JACKSON NATIONAL LIFE(R) DEFINED STRATEGIES
VARIABLE ANNUITYSM
ISSUED BY JACKSON NATIONAL LIFE INSURANCE COMPANY AND JACKSON NATIONAL SEPARATE
ACCOUNT - I
o Individual, flexible premium deferred annuity
o 4 guaranteed accounts and an indexed fixed account option which offer an
interest rate that is guaranteed by Jackson National Life Insurance Company
(Jackson National)
o Investment divisions 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 DowSM Target 5 Series
JNL/First Trust The DowSM 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, you can obtain a free copy of the Statement of Additional Information
(SAI) dated May 1, 2000, 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
MAY 1, 2000
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"Dow Jones", "Dow Jones Industrial AverageSM", "DJIASM", "The Dow 10SM", and
"The Dow 5SM" 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.
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"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.
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TABLE OF CONTENTS
Key Facts...............................................................1
Fee Table...............................................................3
The Annuity Contract....................................................6
The Company.............................................................6
The Guaranteed Accounts and the Indexed Fixed Account Option............7
The Separate Account....................................................7
Investment Divisions....................................................7
Contract Charges........................................................9
Purchases..............................................................11
Transfers..............................................................12
Access to Your Money...................................................12
Income Payments (The Income Phase).....................................13
Death Benefit..........................................................14
Taxes..................................................................15
Other Information......................................................18
Table of Contents of the Statement of Additional Information...........20
Appendix A............................................................A-1
<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 and the indexed fixed
account option of Jackson National and the
investment divisions. 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, the indexed fixed account option
and/or the investment divisions but you may
not put your money in more than eighteen of
the investment options plus the guaranteed
accounts and the indexed fixed account
option 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 divisions. 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.
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EXPENSES (CONT'D) 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 options 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 whether your
contract is non-qualified or purchased as
part of a qualified plan.
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FEE TABLE
OWNER TRANSACTION EXPENSES1
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 DowSM Target 5 Series ........................ .85% 0% .85%
JNL/First Trust The DowSM 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>
Certain Series pay Jackson National Financial Services, LLC, the adviser, an
Administrative Fee of .10% for certain services provided to the JNL Series Trust
and JNL Variable Fund LLC 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 reflect the inclusion of the Administrative Fee.
----------
1 See "Contract Charges"
3
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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>
PPM America/JNL Money Market Division (a) 22 66 114 245
(b) 92 116 144 245
JNL/First Trust The DowSM Target 5 Division (a) 23 71 122 261
(b) 93 121 152 261
JNL/First Trust The DowSM Target 10 Division (a) 23 71 122 261
(b) 93 121 152 261
JNL/First Trust The S&P(R)Target 10 Division (a) 23 71 122 261
(b) 93 121 152 261
JNL/First Trust Global Target 15 Division (a) 24 72 124 266
(b) 94 122 154 266
JNL/First Trust Target 25 Division (a) 23 71 122 261
(b) 93 121 152 261
JNL/First Trust Target Small-Cap Division (a) 23 71 122 261
(b) 93 121 152 261
JNL/First Trust Technology Sector Division (a) 23 71 122 261
(b) 93 121 152 261
JNL/First Trust Pharmaceutical/Healthcare Sector Division (a) 23 71 122 261
(b) 93 121 152 261
JNL/First Trust Financial Sector Division (a) 23 71 122 261
(b) 93 121 152 261
JNL/First Trust Energy Sector Division (a) 23 71 122 261
(b) 93 121 152 261
JNL/First Trust Leading Brands Sector Division (a) 23 71 122 261
(b) 93 121 152 261
JNL/First Trust Communications Sector Division (a) 23 71 122 261
(b) 93 121 152 261
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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 divisions.
A withdrawal charge is imposed on income payments which occur within one year of
the date the contract is issued.
THE EXAMPLES DO NOT REPRESENT PAST OR FUTURE EXPENSES. THE ACTUAL EXPENSES THAT
YOU INCUR MAY BE GREATER OR LESS THAN THOSE SHOWN.
4
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FINANCIAL STATEMENTS. An accumulation unit value history is contained in
Appendix A.
You can find the following financial statements in the SAI:
o the financial statements of the Separate Account for the year ended December
31, 1999 o the financial statements of Jackson National for the year ended
December 31, 1999
The Separate Account's financial statements for the year ended December 31,
1999, and the financial statements of Jackson National for the year ended
December 31, 1999, have been audited by KPMG LLP, independent accountants.
5
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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, the indexed fixed account option and investment divisions. 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. Under qualified plans earnings also accumulate on a
tax-deferred basis.
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 divisions. The investment divisions 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 divisions, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the performance of the
investment divisions 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 divisions you choose for the income phase.
In addition, an endorsement to the contract offers an indexed fixed account
option. This option offers an interest rate that is guaranteed to be at least 3%
per year, and may be higher based on changes in the S&P Composite Stock Price
Index. If you make a withdrawal prior to the end of the specified term, however,
the value of your indexed fixed account will be your premium payments
accumulated at 3% per year, less a withdrawal charge. This option is described
in supplementary materials that your agent can provide you.
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. An assignment may be a taxable event.
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 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.
6
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THE GUARANTEED ACCOUNTS AND THE INDEXED FIXED ACCOUNT OPTION
If you select a guaranteed account or indexed fixed account option, your money
will be placed with Jackson National's other assets. The guaranteed accounts and
the indexed fixed account option are not registered with the SEC and the SEC
does not review the information we provide to you about them. Your contract
contains a more complete description of the guaranteed accounts. The indexed
fixed account option is described in the endorsement and supplementary materials
your agency can provide you.
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 divisions. Jackson National does
not guarantee the investment performance of the separate account or the
investment divisions.
INVESTMENT DIVISIONS
You can put money in any or all of the investment divisions; however, you may
not allocate your money to more than eighteen investment options plus the
guaranteed accounts and the indexed fixed account option during the life of your
contract. The investment divisions 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 DowSM 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 AverageSM 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 DowSM 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 AverageSM 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 AverageSM, 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.
7
<PAGE>
JNL/First Trust Target 25 Series - seeks a high total return through a
combination of capital appreciation and dividend income by investing 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 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 DowSM Target 5 Series
JNL/First Trust The DowSM 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
The investment objectives and policies of certain of the investment divisions
are similar to the investment objectives and policies of other mutual funds that
certain of the investment sub-advisers manage. Although the objectives and
policies may be similar, the investment results of the investment division may
be higher or lower than the result of such other mutual funds. We cannot
guarantee, and make no representation, that the investment results of similar
funds will be comparable even though the funds have the same investment
advisers.
An investment division's performance may be affected by risks specific to
certain types of investments, such as foreign securities, derivative
investments, non-investment grade debt securities, initial public offerings
(IPOs) or companies with relatively small market capitalizations. IPOs and other
investment techniques may have a magnified performance impact on an investment
division with a small asset base. An investment division may not experience
similar performance as its assets grow.
8
<PAGE>
Depending on market conditions, you can make or lose money in any of the
investment divisions. You should read the prospectuses for the JNL Series Trust
and the JNL Variable Fund LLC carefully before investing. Additional investment
divisions 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
division with another division. We will not do this without any required
approval of the SEC. Jackson National will give you notice of such transactions.
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 division, 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 divisions 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).
9
<PAGE>
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.
Amounts allocated to an indexed fixed account option are not subject to this
withdrawal charge. The withdrawal charge applicable to amounts held in that
option is described in the supplementary materials and the endorsement.
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.
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PURCHASES
MINIMUM INITIAL PREMIUM:
o $5,000 under most circumstances
o $2,000 for a qualified plan contract
o 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 division
is $100. There is a $100 minimum balance requirement for each guaranteed account
and investment division.
When you purchase a contract, Jackson National will allocate your premium to one
or more of the guaranteed accounts, the indexed fixed account option and/or the
investment divisions 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 plus the guaranteed accounts and the indexed fixed account option 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 divisions
will go up or down depending on the performance of the divisions. 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 divisions. This is done by:
1. determining the total amount of money invested in the particular
investment division;
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.
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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 division by the value of the accumulation
unit for that investment division.
TRANSFERS
You can transfer money among the guaranteed accounts, the indexed fixed account
option and the investment divisions during the accumulation phase. During the
income phase, you can transfer money between investment divisions.
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 division would be less than $100 after a
transfer, you must transfer the entire value or you may not make the transfer.
Different requirements apply to transfers in and out of the indexed fixed
account option, as described in the endorsement and the supplementary materials.
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 division.
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.
Your withdrawal request must be in writing. Jackson National will accept
withdrawal requests submitted via facsimile. There are risks associated with not
requiring original signatures in order to disburse contract holder monies.
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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 division from which you are making the withdrawal. After your
withdrawal, you must have at least $100 left in the guaranteed account or
investment division. Amounts may not be withdrawn from an indexed fixed account
option until all other amounts under the contract have been withdrawn.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL
YOU MAKE.
There are limitations on withdrawals from qualified plans. 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. In addition, 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 division when:
a) the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
b) trading on the New York Stock Exchange is restricted;
c) an emergency exists so that it is not reasonably practicable to
dispose of securities in the Separate Account or determine the
division value of its assets; or,
d) the SEC, by order, may permit for the protection of owners.
The applicable rules and regulations of the SEC will govern whether the
conditions described in (b) and/or (c) exist.
Jackson National has reserved the right to defer payment for a withdrawal or
transfer from the guaranteed accounts and the indexed fixed account option 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 divisions 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. Unless you tell use otherwise, amounts in an
indexed fixed account option will be applied to payments from the guaranteed
accounts.
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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 DIVISIONS. If you choose to have any portion of
your income payments come from the investment division(s), the dollar amount of
your payment will depend upon three things:
1. the value of your contract in the investment division(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 divisions you selected.
Jackson National calculates the dollar amount of the first income payment that
you receive from the investment divisions. We then use that amount to determine
the number of annuity units that you hold in each investment division. The
amount of each subsequent income payment is determined by multiplying the number
of annuity units that you hold in an investment division by the annuity unit
value for that investment division.
The number of annuity units that you hold in each investment division does not
change unless you reallocate your contract value among the investment divisions.
The annuity unit value of each investment division 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. If the
beneficiary does not want to receive the payments, a single lump sum may be
requested, which will be equal to the present value of the remaining payments
(as of the date of proof of death) discounted at the assumed investment rate for
a variable annuity payout option.
Option 4 - Income for a Specified Period. This income option provides
monthly payments for any number of years from 5 to 30. However, you may elect to
receive a single lump sum payment which will be equal to the present value of
the remaining payments (as of the date of proof of death) discounted at the
assumed investment rate for a variable annuity payout option.
Additional Options - Other income options may be made available by Jackson
National.
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.
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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.
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.
----------
*(4% if the owner is age 70 or older at the date of issue.)
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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 the tax-deferral that is provided by the contract or the
qualified plan). 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 investment in the contract 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.
A qualified contract will not provide any necessary or additional tax deferral
if it is used to fund a qualified plan that is tax deferred. However, the
contract has features and benefits other than tax deferral that may make it an
appropriate investment for a qualified plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a qualified contract.
WITHDRAWALS - NON-QUALIFIED CONTRACTS. If you make a withdrawal from your
contract, the Code generally treats the withdrawal as first coming from earnings
and then from your premium payments. Withdrawn earnings are includible in
income. Additional information is provided in the SAI.
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.
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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 Treasury 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
divisions. 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
divisions, to make transfers among the investment divisions or the number and
type of investment divisions 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 DowSM Target
5 Series, JNL/First Trust the DowSM 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.)
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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 divisions. 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 divisions from the guaranteed
accounts or any of the other investment divisions. This theoretically gives you
a lower average cost per unit over time than you would receive if you made a one
time purchase. The more volatile investment divisions may not result in lower
average costs and such divisions may not be an appropriate source of dollar cost
averaging transfers in volatile markets. 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 divisions 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. You may return your contract to the selling agent or Jackson National
within twenty days after receiving it. Jackson National will return the contract
value in the investment divisions plus any fees and expenses deducted from the
premiums allocated to the investment divisions plus the full amount of premiums
you allocated to the guaranteed accounts and the indexed fixed account option.
We will determine the contract value in the investment divisions as of the date
you mail the contract to us or the date you return it to the selling agent.
Jackson National will return premium payments where required by law.
ADVERTISING. From time to time, Jackson National may advertise several types of
performance for the investment divisions.
o Total return is the overall change in the value of an investment in an
investment division 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 division, 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 division.
o Yield refers to the income generated by an investment over a given period
of time.
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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.
LEGAL PROCEEDINGS. Jackson National has been named as a defendant in civil
litigation proceedings substantially similar to other litigation brought against
many life insurers alleging misconduct in the sale of insurance products. These
matters are sometimes referred to as market conduct litigation. The litigation
against JNL purports to include purchasers of certain life insurance and annuity
products from JNL during the period from 1981 to present. JNL has retained
national and local counsel experienced in the handling of such litigation, and
is vigorously defending these actions. A favorable outcome is anticipated, and
at this time it is not feasible to make a meaningful estimate of the amount or
range of loss that could result from an unfavorable outcome in such actions. In
addition, JNL is a defendant in several individual actions that involve similar
issues, including an August 1999 verdict against JNL for $32.5 million in
punitive damages. JNL has appealed the verdict on the basis that it is not
supported by the facts or the law, and a ruling reversing the judgment is being
sought.
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.
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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 ................................................10
Income Payments; Net Investment Factor ....................................20
Financial Statements ......................................................22
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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 division 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 period ended December 31, 1999 have been
audited by KPMG LLP, independent accountants. The Separate Account's financial
statements for the periods ended December 31, 1998, 1997, 1996 and 1995, 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 DIVISIONS DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995(A)
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<S> <C> <C> <C> <C> <C>
PPM America/JNL Money Market Division
Accumulation unit value:
Beginning of period $11.12 $10.74 $10.37 $10.03 $10.00
End of period $11.48 $11.12 $10.74 $10.37 $10.03
Accumulation units outstanding
at the end of period 11,491,181 4,713,958 3,855,123 2,193,176 14,608
JNL/First Trust The Dow(SM) Target 5 Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $7.74 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 497,804 N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust The Dow(SM) Target 10 Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $8.67 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 898,160 N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust The S&P(R) Target 10 Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $10.98 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 836,713 N/A(b) N/A(b) N/A(b) N/A(b)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT DIVISIONS DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995(A)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JNL/First Trust Global Target 15 Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $8.93 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 227,870 N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Target 25 Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $8.24 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 225,236 N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Target Small-Cap Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $12.29 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 170,871 N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Technology Sector Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $15.28 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 512,510 N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Pharmaceutical/Healthcare
Sector Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $9.67 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 418,359 N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Financial Sector Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $8.91 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 280,321 N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Energy Sector Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $10.20 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 74,681 N/A(b) N/A(b) N/A(b) N/A(b)
JNL/First Trust Leading Brands Sector Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $9.48 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 176,274 N/A(b) N/A(b) N/A(b) N/A(b)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT DIVISIONS DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995(A)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JNL/First Trust Communications Sector Division
Accumulation unit value:
Beginning of period $10.00 N/A(b) N/A(b) N/A(b) N/A(b)
End of period $14.99 N/A(b) N/A(b) N/A(b) N/A(b)
Accumulation units outstanding
at the end of period 336,879 N/A(b) N/A(b) N/A(b) N/A(b)
</TABLE>
(a) The Separate Account commenced operations on October 16, 1995.
(b) Each of the JNL/First Trust The Dow(SM) Target 5 Division, the JNL/First
Trust The Dow(SM) Target 10 Division, the JNL/First Trust The S&P(R) Target
10 Division, the JNL/First Trust Global Target 15 Division, the JNL/First
Trust Target 25 Division, the JNL/First Trust Target Small-Cap Division,
the JNL/First Trust Technology Sector Division, the JNL/First Trust
Pharmaceutical/Healthcare Division, the JNL/First Trust Financial Sector,
the JNL/First Trust Energy Sector Division, the JNL/First Trust Leading
Brands Sector Division, and the JNL/First Trust Communications Sectors
Division commenced operations on July 2, 1999.
<PAGE>
THIS IS NOT PART OF THE PROSPECTUS
PRODUCT BROCHURE FOR THE INDEXED FIXED OPTION OF THE JACKSON NATIONAL LIFE(R)
DEFINED STRATEGIES VARIABLE ANNUITY (SM)
This Product Brochure is a summary of some of the more important points that you
should consider and know before allocating new premiums or eligible earnings
from the Guaranteed Account Options or Investment Divisions (Portfolio Options)
to the Indexed Fixed Option. The Indexed Fixed Option provides minimum
guaranteed values. The Indexed Fixed Option Values may exceed the minimum
guaranteed values. You should know the minimum guaranteed value and understand
the provisions of the endorsement that are used to determine the potential
additional interest credited to the Indexed Fixed Option. The following is a
summary explanation of the determination of the minimum guaranteed values and
the principal features relating to the Indexed Fixed Option. JNL(R) offers other
equity-indexed annuity products that offer different product features, benefits
and charges, including Contract minimum guarantees, withdrawal privileges,
Contract options, withdrawal charges and index participation rates. The Indexed
Fixed Option may also be an available feature of other JNL variable annuity
contracts. Please contact your Financial Representative and select the product
that is right for you.
I. THE INDIVIDUAL DEFERRED VARIABLE AND FIXED ANNUITY CONTRACT
The Jackson National Life Defined Strategies Variable Annuity is intended for
retirement savings or other long-term savings. The Contract, including the
Indexed Fixed Option, provides a means for allocating premium payments and/or
earnings among the Contract options on a tax-deferred basis.
II. INDEXED FIXED OPTION
Amounts allocated to the Indexed Fixed Option are guaranteed a minimum 3% annual
interest (Indexed Fixed Option Minimum Value) less a withdrawal charge, if
applicable. The Indexed Fixed Option offers a return linked to the S&P 500(R)
Composite Stock Price Index calculated at the end of the 9-year Indexed Fixed
Option period. For an Indexed Fixed Option period, JNL declares an Index
Participation Rate (IPR) that is guaranteed to remain the same for the duration
of such period. The IPR is the percentage of any increase in the S&P 500 Index
that will be credited at the end of an Indexed Fixed Option period. The increase
is calculated by comparing the index price at the beginning of the Indexed Fixed
Option period to the index price averaged over the final 52 Index Determination
Dates (IDDs) of an Indexed Fixed Option period. The ending index price is the
average of 52 S&P 500 Index prices rather than the actual index price on a
specified date. (For example, if, after averaging, the S&P 500 Index is up 110%
at the end of the period and your IPR is 70%, your total return would be 77%).
IF THE INDEX PRICE CHANGE IS DETERMINED FOR A PERIOD OF ONE YEAR OR LESS, ALL OF
THE IDDS IN THE PERIOD WILL BE USED TO DETERMINE THE ENDING AVERAGE INDEX PRICE.
Index Determination Dates are each Friday that the JNL Service Center and the
New York Stock Exchange are open for business. If either is closed on a Friday,
the Index Determination Date will be the next Business Day.
Please note that the S&P 500 Index does not include the payment or reinvestment
of dividends in the calculation of its price changes.
NOT FDIC INSURED o MAY LOSE VALUE o NO BANK GUARANTEE
VADV 5845 B 09/00
<PAGE>
The Indexed Fixed Option interest credited at the end of the Indexed Fixed
Option period, or distribution due to the Owner's death before the Annuity Date,
will be the greater of:
(a) The IPR for the period multiplied by the increase in the S&P 500 Index using
the index price at the beginning of the Indexed Fixed Option period compared to
the index price averaged over the final 52 IDDs (or all of the IDDs since the
beginning of the period, if fewer than 52),or
(b) Three percent (3%) per year.
Transactions involving allocations to the Indexed Fixed Option and automatic
transfers out of the Indexed Fixed Option period at the end of such period are
only permitted on Index Determination Dates. All other transactions may be
processed on any date.
THE INDEXED FIXED OPTION CREDITED INTEREST ON A DISTRIBUTION TAKEN AT ANY TIME
OTHER THAN THE END OF THE INDEXED FIXED OPTION PERIOD OR DUE TO THE OWNER'S
DEATH, WILL BE THREE PERCENT (3%) PER ANNUM. Such distributions may also be
subject to the Indexed Fixed Option Withdrawal Charge.
TRANSFERS OUT OF AN INDEXED FIXED OPTION ARE NOT PERMITTED UNTIL THE END OF THE
INDEXED FIXED OPTION PERIOD. TRANSFERS UNDER ANY DOLLAR-COST AVERAGING OR
PORTFOLIO REBALANCING PROGRAMS ARE NOT PERMITTED FROM OR TO THE INDEXED FIXED
OPTION.
At the end of the Indexed Fixed Option period, JNL will automatically transfer
the Indexed Fixed Option Value to the one-year Guaranteed Account Option, where
it will remain until you otherwise notify JNL.
III. ACCESS TO YOUR MONEY
You can take money out of the Contract at any time prior to the Annuity Date.
Withdrawals of all or a portion of the amounts in an Indexed Fixed Option made
prior to the end of such period are subject to an Indexed Fixed Option
Withdrawal Charge (see chart below).
--------------------------------------------------------------------------------
COMPLETED YEARS SINCE ALLOCATION
TO INDEXED FIXED OPTION 0 1 2 3 4 5 6 7 8 9
--------------------------------------------------------------------------------
WITHDRAWAL CHARGE PERCENTAGE
APPLIED TO THE ALLOCATED
AMOUNT WITHDRAWN 7% 6% 5% 4% 3% 2% 1% 0% 0% 0%
--------------------------------------------------------------------------------
Amounts in the Indexed Fixed Option are excluded in determining the Contingent
Deferred Sales Charge and the amount available for the Additional Free
Withdrawal.
Any endorsement of the Contract waiving the Contingent Deferred Sales Charge
will not apply to the Indexed Fixed Option Withdrawal Charge.
Amounts in an Indexed Fixed Option will be the last amounts available for
withdrawal from the Contract. Withdrawals will first be taken from the other
Contract options prior to any amounts being withdrawn from Indexed Fixed
Options. If multiple Indexed Fixed Options are in effect, any amounts withdrawn
from Indexed Fixed Options will be taken from the Indexed Fixed Option periods
on a first-in, first-out basis.
JNL will waive Indexed Fixed Option Withdrawal Charges for the annual Required
Minimum Distribution (RMD)from the Contract for Owners over age 70 1 /2, if it
is necessary to withdraw funds from the Indexed Fixed Options. However, if the
Owner should request an amount greater than the RMD for this Contract, the
entire withdrawal from the Indexed Fixed Option will be subject to the Indexed
Fixed Option Withdrawal Charge. Any withdrawal during an Indexed Fixed Option
period, including an RMD, is based on the Indexed Fixed Option Minimum Value.
<PAGE>
IV. HYPOTHETICAL ILLUSTRATION DEMONSTRATING THE ANNUITY CONTRACT MECHANICS
This hypothetical illustration assumes a $10,000 allocation made on 12/31/90
(index price = 330.22) to the 9-year Indexed Fixed Option period, an 85% Index
Participation Rate, and historical S&P 500 Index price changes. Please note that
this illustration is not guaranteed by JNL and should not be deemed a
representation of future index changes on any Indexed Fixed Option.
WITHDRAWAL VALUES
9-YEAR INDEX FIXED OPTION
--------------------------------------------------------------------------------
INDEXED FIXED INDEXED FIXED
BEGINNING OPTION MINIMUM OPTION WITHDRAWAL
OF YEAR VALUE CHARGE PERCENTAGE WITHDRAWAL VALUE
------------------ -------------------- -------------------- -----------------
1 10,000.00 7% 9,300.00
2 13,300.00 6% 9,700.00
3 10,609.00 5% 10,109.00
4 10,927.27 4% 10,527.27
5 11,255.09 3% 10,955.09
6 11,592.74 2% 11,392.74
7 11,940.52 1% 11,840.52
8 12,298.74 0% 12,298.74
9 12,667.70 0% 12,667.70
--------------------------------------------------------------------------------
END OF PERIOD VALUES
--------------------------------------------------------------------------------
INDEX
BEGINNING AVERAGED CHANGE IN INDEXED FIXED FIXED OPTION WITHDRAWAL
OF YEAR INDEX PRICE INDEX PRICE OPTION VALUE MINIMUM VALUE VALUE
--------------------------------------------------------------------------------
10 1331.50 303.20% 35,773.36 13,047.73 35,773.36
--------------------------------------------------------------------------------
V. ANNUITY OPTIONS (ANNUITY PAYMENTS)
(Each description assumes that you are the Owner and Annuitant.)
OPTION 1 - LIFE INCOME. This Annuity Option provides monthly payments for your
life.
OPTION 2 - JOINT AND SURVIVOR ANNUITY. This Annuity 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 MONTHS PERIOD CERTAIN. This Annuity
Option provides monthly payments for your life, but with payments continuing to
your beneficiary for the remainder of 10 or 20 years (as you select) if you die
before the end of the selected period.
OPTION 4 - INCOME FOR A SPECIFIED PERIOD. This Annuity Option provides monthly
payments for any number of years from 5 to 30.
<PAGE>
The actuarial basis for Options 1, 2 and 3 in the Table of Annuity Options will
be the Annuity 2000 Mortality Table, with interest at 4.5%, and a 2% expense
load. The values shown for Option 4 in the Table of Annuity Options are based on
interest at 3%, without an expense load. Applicable premium taxes are not
included in the Table of Annuity Options.
VI. DEATH BENEFIT AMOUNT BEFORE THE ANNUITY DATE
In determining the amount payable as a death benefit before the Annuity Date,the
amount attributable to any Indexed Fixed Option will be the sum of the Indexed
Fixed Option Values on the IDD immediately preceding the date that JNL receives
a request for payment that is in Good Order.
<PAGE>
VII. APPLICATION AND ALLOCATION PROCESSING
Upon receipt of the application in Good Order, if applicable, and premium at the
JNL Service Center, JNL will initially place such premium designated for the
Indexed Fixed Option into the general account where it will be credited with
interest at the same rate as credited to the one-year Guaranteed Account Option.
On the IDD occurring immediately subsequent to such premium placement, JNL will
transfer the premium and any earned interest to the Indexed Fixed Option.
When you request a transfer of eligible earnings from Guaranteed Account Options
or Investment Divisions (Options) to the Indexed Fixed Option, the money is
first held in the general account and credited with interest at the same rate as
credited to the one-year Guaranteed Account Option until the next IDD. On that
IDD, the amount is transferred to the Indexed Fixed Option. Transfers from a
Guaranteed Account Option may be subject to an Interest Rate Adjustment.
VIII. OTHER INFORMATION
REMEMBER,THE FINAL DECISION ON THE SELECTION OF A CONTRACT OPTION IS YOURS,
BASED UPON YOUR INDIVIDUAL SITUATION, NEEDS, AND GOALS. HISTORICAL S&P 500 INDEX
PRICE CHANGES SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE CHANGES. JNL
DOES NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN. THE INDEXED FIXED OPTION MAY NOT BE
AVAILABLE IN ALL STATES. "S&P 500" is a trademark of The McGraw-Hill
Companies,Inc. and has been licensed for use by Jackson National Life(R). The
product is not sponsored, endorsed, sold or promoted by Standard & Poor's, and
Standard & Poor's makes no representation regarding the advisability of
purchasing the product.
VADV 5845 B 09/00
<PAGE>
PERSPECTIVE (R)
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 and an indexed fixed account option which offer an
interest rate that is guaranteed by Jackson National Life Insurance Company
(Jackson National)
o Investment divisions which purchase shares of the following series of
mutual funds:
JNL SERIES TRUST
JNL/Alger Growth Series
JNL/Alliance Growth Series
JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
JNL/Janus Aggressive Growth Series
JNL/Janus Balanced Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series*
JNL/Putnam Growth Series
JNL/Putnam International Equity Series
JNL/Putnam Midcap 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 Mid-Cap Growth Series
T. Rowe Price/JNL Value Series
JNL VARIABLE FUND LLC
JNL/First Trust The DowSM 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, you can obtain a
free copy of the Statement of Additional Information (SAI) dated May 1, 2000, 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
MAY 1, 2000
----------
* The JNL/Janus Global Equities Series (the "Series") is closed to new
contract holders after September 1, 2000. The Series will still be
available to existing contract holders, even if the contract holder does
not have a current allocation in the Series. The Series will also be
available to both new and existing contract holders as an underlying series
of the JNL/S&P Conservative Growth Series I, the JNL/S&P Moderate Growth
Series I, the JNL/S&P Aggressive Growth Series I, the JNL/S&P Very
Aggressive Growth Series I, the JNL/S&P Equity Growth Series I and the
JNL/S&P Equity Aggressive Growth Series I.
<PAGE>
"Dow Jones", "Dow Jones Industrial AverageSM", "DJIASM", and "The Dow 10SM" 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
JONESDISCLAIMS 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...................................................................1
Fee Table...................................................................3
The Annuity Contract........................................................7
The Company.................................................................7
The Guaranteed Accounts and the Indexed Fixed Account Option................7
The Separate Account........................................................8
Investment Divisions........................................................8
Contract Charges...........................................................10
Purchases..................................................................12
Transfers..................................................................13
Access to Your Money.......................................................13
Income Payments (The Income Phase).........................................14
Death Benefit..............................................................15
Taxes......................................................................17
Other Information..........................................................19
Table of Contents of the Statement of Additional Information...............21
Appendix A................................................................A-1
<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 and the indexed fixed
account option of Jackson National and the
investment divisions. 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, the indexed fixed account option
and/or the investment divisions but you may
not put your money in more than eighteen of
the investment options plus the guaranteed
accounts and the indexed fixed account
option 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 divisions. 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.
1
<PAGE>
EXPENSES (CONT'D) 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 options 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 whether your
contract is non-qualified or purchased as
part of a qualified plan.
2
<PAGE>
FEE TABLE
OWNER TRANSACTION EXPENSES1
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 ........................................ 1.07% 0% 1.07%
JNL/Alliance Growth Series ..................................... .88% 0% .88%
JNL/Eagle Core Equity Series ................................... .99% 0% .99%
JNL/Eagle SmallCap Equity Series ............................... 1.05% 0% 1.05%
JNL/Janus Aggressive Growth Series ............................. 1.01% 0% 1.01%
JNL/Janus Balanced Series ...................................... 1.05% 0% 1.05%
JNL/Janus Capital Growth Series ................................ 1.03% 0% 1.03%
JNL/Janus Global Equities Series* .............................. 1.06% 0% 1.06%
JNL/Putnam Growth Series ....................................... .97% 0% .97%
JNL/Putnam International Equity Series ......................... 1.18% 0% 1.18%
JNL/Putnam Midcap Growth Series ................................ 1.05% 0% 1.05%
JNL/Putnam Value Equity Series ................................. .98% 0% .98%
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 ................................ .82% 0% .82%
PPM America/JNL High Yield Bond Series ......................... .82% 0% .82%
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 .................... .93% 0% .93%
T. Rowe Price/JNL Mid-Cap Growth Series ........................ 1.03% 0% 1.03%
T. Rowe Price/JNL Value Series ................................. 1.00% 0% 1.00%
JNL/First Trust The DowSM Target 10 Series ..................... .85% 0% .85%
-----------------------------------------------------------------------------------------------------
</TABLE>
Certain Series pay Jackson National Financial Services, LLC, the adviser, an
Administrative Fee of .10% for certain services provided to the JNL Series Trust
and JNL Variable Fund LLC by Jackson National Financial Services, LLC. The
JNL/S&P Series do not pay an Administrative Fee. The Total Series Annual
Expenses reflect the inclusion of the Administrative Fee.
----------
1 See "Contract Charges"
3
<PAGE>
* The JNL/Janus Global Equities Series (the "Series") is closed to new contract
holders after September 1, 2000. The Series will still be available to existing
contract holders, even if the contract holder does not have a current allocation
in the Series. The Series will also be available to both new and existing
contract holders as an underlying series of the JNL/S&P Conservative Growth
Series I, the JNL/S&P Moderate Growth Series I, the JNL/S&P Aggressive Growth
Series I, the JNL/S&P Very Aggressive Growth Series I, the JNL/S&P Equity Growth
Series I and the JNL/S&P Equity Aggressive Growth Series I.
** 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 total annual operating expenses for each JNL/S&P Series (including both the
annual operating expenses for the JNL/S&P Series and the annual operating
expenses for the underlying investment divisions) could range from .90% to
1.38%. The table below shows estimated total annual operating expenses for each
of the JNL/S&P Series based on the pro rata share of expenses that the JNL/S&P
Series would bear if they invested in a hypothetical mix of underlying
investment divisions. The adviser believes the expenses shown below to be a
likely approximation of the expenses the JNL/S&P Series will incur based on the
actual mix of underlying investment divisions. The expenses shown below include
both the annual operating expenses for the JNL/S&P Series and the annual
operating expenses for the underlying investment divisions. The actual expenses
of each JNL/S&P Series will be based on the actual mix of underlying investment
divisions in which it invests. The actual expenses may be greater or less than
those shown.
JNL/S&P Conservative Growth Series I....................... 1.134%
JNL/S&P Moderate Growth Series I........................... 1.151%
JNL/S&P Aggressive Growth Series I......................... 1.176%
JNL/S&P Very Aggressive Growth Series I.................... 1.180%
JNL/S&P Equity Growth Series I............................. 1.187%
JNL/S&P Equity Aggressive Growth Series I.................. 1.184%
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 Division (a) $ 25 $ 78 $ 133 $ 283
(b) 95 128 163 283
JNL/Alliance Growth Division (a) 24 72 124 266
(b) 94 122 154 266
JNL/Eagle Core Equity Division (a) 24 75 129 275
(b) 94 125 159 275
JNL/Eagle SmallCap Equity Division (a) 25 77 132 281
(b) 95 127 162 281
JNL/Janus Aggressive Growth Division (a) 25 76 130 277
(b) 95 126 160 277
JNL/Janus Balanced Division (a) 25 77 132 281
(b) 95 127 162 281
JNL/Janus Capital Growth Division (a) 25 76 131 279
(b) 95 126 161 279
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Time Periods
-------------------------------------------------------------------------------- ------- --------- -------- ---------
1 3 5 10
year years years years
-------------------------------------------------------------------------------- ------- --------- -------- ---------
<S> <C> <C> <C> <C>
JNL/Janus Global Equities Division* (a) $ 25 $ 77 $ 132 $ 282
(b) 95 127 162 282
JNL/Putnam Growth Division (a) 24 75 128 273
(b) 94 125 158 273
JNL/Putnam International Equity Division (a) 26 81 138 293
(b) 96 131 168 293
JNL/Putnam Midcap Growth Division (a) 25 77 132 281
(b) 95 127 162 281
JNL/Putnam Value Equity Division (a) 24 75 128 274
(b) 94 125 158 274
JNL/S&P Conservative Growth Division I (a) 16 51 88 192
(b) 86 101 118 192
JNL/S&P Moderate Growth Division I (a) 16 51 88 192
(b) 86 101 118 192
JNL/S&P Aggressive Growth Division I (a) 16 51 88 192
(b) 86 101 118 192
JNL/S&P Very Aggressive Growth Division I (a) 16 51 88 192
(b) 86 101 118 192
JNL/S&P Equity Growth Division I (a) 16 51 88 192
(b) 86 101 118 192
JNL/S&P Equity Aggressive Growth Division I (a) 16 51 88 192
(b) 86 101 118 192
PPM America/JNL Balanced Division (a) 23 70 120 257
(b) 93 120 150 257
PPM America/JNL High Yield Bond Division (a) 23 70 120 257
(b) 93 120 150 257
PPM America/JNL Money Market Division (a) 22 66 114 245
(b) 92 116 144 245
Salomon Brothers/JNL Global Bond Division (a) 24 74 127 271
(b) 94 124 157 271
Salomon Brothers/JNL U.S. Government & Quality Bond Division (a) 23 69 119 255
(b) 93 119 149 255
T. Rowe Price/JNL Established Growth Division (a) 24 73 126 269
(b) 74 123 156 269
T. Rowe Price/JNL Mid-Cap Growth Division (a) 25 76 131 279
(b) 95 126 161 279
T. Rowe Price/JNL Value Division (a) 25 75 129 276
(b) 95 125 159 276
JNL/First Trust The DowSM Target 10 Division (a) 23 71 122 261
(b) 93 121 152 261
</TABLE>
----------
* The JNL/Janus Global Equities Series (the "Series") is closed to new
contract holders after September 1, 2000. The Series will still be
available to existing contract holders, even if the contract holder does
not have a current allocation in the Series. The Series will also be
available to both new and existing contract holders as an underlying series
of the JNL/S&P Conservative Growth Series I, the JNL/S&P Moderate Growth
Series I, the JNL/S&P Aggressive Growth Series I, the JNL/S&P Very
Aggressive Growth Series I, the JNL/S&P Equity Growth Series I and the
JNL/S&P Equity Aggressive Growth Series I.
5
<PAGE>
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 divisions.
A withdrawal charge is imposed on income payments which occur within one year of
the date the contract is issued.
THE EXAMPLES DO 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 financial statements of the Separate Account for the year ended
December 31, 1999
o the financial statements of Jackson National for the year ended
December 31, 1999
The Separate Account's financial statements for the year ended December 31,
1999, and the financial statements of Jackson National for the year ended
December 31, 1999, have been audited by KPMG LLP, independent accountants.
6
<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, the indexed fixed account option and investment divisions. 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. Under qualified plans earnings also accumulate on a
tax-deferred basis.
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 divisions. The investment divisions 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 divisions, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the performance of the
investment divisions 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 divisions you choose for the income phase.
In addition, an endorsement to the contract offers an indexed fixed account
option. This option offers an interest rate that is guaranteed to be at least 3%
per year, and may be higher based on changes in the S&P Composite Stock Price
Index. If you make a withdrawal prior to the end of the specified term, however,
the value of your indexed fixed account will be your premium payments
accumulated at 3% per year, less a withdrawal charge. This option is described
in supplementary materials that your agent can provide you.
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. An assignment may be a taxable event.
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 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 AND THE INDEXED FIXED ACCOUNT OPTION
If you select a guaranteed account, or the indexed fixed account option, your
money will be placed with Jackson National's other assets. The guaranteed
accounts and the indexed fixed account option are not registered with the SEC
and the SEC does not review the information we provide to you about them. Your
contract contains a more complete description of the guaranteed accounts. The
indexed fixed account option is described in the endorsement and supplementary
materials your agent can provide you.
7
<PAGE>
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 divisions. Jackson National does
not guarantee the investment performance of the separate account or the
investment divisions.
INVESTMENT DIVISIONS
You can put money in any or all of the investment divisions; however, you may
not allocate your money to more than eighteen investment options plus the
guaranteed accounts during the life of your contract. The investment divisions
purchase shares of the following series of mutual funds:
JNL Series Trust
JNL/Alger Growth Series
JNL/Alliance Growth Series
JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
JNL/Janus Aggressive Growth Series
JNL/Janus Balanced Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series*
JNL/Putnam Growth Series
JNL/Putnam International Equity Series
JNL/Putnam Midcap 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 Mid-Cap Growth Series
T. Rowe Price/JNL Value Series
----------
* The JNL/Janus Global Equities Series (the "Series") is closed to new
contract holders after September 1, 2000. The Series will still be
available to existing contract holders, even if the contract holder does
not have a current allocation in the Series. The Series will also be
available to both new and existing contract holders as an underlying series
of the JNL/S&P Conservative Growth Series I, the JNL/S&P Moderate Growth
Series I, the JNL/S&P Aggressive Growth Series I, the JNL/S&P Very
Aggressive Growth Series I, the JNL/S&P Equity Growth Series I and the
JNL/S&P Equity Aggressive Growth Series I.
8
<PAGE>
JNL Variable Fund LLC
JNL/First Trust The DowSM 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 AverageSM 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
Alliance Capital Management L.P. JNL/Alliance Growth 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 Balanced Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series*
Putnam Investment Management, Inc. JNL/Putnam Growth Series
JNL/Putnam International Equity Series
JNL/Putnam Midcap 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
T. Rowe Price Associates, Inc. T. Rowe Price/JNL Established Growth
Series
T. Rowe Price/JNL Mid-Cap Growth Series
T. Rowe Price/JNL Value Series
First Trust Advisors L.P. JNL/First Trust The DowSM Target 10
Series
----------
* The JNL/Janus Global Equities Series (the "Series") is closed to new
contract holders after September 1, 2000. The Series will still be
available to existing contract holders, even if the contract holder does
not have a current allocation in the Series. The Series will also be
available to both new and existing contract holders as an underlying series
of the JNL/S&P Conservative Growth Series I, the JNL/S&P Moderate Growth
Series I, the JNL/S&P Aggressive Growth Series I, the JNL/S&P Very
Aggressive Growth Series I, the JNL/S&P Equity Growth Series I and the
JNL/S&P Equity Aggressive Growth Series I.
9
<PAGE>
The investment objectives and policies of certain of the investment divisions
are similar to the investment objectives and policies of other mutual funds that
certain of the investment sub-advisers manage. Although the objectives and
policies may be similar, the investment results of the investment division may
be higher or lower than the result of such other mutual funds. We cannot
guarantee, and make no representation, that the investment results of similar
funds will be comparable even though the funds have the same investment
advisers.
An investment division's performance may be affected by risks specific to
certain types of investments, such as foreign securities, derivative
investments, non-investment grade debt securities, initial public offerings
(IPOs) or companies with relatively small market capitalizations. IPOs and other
investment techniques may have a magnified performance impact on an investment
division with a small asset base. An investment division may not experience
similar performance as its assets grow.
Depending on market conditions, you can make or lose money in any of the
investment divisions. You should read the prospectuses for the JNL Series Trust
and the JNL Variable Fund LLC carefully before investing. Additional investment
divisions 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
division with another division. We will not do this without any required
approval of the SEC. Jackson National will give you notice of such transactions.
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 division, 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 divisions 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.
10
<PAGE>
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.
Amounts allocated to an indexed fixed account option are not subject to this
withdrawal charge. The withdrawal charge applicable to amounts held in that
option is described in the supplementary materials and the endorsement.
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.
11
<PAGE>
PURCHASES
MINIMUM INITIAL PREMIUM:
o $5,000 under most circumstances
o $2,000 for a qualified plan contract
o The maximum we accept without our prior approval is $1 million.
MINIMUM ADDITIONAL PREMIUMS:
o $500
o $50 under the automatic payment plan
o You can pay additional premiums at any time during the accumulation
phase.
The minimum that you may allocate to a guaranteed account or investment division
is $100. There is a $100 minimum balance requirement for each guaranteed account
and investment division.
When you purchase a contract, Jackson National will allocate your premium to one
or more of the guaranteed accounts and/or the investment divisions 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 plus the guaranteed accounts and the indexed fixed account option 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 divisions
will go up or down depending on the performance of the divisions. 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 divisions. This is done by:
1. determining the total amount of money invested in the particular
investment division;
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 division by the value of the accumulation
unit for that investment division.
12
<PAGE>
TRANSFERS
You can transfer money among the guaranteed accounts, the indexed fixed account
option and the investment divisions during the accumulation phase. During the
income phase, you can transfer money between investment divisions.
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 division would be less than $100 after a
transfer, you must transfer the entire value or you may not make the transfer.
Different requirements apply to transfers in and out of the indexed fixed
account option, as described in the endorsement and the supplementary materials.
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 division.
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.
Your withdrawal request must be in writing. Jackson National will accept
withdrawal requests submitted via facsimile. There are risks associated with not
requiring original signatures in order to disburse contract holder monies.
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 division from which you are making the withdrawal. After your
withdrawal, you must have at least $100 left in the guaranteed account or
investment division. Amounts may not be withdrawn from an indexed fixed account
option until all other amounts under the contract have been withdrawn.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL
YOU MAKE.
There are limitations on withdrawals from qualified plans. See "Taxes."
13
<PAGE>
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. In addition, 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 division when:
a) the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
b) trading on the New York Stock Exchange is restricted;
c) an emergency exists so that it is not reasonably practicable to
dispose of securities in the Separate Account or determine the
division value of its assets; or,
d) the SEC, by order, may permit for the protection of owners.
The applicable rules and regulations of the SEC will govern whether the
conditions described in (b) and/or (c) exist.
Jackson National has reserved the right to defer payment for a withdrawal or
transfer from the guaranteed accounts and the indexed fixed account option 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 divisions 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. Unless you tell us otherwise, amounts in an
indexed fixed account option will be applied in payments from the guaranteed
accounts.
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 DIVISIONS. If you choose to have any portion of
your income payments come from the investment division(s), the dollar amount of
your payment will depend upon three things:
1. the value of your contract in the investment division(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 divisions you selected.
Jackson National calculates the dollar amount of the first income payment that
you receive from the investment divisions. We then use that amount to determine
the number of annuity units that you hold in each investment division. The
amount of each subsequent income payment is determined by multiplying the number
of annuity units that you hold in an investment division by the annuity unit
value for that investment division.
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<PAGE>
The number of annuity units that you hold in each investment division does not
change unless you reallocate your contract value among the investment divisions.
The annuity unit value of each investment division 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. If the
beneficiary does not want to receive the payments, a single lump sum may be
requested, which will be equal to the present value of the remaining payments
(as of the date of proof of death) discounted at the assumed investment rate for
a variable annuity payout option.
Option 4 - Income for a Specified Period. This income option provides
monthly payments for any number of years from 5 to 30. However, you may elect to
receive a single lump sum payment which will be equal to the present value of
the remaining payments (as of the date of proof of death) discounted at the
assumed investment rate for a variable annuity payout option.
Additional Options - Other income options may be made available by Jackson
National.
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.
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
----------
* (4% if the owner is age 70 or older at the date of issue)
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<PAGE>
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.
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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 the tax-deferral that is provided by the contract or the
qualified plan). 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 investment in the contract 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.
A qualified contract will not provide any necessary or additional tax deferral
if it is used to fund a qualified plan that is tax deferred. However, the
contract has features and benefits other than tax deferral that may make it an
appropriate investment for a qualified plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a qualified contract.
WITHDRAWALS - NON-QUALIFIED CONTRACTS. If you make a withdrawal from your
contract, the Code generally treats the withdrawal as first coming from earnings
and then from your premium payments. Withdrawn earnings are includible in
income. Additional information is provided in the SAI
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
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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 Treasury 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
divisions. 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
divisions, to make transfers among the investment divisions or the number and
type of investment divisions 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 the JNL/First Trust the DowSM Target 10 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 (ten) 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
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<PAGE>
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 divisions. 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 divisions from the guaranteed
accounts or any of the other investment divisions. This theoretically gives you
a lower average cost per unit over time than you would receive if you made a one
time purchase. The more volatile investment divisions may not result in lower
average costs and such divisions may not be an appropriate source of dollar cost
averaging transfers in volatile markets. 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 divisions 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. You may return your contract to the selling agent or Jackson National
within twenty days after receiving it. Jackson National will return the contract
value in the investment divisions plus any fees and expenses deducted from the
premiums allocated to the investment divisions plus the full amount of premiums
you allocated to the guaranteed accounts and the indexed fixed account option.
We will determine the contract value in the investment divisions as of the date
you mail the contract to us or the date you return it to the selling agent.
Jackson National will return premium payments where required by law.
ADVERTISING. From time to time, Jackson National may advertise several types of
performance for the investment divisions.
o Total return is the overall change in the value of an investment in an
investment division 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 division, 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 division.
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.
LEGAL PROCEEDINGS. Jackson National has been named as a defendant in civil
litigation proceedings substantially similar to other litigation brought against
many life insurers alleging misconduct in the sale of insurance products. These
matters are sometimes referred to as market conduct litigation. The litigation
against JNL purports to include purchasers of certain life insurance and annuity
products from JNL during the period from 1981 to present. JNL has retained
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national and local counsel experienced in the handling of such litigation, and
is vigorously defending these actions. A favorable outcome is anticipated, and
at this time it is not feasible to make a meaningful estimate of the amount or
range of loss that could result from an unfavorable outcome in such actions. In
addition, JNL is a defendant in several individual actions that involve similar
issues, including an August 1999 verdict against JNL for $32.5 million in
punitive damages. JNL has appealed the verdict on the basis that it is not
supported by the facts or the law, and a ruling reversing the judgment is being
sought.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
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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 ................................................10
Income Payments; Net Investment Factor ....................................20
Financial Statements ......................................................22
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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 division 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 period ended December 31, 1999 have been
audited by KPMG LLP, independent accountants. The Separate Account's financial
statements for the periods ended December 31, 1998, 1997, 1996 and 1995, 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 DIVISIONS DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995(A)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JNL/Alger Growth Division
Accumulation unit value:
Beginning of period $19.86 $13.82 $11.11 $9.93 $10.00
End of period $26.20 $19.86 $13.82 $11.11 $9.93
Accumulation units outstanding
at the end of period 12,779,325 7,704,990 5,908,446 3,310,810 12,285
JNL/Alliance Growth Division
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/Eagle Core Equity Division
Accumulation unit value:
Beginning of period $15.77 $13.72 $10.52 $10.00 N/A(c)
End of period $19.21 $15.77 $13.72 $10.52 N/A(c)
Accumulation units outstanding
at the end of period 3,154,438 1,829,363 766,516 84,895 N/A(c)
JNL/Eagle SmallCap Equity Division
Accumulation unit value:
Beginning of period $13.98 $14.00 $11.12 $10.00 N/A(c)
End of period $16.44 $13.98 $14.00 $11.12 N/A(c)
Accumulation units outstanding
at the end of period 3,152,948 2,274,545 857,946 71,014 N/A(c)
JNL/Janus Aggressive Growth Division
Accumulation unit value:
Beginning of period $20.62 $13.26 $11.95 $10.20 $10.00
End of period $39.54 $20.62 $13.26 $11.95 $10.20
Accumulation units outstanding
at the end of period 13,399,786 6,839,305 5,371,379 2,355,530 4,008
JNL/Janus Balanced Division
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>
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT DIVISIONS DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995(A)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JNL/Janus Capital Growth Division
Accumulation unit value:
Beginning of period $17.94 $13.46 $11.87 $10.34 $10.00
End of period $39.66 $17.94 $13.46 $11.87 $10.34
Accumulation units outstanding
at the end of period 12,048,149 5,849,883 5,132,743 2,985,668 1,587
JNL/Janus Global Equities Division
Accumulation unit value:
Beginning of period $19.92 $15.93 $13.57 $10.48 $10.00
End of period $32.33 $19.92 $15.93 $13.57 $10.48
Accumulation units outstanding
at the end of period 15,866,078 11,242,198 9,067,277 3,090,234 4,778
JNL/J.P. Morgan Enhanced S&P 500(R) Division
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/Putnam Growth Division (d)
Accumulation unit value:
Beginning of period $21.13 $15.88 $13.22 $10.58 $10.00
End of period $26.96 $21.13 $15.88 $13.22 $10.58
Accumulation units outstanding
at the end of period 14,056,305 8,348,592 5,207,294 1,682,604 571
JNL/Putnam International Equity Division (e)
Accumulation unit value:
Beginning of period $13.46 $11.94 $11.78 $10.49 $10.00
End of period $17.53 $13.46 $11.94 $11.78 $10.49
Accumulation units outstanding
at the end of period 5,507,406 4,828,701 4,406,642 2,039,430 3,096
JNL/Putnam Midcap Growth Division
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/Putnam Value Equity Division (d)
Accumulation unit value:
Beginning of period $17.29 $15.59 $12.98 $10.59 $10.00
End of period $16.87 $17.29 $15.59 $12.98 $10.59
Accumulation units outstanding
at the end of the period 16,357,203 10,899,898 6,925,507 1,330,288 3,944
JNL/S&P Conservative Growth Division I
Accumulation unit value:
Beginning of period $10.36 $10.00 N/A(f) N/A(f) N/A(f)
End of period $12.21 $10.36 N/A(f) N/A(f) N/A(f)
Accumulation units outstanding
at the end of period 5,873,298 967,674 N/A(f) N/A(f) N/A(f)
JNL/S&P Moderate Growth Division I
Accumulation unit value:
Beginning of period $10.52 $10.00 N/A(f) N/A(f) N/A(f)
End of period $13.15 $10.52 N/A(f) N/A(f) N/A(f)
Accumulation units outstanding
at the end of period 8,312,453 1,198,566 N/A(f) N/A(f) N/A(f)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT DIVISIONS DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995(A)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JNL/S&P Aggressive Growth Division I
Accumulation unit value:
Beginning of period $10.77 $10.00 N/A(f) N/A(f) N/A(f)
End of period $14.38 $10.77 N/A(f) N/A(f) N/A(f)
Accumulation units outstanding
at the end of period 2,790,656 410,888 N/A(f) N/A(f) N/A(f)
JNL/S&P Very Aggressive Growth Division I
Accumulation unit value:
Beginning of period $11.07 $10.00 N/A(f) N/A(f) N/A(f)
End of period $16.25 $11.07 N/A(f) N/A(f) N/A(f)
Accumulation units outstanding
at the end of period 1,438,910 220,495 N/A(f) N/A(f) N/A(f)
JNL/S&P Equity Growth Division I
Accumulation unit value:
Beginning of period $10.53 $10.00 N/A(f) N/A(f) N/A(f)
End of period $14.87 $10.53 N/A(f) N/A(f) N/A(f)
Accumulation units outstanding
at the end of period 3,994,657 478,149 N/A(f) N/A(f) N/A(f)
JNL/S&P Equity Aggressive Growth Division I
Accumulation unit value:
Beginning of period $10.64 $10.00 N/A(f) N/A(f) N/A(f)
End of period $15.24 $10.64 N/A(f) N/A(f) N/A(f)
Accumulation units outstanding
at the end of period 1,183,888 304,127 N/A(f) N/A(f) N/A(f)
PPM America/JNL Balanced Division (d)
Accumulation unit value:
Beginning of period $14.31 $13.19 $11.29 $10.34 $10.00
End of period $14.10 $14.31 $13.19 $11.29 $10.34
Accumulation units outstanding
at the end of period 9,940,416 6,574,171 4,486,973 2,120,529 12,871
PPM America/JNL High Yield Bond Division
Accumulation unit value:
Beginning of period $13.06 $12.75 $11.26 $10.11 $10.00
End of period $13.02 $13.06 $12.75 $11.26 $10.11
Accumulation units outstanding
at the end of period 9,672,921 7,350,674 4,711,051 1,147,840 100
PPM America/JNL Money Market Division
Accumulation unit value:
Beginning of period $11.12 $10.74 $10.37 $10.03 $10.00
End of period $11.48 $11.12 $10.74 $10.37 $10.03
Accumulation units outstanding
at the end of period 11,491,181 4,713,958 3,855,123 2,193,176 14,608
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT DIVISIONS DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995(A)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Salomon Brothers/JNL Global Bond Division
Accumulation unit value:
Beginning of period $12.94 $12.80 $11.74 $10.41 $10.00
End of period $12.99 $12.94 $12.80 $11.74 $10.41
Accumulation units outstanding
at the end of the period 3,970,746 3,166,154 2,603,857 911,885 3,128
Salomon Brothers/JNL U.S. Government & Quality Bond Division
Accumulation unit value:
Beginning of period $12.00 $11.12 $10.33 $10.21 $10.00
End of period $11.53 $12.00 $11.12 $10.33 $10.21
Accumulation units outstanding
at the end of period 7,963,550 5,006,001 2,090,575 902,055 1,275
T. Rowe Price/JNL Established Growth Division
Accumulation unit value:
Beginning of period $20.14 $15.99 $12.53 $10.36 $10.00
End of period $24.19 $20.14 $15.99 $12.53 $10.36
Accumulation units outstanding
at the end of period 14,057,518 10,399,047 7,218,789 2,500,896 10,564
T. Rowe Price/JNL Mid-Cap Growth Division
Accumulation unit value:
Beginning of period $17.58 $14.68 $12.59 $10.37 $10.00
End of period $21.50 $17.58 $14.68 $12.59 $10.37
Accumulation units outstanding
at the end of period 11,658,193 9,941,003 8,031,753 3,585,051 5,120
T. Rowe Price/JNL Value Division
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 Division
Accumulation unit value:
Beginning of period $10.00 N/A(g) N/A(g) N/A(g) N/A(g)
End of period $8.67 N/A(g) N/A(g) N/A(g) N/A(g)
Accumulation units outstanding
at the end of period 898,160 N/A(g) N/A(g) N/A(g) N/A(g)
</TABLE>
(a) The Separate Account commenced operations on October 16, 1995.
(b) These investment divisions had not commenced operations as of December 31,
1999.
(c) The JNL/Eagle Core Equity Division and the JNL/Eagle SmallCap Equity
Division commenced operations on September 16, 1996.
(d) Prior to May 1, 1997, the JNL/Putnam Growth Division was the JNL/Phoenix
Investment Counsel Growth Division and the management fee was .90%, the
JNL/Putnam Value Equity Division was the PPM America/JNL Value Equity
Division and the management fee was .75%; and the PPM America/JNL Balanced
Division was the JNL/Phoenix Investment Counsel Balanced Division and the
management fee was .90%.
(e) Prior to May 1, 2000, the JNL/Putnam International Equity Division was the
T. Rowe Price/JNL International Equity Investment Division and the
management fee was 1.08%.
(f) The JNL/S&P Conservative Growth Division I commenced operations on April 9,
1998, the JNL/S&P Moderate Growth Division I commenced operations on April
8, 1998, the JNL/S&P Aggressive Growth Division I commenced operations on
April 8, 1998, the JNL/S&P Very Aggressive Growth Division I commenced
operations on April 1, 1998, the JNL/S&P Equity Growth Division I commenced
operations on April 13, 1998, and the JNL/S&P Equity Aggressive Growth
Division I commenced operations on April 15, 1998.
(g) Each of the JNL/First Trust The Dow(SM) Target 10 Division commenced
operations on July 2, 1999.
<PAGE>
THIS IS NOT PART OF THE PROSPECTUS
PRODUCT BROCHURE FOR THE INDEXED FIXED OPTION OF THE PERSPECTIVE FIXED AND
VARIABLE ANNUITY (R)
This Product Brochure is a summary of some of the more important points that you
should consider and know before allocating new premiums or eligible earnings
from the Guaranteed Account Options or Investment Divisions (Portfolio Options)
to the Indexed Fixed Option. The Indexed Fixed Option provides minimum
guaranteed values. The Indexed Fixed Option Values may exceed the minimum
guaranteed values. You should know the minimum guaranteed value and understand
the provisions of the endorsement that are used to determine the potential
additional interest credited to the Indexed Fixed Option. The following is a
summary explanation of the determination of the minimum guaranteed values and
the principal features relating to the Indexed Fixed Option. JNL(R) offers other
equity-indexed annuity products that offer different product features, benefits
and charges, including Contract minimum guarantees, withdrawal privileges,
Contract options, withdrawal charges and index participation rates. The Indexed
Fixed Option may also be an available feature of other JNL variable annuity
contracts. Please contact your Financial Representative and select the product
that is right for you.
I. THE INDIVIDUAL DEFERRED VARIABLE AND FIXED ANNUITY CONTRACT
The Perspective Fixed and Variable Annuity is intended for retirement savings or
other long-term savings. The Contract, including the Indexed Fixed Option,
provides a means for allocating premium payments and/or earnings among the
Contract options on a tax-deferred basis.
II. INDEXED FIXED OPTION
Amounts allocated to the Indexed Fixed Option are guaranteed a minimum 3% annual
interest (Indexed Fixed Option Minimum Value) less a withdrawal charge, if
applicable. The Indexed Fixed Option offers a return linked to the S&P 500(R)
Composite Stock Price Index calculated at the end of the 9-year Indexed Fixed
Option period. For an Indexed Fixed Option period, JNL declares an Index
Participation Rate (IPR) that is guaranteed to remain the same for the duration
of such period. The IPR is the percentage of any increase in the S&P 500 Index
that will be credited at the end of an Indexed Fixed Option period. The increase
is calculated by comparing the index price at the beginning of the Indexed Fixed
Option period to the index price averaged over the final 52 Index Determination
Dates (IDDs) of an Indexed Fixed Option period. The ending index price is the
average of 52 S&P 500 Index prices rather than the actual index price on a
specified date. (For example, if, after averaging, the S&P 500 Index is up 110%
at the end of the period and your IPR is 70%, your total return would be 77%).
IF THE INDEX PRICE CHANGE IS DETERMINED FOR A PERIOD OF ONE YEAR OR LESS, ALL OF
THE IDDS IN THE PERIOD WILL BE USED TO DETERMINE THE ENDING AVERAGE INDEX PRICE.
Index Determination Dates are each Friday that the JNL Service Center and the
New York Stock Exchange are open for business. If either is closed on a Friday,
the Index Determination Date will be the next Business Day.
Please note that the S&P 500 Index does not include the payment or reinvestment
of dividends in the calculation of its price changes.
The Indexed Fixed Option interest credited at the end of the Indexed Fixed
Option period, or distribution due to the Owner's death before the Annuity Date,
will be the greater of:
(a) The IPR for the period multiplied by the increase in the S&P 500 Index using
the index price at the beginning of the Indexed Fixed Option period compared to
the index price averaged over the final 52 IDDs (or all of the IDDs since the
beginning of the period, if fewer than 52),or
(b) Three percent (3%) per year.
NOT FDIC INSURED o MAY LOSE VALUE o NO BANK GUARANTEE
VADV 57755 B 06/00
<PAGE>
Transactions involving allocations to the Indexed Fixed Option and automatic
transfers out of the Indexed Fixed Option period at the end of such period are
only permitted on Index Determination Dates. All other transactions may be
processed on any date.
THE INDEXED FIXED OPTION CREDITED INTEREST ON A DISTRIBUTION TAKEN AT ANY TIME
OTHER THAN THE END OF THE INDEXED FIXED OPTION PERIOD OR DUE TO THE OWNER'S
DEATH, WILL BE THREE PERCENT (3%) PER ANNUM. Such distributions may also be
subject to the Indexed Fixed Option Withdrawal Charge.
TRANSFERS OUT OF AN INDEXED FIXED OPTION ARE NOT PERMITTED UNTIL THE END OF THE
INDEXED FIXED OPTION PERIOD. TRANSFERS UNDER ANY DOLLAR-COST AVERAGING OR
PORTFOLIO REBALANCING PROGRAMS ARE NOT PERMITTED FROM OR TO THE INDEXED FIXED
OPTION.
At the end of the Indexed Fixed Option period, JNL will automatically transfer
the Indexed Fixed Option Value to the one-year Guaranteed Account Option, where
it will remain until you otherwise notify JNL.
III. ACCESS TO YOUR MONEY
You can take money out of the Contract at any time prior to the Annuity Date.
Withdrawals of all or a portion of the amounts in an Indexed Fixed Option made
prior to the end of such period are subject to an Indexed Fixed Option
Withdrawal Charge (see chart below).
--------------------------------------------------------------------------------
COMPLETED YEARS SINCE ALLOCATION
TO INDEXED FIXED OPTION 0 1 2 3 4 5 6 7 8 9
--------------------------------------------------------------------------------
WITHDRAWAL CHARGE PERCENTAGE
APPLIED TO THE ALLOCATED
AMOUNT WITHDRAWN 7% 6% 5% 4% 3% 2% 1% 0% 0% 0%
--------------------------------------------------------------------------------
Amounts in the Indexed Fixed Option are excluded in determining the Contingent
Deferred Sales Charge and the amount available for the Additional Free
Withdrawal.
Any endorsement of the Contract waiving the Contingent Deferred Sales Charge
will not apply to the Indexed Fixed Option Withdrawal Charge.
Amounts in an Indexed Fixed Option will be the last amounts available for
withdrawal from the Contract. Withdrawals will first be taken from the other
Contract options prior to any amounts being withdrawn from Indexed Fixed
Options. If multiple Indexed Fixed Options are in effect, any amounts withdrawn
from Indexed Fixed Options will be taken from the Indexed Fixed Option periods
on a first-in, first-out basis.
JNL will waive Indexed Fixed Option Withdrawal Charges for the annual Required
Minimum Distribution (RMD)from the Contract for Owners over age 70 1 /2, if it
is necessary to withdraw funds from the Indexed Fixed Options. However, if the
Owner should request an amount greater than the RMD for this Contract, the
entire withdrawal from the Indexed Fixed Option will be subject to the Indexed
Fixed Option Withdrawal Charge. Any withdrawal during an Indexed Fixed Option
period, including an RMD, is based on the Indexed Fixed Option Minimum Value.
IV. HYPOTHETICAL ILLUSTRATION DEMONSTRATING THE ANNUITY CONTRACT MECHANICS
This hypothetical illustration assumes a $10,000 allocation made on 12/31/90
(index price = 330.22) to the 9-year Indexed Fixed Option period, an 85% Index
Participation Rate, and historical S&P 500 Index price changes. Please note that
this illustration is not guaranteed by JNL and should not be deemed a
representation of future index changes on any Indexed Fixed Option.
<PAGE>
WITHDRAWAL VALUES
9-YEAR INDEXED FIXED OPTION
--------------------------------------------------------------------------------
INDEXED FIXED INDEXED FIXED
BEGINNING OPTION MINIMUM OPTION WITHDRAWAL
OF YEAR VALUE CHARGE PERCENTAGE WITHDRAWAL VALUE
------------------ -------------------- -------------------- -----------------
1 10,000.00 7% 9,300.00
2 13,300.00 6% 9,700.00
3 10,609.00 5% 10,109.00
4 10,927.27 4% 10,527.27
5 11,255.09 3% 10,955.09
6 11,592.74 2% 11,392.74
7 11,940.52 1% 11,840.52
8 12,298.74 0% 12,298.74
9 12,667.70 0% 12,667.70
--------------------------------------------------------------------------------
END OF PERIOD VALUES
--------------------------------------------------------------------------------
INDEX
BEGINNING AVERAGED CHANGE IN INDEXED FIXED FIXED OPTION WITHDRAWAL
OF YEAR INDEX PRICE INDEX PRICE OPTION VALUE MINIMUM VALUE VALUE
--------------------------------------------------------------------------------
10 1331.50 303.20% 35,773.36 13,047.73 35,773.36
--------------------------------------------------------------------------------
V. ANNUITY OPTIONS (ANNUITY PAYMENTS)
(Each description assumes that you are the Owner and Annuitant.)
OPTION 1 - LIFE INCOME. This Annuity Option provides monthly payments for your
life.
OPTION 2 - JOINT AND SURVIVOR ANNUITY. This Annuity 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 MONTHS PERIOD CERTAIN. This Annuity
Option provides monthly payments for your life, but with payments continuing to
your beneficiary for the remainder of 10 or 20 years (as you select) if you die
before the end of the selected period.
OPTION 4 - INCOME FOR A SPECIFIED PERIOD. This Annuity Option provides monthly
payments for any number of years from 5 to 30.
The actuarial basis for Options 1, 2 and 3 in the Table of Annuity Options will
be the Annuity 2000 Mortality Table, with interest at 4.5%, and a 2% expense
load. The values shown for Option 4 in the Table of Annuity Options are based on
interest at 3%, without an expense load. Applicable premium taxes are not
included in the Table of Annuity Options.
VI. DEATH BENEFIT AMOUNT BEFORE THE ANNUITY DATE
In determining the amount payable as a death benefit before the Annuity Date,the
amount attributable to any Indexed Fixed Option will be the sum of the Indexed
Fixed Option Values on the IDD immediately preceding the date that JNL receives
a request for payment that is in Good Order.
<PAGE>
VII. APPLICATION AND ALLOCATION PROCESSING
Upon receipt of the application in Good Order, if applicable, and premium at the
JNL Service Center, JNL will initially place such premium designated for the
Indexed Fixed Option into the general account where it will be credited with
interest at the same rate as credited to the one-year Guaranteed Account Option.
On the IDD occurring immediately subsequent to such premium placement, JNL will
transfer the premium and any earned interest to the Indexed Fixed Option.
When you request a transfer of eligible earnings from Guaranteed Account Options
or Investment Divisions (Options) to the Indexed Fixed Option, the money is
first held in the general account and credited with interest at the same rate as
credited to the one-year Guaranteed Account Option until the next IDD. On that
IDD, the amount is transferred to the Indexed Fixed Option. Transfers from a
Guaranteed Account Option may be subject to an Interest Rate Adjustment.
VIII. OTHER INFORMATION
REMEMBER,THE FINAL DECISION ON THE SELECTION OF A CONTRACT OPTION IS YOURS,
BASED UPON YOUR INDIVIDUAL SITUATION, NEEDS, AND GOALS. HISTORICAL S&P 500 INDEX
PRICE CHANGES SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE CHANGES. JNL
DOES NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN. THE INDEXED FIXED OPTION MAY NOT BE
AVAILABLE IN ALL STATES. "S&P 500" is a trademark of The McGraw-Hill
Companies,Inc. and has been licensed for use by Jackson National Life(R). The
product is not sponsored, endorsed, sold or promoted by Standard & Poor's, and
Standard & Poor's makes no representation regarding the advisability of
purchasing the product.
VADV 5775 B 06/00
