUR MONEY. If you put money in
the investment portfolios, the amount of money you are able to accumulate in
your contract during the accumulation phase depends upon the performance of the
investment portfolios you select. The amount of the income payments you receive
during the income phase also will depend, in part, on the performance of the
investment portfolios you choose for the income phase.
As the owner, you can exercise all the rights under the contract. You and your
spouse can be joint owners. You can assign the contract at any time during your
lifetime but Jackson National will not be bound until it receives written notice
of the assignment.
THE COMPANY
Jackson National is a stock life insurance company organized under the laws of
the state of Michigan in June 1961. Its legal domicile and principal business
address is 5901 Executive Drive, Lansing, Michigan 48911. Jackson National is
admitted to conduct life insurance and annuity business in the District of
Columbia and all states except New York. Jackson National is ultimately a
wholly-owned subsidiary of Prudential Corporation plc (London, England).
Jackson National has responsibility for administration of the contracts and the
Separate Account. We maintain records of the name, address, taxpayer
identification number and other pertinent information for each contract owner
and the number and type of contracts issued to each contract owner, and records
with respect to the value of each contract.
THE GUARANTEED ACCOUNTS
If you select a guaranteed account, your money will be placed with Jackson
National's other assets. The guaranteed accounts are not registered with the SEC
and the SEC does not review the information we provide to you about the
guaranteed accounts. Your contract contains a more complete description of the
guaranteed accounts.
THE SEPARATE ACCOUNT
The Jackson National Separate Account - I was established by Jackson National on
June 14, 1993, pursuant to the provisions of Michigan law, as a segregated asset
account of the company. The separate account meets the definition of a "separate
account" under the federal securities laws and is registered with the SEC as a
unit investment trust under the Investment Company Act of 1940, as amended.
The assets of the separate account legally belong to Jackson National and the
obligations under the contracts are obligations of Jackson National. However,
the contract assets in the separate account are not chargeable with liabilities
arising out of any other business Jackson National may conduct. All of the
income, gains and losses resulting from these assets are credited to or charged
against the contracts and not against any other contracts Jackson National may
issue.
The separate account is divided into investment portfolios. Jackson National
does not guarantee the investment performance of the separate account or the
investment portfolios.
INVESTMENT PORTFOLIOS
You can put money in any or all of the investment portfolios; however, you may
not allocate your money to more than eighteen investment options during the life
of your contract. The investment portfolios purchase shares of the following
series of the JNL Series Trust:
JNL Series Trust
JNL/Alger Growth Series
JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
JNL/Janus Aggressive Growth Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series
JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
JNL/S&P Conservative Growth Series I
JNL/S&P Moderate Growth Series I
JNL/S&P Aggressive Growth Series I
JNL/S&P Very Aggressive Growth Series I
JNL/S&P Equity Growth Series I
JNL/S&P Equity Aggressive Growth Series I
PPM America/JNL Balanced Series
PPM America/JNL High Yield Bond Series
PPM America/JNL Money Market Series
Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL U.S. Government & Quality Bond Series
T. Rowe Price/JNL Established Growth Series
T. Rowe Price/JNL International Equity Investment Series
T. Rowe Price/JNL Mid-Cap Growth Series
The series are described in the attached prospectus for the JNL Series Trust.
Jackson National Financial Services, LLC serves as investment adviser for all of
the series. The sub-adviser for each series is listed in the following table:
Sub-Adviser Series
- ----------- ------
Fred Alger Management, Inc. JNL/Alger Growth Series
Eagle Asset Management, Inc. JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
Janus Capital Corporation JNL/Janus Aggressive Growth Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series
Putnam Investment Management, Inc. JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
Standard & Poor's Investment
Advisory Services, Inc.
JNL/S&P Conservative Growth Series I
JNL/S&P Moderate Growth Series I
JNL/S&P Aggressive Growth Series I
JNL/S&P Very Aggressive Growth
Series I
JNL/S&P Equity Growth Series I
JNL/S&P Equity Aggressive Growth
Series I
PPM America, Inc. PPM America/JNL Balanced Series
PPM America/JNL High Yield Bond Series
PPM America/JNL Money Market Series
Salomon Brothers Asset Management Inc Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL U.S. Government &
Quality Bond Series
Rowe Price-Fleming International, Inc. T. Rowe Price/JNL International Equity
Investment Series
T. Rowe Price Associates, Inc. T. Rowe Price/JNL Established Growth
Series
T. Rowe Price/JNL Mid-Cap Growth Series
Depending on market conditions, you can make or lose money in any of the
investment portfolios. You should read the prospectus for the JNL Series Trust
carefully before investing. Additional investment portfolios may be available in
the future.
VOTING RIGHTS. To the extent required by law, Jackson National will obtain from
you and other owners of the contracts instructions as to how to vote when the
series solicits proxies in conjunction with a vote of shareholders. When Jackson
National receives instructions, we will vote all the shares Jackson National
owns in proportion to those instructions.
SUBSTITUTION. Jackson National may be required to substitute an investment
portfolio with another portfolio. We will not do this without the prior approval
of the SEC. Jackson National will give you notice of our intent to do this.
CONTRACT CHARGES
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges may be a lesser
amount where required by state law or as described below, but will not be
increased. These charges and expenses are:
INSURANCE CHARGES. Each day Jackson National makes a deduction for its insurance
charges. We do this as part of our calculation of the value of the accumulation
units and annuity units. On an annual basis, this charge equals 1.40% of the
daily value of the contracts invested in an investment portfolio, after expenses
have been deducted.
This charge is for the mortality risks, expense risks and administrative
expenses assumed by Jackson National. The mortality risks that Jackson National
assumes arise from our obligations under the contracts:
o to make income payments for the life of the annuitant during the income phase;
o to waive the withdrawal charge in the event of your death; and o to provide
both a standard and an enhanced death benefit prior to the income date.
The expense risk that Jackson National assumes is the risk that our actual cost
of administering the contracts and the investment portfolios will exceed the
amount that we receive from the administration charge and the contract
maintenance charge.
CONTRACT MAINTENANCE CHARGE. During the accumulation phase, Jackson National
deducts a $35 ($30 in Washington) annual contract maintenance charge on each
anniversary of the date on which your contract was issued. If you make a
complete withdrawal from your contract, the contract maintenance charge will
also be deducted. This charge is for administrative expenses.
Jackson National will not deduct this charge, if when the deduction is to be
made, the value of your contract is $50,000 or more. Jackson National may
discontinue this practice at any time.
TRANSFER FEE. A transfer fee of $25 will apply to transfers in excess of 15 in a
contract year. Jackson National may waive the transfer fee in connection with
pre-authorized automatic transfer programs, or may charge a lesser fee where
required by state law.
WITHDRAWAL CHARGE. During the accumulation phase, you can make withdrawals from
your contract.
o At any time during the accumulation phase, you may withdraw premiums which
are not subject to a withdrawal charge (premiums in your annuity for seven
years or longer and not previously withdrawn).
o Once every year, you may withdraw the greater of earnings or 10% of
premiums paid (not yet withdrawn).
Withdrawals in excess of that will be charged a withdrawal charge starting at 7%
in the first year and declining 1% a year to 0% after 7 years. The withdrawal
charge compensates us for costs associated with selling the contracts.
For purposes of the withdrawal charge, Jackson National treats withdrawals as
coming from the oldest premium payment first. If you make a full withdrawal, the
withdrawal charge is based on premiums remaining in the contract. If you
withdraw only part of the value of your contract, we deduct the withdrawal
charge from the remaining value in your contract.
Note: For tax purposes, withdrawals are considered to have come from the last
money into the contract. Thus, for tax purposes, earnings are considered to come
out first.
Jackson National does not assess the withdrawal charge on any payments paid out
as (1) income payments after the first year, (2) death benefits, or (3)
withdrawals necessary to satisfy the minimum distribution requirements of the
Internal Revenue Code. Withdrawals for terminal illness or other specified
conditions as defined by Jackson National may not be subject to a withdrawal
charge. These provisions are not available in all states.
Jackson National may reduce or eliminate the amount of the withdrawal charge
when the contract is sold under circumstances which reduce its sales expense.
Some examples are: the purchase of a contract by a large group of individuals or
an existing relationship between Jackson National and a prospective purchaser.
Jackson National may not deduct a withdrawal charge under a contract issued to
an officer, director, agent or employee of Jackson National or any of its
affiliates.
OTHER EXPENSES. Jackson National pays the operating expenses of the Separate
Account.
There are deductions from and expenses paid out of the assets of the series.
These expenses are described in the attached prospectus for the JNL Series
Trust.
PREMIUM TAXES. Some states and other governmental entities charge premium taxes
or other similar taxes. Jackson National is responsible for the payment of these
taxes and may make a deduction from the value of the contract for them. Premium
taxes generally range from 0% to 4% depending on the state.
INCOME TAXES. Jackson National will make a deduction from the contract for any
income taxes which it incurs because of the contract. Currently, we are not
making any such deduction.
DISTRIBUTION OF CONTRACTS. Jackson National Life Distributors, Inc., located at
401 Wilshire Boulevard, Suite 1200, Santa Monica, California 90401, serves as
the distributor of the contracts. Jackson National Life Distributors, Inc. is a
wholly-owned subsidiary of Jackson National.
Commissions will be paid to broker-dealers who sell the contracts. While
commissions may vary, they are not expected to exceed 8% of any premium payment.
Under certain circumstances, Jackson National may pay bonuses, overrides, and
marketing allowances, in addition to the standard commissions. Jackson National
may under certain circumstances where permitted by applicable law, pay a bonus
to a contract purchaser to the extent the broker-dealer waives its commission.
Jackson National may use any of its corporate assets to cover the cost of
distribution, including any profit from the contract insurance charges.
PURCHASES
MINIMUM INITIAL PREMIUM:
o $5,000 under most circumstances
o $2,000 for a qualified plan contract
The maximum we accept without our prior approval is $1 million.
MINIMUM ADDITIONAL PREMIUMS:
o $500
o $50 under the automatic payment plan
You can pay additional premiums at any time during the accumulation phase.
The minimum that you may allocate to a guaranteed account or investment
portfolio is $100. There is a $100 minimum balance requirement for each
guaranteed account and investment portfolio.
When you purchase a contract, Jackson National will allocate your premium to one
or more of the guaranteed accounts and/or the investment portfolios you have
selected. Your allocations must be in whole percentages ranging from 0% to 100%.
Jackson National will allocate additional premiums in the same way unless you
tell us otherwise.
There may be more than eighteen investment options available under the contract;
however, you may not allocate your money to more than eighteen investment
options during the life of your contract.
Jackson National will issue your contract and allocate your first premium within
2 business days after we receive your first premium and all information that we
require for the purchase of a contract. If we do not receive all of the
information that we require, we will contact you to get the necessary
information. If for some reason Jackson National is unable to complete this
process within 5 business days, we will either return your money or get your
permission to keep it until we receive all of the required information.
The Jackson National business day closes when the New York Stock Exchange
closes, usually 4:00 p.m. Eastern time.
ACCUMULATION UNITS. The contract value allocated to the investment portfolios
will go up or down depending on the performance of the portfolios. In order to
keep track of the value of your contract, Jackson National uses a unit of
measure called an accumulation unit. (An accumulation unit is similar to a share
of a mutual fund.)
During the income phase it is called an annuity unit.
Every business day Jackson National determines the value of an accumulation unit
for each of the investment portfolios. This is done by:
1. determining the total amount of money invested in the particular
investment portfolio;
2. subtracting any insurance charges;
3. dividing this amount by the number of outstanding accumulation units.
The value of an accumulation unit may go up or down from day to day.
When you make a premium payment, Jackson National credits your contract with
accumulation units. The number of accumulation units credited is determined at
the close of Jackson National's business day by dividing the amount of the
premium allocated to any investment portfolio by the value of the accumulation
unit for that investment portfolio.
TRANSFERS
You can transfer money between guaranteed accounts and investment portfolios
during the accumulation phase. During the income phase, you can transfer money
between investment portfolios.
You can make 15 transfers every year during the accumulation phase without
charge. The minimum amount that you can transfer is $100 (unless the transfer is
made under a pre-authorized automatic transfer program). If the remaining value
in a guaranteed account or investment portfolio would be less than $100 after a
transfer, you must transfer the entire value or you may not make the transfer.
TELEPHONE TRANSACTIONS. You may make transfers by telephone, unless you elect
not to have this privilege. When authorizing a transfer, you must complete your
telephone call by the close of Jackson National's business day (usually 4:00
p.m. Eastern time) in order to receive that day's accumulation unit value for an
investment portfolio.
Jackson National has procedures which are designed to provide reasonable
assurance that telephone authorizations are genuine. Our procedures include
requesting identifying information and tape recording telephone communications.
Jackson National and its affiliates disclaim all liability for any claim, loss
or expense resulting from any alleged error or mistake in connection with a
telephone transfer which was not properly authorized by you. However, if Jackson
National fails to employ reasonable procedures to ensure that all telephone
transfers are properly authorized, we may be held liable for such losses.
Jackson National reserves the right to modify or discontinue at any time and
without notice the acceptance of instructions from someone other than you and/or
the telephone transfer privilege.
ACCESS TO YOUR MONEY
You can have access to the money in your contract:
o by making either a partial or complete withdrawal, or
o by electing to receive income payments.
Your beneficiary can have access to the money in your contract when a death
benefit is paid.
When you make a complete withdrawal you will receive:
1. the value of the contract on the day you made the withdrawal;
2. less any premium tax;
3. less any contract maintenance charge; and
4. less any withdrawal charge.
Except in connection with the systematic withdrawal program, you must withdraw
at least $500 or, if less, the entire amount in the guaranteed account or
investment portfolio from which you are making the withdrawal. After your
withdrawal, you must have at least $100 left in the guaranteed account or
investment portfolio.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL
YOU MAKE.
There are limitations on withdrawals from a qualified plan referred to as a
403(b) annuity. See "Taxes."
SYSTEMATIC WITHDRAWAL PROGRAM. You can arrange to have money automatically sent
to you periodically while your contract is still in the accumulation phase. You
will have to pay taxes on money you receive and withdrawals you make before you
reach 59 1/2 may be subject to a 10% tax penalty.
We reserve the right to charge a fee for participation or to discontinue
offering this program in the future.
SUSPENSION OF WITHDRAWALS OR TRANSFERS. Jackson National may be required to
suspend or delay withdrawals or transfers from an investment portfolio when:
o the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
o trading on the New York Stock Exchange is restricted;
o an emergency exists so that it is not reasonably practicable to dispose of
shares of the investment portfolios or determine investment portfolio
values;
o the SEC, by order, may permit for the protection of owners.
Jackson National has reserved the right to defer payment for a withdrawal or
transfer from the guaranteed accounts for the period permitted by law, but not
more than six months.
INCOME PAYMENTS (THE INCOME PHASE)
The income phase occurs when you begin receiving regular payments from your
contract. The income date is the month and year in which those payments begin.
The income date must be at least one year after your contract is issued. You can
choose the income date and an income option. The income options are described
below.
If you do not choose an income option, we will assume that you selected Option 3
which provides a life annuity with 120 months of guaranteed payments.
You can change the income date or income option at any time before the income
date. You must give us 7 days notice. Income payments must begin by your 90th
birthday under a non-qualified contract (or an earlier date under a qualified
contract if required by law).
At the income date, you can choose whether payments will come from the
guaranteed accounts, the investment portfolios or both. Unless you tell us
otherwise, your income payments will be based on the investment allocations that
were in place on the income date.
You can choose to have income payments made monthly, quarterly, semi-annually,
or annually. However, if you have less than $5,000 to apply toward an income
option and state law permits, Jackson National may provide your payment in a
single lump sum. Likewise, if your first income payment would be less than $50
and state law permits, Jackson National may set the frequency of payments so
that the first payment would be at least $50.
INCOME PAYMENTS FROM INVESTMENT PORTFOLIOS. If you choose to have any portion of
your income payments come from the investment portfolio(s), the dollar amount of
your payment will depend upon three things:
1. the value of your contract in the investment portfolio(s) on the
income date;
2. the 3% assumed investment rate used in the annuity table for the
contract; and
3. the performance of the investment portfolios you selected.
Jackson National calculates the dollar amount of the first income payment that
you receive from the investment portfolios. We then use that amount to determine
the number of annuity units that you hold in each investment portfolio. The
amount of each subsequent income payment is determined by multiplying the number
of annuity units that you hold in an investment portfolio by the annuity unit
value for that investment portfolio.
The number of annuity units that you hold in each investment portfolio does not
change unless you reallocate your contract value among the investment
portfolios. The annuity unit value of each investment portfolio will vary based
on the investment performance of the series. If the actual investment
performance exactly matches the assumed rate at all times, the amount of each
income payment will remain equal. If the actual investment performance exceeds
the assumed rate, your income payments will increase. Similarly, if the actual
investment performance is less than the assumed rate, your income payments will
decrease.
INCOME OPTIONS. The annuitant is the person whose life we look to when we make
income payments. (Each description assumes that you are the owner and
annuitant.) The following income options may not be available in all states.
Option 1 - Life Income. This income option provides monthly payments for
your life.
Option 2 - Joint and Survivor Annuity. This income option provides monthly
payments for your life and for the life of another person (usually your spouse)
selected by you.
Option 3 - Life Annuity With 120 or 240 Monthly Payments Guaranteed. This
income option provides monthly payments for the annuitant's life, but with
payments continuing to the beneficiary for the remainder of 10 or 20 years (as
you select) if the annuitant dies before the end of the selected period.
Option 4 - Income for a Specified Period. This income option provides
monthly payments for any number of years from 5 to 30.
Additional Options - Other income options may be made available by Jackson
National.
If you choose Option 1, 2 or 3, you cannot make a withdrawal during the income
phase.
DEATH BENEFIT
The death benefit is calculated as of the date we receive complete claim forms
and proof of death from the beneficiary of record.
DEATH OF OWNER BEFORE THE INCOME DATE. If you die before moving to the income
phase, the person you have chosen as your beneficiary will receive a death
benefit. If you have a joint owner, the death benefit will be paid when the
first joint owner dies. Joint owners must be spouses (unless otherwise permitted
by state law). The surviving joint owner will be treated as the beneficiary. Any
other beneficiary designated will be treated as a contingent beneficiary.
The death benefit equals:
1. current contract value; OR
2. the total premiums (less withdrawals, withdrawal charges and premium
taxes) compounded at 5%*; OR
3. the contract value at the end of the 7th contract year PLUS all
premiums made since the 7th year (less withdrawals, withdrawal charges
and premium taxes) compounded at 5%*
-- whichever is GREATEST.
The death benefit under 3 will never exceed 250% of premiums paid, less partial
withdrawals. The death benefit under 2 and 3 may not be available in all states.
- --------
* (4% if the owner is age 70 or older at the date of issue)
<PAGE>
The entire death benefit must be paid within 5 years of the date of death unless
the beneficiary elects to have the death benefit payable under an income option.
The death benefit payable under an income option must be paid over the
beneficiary's lifetime or for a period not extending beyond the beneficiary's
life expectancy. Payments must begin within one year of the date of death.
Unless the beneficiary chooses to receive the death benefit in a single sum, the
beneficiary must elect an income option within the 60 day period beginning with
the date Jackson National receives proof of death. If the beneficiary chooses to
receive the death benefit in a single sum and all the necessary requirements are
met, Jackson National will pay the death benefit within 7 days. If the
beneficiary is your spouse, he/she can continue the contract in his/her own name
at the then current contract value.
DEATH OF OWNER ON OR AFTER THE INCOME DATE. If you or a joint owner die on or
after the income date, any remaining payments under the income option elected
will continue at least as rapidly as under the method of distribution in effect
at the date of death. If you die, the beneficiary becomes the owner. If the
joint owner dies, the surviving joint owner, if any, will be the designated
beneficiary. Any other beneficiary designation on record at the time of death
will be treated as a contingent beneficiary. A contingent beneficiary is
entitled to receive payment only after the beneficiary dies.
DEATH OF ANNUITANT. If the annuitant is not an owner or joint owner and the
annuitant dies before the income date, you can name a new annuitant. If you do
not name a new annuitant within 30 days of the death of the annuitant, you will
become the annuitant. However, if the owner is a non-natural person (for
example, a corporation), then the death of the annuitant will be treated as the
death of the owner, and a new annuitant may not be named.
If the annuitant dies on or after the income date, any remaining payments will
be as provided for in the income option selected. Any remaining payments will be
paid at least as rapidly as under the method of distribution in effect at the
annuitant's death.
TAXES
THE FOLLOWING IS GENERAL INFORMATION AND IS NOT INTENDED AS TAX ADVICE TO ANY
INDIVIDUAL. YOU SHOULD CONSULT YOUR OWN TAX ADVISER. A FURTHER DISCUSSION
REGARDING TAXES IS INCLUDED IN THE SAI.
The Internal Revenue Code (Code) provides that you will not be taxed on the
earnings on the money held in your contract until you take money out (this is
referred to as tax-deferral). There are different rules as to how you will be
taxed depending on how you take the money out and the type of contract you have
(non-qualified or qualified).
NON-QUALIFIED CONTRACTS - GENERAL TAXATION. You will not be taxed on increases
in the value of your contract until a distribution (either as a withdrawal or as
an income payment) occurs. When you make a withdrawal you are taxed on the
amount of the withdrawal that is earnings. For income payments, a portion of
each income payment is treated as a partial return of your premium and will not
be taxed. The remaining portion of the income payment will be treated as
ordinary income. How the income payment is divided between taxable and
non-taxable portions depends on the period over which income payments are
expected to be made. Income payments received after you have received all of
your premium are treated as income.
If a non-qualified contract is owned by a non-natural person (e.g., corporation
or certain other entities other than a trust holding the contract as an agent
for a natural person), the contract will generally not be treated as an annuity
for tax purposes.
QUALIFIED AND NON-QUALIFIED CONTRACTS. If you purchase the contract as an
individual and not under any pension plan, specially sponsored program or an
individual retirement annuity, your contract is referred to as a non-qualified
contract.
If you purchase the contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your contract is referred to as a qualified
contract. Examples of qualified plans are: Individual Retirement Annuities
(IRAs), Tax-Sheltered Annuities (sometimes referred to as 403(b) contracts), and
pension and profit-sharing plans, which include 401(k) plans and H.R. 10 Plans.
WITHDRAWALS - NON-QUALIFIED CONTRACTS. If you make a withdrawal from your
contract, the Code treats the withdrawal as first coming from earnings and then
from your premium payments. Withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a 10% penalty. Some withdrawals will be
exempt from the penalty. They include any amounts: (1) paid on or after the
taxpayer reaches age 59 1/2; (2) paid after you die; (3) paid if the taxpayer
becomes totally disabled (as that term is defined in the Code); (4) paid in a
series of substantially equal payments made annually (or more frequently) for
life or a period not exceeding life expectancy; (5) paid under an immediate
annuity; or (6) which come from premiums made prior to August 14, 1982.
WITHDRAWALS - QUALIFIED CONTRACTS. There are special rules that govern qualified
contracts. We have provided an additional discussion in the SAI.
WITHDRAWALS - TAX-SHELTERED ANNUITIES. The Code limits the withdrawal of amounts
attributable to purchase payments made under a salary reduction agreement from
Tax-Sheltered Annuities. Withdrawals can only be made when an owner: (1) reaches
age 59 1/2; (2) leaves his/her job; (3) dies; (4) becomes disabled (as that term
is defined in the Code); or (5) in the case of hardship. However, in the case of
hardship, the owner can only withdraw the premium and not any earnings.
WITHDRAWALS - ROTH IRAS. Beginning in 1998, individuals may purchase a new type
of non-deductible IRA, known as a Roth IRA. Qualified distributions from Roth
IRAs are entirely federal income tax free. A qualified distribution requires
that the individual has held the Roth IRA for at least five years and, in
addition, that the distribution is made either after the individual reaches age
59 1/2, on account of the individual's death or disability, or as qualified
first-time home purchase, subject to $10,000 lifetime maximum, for the
individual, or for a spouse, child, grandchild, or ancestor.
WITHDRAWALS - INVESTMENT ADVISER FEES. The Internal Revenue Service has, through
a series of Private Letter Rulings, held that the payment of investment adviser
fees from an IRA or a Tax-Sheltered Annuity is permissible under certain
circumstances and will not be considered a distribution for income tax purposes.
The Rulings require that in order to receive this favorable tax treatment, the
annuity contract must, under a written agreement, be solely liable (not jointly
with the contract owner) for payment of the adviser's fee and the fee must
actually be paid from the annuity contract to the adviser. Withdrawals from
non-qualified contracts for the payment of investment adviser fees will be
considered taxable distributions from the contract.
DEATH BENEFITS. Any death benefits paid under the contract are taxable to the
beneficiary. The rules governing the taxation of payments from an annuity
contract, as discussed above, generally apply to the payment of death benefits
and depend on whether the death benefits are paid as a lump sum or as annuity
payments. Estate taxes may also apply.
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM (ORP). Contracts issued
to participants in ORP contain restrictions required under the Texas
Administrative Code. In accordance with those restrictions, a participant in ORP
will not be permitted to make withdrawals prior to such participant's
retirement, death, attainment of age 70 1/2 or termination of employment in a
Texas public institution of higher education. The restrictions on withdrawal do
not apply in the event a participant in ORP transfers the contract value to
another approved contract or vendor during the period of ORP participation.
ASSIGNMENT. An assignment may be a taxable event. If the contract is issued
pursuant to a qualified plan, there may be limitations on your ability to assign
the contract.
DIVERSIFICATION. The Code provides that the underlying investments for a
variable annuity must satisfy certain diversification requirements in order to
be treated as an annuity contract. Jackson National believes that the underlying
investments are being managed so as to comply with these requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Jackson
National would be considered the owner of the shares of the investment
portfolios. If you are considered to be the owner of the shares, it will result
in the loss of the favorable tax treatment for the contract.
It is unknown to what extent owners are permitted to select investment
portfolios, to make transfers among the investment portfolios or the number and
type of investment portfolios owners may select from without being considered
the owner of the shares. If any guidance is provided which is considered a new
position, then the guidance would generally be applied prospectively. However,
if such guidance is considered not to be a new position, it may be applied
retroactively. This would mean that you, as the owner of the contract, could be
treated as the owner of the investment portfolios. Due to the uncertainty in
this area, Jackson National reserves the right to modify the contract in an
attempt to maintain favorable tax treatment.
OTHER INFORMATION
DOLLAR COST AVERAGING. You can arrange to automatically have a regular amount of
money periodically transferred into the investment portfolios. This
theoretically gives you a lower average cost per unit over time than you would
receive if you made a one time purchase. Certain restrictions may apply.
Jackson National does not currently charge for participation in this program. We
may do so in the future.
REBALANCING. You can arrange to have Jackson National automatically reallocate
money between investment portfolios periodically to keep the blend you select.
Jackson National does not currently charge for participation in this program. We
may do so in the future.
FREE LOOK. If you cancel the contract within twenty days after receiving it (or
whatever period is required in your state), Jackson National will return the
amount your contract is worth on the day we receive your request. This may be
more or less than your original payment. If required by law, Jackson National
will return your premium.
ADVERTISING. From time to time, Jackson National may advertise several types of
performance for the investment portfolios.
o Total return is the overall change in the value of an investment in an
investment portfolio over a given period of time.
o Standardized average annual total return is calculated in accordance
with SEC guidelines.
o Non-standardized total return may be for periods other than those
required or may otherwise differ from standardized average annual
total return. For example, if a series has been in existence longer
than the investment portfolio, we may show non-standardized
performance for periods that begin on the inception date of the
series, rather than the inception date of the investment portfolio.
o Yield refers to the income generated by an investment over a given period
of time.
Performance will be calculated by determining the percentage change in the value
of an accumulation unit by dividing the increase (decrease) for that unit by the
value of the accumulation unit at the beginning of the period. Performance will
reflect the deduction of the insurance charges and may reflect the deduction of
the contract maintenance charge and withdrawal charge. The deduction of the
contract maintenance and/or the withdrawal charge would reduce the percentage
increase or make greater any percentage decrease.
MARKET TIMING AND ASSET ALLOCATION SERVICES. Market timing and asset allocation
services must comply with Jackson National's administrative systems, rules and
procedures.
MODIFICATION OF THE CONTRACT. Only the President, Vice President, Secretary or
Assistant Secretary of Jackson National may approve a change to or waive a
provision of the contract. Any change or waiver must be in writing. Jackson
National may change the terms of the contract in order to comply with changes in
applicable law, or otherwise as deemed necessary by Jackson National.
YEAR 2000 MATTERS. Jackson National initiated a project in 1994 to review and
analyze its computer systems to determine if they are Year 2000 compatible. This
project includes a written plan which provides for a process which ensures that
when a particular system, or software application, is determined to be
"non-compliant" the proper steps are in place to either remedy the
"non-compliance" or cease using the particular system or software.
Jackson National's plan provides for an inventory of all critical computer
systems, testing of such systems and resolution of Year 2000 issues. Jackson
National anticipates that all compliance issues will be resolved by December 31,
1999.
As of the date of this Prospectus, Jackson National has identified and made
available what it believes are the appropriate resources of hardware, people,
and dollars to ensure that the plan will be completed.
Jackson National will not conclusively know the success of its plan until the
Year 2000. Even with appropriate and diligent pursuit of a well-conceived
response plan, including testing procedures, there is no certainty that any
company will achieve complete success. Further, Jackson National's ability to
function unaffected to and through the Year 2000 may be adversely affected by
actions (or inactions) of third parties beyond its knowledge or control.
LEGAL PROCEEDINGS. There are no material legal proceedings, other than ordinary
routine litigation incidental to the business, to which Jackson National Life
Insurance Company, Jackson National Life Distributors, Inc., and the Jackson
National Separate Account - I are parties.
QUESTIONS. If you have questions about your contract, you may call or write to
us at:
o Jackson National Life Annuity Service Center: (800) 766-4683, P.O. Box
378002, Denver, Colorado 80237-8002
o Institutional Marketing Group Service Center: (800) 777-7779, P.O. Box
30386, Lansing, Michigan 48909-9692.
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
General Information and History ......................................... 2
Services ................................................................ 2
Purchase of Securities Being Offered .................................... 3
Underwriters ............................................................ 3
Calculation of Performance .............................................. 3
Additional Tax Information .............................................. 9
Income Payments; Net Investment Factor ..................................17
Financial Statements ....................................................19
<PAGE>
APPENDIX A
CONDENSED FINANCIAL INFORMATION
Accumulation Unit Values
The following table shows accumulation unit values at the beginning and end of
the periods indicated as well as the number of accumulation units outstanding
for each portfolio as of the end of the periods indicated. This information has
been taken from the Separate Account's financial statements. The Separate
Account's financial statements for the periods ended December 31, 1998, 1997,
and 1996, have been audited by PricewaterhouseCoopers LLP, independent
accountants. This information should be read together with the Separate
Account's financial statements and related notes which are in the SAI.
<TABLE>
<CAPTION>
Investment Portfolios March 31, December 31, December 31, December 31, December 31,
1999 (unaudited) 1998 1997 1996 1995(a)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JNL/Alger Growth Portfolio
Accumulation unit value:
Beginning of period $19.86 $13.82 $11.11 $9.93 $10.00
End of period $22.04 $19.86 $13.82 $11.11 $9.93
Accumulation units outstanding
at the end of period 8,661,954 7,704,990 5,908,446 3,310,810 12,285
JNL/Eagle Core Equity Portfolio
Accumulation unit value:
Beginning of period $15.77 $13.72 $10.52 $10.00 N/A(b)
End of period $16.29 $15.77 $13.72 $10.52 N/A(b)
Accumulation units outstanding
at the end of period 2,115,138 1,829,363 766,516 84,895 N/A(b)
JNL/Eagle SmallCap Equity Portfolio
Accumulation unit value:
Beginning of period $13.98 $14.00 $11.12 $10.00 N/A(b)
End of period $12.28 $13.98 $14.00 $11.12 N/A(b)
Accumulation units outstanding
at the end of period 2,313,711 2,274,545 857,946 71,014 N/A(b)
JNL/Janus Aggressive Growth Portfolio
Accumulation unit value:
Beginning of period $20.62 $13.26 $11.95 $10.20 $10.00
End of period $25.46 $20.62 $13.26 $11.95 $10.20
Accumulation units outstanding
at the end of period 7,810,005 6,839,305 5,371,379 2,355,530 4,008
JNL/Janus Capital Growth Portfolio
Accumulation unit value:
Beginning of period $17.94 $13.46 $11.87 $10.34 $10.00
End of period $21.01 $17.94 $13.46 $11.87 $10.34
Accumulation units outstanding
at the end of period 6,450,609 5,849,883 5,132,743 2,985,668 1,587
JNL/Janus Global Equities Portfolio
Accumulation unit value:
Beginning of period $19.92 $15.93 $13.57 $10.48 $10.00
End of period $21.15 $19.92 $15.93 $13.57 $10.48
Accumulation units outstanding
at the end of period 11,917,165 11,242,198 9,067,277 3,090,234 4,778
JNL/Putnam Growth Portfolio(c)
Accumulation unit value:
Beginning of period $21.13 $15.88 $13.22 $10.58 $10.00
End of period $22.17 $21.13 $15.88 $13.22 $10.58
Accumulation units outstanding
at the end of period 9,705,280 8,348,592 5,207,294 1,682,604 571
JNL/Putnam Value Equity Portfolio(c)
Accumulation unit value:
Beginning of period $17.29 $15.59 $12.98 $10.59 $10.00
End of period $17.87 $17.29 $15.59 $12.98 $10.59
Accumulation units outstanding
at the end of the period 11,928,169 10,899,898 6,925,507 1,330,288 3,944
JNL/S&P Conservative Growth Portfolio I
Accumulation unit value:
Beginning of period $10.36 $10.00 N/A(d) N/A(d) N/A(d)
End of period $10.76 $10.36 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 1,836,838 967,674 N/A(d) N/A(d) N/A(d)
JNL/S&P Moderate Growth Portfolio I
Accumulation unit value:
Beginning of period $10.52 $10.00 N/A(d) N/A(d) N/A(d)
End of period $11.09 $10.52 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 2,306,663 1,198,566 N/A(d) N/A(d) N/A(d)
JNL/S&P Aggressive Growth Portfolio I
Accumulation unit value:
Beginning of period $10.77 $10.00 N/A(d) N/A(d) N/A(d)
End of period $11.47 $10.77 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 737,802 410,888 N/A(d) N/A(d) N/A(d)
JNL/S&P Very Aggressive Growth
Portfolio I
Accumulation unit value:
Beginning of period $11.07 $10.00 N/A(d) N/A(d) N/A(d)
End of period $12.03 $11.07 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 275,105 220,495 N/A(d) N/A(d) N/A(d)
JNL/S&P Equity Growth Portfolio I
Accumulation unit value:
Beginning of period $10.53 $10.00 N/A(d) N/A(d) N/A(d)
End of period $11.22 $10.53 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 1,032,825 478,149 N/A(d) N/A(d) N/A(d)
JNL/S&P Equity Aggressive Growth
Portfolio I
Accumulation unit value:
Beginning of period $10.64 $10.00 N/A(d) N/A(d) N/A(d)
End of period $11.43 $10.64 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 391,051 304,127 N/A(d) N/A(d) N/A(d)
PPM America/JNL Balanced Portfolio (c)
Accumulation unit value:
Beginning of period $14.31 $13.19 $11.29 $10.34 $10.00
End of period $14.17 $14.31 $13.19 $11.29 $10.34
Accumulation units outstanding
at the end of period 7,557,659 6,574,171 4,486,973 2,120,529 12,871
PPM America/JNL High Yield Bond
Portfolio
Accumulation unit value:
Beginning of period $13.06 $12.75 $11.26 $10.11 $10.00
End of period $13.11 $13.06 $12.75 $11.26 $10.11
Accumulation units outstanding
at the end of period 8,157,978 7,350,674 4,711,051 1,147,840 100
PPM America/JNL Money Market Portfolio
Accumulation unit value:
Beginning of period $11.12 $10.74 $10.37 $10.03 $10.00
End of period $11.20 $11.12 $10.74 $10.37 $10.03
Accumulation units outstanding
at the end of period 6,469,664 4,713,958 3,855,123 2,193,176 14,608
Salomon Brothers/JNL Global Bond
Portfolio
Accumulation unit value:
Beginning of period $12.94 $12.80 $11.74 $10.41 $10.00
End of period $12.96 $12.94 $12.80 $11.74 $10.41
Accumulation units outstanding
at the end of the period 3,357,156 3,166,154 2,603,857 911,885 3,128
Salomon Brothers/JNL U.S. Government &
Quality Bond Portfolio
Accumulation unit value:
Beginning of period $12.00 $11.12 $10.33 $10.21 $10.00
End of period $11.84 $12.00 $11.12 $10.33 $10.21
Accumulation units outstanding
at the end of period 6,249,323 5,006,001 2,090,575 902,055 1,275
T. Rowe Price/JNL Established Growth
Portfolio
Accumulation unit value:
Beginning of period $20.14 $15.99 $12.53 $10.36 $10.00
End of period $20.53 $20.14 $15.99 $12.53 $10.36
Accumulation units outstanding
at the end of period 11,227,979 10,399,047 7,218,789 2,500,896 10,564
T. Rowe Price/JNL International Equity
Investment Portfolio
Accumulation unit value:
Beginning of period $13.46 $11.94 $11.78 $10.49 $10.00
End of period $13.56 $13.46 $11.94 $11.78 $10.49
Accumulation units outstanding
at the end of period 4,956,337 4,828,701 4,406,642 2,039,430 3,096
T. Rowe Price/JNL Mid-Cap Growth
Portfolio
Accumulation unit value:
Beginning of period $17.58 $14.68 $12.59 $10.37 $10.00
End of period $17.39 $17.58 $14.68 $12.59 $10.37
Accumulation units outstanding
at the end of period 10,303,511 9,941,003 8,031,753 3,585,051 5,120
</TABLE>
(a) The Separate Account commenced operations on October 16, 1995.
(b) The JNL/Eagle Core Equity Portfolio and the JNL/Eagle SmallCap Equity
Portfolio commenced operations on September 16, 1996.
(c) Prior to May 1, 1997, the JNL/Putnam Growth Series was the JNL/Phoenix
Investment Counsel Growth Series and the management fee was .90%, the
JNL/Putnam Value Equity Series was the PPM America/JNL Value Equity Series
and the management fee was .75%; and the PPM America/JNL Balanced Series
was the JNL/Phoenix Investment Counsel Balanced Series and the management
fee was .90%.
(d) The JNL/S&P Conservative Growth Portfolio I commenced operations on April
9, 1998, the JNL/S&P Moderate Growth Portfolio I commenced operations on
April 8, 1998, the JNL/S&P Aggressive Growth Portfolio I commenced
operations on April 8, 1998, the JNL/S&P Very Aggressive Growth Portfolio I
commenced operations on April 1, 1998, the JNL/S&P Equity Growth Portfolio
I commenced operations on April 13, 1998, and the JNL/S&P Equity Aggressive
Growth Portfolio I commenced operations on April 15, 1998.
<PAGE>
THE PERSPECTIVE
FIXED AND VARIABLE ANNUITY
ISSUED BY JACKSON NATIONAL LIFE INSURANCE COMPANY AND JACKSON NATIONAL SEPARATE
ACCOUNT - I
o Individual, flexible premium deferred annuity
o 4 guaranteed accounts which offer an interest rate that is guaranteed by
Jackson National Life Insurance Company (Jackson National)
o Investment portfolios which purchase shares of the following series of
mutual funds:
JNL Series Trust
JNL/Alger Growth Series
JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
JNL/Janus Aggressive Growth Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series
JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
JNL/S&P Conservative Growth Series I
JNL/S&P Moderate Growth Series I
JNL/S&P Aggressive Growth Series I
JNL/S&P Very Aggressive Growth Series I
JNL/S&P Equity Growth Series I
JNL/S&P Equity Aggressive Growth Series I
PPM America/JNL Balanced Series
PPM America/JNL High Yield Bond Series
PPM America/JNL Money Market Series
Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL U.S. Government & Quality Bond Series
T. Rowe Price/JNL Established Growth Series
T. Rowe Price/JNL International Equity Investment Series
T. Rowe Price/JNL Mid-Cap Growth Series
JNL Variable Fund LLC
JNL/First Trust The Dow(SM) Target 10 Series
Please read this prospectus before you purchase a Perspective Fixed and Variable
Annuity. It contains important information about the contract that you ought to
know before investing. You should keep this prospectus on file for future
reference.
To learn more about the Perspective Fixed and Variable Annuity contract, you can
obtain a free copy of the Statement of Additional Information (SAI) dated July
6, 1999, by calling Jackson National at (800) 766-4683 or by writing Jackson
National at: Annuity Service Center, P.O. Box 378002, Denver, Colorado
80237-8002. The SAI has been filed with the Securities and Exchange Commission
(SEC) and is legally a part of this prospectus. The Table of Contents of the SAI
appears at the end of this prospectus. The SEC maintains a website
(http://www.sec.gov) that contains the SAI, material incorporated by reference
and other information regarding registrants that file electronically with the
SEC.
THE SEC HAS NOT APPROVED OR DISAPPROVED THE PERSPECTIVE FIXED AND VARIABLE
ANNUITY OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. IT IS A CRIMINAL OFFENSE
TO REPRESENT OTHERWISE.
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
JULY 6, 1999
<PAGE>
"Dow Jones", "Dow Jones Industrial Average(SM)", "DJIA(SM)" and "The Dow 10(SM)"
are service marks of Dow Jones & Company, Inc. (Dow Jones). Dow Jones has no
relationship to the annuity, other than the licensing of the Dow Jones
Industrial Average (DJIA) and its service marks for use in connection with the
JNL/First Trust The Dow Target 10 Series.
DOW JONES DOES NOT:
o Sponsor, endorse, sell or promote the JNL/First Trust The Dow Target 10
Series.
o Recommend that any person invest in the JNL/First Trust The Dow Target 10
Series or any other securities.
o Have any responsibility or liability for or make any decisions about the
timing, amount or pricing of the JNL/First Trust The Dow Target 10 Series.
o Have any responsibility or liability for the administration, management or
marketing of the JNL/First Trust The Dow Target 10 Series.
o Consider the needs of the JNL/First Trust The Dow Target 10 Series or the
owners of the JNL/First Trust The Dow Target 10 Series in determining,
composing or calculating the DJIA or have any obligation to do so.
- --------------------------------------------------------------------------------
DOW JONES WILL NOT HAVE ANY LIABILITY IN CONNECTION WITH THE JNL/FIRST TRUST THE
DOW TARGET 10 SERIES.
SPECIFICALLY,
o DOW JONES DOES NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED, AND DOW JONES
DISCLAIMS ANY WARRANTY ABOUT:
o THE RESULTS TO BE OBTAINED BY THE JNL/FIRST TRUST THE DOW TARGET 10
SERIES, THE OWNERS OF THE JNL/FIRST TRUST THE DOW TARGET 10 SERIES OR
ANY OTHER PERSON IN CONNECTION WITH THE USE OF THE DJIA AND THE DATA
INCLUDED IN THE DJIA;
o THE ACCURACY OR COMPLETENESS OF THE DJIA AND ITS DATA;
o THE MERCHANTABILITY AND THE FITNESS FOR A PARTICULAR PURPOSE OR USE OF
THE DJIA AND ITS DATA;
o DOW JONES WILL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS
IN THE DJIA OR ITS DATA;
o UNDER NO CIRCUMSTANCES WILL DOW JONES BE LIABLE FOR ANY LOST PROFITS OR
INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES OR LOSSES, EVEN IF DOW
JONES KNOWS THAT THEY MIGHT OCCUR.
THE LICENSING AGREEMENT BETWEEN FIRST TRUST ADVISORS L.P. (SUB-ADVISER TO THE
JNL VARIABLE FUND LLC) AND DOW JONES IS SOLELY FOR THEIR BENEFIT AND NOT FOR THE
BENEFIT OF THE OWNERS OF THE JNL/FIRST TRUST THE DOW TARGET 10 SERIES OR ANY
OTHER THIRD PARTIES.
- --------------------------------------------------------------------------------
"JNL(R)", "Jackson National(R)" and "Jackson National Life(R)" are trademarks of
Jackson National Life Insurance Company.
<PAGE>
TABLE OF CONTENTS
Key Facts
Fee Table
The Annuity Contract
The Company
The Guaranteed Accounts
The Separate Account
Investment Portfolios
Contract Charges
Purchases
Transfers
Access to Your Money
Income Payments (The Income Phase)
Death Benefit
Taxes
Other Information
Table of Contents of the Statement of Additional Information
Appendix A
<PAGE>
KEY FACTS
ANNUITY SERVICE CENTER: 1 (800) 766-4683
Mail Address: P.O. Box 378002, Denver, Colorado 80237-8002
Delivery Address: 8055 East Tufts Avenue, Second Floor,
Denver, Colorado 80237
INSTITUTIONAL MARKETING
GROUP SERVICE CENTER: 1 (800) 777-7779
Mail Address: P.O. Box 30386, Lansing, Michigan 48909-9692
Delivery Address: 5901 Executive Drive, Lansing, Michigan
48911 Attn: IMG
HOME OFFICE: 5901 Executive Drive, Lansing, Michigan
48911
THE ANNUITY CONTRACT The fixed and variable annuity contract
offered by Jackson National provides a means
for investing on a tax-deferred basis in the
guaranteed accounts of Jackson National and
the investment portfolios. The contract is
intended for retirement savings or other
long-term investment purposes and provides
for a death benefit and income options.
INVESTMENT OPTIONS You can put money into any of the guaranteed
accounts and/or the investment portfolios
but you may not put your money in more than
eighteen of the investment options during
the life of your contract.
EXPENSES The contract has insurance features and
investment features, and there are costs
related to each.
Jackson National makes a deduction for its
insurance charges which is equal to 1.40% of
the daily value of the contracts invested in
the investment portfolios. During the
accumulation phase, Jackson National deducts
a $35 annual contract maintenance charge
from your contract.
If you take your money out of the contract,
Jackson National may assess a withdrawal
charge. The withdrawal charge starts at 7%
in the first year and declines 1% a year to
0% after 7 years.
Jackson National may assess a state premium
tax charge which ranges from 0-4%, depending
upon the state, when you begin receiving
regular income payments from your contract,
when you make a withdrawal or, in states
where required, at the time premium payments
are made.
There are also investment charges which
range from .20% to 1.18%, on an annual
basis, of the average daily value of the
series, depending on the series.
PURCHASES Under most circumstances, you can buy a
contract for $5,000 or more ($2,000 or more
for a qualified plan contract). You can add
$500 ($50 under the automatic payment plan)
or more at any time during the accumulation
phase.
ACCESS TO YOUR MONEY You can take money out of your contract
during the accumulation phase. Withdrawals
may be subject to a withdrawal charge. You
may also have to pay income tax and a tax
penalty on any money you take out.
INCOME PAYMENTS You may choose to receive regular income
from your annuity. During the income phase,
you have the same investment choices you had
during the accumulation phase.
DEATH BENEFIT If you die before moving to the income
phase, the person you have chosen as your
beneficiary will receive a death benefit.
FREE LOOK If you cancel your contract within twenty
days after receiving it (or whatever period
is required in your state), Jackson National
will return the amount your contract is
worth on the day we receive your request.
This may be more or less than your original
payment. If required by law, Jackson
National will return your premium.
TAXES The Internal Revenue Code provides that you
will not be taxed on the earnings on the
money held in your contract until you take
money out (this is referred to as
tax-deferral). There are different rules as
to how you will be taxed depending on how
you take the money out and the type of
contract you have (non-qualified or
qualified).
<PAGE>
FEE TABLE
OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of premium payments):
Years Since Premium Payment 0 1 2 3 4 5 6 7+
Charge 7% 6% 5% 4% 3% 2% 1% 0%
Transfer Fee:
$25 for each transfer in excess of 15 in a contract year
Contract Maintenance Charge:
$35 per contract per year
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average account value)
Mortality and Expense Risk Charges 1.25%
Administration Charge .15%
Total Separate Account Annual Expenses 1.40%
SERIES ANNUAL EXPENSES
(as a percentage of the series average net assets)
<TABLE>
<CAPTION>
Management
and Total Series
Administrative Other Annual
Fee Expenses Expenses
- ----------------------------------------------------------------- --------------- ------------- --------------
<S> <C> <C> <C>
JNL/Alger Growth Series 1.075% 0% 1.075%
JNL/Eagle Core Equity Series 1.00% 0% 1.00%
JNL/Eagle SmallCap Equity Series 1.05% 0% 1.05%
JNL/Janus Aggressive Growth Series 1.05% 0% 1.05%
JNL/Janus Capital Growth Series 1.05% 0% 1.05%
JNL/Janus Global Equities Series 1.09% 0% 1.09%
JNL/Putnam Growth Series 1.00% 0% 1.00%
JNL/Putnam Value Equity Series 1.00% 0% 1.00%
JNL/S&P Conservative Growth Series I* .20% 0% .20%
JNL/S&P Moderate Growth Series I* .20% 0% .20%
JNL/S&P Aggressive Growth Series I* .20% 0% .20%
JNL/S&P Very Aggressive Growth Series I* .20% 0% .20%
JNL/S&P Equity Growth Series I* .20% 0% .20%
JNL/S&P Equity Aggressive Growth Series I* .20% 0% .20%
PPM America/JNL Balanced Series .83% 0% .83%
PPM America/JNL High Yield Bond Series .83% 0% .83%
PPM America/JNL Money Market Series .70% 0% .70%
Salomon Brothers/JNL Global Bond Series .95% 0% .95%
Salomon Brothers/JNL U.S. Government & Quality Bond Series .80% 0% .80%
T. Rowe Price/JNL Established Growth Series .94% 0% .94%
T. Rowe Price/JNL International Equity Investment Series 1.18% 0% 1.18%
T. Rowe Price/JNL Mid-Cap Growth Series 1.05% 0% 1.05%
JNL/First Trust The Dow(SM) Target 10 Series .85% 0% .85%
</TABLE>
Effective January 1, 1999, certain Series pay Jackson National Financial
Services, LLC, the adviser, an Administrative Fee of .10% for certain services
provided to the Trust by Jackson National Financial Services, LLC. The JNL/S&P
Series do not pay an Administrative Fee. The Total Series Annual Expenses have
been restated to reflect the Administrative Fee.
* Underlying Series Expenses. The expenses shown above are the annual operating
expenses for the JNL/S&P Series. Because the JNL/S&P Series invest in other
Series of the JNL Series Trust, the JNL/S&P Series will indirectly bear their
pro rata share of fees and expenses of the underlying Series in addition to the
expenses shown.
The table below shows the pro rata share of expenses that the JNL/S&P Series
would bear if they invested in a hypothetical mix of underlying Series. The
table below includes the annual operating expenses for the JNL/S&P Series, which
are shown above. The actual expenses of each JNL/S&P Series will be based on the
actual mix of underlying Series in which it invests. The actual expenses may be
greater or less than those shown.
JNL/S&P Conservative Growth Series I................... 1.162%
JNL/S&P Moderate Growth Series I....................... 1.199%
JNL/S&P Aggressive Growth Series I..................... 1.242%
JNL/S&P Very Aggressive Growth Series I................ 1.259%
JNL/S&P Equity Growth Series I......................... 1.251%
JNL/S&P Equity Aggressive Growth Series I.............. 1.252%
<PAGE>
EXAMPLES. You would pay the following expenses on a $1,000 investment, assuming
a 5% annual return on assets:
(a) if you surrender your contract at the end of each time period;
(b) if you do not surrender your contract or if you begin receiving income
payments from your contract after the first year.
<TABLE>
<CAPTION>
Time Periods
- ---------------------------------------------------------------------------------------------------------------------
1 3 5 10
year years years years
- -------------------------------------------------------------------------------- ------- --------- -------- ---------
<S> <C> <C> <C> <C>
JNL/Alger Growth Portfolio (a) $95 $128 $163 $283
(b) 25 78 133 283
JNL/Eagle Core Equity Portfolio (a) 95 125 159 276
(b) 25 75 129 276
JNL/Eagle SmallCap Equity Portfolio (a) 95 127 162 281
(b) 25 77 132 281
JNL/Janus Aggressive Growth Portfolio (a) 95 127 162 281
(b) 25 77 132 281
JNL/Janus Capital Growth Portfolio (a) 95 127 162 281
(b) 25 77 132 281
JNL/Janus Global Equities Portfolio (a) 95 128 164 285
(b) 25 78 134 285
JNL/Putnam Growth Portfolio (a) 95 125 159 276
(b) 25 75 129 276
JNL/Putnam Value Equity Portfolio (a) 95 125 159 276
(b) 25 75 129 276
JNL/S&P Conservative Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
JNL/S&P Moderate Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
JNL/S&P Aggressive Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
JNL/S&P Very Aggressive Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
JNL/S&P Equity Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
JNL/S&P Equity Aggressive Growth Portfolio I (a) 86 101 N/A N/A
(b) 16 51 N/A N/A
PPM America/JNL Balanced Portfolio (a) 93 120 150 258
(b) 23 70 120 258
PPM America/JNL High Yield Bond Portfolio (a) 93 120 150 258
(b) 23 70 120 258
PPM America/JNL Money Market Portfolio (a) 92 116 144 245
(b) 22 66 114 245
Salomon Brothers/JNL Global Bond Portfolio (a) 94 124 157 271
(b) 24 74 127 271
Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio (a) 93 119 149 255
(b) 23 69 119 255
T. Rowe Price/JNL Established Growth Portfolio (a) 94 124 156 270
(b) 24 74 126 270
T. Rowe Price/JNL International Equity Investment Portfolio (a) 96 131 168 293
(b) 26 81 138 293
T. Rowe Price/JNL Mid-Cap Growth Portfolio (a) 95 127 162 281
(b) 25 77 132 281
JNL/First Trust The Dow(SM) Target 10 Portfolio (a) 93 121 N/A N/A
(b) 23 71 N/A N/A
</TABLE>
EXPLANATION OF FEE TABLE AND EXAMPLES. The purpose of the Fee Table and Examples
is to assist you in understanding the various costs and expenses that you will
bear directly or indirectly. The Fee Table reflects the expenses of the separate
account and the series.
Premium taxes may also apply.
The Examples reflect the contract maintenance charge which is determined by
dividing the total amount of such charges expected to be collected during the
year by the total estimated average net assets of the investment portfolios.
A withdrawal charge is imposed on income payments which occur within one year of
the date the contract is issued.
THE EXAMPLE DOES NOT REPRESENT PAST OR FUTURE EXPENSES. THE ACTUAL EXPENSES THAT
YOU INCUR MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL STATEMENTS. An accumulation unit value history is contained in
Appendix A.
You can find the following financial statements in the SAI:
o the unaudited financial statements of the Separate Account for the period
from January 1, 1999 through March 31, 1999
o the financial statements of the Separate Account for the year ended
December 31, 1998
o the financial statements of Jackson National for the year ended December
31, 1998
The Separate Account's financial statements for the year ended December 31,
1998, and the financial statements of Jackson National for the year ended
December 31, 1998, have been audited by PricewaterhouseCoopers LLP, independent
accountants.
<PAGE>
THE ANNUITY CONTRACT
The fixed and variable annuity contract offered by Jackson National is a
contract between you, the owner, and Jackson National, an insurance company. The
contract provides a means for investing on a tax-deferred basis in guaranteed
accounts and investment portfolios. The contract is intended for retirement
savings or other long-term investment purposes and provides for a death benefit
and guaranteed income options.
The contract, like all deferred annuity contracts, has two phases: (1) the
accumulation phase, and (2) the income phase. During the accumulation phase,
earnings accumulate on a tax-deferred basis and are taxed as income when you
make a withdrawal.
The contract offers guaranteed accounts. The guaranteed accounts offer an
interest rate that is guaranteed by Jackson National for the duration of the
guaranteed account period. While your money is in a guaranteed account, the
interest your money earns and your principal are guaranteed by Jackson National.
The value of a guaranteed account may be reduced if you make a withdrawal prior
to the end of the guaranteed account period, but will never be less than the
premium payments accumulated at 3% per year. If you choose to have your annuity
payments come from the guaranteed accounts, your payments will remain level
throughout the entire income phase.
The contract also offers investment portfolios. The investment portfolios are
designed to offer a higher return than the guaranteed accounts. HOWEVER, THIS IS
NOT GUARANTEED. IT IS POSSIBLE FOR YOU TO LOSE YOUR MONEY. If you put money in
the investment portfolios, the amount of money you are able to accumulate in
your contract during the accumulation phase depends upon the performance of the
investment portfolios you select. The amount of the income payments you receive
during the income phase also will depend, in part, on the performance of the
investment portfolios you choose for the income phase.
As the owner, you can exercise all the rights under the contract. You and your
spouse can be joint owners. You can assign the contract at any time during your
lifetime but Jackson National will not be bound until it receives written notice
of the assignment.
THE COMPANY
Jackson National is a stock life insurance company organized under the laws of
the state of Michigan in June 1961. Its legal domicile and principal business
address is 5901 Executive Drive, Lansing, Michigan 48911. Jackson National is
admitted to conduct life insurance and annuity business in the District of
Columbia and all states except New York. Jackson National is ultimately a
wholly-owned subsidiary of Prudential Corporation plc (London, England).
Jackson National has responsibility for administration of the contracts and the
Separate Account. We maintain records of the name, address, taxpayer
identification number and other pertinent information for each contract owner
and the number and type of contracts issued to each contract owner, and records
with respect to the value of each contract.
THE GUARANTEED ACCOUNTS
If you select a guaranteed account, your money will be placed with Jackson
National's other assets. The guaranteed accounts are not registered with the SEC
and the SEC does not review the information we provide to you about the
guaranteed accounts. Your contract contains a more complete description of the
guaranteed accounts.
THE SEPARATE ACCOUNT
The Jackson National Separate Account - I was established by Jackson National on
June 14, 1993, pursuant to the provisions of Michigan law, as a segregated asset
account of the company. The separate account meets the definition of a "separate
account" under the federal securities laws and is registered with the SEC as a
unit investment trust under the Investment Company Act of 1940, as amended.
The assets of the separate account legally belong to Jackson National and the
obligations under the contracts are obligations of Jackson National. However,
the contract assets in the separate account are not chargeable with liabilities
arising out of any other business Jackson National may conduct. All of the
income, gains and losses resulting from these assets are credited to or charged
against the contracts and not against any other contracts Jackson National may
issue.
The separate account is divided into investment portfolios. Jackson National
does not guarantee the investment performance of the separate account or the
investment portfolios.
INVESTMENT PORTFOLIOS
You can put money in any or all of the investment portfolios; however, you may
not allocate your money to more than eighteen investment options during the life
of your contract. The investment portfolios purchase shares of the following
series of mutual funds:
JNL Series Trust
JNL/Alger Growth Series
JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
JNL/Janus Aggressive Growth Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series
JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
JNL/S&P Conservative Growth Series I
JNL/S&P Moderate Growth Series I
JNL/S&P Aggressive Growth Series I
JNL/S&P Very Aggressive Growth Series I
JNL/S&P Equity Growth Series I
JNL/S&P Equity Aggressive Growth Series I
PPM America/JNL Balanced Series
PPM America/JNL High Yield Bond Series
PPM America/JNL Money Market Series
Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL U.S. Government & Quality Bond Series
T. Rowe Price/JNL Established Growth Series
T. Rowe Price/JNL International Equity Investment Series
T. Rowe Price/JNL Mid-Cap Growth Series
JNL Variable Fund LLC
JNL/First Trust The Dow(SM) Target 10 Series - seeks a high total
return through a combination of capital appreciation and dividend income by
investing approximately equal amounts in the common stock of the ten
companies included in the Dow Jones Industrial Average(SM) which have the
highest dividend yields on a pre-determined selection date.
The series are described in the attached prospectuses for the JNL Series Trust
and the JNL Variable Fund LLC. Jackson National Financial Services, LLC serves
as investment adviser for all of the series. The sub-adviser for each series is
listed in the following table:
Sub-Adviser Series
Fred Alger Management, Inc. JNL/Alger Growth Series
Eagle Asset Management, Inc. JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
Janus Capital Corporation JNL/Janus Aggressive Growth Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series
Putnam Investment Management, Inc. JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
Standard & Poor's Investment
Advisory Services, Inc. JNL/S&P Conservative Growth Series I
JNL/S&P Moderate Growth Series I
JNL/S&P Aggressive Growth Series I
JNL/S&P Very Aggressive Growth Series I
JNL/S&P Equity Growth Series I
JNL/S&P Equity Aggressive Growth
Series I
PPM America, Inc. PPM America/JNL Balanced Series
PPM America/JNL High Yield Bond Series
PPM America/JNL Money Market Series
Salomon Brothers Asset Management Inc Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL U.S. Government &
Quality Bond Series
Rowe Price-Fleming International, Inc. T. Rowe Price/JNL International Equity
Investment Series
T. Rowe Price Associates, Inc. T. Rowe Price/JNL Established Growth
Series
T. Rowe Price/JNL Mid-Cap Growth Series
First Trust Advisors L.P. JNL/First Trust The Dow(SM) Target 10
Series
Depending on market conditions, you can make or lose money in any of the
investment portfolios. You should read the prospectuses for the JNL Series Trust
and the JNL Variable Fund LLC carefully before investing. Additional investment
portfolios may be available in the future.
VOTING RIGHTS. To the extent required by law, Jackson National will obtain from
you and other owners of the contracts instructions as to how to vote when the
series solicits proxies in conjunction with a vote of shareholders. When Jackson
National receives instructions, we will vote all the shares Jackson National
owns in proportion to those instructions.
SUBSTITUTION. Jackson National may be required to substitute an investment
portfolio with another portfolio. We will not do this without the prior approval
of the SEC. Jackson National will give you notice of our intent to do this.
CONTRACT CHARGES
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges may be a lesser
amount where required by state law or as described below, but will not be
increased. These charges and expenses are:
INSURANCE CHARGES. Each day Jackson National makes a deduction for its insurance
charges. We do this as part of our calculation of the value of the accumulation
units and annuity units. On an annual basis, this charge equals 1.40% of the
daily value of the contracts invested in an investment portfolio, after expenses
have been deducted.
This charge is for the mortality risks, expense risks and administrative
expenses assumed by Jackson National. The mortality risks that Jackson National
assumes arise from our obligations under the contracts:
o to make income payments for the life of the annuitant during the income phase;
o to waive the withdrawal charge in the event of your death; and o to provide
both a standard and an enhanced death benefit prior to the income date.
The expense risk that Jackson National assumes is the risk that our actual cost
of administering the contracts and the investment portfolios will exceed the
amount that we receive from the administration charge and the contract
maintenance charge.
CONTRACT MAINTENANCE CHARGE. During the accumulation phase, Jackson National
deducts a $35 ($30 in Washington) annual contract maintenance charge on each
anniversary of the date on which your contract was issued. If you make a
complete withdrawal from your contract, the contract maintenance charge will
also be deducted. This charge is for administrative expenses.
Jackson National will not deduct this charge, if when the deduction is to be
made, the value of your contract is $50,000 or more. Jackson National may
discontinue this practice at any time.
TRANSFER FEE. A transfer fee of $25 will apply to transfers in excess of 15 in a
contract year. Jackson National may waive the transfer fee in connection with
pre-authorized automatic transfer programs, or may charge a lesser fee where
required by state law.
WITHDRAWAL CHARGE. During the accumulation phase, you can make withdrawals from
your contract.
o At any time during the accumulation phase, you may withdraw premiums which
are not subject to a withdrawal charge (premiums in your annuity for seven
years or longer and not previously withdrawn).
o Once every year, you may withdraw the greater of earnings or 10% of
premiums paid (not yet withdrawn).
Withdrawals in excess of that will be charged a withdrawal charge starting at 7%
in the first year and declining 1% a year to 0% after 7 years. The withdrawal
charge compensates us for costs associated with selling the contracts.
For purposes of the withdrawal charge, Jackson National treats withdrawals as
coming from the oldest premium payment first. If you make a full withdrawal, the
withdrawal charge is based on premiums remaining in the contract. If you
withdraw only part of the value of your contract, we deduct the withdrawal
charge from the remaining value in your contract.
Note: For tax purposes, withdrawals are considered to have come from the last
money into the contract. Thus, for tax purposes, earnings are considered to come
out first.
Jackson National does not assess the withdrawal charge on any payments paid out
as (1) income payments after the first year, (2) death benefits, or (3)
withdrawals necessary to satisfy the minimum distribution requirements of the
Internal Revenue Code. Withdrawals for terminal illness or other specified
conditions as defined by Jackson National may not be subject to a withdrawal
charge. These provisions are not available in all states.
Jackson National may reduce or eliminate the amount of the withdrawal charge
when the contract is sold under circumstances which reduce its sales expense.
Some examples are: the purchase of a contract by a large group of individuals or
an existing relationship between Jackson National and a prospective purchaser.
Jackson National may not deduct a withdrawal charge under a contract issued to
an officer, director, agent or employee of Jackson National or any of its
affiliates.
OTHER EXPENSES. Jackson National pays the operating expenses of the Separate
Account.
There are deductions from and expenses paid out of the assets of the series.
These expenses are described in the attached prospectuses for the JNL Series
Trust and the JNL Variable Fund LLC.
PREMIUM TAXES. Some states and other governmental entities charge premium taxes
or other similar taxes. Jackson National is responsible for the payment of these
taxes and may make a deduction from the value of the contract for them. Premium
taxes generally range from 0% to 4% depending on the state.
INCOME TAXES. Jackson National will make a deduction from the contract for any
income taxes which it incurs because of the contract. Currently, we are not
making any such deduction.
DISTRIBUTION OF CONTRACTS. Jackson National Life Distributors, Inc., located at
401 Wilshire Boulevard, Suite 1200, Santa Monica, California 90401, serves as
the distributor of the contracts. Jackson National Life Distributors, Inc. is a
wholly-owned subsidiary of Jackson National.
Commissions will be paid to broker-dealers who sell the contracts. While
commissions may vary, they are not expected to exceed 8% of any premium payment.
Under certain circumstances, Jackson National may pay bonuses, overrides, and
marketing allowances, in addition to the standard commissions. Jackson National
may under certain circumstances where permitted by applicable law, pay a bonus
to a contract purchaser to the extent the broker-dealer waives its commission.
Jackson National may use any of its corporate assets to cover the cost of
distribution, including any profit from the contract insurance charges.
PURCHASES
MINIMUM INITIAL PREMIUM:
o $5,000 under most circumstances
o $2,000 for a qualified plan contract
The maximum we accept without our prior approval is $1 million.
MINIMUM ADDITIONAL PREMIUMS:
o $500
o $50 under the automatic payment plan
You can pay additional premiums at any time during the accumulation phase.
The minimum that you may allocate to a guaranteed account or investment
portfolio is $100. There is a $100 minimum balance requirement for each
guaranteed account and investment portfolio.
When you purchase a contract, Jackson National will allocate your premium to one
or more of the guaranteed accounts and/or the investment portfolios you have
selected. Your allocations must be in whole percentages ranging from 0% to 100%.
Jackson National will allocate additional premiums in the same way unless you
tell us otherwise.
There may be more than eighteen investment options available under the contract;
however, you may not allocate your money to more than eighteen investment
options during the life of your contract.
Jackson National will issue your contract and allocate your first premium within
2 business days after we receive your first premium and all information that we
require for the purchase of a contract. If we do not receive all of the
information that we require, we will contact you to get the necessary
information. If for some reason Jackson National is unable to complete this
process within 5 business days, we will either return your money or get your
permission to keep it until we receive all of the required information.
The Jackson National business day closes when the New York Stock Exchange
closes, usually 4:00 p.m. Eastern time.
ACCUMULATION UNITS. The contract value allocated to the investment portfolios
will go up or down depending on the performance of the portfolios. In order to
keep track of the value of your contract, Jackson National uses a unit of
measure called an accumulation unit. (An accumulation unit is similar to a share
of a mutual fund.) During the income phase it is called an annuity unit.
Every business day Jackson National determines the value of an accumulation unit
for each of the investment portfolios. This is done by:
1. determining the total amount of money invested in the particular
investment portfolio;
2. subtracting any insurance charges;
3. dividing this amount by the number of outstanding accumulation units.
The value of an accumulation unit may go up or down from day to day.
When you make a premium payment, Jackson National credits your contract with
accumulation units. The number of accumulation units credited is determined at
the close of Jackson National's business day by dividing the amount of the
premium allocated to any investment portfolio by the value of the accumulation
unit for that investment portfolio.
TRANSFERS
You can transfer money between guaranteed accounts and investment portfolios
during the accumulation phase. During the income phase, you can transfer money
between investment portfolios.
You can make 15 transfers every year during the accumulation phase without
charge. The minimum amount that you can transfer is $100 (unless the transfer is
made under a pre-authorized automatic transfer program). If the remaining value
in a guaranteed account or investment portfolio would be less than $100 after a
transfer, you must transfer the entire value or you may not make the transfer.
TELEPHONE TRANSACTIONS. You may make transfers by telephone, unless you elect
not to have this privilege. When authorizing a transfer, you must complete your
telephone call by the close of Jackson National's business day (usually 4:00
p.m. Eastern time) in order to receive that day's accumulation unit value for an
investment portfolio.
Jackson National has procedures which are designed to provide reasonable
assurance that telephone authorizations are genuine. Our procedures include
requesting identifying information and tape recording telephone communications.
Jackson National and its affiliates disclaim all liability for any claim, loss
or expense resulting from any alleged error or mistake in connection with a
telephone transfer which was not properly authorized by you. However, if Jackson
National fails to employ reasonable procedures to ensure that all telephone
transfers are properly authorized, we may be held liable for such losses.
Jackson National reserves the right to modify or discontinue at any time and
without notice the acceptance of instructions from someone other than you and/or
the telephone transfer privilege.
ACCESS TO YOUR MONEY
You can have access to the money in your contract:
o by making either a partial or complete withdrawal, or
o by electing to receive income payments.
Your beneficiary can have access to the money in your contract when a death
benefit is paid.
When you make a complete withdrawal you will receive:
1. the value of the contract on the day you made the withdrawal;
2. less any premium tax;
3. less any contract maintenance charge; and
4. less any withdrawal charge.
Except in connection with the systematic withdrawal program, you must withdraw
at least $500 or, if less, the entire amount in the guaranteed account or
investment portfolio from which you are making the withdrawal. After your
withdrawal, you must have at least $100 left in the guaranteed account or
investment portfolio.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL
YOU MAKE.
There are limitations on withdrawals from a qualified plan referred to as a
403(b) annuity. See "Taxes."
SYSTEMATIC WITHDRAWAL PROGRAM. You can arrange to have money automatically sent
to you periodically while your contract is still in the accumulation phase. You
will have to pay taxes on money you receive and withdrawals you make before you
reach 59 1/2 may be subject to a 10% tax penalty.
We reserve the right to charge a fee for participation or to discontinue
offering this program in the future.
SUSPENSION OF WITHDRAWALS OR TRANSFERS. Jackson National may be required to
suspend or delay withdrawals or transfers from an investment portfolio when:
o the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
o trading on the New York Stock Exchange is restricted;
o an emergency exists so that it is not reasonably practicable to dispose of
shares of the investment portfolios or determine investment portfolio
values;
o the SEC, by order, may permit for the protection of owners.
Jackson National has reserved the right to defer payment for a withdrawal or
transfer from the guaranteed accounts for the period permitted by law, but not
more than six months.
INCOME PAYMENTS (THE INCOME PHASE)
The income phase occurs when you begin receiving regular payments from your
contract. The income date is the month and year in which those payments begin.
The income date must be at least one year after your contract is issued. You can
choose the income date and an income option. The income options are described
below.
If you do not choose an income option, we will assume that you selected Option 3
which provides a life annuity with 120 months of guaranteed payments.
You can change the income date or income option at any time before the income
date. You must give us 7 days notice. Income payments must begin by your 90th
birthday under a non-qualified contract (or an earlier date under a qualified
contract if required by law).
At the income date, you can choose whether payments will come from the
guaranteed accounts, the investment portfolios or both. Unless you tell us
otherwise, your income payments will be based on the investment allocations that
were in place on the income date.
You can choose to have income payments made monthly, quarterly, semi-annually,
or annually. However, if you have less than $5,000 to apply toward an income
option and state law permits, Jackson National may provide your payment in a
single lump sum. Likewise, if your first income payment would be less than $50
and state law permits, Jackson National may set the frequency of payments so
that the first payment would be at least $50.
INCOME PAYMENTS FROM INVESTMENT PORTFOLIOS. If you choose to have any portion of
your income payments come from the investment portfolio(s), the dollar amount of
your payment will depend upon three things:
1. the value of your contract in the investment portfolio(s) on the
income date;
2. the 3% assumed investment rate used in the annuity table for the
contract; and
3. the performance of the investment portfolios you selected.
Jackson National calculates the dollar amount of the first income payment that
you receive from the investment portfolios. We then use that amount to determine
the number of annuity units that you hold in each investment portfolio. The
amount of each subsequent income payment is determined by multiplying the number
of annuity units that you hold in an investment portfolio by the annuity unit
value for that investment portfolio.
The number of annuity units that you hold in each investment portfolio does not
change unless you reallocate your contract value among the investment
portfolios. The annuity unit value of each investment portfolio will vary based
on the investment performance of the series. If the actual investment
performance exactly matches the assumed rate at all times, the amount of each
income payment will remain equal. If the actual investment performance exceeds
the assumed rate, your income payments will increase. Similarly, if the actual
investment performance is less than the assumed rate, your income payments will
decrease.
INCOME OPTIONS. The annuitant is the person whose life we look to when we make
income payments. (Each description assumes that you are the owner and
annuitant.) The following income options may not be available in all states.
Option 1 - Life Income. This income option provides monthly payments for
your life.
Option 2 - Joint and Survivor Annuity. This income option provides monthly
payments for your life and for the life of another person (usually your spouse)
selected by you.
Option 3 - Life Annuity With 120 or 240 Monthly Payments Guaranteed. This
income option provides monthly payments for the annuitant's life, but with
payments continuing to the beneficiary for the remainder of 10 or 20 years (as
you select) if the annuitant dies before the end of the selected period.
Option 4 - Income for a Specified Period. This income option provides
monthly payments for any number of years from 5 to 30.
Additional Options - Other income options may be made available by Jackson
National.
If you choose Option 1, 2 or 3, you cannot make a withdrawal during the income
phase.
DEATH BENEFIT
The death benefit is calculated as of the date we receive complete claim forms
and proof of death from the beneficiary of record.
DEATH OF OWNER BEFORE THE INCOME DATE. If you die before moving to the income
phase, the person you have chosen as your beneficiary will receive a death
benefit. If you have a joint owner, the death benefit will be paid when the
first joint owner dies. Joint owners must be spouses (unless otherwise permitted
by state law). The surviving joint owner will be treated as the beneficiary. Any
other beneficiary designated will be treated as a contingent beneficiary.
The death benefit equals:
1. current contract value; OR
2. the total premiums (less withdrawals, withdrawal charges and premium
taxes) compounded at 5%*; OR
3. the contract value at the end of the 7th contract year PLUS all
premiums made since the 7th year (less withdrawals, withdrawal charges
and premium taxes) compounded at 5%*
-- whichever is GREATEST.
The death benefit under 3 will never exceed 250% of premiums paid, less partial
withdrawals. The death benefit under 2 and 3 may not be available in all states.
- --------
* (4% if the owner is age 70 or older at the date of issue)
<PAGE>
The entire death benefit must be paid within 5 years of the date of death unless
the beneficiary elects to have the death benefit payable under an income option.
The death benefit payable under an income option must be paid over the
beneficiary's lifetime or for a period not extending beyond the beneficiary's
life expectancy. Payments must begin within one year of the date of death.
Unless the beneficiary chooses to receive the death benefit in a single sum, the
beneficiary must elect an income option within the 60 day period beginning with
the date Jackson National receives proof of death. If the beneficiary chooses to
receive the death benefit in a single sum and all the necessary requirements are
met, Jackson National will pay the death benefit within 7 days. If the
beneficiary is your spouse, he/she can continue the contract in his/her own name
at the then current contract value.
DEATH OF OWNER ON OR AFTER THE INCOME DATE. If you or a joint owner die on or
after the income date, any remaining payments under the income option elected
will continue at least as rapidly as under the method of distribution in effect
at the date of death. If you die, the beneficiary becomes the owner. If the
joint owner dies, the surviving joint owner, if any, will be the designated
beneficiary. Any other beneficiary designation on record at the time of death
will be treated as a contingent beneficiary. A contingent beneficiary is
entitled to receive payment only after the beneficiary dies.
DEATH OF ANNUITANT. If the annuitant is not an owner or joint owner and the
annuitant dies before the income date, you can name a new annuitant. If you do
not name a new annuitant within 30 days of the death of the annuitant, you will
become the annuitant. However, if the owner is a non-natural person (for
example, a corporation), then the death of the annuitant will be treated as the
death of the owner, and a new annuitant may not be named.
If the annuitant dies on or after the income date, any remaining payments will
be as provided for in the income option selected. Any remaining payments will be
paid at least as rapidly as under the method of distribution in effect at the
annuitant's death.
TAXES
THE FOLLOWING IS GENERAL INFORMATION AND IS NOT INTENDED AS TAX ADVICE TO ANY
INDIVIDUAL. YOU SHOULD CONSULT YOUR OWN TAX ADVISER. A FURTHER DISCUSSION
REGARDING TAXES IS INCLUDED IN THE SAI.
The Internal Revenue Code (Code) provides that you will not be taxed on the
earnings on the money held in your contract until you take money out (this is
referred to as tax-deferral). There are different rules as to how you will be
taxed depending on how you take the money out and the type of contract you have
(non-qualified or qualified).
NON-QUALIFIED CONTRACTS - GENERAL TAXATION. You will not be taxed on increases
in the value of your contract until a distribution (either as a withdrawal or as
an income payment) occurs. When you make a withdrawal you are taxed on the
amount of the withdrawal that is earnings. For income payments, a portion of
each income payment is treated as a partial return of your premium and will not
be taxed. The remaining portion of the income payment will be treated as
ordinary income. How the income payment is divided between taxable and
non-taxable portions depends on the period over which income payments are
expected to be made. Income payments received after you have received all of
your premium are treated as income.
If a non-qualified contract is owned by a non-natural person (e.g., corporation
or certain other entities other than a trust holding the contract as an agent
for a natural person), the contract will generally not be treated as an annuity
for tax purposes.
QUALIFIED AND NON-QUALIFIED CONTRACTS. If you purchase the contract as an
individual and not under any pension plan, specially sponsored program or an
individual retirement annuity, your contract is referred to as a non-qualified
contract.
If you purchase the contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your contract is referred to as a qualified
contract. Examples of qualified plans are: Individual Retirement Annuities
(IRAs), Tax-Sheltered Annuities (sometimes referred to as 403(b) contracts), and
pension and profit-sharing plans, which include 401(k) plans and H.R. 10 Plans.
WITHDRAWALS - NON-QUALIFIED CONTRACTS. If you make a withdrawal from your
contract, the Code treats the withdrawal as first coming from earnings and then
from your premium payments. Withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a 10% penalty. Some withdrawals will be
exempt from the penalty. They include any amounts: (1) paid on or after the
taxpayer reaches age 59 1/2; (2) paid after you die; (3) paid if the taxpayer
becomes totally disabled (as that term is defined in the Code); (4) paid in a
series of substantially equal payments made annually (or more frequently) for
life or a period not exceeding life expectancy; (5) paid under an immediate
annuity; or (6) which come from premiums made prior to August 14, 1982.
WITHDRAWALS - QUALIFIED CONTRACTS. There are special rules that govern qualified
contracts. We have provided an additional discussion in the SAI.
WITHDRAWALS - TAX-SHELTERED ANNUITIES. The Code limits the withdrawal of amounts
attributable to purchase payments made under a salary reduction agreement from
Tax-Sheltered Annuities. Withdrawals can only be made when an owner: (1) reaches
age 59 1/2; (2) leaves his/her job; (3) dies; (4) becomes disabled (as that term
is defined in the Code); or (5) in the case of hardship. However, in the case of
hardship, the owner can only withdraw the premium and not any earnings.
WITHDRAWALS - ROTH IRAS. Beginning in 1998, individuals may purchase a new type
of non-deductible IRA, known as a Roth IRA. Qualified distributions from Roth
IRAs are entirely federal income tax free. A qualified distribution requires
that the individual has held the Roth IRA for at least five years and, in
addition, that the distribution is made either after the individual reaches age
59 1/2, on account of the individual's death or disability, or as qualified
first-time home purchase, subject to $10,000 lifetime maximum, for the
individual, or for a spouse, child, grandchild, or ancestor.
WITHDRAWALS - INVESTMENT ADVISER FEES. The Internal Revenue Service has, through
a series of Private Letter Rulings, held that the payment of investment adviser
fees from an IRA or a Tax-Sheltered Annuity is permissible under certain
circumstances and will not be considered a distribution for income tax purposes.
The Rulings require that in order to receive this favorable tax treatment, the
annuity contract must, under a written agreement, be solely liable (not jointly
with the contract owner) for payment of the adviser's fee and the fee must
actually be paid from the annuity contract to the adviser. Withdrawals from
non-qualified contracts for the payment of investment adviser fees will be
considered taxable distributions from the contract.
DEATH BENEFITS. Any death benefits paid under the contract are taxable to the
beneficiary. The rules governing the taxation of payments from an annuity
contract, as discussed above, generally apply to the payment of death benefits
and depend on whether the death benefits are paid as a lump sum or as annuity
payments. Estate taxes may also apply.
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM (ORP). Contracts issued
to participants in ORP contain restrictions required under the Texas
Administrative Code. In accordance with those restrictions, a participant in ORP
will not be permitted to make withdrawals prior to such participant's
retirement, death, attainment of age 70 1/2 or termination of employment in a
Texas public institution of higher education. The restrictions on withdrawal do
not apply in the event a participant in ORP transfers the contract value to
another approved contract or vendor during the period of ORP participation.
ASSIGNMENT. An assignment may be a taxable event. If the contract is issued
pursuant to a qualified plan, there may be limitations on your ability to assign
the contract.
DIVERSIFICATION. The Code provides that the underlying investments for a
variable annuity must satisfy certain diversification requirements in order to
be treated as an annuity contract. Jackson National believes that the underlying
investments are being managed so as to comply with these requirements.
OWNER CONTROL. Neither the Code nor the Internal Revenue Service Regulations
issued to date provide guidance as to the circumstances under which you, because
of the degree of control you exercise over the underlying investments, and not
Jackson National would be considered the owner of the shares of the investment
portfolios. If you are considered to be the owner of the shares, it will result
in the loss of the favorable tax treatment for the contract.
It is unknown to what extent owners are permitted to select investment
portfolios, to make transfers among the investment portfolios or the number and
type of investment portfolios owners may select from without being considered
the owner of the shares.
Furthermore, under the Contract you may invest in the JNL Variable Fund LLC,
including one or more of the following Series: JNL/First Trust The Dow(SM)
Target 5 Series, JNL/First Trust the Dow(SM) Target 10 Series, JNL/First Trust
the S&P(R) Target 10 Series, JNL/First Trust Global Target 15 Series, JNL/First
Trust Target 25 Series and JNL/First Trust Target Small-Cap Series (Target
Series).
The investment strategy employed by one or more of the Series in the Target
Series involves the purchase on a pre-determined selection date of the common
stock of a limited number of companies meeting certain criteria. Such criteria
consist of pre-set objective standards such as highest dividend yield, price per
share and market capitalization. A pre-set number of stocks meeting such
criteria (ranging from five in one series to forty in another) are purchased in
equal amounts. The Series will purchase and sell stocks on an on-going basis
according to the pre-set criteria and percentage relationships and will
generally follow a buy and hold strategy. (See the JNL Variable Fund LLC
prospectus.)
It is unknown what level of investment management must be exercised by a manager
of a Target Series and what amount of investment diversification of a Target
Series is required in order to preclude the existence of an unacceptable level
of owner control. As discussed above, if you are deemed to possess too much
control over the assets of the Separate Account, the Contract would not be given
tax-deferred treatment and therefore the earnings allocable to the Contract
would be subject to federal income tax prior to receipt by you.
If any guidance is provided which is considered a new position, then the
guidance would generally be applied prospectively. However, if such guidance is
considered not to be a new position, it may be applied retroactively. This would
mean that you, as the owner of the contract, could be treated as the owner of
the investment portfolios. Due to the uncertainty in this area, Jackson National
reserves the right to modify the contract in an attempt to maintain favorable
tax treatment.
OTHER INFORMATION
DOLLAR COST AVERAGING. You can arrange to automatically have a regular amount of
money periodically transferred into the investment portfolios. This
theoretically gives you a lower average cost per unit over time than you would
receive if you made a one time purchase. Certain restrictions may apply.
Jackson National does not currently charge for participation in this program. We
may do so in the future.
REBALANCING. You can arrange to have Jackson National automatically reallocate
money between investment portfolios periodically to keep the blend you select.
Jackson National does not currently charge for participation in this program. We
may do so in the future.
FREE LOOK. If you cancel the contract within twenty days after receiving it (or
whatever period is required in your state), Jackson National will return the
amount your contract is worth on the day we receive your request. This may be
more or less than your original payment. If required by law, Jackson National
will return your premium.
ADVERTISING. From time to time, Jackson National may advertise several types of
performance for the investment portfolios.
o Total return is the overall change in the value of an investment in an
investment portfolio over a given period of time.
o Standardized average annual total return is calculated in accordance
with SEC guidelines.
o Non-standardized total return may be for periods other than those
required or may otherwise differ from standardized average annual
total return. For example, if a series has been in existence longer
than the investment portfolio, we may show non-standardized
performance for periods that begin on the inception date of the
series, rather than the inception date of the investment portfolio.
o Yield refers to the income generated by an investment over a given period
of time.
Performance will be calculated by determining the percentage change in the value
of an accumulation unit by dividing the increase (decrease) for that unit by the
value of the accumulation unit at the beginning of the period. Performance will
reflect the deduction of the insurance charges and may reflect the deduction of
the contract maintenance charge and withdrawal charge. The deduction of the
contract maintenance and/or the withdrawal charge would reduce the percentage
increase or make greater any percentage decrease.
MARKET TIMING AND ASSET ALLOCATION SERVICES. Market timing and asset allocation
services must comply with Jackson National's administrative systems, rules and
procedures.
MODIFICATION OF THE CONTRACT. Only the President, Vice President, Secretary or
Assistant Secretary of Jackson National may approve a change to or waive a
provision of the contract. Any change or waiver must be in writing. Jackson
National may change the terms of the contract in order to comply with changes in
applicable law, or otherwise as deemed necessary by Jackson National.
YEAR 2000 MATTERS. Jackson National initiated a project in 1994 to review and
analyze its computer systems to determine if they are Year 2000 compatible. This
project includes a written plan which provides for a process which ensures that
when a particular system, or software application, is determined to be
"non-compliant" the proper steps are in place to either remedy the
"non-compliance" or cease using the particular system or software.
Jackson National's plan provides for an inventory of all critical computer
systems, testing of such systems and resolution of Year 2000 issues. Jackson
National anticipates that all compliance issues will be resolved by December 31,
1999.
As of the date of this Prospectus, Jackson National has identified and made
available what it believes are the appropriate resources of hardware, people,
and dollars to ensure that the plan will be completed.
Jackson National will not conclusively know the success of its plan until the
Year 2000. Even with appropriate and diligent pursuit of a well-conceived
response plan, including testing procedures, there is no certainty that any
company will achieve complete success. Further, Jackson National's ability to
function unaffected to and through the Year 2000 may be adversely affected by
actions (or inactions) of third parties beyond its knowledge or control.
LEGAL PROCEEDINGS. There are no material legal proceedings, other than ordinary
routine litigation incidental to the business, to which Jackson National Life
Insurance Company, Jackson National Life Distributors, Inc., and the Jackson
National Separate Account - I are parties.
QUESTIONS. If you have questions about your contract, you may call or write to
us at:
o Jackson National Life Annuity Service Center: (800) 766-4683, P.O. Box
378002, Denver, Colorado 80237-8002
o Institutional Marketing Group Service Center: (800) 777-7779, P.O. Box
30386, Lansing, Michigan 48909-9692.
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
General Information and History .......................................... 2
Services ................................................................. 2
Purchase of Securities Being Offered ..................................... 3
Underwriters ............................................................. 3
Calculation of Performance ............................................... 3
Additional Tax Information ............................................... 9
Income Payments; Net Investment Factor ...................................17
Financial Statements .....................................................19
<PAGE>
APPENDIX A
CONDENSED FINANCIAL INFORMATION
Accumulation Unit Values
The following table shows accumulation unit values at the beginning and end of
the periods indicated as well as the number of accumulation units outstanding
for each portfolio as of the end of the periods indicated. This information has
been taken from the Separate Account's financial statements. The Separate
Account's financial statements for the periods ended December 31, 1998, 1997,
and 1996, have been audited by PricewaterhouseCoopers LLP, independent
accountants. This information should be read together with the Separate
Account's financial statements and related notes which are in the SAI.
<TABLE>
<CAPTION>
Investment Portfolios March 31, December 31, December 31, December 31, December 31,
1999 (unaudited) 1998 1997 1996 1995(a)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JNL/Alger Growth Portfolio
Accumulation unit value:
Beginning of period $19.86 $13.82 $11.11 $9.93 $10.00
End of period $22.04 $19.86 $13.82 $11.11 $9.93
Accumulation units outstanding
at the end of period 8,661,954 7,704,990 5,908,446 3,310,810 12,285
JNL/Eagle Core Equity Portfolio
Accumulation unit value:
Beginning of period $15.77 $13.72 $10.52 $10.00 N/A(b)
End of period $16.29 $15.77 $13.72 $10.52 N/A(b)
Accumulation units outstanding
at the end of period 2,115,138 1,829,363 766,516 84,895 N/A(b)
JNL/Eagle SmallCap Equity Portfolio
Accumulation unit value:
Beginning of period $13.98 $14.00 $11.12 $10.00 N/A(b)
End of period $12.28 $13.98 $14.00 $11.12 N/A(b)
Accumulation units outstanding
at the end of period 2,313,711 2,274,545 857,946 71,014 N/A(b)
JNL/Janus Aggressive Growth Portfolio
Accumulation unit value:
Beginning of period $20.62 $13.26 $11.95 $10.20 $10.00
End of period $25.46 $20.62 $13.26 $11.95 $10.20
Accumulation units outstanding
at the end of period 7,810,005 6,839,305 5,371,379 2,355,530 4,008
JNL/Janus Capital Growth Portfolio
Accumulation unit value:
Beginning of period $17.94 $13.46 $11.87 $10.34 $10.00
End of period $21.01 $17.94 $13.46 $11.87 $10.34
Accumulation units outstanding
at the end of period 6,450,609 5,849,883 5,132,743 2,985,668 1,587
JNL/Janus Global Equities Portfolio
Accumulation unit value:
Beginning of period $19.92 $15.93 $13.57 $10.48 $10.00
End of period $21.15 $19.92 $15.93 $13.57 $10.48
Accumulation units outstanding
at the end of period 11,917,165 11,242,198 9,067,277 3,090,234 4,778
JNL/Putnam Growth Portfolio(c)
Accumulation unit value:
Beginning of period $21.13 $15.88 $13.22 $10.58 $10.00
End of period $22.17 $21.13 $15.88 $13.22 $10.58
Accumulation units outstanding
at the end of period 9,705,280 8,348,592 5,207,294 1,682,604 571
JNL/Putnam Value Equity Portfolio(c)
Accumulation unit value:
Beginning of period $17.29 $15.59 $12.98 $10.59 $10.00
End of period $17.87 $17.29 $15.59 $12.98 $10.59
Accumulation units outstanding
at the end of the period 11,928,169 10,899,898 6,925,507 1,330,288 3,944
JNL/S&P Conservative Growth Portfolio I
Accumulation unit value:
Beginning of period $10.36 $10.00 N/A(d) N/A(d) N/A(d)
End of period $10.76 $10.36 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 1,836,838 967,674 N/A(d) N/A(d) N/A(d)
JNL/S&P Moderate Growth Portfolio I
Accumulation unit value:
Beginning of period $10.52 $10.00 N/A(d) N/A(d) N/A(d)
End of period $11.09 $10.52 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 2,306,663 1,198,566 N/A(d) N/A(d) N/A(d)
JNL/S&P Aggressive Growth Portfolio I
Accumulation unit value:
Beginning of period $10.77 $10.00 N/A(d) N/A(d) N/A(d)
End of period $11.47 $10.77 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 737,802 410,888 N/A(d) N/A(d) N/A(d)
JNL/S&P Very Aggressive Growth
Portfolio I
Accumulation unit value:
Beginning of period $11.07 $10.00 N/A(d) N/A(d) N/A(d)
End of period $12.03 $11.07 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 275,105 220,495 N/A(d) N/A(d) N/A(d)
JNL/S&P Equity Growth Portfolio I
Accumulation unit value:
Beginning of period $10.53 $10.00 N/A(d) N/A(d) N/A(d)
End of period $11.22 $10.53 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 1,032,825 478,149 N/A(d) N/A(d) N/A(d)
JNL/S&P Equity Aggressive Growth
Portfolio I
Accumulation unit value:
Beginning of period $10.64 $10.00 N/A(d) N/A(d) N/A(d)
End of period $11.43 $10.64 N/A(d) N/A(d) N/A(d)
Accumulation units outstanding
at the end of period 391,051 304,127 N/A(d) N/A(d) N/A(d)
PPM America/JNL Balanced Portfolio (c)
Accumulation unit value:
Beginning of period $14.31 $13.19 $11.29 $10.34 $10.00
End of period $14.17 $14.31 $13.19 $11.29 $10.34
Accumulation units outstanding
at the end of period 7,557,659 6,574,171 4,486,973 2,120,529 12,871
PPM America/JNL High Yield Bond
Portfolio
Accumulation unit value:
Beginning of period $13.06 $12.75 $11.26 $10.11 $10.00
End of period $13.11 $13.06 $12.75 $11.26 $10.11
Accumulation units outstanding
at the end of period 8,157,978 7,350,674 4,711,051 1,147,840 100
PPM America/JNL Money Market Portfolio
Accumulation unit value:
Beginning of period $11.12 $10.74 $10.37 $10.03 $10.00
End of period $11.20 $11.12 $10.74 $10.37 $10.03
Accumulation units outstanding
at the end of period 6,469,664 4,713,958 3,855,123 2,193,176 14,608
Salomon Brothers/JNL Global Bond
Portfolio
Accumulation unit value:
Beginning of period $12.94 $12.80 $11.74 $10.41 $10.00
End of period $12.96 $12.94 $12.80 $11.74 $10.41
Accumulation units outstanding
at the end of the period 3,357,156 3,166,154 2,603,857 911,885 3,128
Salomon Brothers/JNL U.S. Government &
Quality Bond Portfolio
Accumulation unit value:
Beginning of period $12.00 $11.12 $10.33 $10.21 $10.00
End of period $11.84 $12.00 $11.12 $10.33 $10.21
Accumulation units outstanding
at the end of period 6,249,323 5,006,001 2,090,575 902,055 1,275
T. Rowe Price/JNL Established Growth
Portfolio
Accumulation unit value:
Beginning of period $20.14 $15.99 $12.53 $10.36 $10.00
End of period $20.53 $20.14 $15.99 $12.53 $10.36
Accumulation units outstanding
at the end of period 11,227,979 10,399,047 7,218,789 2,500,896 10,564
T. Rowe Price/JNL International Equity
Investment Portfolio
Accumulation unit value:
Beginning of period $13.46 $11.94 $11.78 $10.49 $10.00
End of period $13.56 $13.46 $11.94 $11.78 $10.49
Accumulation units outstanding
at the end of period 4,956,337 4,828,701 4,406,642 2,039,430 3,096
T. Rowe Price/JNL Mid-Cap Growth
Portfolio
Accumulation unit value:
Beginning of period $17.58 $14.68 $12.59 $10.37 $10.00
End of period $17.39 $17.58 $14.68 $12.59 $10.37
Accumulation units outstanding
at the end of period 10,303,511 9,941,003 8,031,753 3,585,051 5,120
JNL/First Trust The Dow(SM) Target 10
Portfolio
Accumulation unit value:
Beginning of period N/A(e) N/A(e) N/A(e) N/A(e) N/A(e)
End of period N/A(e) N/A(e) N/A(e) N/A(e) N/A(e)
Accumulation units outstanding
at the end of period N/A(e) N/A(e) N/A(e) N/A(e) N/A(e)
</TABLE>
(a) The Separate Account commenced operations on October 16, 1995.
(b) The JNL/Eagle Core Equity Portfolio and the JNL/Eagle SmallCap Equity
Portfolio commenced operations on September 16, 1996.
(c) Prior to May 1, 1997, the JNL/Putnam Growth Series was the JNL/Phoenix
Investment Counsel Growth Series and the management fee was .90%, the
JNL/Putnam Value Equity Series was the PPM America/JNL Value Equity Series
and the management fee was .75%; and the PPM America/JNL Balanced Series
was the JNL/Phoenix Investment Counsel Balanced Series and the management
fee was .90%.
(d) The JNL/S&P Conservative Growth Portfolio I commenced operations on April
9, 1998, the JNL/S&P Moderate Growth Portfolio I commenced operations on
April 8, 1998, the JNL/S&P Aggressive Growth Portfolio I commenced
operations on April 8, 1998, the JNL/S&P Very Aggressive Growth Portfolio I
commenced operations on April 1, 1998, the JNL/S&P Equity Growth Portfolio
I commenced operations on April 13, 1998, and the JNL/S&P Equity Aggressive
Growth Portfolio I commenced operations on April 15, 1998.
(e) These Portfolios had not commenced operations as of March 31, 1999.
<PAGE>
1
STATEMENT OF ADDITIONAL INFORMATION
JULY 6, 1999
INDIVIDUAL DEFERRED FIXED AND VARIABLE ANNUITY CONTRACTS
ISSUED BY THE JACKSON NATIONAL SEPARATE ACCOUNT - I
OF JACKSON NATIONAL LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the Prospectus
and should be read in conjunction with the Prospectus dated July 6, 1999. The
Prospectus may be obtained from Jackson National Life Insurance Company by
writing P. O. Box 378002, Denver, Colorado 82037-8002, or calling
1-800-766-4683. Not all Portfolios described in this SAI may be available for
investment.
TABLE OF CONTENTS
PAGE
General Information and History................................................2
Services.......................................................................2
Purchase of Securities Being Offered...........................................3
Underwriters...................................................................3
Calculation of Performance.....................................................3
Additional Tax Information.....................................................9
Income Payments; Net Investment Factor .......................................18
Financial Statements .........................................................19
<PAGE>
GENERAL INFORMATION AND HISTORY
Jackson National Separate Account - I (Separate Account) is a separate
investment account of Jackson National Life Insurance Company (Jackson
National). Jackson National is a wholly-owned subsidiary of Brooke Life
Insurance Company, and is ultimately a wholly-owned subsidiary of Prudential
Corporation plc, London, England, a life insurance company in the United
Kingdom.
The JNL/First Trust The S&P Target 10 Portfolio is not sponsored, endorsed, sold
or promoted by Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
(S&P). S&P makes no representation or warranty, express or implied, to the
owners of the Portfolio or any member of public regarding the advisability of
investing in securities generally or in the Portfolio 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 are determined, composed and
calculated by S&P without regard to the Licensee or the Portfolio. S&P has no
obligation to take the needs of the Licensee or the owners of the Portfolio 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 prices
and amount of the Portfolio or the timing of the issuance or sale of the
Portfolio or in the determination or calculation of the equation by which the
Portfolio is to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing or trading of the Portfolio.
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 PORTFOLIO, 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 EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT 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.
SERVICES
Jackson National is the custodian of the assets of the Separate Account. The
custodian has custody of all cash of the Separate Account and attends to the
collection of proceeds of shares of the underlying fund bought and sold by the
Separate Account.
PricewaterhouseCoopers LLP, 200 East Randolph Drive, Chicago, Illinois 60601,
audits and reports on Jackson National's financial statements, including the
financial statements of the Separate Account, and performs other professional
accounting, auditing and advisory services when engaged to do so by Jackson
National.
Blazzard, Grodd & Hasenauer, P.C. of Westport, Connecticut has provided advice
on certain matters relating to the federal securities and income tax laws in
connection with the contracts described in the Prospectus.
PURCHASE OF SECURITIES BEING OFFERED
The contracts will be sold by licensed insurance agents in states where the
contracts may be lawfully sold. The agents will be registered representatives of
broker-dealers that are registered under the Securities Exchange Act of 1934 and
members of the National Association of Securities Dealers, Inc. (NASD).
UNDERWRITERS
The contracts are offered continuously and are distributed by Jackson National
Life Distributors, Inc. (JNLD), 401 Wilshire Boulevard, Suite 1200, Santa
Monica, California 90401. JNLD is a subsidiary of Jackson National. During the
fiscal years ended December 31, 1998, 1997 and 1996, no underwriting commissions
were paid by Jackson National to JNLD.
CALCULATION OF PERFORMANCE
When Jackson National advertises performance for an investment portfolio (except
the PPM America/JNL Money Market Portfolio), we will include quotations of
standardized average annual total return to facilitate comparison with
standardized average annual total return advertised by other variable annuity
separate accounts. Standardized average annual total return for an investment
portfolio will be shown for periods beginning on the date the investment
portfolio first invested in the corresponding series. We will calculate
standardized average annual total return according to the standard methods
prescribed by rules of the Securities and Exchange Commission.
Standardized average annual total return for a specific period is calculated by
taking a hypothetical $1,000 investment in an investment portfolio at the
offering on the first day of the period ("initial investment"), and computing
the ending redeemable value ("redeemable value") of that investment at the end
of the period. The redeemable value is then divided by the initial investment
and expressed as a percentage, carried to at least the nearest hundredth of a
percent. Standardized average annual total return is annualized and reflects the
deduction of the insurance charges and the contract maintenance charge. The
redeemable value also reflects the effect of any applicable withdrawal charge
that may be imposed at the end of the period. No deduction is made for premium
taxes which may be assessed by certain states.
The standardized average annual total returns for each investment portfolio
(except the PPM America/JNL Money Market Portfolio) for the periods indicated
are as follows (more recent returns may be more or less than the stated returns
due to market volatility):
<TABLE>
<CAPTION>
Date of Initial
Investment in
One Year Period Corresponding
Ended March 31, Series to
1999 March 31, 1999
---------------- -----------------
<S> <C> <C>
JNL/Alger Growth Portfolio 32.41% 25.69%
JNL/Eagle Core Equity Portfolio 0.36% 20.03%
JNL/Eagle SmallCap Equity Portfolio -31.47% 6.74%
JNL/Janus Aggressive Growth Portfolio 56.41% 31.29%
JNL/Janus Capital Growth Portfolio 33.18% 24.43%
JNL/Janus Global Equities Portfolio 6.69% 24.12%
JNL/Putnam Growth Portfolio 13.41% 26.05%
JNL/Putnam Value Equity Portfolio -3.38% 17.90%
JNL/S&P Conservative Growth Portfolio I N/A 0.54%
JNL/S&P Moderate Growth Portfolio I N/A 3.79%
JNL/S&P Aggressive Growth Portfolio I N/A 7.63%
JNL/S&P Very Aggressive Growth Portfolio I N/A 13.22%
JNL/S&P Equity Growth Portfolio I N/A 5.09%
JNL/S&P Equity Aggressive Growth Portfolio I N/A 7.17%
PPM America/JNL Balanced Portfolio -7.39% 9.92%
PPM America/JNL High Yield Bond Portfolio -8.11% 7.46%
Salomon Brothers/JNL Global Bond Portfolio -7.66% 7.00%
Salomon Brothers/JNL U.S. Government & Quality
Bond Portfolio -1.79% 4.02%
T. Rowe Price/JNL Established Growth Portfolio 4.71% 22.95%
T. Rowe Price/JNL International Equity Investment Portfolio -6.43% 8.46%
T. Rowe Price/JNL Mid-Cap Growth Portfolio -4.62% 17.01%
</TABLE>
The JNL/First Trust The Dow(SM) Target 5 Portfolio, the JNL/First Trust The
Dow(SM) Target 10 Portfolio, the JNL/First Trust The S&P(R) Target 10 Portfolio,
the JNL/First Trust Global Target 15 Portfolio, the JNL/First Trust Target 25
Portfolio, the JNL/First Trust Target Small-Cap Portfolio, the JNL/First Trust
Technology Sector Portfolio, the JNL/First Trust Pharmaceutical/Healthcare
Sector Portfolio, the JNL/First Trust Financial Sector Portfolio, the JNL/First
Trust Energy Sector Portfolio, the JNL/First Trust Leading Brands Sector
Portfolio, and the JNL/First Trust Communications Sector Portfolio had not
commenced operations as of March 31, 1999.
Prior to May 1, 1997, the PPM America/JNL Balanced Portfolio was the JNL/Phoenix
Investment Counsel Balanced Portfolio and the corresponding series was
sub-advised by Phoenix Investment Counsel, Inc., the JNL/Putnam Growth Portfolio
was the JNL/Phoenix Investment Counsel Growth Portfolio and the corresponding
series was sub-advised by Phoenix Investment Counsel, Inc., and the JNL/Phoenix
Value Equity Portfolio was the PPM America/JNL Value Equity Portfolio and the
corresponding series was sub-advised by PPM America, Inc.
Jackson National may also advertise non-standardized total return.
Non-standardized total return may be for periods other than those required to be
presented or may otherwise differ from standardized average annual total return.
Because the contract is designed for long term investment, non-standardized
total return that does not reflect the deduction of any applicable withdrawal
charge may be advertised. Reflecting the deduction of the withdrawal charge
decreases the level of performance advertised. Non-standardized total return may
also assume a larger initial investment which more closely approximates the size
of a typical contract.
The non-standardized total returns that each investment portfolio (except the
PPM America/JNL Money Market Portfolio) would have achieved if it had been
invested in the corresponding series for the periods indicated, calculated in a
manner similar to standardized average annual total return but assuming a
hypothetical initial investment of $10,000 and without deducting the contract
maintenance charge or the withdrawal charge, are as follows (more recent returns
may be more or less than the stated returns due to market volatility):
<TABLE>
<CAPTION>
Commencement of
Operations of
One Year Period Corresponding
Ended Series to
March 31, 1999 March 31, 1999
-------------- --------------
<S> <C> <C>
JNL/Alger Growth Portfolio** 39.44% 25.22%
JNL/Eagle Core Equity Portfolio*** 7.39% 21.58%
JNL/Eagle SmallCap Equity Portfolio*** -24.44% 9.78%
JNL/Janus Aggressive Growth Portfolio* 63.44% 33.51%
JNL/Janus Capital Growth Portfolio* 40.22% 29.01%
JNL/Janus Global Equities Portfolio* 13.73% 27.74%
JNL/Putnam Growth Portfolio* 20.45% 28.50%
JNL/Putnam Value Equity Portfolio* 3.65% 20.32%
JNL/S&P Conservative Growth Portfolio I**** N/A 7.62%
JNL/S&P Moderate Growth Portfolio I**** N/A 10.87%
JNL/S&P Aggressive Growth Portfolio I**** N/A 14.72%
</TABLE>
<TABLE>
<CAPTION>
Commencement of
Operations of
One Year Period Corresponding
Ended Series to
March 31, 1999 March 31, 1999
-------------- --------------
<S> <C> <C>
JNL/S&P Very Aggressive Growth Portfolio I**** N/A 20.31%
JNL/S&P Equity Growth Portfolio I**** N/A 12.17%
JNL/S&P Equity Aggressive Growth Portfolio I**** N/A 14.26%
PPM America/JNL Balanced Portfolio* -0.36% 12.29%
PPM America/JNL High Yield Bond Portfolio* -1.08% 8.36%
Salomon Brothers/JNL Global Bond Portfolio* -0.63% 7.48%
Salomon Brothers/JNL U.S. Government & Quality
Bond Portfolio* 5.24% 5.44%
T. Rowe Price/JNL Established Growth Portfolio* 11.75% 25.09%
T. Rowe Price/JNL International Equity Investment Portfolio* 0.60% 8.52%
T. Rowe Price/JNL Mid-Cap Growth Portfolio* 2.41% 21.77%
</TABLE>
* Corresponding series commenced operations on May 15, 1995.
** Corresponding series commenced operations on October 16, 1995.
*** Corresponding series commenced operations on September 16, 1996.
**** The JNL/S&P Conservative Growth Series I commenced operations on April 9,
1998; the JNL/S&P Moderate Growth Series I commenced operations on April 8,
1998; the JNL/S&P Aggressive Growth Series I commenced operations on April 8,
1998; the JNL/S&P Very Aggressive Growth Series I commenced operations on April
1, 1998; the JNL/S&P Equity Growth Series I commenced operations on April 13,
1998; and the JNL/S&P Equity Aggressive Growth Series I commenced operations on
April 15, 1998. Performance figures are not annualized.
The JNL/First Trust The Dow(SM) Target 5 Portfolio, the JNL/First Trust The
Dow(SM) Target 10 Portfolio, the JNL/First Trust The S&P(R) Target 10 Portfolio,
the JNL/First Trust Global Target 15 Portfolio, the JNL/First Trust Target 25
Portfolio, the JNL/First Trust Target Small-Cap Portfolio, the JNL/First Trust
Technology Sector Portfolio, the JNL/First Trust Pharmaceutical/Healthcare
Sector Portfolio, the JNL/First Trust Financial Sector Portfolio, the JNL/First
Trust Energy Sector Portfolio, the JNL/First Trust Leading Brands Sector
Portfolio, and the JNL/First Trust Communications Sector Portfolio had not
commenced operations as of March 31, 1999.
Prior to May 1, 1997, the PPM America/JNL Balanced Portfolio was the JNL/Phoenix
Investment Counsel Balanced Portfolio and the corresponding series was
sub-advised by Phoenix Investment Counsel, Inc., the JNL/Putnam Growth Portfolio
was the JNL/Phoenix Investment Counsel Growth Portfolio and the corresponding
series was sub-advised by Phoenix Investment Counsel, Inc., and the JNL/Putnam
Value Equity Portfolio was the PPM America/JNL Value Equity Portfolio and the
corresponding series was sub-advised by PPM America, Inc.
Standardized average annual total return quotations will be current to the last
day of the calendar quarter preceding the date on which an advertisement is
submitted for publication. Both standardized average annual total return
quotations and non-standardized total return quotations will be based on rolling
calendar quarters and will cover at least periods of one, five, and ten years,
or a period covering the time the investment portfolio has been in existence, if
it has not been in existence for one of the prescribed periods. If the
corresponding series has been in existence for longer than the investment
portfolio, the non-standardized total return quotations will show the investment
performance the investment portfolio would have achieved (reduced by the
applicable charges) had it been held in the series for the period quoted.
Standardized average annual total return is not available for periods before the
investment portfolio was in existence.
Quotations of standardized average annual total return and non-standardized
total return are based upon historical earnings and will fluctuate. Any
quotation of performance should not be considered a guarantee of future
performance. Factors affecting the performance of a series include general
market conditions, operating expenses and investment management. An owner's
withdrawal value upon surrender of a contract may be more or less than original
cost.
Jackson National may advertise the current annualized yield for a 30-day period
for an investment portfolio. The annualized yield of an investment portfolio
refers to the income generated by the investment portfolio over a specified
30-day period. Because this yield is annualized, the yield generated by an
investment portfolio during the 30-day period is assumed to be generated each
30-day period. The yield is computed by dividing the net investment income per
accumulation unit earned during the period by the price per unit on the last day
of the period, according to the following formula:
a-b 6
YIELD = 2[(---+1) -1]
cd
Where:
a = net investment income earned during the
period by the series attributable to shares
owned by the investment portfolio.
b = expenses for the investment portfolio
accrued for the period (net of
reimbursements).
c = the average daily number of accumulation
units outstanding during the period.
d = the maximum offering price per
accumulation unit on the last day of the
period.
Net investment income will be determined in accordance with rules established by
the Securities and Exchange Commission. Accrued expenses will include all
recurring fees that are charged to all contracts.
The yield for the 30-day period ended March 31, 1999 for each of the referenced
investment portfolios is as follows:
PPM America/JNL Balanced Portfolio 1.02%
PPM America/JNL High Yield Bond Portfolio 7.12%
Salomon Brothers/JNL Global Bond Portfolio 5.30%
Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio 3.60%
Because of the charges and deductions imposed by the Separate Account, the yield
for an investment portfolio will be lower than the yield for the corresponding
series. The yield on amounts held in the investment portfolios normally will
fluctuate over time. Therefore, the disclosed yield for any given period is not
an indication or representation of future yields or rates of return. An
investment portfolio's actual yield will be affected by the types and quality of
portfolio securities held by the series and the series operating expenses.
Any current yield quotations of the PPM America/JNL Money Market Portfolio,
subject to Rule 482 of the Securities Act of 1933, will consist of a seven
calendar day historical yield, carried at least to the nearest hundredth of a
percent. We may advertise yield for the Portfolio based on different time
periods, but we will accompany it with a yield quotation based on a seven day
calendar period. The PPM America/JNL Money Market Portfolio's yield will be
calculated by determining the net change, exclusive of capital changes, in the
value of a hypothetical pre-existing account having a balance of one
accumulation unit at the beginning of the base period, subtracting a
hypothetical charge reflecting deductions from contracts, and dividing the net
change in account value by the value of the account at the beginning of the
period to obtain a base period return and multiplying the base period return by
(365/7). The PPM America/JNL Money Market Portfolio's effective yield is
computed similarly but includes the effect of assumed compounding on an
annualized basis of the current yield quotations of the Portfolio. The PPM
America/JNL Money Market Portfolio's yield and effective yield for the seven day
period ended March 31, 1999 were 2.86% and 2.90%, respectively.
The PPM America/JNL Money Market Portfolio's yield and effective yield will
fluctuate daily. Actual yields will depend on factors such as the type of
instruments in the series' portfolio, portfolio quality and average maturity,
changes in interest rates, and the series' expenses. Although the investment
portfolio determines its yield on the basis of a seven calendar day period, it
may use a different time period on occasion. The yield quotes may reflect the
expense limitations described in the series' Prospectus or Statement of
Additional Information. There is no assurance that the yields quoted on any
given occasion will be maintained for any period of time and there is no
guarantee that the net asset values will remain constant. It should be noted
that neither a contract owner's investment in the PPM America/JNL Money Market
Portfolio nor that Portfolio's investment in the PPM America/JNL Money Market
Series, is guaranteed or insured. Yields of other money market funds may not be
comparable if a different base or another method of calculation is used.
ADDITIONAL TAX INFORMATION
NOTE: INFORMATION CONTAINED HEREIN SHOULD NOT BE SUBSTITUTED FOR THE ADVICE OF A
PERSONAL TAX ADVISER. JACKSON NATIONAL DOES NOT MAKE ANY GUARANTEE REGARDING THE
TAX STATUS OF ANY CONTRACT OR ANY TRANSACTION INVOLVING THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER
UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED IN THIS PROSPECTUS MAY BE APPLICABLE IN CERTAIN SITUATIONS.
MOREOVER, NO ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX
LAWS.
General
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code"),
governs taxation of annuities in general. An individual owner is not taxed on
increases in the value of a contract until distribution occurs, either in the
form of a withdrawal or as annuity payments under the annuity option elected.
For a withdrawal received as a total surrender (total redemption or a death
benefit), the recipient is taxed on the portion of the payment that exceeds the
cost basis of the contract. For a payment received as a partial withdrawal,
federal tax liability is determined on a last-in, first-out basis, meaning
taxable income is withdrawn before the cost basis of the contract is withdrawn.
For contracts issued in connection with non-qualified plans, the cost basis is
generally the premiums, while for contracts issued in connection with qualified
plans there may be no cost basis. The taxable portion of a withdrawal is taxed
at ordinary income tax rates. Tax penalties may also apply.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includable in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the contract (adjusted for any period certain or refund
feature) bears to the expected return under the contract. The exclusion amount
for payments based on a variable annuity option is determined by dividing the
cost basis of the contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid. Payments
received after the investment in the contract has been recovered (i.e. when the
total of the excludable amounts equals the investment in the contract) are fully
taxable. The taxable portion is taxed at ordinary income tax rates. For certain
types of qualified plans there may be no cost basis in the contract within the
meaning of Section 72 of the Code. Owners, annuitants and beneficiaries under
the contracts should seek competent financial advice about the tax consequences
of distributions.
Jackson National is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
Jackson National and its operations form a part of Jackson National.
Withholding Tax on Distributions
The Code generally requires Jackson National (or, in some cases, a plan
administrator) to withhold tax on the taxable portion of any distribution or
withdrawal from a contract. For "eligible rollover distributions" from contracts
issued under certain types of qualified plans, 20% of the distribution must be
withheld, unless the payee elects to have the distribution "rolled over" to
another eligible plan in a direct transfer. This requirement is mandatory and
cannot be waived by the owner.
An "eligible rollover distribution" is the estimated taxable portion of any
amount received by a covered employee from a plan qualified under Section 401(a)
or 403(a) of the Code, or from a tax sheltered annuity qualified under Section
403(b) of the Code (other than (1) a series of substantially equal annuity
payments for the life (or life expectancy) of the employee, or joint lives (or
joint life expectancies) of the employee, and his or her designated beneficiary,
or for a specified period of ten years or more; (2) minimum distributions
required to be made under the Code); and (3) hardship withdrawals. Failure to
"rollover" the entire amount of an eligible rollover distribution (including an
amount equal to the 20% portion of the distribution that was withheld) could
have adverse tax consequences, including the imposition of a penalty tax on
premature withdrawals, described later in this section.
Withdrawals or distributions from a contract other than eligible rollover
distributions are also subject to withholding on the estimated taxable portion
of the distribution, but the owner may elect in such cases to waive the
withholding requirement. If not waived, withholding is imposed (1) for periodic
payments, at the rate that would be imposed if the payments were wages, or (2)
for other distributions, at the rate of 10%. If no withholding exemption
certificate is in effect for the payee, the rate under (1) above is computed by
treating the payee as a married individual claiming 3 withholding exemptions.
Generally, the amount of any payment of interest to a non-resident alien of the
United States shall be subject to withholding of a tax equal to thirty (30%)
percent of such amount or, if applicable, a lower treaty rate. A payment may not
be subject to withholding where the recipient sufficiently establishes that such
payment is effectively connected to the recipient's conduct of a trade or
business in the United States and such payment is included in recipient's gross
income.
Diversification -- Separate Account Investments
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified, in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the contract as
an annuity contract would result in imposition of federal income tax to the
owner with respect to earnings allocable to the contract prior to the receipt of
payments under the contract. The Code contains a safe harbor provision which
provides that annuity contracts such as the contracts meet the diversification
requirements if, as of the close of each calendar quarter, the underlying assets
meet the diversification standards for a regulated investment company, and no
more than 55% of the total assets consist of cash, cash items, U.S. government
securities and securities of other regulated investment companies.
The Treasury Department has issued Regulations establishing diversification
requirements for the investment portfolios underlying variable contracts. The
Regulations amplify the diversification requirements for variable contracts set
forth in the Code and provide an alternative to the safe harbor provision
described above. Under the Regulations, an investment portfolio will be deemed
adequately diversified if (1) no more than 55% of the value of the total assets
of the portfolio is represented by any one investment; (2) no more than 70% of
the value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
Jackson National intends that each series of the JNL Series Trust will be
managed by its respective investment adviser in such a manner as to comply with
these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which contract owner control
of the investments of the Separate Account will cause the contract owner to be
treated as the owner of the assets of the Separate Account, thereby resulting in
the loss of favorable tax treatment of the contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of owner control which may be exercised under the contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the owner with
respect to earnings allocable to the contract prior to receipt of payments under
the contract.
Furthermore, under the Contract you may invest in the JNL Variable Fund LLC,
including one or more of the following Series: JNL/First Trust The Dow(SM)
Target 5 Series, JNL/First Trust the Dow(SM) Target 10 Series, JNL/First Trust
the S&P(R) Target 10 Series, JNL/First Trust Global Target 15 Series, JNL/First
Trust Target 25 Series and JNL/First Trust Target Small-Cap Series (Target
Series).
The investment strategy employed by one or more of the Series in the Target
Series involves the purchase on a pre-determined selection date of the common
stock of a limited number of companies meeting certain criteria. Such criteria
consist of pre-set objective standards such as highest dividend yield, price per
share and market capitalization. A pre-set number of stocks meeting such
criteria (ranging form five in one series to forth in another) are purchased in
equal amounts. The Series will purchase and sell stocks on an on-going basis
according to the pre-set criteria and percentage relationships and will
generally follow a buy and hold strategy. (See the JNL Variable Fund LLC
prospectus.)
It is unknown what level of investment management must be exercised by a manager
of a Target Series and what amount of investment diversification of a Target
Series is required in order to preclude the existence of an unacceptable level
of owner control. As discussed above, if you are deemed to possess too much
control over the assets of the Separate Account, the Contract would not be given
tax-deferred treatment and therefore the earnings allocable to the Contract
would be subject to federal income tax prior to receipt by you.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the owner being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, Jackson National reserves the right to
modify the contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple annuity contracts which are issued within a
calendar year to the same contract owner by one company or its affiliates are
treated as one annuity contract for purposes of determining the tax consequences
of any distribution. Such treatment may result in adverse tax consequences
including more rapid taxation of the distributed amounts from such multiple
contracts. For purposes of this rule, contracts received in a Section 1035
exchange will be considered issued in the year of the exchange. Owners should
consult a tax adviser prior to purchasing more than one annuity contract in any
calendar year.
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on premiums for
contracts will be taxed currently to the owner if the owner is a non-natural
person, e.g., a corporation or certain other entities. Such contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to contracts held by a trust or other entity as an
agent for a natural person nor to contracts held by certain qualified plans.
Purchasers should consult their own tax counsel or other tax adviser before
purchasing a contract to be owned by a non-natural person.
Tax Treatment of Assignments
An assignment or pledge of a contract may have tax consequences, and may also be
prohibited by ERISA in some circumstances. Owners should, therefore, consult
competent legal advisers should they wish to assign or pledge their contracts.
Qualified Plans
The contracts offered by the Prospectus are designed to be suitable for use
under various types of qualified plans. Taxation of owners in each qualified
plan varies with the type of plan and terms and conditions of each specific
plan. Owners, annuitants and beneficiaries are cautioned that benefits under a
qualified plan may be subject to the terms and conditions of the plan,
regardless of the terms and conditions of the contracts issued to fund the plan.
Tax Treatment of Withdrawals
Non-Qualified Plans
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate Premiums
made, any amount withdrawn not in the form of an annuity payment will be treated
as coming first from the earnings and then, only after the income portion is
exhausted, as coming from the principal. Withdrawn earnings are included in a
taxpayer's gross income. Section 72 further provides that a 10% penalty will
apply to the income portion of any distribution. The penalty is not imposed on
amounts received: (1) after the taxpayer reaches 59 1/2; (2) upon the death of
the owner; (3) if the taxpayer is totally disabled as defined in Section
72(m)(7) of the Code; (4) in a series of substantially equal periodic payments
made at least annually for the life (or life expectancy) of the taxpayer or for
the joint lives (or joint life expectancies) of the taxpayer and his
beneficiary; (5) under an immediate annuity; or (6) which are allocable to
premium payments made prior to August 14, 1982.
With respect to (4) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
Qualified Plans
In the case of a withdrawal under a qualified contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a qualified
contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including contracts
issued and qualified under Code Sections 401 (Pension and Profit Sharing plans),
403(b) (tax-sheltered annuities) and 408 and 408A (IRAs). To the extent amounts
are not included in gross income because they have been rolled over to an IRA or
to another eligible qualified plan, no tax penalty will be imposed.
The tax penalty will not apply to the following distributions: (1) if
distribution is made on or after the date on which the owner or annuitant (as
applicable) reaches age 59 1/2; (2) distributions following the death or
disability of the owner or annuitant (as applicable) (for this purpose
"disability" is defined in Section 72(m)(7) of the Code); (3) after separation
from service, distributions that are part of substantially equal periodic
payments made not less frequently than annually for the life (or life
expectancy) of the owner or annuitant (as applicable) or the joint lives (or
joint life expectancies) of such owner or annuitant (as applicable) and his or
her designated beneficiary; (4) distributions to an owner or annuitant (as
applicable) who has separated from service after he has attained age 55; (5)
distributions made to the owner or annuitant (as applicable) to the extent such
distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the owner or annuitant (as applicable) for amounts paid during
the taxable year for medical care; (6) distributions made to an alternate payee
pursuant to a qualified domestic relations order; (7) distributions from an IRA
for the purchase of medical insurance (as described in Section 213(d)(1)(D) of
the Code) for the contract owner or annuitant (as applicable) and his or her
spouse and dependents if the contract owner or annuitant (as applicable) has
received unemployment compensation for at least 12 weeks (this exception will no
longer apply after the contract owner or annuitant (as applicable) has been
re-employed for at least 60 days); (8) distributions from an Individual
Retirement Annuity made to the owner or annuitant (as applicable) to the extent
such distributions do not exceed the qualified higher education expenses (as
defined in Section 72(t)(7) of the Code) of the owner or annuitant (as
applicable) for the taxable year; and (9) distributions from an Individual
Retirement Annuity made to the owner or annuitant (as applicable) which are
qualified first time home buyer distributions (as defined in Section 72(t)(8) of
the Code). The exception stated in items (4) and (6) above do not apply in the
case of an IRA. The exception stated in (3) above applies to an IRA without the
requirement that there be a separation from service.
With respect to (3) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
Withdrawals of amounts attributable to contributions made pursuant to a salary
reduction agreement (in accordance with Section 403(b)(11) of the Code) are
limited to the following: when the owner attains age 59 1/2, separates from
services, dies, becomes disabled (within the meaning of Section 72(m)(7) of the
Code), or in the case of hardship. Hardship withdrawals do not include any
earnings on salary reduction contributions. These limitations on withdrawals
apply to: (1) salary reduction contributions made after December 31, 1988; (2)
income attributable to such contributions; and (3) income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect rollovers or exchanges between certain qualified plans. Tax penalties may
also apply. While the foregoing limitations only apply to certain contracts
issued in connection with Section 403(b) qualified plans, all owners should seek
competent tax advice regarding any withdrawals or distributions.
The taxable portion of a withdrawal or distribution from contracts issued under
certain types of plans may, under some circumstances, be "rolled over" into
another eligible plan so as to continue to defer income tax on the taxable
portion. Effective January 1, 1993, such treatment is available for an "eligible
rollover distribution" made by certain types of plans (as described above under
"Taxes -- Withholding Tax on Distributions") that is transferred within 60 days
of receipt into another eligible plan or an IRA, or an individual retirement
account described in section 408(a) of the Code. Plans making such eligible
rollover distributions are also required, with some exceptions specified in the
Code, to provide for a direct transfer of the distribution to the transferee
plan designated by the recipient.
Amounts received from IRAs may also be rolled over into other IRAs, individual
retirement accounts or certain other plans, subject to limitations set forth in
the Code.
Generally, distributions from a qualified plan must commence no later than April
1 of the calendar year following the year in which the employee attains the
later of age 70 1/2 or the date of retirement. In the case of an IRA,
distribution must commence no later than April 1 of the calendar year following
the year in which the owner attains age 70 1/2. Required distributions must be
over a period not exceeding the life or life expectancy of the individual or the
joint lives or life expectancies of the individual and his or her designated
beneficiary. If the required minimum distributions are not made, a 50% penalty
tax is imposed as to the amount not distributed.
Types of Qualified Plans
The following are general descriptions of the types of qualified plans with
which the contracts may be used. Such descriptions are not exhaustive and are
for general information purposes only. The tax rules regarding qualified plans
are very complex and will have differing applications depending on individual
facts and circumstances. Each purchaser should obtain competent tax advice prior
to purchasing a contract issued under a qualified plan.
Contracts issued pursuant to qualified plans include special provisions
restricting contract provisions that may otherwise be available and described in
this Prospectus. Generally, contracts issued pursuant to qualified plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from qualified plan contracts.
(a) Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c) (3) of the Code.
These qualifying employers may make contributions to the contracts for
the benefit of their employees. Such contributions are not included in
the gross income of the employee until the employee receives
distributions from the contract. The amount of contributions to the
tax-sheltered annuity is limited to certain maximums imposed by the
Code. Furthermore, the Code sets forth additional restrictions
governing such items as transferability, distributions,
non-discrimination and withdrawals. Employee loans are not allowed
under these contracts. Any employee should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
(b) Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute
to an individual retirement program known as an "Individual Retirement
Annuity" ("IRA"). Under applicable limitations, certain amounts may be
contributed to an IRA which will be deductible from the individual's
taxable income. These IRAs are subject to limitations on eligibility,
contributions, transferability and distributions. Sales of contracts
for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure
be given to persons desiring to establish an IRA. Purchasers of
contracts to be qualified as IRAs should obtain competent tax advice as
to the tax treatment and suitability of such an investment.
(c) Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit employers, including
self-employed individuals, to establish various types of retirement
plans for employees. These retirement plans may permit the purchase of
the contracts to provide benefits under the plan. Contributions to the
plan for the benefit of employees will not be included in the gross
income of the employee until distributed from the plan. The tax
consequences to owners may vary depending upon the particular plan
design. However, the Code places limitations on all plans on such items
as amount of allowable contributions; form, manner and timing of
distributions; vesting and non-forfeitability of interests;
nondiscrimination in eligibility and participation; and the tax
treatment of distributions, transferability of benefits, withdrawals
and surrenders. Purchasers of contracts for use with pension or profit
sharing plans should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
(d) Non-Qualified Deferred Compensation Plans -- Section 457
Under Section 457 of the Code, governmental and certain other
tax-exempt employers may establish, for the benefit of their employees,
deferred compensation plans which may invest in annuity contracts. The
Code, as in the case of qualified plans, establishes limitations and
restrictions on eligibility, contributions and distributions. Under
these plans, contributions made for the benefit of the employees will
not be included in the employees' gross income until distributed from
the plan.
(e) Roth IRAs
Section 408A of the Code provides that beginning in 1998, individuals
may purchase a new type of non-deductible IRA, known as a Roth IRA.
Purchase payments for a Roth IRA are limited to a maximum of $2,000 per
year and are not deductible from taxable income. Lower maximum
limitations apply to individuals with adjusted gross incomes between
$95,000 and $110,000 in the case of single taxpayers, between $150,000
and $160,000 in the case of married taxpayers filing joint returns, and
between $0 and $10,000 in the case of married taxpayers filing
separately. An overall $2,000 annual limitation continues to apply to
all of a taxpayer's IRA contributions, including Roth IRAs and non-Roth
IRAs.
Qualified distributions from Roth IRAs are free from federal income
tax. A qualified distribution requires that the individual has held the
Roth IRA for at least five years and, in addition, that the
distribution is made either after the individual reaches age 59 1/2, on
the individual's death or disability, or as a qualified first-time home
purchase, subject to a $10,000 lifetime maximum, for the individual, a
spouse, child, grandchild, or ancestor. Any distribution which is not a
qualified distribution is taxable to the extent of earnings in the
distribution. Distributions are treated as made from contributions
first and therefore no distributions are taxable until distributions
exceed the amount of contributions to the Roth IRA. The 10% penalty tax
and the regular IRA exceptions to the 10% penalty tax apply to taxable
distributions from a Roth IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA.
Furthermore, an individual may make a rollover contribution from a
non-Roth IRA to a Roth IRA, unless the individual has adjusted gross
income over $100,000 or the individual is a married taxpayer filing a
separate return. The individual must pay tax on any portion of the IRA
being rolled over that represents income or a previously deductible IRA
contribution. However, for rollovers in 1998, the individual may pay
that tax ratably over the four taxable year periods beginning with the
tax year 1998. There are no similar limitations on rollovers from a
Roth IRA to another Roth IRA.
INCOME PAYMENTS; NET INVESTMENT FACTOR
See "Income Payments (The Income Phase)" in the Prospectus.
The net investment factor is an index applied to measure the net investment
performance of an investment portfolio from one valuation date to the next.
Since the net investment factor may be greater or less than or equal to one, and
the factor that offsets the 3% investment rate assumed is slightly less than
one, the value of an annuity unit (which changes with the product of that
factor) and the net investment may increase, decrease or remain the same.
The net investment factor for any investment portfolio for any valuation period
is determined by dividing (a) by (b) and then subtracting (c) from the result
where:
(a) is the net result of:
(1) the net asset value of a series share held in the
investment portfolio determined as of the valuation
date at the end of the valuation period, plus
(2) the per share amount of any dividend or other
distribution declared by the series if the
"ex-dividend" date occurs during the valuation
period, plus or minus
(3) a per share credit or charge with respect to any
taxes paid or reserved for by Jackson National during
the valuation period which are determined by Jackson
National to be attributable to the operation of the
investment portfolio (no federal income taxes are
applicable under present law);
(b) is the net asset value of the series share held in the
investment portfolio determined as of the valuation date at
the end of the preceding valuation period; and
(c) is the asset charge factor determined by Jackson National for
the valuation period to reflect the charges for assuming the
mortality and expense risks and the administration charge.
<PAGE>
Jackson National Separate Account - I
[GRAPHIC OMITTED]
Financial Statements
March 31, 1999
<PAGE>
Jackson National Separate Account - I
Statement of Assets and Liabilities (Unaudited)
March 31, 1999
<TABLE>
<CAPTION>
Portfolios
----------------------------------------------------------------------------------------
JNL JNL JNL JNL/Eagle JNL/Eagle
Aggressive Capital Global JNL/Alger Core SmallCap
Growth Growth Equities Growth Equity Equity
------------- ------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in JNL Series Trust,
at market value
(See Schedule of Investments) ............ $198,819,603 $135,516,530 $252,019,815 $190,929,654 $ 34,453,362 $ 28,406,940
Due from Jackson National Life
Insurance Company ........................ 1,501,031 672,193 333,823 497,004 152,224 33,136
Receivable for investments sold .......... 8,875 8,375 83,852 332,694 28,473 25,381
----------- ----------- ----------- ----------- ---------- ----------
Total Assets ............................. 200,329,509 136,197,098 252,437,490 191,759,352 34,634,059 28,465,457
Liabilities:
Payable for investments purchased ........ 1,501,031 672,193 333,823 497,004 152,224 33,136
Due to Jackson National Life
Insurance Company ........................ 8,875 8,375 83,852 332,694 28,473 25,381
----------- ----------- ----------- ----------- ---------- ----------
Total Liabilities ........................ 1,509,906 680,568 417,675 829,698 180,697 58,517
----------- ----------- ----------- ----------- ---------- ----------
Net Assets ............................... $198,819,603 $135,516,530 $252,019,815 $190,929,654 $ 34,453,362 $ 28,406,940
=========== =========== =========== =========== ========== ==========
Total Net Assets Represented by:
Number of units outstanding .............. 7,810,005 6,450,609 11,917,165 8,661,954 2,115,138 2,313,711
=========== =========== =========== =========== ========== ==========
Unit value (net assets divided by
units outstanding) ....................... $ 25.46 $ 21.01 $ 21.15 $ 22.04 $ 16.29 $ 12.28
=========== =========== =========== =========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
PPM PPM
JNL/Putnam PPM America/JNL America/JNL Salomon
JNL/Putnam Value America/JNL High Yield Money Brothers/JNL
Growth Equity Balanced Bond Market Global Bond
------------- ------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in JNL Series Trust,
at market value
(See Schedule of Investments) ............ $215,163,457 $213,106,255 $107,075,356 $106,955,223 $ 72,477,875 $ 43,520,251
Due from Jackson National Life
Insurance Company ........................ 814,976 337,409 277,209 153,294 23,082 26,935
Receivable for investments sold .......... 44,792 94,789 20,033 32,369 444,097 17,726
----------- ----------- ----------- ----------- ---------- ----------
Total Assets ............................. 216,023,225 213,538,453 107,372,598 107,140,886 72,945,054 43,564,912
Liabilities:
Payable for investments purchased ........ 814,976 337,409 277,209 153,294 23,082 26,935
Due to Jackson National Life
Insurance Company ........................ 44,792 94,789 20,033 32,369 444,097 17,726
----------- ----------- ----------- ----------- ---------- ----------
Total Liabilities ........................ 859,768 432,198 297,242 185,663 467,179 44,661
----------- ----------- ----------- ----------- ---------- ----------
Net Assets ............................... $215,163,457 $213,106,255 $107,075,356 $106,955,223 $ 72,477,875 $ 43,520,251
=========== =========== =========== =========== ========== ==========
Total Net Assets Represented by:
Number of units outstanding .............. 9,705,280 11,928,169 7,557,659 8,157,978 6,469,664 3,357,156
=========== =========== =========== =========== ========== ==========
Unit value (net assets divided by
units outstanding) ....................... $ 22.17 $ 17.87 $ 14.17 $ 13.11 $ 11.20 $ 12.96
=========== =========== =========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------
T. Rowe
Salomon T. Rowe Price/JNL T. Rowe
Brothers/JNL Price/JNL International Price/JNL
U.S. Government Established Equity Mid-Cap
& Quality Bond Growth Investment Growth
--------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Assets:
Investments in JNL Series Trust,
at market value
(See Schedule of Investments) ...................... $ 73,969,765 $230,485,160 $ 67,212,537 $179,220,439
Due from Jackson National Life
Insurance Company .................................. 246,989 482,880 104,302 192,958
Receivable for investments sold .................... 41,338 128,185 142,845 77,567
------------ ------------ ------------ ------------
Total Assets ....................................... 74,258,092 231,096,225 67,459,684 179,490,964
Liabilities:
Payable for investments purchased .................. 246,989 482,880 104,302 192,958
Due to Jackson National Life
Insurance Company .................................. 41,338 128,185 142,845 77,567
------------ ------------ ------------ ------------
Total Liabilities .................................. 288,327 611,065 247,147 270,525
------------ ------------ ------------ ------------
Net Assets ......................................... $ 73,969,765 $230,485,160 $ 67,212,537 $179,220,439
============ ============ ============ ============
Total Net Assets Represented by:
Number of units outstanding ........................ 6,249,323 11,227,979 4,956,337 10,303,511
============ ============ ============ ============
Unit value (net assets divided by
units outstanding) ................................. $ 11.84 $ 20.53 $ 13.56 $ 17.39
============ ============ ============ ============
</TABLE>
<PAGE>
Jackson National Separate Account - I
Statement of Assets and Liabilities (Unaudited) (continued)
March 31, 1999
<TABLE>
<CAPTION>
Portfolios
---------------------------------------------------------------------------------------
JNL/S&P JNL/S&P
JNL/S&P JNL/S&P JNL/S&P Very JNL/S&P Equity
Conservative Moderate Aggressive Aggressive Equity Aggressive
Growth I Growth I Growth I Growth I Growth I Growth I
------------- ------------ ------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in JNL Series Trust,
at market value
(See Schedule of Investments) ............ $19,768,113 $25,574,281 $ 8,463,942 $ 3,309,743 $11,585,684 $ 4,467,983
Due from Jackson National Life
Insurance Company ........................ 46,485 191,106 58,953 38,346 42,312 43,191
Receivable for investments sold .......... 756 974 322 125 443 170
----------- ----------- ----------- ----------- ----------- -----------
Total Assets ............................. 19,815,354 25,766,361 8,523,217 3,348,214 11,628,439 4,511,344
Liabilities:
Payable for investments purchased ........ 46,485 191,106 58,953 38,346 42,312 43,191
Due to Jackson National Life
Insurance Company ........................ 756 974 322 125 443 170
----------- ----------- ----------- ----------- ----------- -----------
Total Liabilities ........................ 47,241 192,080 59,275 38,471 42,755 43,361
----------- ----------- ----------- ----------- ----------- -----------
Net Assets ............................... $19,768,113 $25,574,281 $ 8,463,942 $ 3,309,743 $11,585,684 $ 4,467,983
=========== =========== =========== =========== =========== ===========
Total Net Assets Represented by:
Number of units outstanding .............. 1,836,838 2,306,663 737,802 275,105 1,032,825 391,051
=========== =========== =========== =========== =========== ===========
Unit value (net assets divided by
units outstanding) ....................... $ 10.76 $ 11.09 $ 11.47 $ 12.03 $ 11.22 $ 11.43
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Jackson National Separate Account - I
Statement of Operations (Unaudited)
Period ended March 31, 1999
<TABLE>
<CAPTION>
Portfolios
-----------------------------------------------------------------------------------
JNL JNL JNL JNL/Eagle JNL/Eagle
Aggressive Capital Global JNL/Alger Core SmallCap
Growth Growth Equities Growth Equity Equity
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net realized gain (loss) from sales
of investments:
Proceeds from sales ........................... $10,824,049 $ 7,123,613 $10,544,751 $ 9,369,850 $ 2,918,658 $ 5,487,131
Cost of investments sold ...................... 6,690,882 4,807,905 8,026,492 6,099,246 2,527,776 5,349,994
----------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss) from sales
of investments ................................ 4,133,167 2,315,708 2,518,259 3,270,604 390,882 137,137
Change in net unrealized gain on
investments:
Unrealized gain beginning of year ............. 49,487,361 32,985,801 50,589,160 51,837,647 4,137,098 1,497,307
Unrealized gain end of year ................... 80,724,910 49,886,191 62,958,878 66,691,155 4,886,190 (2,365,897)
----------- ----------- ----------- ----------- ----------- -----------
Change in net unrealized gain on
investments ................................ 31,237,549 16,900,390 12,369,718 14,853,508 749,092 (3,863,204)
----------- ----------- ----------- ----------- ----------- -----------
Net gain on investments ....................... 35,370,716 19,216,098 14,887,977 18,124,112 1,139,974 (3,726,067)
Expenses:
Administrative charge ......................... 60,571 42,478 87,970 62,084 11,227 11,350
Mortality and expense charge .................. 504,761 353,980 733,086 517,370 93,560 94,580
----------- ----------- ----------- ----------- ----------- -----------
Total expenses ................................ 565,332 396,458 821,056 579,454 104,787 105,930
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets
resulting from operations ..................... $34,805,384 $18,819,640 $14,066,921 $17,544,658 $ 1,035,187 $(3,831,997)
=========== =========== =========== =========== =========== ===========
</TABLE>
-------------
JNL/Putnam
Growth
-------------
Net realized gain (loss) from sales
of investments:
Proceeds from sales ....................................... $10,311,202
Cost of investments sold .................................. 7,711,640
-----------
Net realized gain (loss) from sales
of investments ............................................ 2,599,562
Change in net unrealized gain on
investments:
Unrealized gain beginning of year ......................... 45,340,042
Unrealized gain end of year ............................... 52,751,595
-----------
Change in net unrealized gain on
investments ............................................ 7,411,553
-----------
Net gain on investments ................................... 10,011,115
Expenses:
Administrative charge ..................................... 70,812
Mortality and expense charge .............................. 590,104
-----------
Total expenses ............................................ 660,916
-----------
Increase (decrease) in net assets
resulting from operations ................................. $ 9,350,199
===========
See accompanying notes to financial statements.
<PAGE>
Jackson National Separate Account - I
Statement of Operations (Unaudited) (continued)
Period ended March 31, 1999
<TABLE>
<CAPTION>
Portfolios
---------------------------------------------------------------------------------------
PPM PPM Salomon
JNL/Putnam PPM America/JNL America/JNL Salomon Brothers/JNL
Value America/JNL High Yield Money Brothers/JNL U.S. Government
Equity Balanced Bond Market Global Bond & Quality Bond
------------- ------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net realized gain (loss) from sales
of investments:
Proceeds from sales .................... $ 9,269,310 $ 4,894,655 $ 7,012,896 $ 17,107,262 $ 4,203,172 $ 6,690,197
Cost of investments sold ............... 8,006,339 4,271,853 6,603,212 16,699,696 3,958,706 6,377,046
------------ ------------ ------------ ------------ ------------ ------------
Net realized gain (loss) from sales
of investments ......................... 1,262,971 622,802 409,684 407,566 244,466 313,151
Change in net unrealized gain
on investments:
Unrealized gain beginning of year ...... 24,616,797 13,317,898 6,008,859 1,448,061 2,650,450 4,016,253
Unrealized gain end of year ............ 30,587,436 12,000,508 6,332,062 1,693,019 2,653,588 3,017,654
------------ ------------ ------------ ------------ ------------ ------------
Change in net unrealized gain on
investments ......................... 5,970,639 (1,317,390) 323,203 244,958 3,138 (998,599)
------------ ------------ ------------ ------------ ------------ ------------
Net gain on investments ................ 7,233,610 (694,588) 732,887 652,524 247,604 (685,448)
Expenses:
Administrative charge .................. 73,588 37,036 37,161 22,514 15,576 25,222
Mortality and expense charge ........... 613,232 308,636 309,671 187,619 129,802 210,185
------------ ------------ ------------ ------------ ------------ ------------
Total expenses ......................... 686,820 345,672 346,832 210,133 145,378 235,407
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets
resulting from operations .............. $ 6,546,790 $ (1,040,260) $ 386,055 $ 442,391 $ 102,226 $ (920,855)
============ ============ ============ ============ ============ ============
</TABLE>
- ---------------------------------
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
T. Rowe
T. Rowe Price/JNL T. Rowe
Price/JNL International Price/JNL JNL/S&P JNL/S&P JNL/S&P
Established Equity Mid-Cap Conservative Moderate Aggressive
Growth Investment Growth Growth I Growth I Growth I
-------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net realized gain (loss) from sales
of investments:
Proceeds from sales ..................... $ 11,804,620 $ 5,432,706 $ 9,383,215 $ 522,385 $ 548,176 $ 132,847
Cost of investments sold ................ 8,934,802 4,859,717 7,301,621 489,489 500,067 120,864
------------ ------------ ------------ ------------ ------------ ------------
Net realized gain (loss) from sales
of investments .......................... 2,869,818 572,989 2,081,594 32,896 48,109 11,983
Change in net unrealized gain
on investments:
Unrealized gain beginning of year ....... 53,413,273 7,505,901 42,084,725 670,963 1,150,278 428,754
Unrealized gain end of year ............. 55,548,623 7,752,843 38,881,758 1,267,879 2,141,686 838,916
------------ ------------ ------------ ------------ ------------ ------------
Change in net unrealized gain on
investments .......................... 2,135,350 246,942 (3,202,967) 596,916 991,408 410,162
------------ ------------ ------------ ------------ ------------ ------------
Net gain on investments ................. 5,005,168 819,931 (1,121,373) 629,812 1,039,517 422,145
Expenses:
Administrative charge ................... 79,939 24,175 64,084 5,262 6,627 2,212
Mortality and expense charge ............ 666,153 201,457 534,031 43,847 55,225 18,433
------------ ------------ ------------ ------------ ------------ ------------
Total expenses .......................... 746,092 225,632 598,115 49,109 61,852 20,645
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets
resulting from operations ............... $ 4,259,076 $ 594,299 $ (1,719,488) $ 580,703 $ 977,665 $ 401,500
============ ============ ============ ============ ============ ============
</TABLE>
---------------------------------------
JNL/S&P JNL/S&P
Very JNL/S&P Equity
Aggressive Equity Aggressive
Growth I Growth I Growth I
------------- ------------- ----------
Net realized gain (loss) from sales
of investments:
Proceeds from sales ..................... $2,011,658 $ 110,808 $ 316,907
Cost of investments sold ................ 1,813,658 98,171 272,867
---------- ---------- ----------
Net realized gain (loss) from sales
of investments .......................... 198,000 12,637 44,040
Change in net unrealized gain
on investments:
Unrealized gain beginning of year ....... 251,923 558,366 374,112
Unrealized gain end of year ............. 302,162 1,068,891 617,382
---------- ---------- ----------
Change in net unrealized gain on
investments .......................... 50,239 510,525 243,270
---------- ---------- ----------
Net gain on investments ................. 248,239 523,162 287,310
Expenses:
Administrative charge ................... 996 2,776 1,393
Mortality and expense charge ............ 8,302 23,130 11,610
---------- ---------- ----------
Total expenses .......................... 9,298 25,906 13,003
---------- ---------- ----------
Increase (decrease) in net assets
resulting from operations ............... $ 238,941 $ 497,256 $ 274,307
========== ========== ==========
<PAGE>
Jackson National Separate Account - I
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Portfolios
-------------------------------------------------------------------------
JNL Aggressive JNL Capital
Growth Growth
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 4,133,167 $ 4,615,599 $ 2,315,708 $ 2,335,855
Change in net unrealized gain (loss) on
investments ........................................ 31,237,549 42,920,968 16,900,390 23,769,738
Administrative charge .............................. (60,571) (148,725) (42,478) (121,112)
Mortality and expense charge ....................... (504,761) (1,239,374) (353,980) (1,009,269)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations .................................... 34,805,384 46,148,468 18,819,640 24,975,212
Net deposits into Separate Account
(Note 6) ........................................... 22,968,193 23,646,262 11,752,314 10,882,915
------------- ------------- ------------- -------------
Increase in net assets ............................. 57,773,577 69,794,730 30,571,954 35,858,127
Net Assets:
Beginning of period ................................ 141,046,026 71,251,296 104,944,576 69,086,449
------------- ------------- ------------- -------------
End of period ...................................... $ 198,819,603 $ 141,046,026 $ 135,516,530 $ 104,944,576
============= ============= ============= =============
</TABLE>
--------------------------------
JNL Global
Equities
--------------------------------
Three
months ended Year ended
March 31, December 31,
1999 1998
--------------- --------------
Operations:
Net realized gain (loss) from sales
of investments ............................... $ 2,518,259 $ 5,199,092
Change in net unrealized gain (loss) on
investments .................................. 12,369,718 36,247,369
Administrative charge ........................ (87,970) (283,226)
Mortality and expense charge ................. (733,086) (2,360,220)
------------- -------------
Increase (decrease) in net assets resulting
from operations .............................. 14,066,921 38,803,015
Net deposits into Separate Account
(Note 6) ..................................... 13,972,488 40,775,401
------------- -------------
Increase in net assets ....................... 28,039,409 79,578,416
Net Assets:
Beginning of period .......................... 223,980,406 144,401,990
------------- -------------
End of period ................................ $ 252,019,815 $ 223,980,406
============= =============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
JNL/Alger JNL/Eagle
Growth Core Equity
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 3,270,604 $ 5,052,325 $ 390,882 $ 260,886
Change in net unrealized gain (loss) on
investments ........................................ 14,853,508 38,910,209 749,092 2,778,344
Administrative charge .............................. (62,084) (169,897) (11,227) (28,467)
Mortality and expense charge ....................... (517,370) (1,415,809) (93,560) (237,222)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations .................................... 17,544,658 42,376,828 1,035,187 2,773,541
Net deposits into Separate Account
(Note 6) ........................................... 20,399,659 28,935,356 4,568,458 15,557,105
------------- ------------- ------------- -------------
Increase in net assets ............................. 37,944,317 71,312,184 5,603,645 18,330,646
Net Assets:
Beginning of period ................................ 152,985,337 81,673,153 28,849,717 10,519,071
------------- ------------- ------------- -------------
End of period ...................................... $ 190,929,654 $ 152,985,337 $ 34,453,362 $ 28,849,717
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
JNL/Eagle JNL/Putnam
SmallCap Equity Growth
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 137,137 $ (352,591) $ 2,599,562 $ 3,873,047
Change in net unrealized gain (loss) on
investments ........................................ (3,863,204) 548,790 7,411,553 34,785,408
Administrative charge .............................. (11,350) (31,118) (70,812) (187,378)
Mortality and expense charge ....................... (94,580) (259,314) (590,104) (1,561,482)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations .................................... (3,831,997) (94,233) 9,350,199 36,909,595
Net deposits into Separate Account
(Note 6) ........................................... 439,891 19,880,105 29,415,881 56,793,299
------------- ------------- ------------- -------------
Increase in net assets ............................. (3,392,106) 19,785,872 38,766,080 93,702,894
Net Assets:
Beginning of period ................................ 31,799,046 12,013,174 176,397,377 82,694,483
------------- ------------- ------------- -------------
End of period ...................................... $ 28,406,940 $ 31,799,046 $ 215,163,457 $ 176,397,377
============= ============= ============= =============
</TABLE>
<PAGE>
Jackson National Separate Account - I
Statements of Changes in Net Assets (Unaudited) (continued)
<TABLE>
<CAPTION>
Portfolios
-------------------------------------------------------------------------
JNL/Putnam PPM America/JNL
Value Equity Balanced
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 1,262,971 $ 2,021,356 $ 622,802 $ 1,478,871
Change in net unrealized gain (loss) on
investments ........................................ 5,970,639 14,791,209 (1,317,390) 5,512,364
Administrative charge .............................. (73,588) (230,885) (37,036) (118,596)
Mortality and expense charge ....................... (613,232) (1,924,037) (308,636) (988,300)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations .................................... 6,546,790 14,657,643 (1,040,260) 5,884,339
Net deposits into Separate Account
(Note 6) ........................................... 18,074,213 65,855,834 14,023,819 29,035,661
------------- ------------- ------------- -------------
Increase in net assets ............................. 24,621,003 80,513,477 12,983,559 34,920,000
Net Assets:
Beginning of period ................................ 188,485,252 107,971,775 94,091,797 59,171,797
------------- ------------- ------------- -------------
End of period ...................................... $ 213,106,255 $ 188,485,252 $ 107,075,356 $ 94,091,797
============= ============= ============= =============
</TABLE>
-------------------------------
PPM America/JNL
High Yield Bond
-------------------------------
Three
months ended Year ended
March 31, December 31,
1999 1998
--------------- --------------
Operations:
Net realized gain (loss) from sales
of investments ............................... $ 409,684 $ 1,800,628
Change in net unrealized gain (loss) on
investments .................................. 323,203 694,811
Administrative charge ........................ (37,161) (129,335)
Mortality and expense charge ................. (309,671) (1,077,793)
------------- -------------
Increase (decrease) in net assets resulting
from operations .............................. 386,055 1,288,311
Net deposits into Separate Account
(Note 6) ..................................... 10,570,073 34,623,835
------------- -------------
Increase in net assets ....................... 10,956,128 35,912,146
Net Assets:
Beginning of period .......................... 95,999,095 60,086,949
------------- -------------
End of period ................................ $ 106,955,223 $ 95,999,095
============= =============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
PPM America/JNL Salomon Brothers/JNL
Money Market Global Bond
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 407,566 $ 1,913,081 $ 244,466 $ 670,770
Change in net unrealized gain (loss) on
investments ........................................ 244,958 573,732 3,138 120,148
Administrative charge .............................. (22,514) (76,791) (15,576) (59,361)
Mortality and expense charge ....................... (187,619) (639,922) (129,802) (494,672)
------------ ------------ ------------ ------------
Increase (decrease) in net assets resulting
from operations .................................... 442,391 1,770,100 102,226 236,885
Net deposits into Separate Account
(Note 6) ........................................... 19,612,101 9,241,010 2,462,191 7,382,318
------------ ------------ ------------ ------------
Increase in net assets ............................. 20,054,492 11,011,110 2,564,417 7,619,203
Net Assets:
Beginning of period ................................ 52,423,383 41,412,273 40,955,834 33,336,631
------------ ------------ ------------ ------------
End of period ...................................... $ 72,477,875 $ 52,423,383 $ 43,520,251 $ 40,955,834
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
Salomon Brothers/JNL
U.S. Government T. Rowe Price/JNL
& Quality Bond Established Growth
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 313,151 $ 1,018,991 $ 2,869,818 $ 4,826,525
Change in net unrealized gain (loss) on
investments ........................................ (998,599) 2,421,520 2,135,350 34,638,958
Administrative charge .............................. (25,222) (58,830) (79,939) (244,140)
Mortality and expense charge ....................... (210,185) (490,253) (666,153) (2,034,500)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations .................................... (920,855) 2,891,428 4,259,076 37,186,843
Net deposits into Separate Account
(Note 6) ........................................... 14,840,030 33,913,087 16,744,819 56,888,880
------------- ------------- ------------- -------------
Increase in net assets ............................. 13,919,175 36,804,515 21,003,895 94,075,723
Net Assets:
Beginning of period ................................ 60,050,590 23,246,075 209,481,265 115,405,542
------------- ------------- ------------- -------------
End of period ...................................... $ 73,969,765 $ 60,050,590 $ 230,485,160 $ 209,481,265
============= ============= ============= =============
</TABLE>
<PAGE>
Jackson National Separate Account - I
Statements of Changes in Net Assets (Unaudited) (continued)
<TABLE>
<CAPTION>
Portfolios
-------------------------------------------------------------------------
T. Rowe Price/JNL
International Equity T. Rowe Price/JNL
Investment Mid-Cap Growth
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ................................. $ 572,989 $ 940,818 $ 2,081,594 $ 4,139,482
Change in net unrealized gain (loss) on
investments .................................... 246,942 6,601,512 (3,202,967) 24,084,836
Administrative charge .......................... (24,175) (91,327) (64,084) (217,537)
Mortality and expense charge ................... (201,457) (761,061) (534,031) (1,812,808)
------------- ------------- ------------- -------------
Increase (decrease) in net assets
resulting from operations ...................... 594,299 6,689,942 (1,719,488) 26,193,973
Net deposits into Separate Account
(Note 6) ....................................... 1,625,897 5,696,219 6,143,656 30,720,629
------------- ------------- ------------- -------------
Increase in net assets ......................... 2,220,196 12,386,161 4,424,168 56,914,602
Net Assets:
Beginning of period ............................ 64,992,341 52,606,180 174,796,271 117,881,669
------------- ------------- ------------- -------------
End of period .................................. $ 67,212,537 $ 64,992,341 $ 179,220,439 $ 174,796,271
============= ============= ============= =============
</TABLE>
-------------------------------
JNL/S&P
Conservative
Growth I
-------------------------------
Three Period from
months April 8,
ended 1998* to
March 31, December 31,
1999 1998
-------------- --------------
Operations:
Net realized gain (loss) from sales
of investments ............................. $ 32,896 $ (15,957)
Change in net unrealized gain (loss) on
investments ................................ 596,916 670,963
Administrative charge ...................... (5,262) (3,948)
Mortality and expense charge ............... (43,847) (32,901)
------------ ------------
Increase (decrease) in net assets
resulting from operations .................. 580,703 618,157
Net deposits into Separate Account
(Note 6) ................................... 9,158,711 9,410,542
------------ ------------
Increase in net assets ..................... 9,739,414 10,028,699
Net Assets:
Beginning of period ........................ 10,028,699 --
------------ ------------
End of period .............................. $ 19,768,113 $ 10,028,699
============ ============
- --------------------------------------
*Commencement of operations.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
JNL/S&P JNL/S&P
Moderate Aggressive
Growth I Growth I
---------------------------------- ----------------------------------
Three Period from Three Period from
months April 8, months April 8,
ended 1998* to ended 1998* to
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 48,109 $ (70,982) $ 11,983 $ (37,082)
Change in net unrealized gain (loss) on
investments ........................................ 991,408 1,150,278 410,162 428,754
Administrative charge .............................. (6,627) (4,756) (2,212) (2,247)
Mortality and expense charge ....................... (55,225) (39,629) (18,433) (18,728)
------------ ------------ ------------ ------------
Increase (decrease) in net assets
resulting from operations .......................... 977,665 1,034,911 401,500 370,697
Net deposits into Separate Account
(Note 6) ........................................... 11,985,679 11,576,026 3,637,531 4,054,214
------------ ------------ ------------ ------------
Increase in net assets ............................. 12,963,344 12,610,937 4,039,031 4,424,911
Net Assets:
Beginning of period ................................ 12,610,937 -- 4,424,911 --
------------ ------------ ------------ ------------
End of period ...................................... $ 25,574,281 $ 12,610,937 $ 8,463,942 $ 4,424,911
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
JNL/S&P
Very JNL/S&P
Aggressive Equity
Growth I Growth I
---------------------------------- ----------------------------------
Three Period from Three Period from
months April 1, months April 13,
ended 1998* to ended 1998* to
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 198,000 $ 45,778 $ 12,637 $ (38,749)
Change in net unrealized gain (loss) on
investments ........................................ 50,239 251,923 510,525 558,366
Administrative charge .............................. (996) (1,371) (2,776) (2,158)
Mortality and expense charge ....................... (8,302) (11,424) (23,130) (17,983)
------------ ------------ ------------ ------------
Increase (decrease) in net assets
resulting from operations .......................... 238,941 284,906 497,256 499,476
Net deposits into Separate Account
(Note 6) ........................................... 629,258 2,156,638 6,051,821 4,537,131
------------ ------------ ------------ ------------
Increase in net assets ............................. 868,199 2,441,544 6,549,077 5,036,607
Net Assets:
Beginning of period ................................ 2,441,544 -- 5,036,607 --
------------ ------------ ------------ ------------
End of period ...................................... $ 3,309,743 $ 2,441,544 $ 11,585,684 $ 5,036,607
============ ============ ============ ============
</TABLE>
<PAGE>
Jackson National Separate Account - I
Statements of Changes in Net Assets (Unaudited) (continued)
Portfolios
----------------------------
JNL/S&P
Equity
Aggressive
Growth I
----------------------------
Period from
Three April 15,
months ended 1998* to
March 31, December 31,
1999 1998
------------- -------------
Operations:
Net realized gain (loss) from sales
of investments ............................... $ 44,040 $ (24,887)
Change in net unrealized gain (loss) on
Investments .................................. 243,270 374,112
Administrative charge ........................ (1,393) (1,394)
Mortality and expense charge ................. (11,610) (11,615)
----------- -----------
Increase (decrease) in net assets
resulting from operations .................... 274,307 336,216
Net deposits into Separate Account
(Note 6) ..................................... 956,750 2,900,710
----------- -----------
Increase in net assets ....................... 1,231,057 3,236,926
Net Assets:
Beginning of period .......................... 3,236,926 --
----------- -----------
End of period ................................ $ 4,467,983 $ 3,236,926
=========== ===========
- --------------------------------------
*Commencement of operations.
<PAGE>
Jackson National Separate Account - I
Schedule of Investments (Unaudited)
March 31, 1999
<TABLE>
<CAPTION>
Number Market
JNL Series Trust of Shares Cost Value
- ---------------- ------------- -------------- --------------
<S> <C> <C> <C>
JNL Aggressive Growth............................................. 7,269,455 $ 118,094,693 $ 198,819,603
JNL Capital Growth................................................ 5,563,076 85,630,339 135,516,530
JNL Global Equities............................................... 10,701,478 189,060,937 252,019,815
JNL/Alger Growth.................................................. 9,044,512 124,238,499 190,929,654
JNL/Eagle Core Equity............................................. 2,089,349 29,567,172 34,453,362
JNL/Eagle SmallCap Equity......................................... 2,175,110 30,772,837 28,406,940
JNL/Putnam Growth................................................. 8,931,650 162,411,862 215,163,457
JNL/Putnam Value Equity........................................... 11,269,501 182,518,819 213,106,255
PPM America/JNL Balanced.......................................... 7,996,666 95,074,848 107,075,356
PPM America/JNL High Yield Bond................................... 9,749,792 100,623,161 106,955,223
PPM America/JNL Money Market...................................... 72,477,875 70,784,856 72,477,875
Salomon Brothers/JNL Global Bond.................................. 4,055,941 40,866,663 43,520,251
Salomon Brothers/JNL U.S. Government & Quality Bond............... 6,700,160 70,952,111 73,969,765
T. Rowe Price/JNL Established Growth.............................. 11,825,816 174,936,537 230,485,160
T. Rowe Price/JNL International Equity Investment................. 4,881,085 59,459,694 67,212,537
T. Rowe Price/JNL Mid-Cap Growth.................................. 8,837,300 140,338,681 179,220,439
JNL/S&P Conservative Growth I..................................... 1,811,926 18,500,234 19,768,113
JNL/S&P Moderate Growth I......................................... 2,275,292 23,432,595 25,574,281
JNL/S&P Aggressive Growth I....................................... 727,768 7,625,026 8,463,942
JNL/S&P Very Aggressive Growth I.................................. 271,290 3,007,581 3,309,743
JNL/S&P Equity Growth I........................................... 1,018,970 10,516,793 11,585,684
JNL/S&P Equity Aggressive Growth I................................ 385,836 3,850,601 4,467,983
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (Unaudited)
Note 1 - Organization
- ---------------------
Jackson National Life Insurance Company ("JNL") established Jackson
National Separate Account - I (the "Separate Account") on June 14,
1993. The Separate Account commenced operations on October 16, 1995,
and is registered under the Investment Company Act of 1940 as a unit
investment trust. The Separate Account receives and invests net
premiums for individual flexible premium variable annuity contracts
issued by JNL. The contracts can be purchased on a non-tax qualified
basis or in connection with certain plans qualifying for favorable
federal income tax treatment. The Separate Account currently contains
twenty-two Portfolios, each of which invests in the following series of
the JNL Series Trust:
JNL Aggressive Growth Series
JNL Capital Growth Series JNL
Global Equities Series
JNL/Alger Growth Series
JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
PPM America/JNL Balanced Series
PPM America/JNL High Yield Bond Series
PPM America/JNL Money Market Series
Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL U.S. Government & Quality Bond Series
T. Rowe Price/JNL Established Growth Series
T. Rowe Price/JNL International Equity Investment Series
T. Rowe Price/JNL Mid-Cap Growth Series
JNL/S&P Conservative Growth Series I
JNL/S&P Moderate Growth Series I
JNL/S&P Aggressive Growth Series I
JNL/S&P Very Aggressive Growth Series I
JNL/S&P Equity Growth Series I
JNL/S&P Equity Aggressive Growth Series I
Jackson National Financial Services, LLC, a wholly-owned subsidiary of
JNL, serves as investment adviser for all the series of the JNL Series
Trust.
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (Unaudited) (continued)
Note 2 - Significant Accounting Policies
- ----------------------------------------
The following is a summary of significant accounting policies followed
by the Separate Account in the preparation of its financial statements.
The policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Investments
-----------
The Separate Account's investments in the corresponding series
of the JNL Series Trust are stated at the net asset values of
the respective series. The average cost method is used in
determining the cost of the shares sold on withdrawals by the
Separate Account. Investments in JNL Series Trust are recorded
on trade date. The Separate Account does not record dividend
income as the series follow the accounting practice known as
consent dividending, whereby all of its net investment income
and realized gains are treated as being distributed to the
Separate Account and are immediately reinvested in the series.
Federal Income Taxes
--------------------
The operations of the Separate Account are included in the
federal income tax return of JNL, which is taxed as a "life
insurance company" under the provisions of the Internal
Revenue Code. Under current law, no federal income taxes are
payable with respect to the Separate Account. Therefore, no
federal income tax has been provided.
Note 3 - Policy Charges
- -----------------------
Charges are deducted from the Separate Account to compensate JNL for
providing the insurance benefits set forth in the contracts,
administering the contracts, distributing the contracts, and assuming
certain risks in connection with the contract.
Contract Maintenance Charge
---------------------------
An annual contract maintenance charge of $35 is charged
against each contract to reimburse JNL for expenses incurred
in establishing and maintaining records relating to the
contract. The contract maintenance charge is assessed on each
anniversary of the contract date that occurs on or prior to
the annuity date. The charge is deducted by redeeming units.
For the period ended March 31, 1999, $185,607 in contract
maintenance charges were assessed.
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (Unaudited) (continued)
Note 3 - Policy Charges (continued)
- -----------------------------------
Transfer Fee Charge
-------------------
A transfer fee of $25 will apply to transfers made by
policyholders between the Portfolios and between the
Portfolios and the general account in excess of 15 transfers
in a contract year. JNL may waive the transfer fee in
connection with pre-authorized automatic transfer programs, or
in those states where a lesser fee is required.
This fee will be deducted from contract values which remain in
the portfolio(s) from which the transfers were made. If such
remaining contract value is insufficient to pay the transfer
fee, then the fee will be deducted from transferred contract
values. For the period ended March 31, 1999, $1,475 in
transfer fees were assessed.
Surrender or Contingent Deferred Sales Charge
---------------------------------------------
During the first seven contract years, certain contracts
include a provision for a charge upon the surrender or partial
surrender of the contract. The amount assessed under the
contract terms, if any, depends upon the cost associated with
distributing the particular contracts. The amount, if any, is
determined based on a number of factors, including the amount
withdrawn, the contract year of surrender, or the number and
amount of withdrawals in a calendar year. The surrender
charges are assessed by JNL and withheld from the proceeds of
the withdrawals. For the period ended March 31, 1999, $620,534
in surrender charges were assessed.
Insurance Charges
-----------------
JNL deducts a daily charge from the assets of the Separate
Account equivalent to an annual rate of 1.25% for the
assumption of mortality and expense risks. The mortality risk
assumed by JNL is that the insured may receive benefits
greater than those anticipated by JNL. The expense risk
assumed by JNL is that the costs of administering the
contracts of the Separate Account will exceed the amount
received from the Administration Charge and the Contract
Maintenance Charge.
JNL deducts a daily charge for administrative expenses from
the net assets of the Separate Account equivalent to an annual
rate of 0.15%. The administration charge is designed to
reimburse JNL for administrative expenses related to the
Separate Account and the issuance and maintenance of
contracts.
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (Unaudited) (continued)
Note 4 - Purchases and Sales of Investments
- -------------------------------------------
For the period ended March 31, 1999, purchases and proceeds from sales
of investments in the JNL Series Trust are as follows:
<TABLE>
<CAPTION>
Proceeds
JNL Series Trust Purchases from Sales
- ---------------- ---------------- ----------------
<S> <C> <C>
JNL Aggressive Growth.................................................. $ 33,226,910 $ 10,824,049
JNL Capital Growth..................................................... 18,479,469 7,123,613
JNL Global Equities.................................................... 23,696,183 10,544,751
JNL/Alger Growth....................................................... 29,190,055 9,369,850
JNL/Eagle Core Equity.................................................. 7,382,329 2,918,658
JNL/Eagle SmallCap Equity.............................................. 5,821,092 5,487,131
JNL/Putnam Growth...................................................... 39,066,167 10,311,202
JNL/Putnam Value Equity................................................ 26,656,703 9,269,310
PPM America/JNL Balanced............................................... 18,572,802 4,894,655
PPM America/JNL High Yield Bond........................................ 17,236,137 7,012,896
PPM America/JNL Money Market........................................... 36,509,230 17,107,262
Salomon Brothers/JNL Global Bond....................................... 6,519,985 4,203,172
Salomon Brothers/JNL U.S. Government & Quality Bond.................... 21,294,820 6,690,197
T. Rowe Price/JNL Established Growth................................... 27,803,347 11,804,620
T. Rowe Price/JNL International Equity Investment...................... 6,832,971 5,432,706
T. Rowe Price/JNL Mid-Cap Growth....................................... 14,928,756 9,383,215
JNL/S&P Conservative Growth I.......................................... 9,631,987 522,385
JNL/S&P Moderate Growth I.............................................. 12,472,003 548,176
JNL/S&P Aggressive Growth I............................................ 3,749,733 132,847
JNL/S&P Very Aggressive Growth I....................................... 2,631,618 2,011,658
JNL/S&P Equity Growth I................................................ 6,136,723 110,808
JNL/S&P Equity Aggressive Growth I..................................... 1,260,654 316,907
</TABLE>
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (Unaudited) (continued)
Note 5 - Accumulation of Unit Activity
- ---------------------------------------
The following is a reconciliation of unit activity for the periods
ended March 31,1999 and December 31, 1998:
<TABLE>
<CAPTION>
Units Units Units
Outstanding Units Units Outstanding Units Units Outstanding
Portfolio: at 12/31/97 Issued Redeemed at 12/31/98 Issued Redeemed at 3/31/99
------------ ----------- ----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
JNL/Janus Aggressive Growth......... 5,371,379 2,787,639 (1,319,713) 6,839,305 1,427,026 (456,326) 7,810,005
JNL/Janus Capital Growth............ 5,132,743 1,833,616 (1,116,476) 5,849,883 960,387 (359,661) 6,450,609
JNL/Janus Global Equities........... 9,067,277 3,746,642 (1,571,721) 11,242,198 1,148,645 (473,678) 11,917,165
JNL/Alger Growth.................... 5,908,446 3,064,437 (1,267,893) 7,704,990 1,378,799 (421,835) 8,661,954
JNL/Eagle Core Equity............... 766,516 1,291,060 (228,213) 1,829,363 464,312 (178,537) 2,115,138
JNL/Eagle SmallCap Equity........... 857,946 1,751,877 (335,278) 2,274,545 431,512 (392,346) 2,313,711
JNL/Putnam Growth................... 5,207,294 4,324,364 (1,183,066) 8,348,592 1,802,548 (445,860) 9,705,280
JNL/Putnam Value Equity............. 6,925,507 5,474,730 (1,500,339) 10,899,898 1,517,685 (489,414) 11,928,169
PPM America/JNL Balanced............ 4,486,973 2,840,078 (752,880) 6,574,171 1,302,820 (319,332) 7,557,659
PPM America/JNL High Yield Bond..... 4,711,051 4,571,237 (1,931,614) 7,350,674 1,318,285 (510,981) 8,157,978
PPM America/JNL Money Market........ 3,855,123 8,948,994 (8,090,159) 4,713,958 3,269,211 (1,513,505) 6,469,664
Salomon Brothers/JNL Global Bond.... 2,603,857 1,427,619 (865,322) 3,166,154 505,835 (314,833) 3,357,156
Salomon Brothers/JNL U.S. Government
& Quality Bond...................... 2,090,575 4,167,543 (1,252,117) 5,006,001 1,787,605 (544,283) 6,249,323
T. Rowe Price/JNL Established Growth 7,218,789 4,670,050 (1,489,792) 10,399,047 1,377,307 (548,375) 11,227,979
T. Rowe Price/JNL International
Equity Investment................... 4,406,642 1,396,050 (973,991) 4,828,701 517,173 (389,537) 4,956,337
T. Rowe Price/JNL Mid-Cap Growth.... 8,031,753 3,689,921 (1,780,671) 9,941,003 870,019 (507,511) 10,303,511
JNL/S&P Conservative Growth I....... - 1,031,476 (63,802) 967,674 914,012 (44,848) 1,836,838
JNL/S&P Moderate Growth I........... - 1,386,264 (187,698) 1,198,566 1,152,888 (44,791) 2,306,663
JNL/S&P Aggressive Growth I......... - 627,797 (216,909) 410,888 337,173 (10,259) 737,802
JNL/S&P Very Aggressive Growth I.... - 317,036 (96,541) 220,495 227,645 (173,035) 275,105
JNL/S&P Equity Growth I............. - 523,931 (45,782) 478,149 562,382 (7,706) 1,032,825
JNL/S&P Equity Aggressive Growth I.. - 337,114 (32,987) 304,127 114,219 (27,295) 391,051
</TABLE>
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (Unaudited) (continued)
Note 6 - Reconciliation of Gross and Net Deposits into the Separate Account
- ---------------------------------------------------------------------------
Deposits into the Separate Account purchase shares of the JNL Series
Trust. Net deposits represent the amounts available for investment in
such shares after the deduction of applicable policy charges. The
following is a summary of net deposits made for the periods ended March
31, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
Portfolios
-------------------------------------------------------------------------
JNL Aggressive JNL Capital
Growth Growth
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 18,067,014 $ 24,607,596 $ 9,682,693 $ 14,145,762
Value of units redeemed ............................ (2,619,085) (4,443,338) (2,006,308) (4,046,738)
Transfers between portfolios and between
portfolios and general account ..................... 7,582,138 3,644,689 4,121,388 917,056
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 23,030,067 23,808,947 11,797,773 11,016,080
Deductions:
Policyholder charges ............................... 61,874 162,685 45,459 133,165
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 22,968,193 $ 23,646,262 $ 11,752,314 $ 10,882,915
============ ============ ============ ============
</TABLE>
------------------------------
JNL Global
Equities
------------------------------
Three
months ended Year ended
March 31, December 31,
1999 1998
-------------- --------------
Proceeds from units issued ................... $ 15,699,261 $ 41,627,440
Value of units redeemed ...................... (3,807,109) (7,440,945)
Transfers between portfolios and between
portfolios and general account ............... 2,175,352 6,833,409
------------ ------------
Total gross deposits net of
transfers to general account ................. 14,067,504 41,019,904
Deductions:
Policyholder charges ......................... 95,016 244,503
------------ ------------
Net deposits from policyholders .............. $ 13,972,488 $ 40,775,401
============ ============
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
JNL/Alger JNL/Eagle
Growth Core Equity
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 17,145,749 $ 26,745,114 $ 4,802,572 $ 10,633,575
Value of units redeemed ............................ (3,149,531) (5,120,589) (282,793) (635,090)
Transfers between portfolios and between
portfolios and general account ..................... 6,475,709 7,457,907 53,121 5,575,481
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 20,471,927 29,082,432 4,572,900 15,573,966
Deductions:
Policyholder charges ............................... 72,268 147,076 4,442 16,861
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 20,399,659 $ 28,935,356 $ 4,568,458 $ 15,557,105
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
JNL/Eagle JNL/Putnam
SmallCap Equity Growth
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 2,750,890 $ 12,039,689 $ 26,869,584 $ 49,827,649
Value of units redeemed ............................ (324,169) (509,032) (2,728,004) (6,336,122)
Transfers between portfolios and between
portfolios and general account ..................... (1,979,539) 8,364,386 5,338,822 13,491,673
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 447,182 19,895,043 29,480,402 56,983,200
Deductions:
Policyholder charges ............................... 7,291 14,938 64,521 189,901
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 439,891 $ 19,880,105 $ 29,415,881 $ 56,793,299
============ ============ ============ ============
</TABLE>
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (Unaudited) (continued)
Note 6 - Reconciliation of Gross and Net Deposits into the Separate Account
(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolios
-------------------------------------------------------------------------
JNL/Putnam PPM America/JNL
Value Equity Balanced
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 17,303,380 $ 61,152,713 $ 10,717,593 $ 26,538,757
Value of units redeemed ............................ (2,852,898) (6,233,980) (1,541,014) (3,923,546)
Transfers between portfolios and between
portfolios and general account ..................... 3,705,194 11,112,397 4,880,176 6,503,296
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 18,155,676 66,031,130 14,056,755 29,118,507
Deductions:
Policyholder charges ............................... 81,463 175,296 32,936 82,846
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 18,074,213 $ 65,855,834 $ 14,023,819 $ 29,035,661
============ ============ ============ ============
</TABLE>
------------------------------
PPM America/JNL
High Yield Bond
------------------------------
Three
months ended Year ended
March 31, December 31,
1999 1998
------------- --------------
Proceeds from units issued ................... $ 8,648,880 $ 39,826,976
Value of units redeemed ...................... (2,027,152) (4,032,454)
Transfers between portfolios and between
portfolios and general account ............... 3,984,247 (1,083,299)
------------ ------------
Total gross deposits net of
transfers to general account ................. 10,605,975 34,711,223
Deductions:
Policyholder charges ......................... 35,902 87,388
------------ ------------
Net deposits from policyholders .............. $ 10,570,073 $ 34,623,835
============ ============
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
PPM America/JNL Salomon Brothers/JNL
Money Market Global Bond
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 15,613,714 $ 30,782,206 $ 2,766,393 $ 10,063,455
Value of units redeemed ............................ (1,654,337) (7,926,544) (537,408) (1,972,251)
Transfers between portfolios and between
portfolios and general account ..................... 5,702,632 (13,392,940) 242,234 (664,160)
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 19,662,009 9,462,722 2,471,219 7,427,044
Deductions:
Policyholder charges ............................... 49,908 221,712 9,028 44,726
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 19,612,101 $ 9,241,010 $ 2,462,191 $ 7,382,318
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Salomon Brothers/JNL U.S. T. Rowe Price/JNL
Government & Quality Bond Established Growth
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 8,920,433 $ 14,609,255 $ 17,507,804 $ 52,824,458
Value of units redeemed ............................ (1,804,402) (1,850,919) (3,185,940) (7,327,082)
Transfers between portfolios and between
portfolios and general account ..................... 7,797,635 21,189,057 2,498,469 11,596,227
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 14,913,666 33,947,393 16,820,333 57,093,603
Deductions:
Policyholder charges ............................... 73,636 34,306 75,514 204,723
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 14,840,030 $ 33,913,087 $ 16,744,819 $ 56,888,880
============ ============ ============ ============
</TABLE>
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (Unaudited) (continued)
Note 6 - Reconciliation of Gross and Net Deposits into the Separate Account
(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolios
-------------------------------------------------------------------------
T. Rowe Price/JNL
International Equity T. Rowe Price/JNL
Investment Mid-Cap Growth
------------------------------- -----------------------------------
Three Three
months ended Year ended months ended Year ended
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 2,727,825 $ 9,234,204 $ 7,716,636 $ 35,690,323
Value of units redeemed ............................ (1,139,504) (2,825,426) (2,761,756) (5,078,043)
Transfers between portfolios and between
portfolios and general account ..................... 58,831 (628,509) 1,261,153 271,174
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 1,647,152 5,780,269 6,216,033 30,883,454
Deductions:
Policyholder charges ............................... 21,255 84,050 72,377 162,825
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 1,625,897 $ 5,696,219 $ 6,143,656 $ 30,720,629
============ ============ ============ ============
</TABLE>
------------------------------
JNL/S&P
Conservative
Growth I
------------------------------
Period from
Three April 9,
months ended 1998* to
March 31, December 31,
1999 1998
------------- -------------
Proceeds from units issued ................... $ 4,153,729 $ 3,632,331
Value of units redeemed ...................... (164,354) (65,201)
Transfers between portfolios and between
portfolios and general account ............... 5,170,188 5,843,640
----------- -----------
Total gross deposits net of
transfers to general account ................. 9,159,563 9,410,770
Deductions:
Policyholder charges ......................... 852 228
----------- -----------
Net deposits from policyholders .............. $ 9,158,711 $ 9,410,542
=========== ===========
- -------------------------------------
*Commencement of operations
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
JNL/S&P JNL/S&P
Moderate Aggressive
Growth I Growth I
-------------------------------- ----------------------------------
Period from Period from
Three April 8, Three April 8,
months ended 1998* to months ended 1998* to
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 7,511,290 $ 6,145,126 $ 2,764,703 $ 2,442,603
Value of units redeemed ............................ (115,484) (88,136) (13,241) (28,931)
Transfers between portfolios and between
portfolios and general account ..................... 4,590,243 5,519,988 886,479 1,641,523
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 11,986,049 11,576,978 3,637,941 4,055,195
Deductions:
Policyholder charges ............................... 370 952 410 981
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 11,985,679 $ 11,576,026 $ 3,637,531 $ 4,054,214
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
JNL/S&P
Very JNL/S&P
Aggressive Equity
Growth I Growth I
-------------------------------- ----------------------------------
Period from Period from
Three April 1, Three April 13,
months ended 1998* to months ended 1998* to
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Proceeds from units issued ............................. $ 1,178,017 $ 1,764,667 $ 4,338,988 $ 2,541,056
Value of units redeemed ................................ (632,692) (88,630) (19,223) (2,744)
Transfers between portfolios and between
portfolios and general account ......................... 84,779 484,744 1,732,890 1,998,887
----------- ----------- ----------- -----------
Total gross deposits net of
transfers to general account ........................... 630,104 2,160,781 6,052,655 4,537,199
Deductions:
Policyholder charges ................................... 846 4,143 834 68
----------- ----------- ----------- -----------
Net deposits from policyholders ........................ $ 629,258 $ 2,156,638 $ 6,051,821 $ 4,537,131
=========== =========== =========== ===========
</TABLE>
------------------------------
JNL/S&P
Equity
Aggressive
Growth I
------------------------------
Period from
Three April 15,
months ended 1998* to
March 31, December 31,
1999 1998
------------- -------------
Proceeds from units issued ................... $ 917,928 $ 1,516,903
Value of units redeemed ...................... (21,923) (10,701)
Transfers between portfolios and between
portfolios and general account ............... 62,158 1,394,684
----------- -----------
Total gross deposits net of
transfers to general account ................. 958,163 2,900,886
Deductions:
Policyholder charges ......................... 1,413 176
----------- -----------
Net deposits from policyholders .............. $ 956,750 $ 2,900,710
=========== ===========
<PAGE>
JACKSON NATIONAL SEPARATE ACCOUNT - I
[LOGO]
FINANCIAL STATEMENTS
DECEMBER 31, 1998
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Jackson National Life Insurance Company and
Contract Owners of Jackson National Separate Account - I
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets present fairly, in all material respects, the financial
position of each of the twenty-two portfolios comprising Jackson National
Separate Account - I at December 31, 1998, the results of each of their
operations and the changes in each of their net assets for each of the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of Jackson National Life Insurance
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with 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 presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
February 17, 1999
<PAGE>
Jackson National Separate Account - I
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
Portfolios
-----------------------------------------------------------------------------------------
JNL JNL JNL JNL/Eagle JNL/Eagle
Aggressive Capital Global JNL/Alger Core SmallCap
Growth Growth Equities Growth Equity Equity
------------- ------------- ------------- ------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in JNL Series Trust,
at market value
(See Schedule of Investments) ............ $141,046,026 $104,944,576 $223,980,406 $152,985,337 $ 28,849,717 $ 31,799,046
Due from Jackson National Life
Insurance Company ........................ 752,139 17,950 73,272 76,692 51,457 27,786
Receivable for investments sold .......... 10,917 30,811 150,734 72,910 68,270 25,086
------------ ------------ ------------ ------------ ------------ ------------
Total Assets ............................. 141,809,082 104,993,337 224,204,412 153,134,939 28,969,444 31,851,918
Liabilities:
Payable for investments purchased ........ 752,139 17,950 73,272 76,692 51,457 27,786
Due to Jackson National Life
Insurance Company ........................ 10,917 30,811 150,734 72,910 68,270 25,086
------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities ........................ 763,056 48,761 224,006 149,602 119,727 52,872
------------ ------------ ------------ ------------ ------------ ------------
Net Assets ............................... $141,046,026 $104,944,576 $223,980,406 $152,985,337 $ 28,849,717 $ 31,799,046
============ ============ ============ ============ ============ ============
Total Net Assets Represented by:
Number of units outstanding .............. 6,839,305 5,849,883 11,242,198 7,704,990 1,829,363 2,274,545
============ ============ ============ ============ ============ ============
Unit value (net assets divided by
units outstanding) ....................... $ 20.62 $ 17.94 $ 19.92 $ 19.86 $ 15.77 $ 13.98
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Portfolios
-----------------------------------------------------------------------------------------
PPM PPM
JNL/Putnam PPM America/JNL America/JNL Salomon
JNL/Putnam Value America/JNL High Yield Money Brothers/JNL
Growth Equity Balanced Bond Market Global Bond
------------- ------------- ------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in JNL Series Trust,
at market value
(See Schedule of Investments) ............ $176,397,377 $188,485,252 $ 94,091,797 $ 95,999,095 $ 52,423,383 $ 40,955,834
Due from Jackson National Life
Insurance Company ........................ 112,236 72,296 76,533 60,881 15,129 72,932
Receivable for investments sold .......... 44,217 43,814 20,418 16,045 699,420 12,043
------------ ------------ ------------ ------------ ------------ ------------
Total Assets ............................. 176,553,830 188,601,362 94,188,748 96,076,021 53,137,932 41,040,809
Liabilities:
Payable for investments purchased ........ 112,236 72,296 76,533 60,881 15,129 72,932
Due to Jackson National Life
Insurance Company ........................ 44,217 43,814 20,418 16,045 699,420 12,043
------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities ........................ 156,453 116,110 96,951 76,926 714,549 84,975
------------ ------------ ------------ ------------ ------------ ------------
Net Assets ............................... $176,397,377 $188,485,252 $ 94,091,797 $ 95,999,095 $ 52,423,383 $ 40,955,834
============ ============ ============ ============ ============ ============
Total Net Assets Represented by:
Number of units outstanding .............. 8,348,592 10,899,898 6,574,171 7,350,674 4,713,958 3,166,154
============ ============ ============ ============ ============ ============
Unit value (net assets divided by
units outstanding) ....................... $ 21.13 $ 17.29 $ 14.31 $ 13.06 $ 11.12 $ 12.94
============ ============ ============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolios
-----------------------------------------------------------
T. Rowe
Salomon T. Rowe Price/JNL T. Rowe
Brothers/JNL Price/JNL International Price/JNL
U.S. Government Established Equity Mid-Cap
& Quality Bond Growth Investment Growth
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Assets:
Investments in JNL Series Trust,
at market value
(See Schedule of Investments) ............ $ 60,050,590 $209,481,265 $ 64,992,341 $174,796,271
Due from Jackson National Life
Insurance Company ........................ 99,100 194,991 150,477 66,353
Receivable for investments sold .......... 5,165 68,121 11,978 95,648
------------ ------------ ------------ ------------
Total Assets ............................. 60,154,855 209,744,377 65,154,796 174,958,272
Liabilities:
Payable for investments purchased ........ 99,100 194,991 150,477 66,353
Due to Jackson National Life
Insurance Company ........................ 5,165 68,121 11,978 95,648
------------ ------------ ------------ ------------
Total Liabilities ........................ 104,265 263,112 162,455 162,001
------------ ------------ ------------ ------------
Net Assets ............................... $ 60,050,590 $209,481,265 $ 64,992,341 $174,796,271
============ ============ ============ ============
Total Net Assets Represented by:
Number of units outstanding .............. 5,006,001 10,399,047 4,828,701 9,941,003
============ ============ ============ ============
Unit value (net assets divided by
units outstanding) ....................... $ 12.00 $ 20.14 $ 13.46 $ 17.58
============ ============ ============ ============
</TABLE>
<PAGE>
Jackson National Separate Account - I
Statement of Assets and Liabilities (continued)
December 31, 1998
<TABLE>
<CAPTION>
Portfolios
--------------------------------------------------------------------------------------
JNL/S&P JNL/S&P
JNL/S&P JNL/S&P JNL/S&P Very JNL/S&P Equity
Conservative Moderate Aggressive Aggressive Equity Aggressive
Growth I Growth I Growth I Growth I Growth I Growth I
------------- ------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in JNL Series Trust,
at market value
(See Schedule of Investments) ............ $ 10,028,699 $ 12,610,937 $ 4,424,911 $ 2,441,544 $ 5,036,607 $ 3,236,926
Due from Jackson National Life
Insurance Company ........................ 13,878 18,882 2,650 13,510 58,882 25,773
Receivable for investments sold .......... 384 483 170 93 191 158
------------ ------------ ------------ ------------ ------------ ------------
Total Assets ............................. 10,042,961 12,630,302 4,427,731 2,455,147 5,095,680 3,262,857
Liabilities:
Payable for investments purchased ........ 13,878 18,882 2,650 13,510 58,882 25,773
Due to Jackson National Life
Insurance Company ........................ 384 483 170 93 191 158
------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities ........................ 14,262 19,365 2,820 13,603 59,073 25,931
------------ ------------ ------------ ------------ ------------ ------------
Net Assets ............................... $ 10,028,699 $ 12,610,937 $ 4,424,911 $ 2,441,544 $ 5,036,607 $ 3,236,926
============ ============ ============ ============ ============ ============
Total Net Assets Represented by:
Number of units outstanding .............. 967,674 1,198,566 410,888 220,495 478,149 304,127
============ ============ ============ ============ ============ ============
Unit value (net assets divided by
units outstanding) ....................... $ 10.36 $ 10.52 $ 10.77 $ 11.07 $ 10.53 $ 10.64
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Jackson National Separate Account - I
Statement of Operations
Year ended December 31, 1998
<TABLE>
<CAPTION>
Portfolios
----------------------------------------------------------------------------------
JNL JNL JNL JNL/Eagle JNL/Eagle
Aggressive Capital Global JNL/Alger Core SmallCap
Growth Growth Equities Growth Equity Equity
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net realized gain (loss) from sales
of investments:
Proceeds from sales ........................... $22,478,449 $16,729,142 $30,948,229 $22,092,006 $ 3,530,908 $ 4,509,067
Cost of investments sold ...................... 17,862,850 14,393,287 25,749,137 17,039,681 3,270,022 4,861,658
----------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss) from sales
of investments ................................ 4,615,599 2,335,855 5,199,092 5,052,325 260,886 (352,591)
Change in net unrealized gain on
investments:
Unrealized gain beginning of year ............. 6,566,393 9,216,063 14,341,791 12,927,438 1,358,754 948,517
Unrealized gain end of year ................... 49,487,361 32,985,801 50,589,160 51,837,647 4,137,098 1,497,307
----------- ----------- ----------- ----------- ----------- -----------
Change in net unrealized gain on
investments ................................ 42,920,968 23,769,738 36,247,369 38,910,209 2,778,344 548,790
----------- ----------- ----------- ----------- ----------- -----------
Net gain on investments ....................... 47,536,567 26,105,593 41,446,461 43,962,534 3,039,230 196,199
Expenses:
Administrative charge ......................... 148,725 121,112 283,226 169,897 28,467 31,118
Mortality and expense charge .................. 1,239,374 1,009,269 2,360,220 1,415,809 237,222 259,314
----------- ----------- ----------- ----------- ----------- -----------
Total expenses ................................ 1,388,099 1,130,381 2,643,446 1,585,706 265,689 290,432
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets
resulting from operations ..................... $46,148,468 $24,975,212 $38,803,015 $42,376,828 $ 2,773,541 $ (94,233)
=========== =========== =========== =========== =========== ===========
</TABLE>
x<PAGE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Portfolios
------------------------------------------------------------------------------------
PPM PPM
JNL/Putnam PPM America/JNL America/JNL Salomon
JNL/Putnam Value America/JNL High Yield Money Brothers/JNL
Growth Equity Balanced Bond Marke Global Bond
------------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net realized gain (loss) from sales
of investments:
Proceeds from sales ........................... $23,069,466 $26,212,067 $11,498,996 $26,352,420 $89,376,464 $11,621,611
Cost of investments sold ...................... 19,196,419 24,190,711 10,020,125 24,551,792 87,463,383 10,950,841
----------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss) from sales
of investments ................................ 3,873,047 2,021,356 1,478,871 1,800,628 1,913,081 670,770
Change in net unrealized gain on
investments:
Unrealized gain beginning of year ............. 10,554,634 9,825,588 7,805,534 5,314,048 874,329 2,530,302
Unrealized gain end of year ................... 45,340,042 24,616,797 13,317,898 6,008,859 1,448,061 2,650,450
----------- ----------- ----------- ----------- ----------- -----------
Change in net unrealized gain on
investments ................................ 34,785,408 14,791,209 5,512,364 694,811 573,732 120,148
----------- ----------- ----------- ----------- ----------- -----------
Net gain on investments ....................... 38,658,455 16,812,565 6,991,235 2,495,439 2,486,813 790,918
Expenses:
Administrative charge ......................... 187,378 230,885 118,596 129,335 76,791 59,361
Mortality and expense charge .................. 1,561,482 1,924,037 988,300 1,077,793 639,922 494,672
----------- ----------- ----------- ----------- ----------- -----------
Total expenses ................................ 1,748,860 2,154,922 1,106,896 1,207,128 716,713 554,033
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets
resulting from operations ..................... $36,909,595 $14,657,643 $ 5,884,339 $ 1,288,311 $ 1,770,100 $ 236,885
=========== =========== =========== =========== =========== ===========
</TABLE>
- ---------------------------------
1 Period from April 9, 1998 (commencement of operations)
2 Period from April 8, 1998 (commencement of operations)
3 Period from April 1, 1998 (commencement of operations)
4 Period from April 13, 1998 (commencement of operations)
5 Period from April 15, 1998 (commencement of operations)
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Portfolios
-------------------------------------------------------------------------------------
T. Rowe
Salomon T. Rowe Price/JNL T. Rowe
Brothers/JNL Price/JNL International Price/JNL JNL/S&P JNL/S&P
U.S. Government Established Equity Mid-Cap Conservative Moderate
& Quality Bond Growth Investment Growth Growth I(1) Growth I(2)
-------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net realized gain (loss) from sales
of investments:
Proceeds from sales ........................... $15,176,261 $28,277,325 $13,273,943 $29,118,733 $ 644,794 $ 1,759,236
Cost of investments sold ...................... 14,157,270 23,450,800 12,333,125 24,979,251 660,751 1,830,218
----------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss) from sales
of investments ................................ 1,018,991 4,826,525 940,818 4,139,482 (15,957) (70,982)
Change in net unrealized gain
on investments:
Unrealized gain beginning of year ............. 1,594,733 18,774,315 904,389 17,999,889 -- --
Unrealized gain end of year ................... 4,016,253 53,413,273 7,505,901 42,084,725 670,963 1,150,278
----------- ----------- ----------- ----------- ----------- -----------
Change in net unrealized gain on
investments ................................ 2,421,520 34,638,958 6,601,512 24,084,836 670,963 1,150,278
----------- ----------- ----------- ----------- ----------- -----------
Net gain on investments ....................... 3,440,511 39,465,483 7,542,330 28,224,318 655,006 1,079,296
Expenses:
Administrative charge ......................... 58,830 244,140 91,327 217,537 3,948 4,756
Mortality and expense charge .................. 490,253 2,034,500 761,061 1,812,808 32,901 39,629
----------- ----------- ----------- ----------- ----------- -----------
Total expenses ................................ 549,083 2,278,640 852,388 2,030,345 36,849 44,385
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets
resulting from operations ..................... $ 2,891,428 $37,186,843 $ 6,689,942 $26,193,973 $ 618,157 $ 1,034,911
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Portfolios
---------------------------------------------------------
JNL/S&P JNL/S&P
JNL/S&P Very JNL/S&P Equity
Aggressive Aggressive Equity Aggressive
Growth I(2) Growth I(3) Growth I(4) Growth I(5)
------------ ----------- ----------- --------------
<S> <C> <C> <C> <C>
Net realized gain (loss) from sales
of investments:
Proceeds from sales ........................... $ 2,095,817 $ 1,011,345 $ 428,796 $ 300,801
Cost of investments sold ...................... 2,132,899 965,567 467,545 325,688
----------- ----------- ----------- -----------
Net realized gain (loss) from sales
of investments ................................ (37,082) 45,778 (38,749) (24,887)
Change in net unrealized gain
on investments:
Unrealized gain beginning of year ............. -- -- -- --
Unrealized gain end of year ................... 428,754 251,923 558,366 374,112
----------- ----------- ----------- -----------
Change in net unrealized gain on
investments ................................ 428,754 251,923 558,366 374,112
----------- ----------- ----------- -----------
Net gain on investments ....................... 391,672 297,701 519,617 349,225
Expenses:
Administrative charge ......................... 2,247 1,371 2,158 1,394
Mortality and expense charge .................. 18,728 11,424 17,983 11,615
----------- ----------- ----------- -----------
Total expenses ................................ 20,975 12,795 20,141 13,009
----------- ----------- ----------- -----------
Increase (decrease) in net assets
resulting from operations ..................... $ 370,697 $ 284,906 $ 499,476 $ 336,216
=========== =========== =========== ===========
</TABLE>
<PAGE>
Jackson National Separate Account - I
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Portfolios
--------------------------------------------------------------------------
JNL Aggressive JNL Capital
Growth Growth
------------------------------------- -----------------------------------
Year ended Year ended
December 31, December 31,
------------------------------------- -----------------------------------
1998 1997 1998 1997
------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 4,615,599 $ 866,398 $ 2,335,855 $ 301,251
Change in net unrealized gain (loss) on
investments ........................................ 42,920,968 5,415,158 23,769,738 8,840,685
Administrative charge .............................. (148,725) (78,473) (121,112) (80,287)
Mortality and expense charge ....................... (1,239,374) (653,938) (1,009,269) (669,055)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations .................................... 46,148,468 5,549,145 24,975,212 8,392,594
Net deposits into Separate Account
(Note 6) ........................................... 23,646,262 37,560,141 10,882,915 25,254,359
------------- ------------- ------------- -------------
Increase in net assets ............................. 69,794,730 43,109,286 35,858,127 33,646,953
Net Assets:
Beginning of period ................................ 71,251,296 28,142,010 69,086,449 35,439,496
------------- ------------- ------------- -------------
End of period ...................................... $ 141,046,026 $ 71,251,296 $ 104,944,576 $ 69,086,449
============= ============= ============= =============
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
<TABLE>
<CAPTION>
Portfolios
--------------------------------------------------------------------------
JNL Global JNL/Alger
Equities Growth
------------------------------------- -----------------------------------
Year ended Year ended
December 31, December 31,
------------------------------------- -----------------------------------
1998 1997 1998 1997
------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 5,199,092 $ 1,621,040 $ 5,052,325 $ 1,494,359
Change in net unrealized gain (loss) on
investments ........................................ 36,247,369 11,430,440 38,910,209 10,624,952
Administrative charge .............................. (283,226) (150,545) (169,897) (89,531)
Mortality and expense charge ....................... (2,360,220) (1,254,542) (1,415,809) (746,090)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations .................................... 38,803,015 11,646,393 42,376,828 11,283,690
Net deposits into Separate Account
(Note 6) ........................................... 40,775,401 90,834,074 28,935,356 33,612,656
------------- ------------- ------------- -------------
Increase in net assets ............................. 79,578,416 102,480,467 71,312,184 44,896,346
Net Assets:
Beginning of period ................................ 144,401,990 41,921,523 81,673,153 36,776,807
------------- ------------- ------------- -------------
End of period ...................................... $ 223,980,406 $ 144,401,990 $ 152,985,337 $ 81,673,153
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Portfolios
--------------------------------------------------------------------------
JNL/Eagle JNL/Eagle
Core Equity SmallCap Equity
------------------------------------- -----------------------------------
Year ended Year ended
December 31, December 31,
------------------------------------- -----------------------------------
1998 1997 1998 1997
------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 260,886 $ 32,173 $ (352,591) $ 203,095
Change in net unrealized gain (loss) on
investments ........................................ 2,778,344 1,346,026 548,790 899,678
Administrative charge .............................. (28,467) (8,399) (31,118) (9,255)
Mortality and expense charge ....................... (237,222) (69,994) (259,314) (77,124)
------------ ------------ ------------ ------------
Increase (decrease) in net assets resulting
from operations .................................... 2,773,541 1,299,806 (94,233) 1,016,394
Net deposits into Separate Account
(Note 6) ........................................... 15,557,105 8,326,570 19,880,105 10,206,905
------------ ------------ ------------ ------------
Increase in net assets ............................. 18,330,646 9,626,376 19,785,872 11,223,299
Net Assets:
Beginning of period ................................ 10,519,071 892,695 12,013,174 789,875
------------ ------------ ------------ ------------
End of period ...................................... $ 28,849,717 $ 10,519,071 $ 31,799,046 $ 12,013,174
============ ============ ============ ============
</TABLE>
Portfolios
-----------------------------------
JNL/Putnam
Growth
----------------------------------
Year ended
December 31,
-----------------------------------
1998 1997
------------------ ---------------
Operations:
Net realized gain (loss) from sales
of investments ............................... $ 3,873,047 $ 638,488
Change in net unrealized gain (loss) on
investments .................................. 34,785,408 9,468,318
Administrative charge ........................ (187,378) (76,896)
Mortality and expense charge ................. (1,561,482) (640,797)
------------- -------------
Increase (decrease) in net assets resulting
from operations .............................. 36,909,595 9,389,113
Net deposits into Separate Account
(Note 6) ..................................... 56,793,299 51,065,168
------------- -------------
Increase in net assets ....................... 93,702,894 60,454,281
Net Assets:
Beginning of period .......................... 82,694,483 22,240,202
------------- -------------
End of period ................................ $ 176,397,377 $ 82,694,483
============= =============
<PAGE>
Jackson National Separate Account - I
Statements of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Portfolios
--------------------------------------------------------------------------
JNL/Putnam PPM Amierca/JNL
Value Equity Balanced
------------------------------------- -----------------------------------
Year ended Year ended
December 31, December 31,
------------------------------------- -----------------------------------
1998 1997 1998 1997
------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 2,021,356 $ 595,400 $ 1,478,871 $ 484,105
Change in net unrealized gain (loss) on
investments ........................................ 14,791,209 8,307,414 5,512,364 6,430,792
Administrative charge .............................. (230,885) (83,044) (118,596) (61,547)
Mortality and expense charge ....................... (1,924,037) (692,035) (988,300) (512,889)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations .................................... 14,657,643 8,127,735 5,884,339 6,340,461
Net deposits into Separate Account
(Note 6) ........................................... 65,855,834 82,577,176 29,035,661 28,882,738
------------- ------------- ------------- -------------
Increase in net assets ............................. 80,513,477 90,704,911 34,920,000 35,223,199
Net Assets:
Beginning of period ................................ 107,971,775 17,266,864 59,171,797 23,948,598
------------- ------------- ------------- -------------
End of period ...................................... $ 188,485,252 $ 107,971,775 $ 94,091,797 $ 59,171,797
============= ============= ============= =============
</TABLE>
Portfolios
-----------------------------------
PPM America/JNL
High Yield Bond
-----------------------------------
Year ended
December 31,
-----------------------------------
1998 1997
------------------ ---------------
Operations:
Net realized gain (loss) from sales
of investments ................................. $ 1,800,628 $ 461,507
Change in net unrealized gain (loss) on
investments .................................... 694,811 4,572,928
Administrative charge .......................... (129,335) (52,086)
Mortality and expense charge ................... (1,077,793) (434,046)
------------ ------------
Increase (decrease) in net assets resulting
from operations ................................ 1,288,311 4,548,303
Net deposits into Separate Account
(Note 6) ....................................... 34,623,835 42,618,313
------------ ------------
Increase in net assets ......................... 35,912,146 47,166,616
Net Assets:
Beginning of period ............................ 60,086,949 12,920,333
------------ ------------
End of period .................................. $ 95,999,095 $ 60,086,949
============ ============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Portfolios
--------------------------------------------------------------------------
PPM America/JNL Salomon Brothers/JNL
Money Market Global Bond
------------------------------------- -----------------------------------
Year ended Year ended
December 31, December 31,
------------------------------------- -----------------------------------
1998 1997 1998 1997
------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 1,913,081 $ 1,032,988 $ 670,770 $ 216,731
Change in net unrealized gain (loss) on
investments ........................................ 573,732 610,915 120,148 2,033,179
Administrative charge .............................. (76,791) (50,377) (59,361) (33,550)
Mortality and expense charge ....................... (639,922) (419,810) (494,672) (279,583)
------------ ------------ ------------ ------------
Increase (decrease) in net assets resulting
from operations .................................... 1,770,100 1,173,716 236,885 1,936,777
Net deposits into Separate Account
(Note 6) ........................................... 9,241,010 17,485,865 7,382,318 20,696,256
------------ ------------ ------------ ------------
Increase in net assets ............................. 11,011,110 18,659,581 7,619,203 22,633,033
Net Assets:
Beginning of period ................................ 41,412,273 22,752,692 33,336,631 10,703,598
------------ ------------ ------------ ------------
End of period ...................................... $ 52,423,383 $ 41,412,273 $ 40,955,834 $ 33,336,631
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Portfolios
--------------------------------------------------------------------------
Salomon Brothers/JNL
U.S. Government T. Rowe Price/JNL
& Quality Bond Established Growth
------------------------------------- -----------------------------------
Year ended Year ended
December 31, December 31,
------------------------------------- -----------------------------------
1998 1997 1998 1997
------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 1,018,991 $ 154,931 $ 4,826,525 $ 1,641,416
Change in net unrealized gain (loss) on
investments ........................................ 2,421,520 1,323,094 34,638,958 16,283,327
Administrative charge .............................. (58,830) (23,031) (244,140) (109,782)
Mortality and expense charge ....................... (490,253) (191,925) (2,034,500) (914,851)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations .................................... 2,891,428 1,263,069 37,186,843 16,900,110
Net deposits into Separate Account
(Note 6) ........................................... 33,913,087 12,663,491 56,888,880 67,178,828
------------- ------------- ------------- -------------
Increase in net assets ............................. 36,804,515 13,926,560 94,075,723 84,078,938
Net Assets:
Beginning of period ................................ 23,246,075 9,319,515 115,405,542 31,326,604
------------- ------------- ------------- -------------
End of period ...................................... $ 60,050,590 $ 23,246,075 $ 209,481,265 $ 115,405,542
============= ============= ============= =============
</TABLE>
<PAGE>
Jackson National Separate Account - I
Statements of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Portfolios
--------------------------------------------------------------------------
T. Rowe Price/JNL
International Equity T. Rowe Price/JNL
Investment Mid-Cap Growth
------------------------------------- -----------------------------------
Year ended Year ended
December 31, December 31,
------------------------------------- -----------------------------------
1998 1997 1998 1997
------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ..................................... $ 940,818 $ 382,718 $ 4,139,482 $ 1,121,672
Change in net unrealized gain (loss) on
investments ........................................ 6,601,512 (369,454) 24,084,836 14,460,621
Administrative charge .............................. (91,327) (62,171) (217,537) (122,581)
Mortality and expense charge ....................... (761,061) (518,091) (1,812,808) (1,021,503)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations .................................... 6,689,942 (566,998) 26,193,973 14,438,209
Net deposits into Separate Account
(Note 6) ........................................... 5,696,219 29,138,889 30,720,629 58,296,400
------------- ------------- ------------- -------------
Increase in net assets ............................. 12,386,161 28,571,891 56,914,602 72,734,609
Net Assets:
Beginning of period ................................ 52,606,180 24,034,289 117,881,669 45,147,060
------------- ------------- ------------- -------------
End of period ...................................... $ 64,992,341 $ 52,606,180 $ 174,796,271 $ 117,881,669
============= ============= ============= =============
</TABLE>
Portfolios
-----------------------------------
JNL/S&P JNL/S&P
Conservative Moderate
Growth I Growth I
------------------ ---------------
Period from Period from
April 9, 1998* April 8, 1998*
to December 31, to December 31,
1998 1998
------------------ ---------------
Operations:
Net realized gain (loss) from sales
of investments ................................. $ (15,957) $ (70,982)
Change in net unrealized gain (loss) on
investments .................................... 670,963 1,150,278
Administrative charge .......................... (3,948) (4,756)
Mortality and expense charge ................... (32,901) (39,629)
------------ ------------
Increase (decrease) in net assets resulting
from operations ................................ 618,157 1,034,911
Net deposits into Separate Account
(Note 6) ....................................... 9,410,542 11,576,026
------------ ------------
Increase in net assets ......................... 10,028,699 12,610,937
Net Assets:
Beginning of period ............................ -- --
------------ ------------
End of period .................................. $ 10,028,699 $ 12,610,937
============ ============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Portfolios
--------------------------------------------------------------------------
JNL/S&P JNL/S&P
JNL/S&P Very JNL/S&P Equity
Aggressive Aggressive Equity Aggressive
Growth I Growth I Growth I Growth I
------------------ ----------------- ------------------ ---------------
Period from Period from Period from Period from
April 8, 1998* April 1, 1998* April 13, 1998* April 15, 1998*
to December 31, to December 31, To December 31, to December 31,
1998 1998 1998 1998
------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Operations:
Net realized gain (loss) from sales
of investments ......................................... $ (37,082) $ 45,778 $ (38,749) $ (24,887)
Change in net unrealized gain (loss) on
investments ............................................ 428,754 251,923 558,366 374,112
Administrative charge .................................. (2,247) (1,371) (2,158) (1,394)
Mortality and expense charge ........................... (18,728) (11,424) (17,983) (11,615)
----------- ----------- ----------- -----------
Increase (decrease) in net assets resulting
from operations ........................................ 370,697 284,906 499,476 336,216
Net deposits into Separate Account
(Note 6) ............................................... 4,054,214 2,156,638 4,537,131 2,900,710
----------- ----------- ----------- -----------
Increase in net assets ................................. 4,424,911 2,441,544 5,036,607 3,236,926
Net Assets:
Beginning of period .................................... -- -- -- --
----------- ----------- ----------- -----------
End of period .......................................... $ 4,424,911 $ 2,441,544 $ 5,036,607 $ 3,236,926
=========== =========== =========== ===========
</TABLE>
<PAGE>
Jackson National Separate Account - I
Schedule of Investments
December 31, 1998
<TABLE>
<CAPTION>
Number Market
JNL Series Trust of Shares Cost Value
- ---------------- ---------------- -------------- ---------------
<S> <C> <C> <C>
JNL Aggressive Growth............................................. 6,387,954 $ 91,558,665 $ 141,046,026
JNL Capital Growth................................................ 5,062,449 71,958,775 104,944,576
JNL Global Equities............................................... 10,130,276 173,391,246 223,980,406
JNL/Alger Growth.................................................. 8,073,105 101,147,690 152,985,337
JNL/Eagle Core Equity............................................. 1,813,307 24,712,619 28,849,717
JNL/Eagle SmallCap Equity......................................... 2,145,685 30,301,739 31,799,046
JNL/Putnam Growth................................................. 7,709,676 131,057,335 176,397,377
JNL/Putnam Value Equity........................................... 10,333,621 163,868,455 188,485,252
PPM America/JNL Balanced.......................................... 6,980,104 80,773,899 94,091,797
PPM America/JNL High Yield Bond................................... 8,815,344 89,990,236 95,999,095
PPM America/JNL Money Market...................................... 52,423,383 50,975,322 52,423,383
Salomon Brothers/JNL Global Bond.................................. 3,838,410 38,305,384 40,955,834
Salomon Brothers/JNL U.S. Government & Quality Bond............... 5,385,703 56,034,337 60,050,590
T. Rowe Price/JNL Established Growth.............................. 10,990,622 156,067,992 209,481,265
T. Rowe Price/JNL International Equity Investment................. 4,771,831 57,486,440 64,992,341
T. Rowe Price/JNL Mid-Cap Growth.................................. 8,555,862 132,711,546 174,796,271
JNL/S&P Conservative Growth I..................................... 957,851 9,357,736 10,028,699
JNL/S&P Moderate Growth I......................................... 1,186,353 11,460,659 12,610,937
JNL/S&P Aggressive Growth I....................................... 406,701 3,996,157 4,424,911
JNL/S&P Very Aggressive Growth I.................................. 218,190 2,189,621 2,441,544
JNL/S&P Equity Growth I........................................... 473,365 4,478,241 5,036,607
JNL/S&P Equity Aggressive Growth I................................ 301,109 2,862,814 3,236,926
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements
Note 1 - Organization
Jackson National Life Insurance Company ("JNL") established Jackson
National Separate Account - I (the "Separate Account") on June 14,
1993. The Separate Account commenced operations on October 16, 1995,
and is registered under the Investment Company Act of 1940 as a unit
investment trust. The Separate Account receives and invests net
premiums for individual flexible premium variable annuity contracts
issued by JNL. The contracts can be purchased on a non-tax qualified
basis or in connection with certain plans qualifying for favorable
federal income tax treatment. The Separate Account currently contains
twenty-two Portfolios, each of which invests in the following series of
the JNL Series Trust:
JNL Aggressive Growth Series
JNL Capital Growth Series
JNL Global Equities Series
JNL/Alger Growth Series
JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
PPM America/JNL Balanced Series
PPM America/JNL High Yield Bond Series
PPM America/JNL Money Market Series
Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL U.S. Government & Quality Bond Series
T. Rowe Price/JNL Established Growth Series
T. Rowe Price/JNL International Equity Investment Series
T. Rowe Price/JNL Mid-Cap Growth Series
JNL/S&P Conservative Growth Series I
JNL/S&P Moderate Growth Series I
JNL/S&P Aggressive Growth Series I
JNL/S&P Very Aggressive Growth Series I
JNL/S&P Equity Growth Series I
JNL/S&P Equity Aggressive Growth Series I
Jackson National Financial Services, LLC, a wholly-owned subsidiary of
JNL, serves as investment adviser for all the series of the JNL Series
Trust.
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (continued)
Note 2 - Significant Accounting Policies
The following is a summary of significant accounting policies followed
by the Separate Account in the preparation of its financial statements.
The policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Investments
-----------
The Separate Account's investments in the corresponding series
of the JNL Series Trust are stated at the net asset values of
the respective series. The average cost method is used in
determining the cost of the shares sold on withdrawals by the
Separate Account. Investments in JNL Series Trust are recorded
on trade date. The Separate Account does not record dividend
income as the series follow the accounting practice known as
consent dividending, whereby all of its net investment income
and realized gains are treated as being distributed to the
Separate Account and are immediately reinvested in the series.
Federal Income Taxes
--------------------
The operations of the Separate Account are included in the
federal income tax return of JNL, which is taxed as a "life
insurance company" under the provisions of the Internal
Revenue Code. Under current law, no federal income taxes are
payable with respect to the Separate Account. Therefore, no
federal income tax has been provided.
Note 3 - Policy Charges
Charges are deducted from the Separate Account to compensate JNL for
providing the insurance benefits set forth in the contracts,
administering the contracts, distributing the contracts, and assuming
certain risks in connection with the contract.
Contract Maintenance Charge
---------------------------
An annual contract maintenance charge of $35 is charged
against each contract to reimburse JNL for expenses incurred
in establishing and maintaining records relating to the
contract. The contract maintenance charge is assessed on each
anniversary of the contract date that occurs on or prior to
the annuity date. The charge is deducted by redeeming units.
For the period ended December 31, 1998, $564,232 in contract
maintenance charges were assessed.
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (continued)
Note 3 - Policy Charges (continued)
Transfer Fee Charge
-------------------
A transfer fee of $25 will apply to transfers made by
policyholders between the Portfolios and between the
Portfolios and the general account in excess of 15 transfers
in a contract year. JNL may waive the transfer fee in
connection with pre-authorized automatic transfer programs, or
in those states where a lesser fee is required.
This fee will be deducted from contract values which remain in
the portfolio(s) from which the transfers were made. If such
remaining contract value is insufficient to pay the transfer
fee, then the fee will be deducted from transferred contract
values. For the period ended December 31, 1998, $4,200 in
transfer fees were assessed.
Surrender or Contingent Deferred Sales Charge
---------------------------------------------
During the first seven contract years, certain contracts
include a provision for a charge upon the surrender or partial
surrender of the contract. The amount assessed under the
contract terms, if any, depends upon the cost associated with
distributing the particular contracts. The amount, if any, is
determined based on a number of factors, including the amount
withdrawn, the contract year of surrender, or the number and
amount of withdrawals in a calendar year. The surrender
charges are assessed by JNL and withheld from the proceeds of
the withdrawals. For the period ended December 31, 1998,
$1,445,120 in surrender charges were assessed.
Insurance Charges
-----------------
JNL deducts a daily charge from the assets of the Separate
Account equivalent to an annual rate of 1.25% for the
assumption of mortality and expense risks. The mortality risk
assumed by JNL is that the insured may receive benefits
greater than those anticipated by JNL. The expense risk
assumed by JNL is that the costs of administering the
contracts of the Separate Account will exceed the amount
received from the Administration Charge and the Contract
Maintenance Charge.
JNL deducts a daily charge for administrative expenses from
the net assets of the Separate Account equivalent to an annual
rate of 0.15%. The administration charge is designed to
reimburse JNL for administrative expenses related to the
Separate Account and the issuance and maintenance of
contracts.
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (continued)
Note 4 - Purchases and Sales of Investments
For the period ended December 31, 1998, purchases and proceeds from
sales of investments in the JNL Series Trust are as follows:
<TABLE>
<CAPTION>
Proceeds
JNL Series Trust Purchases from Sales
- ---------------- ---------------- ----------------
<S> <C> <C>
JNL Aggressive Growth.................................................. $ 44,736,612 $ 22,478,449
JNL Capital Growth..................................................... 26,481,676 16,729,142
JNL Global Equities.................................................... 69,080,184 30,948,229
JNL/Alger Growth....................................................... 49,441,656 22,092,006
JNL/Eagle Core Equity.................................................. 18,822,324 3,530,908
JNL/Eagle SmallCap Equity.............................................. 24,098,740 4,509,067
JNL/Putnam Growth...................................................... 78,113,905 23,069,466
JNL/Putnam Value Equity................................................ 89,912,979 26,212,067
PPM America/JNL Balanced............................................... 39,427,761 11,498,996
PPM America/JNL High Yield Bond........................................ 59,769,127 26,352,420
PPM America/JNL Money Market........................................... 97,900,761 89,376,464
Salomon Brothers/JNL Global Bond....................................... 18,449,896 11,621,611
Salomon Brothers/JNL U.S. Government & Quality Bond.................... 48,540,265 15,176,261
T. Rowe Price/JNL Established Growth................................... 82,887,565 28,277,325
T. Rowe Price/JNL International Equity Investment...................... 18,117,774 13,273,943
T. Rowe Price/JNL Mid-Cap Growth....................................... 57,809,017 29,118,733
JNL/S&P Conservative Growth I.......................................... 10,018,487 644,794
JNL/S&P Moderate Growth I.............................................. 13,290,877 1,759,236
JNL/S&P Aggressive Growth I............................................ 6,129,056 2,095,817
JNL/S&P Very Aggressive Growth I....................................... 3,155,188 1,011,345
JNL/S&P Equity Growth I................................................ 4,945,786 428,796
JNL/S&P Equity Aggressive Growth I..................................... 3,188,502 300,801
</TABLE>
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (continued)
Note 5 - Accumulation of Unit Activity
The following is a reconciliation of unit activity for the periods ended
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Units Units Units
Outstanding Units Units Outstanding Units Units Outstanding
Portfolio: at 12/31/96 Issued Redeemed at 12/31/97 Issued Redeemed at 12/31/98
- ---------- ------------ ----------- ----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
JNL Aggressive Growth............... 2,355,530 3,830,809 (814,960) 5,371,379 2,787,639 (1,319,713) 6,839,305
JNL Capital Growth.................. 2,985,668 3,195,545 (1,048,470) 5,132,743 1,833,616 (1,116,476) 5,849,883
JNL Global Equities................. 3,090,234 6,868,896 (891,853) 9,067,277 3,746,642 (1,571,721) 11,242,198
JNL/Alger Growth.................... 3,310,810 3,360,067 (762,431) 5,908,446 3,064,437 (1,267,893) 7,704,990
JNL/Eagle Core Equity............... 84,895 700,021 (18,400) 766,516 1,291,060 (228,213) 1,829,363
JNL/Eagle SmallCap Equity........... 71,014 926,135 (139,203) 857,946 1,751,877 (335,278) 2,274,545
JNL/Putnam Growth................... 1,682,604 3,978,206 (453,516) 5,207,294 4,324,364 (1,183,066) 8,348,592
JNL/Putnam Value Equity............. 1,330,288 5,934,203 (338,984) 6,925,507 5,474,730 (1,500,339) 10,899,898
PPM America/JNL Balanced............ 2,120,529 2,739,911 (373,467) 4,486,973 2,840,078 (752,880) 6,574,171
PPM America/JNL High Yield Bond..... 1,147,840 4,075,178 (511,967) 4,711,051 4,571,237 (1,931,614) 7,350,674
PPM America/JNL Money Market........ 2,193,176 8,222,523 (6,560,576) 3,855,123 8,948,994 (8,090,159) 4,713,958
Salomon Brothers/JNL Global Bond.... 911,885 1,958,400 (266,428) 2,603,857 1,427,619 (865,322) 3,166,154
Salomon Brothers/JNL U.S. Government
& Quality Bond ................... 902,055 1,564,041 (375,521) 2,090,575 4,167,543 (1,252,117) 5,006,001
T. Rowe Price/JNL Established Growth 2,500,896 5,454,859 (736,966) 7,218,789 4,670,050 (1,489,792) 10,399,047
T. Rowe Price/JNL International
Equity Investment................. 2,039,430 2,905,132 (537,920) 4,406,642 1,396,050 (973,991) 4,828,701
T. Rowe Price/JNL Mid-Cap Growth.... 3,585,051 5,339,307 (892,605) 8,031,753 3,689,921 (1,780,671) 9,941,003
JNL/S&P Conservative Growth I....... - - - - 1,031,476 (63,802) 967,674
JNL/S&P Moderate Growth I........... - - - - 1,386,264 (187,698) 1,198,566
JNL/S&P Aggressive Growth I......... - - - - 627,797 (216,909) 410,888
JNL/S&P Very Aggressive Growth I.... - - - - 317,036 (96,541) 220,495
JNL/S&P Equity Growth I............. - - - - 523,931 (45,782) 478,149
JNL/S&P Equity Aggressive Growth I.. - - - - 337,114 (32,987) 304,127
</TABLE>
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (continued)
Note 6 - Reconciliation of Gross and Net Deposits into the Separate Account
Deposits into the Separate Account purchase shares of the JNL Series
Trust. Net deposits represent the amounts available for investment in
such shares after the deduction of applicable policy charges. The
following is a summary of net deposits made for the periods ended
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Portfolios
-------------------------------------------------------------------------
JNL Aggressive JNL Capital
Growth Growth
-------------------------------- ---------------------------------
Year ended Year ended
December 31, December 31,
-------------------------------- ---------------------------------
1998 1997 1998 1997
------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 24,607,596 $ 45,265,821 $ 14,145,762 $ 37,672,456
Value of units redeemed ............................ (4,443,338) (10,290,778) (4,046,738) (11,594,857)
Transfers between portfolios and between
portfolios and general account ..................... 3,644,689 2,651,747 917,056 (752,866)
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 23,808,947 37,626,790 11,016,080 25,324,733
Deductions:
Policyholder charges ............................... 162,685 66,649 133,165 70,374
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 23,646,262 $ 37,560,141 $ 10,882,915 $ 25,254,359
============ ============ ============ ============
</TABLE>
------------------------------
JNL Global
Equities
------------------------------
Year ended
December 31,
------------------------------
1998 1997
------------ -------------
Proceeds from units issued ................... $ 41,627,440 $ 93,402,947
Value of units redeemed ...................... (7,440,945) (13,733,122)
Transfers between portfolios and between
portfolios and general account ............... 6,833,409 11,247,196
------------ ------------
Total gross deposits net of
transfers to general account ................. 41,019,904 90,917,021
Deductions:
Policyholder charges ......................... 244,503 82,947
------------ ------------
Net deposits from policyholders .............. $ 40,775,401 $ 90,834,074
============ ============
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
JNL/Alger JNL/Eagle
Growth Core Equity
-------------------------------- ---------------------------------
Year ended Year ended
December 31, December 31,
-------------------------------- ---------------------------------
1998 1997 1998 1997
------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 26,745,114 $ 38,632,352 $ 10,633,575 $ 7,461,654
Value of units redeemed ............................ (5,120,589) (9,648,065) (635,090) (234,793)
Transfers between portfolios and between
portfolios and general account ..................... 7,457,907 4,701,036 5,575,481 1,100,202
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 29,082,432 33,685,323 15,573,966 8,327,063
Deductions:
Policyholder charges ............................... 147,076 72,667 16,861 493
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 28,935,356 $ 33,612,656 $ 15,557,105 $ 8,326,570
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
JNL/Eagle JNL/Putnam
SmallCap Equity Growth
-------------------------------- ---------------------------------
Year ended Year ended
December 31, December 31,
-------------------------------- ---------------------------------
1998 1997 1998 1997
------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 12,039,689 $ 10,214,402 $ 49,827,649 $ 49,336,186
Value of units redeemed ............................ (509,032) (1,846,474) (6,336,122) (6,547,755)
Transfers between portfolios and between
portfolios and general account ..................... 8,364,386 1,839,874 13,491,673 8,329,906
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 19,895,043 10,207,802 56,983,200 51,118,337
Deductions:
Policyholder charges ............................... 14,938 897 189,901 53,169
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 19,880,105 $ 10,206,905 $ 56,793,299 $ 51,065,168
============ ============ ============ ============
</TABLE>
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (continued)
Note 6 - Reconciliation of Gross and Net Deposits into the Separate Account
(continued)
<TABLE>
<CAPTION>
Portfolios
-------------------------------------------------------------------------
JNL/Putnam PPM America/JNL
Value Equity Balanced
-------------------------------- ---------------------------------
Year ended Year ended
December 31, December 31,
-------------------------------- ---------------------------------
1998 1997 1998 1997
------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 61,152,713 $ 70,909,880 $ 26,538,757 $ 29,379,692
Value of units redeemed ............................ (6,233,980) (4,969,063) (3,923,546) (4,501,905)
Transfers between portfolios and between
portfolios and general account ..................... 11,112,397 16,686,473 6,503,296 4,046,815
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 66,031,130 82,627,290 29,118,507 28,924,602
Deductions:
Policyholder charges ............................... 175,296 50,114 82,846 41,864
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 65,855,834 $ 82,577,176 $ 29,035,661 $ 28,882,738
============ ============ ============ ============
</TABLE>
------------------------------
PPM America/JNL
High Yield Bond
------------------------------
Year ended
December 31,
------------------------------
1998 1997
------------ -------------
Proceeds from units issued ................... $ 39,826,976 $ 44,481,004
Value of units redeemed ...................... (4,032,454) (6,127,340)
Transfers between portfolios and between
portfolios and general account ............... (1,083,299) 4,294,304
------------ ------------
Total gross deposits net of
transfers to general account ................. 34,711,223 42,647,968
Deductions:
Policyholder charges ......................... 87,388 29,655
------------ ------------
Net deposits from policyholders .............. $ 34,623,835 $ 42,618,313
============ ============
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
PPM America/JNL Salomon Brothers/JNL
Money Market Global Bond
-------------------------------- ---------------------------------
Year ended Year ended
December 31, December 31,
-------------------------------- ---------------------------------
1998 1997 1998 1997
------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 30,782,206 $ 86,733,951 $ 10,063,455 $ 22,112,972
Value of units redeemed ............................ (7,926,544) (34,907,833) (1,972,251) (3,260,129)
Transfers between portfolios and between
portfolios and general account ..................... (13,392,940) (34,311,907) (664,160) 1,866,715
Total gross deposits net of
transfers to general account ....................... 9,462,722 17,514,211 7,427,044 20,719,558
Deductions:
Policyholder charges ............................... 221,712 28,346 44,726 23,302
Net deposits from policyholders .................... $ 9,241,010 $ 17,485,865 $ 7,382,318 $ 20,696,256
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Salomon Brothers/JNL U.S. T. Rowe Price/JNL
Government & Quality Bond Established Growth
-------------------------------- ---------------------------------
Year ended Year ended
December 31, December 31,
-------------------------------- ---------------------------------
1998 1997 1998 1997
------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 14,609,255 $ 16,616,279 $ 52,824,458 $ 67,808,925
Value of units redeemed ............................ (1,850,919) (3,601,095) (7,327,082) (10,747,430)
Transfers between portfolios and between
portfolios and general account ..................... 21,189,057 (336,485) 11,596,227 10,198,231
------------ ------------ ------------ ------------
Total gross deposits net of
transfers to general account ....................... 33,947,393 12,678,699 57,093,603 67,259,726
Deductions:
Policyholder charges ............................... 34,306 15,208 204,723 80,898
------------ ------------ ------------ ------------
Net deposits from policyholders .................... $ 33,913,087 $ 12,663,491 $ 56,888,880 $ 67,178,828
============ ============ ============ ============
</TABLE>
<PAGE>
Jackson National Separate Account - I
Notes to Financial Statements (continued)
Note 6 - Reconciliation of Gross and Net Deposits into the Separate Account
(continued)
<TABLE>
<CAPTION>
Portfolios
-------------------------------------------------------------------------
T. Rowe Price/JNL
International Equity T. Rowe Price/JNL
Investment Mid-Cap Growth
-------------------------------- ---------------------------------
Year ended Year ended
December 31, December 31,
-------------------------------- ---------------------------------
1998 1997 1998 1997
------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Proceeds from units issued ......................... $ 9,234,204 $ 31,886,802 $ 35,690,323 $ 63,794,416
Value of units redeemed ............................ (2,825,426) (6,517,887) (5,078,043) (11,648,973)
Transfers between portfolios and between
portfolios and general account ..................... (628,509) 3,808,627 271,174 6,231,186
Total gross deposits net of
transfers to general account ....................... 5,780,269 29,177,542 30,883,454 58,376,629
Deductions:
Policyholder charges ............................... 84,050 38,653 162,825 80,229
Net deposits from policyholders .................... $ 5,696,219 $ 29,138,889 $ 30,720,629 $ 58,296,400
</TABLE>
-----------------------------------
JNL/S&P JNL/S&P
Conservative Moderate
------------------ ---------------
Period from Period from
April 9, 1998* April 8, 1998*
to December 31, to December 31,
1998 1998
------------------ ---------------
Proceeds from units issued ................... $ 3,632,331 $ 6,145,126
Value of units redeemed ...................... (65,201) (88,136)
Transfers between portfolios and between
portfolios and general account ............... 5,843,640 5,519,988
Total gross deposits net of
transfers to general account ................. 9,410,770 11,576,978
Deductions:
Policyholder charges ......................... 228 952
Net deposits from policyholders .............. $ 9,410,542 $ 11,576,026
- -------------------------------
*Commencement of operations
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------
JNL/S&P JNL/S&P
JNL/S&P Very JNL/S&P Equity
Aggressive Aggressive Equity Aggressive
Growth I Growth I Growth I Growth I
----------- ----------- ----------- -----------
Period from Period from Period from Period from
April 8, April 1, April 13, April 15,
1998* to 1998* to 1998* to 1998* to
December 31, December 31, December 31, December 31,
1998 1998 1998 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Proceeds from units issued ............................. $ 2,442,603 $ 1,764,667 $ 2,541,056 $ 1,516,903
Value of units redeemed ................................ (28,931) (88,630) (2,744) (10,701)
Transfers between portfolios and between
portfolios and general account ......................... 1,641,523 484,744 1,998,887 1,394,684
----------- ----------- ----------- -----------
Total gross deposits net of
transfers to general account ........................... 4,055,195 2,160,781 4,537,199 2,900,886
Deductions:
Policyholder charges ................................... 981 4,143 68 176
----------- ----------- ----------- -----------
Net deposits from policyholders ........................ $ 4,054,214 $ 2,156,638 $ 4,537,131 $ 2,900,710
=========== =========== =========== ===========
</TABLE>
<PAGE>
Jackson National Life Insurance Company
and Subsidiaries
[GRAPHIC]
Consolidated Financial Statements
December 31, 1998
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors and Stockholder of
Jackson National Life Insurance Company
In our opinion, the accompanying consolidated balance sheets and the related
consolidated income statements and consolidated statements of stockholder's
equity and of cash flows present fairly, in all material respects, the financial
position of Jackson National Life Insurance Company and its subsidiaries (the
"Company") at December 31, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1998, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these 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 presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
February 5, 1999
<PAGE>
Jackson National Life Insurance Company and Subsidiaries
Consoldiated Financial Statements
Consolidated Balance Sheet
(In thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31,
------------------ -----------------
Assets 1998 1997
- ------ ------------------ -----------------
<S> <C> <C>
Investments:
Cash and short-term investments $ 2,487,418 $ 3,133,163
Investments available for sale, at market value:
Fixed maturities (amortized cost: 1998, $26,615,730; 1997, 27,304,968 26,604,978
$25,622,420)
Equities (cost: 1998, $247,307; 1997, $157,916) 319,831 252,963
Mortgage loans, net of allowance 2,465,807 1,597,223
Policy loans 652,628 624,192
Other invested assets 415,493 171,220
------------------ -----------------
Total investments 33,646,145 32,383,739
Accrued investment income 427,297 386,412
Deferred acquisition costs 1,311,314 1,140,034
Variable annuity assets 1,951,659 1,122,239
Reinsurance recoverable 256,189 226,219
Value of acquired insurance in force 154,402 169,245
Other assets 91,750 80,197
================== =================
Total assets $ 37,838,756 $ 35,508,085
================== =================
Liabilities and Stockholder's Equity
Liabilities
Policy reserves and liabilities:
Reserves for future policy benefits $ 650,305 $ 635,428
Deposits on investment contracts 25,135,640 25,152,074
Guaranteed investment contracts 4,566,859 2,769,249
Other policyholder funds 12,262 15,674
Claims payable 168,278 159,022
Reverse repurchase and dollar roll repurchase agreements 922,121 1,426,473
Variable annuity liabilities 1,951,659 1,122,239
Surplus note payable 249,176 249,168
Liability for guaranty fund assessments 66,846 81,776
Income taxes currently payable to Parent 178,236 143,295
Deferred income taxes 23,122 43,086
Securities lending payable 425,000 607,000
Other liabilities 607,250 488,452
------------------ -----------------
Total liabilities 34,956,754 32,892,936
------------------ -----------------
Stockholder's Equity
Capital stock, $1.15 par value; authorized 50,000 shares;
outstanding 12,000 shares 13,800 13,800
Additional paid-in capital 1,360,982 832,982
Net unrealized gain on investments,
net of tax of $175,147 in 1998 and $237,212 in 1997 325,273 440,537
Retained earnings 1,181,947 1,327,830
------------------ -----------------
Total stockholder's equity 2,882,002 2,615,149
================== =================
Total liabilities and stockholder's equity $ 37,838,756 $ 35,508,085
================== =================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Jackson National Life Insurance Company and Subsidiaries
Consolidated Financial Statements
Consolidated Income Statement
(In thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
----------------- ----------------- ------------------
Revenues
<S> <C> <C> <C>
Premiums and other considerations $ 263,686 $ 275,851 $ 292,448
Net investment income 2,478,277 2,333,509 1,997,032
Net realized investment gains 69,446 80,335 18,573
Fee income:
Mortality charges 136,040 136,285 123,245
Surrender charges 76,878 66,638 64,933
Expense charges 19,217 20,175 20,641
Variable annuity fees 21,411 10,202 1,948
Net asset management fees 7,044 5,219 946
Net retained commissions 396 443 325
----------------- ----------------- ------------------
Total fee income 260,986 238,962 212,038
Other income 32,974 31,251 28,741
----------------- ----------------- ------------------
Total revenues 3,105,369 2,959,908 2,548,832
----------------- ----------------- ------------------
Benefits and Expenses
Death benefits 274,219 279,014 282,973
Interest credited on deposit liabilities 1,664,133 1,586,249 1,449,852
Interest expense on surplus notes and reverse
repurchase agreements 121,035 107,738 -
Increase (decrease) in reserves, net of
reinsurance recoverables (20,712) (23,292) 3,568
Other policyholder benefits 10,534 16,170 14,446
Commissions 208,177 274,906 232,901
General and administrative expenses 169,274 169,473 146,800
Taxes, licenses and fees 14,152 21,852 23,535
Deferral of policy acquisition costs (251,166) (320,246) (262,351)
Amortization of acquisition costs:
Attributable to operations 194,045 191,425 167,727
Attributable to net realized investment gains 24,096 24,687 7,335
Amortization of insurance in force 14,843 14,039 13,279
----------------- ----------------- ------------------
Total benefits and expenses 2,422,630 2,342,015 2,080,065
----------------- ----------------- ------------------
Pretax income 682,739 617,893 468,767
Income tax expense 239,000 216,300 164,100
----------------- ----------------- ------------------
Net income $ 443,739 $ 401,593 $ 304,667
================= ================= ==================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Jackson National Life Insurance Company and Subsidiaries
Consolidated Financial Statements
Consolidated Statement of Stockholder's Equity
(In thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
------------------- ------------------- -------------------
<S> <C> <C> <C>
Common stock, beginning and end of year $ 13,800 $ 13,800 $ 13,800
------------------- ------------------- -------------------
Additional paid-in capital
Beginning of year 832,982 648,982 603,982
Capital contributions 528,000 184,000 45,000
------------------- ------------------- -------------------
End of year 1,360,982 832,982 648,982
------------------- ------------------- -------------------
Accumulated other comprehensive income
Beginning of year 440,537 180,432 389,883
Net unrealized gain (loss) on investments,
net of tax of $(62,065) in 1998, $140,057 in
1997, and $(112,782) in 1996 (115,264) 260,105 (209,451)
------------------- ------------------- -------------------
End of year 325,273 440,537 180,432
------------------- ------------------- -------------------
Retained earnings
Beginning of year 1,327,830 1,170,737 885,570
Net income 443,739 401,593 304,667
Dividends paid to stockholder (589,622) (244,500) (19,500)
------------------- ------------------- -------------------
End of year 1,181,947 1,327,830 1,170,737
------------------- ------------------- -------------------
Total stockholder's equity $ 2,882,002 $ 2,615,149 $ 2,013,951
=================== =================== ===================
</TABLE>
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
------------------- ------------------- ------------------
<S> <C> <C> <C>
Comprehensive Income
Net income $ 443,739 $ 401,593 $ 304,667
Net unrealized gain (loss) on investments,
net of tax of $(62,065) in 1998, $140,057 in
1997, and $(112,782) in 1996 (115,264) 260,105 (209,451)
=================== =================== ==================
Comprehensive income $ 328,475 $ 661,698 $ 95,216
=================== =================== ==================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Jackson National Life Insurance Company and Subsidiaries
Consolidated Financial Statements
Consolidated Statement of Cash Flows
(In thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
---------------- ---------------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 443,739 $ 401,593 $ 304,667
Adjustments to reconcile net income to net cash
provided by operating activities:
Net realized investment gains (69,446) (80,335) (18,573)
Interest credited on deposit liabilities 1,664,133 1,586,249 1,449,852
Other charges (253,546) (233,300) (210,767)
Amortization of discount and premium on
investments (104,586) (18,437) (55,808)
Change in:
Deferred income taxes 42,100 34,500 44,600
Accrued investment income (40,885) (48,313) (11,077)
Deferred acquisition costs (33,025) (104,134) (87,289)
Value of acquired insurance in force 14,843 14,039 13,279
Income taxes currently payable to Parent 34,941 2,931 38,317
Other assets and liabilities, net (98,924) 659,413 (92,839)
---------------- ---------------- -----------------
Net cash provided by operating activities 1,599,344 2,214,206 1,374,362
---------------- ---------------- -----------------
Cash flows from investing activities:
Sales of:
Fixed maturities and equities available for sale 6,923,936 9,078,616 3,281,105
Mortgage loans 127,201 47,282 16,360
Principal repayments, maturities, calls and redemptions:
Available for sale 1,020,281 960,844 1,052,506
Held to maturity - - 465,862
Purchases of:
Fixed maturities and equities available for sale (8,847,509) (11,588,708) (5,716,350)
Fixed maturities held to maturity - - (557,749)
Mortgage loans (1,008,131) (801,008) (685,938)
Other investing activities (769,833) 1,332,795 -
---------------- ---------------- -----------------
Net cash used by investing activities (2,554,055) (970,179) (2,144,204)
---------------- ---------------- -----------------
Cash flows from financing activities:
Policyholders account balances:
Deposits 5,185,920 5,244,103 4,179,286
Withdrawals (4,306,150) (3,599,724) (2,540,112)
Net transfers to separate accounts (509,182) (604,152) (322,674)
Surplus note payable - 249,163 -
Payment of cash dividends to Parent (589,622) (244,500) (19,500)
Capital contribution from Parent 528,000 184,000 45,000
---------------- ---------------- -----------------
Net cash provided by financing activities 308,966 1,228,890 1,342,000
---------------- ---------------- -----------------
Net increase (decrease) in cash and short-term
investments (645,745) 2,472,917 572,158
Cash and short-term investments, beginning of period 3,133,163 660,246 88,088
================ ================ =================
Cash and short-term investments, end of period $ 2,487,418 $ 3,133,163 $ 660,246
================ ================ =================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Jackson National Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1998
- --------------------------------------------------------------------------------
1. Nature of Operations
Jackson National Life Insurance Company (the "Company" or "JNL") is wholly
owned by Brooke Life Insurance Company ("Brooke Life" or the "Parent")
which is ultimately a wholly owned subsidiary of Prudential Corporation,
plc ("Prudential"), London, England. JNL is licensed to sell individual
annuity products, including immediate and deferred annuities, variable
annuities, guaranteed investment contracts ("GICs"), and individual life
insurance products in 49 states and the District of Columbia.
The accompanying consolidated financial statements include JNL and its
wholly owned subsidiaries, Jackson National Life Insurance Company of New
York, an insurance company; Chrissy Corporation, an advertising agency;
Jackson National Financial Services, LLC, an investment advisor and
transfer agent; Jackson National Life Distributors, Inc., a broker dealer
and JNL Thrift Holdings, Inc., a bank holding company.
On November 10, 1998, JNL Thrift Holdings, Inc. completed its acquisition
of First Federal Savings and Loan Association of San Bernardino, a thrift
located in San Bernardino, California. Following the acquisition the thrift
was renamed Jackson Federal Savings Bank ("Jackson Federal"). The purchase
price amounted to $6.5 million. Additional capital contributions of $4.2
million were made by the Company. Jackson Federal had total assets of
$110.0 million and deposits of $105.8 million at the date of the
acquisition. The $3.8 million excess of the purchase price over the fair
value of assets acquired was allocated to goodwill and core deposits. The
core deposits will be amortized over 7 years and goodwill will be amortized
over 15 years. The acquisition was accounted for by the purchase method and
the results of Jackson Federal are included in the consolidated income
statement from the date of acquisition.
During the second quarter of 1997, the Company sold Jackson National
Compania De Seguros De Vida S.A, a life insurance company of which JNL
owned 90% of the common stock.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles ("GAAP"). All
significant intercompany accounts and transactions have been eliminated in
consolidation. Certain prior year amounts have been reclassified to conform
with the current year presentation.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the use of estimates and
assumptions that affect the amounts reported in the financial statements
and the accompanying notes. Actual results may differ from those estimates.
Changes in Accounting Principles
Effective January 1, 1998, JNL adopted Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive Income ("SFAS 130"). SFAS 130
establishes standards for reporting and presentation of comprehensive
income and its components in the financial statements. Comprehensive income
includes all changes in shareholder's equity (except those arising from
transactions with owners/shareholders) and, in the Company's case, includes
net income and net unrealized gains/(losses) on securities. SFAS 130
requires additional disclosures in the financial statements, but it has no
impact on the Company's financial position or net income. Realized
investment gains on securities held as of the beginning of the year
totaling $128.3 million, $98.1 million and $57.9 million in 1998, 1997 and
1996, respectively, had unrealized appreciation of $107.4 million, $45.8
million and $76.5 million at December 31, 1997, 1996 and 1995,
respectively. Prior year financial statements have been reclassified to
conform with the current year presentation.
<PAGE>
2. Summary of Significant Accounting Policies (continued)
Investments
Cash and short-term investments which primarily include cash, commercial
paper, and money market instruments are carried at cost, which approximates
fair value. These investments have maturities of three months or less and
are considered cash equivalents for reporting cash flows.
Fixed maturities consist of debt securities and commercial loans. Debt
securities include bonds, notes, redeemable preferred stocks,
mortgage-backed securities and structured securities. All debt securities
are considered available for sale and are carried at aggregate market
value. Debt securities are reduced to estimated net realizable value for
declines in market value considered to be other than temporary. Commercial
loans include certain term and revolving notes as well as certain
receivables arising from asset based lending activities. Commercial loans
are carried at outstanding principal balances, less an allowance for loan
losses.
Equity securities which include common stocks and non-redeemable preferred
stocks are carried at market value.
Mortgage loans are carried at the unpaid principal balances, net of
unamortized discounts and premiums and an allowance for loan losses. The
allowance for loan losses is maintained at a level considered adequate to
absorb losses inherent in the mortgage loan portfolio.
Policy loans are carried at the unpaid principal balances.
Real estate is carried at the lower of depreciated cost or fair value.
Limited partnership investments are accounted for using the equity method.
Realized gains and losses on the sale of investments are recognized in
income at the date of sale and are determined using the specific cost
identification method. Acquisition premiums and discounts on investments
are amortized to investment income using call or maturity dates. The
changes in unrealized gains or losses on investments classified as
available for sale, net of tax and the effect of the deferred acquisition
costs adjustment, are excluded from net income and included as a component
of comprehensive income in stockholder's equity.
Derivative Financial Instruments
The Company enters into financial derivative transactions, including swaps,
put-swaptions, futures and options to reduce and manage business risks.
These transactions manage the risk of a change in the value, yield, price,
cash flows, or quantity of, or a degree of exposure with respect to assets,
liabilities, or future cash flows, which the Company has acquired or
incurred. Hedge accounting practices are supported by cash flow matching,
duration matching and scenario testing.
Interest rate swap agreements generally involve the exchange of fixed and
floating payments over the life of the agreement without an exchange of the
underlying principal amount. Interest rate swap agreements outstanding at
December 31, 1998 and 1997 hedge available for sale securities and are
carried at fair value with the change in value reflected in comprehensive
income and stockholder's equity. Amounts paid or received on interest rate
swap agreements are included in investment income. Accrued amounts payable
to or receivable from counterparties are included in other liabilities or
other assets. Realized gains and losses from the settlement or termination
of the interest rate swaps are deferred and amortized over the life of the
specific hedged assets as an adjustment to the yield.
<PAGE>
2. Summary of Significant Accounting Policies (continued)
Index swap agreements generally involve the exchange of payments based on a
short-term interest rate index for payments based on the total return of a
bond or equity index over the life of the agreement without an exchange of
the underlying principal amount. Index swap agreements outstanding at
December 31, 1998 and 1997 hedge the anticipated purchase of investment
grade available for sale bonds and are carried at fair value. Fair value
and amounts paid or received on the swaps are deferred and will adjust the
basis of bonds acquired upon expiration of the swaps.
Put-swaptions purchased provide the Company with the right, but not the
obligation, to require the writers to pay the Company the present value of
a long duration interest rate swap at future exercise dates. These
put-swaptions are entered into as a hedge against significant upward
movements in interest rates. Premiums paid for put-swaption contracts are
included in other invested assets and are being amortized to investment
income over the remaining terms of the contracts with maturities of up to
10 years. Put-swaptions, designated as a hedge of available for sale
securities, are carried at fair value with the change in value reflected in
comprehensive income and stockholder's equity.
Equity index futures contracts and equity index call options are used in
conjunction with equity index-linked immediate and deferred annuities
offered by the Company. These transactions are accounted for as hedges of
the associated annuity liabilities. The variation margin on futures
contracts is deferred and, upon closing of the contracts, adjusts the basis
of option contracts purchased. The cost of options acquired is amortized
into net investment income over the option term. The fair value of option
contracts is deferred until recognition of the associated index-linked
annuity liability.
Derivative financial instruments are primarily held for hedging purposes.
High yield bond index swaps and equity index swaps were held for investment
purposes in 1998, 1997 and 1996. Emerging market bond index swaps and
equity index futures were held for investment purposes in 1998.
The Company manages the potential credit exposure for over-the-counter
derivative contracts through careful evaluation of the counterparty credit
standing, collateral agreements, and master netting agreements. The Company
is exposed to credit-related losses in the event of nonperformance by
counterparties, however, it does not anticipate nonperformance.
Deferred Acquisition Costs
Certain costs of acquiring new business, principally commissions and
certain costs associated with policy issue and underwriting which vary with
and are primarily related to the production of new business, have been
capitalized as deferred acquisition costs. Deferred acquisition costs are
increased by interest thereon and amortized in proportion to anticipated
premium revenues for traditional life policies and in proportion to
estimated gross profits for annuities and interest-sensitive life products.
As certain fixed maturities and equity securities available for sale are
carried at aggregate market value, an adjustment is made to deferred
acquisition costs equal to the change in amortization that would have
occurred if such securities had been sold at their stated aggregate market
value and the proceeds reinvested at current yields. The change in this
adjustment is included with the change in market value of fixed maturities
and equity securities available for sale, net of tax, that is credited or
charged directly to stockholder's equity and is a component of
comprehensive income. Deferred acquisition costs have been decreased by
$245.3 million and $383.6 million at December 31, 1998 and 1997,
respectively, to reflect this change.
Value of Acquired Insurance in-Force
The value of acquired insurance in-force at acquisition date represents the
present value of anticipated profits of the business in-force on November
25, 1986 (the date the Company was acquired by Prudential) net of
amortization. The value of acquired insurance in-force is amortized in
proportion to anticipated premium revenues for traditional life insurance
contracts and estimated gross profits for annuities and interest-sensitive
life products over a period of 20 years.
<PAGE>
2. Summary of Significant Accounting Policies (continued)
Federal Income Taxes
The Company provides deferred income taxes on the temporary differences
between the tax and financial statement basis of assets and liabilities.
JNL files a consolidated federal income tax return with Brooke Life and
Jackson National Life Insurance Company of New York. In years prior to
1998, JNL filed a consolidated federal income tax return with Brooke Life
only. The non-life insurance company subsidiaries file separate federal
income tax returns. Income tax expense is calculated on a separate company
basis.
Policy Reserves and Liabilities
Reserves for future policy benefits:
For traditional life insurance contracts, reserves for future policy
benefits are determined using the net level premium method and assumptions
as of the issue date as to mortality, interest, policy lapsation and
expenses plus provisions for adverse deviations. Mortality assumptions
range from 59% to 90% of the 1975-1980 Basic Select and Ultimate tables
depending on underwriting classification and policy duration. Interest rate
assumptions range from 6.0% to 9.5%. Lapse and expense assumptions are
based on Company experience.
Deposits on investment contracts:
For the Company's interest-sensitive life contracts, reserves approximate
the policyholder's accumulation account. For deferred annuity, variable
annuity, guaranteed investment contracts and other investment contracts,
the reserve is the policyholder's account value. The reserve for equity
index-linked annuities is based upon the 3% guaranteed contract value;
obligations in excess of this amount are hedged through the use of futures
contracts and call options.
Variable Annuity Assets and Liabilities
The assets and liabilities resulting from individual variable annuity
contracts which aggregated $1,908.1 million and $1,082.7 million at
December 31, 1998 and 1997, respectively, are segregated in separate
accounts. The Company receives administrative fees for managing the funds
and other fees for assuming mortality and certain expense risks. Such fees
are recorded as earned and included in variable annuity fees and net asset
management fees in the consolidated income statement.
In April 1997, the Company issued a group variable annuity contract
designed for use in connection with and issued to the Company's Defined
Contribution Retirement Plan. These deposits are allocated to the Jackson
National Separate Account - II and aggregated $43.6 million and $39.5
million at December 31, 1998 and 1997, respectively. The Company receives
administrative fees for managing the funds and these fees are recorded as
earned and included in net asset management fees in the consolidated income
statement.
Revenue and Expense Recognition
Premiums for traditional life insurance are reported as revenues when due.
Benefits, claims and expenses are associated with earned revenues in order
to recognize profit over the lives of the contracts. This association is
accomplished by provisions for future policy benefits and the deferral and
amortization of acquisition costs.
<PAGE>
2. Summary of Significant Accounting Policies (continued)
Deposits on interest-sensitive life products and investment contracts,
principally deferred annuities and guaranteed investment contracts, are
treated as policyholder deposits and excluded from revenue. Revenues
consist primarily of the investment income and charges assessed against the
policyholder's account value for mortality charges, surrenders and
administrative expenses. Fee income also includes revenues related to asset
management fees and net retained commissions. Surrender benefits are
treated as repayments of the policyholder account. Annuity benefit payments
are treated as reductions to the policyholder account. Death benefits in
excess of the policyholder account are recognized as an expense when
incurred. Expenses consist primarily of the interest credited to
policyholder deposits. Underwriting expenses are associated with gross
profit in order to recognize profit over the life of the business. This is
accomplished by deferral and amortization of acquisition costs.
3. Fair Value of Financial Instruments
The following summarizes the basis used by the Company in estimating its
fair value disclosures for financial instruments:
Cash and Short-Term Investments:
Carrying value is considered to be a reasonable estimate of fair value.
Fixed Maturities:
Fair values for debt securities are based principally on quoted market
prices, if available. For securities that are not actively traded, fair
values are estimated using independent pricing services or analytically
determined values.
For commercial loans, carrying value approximates fair value.
Equity Securities:
Fair values for common and non-redeemable preferred stock are based
principally on quoted market prices, if available. For securities that are
not actively traded, fair values are estimated using independent pricing
services or analytically determined values.
Mortgage Loans:
Fair values are determined by discounting the future cash flows to the
present at current market rates. The fair value of mortgages approximated
$2,682.7 million and $1,655.6 million at December 31, 1998 and 1997,
respectively.
Policy Loans:
Fair value approximates carrying value since policy loan balances reduce
the amount payable at death or surrender of the contract.
Derivatives:
Fair values are based on quoted market prices, estimates received from
financial institutions, or valuation pricing models.
Variable Annuity Assets:
Variable annuity assets are carried at the market value of the underlying
securities.
Annuity Reserves:
Fair values for immediate annuities, without mortality features, are
derived by discounting the future estimated cash flows using current
interest rates with similar maturities. For deferred annuities, fair value
is based on account value less surrender charges. The carrying value and
fair value of such annuities approximated $20.0 billion and $19.1 billion,
respectively, at December 31, 1998, and $21.2 billion and $20.1 billion,
respectively, at December 31, 1997.
<PAGE>
3. Fair Value of Financial Instruments (continued)
Reserves for Guaranteed Investment Contracts:
Fair value is based on the present value of future cash flows at current
pricing rates. The fair value approximated $4.6 billion, at December 31,
1998, and $2.8 billion at December 31, 1997.
Variable Annuity Liabilities:
Fair value of contracts in the accumulation phase is based on account value
less surrender charges. Fair values of contracts in the payout phase are
based on the present value of future cash flows at assumed investment
rates. The fair value approximated $1,861.7 million and $1,056.8 million at
December 31, 1998 and 1997, respectively.
Indebtedness:
Fair value is based on the present value of future cash flows at current
interest rates. The fair value of surplus notes approximated $288.9 million
and $276.2 million at December 31, 1998 and 1997, respectively. The
carrying value of reverse repurchase and dollar roll repurchase agreements
approximates fair value.
4. Investments
Investments are comprised primarily of fixed-income securities, primarily
publicly-traded industrial, mortgage-backed, utility and government bonds,
and mortgage and commercial loans. The Company generates the majority of
its deposits from interest-sensitive individual annuity contracts, life
insurance products, and guaranteed investments contracts on which it has
committed to pay a declared rate of interest. The Company's strategy of
investing in fixed-income securities and loans aims to ensure matching of
the asset yield with the interest-sensitive liabilities and to earn a
stable return on its investments.
Fixed Maturities
The following table sets forth fixed maturity investments at December 31,
1998, classified by rating categories as assigned by nationally recognized
statistical rating organizations, the National Association of Insurance
Commissioners ("NAIC"), or if not rated by such organizations, the
Company's investment advisor. At December 31, 1998, investments rated by
the Company's investment advisor totaled $1.1 billion. For purposes of the
table, if not otherwise rated higher by a nationally recognized statistical
rating organization, NAIC Class 1 investments are included in the A rating;
Class 2 in BBB; Class 3 in BB and Classes 4 through 6 in B and below.
Percent of Total
Investment Rating Assets
----------------- ---------------------
AAA 20.7%
AA 2.1
A 21.0
BBB 21.5
---------------------
Investment grade 65.3
---------------------
BB 4.5
B and below 2.4
---------------------
Below investment grade 6.9
---------------------
Total fixed maturities 72.2
---------------------
Other assets 27.8
=====================
Total assets 100.0%
=====================
<PAGE>
4. Investments (continued)
The amortized cost and estimated market value of fixed maturities are as
follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
December 31, 1998 Cost Gains Losses Value
- ----------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities ....................... $ 11,372 $ 276 $ 19 $ 11,629
U.S. Government agencies
and foreign governments ................... 210,907 19,512 4,188 226,231
Public utilities ............................... 512,375 25,274 23 537,626
Corporate securities
and commercial loans ...................... 13,929,370 671,454 220,363 14,380,461
Mortgage-backed securities ..................... 11,951,706 265,076 67,761 12,149,021
----------- ----------- ----------- -----------
Total ..................................... $26,615,730 $ 981,592 $ 292,354 $27,304,968
----------- =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
December 31, 1997 Cost Gains Losses Value
- ----------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities ....................... $ 510,107 $ 9,040 $ 935 $ 518,212
U.S. Government agencies
and foreign governments .................... 216,167 15,292 1,890 229,569
Public utilities ............................... 744,464 26,370 3,462 767,372
Corporate securities
and commercial loans ..................... 11,617,384 629,123 28,971 12,217,536
Mortgage-backed securities ..................... 12,534,298 356,238 18,247 12,872,289
----------- ----------- ----------- -----------
Total ..................................... $25,622,420 $ 1,036,063 $ 53,505 $26,604,978
=========== =========== =========== ===========
</TABLE>
Gross unrealized gains pertaining to equity securities at December 31, 1998
and 1997 were $94.3 million and $102.7 million, respectively. Gross
unrealized losses at December 31, 1998 and 1997 were $21.8 million and $7.7
million, respectively.
The amortized cost and estimated market value of fixed maturities at
December 31, 1998, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without early
redemption penalties.
Fixed maturities (in thousands):
Amortized Estimated
Cost Market Value
----------- ------------
Due in 1 year or less ........................ $ 389,300 $ 405,724
Due after 1 year through 5 years ............. 2,942,542 2,965,561
Due after 5 years through 10 years ........... 5,664,540 5,758,903
Due after 10 years through 20 years .......... 2,104,894 2,274,803
Due after 20 years ........................... 3,562,748 3,750,956
Mortgage-backed securities ................... 11,951,706 12,149,021
=========== ===========
Total ................................... $26,615,730 $27,304,968
=========== ===========
<PAGE>
4. Investments (continued)
Discounts and premiums on collateralized mortgage obligations are amortized
over the estimated redemption period using the effective interest method.
Yields which are used to calculate premium/discount amortization are
adjusted periodically to reflect actual payments to date and anticipated
future payments.
Fixed maturities with a carrying value of $6.7 million and $6.6 million
were on deposit with regulatory authorities at December 31, 1998 and 1997,
respectively, as required by law in various states in which the insurance
operations conduct business.
Mortgage Loans
Mortgage loans, net of allowance for loan losses, are as follows (in
thousands):
December 31,
1998 1997
---------- ----------
Single Family ........................ $ 87 $ 1,596
Commercial ........................... 2,465,720 1,595,627
========== ==========
Total ........................... $2,465,807 $1,597,223
========== ==========
At December 31, 1998, mortgage loans were collateralized by properties
located in 36 states and Canada. Approximately 17% of the aggregate
carrying value of the portfolio is secured by properties located in Texas.
Other Invested Assets
Other invested assets consist primarily of investments in limited
partnerships which invest in securities. Limited partnership income
recognized by the Company was $10.2 million, $38.9 million and $3.3 million
in 1998, 1997 and 1996, respectively. At December 31, 1998, the Company has
unfunded commitments related to its investments in limited partnerships
totaling $270.6 million.
Derivatives
The fair value of derivatives reflects the estimated amounts that the
Company would receive or pay upon termination of the contracts, net of
payment accruals, at the reporting date. With respect to swaps and
put-swaptions, the notional amount represents the stated principal balance
used as a basis for calculating payments. With respect to futures and
options, the contractual amount represents the market exposure of
outstanding positions.
A summary of the aggregate contractual or notional amounts, estimated fair
values and gain/(loss) for derivative financial instruments outstanding is
as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
1998 1997
----------------------------------------- ------------------------------------------
Contractual/ Contractual/
Notional Fair Gain/ Notional Fair Gain/
Amount Value (Loss) Amount Value (Loss)
----------- ------------ ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Interest rate swaps $ 3,300,000 $ (57,337) $ (57,337) $ 3,138,000 $ (9,257) $ (9,257)
Index swaps ....... 650,000 -- 3,630 1,000,000 -- 11,196
Put-swaptions ..... 34,500,000 2,987 (16,013) 37,000,000 3,531 (16,273)
Futures ........... 48,844 -- 3,020 32,435 -- 282
Call options ...... 811,691 298,851 169,020 385,797 114,161 42,415
</TABLE>
<PAGE>
4. Investments (continued)
In 1998, the Company recorded a loss of $20.2 million in investment income
related to derivative instruments. Income on derivatives of $35.8 million
and $24.3 million was recorded in 1997 and 1996, respectively. Included in
these amounts was a loss of $6.1 million in 1998, and income of $36.3
million, and $12.6 million, in 1997 and 1996, respectively, related to
investment activity. During 1998, the Company also incurred a realized loss
of $10.1 million on the termination of emerging market bond index swaps.
The average notional amount of swaps outstanding was $4.3 billion and $3.3
billion in 1998 and 1997, respectively. Included in the average outstanding
amount were high yield and emerging market bond index swaps and equity
index swaps of $231.1 million and $461.7 million in 1998 and 1997,
respectively. The average outstanding contractual amount of equity futures
held for investment purposes was $57.6 million during 1998.
Securities Lending
The Company has entered into a securities lending agreement with an agent
bank whereby blocks of securities are loaned to third parties, primarily
major brokerage firms. As of December 31, 1998 and 1997, the estimated fair
value of loaned securities was $440.2 million and $674.4 million,
respectively. The agreement requires a minimum of 102 percent of the fair
value of the loaned securities as collateral, calculated on a daily basis.
To further minimize the credit risks related to this program, the financial
condition of counterparties is monitored on a regular basis. Cash
collateral received in the amount of $425.0 million and $607.0 million at
December 31, 1998 and 1997, respectively, was invested in a pooled fund
managed by the agent bank and included in short-term investments of the
Company. A related payable recognized for cash collateral received is
included in liabilities.
5. Investment Income and Realized Gains and Losses
The sources of net investment income by major category are as follows (in
thousands):
Years ended December 31,
1998 1997 1996
----------- ----------- -----------
Fixed maturities ............. $ 2,160,543 $ 2,003,256 $ 1,872,820
Other investment income ...... 360,846 359,948 140,717
----------- ----------- -----------
Total investment income .... 2,521,389 2,363,204 2,013,537
Less investment expenses ..... (43,112) (29,695) (16,505)
----------- ----------- -----------
Net investment income ...... $ 2,478,277 $ 2,333,509 $ 1,997,032
=========== =========== ===========
Net realized investment gains and losses are as follows (in thousands):
Years ended December 31,
1998 1997 1996
----------- ----------- -----------
Sales of fixed maturities
Gross gains ..................... $ 120,325 $ 121,916 $ 78,099
Gross losses .................... (29,121) (46,009) (36,624)
Sales of equity securities
Gross gains ..................... 25,682 50,643 20,886
Gross losses .................... (100) (783) (5,329)
Impairment losses ................. (31,532) (39,415) (29,500)
Other invested assets, net ........ (15,808) (6,017) (8,959)
--------- --------- ---------
Total ........................... $ 69,446 $ 80,335 $ 18,573
========= ========= =========
<PAGE>
6. Value of Acquired Insurance in-Force
The value of acquired insurance in-force was determined by using
assumptions as to interest, persistency and mortality. Profits were then
discounted to arrive at the value of the insurance in-force.
The amortization of acquired insurance in-force was as follows (in
thousands):
Years ended December 31,
1998 1997
--------- ----------
Balance, beginning of year ................. $ 169,245 $ 183,284
Amortization, net of interest .............. (14,843) (14,039)
--------- ---------
Balance, end of year ....................... $ 154,402 $ 169,245
========= =========
The value of acquired insurance in-force estimated amortization is as
follows (in thousands):
1999 $ 16,000
2000 17,000
2001 18,000
2002 19,000
Thereafter 84,402
-----------------
Total $
154,402
=================
7. Indebtedness
Surplus Notes
On March 15, 1997, the Company issued 8.15% Notes (the "Notes") in the
principal amount of $250 million due March 15, 2027. The Notes were issued
pursuant to Rule 144A under the Securities Act of 1933 and are unsecured
and subordinated to all present and future indebtedness, policy claims and
other creditor claims.
Under Michigan State Insurance law, the Notes are not part of the legal
liabilities of the Company and are considered capital and surplus for
statutory reporting purposes. Payments of interest or principal may only be
made with the prior approval of the Commissioner of Insurance of the State
of Michigan and only out of surplus earnings which the Commissioner
determines to be available for such payments under Michigan State Insurance
law. The Notes may not be redeemed at the option of the Company or any
holder prior to maturity.
Interest is payable semi-annually on March 15 and September 15 of each
year. Interest expense on the Notes was $20.8 million and $16.3 million in
1998 and 1997, respectively.
Reverse Repurchase and Dollar Roll Repurchase Agreements
During 1998 and 1997, the Company entered into reverse repurchase and
dollar roll repurchase agreements whereby the Company agreed to sell and
repurchase securities. These activities have been accounted for as
financing transactions, with the assets and associated liabilities included
in the consolidated balance sheet. Short-term borrowings under such
agreements averaged $1.8 billion during 1998 and 1997, at weighted average
interest rates of 5.49% and 5.39%, respectively. Interest expense on such
agreements was $100.2 million and $91.4 million in 1998 and 1997,
respectively. The highest level of short-term borrowings at any month end
was $2.4 billion in 1998 and $3.8 billion in 1997.
<PAGE>
8. Reinsurance
The Company assumes and cedes reinsurance from and to other insurance
companies in order to limit losses from large exposures; however, if the
reinsurer is unable to meet its obligations, the originating issuer of the
coverage retains the liability. The maximum amount of life insurance risk
retained by the Company on any one life is generally $1.5 million. Amounts
not retained are ceded to other companies on a yearly renewable-term or a
coinsurance basis.
The effect of reinsurance on premiums is as follows (in thousands):
Years ended December 31,
1998 1997 1996
--------- --------- ----------
Direct premiums ................ $ 356,368 $ 352,256 $ 358,533
Assumed premiums ............... 5,162 5,354 10,961
Less reinsurance ceded ......... (97,844) (81,759) (77,046)
========= ========= =========
Total net premiums ........... $ 263,686 $ 275,851 $ 292,448
========= ========= =========
Components of the reinsurance recoverable asset are as follows (in
thousands):
December 31,
1998 1997
-------- --------
Ceded reserves ........................... $237,971 $202,385
Ceded claims liability ................... 9,132 11,369
Ceded - other ............................ 9,086 12,465
======== ========
Total .................................. $256,189 $226,219
======== ========
Reserves reinsured through Brooke Life were $79.1 million and $83.4 million
at December 31, 1998 and 1997, respectively.
9. Federal Income Taxes
The components of the provision for federal income taxes are as follows (in
thousands):
Years ended December 31,
1998 1997 1996
-------- -------- --------
Current tax expense ..................... $196,900 $181,800 $119,500
Deferred tax expense .................... 42,100 34,500 44,600
-------- -------- --------
Provision for federal income taxes ...... $239,000 $216,300 $164,100
======== ======== ========
The federal income tax provisions differ from the amounts determined by
multiplying pretax income by the statutory federal income tax rate of 35%
for 1998, 1997 and 1996 as follows (in thousands):
Years ended December 31,
1998 1997 1996
-------- -------- --------
Income taxes at statutory rate .......... $238,959 $216,263 $164,069
Other ................................... 41 37 31
-------- -------- --------
Provision for federal income taxes ...... $239,000 $216,300 $164,100
======== ======== ========
Effective tax rate ...................... 35.0% 35.0% 35.0%
======== ======== ========
<PAGE>
9. Federal Income Taxes (continued)
Federal income taxes paid were $161.9 million, $178.9 million and $81.2
million, in 1998, 1997 and 1996, respectively.
The tax effects of significant temporary differences that give rise to
deferred tax assets and liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
1998 1997
--------- ---------
<S> <C> <C>
Gross deferred tax asset
Policy reserves and other insurance items .................. $ 611,094 $ 615,877
Difference between financial reporting and the tax basis of:
Assets acquired ....................................... 14,035 9,309
Insolvency fund assessments ........................... 28,553 30,020
Other, net ............................................ 10,288 29,959
--------- ---------
Total deferred tax asset ................................... 663,970 685,165
--------- ---------
Gross deferred tax liability
Deferred acquisition costs ................................. (334,851) (278,049)
Difference between financial reporting and the tax basis of
value of the insurance in-force ......................... (54,041) (59,236)
Difference between financial reporting and the tax basis of
other assets ............................................ (1,696) (3,555)
Net unrealized gains on available for sale securities ...... (261,013) (371,466)
Other, net ................................................. (35,491) (15,945)
--------- ---------
Total deferred tax liability ............................... (687,092) (728,251)
--------- ---------
Net deferred tax liability ................................. $ (23,122) $ (43,086)
========= =========
</TABLE>
10. Contingencies
The Company and its subsidiaries are involved in litigation arising in the
ordinary course of business, including litigation relating to allegations
of improper sales practices. It is the opinion of management that the
ultimate disposition of such litigation will not have a material adverse
affect on the Company's financial condition or results of operations.
State guaranty funds provide payments for policyholders of insolvent life
insurance companies. These guaranty funds are financed by assessments to
solvent insurance companies based on location, volume, and types of
business. The Company estimated its reserve for future state guaranty fund
assessments based on data received from the National Organization of Life
and Health Insurance Guaranty Associations. Based on data received at the
end of 1998, the Company's reserve for future state guaranty fund
assessments was $66.8 million. The Company believes the reserve is adequate
for all anticipated payments for known insolvencies.
The Company offers synthetic GIC contracts to group customers including
pension funds and other institutional organizations. The synthetic GIC
contract is an off-balance sheet fee based product where the customer
retains ownership of the assets related to these contracts and JNL
guarantees the customer's obligation to meet withdrawal requirements. The
value of off-balance sheet guarantees were $892 million and $675 million at
December 31, 1998 and 1997, respectively.
<PAGE>
11. Stockholder's Equity
Under Michigan State Insurance Law, dividends on capital stock can only be
distributed out of earned surplus. Furthermore, without the prior approval
of the Commissioner, dividends cannot be declared or distributed which
exceed the greater of 10% of the Company's statutory surplus or statutory
net gain from operations for the prior year. On January 1, 1999 the maximum
amount of dividends that can be paid by the Company without prior approval
of the Commissioner under this limitation approximated $321.8 million.
The Company received capital contributions from its parent of $528.0
million, $184.0 million, and $45.0 million in 1998, 1997, and 1996,
respectively. Dividend payments were $589.6 million in 1998 and received
the required approval from the Michigan Insurance Bureau prior to payment.
The dividend payments were $244.5 million and $19.5 million in 1997 and
1996, respectively.
Statutory capital and surplus of the Company was $2,127.4 million and
$1,942.1 million at December 31, 1998 and 1997, respectively. Statutory net
income of the Company was $321.8 million, $237.4 million, and $272.2
million in 1998, 1997 and 1996, respectively.
12. Related Party Transactions
The Company's investment portfolio is managed by PPM America, Inc. ("PPM"),
a registered investment advisor and a wholly owned subsidiary of
Prudential. The Company paid $28.9 million, $20.1 million and $8.7 million
to PPM for investment advisory services during 1998, 1997 and 1996,
respectively.
On October 31, 1991, Brooke Life issued $200 million of 9.75% notes due
October 31, 2001 to Prudential Finance BV, a Prudential subsidiary. On
November 8, 1996, Brooke Life issued $388 million of 8.50% notes due
December 31, 2006 to Brooke Finance, Inc. ("Brooke Finance"), a wholly
owned subsidiary of Brooke Holdings, Inc., ultimately a wholly owned
subsidiary of Prudential. On December 31, 1996, Brooke Life issued $45
million of 8.51% notes due December 31, 2006 to Brooke Finance. At December
31, 1998, the aggregate amount outstanding on the Brooke Life notes was as
follows (in thousands):
Principal $ 633,000
Accrued interest 4,106
---------------------
Total $ 637,106
=====================
13. Benefit Plans
The Company has a defined contribution retirement plan covering
substantially all employees. To be eligible, an employee must have attained
the age of 21 and completed at least 1,000 hours of service in a 12-month
period. The Company's annual contributions, as declared by the board of
directors, are based on a percentage of eligible compensation paid to
participating employees during the year. The Company's expense related to
this plan was $3.8 million in 1998, $4.3 million in 1997, and $2.4 million
in 1996.
<PAGE>
