As filed with the Securities and Exchange Commission on April 28, 2000
1933 Act Registration No. 33-87244
1940 Act Registration No. 811-8894
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
----
Post-Effective Amendment No. 20 [X]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 21 [X]
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JNL SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
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5901 Executive Drive, Lansing, Michigan 48911
(Address of Principal Executive Offices) (Zip Code)
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Registrant's Telephone Number, including Area Code: (517) 394-3400
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Thomas J. Meyer, Esq. with a copy to:
JNL Series Trust
Vice President & Counsel Blazzard, Grodd & Hasenauer P.C.
5901 Executive Drive P.O. Box 5108
Lansing, Michigan 48911 Westport, Connecticut 06881
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
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X on May 1, 2000 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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on (date)pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of Rule 485.
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This post-effective amendment designates a new effective date for a
- --- previously filed post-effective amendment.
<PAGE>
JNL SERIES TRUST
REFERENCE TO ITEMS REQUIRED BY FORM N-1A
Caption in Prospectus or
Statement of Additional
Information relating to
N-1A Item each Item
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Part A. Information Required in a Prospectus Prospectus
- ------- ------------------------------------ ----------
1. Front and Back Cover Pages Front and Back Cover Pages
2. Risk/Return Summary: Investments, About the Series of the Trust
Risks, and Performance
3. Risk/Return Summary: Fee Table Not Applicable
4. Investment Objectives, Principal About the Series of the Trust
Investment Strategies, and Related Risks
5. Management's Discussion of Fund Not Applicable
Performance
6. Management, Organization and Capital Management of the Trust;
Structure About the Series of the Trust
7. Shareholder Information Investment of Trust Shares;
Share Redemption; Tax Status
8. Distribution Arrangements Not Applicable
9. Financial Highlights Information Financial Highlights
Information Required in a Statement Statement of
Part B. of Additional Information Additional Information
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10. Cover Page and Table Of Contents Cover Page and Table of Contents
11. Fund History General Information and History
12. Description of the Fund and Its Common Types of Investments and
Investments and Risks Management Practices; Additional
Risk Considerations; Investment
Restrictions Applicable to All
Series
13. Management of the Fund Management of the Trust
14. Control Persons and Principal Holders Management of the Trust
of Securities
15. Investment Advisory and Other Services Investment Advisory and Other
Services
16. Brokerage Allocation and Other Practices Investment Advisory and Other
Services
17. Capital Stock and Other Securities Purchases, Redemptions and
Pricing of Shares; Additional
Information
18. Purchase, Redemption and Pricing of Purchases, Redemptions and
Shares Pricing of Shares
19. Taxation of the Fund Tax Status
20. Underwriters Not Applicable
21. Calculation of Performance Data Performance
22. Financial Statements Financial Statements
Part C.
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Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Amendment to the Registration Statement.
<PAGE>
JNL(R) SERIES TRUST
<PAGE>
PROSPECTUS
May 1, 2000
JNL(R) SERIES TRUST
5901 Executive Drive o Lansing, Michigan 48911
This Prospectus provides you with the basic information you should know before
investing in the JNL Series Trust (Trust).
The shares of the Trust are sold to life insurance company separate accounts to
fund the benefits of variable annuity contracts and variable life insurance
policies. Shares of the Trust may also be sold directly to qualified retirement
plans. The Trust currently offers shares in the following separate Series, each
with its own investment objective.
<PAGE>
JNL/Alger Growth Series
JNL/Alliance Growth Series
JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
JNL/J.P. Morgan Enhanced S&P 500 Stock Index Series
JNL/J.P. Morgan International & Emerging Markets Series
JNL/Janus Aggressive Growth Series
JNL/Janus Balanced Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series
JNL/Janus Growth & Income Series
JNL/PIMCO Total Return Bond 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
JNL/S&P Conservative Growth Series II
JNL/S&P Moderate Growth Series II
JNL/S&P Aggressive Growth Series II
JNL/S&P Very Aggressive Growth Series II
JNL/S&P Equity Growth Series II
JNL/S&P Equity Aggressive Growth Series II
JNL/S&P Conservative Growth Series
JNL/S&P Moderate Growth Series
JNL/S&P Aggressive Growth Series
JNL Enhanced Intermediate Bond Index Series
JNL International Index Series
JNL Russell 2000 Index Series
JNL S&P 500 Index Series
JNL S&P MidCap Index Series
Lazard/JNL Mid Cap Value Series
Lazard/JNL Small Cap Value Series
PPM America/JNL Balanced Series
PPM America/JNL High Yield Bond Series
PPM America/JNL Money Market Series
Salomon Brothers/JNL Balanced Series
Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL High Yield 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
<PAGE>
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
TRUST'S SECURITIES, OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR
COMPLETE. IT IS A CRIMINAL OFFENSE TO STATE OTHERWISE.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500", "S&P
MidCap 400 Index" and "Standard & Poor's 400 Index" are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Jackson National
Life Insurance Company. The JNL/J.P. Morgan Enhanced S&P 500 Stock Index Series,
JNL S&P 500 Index Series and JNL S&P MidCap Index Series are 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. Among the
fund options considered are index funds based on the S&P 500 and other indexes
that are published by S&P's affiliate. This affiliate typically receives license
fees from the issuers of such funds, some of which may be based on the amount of
assets invested in the fund. Please see the Statement of Additional Information
which sets forth certain additional disclaimers and limitations of liabilities
on behalf of S&P.
For more detailed information about the Trust and the Series, see the Trust's
Statement of Additional Information (SAI), which is incorporated by reference
into this prospectus.
---------------
<PAGE>
TABLE OF CONTENTS
I. ABOUT THE SERIES OF THE TRUST
INCLUDES A DESCRIPTION OF EACH SERIES, ITS INVESTMENT STRATEGIES AND
PRINCIPAL RISKS; HISTORIC PERFORMANCE; HIGHEST AND LOWEST PERFORMING
QUARTERS; PERFORMANCE MEASURED AGAINST A RELEVANT BENCHMARK; AND MANAGEMENT
OF THE SERIES.
II. MANAGEMENT OF THE TRUST
MANAGEMENT OF THETRUST;ADMINISTRATIVE FEE; INVESTMENT IN TRUST SHARES;
SHARE REDEMPTION; AND TAX STATUS.
III. FINANCIAL HIGHLIGHTS
THE FINANCIAL HIGHLIGHTS TABLES WILL HELP YOU UNDERSTAND A SERIES'
FINANCIAL PERFORMANCE FOR THE PAST FIVE YEARS, OR FOR THE SHORTER LIFE OF
THE SERIES.
<PAGE>
ABOUT THE SERIES OF THE TRUST
JNL/ALGER GROWTH SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/Alger Growth Series is
long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing at least 65% in a diversified portfolio of equity securities - common
stock, preferred stock, and securities convertible into or exchangeable for
common stock - of large, companies which trade on U.S. exchanges or in the U.S.
over-the-counter market. The Series considers a large company to be one that, at
the time its securities are acquired by the Series, has a market capitalization
of $1 billion or more. These companies typically have broad product lines,
markets, financial resources and depth of management.
To provide flexibility to take advantage of investment opportunities, the Series
may hold a portion of its assets in money market investments and repurchase
agreements.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in U.S. traded equity securities,
it is subject to stock market risk. Stock prices typically fluctuate more
than the values of other types of securities, typically in response to
changes in the particular company's financial condition and factors
affecting the market in general. For example, unfavorable or unanticipated
poor earnings performance of the company may result in a decline in its
stock's price, and a broad-based market drop may also cause a stock's price
to fall.
o Growth investing risk. Growth companies usually invest a high portion of
earnings in their businesses, and may lack the dividends of value stocks
that can cushion prices in a falling market. Also, earnings disappointments
often lead to sharp declines in prices because investors buy growth stocks
in anticipation of superior earnings growth.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
13.41% 26.20% 45.66% 33.80%
[Insert Chart]
1996 1997 1998 1999
During the period covered, the Series' highest quarterly return was 25.65% (4th
quarter of 1998) and its lowest quarterly return was -7.37% (3rd quarter of
1998).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/Alger Growth Series 33.80% 27.08%
S&P 500 Index 21.04% 26.67%
The S&P 500 Index is a broad-based, unmanaged index. * The Series began
operations on October 16, 1995.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
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ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
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Management/Administrative Fee 1.07%
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Other Expenses 0%
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Total Series Annual Operating Expenses 1.07%
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EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
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EXPENSE EXAMPLE
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1 Year $109
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3 Years $340
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5 Years $590
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10 Years $1,306
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ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series may take a temporary, defensive position by
investing up to all of its assets in debt securities (typically of a high
grade), cash equivalents and repurchase agreements. Taking a defensive position
may reduce the potential for appreciation in the Series' portfolio.
The Series may actively trade securities in seeking to achieve its objective.
Doing so may increase transaction costs, which may reduce performance.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Alger Growth
Series is Fred Alger Management, Inc. (Alger Management), which is located at 1
World Trade Center, Suite 9333, New York, New York 10048. Alger Management is
generally engaged in the business of rendering investment advisory services to
institutions and, to a lesser extent, individuals and has been so engaged since
1964.
David D. Alger, President and Chief Investment Officer of Alger Management, is
primarily responsible for the day-to-day management of the Series. He has been
employed by Alger Management as Executive Vice President and Director of
Research since 1971, and as President since 1995. He serves as portfolio manager
for other mutual funds and investment accounts managed by Alger Management.
Ronald Tartaro also participates in the management of the Series. Mr. Tartaro
has been employed by Alger Management as a senior research analyst since 1990
and as a Senior Vice President since 1995. Mr. Alger and Mr. Tartaro have had
responsibility for the day-to-day management of the Series since the inception
of the Series.
<PAGE>
JNL/ALLIANCE GROWTH SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/Alliance Growth Series
is long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing primarily in a diversified portfolio of common stocks or securities
with common stock characteristics that the sub-adviser believes have the
potential for capital appreciation, which include securities convertible into or
exchangeable for common stock. In selecting equity securities, the sub-adviser
considers a variety of factors, such as an issuer's current and projected
revenue, earnings, cash flow and assets, as well as general market conditions.
Because the Series holds securities selected for growth potential rather than
protection of income, the value of the Series' portfolio may be more volatile in
response to market changes than it would be if the Series held income-producing
securities.
The Series invests primarily in high-quality U.S. companies, generally those of
large market capitalization. The Series may invest a portion of its assets in
foreign securities. The potential for appreciation of capital is the basis for
investment decisions. Whatever income the Series' investments generate is
incidental to the objective of capital growth.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. and foreign
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically in
response to changes in the particular company's financial condition and
factors affecting the market in general. For example, unfavorable or
unanticipated poor earnings performance of the company may result in a
decline in its stock's price, and a broad-based market drop may also cause
a stock's price to fall.
o Growth investing risk. Growth companies usually invest a high portion of
earnings in their businesses, and may lack the dividends of value stocks
that can cushion prices in a falling market. Also, earnings disappointments
often lead to sharp declines in prices because investors buy growth stocks
in anticipation of superior earnings growth.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others, adverse
fluctuations in foreign currency values as well as adverse political,
social and economic developments affecting a foreign country. In addition,
foreign investing involves less publicly available information and more
volatile or less liquid securities markets. Investments in foreign
countries could be affected by factors not present in the U.S., such as
restrictions on receiving the investment proceeds from a foreign country,
foreign tax laws, and potential difficulties in enforcing contractual
obligations. Transactions in foreign securities may be subject to less
efficient settlement practices, including extended clearance and settlement
periods. Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate more
than if it held only U.S. securities.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
28.23%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
17.69% (4th quarter of 1999) and its lowest quarterly return was -5.30% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/Alliance Growth Series 28.23% 33.64%
S&P 500 Index 21.04% 26.67%
The S&P 500 Index is a broad-based, unmanaged index. *The Series began
operations on March 2, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
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ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
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Management/Administrative Fee .88%
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Other Expenses 0%
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Total Series Annual Operating Expenses .88%
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EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
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EXPENSE EXAMPLE
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1 Year $89
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3 Years $279
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5 Years $485
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10 Years $1,078
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ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series may use derivative instruments, such as
futures contracts, options and forward currency contracts, for hedging and risk
management. These instruments are subject to transaction costs and certain
risks, such as unanticipated changes in securities prices and global currency
markets. The Series may take a temporary, defensive position by investing a
substantial portion of its assets in U.S. government securities, cash, cash
equivalents and repurchase agreements. Taking a defensive position may reduce
the potential for appreciation in the Series' portfolio. The Series may actively
trade securities in seeking to achieve its objective. Doing so may increase
transaction costs, which may reduce performance. The SAI has more information
about the Series' authorized investments and strategies, as well as the risks
and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Alliance
Growth Series is Alliance Capital Management L.P. (Alliance), with principal
offices at 1345 Avenue of the Americas, New York, New York 10105. Alliance is a
major international investment manager whose clients primarily are major
corporate employee benefit funds, investment companies, foundations, endowment
funds and public employee retirement systems.
James G. Reilly, Executive Vice President of Alliance, and Syed Hasnain, Senior
Vice President and Large Cap Growth Portfolio Manager of Alliance, share the
responsibility for the day-to-day management of the Series. Mr. Reilly joined
Alliance in 1984. Mr. Hasnain joined Alliance in 1993. Mr. Reilly has had
responsibility for the day-to-day management of the Series since the inception
of the Series. Mr. Hasnain has shared responsibility for the day-to-day
management of the Series since January 1999.
<PAGE>
JNL/EAGLE CORE EQUITY SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/Eagle Core Equity
Series is long-term capital appreciation and, secondarily, current income.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing at least 65% of total assets in a diversified portfolio of common
stock of U.S. companies that meet the criteria for one of three separate equity
strategies: the growth equity strategy, the value equity strategy and the equity
income strategy.
o Under the GROWTH EQUITY STRATEGY, the sub-adviser selects common stocks in
part based on its opinions regarding the sustainability of the company's
competitive advantage in the marketplace and the company's management team.
The sub-adviser looks for securities of companies which have an exceptional
management team and which have the potential to increase market share and
drive earnings per share growth. If a particular stock appreciates to over
5% of the total assets of the portfolio, the sub-adviser typically will
reduce the position to less than 5%. Generally, the sub-adviser will sell a
stock if its price appreciates to a level that the sub-adviser views as not
sustainable or to purchase stock that the sub-adviser believes presents a
better investment opportunity.
The sub-adviser seeks securities of companies which:
-- have projected earnings growth and return on equity
greater than 15%,
-- are dominant in their industries, and
-- have the ability to create and sustain a competitive
advantage.
o Under the VALUE EQUITY STRATEGY, the sub-adviser invests in securities
which it believes indicate above-average financial soundness and high
intrinsic value relative to price. The sub-adviser screens a universe of
over 2,500 companies. From this universe, the sub-adviser makes selections
based on its projections of the company's growth in earnings and dividends,
earnings momentum, and undervaluation based on a dividend discount model.
The sub-adviser develops target prices and value ranges from this analysis
and makes portfolio selection from among the top-rated securities. The
sub-adviser will typically sell a security if the security reaches its
target price, negative changes occur with respect to the issuer or its
industry, or there is a significant change in one or more of the four
characteristics applicable to the security's selection. However, the Series
may continue to hold equity securities that no longer meet the selection
criteria but that the sub-adviser deems suitable investments in view of the
Series' investment objective.
These securities or their respective issuers have at least one of the
following characteristics when acquired for the Series:
-- low price-to-earnings price-to-book value, price to
cash flow and price-to-sales ratios, as compared to the
broad market, industry peers and the company's
historical ratios
-- above average dividend yield , or
-- Beta below that of the broad market
o Under the EQUITY INCOME STRATEGY, the sub-adviser invests in
income-producing securities.
The sub-adviser divides the Series' assets among each of these three strategies,
with about 40% of the assets allocated to each of the growth equity and value
equity strategies and about 20% to the equity income strategy.
Under normal market conditions, the Series invests at least 65% of its assets in
the common stock of U.S. companies and may invest the balance in other
securities, such as common stock of foreign issuers, corporate debt obligations,
U.S. Government securities, preferred stock, convertible stock, warrants and
rights to buy common stock, real estate investment trusts, repurchase agreements
and money market instruments. Investing in foreign securities presents
additional risks, such as those related to currency fluctuations and adverse
political or economic conditions affecting a foreign country. Although the
Series emphasizes investment-grade securities (or unrated securities that the
sub-adviser deems to be of comparable quality), the Series may invest in
non-investment-grade securities. A non-investment grade security may fluctuate
more in value, and present a greater risk of default, than a higher-rated
security.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests primarily in stocks of U.S.
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall.
o Growth investing risk. Growth companies usually invest a high portion
of earnings in their businesses, and may lack the dividends of value
stocks that can cushion prices in a falling market. Also, earnings
disappointments often lead to sharp declines in prices because
investors buy growth stocks in anticipation of superior earnings
growth.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks. The
Series' sub-advisers must correctly predict the price movements,
during the life of a derivative, of the underlying asset in order to
realize the desired results from the investment. The value of
derivatives may rise or fall more rapidly than other investments,
which may increase the volatility of the Series depending on the
nature and extent of the derivatives in the Series' portfolio. If the
sub-adviser uses derivatives in attempting to manage or "hedge" the
overall risk of the portfolio, the strategy might not be successful,
for example, due to changes in the value of the derivatives that do
not correlate with price movements in the rest of the portfolio.
Valueinvesting risk. The value approach carries the risk that the
market will not recognize a security's intrinsic value for a long
time, or that a stock judged to be undervalued may actually be
appropriately priced.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
32.35% 16.54% 23.55%
[Insert Chart]
1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
18.43% (4th quarter of 1998) and its lowest quarterly return was -10.99% (3rd
quarter of 1998).
Average Annual Total Returns as of December 31,1999
1 year Life of Series*
JNL/Eagle Core Equity Series 23.55% 23.96%
S&P 500 Index 21.04% 28.10%
The S&P 500 Index is a broad-based, unmanaged index. * The Series began
operations on September 16, 1996.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 0.99%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 0.99%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $101
- --------------------------------------------------------------------------------
3 Years $315
- --------------------------------------------------------------------------------
5 Years $547
- --------------------------------------------------------------------------------
10 Years $1,213
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES.
The Series may also use derivative instruments, such as options, futures
contracts and indexed securities, which are subject to transaction costs and
certain risks, such as unanticipated changes in securities prices.
For temporary defensive purposes during actual or anticipated periods of general
market decline, the Series may invest up to 100% of its assets in high-grade
money market instruments, including U.S. Government securities, and repurchase
agreements secured by such instruments, as well as other high-quality debt
securities. Taking a defensive position may reduce the potential for
appreciation in the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Eagle Core
Equity Series is Eagle Asset Management, Inc. (Eagle), 880 Carillon Parkway, St.
Petersburg, Florida 33716. Eagle is a wholly owned subsidiary of Raymond James
Financial, Inc. Eagle and its affiliates provide a wide range of financial
services to retail and institutional clients.
In its capacity as sub-adviser, Eagle supervises and manages the investment
portfolio of the Series. Mr. Ashi Parikh, Managing Director and Portfolio
Manager, is responsible for the day-to-day management of the growth equity
strategy. Mr. Parikh joined Eagle in April 1999, after serving as Managing
Director at Banc One Investment Advisers in Columbus, Ohio. Mr. Ed Cowart,
Managing Director and Portfolio Manager, is responsible for the day-to-day
management of the value equity strategy. Mr. Cowart joined Eagle in August 1999,
after serving as Managing Director at Banc One Investment Advisors in Columbus,
Ohio. Mr. Lou Kirschbaum, Managing Director and Portfolio Manager and Mr. David
Blount, Portfolio Manager, as co-managers, are responsible for the day-to-day
management of the equity income strategy. They have been responsible for the
equity income strategy since the inception of the Series. Mr. Kirschbaum has
been with Eagle since 1986, and Mr. Blount joined Eagle in 1993.
<PAGE>
JNL/EAGLE SMALLCAP EQUITY SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/Eagle SmallCap Equity
Series is long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing 65% of its total assets in a diversified portfolio of equity
securities of domestic small capitalization companies, i.e., companies which, at
the time of purchase, typically have a market capitalization under $1 billion.
The sub-adviser employs a bottom-up approach to identify rapidly growing,
under-researched small capitalization companies that appear to be undervalued in
relation to their long term earnings growth rate or asset value. The sub-adviser
generally invests in companies which have accelerating earnings, reasonable
valuations strong management that participates in the ownership of the company,
reasonable debt, and a high or expanding return on equity. The Series' equity
holdings consist primarily of common stocks, but may also include preferred
stocks and investment grade securities convertible into common stocks and
warrants.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests primarily in stocks of
U.S. companies, it is subject to stock market risk. Stock prices
typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's
price to fall.
o Small cap investing. Investing in smaller, newer companies
generally involves greater risks than investing in larger, more
established ones. The companies in which the Series is likely to
invest have limited product lines, markets or financial
resources, or may depend on the expertise of a few people and may
be subject to more abrupt or erratic market movements than
securities of larger, more established companies or the market
averages in general. In addition, many small capitalization
companies may be in the early stages of development. Accordingly,
an investment in the Series may not be appropriate for all
investors.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
27.64% 1.18% 19.27%
[Insert Chart]
1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
29.40% (2nd quarter of 1999) and its lowest quarterly return was -23.92% (3rd
quarter of 1998).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/Eagle SmallCap Equity Series 19.27% 19.09%
Russell 2000 Index 21.35% 13.64%
The Russell 2000 Index is a broad-based, unmanaged index. * The Series began
operations on September 16, 1996.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.05%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.05%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $107
- --------------------------------------------------------------------------------
3 Years $334
- --------------------------------------------------------------------------------
5 Years $579
- --------------------------------------------------------------------------------
10 Years $1,283
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/Eagle SmallCap Equity Series may also invest in
American Depositary Receipts of U.S. traded foreign issuers, U.S. Government
securities, repurchase agreements and other short-term money market instruments.
For temporary, defensive purposes during actual or anticipated periods of
general market decline, the Series may invest up to 100% of its assets in
high-grade money market instruments, including U.S. Government securities, and
repurchase agreements secured by such instruments, as well as other high-quality
debt securities. Taking a defensive position may reduce the potential for
appreciation in the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Eagle
SmallCap Equity Series is Eagle Asset Management, Inc. (Eagle), 880 Carillon
Parkway, St. Petersburg, Florida 33716. Eagle and its affiliates provide a wide
range of financial services to retail and institutional clients.
Bert L. Boksen, Managing Director and Portfolio Manager of Eagle, is responsible
for the day-to-day management of the Series. Mr. Boksen joined Eagle in April
1995 and has portfolio management responsibilities for its small cap equity
accounts. Prior to joining Eagle, Mr. Boksen was employed for 16 years by
Raymond James & Associates, Inc. in its institutional research and sales
department. While employed by Raymond James & Associates, Inc., Mr. Boksen
served as co-head of Research, Chief Investment Officer and Chairman of the
Raymond James & Associates, Inc. Focus List Committee. Mr. Boksen has had
responsibility for the day-to-day management of the Series since the inception
of the Series.
<PAGE>
JNL/J.P. MORGAN ENHANCED S&P 500 STOCK INDEX SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/J.P. Morgan Enhanced
S&P 500 Stock Index Series is to provide high total return from a broadly
diversified portfolio of equity securities.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing primarily in a diversified portfolio of large- and
medium-capitalization U.S. companies. At least 65% of its total assets will be
invested, under normal market conditions, in stocks. The Series owns a large
number of stocks within the Standard & Poor's 500 Composite Stock Price Index
(S&P 500 Index), generally tracking the industry weighting of that Index. Within
each industry, the Series modestly overweights stocks that the sub-adviser
regards as undervalued or fairly valued and modestly underweights or does not
hold stocks that the sub-adviser determines are overvalued. By so doing, the
Series seeks returns that slightly exceed those of the S&P 500 Index over the
long term with virtually the same level of volatility. The Series' foreign
investments generally reflect the weightings of foreign securities in the S&P
500 Index.
In managing the JNL/J.P. Morgan Enhanced S&P 500 Stock Index Series,
the sub-adviser generally employs a three-step process:
(i) based on its in-house research, the sub-adviser takes an in-depth
look at company prospects over a relatively long period, often as much
as five years, rather than focusing on near-term expectations. This
approach is designed to provide insight into a company's real growth
potential.
(ii) the research findings allow the sub-adviser to rank the companies
in each industry group according to their relative value. These
valuation rankings are produced with the help of models that quantify
the research team's findings.
(iii) the sub-adviser buys and sells stocks for the Series according
to the policies of the Series based on the sub-adviser's research and
valuation rankings.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. and
foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's
price to fall.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .90%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .90%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $92
- --------------------------------------------------------------------------------
3 Years $287
- --------------------------------------------------------------------------------
5 Years $498
- --------------------------------------------------------------------------------
10 Years $1,108
- --------------------------------------------------------------------------------
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the returns since the inception of the
Series. Both the chart and the table assume reinvestment of dividends and
distributions. The Series' returns shown in the chart and table below do not
reflect the deduction of any charges that are imposed under a variable insurance
contract. Those charges, which are described in the variable insurance
prospectus, will reduce the Series' performance. As with all mutual funds, the
Series' past performance does not necessarily indicate how it will perform in
the future.
Total Return as of December 31, 1999 since inception (8/16/99) 6.85% [Insert
Chart] 1999
COMPARABLE PERFORMANCE
PRIVATE ACCOUNT PERFORMANCE COMPOSITE.
The JNL/J.P. Morgan Enhanced S&P 500 Stock Index Series has substantially
similar investment objectives, policies and investment strategies as certain
Private Accounts. Each of these Private Accounts is managed by J.P. Morgan
Investment Management Inc., the same Sub-Adviser which manages each of the
corresponding Series.
The historical performance of each of these Private Accounts is shown below.
This performance data should not be considered as an indication of future
performance of the Series. The Private Account performance figures shown below:
o do not reflect Contract fees or charges imposed by Jackson National
Life. Investors should refer to the separate account prospectus for
information describing the Contract fees and charges. These fees and
charges will have a detrimental effect on Series performance.
The Series and Private Accounts are expected to hold similar securities.
However, their investment results are expected to differ for the following
reasons:
o differences in asset size and cash flow resulting from purchases and
redemptions of Series shares may result in different security
selections
o differences in the relative weightings of securities
o differences in the price paid for particular portfolio holdings
o differences relating to certain tax matter
o differences in that such Accounts are not subject to certain
investment limitations, diversification requirements and other
restrictions imposed by federal tax and securities laws
However, the differences cited do not alter the conclusion that the funds have
substantially similar investment objectives, policies and strategies.
The chart below shows performance information derived from historical composite
performance of Private Accounts.
PRIVATE ACCOUNT
COMPOSITE PERFORMANCE FOR PERIODS ENDED 12/31/99
- -------------------------------------------------------------------------------
ANNUALIZED RETURNS AS OF DECEMBER 31, 1999
- -------------------------------------------------------------------------------
STRUCTURED STOCK SELECTION S&P 500 INDE
COMPOSITE
- ----------------------------------------------------- -------------------------
1 YEAR 18.80% 21.04%
- ----------------------------------------------------- -------------------------
3 YEARS 27.85% 27.56%
- ----------------------------------------------------- -------------------------
5 YEARS 28.85% 28.55%
- ----------------------------------------------------- -------------------------
10 YEARS 18.92% 18.21%
- ----------------------------------------------------- -------------------------
Performance results represent the investment performance record for a
size-weighted composite of similarly managed, unconstrained discretionary
accounts following the Structured Stock Selection Strategy. The composite
performance was calculated according to the requirements of the Association for
Investment Management and Research. These requirements differ from those
required by the Securities and Exchange Commission. The composite consists of
private individual and institutional accounts. Hence, these accounts are not
subject to investment limitations, diversification requirements, and other
restrictions imposed on mutual funds by the 1940 Act and the Internal Revenue
Code. The performance of the accounts might have been lower if they were subject
to these extra restrictions. Note also that the performance shown would be lower
upon taking into account charges assessed in connection with a variable annuity
or variable life contract.
Composite returns reflect the deduction of the highest fee J.P. Morgan charges
for the strategy. The fee deducted by J.P. Morgan is less than the fees of the
Series. If the expenses of the Series had been deducted, the performance results
would have been lower. Actual account performance will vary depending on the
size of a portfolio and applicable fee schedule. Past performance does not
guarantee future results.
The following is an example of the effect of compounded advisory fees over a
period of time on the value of a client's portfolio: A portfolio with a
beginning value of $100, gaining an annual return of 10% per annum would grow to
$259 after 10 years, assuming no fees have been paid out. Conversely, a
portfolio with a beginning value of $100, gaining an annual return of 10% per
annum, but paying a fee of 1% per annum, would only grow to $235 after 10 years.
The annualized returns over the 10 year time period are 10.00% (gross of fees)
and 8.91% (net of fees). If the fee in the above example was 0.25% per annum,
the portfolio would grow to $253 after 10 years and return 9.73% net of fees.
The fees were calculated on a monthly basis, which shows the maximum effect of
compounding.
A Series' 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 magnified performance impact on a Series with a small asset base. A
Series may not experience similar performance as its assets grow.
ADDITIONAL INFORMATION
ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS AND RISKS OF THE
SERIES. In general, the sub-adviser buys stocks that it identifies as
undervalued and considers selling them when they appear overvalued. Along with
attractive valuation, the Series' sub-adviser may consider other criteria, such
as: catalysts that could trigger a rise in a stock's price; high potential
reward compared to potential risk; and temporary mispricings caused by market
overreactions. Under normal market conditions, the Series holds approximately
300 stocks and limits each stock's weight in the portfolio to be within +/- 1.0%
of its weight in the S&P 500 Index.
The Series may invest up to 100% of its assets in investment-grade, short-term
fixed-income securities during severe market downturns. Doing so may reduce the
potential for appreciation in the Series' portfolio. The Series generally avoids
short-term trading, except to take advantage of attractive or unexpected
opportunities or to meet demands generated by shareholder activity. Active
trading may increase transaction costs, which may reduce performance.
The Series may use derivative instruments, such as futures contracts, options,
forward currency contracts and swaps, for hedging and risk management, i.e., to
establish or adjust exposure to the equities market. These instruments are
subject to transaction costs and certain risks, such as unanticipated changes in
securities prices and global currency markets.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/J.P. Morgan
Enhanced S&P 500 Stock Index Series is J.P. Morgan Investment Management Inc.
(J.P. Morgan), with principal offices at 522 Fifth Avenue, New York, New York
10036. J.P. Morgan and its affiliates offer a wide range of services to
governmental, institutional, corporate and individual customers and act as
investment adviser to individual and institutional customers.
Nanett Buziak, Vice President of J.P. Morgan, Timothy Devlin, Vice President of
J.P. Morgan and Bernard Kroll, Vice President of J.P. Morgan share the
responsibility for the day to day management of the Series. Ms. Buziak has been
with J.P. Morgan since March of 1997 and prior to that time was an index
arbitrage trader and convertible bond portfolio manager at First Marathon
America, Inc. Mr. Devlin has been at J.P. Morgan since July of 1996, and prior
to that time was an equity portfolio manager at Mitchell Hutchins Asset
Management Inc. Mr. Knoll has been with J.P. Morgan since August of 1996 and has
had primary responsibility for the day to day management of the Series since its
inception. JNL/J.P. MORGAN INTERNATIONAL & EMERGING MARKETS SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/J.P. Morgan
International & Emerging Markets Series is to provide high total return from a
portfolio of equity securities of foreign companies in developed and, to a
lesser extent, developing markets.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing primarily in a diversified portfolio of common stocks of non-U.S.
companies in developed markets. At least 65% of its total assets will be
invested, under normal market conditions, in equity securities of foreign
issuers. The Series also invests in the equity securities of companies in
developing countries or "emerging markets." The sub-adviser considers "emerging
markets" to be any country generally considered to be an emerging or developing
country by the World Bank, the International Finance Corporation or the United
Nations or its authorities. An issuer in an emerging market is one that: (i) has
its principal securities trading market in an emerging market country; (ii) is
organized under the laws of an emerging market; (iii) derives 50% or more of its
total revenue from either goods produced, sales made or services performed in
emerging markets; or (iv) has at least 50% of its assets located in emerging
markets.
The Series focuses its emerging market investments in those countries which the
sub-adviser believes have strongly developing economies and in which the markets
are becoming more sophisticated.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of foreign
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities.
o Emerging markets risk. The Series may invest a portion of its assets
in securities of issuers in emerging markets, which involves greater
risk. Emerging market countries typically have economic and political
systems that are less fully developed, and likely to be less stable,
than those of more advanced countries. Emerging market countries may
have policies that restrict investment by foreigners, and there is a
higher risk of a government taking private property. Low or
nonexistent trading volume in securities of issuers in emerging
markets may result in a lack of liquidity and in price volatility.
Issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than are companies in
developed markets.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks. The
Series sub-adviser must correctly predict price movements, during the
life of a derivative, of the underlying asset in order to realize the
desired results from the investment. The value of derivatives may rise
or fall more rapidly than other investments, which may increase the
volatility of the Series depending on the nature and extent of the
derivatives in the Series' portfolio. If the sub-adviser uses
derivatives in attempting to manage or "hedge" the overall risk of the
portfolio, the strategy might not be successful, for example, due to
changes in the value of the derivatives that do not correlate with
price movements in the rest of the portfolio.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions.
The Series' returns shown in the chart and table below do not reflect the
deduction of any charges that are imposed under a variable insurance contract.
Those charges, which are described in the variable insurance prospectus, will
reduce the Series' performance. As with all mutual funds, the Series' past
performance does not necessarily indicate how it will perform in the future.
Annual Total
Returns as of
December 31
38.02%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
17.86% (4th quarter of 1999) and its lowest quarterly return was 4.07% (1st
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/J.P. Morgan International & Emerging Markets Series 38.02% 18.38%
MSCI All Country World Free (ex-US) Index 25.49% 16.53%
The MSCI All Country World Free (ex-US) Index is a broad-based, unmanaged index.
* The Series began operations on March 2, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.08%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.075%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE.
This example is intended to help you compare the cost of investing in the Series
with the cost of investing in other mutual funds. Also, this example does not
reflect the expenses of the Qualified Plan. The table below shows the expenses
you would pay on a $10,000 investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period. This illustration is hypothetical and
is not intended to be representative of past or future performance of the
Series. The example also assumes that the Series operating expenses remain the
same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
- -------------------------------------------------------------------------------
EXPENSE EXAMPLE
- -------------------------------------------------------------------------------
1 Year $110
- -------------------------------------------------------------------------------
3 Years $342
- -------------------------------------------------------------------------------
5 Years $593
- -------------------------------------------------------------------------------
10 Years $1,311
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/J.P. Morgan International & Emerging Markets
Series seeks to achieve its investment objective primarily through its stock
selection process. Using a variety of quantitative valuation techniques and
based on in-house research, the sub-adviser ranks issuers within each industry
group according to their relative value. The sub-adviser makes investment
decisions using the research and valuation ranking, as well as its assessment of
other factors, including: catalysts that could trigger a change in a stock's
price; potential reward compared to potential risk, and temporary mispricings
caused by market overreactions. The Series' country allocation and industrial
sector weightings result primarily from its stock selection decisions and may
vary significantly from the MSCI All Country World Free (ex-U.S.) Index, the
Series' benchmark.
Under normal market conditions, the Series may invest in money market
instruments to invest temporary cash balances or to maintain liquidity to meet
redemptions. The Series may also invest in money market instruments as a
temporary defensive measure when, in the sub-adviser's view, market conditions
are, or are anticipated to be, adverse. Doing so may reduce the potential for
appreciation in the Series' portfolio.
The sub-adviser manages the Series actively in pursuit of its investment
objective. Active trading may increase transaction costs, which may reduce
performance.
The Series may use derivative instruments, such as futures contracts, options
and forward currency contracts, for hedging and risk management. These
instruments are subject to transaction costs and certain risks, such as
unanticipated changes in interest rates, securities prices and global currency
markets.
The Series may invest in when-issued and delayed delivery securities. Actual
payment for and delivery of such securities does not take place until some time
in the future, i.e., beyond normal settlement. The purchase of these securities
will result in a loss if their value declines prior to the settlement date. This
could occur, for example, if interest rates increase prior to settlement.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/J.P. Morgan
International & Emerging Markets Series is J.P. Morgan Investment Management
Inc. (J.P. Morgan), with principal offices at 522 Fifth Avenue, New York, New
York 10036. J.P. Morgan and its affiliates offer a wide range of services to
governmental, institutional, corporate and individual customers and act as
investment adviser to individual and institutional customers.
The Series has a portfolio management team that is responsible for the
day-to-day management of the Series. The portfolio management team is led by
Paul A. Quinsee, Managing Director of J.P. Morgan, Andrew C. Cormie, Vice
President of J.P. Morgan, and Nigel F. Emmett, Vice President of J.P. Morgan.
Mr. Quinsee has been at J.P. Morgan since 1992 and has been on the portfolio
management team since the inception of the Series. Mr. Cormie has been an
international equity portfolio manager since 1997 and employed by J.P. Morgan
since 1984. Mr. Emmett joined J.P. Morgan in August 1997; prior to that, he was
an assistant manager at Brown Brothers Harriman and Co. and a portfolio manager
at Gartmore Investment Management. Mr. Cormie and Mr. Emmett have been on the
portfolio management team for the Series since the inception of the Series.
<PAGE>
JNL/JANUS AGGRESSIVE GROWTH SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/Janus Aggressive
Growth Series is long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing primarily in a diversified portfolio of common stocks of U.S. and
foreign companies selected for their growth potential. The JNL/Janus Aggressive
Growth Series invests primarily in common stocks when the sub-adviser believes
that the relevant market environment favors profitable investing in those
securities. The Series may invest in companies of any size, from larger,
well-established companies to smaller, emerging growth companies. The
sub-adviser seeks to identify individual companies with earnings growth
potential that may not be recognized by the market. The sub-adviser selects
securities for their capital growth potential; investment income is not a
consideration. When the sub-adviser believes that market conditions are not
favorable for profitable investing or when the sub-adviser is otherwise unable
to locate favorable investment opportunities, the Series may hedge its
investments to a greater degree and/or increase its position in cash or similar
investments. Doing so may reduce the potential for appreciation in the Series'
portfolio.
The Series may invest to a lesser degree in other types of securities, including
preferred stock, warrants, convertible securities and debt securities. The
Series may invest without limit in foreign securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. and
foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's
price to fall. Investing in smaller, newer companies generally
involves greater risks than investing in larger, more established
ones.
For bonds, market risk generally reflects credit risk and
interest rate risk. Credit risk is the actual or perceived risk
that the issuer of the bond will not pay the interest and
principal payments when due. Bond value typically declines if the
issuer's credit quality deteriorates. Interest rate risk is the
risk that interest rates will rise and the value of bonds,
including those held by the Series, will fall. A broad-based
market drop may also cause a bond's price to fall.
o Prepayment risk. During periods of falling interest rates, there
is the risk that a debt security with a high stated interest rate
will be prepaid before its expected maturity date. Growth
investing risk. Growth companies usually invest a high portion of
earnings in their businesses, and may lack the dividends of value
stocks that can cushion prices in a falling market. Also,
earnings disappointments often lead to sharp declines in prices
because investors buy growth stocks in anticipation of superior
earnings growth.
o Foreign investing risk. Foreign investing involves risks not
typically associated with U.S. investment. These risks include,
among others, adverse fluctuations in foreign currency values as
well as adverse political, social and economic developments
affecting a foreign country. In addition, foreign investing
involves less publicly available information and more volatile or
less liquid markets. Investments in foreign countries could be
affected by factors not present in the U.S., such as restrictions
on receiving the investment proceeds from a foreign country,
foreign tax laws, and potential difficulties in enforcing
contractual obligations. Transactions in foreign securities may
be subject to less efficient settlement practices, including
extended clearance and settlement periods. Foreign accounting may
be less revealing than American accounting practices. Foreign
regulation may be inadequate or irregular. Owning foreign
securities could cause the Series' performance to fluctuate more
than if it held only U.S. securities.
o Currency risk. The value of the Series' shares may change as a
result of changes in exchange rates reducing the value of the
U.S. dollar value of the Series' foreign investments. Currency
exchange rates can be volatile and affected by a number of
factors, such as the general economics of a country, the actions
of U.S. and foreign governments or central banks, the imposition
of currency controls, and speculation.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks.
The Series sub-adviser must correctly predict price movements,
during the life of a derivative, of the underlying asset in order
to realize the desired results from the investment. The value of
derivatives may rise or fall more rapidly than other investments,
which may increase the volatility of the Series depending on the
nature and extent of the derivatives in the Series' portfolio. If
the sub-adviser uses derivatives in attempting to manage or
"hedge" the overall risk of the portfolio, the strategy might not
be successful, for example, due to changes in the value of the
derivatives that do not correlate with price movements in the
rest of the portfolio.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
18.95% 12.67% 57.66% 94.43%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
41.64% (4th quarter of 1999) and its lowest quarterly return was -6.56% (3rd
quarter of 1998).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/Janus Aggressive Growth Series 94.43% 42.10%
S&P 500 Index 21.04% 26.95%
The S&P 500 Index is a broad-based, unmanaged index. * The Series began
operations on May 15, 1995.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or
indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.01%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.01%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $103
- --------------------------------------------------------------------------------
3 Years $322
- --------------------------------------------------------------------------------
5 Years $558
- --------------------------------------------------------------------------------
10 Years $1,236
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series may invest in "special situations" from time
to time. A special situation arises when, in the opinion of the sub-adviser, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating
special situations might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.
Investment in special situations may carry an additional risk of loss in the
event that the anticipated development does not occur or does not attract the
expected attention. The impact of this strategy on the Series will depend on the
Series' size and the extent of its holdings of special situation issuers
relative to total net assets.
The Series may use derivative instruments, such as futures contracts, options,
and forward currency contracts, for hedging or as a means of enhancing return.
These instruments are subject to transaction costs and certain risks, such as
unanticipated changes in interest rates, securities prices and global currency
markets.
The Series may invest in high-yield, high-risk, fixed-income securities,
commonly known as "junk bonds." These are corporate debt securities rated BBB or
lower by S&P or Baa or lower by Moody's, or unrated securities deemed by the
sub-adviser to be of comparable quality. Lower-rated securities generally
involve a higher risk of default than higher-rated ones.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Janus
Aggressive Growth Series is Janus Capital Corporation (Janus Capital), with
principal offices at 100 Fillmore Street, Denver, Colorado 80206. Janus Capital
provides investment advisory services to mutual funds and other institutional
accounts.
Warren B. Lammert, Portfolio Manager of Janus Capital, is responsible for the
day-to-day management of the Series. Mr. Lammert joined Janus Capital in 1987.
He holds a Bachelor of Arts in Economics from Yale University and a Master of
Science in Economic History from the London School of Economics. He has earned
the right to use the Chartered Financial Analyst designation. Mr. Lammert has
had responsibility for the day-to-day management of the Series since the
inception of the Series.
<PAGE>
JNL/JANUS BALANCED SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/Janus Balanced Series
is long-term capital growth, consistent with preservation of capital and
balanced by current income.
PRINCIPAL INVESTMENT STRATEGIES. The Series normally invests 40-60% of its
assets in securities selected primarily for their growth potential and 40-60% of
its assets in securities selected primarily for their income potential. The
JNL/Janus Balanced Series invests primarily in common stocks when the
sub-adviser believes that the relevant market environment favors profitable
investing in those securities. The sub-adviser seeks to identify individual
companies with earnings growth potential that may not be recognized by the
market. The sub-adviser selects securities for their capital growth potential.
The sub-adviser may also consider dividend-paying characteristics when selecting
common stock. When the sub-adviser believes that market conditions are not
favorable for profitable investing or when the sub-adviser is otherwise unable
to locate favorable investment opportunities, the Series may hedge its
investments to a greater degree and/or increase its position in cash or similar
investments. Doing so may reduce the potential for appreciation in the Series'
portfolio. The Series will normally invest at least 25% of its assets in
fixed-income securities. The Series may invest without limit in foreign
securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. and foreign
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall. Investing in smaller, newer
companies generally involves greater risks than investing in larger,
more established ones.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by the Series, will
fall. A broad-based market drop may also cause a stock's price to
fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information, more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. This Series will commence investment operations on or about the
date of this Prospectus. Therefore, a bar chart and table have not been included
for this Series.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.05%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.05%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $107
- --------------------------------------------------------------------------------
3 Years $334
- --------------------------------------------------------------------------------
5 Years $579
- --------------------------------------------------------------------------------
10 Years $1,283
- --------------------------------------------------------------------------------
COMPARABLE PERFORMANCE.
PUBLIC FUND/PRIVATE ACCOUNT PERFORMANCE COMPOSITE. The JNL/Janus Balanced Series
has substantially similar investment objectives, policies and strategies as
certain mutual funds and Private Accounts. Each of these public mutual funds and
Private Accounts is managed by Janus Capital Corporation, the same Sub-Adviser
which manages the JNL/Janus Balanced Series.
The historical performance of a composite of these public mutual funds and
Private Accounts is shown below. This is not the performance of the JNL/Janus
Balanced Series and the performance of the Series may differ. This performance
data should not be considered as an indication of future performance of the
Series. The public mutual fund and Private Account performance figures shown
below:
o reflect the deduction of the historical fees and expenses paid by the
public mutual funds and not those to be paid by the Series.
o do not reflect Contract fees or charges imposed by Jackson National
Life. Investors should refer to the separate account prospectus for
information describing the Contract fees and charges. These fees and
charges will have a detrimental effect on Series performance.
The Series and their corresponding public mutual fund series and Private
Accounts are expected to hold similar securities. However, their investment
results are expected to differ for the following reasons:
o differences in asset size and cash flow resulting from purchases and
redemptions of Series shares may result in different security
selections
o differences in the relative weightings of securities
o differences in the price paid for particular portfolio holdings
o differences relating to certain tax matters
o differences (with respect to the Private Accounts) in that such
Accounts are not subject to certain investment limitations,
diversification requirements and other restrictions imposed by federal
tax and securities laws
However, the differences cited do not alter the conclusion that the Funds have
substantially similar investment objectives, policies and strategies.
The chart below shows performance information derived from historical composite
performance of the public mutual funds and Private Accounts. The inception date
for the composite shown is January 1, 1988.
JANUS BALANCED FUNDS COMPOSITE PERFORMANCE (INCLUDING MUTUAL FUNDS) FOR PERIODS
ENDED 12/31/99
- --------------------------------------------------------------------------------
Annualized Returns
- --------------------------------------------------------------------------------
JANUS BALANCED S&P 500 INDEX
- ------------- ------------------------------------ -----------------------------
1 Year 24.68% 21.14%
- ------------- ------------------------------------ -----------------------------
3 Years 26.08% 27.66%
- ------------- ------------------------------------ -----------------------------
5 Years 23.93% 28.66%
- ------------- ------------------------------------ -----------------------------
10 Years 18.74% 18.25%
- ------------- ------------------------------------ -----------------------------
*Inception January 1, 1988.
The Balanced Composite includes all fully discretionary separately managed
balanced accounts and mutual funds for which Janus Capital Corporation serves as
investment advisor. The composite was calculated according to the requirements
of the Association for Investment Management and Research. These requirements
differ from those required by the Securities and Exchange Commission. Composite
performance is presented net of all fees and reflects reinvestment of dividends
and capital gains. The fees deducted are less than the fees charged by the
Series. If the expenses of the Series had been deducted, the performance results
would have been lower. As of December 31, 1999, the Balanced Composite included
12 accounts and assets of $6,419.1 million, which represented 2.57% of total
assets under management. The percentage of total assets managed is defined as
composite assets as a percentage of the total assets managed including mutual
fund company accounts under management. Performance figures are based upon
historical information and do not guarantee future results. In addition, the
managers responsible for the historical performance record of these accounts
(Blaine Rollins and James Craig) assumed new responsibilities at Janus beginning
January 1, 2000. Karen Reidy is now the Portfolio Manager for all Balanced
Products. No changes will be made with regard to the investment philosophy or
process of the Funds or separate accounts. Prospective clients should recognize
the limitations inherent in composites, and consider all information presented
by Janus regarding its investment management capabilities. The S&P 500 is an
unmanaged index of common stock prices and includes reinvestment of dividends
and capital gains. They have been taken from published sources and have not been
audited. Composition of each separately managed account portfolio may differ
significantly from securities in the corresponding benchmark indices. A complete
list of Janus composites is available upon request.
Please call 800-525-1068.
A Series' 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 magnified performance impact on a Series with a small asset base. A
Series may not experience similar performance as its assets grow.
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series may invest in "special situations" from time
to time. A special situation arises when, in the opinion of the sub-adviser, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating
special situations might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.
Investment in special situations may carry an additional risk of loss in the
event that the anticipated development does not occur or does not attract the
expected attention. The impact of this strategy on the Series will depend on the
Series' size and the extent of its holdings of special situation issuers
relative to total net assets.
The Series may use derivative instruments, such as futures contracts, options,
and forward currency contracts, for hedging or as a means of enhancing return.
These instruments are subject to transaction costs and certain risks, such as
unanticipated changes in interest rates, securities prices and global currency
markets.
The Series may invest in high-yield, high-risk, fixed-income securities,
commonly known as "junk bonds." These are corporate debt securities rated BBB or
lower by S&P or Baa or lower by Moody's, or unrated securities deemed by the
sub-adviser to be on comparable quality. Lower-rated securities generally
involve a higher risk of default than higher-rated ones.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Janus
Balanced Series is Janus Capital Corporation (Janus Capital), with principal
offices at 100 Fillmore Street, Denver, Colorado 80206. Janus Capital provides
investment advisory services to mutual funds and other institutional accounts.
Karen L. Reidy is the Portfolio Manager of the Series. She is also the portfolio
manager and Executive Vice President of Janus Balanced Fund and Janus Equity
Income Fund, as well as Janus Aspen Balanced and Janus Aspen Equity Income
Portfolios. She is also an Assistant Portfolio Manager of Janus Fund and manages
separate accounts and sub-advised portfolios in the Balanced discipline. Prior
to joining Janus in 1995, Ms. Reidy worked for Price Waterhouse in the Mergers
and Acquisitions area, performing corporate due diligence, and as an audit
manager, analyzing financials for corporate clients. Before assuming management
responsibilities of Janus Balanced Fund and Janus Equity Income Fund in January
2000, Ms. Reidy was Assistant Portfolio Manager of Janus Fund, focusing her
research on large-capitalization companies. Ms. Reidy earned a bachelor's degree
in accounting from the University of Colorado. She passed the Certified Public
Accountant exam in 1992 and has earned the right to use the Chartered Financial
Analyst designation. She has five years of professional investment experience.
<PAGE>
JNL/JANUS CAPITAL GROWTH SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/Janus Capital Growth
Series is long-term growth of capital in a manner consistent with the
preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective
through a non-diversified portfolio consisting primarily of common stock of U.S.
and foreign companies selected for their growth potential and normally invests
at least 50% of its equity assets in medium-sized companies. Medium-sized
companies are those whose market capitalizations fall within the range of
companies in the S&P MidCap 400 Index and are determined at the time their
securities are acquired by the Series. The market capitalizations within the
Index will vary, but as of December 31, 1999, they ranged between approximately
$170 million and $37 billion. The sub-adviser seeks to identify individual
companies with earnings growth potential that may not be recognized by the
market. The sub-adviser selects securities for their capital growth potential;
investment income is not a consideration. When the sub-adviser believes that
market conditions are not favorable for profitable investing or when the
sub-adviser is otherwise unable to locate favorable investment opportunities,
the Series may hedge its investments to a greater degree and/or increase its
position in cash or similar investments. Doing so may reduce the potential for
appreciation in the Series' portfolio.
The Series normally invests a majority of its equity assets in medium-sized
companies. The Series may invest to a lesser degree in other types of
securities, including preferred stock, warrants, convertible securities and debt
securities. The Fund may invest without limit in foreign securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. and foreign
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by the Series, will
fall. A broad-based market drop may also cause a bond's price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date. Growth investing risk.
Growth companies usually invest a high portion of earnings in their
businesses, and may lack the dividends of value stocks that can
cushion prices in a falling market. Also, earnings disappointments
often lead to sharp declines in prices because investors buy growth
stocks in anticipation of superior earnings growth.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of
December 31
16.83% 15.01% 35.16% 124.19%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
59.05% (4th quarter of 1999) and its lowest quarterly return was -15.05% (3rd
quarter of 1998).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/Janus Capital Growth Series 124.19% 44.09%
S&P MidCap 400 Index 14.70% 21.41%
The S&P 400 MidCap Index is a broad-based, unmanaged index. * The Series began
operations on May 15, 1995.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.03%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.03%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $105
- --------------------------------------------------------------------------------
3 Years $328
- --------------------------------------------------------------------------------
5 Years $569
- --------------------------------------------------------------------------------
10 Years $1,259
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series may invest in "special situations" from time
to time. A special situation arises when, in the opinion of the sub-adviser, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating
special situations might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.
Investment in special situations may carry an additional risk of loss in the
event that the anticipated development does not occur or does not attract the
expected attention. The impact of this strategy on the Series will depend on the
Series' size and the extent of its holdings of special situation issuers
relative to total net assets.
The Series may use derivative instruments, such as futures contracts, options,
and forward currency contracts, for hedging or as a means of enhancing return.
These instruments are subject to transaction costs and certain risks, such as
unanticipated changes in interest rates, securities prices and global currency
markets.
The Series may invest in high-yield, high-risk, fixed-income securities,
commonly known as "junk bonds." These are corporate debt securities rated BBB or
lower by S&P or Baa or lower by Moody's, or unrated securities deemed by the
sub-adviser to be on comparable quality. Lower-rated securities generally
involve a higher risk of default than higher-rated ones.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Janus
Capital Growth Series is Janus Capital Corporation (Janus Capital), with
principal offices at 100 Fillmore Street, Denver, Colorado 80206. Janus Capital
provides investment advisory services to mutual funds and other institutional
accounts.
James P. Goff, Portfolio Manager of Janus Capital, is responsible for the
day-to-day management of the JNL/Janus Capital Growth Series. Mr. Goff joined
Janus Capital in 1988. He holds a Bachelor of Arts in Economics from Yale
University and has earned the right to use the Chartered Financial Analyst
designation. Mr. Goff has had responsibility for the day-to-day management of
the Series since the inception of the Series.JNL/JANUS GLOBAL EQUITIES SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/Janus Global Equities
Series is long-term growth of capital in a manner consistent with the
preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing at least 65% in a diversified portfolio of common stocks of foreign
and domestic issuers. The sub-adviser seeks to identify individual companies
with earnings growth potential that may not be recognized by the market at
large. The sub-adviser selects securities for their capital growth potential;
investment income is not a consideration. When the sub-adviser believes that
market conditions are not favorable for profitable investing or when the
sub-adviser is otherwise unable to locate favorable investment opportunities,
the Series may hedge its investments to a greater degree and/or increase its
position in cash or similar investments. Doing so may reduce the potential for
appreciation in the Series' portfolio.
The Series may invest to a lesser degree in other types of securities, including
preferred stock, warrants, convertible securities, and debt securities, such as
corporate bonds. The Series can invest on a worldwide basis in companies and
other organizations of any size, regardless of country of organization or place
of principal business activity, as well as domestic and foreign governments,
government agencies and other governmental entities. The Series normally invests
in securities of issuers from at least five different countries, including the
United States, although it may invest in fewer than five countries. The Series
may invest without limit in foreign securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. and foreign
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by the Series, will
fall. A broad-based market drop may also cause a bond's price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities. To the extent that the
Series invests in bonds issued by a foreign government, the Series may
have limited legal recourse in the event of default. Political
conditions, especially a country's willingness to meet the terms of
its debt obligations, can create special risks.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks. The
Series sub-adviser must correctly predict price movements, during the
life of a derivative, of the underlying asset in order to realize the
desired results from the investment. The value of derivatives may rise
or fall more rapidly than other investments, which may increase the
volatility of the Series depending on the nature and extent of the
derivatives in the Series' portfolio. If the sub-adviser uses
derivatives in attempting to manage or "hedge" the overall risk of the
portfolio, the strategy might not be successful, for example, due to
changes in the value of the derivatives that do not correlate with
price movements in the rest of the portfolio.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
31.36% 19.12% 26.87% 64.58%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
43.03% (4th quarter of 1999) and its lowest quarterly return was -16.93% (3rd
quarter of 1998).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/Janus Global Equities Series 64.58% 36.45%
Morgan Stanley Capital International World Index 23.56% 18.01%
The Morgan Stanley Capital International World Index is a broad-based, unmanaged
index.
* The Series began operations on May 15, 1995.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.06%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.06%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $108
- --------------------------------------------------------------------------------
3 Years $337
- --------------------------------------------------------------------------------
5 Years $585
- --------------------------------------------------------------------------------
10 Years $1,294
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES The Series may invest in "special situations" from time
to time. A special situation arises when, in the opinion of the sub-adviser, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating
special situations might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.
Investments in special situations may carry an additional risk of loss in the
event that the anticipated development does not occur or does not attract the
expected attention. The impact of this strategy on the Series will depend on the
Series' size and the extent of its holdings of special situation issuers
relative to total net assets.
The Series may use derivative instruments, such as futures contracts, options,
and forward currency contracts, for hedging or as a means of enhancing return.
These instruments are subject to transaction costs and certain risks, such as
unanticipated changes in interest rates, securities prices and global currency
markets.
The Series may invest in high-yield, high-risk fixed-income securities, commonly
known as "junk bonds." These are corporate debt securities rated BBB or lower by
S&P or Baa or lower by Moody's, or unrated securities deemed by the sub-adviser
to be of comparable quality. Lower-rated securities generally involve a higher
risk of default, and may fluctuate more in value than higher-rated securities.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Janus
Global Equities Series is Janus Capital Corporation (Janus Capital), with
principal offices at 100 Fillmore Street, Denver, Colorado 80206. Janus Capital
provides investment advisory services to mutual funds and other institutional
accounts.
Helen Young Hayes, Portfolio Manager of Janus Capital, is responsible for the
day-to-day management of the Series. Ms. Hayes joined Janus Capital in 1987. She
holds a Bachelor of Arts in Economics from Yale University and has earned the
right to use the Chartered Financial Analyst designation. Ms. Hayes has had
responsibility for the day-to-day management of the Series since the inception
of the Series.
<PAGE>
JNL/JANUS GROWTH & INCOME SERIES (FORMERLY THE GOLDMAN SACHS/JNL GROWTH & INCOME
SERIES).
INVESTMENT OBJECTIVE. The investment objectives of the JNL/Janus Growth & Income
Series are long-term capital growth and current income.
PRINCIPAL INVESTMENT STRATEGIES. The Series normally emphasizes investments in
common stocks. It will normally invest up to 75% of its assets in equity
securities selected primarily for their growth potential, and at least 25% of
its assets in securities the portfolio manager believes have income potential.
The sub-adviser seeks to identify individual companies with earnings growth
potential that may not be recognized by the market. The sub-adviser selects
securities for their capital growth potential. The sub-adviser may also consider
dividend-paying characteristics when selecting common stock. When the
sub-adviser believes that market conditions are not favorable for profitable
investing or when the sub-adviser is otherwise unable to locate favorable
investment opportunities, the Series may hedge its investments to a greater
degree and/or increase its position in cash or similar investments. Doing so may
reduce the potential for appreciation in the Series' portfolio. Equity
securities may make up part of this income component if they currently pay
dividends or the portfolio manager believes they have potential for increasing
or commencing dividend payments. The Series may invest without limit in foreign
securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. and foreign
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall. Investing in smaller, newer
companies generally involves greater risks than investing in larger,
more established ones.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by the Series, will
fall. A broad-based market drop may also cause a stock's price to
fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information, more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks. The
Series sub-adviser must correctly predict price movements, during the
life of a derivative, of the underlying asset in order to realize the
desired results from the investment. The value of derivatives may rise
or fall more rapidly than other investments, which may increase the
volatility of the Series depending on the nature and extent of the
derivatives in the Series' portfolio. If the sub- adviser uses
derivatives in attempting to manage or "hedge" the overall risk of the
portfolio, the strategy might not be successful, for example, due to
changes in the value of the derivatives that do not correlate with
price movements in the rest of the portfolio.
o Growth investing risk. Growth companies usually invest a high portion
of earnings in their businesses, and may lack the dividends of value
stocks that can cushion prices in a falling market. Also, earnings
disappointments often lead to sharp declines in prices because
investors buy growth stocks in anticipation of superior earnings
growth.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' average annual returns
and compares them to a broad based index since these shares were first offered.
Both the chart and the table assume reinvestment of dividends and distributions.
The Series' returns shown in the chart and table below do not reflect the
deduction of any charges that are imposed under a variable insurance contract.
Those charges, which are described in the variable insurance prospectus, will
reduce the Series' performance.
As of the effective date of this Prospectus, Janus Capital Corporation (Janus)
has replaced Goldman Sachs Asset Management as the sub-adviser to this Series.
In addition, certain investment policies, practices and strategies have been
changed to reflect the management style of Janus, the new sub-adviser. The
advisory fees have also been changed. Given these changes, the performance
information shown below is not indicative in any manner of how the Series will
perform in the future.
Annual Total Returns as of December 31 (Results achieved by prior sub-adviser)
4.98%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was 8.43%
(2nd quarter of 1999) and its lowest quarterly return was -11.92% (3rd quarter
of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/Janus Growth & Income Series 4.98% -2.64%
S&P 500 Index 21.04% 21.78%
The S&P 500 Index is a broad-based, unmanaged index. *The Series began
operations on March 2, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.03%
- --------------------------------------------------------------------------------
Other Expenses
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.03%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $107
- --------------------------------------------------------------------------------
3 Years $334
- --------------------------------------------------------------------------------
5 Years $579
- --------------------------------------------------------------------------------
10 Years $1,283
- --------------------------------------------------------------------------------
COMPARABLE PERFORMANCE.
PUBLIC FUND PERFORMANCE COMPOSITE
The JNL/Janus Growth & Income Series has substantially similar investment
objectives, policies and strategies as certain mutual funds. Each of these
public mutual funds is managed by Janus Capital Corporation, the same
Sub-Adviser which manages the JNL/Janus Growth & Income Series.
The historical performance of a composite of these public mutual funds is shown
below. This is not the performance of the JNL/Janus Growth & Income Series and
the performance of the Series may differ. This performance data should not be
considered as an indication of future performance of the Series. The public
mutual fund performance figures shown below:
o reflect the deduction of the historical fees and expenses paid by the
public mutual funds and not those to be paid by the Series. do not
reflect Contract fees or charges imposed by Jackson National Life.
Investors should refer to the separate account prospectus for
information describing the Contract fees and charges. These fees and
charges will have a detrimental effect on Series performance.
The Series and their corresponding public mutual fund series are expected to
hold similar securities. However, their investment results are expected to
differ for the following reasons:
o differences in asset size and cash flow resulting from purchases and
redemptions of Series shares may result in different security
selections
o differences in the relative weightings of securities
o differences in the price paid for particular portfolio holdings
o differences relating to certain tax matters
However, the differences cited do not alter the conclusion that the Funds have
substantially similar investment objectives, policies and strategies.
The chart below shows performance information derived from historical composite
performance of the public mutual funds. The inception date for the composite
shown is October 1,1991.
JANUS GROWTH & INCOME FUNDS COMPOSITE PERFORMANCE (INCLUDING MUTUAL FUNDS) FOR
PERIODS ENDED 12/31/99
- --------------------------------------------------------------------------------
Annualized Returns
- ------------------- ------------------------------------ -----------------------
JANUS GROWTH & INCOME S&P 500 INDEX
- ------------------- ------------------------------------ -----------------------
1 Year 51.30% 21.14%
- ------------------- ------------------------------------ -----------------------
3 Years 40.07% 27.66%
- ------------------- ------------------------------------ -----------------------
5 Years 36.41% 28.66%
- ------------------- ------------------------------------ -----------------------
Since Inception* 25.27% 20.36%
- ------------------- ------------------------------------ -----------------------
*Inception October 1, 1991.
The Growth & Income Composite includes the Janus Growth & Income Fund and Janus
Aspen Series Growth & Income Fund for which Janus Capital Corporation serves as
investment advisor. The composite performance was calculated according to the
requirements of the Association for Investment Management and Research. These
requirements differ from those required by the Securities and Exchange
Commission. Composite performance is presented net of all fees and reflects
reinvestment of dividends and capital gains.The fees deducted are less than the
fees charged by the Series. If the expenses of the Series had been deducted, the
performance results would have been lower. As of December 31, 1999, the Growth &
Income Composite had assets of $7,583.6 million, which represented 3.04% of
total assets under management. Accounts enter the composite upon their first
full quarter under management. The percentage of total assets managed is defined
as composite assets as a percentage of the total assets managed including mutual
fund company accounts under management. Performance figures are based upon
historical information and do not guarantee future results. Please see a
prospectus for more complete information regarding the Funds, including the
expenses associated with each portfolio. In addition, the manager responsible
for the historical performance record of the composite from inception to August
of 1997 is no longer with the firm. David Corkins is now the Portfolio Manager
for all Growth & Income Products. No changes were made with regard to the
investment philosophy or process of the Funds. Prospective clients should
recognize the limitations inherent in composites, and consider all information
presented by Janus regarding its investment management capabilities. The S&P 500
is an unmanaged index of common stock prices and includes reinvestment of
dividends and capital gains. They have been taken from published sources and
have not been audited. Composition of each separately managed account portfolio
may differ significantly from securities in the corresponding benchmark indices.
A complete list of Janus composites is available upon request. Please call
800-525-1068.
A Series' 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 magnified performance impact on a Series with a small asset base. A
Series may not experience similar performance as its assets grow.
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series may invest in "special situations" from time
to time. A special situation arises when, in the opinion of the sub-adviser, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating
special situations might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.Investment
in special situations may carry an additional risk of loss in the event that the
anticipated development does not occur or does not attract the expected
attention. The impact of this strategy on the Series will depend on the Series'
size and the extent of its holdings of special situation issuers relative to
total net assets.
The Series may use derivative instruments, such as futures contracts, options,
and forward currency contracts, for hedging or as a means of enhancing return.
These instruments are subject to transaction costs and certain risks, such as
unanticipated changes in interest rates, securities prices and global currency
markets.
The Series may invest in high-yield, high-risk, fixed-income securities,
commonly known as "junk bonds." These are corporate debt securities rated BBB or
lower by S&P or Baa or lower by Moody's, or unrated securities deemed by the
sub-adviser to be on comparable quality. Lower-rated securities generally
involve a higher risk of default than higher-rated ones.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Janus
Growth & Income Series is Janus Capital Corporation (Janus Capital), with
principal offices at 100 Fillmore Street, Denver, Colorado 80206. Janus Capital
providesinvestment advisory services to mutual funds and other institutional
accounts.
David Corkins is Portfolio Manager of the Series. He is also the portfolio
manager and Executive Vice President of Janus Growth and Income Fund and Janus
Aspen Growth and Income Portfolio. He also manages separate accounts in the
LargeCap Growth and Diversified Growth disciplines. Prior to joining Janus in
1995, Mr. Corkins was Chief Financial Officer of Chase U.S. Consumer Services,
Inc., a Chase Manhattan mortgage business. While at Chase, Mr. Corkins also
worked in consumer credit and mortgage issuance and analysis. Mr. Corkins
graduated cum laude from Dartmouth College with a bachelor's degree in English
and Russian, and earned an M.B.A. in finance with honors from Columbia
University. He has nine years of professional investment experience.
<PAGE>
JNL/PIMCO TOTAL RETURN BOND SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/PIMCO Total Return
Bond Series is to realize maximum total return, consistent with the preservation
of capital and prudent investment management.
PRINCIPAL INVESTMENT STRATEGIES. The Series attempts to achieve its objective by
investing primarily in a diversified portfolio of investment-grade fixed-income
securities of U.S. and foreign issuers such as government, corporate, mortgage-
and other asset-backed securities and cash equivalents. At least 65% of its
total assets will be invested, under normal market conditions in fixed-income
securities.
The average duration of the Series typically ranges between three and six years,
although the maturities of the securities it holds may vary. For example, with a
duration of 5 years, there will be a 5% change in the value of the Series with a
1% movement in interest rates. The Series' foreign investments will primarily be
in securities of issuers based in developed countries, although it may invest in
securities of issuers in emerging market countries. A significant portion of the
Series' foreign holdings may be denominated in foreign currencies. The Series
may buy and sell foreign currency and foreign currency contracts, and invest in
options, futures contracts, swap agreements, and other indexed instruments. The
Series may enter into a series of purchase or sale contracts or use other
investment techniques to obtain market exposure or to hedge against changes in
foreign currency exchange rates, interest rates or securities prices.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in securities of U.S. and
foreign issuers, it is subject to market risk. For bonds, market risk
generally reflects credit risk and interest rate risk. Credit risk is
the actual or perceived risk that the issuer of the bond will not pay
the interest and principal payments when due. Bond value typically
declines if the issuer's credit quality deteriorates. Interest rate
risk is the risk that interest rates will rise and the value of bonds,
including those held by the Series, will fall. A broad-based market
drop may also cause a bond's price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities. To the extent that the
Series invests in bonds issued by a foreign government, the Series may
have limited legal recourse in the event of default. Political
conditions, especially a country's willingness to meet the terms of
its debt obligations, can create special risks.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks. The
Series sub-adviser must correctly predict price movements, during the
life of a derivative, of the underlying asset in order to realize the
desired results from the investment. The value of derivatives may rise
or fall more rapidly than other investments, which may increase the
volatility of the Series depending on the nature and extent of the
derivatives in the Series' portfolio. If the sub-adviser uses
derivatives in attempting to manage or "hedge" the overall risk of the
portfolio, the strategy might not be successful, for example, due to
changes in the value of the derivatives that do not correlate with
price movements in the rest of the portfolio.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
- -0.26%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was 1.00%
(3rd quarter of 1999) and its lowest quarterly return was -1.57% (2nd quarter of
1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/PIMCO Total Return Bond Series -0.26% 2.92%
Lehman Brothers Aggregate Bond Index -0.82% 2.83%
The Lehman Brothers Aggregate Bond Index is a broad-based, unmanaged index.
* The Series began operations on March 2, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .80%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .80%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $82
- --------------------------------------------------------------------------------
3 Years $255
- --------------------------------------------------------------------------------
5 Years $444
- --------------------------------------------------------------------------------
10 Years $990
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series seeks to consistently add value relative to
the Lehman Brothers Aggregate Bond Index, while keeping risk equal to or less
than that index. In managing the Series, the sub-adviser generally makes
investment decisions based on its view of longer-term (three- to five-year)
trends and non-economic factors that may affect interest rates, while seeking to
maintain a portfolio duration that approximates that of the Lehman Brothers
Aggregate Bond Index.
The Series may invest in a wide variety of taxable fixed-income securities,
including convertible securities, fixed- and floating-rate loans and loan
participations. The Series may also invest in repurchase agreements, reverse
repurchase agreements, and dollar rolls. The Series may invest all of its assets
in derivative instruments, such as options, futures contracts or swap
agreements. The Series may invest all of its assets in mortgage- or other
asset-backed securities, zero coupon bonds or strips.
The Series may invest in when-issued and delayed delivery securities. Actual
payment for and delivery of such securities does not take place until some time
in the future, i.e., beyond normal settlement. The purchase of these securities
will result in a loss if their value declines prior to the settlement date. This
could occur, for example, if interest rates increase prior to settlement.
The Series may invest in high-yield, high-risk, fixed-income securities,
commonly known as "junk bonds." These are corporate debt securities rated BBB or
lower by S&P or Baa or lower by Moody's, or unrated securities deemed by the
sub-adviser to be of comparable quality. Lower-rated securities generally
involve a higher risk of default than higher-rated ones.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/PIMCO Total
Return Bond Series is Pacific Investment Management Company (PIMCO), located at
840 Newport Center Drive, Suite 300, Newport Beach, California 92660. PIMCO is
an investment counseling firm founded in 1971.
William H. Gross, Managing Director of PIMCO, is responsible for the day-to-day
management of the Series. A Fixed Income Portfolio Manager, Mr. Gross is one of
the founders of PIMCO. Mr. Gross has had responsibility for the day-to-day
management of the Series since the inception of the Series.
<PAGE>
JNL/PUTNAM GROWTH SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/Putnam Growth Series
is long-term capital growth.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing primarily in a diversified portfolio of common stock of domestic,
large-capitalization companies. However, the Series may also invest in preferred
stocks, bonds, convertible preferred stock and convertible debentures if the
sub-adviser believes that they offer the potential for capital appreciation. The
Series may invest a portion of its assets in foreign securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. and foreign
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by the Series, will
fall. A broad-based market drop may also cause a stock's price to
fall. Prepayment risk. During periods of falling interest rates, there
is the risk that a debt security with a high stated interest rate will
be prepaid before its expected maturity date. Growth investing risk.
Growth companies usually invest a high portion of earnings in their
businesses, and may lack the dividends of value stocks that can
cushion prices in a falling market. Also, earnings disappointments
often lead to sharp declines in prices because investors buy growth
stocks in anticipation of superior earnings growth.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities. Currency risk. The value of
the Series' shares may change as a result of changes in exchange rates
reducing the value of the U.S. dollar value of the Series' foreign
investments. Currency exchange rates can be volatile and affected by a
number of factors, such as the general economics of a country, the
actions of U.S. and foreign governments or central banks, the
imposition of currency controls, and speculation.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks. The
Series sub-adviser must correctly predict price movements, during the
life of a derivative, of the underlying asset in order to realize the
desired results from the investment. The value of derivatives may rise
or fall more rapidly than other investments, which may increase the
volatility of the Series depending on the nature and extent of the
derivatives in the Series' portfolio. If the sub-adviser uses
derivatives in attempting to manage or "hedge" the overall risk of the
portfolio, the strategy might not be successful, for example, due to
changes in the value of the derivatives that do not correlate with
price movements in the rest of the portfolio.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad-based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
26.81% 21.88% 34.93% 29.41%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
24.99% (4th quarter of 1998) and its lowest quarterly return was -12.00% (3rd
quarter of 1998).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/Putnam Growth Series 29.41% 30.51%
S&P 500 Index =21.04% 26.95%
The S&P 500 Index is a broad-based, unmanaged index.
* The Series began operations on May 15, 1995. Prior to May 1, 1997, the Series
was managed by Phoenix Investment Counsel, Inc.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 0.97%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 0.97%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be: .
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $99
- --------------------------------------------------------------------------------
3 Years $309
- --------------------------------------------------------------------------------
5 Years $536
- --------------------------------------------------------------------------------
10 Years $1,190
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series may invest any amount or proportion of its
assets in any class or type of security believed by the sub-adviser to offer
potential for capital appreciation over both the intermediate and long term.
The Series may use derivative instruments, such as financial futures contracts
and options, for hedging and risk management. These instruments are subject to
transaction costs and certain risks, such as unanticipated changes in interest
rates, securities prices and global currency markets.
For temporary, defensive purposes, when the sub-adviser believes other types of
investments are advantageous on the basis both of risk and protection of capital
values, the Series may invest in fixed-income securities with or without
warrants or conversion features and may retain cash, or invest up to all of its
assets in cash equivalents. Taking a defensive position may reduce the potential
for appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Putnam
Growth Series is Putnam Investment Management, Inc. (Putnam), located at One
Post Office Square, Boston, Massachusetts 02109. Putnam has been managing mutual
funds since 1937.
The Series is managed by the Core Growth Equity team at Putnam. The team is
headed by C. Beth Cotner, Managing Director and Chief Investment Officer of the
Group. Ms. Cotner joined Putnam in 1995 as Senior Portfolio Manager in the Core
Growth Equity Group. Prior to that, Ms. Cotner was Executive Vice President of
Kemper Financial Services. Ms. Cotner has had responsibility for the day-to-day
management of the Series since May 1, 1997.
<PAGE>
JNL/PUTNAM INTERNATIONAL EQUITY SERIES (FORMERLY THE T. ROWE PRICE/JNL
INTERNATIONAL EQUITY INVESTMENT SERIES)
INVESTMENT OBJECTIVE. The investment objective of the JNL/Putnam International
Equity Series is long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing at least 65% in a diversified portfolio consisting primarily of common
stocks of non-U.S. companies. The Series invests in foreign securities that the
sub-adviser believes offer significant potential for long-term appreciation. The
Series normally has at least three countries represented in its portfolio,
including both developed and emerging markets.
Putnam's Core International Equity team seeks consistent, above-average relative
returns and below-average relative risk through a balance of country and sector
diversification and the selection of believed underpriced companies. The team's
process relies on both top-down macroeconomic and market analysis and bottom-up
fundamental company research.
Putnam selects stocks through a bottom up process, using its valuation approach
to identify significantly mispriced companies. Its expertise is in identifying
stocks selling for less than their real or relative worth regardless of the type
of company (i.e., growth, cyclical, or mature) or the current market
environment. Putnam begins by screening its international stock database of over
5,500 non-U.S. companies to identify those companies with a positive valuation
indicator (price to book relative to return on equity). Stocks passing this
initial valuation screen are then subjected to a rigorous process. The decision
to purchase a stock is based on the combined judgment of the Core International
Equity portfolio managers, and their decision must be unanimous. Putnam
typically visits all companies before a purchase decision is finalized.PRINCIPAL
RISKS OF INVESTING IN THE SERIES. An investment in the Series is not guaranteed.
As with any mutual fund, the value of the Series' shares will change and you
could lose money by investing in the Series. A variety of factors may influence
its investment performance, such as:
o Market risk. Because the Series invests in stocks, it is subject to
stock market risk. Stock prices typically fluctuate more than the
values of other types of securities, typically in response to changes
in the particular company's financial condition and factors affecting
the market in general. For example, unfavorable or unanticipated poor
earnings performance of the company may result in a decline in its
stock's price, and a broad-based market drop may also cause a stock's
price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities.
o Emerging markets risk. The Series may invest a portion of its assets
in securities of issuers in emerging markets, which involves greater
risk. Emerging market countries typically have economic and political
systems that are less developed, and likely to be less stable, than
those of more advanced countries. Emerging market countries may have
policies that restrict investment by foreigners, and there is a higher
risk of a government taking private property. Low or nonexistent
trading volume in securities of issuers in emerging markets may result
in a lack of liquidity and in price volatility. Issuers in emerging
markets typically are subject to a greater degree of change in
earnings and business prospects than are companies in developed
markets.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks. The
Series sub-adviser must correctly predict price movements, during the
life of a derivative, of the underlying asset in order to realize the
desired results from the investment. The value of derivatives may rise
or fall more rapidly than other investments, which may increase the
volatility of the Series depending on the nature and extent of the
derivatives in the Series' portfolio. If the sub-adviser uses
derivatives in attempting to manage or "hedge" the overall risk of the
portfolio, the strategy might not be successful, for example, due to
changes in the value of the derivatives that do not correlate with
price movements in the rest of the portfolio.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series. PERFORMANCE.
The bar chart and table below show the past performance of the Series' shares.
The chart presents the annual returns and shows how performance has varied from
year to year. The table shows the Series' annual returns and compares them to a
broad based index since these shares were first offered. Both the chart and the
table assume reinvestment of dividends and distributions. The Series' returns
shown in the chart and table below do not reflect the deduction of any charges
that are imposed under a variable insurance contract. Those charges, which are
described in the variable insurance prospectus, will reduce the Series'
performance. As with all mutual funds, the Series' past performance does not
necessarily indicate how it will perform in the future.
As of the effective date of this Prospectus, Putnam Investment Management, Inc.
has replaced Rowe-Price Fleming International, Inc. as the sub-adviser for the
Series. Therefore, the performance information shown below is not indicative in
any manner of how the Series will perform in the future.
Annual Total Returns as of December 31(Results achieved by prior sub-adviser)
13.91% 2.65% 14.43% 32.11%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
23.24% (4th quarter of 1999) and its lowest quarterly return was -13.48% (3rd
quarter of 1998).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/Putnam International Equity Series 32.11% 14.78%
Morgan Stanley Europe and Australasia,
Far East Equity Index 25.27% 11.61%
The Morgan Stanley Europe and Australasia, Far East Equity Index is a
broad-based, unmanaged index. * The Series began operations on May 15, 1995.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.18%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.18%
- ---------------------------------------------------------------------------=----
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $120
- --------------------------------------------------------------------------------
3 Years $375
- --------------------------------------------------------------------------------
5 Years $649
- --------------------------------------------------------------------------------
10 Years $1,432
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. In addition to common stocks, the Series may also
invest in other types of securities, such as preferred stocks, convertible
securities, fixed-income securities.
The Series may use derivative instruments, such as futures contracts, options
and forward currency contracts, for hedging and risk management. These
instruments are subject to transaction costs and certain risks, such as
unanticipated changes in securities prices and global currency markets.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Putnam
International Equity Series is Putnam Investment Management, Inc. (Putnam)
located at One Post Office Square, Boston, Massachusetts 02109. Putnam has been
managing mutual funds since 1937.
The Series is managed by the Core International Equity team at Putnam. The team
is headed by Omid Kamshad, Managing Director and Chief Investment Officer of the
group. Mr. Kamshad has been employed by Putnam since 1996. Prior to January
1996, Mr. Kamshad was employed at Lombard Odier International Portfolio
Management Limited and prior to April 1995, he was employed at Baring Asset
Management Company.
<PAGE>
JNL/PUTNAM MIDCAP GROWTH SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/Putnam Midcap Growth
Series is capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES. The Series invests mainly in common stocks of
U.S. companies with a focus on growth stocks which are stocks whose earnings the
sub-adviser believes are likely to grow faster than the economy as a whole.
Growth stocks typically trade at higher multiples of current earnings than other
stocks. Therefore, the values of growth stocks may be more sensitive to changes
in current or expected earnings than the values of other stocks.
Growth stocks are issued by companies whose earnings the sub-adviser believes
are likely to grow faster than the economy as a whole. Growth in a company's
earnings may lead to an increase in the price of its stock. The Series invests
mainly in mid-cap companies.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of companies, it is
subject to stock market risk. Stock prices typically fluctuate more
than the values of other types of securities, typically in response to
changes in the particular company's financial condition and factors
affecting the market in general. For example, unfavorable or
unanticipated poor earnings performance of the company may result in a
decline in its stock's price, and a broad-based market drop may also
cause a stock's price to fall. Investing in small and mid-size
companies generally involves greater risks than investing in larger
more established ones.
o Growth investing risk. Growth companies usually invest a high portion
of earnings in their businesses, and may lack the dividends of value
stocks that can cushion prices in a falling market. Also, earnings
disappointments often lead to sharp declines in prices because
investors buy growth stocks in anticipation of superior earnings
growth.There is a risk that the market as a whole may not favor the
type of investments which the Series makes.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. This Series will commence investment operations on or about the
date of this Prospectus. Therefore, a bar chart and table have not been included
for this Series.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.05%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.05%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $107
- --------------------------------------------------------------------------------
3 Years $334
- --------------------------------------------------------------------------------
5 Years $579
- --------------------------------------------------------------------------------
10 Years $1,283
- --------------------------------------------------------------------------------
COMPARABLE PERFORMANCE
PRIVATE ACCOUNT PERFORMANCE COMPOSITE
The Putnam/JNL Midcap Series has substantially similar investment objectives,
policies and investment strategies as certain Private Accounts. Each of these
Private Accounts is managed by the Putnam Advisory Company Inc. of Putnam
Fiduciary Trust Company, affiliates of the Sub-Adviser which manages the
corresponding Series.
The historical performance of a composite of these Private Accounts is shown
below. This performance data should not be considered as an indication of future
performance of the Series. The Private Account performance figures shown below:
o do not reflect Contract fees or charges imposed by Jackson National Life.
Investors should refer to the separate account prospectus for information
describing the Contract fees and charges. These fees and charges will have
a detrimental effect on Series performance.
The Series and their corresponding Private Account are expected to hold similar
securities. However, their investment results are expected to differ for the
following reasons:
o differences in asset size and cash flow resulting from purchases and
redemptions of Series shares may result in different security selections
o differences in the relative weightings of securities
o differences in the price paid for particular portfolio holdings
o differences relating to certain tax matters
o differences in that Private Accounts are not subject to certain investment
limitations, diversification requirements and other restrictions imposed by
federal tax and securities laws.
However, the differences cited do not alter the conclusion that the Funds have
substantially similar investment objectives, policies and strategies.
The chart below shows performance information derived from historical composite
performance of Private Accounts. The inception date for the composite shown is
April 1, 1992.
PUTNAM MIDCAP EQUITY (S&P MIDCAP 400) COMPOSITE RETURNS AS OF 12/31/1999
- -------------------------------- ------------------- ---------------------------
Putnam Composite S&P Midcap 400 Index
- -------------------------------- ------------------- ---------------------------
1 YEAR 39.76% 14.72%
- -------------------------------- ------------------- ---------------------------
3 YEARS (ANNUALIZED) 26.88% 21.82%
- -------------------------------- ------------------- ---------------------------
5 YEARS (ANNUALIZED) 28.18% 23.05%
- -------------------------------- ------------------- ---------------------------
INCEPTION * (ANNUALIZED) 23.04% 17.48%
- -------------------------------- ------------------- ---------------------------
*Inception April 1, 1992.
1. Composition of Composite
The inception date for the Putnam Midcap Equity (S&P Midcap 400)
Composite was April 1, 1992. The composite is composed of all US
institutional tax-exempt accounts managed by Putnam in this investment
style. It does not include performance of retail funds, accounts for
taxable entities, accounts for non-US investors and accounts whose
investment guidelines differ in a material way from the standard
guidelines established by Putnam for its Midcap Equity (S&P Midcap 400)
accounts. Since tax exempt institutional accounts typically do not need
to manage subscriptions and redemptions on a daily basis, performance
will vary from that of a mutual fund investing in the same investment
style.
Composite returns reflect the deduction of all expenses. The fees
deducted are the same as the highest fees charged by the Series.
Accounts are included no later than the beginning of the first calendar
quarter following three months from the date of funding, and are
excluded as of the last full calendar month under management or such
prior date Putnam receives notice of termination and begins managing
the account in a manner different from other accounts in the composite.
2. Calculation of Composite; Index Disclosure
The investment performance of an individual account within a composite
is calculated monthly using a time-weighted, rate-of-return calculation
method. The investment performance of a composite is calculated monthly
by summing the size-weighted return for that month of the individual
accounts that make up the composite for the month in question. The
investment performance of a composite over periods longer than a month
is calculated by linking its monthly rates of return. The composite's
benchmark is the S&P Midcap 400 Index. Performance calculations for
Putnam accounts and comparative indices reflect changes in value and
reinvestment of all distributions. Putnam portfolios are actively
managed using specified strategies, while the indices are unmanaged and
may contain securities different from those included in Putnam
portfolios.
3. AIMR Verification
The Putnam Midcap Equity (S&P Midcap 400) Composite has been Level II
verified by Arthur Andersen LLP for the calendar years 1993, 1994,
1995, 1996, and 1997. A list of Putnam's composites and auditors'
reports is available upon request. The AIMR requirements differ than
the requirements of the Securities and Exchange Commission.
4. Past Performance
Past performance is not necessarily indicative of future performance.
No assurance can be given as to future performance.
A Series' 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 magnified performance impact on a Series with a small asset base. A
Series may not experience similar performance as its assets grow.
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES.
The Series may also invest in securities of foreign issuers which involve
certain special risks. These risks include, among others, adverse fluctuations
in foreign currency values as well as adverse political, social and economic
developments affecting a foreign country. In addition, foreign investing
involves less publicly available information and more volatile or less liquid
markets. Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment proceeds
from a foreign country, foreign tax laws, and potential difficulties in
enforcing contractual obligations. Transactions in foreign securities may be
subject to less efficient settlement practices, including extended clearance and
settlement periods. Foreign accounting may be less revealing than American
accounting practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate more than if
it held only U.S. securities. To the extent that the Series invests in bonds
issued by a foreign government, the Series may have limited legal recourse in
the event of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
The Series may buy and sell investments relatively often, which involves higher
brokerage commissions and other expenses.
In addition to the main investment strategies described above, the Series may
make other investments, such as investments in preferred stocks, convertible
securities, debt instruments and derivatives, which may be subject to other
risks, as described in the SAI.
At times the sub-adviser may judge that market conditions make pursuing the
Series' usual investment strategies inconsistent with the best interests of the
Series' shareholders. The sub-adviser then may temporarily use alternative
strategies that are mainly designed to limit losses. However, the sub-adviser
may choose not to use these strategies for a variety of reasons, even in very
volatile market conditions. These strategies may cause the Series to miss out on
investment opportunities, and may prevent the Series from achieving its goal.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT The sub-adviser to the JNL/Putnam
Midcap Growth Series is Putnam Investment Management, Inc. (Putnam) located at
One Post Office Square, Boston, Massachusetts 02109. Putnam has been managing
mutual funds since 1937.
The Series is managed by the Midcap Equity Growth team at Putnam. The team is
headed by Eric M. Wetlaufer, Managing Director and Chief Investment Officer for
the group. Mr. Welaufer has been with Putnam since 1997.
Prior to 1997 Mr. Wetlaufer was with Cadence Capital Management.
<PAGE>
JNL/PUTNAM VALUE EQUITY SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/Putnam Value Equity
Series is capital growth, with income as a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objectives by
investing primarily in a diversified portfolio of equity securities of domestic,
large-capitalization companies. At least 65% of its total assets will be
invested, under normal market conditions, in equity securities. For this
purpose, equity securities include common stocks, securities convertible into
common stock and securities with common stock characteristics, such as rights
and warrants. The Series considers a large-capitalization company to be one
that, at the time its securities are acquired by the Series, has a market
capitalization of $2 billion or greater.
The JNL/Putnam Value Equity Series invests primarily in equity securities of
domestic, large-capitalization companies. The sub-adviser typically selects
companies whose stocks have distinctly above-average dividend yields and market
prices that it believes are undervalued relative to the normal earning power of
the company. Under this approach, the sub-adviser seeks to identify investments
where current investor enthusiasm is low, as reflected in their valuations. The
sub-adviser typically reduces the Series' exposure to a company when its stock
price approaches, in the sub-adviser's judgment, fair valuation.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in the equity securities of
U.S. and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities.
o Value investing risk. With a value approach, there is also the risk
that stocks may remain undervalued during a given period. This may
happen because value stocks as a category lose favor with investors
compared to growth stocks or because the manager failed to anticipate
which stocks or industries would benefit from changing market or
economic conditions.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
24.33% 21.82% 12.48% -1.04%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
16.64% (4th quarter of 1998) and its lowest quarterly return was -11.73% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/Putnam Value Equity Series -1.04% 16.96%
S&P 500 Index 21.04% 26.95%
The S&P 500 Index is a broad-based, unmanaged index.
* The Series began operations on May 15, 1995. Prior to May 1, 1997, the Series
was managed by PPM America, Inc.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 0.98%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 0.98%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $100
- --------------------------------------------------------------------------------
3 Years $312
- --------------------------------------------------------------------------------
5 Years $542
- --------------------------------------------------------------------------------
10 Years $1,201
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The SAI has more information about the Series'
authorized investments and strategies, as well as the risks and restrictions
that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/Putnam
Value Equity Series is Putnam Investment Management, Inc. (Putnam), located at
One Post Office Square, Boston, Massachusetts 02109. Putnam has been managing
mutual funds since 1937.The Series is managed by the Large Cap Value team at
Putnam. The team is headed by Deborah F. Kuenstner, CFA, Managing Director and
Chief Investment Officer of the group. In this role, she heads the team managing
large-cap value equity portfolios for retail and institutional clients. Ms.
Kuenstner joined Putnam in 1997 as Senior Vice President and Senior Portfolio
Manager in the International Core and Value Equity Group. In 1998, she was
promoted to Chief Investment Officer of the International Value Equities team. A
Chartered Financial Analyst, Ms. Kuenster has 20 years of investment experience.
Before joining Putnam, Ms. Kuenster was a Senior Portfolio Manager of
International Equities from 1989 through 1997 at DuPont Pension Fund Investment.
<PAGE>
JNL/S&P CONSERVATIVE GROWTH SERIES I
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Conservative
Growth Series I is capital growth and current income.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which the JNL/S&P Conservative Growth Series I
may invest are the 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 Value Equity Series, JNL/Putnam Midcap
Growth Series, PPM America/JNL Balanced Series, PPM America/JNL High Yield Bond
Series, PPM America/JNL Money Market Series, Salomon Brothers/JNL Global Bond
Series, Salomon Brothers/JNL U.S. Government & Quality Bond Series, T. Rowe
Price/JNL Established Growth Series, T. Rowe Price/JNL Mid-Cap Growth Series,
and T. Rowe Price/JNL Value Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Series that invest in stocks of large established companies as well as those
that invest in stocks of smaller companies with above-average growth potential.
The Series seeks to achieve current income through its investments in Underlying
Series that invest primarily in fixed-income securities. These investments may
include Underlying Series that invest in foreign bonds denominated in currencies
other than U.S. dollars as well as Underlying Series that invest exclusively in
bonds of U.S. issuers. The Series may invest in Underlying Series that invest
exclusively in investment-grade securities, as well as Underlying Series that
invest in high-yield, high-risk bonds.
Under normal circumstances, the Series allocates approximately 55% to 65% of its
assets to Underlying Series that invest primarily in equity securities, 30% to
40% to Underlying Series that invest primarily in fixed-income securities and 0%
to 10% to Underlying Series that invest primarily in money market funds. Within
these three asset classes, the Series remains flexible with respect to the
percentage it will allocate among Underlying Series.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence the
performance of the Series, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information, more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, an Underlying Series would experience a
reduction in its income, a decline in the market value of the
securities so affected and a decline in the value of its shares.
During an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which
could adversely affect their ability to service principal and interest
payment obligations, to meet projected business goals and to obtain
additional financing. The market prices of lower-rated securities are
generally less sensitive to interest rate changes than higher-rated
investments, but more sensitive to adverse economic or political
changes, or individual developments specific to the issuer. Periods of
economic or political uncertainty and change can be expected to result
in volatility of prices of these securities.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of an Underlying Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other Series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
19.52%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
13.55% (4th quarter of 1999) and its lowest quarterly return was -2.99% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Conservative Growth Series I 19.52% 13.85%
S&P 500 Index 21.05% 19.06%
S&P 500 Index /Lehman Bond Aggregate
Total Return Series 12.30% 13.16%
The S&P 500 Index and the Lehman Bond Aggregate Total Return Series are
broad-based, unmanaged indexes. The total returns were calculated according to
the following weightings: the S&P 500 Index represents 60% of the equity
investments and the Lehman Bond Aggregate Total Return Series represents 40% of
the fixed-income investments of the Series.
* The Series began operations on April 9, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIESASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 1.13%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Conservative Growth Series I asset
allocation is expected to result in less risk than that incurred by 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 or JNL/S&P Equity
Aggressive Growth Series I.
When the sub-adviser believes that a temporary defensive position is desirable,
the Series may invest up to 100% of its assets in cash or cash equivalents.
Doing so may reduce the potential for appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P
Conservative Growth Series I is Standard & Poor's Investment Advisory Services,
Inc. (SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was
established in 1995 to provide investment advice to the financial community.
SPIAS operates independently of and has no access to analysis or other
information supplied or obtained by Standard & Poor's Ratings Services in
connection with its ratings business, except to the extent such information is
made available by Standard & Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P MODERATE GROWTH SERIES I
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Moderate Growth
Series I is to seek capital growth. Current income is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objectives by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which the JNL/S&P Moderate Growth Series I may
invest are the 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 Value Equity Series, JNL/Putnam Midcap
Growth Series, PPM America/JNL Balanced Series, PPM America/JNL High Yield Bond
Series, PPM America/JNL Money Market Series, Salomon Brothers/JNL Global Bond
Series, Salomon Brothers/JNL U.S. Government & Quality Bond Series, T. Rowe
Price/JNL Established Growth Series, T. Rowe Price/JNL Mid-Cap Growth Series,
and T. Rowe Price/JNL Value Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Underlying Series that invest in stocks of large established companies as well
as those that invest in stocks of smaller companies with above-average growth
potential.
The Series seeks to achieve current income through its investments in Underlying
Series that invest primarily in fixed-income securities. These investments may
include Underlying Series that invest in foreign bonds denominated in currencies
other than U.S. dollars as well as Underlying Series that invest exclusively in
bonds of U.S. issuers. The Series may invest in Underlying Series that invest
exclusively in investment-grade securities, as well as Underlying Series that
invest in high-yield, high-risk bonds.
Under normal circumstances, the Series allocates approximately 70% to 80% of its
assets to Underlying Series that invest primarily in equity securities and 20%
to 30% to Underlying Series that invest primarily in fixed-income securities.
Within these asset classes, the Series remains flexible with respect to the
percentage it will allocate among particular Underlying Series.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, an Underlying Series would experience a
reduction in its income, a decline in the market value of the
securities so affected and a decline in the value of its shares.
During an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which
could adversely affect their ability to service principal and interest
payment obligations, to meet projected business goals and to obtain
additional financing. The market prices of lower-rated securities are
generally less sensitive to interest rate changes than higher-rated
investments, but more sensitive to adverse economic or political
changes, or individual developments specific to the issuer. Periods of
economic or political uncertainty and change can be expected to result
in volatility of prices of these securities.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
26.74%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
17.87% (4th quarter of 1999) and its lowest quarterly return was -3.54% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Moderate Growth Series I 26.74% 18.75%
S&P 500 Index 21.05% 19.06%
S&P 500 Index/ Lehman Bond Aggregate
Total Return Series 15.58% 15.38%
The S&P 500 Index and the Lehman Bond Aggregate Total Return Series are
broad-based, unmanaged indexes. The total returns were calculated according to
the following weightings: the S&P 500 Index represents 75% of the equity
investments and the Lehman Bond Aggregate Total Return Series represents 25% of
the fixed-income investments of the Series.
* The Series began operations on April 8, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 Moderate Growth Series I.................................... 1.15%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THEOTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Moderate Growth Series I asset allocation
is expected to result in less risk than that incurred by JNL/S&P Aggressive
Growth Series I, JNL/S&P Very Aggressive Growth Series I, JNL/S&P Equity Growth
Series I or JNL/S&P Equity Aggressive Growth Series I, but more risk than
JNL/S&P Conservative Growth Series I.
When the sub-adviser believes that a temporary defensive position is desirable,
the Series may invest up to 100% of its assets in cash or cash equivalents.
Doing so may reduce the potential for appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P
Moderate Growth Series I is Standard & Poor's Investment Advisory Services, Inc.
(SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was established
in 1995 to provide investment advice to the financial community. SPIAS operates
independently of and has no access to analysis or other information supplied or
obtained by Standard & Poor's Ratings Services in connection with its ratings
business, except to the extent such information is made available by Standard &
Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P AGGRESSIVE GROWTH SERIES I
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Aggressive Growth
Series I is capital growth.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which the JNL/S&P Aggressive Growth Series I
may invest are the 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 Value Equity Series, JNL/Putnam Midcap
Growth Series, PPM America/JNL Balanced Series, PPM America/JNL High Yield Bond
Series, PPM America/JNL Money Market Series, Salomon Brothers/JNL Global Bond
Series, Salomon Brothers/JNL U.S. Government & Quality Bond Series, T. Rowe
Price/JNL Established Growth Series, T. Rowe Price/JNL Mid-Cap Growth Series,
and T. Rowe Price/JNL Value Series.
The Series seeks to achieve capital growth primarily through its investments in
Underlying Series that invest primarily in equity securities. These investments
may include Series that invest in stocks of large established companies as well
as those that invest in stocks of smaller companies with above-average growth
potential.
The Series seeks to achieve capital growth secondarily through its investment in
Underlying Series that invest primarily in fixed-income securities. These
investments may include Underlying Series that invest in foreign bonds
denominated in currencies other than U.S. dollars as well as Underlying Series
that invest exclusively in bonds of U.S. issuers. The Series may invest in
Underlying Series that invest exclusively in investment-grade securities, as
well as Underlying Series that invest in high-yield, high-risk bonds.
Under normal circumstances, the Series allocates approximately 85% to 95% of its
assets to Underlying Series that invest primarily in equity securities and 5% to
15% to Underlying Series that invest primarily in fixed-income securities.
Within these asset classes, the Series remains flexible with respect to the
percentage it will allocate among particular Underlying Series.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
investment performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.High-yield/high-risk bonds. Lower-rated bonds involve a
higher degree of credit risk, which is the risk that the issuer will
not make interest or principal payments when due. In the event of an
unanticipated default, an Underlying Series would experience a
reduction in its income, a decline in the market value of the
securities so affected and a decline in the value of its shares.
During an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which
could adversely affect their ability to service principal and interest
payment obligations, to meet projected business goals and to obtain
additional financing. The market prices of lower-rated securities are
generally less sensitive to interest rate changes than higher-rated
investments, but more sensitive to adverse economic or political
changes, or individual developments specific to the issuer. Periods of
economic or political uncertainty and change can be expected to result
in volatility of prices of these securities.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited recourse in the event of
default. Political conditions, especially a country's willingness to
meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series. PERFORMANCE. The bar chart and table below show the past performance of
the Series' shares. The chart presents the annual returns and shows how
performance has varied from year to year. The table shows the Series' annual
returns and compares them to a broad based index since these shares were first
offered. Both the chart and the table assume reinvestment of dividends and
distributions. The Series' returns shown in the chart and table below do not
reflect the deduction of any charges that are imposed under a variable insurance
contract. Those charges, which are described in the variable insurance
prospectus, will reduce the Series' performance. As with all mutual funds, the
Series' past performance does not necessarily indicate how it will perform in
the future.
Annual Total Returns as of December 31
35.38%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
22.84% (4th quarter of 1999) and its lowest quarterly return was -3.85% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Aggressive Growth Series I 35.38% 25.02%
S&P 500 Index 21.05% 19.06%
S&P 500 Index/ Lehman Bond Aggregate
Total Return Series 18.86% 17.59%
The S&P 500 Index and the Lehman Bond Aggregate Total Return Series are
broad-based, unmanaged indexes. . The total returns were calculated according to
the following weightings: the S&P 500 Index represents 90% of the equity
investments and the Lehman Bond Aggregate Total Return Series represents 10% of
the fixed-income investments of the Series.
* The Series began operations on April 8, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 Aggressive Growth Series I.................................. 1.18%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Aggressive Growth Series I asset allocation
is expected to result in less risk than that incurred by JNL/S&P Very Aggressive
Growth Series I, JNL/S&P Equity Growth Series I or JNL/S&P Equity Aggressive
Growth Series I, but more risk than JNL/S&P Conservative Growth Series I or
JNL/S&P Moderate Growth Series I.
When the sub-adviser believes that a temporary defensive position is desirable,
the Series may invest up to 100% of its assets in cash or cash equivalents.
Taking a defensive position may reduce the potential for appreciation of the
Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P
Aggressive Growth Series I is Standard & Poor's Investment Advisory Services,
Inc. (SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was
established in 1995 to provide investment advice to the financial community.
SPIAS operates independently of and has no access to analysis or other
information supplied or obtained by Standard & Poor's Ratings Services in
connection with its ratings business, except to the extent such information is
made available by Standard & Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P VERY AGGRESSIVE GROWTH SERIES I
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Very Aggressive
Growth Series I is capital growth.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which the JNL/S&P Very Aggressive Growth
Series I may invest are the 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 Value Equity Series, JNL/Putnam Midcap
Growth Series, PPM America/JNL Balanced Series, PPM America/JNL High Yield Bond
Series, PPM America/JNL Money Market Series, Salomon Brothers/JNL Global Bond
Series, Salomon Brothers/JNL U.S. Government & Quality Bond Series, T. Rowe
Price/JNL Established Growth Series, T. Rowe Price/JNL Mid-Cap Growth Series,
and T. Rowe Price/JNL Value Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Series that invest in stocks of large established companies as well as those
that invest in stocks of smaller companies with above-average growth potential.
Under normal circumstances, the Series allocates up to 100% of its assets to
Underlying Series that invest primarily in equity securities. The Series remains
flexible with respect to the percentage it will allocate among those particular
Underlying Series that invest primarily in equity securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
investment performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, a Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series. PERFORMANCE. The bar chart and table below show the past performance of
the Series' shares. The chart presents the annual returns and shows how
performance has varied from year to year. The table shows the Series' average
annual returns and compares them to a broad based index since these shares were
first offered. Both the chart and the table assume reinvestment of dividends and
distributions. The Series' returns shown in the chart and table below do not
reflect the deduction of any charges that are imposed under a variable insurance
contract. Those charges, which are described in the variable insurance
prospectus, will reduce the Series' performance. As with all mutual funds, the
Series' past performance does not necessarily indicate how it will perform in
the future.
Annual Total Returns as of December 31
48.86%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
29.63% (4th quarter of 1999) and its lowest quarterly return was -2.43% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Very Aggressive Growth Series I 48.86% 33.84%
S&P 500 Index 21.05% 19.06%
The S&P 500 Index is a broad-based, unmanaged indexes. The S&P 500 Index
represents 100% of the equity investments of the Series.
* The Series began operations on April 1, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 Very Aggressive Growth Series I............................. 1.18%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Very Aggressive Growth Series I asset
allocation is expected to result in more risk than that incurred by JNL/S&P
Conservative Growth Series I, JNL/S&P Moderate Growth Series I, JNL/S&P
Aggressive Growth Series I, JNL/S&P Equity Growth Series I or JNL/S&P Equity
Aggressive Growth Series I.
When the sub-adviser believes that a temporary defensive position is desirable,
the Series may invest up to 100% of its assets in cash, cash equivalents or
Underlying Series that invest primarily in fixed-income securities. Taking a
defensive position may reduce the potential for appreciation of the Series'
portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P Very
Aggressive Growth Series I is Standard & Poor's Investment Advisory Services,
Inc. (SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was
established in 1995 to provide investment advice to the financial community.
SPIAS operates independently of and has no access to analysis or other
information supplied or obtained by Standard & Poor's Ratings Services in
connection with its ratings business, except to the extent such information is
made available by Standard & Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services ) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P EQUITY GROWTH SERIES I
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Equity Growth
Series I is capital growth.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which JNL/S&P Equity Growth Series I may
invest are the 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 Value Equity Series, JNL/Putnam Midcap
Growth Series, PPM America/JNL Balanced Series, PPM America/JNL High Yield Bond
Series, PPM America/JNL Money Market Series, Salomon Brothers/JNL Global Bond
Series, Salomon Brothers/JNL U.S. Government & Quality Bond Series, T. Rowe
Price/JNL Established Growth Series, T. Rowe Price/JNL Mid-Cap Growth Series,
and T. Rowe Price/JNL Value Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Series that invest in stocks of large established companies as well as those
that invest in stocks of smaller companies with above-average growth potential.
Under normal circumstances, the Series allocates 100% of its assets to
Underlying Series that invest primarily in equity securities. The Series remains
flexible with respect to the percentage it will allocate among those particular
Underlying Series that invest primarily in equity securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
investment performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, a Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series. PERFORMANCE. The bar chart and table below show the past performance of
the Series' shares. The chart presents the annual returns and shows how
performance has varied from year to year. The table shows the annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
43.19%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
27.60% (4th quarter of 1999) and its lowest quarterly return was -3.40% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Equity Growth Series I 43.19% 27.72%
S&P 500 Index 21.05% 19.06%
The S&P 500 Index is a broad-based, unmanaged indexes. The S&P 500 Index
represents 100% of the equity investments of the Series.
* The Series began operations on April 13, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 Equity Growth Series I...................................... 1.19%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Equity Growth Series I asset allocation is
expected to result in more risk than that incurred by JNL/S&P Conservative
Growth Series I, JNL/S&P Moderate Growth Series I and JNL/S&P Aggressive Growth
Series I, but less risk than JNL/S&P Equity Aggressive Growth Series I or
JNL/S&P Very Aggressive Growth Series I. When the sub-adviser believes that a
temporary defensive position is desirable, the Series may invest up to 100% of
its assets in cash, cash equivalents or Underlying Series that invest primarily
in fixed-income securities. Taking a defensive position may reduce the potential
for appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P Equity
Growth Series I is Standard & Poor's Investment Advisory Services, Inc. (SPIAS),
located at 25 Broadway, New York, New York 10004. SPIAS was established in 1995
to provide investment advice to the financial community. SPIAS operates
independently of and has no access to analysis or other information supplied or
obtained by Standard & Poor's Ratings Services in connection with its ratings
business, except to the extent such information is made available by Standard &
Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P EQUITY AGGRESSIVE GROWTH SERIES I
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Equity Aggressive
Growth Series I is capital growth.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which JNL/S&P Equity Aggressive Growth Series
I may invest are the 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 Value Equity Series, JNL/Putnam Midcap
Growth Series, PPM America/JNL Balanced Series, PPM America/JNL High Yield Bond
Series, PPM America/JNL Money Market Series, Salomon Brothers/JNL Global Bond
Series, Salomon Brothers/JNL U.S. Government & Quality Bond Series, T. Rowe
Price/JNL Established Growth Series, T. Rowe Price/JNL Mid-Cap Growth Series,
and T. Rowe Price/JNL Value Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Series that invest in stocks of large established companies as well as those
that invest in stocks of smaller companies with above-average growth potential.
Under normal circumstances, the Series allocates 100% of its assets to
Underlying Series that invest primarily in equity securities. The Series remains
flexible with respect to the percentage it will allocate among those particular
Underlying Series that invest primarily in equity securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
investment performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging market may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, a Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
45.25%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
28.62% (4th quarter of 1999) and its lowest quarterly return was -2.88% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Equity Aggressive Growth Series I 45.25% 29.67%
S&P 500 Index 21.05% 19.06%
The S&P 500 Index is a broad-based, unmanaged indexes. The S&P 500 Index
represents 100% of the equity investments of the Series.
* The Series began operations on April 15, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 Equity Aggressive Growth Series I........................... 1.18%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Equity Aggressive Growth Series I asset
allocation is expected to result in more risk than that incurred by JNL/S&P
Conservative Growth Series I, JNL/S&P Moderate Growth Series I, JNL/S&P
Aggressive Growth Series I or JNL/S&P Equity Growth Series I, but less risk than
JNL/S&P Very Aggressive Growth Series I.
When the sub-adviser believes that a temporary defensive position is desirable,
the Series may invest up to 100% of its assets in cash, cash equivalents or
Underlying Series that invest primarily in fixed-income securities. Taking a
defensive position may reduce the potential for appreciation of the Series'
portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P Equity
Aggressive Growth Series I is Standard & Poor's Investment Advisory Services,
Inc. (SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was
established in 1995 to provide investment advice to the financial community.
SPIAS operates independently of and has no access to analysis or other
information supplied or obtained by Standard & Poor's Ratings Services in
connection with its ratings business, except to the extent such information is
made available by Standard & Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P CONSERVATIVE GROWTH SERIES II
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Conservative
Growth Series II is capital growth and current income.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which the JNL/S&P Conservative Growth Series
II may invest are the JNL/Alliance Growth Series, JNL/J.P. Morgan International
& Emerging Markets Series, JNL/Janus Aggressive Growth Series, JNL/Janus Global
Equities Series, JNL/Janus Growth & Income Series, JNL/PIMCO Total Return Bond
Series, JNL/Putnam Growth Series, JNL/Putnam International Equity Series,
JNL/Putnam Value Equity Series, JNL/Putnam Midcap Growth Series, Lazard/JNL Mid
Cap Value Series, Lazard/JNL Small Cap Value Series, PPM America/JNL Money
Market Series, Salomon Brothers/JNL Balanced Series, Salomon Brothers/JNL Global
Bond Series, Salomon Brothers/JNL High Yield Bond Series, and T. Rowe Price/JNL
Mid-Cap Growth Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Underlying Series that invest in stocks of large established companies as well
as those that invest in stocks of smaller companies with above-average growth
potential.
The Series seeks to achieve current income through its investments in Underlying
Series that invest primarily in fixed-income securities. These investments may
include Underlying Series that invest in foreign bonds denominated in currencies
other than U.S. dollars as well as Underlying Series that invest exclusively in
bonds of U.S. issuers. The Series may invest in Underlying Series that invest
exclusively in investment-grade securities, as well as Underlying Series that
invest in high-yield, high-risk bonds.
Under normal circumstances, the Series allocates approximately 60% to 70% of its
assets to Underlying Series that invest primarily in equity securities and 30%
to 40% to Underlying Series that invest primarily in fixed-income securities.
Within these asset classes, the Series remains flexible with respect to the
percentage it will allocate among particular Underlying Series.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, an Underlying Series would experience a
reduction in its income, a decline in the market value of the
securities so affected and a decline in the value of its shares.
During an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which
could adversely affect their ability to service principal and interest
payment obligations, to meet projected business goals and to obtain
additional financing. The market prices of lower-rated securities are
generally less sensitive to interest rate changes than higher-rated
investments, but more sensitive to adverse economic or political
changes, or individual developments specific to the issuer. Periods of
economic or political uncertainty and change can be expected to result
in volatility of prices of these securities.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series. PERFORMANCE. The bar chart and table below show the past performance of
the Series' shares. The chart presents the annual returns and shows how
performance has varied from year to year. The table shows the Series' annual
returns and compares them to a broad based index since these shares were first
offered. Both the chart and the table assume reinvestment of dividends and
distributions. The Series' returns shown in the chart and table below do not
reflect the deduction of any charges that are imposed under a variable insurance
contract. Those charges, which are described in the variable insurance
prospectus, will reduce the Series' performance. As with all mutual funds, the
Series' past performance does not necessarily indicate how it will perform in
the future.
Annual Total Returns as of December 31
16.14%
[Inert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
12.71% (4th quarter of 1999) and its lowest quarterly return was -3.63% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Conservative Growth Series II 16.14% 6.14%
S&P 500 Index 21.05% 19.06%
S&P 500 Index/ Lehman Bond Aggregate
Total Return Series 13.39% 13.90%
The S&P 500 Index and the Lehman Bond Aggregate Total Return Series are
broad-based, unmanaged indexes. . The total returns were calculated according to
the following weightings: the S&P 500 Index represents 65% of the equity
investments and the Lehman Bond Aggregate Total Return Series represents 35% of
the fixed-income investments of the Series.
* The Series began operations on April 13, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 II ........................... 1.15%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Conservative Growth Series II asset
allocation is expected to result in less risk than that incurred by JNL/S&P
Moderate Growth Series II, JNL/S&P Aggressive Growth Series II, JNL/S&P Very
Aggressive Growth Series II, JNL/S&P Equity Growth Series II or JNL/S&P Equity
Aggressive Growth Series II.
When the sub-adviser believes that a temporary defensive position is desirable,
the Series may invest up to 100% of its assets in cash or cash equivalents.
Doing so may reduce the potential for appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P
Conservative Growth Series II is Standard & Poor's Investment Advisory Services,
Inc. (SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was
established in 1995 to provide investment advice to the financial community.
SPIAS operates independently of and has no access to analysis or other
information supplied or obtained by Standard & Poor's Ratings Services in
connection with its ratings business, except to the extent such information is
made available by Standard & Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P MODERATE GROWTH SERIES II
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Moderate Growth
Series II is capital growth. Current income is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its investment
objectives by investing in a diversified group of other Series of the Trust
(Underlying Series). The Underlying Series in which the JNL/S&P Moderate Growth
Series II may invest are the JNL/Alliance Growth Series, JNL/J.P. Morgan
International & Emerging Markets Series, JNL/Janus Aggressive Growth Series,
JNL/Janus Global Equities Series, JNL/Janus Growth & Income Series, JNL/PIMCO
Total Return Bond Series, JNL/Putnam Growth Series, JNL/Putnam International
Equity Series, JNL/Putnam Value Equity Series, JNL/Putnam Midcap Growth Series,
Lazard/JNL Mid Cap Value Series, Lazard/JNL Small Cap Value Series, PPM
America/JNL Money Market Series, Salomon Brothers/JNL Balanced Series, Salomon
Brothers/JNL Global Bond Series, Salomon Brothers/JNL High Yield Bond Series,
and T. Rowe Price/JNL Mid-Cap Growth Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Underlying Series that invest in stocks of large established companies as well
as those that invest in stocks of smaller companies with above-average growth
potential.
The Series seeks to achieve current income through its investments in Underlying
Series that invest primarily in fixed-income securities. These investments may
include Underlying Series that invest in foreign bonds denominated in currencies
other than U.S. dollars as well as Underlying Series that invest exclusively in
bonds of U.S. issuers. The Series may invest in Underlying Series that invest
exclusively in investment-grade securities, as well as Underlying Series that
invest in high-yield, high-risk bonds.
Under normal circumstances, the Series allocates approximately 70% to 80% of its
assets to Underlying Series that invest primarily in equity securities and 20%
to 30% to Underlying Series that invest primarily in fixed-income securities.
Within these asset classes, the Series remains flexible with respect to the
percentage it will allocate among particular Underlying Series.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, an Underlying Series would experience a
reduction in its income, a decline in the market value of the
securities so affected and a decline in the value of its shares.
During an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which
could adversely affect their ability to service principal and interest
payment obligations, to meet projected business goals and to obtain
additional financing. The market prices of lower-rated securities are
generally less sensitive to interest rate changes than higher-rated
investments, but more sensitive to adverse economic or political
changes, or individual developments specific to the issuer. Periods of
economic or political uncertainty and change can be expected to result
in volatility of prices of these securities.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer asset, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
22.77%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
15.43% (4th quarter of 1999) and its lowest quarterly return was -4.14% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Moderate Growth Series II 22.77% 14.10%
S&P 500 Index 21.05% 19.06%
S&P 500 Index/ Lehman Bond Aggregate
Total Return Series 15.58% 15.38%
The S&P 500 Index and the Lehman Bond Aggregate Total Return Series are
broad-based, unmanaged indexes. . The total returns were calculated according to
the following weightings: the S&P 500 Index represents 75% of the equity
investments and the Lehman Bond Aggregate Total Return Series represents 25% of
the fixed-income investments of the Series.
* The Series began operations on April 13, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 Moderate Growth Series II................................... 1.174%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Moderate Growth Series II asset allocation
is expected to result in less risk than that incurred by JNL/S&P Aggressive
Growth Series II, JNL/S&P Very Aggressive Growth Series II, JNL/S&P Equity
Growth Series II or JNL/S&P Equity Aggressive Growth Series II, but more risk
than JNL/S&P Conservative Growth Series II.
When the sub-adviser believes that a temporary defensive position is desirable,
the Series may invest up to 100% of its assets in cash or cash equivalents.
Doing so may reduce the potential for appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P
Moderate Growth Series II is Standard & Poor's Investment Advisory Services,
Inc. (SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was
established in 1995 to provide investment advice to the financial community.
SPIAS operates independently of and has no access to analysis or other
information supplied or obtained by Standard & Poor's Ratings Services in
connection with its ratings business, except to the extent such information is
made available by Standard & Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P AGGRESSIVE GROWTH SERIES II
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Aggressive Growth
Series II is capital growth.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which the JNL/S&P Aggressive Growth Series II
may invest are the JNL/Alliance Growth Series, JNL/J.P. Morgan International &
Emerging Market Series, JNL/Janus Aggressive Growth Series, JNL/Janus Global
Equities Series, JNL/Janus Growth & Income Series, JNL/PIMCO Total Return Bond
Series, JNL/Putnam Growth Series, JNL/Putnam International Equity Series,
JNL/Putnam Value Equity Series, JNL/Putnam Midcap Growth Series, Lazard/JNL Mid
Cap Value Series, Lazard/JNL Small Cap Value Series, PPM America/JNL Money
Market Series, Salomon Brothers/JNL Balanced Series, Salomon Brothers/JNL Global
Bond Series, Salomon Brothers/JNL High Yield Bond Series, and T. Rowe Price/JNL
Mid-Cap Growth Series.
The Series seeks to achieve capital growth primarily through its investments in
Underlying Series that invest primarily in equity securities. These investments
may include Series that invest in stocks of large established companies as well
as those that invest in stocks of smaller companies with above-average growth
potential.
The Series seeks to achieve capital growth secondarily through its investment in
Underlying Series that invest primarily in fixed-income securities. These
investments may include Underlying Series that invest in foreign bonds
denominated in currencies other than U.S. dollars as well as Underlying Series
that invest exclusively in bonds of U.S. issuers. The Series may invest in
Underlying Series that invest exclusively in investment-grade securities, as
well as Underlying Series that invest in high-yield, high-risk bonds.
Under normal circumstances, the Series allocates approximately 85% to 95% of its
assets to Underlying Series that invest primarily in equity securities and 5% to
15% to Underlying Series that invest primarily in fixed-income securities.
Within these asset classes, the Series remains flexible with respect to the
percentage it will allocate among particular Underlying Series.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
investment performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, an Underlying Series would experience a
reduction in its income, a decline in the market value of the
securities so affected and a decline in the value of its shares.
During an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which
could adversely affect their ability to service principal and interest
payment obligations, to meet projected business goals and to obtain
additional financing. The market prices of lower-rated securities are
generally less sensitive to interest rate changes than higher-rated
investments, but more sensitive to adverse economic or political
changes, or individual developments specific to the issuer. Periods of
economic or political uncertainty and change can be expected to result
in volatility of prices of these securities.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series. PERFORMANCE. The bar chart and table below show the past performance of
the Series' shares. The chart presents the annual returns and shows how
performance has varied from year to year. The table shows the Series' annual
returns and compares them to a broad based index since these shares were first
offered. Both the chart and the table assume reinvestment of dividends and
distributions. The Series' returns shown in the chart and table below do not
reflect the deduction of any charges that are imposed under a variable insurance
contract. Those charges, which are described in the variable insurance
prospectus, will reduce the Series' performance. As with all mutual funds, the
Series' past performance does not necessarily indicate how it will perform in
the future.
Annual Total Returns as of December 31
28.66%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
20.17% (4th quarter of 1999) and its lowest quarterly return was -4.69% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Aggressive Growth Series II 28.66% 16.11%
S&P 500 Index 21.05% 19.06%
S&P 500 Index/ Lehman Bond Aggregate
Total Return Series 18.86% 17.59%
The S&P 500 Index and the Lehman Bond Aggregate Total Return Series are
broad-based, unmanaged indexes. . The total returns were calculated according to
the following weightings: the S&P 500 Index represents 90% of the equity
investments and the Lehman Bond Aggregate Total Return Series represents 10% of
the fixed-income investments of the Series.
* The Series began operations on April 13, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 Aggressive Growth Series II................................. 1.21%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- -------------------------------------------------------------------------------
EXPENSE EXAMPLE
- -------------------------------------------------------------------------------
1 Year $20
- -------------------------------------------------------------------------------
3 Years $64
- -------------------------------------------------------------------------------
5 Years $113
- -------------------------------------------------------------------------------
10 Years $255
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Aggressive Growth Series II asset
allocation is expected to result in less risk than that incurred by JNL/S&P Very
Aggressive Growth Series II, JNL/S&P Equity Growth Series II or JNL/S&P Equity
Aggressive Growth Series II, but more risk than JNL/S&P Conservative Growth
Series II or JNL/S&P Moderate Growth Series II.
When the sub-adviser believes that a temporary defensive position is desirable,
the Series may invest up to 100% of its assets in cash or cash equivalents.
Taking a defensive position may reduce the potential for appreciation of the
Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P
Aggressive Growth Series II is Standard & Poor's Investment Advisory Services,
Inc. (SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was
established in 1995 to provide investment advice to the financial community.
SPIAS operates independently of and has no access to analysis or other
information supplied or obtained by Standard & Poor's Ratings Services in
connection with its ratings business, except to the extent such information is
made available by Standard & Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P VERY AGGRESSIVE GROWTH SERIES II
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Very Aggressive
Growth Series II is capital growth.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which JNL/S&P Very Aggressive Growth Series II
may invest are the JNL/Alliance Growth Series, JNL/J.P. Morgan International &
Emerging Markets Series, JNL/Janus Aggressive Growth Series, JNL/Janus Global
Equities Series, JNL/Janus Growth & Income Series, JNL/PIMCO Total Return Bond
Series, JNL/Putnam Growth Series, JNL/Putnam International Equity Series,
JNL/Putnam Value Equity Series, JNL/Putnam Midcap Growth Series, Lazard/JNL Mid
Cap Value Series, Lazard/JNL Small Cap Value Series, PPM America/JNL Money
Market Series, Salomon Brothers/JNL Balanced Series, Salomon Brothers/JNL Global
Bond Series, Salomon Brothers/JNL High Yield Bond Series, and T. Rowe Price/JNL
Mid-Cap Growth Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Series that invest in stocks of large established companies as well as those
that invest in stocks of smaller companies with above-average growth potential.
Under normal circumstances, the Series allocates 100% of its assets to
Underlying Series that invest primarily in equity securities. The Series remains
flexible with respect to the percentage it will allocate among those particular
Underlying Series that invest primarily in equity securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
investment performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, a Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
42.42%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
26.60% (4th quarter of 1999) and its lowest quarterly return was -2.80% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Very Aggressive Growth Series II 42.42% 28.44%
S&P 500 Index 21.05% 19.06%
The S&P 500 Index is a broad-based, unmanaged indexes. The S&P 500 Index
represents 100% of the equity investments of the Series.
* The Series began operations on April 13, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 Very Aggressive Growth Series II............................ 1.23%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- ------------------------------------------------------------------------------
EXPENSE EXAMPLE
- ------------------------------------------------------------------------------
1 Year $20
- ------------------------------------------------------------------------------
3 Years $64
- ------------------------------------------------------------------------------
5 Years $113
- ------------------------------------------------------------------------------
10 Years $255
- ------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Very Aggressive Growth Series II asset
allocation is expected to result in more risk than that incurred by JNL/S&P
Conservative Growth Series II, JNL/S&P Moderate Growth Series II, JNL/S&P
Aggressive Growth Series II, JNL/S&P Equity Growth Series II or JNL/S&P Equity
Aggressive Growth Series II. When the sub-adviser believes that a temporary
defensive position is desirable, the Series may invest up to 100% of its assets
in cash, cash equivalents or Underlying Series that invest primarily in
fixed-income securities. Taking a defensive position may reduce the potential
for appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P Very
Aggressive Growth Series II is Standard & Poor's Investment Advisory Services,
Inc. (SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was
established in 1995 to provide investment advice to the financial community.
SPIAS operates independently of and has no access to analysis or other
information supplied or obtained by Standard & Poor's Ratings Services in
connection with its ratings business, except to the extent such information is
made available by Standard & Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P EQUITY GROWTH SERIES II
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Equity Growth
Series II is capital growth.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which the JNL/S&P Equity Growth Series II may
invest are the JNL/Alliance Growth Series, JNL/J.P. Morgan International &
Emerging Markets Series, JNL/Janus Aggressive Growth Series, JNL/Janus Global
Equities Series, JNL/Janus Growth & Income Series, JNL/PIMCO Total Return Bond
Series, JNL/Putnam Growth Series, JNL/Putnam International Equity Series,
JNL/Putnam Value Equity Series, JNL/Putnam Midcap Growth Series, Lazard/JNL Mid
Cap Value Series, Lazard/JNL Small Cap Value Series, PPM America/JNL Money
Market Series, Salomon Brothers/JNL Balanced Series, Salomon Brothers/JNL Global
Bond Series, Salomon Brothers/JNL High Yield Bond Series, and T. Rowe Price/JNL
Mid-Cap Growth Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Series that invest in stocks of large established companies as well as those
that invest in stocks of smaller companies with above-average growth potential.
Under normal circumstances, the Series allocates 100% of its assets to
Underlying Series that invest primarily in equity securities. The Series remains
flexible with respect to the percentage it will allocate among those particular
Underlying Series that invest primarily in equity securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
investment performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, a Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries . Thus,
the Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series. PERFORMANCE. The bar chart and table below show the past performance of
the Series' shares. The chart presents the annual returns and shows how
performance has varied from year to year. The table shows the Series' annual
returns and compares them to a broad based index since these shares were first
offered. Both the chart and the table assume reinvestment of dividends and
distributions. The Series' returns shown in the chart and table below do not
reflect the deduction of any charges that are imposed under a variable insurance
contract. Those charges, which are described in the variable insurance
prospectus, will reduce the Series' performance. As with all mutual funds, the
Series' past performance does not necessarily indicate how it will perform in
the future.
Annual Total Returns as of December 31
36.29%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
23.27% (4th quarter of 1999) and its lowest quarterly return was -4.31% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Equity Growth Series II 36.29% 19.99%
S&P 500 Index 21.05% 19.06%
The S&P 500 Index is a broad-based, unmanaged indexes. The S&P 500 Index
represents 100% of the equity investments of the Series.
* The Series began operations on April 13, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 Equity Growth Series II..................................... 1.22%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Equity Growth Series II asset allocation is
expected to result in more risk than that incurred by JNL/S&P Conservative
Growth Series II, JNL/S&P Moderate Growth Series II and JNL/S&P Aggressive
Growth Series II, but less risk than JNL/S&P Equity Aggressive Growth Series II
or JNL/S&P VeryAggressive Growth Series II.
When the sub-adviser believes that a temporary defensive position is desirable,
the Series may invest up to 100% of its assets in cash, cash equivalents or
Underlying Series that invest primarily in fixed-income securities. Taking a
defensive position may reduce the potential for appreciation of the Series'
portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P Equity
Growth Series II is Standard & Poor's Investment Advisory Services, Inc.
(SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was established
in 1995 to provide investment advice to the financial community. SPIAS operates
independently of and has no access to analysis or other information supplied or
obtained by Standard & Poor's Ratings Services in connection with its ratings
business, except to the extent such information is made available by Standard &
Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P EQUITY AGGRESSIVE GROWTH SERIES II
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Equity Aggressive
Growth Series II is capital growth.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which the JNL/S&P Equity Aggressive Growth
Series II may invest are the JNL/Alliance Growth Series, JNL/J.P. Morgan
International & Emerging Markets Series, JNL/Janus Aggressive Growth Series,
JNL/Janus Global Equities Series, JNL/Janus Growth & Income Series, JNL/PIMCO
Total Return Bond Series, JNL/Putnam Growth Series, JNL/Putnam International
Equity Series, JNL/Putnam Value Equity Series, JNL/Putnam Midcap Growth Series,
Lazard/JNL Mid Cap Value Series, Lazard/JNL Small Cap Value Series, PPM
America/JNL Money Market Series, Salomon Brothers/JNL Balanced Series, Salomon
Brothers/JNL Global Bond Series, Salomon Brothers/JNL High Yield Bond Series and
T. Rowe Price/JNL Mid-Cap Growth Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Series that invest in stocks of large established companies as well as those
that invest in stocks of smaller companies with above-average growth potential.
Under normal circumstances, the Series allocates 100% of its assets to
Underlying Series that invest primarily in equity securities. The Series remains
flexible with respect to the percentage it will allocate among those particular
Underlying Series that invest primarily in equity securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
investment performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, a Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of single companies or industries. Thus, the Series may
hold a smaller number of issuers than if it were "diversified." With a
smaller number of different issuers, the Series is subject to more
risk than another fund holding a larger number of issuers, since
changes in the financial condition or market status of a single issuer
may cause greater fluctuation in the Series' total return and share
price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series. PERFORMANCE. The bar chart and table below show the past performance of
the Series' shares. The chart presents the annual returns and shows how
performance has varied from year to year. The table shows the Series' annual
returns and compares them to a broad based index since these shares were first
offered. Both the chart and the table assume reinvestment of dividends and
distributions. The Series' returns shown in the chart and table below do not
reflect the deduction of any charges that are imposed under a variable insurance
contract. Those charges, which are described in the variable insurance
prospectus, will reduce the Series' performance. As with all mutual funds, the
Series' past performance does not necessarily indicate how it will perform in
the future.
Annual Total Returns as of December 31
39.61%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
25.34% (4th quarter of 1999) and its lowest quarterly return was -3.59% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
JNL/S&P Equity Aggressive Growth Series II 39.61% 23.92%
S&P 500 Index 21.05% 19.06%
The S&P 500 Index is a broad-based, unmanaged indexes. The S&P 500 Index
represents 100% of the equity investments of the Series.
* The Series began operations on April 13, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 Equity Aggressive Growth Series II.......................... 1.23%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Equity Aggressive Growth Series II asset
allocation is expected to result in more risk than that incurred by JNL/S&P
Conservative Growth Series II, JNL/S&P Moderate Growth Series II, JNL/S&P
Aggressive Growth Series II or JNL/S&P Equity Growth Series II, but less risk
than JNL/S&P Very Aggressive Growth Series II.
When the sub-adviser believes that a temporary defensive position is desirable,
the Series may invest up to 100% of its assets in cash, cash equivalents or
Underlying Series that invest primarily in fixed-income securities. Taking a
defensive position may reduce the potential for appreciation of the Series'
portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P Equity
Aggressive Growth Series II is Standard & Poor's Investment Advisory Services,
Inc. (SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was
established in 1995 to provide investment advice to the financial community.
SPIAS operates independently of and has no access to analysis or other
information supplied or obtained by Standard & Poor's Ratings Services in
connection with its ratings business, except to the extent such information is
made available by Standard & Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
May 1998.
<PAGE>
JNL/S&P CONSERVATIVE GROWTH SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Conservative
Growth Series is capital growth and current income.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which the JNL/S&P Conservative Growth Series
may invest are the JNL/Alliance Growth Series, JNL/J.P. Morgan Enhanced S&P 500
Stock Index Series, JNL/J.P. Morgan International & Emerging Markets Series,
JNL/Janus Aggressive Growth Series, JNL/Janus Global Equities Series, JNL/Janus
Growth & Income Series, JNL/PIMCO Total Return Bond Series, Lazard/JNL Small Cap
Value Series, Lazard/JNL Mid Cap Value Series, PPM America/JNL Money Market
Series, JNL/Putnam International Equity Series, JNL/Putnam Midcap Growth Series,
Salomon Brothers/JNL Balanced Series, Salomon Brothers/JNL Global Bond Series,
Salomon Brothers/JNL High Yield Bond Series, and T. Rowe Price/JNL Mid-Cap
Growth Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Underlying Series that invest in stocks of large established companies as well
as those that invest in stocks of smaller companies with above-average growth
potential.
The Series seeks to achieve current income through its investments in Underlying
Series that invest primarily in fixed-income securities. These investments may
include Underlying Series that invest exclusively in bonds of U.S. corporate and
government issuers and Underlying Series that invest exclusively in
investment-grade securities.
Under normal circumstances, the Series allocates approximately 50% to 75% of its
assets to Underlying Series that invest primarily in equity securities, 15% to
50% to Underlying Series that invest primarily in fixed-income securities and 0%
to 20% to Underlying Securities that invest primarily in money market funds.
Within these asset classes, the Series remains flexible with respect to the
percentage it will allocate among particular Underlying Series.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities. To the extent
that an Underlying Series invests in bonds issued by a foreign
government, that Series may have limited legal recourse in the event
of default. Political conditions, especially a country's willingness
to meet the terms of its debt obligations, can create special risks.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series. PERFORMANCE. The performance of the Series will vary from year to year.
The Series' performance figures will not reflect the deduction of any charges
that are imposed under a variable insurance contract. Those charges, which are
described in the variable insurance prospectus, will reduce the Series'
performance. As with all mutual funds, the Series' past performance does not
necessarily indicate how it will perform in the future.
Performance for the Series has not been included because the Series had not been
in operation for the year ended December 31, 1999.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 division. 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 ................................. 1.04%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Conservative Growth Series may invest up to
100% of its assets in cash or cash equivalents when the sub-adviser believes
that a temporary defensive position is desirable. Doing so may reduce the
potential for appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P
Conservative Growth Series is Standard & Poor's Investment Advisory Services,
Inc. (SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was
established in 1995 to provide investment advice to the financial community.
SPIAS operates independently of and has no access to analysis or other
information supplied or obtained by Standard & Poor's Ratings Services in
connection with its ratings business, except to the extent such information is
made available by Standard & Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Poor's Financial Services Group. Mr.
Harari has had responsibility for the day-to-day management of the Series since
the inception of the Series.
<PAGE>
JNL/S&P MODERATE GROWTH SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Moderate Growth
Series is capital growth. Current income is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objectives by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which the JNL/S&P Moderate Growth Series may
invest are the JNL/Alliance Growth Series, JNL/J.P. Morgan Enhanced S&P 500
Stock Index Series, JNL/J.P. Morgan International & Emerging Markets Series,
JNL/Janus Aggressive Growth Series, JNL/Janus Global Equities Series, JNL/Janus
Growth & Income Series, JNL/PIMCO Total Return Bond Series, Lazard/JNL Small Cap
Value Series, Lazard/JNL Mid Cap Value Series, PPM America/JNL Money Market
Series, JNL/Putnam International Equity Series, JNL/Putnam Midcap Growth Series,
Salomon Brothers/JNL Balanced Series, Salomon Brothers/JNL Global Bond Series,
Salomon Brothers/JNL High Yield Bond Series, and T. Rowe Price/JNL Mid-Cap
Growth Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Series that invest in stocks of large established companies as well as those
that invest in stocks of smaller companies with above-average growth potential.
The Series seeks to achieve current income through its investment in Underlying
Series that invest primarily in fixed-income securities. These investments may
include Underlying Series that invest exclusively in bonds of U.S. corporate and
government issuers and Underlying Series that invest exclusively in
investment-grade securities.
Under normal circumstances, the Series allocates approximately 60% to 80% of its
assets to Underlying Series that invest primarily in equity securities and 20%
to 40% to Underlying Series that invest primarily in fixed-income securities.
Within these asset classes, the Series remains flexible with respect to the
percentage it will allocate among particular Underlying Series.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, a Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series. PERFORMANCE. The performance of the Series will vary from year to year.
The Series' performance figures will not reflect the deduction of any charges
that are imposed under a variable insurance contract. Those charges, which are
described in the variable insurance prospectus, will reduce the Series'
performance. As with all mutual funds, the Series' past performance does not
necessarily indicate how it will perform in the future.
Performance for the Series has not been included because the Series had not been
in operation for the year ended December 31, 1999.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- -------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- -------------------------------------------------------------------------------
Management/Administrative Fee .20%
- -------------------------------------------------------------------------------
Other Expenses 0%
- -------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- -------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 division. 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 Moderate Growth Series ..................................... 1.00%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Moderate Growth Series may invest up to
100% of its assets in cash or cash equivalents when the sub-adviser believes
that a temporary defensive position is desirable. Doing so may reduce the
potential appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P
Moderate Growth Series is Standard & Poor's Investment Advisory Services, Inc.
(SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was established
in 1995 to provide investment advice to the financial community. SPIAS operates
independently of and has no access to analysis or other information supplied or
obtained by Standard & Poor's Ratings Services in connection with its ratings
business, except to the extent such information is made available by Standard &
Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982. Mr. Blitzer has had responsibility for the day-to-day
management of the Series since the inception of the Series. Mr. Harari has been
a senior investment officer with the Quantitative Services department of
Standard & Poor's Financial Information Services since 1998. Since joining
Standard & Poor's in 1986, Mr. Harari served as an equity analyst and supervisor
of industrial analysts with Standard & Financial Services Group. Mr. Harari has
had responsibility for the day-to-day management of the Series since the
inception of the Series.
<PAGE>
JNL/S&P AGGRESSIVE GROWTH SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL/S&P Aggressive Growth
Series is capital growth. Current income is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objectives by
investing in a diversified group of other Series of the Trust (Underlying
Series). The Underlying Series in which the JNL/S&P Aggressive Growth Series may
invest are the JNL/Alliance Growth Series, JNL/J.P. Morgan Enhanced S&P 500
Stock Index Series, JNL/J.P. Morgan International & Emerging Markets Series,
JNL/Janus Aggressive Growth Series, JNL/Janus Global Equities Series, JNL/Janus
Growth & Income Series, JNL/PIMCO Total Return Bond Series, Lazard/JNL Small Cap
Value Series, Lazard/JNL Mid Cap Value Series, PPM America/JNL Money Market
Series, JNL/Putnam International Equity Series, JNL/Putnam Midcap Growth Series,
Salomon Brothers/JNL Balanced Series, Salomon Brothers/JNL Global Bond Series,
Salomon Brothers/JNL High Yield Bond Series, and T. Rowe Price/JNL Mid-Cap
Growth Series.
The Series seeks to achieve capital growth through its investments in Underlying
Series that invest primarily in equity securities. These investments may include
Series that invest in stocks of large established companies as well as those
that invest in stocks of smaller companies with above-average growth potential.
The Series seeks to achieve current income through its investment in Underlying
Series that invest primarily in fixed-income securities. These investments may
include Underlying Series that invest exclusively in bonds of U.S. corporate and
government issuers and Underlying Series that invest exclusively in
investment-grade securities.
Under normal circumstances, the Series allocates 75% to 100% of its assets to
Underlying Series that invest primarily in equity securities and 0% to 25% to
Underlying Series that invest primarily in fixed-income securities. Within these
asset classes, the Series remains flexible with respect to the percentage it
will allocate among particular Underlying Series.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. Since the Series
concentrates its investments in shares of the Underlying Series, its performance
is directly related to the ability of the Underlying Series to meet their
respective investment objectives, as well as the sub-adviser's allocation among
the Underlying Series. Accordingly, a variety of factors may influence its
performance, such as:
o Market risk. Because the Series invests indirectly in stocks of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, a Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause an Underlying Series' performance to
fluctuate more than if it held only U.S. securities.
o Emerging markets risk. The Series may invest a portion of its assets
in one or more Underlying Series that hold securities of issuers in
emerging markets, which involves greater risk. Emerging market
countries typically have economic and political systems that are less
fully developed, and likely to be less stable, than those of more
advanced countries. Emerging market countries may have policies that
restrict investment by foreigners, and there is a higher risk of a
government taking private property. Low or nonexistent trading volume
in securities of issuers in emerging markets may result in a lack of
liquidity and in price volatility. Issuers in emerging markets
typically are subject to a greater degree of change in earnings and
business prospects than are companies in developed markets.
o Currency risk. The value of an Underlying Series' shares may change as
a result of changes in exchange rates reducing the value of the U.S.
dollar value of the Series' foreign investments. Currency exchange
rates can be volatile and affected by a number of factors, such as the
general economics of a country, the actions of U.S. and foreign
governments or central banks, the imposition of currency controls, and
speculation.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
Because the Series invests exclusively in other series of the Trust, you should
look elsewhere in this prospectus for the particular information about those
series. PERFORMANCE. The performance of the Series will vary from year to year.
The Series' performance figures will not reflect the deduction of any charges
that are imposed under a variable insurance contract. Those charges, which are
described in the variable insurance prospectus, will reduce the Series'
performance. As with all mutual funds, the Series' past performance does not
necessarily indicate how it will perform in the future.
Performance for the Series has not been included because the Series had not been
in operation for the year ended December 31, 1999.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .20%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .20%
- --------------------------------------------------------------------------------
As a shareholder of an Underlying Series, the Series will bear its pro rata
share of the expenses of that Underlying Series, which could result in
duplication of certain fees, including management and administration fees.
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
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 division. 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 Aggressive Growth Series ................................... 1.17%
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $20
- --------------------------------------------------------------------------------
3 Years $64
- --------------------------------------------------------------------------------
5 Years $113
- --------------------------------------------------------------------------------
10 Years $255
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL/S&P Aggressive Growth Series may invest up to
100% of its assets in cash or cash equivalents when the sub-adviser believes
that a temporary defensive position is desirable. Doing so may reduce the
potential for appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the JNL/S&P
Aggressive Growth Series is Standard & Poor's Investment Advisory Services, Inc.
(SPIAS), located at 25 Broadway, New York, New York 10004. SPIAS was established
in 1995 to provide investment advice to the financial community. SPIAS operates
independently of and has no access to analysis or other information supplied or
obtained by Standard & Poor's Ratings Services in connection with its ratings
business, except to the extent such information is made available by Standard &
Poor's Ratings Services to the general public.
David M. Blitzer and Joshua M. Harari, CFA, share the primary responsibility for
the day-to-day management of the Series. Mr. Blitzer has been Vice President of
SPIAS since 1995 and has been an economist with Standard & Poor's Financial
Services Group (which operates independently of Standard & Poor's Ratings
Services) since 1982.
Mr. Blitzer has had responsibility for the day-to-day management of the Series
since the inception of the Series. Mr. Harari has been a senior investment
officer with the Quantitative Services department of Standard & Poor's Financial
Information Services since 1998. Since joining Standard & Poor's in 1986, Mr.
Harari served as an equity analyst and supervisor of industrial analysts with
Standard & Poor's Financial Services Group. Mr. Harari has had responsibility
for the day-to-day management of the Series since the inception of the Series.
<PAGE>
JNL ENHANCED INTERMEDIATE BOND INDEX SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL Enhanced Intermediate
Bond Fund Index Series is to match or exceed the return of the Lehman Brothers
Intermediate Government/Corporate Bond Index.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
utilizing an enhanced bond indexing strategy intended to add incremental value
over the Lehman Brothers Intermediate Government/Corporate Index in a
risk-controlled framework. The JNL Enhanced Intermediate Bond Index Series
invests primarily in U.S. dollar-denominated U.S. Treasury, Agency, corporate,
and mortgage- and other asset-backed securities, and supranational and sovereign
debt obligations. The Series invests at least 65% in a diversified portfolio of
intermediate-maturity, investment-grade fixed-income securities The Series has
no policy regarding the quality and maturity of the bonds which may be
purchased.. The sub-adviser may engage in options, financial futures and swap
transactions in seeking to hedge the portfolio or enhance return.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in the securities of U.S. and
foreign issuers, it is subject to market risk. For bonds, market risk
generally reflects credit risk and interest rate risk. Credit risk is
the actual or perceived risk that the issuer of the bond will not pay
the interest and principal payments when due. Bond value typically
declines if the issuer's credit quality deteriorates. Interest rate
risk is the risk that interest rates will rise and the value of bonds,
including those held by the Series, will fall. A broad-based market
drop may also cause a bond's price to fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks. The
Series' sub-advisers must correctly predict the price movements,
during the life of a derivative, of the underlying asset in order to
realize the desired results from the investment. The value of
derivatives may rise or fall more rapidly than other investments,
which may increase the volatility of the Series depending on the
nature and extent of the derivatives in the Series' portfolio. If the
sub-adviser uses derivatives in attempting to manage or "hedge" the
overall risk of the portfolio, the strategy might not be successful,
for example, due to changes in the value of the derivatives that do
not correlate with price movements in the rest of the portfolio.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The performance of the Series will vary from year to year. The
Series' performance figures will not reflect the deduction of any charges that
are imposed under a variable insurance contract. Those charges, which are
described in the variable insurance prospectus, will reduce the Series'
performance. As with all mutual funds, the Series' past performance does not
necessarily indicate how it will perform in the future.
Performance for the Series has not been included because the Series had not
commenced operations as of the date of this prospectus.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 0.75%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 0.75%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $77
- --------------------------------------------------------------------------------
3 Years $240
- --------------------------------------------------------------------------------
5 Years $417
- --------------------------------------------------------------------------------
10 Years $930
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series may invest in money market funds including
those for which the sub-adviser acts as an investment adviser. As a shareholder
in a money market fund, the Series would bear its share of that fund's expenses.
The sub-adviser uses a combination of quantitative and qualitative analysis in
balancing the top-down sector decision - selecting among government obligations,
corporate securities and structured investments - with the bottom-up security
selection which is based upon fundamental and technical analysis.
The Series may invest in when-issued and delayed delivery securities. Actual
payment for and delivery of such securities does not take place until some time
in the future, i.e., beyond normal settlement. The purchase of these securities
will result in a loss if their value declines prior to the settlement date. This
could occur, for example, if interest rates increase prior to settlement.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
<PAGE>
JNL INTERNATIONAL INDEX SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL International Index
Series is to closely match the performance of the Morgan Stanley Capital
International Europe and Australasia, Far East Equity Index (MSCI E.A.FE. Index)
while minimizing transaction costs.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective
through a diversified portfolio whose returns closely parallel those of the MSCI
E.A.FE. Index. The Series typically holds all securities contained in the MSCI
E.A.FE. Index. To better track the performance of the Index and provide
liquidity, the Series may hold E.A.FE. futures contracts instead of cash
equivalents in its portfolio. The sub-adviser uses a trading approach intended
to reduce the Series' transaction costs.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of foreign
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities.
o Emerging markets risk. The Series may invest a portion of its assets
in securities of issuers in emerging markets, which involves greater
risk. Emerging market countries typically have economic and political
systems that are less fully developed, and likely to be less stable,
than those of more advanced countries. Emerging market countries may
have policies that restrict investment by foreigners, and there is a
higher risk of a government taking private property. Low or
nonexistent trading volume in securities of issuers in emerging
markets may result in a lack of liquidity and in price volatility.
Issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than are companies in
developed markets.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks. The
Series sub-adviser must correctly predict price movements, during the
life of a derivative, of the underlying asset in order to realize the
desired results from the investment. The value of derivatives may rise
or fall more rapidly than other investments, which may increase the
volatility of the Series depending on the nature and extent of the
derivatives in the Series' portfolio. If the sub-adviser uses
derivatives in attempting to manage or "hedge" the overall risk of the
portfolio, the strategy might not be successful, for example, due to
changes in the value of the derivatives that do not correlate with
price movements in the rest of the portfolio.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The performance of the Series will vary from year to year. The
Series' performance figures will not reflect the deduction of any charges that
are imposed under a variable insurance contract. Those charges, which are
described in the variable insurance prospectus, will reduce the Series'
performance. As with all mutual funds, the Series' past performance does not
necessarily indicate how it will perform in the future.
Performance for the Series has not been included because the Series had not
commenced operations as of the date of this prospectus.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 0.75%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 0.75%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $77
- --------------------------------------------------------------------------------
3 Years $240
- --------------------------------------------------------------------------------
5 Years $417
- --------------------------------------------------------------------------------
10 Years $930
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The SAI has more information about the Series'
authorized investments and strategies, as well as the risks and restrictions
that may apply to them.
<PAGE>
JNL RUSSELL 2000 INDEX SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL Russell 2000 Index
Series is to closely match the returns and characteristics of the Russell 2000
Index.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective
through a diversified portfolio whose return closely tracks that of the Russell
2000 Index. The Series typically holds all the common stocks included in the
Russell 2000 Index.
The sub-adviser generally follows a buy and hold strategy, trading only when
there is a change in the composition of the Russell 2000 Index or when cash flow
activity occurs in the Series. The sub-adviser uses a trading approach intended
to reduce the Series' transaction costs.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. companies,
it is subject to stock market risk. Stock prices typically fluctuate
more than the values of other types of securities, typically in
response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall.
o Small cap investing risk. Investing in smaller, newer companies
generally involves greater risks than investing in larger, more
established ones. The companies in which the Series is likely to
invest have limited product lines, markets or financial resources, or
may depend on the expertise of a few people, and may be subject to
more abrupt or erratic market movements than securities of larger,
more established companies or the market averages in general. In
addition, many small capitalization companies may be in the early
stages of development. Accordingly, an investment in the Series may
not be appropriate for all investors.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The performance of the Series will vary from year to year. The
Series' performance figures will not reflect the deduction of any charges that
are imposed under a variable insurance contract. Those charges, which are
described in the variable insurance prospectus, will reduce the Series'
performance. As with all mutual funds, the Series' past performance does not
necessarily indicate how it will perform in the future.
Performance for the Series has not been included because the Series had not
commenced operations as of the date of this prospectus.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 0.60%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 0.60%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $61
- --------------------------------------------------------------------------------
3 Years $192
- --------------------------------------------------------------------------------
5 Years $335
- --------------------------------------------------------------------------------
10 Years $750
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL Russell 2000 Index Series may also hold U.S.
Treasury Bills, short-term fixed- income securities, equity index futures,
Standard & Poor's Depository Receipts traded on the American Stock Exchange and
other similar derivative instruments.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
<PAGE>
JNL S&P 500 INDEX SERIES
INVESTMENT OBJECTIVE. The investment objective of the JNL S&P 500 Index Series
is to closely match the returns and characteristics of the Standard & Poor's 500
Composite Stock Price Index (S&P 500 Index).
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective
through a diversified portfolio whose return closely tracks that of the S&P 500
Index. The Series typically holds all the stock in the S&P 500 Index in
approximately the same proportions as they appear in the Index. To better track
the performance of the Index and provide liquidity, the Series may hold S&P 500
futures contracts instead of cash equivalents in its portfolio. The sub-adviser
generally follows a buy and hold strategy, trading only when there is a change
in the composition of the S&P 500 Index or when cash flow activity occurs in the
Series. The sub-adviser uses a trading approach intended to reduce the Series'
transaction costs.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. and foreign
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The performance of the Series will vary from year to year. The
Series' performance figures will not reflect the deduction of any charges that
are imposed under a variable insurance contract. Those charges, which are
described in the variable insurance prospectus, will reduce the Series'
performance. As with all mutual funds, the Series' past performance does not
necessarily indicate how it will perform in the future.
Performance for the Series has not been included because the Series had not
commenced operations as of the date of this prospectus.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 0.60%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 0.60%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $61
- --------------------------------------------------------------------------------
3 Years $192
- --------------------------------------------------------------------------------
5 Years $335
- --------------------------------------------------------------------------------
10 Years $750
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The SAI has more information about the Series'
authorized investments and strategies, as well as the risks and restrictions
that may apply to them.
<PAGE>
JNL S&P MIDCAP INDEX SERIES
INVESTMENT OBJECTIVE. The objective of the JNL S&P MidCap Index Series is to
closely match the returns and characteristics of the Standard & Poor's MidCap
400 Index (S&P MidCap 400 Index).
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective
through a diversified portfolio whose return closely tracks that of the S&P
MidCap 400 Index. The Series typically holds all the stock in the S&P MidCap 400
Index in approximately the same proportions as they appear in the Index. To
better track the performance of the Index and provide liquidity, the Series may
invest in equity index futures contracts and other derivatives instead of cash
equivalents. The sub-adviser generally follows a buy and hold strategy, trading
only when there is a change in the composition of the S&P MidCap 400 Index or
when cash flow activity occurs in the Series. The sub-adviser uses a trading
approach intended to reduce the Series' transaction costs.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. and foreign
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The performance of the Series will vary from year to year. The
Series' performance figures will not reflect the deduction of any charges that
are imposed under a variable insurance contract. Those charges, which are
described in the variable insurance prospectus, will reduce the Series'
performance. As with all mutual funds, the Series' past performance does not
necessarily indicate how it will perform in the future.
Performance for the Series has not been included because the Series had not
commenced operations as of the date of this prospectus.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 0.60%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 0.60%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- -------------------------------------------------------------------------------
EXPENSE EXAMPLE
- -------------------------------------------------------------------------------
1 Year $61
- -------------------------------------------------------------------------------
3 Years $192
- -------------------------------------------------------------------------------
5 Years $335
- -------------------------------------------------------------------------------
10 Years $750
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The JNL S&P MidCap Index Series may invest in
interest-bearing cash equivalents, notes and other short-term instruments,
including call accounts pending the investment of available cash. The Series
will be rebalanced periodically to reflect changes in the S&P MidCap 400 Index,
and all dividends and realized capital gains will be reinvested.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
<PAGE>
LAZARD/JNL MID CAP VALUE SERIES
INVESTMENT OBJECTIVE. The investment objective of the Lazard/JNL Mid Cap Value
Series is capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing at least 80% of total assets in a non-diversified portfolio of equity
securities of U.S. companies with market capitalizations in the range of
companies represented in the Russell Mid Cap Index and that the sub-adviser
believes are undervalued based on their return on equity. The Russell Mid Cap
Index is composed of selected common stocks of medium-size U.S. companies. The
Series' equity holdings consist primarily of common stocks but may also include
preferred stocks, securities convertible into or exchangeable for common stocks,
rights and warrants, real estate investment trusts and American and Global
Depositary Receipts. To the extent its assets are not invested in such
securities, the Series may invest in the equity securities of larger
capitalization companies or investment grade fixed-income securities. In
searching for undervalued medium capitalization stocks, the sub-adviser uses a
stock-selection process based primarily on analysis of historical financial
data, with little emphasis placed on forecasting future earnings or events.
The sub-adviser does not automatically sell a security if its market
capitalization grows or falls outside the range of companies in the Russell
Midcap Index. The sub-adviser may sell a security for any of the following
reasons:
o its price rises to a level where it no longer reflects value (target
valuation);
o the underlying investment assumptions are no longer valid;
o company management changes their direction; or
o external events occur (e.g., changes in regulation, taxes and
competitive position).
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests primarily in equity securities
of U.S. companies, it is subject to stock market risk. Stock prices
typically fluctuate more than the values of other types of securities,
typically in response to changes in the particular company's financial
condition and factors affecting the market in general. For example,
unfavorable or unanticipated poor earnings performance of the company
may result in a decline in its stock's price, and a broad-based market
drop may also cause a stock's price to fall.
o Value investing risk. The value approach carries the risk that the
market will not recognize a security's intrinsic value for a long
time, or that a stock judged to be undervalued may actually be
appropriately priced.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
4.77%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
12.00% (2nd quarter of 1999) and its lowest quarterly return was -13.00% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
Lazard/JNL Mid Cap Value Series 4.77% -1.78%
Russell MidCap Index 16.48% 10.22%
The Russell Mid Cap Index is a broad-based, unmanaged index. * The Series began
operations on March 2, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.08%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.08%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $110
- --------------------------------------------------------------------------------
3 Years $342
- --------------------------------------------------------------------------------
5 Years $593
- --------------------------------------------------------------------------------
10 Years 1,311
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series may use derivative instruments, such as
options and futures contracts and forward currency contracts, for hedging or to
enhance return. These instruments are subject to transaction costs and certain
risks, such as unanticipated changes in securities prices. For temporary,
defensive purposes, the Series may invest up to all of its assets in larger
capitalization companies, cash and short-term money market instruments. Taking a
defensive position may reduce the potential for appreciation of the Series'
portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the Lazard/JNL Mid
Cap Value Series is Lazard Asset Management (Lazard), 30 Rockefeller Plaza, New
York, New York 10112. Lazard is a division of Lazard Freres & Co. LLC (Lazard
Freres), a New York limited liability company, which provides its clients with a
wide variety of investment banking, brokerage and related services. Lazard and
its affiliates provide investment management services to client discretionary
accounts of both individuals and institutions.
Herbert W. Gullquist and Eileen Alexanderson share primary responsibility for
the day-to-day management of the Series. Mr. Gullquist has been with Lazard
since 1982. He is a Managing Director and a Vice-Chairman of Lazard Freres, and
is the Chief Investment Officer of Lazard. Mr. Gullquist is responsible for
monitoring all investment activity to ensure adherence to Lazard's investment
philosophy and guidelines. Ms. Alexanderson has been with Lazard since 1979. She
has been a Managing Director of Lazard Freres since January 1997; prior thereto,
Ms. Alexanderson was a Senior Vice President of Lazard. Ms. Alexanderson is
responsible for U.S./global equity management and overseeing the day-to-day
operations of the U.S. Small Cap and U.S. Mid Cap equity investment teams. Mr.
Gullquist and Ms. Alexanderson have shared responsibility for the day-to-day
management of the Series since the inception of the Series.
<PAGE>
LAZARD/JNL SMALL CAP VALUE SERIES
INVESTMENT OBJECTIVE. The investment objective of the Lazard/JNL Small Cap Value
Series is capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing at least 80% of its total assets in a non-diversified portfolio of
equity securities of U.S. companies with market capitalizations in the range of
companies represented by the Russell 2000 Index that the sub-adviser believes
are undervalued based on their return on equity. The Russell 2000 Index is
composed of selected common stocks of small, generally unseasoned U.S.
companies. The Series' equity holdings consist primarily of common stocks but
may also include preferred stocks, securities convertible into or exchangeable
for common stocks, rights and warrants, real estate investment trusts and
American and Global Depositary Receipts. The Lazard/JNL Small Cap Value Series
invests in equity securities of small U.S. companies that, in the sub-adviser's
opinion, have one or more of the following characteristics: (i) are undervalued
relative to their earnings, cash flow, or asset values; (ii) have an attractive
price/value relationship with expectations that some catalyst will cause the
perception of value to change within 2 years; (iii) are out of favor due to
circumstances which are unlikely to harm the company's franchise or earnings
power; (iv) have low projected price-to-earnings or price-to-cash-flow
multiples; (v) have the potential to become a larger factor in the company's
business; (vi) have significant debt but have high levels of free cash flow; and
(vii) have a relatively short corporate history with the expectation that the
business may grow. In searching for undervalued small capitalization stocks, the
sub-adviser uses a stock-selection process based primarily on analysis of
historical financial data, with little emphasis placed on forecasting future
earnings or events. PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in
the Series is not guaranteed. As with any mutual fund, the value of the Series'
shares will change and you could lose money by investing in the Series. A
variety of factors may influence its investment performance, such as:
o Market risk. Because the Series invests in equity securities, it is
subject to stock market risk. Stock prices typically fluctuate more
than the values of other types of securities, typically in response to
changes in the particular company's financial condition and factors
affecting the market in general. For example, unfavorable or
unanticipated poor earnings performance of the company may result in a
decline in its stock's price, and a broad-based market drop may also
cause a stock's price to fall.
o Value investing risk. The value approach carries the risk that the
market will not recognize a security's intrinsic value for a long
time, or that a stock judged to be undervalued may actually be
appropriately priced.
o Small cap investing risk. Investing in smaller, newer companies
generally involves greater risks than investing in larger, more
established ones. The companies in which the Series is likely to
invest have limited product lines, markets or financial resources, or
may depend on the expertise of a few people and may be subject to more
abrupt or erratic market movements than securities of larger, more
established companies or the market averages in general. In addition,
many small capitalization companies may be in the early stages of
development. Accordingly, an investment in the Series may not be
appropriate for all investors.
o Non-diversification. The Series is "non-diversified." Under a
definition provided by the Investment Company Act of 1940, as amended,
non-diversified funds may invest in fewer assets, or in larger
proportions of the assets of single companies or industries. Thus, the
Series may hold a smaller number of issuers than if it were
"diversified." With a smaller number of different issuers, the Series
is subject to more risk than another fund holding a larger number of
issuers, since changes in the financial condition or market status of
a single issuer may cause greater fluctuation in the Series' total
return and share price.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
1.96%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
20.18% (2nd quarter of 1999) and its lowest quarterly return was -8.85% (1st
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
Lazard/JNL Small Cap Value Series 1.96% -6.27%
Russell 2000 21.35% 5.69%
The Russell 2000 Index is a broad-based, unmanaged index.
* The Series began operations on March 2, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.15%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.15%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $117
- --------------------------------------------------------------------------------
3 Years $365
- --------------------------------------------------------------------------------
5 Years $633
- --------------------------------------------------------------------------------
10 Years $1,398
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The sub-adviser does not automatically sell a security
if its market capitalization grows or falls outside the range of companies in
the Russell 2000 Index. The sub-adviser may sell a security for any of the
following reasons:
o its price rises to a level where it no longer reflects value (target
valuation);
o the underlying investment assumptions are no longer valid;
o company management changes their direction; or
o external events occur (e.g., changes in regulation, taxes and
competitive position).
The Series may invest in equity securities of larger U.S. companies or
investment grade fixed-income securities.
The Series may use derivative instruments, such as options and futures contracts
and forward currency contracts, for hedging or to enhance return. These
instruments are subject to transaction costs and certain risks, such as
unanticipated changes in securities prices.
For temporary, defensive purposes, the Series may invest up to all of its assets
in larger capitalization companies, cash and short-term money market
instruments. Taking a defensive position may reduce the potential for
appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the Lazard/JNL
Small Cap Value Series is Lazard Asset Management (Lazard), 30 Rockefeller
Plaza, New York, New York 10112. Lazard is a division of Lazard Freres & Co. LLC
(Lazard Freres), a New York limited liability company, which provides its
clients with a wide variety of investment banking, brokerage and related
services. Lazard and its affiliates provide investment management services to
client discretionary accounts of both individuals and institutions.
Herbert W. Gullquist and Eileen Alexanderson share primary responsibility for
the day-to-day management of the Series. Mr. Gullquist has been with Lazard
since 1982. He is a Managing Director and a Vice-Chairman of Lazard Freres, and
is the Chief Investment Officer of Lazard. Mr. Gullquist is responsible for
monitoring all investment activity to ensure adherence to Lazard's investment
philosophy and guidelines. Ms. Alexanderson has been with Lazard since 1979. She
has been a Managing Director of Lazard Freres since January 1997; prior thereto,
Ms. Alexanderson was a Senior Vice President of Lazard. Ms. Alexanderson is
responsible for U.S./global equity management and overseeing the day-to-day
operations of the U.S. Small Cap and U.S. Mid Cap equity investment teams. Mr.
Gullquist and Ms. Alexanderson have shared responsibility for the day-to-day
management of the Series since the inception of the Series.
<PAGE>
PPM AMERICA/JNL BALANCED SERIES
INVESTMENT OBJECTIVE. The investment objective of the PPM America/JNL Balanced
Series is reasonable income, long-term capital growth and preservation of
capital.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objectives by
investing primarily in a diversified portfolio of common stock and fixed-income
securities of U.S. companies, but may also invest in securities convertible into
common stocks, deferred debt obligations and zero coupon bonds. The Series may
invest in any type or class of security. The anticipated mix of the Series'
holdings is approximately 45-75% of its assets in equities and 25-55% in
fixed-income securities.
The Series emphasizes investment-grade, fixed-income securities. However, the
Series may take a modest position in lower- or non-rated fixed-income
securities, and if, in the sub-adviser's opinion, market conditions warrant, may
increase its position in lower- or non-rated securities from time to time.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in equity securities of U.S.
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by the Series, will
fall. A broad-based market drop may also cause a bond's price to fall.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, the Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
10.81% 18.43% 10.06% -0.11%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
9.77% (2nd quarter of 1997) and its lowest quarterly return was -5.75% (3rd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
PPM America/JNL Balanced Series -0.11% 11.64%
S&P 500 Index 21.04% 26.95%
Lehman Brothers Aggregate Bond Index -0.82% 5.98%
Each of the S&P 500 Index and the Lehman Brothers Aggregate Bond Index is a
broad-based, unmanaged index.
* The Series began operations on May 15, 1995. Prior to May 1, 1997, the Series
was managed by Phoenix Investment Counsel, Inc.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .82%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .82%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $84
- --------------------------------------------------------------------------------
3 Years $262
- --------------------------------------------------------------------------------
5 Years $455
- --------------------------------------------------------------------------------
10 Years $1,014
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The PPM America/JNL Balanced Series invests primarily
in common stocks and fixed-income securities The Series may use derivative
instruments, such as options and financial futures contracts, for hedging
purposes. These instruments are subject to transaction costs and certain risks,
such as unanticipated changes in interest rates and securities prices.
For temporary, defensive purposes, the Series may invest up to all of its assets
in cash equivalents, such as U.S. Government securities and high grade
commercial paper. Taking a defensive position may reduce the potential for
appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the PPM America/JNL
Balanced Series is PPM America, Inc. (PPM), which is located at 225 West Wacker
Drive, Chicago, Illinois 60606. PPM, an affiliate of the investment adviser to
the Trust, manages assets of Jackson National Life Insurance Company and of
other affiliated companies.
PPM supervises and manages the investment portfolio of the Series and directs
the purchase and sale of the Series' investment securities. PPM utilizes teams
of investment professionals acting together to manage the assets of the Series.
The teams meet regularly to review portfolio holdings and to discuss purchase
and sale activity. The teams adjust holdings in the portfolios as they deem
appropriate in the pursuit of the Series' investment objectives. PPM has
supervised and managed the investment portfolio of the Series since May 1, 1997.
<PAGE>
PPM AMERICA/JNL HIGH YIELD BOND SERIES
INVESTMENT OBJECTIVE. The primary investment objective of the PPM America/JNL
High Yield Bond Series is to provide a high level of current income; its
secondary investment objective is capital appreciation by investing in
fixed-income securities, with emphasis on higher-yielding, higher-risk,
lower-rated or unrated corporate bonds.
PRINCIPAL INVESTMENT STRATEGIES. The Series attempts to achieve its objective by
investing substantially in a diversified portfolio of long-term (over 10 years
to maturity) and intermediate-term (3 to 10 years to maturity) fixed-income
securities of U.S. and foreign issuers, with emphasis on higher-yielding,
higher-risk, lower-rated or unrated corporate bonds. The Series will invest at
least 65% in "junk bonds," which are bonds rated Ba or below by Moody's or BB or
below by S&P or, if unrated, considered by the sub-adviser to be of comparable
quality. However, the Series will not invest more than 10% of its total assets
in bonds rated C by Moody's or D by S&P (or unrated but considered by the
sub-adviser to be of comparable quality). Lower-rated securities generally
involve a higher risk of default than higher-rated ones.In pursuing its
secondary investment objective of capital appreciation, the Series may purchase
high-yield bonds that the sub-adviser expects will increase in value due to
improvements in their credit quality or ratings or anticipated declines in
interest rates. In addition, the Series may invest for this purpose up to 25% of
its assets in equity securities, such as common stocks or securities convertible
into or exchangeable for common stock.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in the securities of U.S. and
foreign issuers, it is subject to market risk. For bonds, market risk
generally reflects credit risk and interest rate risk. Credit risk is
the actual or perceived risk that the issuer of the bond will not pay
the interest and principal payments when due. Bond value typically
declines if the issuer's credit quality deteriorates. Interest rate
risk is the risk that interest rates will rise and the value of bonds,
including those held by the Series, will fall. A broad-based market
drop may also cause a bond's price to fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
To the extent the Series invests in the equity securities of U.S. and
foreign companies, it is subject to stock market risk. Stock prices
typically fluctuate more than the values of other types of securities,
typically in response to changes in the particular company's financial
condition and factors affecting the market in general. For example,
unfavorable or unanticipated poor earnings performance of the company
may result in a decline in its stock's price, and a broad-based market
drop may also cause a stock's price to fall.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, the Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities. To the extent that the
Series invests in bonds issued by a foreign government, the Series may
have limited legal recourse in the event of default. Political
conditions, especially a country's willingness to meet the terms of
its debt obligations, can create special risks.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
Treating high current income as its primary investment objective means that the
Series may forego opportunities that would result in capital gains and may
accept prudent risks to capital value, in each case to take advantage of
opportunities for higher current income. In addition, the performance of the
Series depends on the sub-adviser's ability to effectively implement the
investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
12.90% 15.05% 3.84% 1.09%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
5.71% (3rd quarter of 1997) and its lowest quarterly return was -4.56% (3rd
quarter of 1998).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
PPM America/JNL High Yield Bond Series 1.09% 8.32%
Lehman Brothers High Yield Index 2.39% 9.15%
The Lehman Brothers High Yield Index is a broad-based, unmanaged index.
* The Series began operations on May 15, 1995.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- -------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS
- -------------------------------------------------------------------------------
Management/Administrative Fee .82%
- -------------------------------------------------------------------------------
Other Expenses 0%
- -------------------------------------------------------------------------------
Total Series Annual Operating Expenses .82%
- -------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $84
- --------------------------------------------------------------------------------
3 Years $262
- --------------------------------------------------------------------------------
5 Years $455
- --------------------------------------------------------------------------------
10 Years $1,014
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The PPM America/JNL High Yield Bond Series invests the
majority of its assets under normal market conditions in U.S. corporate bonds of
below investment-grade quality and with maturities exceeding three years. In
addition to investing in securities of foreign issuers, the Series may also hold
a portion of its assets in foreign currencies and enter into forward currency
exchange contracts, currency options, currency and financial futures contracts,
and options on such futures contracts. The Series may enter into repurchase
agreements and firm commitment agreements and may purchase securities on a
when-issued basis. The Series may invest without limit in zero coupon bonds.
The Series may adopt a temporary defensive position, such as investing up to all
of its assets in cash or cash equivalents, during adverse market, economic or
other circumstances that the sub-adviser believes require immediate action to
avoid losses. In doing so, the Series may not be pursuing its investment
objectives.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the PPM America/JNL
High Yield Bond Series is PPM America, Inc. (PPM), which is located at 225 West
Wacker Drive, Chicago, Illinois 60606. PPM, an affiliate of the investment
adviser to the Trust, manages assets of Jackson National Life Insurance Company
and of other affiliated companies.
PPM supervises and manages the investment portfolio of the Series and directs
the purchase and sale of the Series' investment securities. PPM utilizes teams
of investment professionals acting together to manage the assets of the Series.
The teams meet regularly to review portfolio holdings and to discuss purchase
and sale activity. The teams adjust holdings in the portfolios as they deem
appropriate in the pursuit of the Series' investment objectives. PPM has
supervised and managed the investment portfolio of the Series since inception of
the Series.
<PAGE>
PPM AMERICA/JNL MONEY MARKET SERIES
INVESTMENT OBJECTIVE. The investment objective of the PPM America/JNL Money
Market Series is to achieve as high a level of current income as is consistent
with the preservation of capital and maintenance of liquidity by investing in
high quality, short-term money market instruments.
PRINCIPAL INVESTMENT STRATEGIES. The Series invests in the following types of
high quality, U.S. dollar-denominated money market instruments that mature in
397 days or less.
o Obligations issued or guaranteed as to principal and interest by the
U.S. Government, its agencies and instrumentalities;
o Obligations, such as time deposits, certificates of deposit and
bankers acceptances, issued by U.S. banks and savings banks that are
members of the Federal Deposit Insurance Corporation, including their
foreign branches and foreign subsidiaries, and issued by domestic and
foreign branches of foreign banks;
o Corporate obligations, including commercial paper, of domestic and
foreign issuers;
o Obligations issued or guaranteed by one or more foreign governments or
any of their political subdivisions, agencies or instrumentalities,
including obligations of supranational entities; and
o Repurchase agreements on obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
The sub-adviser manages the Series to meet the requirements of Rule 2a-7 under
the Investment Company Act of 1940, as amended, including those as to quality,
diversification and maturity. The Series may invest more than 25% of its assets
in the U.S. banking industry.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Series seeks to preserve the value of your
investment at $1.00 per share, you could lose money by investing in the Series.
A variety of factors may influence its investment performance, such as:
o Market risk. Fixed income securities in general are subject to credit
risk and market risk. Credit risk is the actual or perceived risk that
the issuer of the bond will not pay the interest and principal
payments when due. Bond value typically declines if the issuer's
credit quality deteriorates. Market risk, also known as interest rate
risk, is the risk that interest rates will rise and the value of
bonds, including those held by the Series, will fall. A broad-based
market drop may also cause a bond's price to fall.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
4.87% 5.01% 4.99% 4.67%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
1.30% (3rd quarter of 1995) and its lowest quarterly return was 1.07% (1st
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
PPM America/JNL Money Market Series 4.67% 4.93%
Merrill Lynch Treasury Bill Index (3 month) 4.85% 5.34%
The 7-day yield of the Series on December 31, 1999, was 5.37%. The Merrill Lynch
Treasury Bill Index is a broad-based unmanaged index.
* The Series began operations on May 15, 1995.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- -------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- -------------------------------------------------------------------------------
Management/Administrative Fee .70%
- -------------------------------------------------------------------------------
Other Expenses 0%
- -------------------------------------------------------------------------------
Total Series Annual Operating Expenses .70%
- -------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $72
- --------------------------------------------------------------------------------
3 Years $224
- --------------------------------------------------------------------------------
5 Years $390
- --------------------------------------------------------------------------------
10 Years $871
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the PPM America/JNL
Money Market Series is PPM America, Inc. (PPM), which is located at 225 West
Wacker Drive, Chicago, Illinois 60606. PPM, an affiliate of the investment
adviser to the Trust, manages assets of Jackson National Life Insurance Company
and of other affiliated companies.
PPM supervises and manages the investment portfolio of the Series and directs
the purchase and sale of the Series' investment securities. PPM utilizes teams
of investment professionals acting together to manage the assets of the Series.
The teams meet regularly to review portfolio holdings and to discuss purchase
and sale activity. The teams adjust holdings in the portfolio as they deem
appropriate in the pursuit of the Series' investment objectives. PPM has
supervised and managed the investment portfolio of the Series since inception of
the Series.
<PAGE>
SALOMON BROTHERS/JNL BALANCED SERIES
INVESTMENT OBJECTIVE. The investment objective of the Salomon Brothers/JNL
Balanced Series is to obtain above-average income. The Series' secondary
objective is to take advantage of opportunities for growth of capital and
income.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objectives by
investing in a diversified portfolio of a broad variety of securities, including
equity securities, fixed-income securities and short-term obligations. The
Series may vary the percentage of assets invested in any one type of security in
accordance with the sub-adviser's view of existing and anticipated economic and
market conditions, fiscal and monetary policy and underlying security values.
Under normal market conditions, approximately 40% of the Series' assets will
consist of equity securities. Equity holdings may include common and preferred
stock, securities convertible into common or preferred stock, rights and
warrants, equity interests in trusts, partnerships, joint ventures or similar
enterprises, and Depositary Receipts.
The sub-adviser may invest up to 25% in the full range of maturities of
fixed-income securities, which may include corporate debt securities, U.S.
Government securities, mortgage-backed securities, zero coupon bonds, deferred
interest bonds and payment-in-kind securities. Generally, most of the Series'
long-term debt investments consist of investment grade securities, although the
Series may invest in non-investment grade securities commonly known as "junk
bonds." The Series may also invest in foreign securities.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in equity securities of U.S.
and foreign companies, it is subject to stock market risk. Stock
prices typically fluctuate more than the values of other types of
securities, typically in response to changes in the particular
company's financial condition and factors affecting the market in
general. For example, unfavorable or unanticipated poor earnings
performance of the company may result in a decline in its stock's
price, and a broad-based market drop may also cause a stock's price to
fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by the Series, will
fall. A broad-based market drop may also cause a bond's price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, the Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
0.09%
[Insert Chart]
1999
In the period shown in the chart, the Series' highest quarterly return was
- -4.91% (3rd quarter of 1999) and its lowest quarterly return was 4.15% (2nd
quarter of 1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
Salomon Brothers/JNL Balanced Series 0.09% 3.23%
Lehman Brothers Aggregate Bond Index -0.82% 2.83%
S&P 500 Index 21.04% 21.78%
Each of the Lehman Brothers Aggregate Bond Index and the S&P 500 Index is a
broad-based, unmanaged index.
* The Series began operations on March 2, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED DIRECTLY FROM
SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .90%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .90%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $92
- --------------------------------------------------------------------------------
3 Years $287
- --------------------------------------------------------------------------------
5 Years $498
- --------------------------------------------------------------------------------
10 Years $1,108
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Salomon Brothers/JNL Balanced Series allocates its
assets primarily among common stocks, investment-grade bonds, convertible
securities, high-yield/high-risk securities and cash.
The Series may use derivative instruments, such as futures contracts and
options, for hedging or maturity or duration purposes, or as a means of
enhancing return. These instruments are subject to transaction costs and certain
risks, such as unanticipated changes in interest rates and securities prices.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the Salomon
Brothers/JNL Balanced Series is Salomon Brothers Asset Management Inc (SBAM).
SBAM was incorporated in 1987, and, together with affiliates in London,
Frankfurt, Tokyo and Hong Kong, SBAM provides a broad range of fixed-income and
equity investment advisory services to various individual and institutional
clients located throughout the world and serves as sub-adviser to various
investment companies. SBAM's business offices are located at 7 World Trade
Center, New York, New York 10048.
George Williamson, Director and Senior Portfolio Manager of SBAM, is primarily
responsible for the day-to-day management of the Series. Mr. Williamson has had
primary responsibility for the day-to-day management of the Series since
September 1998.
<PAGE>
SALOMON BROTHERS/JNL GLOBAL BOND SERIES
INVESTMENT OBJECTIVE. The primary investment objective of the Salomon
Brothers/JNL Global Bond Series is to seek a high level of current income. As a
secondary objective, the Series seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES. The Salomon Brothers/JNL Global Bond Series
invests at least 65% in a globally diverse portfolio of fixed-income
investments. The sub-adviser has broad discretion to invest the Series' assets
among certain segments of the fixed-income market, primarily U.S.
investment-grade bonds, high-yield corporate debt securities, emerging market
debt securities and investment-grade foreign debt securities. These segments
include U.S. Government securities and mortgage- and other asset-backed
securities (including interest-only or principal-only securities), as well as
debt obligations issued or guaranteed by a foreign government or supranational
organization. The Series does not currently intend to invest more than 75% of
assets in medium or lower rated securities.
In determining the assets to invest in each type of security, the sub-adviser
relies in part on quantitative analytical techniques that measure relative risks
and opportunities of each type of security based on current and historical
economic, market, political and technical data for each type of security, as
well as on its own assessment of economic and market conditions both on a global
and local (country) basis. The sub-adviser continuously reviews the allocation
of assets for the Series and makes such adjustments as it deems appropriate. The
sub-adviser has discretion to select the range of maturities of the various
fixed income securities in which the Series invests. The sub-adviser anticipates
that, under current market conditions, the Series' portfolio securities will
have a weighted average life of 6 to 10 years. However, the weighted average
life of the portfolio securities may vary substantially from time to time
depending on economic and market conditions.
The sub-adviser may invest in medium or lower-rated securities. Investments of
this type involve significantly greater risks, including price volatility and
risk of default in the payment of interest and principal, than higher-quality
securities. PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the
Series is not guaranteed. As with any mutual fund, the value of the Series'
shares will change and you could lose money by investing in the Series. A
variety of factors may influence its investment performance, such as:
o Market risk. Because the Series invests in fixed-income securities of
U.S. and foreign issuers, it is subject to market risk. For bonds,
market risk generally reflects credit risk and interest rate risk.
Credit risk is the actual or perceived risk that the issuer of the
bond will not pay the interest and principal payments when due. Bond
value typically declines if the issuer's credit quality deteriorates.
Interest rate risk is the risk that interest rates will rise and the
value of bonds, including those held by the Series, will fall. A
broad-based market drop may also cause a bond's price to fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities. To the extent that the
Series invests in bonds issued by a foreign government, the Series may
have limited legal recourse in the event of default. Political
conditions, especially a country's willingness to meet the terms of
its debt obligations, can create special risks.
o High-yield/high-risk bonds. Lower rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, the Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Emerging markets risk. The Series may invest a portion of its assets
in securities of issuers in emerging markets, which involves greater
risk. Emerging market countries typically have economic and political
systems that are less fully developed, and likely to be less stable,
than those of more advanced countries. Emerging market countries may
have policies that restrict investment by foreigners, and there is a
higher risk of a government taking private property. Low or
nonexistent trading volume in securities of issuers in emerging
markets may result in a lack of liquidity and in price volatility.
Issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than are companies in
developed markets.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks. The
Series sub-adviser must correctly predict price movements, during the
life of a derivative, of the underlying asset in order to realize the
desired results from the investment. The value of derivatives may rise
or fall more rapidly than other investments, which may increase the
volatility of the Series depending on the nature and extent of the
derivatives in the Series' portfolio. If the sub-adviser uses
derivatives in attempting to manage or "hedge" the overall risk of the
portfolio, the strategy might not be successful, for example, due to
changes in the value of the derivatives that do not correlate with
price movements in the rest of the portfolio.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
14.39% 10.66% 2.46% 1.87%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
4.86% (2nd quarter of 1997) and its lowest quarterly return was -2.72% (3rd
quarter of 1998).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
Salomon Brothers/JNL Global Bond Series 1.87% 7.79%
Salomon Smith Barney Broad Investment Grade Index -0.83% 6.46%
The Salomon Smith Barney Broad Investment Grade Index is a broad-based,
unmanaged index.
* The Series began operations on May 15, 1995.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- -------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS
- -------------------------------------------------------------------------------
Management/Administrative Fee .95%
- -------------------------------------------------------------------------------
Other Expenses 0%
- -------------------------------------------------------------------------------
Total Series Annual Operating Expenses .95%
- -------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $97
- --------------------------------------------------------------------------------
3 Years $303
- --------------------------------------------------------------------------------
5 Years $525
- --------------------------------------------------------------------------------
10 Years $1,166
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES.
When the sub-adviser believes that adverse conditions prevail in the market for
fixed-income securities, the Series may, for temporary defensive purposes,
invest its assets without limit in high-quality, short-term money market
instruments. Doing so may reduce the potential for high current income or
appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the Salomon
Brothers/JNL Global Bond Series is Salomon Brothers Asset Management Inc (SBAM).
SBAM was incorporated in 1987, and, together with affiliates in London,
Frankfurt, Tokyo and Hong Kong, SBAM provides a broad range of fixed-income and
equity investment advisory services to various individualand institutional
clients located throughout the world and serves as sub-adviser to various
investment companies. SBAM's business offices are located at 7 World Trade
Center, New York, New York 10048.
In connection with SBAM's service as sub-adviser to the Series, SBAM Limited,
whose business address is Victoria Plaza, 111 Buckingham Palace Road, London
SW1W OSB, England, provides certain sub-advisory services to SBAM relating to
currency transactions and investments in non-dollar denominated debt securities
for the benefit of the Series. SBAM Limited is compensated by SBAM at no
additional expense to the Trust.
Peter J. Wilby is primarily responsible for the day-to-day management of the
high-yield and emerging market debt securities portions of the Series. Mr. Wilby
has had primary responsibility for the day-to-day management of the high-yield
and emerging market debt securities portions of the Series since the inception
of the Series. Beth Semmel assists Mr. Wilby in the day-to-day management of the
Series. Mr. Wilby, who joined SBAM in 1989, is a Managing Director and Chief
Investment Officer - Fixed Income of SBAM and is responsible for investment
company and institutional portfolios which invest in high-yield non-U.S. and
U.S. corporate debt securities and high-yield foreign sovereign debt securities.
Ms. Semmel is a Managing Director of SBAM. Ms. Semmel joined SBAM in May of
1993, where she manages high-yield portfolios. Ms. Semmel has assisted in the
day-to-day management of the Series since inception of the Series.
David J. Scott, a Managing Director and Senior Portfolio Manager of SBAM, is
primarily responsible for currency transactions and investments in non-dollar
denominated debt securities for the Series.
Roger Lavan is primarily responsible for the mortgage-backed securities and U.S.
Government securities portions of the Series. Mr. Lavan joined SBAM in 1990 and
is a Director and Portfolio Manager responsible for investment grade portfolios.
<PAGE>
SALOMON BROTHERS/JNL HIGH YIELD BOND SERIES
INVESTMENT OBJECTIVE. The investment objective of the Salomon Brothers/JNL High
Yield Bond Series is to maximize current income. As a secondary objective, the
Series seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES. The Salomon Brothers/JNL High Yield Bond Series
invests a substantial percentage of its total assets in high-yield, high-risk
debt securities, commonly referred to as "junk bonds." In light of the risks
associated with such securities, the sub-adviser takes various factors into
consideration in evaluating the creditworthiness of an issuer. For corporate
debt securities, these typically include the issuer's financial resources, its
sensitivity to economic conditions and trends, the operating history of the
issuer, and the experience and track record of the issuer's management. For
sovereign debt instruments, these typically include the economic and political
conditions within the issuer's country, the issuer's overall and external debt
levels and debt service ratios, the issuer's access to capital markets and other
sources of funding, and the issuer's debt service payment history. The
sub-adviser also reviews the ratings, if any, assigned to the security by any
recognized rating agencies, although the sub-adviser's judgment as to the
quality of a debt security may differ from that suggested by the rating
published by a rating service. The Series' ability to achieve its investment
objectives may be more dependent on the sub-adviser's credit analysis than would
be the case if it invested in higher quality debt securities.
In pursuing the Series' secondary objective of capital appreciation, the
sub-adviser looks for those companies that the sub-adviser believes have the
highest potential for improving credit fundamentals. The Fund may also invest in
securities of foreign issuers.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in fixed-income securities of
U.S. and foreign issuers, it is subject to market risk. For bonds,
market risk generally reflects credit risk and interest rate risk.
Credit risk is the actual or perceived risk that the issuer of the
bond will not pay the interest and principal payments when due. Bond
value typically declines if the issuer's credit quality deteriorates.
Interest rate risk is the risk that interest rates will rise and the
value of bonds, including those held by the Series, will fall. A
broad-based market drop may also cause a bond's price to fall.
For bonds, market risk generally reflects credit risk and interest
rate risk. Credit risk is the actual or perceived risk that the issuer
of the bond will not pay the interest and principal payments when due.
Bond value typically declines if the issuer's credit quality
deteriorates. Interest rate risk is the risk that interest rates will
rise and the value of bonds, including those held by an Underlying
Series, will fall. A broad-based market drop may also cause a bond's
price to fall.
To the extent the Series invests in the equity securities of U.S. and
foreign companies, it is subject to stock market risk. Stock prices
typically fluctuate more than the values of other types of securities,
typically in response to changes in the particular company's financial
condition and factors affecting the market in general. For example,
unfavorable or unanticipated poor earnings performance of the company
may result in a decline in its stock's price, and a broad-based market
drop may also cause a stock's price to fall.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities. To the extent that the
Series invests in bonds issued by a foreign government, the Series may
have limited legal recourse in the event of default. Political
conditions, especially a country's willingness to meet the terms of
its debt obligations, can create special risks.
o High-yield/high-risk bonds. Lower-rated bonds involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, a Series would experience a reduction in its
income, a decline in the market value of the securities so affected
and a decline in the value of its shares. During an economic downturn
or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress which could adversely affect
their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but
more sensitive to adverse economic or political changes, or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of
prices of these securities.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.Annual Total
Returns as of December 31 -1.76% [Insert Chart] 1999
In the period shown in the chart, the Series' highest quarterly return was 1.56%
(1st quarter of 1999) and its lowest quarterly return was -2.18% (3rd quarter of
1999).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
Salomon Brothers/JNL High Yield Bond Series -1.76% -0.25%
Salomon Brothers High Yield Index 1.73% 1.29%
The Salomon Brothers High Yield Index is a broad-based, unmanaged index.
* The Series began operations on March 2, 1998.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .90%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .90%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $92
- --------------------------------------------------------------------------------
3 Years $287
- --------------------------------------------------------------------------------
5 Years $498
- --------------------------------------------------------------------------------
10 Years $1,108
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series may invest in foreign securities, such as
obligations issued or guaranteed by foreign governmental authorities, debt
obligations of supranational organizations and fixed-income securities of
foreign corporate issuers. The Series may invest without limit in zero coupon
securities, pay-in-kind bonds and deferred payment securities, which involve
special risk considerations. The Series may invest in fixed- and floating-rate
loans, including loan participations. The Series may invest up to 10% of its
total assets in either (i) equipment lease or trust certificates and conditional
sales contracts or (ii) limited partnership interests. The Series may also
invest up to 10% of its total assets in equity securities (other than preferred
stock, in which the Series may invest without limit), typically equity
investments acquired as a result of purchases of fixed-income securities.
The sub-adviser has discretion to select the range of maturities of the
fixed-income securities in which the Series may invest. The sub-adviser
anticipates that, under current market conditions, the Series will have average
portfolio life of 10 to 15 years. However, the average portfolio life may vary
substantially from time to time depending on economic and market conditions.
The Series may use derivative instruments, such as futures contracts, options
and forward currency contracts, and invest in indexed securities for hedging and
risk management. These instruments are subject to transaction costs and certain
risks, such as unanticipated changes in securities prices and global currency
markets.
When the sub-adviser believes that adverse conditions prevail in the markets for
high-yield fixed-income securities that make the Series' investment strategy
inconsistent with the best interests of the Series' shareholders, the Series may
invest its assets without limit in high-quality, short-term money market
instruments. Doing so may reduce the potential for high current income or
appreciation of the Series' portfolio.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the Salomon
Brothers/JNL High Yield Bond Series is Salomon Brothers Asset Management Inc
(SBAM). SBAM was incorporated in 1987, and, together with affiliates in London,
Frankfurt, Tokyo and Hong Kong, SBAM provides a broad range of fixed-income and
equity investment advisory services to various individual and institutional
clients located throughout the world and serves as sub-adviser to various
investment companies. SBAM's business offices are located at 7 World Trade
Center, New York, New York 10048.
Peter J. Wilby is primarily responsible for the day-to-day management of the
Series. Mr. Wilby has had primary responsibility for the day-to-day management
of the Series since the inception of the Series. Mr. Wilby, who joined SBAM in
1989, is a Managing Director and Chief Investment Officer - Fixed Income of SBAM
is responsible for investment company and institutional portfolios which invest
in high-yield non-U.S. and U.S. corporate debt securities and high-yield foreign
sovereign debt securities.
<PAGE>
SALOMON BROTHERS/JNL U.S. GOVERNMENT & QUALITY BOND SERIES
INVESTMENT OBJECTIVE. The investment objective of the Salomon Brothers/JNL U.S.
Government & Quality Bond Series is to obtain a high level of current income.
PRINCIPAL INVESTMENT STRATEGIES. The Salomon Brothers/JNL U.S. Government &
Quality Bond Series invests at least 65% of its assets in:
(i) U.S. Treasury obligations;
(ii) obligations issued or guaranteed by agencies or instrumentalities
of the U.S. Government which are backed by their own credit and
may not be backed by the full faith and credit of the U.S.
Government;
(iii)mortgage-backed securities guaranteed by the Government National
Mortgage Association that are supported by the full faith and
credit of the U.S. Government. Such securities entitle the holder
to receive all interest and principal payments due whether or not
payments are actually made on the underlying mortgages;
(iv) mortgage-backed securities guaranteed by agencies or
instrumentalities of the U.S. Government which are supported by
their own credit but not the full faith and credit of the U.S.
Government, such as the Federal Home Loan Mortgage Corporation and
Fannie Mae (formerly, the Federal National Mortgage Association);
(v) collateralized mortgage obligations issued by private issuers for
which the underlying mortgage-backed securities serving as
collateral are backed by (i) the credit alone of the U.S.
Government agency or instrumentality which issues or guarantees
the mortgage-backed securities, or (ii) the full faith and credit
of the U.S. Government; and
(vi) repurchase agreements collateralized by any of the foregoing.
Any guarantee of the securities in which the Series invests runs only to the
principal and interest payments on the securities and not to the market value of
such securities or to the principal and interest payments on the underlying
mortgages. A security issued or guaranteed by a U.S. Government agency may
significantly fluctuate in value, and the Series may not receive the originally
anticipated yield on the security. Shares of the Series are not insured or
guaranteed by the U.S. Government, its agencies or instrumentalities.
The sub-adviser seeks to add value by actively managing the portfolio's interest
rate exposure, yield curve positioning, sector allocation and security
selection. In selecting mortgage-backed securities for the Series, the
sub-adviser determines a security's average maturity and duration according to
mathematical models that reflect certain payment assumptions and estimates of
future economic factors. These estimates may vary from actual results, and the
average maturity and duration of mortgage-backed derivative securities may not
reflect the price volatility of those securities in certain market conditions.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in fixed-income securities of
U.S. and foreign issuers, it is subject to market risk. For bonds,
market risk generally reflects credit risk and interest rate risk.
Credit risk is the actual or perceived risk that the issuer of the
bond will not pay the interest and principal payments when due. Bond
value typically declines if the issuer's credit quality deteriorates.
Interest rate risk is the risk that interest rates will rise and the
value of bonds, including those held by the Series, will fall. A
broad-based market drop may also cause a bond's price to fall.
o Prepayment risk. During periods of falling interest rates, there is
the risk that a debt security with a high stated interest rate will be
prepaid before its expected maturity date.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
2.58% 9.16% 9.40% -2.50%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
5.86% (3rd quarter of 1998) and its lowest quarterly return was -2.13% (1st
quarter of 1996).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
Salomon Brothers/JNL U.S. Government &
Quality Bond Series -2.50% 5.42%
Salomon Brothers Treasury Index -2.45% 6.08%
The Salomon Brothers Treasury Index is a broad-based, unmanaged index. * The
Series began operations on May 15, 1995.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .80%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .80%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $82
- --------------------------------------------------------------------------------
3 Years $255
- --------------------------------------------------------------------------------
5 Years $444
- --------------------------------------------------------------------------------
10 Years $990
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The SAI has more information about the Series'
authorized investments and strategies, as well as the risks and restrictions
that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the Salomon
Brothers/JNL U.S. Government & Quality Bond Series is Salomon Brothers Asset
Management Inc (SBAM). SBAM was incorporated in 1987, and, together with
affiliates in London, Frankfurt, Tokyo and Hong Kong, SBAM provides a broad
range of fixed-income and equity investment advisory services to various
individual and institutional clients located throughout the world and serves as
sub-adviser to various investment companies. SBAM's business offices are located
at 7 World Trade Center, New York, New York 10048.
Roger Lavan is primarily responsible for the day-to-day management of the
Series. Mr. Lavan joined SBAM in 1990 and is a Director and Portfolio Manager
responsible for investment grade portfolios.
<PAGE>
T. ROWE PRICE/JNL ESTABLISHED GROWTH SERIES
INVESTMENT OBJECTIVE. The investment objective of the T. Rowe Price/JNL
Established Growth Series is long-term growth of capital and increasing dividend
income.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing primarily in a diversified portfolio of common stocks of
well-established U.S. growth companies. A growth company is one which (i) has
demonstrated historical growth of earnings faster than the growth of inflation
and the economy in general, and (ii) has indications of being able to continue
this growth pattern in the future.While the Series will invest principally in
U.S. companies, a substantial portion of the Series' assets can be invested in
foreign stocks.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests primarily in equity
securities, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall.
o Growth investing risk. Growth companies usually invest a high portion
of earnings in their businesses, and may lack the dividends of value
stocks that can cushion prices in a falling market. Also, earnings
disappointments often lead to sharp declines in prices because
investors buy growth stocks in anticipation of superior earnings
growth.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
<PAGE>
Annual Total Returns as of December 31
22.59% 29.47% 27.78% 21.77%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
23.36% (4th quarter of 1998) and its lowest quarterly return was -11.63% (3rd
quarter of 1998).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
T. Rowe Price/JNL Established Growth Series 21.77% 26.74%
S&P 500 Index 21.04% 26.95%
The S&P 500 Index is a broad-based, unmanaged index.
* The Series began operations on May 15, 1995.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee .93%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses .93%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- -------------------------------------------------------------------------------
EXPENSE EXAMPLE
- -------------------------------------------------------------------------------
1 Year $95
- -------------------------------------------------------------------------------
3 Years $296
- -------------------------------------------------------------------------------
5 Years $515
- -------------------------------------------------------------------------------
10 Years $1,143
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The T. Rowe Price/JNL Established Growth Series invests
most of its assets in common stocks of U.S. companies. However, the Series may
invest in other securities, including convertible securities, warrants,
preferred stocks and corporate and government debt obligations.
The Series may use derivative instruments, such as options and futures
contracts, for hedging purposes and to maintain market exposure. These
instruments are subject to transaction costs and certain risks, such as
unanticipated changes in securities prices. If the Series uses futures and
options, it is exposed to additional volatility and potential losses.
The Series may sell securities for a variety of reasons, such as to secure
gains, limit losses, or redeploy assets into more promising opportunities.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the T. Rowe
Price/JNL Established Growth Series is T. Rowe Price Associates, Inc. (T. Rowe),
located at 100 East Pratt Street, Baltimore, Maryland 21202. T. Rowe was founded
in 1937. T. Rowe and its affiliates provide investment advisory services to
individual and institutional investor accounts.
Robert W. Smith is responsible for the day-to-day management of the Series. Mr.
Smith is a Managing Director and Equity Portfolio Manager for T. Rowe. Mr. Smith
joined T. Rowe in 1992 and has been managing investments since 1987. Mr. Smith
has had responsibility for the day-to-day management of the Series since
February 21, 1997.
<PAGE>
T. ROWE PRICE/JNL MID-CAP GROWTH SERIES
INVESTMENT OBJECTIVE. The investment objective of the T. Rowe Price/JNL Mid-Cap
Growth Series is long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES. The Series seeks to achieve its objective by
investing at least 65% of its total assets, under normal market conditions in a
diversified portfolio of common stocks of medium-sized (mid-cap) U.S. companies
which the sub-adviser believes have the potential for above-average earnings
growth. The sub-adviser defines mid-cap companies as those whose market
capitalization, at the time of acquisition by the Series, falls within the
capitalization range of companies in the S&P MidCap 400 Index. The sub-adviser
relies on its proprietary research to identify mid-cap companies with attractive
growth prospects. The Series seeks to invest primarily in companies that: (i)
offer proven products or services; (ii) have a historical record of earnings
growth that is above average; (iii) demonstrate the potential to sustain
earnings growth; (iv) operate in industries experiencing increasing demand;
and/or (v) the sub-adviser believes are undervalued in the marketplace. However,
the Series will not automatically sell or cease to purchase stock of a company
it already owns just because the company's market capitalization grows or falls
outside this range.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in equity securities, it is
subject to stock market risk. Stock prices typically fluctuate more
than the values of other types of securities, typically in response to
changes in the particular company's financial condition and factors
affecting the market in general. For example, unfavorable or
unanticipated poor earnings performance of the company may result in a
decline in its stock's price, and a broad-based market drop may also
cause a stock's price to fall.
o Growth investing risk. Growth companies usually invest a high portion
of earnings in their businesses, and may lack the dividends of value
stocks that can cushion prices in a falling market. Also, earnings
disappointments often lead to sharp declines in prices because
investors buy growth stocks in anticipation of superior earnings
growth.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities.
Stocks of mid-cap companies entail greater risk and are usually more volatile
than shares of larger companies. In addition, the performance of the Series
depends on the sub-adviser's ability to effectively implement the investment
strategies of the Series.
PERFORMANCE. The bar chart and table below show the past performance of the
Series' shares. The chart presents the annual returns and shows how performance
has varied from year to year. The table shows the Series' annual returns and
compares them to a broad based index since these shares were first offered. Both
the chart and the table assume reinvestment of dividends and distributions. The
Series' returns shown in the chart and table below do not reflect the deduction
of any charges that are imposed under a variable insurance contract. Those
charges, which are described in the variable insurance prospectus, will reduce
the Series' performance. As with all mutual funds, the Series' past performance
does not necessarily indicate how it will perform in the future.
Annual Total Returns as of December 31
23.47% 18.21% 21.49% 24.01%
[Insert Chart]
1996 1997 1998 1999
In the periods shown in the chart, the Series' highest quarterly return was
27.05% (4th quarter of 1998) and its lowest quarterly return was -18.02% (3rd
quarter of 1998).
Average Annual Total Returns as of December 31, 1999
1 year Life of Series*
T. Rowe Price/JNL Mid-Cap Growth Series 24.01% 25.27%
S&P MidCap 400 Index 14.70% 21.41%
The S&P MidCap 400 Index is a broad-based, unmanaged index. * The Series began
operations on May 15, 1995.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- -------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- -------------------------------------------------------------------------------
Management/Administrative Fee 1.03%
- -------------------------------------------------------------------------------
Other Expenses 0%
- -------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.03%
- -------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- -------------------------------------------------------------------------------
EXPENSE EXAMPLE
- -------------------------------------------------------------------------------
1 Year $105
- -------------------------------------------------------------------------------
3 Years $328
- -------------------------------------------------------------------------------
5 Years $569
- -------------------------------------------------------------------------------
10 Years $1,259
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The T. Rowe Price/JNL Mid-Cap Growth Series seeks to
achieve its objective of long-term growth of capital by investing primarily in
common stocks of U.S. companies with medium-sized market capitalizations and the
potential for above-average growth. The Series may also invest in securities
other than U.S. common stocks, including foreign securities, convertible
securities, and warrants. The Series may use derivative instruments, such as
options and futures contracts, for hedging purposes and to maintain market
exposure. These instruments are subject to transaction costs and certain risks,
such as unanticipated changes in securities prices. If the Series uses futures
and options, it is exposed to additional volatility and potential losses.
The Series may sell securities for a variety of reasons, such as to secure
gains, limit losses, or redeploy assets into more promising opportunities.
The SAI has more information about the Series' authorized investments and
strategies, as well as the risks and restrictions that may apply to them.
THE SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the T. Rowe
Price/JNL Mid-Cap Growth Series is T. Rowe Price Associates, Inc. (T. Rowe),
located at 100 East Pratt Street, Baltimore, Maryland 21202. T. Rowe was founded
in 1937. T. Rowe and its affiliates provide investment advisory services to
individual and institutional investor accounts.
The Series has an Investment Advisory Committee composed of the following
members: Brian W. Berghuis, Chairman, James A.C. Kennedy, and John F. Wakeman.
The Committee Chairman has day to day responsibility for managing the Series and
works with the Committee in developing and executing the Series' investment
program. Mr. Berghuis, a Managing Director of T. Rowe, has been managing
investments since joining T. Rowe in 1985. The Investment Advisory Committee has
had day-to-day responsibility for managing the Series since the inception of the
Series.
<PAGE>
T. ROWE PRICE/JNL VALUE SERIES
INVESTMENT OBJECTIVE. The investment objective of the T. Rowe Price/JNL Value
Series is to provide long-term capital appreciation by investing in common
stocks believed to be undervalued. Income is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES. In taking a value approach to investment
selection, at least 65% of total assets will be invested in common stocks the
portfolio manager regards as undervalued. Stock holdings are expected to consist
primarily of large-company issues, but may also include smaller companies. In
selecting investments, the sub-adviser generally looks for the following:
o low price/earnings, price/book value, or price/cash flow ratios
relative to the S&P 500 Index, the company's peers, or its own
historic norm;
o low stock price relative to a company's underlying asset values;
o a plan to improve the business through restructuring; and
o a sound balance sheet and other positive financial characteristics.
PRINCIPAL RISKS OF INVESTING IN THE SERIES. An investment in the Series is not
guaranteed. As with any mutual fund, the value of the Series' shares will change
and you could lose money by investing in the Series. A variety of factors may
influence its investment performance, such as:
o Market risk. Because the Series invests in stocks of U.S. and foreign
companies, it is subject to stock market risk. Stock prices typically
fluctuate more than the values of other types of securities, typically
in response to changes in the particular company's financial condition
and factors affecting the market in general. For example, unfavorable
or unanticipated poor earnings performance of the company may result
in a decline in its stock's price, and a broad-based market drop may
also cause a stock's price to fall. Investing in small- and
medium-company stocks generally involves greater risks than investing
in larger, more established ones. Valueinvesting risk. The value
approach carries the risk that the market will not recognize a
security's intrinsic value for a long time, or that a stock judged to
be undervalued may actually be appropriately priced.
o Foreign investing risk. Foreign investing involves risks not typically
associated with U.S. investment. These risks include, among others,
adverse fluctuations in foreign currency values as well as adverse
political, social and economic developments affecting a foreign
country. In addition, foreign investing involves less publicly
available information and more volatile or less liquid markets.
Investments in foreign countries could be affected by factors not
present in the U.S., such as restrictions on receiving the investment
proceeds from a foreign country, foreign tax laws, and potential
difficulties in enforcing contractual obligations. Transactions in
foreign securities may be subject to less efficient settlement
practices, including extended clearance and settlement periods.
Foreign accounting may be less revealing than American accounting
practices. Foreign regulation may be inadequate or irregular. Owning
foreign securities could cause the Series' performance to fluctuate
more than if it held only U.S. securities.
o Derivatives risk. Investing in derivative instruments, such as
options, futures contracts, forward currency contracts, indexed
securities and asset-backed securities, involves special risks. The
Series sub-adviser must correctly predict price movements, during the
life of a derivative, of the underlying asset in order to realize the
desired results from the investment. The value of derivatives may rise
or fall more rapidly than other investments, which may increase the
volatility of the Series depending on the nature and extent of the
derivatives in the Series' portfolio. If the sub-adviser uses
derivatives in attempting to manage or "hedge" the overall risk of the
portfolio, the strategy might not be successful, for example, due to
changes in the value of the derivatives that do not correlate with
price movements in the rest of the portfolio.
o Currency risk. The value of the Series' shares may change as a result
of changes in exchange rates reducing the value of the U.S. dollar
value of the Series' foreign investments. Currency exchange rates can
be volatile and affected by a number of factors, such as the general
economics of a country, the actions of U.S. and foreign governments or
central banks, the imposition of currency controls, and speculation.
In addition, the performance of the Series depends on the sub-adviser's ability
to effectively implement the investment strategies of the Series.
PERFORMANCE. This Series will commence investment operations on or about the
date of this Prospectus. Therefore, a bar chart and table have not been included
for this Series.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MAXIMUM SALES LOAD IMPOSED ON PURCHASES NONE
MAXIMUM SALES LOAD IMPOSED ON REINVESTED DIVIDENDS NONE
DEFERRED SALES LOAD NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
EXPENSES. The table below shows certain expenses you will incur as a Series
investor, either directly or indirectly.
- --------------------------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM SERIES ASSETS)
- --------------------------------------------------------------------------------
Management/Administrative Fee 1.00%
- --------------------------------------------------------------------------------
Other Expenses 0%
- --------------------------------------------------------------------------------
Total Series Annual Operating Expenses 1.00%
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the Series with the cost of investing in other mutual funds. Also,
this example does not reflect the expenses of the Qualified Plan. The table
below shows the expenses you would pay on a $10,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. This
illustration is hypothetical and is not intended to be representative of past or
future performance of the Series. The example also assumes that the Series
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
1 Year $102
- --------------------------------------------------------------------------------
3 Years $318
- --------------------------------------------------------------------------------
5 Years $552
- --------------------------------------------------------------------------------
10 Years $1,225
- --------------------------------------------------------------------------------
COMPARABLE PERFORMANCE
Public Fund Performance. The T. Rowe Price/JNL Value Series has substantially
similar investment objectives, policies and investment strategies as certain
mutual funds whose shares are sold to the public. The T. Rowe Price Value Fund
is a public mutual fund managed by T. Rowe Price Associates, Inc., the same
Sub-Adviser which manages each of the corresponding Series.
The historical performance of the T. Rowe Price Value Fund is shown below. This
performance data should not be considered as an indication of future performance
of the Series. The public mutual fund performance figures shown below:
o reflects the historical fees and expenses paid by the T. Rowe Value
Fund and not those paid by the Series.
o do not reflect Contract fees or charges imposed by Jackson National
Life. Investors should refer to the separate account prospectus for
information describing the Contract fees and charges. These fees and
charges will have a detrimental effect on Series performance.
The Series and their corresponding public mutual fund series are expected to
hold similar securities. However, their investment results are expected to
differ for the following reasons:
o differences in asset size and cash flow resulting from purchases and
redemptions of Series shares may result in different security
selections
o differences in the relative weightings of securities
o differences in the price paid for particular portfolio holdings
o differences relating to certain tax matters
However, the differences cited do not alter the conclusion that the Funds have
substantially similar investment objectives, policies and strategies.
The chart below shows performance information for the T. Rowe Price Value Fund,
a retail mutual fund managed by the Series' sub-advisor with assets of $851.4
million at 12/31/99.
ANNUALIZED RETURNS FOR THE PERIOD ENDED 12/31/99 (1)
- ------------------- ------------------------------- ---------------------------
T. ROWE PRICE VALUE FUND LIPPER MULTI-CAP
VALUE FUNDS AVERAGE (2)
- ------------------- ------------------------------- ---------------------------
1 Year 9.16% 6.34%
- ------------------- ------------------------------- ---------------------------
3 Years 14.66% 13.15%
- ------------------- ------------------------------- ---------------------------
5 Years 22.06% 18.12%
- ------------------- ------------------------------- ---------------------------
Since Inception* 21.61% 16.83%
- ------------------- ------------------------------- ---------------------------
*Inception September 30, 1994.
(1) Source: T. Rowe Price Associates, Inc. Total returns were calculated using
the actual fees and expenses of the T. Rowe Value Fund. These fees and expenses
are less than the fees charged by the Series. The performance returns would have
been lower if the actual expenses of the Series had been used. The returns were
calculated using the standardized Securities and Exchange Commission method.
Actual account performance will vary depending on the size of a portfolio and
applicable fee schedule. Performance figures are based on historical performance
and do not guarantee future results. Performance for the T. Rowe Price/JNL Vale
Series will vary based on different fees, different implementation of investment
policies, different cash flows into and out of the portfolio and different
sizes.
(2) The Lipper Multi-Cap Value Funds Average consistS of all the mutual funds in
this particular category as tracked by Lipper Inc. The Multi-Cap Value Fund
category includes funds that by portfolio practice, invest in a variety of
market capitalization ranges, without concentrating 75% of their equity assets
in any one market capitalization range over an extended period of time. A
Series' 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 magnified performance impact on a Series with a small asset base. A
Series may not experience similar performance as its assets grow.
ADDITIONAL INFORMATION ABOUT THE OTHER INVESTMENT STRATEGIES, OTHER INVESTMENTS
AND RISKS OF THE SERIES. The Series may sell securities for a variety of
reasons, such as to secure gains, limit losses, or redeploy assets into more
promising opportunities.
The Series may invest up to 25% of its total assets (excluding reserves) in
foreign securities. Although the Series will invest primarily in common stocks,
the Series may invest in any type of security or instrument (including certain
potentially high-risk derivatives) whose investment characteristics are
consistent with the Series' investment program. These may include:
o preferred stocks
o convertible securities and warrants
o fixed income securities, including lower quality (high-yield,
high-risk bonds) commonly referred to as "junk bonds" ohybrid
instruments which combine the characteristics of securities, futures
and options o private placements
If the Series uses futures and options, it is exposed to additional volatility
and potential losses.The SAI has more information about the Series' authorized
investments and strategies.
SUB-ADVISER AND PORTFOLIO MANAGEMENT. The sub-adviser to the T. Rowe Price/JNL
Value Series is T. Rowe Price Associates, Inc. (T. Rowe), located at 100 East
Pratt Street, Baltimore, Maryland 21202. T. Rowe was founded in 1937. T. Rowe
and its affiliates provide investment advisory services to individual and
institutional investor accounts.
The Series has an Investment Advisory Committee with the following members:
Brian C. Rogers, Chairman, Stephen W. Boesel, Richard P. Howard, Kara Cheseby
Landers, Robert W. Sharps, and David J. Wallack. The committee chairman has
day-to-day responsibility for managing the portfolio and works with the
committee in developing and executing the fund's investment program. Mr. Rogers
is the lead portfolio manager. He joined T. Rowe Price in 1982 and has been
managing investments since 1983.
<PAGE>
MORE ABOUT THE INVESTMENT OBJECTIVES AND RISKS OF ALL SERIES
The investment objectives of the respective Series are not fundamental and may
be changed by the Trustees without shareholder approval.
<PAGE>
MANAGEMENT OF THE TRUST
INVESTMENT ADVISER
Under Massachusetts law and the Trust's Declaration of Trust and By-Laws, the
management of the business and affairs of the Trust is the responsibility of the
Trustees.
Jackson National Financial Services, LLC (JNFS), 5901 Executive Drive, Lansing,
Michigan 48911, is the investment adviser to the Trust and provides the Trust
with professional investment supervision and management. JNFS is a wholly owned
subsidiary of Jackson National Life Insurance Company (JNL), which is in turn
wholly owned by Prudential plc, a life insurance company in the United Kingdom.
JNFS is a successor to Jackson National Financial Services, Inc. which served as
investment adviser to the Trust from the inception of the Trust until July 1,
1998, when it transferred its duties as investment adviser and its professional
staff for investment advisory services to JNFS.
MANAGEMENT FEE
As compensation for its services, JNFS receives a fee from the Trust computed
separately for each Series, accrued daily and payable monthly. The fee which
JNFS received from each Series for the fiscal year ended December 31, 1999, is
set forth below as an annual percentage of the net assets of the Series' fee.
Each JNL/S&P Series will indirectly bear its pro rata share of fees of the
Underlying Series in addition to the fees shown for that Series.
<TABLE>
<CAPTION>
- ---------------------------------------------- ----------------------------------- ---------------------------------
Advisory Fee (Annual Rate Based
on Average Net Assets of each
Series Assets Series)
- ---------------------------------------------- ----------------------------------- ---------------------------------
<S> <C> <C>
JNL/Alger Growth Series $0 to $300 million .975%
$300 million to $500 million .95%
Over $500 million .90%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Alliance Growth Series $0 to $250 million .775%
Over $250 million .70%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Eagle Core Equity Series $0 to $50 million .90%
$50 million to $300 million .85%
Over $300 million .75%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Eagle SmallCap Equity Series $0 to $150 million .95%
$150 million to $500 million .90%
Over $500 million .85%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/J.P. Morgan Enhanced S&P 500 Stock Index $0 to $25 million .80%
Series Over $25 million .75%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/J.P. Morgan International & Emerging $0 to $50 million .975%
Markets Series $50 million to $200 million .95%
$200 million to $350 million .90%
Over $350 million .85%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Janus Aggressive Growth Series $0 to $150 million .95%
$150 million to $300 million .90%
Over $300 million .85%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Janus Balanced Series $0 to $300 million .95%
Over $300 million .90%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Janus Capital Growth Series $0 to $150 million .95%
$150 million to $300 million .90%
Over $300 million .85%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Janus Global Equities Series $0 to $150 million 1.00%
$150 million to $300 million .95%
Over $300 million .90%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Janus Growth & Income Series $0 to $300 million .95%
Over $300 million .90%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/PIMCO Total Return Bond Series All assets .70%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Putnam Growth Series $0 to $150 million .90%
$150 million to $300 million .85%
Over $300 million .80%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Putnam International Equity Series $0 to $50 million 1.10%
$50 million to $150 million 1.05%
$150 million to $300 million 1.00%
$300 million to $500 million .95%
Over $500 million .90%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Putnam Value Equity Series $0 to $150 million .90%
$150 million to $300 million .85%
Over $300 million .80%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/Putnam Midcap Growth Series $0 to $300 million .95%
Over $300 million .90%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Conservative Growth Series I $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Moderate Growth Series I $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Aggressive Growth Series I $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Very Aggressive Growth Series I $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Equity Growth Series I $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Equity Aggressive Growth Series I $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Conservative Growth Series II $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Moderate Growth Series II $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Aggressive Growth Series II $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Very Aggressive Growth Series II $0 to $500 million .20%
Over $500 million .15%
- --------------------------------------------- ----------------------------------- ----------------------------------
JNL/S&P Equity Growth Series II $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Equity Aggressive Growth Series II $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Conservative Growth Series $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Moderate Growth Series $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL/S&P Aggressive Growth Series $0 to $500 million .20%
Over $500 million .15%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL Enhanced Intermediate Bond Index Series All Assets .65%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL International Index Series All Assets .60%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL Russell 2000 Index Series All Assets .50%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL S&P 500 Index Series All Assets .50%
- ---------------------------------------------- ----------------------------------- ---------------------------------
JNL S&P Mid Cap Value Series All Assets .50%
- ---------------------------------------------- ----------------------------------- ---------------------------------
Lazard/JNL Mid Cap Value Series $0 to $150 million .975%
$150 million to $300 million .925%
Over $300 million .90%
- ---------------------------------------------- ----------------------------------- ---------------------------------
Lazard/JNL Small Cap Value Series $0 to $50 million 1.05%
$50 million to $150 million 1.00%
$150 million to $300 million .975%
Over $300 million .925%
- ---------------------------------------------- ----------------------------------- ---------------------------------
PPM America/JNL Balanced Series $0 to $50 million .75%
$50 million to $150 million .70%
$150 million to $300 million .675%
$300 million to $500 million .65%
Over $500 million .625%
- ---------------------------------------------- ----------------------------------- ---------------------------------
PPM America/JNL High Yield Bond Series $0 to $50 million .75%
$50 million to $150 million .70%
$150 million to $300 million .675%
$300 million to $500 million .65%
Over $500 million .625%
- ---------------------------------------------- ----------------------------------- ---------------------------------
PPM America/JNL Money Market Series $0 to $150 million .60%
$150 million to $300 million .575%
$300 million to $500 million .55%
Over $500 million .525%
- ---------------------------------------------- ----------------------------------- ---------------------------------
Salomon Brothers/JNL Balanced Series $0 to $50 million .80%
$50 million to $150 million .75%
Over $150 million .70%
- ---------------------------------------------- ----------------------------------- ---------------------------------
Salomon Brothers/JNL Global Bond Series $0 to $150 million .85%
$150 million to $500 million .80%
Over $500 million .75%
- ---------------------------------------------- ----------------------------------- ---------------------------------
Salomon Brothers/JNL High Yield Bond Series $0 to $50 million .80%
$50 million to $150 million .75%
Over $150 million .70%
- ---------------------------------------------- ----------------------------------- ---------------------------------
Salomon Brothers/JNL U.S. Government & $0 to $150 million .70%
Quality Bond Series $150 million to $300 million .65%
$300 million to $500 million .60%
Over $500 million .55%
- ---------------------------------------------- ----------------------------------- ---------------------------------
T. Rowe Price/JNL Established Growth Series $0 to $150 million .85%
Over $150 million .80%
- ---------------------------------------------- ----------------------------------- ---------------------------------
T. Rowe Price/JNL Mid-Cap Growth Series $0 to $150 million .95%
Over $150 million .90%
- ---------------------------------------------- ----------------------------------- ---------------------------------
T. Rowe Price/JNL Value Series $0 to $300 million .90%
Over $300 million .85%
- ---------------------------------------------- ----------------------------------- ---------------------------------
</TABLE>
SUB-ADVISORY ARRANGEMENTS
JNFS selects, contracts with and compensates sub-advisers to manage the
investment and reinvestment of the assets of the Series of the Trust. JNFS
monitors the compliance of such sub-advisers with the investment objectives and
related policies of each Series and reviews the performance of such sub-advisers
and reports periodically on such performance to the Trustees of the Trust.
Under the terms of each of the Sub-Advisory Agreements with JNFS, the
sub-adviser manages the investment and reinvestment of the assets of the
assigned Series, subject to the supervision of the Trustees of the Trust. The
sub-adviser formulates a continuous investment program for each such Series
consistent with its investment objectives and policies outlined in this
Prospectus. Each sub-adviser implements such programs by purchases and sales of
securities and regularly reports to JNFS and the Trustees of the Trust with
respect to the implementation of such programs.
As compensation for its services, each sub-adviser receives a fee from JNFS
computed separately for the applicable Series, stated as an annual percentage of
the net assets of such Series. The SAI contains a schedule of the management
fees JNFS currently is obligated to pay the sub-advisers out of the advisory fee
it receives from the Series.
ADMINISTRATIVE FEE
In addition to the investment advisory fee, each Series, except the JNL
International Index Series and the JNL/S&P Series, pays to JNFS an
Administrative Fee of .10% of the average daily net assets of the Series. The
JNL International Index Series pays an Administrative Fee of .15%. The JNL/S&P
Series do not pay an Administrative Fee. In return for the fee, JNFS provides or
procures all necessary administrative functions and services for the operation
of the Series. In addition, JNFS, at its own expense, arranges for legal, audit,
fund accounting, custody, printing and mailing, and all other services necessary
for the operation of each Series. Each Series is responsible for trading
expenses including brokerage commissions, interest and taxes, and other
non-operating expenses.
INVESTMENT IN TRUST SHARES
Shares of the Trust are currently sold to separate accounts (Accounts) of
Jackson National Life Insurance Company, 5901 Executive Drive, Lansing, Michigan
48911, and Jackson National Life Insurance Company of New York, 2900 Westchester
Avenue, Purchase, New York 10577, to fund the benefits under certain variable
annuity contracts (Contracts) and to qualified retirement plans. An insurance
company purchases the shares of the Series at their net asset value using
premiums received on Contracts issued by the insurance company. There is no
sales charge.
Shares of the Series are not available to the general public directly. Some of
the Series are managed by sub-advisers who manage publicly traded mutual funds
having similar names and investment objectives. While some of the Series may be
similar to, and may in fact be modeled after publicly traded mutual funds,
Contract purchasers should understand that the Series are not otherwise directly
related to any publicly traded mutual fund. Consequently, the investment
performance of publicly traded mutual funds and any corresponding Series may
differ substantially.
The net asset value per share of each Series is determined at the close of
regular trading on the New York Stock Exchange (normally 4:00 p.m., Eastern
time) each day that the New York Stock Exchange is open. The net asset value per
share is calculated by adding the value of all securities and other assets of a
Series, deducting its liabilities, and dividing by the number of shares
outstanding. Generally, the value of exchange-listed or -traded securities is
based on their respective market prices, bonds are valued based on prices
provided by an independent pricing service and short-term debt securities are
valued at amortized cost, which approximates market value. A Series may invest
in securities primarily listed on foreign exchanges and that trade on days when
the Series does not price its shares. As a result, a Series' net asset value may
change on days when shareholders are not able to purchase or redeem the Series'
shares.
All investments in the Trust are credited to the shareholder's account in the
form of full and fractional shares of the designated Series (rounded to the
nearest 1/1000 of a share). The Trust does not issue share certificates.
SHARE REDEMPTION
An Account redeems shares to make benefit or withdrawal payments under the terms
of its Contracts. Redemptions are processed on any day on which the Trust is
open for business and are effected at net asset value next determined after the
redemption order, in proper form, is received by the Trust's transfer agent.
The Trust may suspend the right of redemption only under the following unusual
circumstances:
o when the New York Stock Exchange is closed (other than weekends and
holidays) or trading is restricted;
o when an emergency exists, making disposal of portfolio securities or
the valuation of net assets not reasonably practicable; or
o during any period when the SEC has by order permitted a suspension of
redemption for the protection of shareholders.
TAX STATUS
Each Series' policy is to meet the requirements of Subchapter M of the Internal
Revenue Code (Code) necessary to qualify as a regulated investment company. Each
Series intends to distribute all its net investment income and net capital gains
to shareholders and, therefore, will not be required to pay any federal income
taxes.
Each Series is treated as a separate corporation for purposes of the Code.
Therefore, the assets, income, and distributions of each Series are considered
separately for purposes of determining whether or not the Series qualifies as a
regulated investment company.
Because the shareholders of each Series are Accounts and qualified retirement
plans, there are no tax consequences to shareholders of buying, holding,
exchanging and selling shares of the Series. Distributions from the Series are
not taxable to those shareholders. However, owners of Contracts should consult
the applicable Account prospectus for more detailed information on tax issues
related to the Contracts.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides selected per share data for one share of each
Series. The information does not reflect any charges imposed by an Account
investing in shares of the Series. You should refer to the appropriate Account
prospectus for additional information regarding such charges.
The information for each of the periods shown below has been audited by
PricewaterhouseCoopers LLP, independent accountants, and should be read in
conjunction with the financial statements and notes thereto, together with the
report of PricewaterhouseCoopers LLP thereon, in the Annual Report.
JNL/ALGER GROWTH SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, OCTOBER 16,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
---------------- -------------- ------------ ----------------- --------------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data
Net asset value, beginning of period ................... $ 18.95 $ 13.56 $ 11.16 $ 10.38 $ 10.00
--------- ------------ ----------- ----------- ----------
Income from operations:
Net investment income (loss) ........................... (0.03) -- (0.01) -- --
Net realized and unrealized gains on investments ....... 6.42 6.20 2.93 0.78 0.38
--------- ------------ ----------- ----------- ----------
Total income from operations ........................... 6.39 6.20 2.92 0.78 0.38
--------- ------------ ----------- ----------- ----------
Less distributions:
From net investment income ............................. -- -- -- -- --
From net realized gains on investment transactions ..... (2.43) (0.81) (0.52) -- --
--------- ------------ ----------- ----------- ----------
Total distributions .................................... (2.43) (0.81) (0.52) -- --
--------- ------------ ----------- ----------- ----------
Net increase ........................................... 3.96 5.39 2.40 0.78 0.38
--------- ------------ ----------- ----------- ----------
Net asset value, end of period ......................... $ 22.91 $ 18.95 $ 13.56 $ 11.16 $ 10.38
========= ============ =========== =========== ==========
Total Return (a) ....................................... $ 0.34 $ 0.46 26.20% 7.51% 3.80%
Ratios and Supplemental Data:
Net assets, end of period (in thousands) ............... $ 400,639 $ 164,948 $ 85,877 $ 38,252 $ 8,649
Ratio of expenses to average net assets (b) ............ 1.07 % 1.06 % 1.10 % 1.07 % 1.03 %
Ratio of net investment loss to average net assets (b) . (0.22)% (0.02)% (0.07)% (0.02)% (0.17)%
Portfolio turnover ..................................... 122.58 % 121.39 % 125.44 % 59.92 % 50.85 %
Ratio information assuming no expense reimbursement
or fees paid indirectly:
Ratio of expenses to average net assets (b) ............ n/a 1.06 % 1.10 % 1.19 % 1.89 %
Ratio of net investment loss to average net assets (b) . n/a (0.02)% (0.07)% (0.14)% (1.03)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/ALLIANCE GROWTH SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 2,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- --------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ..................................... $ 13.28 $ 10.00
--------------- --------------
INCOME FROM OPERATIONS:
Net investment income loss ............................................. (0.01) (0.01)
Net realized and unrealized gains on investments ....................... 3.76 3.29
--------------- --------------
Total income from operations ........................................... 3.75 3.28
--------------- --------------
LESS DISTRIBUTIONS:
From net investment income ............................................. -- --
From net realized gains on investment transactions ..................... (0.39) --
--------------- --------------
Total distributions .................................................... (0.39) --
--------------- --------------
Net increase ........................................................... 3.36 3.28
--------------- --------------
NET ASSET VALUE, END OF PERIOD ........................................... $ 16.64 $ 13.28
=============== ==============
TOTAL RETURN (A) ......................................................... 28.23 % 32.80 %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ............................... $ 18,256 $ 4,573
Ratio of expenses to average net assets (b) ............................ 0.875 % 0.925 %
Ratio of net investment loss to average net assets (b) ................. (0.07)% (0.08)%
Portfolio turnover ..................................................... 51.15 % 136.69 %
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT:
Ratio of expenses to average net assets (b) ............................ n/a 2.13 %
Ratio of net investment loss to average net assets (b) ................. n/a (1.28)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/EAGLE CORE EQUITY SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 16,
1996* TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996
----------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Selected Per Share Data
Net asset value, beginning of period ........................... $ 15.91 $ 13.75 $ 10.62 $ 10.00
----------- ----------- ----------- ----------
Income from operations:
Net investment income .......................................... 0.11 0.10 0.08 0.03
Net realized and unrealized gains on investments and
options written ................................................ 3.63 2.17 3.35 0.62
----------- ----------- ----------- ----------
Total income from operations ................................... 3.74 2.27 3.43 0.65
----------- ----------- ----------- ----------
Less distributions:
From net investment income ..................................... (0.11) (0.09) (0.08) (0.03)
From net realized gains on investment transactions ............. (1.07) (0.02) (0.22) --
----------- ----------- ----------- ----------
Total distributions ............................................ (1.18) (0.11) (0.30) (0.03)
----------- ----------- ----------- ----------
Net increase ................................................... 2.56 2.16 3.13 0.62
----------- ----------- ----------- ----------
Net asset value, end of period ................................. $ 18.47 $ 15.91 $ 13.75 $ 10.62
=========== =========== =========== ==========
Total Return (a) ............................................... 23.55 % 16.54 % 32.35 % 6.47 %
Ratios and Supplemental Data:
Net assets, end of period (in thousands) ....................... $ 95,329 $ 37,169 $ 11,896 $ 1,954
Ratio of expenses to average net assets (b) .................... 0.99 % 1.05 % 1.05 % 1.05 %
Ratio of income to average net assets (b) ...................... 0.97 % 1.07 % 1.00 % 1.10 %
Portfolio turnover ............................................. 124.71 % 67.04 % 51.48 % 1.36 %
Ratio information assuming no expense reimbursement:
Ratio of expenses to average net assets (b) .................... n/a 1.17 % 1.54 % 4.57 %
Ratio of net investment income (loss) to average net
assets (b) ..................................................... n/a 0.95 % 0.51 % (2.42)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/EAGLE SMALLCAP EQUITY SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 16,
1996* TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996
----------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Selected Per Share Data
Net asset value, beginning of period ............................ $ 14.82 $ 14.73 $ 11.54 $ 10.00
---------- ----------- ----------- ----------
Income from operations:
Net investment loss ............................................. (0.04) (0.06) (0.07) (0.01)
Net realized and unrealized gains on investments ................ 2.88 0.23 3.26 1.55
---------- ----------- ----------- ----------
Total income from operations .................................... 2.84 0.17 3.19 1.54
---------- ----------- ----------- ----------
Less distributions:
From net investment income ...................................... -- -- -- --
From net realized gains on investment transactions .............. (0.69) (0.08) -- --
---------- ----------- ----------- ----------
Total distributions ............................................. (0.69) (0.08) -- --
---------- ----------- ----------- ----------
Net increase .................................................... 2.15 0.09 3.19 1.54
---------- ----------- ----------- ----------
Net asset value, end of period .................................. $ 16.97 $ 14.82 $ 14.73 $ 11.54
========== =========== =========== ==========
Total Return (a) ................................................ 19.27 % 1.18 % 27.64 % 15.40 %
Ratios and Supplemental Data:
Net assets, end of period (in thousands) ........................ $ 61,504 $ 34,953 $ 13,493 $ 1,944
Ratio of expenses to average net assets (b) ..................... 1.05 % 1.10 % 1.10 % 1.10 %
Ratio of net investment loss to average net assets (b) .......... (0.35)% (0.42)% (0.54)% (0.26)%
Portfolio turnover .............................................. 61.69 % 51.90 % 60.78 % 28.01 %
Ratio information assuming no expense reimbursement:
Ratio of expenses to average net assets (b) ..................... n/a 1.17 % 1.51 % 4.77 %
Ratio of net investment loss to average net assets (b) .......... n/a (0.49)% (0.95)% (3.93)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/J.P. MORGAN INTERNATIONAL & EMERGING MARKETS SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 2,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- -----------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 9.82 $ 10.00
--------------- -----------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.06 0.08
Net realized and unrealized gains (losses) on investments, futures contracts
and foreign currency related items ......................................... 3.67 (0.20)
--------------- -----------------
Total income (loss) from operations .......................................... 3.73 (0.12)
--------------- -----------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.21) (0.06)
From net realized gains on investment transactions ........................... (0.19) --
--------------- -----------------
Total distributions .......................................................... (0.40) (0.06)
--------------- -----------------
Net increase (decrease) ...................................................... 3.33 (0.18)
--------------- -----------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 13.15 $ 9.82
=============== =================
TOTAL RETURN (A) ............................................................... 38.02 % (1.24)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 7,777 $ 4,997
Ratio of expenses to average net assets (b) .................................. 1.075 % 1.125 %
Ratio of net investment income to average net assets (b) ..................... 0.53 % 0.62 %
Portfolio turnover ........................................................... 66.82 % 231.88 %
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT:
Ratio of expenses to average net assets (b) .................................. n/a 2.64 %
Ratio of net investment loss to average net assets (b) ....................... n/a (0.90)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/J.P. MORGAN ENHANCED S&P 500 INDEX SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
MAY 16,
1999* TO
DECEMBER 31,
1999
---------------
<S> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ......................................... $ 10.00
---------------
INCOME FROM OPERATIONS:
Net investment income ...................................................... 0.03
Net realized and unrealized gains on investments ........................... 0.65
---------------
Total income from operations ............................................... 0.68
---------------
LESS DISTRIBUTIONS:
From net investment income ................................................. (0.03)
From net realized gain on investment transactions .......................... (0.07)
---------------
Total distributions ........................................................ (0.10)
---------------
Net increase ............................................................... 0.58
---------------
NET ASSET VALUE, END OF PERIOD ............................................... $ 10.58
===============
TOTAL RETURN (A) ............................................................. 6.85%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ................................... $ 5,341
Ratio of expenses to average net assets (b) ................................ 0.90%
Ratio of net investment income to average net assets (b) ................... 0.56%
Portfolio turnover ......................................................... 34.39%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/JANUS AGGRESSIVE GROWTH SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
----------- -------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data
Net asset value, beginning of period ..................... $ 22.09 $ 14.53 $ 13.38 $ 13.13 $ 10.00
---------- ------------ ----------- ----------- -----------
Income from operations:
Net investment income (loss) ............................. (0.06) (0.06) 0.04 0.05 0.01
Net realized and unrealized gains on investments and
foreign currency related items ........................... 20.87 8.45 1.65 1.10 3.53
---------- ------------ ----------- ----------- -----------
Total income from operations ............................. 20.81 8.39 1.69 1.15 3.54
---------- ------------ ----------- ----------- -----------
Less distributions:
From net investment income ............................... -- (0.05) -- (0.05) --
From net realized gains on investment transactions ....... (2.93) (0.78) (0.54) (0.71) (0.41)
Return of capital ........................................ -- -- -- (0.14) --
---------- ------------ ----------- ----------- -----------
Total distributions ...................................... (2.93) (0.83) (0.54) (0.90) (0.41)
---------- ------------ ----------- ----------- -----------
Net increase ............................................. 17.88 7.56 1.15 0.25 3.13
---------- ------------ ----------- ----------- -----------
Net asset value, end of period ........................... $ 39.97 $ 22.09 $ 14.53 $ 13.38 $ 13.13
========== ============ =========== =========== ===========
Total Return (a) ......................................... 94.43 % 57.66 % 12.67 % 8.72 % 35.78 %
Ratios and Supplemental Data:
Net assets, end of period (in thousands) ................. $ 654,546 $ 161,842 $ 78,870 $ 29,555 $ 8,527
Ratio of expenses to average net assets (b) .............. 1.01 % 1.10 % 1.10 % 1.09 % 1.09 %
Ratio of net investment income (loss) to average net
assets (b) ............................................... (0.40)% (0.35)% 0.39 % 0.77 % 0.27 %
Portfolio turnover ....................................... 95.06 % 114.51 % 137.26 % 85.22 % 163.84 %
Ratio information assuming no expense reimbursement
or fees paid indirectly:
Ratio of expenses to average net assets (b) .............. n/a 1.10 % 1.17 % 1.40 % 2.77 %
Ratio of net investment income (loss) to average net
assets (b) ............................................... n/a (0.35)% 0.32 % 0.46 % (1.41)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/JANUS CAPITAL GROWTH SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
--------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data
Net asset value, beginning of period .................... $ 20.73 $ 16.50 $ 14.46 $ 13.86 $ 10.00
--------- ------------ ----------- ----------- ----------
Income from operations:
Net investment income (loss) ............................ (0.13) (0.12) (0.06) 0.06 --
Net realized and unrealized gains on investments and
foreign currency related items .......................... 25.85 5.92 2.23 0.70 4.70
--------- ------------ ----------- ----------- ----------
Total income from operations ............................ 25.72 5.80 2.17 0.76 4.70
--------- ------------ ----------- ----------- ----------
Less distributions:
From net investment income .............................. -- -- (0.02) -- --
From net realized gains on investment transactions ...... (2.83) (1.57) (0.04) (0.16) (0.84)
Return of capital ....................................... -- -- (0.07) -- --
--------- ------------ ----------- ----------- ----------
Total distributions ..................................... (2.83) (1.57) (0.13) (0.16) (0.84)
--------- ------------ ----------- ----------- ----------
Net increase ............................................ 22.89 4.23 2.04 0.60 3.86
--------- ------------ ----------- ----------- ----------
Net asset value, end of period .......................... $ 43.62 $ 20.73 $ 16.50 $ 14.46 $ 13.86
========= ============ =========== =========== ==========
Total Return (a) ........................................ 124.19 % 35.16 % 15.01 % 5.45 % 47.94 %
Ratios and Supplemental Data:
Net assets, end of period (in thousands) ................ $ 509,086 $ 111,037 $ 73,749 $ 36,946 $ 9,578
Ratio of expenses to average net assets (b) ............. 1.03 % 1.09 % 1.10 % 1.09 % 1.09 %
Ratio of net investment income (loss) to average net
assets (b) .............................................. (0.75)% (0.68)% (0.30)% 0.91 % (0.49)%
Portfolio turnover ...................................... 102.26 % 128.95 % 131.43 % 115.88 % 128.56 %
Ratio information assuming no expense reimbursement
or fees paid indirectly:
Ratio of expenses to average net assets (b) ............. n/a 1.09 % 1.11 % 1.27 % 2.08 %
Ratio of net investment income (loss) to average net
assets (b) .............................................. n/a (0.68)% (0.31)% 0.73 % (1.48)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/JANUS GLOBAL EQUITIES SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
--------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data
Net asset value, beginning of period ................... $ 22.11 $ 17.48 $ 15.20 $ 13.75 $ 10.00
--------- ------------ ------------ ---------- ----------
Income from operations:
Net investment income .................................. -- 0.04 0.07 0.03 0.10
Net realized and unrealized gains on investments and
foreign currency related items ......................... 14.27 4.66 2.84 2.72 4.02
--------- ------------ ------------ ---------- ----------
Total income from operations ........................... 14.27 4.70 2.91 2.75 4.12
--------- ------------ ------------ ---------- ----------
Less distributions:
From net investment income ............................. -- (0.07) -- (0.08) --
From net realized gains on investment transactions ..... (0.69) -- (0.63) (0.90) (0.37)
Return of capital ...................................... -- -- -- (0.32) --
--------- ------------ ------------ ---------- ----------
Total distributions .................................... (0.69) (0.07) (0.63) (1.30) (0.37)
--------- ------------ ------------ ---------- ----------
Net increase ........................................... 13.58 4.63 2.28 1.45 3.75
--------- ------------ ------------ ---------- ----------
Net asset value, end of period ......................... $ 35.69 $ 22.11 $ 17.48 $ 15.20 $ 13.75
========= ============ ============ ========== ==========
Total Return (a) ....................................... 64.58 % 26.87 % 19.12 % 19.99 % 41.51 %
Ratios and Supplemental Data:
Net assets, end of period (in thousands) ............... $ 597,241 $ 240,385 $ 151,050 $ 48,638 $ 16,141
Ratio of expenses to average net assets (b) ............ 1.06 % 1.14 % 1.15 % 1.14 % 1.15 %
Ratio of net investment income to average net assets (b) 0.01 % 0.13 % 0.33 % 0.37 % 0.39 %
Portfolio turnover ..................................... 61.60 % 81.46 % 97.21 % 52.02 % 142.36 %
Ratio information assuming no expense reimbursement
or fees paid indirectly:
Ratio of expenses to average net assets (b) ............ n/a 1.30 % 1.37 % 1.63 % 2.25 %
Ratio of net investment income (loss) to average net
assets (b) ............................................. n/a (0.03)% 0.11 % (0.12)% (0.71)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/PIMCO TOTAL RETURN BOND SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 2,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 10.16 $ 10.00
--------------- ---------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.49 0.31
Net realized and unrealized gains (losses) on investments, futures contracts,
options written and foreign currency related items ......................... (0.52) 0.26
--------------- ---------------
Total income (loss) from operations .......................................... (0.03) 0.57
--------------- ---------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.49) (0.31)
From net realized gains on investment transactions ........................... -- (0.10)
--------------- ---------------
Total distributions .......................................................... (0.49) (0.41)
--------------- ---------------
Net increase (decrease) ...................................................... (0.52) 0.16
--------------- ---------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 9.64 $ 10.16
=============== ===============
TOTAL RETURN (A) (0.26)% 5.70 %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 9,451 $ 6,133
Ratio of expenses to average net assets (b) .................................. 0.80 % 0.85 %
Ratio of net investment income to average net assets (b) ..................... 5.41 % 4.95 %
Portfolio turnover ........................................................... 91.12 % 269.16 %
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT:
Ratio of expenses to average net assets (b) .................................. n/a 1.57 %
Ratio of net investment income to average net assets (b) ..................... n/a 4.23 %
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/PUTNAM GROWTH SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
--------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data
Net asset value, beginning of period ..................... $ 22.88 $ 16.99 $ 14.21 $ 12.50 $ 10.00
--------- ----------- ----------- -------- --------
Income from operations:
Net investment income (loss) ............................. (0.04) (0.01) 0.04 0.04 0.01
Net realized and unrealized gains on investments ......... 6.76 5.94 3.07 2.12 3.66
--------- ----------- ----------- -------- --------
Total income from operations ............................. 6.72 5.93 3.11 2.16 3.67
--------- ----------- ----------- -------- --------
Less distributions:
From net investment income ............................... -- (0.01) (0.02) (0.05) --
From net realized gains on investment transactions ....... (1.15) (0.03) (0.31) (0.40) (1.17)
--------- ----------- ----------- -------- --------
Total distributions ...................................... (1.15) (0.04) (0.33) (0.45) (1.17)
--------- ----------- ----------- -------- --------
Net increase ............................................. 5.57 5.89 2.78 1.71 2.50
--------- ----------- ----------- -------- --------
Net asset value, end of period ........................... $ 28.45 $ 22.88 $ 16.99 $ 14.21 $ 12.50
========= =========== =========== ======== ========
Total Return (a) ......................................... 29.41 % 34.93 % 21.88 % 17.28 % 37.69 %
Ratios and Supplemental Data:
Net assets, end of period (in thousands) ................. $ 454,393 $ 182,097 $ 83,612 $ 22,804 $ 2,518
Ratio of expenses to average net assets (b) (c) .......... 0.97 % 1.01 % 1.13 % 1.04 % 0.95 %
Ratio of net investment income (loss) to average net
assets (b) (0.21)% (0.07)% 0.31 % 0.94 % 0.28 %
Portfolio turnover ....................................... 74.67 % 70.55 % 194.81 % 184.33 % 255.03 %
Ratio information assuming no expense reimbursement
or fees paid indirectly:
Ratio of expenses to average net assets (b) .............. n/a 1.01 % 1.13 % 1.27 % 5.38 %
Ratio of net investment income (loss) to average net
assets (b) ............................................... n/a (0.07)% 0.31 % 0.71 % (4.15)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) For the year ended December 31, 1997, the ratio of expenses to average net
assets excluding non-operating expenses was 1.05%.
<PAGE>
JNL/PUTNAM VALUE EQUITY SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
--------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data
Net asset value, beginning of period ................... $ 18.24 $ 16.82 $ 14.50 $ 12.77 $ 10.00
Income from operations:
Net investment income .................................. 0.19 0.16 0.13 0.10 0.23
Net realized and unrealized gains (losses)
on investments ....................................... (0.38) 1.94 3.03 1.97 2.86
Total income (loss) from operations .................... (0.19) 2.10 3.16 2.07 3.09
Less distributions:
From net investment income ............................. (0.20) (0.16) (0.13) (0.15) (0.17)
From net realized gains on investment transactions ..... (1.07) (0.52) (0.71) (0.19) (0.15)
Total distributions .................................... (1.27) (0.68) (0.84) (0.34) (0.32)
Net increase (decrease) ................................ (1.46) 1.42 2.32 1.73 2.77
Net asset value, end of period ......................... $ 16.78 $ 18.24 $ 16.82 $ 14.50 $ 12.77
Total Return (a) ....................................... (1.04)% 12.48 % 21.82% 16.25% 31.14%
Ratios and Supplemental Data:
Net assets, end of period (in thousands) ............... $ 319,454 $ 195,936 $ 108,565 $ 17,761 $ 3,365
Ratio of expenses to average net assets (b) ............ 0.98 % 1.01 % 1.03 % 0.85 % 0.87 %
Ratio of net investment income to average
net assets (b) ....................................... 1.19 % 1.06 % 1.43 % 2.29 % 2.33 %
Portfolio turnover ..................................... 72.23 % 77.80 % 112.54 % 13.71 % 30.12 %
Ratio information assuming no expense reimbursement
or fees paid indirectly:
Ratio of expenses to average net assets (b) ............ n/a 1.01 % 1.09 % 1.53 % 2.28 %
Ratio of net investment income to average
net assets (b) ....................................... n/a 1.06 % 1.37 % 1.61 % 0.91 %
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
GOLDMAN SACHS/JNL GROWTH & INCOME SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 2,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 9.00 $ 10.00
--------------- ---------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.09 0.07
Net realized and unrealized gains (losses) on investments,
futures contracts, and options written ..................................... 0.36 (1.00)
--------------- ---------------
Total income (loss) from operations .......................................... 0.45 (0.93)
--------------- ---------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.09) (0.07)
From net realized gains on investment transactions ........................... -- --
--------------- ---------------
Total distributions .......................................................... (0.09) (0.07)
--------------- ---------------
Net increase (decrease) ...................................................... 0.36 (1.00)
--------------- ---------------
NET ASSET VALUE, END OF PERIOD ................................................. $9.36 $9.00
=============== ===============
TOTAL RETURN (A) ............................................................... 4.98% (9.31)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 7,677 $ 4,311
Ratio of expenses to average net assets (b) .................................. 1.025% 1.075%
Ratio of net investment income to average net assets (b) ..................... 1.17% 1.01%
Portfolio turnover ........................................................... 120.54% 129.99%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT:
Ratio of expenses to average net assets (b) .................................. n/a 2.16%
Ratio of net investment loss to average net assets (b) ....................... n/a (0.08)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/S&P CONSERVATIVE GROWTH SERIES I
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 9,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
----------------- -----------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 10.47 $ 10.00
----------------- -----------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.37 0.38
Net realized and unrealized gains on investments ............................. 1.67 0.09
----------------- -----------------
Total income from operations ................................................. 2.04 0.47
----------------- -----------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.06) --
From net realized gains on investment transactions ........................... -- --
----------------- -----------------
Total distributions .......................................................... (0.06) --
----------------- -----------------
Net increase ................................................................. 1.98 0.47
----------------- -----------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 12.45 $ 10.47
================= =================
TOTAL RETURN (A) ............................................................... 19.52% 4.70%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 72,998 $ 10,026
Ratio of expenses to average net assets (b) .................................. 0.20% 0.20%
Ratio of net investment income to average net assets (b) ..................... 10.35% 14.15%
Portfolio turnover ........................................................... 12.96% 36.08%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/S&P MODERATE GROWTH SERIES I
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 9,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 10.63 $ 10.00
--------------- ---------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.46 0.36
Net realized and unrealized gains on investments ............................. 2.38 0.27
--------------- ---------------
Total income from operations ................................................. 2.84 0.63
--------------- ---------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.05) --
From net realized gains on investment transactions ........................... -- --
--------------- ---------------
Total distributions .......................................................... (0.05) --
--------------- ---------------
Net increase ................................................................. 2.79 0.63
--------------- ---------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 13.42 $ 10.63
=============== ===============
TOTAL RETURN (A) ............................................................... 26.74% 6.30%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 110,608 $ 12,612
Ratio of expenses to average net assets (b) .................................. 0.20% 0.20%
Ratio of net investment income to average net assets (b) ..................... 11.55% 13.74%
Portfolio turnover ........................................................... 17.15% 57.96%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/S&P AGGRESSIVE GROWTH SERIES I
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 8,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
----------------- -----------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 10.88 $ 10.00
----------------- -----------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.64 0.27
Net realized and unrealized gains on investments ............................. 3.21 0.61
----------------- -----------------
Total income from operations ................................................. 3.85 0.88
----------------- -----------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.04) --
From net realized gains on investment transactions ........................... -- --
----------------- -----------------
Total distributions .......................................................... (0.04) --
----------------- -----------------
Net increase ................................................................. 3.81 0.88
----------------- -----------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 14.69 $ 10.88
================= =================
TOTAL RETURN (A) ............................................................... 35.38% 8.80%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 41,329 $ 4,425
Ratio of expenses to average net assets (b) .................................. 0.20% 0.20%
Ratio of net investment income to average net assets (b) ..................... 13.46% 7.34%
Portfolio turnover ........................................................... 26.50% 126.18%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/S&P VERY AGGRESSIVE GROWTH SERIES I
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 1,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ......................................... $ 11.19 $ 10.00
--------------- ---------------
INCOME FROM OPERATIONS:
Net investment income ...................................................... 0.88 0.24
Net realized and unrealized gains on investments ........................... 4.59 0.95
--------------- ---------------
Total income from operations ............................................... 5.47 1.19
--------------- ---------------
LESS DISTRIBUTIONS:
From net investment income ................................................. (0.04) --
From net realized gains on investment transactions ......................... (0.01) --
--------------- ---------------
Total distributions ........................................................ (0.05) --
--------------- ---------------
Net increase ............................................................... 5.42 1.19
--------------- ---------------
NET ASSET VALUE, END OF PERIOD ............................................... $ 16.61 $ 11.19
=============== ===============
TOTAL RETURN (A) ............................................................. 48.86% 11.90%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ................................... $ 23,588 $ 2,441
Ratio of expenses to average net assets (b) ................................ 0.20% 0.20%
Ratio of net investment income to average net assets (b) ................... 16.71% 5.73%
Portfolio turnover ......................................................... 141.89% 121.03%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/S&P EQUITY GROWTH SERIES I
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 13,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 10.64 $ 10.00
--------------- ---------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.70 0.21
Net realized and unrealized gains on investments ............................. 3.89 0.43
--------------- ---------------
Total income from operations ................................................. 4.59 0.64
--------------- ---------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.02) --
From net realized gains on investment transactions ........................... -- --
--------------- ---------------
Total distributions .......................................................... (0.02) --
--------------- ---------------
Net increase ................................................................. 4.57 0.64
--------------- ---------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 15.21 $ 10.64
=============== ===============
TOTAL RETURN (A) ............................................................... 43.19% 6.40%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 60,879 $ 5,035
Ratio of expenses to average net assets (b) .................................. 0.20% 0.20%
Ratio of net investment income to average net assets (b) ..................... 14.02% 6.93%
Portfolio turnover ........................................................... 34.62% 72.69%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/S&P EQUITY AGGRESSIVE GROWTH SERIES I
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 15,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
----------------- -----------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 10.75 $ 10.00
----------------- -----------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.79 0.21
Net realized and unrealized gains on investments ............................. 4.07 0.54
----------------- -----------------
Total income from operations ................................................. 4.86 0.75
----------------- -----------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.05) --
From net realized gains on investment transactions ........................... -- --
----------------- -----------------
Total distributions .......................................................... (0.05) --
----------------- -----------------
Net increase ................................................................. 4.81 0.75
----------------- -----------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 15.56 $ 10.75
================= =================
TOTAL RETURN (A) ............................................................... 45.25% 7.50%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 18,680 $ 3,238
Ratio of expenses to average net assets (b) .................................. 0.20% 0.20%
Ratio of net investment income to average net assets (b) ..................... 13.54% 7.01%
Portfolio turnover ........................................................... 41.60% 67.88%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/S&P CONSERVATIVE GROWTH SERIES II
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 13,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
-------------- --------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 9.54 $ 10.00
-------------- --------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.28 0.23
Net realized and unrealized gain (loss) on investments ....................... 1.26 (0.69)
-------------- --------------
Total income (loss) from operations .......................................... 1.54 (0.46)
-------------- --------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.07) --
From net realized gains on investment transactions ........................... -- --
-------------- --------------
Total distributions .......................................................... (0.07) --
-------------- --------------
Net increase (decrease) ...................................................... 1.47 (0.46)
-------------- --------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 11.01 $ 9.54
============== ==============
TOTAL RETURN (A) ............................................................... 16.14% (4.60)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 6,513 $ 1,701
Ratio of expenses to average net assets (b) .................................. 0.20% 0.20%
Ratio of net investment income to average net assets (b) ..................... 6.57% 2.29%
Portfolio turnover ........................................................... 55.32% 369.99%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return
is not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/S&P MODERATE GROWTH SERIES II
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 13,
1998* TO
YEAR ENDED
DECEMBER 31,
DECEMBER
31,
1998
1999
-------------- --------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 10.22 $ 10.00
-------------- --------------
INCOME FROM OPERATIONS:
Net investment income ....................................................... 0.35 0.17
Net realized and unrealized gain on investments ............................. 1.98 0.05
-------------- --------------
Total income from operations ................................................ 2.33 0.22
-------------- --------------
LESS DISTRIBUTIONS:
From net investment income .................................................. (0.06) --
From net realized gains on investment transactions .......................... -- --
-------------- --------------
Total distributions ......................................................... (0.06) --
-------------- --------------
Net increase ................................................................ 2.27 0.22
-------------- --------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 12.49 $ 10.22
============== ==============
TOTAL RETURN (A) ............................................................... 22.77% 2.20%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .................................... $ 10,450 $ 2,856
Ratio of expenses to average net assets (b) ................................. 0.20% 0.20%
Ratio of net investment income to average net assets (b) .................... 6.14% 4.09%
Portfolio turnover .......................................................... 38.38% 103.28%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/S&P AGGRESSIVE GROWTH SERIES II
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 13,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 10.05 10.00
--------------- ---------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.41 0.10
Net realized and unrealized gain (loss) on investments ....................... 2.47 (0.05)
--------------- ---------------
Total income from operations ................................................. 2.88 0.05
--------------- ---------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.01) --
From net realized gains on investment transactions ........................... -- --
--------------- ---------------
Total distributions .......................................................... (0.01) --
--------------- ---------------
Net increase ................................................................. 2.87 0.05
--------------- ---------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 12.92 $ 10.05
=============== ===============
TOTAL RETURN (A) ............................................................... 28.66% 0.50%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 3,379 $ 267
Ratio of expenses to average net assets (b) .................................. 0.20% 0.20%
Ratio of net investment income to average net assets (b) ..................... 7.97% 2.19%
Portfolio turnover ........................................................... 72.67% 165.71%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/S&P VERY AGGRESSIVE GROWTH SERIES II
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 13,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
----------------- -----------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD .......................................... $ 10.80 $ 10.00
----------------- -----------------
INCOME FROM OPERATIONS:
Net investment income ....................................................... 0.57 0.07
Net realized and unrealized gains on investments ............................ 4.01 0.73
----------------- -----------------
Total income from operations ................................................ 4.58 0.80
----------------- -----------------
LESS DISTRIBUTIONS:
From net investment income .................................................. -- --
From net realized gains on investment transactions .......................... (0.01) --
----------------- -----------------
Total distributions ......................................................... (0.01) --
----------------- -----------------
Net increase ................................................................ 4.57 0.80
----------------- -----------------
NET ASSET VALUE, END OF PERIOD ................................................ $ 15.37 $ 10.80
================= =================
TOTAL RETURN (A) .............................................................. 42.42% 8.00%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .................................... $ 3,122 $ 155
Ratio of expenses to average net assets (b) ................................. 0.20% 0.20%
Ratio of net investment income to average net assets (b) .................... 9.04% 0.91%
Portfolio turnover .......................................................... 145.99% 208.66%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
JNL/S&P EQUITY GROWTH SERIES II
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 13,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.04 10.00
--------------- ---------------
INCOME FROM OPERATIONS:
Net investment income 0.50 0.08
Net realized and unrealized gain (loss) on investments 3.14 (0.04)
--------------- ---------------
Total income from operations 3.64 0.04
--------------- ---------------
LESS DISTRIBUTIONS:
From net investment income (0.01) --
From net realized gains on investment transactions -- --
--------------- ---------------
Total distributions (0.01) --
--------------- ---------------
Net increase 3.63 0.04
--------------- ---------------
NET ASSET VALUE, END OF PERIOD $ 13.67 $ 10.04
=============== ===============
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
LAZARD/JNL SMALL CAP VALUE SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 2,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 8.70 $ 10.00
--------------- ---------------
INCOME FROM OPERATIONS:
Net investment income (loss) ................................................. 0.03 (0.01)
Net realized and unrealized gain (loss) on investments ....................... 0.14 (1.28)
--------------- ---------------
Total income (loss) from operations .......................................... 0.17 (1.29)
--------------- ---------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.03) --
From net realized gains on investment transactions ........................... -- --
Return of capital ............................................................ -- (0.01)
--------------- ---------------
Total distributions .......................................................... (0.03) (0.01)
--------------- ---------------
Net increase (decrease) ...................................................... 0.14 (1.30)
--------------- ---------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 8.84 $ 8.70
=============== ===============
TOTAL RETURN (A) ............................................................... 1.96% (12.92)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 6,313 $ 4,804
Ratio of expenses to average net assets (b) .................................. 1.15% 1.20%
Ratio of net investment income (loss) to average net assets (b) .............. 0.43% (0.04)%
Portfolio turnover ........................................................... 53.35% 40.15%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT:
Ratio of expenses to average net assets (b) .................................. n/a 1.89%
Ratio of net investment loss to average net assets (b) ....................... n/a (0.73)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
LAZARD/JNL MID CAP VALUE SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 2,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 9.21 $ 10.00
--------------- ---------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.02 0.03
Net realized and unrealized gains (losses) on investments .................... 0.42 (0.79)
--------------- ---------------
Total income (loss) from operations .......................................... 0.44 (0.76)
--------------- ---------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.02) (0.03)
From net realized gains on investment transactions ........................... -- --
--------------- ---------------
Total distributions .......................................................... (0.02) (0.03)
--------------- ---------------
Net increase (decrease) ...................................................... 0.42 (0.79)
--------------- ---------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 9.63 $ 9.21
=============== ===============
TOTAL RETURN (A) ............................................................... 4.77 % (7.64)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 6,394 $ 4,731
Ratio of expenses to average net assets (b) .................................. 1.075 % 1.125 %
Ratio of net investment income to average net assets (b) ..................... 0.25 % 0.34 %
Portfolio turnover ........................................................... 118.56 % 70.72 %
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT:
Ratio of expenses to average net assets (b) .................................. n/a 1.85 %
Ratio of net investment loss to average net assets (b) ....................... n/a (0.38)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
PPM AMERICA/JNL BALANCED SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
--------------- --------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ............... $ 13.48 $ 13.06 $ 11.92 $ 11.17 $ 10.00
--------------- --------------- --------------- -------------- --------------
INCOME FROM OPERATIONS:
Net investment income ............................ 0.44 0.47 0.36 0.10 0.25
Net realized and unrealized gains (losses) on
investments .................................... (0.45) 0.84 1.83 0.98 1.40
--------------- --------------- --------------- -------------- --------------
Total income (loss) from operations .............. (0.01) 1.31 2.19 1.08 1.65
--------------- --------------- --------------- -------------- --------------
LESS DISTRIBUTIONS:
From net investment income ....................... (0.44) (0.47) (0.36) (0.15) (0.19)
From net realized gains on investment transactions (0.43) (0.42) (0.69) (0.18) (0.29)
--------------- --------------- --------------- -------------- --------------
Total distributions .............................. (0.87) (0.89) (1.05) (0.33) (0.48)
--------------- --------------- --------------- -------------- --------------
Net increase (decrease) .......................... (0.88) 0.42 1.14 0.75 1.17
--------------- --------------- --------------- -------------- --------------
NET ASSET VALUE, END OF PERIOD ..................... $ 12.60 $ 13.48 $ 13.06 $ 11.92 $ 11.17
=============== =============== =============== ============== ==============
TOTAL RETURN (A) ................................... (0.11)% 10.06% 18.43% 9.72% 16.60%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $ 143,012 $ 95,974 $ 59,694 $ 24,419 $ 4,761
Ratio of expenses to average net assets (b) ...... 0.82% 0.85% 0.93% 1.04% 1.01%
Ratio of net investment income to average net
assets (b) ..................................... 3.71% 3.87% 3.72% 2.39% 2.99%
Portfolio turnover ............................... 35.02% 33.74% 160.88% 158.15% 115.84%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT
OR FEES PAID INDIRECTLY:
Ratio of expenses to average net assets (b) ...... n/a 0.85% 0.94% 1.22% 3.71%
Ratio of net investment income to average net
assets (b) ..................................... n/a 3.87% 3.71% 2.21% 0.29%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
PPM AMERICA/JNL HIGH YIELD BOND SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
--------------- --------------- ------------------------------ --------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD .............. $ 10.89 $ 11.48 $ 10.67 $ 10.23 $ 10.00
--------------- --------------- --------------- -------------- --------------
INCOME FROM OPERATIONS:
Net investment income ........................... 0.88 0.91 0.59 0.51 0.73
Net realized and unrealized gains (losses) on
investments ..................................... (0.76) (0.47) 1.02 0.64 0.04
-------------- --------------- ------------ ----------------- --------------
Total income from operations .................... 0.12 0.44 1.61 1.15 0.77
-------------- --------------- ------------ ----------------- --------------
LESS DISTRIBUTIONS:
From net investment income ...................... (0.88) (0.91) (0.59) (0.69) (0.54)
From net realized gains on investment transactions -- (0.12) (0.21) (0.02) --
-------------- --------------- -------------- --------------- --------------
Total distributions ............................. (0.88) (1.03) (0.80) (0.71) (0.54)
-------------- --------------- -------------- --------------- --------------
Net increase (decrease) ......................... (0.76) (0.59) 0.81 0.44 0.23
-------------- --------------- -------------- --------------- --------------
NET ASSET VALUE, END OF PERIOD .................... $ 10.13 $ 10.89 $ 11.48 $ 10.67 $ 10.23
============== =============== ============== =============== ==============
TOTAL RETURN (A) .................................. 1.09% 3.84% 15.05% 11.24% 7.82%
RATIOS AND SUPPLEMENTAL DATA: .....................
Net assets, end of period (in thousands) $147,023 $ 101,485 $ 62,712 $ 13,396 $ 6,156
Ratio of expenses to average net assets (b) ..... 0.82% 0.83% 0.90% 0.88% 0.88%
Ratio of net investment income to average net
assets (b) ...................................... 9.22% 8.62% 8.15% 8.64% 8.34%
Portfolio turnover .............................. 61.03% 129.85% 189.25% 113.08% 186.21%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT
OR FEES PAID INDIRECTLY:
Ratio of expenses to average net assets (b) ..... n/a 0.83% 0.90% 1.21% 1.50%
Ratio of net investment income to average net
assets (b) ...................................... n/a 8.62% 8.15% 8.31% 7.72%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
PPM AMERICA/JNL MONEY MARKET SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
--------------- --------------- --------------- -----------------------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------------- --------------- --------------- ------------- --------------
INCOME FROM OPERATIONS:
Net investment income ............................. 0.05 0.05 0.05 0.04 0.04
--------------- --------------- --------------- ------------- --------------
LESS DISTRIBUTIONS:
From net investment income ........................ (0.05) (0.05) (0.05) (0.04) (0.04)
--------------- --------------- --------------- ------------- --------------
Net increase ...................................... -- -- -- -- --
--------------- --------------- --------------- ------------- --------------
NET ASSET VALUE, END OF PERIOD ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=============== =============== =============== ============= ==============
TOTAL RETURN (A) .................................... 4.67% 4.99% 5.01% 3.61% 4.59%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .......... $ 164,446 $ 56,349 $ 41,808 $ 23,752 $ 6,816
Ratio of expenses to average net assets (b) ....... 0.70% 0.74% 0.75% 0.75% 0.75%
Ratio of net investment income to average net
assets (b) ........................................ 4.63% 4.87% 4.92% 4.75% 5.06%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT
OR FEES PAID INDIRECTLY:
Ratio of expenses to average net assets (b) ....... n/a 0.75% 0.76% 0.85% 1.30%
Ratio of net investment income to average net
assets (b) ........................................ n/a 4.86% 4.91% 4.65% 4.51%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
SALOMON BROTHERS/JNL BALANCED SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 2,
YEAR ENDED 1998* TO
DECEMBER 31 DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 10.38 $ 10.00
--------------- ---------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.28 0.21
Net realized and unrealized gains (losses) on investments .................... (0.27) 0.38
--------------- ---------------
Total income from operations ................................................ 0.01 0.59
--------------- ---------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.28) (0.21)
From net realized gains on investment transactions ........................... -- --
--------------- ---------------
Total distributions .......................................................... (0.28) (0.21)
--------------- ---------------
Net increase (decrease) ...................................................... (0.27) 0.38
--------------- ---------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 10.11 $ 10.38
=============== ===============
TOTAL RETURN (A) ............................................................... 0.09% 5.91%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 7,517 $ 3,297
Ratio of expenses to average net assets (b) .................................. 0.90% 0.95%
Ratio of net investment income to average net assets (b) ..................... 3.54% 3.49%
Portfolio turnover ........................................................... 59.53% 128.41%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT:
Ratio of expenses to average net assets (b) .................................. n/a 2.38%
Ratio of net investment income to average net assets (b) ..................... n/a 2.06%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
SALOMON BROTHERS/JNL GLOBAL BOND SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
--------------- --------------- --------------- -----------------------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ................ $ 10.67 $ 11.12 $ 10.63 $ 10.46 $ 10.00
--------------- --------------- --------------- --------------- -------------
INCOME FROM OPERATIONS:
Net investment income ............................. 0.62 0.72 0.54 0.42 0.81
Net realized and unrealized gains (losses) on
investments and foreign currency
related items .................................... (0.42) (0.45) 0.59 0.70 0.24
--------------- --------------- --------------- --------------- -------------
Total income from operations ...................... 0.20 0.27 1.13 1.12 1.05
--------------- --------------- --------------- --------------- -------------
LESS DISTRIBUTIONS:
From net investment income ........................ (0.62) (0.72) (0.58) (0.69) (0.56)
From net realized gains on investment transactions -- -- (0.05) (0.26) (0.03)
Return of capital ................................. -- -- (0.01) -- --
--------------- --------------- --------------- --------------- -------------
Total distributions ............................... (0.62) (0.72) (0.64) (0.95) (0.59)
--------------- --------------- --------------- --------------- -------------
Net increase (decrease) ........................... (0.42) (0.45) 0.49 0.17 0.46
--------------- --------------- --------------- --------------- -------------
NET ASSET VALUE, END OF PERIOD ...................... $ 10.25 $ 10.67 $ 11.12 $ 10.63 $ 10.46
=============== =============== =============== =============== =============
TOTAL RETURN (A) .................................... 1.87% 2.46% 10.66% 10.68% 10.74%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .......... $ 81,061 $ 48,167 $ 36,725 $ 12,483 $ 6,380
Ratio of expenses to average net assets (b) (c) ... 0.95% 1.00% 1.01% 0.99% 1.00%
Ratio of net investment income to average net .....
assets (b) ........................................ 7.22% 7.05% 6.83% 7.52% 9.01%
Portfolio turnover ................................ 98.01% 261.87% 134.55% 109.85% 152.89%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT
OR FEES PAID INDIRECTLY:
Ratio of expenses to average net assets (b) ....... n/a 1.01% 1.08% 1.44% 2.14%
Ratio of net investment income to average net
assets (b) ........................................ n/a 7.04% 6.76% 7.07% 7.87%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) For the year ended December 31, 1997, the ratio of expenses to average net
assets excluding non-operating expenses was 1.00%.
<PAGE>
SALOMON BROTHERS/JNL HIGH YIELD BOND SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 2,
YEAR ENDED 1998* TO
DECEMBER 31, DECEMBER 31,
1999 1998
--------------- --------------
<S> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ........................................... $ 9.59 $ 10.00
--------------- --------------
INCOME FROM OPERATIONS:
Net investment income ........................................................ 0.71 0.54
Net realized and unrealized losses on investments ............................ (0.88) (0.41)
--------------- --------------
Total income (loss) from operations .......................................... (0.17) 0.13
--------------- --------------
LESS DISTRIBUTIONS:
From net investment income ................................................... (0.71) (0.54)
From net realized gains on investment transactions ........................... -- --
--------------- --------------
Total distributions .......................................................... (0.71) (0.54)
--------------- --------------
Net decrease ................................................................. (0.88) (0.41)
--------------- --------------
NET ASSET VALUE, END OF PERIOD ................................................. $ 8.71 $ 9.59
=============== ==============
TOTAL RETURN (A) ............................................................... (1.76)% 1.32%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $ 10,690 $ 7,388
Ratio of expenses to average net assets (b) .................................. 0.90% 0.95%
Ratio of net investment income to average net assets (b) ..................... 8.74% 7.80%
Portfolio turnover ........................................................... 31.39% 37.45%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT:
Ratio of expenses to average net assets (b) .................................. n/a 1.39%
Ratio of net investment income to average net assets (b) ..................... n/a 7.36%
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
SALOMON BROTHERS/JNL U.S. GOVERNMENT & QUALITY BOND SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
--------------- --------------- ------------------------------ --------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ............... $ 11.15 $ 10.69 $ 10.20 $ 10.09 $ 10.00
--------------- --------------- --------------- -------------- --------------
INCOME FROM OPERATIONS:
Net investment income ............................ 0.51 0.41 0.44 0.24 0.45
Net realized and unrealized gains (losses) on
investments ...................................... (0.79) 0.60 0.49 0.24 0.02
--------------- --------------- --------------- -------------- --------------
Total income (loss) from operations .............. (0.28) 1.01 0.93 0.48 0.47
--------------- --------------- --------------- -------------- --------------
LESS DISTRIBUTIONS:
From net investment income ....................... (0.51) (0.41) (0.42) (0.34) (0.34)
From net realized gains on investment transactions -- (0.14) (0.02) (0.03) (0.04
--------------- --------------- --------------- -------------- --------------
Total distributions .............................. (0.51) (0.55) (0.44) (0.37) (0.38)
--------------- --------------- --------------- -------------- --------------
Net increase (decrease) (0.79) 0.46 0.49 0.11 0.09
--------------- --------------- --------------- -------------- --------------
NET ASSET VALUE, END OF PERIOD ..................... $ 10.36 $ 11.15 $ 10.69 $ 10.20 $ 10.09
=============== =============== =============== ============== ==============
TOTAL RETURN (A) ................................... (2.50)% 9.40% 9.16% 4.82% 4.65%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $ 106,329 $ 63,785 $ 25,389 $ 9,832 $ 3,007
Ratio of expenses to average net assets (b) ...... 0.80% 1.28% 0.94% 0.84% 0.84%
Ratio of net investment income to average net
assets (b) ....................................... 5.45% 5.33% 5.99% 5.72% 5.41%
Portfolio turnover ............................... 122.72% 429.70% 378.59% 218.50% 253.37%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT
OR FEES PAID INDIRECTLY:
Ratio of expenses to average net assets (b) ...... n/a 1.29% 1.05% 1.37% 2.53%
Ratio of net investment income to average net
assets (b) ....................................... n/a 5.32% 5.88% 5.19% 3.72%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) For the years ended December 31, 1998 and 1997, the ratio of expenses to
average net assets excluding non-operating expenses was 0.85% for each
year.
<PAGE>
T. ROWE PRICE/JNL ESTABLISHED GROWTH SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
--------------- --------------- ------------------------------ --------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ................. $ 19.06 $ 15.62 $ 12.56 $ 11.36 $ 10.00
--------------- --------------- --------------- -------------- --------------
INCOME FROM OPERATIONS:
Net investment income .............................. 0.03 0.05 0.06 0.03 0.07
Net realized and unrealized gains on investments
and foreign currency related items ................ 4.12 4.29 3.64 1.81 2.68
--------------- --------------- --------------- -------------- --------------
Total income from operations ....................... 4.15 4.34 3.70 1.84 2.75
--------------- --------------- --------------- -------------- --------------
LESS DISTRIBUTIONS:
From net investment income ......................... (0.03) (0.06) (0.03) (0.04) (0.06)
From net realized gains on investment transactions . (1.48) (0.84) (0.61) (0.09) (1.33)
Return of capital .................................. -- -- -- (0.51) --
--------------- --------------- --------------- -------------- --------------
Total distributions ................................ (1.51) (0.90) (0.64) (0.64) (1.39)
--------------- --------------- --------------- -------------- --------------
Net increase ....................................... 2.64 3.44 3.06 1.20 1.36
--------------- --------------- --------------- -------------- --------------
NET ASSET VALUE, END OF PERIOD ....................... $ 21.70 $ 19.06 $ 15.62 $ 12.56 $ 11.36
=============== =============== =============== ============== ==============
TOTAL RETURN (A) ..................................... 21.77% 27.78% 29.47% 16.12% 28.23%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ........... $ 351,338 $ 216,599 $ 124,022 $ 32,291 $ 8,772
Ratio of expenses to average net assets (b) ........ 0.93% 0.95% 0.98% 1.00% 1.00%
Ratio of net investment income to average net
assets (b) ......................................... 0.16% 0.38% 0.43% 0.59% 0.75%
Portfolio turnover ................................. 61.45% 54.93% 47.06% 36.41% 101.13%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT
OR FEES PAID INDIRECTLY:
Ratio of expenses to average net assets (b) ........ n/a 0.95% 0.98% 1.11% 2.09%
Ratio of net investment income (loss) to average
net assets (b) .................................... n/a 0.38% 0.43% 0.48% (0.34)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
T. ROWE PRICE/JNL INTERNATIONAL EQUITY INVESTMENT SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ................ $ 13.62 $ 12.09 $ 12.08 $ 11.25 $ 10.00
--------------- -------------- ------------ ------------- -------------
INCOME FROM OPERATIONS:
Net investment income ............................. 0.09 0.16 0.09 0.06 0.04
Net realized and unrealized gains on
investments and
foreign currency related items ................... 4.28 1.58 0.23 0.90 1.21
--------------- -------------- ------------ ------------- -------------
Total income from operations ...................... 4.37 1.74 0.32 0.96 1.25
--------------- -------------- ------------ ------------- -------------
LESS DISTRIBUTIONS:
From net investment income ........................ (0.16) (0.19) (0.08) (0.12) --
From net realized gains on investment transactions (0.14) (0.02) (0.23) (0.01) --
--------------- -------------- ------------ ------------- -------------
Total distributions ............................... (1.20) (0.21) (0.31) (0.13) --
--------------- -------------- ------------ ------------- -------------
Net increase ...................................... 3.17 1.53 0.01 0.83 1.25
--------------- -------------- ------------ ------------- -------------
NET ASSET VALUE, END OF PERIOD ...................... $ 16.79 $ 13.62 $ 12.09 $ 12.08 $ 11.25
=============== ============== ============ ============= =============
TOTAL RETURN (A) .................................... 32.11% 14.43% 2.65% 8.54% 12.50%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .......... $ 105,034 $ 70,927 $ 78,685 $ 48,204 $ 24,211
Ratio of expenses to average net assets (b) ....... 1.18% 1.23% 1.24% 1.25% 1.25%
Ratio of net investment income to average net
assets (b) ........................................ 0.63% 0.88% 0.74% 1.09% 0.78%
Portfolio turnover ................................ 26.19% 16.39% 18.81% 5.93% 16.45%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT
OR FEES PAID INDIRECTLY:
Ratio of expenses to average net assets (b) ....... n/a 1.28% 1.32% 1.29% 2.14%
Ratio of net investment income (loss) to average
net assets (b) ................................... n/a 0.83% 0.66% 1.05% (0.11)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
T. ROWE PRICE/JNL MID-CAP GROWTH SERIES
Financial Highlights
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
APRIL 1, MAY 15,
1996 TO 1995* TO
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1997 1996 1996
--------------- ------------------------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD ................ $ 20.43 $ 17.37 $ 14.89 $ 13.43 $ 10.00
--------------- ---------------- ------------- --------------- --------------
INCOME FROM OPERATIONS:
Net investment income (loss) ...................... (0.05) (0.07) (0.03) (0.05) 0.06
Net realized and unrealized gains on
investments and foreign currency
related items .................................... 4.93 3.80 2.74 1.92 3.90
--------------- ---------------- ------------- --------------- --------------
Total income from operations ...................... 4.88 3.73 2.71 1.87 3.96
--------------- ---------------- ------------- --------------- --------------
LESS DISTRIBUTIONS:
From net investment income ........................ -- -- -- (0.05) --
From net realized gains on investment transactions (1.60) (0.67) (0.23) (0.36) (0.53)
--------------- ---------------- ------------- --------------- --------------
Total distributions ............................... (1.60) (0.67) (0.23) (0.41) (0.53)
--------------- ---------------- ------------- --------------- --------------
Net increase ...................................... 3.28 3.06 2.48 1.46 3.43
--------------- ---------------- ------------- --------------- --------------
NET ASSET VALUE, END OF PERIOD ...................... $ 23.71 $ 20.43 $ 17.37 $ 14.89 $ 13.43
=============== ================ ============= =============== ==============
TOTAL RETURN (A) .................................... 24.01% 21.49% 18.21% 13.91% 40.06%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .......... $ 286,502 $189,636 $ 127,052 $ 47,104 $ 10,545
Ratio of expenses to average net assets (b) ....... 1.03% 1.04% 1.06% 1.10% 1.10%
Ratio of net investment income (loss) to average
net assets (b) ................................... (0.28)% (0.37)% (0.26)% (0.18)% 0.82%
Portfolio turnover ................................ 56.68% 50.92% 41.43% 25.05% 66.04%
RATIO INFORMATION ASSUMING NO EXPENSE REIMBURSEMENT
OR FEES PAID INDIRECTLY:
Ratio of expenses to average net assets (b) ....... n/a 1.04% 1.06% 1.14% 2.10%
Ratio of net investment loss to average net assets n/a (0.37)% (0.26)% (0.22)% (0.18)%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Assumes investment at net asset value at the beginning of the period,
reinvestment of all distributions, and a complete redemption of the
investment at the net asset value at the end of the period. Total Return is
not annualized for periods less than one year.
(b) Annualized for periods less than one year.
<PAGE>
PROSPECTUS
MAY 1, 2000
JNL SERIES TRUST
You can find more information about the Trust in:
o The Trust's STATEMENT OF ADDITIONAL INFORMATION (SAI) dated May 1,
2000, which contains further information about the Trust and the
Series, particularly their investment practices and restrictions.
The current SAI is on file with the Securities and Exchange
Commission (SEC) and is incorporated into the Prospectus by
reference (which means the SAI is legally part of the Prospectus).
o The Trust's ANNUAL AND SEMI-ANNUAL REPORTS to shareholders, which
show the Series' actual investments and include financial
statements as of the close of the particular annual or semi-annual
period. The Annual Report also discusses the market conditions and
investment strategies that significantly affected each Series'
performance during the year covered by the report.
You can obtain a copy of the current SAI or the most recent Annual or
Semi-Annual Reports without charge, or make other inquiries, by calling (800)
766-4683, or writing the JNL Series Trust Service Center, P.O. Box 378002,
Denver, Colorado 80237-8003.
You can also obtain information about the Trust (including its current SAI and
most recent Annual and Semi-Annual Reports) from the SEC's Internet site
(http://www.sec.gov), by electronic request ([email protected]) or by writing
the SEC's Public Reference Section Washington, D.C. 20549-0102. You can find out
about the operation of the Public Reference Section and copying charges by
calling 1-202-942-8090.
The Trust's SEC file number is: 811-8894
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
JNL SERIES TRUST
================================================================================
This Statement of Additional Information (the "SAI") is not a prospectus. It
contains information in addition to and more detailed than set forth in the
Prospectus and should be read in conjunction with the JNL Series Trust
Prospectus dated May 1, 2000 (the "Prospectus"). Not all Series described in
this SAI may be available for investment. The Prospectus may be obtained at no
charge by calling (800) 766-4683, or writing JNL Series Trust, P.O. Box 378002,
Denver, Colorado 80237-8002.
================================================================================
TABLE OF CONTENTS
General Information and History .................................. 2
Common Types of Investments and Management Practices ............. 2
Additional Risk Considerations ................................... 14
Investment Restrictions Applicable to all Series ................. 18
Trustees and Officers of the Trust ............................... 24
Performance ...................................................... 27
Investment Adviser and Other Services ............................ 32
Purchases, Redemptions and Pricing of Shares ..................... 43
Additional Information ........................................... 44
Tax Status ....................................................... 46
Financial Statements ............................................. 47
Appendix A - Ratings of Investments .............................. A-1
<PAGE>
GENERAL INFORMATION AND HISTORY
The JNL Series Trust (the "Trust") is an open-end management investment
company organized under the laws of the Commonwealth of Massachusetts, by a
Declaration of Trust dated June 1, 1994. The Trust offers shares in separate
Series, each with its own investment objective.
COMMON TYPES OF INVESTMENTS AND MANAGEMENT PRACTICES
This section describes some of the types of securities a Series may
hold in its portfolio and the various kinds of investment practices that may be
used in day-to-day portfolio management. A Series may invest in the following
securities or engage in the following practices to the extent that such
securities and practices are consistent with the Series' investment objective(s)
and policies described in the Prospectus and in this SAI.
ASSET-BACKED SECURITIES. A Series may invest in asset-backed securities, which
include mortgage-backed securities. Asset-backed securities represent interests
in pools of consumer loans and most are structured as pass-through securities.
The credit quality of most asset-backed securities depends primarily on the
credit quality of the assets underlying such securities, how well the entity
issuing the security is insulated from the credit risk of the originator or any
other affiliated entities, and the amount and quality of any credit support
provided to the securities. The rate of principal payment on asset-backed
securities generally depends on the rate of principal payments received on the
underlying assets, which in turn may be affected by a variety of economic and
other factors. As a result, the yield on any asset-backed security is difficult
to predict with precision and actual yield to maturity may be more or less than
the anticipated yield to maturity. A sub-adviser considers estimated prepayment
rates in calculating the average weighted maturities of the Series. Unscheduled
prepayments are more likely to accelerate during periods of declining long-term
interest rates. In the event of a prepayment during a period of declining
interest rates, a Series may be required to invest the unanticipated proceeds at
a lower interest rate. Prepayments during such periods will also limit a Series'
ability to participate in as large a market gain as may be experienced with a
comparable security not subject to prepayment.
Asset-backed securities may be classified as pass-through certificates
or collateralized obligations. Pass-through certificates are asset-backed
securities that represent an undivided fractional ownership interest in an
underlying pool of assets. Pass-through certificates usually provide for
payments of principal and interest received to be passed through to their
holders, usually after deduction for certain costs and expenses incurred in
administering the pool. Because pass-through certificates represent an ownership
interest in the underlying assets, the holders thereof directly bear the risk of
any defaults by the obligors on the underlying assets not covered by any credit
support.
Asset-backed securities issued in the form of debt instruments, also
known as collateralized obligations, are generally issued as the debt of a
special purpose entity organized solely for the purpose of owning such assets
and issuing such debt. Such assets are most often trade, credit card or
automobile receivables. The assets collateralizing such asset-backed securities
are pledged to a trustee or custodian for the benefit of the holders hereof.
Such issuers generally hold no assets other than those underlying the
asset-backed securities and any credit support provided. As a result, although
payments on such asset-backed securities are obligations of the issuers, in the
event of defaults on the underlying assets not covered by any credit support,
the issuing entities are unlikely to have sufficient assets to satisfy their
obligations on the related asset-backed securities.
BANK OBLIGATIONS. A Series may invest in bank obligations, which include
certificates of deposit, bankers' acceptances, and other short-term debt
obligations. Certificates of deposit are short-term obligations of commercial
banks. A bankers' acceptance is a time draft drawn on a commercial bank by a
borrower, usually in connection with international commercial transactions.
Certificates of deposit may have fixed or variable rates. The Series may invest
in U.S. banks, foreign branches of U.S. banks, U.S. branches of foreign banks,
and foreign branches of foreign banks.
BORROWING AND LENDING. A Series may borrow money from banks for temporary or
emergency purposes in amounts up to 25% of its total assets. To secure
borrowings, a Series may mortgage or pledge securities in amounts up to 15% of
its net assets.
CASH POSITION. A Series may hold a certain portion of its assets in repurchase
agreements and money market securities maturing in one year or less that are
rated in one of the two highest rating categories by a nationally recognized
statistical rating organization. For temporary, defensive purposes, a Series may
invest without limitation in such securities. This reserve position provides
flexibility in meeting redemptions, expenses, and the timing of new investments,
and serves as a short-term defense during periods of unusual market volatility.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS). A Series may invest in CMOs, which
are bonds that are collateralized by whole loan mortgages or mortgage
pass-through securities. The bonds issued in a CMO transaction are divided into
groups, and each group of bonds is referred to as a "tranche." Under the
traditional CMO structure, the cash flows generated by the mortgages or mortgage
pass-through securities in the collateral pool are used to first pay interest
and then pay principal to the CMO bondholders. The bonds issued under a CMO
structure are retired sequentially as opposed to the pro rata return of
principal found in traditional pass-through obligations. Subject to the various
provisions of individual CMO issues, the cash flow generated by the underlying
collateral (to the extent it exceeds the amount required to pay the stated
interest) is used to retire the bonds. Under the CMO structure, the repayment of
principal among the different tranches is prioritized in accordance with the
terms of the particular CMO issuance. The "fastest-pay" tranche of bonds, as
specified in the prospectus for the issue, would initially receive all principal
payments. When that tranche of bonds is retired, the next tranche, or tranches,
in the sequence, as specified in the prospectus, receive all of the principal
payments until they are retired. The sequential retirement of bonds groups
continues until the last tranche, or group of bonds, is retired. Accordingly,
the CMO structure allows the issuer to use cash flows of long maturity,
monthly-pay collateral to formulate securities with short, intermediate and long
final maturities and expected average lives. Depending on the type of CMOs in
which the Series invests, the investment may be subject to a greater or lesser
risk of prepayment than other types of mortgage-related securities.
The primary risk of any mortgage security is the uncertainty of the
timing of cash flows. For CMOs, the primary risk results from the rate of
prepayments on the underlying mortgages serving as collateral. An increase or
decrease in prepayment rates (resulting primarily from a decrease or increase in
mortgage interest rates) will affect the yield, average life, and price of CMOs.
The prices of certain CMOs, depending on their structure and the rate of
prepayments, can be volatile. Some CMOs may also not be as liquid as other
securities.
COMMERCIAL PAPER. A Series may invest in commercial paper. Commercial paper are
short-term promissory notes issued by corporations primarily to finance
short-term credit needs. Certain notes may have floating or variable rates.
COMMON AND PREFERRED STOCKS. A Series may invest in common and/or preferred
stocks. Stocks represent shares of ownership in a company. Generally, preferred
stock has a specified dividend and ranks after bonds and before common stocks in
its claim on income for dividend payments and on assets should the company be
liquidated. After other claims are satisfied, common stockholders participate in
company profits on a pro rata basis; profits may be paid out in dividends or
reinvested in the company to help it grow. Increases and decreases in earnings
are usually reflected in a company's stock price, so common stocks generally
have the greatest appreciation and depreciation potential of all corporate
securities. While most preferred stocks pay a dividend, a Series may purchase
preferred stock where the issuer has omitted, or is in danger of omitting,
payment of its dividend. Such investments would be made primarily for their
capital appreciation potential. Although common and preferred stocks have a
history of long-term growth in value, their prices tend to fluctuate in the
short term, particularly those of smaller companies.
CONVERTIBLE SECURITIES AND WARRANTS. A Series may invest in debt or preferred
equity securities convertible into or exchangeable for equity securities.
Traditionally, convertible securities have paid dividends or interest at rates
higher than common stocks but lower than non-convertible securities. They
generally participate in the appreciation or depreciation of the underlying
stock into which they are convertible, but to a lesser degree. In recent years,
convertibles have been developed which combine higher or lower current income
with options and other features. Warrants are options to buy a stated number of
shares of common stock at a specified price any time during the life of the
warrants (generally, two or more years).
CATASTROPHE BONDS. Catastrophe bonds are fixed income securities for which the
return of principal and payment of interest is contingent on the non-occurrence
of a specific trigger event, such as a hurricane or an earthquake. If a trigger
event causes losses exceeding a specific amount in the geographic region and
time period specified in a bond, a Series investing in the bond may lose a
portion or all of its principal invested in the bond. If no trigger event
occurs, the Series will recover its principal plus interest. Catastrophe bonds
may also expose the Series to certain unanticipated risks including, but not
limited to, issuer (credit) default, adverse regulatory or jurisdictional
interpretation, and adverse tax consequences.
<PAGE>
DIVERSIFICATION. Certain of the Series are diversified companies, as such term
is defined under the Investment Company Act of 1940, as amended (the "1940
Act"). A Series that is a diversified company under the 1940 Act will have at
least 75% of the value of its total assets represented by:
o cash and cash items (including receivables),
o Government securities,
o securities of other investment companies, and
o other securities limited in respect to any one issuer to not more than
5% of the value of the Series' total assets and to not more than 10% of
the outstanding voting securities of such issuer.
These percentage limitations are measured at the time that a Series
acquires a security, and a Series will not lose its diversification status if
the Series' holdings exceed these percentages because of post-acquisition
changes in security prices.
EQUITY SWAPS. Equity swap contracts offer an opportunity to invest in a market
without owning or taking physical custody of securities in circumstances in
which direct investment is restricted for legal reasons or is otherwise
impracticable. The counterparty to an equity swap contract will typically be a
bank, investment banking firm or broker/dealer. The counterparty will generally
agree to pay the Series the amount, if any, by which the notional amount of the
equity swap contract would have increased in value had it been invested in the
particular stocks, plus the dividends that would have been received on those
stocks. The Series will agree to pay to the counterparty a floating rate of
interest on the notional amount of the equity swap contract plus the amount, if
any, by which that notional amount would have decreased in value had it been
invested in such stocks. Therefore, the return to the Series on any equity swap
contract should be the gain or loss on the notional amount plus dividends on the
stocks less the interest paid by the Series on the notional amount.
The Series will enter into equity swaps only on a net basis, which
means that the two payment streams are netted out, with the Series receiving or
paying, as the case may be, only the net amount of the two payments. Payments
may be made at the conclusion of an equity swap contract or periodically during
its term. Equity swaps do not involve the delivery of securities or other
underlying assets. Accordingly, the risk of loss with respect to equity swaps is
limited to the net amount of payments that is contractually obligated to be
made. If the other party to an equity swap defaults, the Series' risk of loss
consists of the net amount of payments that such Series is contractually
entitled to receive, if any. The net amount of the excess, if any, of the
Series' obligations over its entitlements with respect to each equity swap will
be accrued on a daily basis and an amount of cash or liquid assets, having an
aggregate net asset value at least equal to such accrued excess will be
maintained in a segregated account by the Series' custodian. Inasmuch as these
transactions are entered into for hedging purposes or are offset by segregated
cash or liquid assets, as permitted by applicable law, the Series will not treat
them as being subject to the Series' borrowing restrictions.
FIXED-INCOME SECURITIES. A Series may invest in fixed-income securities of
companies which meet the investment criteria for the Series. The price of
fixed-income securities fluctuates with changes in interest rates, generally
rising when interest rates fall and falling when interest rates rise. Prices of
longer-term securities generally increase or decrease more sharply than those of
shorter-term securities in response to interest rate changes.
FOREIGN CURRENCY TRANSACTIONS. A Series will normally conduct its foreign
currency exchange transactions either on a spot (i.e., cash), basis at the spot
rate prevailing in the foreign currency exchange market, or through entering
into forward contracts to purchase or sell foreign currencies. A Series will
generally not enter into a forward contract with a term of greater than one
year.
There are certain markets where it is not possible to engage in
effective foreign currency hedging. This may be true, for example, for the
currencies of various countries where the foreign exchange markets are not
sufficiently developed to permit hedging activity to take place.
FOREIGN SECURITIES. A Series may invest in foreign securities. Investors should
realize that investing in foreign securities involves certain special
considerations which are not typically associated with investing in U.S.
securities. These include non-U.S. dollar-denominated securities traded
principally outside the U.S. and U.S. dollar-denominated securities traded in
the U.S. (such as American Depositary Receipts). Such investments increase a
Series' diversification and may enhance return, but they also involve some
special risks such as exposure to potentially adverse local political and
economic developments; nationalization and exchange controls; potentially lower
liquidity and higher volatility; possible problems arising from accounting,
disclosure, settlement, and regulatory practices that differ from U.S.
standards; and the chance that fluctuations in foreign exchange rates will
decrease the investment's value (favorable changes can increase its value). In
addition, foreign securities purchased by the Series, may be subject to foreign
government taxes, higher custodian fees, higher brokerage commissions and
dividend collection fees. Foreign government securities are issued or guaranteed
by a foreign government, province, instrumentality, political subdivision or
similar unit thereof.
FUTURES AND OPTIONS. Futures contracts are often used to manage risk, because
they enable the investor to buy or sell an asset in the future at an agreed upon
price. Options give the investor the right, but not the obligation, to buy or
sell an asset at a predetermined price in the future. A Series may buy and sell
futures contracts (and options on such contracts) to manage its exposure to
changes in securities prices and foreign currencies and as an efficient means of
adjusting overall exposure to certain markets. A Series may purchase or sell
call and put options on securities, financial indices, and foreign currencies,
and may invest in futures contracts on foreign currencies and financial indices,
including interest rates or an index of U.S. Government securities, foreign
government securities or equity or fixed-income securities.
Futures contracts and options may not always be successful hedges;
their prices can be highly volatile; using them could lower a Series' total
return; and the potential loss from the use of futures can exceed the Series'
initial investment in such contracts. These instruments may also be used for
non-hedging purposes such as increasing a Series' income.
The Series' use of commodity futures and commodity options trading
should not be viewed as providing a vehicle for shareholder participation in a
commodity pool. Rather, in accordance with regulations adopted by the Commodity
Futures Trading Commission (CFTC), a Series will employ such techniques only for
(1) hedging purposes, or (2) otherwise, to the extent that aggregate initial
margin and required premiums do not exceed 5 percent of the Series' net assets.
Foreign government securities are issued or guaranteed by a foreign
government, province, instrumentality, political subdivision or similar unit
thereof.
HIGH-YIELD BONDS. A Series may invest its assets in fixed-income securities
offering high current income that are in the lower-rated categories of
recognized rating agencies or, if not rated, considered to be of comparable
quality. These lower-rated fixed-income securities are considered, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation and generally will
involve more credit risk than securities in the higher rated categories.
High-yield bonds are commonly referred to as "junk bonds."
High-yield securities frequently are issued by corporations in the
growth stage of their development. They may also be issued in connection with a
corporate reorganization or a corporate takeover. Companies that issue such
high-yielding securities often are highly leveraged and may not have available
to them more traditional methods of financing. Therefore, the risk associated
with acquiring the securities of such issuers generally is greater than is the
case with higher rated securities. For example, during an economic downturn or
recession, highly leveraged issuers of high-yield securities may experience
financial stress. During such periods, such issuers may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
service its debt obligations may also be adversely affected by specific
corporate developments, or the issuer's inability to meet specific projected
business forecasts, or the unavailability of additional financing. Adverse
publicity and investor perceptions regarding lower rated bonds, whether or not
based upon fundamental analysis, may also depress the price for such securities.
The risk of loss from default by the issuer is significantly greater for the
holders of high-yield securities because such securities are generally unsecured
and are often subordinated to other creditors of the issuer.
HYBRID INSTRUMENTS. A Series may purchase hybrid instruments, which combine the
elements of futures contracts or options with those of debt, preferred equity or
a depository instrument. Often these hybrid instruments are indexed to the price
of a commodity, a particular currency, or a domestic or foreign debt or equity
securities index. Hybrid instruments may take a variety of forms, including, but
not limited to, debt instruments with interest or principal payments or
redemption terms determined by reference to the value of a currency or commodity
or securities index at a future point in time, preferred stock with dividend
rates determined by reference to the value of a currency, or convertible
securities with the conversion terms related to a particular commodity.
ILLIQUID SECURITIES. A Series may hold illiquid investments. Illiquid
investments are investments that cannot be sold or disposed of in the ordinary
course of business within seven days at approximately the price at which they
are valued. Illiquid investments generally include: repurchase agreements not
terminable within seven days; securities for which market quotations are not
readily available; restricted securities not determined to be liquid in
accordance with guidelines established by the Trust's Board of Trustees;
over-the-counter (OTC) options and, in certain instances, their underlying
collateral; and securities involved in swap, cap, collar and floor transactions.
INFLATION-INDEXED BONDS. A Series may purchase inflation-indexed bonds.
Inflation-indexed bonds are fixed income securities whose principal value is
periodically adjusted according to the rate of inflation. Such bonds generally
are issued at an interest rate lower than typical bonds, but are expected to
retain their principal value over time. The interest rate on these bonds is
fixed at issuance, but over the life of the bond the interest may be paid on an
increasing principal value, which has been adjusted for inflation.
Inflation-indexed securities issued by the U.S. Treasury have
maturities of ten years, although it is anticipated that securities with other
maturities will be issued in the future. The securities pay interest on a
semi-annual basis, equal to a fixed percentage of the inflation-adjusted
principal amount.
If the periodic adjustment rate measuring inflation falls, the
principal value of inflation-indexed bonds will be adjusted downward, and
consequently the interest payable on these securities (calculated with respect
to a smaller principal amount) will be reduced. Repayment of the original bond
principal upon maturity (as adjusted for inflation) is guaranteed in the case of
U.S. Treasury inflation-indexed bonds, even during a period of deflation.
However, the current market value of the bonds is not guaranteed, and will
fluctuate. The Series may also invest in other inflation related bonds which may
or may not provide a similar guarantee. If a guarantee of principal is not
provided, the adjusted principal value of the bond repaid at maturity may be
less than the original principal.
The value of inflation-indexed bonds is expected to change in response
to changes in real interest rates. Real interest rates in turn are tied to the
relationship between nominal interest rates and the rate of inflation.
Therefore, if inflation were to rise at a faster rate than nominal interest
rates, real interest rates might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increased at a
faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds.
The periodic adjustment of U.S. inflation-index bonds is tied to the
Consumer Price-Index for Urban Consumers (CPI-U), which is calculated monthly by
the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in
the cost of living, made up of components such as housing, food, transportation
and energy. Inflation-indexed bonds issued by a foreign government are generally
adjusted to reflect a comparable inflation index, calculated by that government.
There can be no assurance that the CPI-U or any foreign inflation index will
accurately measure the real rate of inflation in the prices of goods and
services. Moreover, there can be no assurance that the rate of inflation in a
foreign country will be correlated to the rate of inflation in the United
States.
Any increase in the principal amount of an inflation-indexed bond will
be considered taxable ordinary income, even though investors do not receive
their principal until maturity.
INVESTMENT COMPANIES. A Series may invest in investment companies to the extent
permitted under the 1940 Act. As a shareholder in an investment company, the
Series would bear its pro rata share of that investment company's expenses,
which could result in duplication of certain fees, including management and
administrative fees.
A Series may invest cash balances into investment companies managed by
a common investment adviser or its affiliates. A Series' investments in any such
fund will not be subject to any additional fees, including management and
administrative fees.
MORTGAGE-BACKED SECURITIES. A Series may invest in mortgage-backed securities.
Mortgage-backed securities are securities representing an interest in a pool of
mortgages. The mortgages may be of a variety of types, including adjustable
rate, conventional 30-year, fixed-rate, graduated payment, and 15-year.
Principal and interest payments made on the mortgages in the underlying mortgage
pool of a mortgage-backed security held by a Series are passed through to the
Series. This is in contrast to traditional bonds where principal is normally
paid back at maturity in a lump sum. Unscheduled prepayments of principal
shorten the securities' weighted average life and may lower their total return.
(When a mortgage in the underlying mortgage pool is prepaid, an unscheduled
principal prepayment is passed through to the Series. This principal is returned
to the Series at par. As a result, if a mortgage security were trading at a
discount, its total return would be increased by prepayments). The value of
these securities also may change because of changes in the market's perception
of the creditworthiness of the issuer. In addition, the mortgage securities
market in general may be adversely affected by changes in governmental
regulation or tax policies.
MORTGAGE DOLLAR ROLLS. A Series may enter into mortgage dollar rolls in which a
Series sells mortgage-backed securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar (same type, coupon
and maturity) securities on a specified future date. During the roll period, a
Series foregoes principal and interest paid on the mortgage-backed securities. A
Series is compensated by the interest earned on the cash proceeds of the initial
sale and from negotiated fees paid by brokers offered as an inducement to the
Series to "roll over" its purchase commitments. A Series may only enter into
covered rolls. A "covered roll" is a specific type of dollar roll for which
there is an offsetting cash position which matures on or before the forward
settlement date of the dollar roll transaction. At the time a Series enters into
a mortgage "dollar roll", it will establish an account with its custodian bank
in which it will maintain cash, U.S. Government securities or other liquid
assets equal in value to its obligations in respect of dollar rolls, and
accordingly, such dollar rolls will not be considered borrowings. Mortgage
dollar rolls involve the risk that the market value of the securities the Series
is obligated to repurchase under the agreement may decline below the repurchase
price. In the event the buyer of securities under a mortgage dollar roll files
for bankruptcy or becomes insolvent, the Series' use of proceeds of the dollar
roll may be restricted pending a determination by the other party, or its
trustee or receiver, whether to enforce the Series' obligation to repurchase the
securities.
PARTICIPATIONS AND ASSIGNMENTS. A Series may invest in fixed- and floating-rate
loans (Loans) arranged through private negotiations between a corporate borrower
or a foreign sovereign entity and one or more financial institutions (Lenders).
A Series may invest in such Loans in the form of participations in Loans
(Participations) and assignments of all or a portion of Loans from third parties
(Assignments). Participations typically will result in a Series having a
contractual relationship only with the Lender, not with the borrower. A Series
will have the right to receive payments of principal, interest and any fees to
which it is entitled only from the Lender selling the Participation and only
upon receipt by the Lender of the payments from the borrower. In connection with
purchasing Participations, a Series generally will have no right to enforce
compliance by the borrower with the terms of the loan agreement relating to the
Loan, nor any rights of set-off against the borrower, and a Series may not
benefit directly from any collateral supporting the Loan in which it has
purchased the Participation. As a result, a Series will assume the credit risk
of both the borrower and the Lender that is selling the Participation. In the
event of the insolvency of the Lender selling a Participation, a Series may be
treated as a general creditor of the Lender and may not benefit from any set-off
between the Lender and the borrower. A Series will acquire Participations only
if the Lender interpositioned between a Series and the borrower is determined by
the sub-adviser to be creditworthy. When a Series purchases Assignments from
Lenders, a Series will acquire direct rights against the borrower on the Loan,
except that under certain circumstances such rights may be more limited than
those held by the assigning Lender.
A Series may have difficulty disposing of Assignments and
Participations. Because the market for such instruments is not highly liquid, a
Series anticipates that such instruments could be sold only to a limited number
of institutional investors. The lack of a highly liquid secondary market may
have an adverse impact on the value of such instruments and will have an adverse
impact on a Series' ability to dispose of particular Assignments or
Participations in response to a specific economic event, such as deterioration
in the creditworthiness of the borrower. A Series currently treats investments
in Participations and Assignments as illiquid for purposes of its limitation on
investment in illiquid securities. However, the Trustees may in the future adopt
guidelines for determining whether Assignments and Loan Participations are
liquid or illiquid.
PASSIVE FOREIGN INVESTMENT COMPANIES. A Series may purchase the securities of
passive foreign investment companies. A passive foreign investment company, in
general, is a foreign corporation of which either at least 75% of its income is
passive or an average of at least 50% of its assets produce, or are held for the
production of, passive income. In addition to bearing their proportionate share
of the Trust's expenses (management fees and operating expenses), shareholders
will also indirectly bear similar expenses of such investment companies.
PORTFOLIO TURNOVER. To a limited extent, a Series may engage in short-term
transactions if such transactions further its investment objective. A Series may
sell one security and simultaneously purchase another of comparable quality or
simultaneously purchase and sell the same security to take advantage of
short-term differentials in bond yields or otherwise purchase individual
securities in anticipation of relatively short-term price gains. The rate of
portfolio turnover will not be a determining factor in the purchase and sale of
such securities. Increased portfolio turnover necessarily results in
correspondingly higher costs including brokerage commissions, dealer mark-ups
and other transaction costs on the sale of securities and reinvestment in other
securities, and may result in the acceleration of taxable gains.
REAL ESTATE INVESTMENT TRUSTS (REITS). REITs are pooled investment vehicles
whose assets consist primarily of interests in real estate and real estate
loans. The REITs in which a Series may invest include equity REITs, which own
real estate properties and realize income from rents and gain or loss from the
sale of real estate interests, and mortgage REITs, which make construction,
development and long-term mortgage loans and realize income from interest
payments on loans. The value of an equity REIT may be affected by changes in the
value of the underlying property, while a mortgage REIT may be affected by the
quality of the credit extended. The performance of both types of REITs depends
upon conditions in the real estate industry, management skills and the amount of
cash flow. The risks associated with REITs include defaults by borrowers, heavy
cash flow dependency, self-liquidation, failure to qualify as a "pass-through"
entity under the Federal tax law, failure to qualify as an exempt entity under
the 1940 Act, and the fact that REITs are not diversified. REITs (especially
mortgage REITs) are subject to interest rate risk.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS. A Series may invest in
repurchase or reverse repurchase agreements. A repurchase agreement involves the
purchase of a security by a Series and a simultaneous agreement (generally by a
bank or dealer) to repurchase that security from the Series at a specified price
and date or upon demand. This technique offers a method of earning income on
idle cash. A repurchase agreement may be considered a loan collateralized by the
underlying security. The Series must take physical possession of the security or
receive written confirmation of the purchase and a custodial or safekeeping
receipt from a third party or be recorded as the owner of the security through
the Federal Reserve Book Entry System.
The Series may invest in open repurchase agreements which vary from the
typical agreement in the following respects: (1) the agreement has no set
maturity, but instead matures upon 24 hours' notice to the seller; and (2) the
repurchase price is not determined at the time the agreement is entered into,
but is instead based on a variable interest rate and the duration of the
agreement. In addition, a Series, together with other registered investment
companies having management agreements with a common investment adviser or its
affiliates, may transfer uninvested cash balances into a single joint account,
the daily aggregate balance of which will be invested in one or more repurchase
agreements.
When a Series invests in a reverse repurchase agreement, it sells a
portfolio security to another party, such as a bank or a broker-dealer, in
return for cash, and agrees to buy the security back at a future date and price.
Reverse repurchase agreements may be used to provide cash to satisfy unusually
heavy redemption requests or for other temporary or emergency purposes without
the necessity of selling portfolio securities or to earn additional income on
portfolio securities, such as Treasury bills and notes.
SHORT SALES. A Series may sell securities short. A short sale is the sale of a
security the Series does not own. It is "against the box" if at all times when
the short position is open the Series owns an equal amount of the securities or
securities convertible into, or exchangeable without further consideration for,
securities of the same issue as the securities sold short. To the extent that a
Series engages in short sales that are not "against the box," it must maintain
asset coverage in the form of assets determined to be liquid by the sub-adviser
in accordance with procedures established by the Board of Trustees, in a
segregated account, or otherwise cover its position in a permissible manner. If
the value of the security goes up, the Series will have to buy it back at a loss
to make good on the borrowing.
SHORT-TERM CORPORATE DEBT SECURITIES. A Series may invest in short-term
corporate debt securities. These are non-convertible corporate debt securities
(e.g., bonds and debentures) which have one year or less remaining to maturity.
Corporate notes may have fixed, variable, or floating rates.
STANDARD & POOR'S DEPOSITORY RECEIPTS (SPDRS). SPDRs are American Stock
Exchange-traded securities that represent ownership in the SPDR Trust, a trust
which has been established to accumulate and hold a portfolio of common stocks
that is intended to track the price performance and dividend yield of the S&P
500 Index. The SPDR trust is sponsored by a subsidiary of the American Stock
Exchange. SPDRs may be used for several reasons including but not limited to:
facilitating the handling of cash flows or trading, or reducing transaction
costs. The use of SPDRs would introduce additional risk to a Series as the price
movement of the instrument does not perfectly correlate with the price action of
the underlying index.
STRIPPED MORTGAGE-BACKED SECURITIES. A Series may purchase stripped
mortgage-backed securities, which may be considered derivative mortgage-backed
securities, which may be issued by agencies or instrumentalities of the U.S.
Government or by private entities. Stripped mortgage-backed securities have
greater volatility than other types of mortgage-backed securities. Stripped
mortgage-backed securities are structured with two or more classes that receive
different proportions of the interest and principal distributions on a pool of
mortgage assets. In the most extreme case, one class will receive all of the
interest (IOs, or interest-only securities), while the other class will receive
all of the principal (POs, or principal-only securities). The yield to maturity
of such mortgage-backed securities that are purchased at a substantial discount
or premium are extremely sensitive to changes in interest rates as well as to
the rate of principal payments (including prepayments) on the related underlying
mortgage assets.
As interest rates rise and fall, the value of IOs tends to move in the
same direction as interest rates. The value of the other mortgage-backed
securities described herein, like other debt instruments, will tend to move in
the opposite direction compared to interest rates. Under the Internal Revenue
Code of 1986, as amended (Code), POs may generate taxable income from the
current accrual of original issue discount, without a corresponding distribution
of cash to the Series.
The cash flows and yields on IO and PO classes are extremely sensitive
to the rate of principal payments (including prepayments) on the related
underlying mortgage assets. For example, a rapid or slow rate of principal
payments may have a material adverse effect on the prices of IOs or POs,
respectively. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, an investor may fail to recoup fully its
initial investment in an IO class of a stripped mortgage-backed security, even
if the IO class is rated AAA or Aaa or is derived from a full faith and credit
obligation. Conversely, if the underlying mortgage assets experience slower than
anticipated prepayments of principal, the price on a PO class will be affected
more severely than would be the case with a traditional mortgage-backed
security.
SUPRANATIONAL AGENCY SECURITIES. A Series may invest in securities issued or
guaranteed by certain supranational entities, such as the International
Development Bank.
U.S. GOVERNMENT SECURITIES. U.S. Government securities are issued or guaranteed
as to principal and interest by U.S. Government agencies or instrumentalities.
These include securities issued by the Federal National Mortgage Association
(Fannie Mae), Government National Mortgage Association (Ginnie Mae), Federal
Home Loan Bank, Federal Land Banks, Farmers Home Administration, Banks for
Cooperatives, Federal Intermediate Credit Banks, Federal Financing Bank, Farm
Credit Banks, the Small Business Association, Student Loan Marketing
Association, and the Tennessee Valley Authority. Some of these securities, such
as those issued by Ginnie Mae, are supported by the full faith and credit of the
U.S. Treasury; others, such as those of Fannie Mae, are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations; and still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government will provide financial support
to U.S. Government agencies or instrumentalities in the future, other than as
set forth above, since it is not obligated to do so by law.
U.S. GOVERNMENT OBLIGATIONS. U.S. Government obligations include bills, notes,
bonds, and other debt securities issued by the U.S. Treasury. These are direct
obligations of the U.S. Government and differ mainly in the length of their
maturities.
VARIABLE RATE SECURITIES. Variable rate securities provide for a periodic
adjustment in the interest rate paid on the obligations. The terms of such
obligations must provide that interest rates are adjusted periodically based
upon some appropriate interest rate adjustment index as provided in the
respective obligations. The adjustment intervals may be regular and range from
daily up to annually, or may be event based, such as on a change in the prime
rate.
WARRANTS. A Series may invest in warrants. Warrants have no voting rights, pay
no dividends and have no rights with respect to the assets of the corporation
issuing them. Warrants basically are options to purchase equity securities at a
specific price valid for a specific period of time. They do not represent
ownership of the securities, but only the right to buy them. Warrants differ
from call options in that warrants are issued by the issuer of the security
which may be purchased on their exercise, whereas call options may be written or
issued by anyone. The prices of warrants do not necessarily move parallel to the
prices of the underlying securities.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENT CONTRACTS. A Series may purchase
securities on a when-issued or delayed delivery basis (When-Issueds) and may
purchase securities on a forward commitment basis (Forwards). Any or all of the
Series' investments in debt securities may be in the form of When-Issueds and
Forwards. The price of such securities, which may be expressed in yield terms,
is fixed at the time the commitment to purchase is made, but delivery and
payment take place at a later date. Normally, the settlement date occurs within
90 days of the purchase for When-Issueds, but may be substantially longer for
Forwards. During the period between PURCHASE and settlement, no payment is made
by the Series to the issuer and no interest accrues to the Series. The purchase
of these securities will result in a loss if their value declines prior to the
settlement date. This could occur, for example, if interest rates increase prior
to settlement. The longer the period between purchase and settlement, the
greater the risks. At the time the Series makes the commitment to purchase these
securities, it will record the transaction and reflect the value of the security
in determining its net asset value. The Series will maintain cash and/or liquid
assets with its custodian bank at least equal in value to commitments for them
during the time between the purchase and the settlement. Therefore, the longer
this period, the longer the period during which alternative investment options
are not available to the Series (to the extent of the securities used for
cover). Such securities either will mature or, if necessary, be sold on or
before the settlement date.
ZERO COUPON AND PAY-IN-KIND BONDS. Unless otherwise stated herein, a Series may
invest up to 10% of its assets in zero coupon bonds or strips. Zero coupon bonds
do not make regular interest payments; rather, they are sold at a discount from
face value. Principal and accreted discount (representing interest accrued but
not paid) are paid at maturity. Strips are debt securities that are stripped of
their interest after the securities are issued, but otherwise are comparable to
zero coupon bonds. The market value of strips and zero coupon bonds generally
fluctuates in response to changes in interest rates to a greater degree than
interest-paying securities of comparable term and quality. A Series may also
purchase pay-in-kind bonds. Pay-in-kind bonds pay all or a portion of their
interest in the form of debt or equity securities.
Zero coupon and pay-in-kind bonds tend to be subject to greater price
fluctuations in response to changes in interest rates than are ordinary
interest-paying debt securities with similar maturities. The value of zero
coupon securities appreciates more during periods of declining interest rates
and depreciates more during periods of rising interest rates than ordinary
interest-paying debt securities with similar maturities. Zero coupon securities
and pay-in-kind bonds may be issued by a wide variety of corporate and
governmental issuers.
Current federal income tax law requires the holder of a zero coupon
security, certain pay-in-kind bonds and certain other securities acquired at a
discount (such as Brady Bonds) to accrue income with respect to these securities
prior to the receipt of cash payments. Accordingly, to avoid liability for
federal income and excise taxes, a Series may be required to distribute income
accrued with respect to these securities and may have to dispose of portfolio
securities under disadvantageous circumstances in order to generate cash to
satisfy these distribution requirements.
ADDITIONAL RISK CONSIDERATIONS
EMERGING MARKETS. The considerations noted below under "Foreign Securities" may
be intensified in the case of investment in developing countries. Investments in
securities of issuers in emerging markets countries may involve a high degree of
risk and many may be considered speculative. These investments carry all of the
risks of investing in securities of foreign issuers to a heightened degree.
These heightened risks include: (i) greater risks of expropriation, confiscatory
taxation, nationalization, and less social, political and economic stability;
(ii) limitations on daily price changes and the small current size of the
markets for securities of emerging markets issuers and the currently low or
nonexistent volume of trading, resulting in lack of liquidity and in price
volatility; (iii) certain national policies which may restrict a Series'
investment opportunities including limitations on aggregate holdings by foreign
investors and restrictions on investing in issuers or industries deemed
sensitive to relevant national interests; and (iv) the absence of developed
legal structures governing private or foreign investment and private property.
In addition, emerging market economies may be based on only a few industries,
may be highly vulnerable to changes in local or global trade conditions, and may
suffer from extreme and volatile debt burdens or inflation rates.
FOREIGN SECURITIES. Investments in foreign securities, including those of
foreign governments, involve risks that are different in some respects from
investments in securities of U.S. issuers, such as the risk of fluctuations in
the value of the currencies in which they are denominated, a heightened risk of
adverse political and economic developments and, with respect to certain
countries, the possibility of expropriation, nationalization or confiscatory
taxation or limitations on the removal of funds or other assets of a Series.
Securities of some foreign issuers in many cases are less liquid and more
volatile than securities of comparable domestic issuers. There also may be less
publicly available information about foreign issuers than domestic issuers, and
foreign issuers generally are not subject to the uniform accounting, auditing
and financial reporting standards, practices and requirements applicable to
domestic issuers. Certain markets may require payment for securities before
delivery. A Series may have limited legal recourse against the issuer in the
event of a default on a debt instrument. Delays may be encountered in settling
securities transactions in certain foreign markets and a Series will incur costs
in converting foreign currencies into U.S. dollars. Bank custody charges are
generally higher for foreign securities. The Series which invest primarily in
foreign securities are particularly susceptible to such risks. American
Depositary Receipts do not involve the same direct currency and liquidity risks
as foreign securities.
The share price of a Series that invests in foreign securities will
reflect the movements of both the prices of the portfolio securities and the
currencies in which such securities are denominated. A Series' foreign
investments may cause changes in a Series' share price that have a low
correlation with movement in the U.S. markets. Because most of the foreign
securities in which a Series invests will be denominated in foreign currencies,
or otherwise will have values that depend on the performance of foreign
currencies relative to the U.S. dollar, the relative strength of the U.S. dollar
may be an important factor in the performance of a Series, depending on the
extent of the Series' foreign investments.
A Series may employ certain strategies in order to manage exchange rate
risks. For example, a Series may hedge some or all of its investments
denominated in or exposed to a foreign currency against a decline in the value
of that currency. A Series may enter into contracts to sell that foreign
currency for U.S. dollars (not exceeding the value of a Series' assets
denominated in or exposed to that currency) or by participating in options or
futures contracts with respect to such currency (position hedge). A Series could
also hedge that position by selling a second currency, which is expected to
perform similarly to the currency in which portfolio investments are
denominated, for U.S. dollars (proxy hedge). A Series may also enter into a
forward contract to sell the currency in which the security is denominated for a
second currency that is expected to perform better relative to the U.S. dollar
if the sub-adviser believes there is a reasonable degree of correlation between
movements in the two currencies (cross hedge). A Series may also enter into a
forward contract to sell a currency in which portfolio securities are
denominated in exchange for a second currency in order to manage its currency
exposure to selected countries. In addition, when a Series anticipates
purchasing securities denominated in or exposed to a particular currency, the
Series may enter into a forward contract to purchase or sell such currency in
exchange for the dollar or another currency (anticipatory hedge).
These strategies minimize the effect of currency appreciation as well
as depreciation, but do not protect against a decline in the underlying value of
the hedged security. In addition, such strategies may reduce or eliminate the
opportunity to profit from increases in the value of the original currency and
may adversely impact a Series' performance if the sub-adviser's projection of
future exchange rates is inaccurate.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. The use of futures, options,
forward contracts, and swaps (derivative instruments) exposes a Series to
additional investment risks and transaction costs. If a sub-adviser seeks to
protect a Series against potential adverse movements in the securities, foreign
currency or interest rate markets using these instruments, and such markets do
not move in a direction adverse to the Series, that Series could be left in a
less favorable position than if such strategies had not been used. Risks
inherent in the use of futures, options, forward contracts and swaps include:
(i) the risk that interest rates, securities prices and currency markets will
not move in the directions anticipated; (ii) imperfect correlation between the
price of derivative instruments and movements in the prices of the securities,
interest rates or currencies being hedged; (iii) the fact that skills needed to
use these strategies are different from those needed to select portfolio
securities; (iv) the possible absence of a liquid secondary market for any
particular instrument at any time; and (v) the possible need to defer closing
out certain hedged positions to avoid adverse tax consequences.
HIGH-YIELD/HIGH-RISK BONDS. Lower-rated bonds involve a higher degree of credit
risk, which is the risk that the issuer will not make interest or principal
payments when due. In the event of an unanticipated default, a Series would
experience a reduction in its income, a decline in the market value of the
securities so affected and a decline in the value of its shares. More careful
analysis of the financial condition of issuers of lower-rated securities is
therefore necessary. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress which
could adversely affect their ability to service principal and interest payment
obligations, to meet projected business goals and to obtain additional
financing.
The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher rated investments, but more
sensitive to adverse economic or political changes, or individual developments
specific to the issuer. Periods of economic or political uncertainty and change
can be expected to result in volatility of prices of these securities. Since the
last major economic recession, there has been a substantial increase in the use
of high-yield debt securities to fund highly leveraged corporate acquisitions
and restructurings, so past experience with high-yield securities in a prolonged
economic downturn may not provide an accurate indication of future performance
during such periods. Lower-rated securities also may have less liquid markets
than higher-rated securities, and their liquidity as well as their value may be
more severely affected by adverse economic conditions. Many high-yield bonds do
not trade frequently. When they do trade, their price may be substantially
higher or lower than had been expected. A lack of liquidity also means that
judgment may play a bigger role in valuing the securities. Adverse publicity and
investor perceptions as well as new or proposed laws may also have a greater
negative impact on the market for lower rated bonds.
A Series may also invest in unrated debt securities of foreign and
domestic issuers. Unrated debt, while not necessarily of lower quality than
rated securities, may not have as broad a market. Sovereign debt of foreign
governments is generally rated by country, because these ratings do not take
into account individual factors relevant to each issue and may not be updated
regularly. Because of the size and perceived demand of the issue, among other
factors, certain municipalities may not incur the costs of obtaining a rating.
The sub-adviser will analyze the credit- worthiness of the issuer, as well as
any financial institution or other party responsible for payments on the
security, in determining whether to purchase unrated municipal bonds. (See
Appendix A for a description of bond rating categories).
HIGH-YIELD FOREIGN SOVEREIGN DEBT SECURITIES. Investing in fixed and floating
rate high-yield foreign sovereign debt securities will expose the Series
investing in such securities to the direct or indirect consequences of
political, social or economic changes in the countries that issue the
securities. (See "Foreign Securities.") The ability and willingness of sovereign
obligors in developing and emerging market countries or the governmental
authorities that control repayment of their external debt to pay principal and
interest on such debt when due may depend on general economic and political
conditions within the relevant country. Countries such as those in which a
Series may invest have historically experienced, and may continue to experience,
high rates of inflation, high interest rates, exchange rate trade difficulties
and extreme poverty and unemployment. Many of these countries are also
characterized by political uncertainty or instability. Additional factors which
may influence the ability or willingness to service debt include, but are not
limited to, a country's cash flow situation, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of its debt
service burden to the economy as a whole, and its government's policy towards
the International Monetary Fund, the World Bank and other international
agencies.
HYBRID INSTRUMENTS. The risks of investing in hybrid instruments reflect a
combination of the risks of investing in securities, options, futures and
currencies, including volatility and lack of liquidity. Reference is made to the
discussion of futures, options, and forward contracts herein for a discussion of
these risks. Further, the prices of the hybrid instrument and the related
commodity or currency may not move in the same direction or at the same time.
Hybrid instruments may bear interest or pay preferred dividends at below market
(or even relatively nominal) rates. Alternatively, hybrid instruments may bear
interest at above market rates but bear an increased risk of principal loss. In
addition, because the purchase and sale of hybrid instruments could take place
in an over-the-counter or in a private transaction between the Series and the
seller of the hybrid instrument, the creditworthiness of the counter-party to
the transaction would be a risk factor which the Series would have to consider.
Hybrid instruments also may not be subject to regulation of the Commodity
Futures Trading Commission, which generally regulates the trading of commodity
futures by U.S. persons, the Securities and Exchange Commission, which regulates
the offer and sale of securities by and to U.S. persons, or any other
governmental regulatory authority.
SECURITIES LENDING. Lending securities enables a Series to earn additional
income, but could result in a loss or delay in recovering these securities. The
borrower of a Series' portfolio securities must maintain acceptable collateral
with that Series' custodian in an amount, marked to market daily, at least equal
to the market value of the securities loaned, plus accrued interest and
dividends. Acceptable collateral is limited to cash, U.S. government securities
and irrevocable letters of credit that meet certain guidelines. A Series may
reinvest any cash collateral in money market investments or other short-term
liquid investments. A Series will retain authority to terminate any of its loans
at any time. A Series may pay reasonable fees in connection with a loan and may
pay the borrower or placing broker a negotiated portion of the interest earned
on the reinvestment of cash held as collateral. A Series will receive amounts
equivalent to any dividends, interest or other distributions on the securities
loaned. A Series will regain record ownership of loaned securities to exercise
beneficial rights, such as voting and subscription rights, when regaining such
rights is considered to be in the Series' interest.
<PAGE>
INVESTMENT RESTRICTIONS APPLICABLE TO ALL SERIES
FUNDAMENTAL POLICIES. Each Series is subject to certain fundamental policies and
restrictions that may not be changed without shareholder approval. Shareholder
approval means approval by the lesser of (i) more than 50% of the outstanding
voting securities of the Trust (or a particular Series if a matter affects just
that Series), or (ii) 67% or more of the voting securities present at a meeting
if the holders of more than 50% of the outstanding voting securities of the
Trust (or the affected Series) are present or represented by proxy. Unless
otherwise indicated, all restrictions apply at the time of investment.
(1) Each Series, except the JNL/Janus Capital Growth Series, JNL/S&P
Conservative Growth Series I, JNL/S&P Moderate Growth Series I, JNL/S&P
Aggressive Growth Series I, JNL/S&P Very Aggressive Growth Series I, JNL/S&P
Equity Growth Series I, JNL/S&P Equity Aggressive Growth Series I, JNL/S&P
Conservative Growth Series II, JNL/S&P Moderate Growth Series II, JNL/S&P
Aggressive Growth Series II, JNL/S&P Very Aggressive Growth Series II, JNL/S&P
Equity Growth Series II, JNL/S&P Equity Aggressive Growth Series II, JNL/S&P
Conservative Growth Series, JNL/S&P Moderate Growth Series, JNL/S&P Aggressive
Growth Series, Lazard/JNL Small Cap Value Series and Lazard/JNL Mid Cap Value
Series, shall be a "diversified company," as such term is defined under the 1940
Act.
(2) No Series may invest more than 25% of the value of their respective
assets in any particular industry (other than U.S. Government securities),
except the PPM America/JNL Money Market Series. The telecommunications industry
is comprised of several services which are considered separate industries by the
sub-advisers. Services can include cellular, long distance, paging and
messaging, satellite or data and internet. As the telecommunications industry
continues to expand, there will be more service industries created.
(3) No Series may invest directly in real estate or interests in real
estate; however, the Series may own debt or equity securities issued by
companies engaged in those businesses.
(4) No Series may purchase or sell physical commodities other than
foreign currencies unless acquired as a result of ownership of securities (but
this limitation shall not prevent the Series from purchasing or selling options,
futures, swaps and forward contracts or from investing in securities or other
instruments backed by physical commodities).
(5) No Series may lend any security or make any other loan if, as a
result, more than 33 1/3% of the Series' total assets would be lent to other
parties (but this limitation does not apply to purchases of commercial paper,
debt securities or repurchase agreements).
(6) No Series may act as an underwriter of securities issued by others,
except to the extent that a Series may be deemed an underwriter in connection
with the disposition of portfolio securities of such Series.
(7) No Series may invest more than 15% of a Series' net assets (10% in
the case of the PPM America/JNL Money Market Series and the JNL/Alger Growth
Series) in illiquid securities. This limitation does not apply to securities
eligible for resale pursuant to Rule 144A of the Securities Act of 1933 or
Commercial Paper issued in reliance upon the exemption from registration
contained in Section 4(2) of that Act, which have been determined to be liquid
in accordance with guidelines established by the Board of Trustees.
(8) The Series will not issue senior securities except that they may
borrow money for temporary or emergency purposes (not for leveraging or
investment) in an amount not exceeding 25% of the value of their respective
total assets (including the amount borrowed) less liabilities (other than
borrowings). If borrowings exceed 25% of the value of a Series' total assets by
reason of a decline in net assets, the Series will reduce its borrowings within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements, deposits of assets
to margin or guarantee positions in futures, options, swaps and forward
contracts, or the segregation of assets in connection with such contracts.
OPERATING POLICIES. The Trustees have adopted additional investment restrictions
for the Series. These restrictions are operating policies of the Series and may
be changed by the Trustees without shareholder approval. The additional
investment restrictions adopted by the Trustees to date include the following:
For each Series, to the extent applicable:
(a) The Series intend to comply with the CFTC regulations limiting
a Series' investments in futures and options for non-hedging
purposes.
For the JNL/Alger Growth Series:
(a) At least 85% of the Series' net assets, under normal market
conditions, will be invested in equity securities and at least
65% of its total assets will be invested in the equity
securities of companies that, at the time their securities are
purchased by the Series, have a market capitalization of $1
billion or more.
(b) The Series may hold up to 15% of its net assets in money
market instruments and repurchase agreements.
For the JNL/Alliance Growth Series:
(a) The Series may invest up to 25% of its total assets in foreign
securities.
For the JNL/Eagle Core Equity Series:
(a) At least 65% of the Series' total assets, under normal market
conditions, will be invested in U.S. common stocks.
(b) The Series may invest up to 35% of its assets in
non-investment grade securities.
(c) The Series may invest up to 25% of its total assets in foreign
securities.
For the JNL/Eagle SmallCap Equity Series:
(a) At least 65% of its total assets will be invested, under
normal market conditions, in the equity securities of
companies that, at the time their securities are purchased by
the Series, have a market capitalization under $1 billion.
(b) The Series may invest up to 5% of its assets in non-investment
grade securities.
For the JNL/J.P. Morgan Enhanced S&P 500 Stock Index Series:
(a) At least 65% of its total assets will be invested, under
normal market conditions, in stocks.
For the JNL/J.P. Morgan International & Emerging Markets Series:
(a) At least 65% of its total assets will be invested, under
normal market conditions, in equity securities of foreign
issuers.
(b) The Series may invest up to 10% of its total assets in shares
of investment companies and up to 5% of its total assets in
any one investment company as long as that investment does not
represent more than 3% of the total voting stock of the
acquired investment company.
For each of the JNL/Janus Aggressive Growth Series, JNL/Janus Capital Growth
Series and JNL/Janus Global Equities Series:
(a) The Series may not invest more than 35% of its net assets in
high-yield/high-risk bonds.
(b) The Series may not invest more than 25% of its assets in
mortgage- and asset-backed securities.
(c) The Series may not invest more than 10% of its assets in zero
coupon bonds.
For the JNL/Janus Balanced Series and JNL/Janus Growth & Income Series:
(a) The Series may not invest more than 35% of its net assets in
high-yield/high-risk bonds.
(b) The Series may not invest more than 10% of its assets in zero
coupon bonds.
For the JNL/PIMCO Total Return Bond Series:
(a) At least 65% of its total assets will be invested, under
normal market conditions, in fixed-income securities.
(b) The Series may invest up to 10% of its assets in
non-investment grade fixed-income securities rated at least B
by Moody's or S&P.
(c) The Series may invest up to 20% of its assets in securities
denominated in foreign currencies. A minimum of 75% of
currency exposure will be hedged.
(d) The Series may invest up to 10% of its assets in securities of
issuers based in emerging markets.
(e) The Series may not invest more than 5% of its net assets in
any combination of inverse floater, interest-only or
principal-only securities.
(f) The Series may not enter into a swap agreement with a party if
the net amount owed or to be received under existing contracts
with that party would exceed 5% of the Series' assets.
For the JNL/Putnam Growth Series:
The Series may invest up to 20% of its net assets in foreign securities.
JNL/Putnam International Equity Series:
(a) The Series normally invests at least 65% of its total assets
in equity securities of companies located in three countries
other than the U.S. Companies are located outside the U.S. if
(1) the are organized under U.S. law, (2) their principal
office is outside the U.S., (3) their securities are
principally traded outside the U.S., (4) 50% or more of total
revenues come from outside the U.S. or (5) 50% or more of
assets are outside the U.S.
For the JNL/Putnam Value Equity Series:
(a) At least 65% of its total assets will be invested, under
normal market conditions, in equity securities.
(b) The Series may invest up to 25% of its total assets in the
common stocks of foreign issuers.
For the JNL International Index Series:
(a) The Series may hold up to 25% of its value in MSCI E.A.FE.
futures contracts.
For the JNL Russell 2000 Index Series:
(a) The Series may hold up to 5% of its value in Russell 2000
Index futures contracts.
For the JNL S&P 500 Index Series:
(a) The Series may hold up to 25% of its value in S&P 500 Index
futures contracts.
For the Lazard/JNL Mid Cap Value Series:
(a) At least 80% of its total assets will generally be invested in
the equity securities of undervalued medium size companies.
(b) The Series may invest up to 15% of its total assets in foreign
securities.
For the Lazard/JNL Small Cap Value Series:
(a) At least 80% of its total assets will generally be invested in
the equity securities of small U.S. companies in the range of
the Russell 2000 Index.
(b) The Series does not currently intend to invest more than 10%
of its total assets in the securities of unseasoned companies.
For the PPM America/JNL Balanced Series:
(a) At least 25% of its assets will be invested, under normal
market conditions, in fixed-income senior securities.
(b) The Series may invest up to 35% of its net assets in
non-investment grade securities rated at least Ca by Moody's
Investors Services, Inc. (Moody's) or CC by Standard & Poor's,
a division of The McGraw-Hill Companies, Inc. (S&P).
For the PPM America/JNL High Yield Bond Series:
(a) At least 65% of its total assets will be invested, under
normal market conditions, in bonds rated Ba or below by
Moody's or BB or below by S&P, or if unrated, of comparable
quality.
(b) The Series may invest up to 10% of its total assets in bonds
rated C by Moody's or D by S&P.
(c) The Series may invest up to 25% of its assets in foreign
securities.
For the PPM America/JNL Money Market Series:
(a) The Series may not invest more than 5% of its assets in the
securities of any one issuer or invest more than 5% of its
assets in securities (other than U.S. Government securities
and repurchase agreements on such securities) that have not
been rated in the highest category by the requisite rating
agencies or, if unrated, have not been deemed to be of
comparable quality, as determined in accordance with Rule 2a-7
under the 1940 Act.
(b) The Series may invest more than 25% of its total assets in the
domestic banking industry. There are no limitations on
investments in U.S. Government securities, including
obligations issued or guaranteed by its agencies or
instrumentalities.
For the Salomon Brothers/JNL Balanced Series:
(a) The Series currently expects that at least 40% of its total
assets will be invested, under normal market conditions, in
equity securities.
(b) The Series may invest up to 20% of its net assets in
nonconvertible fixed-income securities rated Ba or lower by
Moody's or BB or lower by S&P or, if unrated, are determined
to be of comparable quality.
(c) The Series may invest up to 20% of its total assets in foreign
securities.
(d) The Series may not invest more than 10% of its assets in
repurchase agreements maturing in more than 7 days.
For the Salomon Brothers/JNL Global Bond Series:
(a) The Series does not currently intend to invest more than 75%
of its assets in medium- or lower-rated securities.
(b) The Series may invest up to 20% of its assets in common stock,
convertible securities, warrants, preferred stock or other
equity securities when consistent with the Series' objectives.
(c) To maintain liquidity, the Series may invest up to 20% of its
assets in high-quality, short-term money market instruments.
(d) The Series may not make loans of its portfolio securities with
a value in excess of 25% of its total assets.
For the Salomon Brothers/JNL High Yield Bond Series:
(a) At least 80% of its total assets will be invested, under
normal market conditions, in non-investment grade fixed-income
securities.
(b) The Series may invest up to 35% of its total assets in the
securities of foreign issuers and up to 5% of its total assets
in foreign governmental issuers in any one country.
(c) The Series may invest up to 10% of its total assets in either
(i) equipment lease certificates, equipment trust certificates
and conditional sales contracts or (ii) limited partnership
interests.
(d) The Series may invest up to 10% of its total assets in common
stock, convertible securities, warrants or other equity
securities when consistent with its objective.
(e) To maintain liquidity, the Series may invest up to 20% of its
assets in cash and/or U.S. dollar-denominated debt securities
(short term investments in securities for the forward
settlement of trades shall not count for purposes of this
policy).
For the Salomon Brothers/JNL U.S. Government & Quality Bond Series:
(a) At least 65% of its total assets will be invested, under
normal market conditions, in: U.S. Treasury obligations;
obligations issued or guaranteed by agencies or
instrumentalities of the U.S. Government; mortgage-backed
securities guaranteed by Ginnie Mae that are supported by the
full faith and credit of the U.S. Government; mortgage-backed
securities guaranteed by agencies or instrumentalities of the
U.S. Government which are supported by their own credit but
not the full faith and credit of the U.S. Government; and
collateralized mortgage obligations issued by private issuers
for which the underlying mortgage-backed securities serving as
collateral are backed either by (i)the credit alone of the
U.S. Government agency or instrumentality which issues or
guarantees them or (ii) the full faith and credit of the U.S.
Government.
(b) The Series may invest up to 35% of its assets in U.S.
dollar-denominated securities rated AAA, AA, A or BBB by S&P
or Aaa, Aa, A or Baa by Moody's, or if unrated, determined to
be of comparable quality.
(c) The Series may not invest more than 10% of its total assets in
obligations of foreign issuers.
(d) The Series may not make loans of its portfolio securities with
a value in excess of 25% of its total assets.
For the T. Rowe Price/JNL Established Growth Series:
(a) The Series may invest up to 30% of its total assets (excluding
reserves) in foreign securities.
For the T. Rowe Price/JNL Mid-Cap Growth Series:
(a) At least 65% of its total assets will be invested, under
normal market conditions, in mid-cap (as defined in the
Prospectus) common stocks with above-average growth potential.
(b) The Series may invest up to 25% of its total assets (excluding
reserves) in foreign securities.
For the T. Rowe Price/JNL Value Series:
(a) The Series may invest up to 25% of its total assets (excluding
reserves) in foreign securities.
INSURANCE LAW RESTRICTIONS. In connection with the Trust's agreement to sell
shares to the separate accounts, Jackson National Financial Services, LLC (JNFS)
and the insurance companies may enter into agreements, required by certain state
insurance departments, under which JNFS may agree to use its best efforts to
assure and to permit insurance companies to monitor that each Series of the
Trust complies with the investment restrictions and limitations prescribed by
state insurance laws and regulations applicable to the investment of separate
account assets in shares of mutual funds. If a Series failed to comply with such
restrictions or limitations, the insurance company would take appropriate action
which might include ceasing to make investments in the Series or withdrawing
from the state imposing the limitation. Such restrictions and limitations are
not expected to have a significant impact on the Trust's operations.
TRUSTEES AND OFFICERS OF THE TRUST
The officers of the Trust manage its day to day operations and are
responsible to the Trust's Board of Trustees. The trustees set broad policies
for each Series and choose the Trust's officers. The following is a list of the
trustees and officers of the Trust and a statement of their present positions
and principal occupations during the past five years.
For purposes of this section, the term "Fund Complex" includes each of the
following investment companies: JNL Series Trust, JNL Variable Fund LLC, JNL
Variable Fund III LLC, JNL Variable Fund V LLC, JNLNY Variable Fund I LLC, and
JNLNY Variable Fund II LLC. Each of the Trustees is also a Trustee or Manager of
each of the other funds in the Fund Complex and each of the Trust's officers is
also an officer of one or more of the funds in the Fund Complex.
ANDREW B. HOPPING* (Age 41), 5901 Executive Drive, Lansing, Michigan 48911
Trustee of the Trust and Member of the Board of Managers of each of the other
funds in the Fund Complex
President and Chief Executive Officer of the Trust and each of the other funds
in the Fund Complex
JNL Series Trust, Vice President (8/96 to 8/97)
JNL Series Trust, Treasurer (8/96 to 8/97)
JNL Series Trust, Chief Financial Officer (8/96 to 8/97)
Jackson National Life Distributors, Inc., Treasurer (1/98 to present)
Jackson National Financial Services, LLC, President and Managing Board Member
(3/98 to present)
Jackson National Life Insurance Company, Executive Vice President
(7/98 to present)
Jackson National Life Insurance Company, Chief Financial Officer
(12/97 to present) Jackson National Life Insurance Company,
Senior Vice President (6/94 to 7/98)
National Planning Corporation, Vice President (5/98 to 7/98)
Jackson National Life Distributors, Inc., Chief Financial Officer and Vice
President (7/97 to present)
National Planning Corporation, Director (6/97 to present)
Jackson National Financial Services, Inc., Chief Executive Officer and President
(7/97 to 5/98)
Countrywide Credit, Executive Vice President (3/92 to 6/94)
JOSEPH FRAUENHEIM (Age 65), 1405 Cambridge, Lansing, MI 48911
Trustee of the Trust and Member of the Board of Managers of each of the other
funds in the Fund Complex
Consultant (1991 to present)
ROBERT A. FRITTS* (Age 51) 5901 Executive Drive, Lansing, Michigan 48911
Trustee of the Trust and Member of the Board of Managers of each of the other
funds in the Fund Complex
Vice President, Treasurer and Chief Financial Officer of the Trust and each of
the other funds in the Fund Complex
JNL Series Trust, Assistant Treasurer (2/96 to 8/97)
JNL Series Trust, Assistant Secretary (12/94 to 2/96)
Jackson National Life Insurance Company, Vice President and Controller
(8/82 to present)
THOMAS J. MEYER (Age 53) 5901 Executive Drive, Lansing, Michigan 48911
Vice President, Secretary and Counsel of the Trust and each of the other funds
in the Fund Complex
Jackson National Life Insurance Company, Senior Vice President (7/98 to present)
Jackson National Life Insurance Company, Secretary (9/94 to present)
Jackson National Life Insurance Company, General Counsel (3/85 to present)
Jackson National Life Insurance Company, Vice President (3/85 to 7/98)
RICHARD MCLELLAN (Age 58), 1191 Carriageway North, East Lansing, MI 48823
Trustee of the Trust and Member of the Board of Managers of each of the other
funds in the Fund Complex
Dykema Gossett PLLC, Attorney
PETER MCPHERSON (Age 59), 1 Abbott Road, East Lansing, MI 48824
Trustee of the Trust and Member of the Board of Managers of each of the other
funds in the Fund Complex
Michigan State University, President (10/93 to present)
MARK D. NERUD (Age 33) 225 West Wacker Drive, Suite 1200, Chicago, IL 60606
Vice President and Assistant Treasurer of the Trust and each of the other funds
in the Fund Complex
Jackson National Financial Services, LLC, Chief Financial Officer
(3/98 to present)
Jackson National Financial Services, LLC, Managing Board Member
(3/98 to present)
National Planning Corporation, Vice President (5/98 to present)
Jackson National Life Distributors, Inc., Chief Operating Officer
(7/97 to present)
Jackson National Financial Services, Inc., Director (1/98 to 5/98)
Jackson National Financial Services, Inc., Chief Operating Officer
(6/97 to 5/98)
Jackson National Financial Services, Inc., Treasurer (6/97 to 5/98)
Jackson National Life Insurance Company, Vice President - Fund Accounting &
Administration (1/00 to present)
Jackson National Life Insurance Company, Assistant Vice President - Mutual Fund
Operations (4/97 to 12/99)
Jackson National Life Insurance Company, Assistant Controller (10/96 to 4/97)
Jackson National Life Insurance Company, Senior Manager - Mutual Fund Operations
(4/96 to 10/96)
Voyageur Asset Management Company, Manager - Mutual Fund Accounting
(5/93 to 4/96)
SUSAN S. MIN (Age 28), 5901 Executive Drive, Lansing, MI 48911
Assistant Secretary of the Trust and each of the other funds in the Fund Complex
Jackson National Financial Services, LLC, Secretary
Jackson National Life Insurance Company, Senior Attorney (1/00 to present)
Goldman, Sachs & Co., Associate (10/99 to 12/99)
Van Eck Associates Corporation, Staff Attorney (9/97 to 10/99)
- -----------
*Trustees who are interested persons as defined in the Investment Company Act of
1940.
As of January 20, 2000, the officers and trustees of the Trust, as a
group, owned less than 1% of the then outstanding shares of the Trust. To the
extent required by applicable law, Jackson National Life Insurance Company will
solicit voting instructions from owners of variable insurance or variable
annuity contracts. All shares of each Series of the Trust will be voted by
Jackson National Life Insurance Company in accordance with voting instructions
received from such variable contract owners. Jackson National Life Insurance
Company will vote all of the shares which it is entitled to vote in the same
proportion as the voting instructions given by variable contract owners, on the
issues presented, including shares which are attributable to Jackson National
Life Insurance Company's interest in the Trust.
The trustees who are "interested persons" and officers as designated
above receive no compensation from the Trust. Disinterested Trustees will be
paid $5,000 for each meeting of the Board of Trustees that they attend. The fees
to the disinterested Trustees are divided among the funds in the Fund Complex
based on their relative size.
For the year ended December 31, 1999, the disinterested Trustees received the
following fees from the Trust for service as Trustee:
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION FROM THE PENSION OR RETIREMENT BENEFITS
TRUSTEE ADVISER ACCRUED AS PART OF TRUST EXPENSES
<S> <C> <C>
Joseph Frauenheim $16,000 $0
Richard McLellan $16,000 0
Peter McPherson $16,000 0
</TABLE>
PERFORMANCE
A Series' historical performance may be shown in the form of total
return and yield. These performance measures are described below. Performance
advertised for a Series may or may not reflect the effect of any charges that
are imposed under a variable annuity contract (Contract) that is funded by the
Trust. Such charges, described in the prospectus for the Contract, will have the
effect of reducing a Series' performance.
Standardized average annual total return and non-standardized total
return measure both the net investment income generated by, and the effect of
any realized and unrealized appreciation or depreciation of, the underlying
investments of a Series. Yield is a measure of the net investment income per
share earned over a specific one month or 30-day period (seven-day period for
the PPM America/JNL Money Market Series) expressed as a percentage of the net
asset value.
A Series' standardized average annual total return quotation is
computed in accordance with a standardized method prescribed by rules of the
Securities and Exchange Commission (SEC). Standardized average annual total
return shows the percentage rate of return of a hypothetical initial investment
of $1,000 for the most recent one-, five- and ten-year periods, or for a period
covering the time the Series has been in existence if the Series has not been in
existence for one of the prescribed periods. Because average annual total
returns tend to smooth out variations in the Series' returns, you should
recognize that they are not the same as actual year-by-year results. The
standardized average annual total return for a Series for a specific period is
found by first taking a hypothetical $1,000 investment (initial investment) in
the Series' shares on the first day of the period, adjusting to deduct the
applicable charges, if any, and computing the redeemable value of that
investment at the end of the period. The redeemable value is then divided by the
initial investment, and this quotient is taken to the Nth root (N representing
the number of years in the period) and 1 is subtracted from the result, which is
then expressed as a percentage. The calculation assumes that all income and
capital gains dividends paid by the Series have been reinvested at net asset
value on the reinvestment dates during the period.
The standardized average annual total return for each Series for the
periods indicated was as follows:
<TABLE>
<CAPTION>
One-Year Period Commencement of
Ended December 31, Operations to
1999 December 31, 1999
---- -----------------
<S> <C> <C>
JNL/Alger Growth Series** 33.80% 27.08%
JNL/Alliance Growth Series**** 28.23% 33.64%
JNL/Eagle Core Equity Series*** 23.55% 23.96%
JNL/Eagle SmallCap Equity Series*** 19.27% 19.09%
JNL/J.P. Morgan International & Emerging Markets Series**** 38.02% 18.38%
JNL/J.P. Morgan Enhanced S&P 500 Stock Index Series**** N/A 6.85%
JNL/Janus Aggressive Growth Series* 94.43% 42.10%
JNL/Janus Capital Growth Series* 124.19% 44.09%
JNL/Janus Global Equities Series* 64.58% 36.45%
JNL/Janus Growth & Income Series****** 4.98% -2.64%
JNL/PIMCO Total Return Bond Series**** -0.26% 2.92%
JNL/Putnam Growth Series* 29.41% 30.51%
JNL/Putnam International Equity Series******* 32.11% 14.78%
JNL/Putnam Value Equity Series* -1.04% 16.96%
JNL/S&P Conservative Growth Series I***** 19.52% 13.85%
JNL/S&P Moderate Growth Series I***** 26.74% 18.75%
JNL/S&P Aggressive Growth Series I***** 35.38% 25.02%
JNL/S&P Very Aggressive Growth Series I***** 48.86% 33.84%
JNL/S&P Equity Growth Series I***** 43.19% 27.72%
JNL/S&P Equity Aggressive Growth Series I***** 45.25% 29.67%
JNL/S&P Conservative Growth Series II***** 16.14% 6.14%
JNL/S&P Moderate Growth Series II***** 22.77% 14.10%
JNL/S&P Aggressive Growth Series II***** 28.66% 16.11%
JNL/S&P Very Aggressive Growth Series II***** 42.42% 28.44%
JNL/S&P Equity Growth Series II***** 36.29% 19.99%
JNL/S&P Equity Aggressive Growth Series II***** 39.61% 23.92%
Lazard/JNL Mid Cap Value Series**** 4.77% -1.78%
Lazard/JNL Small Cap Value Series**** 1.96% -6.27%
PPM America/JNL Balanced Series* -0.11% 11.64%
PPM America/JNL Money Market Series* 4.67% 4.93%
PPM America/JNL High-Yield Bond Series* 1.09% 8.32%
Salomon Brothers/JNL Balanced Series**** 0.09% 3.23%
Salomon Brothers/JNL Global Bond Series* 1.87% 7.79%
Salomon Brothers/JNL High-Yield Bond Series**** -1.76% -0.25%
Salomon Brothers/JNL U.S. Government & Quality Bond Series* -2.50% 5.42%
T. Rowe Price/JNL Established Growth Series* 21.77% 26.74%
T. Rowe Price/JNL Mid-Cap Growth Series* 24.01% 25.27%
</TABLE>
* Commenced operations on May 15, 1995.
** Commenced operations on October 16, 1995.
*** Commenced operations on September 16, 1996.
**** Commenced operations on March 2, 1998. Performance figures are not
annualized.
***** The JNL/S&P Conservative Growth Series I commenced operations on
April 9, 1998; the JNL/S&P Moderate Growth Series I commenced operations on
April 8, 1998; the JNL/S&P Aggressive Growth Series I commenced operations on
April 8, 1998; the JNL/S&P Very Aggressive Growth Series I commenced operations
on April 1, 1998; the JNL/S&P Equity Growth Series I commenced operations on
April 13, 1998; the JNL/S&P Equity Aggressive Growth Series I commenced
operations on April 15, 1998; the JNL/S&P Conservative Growth Series II
commenced operations on April 13, 1998; the JNL/S&P Moderate Growth Series II
commenced operations on April 13, 1998; the JNL/S&P Aggressive Growth Series II
commenced operations on April 13, 1998; the JNL/S&P Very Aggressive Growth
Series II commenced operations on April 13, 1998; the JNL/S&P Equity Growth
Series II commenced operations on April 13, 1998; the JNL/S&P Equity Aggressive
Growth Series II commenced operations on April 13, 1998 and the JNL/J.P. Morgan
Enhanced S&P 500 Index Series commenced operations on May 16, 1999. Performance
figures are not annualized.
****** Commenced operations on March 2, 1998. As of the effective date
of this Statement of Additional Information, Janus Capital Corporation (Janus)
has replaced Goldman Sachs Asset Management as the sub-adviser to this Series.
In addition, certain investment policies, practices and strategies have been
changed to reflect the management style of Janus, the new sub-adviser. The
Advisory fees have also been changed. Given these changes, the performance
information shown below is not indicative in any manner of how the Series will
perform in the future.
******* Commenced operations on May 15, 1995. As of the effective date
of this Statement of Additional Information, Putnam Investment Management, Inc.
has replaced Rowe-Price Fleming International, Inc. as the sub-adviser to this
Series. Therefore, the performance information shown below is not indicative in
any manner of how the Series will perform in the future.
The JNL/S&P Conservative Growth Series, the JNL/S&P Moderate Growth
Series, the JNL/S&P Aggressive Growth Series, the JNL Enhanced Intermediate Bond
Index Series, the JNL International Index Series, the JNL Russell 2000 Index
Series, the JNL S&P 500 Index Series, and the JNL S&P MidCap Index Series were
not in operation in 1999. Prior to May 1, 1997, the PPM America/JNL Balanced
Series was the JNL/Phoenix Investment Counsel Balanced Series and was
sub-advised by Phoenix Investment Counsel Inc., the JNL/Putnam Growth Series was
the JNL/Phoenix Investment Counsel Growth Series and was sub-advised by Phoenix
Investment Counsel, Inc., and the JNL/Putnam Value Equity Series was the PPM
America/JNL Value Equity Series and was sub-advised by PPM America, Inc.
A Series' 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 magnified performance impact on a Series with a
small asset base. A Series may not experience similar performance as its assets
grow.
The standardized average annual total return quotations will be current
to the last day of the calendar quarter preceding the date on which an
advertisement is submitted for publication. The standardized average annual
total return will be based on rolling calendar quarters and will cover at least
periods of one, five and ten years, or a period covering the time the Series has
been in existence, if it has not been in existence for one of the prescribed
periods.
Non-standardized total return may also be advertised. Non-standardized
total return may be for periods other than those required to be presented or may
otherwise differ from standardized average annual total return. Non-standardized
total return for a specific period is calculated by first taking an investment
(initial investment) in the Series' shares on the first day of the period and
computing the end value of that investment at the end of the period. The total
return percentage is then determined by subtracting the initial investment from
the ending value and dividing the remainder by the initial investment and
expressing the result as a percentage. The calculation assumes that all income
and capital gains dividends paid by the Series have been reinvested at net asset
value on the reinvestment dates during the period. Non-standardized total return
may also be shown as the increased dollar value of the hypothetical investment
over the period.
Quotations of standardized average annual total return and
non-standardized total return are based upon historical earnings and will
fluctuate. Any quotation of performance, therefore, should not be considered a
guarantee of future performance. Factors affecting the performance of a Series
include general market conditions, operating expenses and investment management.
The yield for a Series other than the PPM America/JNL Money Market
Series is computed in accordance with a standardized method prescribed by the
rules of the SEC. The yield is calculated by assuming that the income generated
by the investment during that 30-day period is generated each 30-day period over
a 12-month period and is shown as a percentage of the investment. Under this
method, yield is computed by dividing the net investment income per share earned
during the specified one month or 30-day period by the offering price per share
on the last day of the period, according to the following formula:
[OBJECT OMITTED]
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the offering price (net asset value) per share on the last day of
the period.
The yield for the 30-day period ended December 31, 1999, for each of
the referenced Series was as follows:
JNL/PIMCO Total Return Bond Series ............................. 6.10%
PPM America/JNL Balanced Series ................................ 3.83%
PPM America/JNL High-Yield Bond Series ......................... 10.21%
Salomon Brothers/JNL Balanced Series ........................... 2.96%
Salomon Brothers/JNL Global Bond Series ........................ 8.12%
Salomon Brothers/JNL High-Yield Bond Series .................... 9.71%
Salomon Brothers/JNL U.S. Government & Quality Bond Series ..... 6.22%
In computing the foregoing yield, the Series follow certain
standardized accounting practices specified by SEC rules. These practices are
not necessarily consistent with those that the Series use to prepare annual and
interim financial statements in accordance with generally accepted accounting
principles.
The PPM America/JNL Money Market Series' yield is also computed in
accordance with a standardized method prescribed by rules of the SEC. This
Series' yield is a measure of the net dividend and interest income earned over a
specific seven-day period expressed as a percentage of the offering price of the
Series. The yield is an annualized figure, which means that it is assumed that
the Series generates the same level of net income over a 52-week period. Under
this method, the current yield quotation is based on a seven-day period and is
computed as follows. The first calculation is net investment income per share;
which is accrued interest on portfolio securities, plus or minus amortized
discount or premium, less accrued expenses. This number is then divided by the
price per share (expected to remain constant at $1.00) at the beginning of the
period (base period return). The result is then divided by 7 and multiplied by
365 and the resulting yield figure is carried to the nearest one-hundredth of
one percent. Realized capital gains or losses and unrealized appreciation or
depreciation of investments are not included in the calculation. The PPM
America/JNL Money Market Series' yield for the seven-day period ended December
31, 1999, was 5.37%.
The PPM America/JNL Money Market Series' effective yield is determined
by taking the base period return (computed as described above) and calculating
the effect of assumed compounding. The formula for the effective yield is: (base
period return + 1)365/7 - 1. The PPM America/JNL Money Market Series' effective
yield for the seven-day period ended December 31, 1999, was 5.52%.
A Series' performance quotations are based upon historical results and
are not necessarily representative of future performance. The Series' shares are
sold at net asset value. Returns and net asset value will fluctuate, except that
the PPM America/JNL Money Market Series seeks to maintain a $1.00 net asset
value per share. Factors affecting a Series' performance include general market
conditions, operating expenses and investment management. Shares of a Series are
redeemable at the then current net asset value, which may be more or less than
original cost.
The performance of the Series may be compared to the performance of
other mutual funds or mutual fund indices with similar objectives and policies
as reported by Lipper Analytical Services, Inc. (Lipper), CDA Investment
Technologies, Inc. (CDA) or Donoghue's Money Fund Report. Lipper and CDA
performance calculations are based upon changes in net asset value with all
dividends reinvested and do not include the effect of any sales charges. A
Series' performance may also be compared to that of the Consumer Price Index or
various unmanaged stock and bond indices including, but not limited to the
Consumer Price Index, the Standard & Poor's 500 Index, the Standard & Poor's
MidCap 400 Index, the Morgan Stanley Capital International All Country World
Free (ex-U.S.) Index, the Morgan Stanley Capital International World Index, the
Lehman Brothers Aggregate Bond Index, the Lehman Brothers High-Yield Index, the
Merrill Lynch Treasury Bill Index (3 month), the Salomon Smith Barney Broad
Investment Grade Bond Index, the Salomon Smith Barney High Yield Market Index,
the Salomon Brothers Treasury Index, the Russell 2000 Index, the Russell Midcap
Index, the Morgan Stanley Europe and Australasia, Far East Equity Index, the S&P
Micropal Asset Allocation USA Income Funds Sector Index, or the S&P Micropal
Asset Allocation USA Balanced Funds Sector Index,. No adjustments are made for
taxes payable on dividends. Lipper and CDA are widely recognized independent
mutual fund reporting services. Lipper and CDA indices are weighted performance
averages of other mutual funds with similar investment objectives.
From time to time, a Series also may quote information from
publications including, but not limited to, the following: Morningstar, Inc.,
The Wall Street Journal, Money Magazine, Forbes, Barron's, The New York Times,
USA Today, Institutional Investor and Registered Representative. Also, investors
may want to compare the historical returns of various investments, performance
indices of those investments or economic indicators, including but not limited
to stocks, bonds, certificates of deposit and other bank products, money market
funds and U.S. Treasury obligations. Certain of these alternative investments
may offer fixed rates of return and guaranteed principal, and may be insured.
Economic indicators may include, without limitation, indicators of market rate
trends and cost of funds, such as Federal Home Loan Bank Board 11th District
Cost of Funds Index (COFI).
The net asset values and returns of the Series will fluctuate. Shares
of a Series are redeemable by an investor at the then current net asset value,
which may be more or less than original cost.
A Series may periodically advertise tax-deferred compounding charts and
other hypothetical illustrations.
INVESTMENT ADVISER AND OTHER SERVICES
Jackson National Financial Services, LLC ("JNFS"), 5901 Executive
Drive, Lansing, Michigan 48911, is the investment adviser to the Trust. As
investment adviser, JNFS provides the Trust with professional investment
supervision and management. JNFS is a wholly owned subsidiary of Jackson
National Life Insurance Company, which is in turn wholly owned by Prudential
plc, a life insurance company in the United Kingdom.
JNFS acts as investment adviser to the Trust pursuant to an Amended
Investment Advisory and Management Agreement. Prior to July 1, 1998, Jackson
National Financial Services, Inc., an affiliate of JNFS, acted as investment
adviser to the Trust. Jackson National Financial Services, Inc. transferred the
Amended Investment Advisory and Management Agreement, all related investment
management duties and its related professional staff to JNFS on July 1, 1998,
with the approval of the Board of Trustees of the Trust.
The Amended Investment Advisory and Management Agreement continues in
effect for each Series from year to year after its initial two-year term so long
as its continuation is approved at least annually by (i) a majority of the
Trustees who are not parties to such agreement or interested persons of any such
party except in their capacity as Trustees of the Trust, and (ii) the
shareholders of the affected Series or the Board of Trustees. It may be
terminated at any time upon 60 days notice by either party, or by a majority
vote of the outstanding shares of a Series with respect to that Series, and will
terminate automatically upon assignment. Additional Series may be subject to a
different agreement. The Amended Investment Advisory and Management Agreement
provides that JNFS shall not be liable for any error of judgment, or for any
loss suffered by the Series in connection with the matters to which the
agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of JNFS in the performance of its obligations
and duties, or by reason of its reckless disregard of its obligations and duties
under the agreement. As compensation for its services, the Trust pays JNFS a fee
as described in the Prospectus. The fees paid by the Trust to Jackson National
Financial Services, Inc. pursuant to the Amended Investment Advisory and
Management Agreement for the fiscal year ended December 31, 1997 were
$7,264,087, and for the period from January 1, 1998 to June 30, 1998 were
$6,458,387. The fees paid by the Trust to JNFS pursuant to the Amended
Investment Advisory and Management Agreement from July 1, 1998 to December 31,
1998 and for the fiscal year ended December 31, 1999 were $7,786,576 and
$26,522,400, respectively.
In addition to providing the services described above, JNFS selects,
contracts with and compensates sub-advisers to manage the investment and
reinvestment of the assets of the Series of the Trust. JNFS monitors the
compliance of such sub-advisers with the investment objectives and related
policies of each Series and reviews the performance of such sub-advisers and
reports periodically on such performance to the Trustees of the Trust.
Alliance Capital Management L.P. (Alliance), with principal offices at
1345 Avenue of the Americas, New York, New York 10105, serves as sub-adviser to
the JNL/Alliance Growth Series. Alliance's clients are primarily major corporate
employee benefit funds, investment companies, foundations, endowment funds and
public employee retirement systems.
Eagle Asset Management, Inc. (Eagle), 880 Carillon Parkway, St.
Petersburg, Florida 33716, serves as sub-adviser to the JNL/Eagle Core Equity
Series and the JNL/Eagle SmallCap Equity Series. Eagle is a wholly owned
subsidiary of Raymond James Financial, Inc., which, together with its
subsidiaries, provides a wide range of financial services to retail and
institutional clients.
Fred Alger Management, Inc. (Alger Management), which is located at 1
World Trade Center, Suite 9333, New York, New York 10048, serves as sub-adviser
to the JNL/Alger Growth Series. Alger Management is generally engaged in the
business of rendering investment advisory services to institutions and, to a
lesser extent, individuals. Alger Management has been engaged in the business of
rendering investment advisory services since 1964. Alger Management is a wholly
owned subsidiary of Fred Alger & Company, Incorporated which in turn is a wholly
owned subsidiary of Alger Associates, Inc., a financial services holding
company. Fred M. Alger III and his brother, David D. Alger are majority
shareholders of Alger Associates, Inc. and may be deemed to control that company
and its subsidiaries.
J.P. Morgan Investment Management Inc. (J.P. Morgan), with principal
offices at 522 Fifth Avenue, New York, New York 10036, serves as sub-adviser to
the JNL/J.P. Morgan Enhanced S&P 500 Stock Index Series and the JNL/J.P. Morgan
International & Emerging Markets Series. J.P. Morgan is a wholly-owned
subsidiary of J.P. Morgan & Co. Incorporated, a bank holding company that also
owns Morgan Guaranty Trust Company, J.P. Morgan Securities Inc. and J.P. Morgan
Futures Inc. J.P. Morgan and its affiliates offer a wide range of services to
governmental, institutional, corporate and individual customers and act as
investment advisor to individual and institutional customers.
Janus Capital Corporation (Janus Capital), a Colorado corporation with
principal offices at 100 Fillmore Street, Denver, Colorado 80206, serves as
sub-adviser to the JNL/Janus Aggressive Growth Series, the JNL/Janus Balanced
Series, the JNL/Janus Capital Growth Series, the JNL/Janus Global Equities
Series, and the JNL/Janus Growth & Income Series. Kansas City Southern
Industries, Inc. (KCSI) indirectly through its wholly-owned subsidiary, Stilwell
Financial, Inc., owns approximately 82% of the outstanding voting stock of Janus
Capital. KCSI is a publicly-traded holding company whose primary subsidiaries
are engaged in transportation and financial services. Thomas H. Bailey,
President and Chairman of the Board of Janus Capital, owns approximately 12% of
its voting stock and, by agreement with KCSI, selects a majority of Janus
Capital's Board. KCSI has announced its intention to separate its transportion
and financial services businesses. KCSI anticipates the separation to be
completed in the first half of 2000.
Lazard Asset Management (Lazard), 30 Rockefeller Plaza, New York, New
York 10112, serves as sub-adviser to the Lazard/JNL Mid Cap Value Series and the
Lazard/JNL Small Cap Value Series. Lazard is a division of Lazard Freres & Co.
LLC (Lazard Freres), a New York limited liability company, which is registered
as an investment adviser with the SEC and is a member of the New York, American
and Chicago Stock Exchanges. Lazard Freres provides its clients with a wide
variety of investment banking, brokerage and related services. Its clients are
both individuals and institutions.
Pacific Investment Management Company (PIMCO), located at 840 Newport
Center Drive, Suite 300, Newport Beach, California 92660, serves as sub-adviser
to the JNL/PIMCO Total Return Bond Series. PIMCO is an investment counseling
firm founded in 1971. PIMCO is a subsidiary of PIMCO Advisors L.P. (PIMCO
Advisors). The general partners of PIMCO Advisors are PIMCO Partners, G.P. and
PIMCO Advisors Holdings L.P. (PAH). PIMCO Partners, G.P. is a general
partnership between PIMCO Holding LLC, a Delaware limited liability company and
indirect wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO
Partners LLC, a California limited liability company controlled by the PIMCO
Managing Directors. PIMCO Partners, G.P. is the sole general partner of PAH. On
October 1, 1999, an Implementation and Merger Agreement ("Merger Agreement") was
entered into with Allianz of America ("Allianz"). The Merger Agreement provided
for the acquisition of 70% of PAH by Allianz through a merger of a subsidiary of
Allianz with and into PAH. PIMCO may, from time to time, seek research
assistance and rely on other management resources of its affiliated companies. A
portion of the sub-advisory fees received by PIMCO may be paid to those
affiliates in return for such services provided.
PPM America, Inc. (PPM), which is located at 225 West Wacker Drive,
Suite 1200, Chicago, Illinois 60606, serves as sub-adviser to the PPM
America/JNL Balanced Series, the PPM America/JNL High Yield Bond Series and the
PPM America/JNL Money Market Series. PPM, an affiliate of JNFS, is a wholly
owned subsidiary of Prudential Portfolio Managers Ltd., (PPM Ltd.) an investment
management company engaged in global money management, which is in turn wholly
owned by Prudential Corporation plc.
Putnam Investment Management, Inc. (Putnam), located at One Post Office
Square, Boston, Massachusetts 02109, serves as sub-adviser to the JNL/Putnam
Growth Series, the JNL/Putnam International Equity Series, the JNL/Putnam Value
Equity Series, and the JNL/Putnam Midcap Growth Series. Putnam has been managing
mutual funds since 1937. Putnam is a subsidiary of Putnam Investment, Inc.,
which is owned by Marsh & McLennan Companies, Inc., a publicly-owned holding
company whose principal businesses are international insurance and reinsurance
brokerage, employee benefit consulting and investment management.
Salomon Brothers Asset Management Inc (SBAM), located at 7 World Trade
Center, New York, New York 10048, serves as sub-adviser to the Salomon
Brothers/JNL Balanced Series, the Salomon Brothers/JNL Global Bond Series, the
Salomon Brothers/JNL High Yield Bond Series and the Salomon Brothers/JNL U.S.
Government & Quality Bond Series. SBAM is an indirect wholly owned subsidiary of
Citigroup Inc. SBAM was incorporated in 1987, and, together with affiliates in
London, Frankfurt, Tokyo and Hong Kong, SBAM provides a broad range of fixed
income and equity investment advisory services to various individual and
institutional clients located throughout the world and serves as sub-advisor to
various investment companies.
In connection with SBAM's service as sub-adviser to the Salomon
Brothers/JNL Global Bond Series, SBAM Limited, whose business address is
Victoria Plaza, 111 Buckingham Palace Road, London SW1W OSB, England, provides
certain sub-advisory services to SBAM relating to currency transactions and
investments in non-dollar denominated debt securities for the benefit of the
Series. SBAM Limited is compensated by SBAM at no additional expense to the
Trust. Like SBAM, SBAM Limited is an indirect, wholly owned subsidiary of
Citigroup Inc. SBAM Limited is a member of the Investment Management Regulatory
Organization Limited in the United Kingdom and is registered as an investment
adviser in the United States pursuant to the Investment Advisers Act of 1940, as
amended.
Standard & Poor's Investment Advisory Services, Inc. (SPIAS), located
at 25 Broadway, New York, New York 10004, serves as sub-adviser to the 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, JNL/S&P
Conservative Growth Series II, JNL/S&P Moderate Growth Series II, JNL/S&P
Aggressive Growth Series II, JNL/S&P Very Aggressive Growth Series II, JNL/S&P
Equity Growth Series II, JNL/S&P Equity Aggressive Growth Series II, JNL/S&P
Conservative Growth Series, JNL/S&P Moderate Growth Series and JNL/S&P
Aggressive Growth Series. SPIAS was established in 1995 to provide investment
advice to the financial community. SPIAS is a subsidiary of The McGraw-Hill
Companies, Inc. and is affiliated with S&P. SPIAS operates independently of and
has no access to analysis or other information supplied or obtained by S&P in
connection with its ratings business, except to the extent such information is
made available by S&P to the general public.
T. Rowe Price Associates, Inc. (T. Rowe), located at 100 East Pratt
Street, Baltimore, Maryland 21202, serves as sub-adviser to the T. Rowe
Price/JNL Established Growth Series, the T. Rowe Price/JNL Mid-Cap Growth
Series, and the T. Rowe Price/JNL Value Series. T. Rowe was founded in 1937 by
the late Thomas Rowe Price, Jr.
As compensation for their services, the sub-advisers receive fees from
JNFS computed separately for each Series. The fee for each Series is stated as
an annual percentage of the net assets of such Series. The fees are calculated
based on the average net assets of each Series. The following is a schedule of
the management fees JNFS currently is obligated to pay the sub-advisers out of
the advisory fee it receives from the Series as described elsewhere in this SAI
and the Prospectus:
<TABLE>
<CAPTION>
SERIES ASSETS FEES
------ ------ ----
<S> <C> <C>
JNL/Alger Growth Series.............................. $0 to $300 million...................... .55%
$300 million to $500 million............ .50%
Over $500 million....................... .45%
JNL/Alliance Growth Series........................... $0 to $250 million...................... .35%
Over $250 million....................... .25%
JNL/Eagle Core Equity Series......................... $0 to $50 million....................... .45%
$50 million to $300 million............. .40%
Over $300 million....................... .30%
JNL/Eagle SmallCap Equity Series..................... $0 to $150 million...................... .50%
$150 million to $500 million............ .45%
Over $500 million....................... .40%
JNL/J.P. Morgan Enhanced S&P 500 Stock Index Series.. $0 to $25 million....................... .35%
Over $25 million........................ .30%
JNL/J.P. Morgan International & Emerging Markets Series.... $0 to $50 million....................... .55%
$50 million to $200 million............. .50%
$200 million to $350 million............ .45%
Over $350 million....................... .40%
JNL/Janus Aggressive Growth Series................... $0 to $100 million...................... .55%
$100 million to $500 million............ .50%
Over $500 million....................... .45%
JNL/Janus Balanced Series............................ $0 to $100 million...................... .55%
$100 million to $500 million............ .50%
Over $500 million....................... .45%
JNL/Janus Capital Growth Series...................... $0 to $100 million...................... .55%
$100 million to $500 million............ .50%
Over $500 million....................... .45%
JNL/Janus Global Equities Series..................... $0 to $100 million...................... .55%
$100 million to $500 million............ .50%
Over $500 million....................... .45%
JNL/Janus Growth & Income Series..................... $0 to $100 million...................... .55%
$100 million to $500 million............ .50%
Over $500 million....................... .45%
JNL/PIMCO Total Return Bond Series................... all assets.............................. .25%
JNL/Putnam Growth Series............................. $0 to $150 million...................... .50%
$150 million to $300 million............ .45%
Over $300 million....................... .35%
JNL/Putnam International Equity Series............... $0 to $150 million...................... .65%
$150 million to $300 million............ .55%
Over $300 million....................... .45%
JNL/Putnam Value Equity Series....................... $0 to $150 million...................... .50%
$150 million to $300 million............ .45%
Over $300 million....................... .35%
JNL/Putnam Midcap Growth Series...................... $0 to $250 million...................... .50%
Over $250 million...................... .45%
JNL/S&P Conservative Growth Series I................. $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Moderate Growth Series I..................... $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Aggressive Growth Series I................... $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Very Aggressive Growth Series I.............. $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Equity Growth Series I....................... $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Equity Aggressive Growth Series I............ $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Conservative Growth Series II................ $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Moderate Growth Series II.................... $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Aggressive Growth Series II.................. $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Very Aggressive Growth Series II............. $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Equity Growth Series II...................... $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Equity Aggressive Growth Series II........... $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Conservative Growth Index Series............. $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Moderate Growth Index Series................. $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL/S&P Aggressive Growth Index Series............... $0 to $500 million...................... .10%
Over $500 million....................... .075%
JNL Enhanced Intermediate Bond Index Series.......... all assets.............................. .20%
JNL International Index Series....................... all assets.............................. .15%
JNL Russell 2000 Index Series........................ all assets.............................. .05%
JNL S&P 500 Index Series............................. all assets.............................. .05%
JNL S&P MidCap Index Series.......................... all assets.............................. .05%
Lazard/JNL Mid Cap Value Series...................... $0 to $50 million....................... .55%
$50 million to $150 million............. .525%
$150 million to $300 million............ .475%
Over $300 million....................... .45%
Lazard/JNL Small Cap Value Series.................... $0 to $50 million....................... .625%
$50 million to $150 million............. .575%
$150 million to $300 million............ .525%
Over $300 million....................... .475%
PPM America/JNL Balanced Series...................... $0 to $50 million....................... .25%
$50 million to $150 million............. .20%
$150 million to $300 million............ .175%
$300 million to $500 million............ .15%
Over $500 million....................... .125%
PPM America/JNL High Yield Bond Series............... $0 to $50 million....................... .25%
$50 million to $150 million............. .20%
$150 million to $300 million............ .175%
$300 million to $500 million............ .15%
Over $500 million....................... .125%
PPM America/JNL Money Market Series.................. $0 to $50 million....................... .20%
$50 million to $150 million............. .15%
$150 million to $300 million............ .125%
$300 million to $500 million............ .10%
Over $500 million....................... .075%
Salomon Brothers/JNL Balanced Series................. $0 to $50 million....................... .35%
$50 million to $100 million............. .30%
Over $100 million....................... .25%
Salomon Brothers/JNL Global Bond Series.............. $0 to $50 million....................... .375%
$50 million to $150 million............. .35%
$150 million to $500 million............ .30%
Over $500 million....................... .25%
Salomon Brothers/JNL High Yield Bond Series.......... $0 to $50 million....................... .35%
$50 million to $100 million............. .30%
Over $100 million....................... .25%
Salomon Brothers/JNL U.S. Government & Quality Bond Series. $0 to $150 million...................... .225%
$150 million to $300 million............ .175%
$300 million to $500 million............ .15%
Over $500 million....................... .10%
T. Rowe Price/JNL Established Growth Series.......... $0 to $20 million....................... .45%
$20 million to $50 million.............. .40%
Over $50 million........................ .40%*
T. Rowe Price/JNL Mid-Cap Growth Series.............. $0 to $20 million....................... .60%
$20 million to $50 million.............. .50%
Over $50 million........................ .50%*
T. Rowe Price/JNL Value Series....................... $0 to $50 million....................... .50%
Over $50 million........................ .40%
</TABLE>
* When average net assets exceed this amount, the sub-advisory fee asterisked
is applicable to all amounts in this Series.
The sub-advisory fees payable by JNFS to a sub-adviser may be reduced
as agreed to by the parties from time to time. With respect to the Salomon
Brothers/JNL Global Bond Series and in connection with the advisory consulting
agreement between Salomon Brothers and SBAM Limited, Salomon Brothers will pay
SBAM Limited, as full compensation for all services provided under the advisory
consulting agreement, a portion of its investment management fee. The amount
payable to SBAM Limited will be equal to the fee payable under Salomon Brothers'
sub-advisory agreement multiplied by the portion of the assets of the Series
that SBAM Limited has been delegated to manage divided by the current value of
the net assets of the Series.
Subject to the supervision of JNFS and the Trustees pursuant to
investment sub-advisory agreements entered into between JNFS and each of the
sub-advisers, respectively, the sub-advisers invest and reinvest the Series'
assets consistent with the Series' respective investment objectives and
policies. The investment sub-advisory agreement continues in effect for each
Series from year to year after its initial two-year term so long as its
continuation is approved at least annually by a majority of the Trustees who are
not parties to such agreement or interested persons of any such party except in
their capacity as Trustees of the Series and by the shareholders of the affected
Series or the Board of Trustees. It may be terminated at any time upon 60 days
notice by either party, or by a majority vote of the outstanding shares of a
Series with respect to that Series, and will terminate automatically upon
assignment or upon the termination of the investment management agreement
between JNFS and the Series. Additional Series may be subject to a different
agreement. The sub-advisers are responsible for compliance with or have agreed
to use their best efforts to manage the Series to comply with the provisions of
Section 817(h) of the Code, applicable to each Series (relating to the
diversification requirements applicable to investments in underlying variable
annuity contracts).
The JNL/J.P. Morgan Enhanced S&P 500 Stock Index Series, JNL S&P 500
Index Series, and JNL S&P MidCap Index Series are not sponsored, endorsed, sold
or promoted by Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
(S&P). S&P makes no representation or warranty, express or implied, to the
owners of the Series or any member of public regarding the advisability of
investing in securities generally or in the Series particularly or the ability
of the S&P 500 Index or the S&P MidCap 400 Index to track general stock market
performance. S&P's only relationship to the Licensee is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index and the S&P MidCap
400 Index which are determined, composed and calculated by S&P without regard to
the Licensee or the Series. S&P has no obligation to take the needs of the
Licensee or the owners of the Series into consideration in determining,
composing or calculating the S&P 500 Index or the S&P MidCap 400 Index. S&P is
not responsible for and has not participated in the determination of the prices
and amount of the Series or the timing of the issuance or sale of the Series or
in the determination or calculation of the equation by which the Series is to be
converted into cash. S&P has no obligation or liability in connection with the
administration, marketing or trading of the Series.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
500 INDEX OR THE S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL
HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES
NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE,
OWNERS OF THE SERIES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500
INDEX OR THE S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO
EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
S&P 500 INDEX OR THE S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
ADMINISTRATIVE FEE. Each Series, except the JNL/] International Index Series and
each of the JNL/S&P Series, pays to JNFS an Administrative Fee of .10% of the
average daily net assets of the Series. The JNLInternational Index Series pays
an Administrative Fee of .15%. The JNL/S&P Series do not pay an Administrative
Fee. In return for the fee, JNFS provides or procures all necessary
administrative functions and services for the operation of the Series. In
addition, JNFS, at its own expense, arranges for legal, audit, fund accounting,
custody, printing and mailing, and all other services necessary for the
operation of each Series. Prior to January 1, 1999, each Series paid all of its
own operating expenses. Each Series is responsible for trading expenses
including brokerage commissions, interest and taxes, and other non-operating
expenses.
CUSTODIAN AND TRANSFER AGENT. The custodian has custody of all securities and
cash of the Trust maintained in the United States and attends to the collection
of principal and income and payment for and collection of proceeds of securities
bought and sold by the Trust.
Boston Safe Deposit and Trust Company, One Boston Place, Boston,
Massachusetts 02108, acts as custodian for the JNL/Alger Growth Series,
JNL/Alliance Growth Series, JNL/Eagle Core Equity Series, JNL/Eagle SmallCap
Equity Series, JNL/J.P. Morgan Enhanced S&P 500 Stock Index Series, JNL/J.P.
Morgan International & Emerging Markets Series, JNL/Janus Aggressive Growth
Series, JNL/Janus Balanced Series, JNL/Janus Capital Growth Series, JNL/Janus
Global Equities Series JNL/Janus Growth & Income Series, JNL/PIMCO Total Return
Bond Series, JNL/Putnam Growth Series, JNL/Putnam International Equity Series,
JNL/Putnam Midcap Growth Series, JNL/Putnam Value Equity Series, JNL Enhanced
Intermediate Bond Index Series, JNL International Index Series, JNL Russell 2000
Index Series, JNL S&P 500 Index Series, JNL S&P MidCap Index Series, Lazard/JNL
Small Cap Value Series, Lazard/JNL Mid Cap Value Series, PPM America/JNL
Balanced Series, PPM America/JNL High Yield Bond Series, PPM America/JNL Money
Market Series, Salomon Brothers/JNL Balanced Series, Salomon Brothers/JNL Global
Bond Series, Salomon Brothers/JNL High Yield Bond Series, Salomon Brothers/JNL
U.S. Government & Quality Bond Series, T. Rowe Price/JNL Established Growth
Series, T. Rowe Price/JNL Midcaap Growth Series, T. Rowe Price/JNL Value Series,
JNL Enhanced Intermediate Bond Index Series, JNL/SSGA International Index
Series, JNL Russell 2000 Index Series, JNL S&P 500 Index Series, and JNL S&P
MidCap Index Series.
The Trust acts as custodian for the 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, JNL/S&P Conservative Growth Series II, JNL/S&P
Moderate Growth Series II, JNL/S&P Aggressive Growth Series II, JNL/S&P Very
Aggressive Growth Series II, JNL/S&P Equity Growth Series II, JNL/S&P Equity
Aggressive Growth Series II, JNL/S&P Conservative Growth Series, JNL/S&P
Moderate Growth Series, and JNL/S&P Aggressive Growth Series.
JNFS is the transfer agent and dividend-paying agent for each Series of
the Trust.
INDEPENDENT ACCOUNTANTS. The Series' independent accountants,
PricewaterhouseCoopers LLP, 203 North LaSalle, Chicago, Illinois 60601, audit
and report on the Series' annual financial statements, and perform other
professional accounting, auditing and advisory services when engaged to do so by
the Series.
SERIES TRANSACTIONS AND BROKERAGE. Purchases and sales of newly issued portfolio
securities are usually principal transactions without brokerage commissions
effected directly with the issuer or with an underwriter acting as principal.
Other purchases and sales may be effected on a securities exchange or
over-the-counter, depending on where it appears that the best price or execution
will be obtained. The purchase price paid by a Series to underwriters of newly
issued securities usually includes a concession paid by the issuer to the
underwriter, and purchases of securities from dealers, acting as either
principals or agents in the after market, are normally executed at a price
between the bid and asked price, which includes a dealer's mark-up or mark-down.
Transactions on U.S. stock exchanges and some foreign stock exchanges involve
the payment of negotiated brokerage commissions. On exchanges on which
commissions are negotiated, the cost of transactions may vary among different
brokers. On most foreign exchanges, commissions are generally fixed. There is
generally no stated commission in the case of securities traded in domestic or
foreign over-the-counter markets, but the price of securities traded in
over-the-counter markets includes an undisclosed commission or mark-up. U.S.
Government Securities are generally purchased from underwriters or dealers,
although certain newly issued U.S. Government Securities may be purchased
directly from the U.S. Treasury or from the issuing agency or instrumentality.
No brokerage commissions are typically paid on purchases and sales of U.S.
Government Securities.
Transactions for a Series may be effected on foreign securities
exchanges. In transactions for securities not actively traded on a foreign
securities exchange, a Series will deal directly with the dealers who make a
market in the securities involved, except in those circumstances where better
prices and execution are available elsewhere. Such dealers usually are acting as
principal for their own account. On occasion, securities may be purchased
directly from the issuer. Such portfolio securities are generally traded on a
net basis and do not normally involve brokerage commissions. Securities firms
may receive brokerage commissions on certain portfolio transactions, including
options, futures and options on futures transactions and the purchase and sale
of underlying securities upon exercise of options.
Each Series may participate, if and when practicable, in bidding for
the purchase of securities for the Series' portfolio directly from an issuer in
order to take advantage of the lower purchase price available to members of such
a group. A Series will engage in this practice, however, only when the
sub-adviser, in its sole discretion, believes such practice to be otherwise in
the Series' interest.
The primary consideration in portfolio security transactions is "best
execution," i.e., execution at the most favorable prices and in the most
effective manner possible. JNFS and the sub-advisers always attempt to achieve
best execution and have complete freedom as to the markets in and the
broker/dealers through which they seek this result. Subject to the requirement
of seeking best execution, securities may be bought from or sold to
broker/dealers who have furnished statistical, research, and other information
or services to JNFS or the sub-advisers. In placing orders with such
broker/dealers, JNFS and the sub-advisers will, where possible, take into
account the comparative usefulness of such information. Such information is
useful to JNFS and the sub-advisers even though its dollar value may be
indeterminable and its receipt or availability generally does not reduce JNFS'
or the sub-advisers' normal research activities or expenses.
JNFS and the sub-advisers are authorized, consistent with Section 28(e)
of the Securities Exchange Act of 1934, as amended, when placing portfolio
transactions for a Series with a broker to pay a brokerage commission (to the
extent applicable) in excess of that which another broker might have charged for
effecting the same transaction on account of the receipt of research, market or
statistical information. The term "research, market or statistical information"
may include (a) advice as to (i) the value of securities, (ii) the advisability
of investing in, purchasing or selling securities, and (iii) the availability of
securities or purchasers or sellers of securities and (b) furnishing analysis
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts. Higher commissions
may be paid to firms that provide research services to the extent permitted by
law. JNFS and the sub-advisers may use this research information in managing the
Trust's assets, as well as the assets of other clients.
Pursuant to the Sub-advisory Agreements, the Sub-advisers are
responsible for placing all orders for the purchase and sale of portfolio
securities of the Trust. The Sub-advisers have no formula for the distribution
of the Trust's brokerage business, their intention being to place orders for the
purchase and sale of securities with the primary objective of obtaining the most
favorable overall results for the Trust. The cost of securities transactions for
each portfolio will consist primarily of brokerage commissions or dealer or
underwriter spreads. Bonds and money market instruments are generally traded on
a net basis and do not normally involve either brokerage commissions or transfer
taxes.
Occasionally, securities may be purchased directly from the issuer. For
securities traded primarily in the over-the-counter market, the Sub-advisers
will, where possible, deal directly with dealers who make a market in the
securities unless better prices and execution are available elsewhere. Such
dealer usually act as principals for their own account.
In selecting brokers and dealers through whom to effect transactions,
the Sub-advisers will give consideration to a number of factors, including
price, dealer spread or commission, if any, the reliability, integrity and
financial condition of the broker-dealer, size of the transaction and difficulty
of execution. Consideration of these factors by a Sub-adviser, either in terms
of a particular transaction or the Sub-adviser's overall responsibilities with
respect to the Trust and any other accounts managed by the Sub-adviser, could
result in the Trust paying a commission or spread on a transaction that is in
excess of the amount of commission or spread another broker-dealer might have
charged for executing the same transaction. In selecting brokers and dealers,
the Sub-advisers will also give consideration to the value and quality of any
research, statistical, quotation or valuation services provided by the broker or
dealer. In placing a purchase or sale order, a Sub-adviser may use a broker
whose commission in effecting the transaction is higher than that of some other
broker if the Sub-adviser determines in good faith that the amount of the higher
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker, viewed in terms of either the particular
transaction or the Sub-adviser's overall responsibilities with respect to the
Trust and any other accounts managed by the Sub-adviser. Brokerage and research
services provided by brokers and dealers include advice, either directly or
through publications or writings, as to the value of securities, the
advisability of purchasing or selling securities, the availability of securities
or purchasers or sellers of securities, and analyses and reports concerning
issuers, industries, securities, economic factors and trends and portfolio
strategy. Consistent with the foregoing considerations and the Rules of Fair
Practice of the NASD, sales of contracts for which the broker-dealer or an
affiliate thereof is responsible may be considered as a factor in the selection
of such brokers or dealers. A higher cost broker-dealer will not be selected,
however, solely on the basis of sales volume but will be selected in accordance
with the criteria set forth above.
To the extent research services are used by the Sub-advisers in
rendering investment advice to the Trust, such services would tend to reduce the
Sub-advisers' expenses. However, the Sub-advisers do not believe that an exact
dollar value can be assigned to these services. Research services received by
the Sub-advisers from brokers or dealers executing transactions for the Trust
will be available also for the benefit of other portfolios managed by the
Sub-advisers.
The Trustees periodically review the Adviser's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Series and review commissions paid by the Series over a period of
time to determine if they are reasonable in relation to the benefit to the
Series.
Any portfolio transaction for a Series may be executed through brokers
that are affiliated with the Trust, JNFS and/or sub-adviser, if, in the
sub-adviser's judgment, the use of such affiliated brokers is likely to result
in price and execution at least as favorable as those of other qualified
brokers, and if, in the transaction, the affiliated broker charges the Series a
commission rate consistent with those charged by the affiliated broker to
comparable unaffiliated customers in similar transactions. All transactions with
affiliated brokers will comply with Rule 17e-1 under the 1940 Act.
Trust portfolio transactions may be effected with broker/dealers who
have assisted investors in the purchase of Contracts. However, neither such
assistance nor sale of other investment company shares is a qualifying or
disqualifying factor in a broker/dealer's selection, nor is the selection of any
broker/dealer based on the volume of shares sold.
There may be occasions when portfolio transactions for the Trust are
executed as part of concurrent authorizations to purchase or sell the same
security for trusts or other accounts served by affiliated companies of JNFS or
the sub-advisers. Although such concurrent authorizations potentially could be
either advantageous or disadvantageous to the Trust, they are effected only when
JNFS and the sub-advisers believe that to do so is in the interest of the Trust.
When such concurrent authorizations occur the executions will be allocated in an
equitable manner.
During the periods indicated, the Series paid the following amounts in
brokerage commissions:
<TABLE>
<CAPTION>
Fiscal year ended Fiscal year ended Fiscal year ended
December 31, 1999 December 31, 1998 December 31, 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
JNL/Alger Growth Series*** $543,677 $300,075 $183,075
JNL/Alliance Growth Series***** 16,815 7,467 0
JNL/Eagle Core Equity Series**** 176,866 70,878 17,298
JNL/Eagle SmallCap Equity Series**** 38,923 59,117 33,313
JNL/J.P. Morgan International & Emerging
Markets Series***** 16,988 34,462 0
JNL/J.P. Morgan Enhanced S&P 500 Stock Index
Series* 3,495 0 0
JNL/Janus Aggressive Growth Series** 500,158 194,347 162,153
JNL/Janus Capital Growth Series** 277,576 209,026 147,014
JNL/Janus Global Equities Series** 559,149 487,399 453,347
JNL/Janus Growth & Income Series (formerly,
Goldman Sachs/JNL Growth & Income
Series)***** 23,133 12,650 0
JNL/PIMCO Total Return Bond Series***** 349 275 0
JNL/Putnam Growth Series** 323,736 169,997 181,765
JNL/Putnam International Equity Series
(formerly, T. Rowe Price/JNL International
Equity Investment Series)** 98,046 87,777 142,628
JNL/Putnam Value Equity Series** 475,590 249,514 139,522
Lazard/JNL Mid Cap Value Series***** 23,907 11,510 0
Lazard/JNL Small Cap Value Series***** 12,644 8,479 0
PPM America/JNL Balanced Series** 73,565 27,513 43,630
PPM America/JNL High Yield Bond Series** 0 4,823 0
PPM America/JNL Money Market Series** 0 0 0
Salomon Brothers/JNL Balanced Series***** 4,741 2,066 0
Salomon Brothers/JNL Global Bond Series** 0 32 0
Salomon Brothers/JNL High-Yield Bond Series***** 0 0 0
Salomon Brothers/JNL U.S. Government and
Quality Bond Series** 0 0 0
T. Rowe Price/JNL Established Growth Series** 420,664 239,877 114,988
T. Rowe Price/JNL Mid-Cap Growth Series** 350,062 195,160 164,887
</TABLE>
* Commenced operations on May 16, 1999.
** Commenced operations on May 15, 1995.
*** Commenced operations on October 16, 1995.
**** Commenced operations on September 16, 1996.
***** Commenced operations on March 2, 1998.
During the periods indicated, the Trust paid the following amounts in
brokerage commissions to affiliated broker/dealers:
<TABLE>
<CAPTION>
Period Ended December Period Ended December Period Ended
Name of Broker/Dealer 31, 1999 31, 1998 December 31, 1997
- --------------------- -------- -------- -----------------
<S> <C> <C> <C>
Fred Alger & Co., Inc. $629,057.11 $ 297,614.70 $ 181,990.33
Goldman Sachs 1,142.73 821.76 0.00
Jardine Fleming 551.77 0.00 0.00
Raymond James & Associates, Inc. 7,281.60 4,700.00 4,306.92
Robert Fleming 2,426.04 9,558.28 34,696.52
Salomon Brothers Inc. 264.00 178.00 0.00
</TABLE>
Each of the broker/dealers listed above is affiliated with the Trust
through a sub-adviser.
The percentage of the Trust's aggregate brokerage commissions paid to
affiliated broker/dealers during the period ended December 31, 1999 is as
follows:
Broker/Dealer Percentage of Aggregate Commissions
Fred Alger & Co., Inc. 15.966%
Goldman Sachs 0.030%
Jardine Fleming 0.014%
Raymond James & Associates, Inc. 0.185%
Robert Fleming 0.062%
Salomon Brothers Inc. 0.007%
As of December 31, 1999, the following Series owned securities of one
of the Trust's regular broker/dealers:
<TABLE>
<CAPTION>
Amount of
Securities
Series Broker/Dealer Owned
------ ------------- -----
<S> <C> <C>
JNL/Alger Growth Series Morgan Stanley & Co. Inc. 13,803,925
JNL/Alger Growth Series Merrill Lynch Pierce, Fenner & Smith 1,862,050
JNL/Alliance Growth Series CIT Group Holdings 202,800
JNL/Alliance Growth Series Goldman Sachs & Co. 178,956
JNL/Alliance Growth Series Merrill Lynch Pierce, Fenner & Smith 175,350
JNL/Alliance Growth Series Morgan Stanley & Co. Inc. 656,650
JNL/Janus Growth & Income Series (formerly, Goldman Morgan Stanley & Co. Inc. 57,100
Sachs/JNL Growth & Income Series)
JNL/J.P. Morgan Enhanced S&P 500 Stock Index CIT Group Holdings 4,225
JNL/J.P. Morgan Enhanced S&P 500 Stock Index Goldman, Sachs & Co. 27,314
JNL/J.P. Morgan Enhanced S&P 500 Stock Index Merrill Lynch Pierce, Fenner & Smith 25,885
JNL/PIMCO Total Return Bond Series Goldman, Sachs & Co. 116,438
JNL/PIMCO Total Return Bond Series Merrill Lynch Pierce, Fenner & Smith 252,123
JNL/PIMCO Total Return Bond Series Morgan Stanley & Co. Inc. 271,685
JNL/Putnam International Equity Series (formerly, T. Credit Suisse Group 373,702
Rowe Price/JNL International Equity Investment Series)
JNL/Putnam International Equity Series (formerly, T. HSBC Securities 387,007
Rowe Price/JNL International Equity Investment Series)
JNL/Putnam Value Equity Series J.P. Morgan Securities, Inc. 2,625,569
JNL/Putnam Value Equity Series Merrill Lynch Pierce, Fenner & Smith 1,987,718
Lazard/JNL Mid Cap Value Series CIT Group Holdings 80,275
Salomon Brothers/JNL Balanced Series Donaldson, Lufkin & Jenrette 48,563
Salomon Brothers/JNL Balanced Series Merrill Lynch Pierce, Fenner & Smith 70,875
Salomon Brothers/JNL Global Bond Series Merrill Lynch Pierce, Fenner & Smith 806,710
T. Rowe Price/JNL Established Growth Series HSBC Holdings 883,386
T. Rowe Price/JNL Established Growth Series Morgan Stanley & Co. Inc 2,398,200
T. Rowe Price/JNL Mid-Cap Growth Series CIT Group Inc. 1,719,575
</TABLE>
CODE OF ETHICS. To mitigate the possibility that a Series will be adversely
affected by personal trading of employees, the Trust, JNFS and the sub-advisers
have adopted Codes of Ethics under Rule 17j-1 of the 1940 Act. These Codes
contain policies restricting securities trading in personal accounts of the
portfolio managers and others who normally come into possession of information
on portfolio transactions. These Codes comply, in all material respects, with
the recommendations of the Investment Company Institute. Employees subject to
the Code of Ethics may invest in securities for their own investment accounts,
including securities that may be purchased or held by the Trust.
PURCHASES, REDEMPTIONS AND PRICING OF SHARES
An insurance company may purchase shares of the Series at their
respective net asset values, using premiums received with respect to Contracts
issued by the company's separate accounts. These separate accounts are funded by
shares of the Trust.
All investments in the Trust are credited to the shareholder's account
in the form of full and FRACTIONAL shares of the designated Series (rounded to
the nearest 1/1000 of a share). The Trust does not issue share certificates.
As stated in the Prospectus, the net asset value (NAV) of a Series'
shares is determined once each day on which the New York Stock Exchange (NYSE)
is open (Business Day) at the close of the regular trading session of the
Exchange (normally 4:00 p.m., Eastern Time, Monday through Friday). The NAV of a
Series' shares is not determined on the days the NYSE is closed, which days
generally are New Year's Day, Martin Luther King Jr. holiday, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
The per share NAV of a Series is determined by dividing the total value
of the securities and other assets, less liabilities, by the total number of
shares outstanding. In determining NAV, securities listed on the national
securities exchanges, the Nasdaq National Market and foreign markets are valued
at the closing prices on such markets, or if such price is lacking for the
trading period immediately preceding the time of determination, such securities
are valued at their current bid price. Securities that are traded on the
over-the-counter market are valued at their closing bid prices. Foreign
securities and currencies are converted to U.S. dollars using exchange rates in
effect at the time of valuation. A Series may determine the market value of
individual securities held by it, by using prices provided by one or more
professional pricing services which may provide market prices to other funds,
or, as needed, by obtaining market quotations from independent broker-dealers.
Short-term securities maturing within 60 days are valued on the amortized cost
basis.
Trading in securities on European and Far Eastern securities exchanges
and over-the-counter markets is normally completed well before the close of
business on each Business Day. In addition, European and Far Eastern securities
trading generally or in a particular country or countries may not take place on
all Business Days. Furthermore, trading takes place in Japanese markets on
certain Saturdays and in various foreign markets on days which are not Business
Days and on which a Series' NAV is not calculated. A Series calculates NAV per
share, and therefore effects sales, redemptions and repurchases of its shares,
as of the close of the NYSE once on each day on which the NYSE is open. Such
calculation does not take place contemporaneously with the determination of the
prices of the majority of the foreign portfolio securities used in such
calculation.
For the PPM America/JNL Money Market Series, securities are valued at
amortized cost, which approximates market value, in accordance with Rule 2a-7
under the 1940 Act. The net income of the PPM America/JNL Money Market Series is
determined once each day, on which the NYSE is open, at the close of the regular
trading session of the NYSE (normally 4:00 p.m., Eastern time, Monday through
Friday). All the net income of the Series, so determined, is declared as a
dividend to shareholders of record at the time of such determination. Shares
purchased become entitled to dividends declared as of the first day following
the date of investment. Dividends are distributed in the form of additional
shares of the Series on the last business day of each month at the rate of one
share (and fraction thereof) of the Series for each one dollar (and fraction
thereof) of dividend income.
For this purpose, the net income of the PPM America/JNL Money Market
Series (from the time of the immediately preceding determination thereof) shall
consist of: (a) all interest income accrued on the portfolio assets of the
Series, (b) less all actual and accrued expenses, and (c) plus or minus net
realized gains and losses on the assets of the Series determined in accordance
with generally accepted accounting principles. Interest income includes discount
earned (including both original issue and market discount) on discount paper
accrued ratably to the date of maturity. Securities are valued at amortized cost
which approximates market, which the Trustees have determined in good faith
constitutes fair value for the purposes of complying with the 1940 Act.
Because the net income of the PPM America/JNL Money Market Series is
declared as a dividend each time the net income is determined, the net asset
value per share (i.e., the value of the net assets of the Series divided by the
number of shares outstanding) remains at one dollar per share immediately after
each such determination and dividend declaration. Any increase in the value of a
shareholder's investment in the Series, representing the reinvestment of
dividend income, is reflected by an increase in the number of shares of the
Series in its account. Pursuant to its objective of maintaining a fixed one
dollar share price, the Series will not purchase securities with a remaining
maturity of more than 397 days and will maintain a dollar-weighted average
portfolio maturity of 90 days or less.
The Trust may suspend the right of redemption for any Series only under
the following unusual circumstances: (a) when the NYSE is closed (other than
weekends and holidays) or trading is restricted; (b) when an emergency exists,
making disposal of portfolio securities or the valuation of net assets not
reasonably practicable; or (c) during any period when the Securities and
Exchange Commission has by order permitted a suspension of redemption for the
protection of shareholders.
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES. The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest of each
Series and to divide or combine such shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in the
Trust. Each share of a Series represents an equal proportionate interest in that
Series with each other share. The Trust reserves the right to create and issue
any number of Series of shares. In that case, the shares of each Series would
participate equally in the earnings, dividends, and assets of the particular
Series. Upon liquidation of a Series, shareholders are entitled to share pro
rata in the net assets of such Series available for distribution to
shareholders.
VOTING RIGHTS. Shareholders are entitled to one vote for each share held. Except
for matters affecting a particular Series, as described below, all shares of the
Trust have equal voting rights and may be voted in the election of Trustees and
on other matters submitted to the vote of the shareholders. Shareholders'
meetings ordinarily will not be held unless required by the 1940 Act. As
permitted by Massachusetts law, there normally will be no shareholders' meetings
for the purpose of electing Trustees unless and until such time as fewer than a
majority of the Trustees holding office have been elected by shareholders. At
that time, the Trustees then in office will call a shareholders' meeting for the
election of Trustees. The Trustees must call a meeting of shareholders for the
purpose of voting upon the removal of any Trustee when requested to do so by the
record holders of 10% of the outstanding shares of the Trust. A Trustee may be
removed after the holders of record of not less than two-thirds of the
outstanding shares have declared that the Trustee be removed either by
declaration in writing or by votes cast in person or by proxy. Except as set
forth above, the Trustees shall continue to hold office and may appoint
successor Trustees, provided that immediately after the appointment of any
successor Trustee, at least two-thirds of the Trustees have been elected by the
shareholders. Shares do not have cumulative voting rights. Thus, holders of a
majority of the shares voting for the election of Trustees can elect all the
Trustees.
In matters affecting only a particular Series, the matter shall have
been effectively acted upon by a majority vote of that Series even though: (1)
the matter has not been approved by a majority vote of any other Series; or (2)
the matter has not been approved by a majority vote of the Trust.
Shareholders of a Massachusetts business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Trust. The risk of a shareholder incurring any financial loss on account of
shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations. The Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Trust
and provides that notice of the disclaimer must be given in each agreement,
obligation or instrument entered into or executed by the Trust or Trustees. The
Declaration of Trust provides for indemnification of any shareholder held
personally liable for the obligations of the Trust and also provides for the
Trust to reimburse the shareholder for all legal and other expenses reasonably
incurred in connection with any such claim or liability.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust. The
Trustees may, however, amend the Declaration of Trust without the vote or
consent of shareholders to:
o designate Series of the Trust; or
o change the name of the Trust; or
o supply any omission, cure, correct, or supplement any ambiguous,
defective, or inconsistent provision to conform the Declaration of
Trust to the requirements of applicable federal or state regulations if
they deem it necessary.
If not terminated by the vote or written consent of a majority of its
outstanding shares, the Trust will continue indefinitely. Shares have no
pre-emptive or conversion rights. Shares are fully paid and non-assessable.
SHAREHOLDER INQUIRIES. All inquiries regarding the Trust should be directed to
the Trust at the telephone number or address shown on the back cover page of the
Prospectus.
TAX STATUS
The Trust's policy is to meet the requirements of Subchapter M of the
Internal Revenue Code. Each Series intends to distribute taxable net investment
income and capital gains to shareholders in amounts that will avoid federal
income or excise tax. In addition, each Series intends to comply with the
diversification requirements of Code Section 817(h) related to the tax-deferred
status of annuity and life insurance contracts issued by insurance company
separate accounts. If any Series failed to qualify for treatment as a regulated
investment company for any taxable year, (1) it would be taxed at corporate
rates on the full amount of its taxable income for that year without being able
to deduct the distributions it makes to its shareholders, (2) the shareholders
would treat all those distributions, including distributions of net capital gain
(the excess of net long-term capital gain over net short-term capital loss), as
dividends (that is, ordinary income) to the extent of the Series' earnings and
profits, and (3) most importantly, each insurance company separate account
invested therein would fail to satisfy the diversification requirements of
Section 817(h), with the result that the variable annuity contracts supported by
that account would no longer be eligible for tax deferral. In addition, the
Series could be required to recognize unrealized gains, pay substantial taxes
and interest and make substantial distributions before requalifying for
regulated investment company treatment.
All income dividends and capital gain distributions, if any, on Series
shares are reinvested automatically in additional shares of the Series at the
NAV determined on the first Business Day following the record date, unless
otherwise requested by a shareholder.
Each Series is treated as a separate corporation for purpose of the
Code and, therefore, the assets, income, and distributions of each Series are
considered separately for purposes of determining whether or not the Series
qualifies as a regulated investment company.
<PAGE>
JNL SERIES TRUST
FINANCIAL STATEMENTS
The financial statements of the JNL Series Trust for the year ended December 31,
1999 are incorporated by reference from the Trust's Annual Reports to
shareholders which are available at no charge upon written or telephone request
to the Trust at the address and telephone number set forth on the front page of
this Statement of Additional Information.
<PAGE>
APPENDIX A -- RATINGS OF INVESTMENTS
MOODY'S INVESTORS SERVICE, INC.
COMMERCIAL PAPER RATINGS. The ratings Prime-1 and Prime-2 are the two highest
commercial paper ratings assigned by Moody's Investors Service, Inc. (Moody's).
Among the factors considered by it in assigning ratings are the following: (1)
evaluation of the management of the issuer; (2) economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks which
may be inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer-acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist with
the issuer; and (8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and preparations
to meet such obligations. Relative strength or weakness of the above factors
determines whether the issuer's commercial paper is rated Prime-1 or 2.
BOND RATINGS.
AAA. Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA. Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
BA. Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B. Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA. Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal and
interest.
CA. Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C. Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
STANDARD & POOR'S RATINGS SERVICES
ISSUE CREDIT RATINGS DEFINITIONS. A Standard & Poor's issue credit rating is a
current opinion of the creditworthiness of an obligor with respect to a specific
financial obligation, a specific class of financial obligations, or a specific
financial program (including ratings on medium-term note programs and commercial
paper programs). It takes into consideration the creditworthiness of guarantors,
insurers, or other forms of credit enhancement on the obligation and takes into
account the currency in which the obligation is denominated. The issue credit
rating is not a recommendation to purchase, sell, or hold a financial
obligation, inasmuch as it does not comment as to market price or suitability
for a particular investor.
Issue credit ratings are based on current information furnished by the obligors
or obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in connection with any credit rating
and may, on occasion, rely on unaudited financial information. Credit ratings
may be changed, suspended, or withdrawn as a result of changes in, or
unavailability of, such information, or based on other circumstances.
Issue credit ratings can be either long-term or short-term. Short-term ratings
are generally assigned to those obligations considered short-term in the
relevant market. In the U.S., for example, that means obligations with an
original maturity of no more than 365 days - including commercial paper.
Short-term ratings are also used to indicate the creditworthiness of an obligor
with respect to put features on long-term obligations. The result is a dual
rating, in which the short-term rating addresses the put feature, in addition to
the usual long-term rating. Medium-term notes are assigned long-term ratings.
LONG-TERM ISSUE CREDIT RATINGS. Issue credit ratings are based, in varying
degrees, on the following considerations:
1. Likelihood of payment-capacity and willingness of the obligor to meet
its financial commitment on an obligation in accordance with the terms
of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization, or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
The issue rating definitions are expressed in terms of default risk. As such,
they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above. (Such differentiation applies when an entity has
both senior and subordinated obligations, secured and unsecured obligations, or
operating company and holding company obligations.) Accordingly, in the case of
junior debt, the rating may not confirm exactly with the category definition.
AAA. An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA. An obligation rated AA differs from the highest-rated obligations only
in small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A. An obligation rated A is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB. An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB. An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
B. An obligation rated B is more vulnerable to nonpayment than obligations
rated BB, but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
CCC. An obligation rated CCC is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC. An obligation rated CC is currently highly vulnerable to nonpayment.
C. The C rating may be used to cover a situation where a bankruptcy petition
has been filed or similar action has been taken, but payments on this obligation
are being continued.
D. An obligation rated D is in payment default. The D rating category is
used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-). The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
R. This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk-such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
SHORT-TERM ISSUE CREDIT RATINGS.
A-1. A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2. A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3. A short-term obligation rated A-3 exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.
B. A short-term obligation rated B is regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet its
financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.
C. A short-term obligation rated C is currently vulnerable to nonpayment and
is dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D. A short-term obligation rated D is in payment default. The D rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The D rating
also will be used upon the filing of a bankruptcy petition or the taking of a
similar action if payments on an obligation are jeopardized.
LOCAL CURRENCY AND FOREIGN CURRENCY RISKS. Country risk considerations are a
standard part of Standard & Poor's analysis for credit ratings on any issuer or
issue. Currency of repayment is a key factor in this analysis. An obligor's
capacity to repay foreign currency obligations may be lower than its capacity to
repay obligations in its local currency due to the sovereign government's own
relatively lower capacity to repay external versus domestic debt. These
sovereign risk considerations are incorporated in the debt ratings assigned to
specific issues. Foreign currency issuer ratings are also distinguished from
local currency issuer ratings to identify those instances where sovereign risks
make them different for the same issuer.
<PAGE>
JNL SERIES TRUST
PART C
OTHER INFORMATION
Note: Items 23-30 have been answered with respect to all investment portfolios
(Series) of the Registrant.
Item 23. Exhibits
(a) Agreement and Declaration of Trust of Registrant dated June 1, 1994,
incorporated by reference to Registrant's Post-Effective Amendment No. 5 filed
with the Securities and Exchange Commission on June 28, 1996.
(b) Amended and Restated By-laws of Registrant, incorporated by reference to
Registrant's Post-Effective Amendment No. 7 filed with the Securities and
Exchange Commission on September 13, 1996.
(c) Not Applicable
(d) (1) Amended Investment Advisory and Management Agreement between
Registrant and Jackson National Financial Services, Inc. dated
August 17, 1995, incorporated by reference to Registrant's
Post-Effective Amendment No. 5 filed with the Securities and
Exchange Commission on June 28, 1996.
(2) Investment Sub-Advisory Agreement between Jackson National
Financial Services, Inc. and Fred Alger Management, Inc. dated
August 16, 1995, incorporated by reference to Registrant's
Post-Effective Amendment No. 5 filed with the Securities and
Exchange Commission on June 28, 1996.
(3) Investment Sub-Advisory Agreement between Jackson National
Financial Services, Inc. and Janus Capital Corporation dated
February 28, 1995, incorporated by reference to Registrant's
Post-Effective Amendment No. 5 filed with the Securities and
Exchange Commission on June 28, 1996.
(4) Investment Sub-Advisory Agreement between Jackson National
Financial Services, Inc. and PPM America, Inc. dated February
17, 1995, incorporated by reference to Registrant's
Post-Effective Amendment No. 5 filed with the Securities and
Exchange Commission on June 28, 1996.
(5) Investment Sub-Advisory Agreement between Jackson National
Financial Services, Inc. and Rowe Price-Fleming International,
Inc. dated February 20, 1995, incorporated by reference to
Registrant's Post-Effective Amendment No. 5 filed with the
Securities and Exchange Commission on June 28, 1996.
(6) Investment Sub-Advisory Agreement between Jackson National
Financial Services, Inc. and Salomon Brothers Asset Management
Inc dated February 8, 1995, incorporated by reference to
Registrant's Post-Effective Amendment No. 5 filed with the
Securities and Exchange Commission on June 28, 1996.
(7) Investment Sub-Advisory Agreement between Jackson National
Financial Services, Inc. and T. Rowe Price Associates, Inc.
dated February 20, 1995, incorporated by reference to
Registrant's Post-Effective Amendment No. 5 filed with the
Securities and Exchange Commission on June 28, 1996.
(8) Amendment dated August 7, 1996 to Amended Investment Advisory
and Management Agreement between Registrant and Jackson
National Financial Services, Inc. dated August 17, 1995,
incorporated by reference to Registrant's Post-Effective
Amendment No. 7 filed with the Securities and Exchange
Commission on September 13, 1996.
(9) Investment Sub-Advisory Agreement between Jackson National
Financial Services, Inc. and Eagle Asset Management, Inc.
dated August 9, 1996, incorporated by reference to
Registrant's Post-Effective Amendment No. 7 filed with the
Securities and Exchange Commission on September 13, 1996.
(10) Amendment dated August 21, 1996 to Investment Sub-Advisory
Agreement between Jackson National Financial Services, Inc.
and Janus Capital Corporation dated February 28, 1995,
incorporated by reference to Registrant's Post-Effective
Amendment No. 7 filed with the Securities and Exchange
Commission on September 13, 1996.
(11) Amendment dated April 18, 1997 to Amended Investment Advisory
and Management Agreement between Registrant and Jackson
National Financial Services, Inc. dated August 17, 1995,
incorporated by reference to Registrant's Post-Effective
Amendment No. 11 filed with the Securities and Exchange
Commission on October 16, 1997.
(12) Amendment dated April 18, 1997 to Investment Sub-Advisory
Agreement between Jackson National Financial Services, Inc.
and PPM America, Inc. dated February 17, 1995, incorporated by
reference to Registrant's Post-Effective Amendment No. 11
filed with the Securities and Exchange Commission on October
16, 1997.
(13) Sub-Advisory Agreement between Jackson National Financial
Services, Inc. and Putnam Investment Management, Inc. dated
April 22, 1997, incorporated by reference to Registrant's
Post-Effective Amendment No. 11 filed with the Securities and
Exchange Commission on October 16, 1997.
(14) Amendment dated December 17, 1997 to Amended Investment
Advisory and Management Agreement between Registrant and
Jackson National Financial Services, Inc. dated August 17,
1995, incorporated by reference to Registrant's Post-Effective
Amendment No. 12 filed with the Securities and Exchange
Commission on January 16, 1998.
(15) Sub-Advisory Agreement between Jackson National Financial
Services, Inc. and Alliance Capital Management L.P. dated
December 17, 1997, incorporated by reference to Registrant's
Post-Effective Amendment No. 12 filed with the Securities and
Exchange Commission on January 16, 1998.
(16) Amendment dated December 21, 1998 to Amended Investment
Advisory and Management Agreement between the Registrant and
Jackson National Financial Services, LLC dated August 17,
1995, attached hereto.
(17) Sub-Advisory Agreement between Jackson National Financial
Services, Inc. and Goldman Sachs Asset Management dated
December 17, 1997, incorporated by reference to Registrant's
Post-Effective Amendment No. 13 filed with the Securities and
Exchange Commission on March 27, 1998.
(18) Sub-Advisory Agreement between Jackson National Financial
Services, Inc. and J.P. Morgan Investment Management Inc.
dated December 17, 1997, incorporated by reference to
Registrant's Post-Effective Amendment No. 12 filed with the
Securities and Exchange Commission on January 16, 1998.
(19) Sub-Advisory Agreement between Jackson National Financial
Services, Inc. and Lazard Asset Management dated December 17,
1997, incorporated by reference to Registrant's Post-Effective
Amendment No. 12 filed with the Securities and Exchange
Commission on January 16, 1998.
(20) Sub-Advisory Agreement between Jackson National Financial
Services, Inc. and Pacific Investment Management Company dated
December 17, 1997, incorporated by reference to Registrant's
Post-Effective Amendment No. 12 filed with the Securities and
Exchange Commission on January 16, 1998.
(21) Amendment dated December 17, 1997 to Investment Sub-Advisory
Agreement between Jackson National Financial Services, Inc.
and Salomon Brothers Asset Management Inc dated February 8,
1995, incorporated by reference to Registrant's Post-Effective
Amendment No. 12 filed with the Securities and Exchange
Commission on January 16, 1998.
(22) Sub-Advisory Agreement between Jackson National Financial
Services, Inc. and Standard & Poor's Investment Advisory
Services, Inc. dated March 2, 1998, incorporated by reference
to Registrant's Post-Effective Amendment No. 14 filed with the
Securities and Exchange Commission on May 1, 1998.
(23) Amendment dated April 30, 1999 to Investment Sub-Advisory
Agreement between Jackson National Financial Services, LLC and
J.P. Morgan Investment Management, Inc. dated December 17,
1997, attached hereto.
(24) Amendment dated December 31, 1999 to Investment Sub-Advisory
Agreement between Jackson National Financial Services, LLC and
Standard & Poor's Investment Advisory Services, Inc. dated
March 2, 1998, attached hereto.
(25) Sub-Advisory Agreement between Jackson National Financial
Services, LLC and Pacific Investment Management Company dated
March 14, 2000, attached hereto.
(26) Amendment dated February 10, 2000 to Amended Investment
Advisory and Management Agreement between the Registrant and
Jackson National Financial Services, LLC dated August 17,
1995, attached hereto.
(27) Amendment dated February 10, 2000 to Investment Sub-Advisory
Agreement between Jackson National Financial Services, LLC and
T. Rowe Price Associates, Inc. dated February 20, 1995,
attached hereto.
(28) Amendment dated February 10, 2000 to Investment Sub-Advisory
Agreement between Jackson National Financial Services, LLC and
Putnam Investment Management, Inc. dated August 17, 1995,
attached hereto.
(29) Amendment dated February 10, 2000 to Investment Sub-Advisory
Agreement between Jackson National Financial Services, LLC and
Janus Capital Corporation dated February 28, 1995, attached
hereto.
(e) (1) Amended Fund Participation Agreement between Registrant,
Jackson National Life Insurance Company and Jackson National
Separate Account I dated September 19, 1995, incorporated by
reference to Registrant's Post-Effective Amendment No. 5 filed
with the Securities and Exchange Commission on June 28, 1996.
(2) Amendment dated August 7, 1996 to Amended Fund Participation
Agreement between JNL Series Trust, Jackson National Life
Insurance Company and Jackson National Separate Account I
dated September 19, 1995, incorporated by reference to
Registrant's Post-Effective Amendment No. 7 filed with the
Securities and Exchange Commission on September 13, 1996.
(3) Amendment dated April 18, 1997 to Amended Fund Participation
Agreement between JNL Series Trust, Jackson National Life
Insurance Company and Jackson National Separate Account I
dated September 19, 1995, incorporated by reference to
Registrant's Post-Effective Amendment No. 11 filed with the
Securities and Exchange Commission on October 16, 1997.
(4) Fund Participation Agreement between Registrant, Jackson
National Life Insurance Company and Jackson National Separate
Account III dated March 16, 1998, incorporated by reference to
Registrant's Post-Effective Amendment No. 13 filed with the
Securities and Exchange Commission on March 27, 1998.
(5) Amendment dated March 16, 1998 to Amended Fund Participation
Agreement between JNL Series Trust, Jackson National Life
Insurance Company and Jackson National Separate Account I
dated September 19, 1995, incorporated by reference to
Registrant's Post-Effective Amendment No. 13 filed with the
Securities and Exchange Commission on March 27, 1998.
(6) Fund Participation Agreement between Registrant, Jackson
National Life Insurance Company and Jackson National Separate
Account V dated February 11, 1999, attached hereto.
(7) Fund Participation Agreement between Registrant, Jackson
National Life Insurance Company of New York and JNLNY Separate
Account I dated March 16, 1998, incorporated by reference to
Registrant's Post-Effective Amendment No. 13 filed with the
Securities and Exchange Commission on March 27, 1998.
(8) Fund Participation Agreement between Registrant, Jackson
National Life Insurance Company of New York and JNLNY Separate
Account II dated December 16, 1999, attached hereto.
(f) Not Applicable
(g) (1) Custodian Contract between Registrant and State Street Bank
and Trust Company dated September 16, 1996, incorporated by
reference to Registrant's Post-Effective Amendment No. 10
filed with the Securities and Exchange Commission on April 15,
1997.
(2) Custody Contract between Registrant and Boston Safe deposit &
Trust Company dated May 14, 1999, attached hereto.
(h) (1) Administration Agreement between Registrant and Jackson
National Financial Services, LLC dated January 1, 1999,
incorporated by reference to Registrant's Post-Effective
Amendment No. 17 filed with the Securities and Exchange
Commission on March 1, 1999.
(2) Amendment dated February 10, 2000 to Administration Agreement
between Registrant and Jackson National Financial Services,
LLC dated January 1, 1999, attached hereto.
(i) Consent of Counsel, attached hereto.
(j) Consent of Auditors, attached hereto.
(k) Not Applicable
(l) Not Applicable
(m) Not Applicable
(n) Not Applicable
(o) Not Applicable
(p) (1) The Registrant's Code of Ethics, attached hereto.
(2) Alliance Capital Management L.P. Code of Ethics, attached
hereto.
(3) Eagle Asset Management, Inc. Code of Ethics, attached hereto.
(4) Fred Alger Management, Inc. Code of Ethics, attached hereto.
(5) J.P. Morgan Investment Management Inc. Code of Ethics,
attached hereto.
(6) Janus Capital Corporation Code of Ethics, attached hereto.
(7) Lazard Asset Management Code of Ethics, attached hereto.
(8) Pacific Investment Management Company Code of Ethics, attached
hereto.
(9) PPM America, Inc. Code of Ethics, attached hereto.
(10) Putnam Investment Management, Inc. Code of Ethics, attached
hereto.
(11) Salomon Brothers Asset Management Inc Code of Ethics, attached
hereto.
(12) Standard & Poor's Investment Advisory Services, Inc. Code of
Ethics, attached hereto.
(13) T. Rowe Price Associates, Inc. Code of Ethics, attached
hereto.
Item 24. Persons controlled by or under Common Control with Registrant.
Jackson National Separate Account - I Jackson National
Separate Account III Jackson National Separate Account V
Jackson National Separate Account VI JNLNY Separate Account I
JNLNY Separate Account II
Item 25. Indemnification.
Article VIII of the Registrant's Agreement and Declaration of
Trust provides that each of its Trustees and Officers
(including persons who serve at the Registrant's request as
directors, officers or trustees of another organization in
which the Registrant has any interest as a shareholder,
creditor or otherwise) (each, a "Covered Person") shall be
indemnified by the Registrant against all liabilities and
expenses that may be incurred by reason of being or having
been such a Covered Person, except that no Covered Person
shall be indemnified against any liability to the Registrant
or its shareholders to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office.
The foregoing indemnification arrangements are subject to the
provisions of Section 17(h) of the Investment Company Act of
1940.
Insofar as indemnification by the Registrant for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
In addition to the above indemnification, Jackson National
Life Insurance Company extends its indemnification of its own
officers, directors and employees to cover such persons'
activities as officers, trustees or employees of the
Registrant, and by separate agreement Jackson National Life
Insurance Company has agreed to indemnify trustees of the
Registrant who are not interested persons of the Registrant or
its investment adviser.
Item 26. Business and Other Connections of Investment Adviser.
Incorporated herein by reference from the Prospectus and
Statement of Additional Information relating to the Trust are
the following: the description of the business of Jackson
National Financial Services, LLC ("JNFSLLC") contained in the
section entitled "Management of the Trust" of the Prospectus,
and the biographical information pertaining to Messrs.
Hopping,Frauenheim, Meyer, Fritts, McLellan, McPherson and
Nerud and Ms. Min, contained in the section entitled "Trustees
and Officers of the Trust" and the description of JNFSLLC
contained in the section entitled "Investment Adviser and
Other Services" of the Statement of Additional Information.
Directors and Officers of JNFSLLC:
Name Address Principal Occupation
Andrew B. Hopping 5901 Executive Drive President, Managing
Lansing, MI 48911 Board Member
(3/98 to Present)
Mark D. Nerud 5901 Executive Drive Chief Financial Officer,
Lansing, MI 48911 Managing Board Member
(3/98 to Present)
Susan S. Min 5901 Executive Drive Secretary
Lansing, MI 48911 (1/00 to Present)
Alliance Capital Management L.P., Eagle Asset Management,
Inc., Fred Alger Management, Inc., Janus Capital Corporation,
J.P. Morgan Investment Management Inc., Lazard Asset
Management, Pacific Investment Management Company, PPM
America, Inc., Putnam Investment Management, Inc., Salomon
Brothers Asset Management Inc, Salomon Brothers Asset
Management Limited, Standard & Poor's Investment Advisory
Services, Inc., and T. Rowe Price Associates, Inc., the
sub-advisers of certain series of the Trust, are primarily
engaged in the business of rendering investment advisory
services. Reference is made to the most recent Form ADV and
schedules thereto on file with the Commission for a
description of the names and employment of the directors and
officers of the sub-advisers and other required information:
File No.
Alliance Capital Management L.P. 801-32361
Eagle Asset Management, Inc. 801-21343
Fred Alger Management, Inc. 801-06709
Janus Capital Corporation 801-13991
J.P. Morgan Investment Management Inc. 801-21011
Lazard Asset Management 801-6568
Pacific Investment Management Company 801-48187
PPM America, Inc. 801-40783
Putnam Investment Management, Inc. 801-7974
Salomon Brothers Asset Management Inc 801-32046
Standard & Poor's Investment Advisory
Services, Inc. 801-51431
T. Rowe Price Associates, Inc. 801-856
Salomon Brothers Asset Management Limited 801-43335
Item 27. Principal Underwriters.
Not Applicable.
Item 28. Location of Accounts and Records
Certain accounts, books and other documents required to be
maintained pursuant to Rule 31a-1(b)(4), (5), (6), (7), (9),
(10), and (11) are in the physical possession of the
Registrant at 5901 Executive Drive, Lansing, Michigan 48911;
certain accounts, books and other documents required to be
maintained pursuant to Rule 31a-1(b)(4), (5), (6), (7), (9),
(10), and (11) are in the physical possession of the
Registrant at 225 West Wacker Drive, Suite 1200, Chicago,
Illinois 60606; all other books, accounts and other documents
required to be maintained under Section 31(a) of the
Investment Company Act of 1940 and the Rules promulgated
thereunder are in the physical possession of Boston Safe
Deposit and Trust Company, One Boston Place, Boston, MA 02108.
Item 21. Management Services.
Not Applicable.
Item 30. Undertakings.
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment
Company Act, the Fund certifies that it meets all of the rquirments for
effectiveness of this Post-Effective Amendment under rule 485(b) under the
Securities Act and has duly caused this Post-Effective Amendment to be signed on
its behalf by the undersigned, duly authorized, in the City of Lansing and the
State of Michigan on the 28th day of April, 2000.
JNL SERIES TRUST
By: /s/ Andrew B. Hopping by Thomas J. Meyer*
---------------------------------------------
Andrew B. Hopping
President, CEO and Trustee
Pursuant to the requirements of the Securities Act, this Post-Effective
Amendment has been signed below by the following persons in the capacities and
on the date indicated.
/s/ Andrew B. Hopping President, CEO and
by Thomas J. Meyer* Trustee April 28, 2000
- -------------------------------- -----------------
Andrew B. Hopping
/s/ Robert A. Fritts Vice President,
by Thomas J. Meyer* Treasurer, CFO and April 28, 2000
- -------------------------------- Trustee -----------------
Robert A. Fritts
/s/ Joseph Frauenheim Trustee
by Thomas J. Meyer* April 28, 2000
- -------------------------------- -----------------
Joseph Frauenheim
/s/ Richard McLellan Trustee
by Thomas J. Meyer* April 28, 2000
- -------------------------------- -----------------
Richard McLellan
/s/ Peter McPherson Trustee
by Thomas J. Meyer* April 28, 2000
- -------------------------------- -----------------
Peter McPherson
* Attorney In Fact
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as directors of JNL
SERIES TRUST, a Massachusetts business trust, which has filed or will file with
the Securities and Exchange Commission under the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, as amended, various Registration
Statements and amendments thereto for the registration under said Acts of the
sale of shares of beneficial interest of JNL Series Trust, hereby constitute and
appoint Andrew B. Hopping, Thomas J. Meyer and Robert P. Saltzman, his attorney,
with full power of substitution and resubstitution, for and in his name, place
and stead, in any and all capacities to approve and sign such Registration
Statements and any and all amendments thereto and to file the same, with all
exhibits thereto and other documents, granting unto said attorneys, each of
them, full power and authority to do and perform all and every act and thing
requisite to all intents and purposes as he might or could do in person, hereby
ratifying and confirming that which said attorneys, or any of them, may lawfully
do or cause to be done by virtue hereof. This instrument may be executed in one
or more counterparts.
IN WITNESS WHEREOF, the undersigned have herewith set their names as of the
dates set forth below.
/s/ Andrew B. Hopping April 1, 2000
- --------------------------------- -----------------
Andrew B. Hopping Date
/s/ Robert A. Fritts April 1, 2000
- --------------------------------- -----------------
Robert A. Fritts Date
/s/ Joseph Frauenheim April 1, 2000
- --------------------------------- -----------------
Joseph Frauenheim Date
/s/ Richard McLellan April 1, 2000
- --------------------------------- -----------------
Richard McLellan Date
/s/ Peter McPherson April 1, 2000
- --------------------------------- -----------------
Peter McPherson Date
<PAGE>
EXHIBIT LIST
Exhibit
Number Description
- ------ -----------
23.(d)(16) Amendment dated December 21, 1998 to Amended
Investment Advisory and Management Agreement between
the Registrant and Jackson National Financial
Services, LLC dated August 17, 1995, attached hereto
as EX-99.d16 ADVSR CONT.
23.(d)(23) Amendment dated April 30, 1999 to Investment
Sub-Advisory Agreement between Jackson National
Financial Services, LLC and J.P. Morgan Investment
Management, Inc. dated December 17, 1997, attached
hereto as EX-99.d23 ADVSR CONT.
23.(d)(24) Amendment dated December 31, 1999 to Investment
Sub-Advisory Agreement between Jackson National
Financial Services, LLC and Standard & Poor's
Investment Management, Inc. dated March 2, 1998,
attached hereto as EX-99.d24 ADVSR CONT.
23.(d)(25) Sub-Advisory Agreement between Jackson National
Financial Services, LLC and Pacific Investment
Management Company dated March 14, 1999, attached
hereto as EX-99.d25 ADVSR CONT.
23.(d)(26) Amendment dated February 10, 2000 to Amended
Investment Sub-Advisory Agreement between Jackson
National Financial Services, LLC and the Registrant
dated August 17, 1995, attached hereto as EX-99.d26
ADVSR CONT.
23.(d)(27) Amendment dated February 10, 2000 to Investment
Sub-Advisory Agreement between Jackson National
Financial Services, LLC and T. Rowe Price Associates,
Inc. dated February 20, 1995, attached hereto as
EX-99.d27 ADVSR CONT.
23.(d)(28) Amendment dated February 10, 2000 to Investment
Sub-Advisory Agreement between Jackson National
Financial Services, LLC and Putnam Investment
Management, Inc. dated August 17, 1995, attached
hereto as EX-99.d28 ADVSR CONT.
23.(d)(29) Amendment dated February 10, 2000 to Investment
Sub-Advisory Agreement between Jackson National
Financial Services, LLC and Janus Capital Corporation
dated February 28, 1995, attached hereto as EX-99.d29
ADVSR CONT.
23.(i) Consent of Counsel, attached hereto as EX-99.i LEGAL
OPININ.
23.(j) Consent of Auditor, attached hereto as EX-99.j AUDIT
OPININ.
23.(e)(6) Fund Participation Agreement between Registrant,
Jackson National Life Insurance Company and Jackson
National Separate Account V dated February 11, 1999,
attached hereto as EX-99.e6 UND CONTR.
23.(e)(8) Fund Participation Agreement between Registrant,
Jackson National Life Insurance Company of New York
and JNLNY Separate Account II dated December 16,
1999, attached hereto as EX-99.e8 UND CONTR.
23.(g)(2) Custody Contract between Registrant and Boston Safe
deposit & Trust Company dated May 14, 1999, attached
hereto as EX-99.g2 CUST AGRMT.
23.(h)(2) Amendment dated February 10, 2000 to Administration
Agreement between Registrant and Jackson National
Financial Services, LLC dated January 1, 1999,
attached hereto as EX-99.h2 ADMIN AGRMT.
23.(p)(1) The Registrant's Code of Ethics, attached hereto as
EX-99.p1 CODE ETH.
23.(p)(2) Alliance Capital Management L.P. Code of Ethics,
attached hereto as EX-99.p2 CODE ETH.
23.(p)(3) Eagle Asset Management, Inc. Code of Ethics, attached
hereto as EX-99.p3 CODE ETH.
23.(p)(4) Fred Alger Management, Inc. Code of Ethics, attached
hereto as EX-99.p4 CODE ETH.
23.(p)(5) J.P. Morgan Investment Management Inc. Code of
Ethics, attached hereto as EX-99.p5 CODE ETH.
23.(p)(6) Janus Capital Corporation Code of Ethics, attached
hereto as EX-99.p6 CODE ETH.
23.(p)(7) Lazard Asset Management Code of Ethics, attached
hereto as EX-99.p7 CODE ETH.
23.(p)(8) Pacific Investment Management Company Code of Ethics,
attached hereto as EX-99.p8 CODE ETH.
23.(p)(9) PPM America, Inc. Code of Ethics, attached hereto as
EX-99.p9 CODE ETH.
23.(p)(10) Putnam Investment Management, Inc. Code of Ethics,
attached hereto as EX-99.p10 CODE ETH.
23.(p)(11) Salomon Brothers Asset Management Inc Code of Ethics,
attached hereto as EX-99.p11 CODE ETH.
23.(p)(12) Standard & Poor's Investment Advisory Services, Inc.
Code of Ethics, attached hereto as EX-99.p12 CODE
ETH.
23.(p)(13) T. Rowe Price Associates, Inc. Code of Ethics,
attached hereto as EX-99.p13 CODE ETH.
AMENDMENT
TO
AMENDED INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
BETWEEN
JNL SERIES TRUST
AND
JACKSON NATIONAL FINANCIAL SERVICES, INC.
This AMENDMENT is by and between JNL Series Trust, a Massachusetts
business trust (the "Trust") and Jackson National Financial Services, LLC, a
Michigan limited liability company and registered investment adviser (the
"Adviser").
WHEREAS, the Trust and Jackson National Financial Services, Inc.
("JNFSI") entered into an Amended Investment Advisory and Management Agreement
dated August 17, 1995 (the "Agreement"), whereby the Trust retained JNFSI to
perform investment advisory and management services for the Series of the Trust
enumerated in the Agreement; and
WHEREAS, effective July 1, 1998, JNFSI assigned, transferred and
conveyed to Adviser, and Adviser assumed, all of the interests, rights,
responsibilities and obligations of JNFSI under the Agreement, and thereafter
Adviser was deemed a party in lieu of JNFSI to such Agreement; and
WHEREAS, nine new Series will be added to the Trust and the Trust
desires the Adviser to perform investment advisory and management services for
these Series of the Trust; and
WHEREAS, the Adviser agrees to serve as the investment adviser and
business manager for the above-referenced Series of the Trust on the terms and
conditions set forth in the Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the Trust and the Adviser
agree as follows:
1. Both parties hereby ratify and approve, effective as of July 1,
1998, JNFSI's assignment, transfer and conveyance to Adviser, and Adviser's
assumption, of all of the interests, rights, responsibilities and obligations of
JNFSI under the Agreement, and further, both parties hereby agree that,
effective July 1, 1998, Adviser is deemed a party in lieu of JNFSI to the
Agreement.
<PAGE>
2. Effective with respect to a Series upon capitalization of such
Series, the Adviser shall serve as the investment adviser and business manager
for the JNL/J.P. Morgan Enhanced S&P 500 Index Series, JNL/SSGA Enhanced
Intermediate Bond Index Series, JNL/SSGA International Index Series, JNL/SSGA
Russell 2000 Index Series, JNL/SSGA S&P 500 Index Series, JNL/SSGA S&P MidCap
Index Series, JNL/S&P Conservative Growth Series, JNL/S&P Moderate Growth
Series, and JNL/S&P Aggressive Growth Series.
3. As compensation for services performed and the facilities and
personnel provided by the Adviser under the Agreement, the Trust will pay to the
Adviser, promptly after the end of each month for the services rendered by the
Adviser during the preceding month, the sum of the following amounts:
<TABLE>
<CAPTION>
<S> <C> <C>
JNL/J.P. Morgan Enhanced S&P 500 Index Series................... $0 to $25 million....... .80%
Over $25 million........ .75%
JNL/S&P Conservative Growth Series.............................. $0 to $500 million...... .20%
Over $500 million....... .15%
JNL/S&P Moderate Growth Series.................................. $0 to $500 million...... .20%
Over $500 million....... .15%
JNL/S&P Aggressive Growth Series................................ $0 to $500 million...... .20%
Over $500 million....... .15%
JNL/SSGA Enhanced Intermediate Bond Index Series................ all assets.............. .65%
JNL/SSGA International Index Series............................. all assets.............. .60%
JNL/SSGA Russell 2000 Index Series.............................. all assets.............. .50%
JNL/SSGA S&P 500 Index Series................................... all assets.............. .50%
JNL/SSGA S&P MidCap Index Series................................ all assets.............. .50%
</TABLE>
4. The Trust and the Adviser agree to abide and be bound by all of the
terms and conditions set forth in the Agreement.
<PAGE>
IN WITNESS WHEREOF, the Trust and the Adviser have caused this
Agreement to be executed by their duly authorized officers as of the 21st day of
December, 1998.
JNL SERIES TRUST
By: /s/ Andrew B. Hopping
----------------------------------
Name: Andrew B. Hopping
Title: President
JACKSON NATIONAL FINANCIAL SERVICES, LLC
By: /s/ Mark D. Nerud
----------------------------------
Name: Mark D. Nerud
Title: Chief Financial Officer
AMENDMENT
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, INC.
AND
J. P. MORGAN INVESTMENT MANAGEMENT INC.
This AMENDMENT is made by and between JACKSON NATIONAL FINANCIAL
SERVICES, LLC, a Michigan limited liability company and registered investment
adviser ("Adviser"), and J. P. MORGAN INVESTMENT MANAGEMENT INC., a Delaware
corporation and registered investment adviser ("Sub-Adviser").
WHEREAS, Jackson National Financial Services, Inc. ("JNFSI") and
Sub-Adviser entered into an Investment Sub-Advisory Agreement dated as of
December 17, 1997 ("Agreement"), whereby JNFSI appointed Sub-Adviser to provide
certain sub-investment advisory services to the investment portfolios of the JNL
Series Trust; and
WHEREAS, effective July 1, 1998, JNFSI assigned, transferred and
conveyed to Adviser, and Adviser assumed, all of the interests, rights,
responsibilities and obligations of JNFSI under the Agreement, and thereafter
Adviser was deemed a party in lieu of JNFSI to such Agreement; and
WHEREAS, the Agreement provides that the Adviser will pay the
Sub-Adviser for the services provided and the expenses assumed pursuant to the
Agreement a sub-advisory fee as set forth on Schedule B to the Agreement and the
Sub-Adviser agrees to accept such sub-advisory fee as full compensation for such
services and expenses; and
WHEREAS, the Adviser desires to appoint Sub-Adviser to provide and
Sub-Adviser agrees to provide sub-investment advisory services to an additional
investment portfolio of the JNL Series Trust, effective upon execution or, if
later, the date that initial capital for such investment portfolio is first
provided.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree to amend the Agreement as follows:
1. Both parties hereby ratify and approve, effective as of July 1,
1998, JNFSI's assignment, transfer and conveyance to Adviser, and Adviser's
assumption, of all of the interests, rights, responsibilities and obligations of
JNFSI under the Agreement, and further, both parties hereby agree that,
effective July 1, 1998, Adviser is deemed a party in lieu of JNFSI to the
Agreement.
2. Schedule A to the Agreement is hereby amended and replaced with
Schedule A dated May 1, 1999, attached hereto.
2. Schedule B to the Agreement is hereby amended and replaced with
Schedule B dated May 1, 1999, attached hereto.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Amendment to be executed as of this 30th day of April, 1999.
JACKSON NATIONAL FINANCIAL J. P. MORGAN INVESTMENT
SERVICES, LLC MANAGEMENT INC.
By: /s/ Andrew B. Hopping By: /s/ Diane Minardi
------------------------- --------------------------
Name: Andrew B. Hopping Name: Diane Minardi
------------------------- --------------------------
Title: President Title: Vice President
------------------------- --------------------------
<PAGE>
SCHEDULE A
DATED MAY 1, 1999
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, INC.
AND
J. P. MORGAN INVESTMENT MANAGEMENT INC.
(Fund)
JNL/J.P. Morgan Enhanced S&P 500 Index Series
JNL/J.P. Morgan International & Emerging Markets Series
<PAGE>
SCHEDULE B
DATED MAY 1, 1999
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, INC.
AND
J. P. MORGAN INVESTMENT MANAGEMENT INC.
(Compensation)
JNL/J.P. MORGAN INTERNATIONAL & EMERGING MARKETS SERIES
Average Daily Net Assets Annual Rate
0 to $50 Million: .55%
$50 Million to $200 Million: .50%
$200 Million to $350 Million: .45%
Amounts over $350 Million: .40%
JNL/J.P. MORGAN ENHANCED S&P 500 INDEX SERIES
Average Daily Net Assets Annual Rate
0 to $25 Million: .35%
Amounts over $25 Million: .30%
AMENDMENT
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
STANDARD & POOR'S INVESTMENT ADVISORY SERVICES LLC
This AMENDMENT is made by and between JACKSON NATIONAL FINANCIAL SERVICES,
LLC, a Michigan limited liability company and registered investment adviser
("Adviser"), and STANDARD & POOR'S INVESTMENT ADVISORY SERVICES LLC (formerly
known as Standard & Poor's Investment Advisory Services, Inc.), a Delaware
limited liability company and registered investment adviser ("Sub-Adviser").
WHEREAS, Jackson National Financial Services, Inc. ("JNFSI") and
Sub-Adviser entered into an Investment Sub-Advisory Agreement dated as of March
2, 1998 ("Agreement"), whereby JNFSI appointed Sub-Adviser to provide certain
sub-investment advisory services to the investment portfolios of the JNL Series
Trust; and
WHEREAS, effective July 1, 1998, JNFSI assigned, transferred and conveyed
to Adviser, and Adviser assumed, all of the interests, rights, responsibilities
and obligations of JNFSI under the Agreement, and thereafter Adviser was deemed
a party in lieu of JNFSI to such Agreement; and
WHEREAS, pursuant to the Agreement, the Adviser agreed to pay the
Sub-Adviser for the services provided and the expenses assumed by the
Sub-Advisor a sub-advisory fee as set forth on Schedule B to the Agreement, and
the Sub-Adviser agreed to accept such sub-advisory fee as full compensation
under the Agreement for such services and expenses; and
WHEREAS, the Adviser desires to appoint Sub-Adviser to provide, and
Sub-Adviser has agreed to provide, additional sub-investment advisory services
to three new investment portfolios of the JNL Series Trust, effective upon
execution or, if later, the date that initial capital for such investment
portfolio is first provided.
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree to amend the Agreement as follows:
1. Capitalized terms used and not defined herein shall have the meanings
ascribed thereto in the Agreement.
2. Both parties hereby ratify and approve, effective as of July 1, 1998,
JNFSI's assignment, transfer and conveyance to Adviser, and Adviser's
assumption, of all of the interests, rights, responsibilities and
obligations of JNFSI under the Agreement, and further, both parties hereby
agree that, effective July 1, 1998, Adviser is deemed a party to the
Agreement in lieu of JNFSI.
3. Schedule A to the Agreement is hereby deleted and replaced in its entirety
with Schedule A dated December 31, 1999, attached hereto.
4. Schedule B to the Agreement is hereby deleted and replaced in its entirety
with Schedule B dated December 31, 1999, attached hereto.
5. Except as expressly set forth above, all other provisions in the Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Amendment to be executed as of this 31st day of December, 1999.
JACKSON NATIONAL FINANCIAL STANDARD & POOR'S INVESTMENT
SERVICES, LLC ADVISORY SERVICES LLC
By: /s/ Andrew B. Hopping By: /s/ Thomas F. Gizicki
------------------------------- -------------------------
Name: Andrew B. Hopping Name: Thomas F. Gizicki
------------------------------- -------------------------
Title: President Title: Vice President & Gen. Mgr.
------------------------------- -------------------------
<PAGE>
SCHEDULE A
DATED DECEMBER 31, 1999
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
STANDARD & POOR'S INVESTMENT ADVISORY SERVICES LLC
(Fund)
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 JNL/S&P
Conservative Growth Series II JNL/S&P Moderate Growth Series II JNL/S&P
Aggressive Growth Series II JNL/S&P Very Aggressive Growth Series II JNL/S&P
Equity Growth Series II JNL/S&P Equity Aggressive Growth Series II JNL/S&P
Conservative Growth Series JNL/S&P Moderate Growth Series JNL/S&P Aggressive
Growth Series
<PAGE>
SCHEDULE B
DATED DECEMBER 31, 1999
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
STANDARD & POOR'S INVESTMENT ADVISORY SERVICES LLC
(Compensation)
JNL/S&P CONSERVATIVE GROWTH SERIES I
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P MODERATE GROWTH SERIES I
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P AGGRESSIVE GROWTH SERIES I
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P VERY AGGRESSIVE GROWTH SERIES I
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P EQUITY GROWTH SERIES I
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P EQUITY AGGRESSIVE GROWTH SERIES I
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P CONSERVATIVE GROWTH SERIES II
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P MODERATE GROWTH SERIES II
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P AGGRESSIVE GROWTH SERIES II
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P VERY AGGRESSIVE GROWTH SERIES II
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P EQUITY GROWTH SERIES II
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P EQUITY AGGRESSIVE GROWTH SERIES II
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P CONSERVATIVE GROWTH SERIES
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P MODERATE GROWTH SERIES
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
JNL/S&P AGGRESSIVE GROWTH SERIES
Average Daily Net Assets Annual Rate
0 to $500 Million: .10%
Amounts over $500 Million: .075%
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT is effective this 14th day of March, 2000, by and
between JACKSON NATIONAL FINANCIAL SERVICES, LLC, a Michigan limited liability
company and registered investment adviser ("Adviser"), and PACIFIC INVESTMENT
MANAGEMENT COMPANY, a Delaware general partnership and registered investment
adviser ("Sub-Adviser").
WHEREAS, Adviser is the investment manager for the JNL Series Trust
(the "Trust"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust is authorized to issue separate series, each series
having its own investment objective or objectives, policies and limitations;
WHEREAS, Adviser desires to retain Sub-Adviser as Adviser's agent to
furnish investment advisory services to the series of the Trust listed on
Schedule A hereto ("Fund").
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser to provide certain
sub-investment advisory services to the Fund for the period and on the
terms set forth in this Agreement. Sub-Adviser accepts such appointment
and agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Adviser designates one or more series other than the
Fund with respect to which the Adviser wishes to retain the Sub-Adviser
to render investment advisory services hereunder, it shall notify the
Sub-Adviser in writing. If the Sub-Adviser is willing to render such
services, it shall notify the Adviser in writing, whereupon such series
shall become a Fund hereunder, and be subject to this Agreement.
2. Delivery of Documents. Adviser has or will furnish Sub-Adviser with
copies properly certified or authenticated of each of the following:
a) the Trust's Agreement and Declaration of Trust, as filed with
the Secretary of State of The Commonwealth of Massachusetts on
June 1, 1994, and all amendments thereto or restatements
thereof (such Declaration, as presently in effect and as it
shall from time to time be amended or restated, is herein
called the "Declaration of Trust");
b) the Trust's By-Laws and amendments thereto;
c) resolutions of the Trust's Board of Trustees authorizing the
appointment of Sub-Adviser and approving this Agreement;
d) the Trust's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange
Commission (the "SEC") and all amendments thereto;
e) the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act") and under the
1940 Act as filed with the SEC and all amendments thereto
insofar as such Registration Statement and such amendments
relate to the Fund; and
f) the Trust's most recent prospectus and Statement of Additional
Information (collectively called the "Prospectus").
Adviser will furnish the Sub-Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. Management. Subject always to the supervision of Trust's Board of
Trustees and the Adviser, Sub-Adviser will furnish an investment
program in respect of, and make investment decisions for, all assets of
the Fund and place all orders for the purchase and sale of securities,
all on behalf of the Fund. In the performance of its duties,
Sub-Adviser will satisfy its fiduciary duties to the Fund (as set forth
below), and will monitor the Fund's investments, and will comply with
the provisions of Trust's Declaration of Trust and By-Laws, as amended
from time to time, and the stated investment objectives, policies and
restrictions of the Fund. Sub-Adviser and Adviser will each make its
officers and employees available to the other from time to time at
reasonable times to review investment policies of the Fund and to
consult with each other regarding the investment affairs of the Fund.
Sub-Adviser will report to the Board of Trustees and to Adviser with
respect to the implementation of such program. Sub-Adviser is
responsible for compliance with the provisions of Section 817(h) of the
Internal Revenue Code of 1986, as amended, applicable to the Fund.
The Sub-Adviser further agrees that it:
a) will use the same skill and care in providing such services as
it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
b) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission in all material respects
and in addition will conduct its activities under this
Agreement in accordance with any applicable regulations of any
governmental authority pertaining to its investment advisory
activities;
c) will place orders pursuant to its investment determinations
for the Fund either directly with the issuer or with any
broker or dealer, including an affiliated broker-dealer which
is a member of a national securities exchange as permitted in
accordance with guidelines established by the Board of
Trustees. In placing orders with brokers and dealers, the
Sub-Adviser will attempt to obtain the best combination of
prompt execution of orders in an effective manner and at the
most favorable price. Consistent with this obligation, when
the execution and price offered by two or more brokers or
dealers are comparable Sub-Adviser may, in its discretion,
purchase and sell portfolio securities to and from brokers and
dealers who provide the Sub-Adviser with research advice and
other services. In no instance will portfolio securities be
purchased from or sold to the Adviser, Sub-Adviser or any
affiliated person of either the Trust, Adviser, or
Sub-Adviser, except as may be permitted under the 1940 Act;
d) will report regularly to Adviser and to the Board of Trustees
and will make appropriate persons available for the purpose of
reviewing with representatives of Adviser and the Board of
Trustees on a regular basis at reasonable times the management
of the Fund, including, without limitation, review of the
general investment strategies of the Fund, the performance of
the Fund in relation to standard industry indices, interest
rate considerations and general conditions affecting the
marketplace and will provide various other reports from time
to time as reasonably requested by Adviser;
e) will prepare and maintain such books and records with respect
to the Fund's securities transactions and will furnish Adviser
and Trust's Board of Trustees such periodic and special
reports as the Board or Adviser may request;
f) will act upon instructions from Adviser not inconsistent with
the fiduciary duties hereunder;
g) will treat confidentially and as proprietary information of
Trust all such records and other information relative to Trust
maintained by the Sub-Adviser, and will not use such records
and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior
notification to and approval in writing by Trust, which
approval shall not be unreasonably withheld and may not be
withheld where the Sub-Adviser may be exposed to civil or
criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted
authorities, or when so requested by Trust; and
h) will vote proxies received in connection with securities held
by the Fund consistent with its fiduciary duties hereunder.
4. Aggregation of Orders. Provided the investment objectives of the Fund
are adhered to, the Adviser agrees that the Sub-Adviser may aggregate
sales and purchase orders of securities held in the Fund with similar
orders being made simultaneously for other accounts managed by the
Sub-Adviser or with accounts of the affiliates of the Sub-Adviser, if
in the Sub-Adviser's reasonable judgment such aggregation shall result
in an overall economic benefit to the Fund, taking into consideration
the advantageous selling or purchase price, brokerage commission and
other expenses. The Adviser acknowledges that the determination of such
economic benefit to the Fund by the Sub-Adviser is subjective and
represents the Sub-Adviser's evaluation that the Fund is benefited by
relatively better purchase or sales prices, lower commission expenses
and beneficial timing of transactions or a combination of these and
other factors.
5. Futures and Options. Provided the investment objectives of the Fund are
adhered to, the Sub-Adviser's investment authority shall include the
authority to purchase, sell, cover open positions, and generally to
deal in financial futures contracts and options thereon.
The Adviser will (i) open and maintain brokerage accounts for financial
futures and options (such accounts hereinafter referred to as
"brokerage accounts") on behalf of and in the name of the Fund and (ii)
execute for and on behalf of the Fund, standard customer agreements
with a broker or brokers. The Sub-Adviser may, using such of the
securities and other property in the Fund as the Sub-Adviser deems
necessary or desirable, direct the Adviser to deposit on behalf of the
Fund, original and maintenance brokerage deposits and otherwise direct
payments of cash, cash equivalents and securities and other property
into such brokerage accounts and to such brokers as the Sub-Adviser
deems desirable or appropriate.
Upon the solicitation of the Adviser, the Sub-Adviser delivered to the
Adviser a copy of its Disclosure Document, as amended, dated July 3,
1997, on file with the Commodity Futures Trading Commission. The
Adviser hereby acknowledges receipt of such copy.
6. Expenses. During the term of this Agreement, Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage
commission, if any) purchased for the Fund.
7. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records
which it maintains for the Trust are the property of the Trust and
further agrees to surrender promptly to the Trust any of such records
upon the Trust's request. Sub-Adviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-1 under the 1940 Act.
8. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, Adviser will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a
sub-advisory fee, accrued daily and payable monthly on the average
daily net assets in the Fund or Funds excluding the net assets
representing capital contributed by Jackson National Life Insurance
Company in accordance with Schedule B hereto. From time to time, the
Sub-Adviser may agree to waive or reduce some or all of the
compensation to which it is entitled under this Agreement.
The Sub-Adviser represents and warrants that in no event shall the
Sub-Adviser provide similar investment advisory services to any client
comparable to the Fund being managed under this Agreement at a
composite rate of compensation less than that provided for herein.
9. Services to Others. Adviser understands, and has advised the Trust's
Board of Trustees, that Sub-Adviser now acts, or may in the future act,
as an investment adviser to fiduciary and other managed accounts, and
as investment adviser or sub-investment adviser to other investment
companies. Adviser has no objection to Sub-Adviser acting in such
capacities, provided that whenever the Fund and one or more other
investment advisory clients of Sub-Adviser have available funds for
investment, investments selected for each will be allocated in a manner
believed by Sub-Adviser to be equitable to each. Adviser recognizes,
and has advised Trust's Board of Trustees, that in some cases this
procedure may adversely affect the size of the position that the
participating Fund may obtain in a particular security. In addition,
Adviser understands, and has advised Trust's Board of Trustees, that
the persons employed by Sub-Adviser to assist in Sub-Adviser's duties
under this Agreement will not devote their full time to such service
and nothing contained in this Agreement will be deemed to limit or
restrict the right of Sub-Adviser or any of its affiliates to engage in
and devote time and attention to other businesses or to render services
of whatever kind or nature.
10. Standard of Care and Limitation of Liability. The Sub-Adviser shall
exercise its best judgment and shall act in good faith in rendering the
services pursuant to this Agreement.
Sub-Adviser, its officers, directors, employees, agents or affiliates
will not be subject to any liability to the Adviser or the Fund or
their directors, officers, employees, agents or affiliates for any
error of judgment or mistake of law or for any loss suffered by the
Fund in connection with the performance of Sub-Adviser's duties under
this Agreement, except for a loss resulting from Sub-Adviser's willful
misfeasance, bad faith, or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties under this Agreement.
11. Indemnification. Notwithstanding Section 10 of this Agreement, the
Sub-Adviser agrees to indemnify and hold harmless the Adviser, any
affiliated person of the Adviser, and each person, if any, who, within
the meaning of Section 15 of the 1933 Act, controls ("controlling
person") the Adviser (all of such persons being referred to as "Adviser
Indemnified Persons") against any and all losses, claims, damages,
liabilities, or litigation (including reasonable legal and other
expenses) to which an Adviser Indemnified Person may become subject
under the 1933 Act, 1940 Act, the Investment Advisers Act of 1940, the
Internal Revenue Code, under any other statute, at common law or
otherwise, arising out of the Sub-Adviser's responsibilities as
Sub-Adviser to the Fund and to the Trust which is based upon the
willful misfeasance, bad faith or negligence or breach of this
Agreement by Sub-Adviser or its agents, or may be based upon any untrue
statement of a material fact provided in writing by the Sub-Adviser
specifically for inclusion in the Prospectus, or any amendment or
supplement thereto, or the omission to state therein a material fact
known or which should have been known to the Sub-Adviser and was
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that in no case shall the
indemnity in favor of an Adviser Indemnified Person be deemed to
protect such person against any liability to which any such person
would otherwise be subject by reason of willful misfeasance, bad faith,
negligence in the performance of its duties, or by reason of its breach
of this Agreement.
12. Duration and Termination. This Agreement will become effective as to a
Fund upon execution or, if later, on the date that initial capital for
such Fund is first provided to it and, unless sooner terminated as
provided herein, will continue in effect for two years from such date.
Thereafter, if not terminated as to a Fund, this Agreement will
continue in effect as to a Fund for successive periods of 12 months,
provided that such continuation is specifically approved at least
annually by the Trust's Board of Trustees or by vote of a majority of
the outstanding voting securities of such Fund, and in either event
approved also by a majority of the Trustees of the Trust who are not
interested persons of the Trust, or of the Adviser, or of the
Sub-Adviser. Notwithstanding the foregoing, this Agreement may be
terminated as to a Fund at any time, without the payment of any
penalty, on sixty days' written notice by the Trust or Adviser, or on
sixty days' written notice by the Sub-Adviser. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities",
"interested persons" and "assignment" have the same meanings of such
terms in the 1940 Act.)
13. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally; but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
14. Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such
notice.
15. Proprietary Rights. Sub-Adviser represents, and the Trust and the
Adviser acknowledge, that Sub-Adviser is the sole owner of the names
"Pacific Investment Management Company" and "PIMCO" and certain logos
associated with such names (the "PIMCO Marks").
The use by the Trust and the Adviser, or their affiliates, on their own
behalf or on behalf of the JNL/PIMCO Total Return Bond Series, of any
PIMCO Marks or any representations regarding Sub-Adviser in any
disclosure document, advertisement, sales literature or other materials
promoting the JNL/PIMCO Total Return Bond Series shall remain subject
to the approval of Sub-Adviser; provided, however, that (i)
Sub-Adviser's review of any material pursuant to this Agreement shall
be conducted in a reasonable and timely manner; (ii) Sub-Adviser's
approval under this Agreement shall not be unreasonably withheld; and
(iii) Sub-Adviser's approval under this Agreement shall not be required
with respect to any use which has been previously approved by
Sub-Adviser, including, but not limited to, any use which has been
derived from disclosure contained in the Trust's or the Adviser's most
recent Prospectus and/or Statement of Additional Information, or any
supplements thereto, regarding any PIMCO Marks, PIMCO, or the JNL/PIMCO
Total Return Bond Series, which has been previously approved by
Sub-Adviser.
Sub-Adviser acknowledges and agrees that it will not use the name the
JNL/PIMCO Total Return Bond Series on its own behalf, or in relation to
any investment company for which Sub-Adviser or its successors and any
subsidiary or affiliate thereof acts as investment adviser, without the
express written permission of the Trust or the Adviser, respectively,
except that Sub-Adviser may state that it acts as a sub-advisor to the
Trust and the Adviser.
The parties hereby acknowledge that the Trust has adopted the name the
"JNL/PIMCO Total Return Bond Series" through the permission of
Sub-Adviser.
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
will be binding upon and shall inure to the benefit of the parties
hereto.
The name "JNL Series Trust" and "Trustees of JNL Series Trust" refer
respectively to the Trust created by, and the Trustees, as trustees but
not individually or personally, acting from time to time under, the
Declaration of Trust, to which reference is hereby made and a copy of
which is on file at the office of the Secretary of State of the
Commonwealth of Massachusetts and elsewhere as required by law, and to
any and all amendments thereto so filed or hereafter filed. The
obligations of the "JNL Series Trust" entered in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually but only in such capacities and are not binding upon any
of the Trustees, Shareholders or representatives of the Trust
personally, but bind only the assets of the Trust, and persons dealing
with the Fund must look solely to the assets of the Trust belonging to
such Fund for the enforcement of any claims against Trust.
17. Representations and Warranties of the Sub-Adviser.
The Sub-Adviser hereby represents that this Agreement does not violate
any existing agreements between the Sub-Adviser and any other party.
The Sub-Adviser further represents and warrants that it is a duly
registered investment adviser under the Investment Advisers Act of
1940, as amended and has provided to the Adviser a copy of its most
recent Form ADV as filed with the Securities and Exchange Commission.
The Sub-Adviser further represents that is has reviewed the
post-effective amendment to the Registration Statement for the Trust
filed with the Securities and Exchange Commission that contains
disclosure about the Sub-Adviser, and represents and warrants that,
with respect to the disclosure about the Sub-Adviser or information
relating, directly or indirectly, to the Sub-Adviser, such Registration
Statement contains, as of the date hereof, no untrue statement of any
material fact and does not omit any statement of a material fact which
was required to be stated therein or necessary to make the statements
contained therein not misleading.
18. Applicable Law. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of Michigan.
<PAGE>
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Agreement to be executed as of this 14th day of March, 2000.
JACKSON NATIONAL FINANCIAL
SERVICES, LLC
By: /s/ Andrew B. Hopping
-----------------------------------
Name: Andrew B. Hopping
Title: President
PACIFIC INVESTMENT MANAGEMENT COMPANY
By: PIMCO Management, Inc., a general partner
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
<PAGE>
SCHEDULE A
(Fund)
JNL/PIMCO TOTAL RETURN BOND SERIES
<PAGE>
SCHEDULE B
(Compensation)
JNL/PIMCO TOTAL RETURN BOND SERIES
Average Daily Net Assets Annual Rate
Amounts over $0: .25%
AMENDMENT
TO
AMENDED INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
BETWEEN
JNL SERIES TRUST
AND
JACKSON NATIONAL FINANCIAL SERVICES, LLC
This AMENDMENT is by and between JNL Series Trust, a Massachusetts
business trust (the "Trust") and Jackson National Financial Services, Inc., a
Delaware corporation (the "Adviser").
WHEREAS, the Trust and the Adviser entered into an Amended Investment
Advisory and Management Agreement dated August 17, 1995 (the "Agreement"),
whereby the Trust retained the Adviser to perform investment advisory and
management services for the Series of the Trust enumerated in the Agreement; and
WHEREAS, four new Series will be added to the Trust and the Trust
desires the Adviser to perform investment advisory and management services for
these Series of the Trust; and
WHEREAS, the Adviser agrees to serve as the investment adviser and
business manager for the above-referenced Series of the Trust on the terms and
conditions set forth in the Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the Trust and the Adviser
agree as follows:
1. Effective with respect to a Series upon capitalization of such
Series, the Adviser shall serve as the investment adviser and business manager
for the JNL/Janus Balanced Series, JNL/Putnam Mid-Cap Growth Series and T. Rowe
Price/JNL Value Series.
2. As compensation for services performed and the facilities and
personnel provided by the Adviser under the Agreement, the Trust will pay to the
Adviser, promptly after the end of each month for the services rendered by the
Adviser during the preceding month, the sum of the following amounts:
JNL/Janus Balanced Series........... $0 to $300 million ... 0.95%
Over $300 million .... 0.90%
JNL/Putnam Mid-Cap Growth Series.... $0 to $300 million ... 0.95%
Over $300 million .... 0.90%
T. Rowe Price/JNL Value Series...... $0 to $300 million ... 0.90%
Over $300 million .... 0.85%
3. The Trust and the Adviser agree to abide and be bound by all of the
terms and conditions set forth in the Agreement.
IN WITNESS WHEREOF, the Trust and the Adviser have caused this
Agreement to be executed by their duly authorized officers as of the 10th day of
February, 2000.
JNL SERIES TRUST
By: /s/ Andrew B. Hopping
-------------------------------
Name: Andrew B. Hopping
-------------------------------
Title: President
-------------------------------
JACKSON NATIONAL FINANCIAL SERVICES, LLC
By: /s/ Thomas J. Meyer
-------------------------------
Name: Thomas J. Meyer
-------------------------------
Title: Senior Vice President
-------------------------------
AMENDMENT
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
T. ROWE PRICE ASSOCIATES, INC.
This AMENDMENT is made by and between JACKSON NATIONAL FINANCIAL
SERVICES, LLC, a Michigan limited liability company and registered investment
adviser ("Adviser"), and T. ROWE PRICE ASSOCIATES, INC., a Maryland corporation
and registered investment adviser ("Sub-Adviser").
WHEREAS, the Adviser and Sub-Adviser entered into an Investment
Sub-Advisory Agreement dated as of February 20, 1995 ("Agreement"), whereby
Adviser appointed Sub-Adviser to provide certain sub-investment advisory
services to the investment portfolios of the JNL Series Trust; and
WHEREAS, pursuant to the Agreement, the Adviser agreed to pay the
Sub-Adviser for the services provided and the expenses assumed by the
Sub-Advisor a sub-advisory fee as set forth on Schedule B to the Agreement, and
the Sub-Adviser agreed to accept such sub-advisory fee as full compensation
under the Agreement for such services and expenses; and
WHEREAS, the Adviser desires to appoint Sub-Adviser to provide, and
Sub-Adviser has agreed to provide, additional sub-investment advisory services a
new investment portfolio of the JNL Series Trust, effective upon execution or,
if later, the date that initial capital for such investment portfolio is first
provided.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree to amend the Agreement as follows:
1. Schedule A to the Agreement is hereby deleted and replaced in its
entirety with Schedule A dated May 1, 2000, attached hereto.
2. Schedule B to the Agreement is hereby deleted and replaced in its
entirety with Schedule B dated May 1, 2000, attached hereto.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Amendment to be executed as of this 29th day of February, 2000.
JACKSON NATIONAL FINANCIAL T. ROWE PRICE ASSOCIATES, INC.
SERVICES, LLC
By: /s/ Andrew B. Hopping By: /s/ Darrell N. Braman
-------------------- -------------------
Name: Andrew B. Hopping Name: Darrell N. Braman
-------------------- -------------------
Title: President Title: Vice President
-------------------- --------------------
<PAGE>
SCHEDULE A
DATED MAY 1, 2000
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
T. ROWE PRICE ASSOCIATES, INC.
(Fund)
T. Rowe Price/JNL Established Growth Series
T. Rowe Price/JNL Mid-Cap Growth Series
T. Rowe Price/JNL Value Series
<PAGE>
SCHEDULE B
DATED MAY 1, 2000
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
T. ROWE PRICE ASSOCIATES, INC.
(Compensation)
T. Rowe Price Established Growth Series
Average Daily Net Assets Annual Rate
$0 to $20 million 0.45%
$20 to $50 million 0.40%
$50 to $200 million 0.40%*
Above $200 million 0.40%
T. Rowe Price/JNL Mid-Cap Growth Series
Average Daily Net Assets Annual Rate
$0 to $20 million 0.60%
$20 to $50 million 0.50%
$50 to $200 million 0.50%*
Above $200 million 0.50%
*When average daily net assets exceed this amount, the annual rate asterisked is
applicable to all the amounts in the T. Rowe Price/JNL Established Growth and T.
Rowe Price/JNL Mid-Cap Growth Series, respectively.
T. Rowe Price/JNL Value Series
Average Daily Net Assets Annual Rate
$0 to $50 million 0.50%
Amounts over $50 million 0.40%
AMENDMENT
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
PUTNAM INVESTMENT MANAGEMENT, INC.
This AMENDMENT is made by and between JACKSON NATIONAL FINANCIAL
SERVICES, LLC, a Michigan limited liability company and registered investment
adviser ("Adviser"), and PUTNAM INVESTMENT MANAGEMENT, INC. a Massachusetts
corporation and registered investment adviser ("Sub-Adviser").
WHEREAS, the Adviser and Sub-Adviser entered into an Investment
Sub-Advisory Agreement dated as of August 17, 1995 ("Agreement"), whereby
Adviser appointed Sub-Adviser to provide certain sub-investment advisory
services to the investment portfolios of the JNL Series Trust; and
WHEREAS, pursuant to the Agreement, the Adviser agreed to pay the
Sub-Adviser for the services provided and the expenses assumed by the
Sub-Advisor a sub-advisory fee as set forth on Schedule B to the Agreement, and
the Sub-Adviser agreed to accept such sub-advisory fee as full compensation
under the Agreement for such services and expenses; and
WHEREAS, the Adviser desires to appoint Sub-Adviser to provide, and
Sub-Adviser has agreed to provide, additional sub-investment advisory services
to two new investment portfolios of the JNL Series Trust, effective upon
execution or, if later, the date that initial capital for such investment
portfolio is first provided.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree to amend the Agreement as follows:
1. Schedule A to the Agreement is hereby deleted and replaced in its
entirety with Schedule A dated May 1, 2000, attached hereto.
2. Schedule B to the Agreement is hereby deleted and replaced in its
entirety with Schedule B dated May 1, 2000, attached hereto.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Amendment to be executed as of this 29th day of February, 2000.
JACKSON NATIONAL FINANCIAL PUTNAM INVESTMENT
SERVICES, LLC MANAGEMENT, INC.
By: /s/ Andrew B. Hopping By: /s/ John Verani
-------------------------------- --------------------------
Name: Andrew B. Hopping Name: John Verani
-------------------------------- --------------------------
Title: President Title:Senior Vice President
-------------------------------- --------------------------
<PAGE>
SCHEDULE A
DATED MAY 1, 2000
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
PUTNAM INVESTMENT MANAGEMENT, INC.
(Fund)
JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
JNL/Putnam International Equity Series
JNL/Putnam Mid-Cap Growth Series
<PAGE>
SCHEDULE B
DATED MAY 1, 2000
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
PUTNAM INVESTMENT MANAGEMENT, INC.
(Compensation)
JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
Average Daily Net Assets Annual Rate
First $150 million 0.50%
Next $150 million 0.45%
Over $300 million 0.35%
JNL/Putnam International Equity Series
Average Daily Net Assets Annual Rate
First $150 million 0.65%
Next $150 million 0.55%
Over $300 million 0.45%
JNL/Putnam Mid-Cap Growth Series
Average Daily Net Assets Annual Rate
$0 to $250 million 0.50%
Over $250 million 0.45%
AMENDMENT
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
JANUS CAPITAL CORPORATION
This AMENDMENT is made by and between JACKSON NATIONAL FINANCIAL
SERVICES, LLC, a Michigan limited liability company and registered investment
adviser ("Adviser"), and JANUS CAPITAL CORPORATION, a Colorado corporation and
registered investment adviser ("Sub-Adviser").
WHEREAS, the Adviser and Sub-Adviser entered into an Investment
Sub-Advisory Agreement dated as of February 28, 1995 ("Agreement"), whereby
Adviser appointed Sub-Adviser to provide certain sub-investment advisory
services to the investment portfolios of the JNL Series Trust; and
WHEREAS, pursuant to the Agreement, the Adviser agreed to pay the
Sub-Adviser for the services provided and the expenses assumed by the
Sub-Advisor a sub-advisory fee as set forth on Schedule B to the Agreement, and
the Sub-Adviser agreed to accept such sub-advisory fee as full compensation
under the Agreement for such services and expenses; and
WHEREAS, the Adviser desires to appoint Sub-Adviser to provide, and
Sub-Adviser has agreed to provide, additional sub-investment advisory services
to two new investment portfolios of the JNL Series Trust, effective upon
execution or, if later, the date that initial capital for such investment
portfolio is first provided.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree to amend the Agreement as follows:
1. Schedule A to the Agreement is hereby deleted and replaced in its
entirety with Schedule A dated May 1, 2000, attached hereto.
2. Schedule B to the Agreement is hereby deleted and replaced in its
entirety with Schedule B dated May 1, 2000, attached hereto.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Amendment to be executed as of this 29th day of February, 2000.
JACKSON NATIONAL FINANCIAL JANUS CAPITAL CORPORATION
SERVICES, LLC
By: /s/ Andrew B. Hopping By: /s/ Bonnie M. Howe
--------------------------- --------------------------
Name: Andrew B. Hopping Name: Bonnie M. Howe
--------------------------- --------------------------
Title: President Title: Vice President
--------------------------- --------------------------
<PAGE>
SCHEDULE A
DATED MAY 1, 2000
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
JANUS CAPITAL CORPORATION
(Fund)
JNL/Janus Capital Growth Series
JNL/Janus Aggressive Growth Series
JNL/Janus Global Equities Series
JNL/Janus Balanced Series
JNL/Janus Growth & Income Series
<PAGE>
SCHEDULE B
DATED MAY 1, 2000
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
JACKSON NATIONAL FINANCIAL SERVICES, LLC
AND
JANUS CAPITAL CORPORATION
(Compensation)
JNL/Janus Capital Growth Series
Average Daily Net Assets Annual Rate
$0 to $100 million .55%
$100 million to $500 million .50%
Amounts over $500 million .45%
JNL/Janus Aggressive Growth Series
Average Daily Net Assets Annual Rate
$0 to $100 million .55%
$100 million to $500 million .50%
Amounts over $500 million .45%
JNL/Janus Global Equities Series
Average Daily Net Assets Annual Rate
$0 to $100 million .55%
$100 million to $500 million .50%
Amounts over $500 million .45%
JNL/Janus Balanced Series
Average Daily Net Assets Annual Rate
$0 to $100 million .55%
$100 million to $500 million .50%
Amounts over $500 million .45%
JNL/Janus Growth & Income Series
Average Daily Net Assets Annual Rate
$0 to $100 million .55%
$100 million to $500 million .50%
Amounts over $500 million .45%
April 4, 2000
Board of Trustees
JNL Series Trust
5901 Executive Drive
Lansing, MI 48911
Re: Opinion of Counsel - JNL Series Trust
Gentlemen:
You have requested our Opinion of Counsel in connection with the filing
with the Securities and Exchange Commission of Post-Effective Amendment No. 20
to the Registration Statement on Form N-1A with respect to the JNL Series Trust.
We have made such examination of the law and have examined such records
and documents as in our judgment are necessary or appropriate to enable us to
render the opinions expressed below.
We are of the following opinions:
1. JNL Series Trust ("Trust") is a valid and existing unincorporated
voluntary association, commonly known as a business trust.
2. The Trust is a business Trust created and validly existing pursuant to
the Massachusetts Laws.
3. All of the prescribed Trust procedures for the issuance of the shares
have been followed, and, when such shares are issued in accordance with
the Prospectus contained in the Registration Statement for such shares,
all state requirements relating to such Trust shares will have been
complied with.
<PAGE>
Board of Trustees
JNL Series Trust
April 4, 2000
Page 2
4. Upon the acceptance of purchase payments made by shareholders in
accordance with the Prospectus contained in the Registration Statement
and upon compliance with applicable law, such shareholders will have
legally-issued, fully paid, non-assessable shares of the Trust.
You may use this opinion letter, or a copy thereof, as an exhibit to
the Registration.
Sincerely,
BLAZZARD, GRODD & HASENAUER, P.C.
By:/s/ Raymond A. O'Hara III
---------------------------------
Raymond A. O'Hara III
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-1A of our report dated February 12, 2000, relating to the
financial statements and financial highlights which appear in the December 31,
1999 Annual Report to the Shareholder of JNL Series Trust, which are also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Financial Highlights" and "Independent
Accountants" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
203 North Lasalle Street
Chicago, Illinois 60601
April 7, 2000
FUND PARTICIPATION AGREEMENT
THIS FUND PARTICIPATION AGREEMENT, made on this the 11th day of
February, 1999 among JNL Series Trust (the "Trust"), a business trust organized
under the laws of the Commonwealth of Massachusetts, and Jackson National Life
Insurance Company (the "Company"), a life insurance company organized under the
laws of the State of Michigan, on behalf of itself and on behalf of Jackson
National Separate Account V ("Separate Account"), a separate account of the
Company existing pursuant to the Michigan Insurance Code.
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company which
is divided into various investment series ("Series"), each Series being subject
to separate investment objectives and restrictions. (See Exhibit A for available
Series); and
WHEREAS, the Trust's shares may be offered to variable annuity and
variable life insurance separate accounts of insurance companies, which may or
may not be affiliated persons of each other ("Participating Insurers"), pursuant
to fund participation agreements substantially identical to this Agreement; and
WHEREAS, the Company, by resolution, has established the Separate
Account on its books of account for the purpose of funding certain variable
contracts ("Contracts"); and
WHEREAS, the Separate Account, registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940 ("1940 Act"), is divided into various "Portfolios" under which the
income, gains and losses, whether or not realized, from assets allocated to each
such Portfolio are, in accordance with the Contracts, credited to or charged
against such Portfolio without regard to any other income, gains or losses of
other Portfolios or separate accounts or of the Company; and
WHEREAS, the Separate Account desires to purchase shares of the Trust;
and
WHEREAS, the Trust agrees to make its shares available to serve as
underlying investment media for the various Portfolios of the Separate Account
with each Series of the Trust serving as the underlying investment medium for
the corresponding Portfolio of the Separate Account; and
WHEREAS, the Trust has undertaken that its Board of Trustees ("Board")
will monitor the Trust for the existence of any material irreconcilable
conflicts that may arise between the contract owners of separate accounts of
insurance companies that invest in the Trust for the purpose of identifying and
remedying any such conflict;
NOW, THEREFORE, in consideration of the foregoing and of mutual
covenants and conditions set forth herein and for other good and valuable
consideration, the Trust and the Company (on behalf of itself and the Separate
Account) hereby agree as follows:
ARTICLE I
SALE OF TRUST SHARES
1.1 The Contracts funded by the Separate Account will provide for the
allocation of net amounts among the various Portfolios of the Separate Account
for investment in the shares of the particular Series of the Trust underlying
each Portfolio. The selection of a particular Portfolio is to be made (and such
selection may be changed) in accordance with the terms of the Contract.
1.2 Trust shares to be made available to the respective Portfolios of
the Separate Account shall be sold by each of the respective Series of the Trust
and purchased by the Company for that Portfolio at the net asset value next
computed after receipt of each order, as established in accordance with the
provisions of the then current prospectus of the Trust. Shares of a particular
Series of the Trust shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of those
Contracts having amounts allocated to the Portfolio for which the Trust Series
shares serve as the underlying investment medium. Orders and payments for shares
purchased will be sent promptly to the Trust and will be made payable in the
manner established from time to time by the Trust for the receipt of such
payments. Notwithstanding the foregoing, the Board of the Trust may refuse to
sell shares of any Series to any person or suspend or terminate the offering of
shares of any Series if such action is required by law or by regulatory
authority having jurisdiction over the Trust or is, in the sole discretion of
the Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interests of the
shareholders of such Series.
1.3 The Trust will redeem the shares of the various Series when
requested by the Company on behalf of the corresponding Portfolio of the
Separate Account at the net asset value next computed after receipt of each
request for redemption, as established in accordance with the provisions of the
then current prospectus of the Trust. The Trust will make payment in the manner
established from time to time by the Trust for the receipt of such redemption
requests, but in no event shall payment be delayed for a greater period than is
permitted by the 1940 Act.
1.35 For purposes of paragraphs 1.2 and 1.3 hereinabove, the Company
shall be the agent of the Trust for the receipt of (1) orders to purchase, and
(2) requests to redeem, shares of the Series of the Trust on behalf of the
Separate Account, and receipt of such orders and requests by such agent shall
constitute receipt thereof by the Trust, provided that the Trust receives actual
notice of such order or request by 12:00 noon (at the Trust's offices) on the
next following Business Day. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Trust calculates its
net asset value pursuant to the rules of the Securities and Exchange Commission.
1.4 Transfer of the Trust's shares will be by book entry only. No stock
certificates will be issued to the Separate Account. Shares ordered from a
particular Series of the Trust will be recorded in an appropriate title for the
corresponding Portfolio of the Separate Account.
1.5 The Trust shall furnish same day notice to the Company of any
dividend or distribution payable on its shares. All of such dividends and
distributions as are payable on each of the Series shares in the title for the
corresponding Portfolio of the Separate Account shall be automatically
reinvested in additional shares of that Series of the Trust. The Trust shall
notify the Company of the number of shares so issued.
1.6 The Trust shall make the net asset value per share of each Series
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 6:00 p.m. Eastern Time.
ARTICLE II
SALES MATERIAL AND INFORMATION
2.1 The Company shall furnish to the Trust each piece of sales
literature or other promotional material in which the Trust or its investment
adviser is named at least ten business days prior to its use. No such material
shall be used if the Trust objects to such use within five business days after
receipt of such material.
2.2 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust shares, as such documents may be amended or supplemented from time to
time, or in reports or proxy statements for the Trust, or in sales literature or
other promotional material approved by the Trust, except with the permission of
the Trust.
2.3 The Trust shall furnish to the Company each piece of sales
literature or other promotional material in which the Company or the Separate
Account is named at least ten business days prior to its use. No such material
shall be used if the Company objects to such use within five business days after
receipt of such material.
2.4 The Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Separate
Account, or the Contracts other than the information or representations
contained in the registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for the Separate Account which are in the
public domain or approved by the Company for distribution to Contract owners, or
in sales literature or other promotional material approved by the Company,
except with the permission of the Company.
2.5 The Trust will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above that relate to the Trust or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
2.6 The Company will provide to the Trust at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Contracts or
the Separate Account, contemporaneously with the filing of such documents with
the Securities and Exchange Commission or other regulatory authorities.
2.7 For purposes of this Article II, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials.
ARTICLE III
EXPENSES
3.1 The Trust shall pay no fee or other compensation to the Company
under this Agreement. All expenses incident to performance by the Trust under
this Agreement shall be paid by the Trust. The Trust shall bear the expenses
for: the cost of registration of the Trust's shares; preparation and filing of
the Trust's prospectus and registration statement; preparation and filing of
proxy materials and reports; setting the prospectus in type; setting in type the
proxy materials and reports to shareholders; the preparation of all statements
and notices required of the Trust by any federal or state law; and all taxes on
the issuance or transfer of the Trust's shares.
3.2 The Trust's prospectus shall state that the statement of additional
information for the Trust is available from the Trust, and the Trust, at its
expense, shall provide such statement free of charge to the Company and to any
Contract owner or prospective Contract owner who requests such statement.
3.3 The Trust, at its expense, shall provide the Company with copies of
its proxy material, reports to stockholders and other communications to
stockholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
ARTICLE IV
VOTING
4.1 The Company shall provide pass-through voting privileges to all
Contract owners so long as the Securities and Exchange Commission continues to
interpret the 1940 Act to require pass-through voting privileges for variable
contract owners. The Company shall be responsible for assuring that the Separate
Account calculates voting privileges in a manner consistent with standards
provided by the Trust, which standards will also be provided to other
Participating Insurers. To the extent required by law, the Company will vote
shares for which it has not received voting instructions as well as shares
attributable to the Company in the same proportion as it votes shares for which
it has received instructions.
4.2 The Trust will comply with all provisions of the 1940 Act requiring
voting by shareholders and, in particular, the Trust will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Trust
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Trust will act
in accordance with the Securities and Exchange Commission's interpretation of
the requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE V
POTENTIAL CONFLICTS
5.1 The Board of the Trust will monitor the Trust for the existence of
any material irreconcilable conflict between the interests of the contract
owners of all separate accounts investing in the Trust. The Company will report
to the Board any potential or existing conflicts of which it is or becomes aware
between any of its Contract owners, or between any of its Contract owners and
contract owners of other Participating Insurers. The Company will be responsible
for assisting the Board in carrying out its responsibilities to identify and
resolve material conflicts by providing the Board with all information available
to it that is reasonably necessary for the Board to consider any issues raised,
including information as to a decision by the Company to disregard voting
instructions of its Contract owners.
5.2 The Board's determination of the existence of any irreconcilable
material conflict and its implications shall be made known promptly by it to the
Company and other Participating Insurers. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance tax, or securities laws or regulations, or a public ruling, private
letter ruling, or any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of any Series are being
managed; (e) a difference in voting instructions given by variable annuity
contract owners and variable life insurance contract owners or by contract
owners of different Participating Insurers; or (f) a decision by a Participating
Insurer to disregard the voting instructions of its variable contract owners.
5.3 If it is determined by a majority of the Board or a majority of its
disinterested Trustees that a material irreconcilable conflict exists that
affects the interests of the Contract owners, the Company shall, to the extent
reasonably practicable (as determined by a majority of the Trust's disinterested
Trustees), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to the Separate Account from the Trust or any Series and
reinvesting such assets in a different investment medium, including another
Series of the Trust, or participating in the submission of the question of
whether such segregation should be implemented to a vote of all affected
contract owners and, as appropriate, segregating the assets of any particular
group (e.g. annuity contract owners or life insurance contract owners) that
votes in favor of such segregation, or offering to the affected contract owners
the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account. The Company shall
take such steps at its expense if the conflict affects solely the interests of
the owners of the Company's Contracts, but shall bear only its equitable portion
of any such expense if the conflict also affects the interests of the contract
owners of one or more Participating Insurers other than the Company, provided:
that this sentence shall not be construed to require the Trust to bear any
portion of such expense. If a material irreconcilable conflict arises because of
the Company's decision to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at Trust's election, to withdraw the investment of the
Separate Account in the Trust, and no charge or penalty will be imposed as a
result of such a withdrawal. The Company agrees to take such remedial action as
may be required under this paragraph 5.3 with a view only to the interests of
its Contract owners. For purposes of this paragraph 5.3, a majority of the
disinterested members of the Trust's Board shall determine whether or not any
proposed action adequately remedies any irreconcilable conflict, but in no event
will Trust be required to establish a new funding medium for any variable
contract. The Company shall not be required by this paragraph 5.3 to establish a
new funding medium if any offer to do so has been declined by vote of a majority
of contract owners materially and adversely affected by the irreconcilable
material conflict.
Notwithstanding the foregoing, if the Company is required under this
paragraph 5.3 to withdraw the investment of the Separate Account in the Trust,
such withdrawal may take place within six (6) months after the Trust gives
written notice that this paragraph 5.3 is being implemented, provided: That the
Trust may require that such withdrawal must take place within a shorter period
of time after such notice if a majority of the disinterested members of the
Trust's Board determines that such shorter period is necessary to avoid
irreparable harm to its shareholders; and further provided: That until the end
of such six month (or shorter) period the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of Trust Shares.
The Company will not be required to withdraw investments in the Separate Account
of the Trust until all regulatory approval is obtained.
5.4 In discharging its responsibilities under this Article V, the
Company will cooperate and coordinate, to the extent necessary, with the Board
and with other Participating Insurers.
5.5 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or a subsequent Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect to mixed
or shared funding on terms and conditions materially different from those
contained in the Trust's mixed and shared funding order then the Trust or the
Participating Insurers, as appropriate, shall take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3(T), and related Rules as amended,
to the extent such rules are applicable.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 The Company represents and warrants that the Contracts are or will
be registered under the Securities Act of 1933 ("1933 Act"), that the Contracts
will be issued and sold in compliance in all material respects with all
applicable federal and state laws, and that the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
The Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable laws and that it has legally and
validly established the Separate Account prior to any issuance or sale thereof
as a segregated asset account under the Michigan Insurance Code and has
registered or, prior to any issuance or sale of the Contracts, will register the
Separate Account as a unit investment trust in accordance with the provisions of
the 1940 Act to serve as a segregated investment account for the Contracts.
6.2 The Trust represents and warrants that Trust shares sold pursuant
to this Agreement shall be registered under the 1933 Act, shall be duly
authorized for issuance and sold in compliance with the laws of the State of
Massachusetts and all applicable federal and state securities laws and that the
Trust is and shall remain registered under the 1940 Act. The Trust shall amend
the Registration Statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
shares. The Trust represents that it is lawfully organized and validly existing
under the laws of the State of Massachusetts and that it does and will comply in
all material respects with the 1940 Act.
6.3 The Trust represents and warrants that it intends to qualify each
of its Series as a Regulated Investment Company under Subchapter M of the
Internal Revenue Code, as amended, (the "Code") and that it will make every
effort to maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Company immediately upon having a
reasonable basis for believing that any such Series may not so qualify in the
future.
6.4 The Trust represents and warrants that it will at all times invest
money from the Contracts in such a manner as to ensure that the Contracts will
be treated as variable contracts under the Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Trust will at all
times comply with Section 817(h) of the Code and the Regulations thereunder,
relating to the diversification requirements for annuity, endowment, or life
insurance contracts and any amendments or other modifications to such Section or
Regulation.
6.5 The Company represents that the Contracts are to be treated as
annuity, endowment, or life insurance contracts, under applicable provisions of
the Code, and that it will make every effort to maintain such treatment and that
it will notify the Trust immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they might not
be so treated in the future.
6.6 The Trust makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Trust represents that its investment policies, fees and expenses
are and shall at all times remain in compliance with the laws of the State of
Massachusetts and the Trust represents that its operations are and shall at all
times remain in material compliance with the 1940 Act.
6.7 The Trust represents and warrants that all of its Trustees,
officers, employees, investment advisers, and other persons dealing with the
money or securities of the Trust are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Trust in an amount not less that the minimal coverage as required currently by
Section 17(g) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
6.8 The Company represents and warrants that all of its directors,
officers, employees, and other persons who are directly dealing with the money
or securities of the Trust are and shall continue to be at all times covered by
a blanket fidelity bond or similar coverage in amounts which shall comply with
Rule 17g-1 under the 1940 Act.
6.9 The Trust represents and warrants that shares of the Trust will be
sold only to Participating Insurers and their separate accounts or to qualified
plans as permitted under section 817(h) of the Code. No shares of any Series
will be sold to the general public. The Trust further represents and warrants
that it will not sell Trust shares to any insurance company or separate account
except pursuant to an agreement containing provisions substantially the same as
those contained in Articles IV and V of this Agreement governing voting rights
and conflicts of interest, respectively.
6.10 The Company represents and warrants that it will make reasonable
efforts to market those Contracts it determines from time to time to offer for
sale and, although it is not required to offer for sale new Contracts in all
cases, will accept payments and otherwise service existing Contracts funded in
the Separate Account. No representation is made as to the number or amount of
such Contracts to be sold.
ARTICLE VII
INDEMNIFICATION
7.1 The Company agrees to indemnify and hold harmless the Trust and
each of the Trust's Trustees and officers and each person, if any, who controls
the Trust within the meaning of Section 15 of the 1933 Act against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses), arising out of the acquisition of any shares of the Trust by any
person, to which the Trust or such Trustees, officers or controlling person may
become subject under the 1933 Act, under any other statute, at common law or
otherwise, which (i) may be based upon any wrongful act by the Company, any of
its employees or representatives, any affiliate of or any person acting on
behalf of the Company or a principal underwriter of its insurance products, or
(ii) may be based upon any untrue statement or alleged untrue statement of a
material fact contained in a registration statement or prospectus covering
shares of the Trust or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon information furnished to
the Trust by the Company, or (iii) may be based on any untrue statement or
alleged untrue statement of a material fact contained in a registration
statement or prospectus covering the Contracts, or any amendments or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement or statements
therein not misleading, unless such statement or omission was made in reliance
upon information furnished to the Company or such affiliate by or on behalf of
the Trust; provided, however, that in no case (i) is the Company's indemnity in
favor of a Trustee or officer or any other person deemed to protect such Trustee
or officer or other person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his or her duties or by reason of his or her
reckless disregard of obligations and duties under this Agreement or (ii) is the
Company to be liable under its indemnity agreement contained in this Paragraph
7.1 with respect to any claim made against the Trust or any person indemnified
unless the Trust or such person, as the case may be, shall have notified the
Company in writing pursuant to Paragraph 10 of this Agreement within a
reasonable time after the summons or other first legal process giving
information of the nature of the claims shall have been served upon the Trust or
upon such person (or after the Trust or such person shall have received notice
of such service on any designated agent), but failure to notify the Company of
any such claim shall not relieve the Company from any liability which it has to
the Trust or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this Paragraph 7.1. The Company
shall be entitled to participate, at its own expense, in the defense, or, if it
so elects, to assume the defense of any suit which could result in liability to
it under this Paragraph 7.1, but, if it elects to assume the defense, such
defense shall be conducted by counsel chosen by it and satisfactory to the Trust
and to such of its officers, Trustees and controlling person or persons as may
be defendants in the suit. In the event that the Company elects to assume the
defense of any such suit and retain such counsel, the Trust, such officers,
Trustees and controlling person or persons shall bear the fees and expenses of
any additional counsel retained by them, but, in case the Company does not elect
to assume the defense of any such suit, the Company will reimburse the Trust,
such officers, Trustees and controlling person or persons for the reasonable
fees and expenses of any counsel retained by them. The Company agrees promptly
to notify the Trust pursuant to Paragraph 10 of this Agreement of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of any shares of the Trust.
7.2 The Trust agrees to indemnify and hold harmless the Company and its
affiliated principal underwriter of the Contracts and each of the Company's
Directors and officers and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
it or such directors, officers or controlling person may become subject under
the 1933 Act, under any other statute, at common law or otherwise, arising out
of the acquisition of any shares of the Trust by any person which (i) may be
based upon any wrongful act by the Trust or any of its employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement or
prospectus covering shares of the Trust or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading unless such statement or omission was made in reliance upon
information furnished to the Trust by the Company, or (iii) may be based on any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering the Contracts, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf of the Trust;
provided, however, that in no case (i) is the Trust's indemnity in favor of a
Director or officer or any other person deemed to protect such Director or
officer or other person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his or her duties or by reason of his or her
reckless disregard of obligations and duties under this Agreement or (ii) is the
Trust to be liable under its indemnity agreement contained in this Paragraph 7.2
with respect to any claims made against the Company or any such Director,
officer or controlling person unless it, Director, officer or controlling
person, as the case may be, shall have notified the Trust in writing pursuant to
Paragraph 10 of this Agreement within a reasonable time after the summons or the
first legal process giving information of the nature of the claim shall have
been served upon it or upon such Director, officer or controlling person (or
after the Company or such Director, officer or controlling person shall have
received notice of such service on any designated agent), but failure to notify
the Trust of any claim shall not relieve it from any liability which it may have
to the person against whom such action is brought otherwise than on account of
its indemnity agreement contained in this Paragraph 7.2. The Trust will be
entitled to participate, at its own expense, in the defense, or, if it so
elects, to assume the defense of any suit which could result in liability to it
under this Paragraph 7.2, but, if the Trust elects to assume the defense, such
defense shall be conducted by counsel chosen by it and satisfactory to the
Company and to such of its Directors, officers and controlling person or persons
as may be defendants in the suit. In the event that the Trust elects to assume
the defense of any such suit and retain such counsel, the Company, such
Directors, officers and controlling person or persons shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Trust does
not elect to assume the defense of any such suit, it will reimburse the Company,
such Directors, officers and controlling person or persons for the reasonable
fees and expenses of any counsel retained by them. The Trust agrees promptly to
notify the Company pursuant to Paragraph 10 of this Agreement of the
commencement of any litigation or proceedings against it or any of its officers
or Trustees in connection with the issue and sale of any of its shares.
ARTICLE VIII
CONFIDENTIALITY
8. Subject to the requirements of legal process and regulatory
authority, each party shall treat as confidential all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize
confidential information without the express written consent of the affected
party until such time as it may come into the public domain.
ARTICLE IX
TERMINATION
9.1 This Agreement shall terminate:
(a) at the option of the Company or the Trust upon 90
days' advance written notice to all other parties to
this Agreement, provided, however, such notice shall
not be given earlier than twenty four months
following the date of this Agreement; or
(b) at the option of the Company if any of the Trust's
shares are not reasonably available to meet the
requirements of the Contracts funded in the Separate
Account as determined by the Company; or
(c) at the option of any party to this Agreement upon
institution of formal proceedings against any other
party to this Agreement by the Securities and
Exchange Commission or any other regulatory body; or
(d) upon the vote of Contract owners having an interest
in a particular Portfolio of the Separate Account.
The Company will give 30 days' prior written notice
to the Trust of the date of any proposed action to
replace the Trust's shares; or
(e) at the option of the Company if the Trust's shares
are not registered, issued or sold in accordance with
applicable state and/or federal law or such law
precludes the use of such shares as the underlying
investment medium of the Contracts funded in the
Separate Account; or
(f) at the option of the Company if any Series of the
Trust ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code or under any
successor similar provision, or if the Company
reasonably believes that any Series of the Trust may
fail to so qualify; or
(g) at the option of the Company if any Series of the
Trust fails to meet the diversification requirements
specified in paragraph 6.4 hereof.
9.2 Prompt notice of election to terminate under subparagraphs (b),
(c), (e), (f) and (g) of paragraph 9.1 shall be furnished by the electing party.
9.3 Notwithstanding any termination of this Agreement, the Trust shall,
at the option of the Company, continue to make available additional shares of
the Trust pursuant to the terms and conditions of this Agreement for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Trust, redeem investments in the Trust or invest
in the Trust upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this paragraph 9.3 shall not apply to any
terminations under Article V and the effect of such Article V terminations shall
be governed by Article V of this Agreement.
9.4 Notwithstanding Article V and the foregoing provisions of this
Article IX, the provisions of Article VII (Indemnification) and Article VIII
(Confidentiality) shall survive any termination of this Agreement.
ARTICLE X
NOTICES
10. Any notice shall be sufficiently given when sent by registered or
certified mail to each other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
JNL Series Trust
ATTN: Andrew B. Hopping
President
5901 Executive Drive
Lansing, MI 48911
If to the Company or the Separate Account:
Jackson National Life Insurance Company
ATTN: Thomas J. Meyer
Senior Vice President
5901 Executive Drive
Lansing, MI 48911
ARTICLE XI
APPLICABLE LAW
11. This Agreement shall be construed in accordance with the laws of
the State of Michigan.
ARTICLE XII
MISCELLANEOUS
12.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.2 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.3 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 The Trust and the Company agree that the obligations of the Trust
under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Trust individually, but are binding only upon the assets and
property of the Trust or of the appropriate Series thereof, as provided in the
Agreement and Declaration of Trust. The execution and delivery of this Agreement
has been authorized by the Trustees of the Trust, and signed by an authorized
officer of the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them or any shareholder of the Trust individually or to
impose any liability on any of them or any shareholder of the Trust personally,
but shall bind only the assets and property of the Trust or of the appropriate
Series thereof as provided in the Agreement and Declaration of Trust.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Attest: JNL Series Trust
/s/ Barbra Homier By: /s/ Andrew B. Hopping
- ------------------------ ----------------------------
Andrew B. Hopping
President
Attest: Jackson National Life Insurance Company
/s/ Barbra Homier By: /s/ Thomas J. Meyer
- ------------------------ ----------------------------
Thomas J. Meyer
Senior Vice President
Jackson National Separate Account V
Attest: By: Jackson National Life Insurance Company
/s/ Barbra Homier By: /s/ Thomas J. Meyer
- ------------------------ ----------------------------
Thomas J. Meyer
Senior Vice President
<PAGE>
EXHIBIT A
JNL SERIES TRUST
- - JNL/Alliance Growth Series
- - JNL/J.P. Morgan Enhanced S&P 500 Index Series
- - JNL/J.P. Morgan International & Emerging Markets Series
- - JNL/Janus Aggressive Growth Series
- - JNL/Janus Global Equities Series
- - JNL/PIMCO Total Return Bond Series
- - JNL/S&P Conservative Growth Series
- - JNL/S&P Moderate Growth Series
- - JNL/S&P Aggressive Growth Series
- - Goldman Sachs/JNL Growth & Income Series
- - Lazard/JNL Small Cap Value Series
- - Lazard/JNL Mid Cap Value Series
- - PPM America/JNL Money Market Series
- - Salomon Brothers/JNL Balanced Series
- - Salomon Brothers/JNL Global Bond Series
- - Salomon Brothers/JNL High Yield Bond Series
- - T. Rowe Price/JNL International Equity Investment Series
- - T. Rowe Price/JNL Mid-Cap Growth Series
FUND PARTICIPATION AGREEMENT
This FUND PARTICIPATION AGREEMENT, made on this the 16th day of
December, 1999, among JNL Series Trust (the "Trust"), a business trust organized
under the laws of the Commonwealth of Massachusetts, and Jackson National Life
Insurance Company of New York (the "Company"), a life insurance company
organized under the laws of the State of New York, on behalf of itself and on
behalf of JNLNY Separate Account II ("Separate Account"), a separate account of
the Company existing pursuant to the New York Insurance Code.
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company, which
is divided into various investment series ("Series"), each Series being subject
to separate investment objectives and restrictions. (See Schedule A for
available Series); and
WHEREAS, the Trust's shares may be offered to variable annuity and
variable life insurance separate accounts of insurance companies, which may or
may not be affiliated persons of each other ("Participating Insurers"), pursuant
to fund participation agreements substantially identical to this Agreement; and
+
WHEREAS, the Company, by resolution has established the Separate
Account on its books of account for the purpose of funding certain variable
contracts ("Contracts"); and
WHEREAS, the Separate Account, registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940, as amended ("1940 Act"), is divided into various "Portfolios" under
which the income, gains and losses, whether or not realized, from assets
allocated to each such Portfolio are, in accordance with the Contracts, credited
to or charged against such Portfolio without regard to any other income, gains
or losses of other Portfolios or separate accounts or of the Company; and
WHEREAS, the Separate Account desires to purchase shares of the Trust;
and
WHEREAS, the Trust agrees to make its shares available to serve as
underlying investment media for the various Portfolios of the Separate Account
with each Series of the Trust serving as the underlying investment medium for
the corresponding Portfolio of the Separate Account; and
WHEREAS, the Trust has undertaken that its Board of Trustees ("Board")
will monitor the Trust for the existence of any material irreconcilable
conflicts that may arise between the contract owners of the separate accounts of
insurance companies that invest in the Trust for the purpose of identifying and
remedying any such conflict;
NOW, THEREFORE, in consideration of the foregoing and of mutual
covenants and conditions set forth herein and for other good and valuable
consideration, the Trust and the Company (on behalf of itself and the Separate
Account) hereby agree as follows:
ARTICLE I
SALE OF TRUST SHARES
1.1 The Contracts funded by the Separate Account will provide for the
allocation of net amounts among the various Portfolios of the Separate Account
for investment in the shares of the particular Series of the Trust underlying
each Portfolio. The selection of a particular Portfolio is to be made (and such
selection may be changed) in accordance with the terms of the Contract.
1.2 Trust shares to be made available to the respective Portfolios of
the Separate Account shall be sold by each of the respective Series of the Trust
and purchased by the Company for that Portfolio at the net asset value next
computed after receipt of each order, as established in accordance with the
provisions of the then current prospectus of the Trust. Shares of a particular
Series of the Trust shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of those
Contracts having amounts allocated to the Portfolio for which the Trust Series
shares serve as the underlying investment medium. Orders and payments for shares
purchased will be sent promptly to the Trust and will be made payable in the
manner established from time to time by the Trust for the receipt of such
payments. Notwithstanding the foregoing, the Board of the Trust may refuse to
sell shares of any Series to any person or suspend or terminate the offering of
shares of any Series if such action is required by law or by regulatory
authority having jurisdiction over the Trust or is, in the sole discretion of
the Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interests of the
shareholders of such Series.
1.3 The Trust will redeem the shares of the various Series when
requested by the Company on behalf of the corresponding Portfolio of the
Separate Account at the net asset value next computed after receipt of each
request for redemption, as established in accordance with the provisions of the
then current prospectus of the Trust. The Trust will make payment in the manner
established from time to time by the Trust for the receipt of such redemption
requests, but in no event shall payment be delayed for a greater period than is
permitted by the 1940 Act.
1.4 For purposes of paragraphs 1.2 and 1.3 above, the Company shall be
the agent of the Trust for the receipt of (1) orders to purchase, and (2)
requests to redeem, shares of the Series of the Trust on behalf of the Separate
Account, and receipt of such orders and requests by such agent shall constitute
receipt thereof by the Trust, provided that the Trust receives actual notice of
such order or request by 12:00 noon (at the Trust's offices) on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Trust calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.5 Transfer of the Trust's shares will be by book entry only. No stock
certificates will be issued to the Separate Account. Shares ordered from a
particular Series of the Trust will be recorded in an appropriate title for the
corresponding Portfolio of the Separate Account.
1.6 The Trust shall furnish same day notice to the Company of any
dividend or distribution payable on its shares. All of such dividends and
distributions as are payable on each of the Series shares in the title for the
corresponding Portfolio of the Separate Account shall be automatically
reinvested in additional shares of that Series of the Trust. The Trust shall
notify the Company of the number of shares so issued.
1.7 The Trust shall make the net asset value per interest of each
Series available to the Company on a daily basis as soon as reasonably practical
after the net asset value per interest is calculated and shall use its best
efforts to make such net asset value per interest available by 6:00 p.m. Eastern
time.
ARTICLE II
SALES MATERIAL AND INFORMATION
2.1 The Company shall furnish to the Trust each piece of sales
literature or other promotional material in which the Trust or its investment
adviser is named at least ten business days prior to its use. No such material
shall be used if the Trust objects to such use within five business days after
receipt of such material.
2.2 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust shares, as such documents may be amended or supplemented from time to
time, or in reports or proxy statements for the Trust, or in sales literature or
other promotional material approved by the Trust, except with the permission of
the Trust.
2.3 The Trust shall furnish to the Company each piece of sales
literature or other promotional material in which the Company or the Separate
Account is named at least ten business days prior to its use. No such material
shall be used if the Company objects to such use within five business days after
receipt of such material.
2.4 The Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Separate
Account, or the Contracts other than the information or representations
contained in the registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for the Separate Account which are in the
public domain or approved by the Company for distribution to Contract owners, or
in sales literature or other promotional material approved by the Company,
except with the permission of the Company.
2.5 The Trust will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above that relate to the Trust or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
2.6 The Company will provide to the Trust at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Contracts or
the Separate Account, contemporaneously with the filing of such documents with
the Securities and Exchange Commission or other regulatory authorities.
2.7 For purposes of this Article II, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, statements of additional information, interest holder reports, and
proxy materials.
ARTICLE III
EXPENSES
3.1 The Trust shall pay no fee or other compensation to the Company
under this Agreement. All expenses incident to performance by the Trust under
this Agreement shall be paid by the Trust. The Trust shall bear the expenses
for: the cost of registration of the Trust's shares; preparation and filing of
the Trust's prospectus and registration statement; preparation and filing of
proxy materials and reports; setting the prospectus in type; setting in type the
proxy materials and reports to shareholders; the preparation of all statements
and notices required of the Trust by any federal or state law; and all taxes on
the issuance or transfer of the Trust's shares.
3.2 The Trust's prospectus shall state that the statement of additional
information for the Trust is available from the Trust, and the Trust, at its
expense, shall provide such statement free of charge to the Company and to any
Contract owner or prospective Contract owner who requests such statement.
3.3 The Trust, at its expense, shall provide the Company with copies of
its proxy material, reports to shareholders and other communications to
shareholders in such quantities as the Company shall reasonably require for
distribution to Contract owners.
ARTICLE IV
VOTING
4.1 The Company shall provide pass-through voting privileges to all
Contract owners so long as the Securities and Exchange Commission continues to
interpret the 1940 Act to require pass-through voting privileges for variable
contract owners. The Company shall be responsible for assuring that the Separate
Account calculates voting privileges in a manner consistent with standards
provided by the Trust, which standards will also be provided to other
Participating Insurers. To the extent required by law, the Company will vote
shares for which it has not received voting instructions as well as shares
attributable to the Company in the same proportion as it votes shares for which
it has received instructions.
4.2 The Trust will comply with all provisions of the 1940 Act requiring
voting by shareholders and, in particular, the Trust will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Trust
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Trust will act
in accordance with the Securities and Exchange Commission's interpretation of
the requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE V
POTENTIAL CONFLICTS
5.1 The Board of the Trust will monitor the Trust for the existence of
any material irreconcilable conflict between the shares of the contract owners
of the separate accounts investing in the Trust. The Company will report to the
Board any potential or existing conflicts of which it is or becomes aware
between any of its Contract owners and contracts owners of other Participating
Insurers. The Company will be responsible for assisting the Board in carrying
out its responsibilities to identify and resolve material conflicts by providing
the Board with all information available to it that is reasonably necessary for
the Board to consider any issues raised, including information as to a decision
by the Company to disregard voting instructions of its Contract owners.
5.2 The Board's determination of the existence of any irreconcilable
material conflict and its implications shall be made known promptly by it to the
Company and other Participating Insurers. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance tax, or securities laws or regulations, or a public ruling, private
letter ruling, or any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of any Series are being
managed; (e) a difference in voting instructions given by variable annuity
contract owners and variablelife insurance contract owners or by contract owners
of different Participating Insurers; or (f) a decision by a Participating
Insurer to disregard the voting instructions of its variable contract owners.
5.3 If it is determined by a majority of the Board or a majority of its
disinterested Trustees that a material irreconcilable conflict exists that
affects the shares of the Contract owners, the Company shall, to the extent
reasonably practicable (as determined by a majority of the Trust's disinterested
Trustees), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to the Separate Account from the Trust or any Series and
reinvesting such assets in a different investment medium, including another
Series of the Trust, or offering to the affected Contract owners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account. If a material irreconcilable
conflict arises because of the Company's decision to disregard Contract owner
voting instructions and that decision represents a minority position or would
preclude a majority vote, the Company may be required, at the Trust's election,
to withdraw the investment of the Separate Account in the Trust, and no charge
or penalty will be imposed as a result of such a withdrawal. The Company agrees
to take such remedial action as may be required under this paragraph 5.3 with a
view only to the shares of its Contract owners. For purposes of this paragraph
5.3, a majority of the disinterested Trustees of the Trust's Board shall
determine whether or not any proposed action adequately remedies any
irreconcilable conflict, but in no event will the Trust be required to establish
a new funding medium for any variable contract. The Company shall not be
required by this paragraph 5.3 to establish a new funding medium if any offer to
do so has been declined by vote of a majority of Contract owners materially and
adversely affected by the irreconcilable material conflict.
Notwithstanding the foregoing, if the Company is required under this
paragraph 5.3 to withdraw the investment of the Separate Account in the Trust,
such withdrawal may take place within six (6) months after the Trust gives
written notice that this paragraph 5.3 is being implemented, provided that the
Trust may require that such withdrawal must take place within a shorter period
of time after such notice if a majority of the disinterested Trustees of the
Trust's Board determines that such shorter period is necessary to avoid
irreparable harm to its shareholders; and further provided that until the end of
such six month (or shorter) period the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of Trust shares.
The Company will not be required to withdraw investments in the Separate Account
of the Trust until all regulatory approval is obtained.
5.4 In discharging its responsibilities under this Article V, the
Company will cooperate and coordinate, to the extent necessary, with the Board.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 The Company represents and warrants that the Contracts are or will
be registered under the Securities Act of 1933 ("1933 Act"), that the Contracts
will be issued and sold in compliance in all material respects with all
applicable federal and state laws, and that the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
The Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable laws and that it has legally and
validly established the Separate Account prior to any issuance or sale thereof
as a segregated asset account under the New York Insurance Code and has
registered or, prior to any issuance or sale of the Contracts, will register the
Separate Account as a unit investment trust in accordance with the provisions of
the 1940 Act to serve as a segregated investment account for the Contracts.
6.2 The Trust represents and warrants that Trust shares sold pursuant
to this Agreement shall be registered under the 1933 Act, shall be duly
authorized for issuance and sold in compliance with the laws of the State of
Massachusetts and all applicable federal and state securities laws and that the
Trust is and shall remain registered under the 1940 Act. The Trust shall amend
the Registration Statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
shares. The Trust represents that it is lawfully organized and validly existing
under the laws of the State of Massachusetts and that it does and will comply in
all material respects with the 1940 Act.
6.3 The Trust represents and warrants that it will at all times invest
money from the Contracts in such a manner as to ensure that the Contracts will
be treated as variable contracts under the Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Trust will at all
times comply with Section 817(h) of the Code and the Regulations thereunder,
relating to the diversification requirements for annuity, endowment, or life
insurance contracts and any amendments or other modifications to such Section or
Regulation.
6.4 The Company represents that the Contracts are to be treated as
annuity, endowment or life insurance contracts, under applicable provisions of
the Code, and that it will make every effort to maintain such treatment and that
it will notify the Trust immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they might not
be so treated in the future.
6.5 The Trust makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Trust represents that its investment policies, fees and expenses
are and shall at all times remain in compliance with the laws of the State of
Massachusetts and the Trust represents that its operations are and shall at all
times remain in material compliance with the 1940 Act.
6.6 The Trust represents and warrants that all of tits Trustees, its
officers, employees, investment advisers, and other persons dealing with the
money or securities of the Trust are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Trust in an amount not less that the minimal coverage as required currently by
Section 17(g) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
6.7 The Company represents and warrants that all of its directors,
officers, employees, and other persons who are directly dealing with the money
or securities of the Trust are and shall continue to be at all times covered by
a blanket fidelity bond or similar coverage in amounts which shall comply with
Rule 17g-1 under the 1940 Act.
6.8 The Trust represents and warrants that shares of the Trust will be
sold only to the Participating Insurers and their separate accounts or to
qualified plans as permitted under section 817(h) of the Code. No shares of any
Series will be sold to the general public. The Trust further represents and
warrants that it will not sell Trust shares to any insurance company or separate
Account except pursuant to an agreement containing provisions substantially the
same as those contained in Articles IV and V of this Agreement governing voting
rights and conflicts of interest, respectively.
6.9 The Company represents and warrants that it will make reasonable
efforts to market those Contracts it determines from time to time to offer for
sale and, although it is not required to offer for sale new Contracts in all
cases, will accept payments and otherwise service existing Contracts funded in
the Separate Account. No representation is made as to the number or amount of
such Contracts to be sold.
ARTICLE VII
INDEMNIFICATION
7.1 The Company agrees to indemnify and hold harmless the Trust and
each of the Trust's Trustees and officers and each person, if any, who controls
the Trust within the meaning of Section 15 of the 1933 Act against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses), arising out of the acquisition of any shares of the Trust by any
person, to which the Trust or such Trustees, officers or controlling person may
become subject under the 1933 Act, under any other statute, at common law or
otherwise, which (i) may be based upon any wrongful act by the Company, any of
its employees or representatives, any affiliate of or any person acting on
behalf of the Company or a principal underwriter of its insurance products, or
(ii) may be based upon any untrue statement or alleged untrue statement of a
material fact contained in a registration statement or prospectus covering
shares of the Trust or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon information furnished to
the Trust by the Company, or (iii) may be based on any untrue statement or
alleged untrue statement of a material fact contained in a registration
statement or prospectus covering the Contracts, or any amendments or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement or statements
therein not misleading, unless such statement or omission was made in reliance
upon information furnished to the Company or such affiliate by or on behalf of
the Trust; provided, however, that in no case (i) is the Company's indemnity in
favor of a Trustee or officer or any other person deemed to protect such Trustee
or officer or other person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his or her duties or by reason of his or her
reckless disregard of obligations and duties under this Agreement or (ii) is the
Company to be liable under its indemnity agreement contained in this Paragraph
7.1 with respect to any claim made against the Trust or any person indemnified
unless the Trust or such person, as the case may be, shall have notified the
Company in writing pursuant to Paragraph 10 of this Agreement within a
reasonable time after the summons or other first legal process giving
information of the nature of the claims shall have been served upon the Trust or
upon such person (or after the Trust or such person shall have received notice
of such service on any designated agent), but failure to notify the Company of
any such claim shall not relieve the Company from any liability which it has to
the Trust or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this Paragraph 7.1. The Company
shall be entitled to participate, at its own expense, in the defense, or, if it
so elects, to assume the defense of any suit which could result in liability to
it under this Paragraph 7.1, but, if it elects to assume the defense, such
defense shall be conducted by counsel chosen by it and satisfactory to the Trust
and to such of its officers, Trustees and controlling person or persons as may
be defendants in the suit. In the event that the Company elects to assume the
defense of any such suit and retain such counsel, the Trust, such officers,
Trustees and controlling person or persons shall bear the fees and expenses of
any additional counsel retained by them, but, in case the Company does not elect
to assume the defense of any such suit, the Company will reimburse the Trust,
such officers, Trustees and controlling person or persons for the reasonable
fees and expenses of any counsel retained by them. The Company agrees promptly
to notify the Trust pursuant to Paragraph 10 of this Agreement of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of any shares of the Trust.
7.2 The Trust agrees to indemnify and hold harmless the Company and its
affiliated principal underwriter of the Contracts and each of the Company's
Directors and officers and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
it or such directors, officers or controlling person may become subject under
the 1933 Act, under any other statute, at common law or otherwise, arising out
of the acquisition of any shares of the Trust by any person which (i) may be
based upon any wrongful act by the Trust or any of its employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement or
prospectus covering shares of the Trust or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading unless such statement or omission was made in reliance upon
information furnished to the Trust by the Company, or (iii) may be based on any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering the Contracts, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf of the Trust;
provided, however, that in no case (i) is the Trust's indemnity in favor of a
Director or officer or any other person deemed to protect such Director or
officer or other person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his or her duties or by reason of his or her
reckless disregard of obligations and duties under this Agreement or (ii) is the
Trust to be liable under its indemnity agreement contained in this Paragraph 7.2
with respect to any claims made against the Company or any such Director,
officer or controlling person unless it, Director, officer or controlling
person, as the case may be, shall have notified the Trust in writing pursuant to
Paragraph 10 of this Agreement within a reasonable time after the summons or the
first legal process giving information of the nature of the claim shall have
been served upon it or upon such Director, officer or controlling person (or
after the Company or such Director, officer or controlling person shall have
received notice of such service on any designated agent), but failure to notify
the Trust of any claim shall not relieve it from any liability which it may have
to the person against whom such action is brought otherwise than on account of
its indemnity agreement contained in this Paragraph 7.2. The Trust will be
entitled to participate, at its own expense, in the defense, or, if it so
elects, to assume the defense of any suit which could result in liability to it
under this Paragraph 7.2, but, if the Trust elects to assume the defense, such
defense shall be conducted by counsel chosen by it and satisfactory to the
Company and to such of its Directors, officers and controlling person or persons
as may be defendants in the suit. In the event that the Trust elects to assume
the defense of any such suit and retain such counsel, the Company, such
Directors, officers and controlling person or persons shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Trust does
not elect to assume the defense of any such suit, it will reimburse the Company,
such Directors, officers and controlling person or persons for the reasonable
fees and expenses of any counsel retained by them. The Trust agrees promptly to
notify the Company pursuant to Paragraph 10 of this Agreement of the
commencement of any litigation or proceedings against it or any of its officers
or Trustees in connection with the issue and sale of any of its shares.
ARTICLE VIII
CONFIDENTIALITY
8. Subject to the requirements of legal process and regulatory
authority, each party shall treat as confidential all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize
confidential information without the express written consent of the affected
party until such time as it may come into the public domain.
ARTICLE IX
TERMINATION
9.1 This Agreement shall terminate:
(a) at the option of the Company or the Trust upon 90
days' advance written notice to all other parties to
this Agreement, provided, however, such notice shall
not be given earlier than twenty four months
following the date of this Agreement; or
(b) at the option of the Company if any of the Trust's
shares are not reasonably available to meet the
requirements of the Contracts funded in the Separate
Account as determined by the Company; or
(c) at the option of any party to this Agreement upon
institution of formal proceedings against any other
party to this Agreement by the Securities and
Exchange Commission or any other regulatory body; or
(d) upon the vote of Contract owners having an interest
in a particular Portfolio of the Separate Account.
The Company will give 30 days' prior written notice
to the Trust of the date of any proposed action to
replace the Trust's shares; or
(e) at the option of the Company if the Trust's shares
are not registered, issued or sold in accordance with
applicable state and/or federal law or such law
precludes the use of such shares as the underlying
investment medium of the Contracts funded in the
Separate Account; or
(f) at the option of the Company if any Series of the
Trust ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code or under any
successor similar provision, or if the Company
reasonable believes that any Series of the Trust may
fail to so qualify; or
(f) at the option of the Company if any Series of the
Trust fails to meet the diversification requirements
specified in paragraph 6.4 hereof.
9.2 Prompt notice of election to terminate under subparagraphs (b),
(c), (e), (f) and (g) of paragraph 9.1 shall be furnished by the electing party.
9.3 Notwithstanding any termination of this Agreement, the Trust shall,
at the option of the Company, continue to make available additional shares of
the Trust pursuant to the terms and conditions of this Agreement for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Trust, redeem investments in the Trust or invest
in the Trust upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this paragraph 9.3 shall not apply to any
terminations under Article V and the effect of such Article V terminations shall
be governed by Article V of this Agreement.
9.4 Notwithstanding Article V and the foregoing provisions of this
Article IX, the provisions of Article VII (Indemnification) and Article VIII
(Confidentiality) shall survive any termination of this Agreement.
ARTICLE X
NOTICES
10. Any notice shall be sufficiently given when sent by registered or
certified mail to each other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
JNL Series Trust
ATTN: Andrew B. Hopping
President
5901 Executive Drive
Lansing, MI 48911
If to the Company or the Separate Account:
Jackson National Life Insurance Company of New York
ATTN: Thomas J. Meyer
Senior Vice President
5901 Executive Drive
Lansing, MI 48911
ARTICLE XI
APPLICABLE LAW
11. This Agreement shall be construed in accordance with the laws of
the State of New York.
ARTICLE XII
MISCELLANEOUS
12.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.2 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.3 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 The Trust and the Company agree that the obligations of the Trust
under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Trust individually, but are binding only upon the assets and
property of the Trust or of the appropriate Series thereof, as provided in the
Agreement and Declaration of the Trust. The execution and delivery of this
Agreement has been authorized by the Trustees of the Trust, and signed by an
authorized officer of the Trust, acting as such, and neither such authorization
by such Trustees nor such execution and delivery by such officer shall be deemed
to have been made by any of them or any shareholder of the Trust individually or
to impose any liability on any of them or any interest holder of the Trust
personally, but shall bind only the assets and property of the Trust or of the
appropriate Series thereof as provided in the Agreement and Declaration of the
Trust.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Attest: JNL Series Trust
/s/ Barbra Homier /s/ Andrew B. Hopping
- ------------------------- By: ---------------------------
Andrew B. Hopping
President
Attest: Jackson National Life Insurance Company of New York
/s/ Barbra Homier /s/ Thomas J. Meyer
- ------------------------- By: ---------------------------
Thomas J. Meyer
Senior Vice President
JNLNY Separate Account II
Attest: By: Jackson National Life Insurance Company of
New York
/s/ Barbra Homier /s/ Thomas J. Meyer
- ------------------------- By: ---------------------------
Thomas J. Meyer
Senior Vice President
<PAGE>
SCHEDULE A
DATED February 16, 1999
JNL/Alliance Growth Series
JNL/J.P. Morgan International & Emerging Markets Series
JNL/Janus Aggressive Growth Series
JNL/Janus Global Equities Series
JNL/PIMCO Total Return Bond Series
JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
JNL/S&P Conservative Growth Series II
JNL/S&P Moderate Growth Series II
JNL/S&P Aggressive Growth Series II
JNL/S&P Very Aggressive Growth Series II
JNL/S&P Equity Growth Series II
JNL/S&P Equity Aggressive Growth Series II
Goldman Sachs/JNL Growth & Income Series
Lazard/JNL Small Cap Value Series
Lazard/JNL Mid Cap Value Series
PPM America/JNL Money Market Series
Salomon Brothers/JNL Balanced Series
Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL High Yield Bond Series
T. Rowe Price/JNL International Equity Investment Series
T. Rowe Price/JNL Mid-Cap Growth Series
DELEGATION, CUSTODY AND INFORMATION SERVICES AGREEMENT
AGREEMENT dated as of May 14, 1999 between JNL Series Trust ("Trust"), a
Massachusetts business trust organized under the laws of the Commonwealth of
Massachusetts having its principal office and place of business at 225 West
Wacker Drive, Suite 1200, Chicago, IL 60606, Boston Safe Deposit and Trust
Company ("Custodian"), a Massachusetts trust company with its principal place of
business at One Boston Place, Boston, Massachusetts 02108.
W I T N E S S E T H:
WHEREAS, The Trust is authorized to issue shares in separate series with
each such series representing interests in a separate portfolio of securities
and other assets, and the Trust has made the Series listed on Appendix D subject
to this Agreement (each such series, together with all other series subsequently
established by the Trust and made subject to the Agreement in accordance with
the terms hereof, shall be referred to as a Fund" and collectively as the
"Funds");
WHEREAS, The Board desires to delegate certain of its responsibilities
for performing the services set forth in paragraphs (c)(1), (c)(2) and (c)(3) of
Rule 17f-5 to the Custodian;
WHEREAS, The Custodian agrees to accept such delegation with respect to
Assets held by Eligible Foreign Custodians in the jurisdictions listed on
Appendix B as set forth in Article II;
WHEREAS, The Trust desires to hire the Custodian as a vendor to provide
certain information available to the Custodian with respect to foreign
jurisdictions, Securities Depositories and Foreign Custodians not listed on
Appendix B for which the board or a delegatee other than the Custodian has the
responsibilities described in paragraphs (c)(1), (c)(2) and (c)(3) of Rule
17f-5; and
WHEREAS, The Custodian agrees to provide, as a vendor, the information
described in Article IV if, and when available in accordance with the terms and
conditions of Article IV.
WHEREAS, The Trust and the Custodian desire to set forth their agreement
with respect to the custody of the Funds' Assets and other property and the
processing of securities transactions;
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Trust and the Custodian agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used in this Agreement or in any Appendices to this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
(a) "Affiliated Person" shall have the meaning of the term within Section
2(a) 3 of the 1940 Act.
(b) "Agreement" shall mean this Delegation, Custody and Information
Services Agreement.
(c) "Assets" shall mean any of the Funds' investmentsand such cash and cash
equivalents as are reasonably necessary to effect the Funds'
transactions in such investments.
(d) "Authorized Person" shall be deemed to include the President, and any
Vice President, the Secretary, the Treasurer or any other person,
whether or not any such person is an officer or employee of the Trust,
duly authorized by the Board to add or delete jurisdictions pursuant to
Article II and to give Oral Instructions and Written Instructions on
behalf of a Fund and listed in the certification annexed hereto as
Appendix A , as may be amended from time to time.
(e) "Board" shall mean the Board of Trustees of the Trust.
(f) "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor
or successors and its nominee or nominees.
(g) "Business Day" shall mean any day on which the Fund, the Custodian, the
Book-Entry System and appropriate clearing corporation(s) are open for
business.
(h) "Certificate" shall mean any notice, instruction or other instrument in
writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on
behalf of a Fund by any two Authorized Persons.
(i) "Country Risk" means all factors reasonably related to the systematic
risk of holding assets in a particular country including, but not
limited to, such country's financial infrastructure (including any
Securities Depositories operating in such country), prevailing custody
and settlement practices and laws applicable to the safekeeping and
recovery of Assets held in custody.
(j) "Custodian" shall mean Boston Safe Deposit and Trust Company in its
capacity as delegate, custodian or information services provider as
required under the terms of each Article.
(k) "Custody Agreement" shall mean the provisions of Articles I, III and V
of this Agreement and any Appendices referenced therein and attached to
this Agreement.
(l) "Information Services Agreement" shall mean the provisions of Articles
I and IV and V of this Agreement and any Appendices referenced therein
and attached to this Agreement.
(m) Master Trust Agreement shall mean Declaration and Agreement of Trust of
the Trust dated June 1, 1994 as the same may be amended from time to
time.
(n) "Foreign Custodian" shall mean: (a) a banking institution or trust
company incorporated or organized under the laws of a country other
than the United States, that is regulated as such by the country's
government or an agency of the country's government; (b) a
majority-owned direct or indirect subsidiary of a U.S. Bank or
bank-holding company; or (c) any entity other than a Securities
Depository with respect to which exemptive or no-action relief has been
granted by the U. S. Securities and Exchange Commission. For the
avoidance of doubt, the term "Foreign Custodian" shall not include
Euroclear, Cedel, First Chicago Clearing Centre or any other
transnational system for the central handling of securities or
equivalent book-entries regardless of whether or not such entities are
acting in a custodial capacity with respect to Assets or other property
of the Fund.
(o) "Delegation Agreement" shall mean the provisions of Articles I, II and
V of this Agreement and any Appendices referenced therein and attached
to this Agreement.
(p) "Money Market Security" shall be deemed to include, without limitation,
debt obligations issued or guaranteed as to interest and principal by
the government of the United States or agencies or instrumentalities
thereof ("U.S. government securities"), commercial paper, bank
certificates of deposit, bankers' acceptances and short-term corporate
obligations, where the purchase or sale of such securities normally
requires settlement in federal funds on the same day as such purchase
or sale, and repurchase and reverse repurchase agreements with respect
to any of the foregoing types of securities.
(q) "Oral Instructions" shall mean verbal instructions actually received by
the Custodian from a person reasonably believed by the Custodian to be
an Authorized Person or Senior Authorized Person.
(r) "Prospectus" shall mean a Fund's current prospectus and statement of
additional information relating to the registration of the Fund's
Shares under the Securities Act of 1933, as amended.
(s) "Rule 17f-5" shall mean Rule 17f-5 promulgated under Section 17(f) of
the 1940 Act as such rule (and any successor regulation) may be amended
from time to time.
(t) "Selected Countries" means the jurisdictions listed on Appendix B as
such may be amended from time to time in accordance with Article II.
(u) "Senior Authorized Person" shall be such individuals so designated on
Appendix A.
(v) "Shares" refers to shares of beneficial interest of each Fund.
(w) "Securities Depository" shall mean any entity described in subparagraph
(a)(1)(ii) or paragraph (a)(6) of Rule 17f-5 or any other recognized
foreign or domestic clearing facility, book-entry system, centralized
custodial depository or similar organization. For the avoidance of
doubt, the term "Securities Depository" shall include Euroclear, Cedel,
First Chicago Clearing Centre or any other transnational system for the
central handling of securities or equivalent book-entries regardless of
whether or not such entities are acting in a custodial capacity with
respect to Assets or other property of the Funds.
(x) "Transfer Agent" shall mean the person which performs the transfer
agent, dividend disbursing agent and shareholder servicing agent
functions for a Fund.
(y) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person or Senior Authorized Person by any
system, including, without limitation, electronic transmissions,
facsimile and telex.
(z) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time.
<PAGE>
ARTICLE II
DELEGATION AGREEMENT
1. REPRESENTATIONS.
(a) Status of Custodian. The Custodian represents that it is a
U.S. Bank within the meaning of paragraph (a)(7) of Rule 17f-5
and a "Securities Intermediary" as that term is defined in
Section 8-102 (A)(4) of Article 8 of the Massachusetts Uniform
Commercial Code.
(b) Trust Determinations and Authorizations. The Board represents
that it has determined that it is reasonable to rely on
Custodian to perform the responsibilities delegated pursuant
to this Delegation Agreement and that it has made the
delegations set forth below, subject to the acceptance of such
delegation by the Custodian on the terms and conditions set
forth in this Delegation Agreement.
(c) Trust Responsibilities. The Trust acknowledges and agrees
that, except as expressly set forth in this Delegation
Agreement, the Trust is solely responsible to assure that the
maintenance of each Fund's Assets hereunder complies with
applicable laws and regulations, including without limitation
the 1940 Act and the rules and regulations promulgated
thereunder and applicable interpretations thereof or
exemptions therefrom.
2. DELEGATION AND CUSTODIAN'S SERVICES.
(a) Delegation. Subject to the provisions of this Delegation
Agreement and the requirements of Rule 17f-5, the Board hereby
delegates to, and the Custodian hereby agrees to accept the
responsibility for selecting, contracting with and monitoring
Foreign Custodians in Selected Countries in accordance with
paragraphs (c)(1), (c)(2) and (c)(3) of Rule 17f-5. Pursuant
to this delegation, the Board authorizes the Custodian to
place and maintain Assets in the care of any Foreign
Custodian(s) in the Selected Countries and to enter into, on
behalf of a Fund, such written contracts governing the Fund's
foreign custody arrangements with such Foreign Custodian(s) as
the Custodian deems reasonably appropriate.
(b) Scope of Delegation. The delegation contained in Section 2(a)
applies only to the selection of, contracting with and
monitoring of Foreign Custodians located in Selected Countries
and only with respect to Assets held by such Foreign
Custodians in Selected Countries. The Board and the Custodian
agree that nothing in this Delegation Agreement or this
Agreement as a whole shall cause or be deemed to cause any
delegation to the Custodian of any of the Board's
responsibilities with respect to Assets or other property held
in Securities Depositories or Assets held by Foreign
Custodians in jurisdictions other than Selected Countries.
(c) Additions to Appendix B. Appendix B may be amended from time
to time to add jurisdictions by an instrument in writing
signed by an Authorized Person and the Custodian, provided
that with respect to any amendment that adds a jurisdiction to
Appendix B, the Custodian's responsibility and authority with
respect to any jurisdiction so added will commence at the
later of (i) the time that the Custodian and the Authorized
Person have both executed such amendment, or (ii) the time
that the Custodian receives a copy of such executed amendment.
(d) Deletions from Appendix B. The Board may withdraw its
delegation with respect to any jurisdiction listed in Appendix
B upon written notice to the Custodian. The Custodian shall
withdraw its acceptance of delegated authority with respect to
any jurisdiction listed in Appendix B upon written notice to
the Board. Upon receipt of such notice by the party to whom
such notice is given, the Custodian shall have no further
responsibilities under this Delegation Agreement with respect
to the selecting, contracting with, and monitoring of any
Foreign Custodian holding Assets in the removed jurisdiction.
(e) Reports to Board. Custodian shall provide written reports
notifying Board of the placement of Assets with a particular
Foreign Custodian and of any material change in a Fund's
foreign custody arrangements. Such reports shall be provided
to Board initially within 30 days after the execution of this
Agreement and thereafter quarterly, except as otherwise agreed
by the Custodian and the Trust.
(f) Monitoring System. In each case in which the Custodian has
exercised the authority delegated under this Article II,
Section 2 to place Assets with an Foreign Custodian, the
Custodian is authorized to, and shall, on behalf of a Fund,
establish a system to re-assess or re-evaluate, at least
annually (i) the appropriateness of maintaining Assets with
such Foreign Custodian and (ii) the contract governing the
Fund's arrangements with such Foreign Custodian.
3. GUIDELINES AND PROCEDURES.
(a) Country Risk. In exercising its delegated authority under
Article II, Section 2, the Custodian may assume, for all
purposes, that the Board (or the Fund's investment adviser,
pursuant to authority delegated by the Board) has considered,
and, pursuant to its fiduciary duties to the Funds and the
Fund's shareholders, determined to accept, Country Risk. In
exercising its delegated authority under Article II, Section
2, the Custodian may also assume that the Board (or the Fund's
investment adviser, pursuant to authority delegated by the
Board) has, and will continue to, monitor such Country Risk to
the extent the Board deems necessary or appropriate. Nothing
in this Delegation Agreement shall require the Custodian to
make any selection or to engage in any monitoring on behalf of
a Fund (i) that would entail consideration of Country Risk or
(ii) otherwise in connection with any Securities Depository or
Foreign Custodians in jurisdictions other than Selected
Countries.
(b) Standard of Care for Selection of Eligible Foreign Custodians.
In exercising the authority delegated under Article II,
Section 2, to place Assets with a Foreign Custodian in a
Selected Country, the Custodian shall determine that Assets
will be subject to reasonable care, based on the standards
applicable to custodians in the Selected Country in which the
Assets will be held, after considering all factors relevant to
the safekeeping of such assets, including the factors set
forth in Rule 17f-5(c)(1)(i)-(iv).
(c) Standard for Contracting with Eligible Foreign Custodians. In
exercising the authority delegated under Article II, Section
2, to enter into a written contract governing a Fund's foreign
custody arrangements with a Foreign Custodian in a Selected
Country, the Custodian shall determine that such contract
provides reasonable care for Assets based on the standards
applicable to Foreign Custodians in the Selected Country. In
making this determination, the Custodian shall consider the
provisions of Rule 17f-5(c)(2).
(d) Standard of Care for Delegated Authority. In exercising the
authority delegated under Article II, Section 2, the Custodian
agrees to exercise reasonable care, prudence and diligence
such as a person having direct responsibility for the
safekeeping of the Assets would exercise.
<PAGE>
ARTICLE III
CUSTODY PROVISIONS
1. APPOINTMENT OF CUSTODIAN.
(a) The Board hereby constitutes and appoints the Custodian as
custodian of all the Assets and monies at the time owned by or
in the possession of the Funds during the period of this
Agreement.
(b) The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth
2. CUSTODY OF CASH AND SECURITIES.
(a) Receipt and Holding of Assets. The Funds will deliver or cause
to be delivered to the Custodian all Assets and monies owned
by them at any time during the period of this Custody
Agreement. The Custodian will not be responsible for such
Assets and monies until actually received by it. The Board
hereby specifically authorizes the Custodian to hold Assets or
other property of the Funds with any domestic subcustodian,
Foreign Custodian or Securities Depository. Assets and monies
of the Funds deposited in a Securities Depository will be
represented in accounts which include only assets held by the
Custodian for customers, including but not limited to accounts
for which the Custodian acts in a fiduciary or representative
capacity.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain a separate account in the name of each Fund and shall
credit to such separate accounts all monies, Assets and other
property received by it for the account of each Fund and shall
disburse the same only:
1. In payment for Securities purchased for the
applicable Fund;
2. In payment of dividends or distributions with respect
to the Shares;
3. In payment of original issue or other taxes with
respect to the Shares;
4. In payment for Shares which have been redeemed by the
applicable Fund;
5. Pursuant to Written Instructions received by a Senior
Authorized Person setting forth the name and address
of the person to whom the payment is to be made, the
amount to be paid and the purpose for which payment
is to be made, provided that in the event of
disbursements pursuant to this sub-section 2(b), the
Trust shall indemnify and hold the Custodian harmless
from any claims or losses arising out of such
disbursements in reliance on such Written
Instructions which it, reasonably and in good faith,
believes to be received from Senior Authorized
Persons; or
6. In payment of fees and in reimbursement of the
reasonable expenses and liabilities of the Custodian
attributable to the applicable Fund, as provided in
Article III, Section 9(I) and Article V, Section 1.
(c) Confirmation and Statements. Promptly after the close of
business on each day, the Custodian shall furnish by Facsimile
each Fund with confirmations and a summary of all transfers to
or from the account of the Fund during said Business Day.
Where securities purchased by a Fund are in a fungible bulk of
securities registered in the name of the Custodian (or its
nominee) or shown on the Custodian's account on the books of a
Securities Depository, the Custodian shall by book-entry or
otherwise identify the quantity of those securities belonging
to that Fund. At least monthly, the Custodian shall furnish
each Fund with a detailed statement of the Assets and monies
held for the Fund under this Custody Agreement.
(d) Registration of Securities and Physical Separation. The
Custodian is authorized to hold all Assets, or other property
of each Fund in nominee name, in bearer form or in book-entry
form. The Custodian may register any Assets or other property
of each Fund in the name of the Trust or the Fund, in the name
of the Custodian, any domestic subcustodian, or Foreign
Custodian, in the name of any duly appointed registered
nominee of such entity, or in the name of a Securities
Depository or its successor or successors, or its nominee or
nominees. The Custodian will credit to each Fund's Account at
the Custodian such Assets or other property of the respective
Fund. The Custodian is hereby authorized to deposit with, and
hold Assets or other property of the applicable Fund with any
Securities Depository. The Trust agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to
hold or deliver in proper form for transfer, or to register in
the name of its registered nominee or in the name of a
Securities Depository, any Assets which it may hold for the
account of the applicable Fund and which may from time to time
be registered in the name of the Trust or the applicable Fund.
The Custodian shall hold all such Assets specifically
allocated to the applicable Fund which are not held in a
Securities Depository in a separate account for the Fund in
the name of the Fund physically segregated at all times from
those of any other person or persons.
(e) Segregated Accounts. Upon receipt of a Written Instruction,
the Custodian will establish segregated accounts on behalf of
the applicable Fund to hold liquid or other assets as it shall
be directed by a Written Instruction and shall increase or
decrease the assets in such segregated account only as it
shall be directed by subsequent Written Instruction.
(f) Collection of Income and Other Matters Affecting Securities.
Unless otherwise instructed to the contrary by a Written
Instruction, the Custodian by itself, or through the use of a
Securities Depository with respect to Securities therein
deposited, shall with respect to all Securities held for the
Funds in accordance with this Agreement:
1. Collect all income due or payable, provided that the
Custodian shall not be responsible for the failure to
receive payment of (or late payment of) distributions
with respect to Assets held in the account;
2. Present for payment and collect the amount payable
upon all Securities which may mature or be called,
redeemed, retired or otherwise become payable.
Notwithstanding the foregoing, the Custodian shall
have no responsibility to the Funds for monitoring or
ascertaining any call, redemption or retirement dates
with respect to put bonds which are owned by the
Funds and held by the Custodian or its nominees. Nor
shall the Custodian have any responsibility or
liability to the Funds for any loss by the Funds for
any missed payments or other defaults resulting
therefrom, unless the Custodian received timely
notification from the Funds specifying the time,
place and manner for the presentment of any such put
bond owned by the Funds and held by the Custodian or
its nominee. The Custodian shall not be responsible
and assumes no liability for the accuracy or
completeness of any notification the Custodian may
furnish to the Funds with respect to put bonds,
unless the Custodian has not acted in a reasonably
prudent manner in transmitting information with
respect to the accuracy, completeness or furnishings
of such notice;
3. Surrender Securities in temporary form for definitive
Securities;
4. Promptly execute any necessary declarations or
certificates of ownership under the Federal income
tax laws or the laws or regulations of any other
taxing authority now or hereafter in effect; and
5. Hold directly, or through a Securities Depository
with respect to Securities therein deposited, for the
account of the applicable Fund all rights and similar
Securities issued with respect to any Securities held
by the Custodian hereunder for that Fund.
(g) Delivery of Securities and Evidence of Authority. Upon receipt
of a Written Instruction and not otherwise, except for
subparagraphs 5, 6, 7, and 8 of this section 2(g) which may be
effected by Oral or Written Instructions, the Custodian,
directly or through the use of a Securities Depository, shall:
1. Execute and promptly deliver or cause to be executed
and delivered to such persons as may be designated in
such Written Instructions, proxies, consents,
authorizations, and any other instruments whereby the
authority of the applicable Fund as owner of any
Securities may be exercised;
2. Deliver or cause to be delivered any Securities held
for the applicable Fund in exchange for other
Securities or cash issued or paid in connection with
the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held
for the applicable Fund to any protective committee,
reorganization committee or other person in
connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of
assets of any corporation, and receive and hold under
the terms of this Custody Agreement in the separate
account for the Fund such certificates of deposit,
interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges
of the assets specifically allocated to the separate
account of the applicable Fund and take such other
steps as shall be stated in Written Instructions to
be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the
Fund;
5. Deliver Securities upon sale of such Securities for
the account of the applicable Fund pursuant to
Section 3;
6. Deliver Securities upon the receipt of payment in
connection with any repurchase agreement related to
such Securities entered into by the applicable Fund;
7. Deliver Securities owned by the applicable Fund to
the issuer thereof or its agent when such Securities
are called, redeemed, retired or otherwise become
payable; provided, however, that in any such case the
cash or other consideration is to be delivered to the
Custodian. Notwithstanding the foregoing, the
Custodian shall have no responsibility to the Fund
for monitoring or ascertaining any call, redemption
or retirement dates with respect to the put bonds
which are owned by the Fund and held by the Custodian
or its nominee. Nor shall the Custodian have any
responsibility or liability to the Fund for any loss
by the Fund for any missed payment or other default
resulting therefrom unless the Custodian received
timely notification from the Fund specifying the
time, place and manner for the presentment of any
such put bond owned by the Fund and held by the
Custodian or its nominee. The Custodian shall not be
responsible and assumes no liability to the Fund for
the accuracy or completeness of any notification the
Custodian may furnish to the Fund with respect to put
bonds;
8. Deliver Securities in connection with any loans of
Securities made by the Funds but only against receipt
of adequate collateral as agreed upon from time to
time by the Custodian and the Funds which may be in
the form of cash or U.S. government securities or a
letter of credit;
9. Deliver Securities as security in connection with any
borrowings by the Funds requiring a pledge of the
applicable Fund's assets, but only against receipt of
amounts borrowed;
10. Deliver Securities upon receipt of Written
Instructions from a Fund for delivery to the Transfer
Agent or to the holders of Shares in connection with
distributions in kind, as may be described from time
to time in the Fund's Prospectus, in satisfaction of
requests by holders of Shares for repurchase or
redemption;
11. Deliver Securities as collateral in connection with
short sales by a Fund of common stock for which the
Fund owns the stock or owns preferred stocks or debt
securities convertible or exchangeable, without
payment or further consideration, into shares of the
common stock sold short;
12. Deliver Securities for any purpose expressly
permitted by and in accordance with procedures
described in the Trust's Prospectus; and
13. Deliver Securities for any other proper business
purpose, but only upon receipt of, in addition to
Written Instructions, a certified copy of a
resolution of the Board signed by an Authorized
Person and certified by the Secretary of the Funds,
specifying the Securities to be delivered, setting
forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper business
purpose, and naming the person or persons to whom
delivery of such Securities shall be made.
Notwithstanding anything in this Agreement to the contrary,
the Custodian shall not be liable for the acts or omissions of
any agent appointed under paragraph (f) of Section 9 pursuant
to Oral or Written Instructions including, but not limited to,
any broker-dealer or other entity designated by a Fund or its
investment advisor to hold any Securities or other property of
the Fund as collateral or otherwise pursuant to any investment
strategy.
(h) Endorsement and Collection of Checks, Etc. The Custodian is
hereby authorized to endorse and collect all checks, drafts or
other orders for the payment of money received by the
Custodian for the account of the applicable Fund.
3. SETTLEMENT OF FUNDS TRANSACTIONS.
(a) Customary Practices. Notwithstanding anything to the contrary
in this Agreement, the Custodian is authorized to settle
transactions in accordance with trading and processing
practices customary in the jurisdiction or market where the
transaction occurs. The Trust acknowledges that this may, in
certain circumstances, require the delivery of cash or
Securities (or other property) without the concurrent receipt
of Securities (or other property) or cash and, in such
circumstances, the Trust shall have responsibility for
nondelivery of Securities or other property (or late delivery)
or nonreceipt of payments of monies (or late payment) by the
counterparty, provided, however, that in such an event, the
Custodian agrees to provide reasonable assistance to the Trust
in order to consummate such incomplete transaction(s) .
(b) Contractual Income. The Custodian shall credit the applicable
Fund with income and maturity proceeds on securities on
contractual payment date net of any taxes or upon actual receipt
as agreed between the Custodian and the Fund. To the extent the
Fund and the Custodian have agreed to credit income on
contractual payment date, the Custodian may reverse such
accounting entries with back value to the contractual payment
date if the Custodian reasonably believes that it will not
receive such amount.
(c) Contractual Settlement. The Custodian will attend to the
settlement of securities transactions on the basis of either
contractual settlement date accounting or actual settlement date
accounting as agreed between the Trust and the Custodian. To the
extent the Trust and the Custodian have agreed to settle certain
securities transactions on the basis of contractual settlement
date accounting, the Custodian may reverse with back value to
the contractual settlement date any entry relating to such
contractual settlement where the related transaction remains
unsettled in accordance with established procedures.
4. LENDING OF SECURITIES.
The Custodian may lend the assets of the Funds in accordance with the
terms and conditions of a separate securities lending agreement,
approved by the Trust.
5. PAYMENT OF DIVIDENDS OR DISTRIBUTIONS.
(a) The Trust shall furnish to the Custodian the vote of the Board
certified by the Secretary (i) authorizing the declaration of
distributions on a specified periodic basis and authorizing
the Custodian to rely on Oral or Written Instructions
specifying the date of the declaration of such distribution,
the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the
amount payable per share to the shareholders of record as of
the record date and the total amount payable to the Transfer
Agent on the payment date, or (ii) setting forth the date of
declaration of any distribution by the Funds, the date of
payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable
per share to the shareholders of record as of the record date
and the total amount payable to the Transfer Agent on the
payment date.
(b) Upon the payment date specified in such vote, Oral
Instructions or Written Instructions, as the case may be, the
Custodian shall pay out the total amount payable to the
Transfer Agent of the Trust.
6. SALE AND REDEMPTION OF SHARES OF THE FUNDS.
(a) Whenever a Fund shall sell any Shares, that Fund shall deliver
or cause to be delivered to the Custodian a Written
Instruction duly specifying:
1. The number of Shares sold, trade date, and price; and
2. The amount of money to be received by the Custodian
for the sale of such Shares.
The Custodian understands and agrees that Written Instructions
may be furnished subsequent to the purchase of Shares and that
the information contained therein will be derived from the
sales of Shares as reported to the Fund by the Transfer Agent.
(b) Upon receipt of money from the Transfer Agent, the Custodian
shall credit such money to the separate account of the
applicable Fund.
(c) Upon issuance of any Shares in accordance with the foregoing
provisions of this Section 6, the Custodian shall pay all
original issue or other taxes required to be paid in
connection with such issuance upon the receipt of a Written
Instruction specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Shares are
redeemed, a Fund shall cause the Transfer Agent to promptly
furnish to the Custodian Written Instructions, specifying:
1. The number of Shares redeemed; and
2. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information
contained in such Written Instructions will be derived from
the redemption of Shares as reported to the Fund by the
Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth
the number of Shares received by the Transfer Agent for
redemption and that such Shares are valid and in good form for
redemption, the Custodian shall make payment to the Transfer
Agent of the total amount specified in a Written Instruction
issued pursuant to paragraph (d) of this Section 6.
(f) Notwithstanding the above provisions regarding the redemption
of Shares, whenever such Shares are redeemed pursuant to any
check redemption privilege which may from time to time be
offered by the Funds, the Custodian, unless otherwise
instructed by a Written Instruction shall, upon receipt of
advice from the Funds or its agent stating that the redemption
is in good form for redemption in accordance with the check
redemption procedure, honor the check presented as part of
such check redemption privilege out of the monies specifically
allocated to the Funds in such advice for such purpose.
7. INDEBTEDNESS.
(a) The Trust will cause to be delivered to the Custodian by any
bank (excluding the Custodian) from which the a Fund borrows
money for temporary administrative or emergency purposes using
Securities as collateral for such borrowings, a notice or
undertaking in the form currently employed by any such bank
setting forth the amount which such bank will loan to the Fund
against delivery of a stated amount of collateral. The Fund
shall promptly deliver to the Custodian Written Instructions
stating with respect to each such borrowing: (1) the name of
the bank; (2) the amount and terms of the borrowing, which may
be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Funds, or other loan
agreement; (3) the time and date, if known, on which the loan
is to be entered into (the "borrowing date"); (4) the date on
which the loan becomes due and payable; (5) the total amount
payable to the Funds on the borrowing date; (6) the market
value of Securities to be delivered as collateral for such
loan, including the name of the issuer, the title and the
number of shares or the principal amount of any particular
Securities; (7) whether the Custodian is to deliver such
collateral through a Securities Depository; and (8) a
statement that such loan is in conformance with the 1940 Act
and the Trust's Prospectus.
(b) Upon receipt of the Written Instruction referred to in
subparagraph (a) above, the Custodian shall deliver on the
borrowing date the specified collateral and the executed
promissory note, if any, against delivery by the lending bank
of the total amount of the loan payable, provided that the
same conforms to the total amount payable as set forth in the
Written Instruction. The Custodian may, at the option of the
lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein granted to
the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver as additional
collateral in the manner directed by the Fund from time to
time such Securities as may be specified in Written
Instruction to collateralize further any transaction described
in this Section 7. The Fund shall cause all Securities
released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time
such return of collateral as may be tendered to it. In the
event that the Fund fails to specify in Written Instruction
all of the information required by this Section 7, the
Custodian shall not be under any obligation to deliver any
Securities. Collateral returned to the Custodian shall be held
hereunder as it was prior to being used as collateral.
8. PERSONS HAVING ACCESS TO ASSETS OF THE FUNDS.
(a) No trustee or agent of the Trust, and no officer, director,
employee or agent of the Trust's investment adviser, of any
sub-investment adviser of the Trust, or of the Trust's
administrator, shall have physical access to the assets of the
Funds held by the Custodian or be authorized or permitted to
withdraw any investments of the Funds, nor shall the Custodian
deliver any assets of the Funds to any such person. No
officer, director, employee or agent of the Custodian who
holds any similar position with the Trust's investment
adviser, with any sub-investment adviser of the Trust or with
the Trust's administrator shall have access to the assets of
the Funds.
(b) Nothing in this Section 8 shall prohibit any duly authorized
officer, employee or agent of the Trust, including the Trust's
independent public accountants or any duly authorized officer,
director, employee or agent of the investment adviser, of any
sub-investment adviser of the Funds or of the Fund's
administrator, from giving Oral Instructions or Written
Instructions to the Custodian or executing a Certificate so
long as it does not result in delivery of or access to assets
of the Funds prohibited by paragraph (a) of this Section 8.
9. CONCERNING THE CUSTODIAN.
(a) Standard of Conduct. Notwithstanding any other provision of
this Custody Agreement, the Custodian shall not be liable for
any loss or damage, including counsel fees, resulting from its
action or omission to act or otherwise, except for any such
loss or damage arising out of the negligence, recklessness, or
willful misconduct of the Custodian or its breach of this
Agreement. The Custodian will use reasonable care in the
performance of its duties under this contract. The Custodian
may, with respect to questions of law, apply for and obtain
the advice and opinion of counsel to the Trust or of its own
counsel with substantial experience in the subject matter
concerning such questions of the law, at the expense of the
Trust, and shall be fully protected with respect to anything
done or omitted by it reasonably and in good faith in
conformity with such advice or opinion.
(b) Limit of Duties. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or obligation
to inquire into, and shall not be liable for:
1. The validity of the issue of any Securities purchased
by the Funds, the legality of the purchase thereof,
or the propriety of the amount paid therefor;
2. The legality of the sale of any Securities by the
Funds or the propriety of the amount for which the
same are sold;
3. The legality of the issue or sale of any Shares, or
the sufficiency of the amount to be received
therefor;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of the Funds;
6. The legality of any borrowing for temporary
administrative or emergency purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable
for, or considered to be the Custodian of, any money, whether
or not represented by any check, draft, or other instrument
for the payment of money, received by it on behalf of the
Funds until the Custodian actually receives and collects such
money.
(d) Amounts Due from Transfer Agent. The Custodian shall not be
under any duty or obligation to take action to effect
collection of any amount due to the Funds from the Transfer
Agent nor to take any action to effect payment or distribution
by the Transfer Agent of any amount paid by the Custodian to
the Transfer Agent in accordance with this Custody Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be
under any duty or obligation to take action to effect
collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused
after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and
(ii) it shall be assured to its satisfaction of reimbursement
of its costs and expenses in connection with any such action.
(f) Appointment of Subcustodians. (i) The Custodian is hereby
authorized to appoint one or more domestic subcustodians
(which may be an affiliate of the Custodian) to hold
Securities and monies at any time owned by the Funds.The
Custodian is also hereby authorized to place Assets with any
Foreign Custodian located in a jurisdiction which is not a
Selected Country and with Euroclear, Cedel, First Chicago
Clearing Centre or any other transnational depository.
(g) No Duty to Ascertain Authority. The Custodian shall not be
under any duty or obligation to ascertain whether any
Securities at any time delivered to or held by it for the
Funds are such as may properly be held by the Funds under the
provisions of the Master Trust Agreement and the Prospectus.
(h) Reliance on Certificates and Instructions. The Custodian shall
be entitled to rely upon any Certificate, notice or other
instrument in writing received by the Custodian and reasonably
believed by the Custodian to be genuine and to be signed by an
officer or Authorized Person or a Senior Authorized Person.
The Custodian shall be entitled to rely upon any Written
Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this
Agreement and reasonably believed by the Custodian to be
genuine and to be given by such person. The Funds agree to
forward to the Custodian Written Instructions from an
Authorized Person or Senior Authorized Person confirming such
Oral Instructions in such manner so that such Written
Instructions are received by the Custodian, whether by hand
delivery, telex or otherwise, by the close of business on the
same day that such Oral Instructions are given to the
Custodian. The Funds agree that the fact that such confirming
instructions are not received by the Custodian shall in no way
affect the validity of the transactions or enforceability of
the transactions hereby authorized by the Funds. The Funds
agree that the Custodian shall incur no liability to the Funds
in acting upon Oral Instructions given to the Custodian
hereunder concerning such transactions provided such
instructions reasonably appear to have been received from a
duly Authorized Person or Senior Authorized Person. The
Custodian shall be under no duty to question any direction of
an Authorized Person or a Senior Authorized Person with
respect to the portion of the account over which such person
has authority, to review any property held in the account, to
make any suggestions with respect to the investment and
reinvestment of the assets in the account, or to evaluate or
question the performance of any Authorized Person or Senior
Authorized Person. The Custodian shall not be responsible or
liable for any diminution of value of any securities or other
property held by the Custodian.
(i) Overdraft Facility and Security for Payment. In the event that
the Custodian is directed by Written Instruction (or Oral
Instructions confirmed in writing in accordance with Section
9(h) hereof) to make any payment or transfer of monies on
behalf of the Funds for which there would be, at the close of
business on the date of such payment or transfer, insufficient
monies held by the Custodian on behalf of the Funds, the
Custodian may, in its sole discretion, provide an overdraft
(an "Overdraft") to the Funds in an amount sufficient to allow
the completion of such payment or transfer. The Custodian
shall promptly notify the Funds (an "Overdraft Notice") of any
Overdraft by facsimile transmission or in such other manner as
the Funds and the Custodian may agree. Any Overdraft provided
hereunder: (a) shall be payable on the next Business Day after
receipt of an Overdraft Notice, unless otherwise agreed by the
Funds and the Custodian; and (b) shall accrue interest from
the date of the Overdraft to the date of payment in full by
the Funds at a rate agreed upon from time to time, by the
Custodian and the Funds. The Custodian and the Funds
acknowledge that the purpose of such Overdraft is to
temporarily finance the purchase of Securities for prompt
delivery in accordance with the terms hereof, to meet
unanticipated or unusual redemptions, to allow the settlement
of foreign exchange contracts or to meet other emergency
expenses not reasonably foreseeable by the Funds. To secure
payment of any Overdraft, the Funds hereby grant to the
Custodian a continuing security interest in and right of
setoff against the Securities and cash in the Fund's accounts
from time to time in the full amount of such Overdraft. Should
the Funds fail to pay promptly any amounts owed hereunder, the
Custodian shall be entitled to use available cash in the
applicable Fund's account and to liquidate Securities in the
account as is necessary to meet the Fund's obligations under
the Overdraft. In any such case, and without limiting the
foregoing, the Custodian shall be entitled to take such other
actions(s) or exercise such other options, powers and rights
as the Custodian now or hereafter has as a secured creditor
under the Massachusetts Uniform Commercial Code or any other
applicable law.
ARTICLE IV
INFORMATION SERVICES AGREEMENT
The following sets forth our agreement with respect to the delivery of certain
information to the Board or its agents as requested by the Board from time to
time.
1. PROVISIONS OF INFORMATION
In accordance with the provisions of this Information Services
Agreement, the Custodian agrees to provide to the Board, or at the
direction of the Board, to the Trust's investment advisers, the
information set forth in Article IV, Section 2 with respect to Foreign
Custodians and Securities Depositories which hold Securities, Assets,
or other property of the Funds and the systems and environment for
securities processing in the jurisdiction in which such Foreign
Custodians or Securities Depositories are located. The Custodian shall
provide only that portion of such information as is reasonably
available to it.
2. INFORMATION TO BE PROVIDED
COUNTRY INFORMATION
o Settlement Environment
o Depository
o Settlement Period
o Trading
o Security Registration
o Currency
o Foreign Investment Restrictions
o Entitlements
o Proxy Voting
o Foreign Taxation
<PAGE>
Depository Information (if applicable to the Country)
o Name
o Information relative to Determining Compulsory or
Voluntary Status of the Facility
o Type of Entity
o Ownership Structure
o Operating History
o Eligible Instruments
o Security Form
o Financial Data
o Regulator
o External Auditor
SUBCUSTODIAN INFORMATION
o Financial Information
o Regulator
o External Auditor
o How Securities are Held
o Operational Capabilities
o Insurance Coverage
INFORMATION ON THE FOLLOWING LEGAL QUESTIONS
o Would the applicable foreign law restrict the access afforded the
independent public accountants of the Funds to books and records kept
by a foreign custodian?
o Would the applicable foreign law restrict the ability of the Funds to
recover their assets in the event of bankruptcy of the foreign
custodian?
o Would the applicable foreign law restrict the ability of the Funds to
recover assets that are lost while under the control or in the custody
of the foreign custodian?
o What are the foreseeable difficulties in converting the Fund's cash
from the relevant foreign currency into U.S. dollars?
3. LIABILITY AND WARRANTIES
The Custodian will use reasonable best efforts to ensure that the information
provided pursuant to Article IV, Section 1 is accurate and current as of time of
provision. However, due to the nature and source of this information, and the
necessity of relying on various information sources, most of which are external
to the Custodian, the Custodian shall have no liability for direct or indirect
use of such information if the Custodian acted reasonably. The Custodian makes
no other warranty or condition, either express or implied, as to the
merchantability or fitness for any particular purpose of the information
provided under this Article IV.
ARTICLE V
ADDITIONAL PROVISIONS
1. COMPENSATION.
(a) The Custodian shall be entitled to receive, and the Trust
agrees to pay to the Custodian, such reasonable compensation
as may be agreed upon from time to time between the Custodian
and the Trust. The Custodian may charge against any monies
held on behalf of the Funds pursuant to this Agreement such
reasonable compensation and any reasonable expenses incurred
by the Custodian in the performance of its duties pursuant to
this Agreement. The Custodian shall also be entitled to charge
against any money held on behalf of the Funds pursuant to this
Agreement the amount of any loss, damage, liability or expense
incurred with respect to the Funds, including counsel fees,
for which it shall be entitled to reimbursement under the
provisions of this Agreement. The expenses which the Custodian
may charge against such account include, but are not limited
to, the expenses of domestic subcustodians and Foreign
Custodians incurred in settling transactions outside of
Boston, Massachusetts or New York City, New York involving the
purchase and sale of Securities.
(b) The Trust will compensate the Custodian for its services
rendered under this Agreement in accordance with the fees set
forth in a separate Fee Schedule which schedule may be
modified by the Custodian upon not less than sixty days prior
written notice to the Trust.
(c) Any compensation agreed to hereunder may be adjusted from time
to time by a revised Fee Schedule, dated and signed by a
Senior Authorized Person or authorized representative of each
party hereto.
(d) The Custodian will bill the Trust for services rendered
hereunder as soon as practicable after the end of each
calendar month but in no event later than the 15th day of the
month following the month in which such services were
rendered. The Trust will promptly pay to the Custodian the
amount of such billing unless such fees have been previously
debited under Section 1(a). In making payments to service
providers pursuant to Written Instructions, the Trust
acknowledges that the Custodian is acting as a paying agent
and not as the payor, for tax information reporting and
withholding purposes.
2. INSOLVENCY OF ELIGIBLE FOREIGN CUSTODIANS.
The Custodian shall not be responsible or liable for any losses or
damages suffered by the Funds arising as a result of the insolvency of
any Foreign Custodian except with respect to any Foreign Custodian in
any Selected Country which the Custodian appointed in accordance with
the provisions of Article II but only to the extent that the Custodian
failed to comply with the standard of care set forth in Article II with
respect to the selection and monitoring of such Foreign Custodian.
3. LIABILITY FOR DEPOSITORIES.
The Custodian shall not be responsible for any losses resulting from
the deposit or maintenance of Securities, Assets or other property of
the Funds with any Securities Depository.
4. DAMAGES.
Under no circumstances shall the Custodian be liable for any indirect,
consequential or special damages with respect to its role as Delegate,
Custodian or information vendor.
5. LIMITATION OF LIABILITY.
The Funds and the Custodian agree that the obligations of the Trust
under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Funds, individually, but are binding only
upon the assets and property of the Trust, as provided in the Master
Trust Agreement. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust, and signed by an authorized
officer of the Trust, acting as such. Neither such authorization by
such Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them or any shareholder of the Funds
individually or to impose any liability on any of them or any
shareholder of the Funds personally, but shall bind only the assets and
property of the Trust as provided in the Master Trust Agreement.
6. TERM AND TERMINATION.
(a) This Agreement and any portion thereof shall become effective
on the date first set forth above (the "Effective Date") and
shall continue in effect thereafter until such time as this
Agreement may be terminated in accordance with the provisions
hereof.
(b) Either of the parties hereto may terminate this Agreement as a
whole or may terminate either the Delegation Agreement or the
Information Services Agreement individually or the Delegation
Agreement collectively by giving to the other party a notice
in writing specifying the date and scope of such termination,
which shall be not less than 60 days after the date of receipt
of such notice. In the event such notice is given by the
Trust, it shall be accompanied by a certified vote of the
Board, electing to terminate this Agreement or the applicable
portion thereof .
In the event such notice is given by the Custodian of any
termination which includes the Custody Agreement, the Trust
shall, on or before the termination date, deliver to the
Custodian a certified vote of the Board, designating a
successor custodian or custodians. In the absence of such
designation by the Trust, the Custodian may designate a
successor custodian, which shall be a person qualified to so
act under the 1940 Act. If the Trust fails to designate a
successor custodian, the Trust shall upon the date specified
in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities and monies then
owned by the Funds, be deemed to be its own custodian and the
Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement or the portion so
terminated, other than the duty with respect to Securities
held in the Book-Entry System which cannot be delivered to the
Funds.
(c) Upon the date set forth in such notice under paragraph (b) of
this Section 6, this Agreement or portion thereof shall
terminate to the extent specified in such notice, and if the
Custody Agreement is terminated the Custodian shall upon
receipt of a notice of acceptance by the successor custodian
on that date deliver directly to the successor custodian all
Securities and monies then held by the Custodian on behalf of
the Funds, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it shall
then be entitled as set forth in this Agreement.
(d) If there is a material default in the Agreement by either
party, the non-defaulting party may immediately terminate the
Agreement pursuant to the procedures set forth in Section 6(b)
and the non-defaulting party shall be entitled to reasonable
attorney's fees.
7. FORCE MAJEURE.
Notwithstanding anything in this Agreement to the contrary, neither the
Custodian nor the Trust shall be liable for any losses resulting from
or caused by events or circumstances beyond its reasonable control,
including, but not limited to, losses resulting from nationalization,
strikes, expropriation, devaluation, revaluation, confiscation,
seizure, cancellation, destruction or similar action by any
governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental
authority of currency restrictions, exchange controls, taxes, levies or
other charges affecting the Fund's property; or the breakdown, failure
or malfunction of any utilities or telecommunications systems; or any
order or regulation of any banking or securities industry including
changes in market rules and market conditions affecting the execution
or settlement of transactions; or acts of war, terrorism, insurrection
or revolution; or any other similar or third-party event. This Section
shall survive the termination of this Agreement.
8. INSPECTION OF BOOKS AND RECORDS.
The books and records of the Custodian shall be open to inspection and
audit at reasonable times by officers and auditors employed by the
Trust at its own expense and with prior written notice to the
Custodian, and by the appropriate staff of the Securities and Exchange
Commission.
9. MISCELLANEOUS.
(a) Annexed hereto as Appendix C is a certification signed by the
Secretary of the Trust setting forth the names and the
signatures of the present Authorized and Senior Authorized
Persons. The Trust agrees to furnish to the Custodian a new
certification in similar form in the event that any such
present person ceases to be such an Authorized Person or
Senior Authorized Person or in the event that other or
additional persons are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement
upon Oral Instructions or signatures of the present Authorized
and Senior Authorized Persons as set forth in the last
delivered certification.
(b) Annexed hereto as Appendix A is a certification signed by the
Secretary of the Trust setting forth the names and the
signatures of the present officers of the Trust. The Trust
agrees to furnish to the Custodian a new certification in
similar form in the event any such present officer ceases to
be an officer of the Trust or in the event that other or
additional officers are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement
upon the signature of an officer as set forth in the last
delivered certification.
(c) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall
be sufficiently given if actually received by the Custodian at
its offices at One Boston Place, Boston, Massachusetts 02108
or at such other place as the Custodian may from time to time
designate in writing.
(d) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Trust, shall be
sufficiently given if actually received by the Trust at its
offices at 225 West Wacker Drive, Suite 1200, Chicago, IL
60606 or at such other place as the Trust may from time to
time designate in writing.
(e) Except as provided in Article II, Section 2 this Agreement may
not be amended or modified in any manner except by a written
agreement executed by both parties with the same formality as
this Agreement (i) authorized, or ratified and approved by a
vote of the Board of Trustees of the Trust, including a
majority of the members of the Board of Trustees of the Trust
who are not "interested persons" of the Fund (as defined in
the 1940 Act), or (ii) authorized, or ratified and approved by
such other procedures as may be permitted or required by the
1940 Act.
(f) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable
by the Trust without the written consent of the Custodian, or
by the Custodian without the written consent of the Trust
authorized or approved by a vote of the Board of Trustees of
the Trust provided, however, that the Custodian may assign the
Agreement to an Affiliated Person and any attempted assignment
without such written consent shall be null and void. Nothing
in this Agreement shall give or be construed to give or confer
upon any third party any rights hereunder.
(g) The Trust represents that a copy of the Master Trust Agreement
is on file with the Secretary of the Commonwealth of
Massachusetts and with the Boston City Clerk.
(h) This Agreement shall be construed in accordance with the laws
of The Commonwealth of Massachusetts.
(i) The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
(j) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
(k) Each party represents to the other that it has all necessary
power and authority, and has obtained any consent or approval
necessary to permit it, to enter into and perform under this
Agreement and that this Agreement does not violate, breach,
give rise to a default or right of termination under or
otherwise conflict with any applicable law, regulation,
ruling, decree or other governmental authorization or any
contract to which it is a party or by which any of its assets
is bound.
(l) Custodian convenants that it will maintain financial insurance
coverage for its operations, including errors and omissions,
directors and officers and Fidelity bond insurance.
(m) The parties agree that information disclosed between the
parties, including but not limited to information learned by
one party from the other party's employees, agents or through
inspection of its property, that relates to it or its
affiliates' (which includes any entity controlling or under
the common control of such party) products, designs, business
plans, business opportunities, finances, research,
development, know-how, personnel, third-party confidential
information, the terms and conditions of this Agreement,
information regarding either party's or its affiliates'
customers and the existence of the discussion between the
parties will be considered and referred to collectively in
this Agreement as "Confidential Information," provided that
information disclosed by the disclosing party (the
"discloser") will be considered Confidential Information by
the receiving party (the "recipient"). Confidential
Information, however, does not include information that: (1)
is now or subsequently becomes generally available to the
public through no fault or breach on the part of the
recipient; (2) the recipient can demonstrate to have had
rightfully in its possession free of any obligation of
Confidentiality; (3) is independently developed by the
recipient without the use of any Confidential Information; or
(4) the recipient rightfully obtains from a third party who
has the right to transfer or disclose it or if such party does
not have such right, then the recipient had no reason to know
of such circumstance and no actual knowledge of such
circumstance.
The recipient will not disclose, publish, or disseminate
Confidential Information to anyone other than those of its
employees or consultant (or its affiliates' or subsidiaries'
employees or consultants) with a need to know, and the
recipient agrees to take reasonable precautions to prevent any
unauthorized use, disclosure, publication, or dissemination of
Confidential Information. The recipient agrees to accept
Confidential Information for the sole purpose of the
performance of its duties in connection with this Agreement.
The recipient agrees not to use Confidential Information
otherwise for its own or any third party's benefit without the
prior written approval of an authorized representative of the
discloser in each instance.
All Confidential Information, and any Derivative thereof,
whether created by the recipient or the discloser, remains the
property of the discloser and no license or other rights to
Confidential Information is granted or implied hereby. For
purposes of this Agreement, "Derivatives" shall mean: (1) for
copyrightable or copyrighted material, any translation,
abridgment, revision or other form in which an existing work
may be recast, transformed or adapted; (2) for patentable or
patented material, or any improvement thereon; and (3) for
material which is protected by trade secret, any new material
derived from such existing trade secret material, including
any new material which may be protected by copyright, patent
and/or trade secret.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective representatives duly authorized as of the day and
year first above written.
JNL SERIES TRUST
By: /s/ Andrew B. Hopping
---------------------------
Name: Andrew B. Hopping
Title: President
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ Christopher Healy
---------------------------
Name: Christopher Healy
Title: Vice President
<PAGE>
APPENDIX A
I, Thomas J. Meyer, the Secretary of the JNL Series Trust, a business
trust organized under the laws of the Commonwealth of Massachusetts (the
"Trust"), do hereby certify that:
The following individuals have been duly authorized as Authorized
Persons to give Oral Instructions and Written Instructions on behalf of the
Trust and each Fund thereof and the specimen signatures set forth opposite their
respective names are their true and correct signatures:
NAME POSITION SIGNATURE
Andrew B. Hopping President and Chief /s/ Andrew B. Hopping
Executive Officer --------------------------
Robert A. Fritts Vice President, /s/ Robert A. Fritts
Treasurer and Chief --------------------------
Financial Officer
Thomas J. Meyer Vice President, Counsel /s/ Thomas J. Meyer
and Secretary --------------------------
Mark D. Nerud Vice President and /s/ Mark D. Nerud
Assistant Treasurer --------------------------
Amy D. Eisenbeis Vice President and /s/ Amy D. Eisenbeis
Assistant Secretary --------------------------
William V. Simon Employee of Jackson /s/ William V. Simon
National Financial --------------------------
Services, LLC
Elsa Chessani Employee of Jackson /s/ Elsa Chessani
National Financial --------------------------
Services, LLC
By: /s/ Thomas J. Meyer
---------------------
Secretary
Dated
<PAGE>
APPENDIX B
SELECTED COUNTRIES
ARGENTINA KOREA, REPULBIC OF
AUSTRALIA LUXEMBOURG
AUSTRIA MALAYSIA
BANGLADESH MAURITIUS
BELGIUM MEXICO
BERMUDA NAMIBIA
BOSTWANA THE NETHERLANDS
BRAZIL NEW ZEALAND
CANADA NORWAY
CHILE PAKISTAN
CHINA, PEOPLES' REPUBLIC OF PERU
COLOMBIA THE PHILIPPINES
CYPRUS POLAND
THE CZECH REPUBLIC PORTUGAL
DENMARK SINGAPORE
EGYPT SLOVAK REPUBLIC
FINLAND SOUTH AFRICA
FRANCE SPAIN
GERMANY SRI LANKA
GHANA SWEDEN
GREECE SWITZERLAND
HONG KONG TAIWAN
HUNGARY TURKEY
INDIA UNITED KINGDOM
INDONESIA URUGUAY
IRELAND VENEZUELA
ISRAEL ZAMBIA
ITALY ZIMBABWE
JAPAN
KENYA
<PAGE>
APPENDIX C
I, Thomas J. Meyer, the Secretary of the JNL Series Trust, a business
trust organized under the laws of the Commonwealth of Massachusetts (the
"Trust"), do hereby certify that:
The following individuals serve in the following positions with the Fund
and each individual has been duly elected or appointed to each such position and
qualified therefor in conformity with the Trust's Master Trust Agreement and the
specimen signatures set forth opposite their respective names are their true and
correct signatures:
NAME POSITION SIGNATURE
Andrew B. Hopping President and Chief /s/ Andrew B. Hopping
Executive Officer --------------------------
Robert A. Fritts Vice President, /s/ Robert A. Fritts
Treasurer and Chief --------------------------
Financial Officer
Thomas J. Meyer Vice President, Counsel /s/ Thomas J. Meyer
and Secretary --------------------------
Mark D. Nerud Vice President and /s/ Mark D. Nerud
Assistant Treasurer --------------------------
Amy D. Eisenbeis Vice President and /s/ Amy D. Eisenbeis
Assistant Secretary --------------------------
By: /s/ Thomas J. Meyer
---------------------
Secretary
Dated
<PAGE>
APPENDIX D
AS AMENDED AUGUST 30, 1999
JNL SERIES TRUST
SERIES:
JNL/J.P. Morgan Enhanced S&P 500 Index Series
JNL/Janus Aggressive Growth Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series
JNL/Alger Growth Series
JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
PPM America/JNL Balanced Series
PPM America/JNL High Yield Bond Series
PPM America/JNL Money Market Series
Salomon Brothers/JNL Balanced Series
Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL High Yield Bond Series
Salomon Brothers/JNL U.S. Government & Quality Bond Series
T. Rowe Price/JNL Established Growth Series
T. Rowe Price/JNL International Equity Investment Series
T. Rowe Price/JNL Mid-Cap Growth Series
JNL/Alliance Growth Series
JNL/J.P. Morgan International & Emerging Markets Series
JNL/PIMCO Total Return Bond Series
Goldman Sachs/JNL Growth & Income Series
Lazard/JNL Small Cap Value Series
Lazard/JNL Mid Cap Value Series
JNL SERIES TRUST BOSTON SAFE DEPOSIT AND
TRUST COMPANY
By: /s/ Mark D. Nerud By: /s/ Christopher Healy
---------------------------- ---------------------------
Name: Mark D. Nerud Name: Christopher Healy
Title: VP Title: Vice President
AMENDMENT
TO
ADMINISTRATION AGREEMENT
BETWEEN
JNL SERIES TRUST
AND
JACKSON NATIONAL FINANCIAL SERVICES, LLC
This AMENDMENT is made by and between JACKSON NATIONAL FINANCIAL
SERVICES, LLC, a Michigan limited liability company ("Administrator"), and JNL
SERIES TRUST, a Massachusetts business trust ("Trust").
WHEREAS, the Administrator and the Trust entered into an Administration
Agreement dated as of January 1, 1999 ("Agreement"), whereby the Administrator
agreed to provide certain administrative services to the investment portfolios
of the JNL Series Trust; and
WHEREAS, pursuant to the Agreement, each Series agreed to pay the
Administrator for the services provided and the expenses assumed by each Series
as set forth in Schedule B to the Agreement, and the Administrator agreed to
accept such fee as full compensation under the Agreement for such services and
expenses; and
WHEREAS, the Trust desires to appoint Administrator to provide, and
Administrator has agreed to provide, additional administrative services to six
new investment portfolios of the JNL Series Trust, effective upon execution or,
if later, the date that initial capital for such investment portfolio is first
provided.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree to amend the Agreement as follows:
1. Schedule A to the Agreement is hereby deleted and replaced in its
entirety with Schedule A dated May 1, 2000, attached hereto.
2. Schedule B to the Agreement is hereby deleted and replaced in its
entirety with Schedule B dated May 1, 2000, attached hereto.
IN WITNESS WHEREOF, the Administrator and the Trust have caused this
Amendment to be executed as of this 10th day of February, 2000.
JACKSON NATIONAL FINANCIAL JNL SERIES TRUST
SERVICES, LLC
By: /s/ Mark D. Nerud By: /s/ Andrew B. Hopping
------------------------- -----------------------
Name: Mark D. Nerud Name: Andrew B. Hopping
------------------------- -----------------------
Title: Chief Financial Officer Title: President
------------------------- -----------------------
<PAGE>
SCHEDULE A
DATED MAY 1, 2000
JNL/Alger Growth Series
JNL/Alliance Growth Series
JNL/Eagle Core Equity Series
JNL/Eagle SmallCap Equity Series
JNL/J.P. Morgan Enhanced S&P 500 Index Series
JNL/J.P. Morgan International & Emerging Markets Series
JNL/Janus Aggressive Growth Series
JNL/Janus Capital Growth Series
JNL/Janus Global Equities Series
JNL/Janus Balanced Series
JNL/Janus Growth & Income Series
JNL/PIMCO Total Return Bond Series
JNL/Putnam Growth Series
JNL/Putnam Value Equity Series
JNL/Putnam International Equity Series
JNL/Putnam Mid-Cap Growth Series
JNL/S&P Conservative Growth Series I
JNL/S&P Moderate Growth Series I
JNL/S&P Aggressive Growth Series I
JNL/S&P Very Aggressive Growth Series I
JNL/S&P Equity Growth Series I
JNL/S&P Equity Aggressive Growth Series I
JNL/S&P Conservative Growth Series II
JNL/S&P Moderate Growth Series II
JNL/S&P Aggressive Growth Series II
JNL/S&P Very Aggressive Growth Series II
JNL/S&P Equity Growth Series II
JNL/S&P Equity Aggressive Growth Series II
JNL/S&P Aggressive Growth Index Series
JNL/S&P Conservative Growth Index Series
JNL/S&P Moderate Growth Index Series
JNL/SSGA Enhanced Intermediate Bond Index Series
JNL/SSGA International Index Series
JNL/SSGA Russell 2000 Index Series
JNL/SSGA S&P 500 Index Series
JNL/SSGA S&P MidCap Index Series
Lazard/JNL Small Cap Value Series
Lazard/JNL Mid Cap Value Series
PPM America/JNL Balanced Series
PPM America/JNL High Yield Bond Series
PPM America/JNL Money Market Series
Salomon Brothers/JNL Balanced Series
Salomon Brothers/JNL Global Bond Series
Salomon Brothers/JNL High Yield 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
<PAGE>
SCHEDULE B
DATED MAY 1, 2000
Series Fee
- ------ ---
JNL/Alger Growth Series .10%
JNL/Alliance Growth Series .10%
JNL/Eagle Core Equity Series .10%
JNL/Eagle SmallCap Equity Series .10%
JNL/J.P. Morgan Enhanced S&P 500 Index Series .10%
JNL/J.P. Morgan International & Emerging Markets Series .10%
JNL/Janus Aggressive Growth Series .10%
JNL/Janus Capital Growth Series .10%
JNL/Janus Global Equities Series .10%
JNL/Janus Balanced Series .10%
JNL/Janus Growth & Income Series .10%
JNL/PIMCO Total Return Bond Series .10%
JNL/Putnam Growth Series .10%
JNL/Putnam Value Equity Series .10%
JNL/Putnam International Equity Series .10%
JNL/Putnam Mid-Cap Series .10%
JNL/S&P Conservative Growth Series I .00%
JNL/S&P Moderate Growth Series I .00%
JNL/S&P Aggressive Growth Series I .00%
JNL/S&P Very Aggressive Growth Series I .00%
JNL/S&P Equity Growth Series I .00%
JNL/S&P Equity Aggressive Growth Series I .00%
JNL/S&P Conservative Growth Series II .00%
JNL/S&P Moderate Growth Series II .00%
JNL/S&P Aggressive Growth Series II .00%
JNL/S&P Very Aggressive Growth Series II .00%
JNL/S&P Equity Growth Series II .00%
JNL/S&P Equity Aggressive Growth Series II .00%
JNL/S&P Aggressive Growth Index Series .00%
JNL/S&P Conservative Growth Index Series .00%
JNL/S&P Moderate Growth Index Series .00%
JNL/SSGA Enhanced Intermediate Bond Index Series .10%
JNL/SSGA International Index Series .15%
JNL/SSGA Russell 2000 Index Series .10%
JNL/SSGA S&P 500 Index Series .10%
JNL/SSGA S&P MidCap Index Series .10%
Lazard/JNL Small Cap Value Series .10%
Lazard/JNL Mid Cap Value Series .10%
PPM America/JNL Balanced Series .10%
PPM America/JNL High Yield Bond Series .10%
PPM America/JNL Money Market Series .10%
Salomon Brothers/JNL Balanced Series .10%
Salomon Brothers/JNL Global Bond Series .10%
Salomon Brothers/JNL High Yield Bond Series .10%
Salomon Brothers/JNL U.S. Government & Quality Bond Series .10%
T. Rowe Price/JNL Established Growth Series .10%
T. Rowe Price/JNL Mid-Cap Growth Series .10%
T. Rowe Price/JNL Value Series .10%
CODE OF ETHICS
JACKSON NATIONAL FINANCIAL SERVICES, LLC
JNL SERIES TRUST
JNL VARIABLE FUND LLC
JNL VARIABLE FUND III LLC
JNL VARIABLE FUND V LLC
JNLNY VARIABLE FUND I LLC
JNLNY VARIABLE FUND II LLC
PURPOSE
The Board of Directors of Jackson National Financial Services, LLC, the
Board of Trustees of the JNL Series Trust (the "Trust"), and the Board
of Managers of each of the JNL Variable Fund LLC, the JNL Variable Fund
III LLC, the JNL Variable Fund V LLC, the JNLNY Variable Fund I LLC,
and the JNLNY Variable Fund II LLC (each a "Fund", collectively the
"Funds") have adopted this Code of Ethics ("Code") in accordance with
the provisions of Rule 17j-1 under the Investment Company Act of 1940
("Act"). Its purpose is to govern the personal investment activities of
those persons who are involved in, or who are in a position to gain
information regarding, investment recommendations and decisions with
respect to the portfolio activities of the Trust or a Fund. Each such
person is hereby required to conduct his or her personal securities
transactions in accordance with this Code and in such a manner as to
avoid any actual or potential conflict of interest or any abuse of such
person's position of trust and responsibility. Further, no such person
shall take inappropriate advantage of his or her position with the
Trust or a Fund; and each such person shall be under a duty at all
times to place the interests of the shareholders of the Trust or a
Fund, as applicable, before his or her own interests.
SECTION 1 - DEFINITIONS
(a) "Access person" means any trustee, officer, or advisory person of the
Trust or a Fund; and any employee of the Trust or a Fund or of any
company in a control relationship to the Trust or a Fund, who, in
connection with his regular functions or duties, obtains information
regarding the purchase or sale of a Security by the Trust or a Fund,
and any natural person in a control relationship to the Trust or a Fund
who obtains information concerning recommendations made to the Trust or
a Fund with regard to the purchase or sale of a Security.
However, a person does not become an Access person simply by virtue of
the following:
(i) normally assisting in the preparation of public reports, or
receiving public reports, but not receiving information about
current recommendations or trading; or
(ii) a single instance of obtaining knowledge of current
recommendations or trading activity, or infrequently and
inadvertently obtaining such knowledge.
The Compliance officer shall determine those persons who are Access
persons of the Trust or a Fund.
(b) "Advisory person" means any employee of the Trust or a Fund or of any
company in a control relationship to the Trust or a Fund, or any
natural person in a control relationship to the Trust or a Fund, who,
in connection with his or her regular functions or duties makes or
participates in the purchase or sale of a Security by the Trust or a
Fund, or whose functions relate to the making of any recommendations or
providing information or advice to the Trust or a Fund with respect to
such purchases or sales.
(c) A "Security held or to be acquired" by the Trust or a Fund means any
Security which, within the most recent 15 days, (i) is or has been held
by the Trust or a Fund, as applicable, or (ii) is being or has been
considered by the Trust or a Fund, as applicable.
(d) "Beneficial ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions
of Section 16 of the Securities Exchange Act of 1934 and the rules and
regulations thereunder, except that the determination of direct or
indirect beneficial ownership shall apply to all Securities which an
Access person has or acquires.
(e) "Control" means the power to exercise a controlling influence over the
management or policies of the Trust or a Fund, unless such power is
solely the result of an official position with the Trust or a Fund.
(f) "Disinterested person" means a trustee of the Trust or a member of the
Board of Managers of a Fund who is not an "interested person" of the
Trust or Fund, as applicable, within the meaning of Section 2(a)(19) of
the Act.
(g) "Purchase or sale of a Security" includes, inter alia, the writing of
an option to purchase or sell a Security.
(h) "Security" shall have the meaning set forth in Section 2(a)(36) of the
Act, except that it shall not include shares of registered open-end
investment companies, Securities issued by the Government of the United
States, short term debt Securities which are "Government Securities"
within the meaning of Section 2(a)(16) of the Act, bankers'
acceptances, bank certificates of deposit, commercial paper, and such
other money market instruments as may be designated by the applicable
Board.
(i) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the recommendation,
when such person seriously considers making such a recommendation.
(j) "Personal investment transaction" means a transaction by an Access
person for the direct or indirect purchase or sale of a Security in
which such Access person has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership.
(k) "Compliance officer" means an officer of the Trust or a Fund, as
applicable, responsible for administering this Code.
SECTION 2 - PROHIBITED PURCHASES AND SALES
(a) It is a policy of the Trust and each Fund that information with respect
to current portfolio transactions of the Trust or Fund, as applicable,
be kept confidential. No Access person shall take personal advantage of
any information concerning prospective or actual portfolio transactions
in any manner which might prove detrimental to the interests of the
Trust or Fund.
(b) No Access person shall use his position to gain personal benefit
through work relationships. No such person shall attempt to cause the
Trust or a Fund to purchase, sell or hold a particular security when
that action may reasonably be expected to create a personal benefit to
the Access person.
(c) No Access person shall, in connection with the purchase or sale,
directly or indirectly, by such person of a Security held or to be
acquired by the Trust or a Fund:
(i) Employ any device, scheme or artifice to defraud the Trust or
a Fund;
(ii) Make to the Trust or a Fund any untrue statement of a material
fact or omit to state to the Trust or a Fund a material fact
necessary in order to make the statements made, in light of
the circumstances under which they are made, not misleading;
(iii) Engage in act, practice, or course of business which operates
or would operate as a fraud or deceit upon the Trust or a
Fund; or
(iv) Engage in any manipulative practice with respect to the Trust or a
Fund.
(d) No Access person shall engage in a Personal investment transaction with
respect to any Security which to his or her actual knowledge at the
time of such transaction:
(i) is being considered for purchase or sale by the Trust or a
Fund, as applicable, or any other investment company for whom
the investment adviser to the Trust or a Fund or any of its
sub-advisers serves as investment adviser; or
(ii) is the subject of a pending buy or sell order by the Trust or
a Fund or any other investment company for which the
investment adviser or any of its sub-advisers serves as
investment adviser.
(e) No Advisory person shall:
(i) engage in any Personal investment transaction for the
acquisition of a Security in an initial public offering;
(ii) profit from the purchase and sale, or sale and purchase, of
the same (or equivalent) Securities within 60 calendar days.
Any profits realized on such short term trades shall be
disgorged to the appropriate Series of the Trust or Fund, or
as otherwise determined by the appropriate Board;
(iii) receive any gift or other thing of more than de minimis value
from any person or entity that does business with or on behalf
of the Trust or a Fund;
(iv) serve on the board of directors of any publicly traded
company, unless prior authorization therefor by the applicable
Board has been given after a determination by the Board that
such service is consistent with the interests of the Trust or
a Fund and its shareholders. Where such approval is given,
such Advisory person is prohibited, during the period of such
service and for a 6 month period thereafter from (1) engaging
in any communication regarding such company with any other
Advisory person, and (2) causing any Series with respect to
which he or she is an Advisory person to purchase any security
issued by such company; or
(v) participate in any consideration of whether the Trust or a
Fund should invest in securities of an issuer in which such
Advisory person has invested through a private placement
without disclosing such investment of the Advisory person to
the other participants. Under such circumstances, the decision
to purchase securities of the issuer by the Trust or a Fund
shall be subject to the independent review by appropriate
Advisory persons (or corresponding personnel of the investment
adviser or appropriate sub-adviser) having no personal
interest in the matter.
SECTION 3 - EXEMPTED TRANSACTIONS
(a) The prohibitions of Sections 2(d) and 2(e) of this Code shall not apply to:
(i) Purchases or sales effected in any account over which the
Access person has no direct or indirect influence or control.
(ii) Purchases or sales of Securities which are non-volitional on
the part of either the Access person or the Trust or a Fund,
as applicable.
(iii) Purchases which are part of an automatic dividend reinvestment
plan.
(iv) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its Securities,
to the extent such rights were acquired from such issuer, and
sales of such rights so acquired.
(v) Purchases or sales which are only remotely potentially harmful
to the Trust or a Fund because they would be very unlikely to
affect a highly institutional market, or clearly are not
related economically to the Securities to be purchased, sold
or held by the Trust, as determined by the Board of Trustees.
(b) The prohibitions of Sections 2(d), 2(e)(iii), 2(e)(iv), and 2(e)(v) of this
Code shall not apply to:
(i) Purchases or sales of Securities which are not eligible for
purchase or sale by the Trust or a Fund.
SECTION 4 - COMPLIANCE PROCEDURES
(a) No Access person, except a Disinterested person, shall engage in a
Personal investment transaction unless such transaction has been
submitted to, and approved by, the Compliance officer in advance of the
transaction. The Compliance officer shall make all such approvals only
after making a determination that the proposed transaction would not be
inconsistent with this Code. For purposes of the preceding sentence,
the prohibitions of Section 2(d) shall be applied without regard to the
requirement of actual knowledge contained in such Section. In the case
of a proposed Personal investment transaction for the acquisition by an
Advisory person of a Security in a private placement, the Compliance
officer shall confer with appropriate representatives of the investment
adviser to determine whether such investment opportunity should be
reserved for the Trust or a Fund, as applicable; and the Compliance
officer shall not approve such transaction if it appears to him or her,
after appropriate inquiry, that (1) the opportunity should be reserved
for the Trust or a Fund; or (2) such opportunity has been offered to
the Advisory person by virtue of his or her position with the Trust or
a Fund.
(b) Every Access person, other than a Disinterested person, shall direct
each broker through whom he or she engages in any Personal investment
transaction to supply the Compliance officer with duplicate copies of
(1) all confirmations of such transactions, and (2) periodic statements
of all securities accounts. Such directives shall require the broker to
transmit such duplicate copies within five days after the original has
been transmitted to such Access person.
(c) Every Access person, other than a Disinterested person, shall report to
the Compliance officer the information described in Section 4(e) of
this Code with respect to every Personal investment transaction engaged
in by such Access persons provided, however, that an Access person
shall not be required to make a report with respect to transactions
effected for any account over which such person does not have any
direct or indirect influence, or Security transactions which are not
eligible for purchase or sale by the Trust or a Fund, as applicable.
(d) A Disinterested person need only report a transaction in a Security if
such Disinterested person, at the time of that transaction, knew or, in
the ordinary course of fulfilling his official duties as a trustee of
the Trust or member of the Board of Mangers of a Fund, should have
known that, during the 15-day period immediately preceding or after the
date of the transaction, such Security was purchased or sold by the
Trust or a Fund or was being considered by the Trust or a Fund or its
investment adviser for purchase or sale by the Trust or a Fund, as
applicable.
(e) Every report shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates
was effected, and shall contain the following information:
(i) The date of the transaction, the title and the number of
shares, and the principal amount of each Security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(iii) The price at which the transaction was effected; and,
(iv) The name of the broker, dealer or bank with or through whom
the transaction was effected.
(f) Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he has
any direct or indirect beneficial ownership in the Security to which
the report relates.
(g) Each Advisory person shall disclose all securities holdings in which he
or she has a direct or indirect beneficial ownership to the Compliance
officer (1) upon commencement of employment, and (2) thereafter on an
annual basis.
(h) Each Access person shall certify annually that such Access person:
(i) has read and understands this Code;
(ii) recognizes that he or she is subject thereto;
(iii) has complied with all requirements thereof; and
(iv) has disclosed or reported all Personal investment transactions
required to be disclosed or reported pursuant to the
requirements thereof.
(i) The Compliance officer shall formulate and implement procedures to
carry out the provisions of this Code, including the adoption of
appropriate questionnaires and reporting forms reasonably designed to
provide sufficient information to determine whether any provisions of
this Code are violated. Such procedures shall include procedures
reasonably necessary to monitor the Securities trading activities of
Access persons after approval of Personal investment transactions
pursuant to Section 4(a) of this Code. The Compliance officer shall
prepare an annual report to the Board of Trustees (1) summarizing the
existing procedures concerning personal investing by Access persons,
including any changes made to such procedures during the period covered
by the report; (2) identifying any violations requiring significant
remedial action during such period; and (3) identifying any recommended
changes in existing procedures based upon the Trust's experience under
this Code, evolving industry practices, or developments in applicable
laws or regulations.
(j) Any person becoming aware of a violation or an apparent violation of
this Code of Ethics shall report such matter to the appropriate Board.
SECTION 5 - SANCTIONS
The Board shall review any violation or apparent violation of this Code of
Ethics and may adopt and apply whatever sanctions it may determine appropriate
in respect of such violation, including, inter alia, a letter of censure or
suspension or termination of the employment of the violator.
SECTION 6 - RECORD MAINTENANCE
The Trust shall, at its principal place of business, maintain records in the
following manner:
(a) A copy of this Code of Ethics and any Code of Ethics adopted pursuant
to Rule 17j-1 under the Act which within the past five years has been
in effect, shall be preserved in an easily accessible place;
(b) A record of any violation of this Code of Ethics, and of any action
taken as a result of such violation, shall be preserved in an easily
accessible place for a period of not less than five years following the
end of the fiscal year in which the violation occurs;
(c) A copy of each report made by an Access person pursuant to this Code of
Ethics shall be preserved for a period of not less than five years from
the end of the fiscal year in which it is made, the first two years in
an easily accessible place;
(d) A list of all persons who are, or within the past five years have been,
required to make reports pursuant to this Code of Ethics shall be
maintained in an easily accessible place; and
(e) A copy of such prior clearance procedure for securities transactions as
the Compliance officer shall from time to time determine.
SECTION 7 - INVESTMENT ADVISERS
Personnel of the Investment Adviser or any Investment Sub-Adviser of the Trust
or a Fund who are "Access persons" may, as an alternative to complying with the
foregoing provisions of this Code, comply with the requirements of a code of
ethics adopted pursuant to Rule 17j-1 under the Act by such Investment Adviser
or Investment Sub-Adviser; provided that:
(a) Such code of ethics meets the requirements of Rule 17j-1 under the Act;
(b) Such code of ethics applies to the activities of the Access person as
they relate to the Trust; and
(c) Such Investment Adviser or Investment Sub-Adviser submits a report to
the appropriate Board on a quarterly basis, which report shall (1)
identify the Access persons associated with it that are relying on this
Section 7; (2) certify that the conditions of Section 7(a) and 7(b)
have been met at all times during the period covered by the report; and
(3) either certify that no violation of such code of ethics by any such
Access person has occurred during the period covered by the report, or
identify all such violations. The report shall be accompanied by
appropriate documentation.
Rev. 2-99
FEBRUARY 2000
AS AMENDED AND RESTATED
ALLIANCE CAPITAL MANAGEMENT L.P.
CODE OF ETHICS AND STATEMENT OF POLICY AND PROCEDURES REGARDING
PERSONAL SECURITIES TRANSACTIONS
1. PURPOSES
(A) Alliance Capital Management L.P. ("Alliance", "we" or "us") is
a registered investment adviser and acts as investment manager
or adviser to investment companies and other Clients. In this
capacity, we serve as fiduciaries and owe our Clients an
undivided duty of loyalty. We must avoid even the appearance
of a conflict that may compromise the trust Clients have
placed in us and must insist on strict adherence to fiduciary
standards and compliance with all applicable federal and state
securities laws. Adherence to this Code of Ethics and
Statement of Policy and Procedures Regarding Personal
Securities Transactions (the "Code and Statement") is a
fundamental condition of service with us, any of our
subsidiaries or our general partner (the "Alliance Group").
(B) The Code and Statement is intended to comply with Rule 17j-1
under the Investment Company Act which applies to us because
we serve as an investment adviser to registered investment
companies. Rule 17j-1 specifically requires us to adopt a code
of ethics that contains provisions reasonably necessary to
prevent our "access persons" (defined in Rule 17j-1 to cover
persons such as officers, directors, portfolio managers,
traders, research analysts and others) from engaging in
fraudulent conduct, including insider trading. Each investment
company we advise has also adopted a code of ethics with
respect to its access persons. As set forth in Section 3
below, our Code and Statement applies to all Employees and all
other individuals who are Access Persons. The Code and
Statement is also intended to comply with the provisions of
Rule 204-2 under the Investment Advisers Act of 1940 (the
"Advisers Act") which requires us to maintain records of
securities transactions in which certain of our personnel have
any Beneficial Ownership.
(C) All Employees and all other individuals who are Access Persons
(collectively, "you") also serve as fiduciaries with respect
to our Clients and in this capacity you owe an undivided duty
of loyalty to our Clients. As part of this duty and as
expressed throughout the Code and Statement, you must at all
times:
(i) Place the interests of our Clients first;
(ii) Conduct all personal securities transactions
consistent with this Code and Statement and in such a
manner that avoids any actual or potential conflict
of interest or any abuse of your responsibility and
position of trust; and
(iii) Abide by the fundamental standard that you not take
inappropriate advantage of your position.
(D) This Code and Statement does not attempt to identify all
possible conflicts of interests and literal compliance with
each of the specific procedures will not shield you from
liability for personal trading or other conduct which violates
your fiduciary duties to our Clients. In addition to the
specific prohibitions contained in this Code and Statement,
you are also subject to a general requirement not to engage in
any act or practice that would defraud our Clients. This
general prohibition includes, in connection with the purchase
or sale of a Security held or to be acquired or sold (as this
phrase is defined below in Section 2(k)) by a Client:
(i) Making any untrue statement of a material fact;
(ii) Creating materially misleading impressions by
omitting to state or failing to provide any
information necessary to make any statements made, in
light of the circumstances in which they are made,
not misleading;
(iii) Making investment decisions, changes in research
ratings and trading decisions other than exclusively
for the benefit of and in the best interest of our
Clients;
(iv) Using information about investment or trading
decisions or changes in research ratings (whether
considered, proposed or made) to benefit or avoid
economic injury to you or anyone other than our
Clients;
(v) Taking, delaying or omitting to take any action with
respect to any research recommendation, report or
rating or any investment or trading decision for a
Client in order to avoid economic injury to you or
anyone other than our Clients;
(vi) Purchasing or selling a Security on the basis of
knowledge of a possible trade by or for a Client;
(vii) Revealing to any other person (except in the normal
course of your duties on behalf of a Client) any
information regarding Securities transactions by any
Client or the consideration by any Client of Alliance
of any such Securities transactions; or
(viii) Engaging in any manipulative practice with respect to
any Client.
(E) The provisions contained in this Code and Statement must be
followed when making a personal securities transaction. These
policies and procedures, which must be followed, are
considerably more restrictive and time-consuming than those
applying to investments in the mutual funds and other Clients
we advise. If you are not prepared to comply with these
policies and procedures, you must forego personal trading.
<PAGE>
2. DEFINITIONS
The following definitions apply for purposes of the Code and Statement
in addition to the definitions contained in the text itself.
(A) "ACCESS PERSON" means any director or officer of the general
partner of Alliance, as well as any of the following persons:
(i) any Employee who, in connection with his or her
regular functions or duties --
(A) makes, participates in, or obtains
information regarding the purchase or sale
of a Security by a Client, or whose
functions relate to the making of any
recommendations with respect to such
purchases or sales;
(B) obtains information from any source
regarding any change, or consideration of
any change in Alliance's internal research
coverage, a research rating or an internally
published view on a Security or issuer; or
(C) obtains information from any source
regarding the placing or execution of an
order for a Client account; and
(ii) any natural person having the power to exercise a
controlling influence over the management or policies
of Alliance (unless that power is solely the result
of his or her position with Alliance) who:
(A) obtains information concerning
recommendations made to a Client with regard
to the purchase or sale of a Security;
(B) obtains information from any source
regarding any change, or consideration of
any change in research coverage, research
rating or a published view on a Security or
issuer; and
(C) obtains information from any source
regarding the placing or execution of an
order for a Client account.
(B) A SECURITY IS "BEING CONSIDERED FOR PURCHASE OR SALE" WHEN:
(i) an Alliance research analyst issues research
information (including as part of the daily morning
call) regarding initial coverage of, or changing a
rating with respect to, a Security;
(ii) a portfolio manager has indicated (during the daily
morning call or otherwise) his or her intention to
purchase or sell a Security;
(iii) a portfolio manager places an order for a Client; or
(iv) a portfolio manager gives a trader discretion to
execute an order for a Client over a specified period
of time.
(C) "BENEFICIAL OWNERSHIP" is interpreted in the same manner as in
determining whether a person is subject to the provisions of
Section 16 of the Securities Exchange Act of 1934 ("Exchange
Act"), Rule 16a-1 and the other rules and regulations
thereunder and includes ownership by any person who, directly
or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares a
direct or indirect pecuniary interest in a Security. For
example, an individual has an indirect pecuniary interest in
any Security owned by the individual's spouse. Beneficial
Ownership also includes, directly or indirectly, through any
contract, arrangement, understanding, relationship, or
otherwise, having or sharing "voting power" or "investment
power," as those terms are used in Section 13(d) of the
Exchange Act and Rule 13d-3 thereunder.
(D) "CLIENT" means any person or entity, including an investment
company, for which Alliance serves as investment manager or
adviser.
(E) "COMPLIANCE OFFICER" refers to Alliance's Compliance Officer.
(F) "CONTROL" has the same meaning set forth in Section 2(a)(9) of
the Investment Company Act.
(G) "EMPLOYEE" refers to any person who is an employee of any
member of the Alliance Group, including both part-time
employees, as well as consultants (acting in the capacity of a
portfolio manager, trader or research analyst) under the
control of Alliance who, but for their status as consultants,
would otherwise come within the definition of Access Person.
(H) "INITIAL PUBLIC OFFERING" means an offering of securities
registered under the Securities Act of 1933, the issuer of
which, immediately before the registration, was not subject to
the reporting requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934.
(I) "INVESTMENT PERSONNEL" refers to:
(i) any Employee who acts in the capacity of a portfolio
manager, research analyst or trader;
(ii) any Employee who assists someone acting in the
capacity of a portfolio manager, research analyst or
trader and as an assistant has access to information
generated or used by portfolio managers, research
analysts and traders (including, for example,
assistants who have access to the Alliance Investment
Review or the Alliance International Investment
Review);
(iii) any Employee who receives the Alliance Investment
Review or the Alliance International Investment
Review; or (iv) any natural person who Controls
Alliance and who obtains information concerning
recommendations made to a Client regarding the
purchase or sale of securities by the Client.
(J) "LIMITED OFFERING" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to
Sections 4(2) or 4(6) thereof or pursuant to Rules 504, 505 or
506 under the Securities Act of 1933.
(K) "PERSONAL ACCOUNT" refers to any account (including, without
limitation, a custody account, safekeeping account and an
account maintained by an entity that may act in a brokerage or
a principal capacity) in which an Access Person or Employee
has any Beneficial Ownership and any such account maintained
by or for a financial dependent. For example, this definition
includes Personal Accounts of:
(i) an Access Person's or Employee's spouse, including a
legally separated or divorced spouse who is a
financial dependent,
(ii) financial dependents residing with the Access Person
or Employee, and
(iii) any person financially dependent on an Access Person
or Employee who does not reside with that person,
including financially dependent children away at
college.
(L) "PURCHASE OR SALE OF A SECURITY" includes, among other
transactions, the writing or purchase of an option to sell a
Security and any short sale of a Security.
(M) "SECURITY" has the meaning set forth in Section 2(a)(36) of
the Investment Company Act and any derivative thereof,
commodities, options or forward contracts, except that it
shall not include shares of open-end investment companies
registered under the Investment Company Act, securities issued
by the Government of the United States, short-term debt
securities that are government securities within the meaning
of Section 2(a)(16) of the Investment Company Act, bankers'
acceptances, bank certificates of deposit, commercial paper,
and such other money market instruments as are designated by
the Compliance Officer.
<PAGE>
(N) "SECURITY HELD OR TO BE ACQUIRED OR SOLD" means:
(i) any Security which, within the most recent 15 days
(1) is or has been held by a Client or (2) is being
or has been considered by a Client (to the extent
known by Alliance) or Alliance for purchase by the
Client; and
(ii) any option to purchase or sell, and any Security
convertible into or exchangeable for, a Security.
(O) "SUBSIDIARY" refers to either of the following types of
entities with respect to which Alliance, directly or
indirectly, through the ownership of voting securities, by
contract or otherwise has the power to direct or cause the
direction of management or policies of such entity:
(i) any U.S. entity engaged in money management; and
(ii) any non-U.S. entity engaged in money management for
U.S. accounts.
3. APPLICATION
(A) This Code and Statement applies to all Employees and to all
other individuals who are Access Persons. Please note that
certain provisions apply to all Employees while other
provisions apply only to Access Persons and others apply only
to certain categories of Access Persons who are also
Investment Personnel (e.g., portfolio managers and research
analysts).
(B) Alliance will provide a copy of this Code and Statement to all
Employees and all individuals who are Access Persons. In
addition, the Compliance Officer will maintain lists of Access
Persons and Investment Personnel, including a separate list of
portfolio managers and research analysts.
4. LIMITATIONS ON PERSONAL SECURITIES TRANSACTIONS
(A) ALL EMPLOYEES
It is the responsibility of each Employee to ensure that all
personal securities transactions are made in strict compliance
with the restrictions and procedures in the Code and Statement
and otherwise comply with all applicable legal and regulatory
requirements.
EMPLOYEES MUST HOLD ALL SECURITIES IN A PERSONAL ACCOUNT. This
requirement applies to all types of personal securities
transactions including, for example, the purchase of
Securities in a private placement or other direct investment.
In addition, Employees may not take physical possession of
certificates or other formal evidence of ownership.
<PAGE>
Personal securities transactions for Employees may be effected
only in a Personal Account and in accordance with the
following provisions:
(i) DESIGNATED BROKERAGE ACCOUNTS
All Personal Accounts of an Employee that are
maintained as brokerage accounts must be held only at
the following designated broker-dealers: Donaldson,
Lufkin & Jenrette, Merrill Lynch & Co., and Charles
Schwab.
(ii) SECURITIES BEING CONSIDERED FOR CLIENT PURCHASE OR
SALE
An Employee may not purchase or sell a Security, or
engage in any short sale of a Security, in a Personal
Account if, at the time of the transaction, the
Security is being considered for purchase or sale for
a Client or is being purchased or sold for a Client.
The following non-exhaustive list of examples
illustrates this restriction:
o An Alliance research analyst issues research
information (including as part of the daily
morning call) regarding initial coverage of,
or changing a rating with respect to, a
Security.
o A portfolio manager has, during the daily
morning call, indicated his or her intention
to purchase or sell a Security.
o A portfolio manager places an order in the
Security to purchase or sell the Security
for a Client.
o An open order in the Security exists on the
trading desk.
o An open limit order exists on the trading
desk, and it is reasonably likely that the
Security will reach that limit price in the
near future.
(iii) RESTRICTED LIST
A Security may not be purchased or sold in a Personal
Account if, at the time of the transaction, the
Security appears on the Alliance Daily Restricted
List and is restricted for Employee transactions. The
Daily Restricted List is made available each business
day to all Employees via Lotus Notes and the Alliance
Alert.
(iv) PRECLEARANCE REQUIREMENT
An Employee may not purchase or sell, directly or
indirectly, any Security in which the Employee has
(or after such transaction would have) any Beneficial
Ownership unless the Employee obtains the prior
written approval to the transaction from the
Compliance Department and, in the case of Investment
Personnel, the head of the business unit in which the
Employee works. A request for preclearance must be
made in writing in advance of the contemplated
transaction and must state:
a. the name of the Security involved,
b. the number of shares or principal amount to
be purchased or sold, and
c. a response to all questions contained in the
appropriate pre-clearance form.
Preclearance requests will be acted on only between
the hours of 10:00 a.m. and 3:30 p.m. Any approval
given under this paragraph will remain in effect only
until the end of the trading day on which the
approval was granted.
When a Security is being considered for purchase or
sale for a Client or is being purchased or sold for a
Client following the approval on the same day of a
personal trading request form with respect to the
same security, the Compliance Department is
authorized to cancel the personal order if (x) it has
not been executed and the order exceeds a market
value of $50,000 or (y) the Compliance Department
determines, after consulting with the trading desk
and the appropriate business unit head (if
available), that the order, based on market
conditions, liquidity and other relevant factors,
could have an adverse impact on a Client or on a
Client's ability to purchase or sell the Security or
other Securities of the issuer involved.
(v) AMOUNT OF TRADING
No more than an aggregate of 20 securities
transactions may occur in an Employee's Personal
Accounts in any consecutive thirty-day period.
(vi) DISSEMINATION OF RESEARCH INFORMATION
An Employee may not buy or sell any Security that is
the subject of "significantly new" or "significantly
changed" research during a forty-eight hour period
commencing with the first publication or release of
the research. The terms "significantly new" and
"significantly changed" include:
a. the initiation of coverage by an Alliance
research analysts;
b. any change in a research rating or position
by an Alliance research analyst (unless the
research analyst who makes the change
advises the Compliance Department in writing
that the change is the result of an
unanticipated widely disseminated
announcement or market event, e.g., the
announcement of a major earnings warning as
opposed to the research analysts
independently rethinking his or her
subjective assessment of the security); and
c. any other rating, view, opinion, or advice
from an Alliance research analyst, the
issuance (or reissuance) of which in the
opinion of such research analyst or head of
research would be reasonably likely to have
a material effect on the price of the
security.
(B) ACCESS PERSONS
In addition to the requirements set forth in paragraph (a) of
this Section 4, the following restrictions apply to all Access
Persons:
(i) SHORT SALES
No Access Person shall engage in any short sale of a
Security if, at the time of the transaction, any
Client has a long position in such Security (except
that an Access Person may engage in short sales
against the box and covered call writing provided
that these personal securities transactions do not
violate the prohibition against short-term trading).
(ii) SHORT-TERM TRADING
All Access Persons are subject to a mandatory buy and
hold of all Securities for 60 calendar days. An
Access Person may, however, after 30 calendar days,
sell a Security if the sale price is lower than the
original purchase price (i.e., at a loss on the
original investment). Any trade made in violation of
this paragraph shall be unwound, or, if that is not
practicable, all profits from the short-term trading
must be disgorged as directed by the Compliance
Officer.
(iii) NON-EMPLOYEE ACCESS PERSONS
Any non-Employee Access Person with actual knowledge
that a Security is being considered for purchase or
sale for a Client may not purchase or sell such
Security.
(C) INVESTMENT PERSONNEL
In addition to the requirements set forth in paragraphs (a)
and (b) of this Section 4, the following restrictions apply to
all Investment Personnel:
(i) INITIAL PUBLIC OFFERINGS
No Investment Personnel shall acquire any direct or
indirect Beneficial Ownership in any Securities in
any Initial Public Offering.
(ii) LIMITED OFFERINGS
No Investment Personnel shall acquire any Beneficial
Ownership in any Securities in any Limited Offering
of Securities unless the Compliance Officer and the
business unit head give express prior written
approval and document the basis for granting or
denying approval after due inquiry. The Compliance
Officer, in determining whether approval should be
given, will take into account, among other factors,
whether the investment opportunity should be reserved
for a Client and whether the opportunity is being
offered to the individual by virtue of his or her
position with the Alliance Group. Investment
Personnel so authorized to acquire Securities in a
Limited Offering must disclose that investment when
they play a part in any Client's subsequent
consideration of an investment in the issuer, and in
such a case, the decision of Alliance to purchase
Securities of that issuer for a Client will be
subject to an independent review by Investment
Personnel with no personal interest in such issuer.
(iii) BOARD MEMBER OR TRUSTEE
No Investment Personnel shall serve on any board of
directors or trustees or in any other management
capacity of any private or public company without
prior written authorization from the Compliance
Officer based upon a determination that such service
would not be inconsistent with the interests of any
Client. This prohibition does not include non-profit
corporations, charities or foundations; however,
approval from the Investment Personnel's supervisor
is necessary.
(iv) RECEIPT OF GIFTS
No Investment Personnel shall receive any gift or
other thing of more than de minimis value from any
person or entity, other than a member of the Alliance
Group, that does business with Alliance on behalf of
a Client, provided, however, that receipt of the
following shall not be prohibited:
a. an occasional breakfast, luncheon, dinner or
reception, ticket to a sporting event or the
theater, or comparable entertainment, that
is not so frequent, so costly, nor so
extensive as to raise any question of
impropriety;
b. a breakfast, luncheon, dinner, reception or
cocktail party in conjunction with a bona
fide business meeting; and
c. a gift approved in writing by the Compliance
Officer.
(D) PORTFOLIO MANAGERS
In addition to the requirements set forth in paragraphs (a),
(b) and (c) of this Section 4, the following restrictions
apply to all persons acting in the capacity of a portfolio
manager of a Client account:
<PAGE>
(i) BLACKOUT PERIODS
No person acting in the capacity of a portfolio
manager shall buy or sell a Security for a Personal
Account within seven calendar days before and after a
Client trades in that Security. In the case of Client
accounts managed by more than one portfolio manager,
this restriction will apply to the portfolio manager
who makes the decision to purchase or sell the
relevant Security. If a portfolio manager engages in
such a personal securities transaction during a
blackout period, the Compliance Officer will break
the trade or, if the trade cannot be broken, the
Compliance Officer will direct that any profit
realized on the trade be disgorged.
(ii) ACTIONS DURING BLACKOUT PERIODS
No person acting in the capacity of a portfolio
manager shall delay or accelerate a Client trade due
to a previous purchase or sale of a Security for a
Personal Account. In the event that a portfolio
manager determines that it is in the best interest of
a Client to buy or sell a Security for the account of
the Client within seven days of the purchase or sale
of the same Security in a Personal Account, the
portfolio manager should contact the Compliance
Officer immediately who may direct that the trade in
the Personal Account be canceled or take other
appropriate relief.
(iii) TRANSACTIONS CONTRARY TO CLIENT POSITIONS
No person acting in the capacity of a portfolio
manager shall purchase or sell a Security in a
Personal Account contrary to investment decisions
made on behalf of a Client, unless the portfolio
manager represents and warrants in the personal
trading request form that (x) it is appropriate for
the Client account to buy, sell or continue to hold
that Security and (y) the decision to purchase or
sell the Security for the Personal Account arises
from the need to raise or invest cash or some other
valid reason specified by the portfolio manager and
approved by the Compliance Officer and is not
otherwise based on the portfolio manager's view of
how the Security is likely to perform.
(E) RESEARCH ANALYSTS
In addition to the requirements set forth in paragraphs (a),
(b), (c) of this Section 4, the following restrictions apply
to all persons acting in the capacity of a research analyst:
(i) BLACKOUT PERIODS
No person acting as a research analyst shall buy or
sell a Security within seven calendar days before and
after making a change in a rating or other published
view with respect to that Security. If a research
analyst engages in such a personal securities
transaction during a blackout period, the Compliance
Officer will break the trade or, if the trade cannot
be broken, the Compliance Officer will direct that
any profit realized on the trade be disgorged.
(ii) ACTIONS DURING BLACKOUT PERIODS
No person acting as a research analyst shall delay or
accelerate a rating or other published view with
respect to any Security because of a previous
purchase or sale of a Security in such person's
Personal Account. In the event that a research
analyst determines that it is appropriate to make a
change in a rating or other published view within
seven days of the purchase or sale of the same
Security in a Personal Account, the research analyst
should contact the Compliance Officer immediately who
may direct that the trade in the Personal Account be
canceled or take other appropriate relief.
(iii) ACTIONS CONTRARY TO RATINGS
No person acting as a research analyst shall purchase
or sell a Security (to the extent such Security is
included in the research analyst's research universe)
contrary to an outstanding rating or a pending
ratings change, unless (x) the research analyst
represents and warrants in the personal trading
request form that (as applicable) there is no reason
to change the outstanding rating and (y) the research
analyst's personal trade arises from the need to
raise or invest cash or some other valid reason
specified by the research analyst and approved by the
Compliance Officer and is not otherwise based on the
research analyst's view of how the security is likely
to perform.
5. EXEMPTED TRANSACTIONS
(A) The pre-clearance requirements, as described in Section
4(a)(iv) of this Code and Statement, do not apply to:
(i) NON-VOLITIONAL TRANSACTIONS
Purchases or sales that are non-volitional
(including, for example, any Security received as
part of an individual's compensation) on the part of
an Employee (and any Access Person who is not an
Employee) or are pursuant to a dividend reinvestment
plan (up to an amount equal to the cash value of a
regularly declared dividend, but not in excess of
this amount).
(ii) EXERCISE OF PRO RATA ISSUED RIGHTS
Purchases effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of
the issuer's Securities, to the extent such rights
were acquired from such issuer, and sales of such
rights so acquired. This exemption applies only to
the exercise or sale of rights that are issued in
connection with a specific upcoming public offering
on a specified date, as opposed to rights acquired
from the issuer (such as warrants or options), which
may be exercised from time-to-time up until an
expiration date. This exemption does not apply to the
sale of stock acquired pursuant to the exercise of
rights.
(B) The restrictions on effecting transactions in a (1) Security
being considered for purchase or sale, as described in
Sections 4(a)(ii) and 4(b)(iii) or (2) that is the subject of
"significantly new" or "significantly changed" research, as
described in Section 4(a)(vi) of this Code and Statement, do
not apply to:
(i) NON-VOLITIONAL TRANSACTIONS
Purchases or sales that are non-volitional
(including, for example, any Security received as
part of an individual's compensation) on the part of
an Access Person or are pursuant to a dividend
reinvestment plan (up to an amount equal to the cash
value of a regularly declared dividend, but not in
excess of this amount).
(ii) EXERCISE OF PRO RATA ISSUED RIGHTS
Purchases effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of
the issuer's Securities, to the extent such rights
were acquired from such issuer, and sales of such
rights so acquired. This exemption applies only to
the exercise or sale of rights that are issued in
connection with a specific upcoming public offering
on a specified date, as opposed to rights acquired
from the issuer (such as warrants or options), which
may be exercised from time-to-time up until an
expiration date. This exemption does not apply to the
sale of stock acquired pursuant to the exercise of
rights.
(iii) DE MINIMIS TRANSACTIONS -- FIXED INCOME SECURITIES
Any of the following Securities, if at the time of
the transaction, the Access Person has no actual
knowledge that the Security is being considered for
purchase or sale by a Client, that the Security is
being purchased or sold by the Client or that the
Security is the subject of significantly new or
significantly changed research:
a. Fixed income securities transaction
involving no more than 100 units or having a
principal amount not exceeding $25,000; or
b. Non-convertible debt securities and
non-convertible preferred stocks which are
rated by at least one nationally recognized
statistical rating organization ("NRSRO") in
one of the three highest investment grade
rating categories.
(iv) DE MINIMIS TRANSACTIONS -- EQUITY SECURITIES
Any equity Securities transaction, or series of
related transactions, involving shares of common
stock and excluding options, warrants, rights and
other derivatives, provided
a. any orders are entered after 10:00 a.m. and
before 3:00 p.m. and are not designated as
"market on open" or "market on close";
b. the aggregate value of the transactions do
not exceed (1) $10,000 for securities with a
market capitalization of less than $1
billion; (2) $25,000 for securities with a
market capitalization of $1 billion to $5
billion and (3) $50,000 for securities with
a market capitalization of greater than $5
billion; and
c. the Access Person has no actual knowledge
that the Security is being considered for
purchase or sale by a Client, that the
Security is being purchased or sold by or
for the Client or that the Security is the
subject of significantly new or
significantly changed research.
(C) NON-EMPLOYEE ACCESS PERSONS
The restrictions on Employees and Access Persons, as described
in Sections 4(a) and 4(b) of this Code and Statement, do not
apply to non-Employee Access Persons, if at the time of the
transaction involved, such person has no actual knowledge that
the Security involved is being considered for purchase or
sale.
(D) EXTREME HARDSHIP
In addition to the exceptions contained in Section 5(a) and
(b), the Compliance Officer may, in very limited
circumstances, grant other exceptions under any Section of the
Code and Statement on a case-by-case basis, provided:
(i) The individual seeking the exception furnishes to the
Compliance Officer:
a. a written statement detailing the efforts
made to comply with the requirement from
which the individual seeks an exception;
b. a written statement containing a
representation and warranty that (1)
compliance with the requirement would impose
a severe undue hardship on the individual
and (2) the exception would not, in any
manner or degree, harm or defraud the Client
or compromise the individual's or Alliance's
fiduciary duty to any Client; and
c. any supporting documentation that the
Compliance Officer may request;
(ii) The Compliance Officer conducts an interview with the
individual or takes such other steps the Compliance
Officer deems appropriate in order to verify that
granting the exception will not in any manner or
degree, harm or defraud the Client or compromise the
individual's or Alliance's fiduciary duty to any
Client; and
(iii) The Compliance Officer maintains, along with
statements provided by the individual, a written
record that contains:
a. the name of the individual;
b. the specific requirement of Section 4 from
which the individual sought an exception;
c. the name of the Security involved, the
number of shares or principal amount
purchased or sold, and the date or dates on
which the Securities were purchased or sold;
d. the reason(s) the individual sought an
exception from the requirements of Section
4;
e. the efforts the individual made to comply
with the requirements of Section 4 from
which the individual sought to be excepted;
and
f. the independent basis upon which the
Compliance Officer believes that the
exemption should be granted.
(E) Any Employee or Access Person who acquires an interest in any
private investment fund (including a "hedge fund") or any
other Security that cannot be purchased and held in a Personal
Account shall be excepted from the requirement that all
Securities be held in a Personal Account, as described in
Section 4(a) of this Code and Statement. Such Employee or
Access Person shall provide the Compliance Officer with a
written statement detailing the reason why such Security
cannot be purchased and held in a Personal Account.
Transactions in these Securities nevertheless remain subject
to all other requirements of this Code and Statement,
including applicable private placement procedures,
preclearance requirements and blackout period trading
restrictions.
6. REPORTING
(A) INITIAL HOLDINGS REPORTS BY ALL ACCESS PERSONS
Each Access Person must, at the time of becoming an Access
Person, provide an initial holdings report to the Compliance
Officer disclosing the following:
(i) all Securities beneficially owned by the Access
Person (including the title, number of shares and/or
principal amount of each Security beneficially
owned);
(ii) the name of any broker-dealer or financial
institution where the Access Person maintains a
Personal Account; and
(iii) the date the report is submitted by the Access
Person.
This report must be submitted no later than 10 days
after a person becomes an Access Person. In the event that
Alliance already maintains a record of the required
information via account statements received from the Access
Person's broker-dealer (because, for example, a new Access
Person is already an Alliance Employee), the Access Person may
satisfy this requirement by (i) confirming in writing (which
may include e-mail) the accuracy of the record within 10 days
after becoming an Access Person and (ii) recording the date of
the confirmation.
(A) ANNUAL HOLDINGS REPORTS BY ACCESS PERSONS
Each Access Person must, by January 30 of each year, provide
an annual holdings report to the Compliance Officer disclosing
the following:
(i) all Securities beneficially owned by the Access
Person (including the title, number of shares and/or
principal amount of each Security beneficially
owned);
(ii) the name of any broker-dealer or financial
institution where the Access Person maintains a
Personal Account; and
(iii) the date the report is submitted by the Access
Person.
The first annual holdings report submitted will be
for the year ending December 31, 2000 and must be provided to
the Compliance Officer by January 30, 2001.
The information must be current as of a date not more
than 30 days before the report is submitted. In the event that
Alliance already maintains a record of the required
information via account statements received from the Access
Person's broker-dealer, an Access Person may satisfy this
requirement by (i) confirming in writing (which may include
e-mail) the accuracy of the record and (ii) recording the date
of the confirmation.
(B) DISCLOSURE OF PERSONAL ACCOUNTS AND BENEFICIALLY OWNED SECURITIES
Upon commencement of employment with a member of the Alliance Group, an
Employee must:
(i) file with the Compliance Officer a list of all
Personal Accounts by completing the Employee
Compliance Statement (a copy of which is attached as
Appendix A), and while so employed maintain the list
on a current basis; and
(ii) Disclose to the Compliance Officer all Securities
holdings in which the Employee has any Beneficial
Ownership, and thereafter on an annual basis, to the
extent these Securities do not appear on the
Employee's account statements.
(C) ACCESS PERSONS WHO ARE NOT EMPLOYEES OF ALLIANCE
Every Access Person who is not an Employee of Alliance, shall
report to the Compliance Officer the information described in
Section 6(a) and (b) as well as 6(e) below with respect to
transactions in any Security in which such Access Person has,
or by reason of such transaction acquires, any Beneficial
Ownership in the Security; provided, however, that such Access
Person is not required to make a report with respect to
transactions effected in any account over which the Access
Person does not have any direct or indirect influence or
control, including such an account in which an Access Person
has any Beneficial Ownership.
(D) REPORT CONTENTS
Every report of a non-Employee Access Person required by
Section 6(d) (b) above shall be in writing and shall be
delivered not later than ten days after the end of the
calendar quarter in which a transaction to which the report
relates was effected, and shall contain the following
information:
(i) the date of the transaction, the title and the number
of shares, and the principal amount of each Security
involved;
(ii) the nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition);
(iii) the price at which the transaction was effected; and
(iv) the name of the broker, dealer or bank with or
through whom the transaction was effected.
(E) REPORT REPRESENTATIONS
Any such report may contain a statement that the report is not
to be construed as an admission by the person making the
report that he or she has any direct or indirect Beneficial
Ownership in the Security to which the report relates.
(F) MAINTENANCE OF REPORTS
The Compliance Officer shall maintain the information required
by Section 6 and such other records, if any, as are required
by Rule 17j-1 under the Investment Company Act and Rule 204-2
under the Advisers Act. All reports furnished pursuant to this
Section will be kept confidential, subject to the rights of
inspection by the Compliance Officer, the Transaction
Compliance Committee, the Securities and Exchange Commission
and by other third parties pursuant to applicable law.
7. ANNUAL VERIFICATIONS
Each person subject to this Code and Statement must certify annually
that he or she has read and understands this Code and Statement,
recognizes that he or she is subject thereto and has complied with its
provisions and disclosed or reported all personal Securities
transactions required to be disclosed or reported by this Code and
Statement. Such certificates and reports are to be given to the
Compliance Officer.
8. SANCTIONS
Upon learning of a violation of this Code and Statement, any member of
the Alliance Group, with the advice of the Compliance Officer, may
impose such sanctions as it deems appropriate, including, among other
things, censure, suspension or termination of service. Individuals
subject to this Code and Statement who fail to comply with this Code
and Statement may also be violating the federal securities laws or
other federal and state laws. Any such person who is suspected of
violating this Code and Statement should be reported immediately to the
Compliance Officer.
<PAGE>
CERTIFICATION
I hereby acknowledge receipt of the Code of Ethics and Statement of
Policy and Procedures Regarding Personal Securities Transactions (the "Code and
Statement") of Alliance Capital Management L.P. and its Subsidiaries. I certify
that I have read and understand the Code and Statement and recognize that I am
subject to its provisions. I also certify that I have complied with the
requirements of the Code and Statement and have disclosed or reported all
personal securities transactions required to be disclosed or reported pursuant
to the Code and Statement.
Name
------------------------------------
(please print)
Signature
------------------------------------
Date
------------------------------------
<PAGE>
APPENDIX A
ALLIANCE CAPITAL MANAGEMENT L.P.
EMPLOYEE COMPLIANCE STATEMENT
I hereby certify that I have read and understand the Code of
Ethics and Statement of Policy and Procedures Regarding Personal Securities
Transactions (the "Code and Statement"), dated August 1999 and hereby agree, in
consideration of my continued employment by Alliance Capital Management L.P. or
one of its subsidiaries, to comply with the policies and procedures contained in
the Code and Statement.
1 . In connection therewith, I agree to:
a. file with the Compliance Officer and maintain on a current
basis a list of all Personal Accounts (as defined in paragraph
2(h) of the Code and Statement);
b. arrange to have duplicate trade confirmations and periodic
statements for each Personal Account submitted to the
Compliance Officer directly by the securities firm maintaining
the Account(s); and
c. be personally responsible for determining if any security
transaction for my Personal Account(s) is prohibited by the
Code and Statement or any other Alliance policy statement.
2. The following Personal Account(s) are maintained at the
broker-dealer(s) and/or financial institution(s) named below (if none
write "none"):
a. registered in my name at the following BROKER-DEALER(S) AND/OR
FINANCIAL INSTITUTION(S):
--------------------------------------------------------------
b. registered in the name of my spouse at the following
BROKER-DEALER(S) AND/OR FINANCIAL INSTITUTION(S):
--------------------------------------------------------------
<PAGE>
c. registered in the name of a family member who resides with me
at the following BROKER-DEALER(S) AND/OR FINANCIAL
INSTITUTION(S):
name of family member name of broker-dealer and/or
financial institution(s)
===================== ===========================
------------------- --------------------------------
d. registered in the name of any other person who resides with me
and is financially dependent on me at the following
BROKER-DEALER(S) AND/OR FINANCIAL INSTITUTION(S):
name of person name of broker-dealer and/or
financial institution(s)
==================== ===========================
-------------------- -------------------------------
e. registered in the name of any other person who does not reside
with me, but who is financially dependent on me, at the
following BROKER-DEALER(S) AND/OR FINANCIAL INSTITUTION(S):
name of person name of broker-dealer and/or
financial institution(s)
==================== ============================
-------------------- -------------------------------
3. I have investment discretion over the following other account(s) at the
following BROKER-DEALER(S) AND/OR FINANCIAL INSTITUTION(S) (do not list
Client accounts):
name and description of account name of broker-dealer
and/or financial
institution(s)
=============================== =====================
------------------------------- ---------------------------
4. I will notify the Compliance Officer if a Personal Account is opened or
closed. If the answers to paragraphs a through e of Section 2 above are
all "none", I certify that neither I nor any member of my family who
resides with me, any other person who resides with me currently and is
financially dependent on me, or any other person who is financially
dependent on me maintains a BROKERAGE ACCOUNT OR OTHER TYPE OF
FINANCIAL ACCOUNT.
- ----------------------- -------------------------
Date Employee Signature
-------------------------
Type or print name
EAGLE ASSET MANAGEMENT, INC.
CODE OF ETHICS
A. Important General Prohibitions
The specific provisions and reporting requirements of this Code are
concerned with certain investment activities of "Access Persons," as herein
defined, who may benefit by, or interfere with, the purchase and sale of
securities by an "investment company," as defined herein. Rule 17j-1 (the
"Rule") under the Investment Company Act of 1940 (the "Act") prohibits an access
person of an investment adviser from using information concerning the
investments or investment intentions of an investment company, or from using
their ability to influence such investment intentions, for personal gain or in a
manner detrimental to the interest of an investment company. Specifically, the
Rule makes it unlawful, and it shall be a violation of this Code, for an access
person, directly or indirectly, in connection with the purchase or sale of a
security held or to be acquired by an investment company:
1. to employ any device, scheme or artifice to defraud the investment
company;
2. to make to the investment company (or its agents or affiliates) any
untrue statement of a material fact, or to omit to state to the investment
company (or its agents or affiliates) a material fact necessary in order to make
the statements made, in light of the circumstances under which they are made,
not misleading;
3. to engage in any act, practice, or course of business which operates
or would operate as a fraud or deceit upon the investment company; or
4. to engage in any manipulative practice with respect to the
investment company.
B. Definitions
1. Access Person. The term "access person" means any director, officer,
or advisory person of Eagle Asset Management, Inc. ("Eagle").
2. Investment Company. The term "investment company" means a company
registered as such under the Investment Company Act of 1940 and for which Eagle
is the investment adviser.
3. Advisory Person. The term "advisory person" of Eagle means (a) any
employee of Eagle (or of any company in a control relationship to Eagle) who, in
connection with his or her regular functions or duties, makes, participates in,
or obtains information regarding the purchase or sale of a security by an
investment company, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and (b) any natural
person in a control relationship to Eagle who obtains information concerning
recommendations made to an investment company with regard to the purchase or
sale of a security.
4. Beneficial Ownership. "Beneficial ownership" shall be interpreted in
the same manner as it would be in determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 and the rules
and regulations thereunder. "Beneficial ownership" includes accounts of a
spouse, minor children and relatives resident in the access person's home, as
well as accounts of another person if by reason of any contract, understanding,
relationship, agreement or other arrangement the access person obtains therefrom
benefits substantially equivalent to those of ownership. Access person should
contact the designated compliance officer regarding any questions they have
concerning what constitutes beneficial ownership.
5. Control. The term "control shall have the same meaning as that set
forth in Section 2(a)(9) of the Investment Company Act of 1940. A natural person
shall be presumed not to be a "control person for this purpose, unless a
contrary determination is made by the Securities and Exchange Commission.
6. Purchase or Sale of a Security. "Purchase or sale of a security"
includes, inter alia, the writing of an option to purchase or sell a security.
7. Security. The term `security' shall have the same meaning as set
forth in Section 2(a)(36) of the Investment Company Act of 1940, except that it
shall not include securities issued by the Government of the United States,
bankers' acceptances, bank certificates of deposit, commercial paper and shares
of registered open-end investment companies. Any questions as to whether a
particular investment constitutes a "security" should be referred to the
designated compliance officer.
8. Designated Compliance Officer. The term "designated compliance
officer" shall mean the Eagle officer(s) designated by Eagle's President as
being responsible for receiving reports or notices and performing such other
duties as required by this Code of Ethics.
C. Prohibited Transactions.
1. Purchases and Sales of a Security. Transactions which are prohibited
under the rules of Eagle's Employee Security Transaction Guidelines, which are
incorporated herein by reference, shall be considered prohibited transactions
for access persons under this Code.
D. Exempt Transactions.
Exempt transactions shall include:
1. Purchases or sales in any account over which the access person has
no direct or indirect influence or control.
2. Purchases or sales which are non-volitional on the part of either
the access person or an investment company.
3. Purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities to the extent such rights
were acquired from such issuer, and sales of such rights so acquired.
4. Purchases or sales which receive the prior approval of Eagle's
Compliance Officer, pursuant to Eagle's Employee Security Transaction
Guidelines, which are incorporated herein by reference.
E. Reporting.
1. In accordance with the reporting requirements of the Employee
Security Transaction Guidelines, every access person shall report to the
designated compliance officer the following information with respect to
transactions in any security in which such access person has, or by reason of
such transaction acquires, any direct or indirect beneficial ownership in the
security:
(a) The date of the transaction, the title and the number of shares,
and the principal amount of each security involved;
(b) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(c) The price at which the transaction was effected; and,
(d) The name of the broker, dealer, or bank with or through whom the
transaction was effected.
2.(a) A person who becomes an access person on or after March 1, 2000
must file an initial holdings report with the designated compliance officers
within 10 days of becoming an access person. The report will contain the
following information:
(i) The title, number of shares and principal amount of each
security in which the access person had any direct or indirect
beneficial ownership when the person became an access person;
(ii) The name of any broker, dealer or bank with whom the
access person maintained an account in which any securities
were held for the direct or indirect benefit of the access
person as of the date the person became an access person; and
(iii) The date that the report is submitted by the access
person.
(b) Every access person must submit an annual holdings report
containing the following information (which must be current as of a
date no more than 30 days before the date of the report):
(i) The title, number of shares and principal amount of each
security in which the access person had any direct or indirect
beneficial ownership;
(ii) The name of any broker, dealer or bank with whom the
access person maintains an account in which any securities are
held for the direct or indirect benefit of the access person;
and
(iii) The date that the report is submitted by the access
person.
3. Any report pursuant to this Section E. shall not be construed as an
admission by the person making the report that he or she has any direct or
indirect beneficial ownership in the security to which the report relates.
4. The designated compliance officer shall review all reports to
determine if a violation has occurred. Upon finding a material violation, the
officer shall submit a report to the Chief Compliance Officer of Eagle, who
shall review the events to determine what remedial action, if any, will be
recommended to the President of Eagle.
F. Sanctions.
Upon discovering a violation of this Code, Eagle may impose such
sanctions as it deems appropriate, including inter alia, a letter of censure,
suspension or termination of the employment of the violator. All material
violations of this Code and any sanctions imposed with respect thereto shall be
reported periodically to the board of directors of the investment company with
respect to whose securities the violation occurred.
CODE OF ETHICS CERTIFICATION
I hereby certify that:
- I have read and understand the Code;
- I am subject to the Code;
- I have complied and will continue to comply with the
requirements of the Code; and
- I have disclosed and will continue to disclose all personal
securities transactions required to be disclosed pursuant to
the Code.
---------------------------------------
(Signature)
---------------------------------------
(Print Name)
---------------------------------------
(Date)
<PAGE>
MEMORANDUM
TO:
FROM: Greg Duch
DATE: 03/20/2000
RE: Code of Ethics
- --------------------------------------------------------------------------------
In accordance with the provisions of our Code of Ethics we require that
all employees must certify annually that:
- they have read and understood the Code;
- they are subject to the Code;
- they have complied and will continue to comply with
the requirements of the Code; and
- they have disclosed and will continue to disclose all
personal securities transactions required to be
disclosed pursuant to the Code.
Therefore, attached to this memorandum is a copy of our current Code of
Ethics together with a Certification Form.
PLEASE SIGN THE CERTIFICATION FORM AND RETURN IT BY MARCH 27, 2000 TO
ROSEMARY KIERNAN.
If you have any questions, please contact Mary Marsden-Cochran (ext.
3638) or Felix Mazer (ext. 5292).
<PAGE>
CODE OF ETHICS
I. General Principles
This Code of Ethics ("Code") establishes rules of conduct that govern
personal investment activities of employees of Fred Alger Management,
Inc. ("Alger"), Fred Alger & Company, Incorporated ("Alger Inc.") and
each registered investment company for which Alger acts as investment
adviser ("Alger Fund").
The following categories of personnel are covered by the Code:
(1) portfolio managers - those employees who have direct
responsibility and authority to make investment decisions
affecting an Alger Fund and their immediate family members
residing in the same household;
(2) investment personnel - portfolio managers and all persons such
as securities analysts and traders, who provide information
and advice to a portfolio manager or who help execute the
portfolio manager's decisions and their immediate family
members residing in the same household; and
(3) access persons - all employees of Alger and Alger Inc.
(including investment personnel) and their immediate family
members residing in the same household; and "interested"
directors or trustees and officers of Alger, Alger Inc. or any
Alger Fund.
(4) An independent trustee or director of any Alger Fund will be
subject to the preclearance and reporting requirements of
Section III of the Code only if such person, at the time of
his transaction, knows, or in the ordinary course of
fulfilling his official duties as a director of such company
should know, that during the 15-day period immediately
preceding or after the date of the transaction by such person,
the security such person purchases or sells, is or was
purchased or sold by any Alger Fund or is being considered for
purchase or sale by any Alger Fund or Alger.
Certain general fiduciary principles govern the personal investment
activities of all employees:
(1) the duty at all times to place the interests of Alger Fund
shareholders and Alger investment accounts first;
(2) the requirement that all personal securities transactions be
conducted consistent with the Code and in such a manner as to
avoid any actual or potential conflict of interest or any
abuse of an individual's position of trust and responsibility;
and
<PAGE>
(3) the fundamental standard that Alger personnel should not take
inappropriate advantage of their positions.
The restrictions and procedures of the Code apply to all accounts in
which an access person has, or by reason of the subsequent transaction
acquires, any direct or indirect beneficial ownership (as defined in
Exhibit A).
For purposes of the Code, the term "security" shall not include
government securities, bankers' acceptances, bank certificates of
deposit, commercial paper and shares of registered open-end investment
companies.
II. Restrictions on Personal Investing
A. Initial Public Offerings
- Investment personnel may not acquire any securities
in an initial public offering.
B. Private Placements
- Investment personnel must obtain prior approval of
any acquisition of securities in a private placement.
(a) Any such approved acquisition must be
disclosed if the investment person
subsequently participates in any Alger
Fund's consideration of an investment in the
issuer.
(b) Any Alger Fund's subsequent decision to
purchase securities of the issuer will be
subject to independent review by investment
personnel with no personal interest in the
issuer.
C. Blackout Periods
1. An access person may not execute a securities
transaction at a time when any Portfolio Manager is
considering the purchase or sale of that security. If
the Alger Fund is in the middle of a buying or
selling program for that security, the program must
be completed before the access person may execute his
or her transaction.
(a) An access person may not recommend any
securities transaction by an Alger Fund
without having disclosed his or her
interest, if any, in such securities or the
issuer thereof, including without
limitation:
<PAGE>
(1) direct or indirect beneficial
ownership of any securities of the
issuer;
(2) any position with the issuer or its
affiliates; and
(3) any present or proposed business
relationship between the issuer or
its affiliates and such person or
any party in which such person has
a significant interest.
2. A portfolio manager may not buy or sell a security
within seven calendar days before and after the Alger
Fund that he or she manages trades in that security
unless one of the following situations exists:
(a) The Alger Fund receives a better price on
its transaction made within seven days of
the portfolio manager's transaction.
(b) If a portfolio manager has recommended a
security for purchase or sale by an Alger
Fund and his or her recommendation is
overruled by Senior Management, he or she
may purchase or sell that security for his
or her own account. If Senior Management
subsequently changes its position regarding
that security and decides to purchase or
sell the security for an Alger Fund within 7
days of the portfolio manager's transaction
for his or her own account, the Fund's
purchase or sale will not require
disgorgement by the portfolio manager.
(c) The portfolio manager can demonstrate that a
hardship exists which requires the sale of
the security within the prohibited time
period.
3. Any profits realized on trades within the proscribed
periods must be disgorged to the appropriate Alger
Fund or to charity.
D. Short-term Trading
Investment personnel may not profit in the purchase and sale,
or sale and purchase, of the same (or equivalent) securities*
within 60 calendar days unless the security is not held by any
Alger Fund and is not eligible for purchase by any Alger Fund.
- The Compliance Officer will consider exemptions to
this prohibition on a case-by-case basis when it is
clear that no abuse is involved and the equities of
the situation strongly support an exemption.
* Includes options and short sales
<PAGE>
E. Gifts
Investment personnel may not accept any gift or other thing of
more than de minimus value from any person or entity that does
business with or on behalf of an Alger Fund.
F. Service as a Director
Investment Personnel must obtain prior authorization to serve
on the board of directors of a publicly traded company. Such
authorization will be based on a determination that the board
service would be consistent with the interests of the Alger
Fund and its shareholders.
III. Compliance Procedures
A. Preclearance
All access persons must preclear their personal securities
transactions with the Compliance Officer.
- The Compliance Officer must preclear the personal
securities transactions of all access persons with
the Portfolio Managers in addition to preclearance
with the trading desk.
- Any approval will be valid only for the day on which
it is granted.
B. Brokerage Confirmations and Statements
All access persons should direct their brokers to supply
duplicate copies of all confirmations and periodic statements
to the firm's Compliance Officer.
C. Disclosure of Personal Holdings
All investment personnel must disclose their personal
securities holdings upon commencement of employment and
thereafter on an annual basis.
<PAGE>
D. Certification of Compliance With the Code
All access persons must certify annually that:
- they have read and understood the Code;
- they are subject to the Code;
- they have complied with the requirements of the Code;
and
- they have disclosed all personal securities
transactions required to be disclosed pursuant to the
Code.
E. The management of each Alger Fund will prepare an annual
report to the Fund's Board of Trustees/Directors that:
- summarizes existing procedures concerning personal
investing and any changes made during the previous
year;
- identifies any violations requiring significant
remedial action during the previous year; and
- identifies any recommended changes in existing
restrictions or procedures.
IV. Sanctions
Upon discovering that an access person has not complied with the
requirements of this Code, the Board of Directors of Alger or of any
Alger Fund may impose on that person whatever sanctions the Board deems
appropriate, including, among other things, censure, suspension or
termination of employment.
V. Confidentiality
All information obtained from any access person hereunder shall be kept
in strict confidence, except that reports of securities transactions
hereunder will be made available to the Securities and Exchange
Commission or any other regulatory or self-regulatory organization to
the extent required by law or regulation.
<PAGE>
VI. Other Laws, Rules and Statements of Policy
Nothing contained in this Code shall be interpreted as relieving any
access person from acting in accordance with the provision of any
applicable law, rule, or regulation or any other statement of policy or
procedure adopted by Alger or by an Alger Fund governing the conduct of
such person.
03/17/2000
<PAGE>
EXHIBIT A
For purposes of the attached Code of Ethics, "beneficial ownership"
shall be interpreted in the same manner as it would be in determining whether a
person is subject to the provisions of Section 16 of the Securities Exchange Act
of 1934 and the rules and regulations thereunder, except that the determination
of direct or indirect beneficial ownership shall apply to all securities that an
Access Person has or acquires. The term "beneficial ownership" of securities
would include not only ownership of securities held by an Access Person for his
own benefit, whether in bearer form or registered in his name or otherwise, but
also ownership of securities held for his benefit by others (regardless of
whether or how they are registered) such as custodians, brokers, executors,
administrators, or trustees (including trusts in which he has only a remainder
interest), and securities held for his account by pledgees, securities owned by
a partnership in which he is a member, if he may exercise a controlling
influence over the purchase, sale or voting of such securities held for his
account by pledgees, securities owned by a partnership in which he is a member,
if he may exercise a controlling influence over the purchase, sale or voting of
such securities and securities owned by any corporation. Correspondingly, this
term would exclude securities held by an Access Person for the benefit of
someone else.
Ordinarily, this term would not include securities held by executors or
administrators in estates in which an Access Person is a legatee or beneficiary
unless there is a specific legacy to such person of such securities or such
person is the sole legatee or beneficiary and there are other assets in the
estate sufficient to pay debts ranking ahead of such legacy, or the securities
are held in the estate more than a year after the decedent's death.
Securities held in the name of another should be considered as
"beneficially" owned by an Access Person where such person enjoys "benefits
substantially equivalent to ownership". The Securities and Exchange Commission
has said that although the final determination of beneficial ownership is a
question to be determined in the light of the facts of the particular case,
generally a person is regarded as the beneficial owner of securities held in the
name of his or her spouse and their minor children. Absent special circumstances
such relationship ordinarily results in such person obtaining benefits
substantially equivalent to ownership, e.g., application of the income derived
from such securities to maintain a common home, to meet expenses that such
person otherwise would meet from other sources, or the ability to exercise a
controlling influence over the purchase, sale or voting of such securities.
An Access Person also may be regarded as the beneficial owner of
securities held in the name of another person, if by reason of any contract,
understanding, relationship, agreement, or other arrangement, he obtains
therefrom benefits substantially equivalent to those of ownership.
<PAGE>
Moreover, the fact that the holder is a relative or relative of a
spouse and sharing the same home as an Access Person may in itself indicate that
the Access Person would obtain benefits substantially equivalent to those of
ownership from securities held in the name of such relative. Thus, absent
countervailing facts, it is expected that securities held by relatives who share
the same home as an Access Person will be treated as being beneficially owned by
the Access Person.
An Access Person also is regarded as the beneficial owner of securities
held in the name of a spouse, minor children or other person, even though he
does not obtain therefrom the aforementioned benefits of ownership, if he can
vest or revest title in himself at once or at some future time.
CODE OF ETHICS
1. Purposes
This Code of Ethics (the "Code") has been adopted by the Directors of
J.P. Morgan Investment Management Inc. (the "Adviser"), in accordance with Rule
17j-1(c) promulgated under the Investment Company Act of 1940, as amended (the
"Act"). Rule 17j-1 under the Act generally proscribes fraudulent or manipulative
practices with respect to purchases or sales of securities Held or to be
Acquired (defined in Section 2(k) of this Code) by investment companies, if
effected by associated persons of such companies. The purpose of this Code is to
adopt provisions reasonably necessary to prevent Access Persons from engaging in
any unlawful conduct as set forth in Rule 17j-1(b) as follows:
It is unlawful for any affiliated person of or principal underwriter
for a Fund, or any affiliated person of an investment adviser of or principal
underwriter for a Fund, in connection with the purchase or sale, directly or
indirectly, by the person of a Security Held or to be Acquired by the Fund:
(a) To employ any device, scheme or artifice to defraud the Fund;
(b) To make any untrue statement of a material fact to the Fund or
omit to state a material fact necessary in order to make the
statements made to the Fund, in light of the circumstances
under which they are made, not misleading;
(c) To engage in any act, practice, or course of business that
operates or would operate as a fraud or deceit on the Fund; or
(d) To engage in any manipulative practice with respect to the
Fund.
2. Definitions
(a) "Access Person" means any director, officer, general partner
or Advisory Person of the Adviser.
(b) "Administrator" means Morgan Guaranty Trust Company.
(c) "Advisory Person" means (i) any employee of the Adviser or the
Administrator (or any company in a control relationship to the
Adviser) who, in connection with his or her regular functions
or duties, makes, participates in, or obtains information
regarding the purchase or sale of securities for a Fund, or
whose functions relate to the making of any recommendations
with respect to such purchases or sales; and (ii) any natural
person in a control relationship to the Adviser who obtains
information concerning recommendations regarding the purchase
or sale of securities by a Fund.
(d) "Beneficial ownership" shall be interpreted in the same manner
as it would be under Exchange Act Rule 16a-1(a)(2)in
determining whether a person is subject to the provisions of
Section 16 of the Securities Exchange Act of 1934 and the
rules and regulations thereunder.
(e) "Control" has the same meaning as in Section 2(a)(9) of the
Act.
(f) "Covered Security" shall have the meaning set forth in Section
2(a)(36) of the Act, except that it shall not include shares
of open-end funds, direct obligations of the United States
Government, bankers' acceptances, bank certificates of
deposit, commercial paper and high quality short-term debt
instruments, including repurchase agreements.
(g) "Fund" means an Investment Company registered under the
Investment Company Act of 1940.
(h) "Initial Public Offering" means an offering of Securities
registered under the Securities Act of 1933, the issuer of
which, immediately before the registration, was not subject to
the reporting requirements of Sections 13 or 15(d) of the
Securities Exchange Act.
(i) "Limited Offering" means an offering that is exempt from
registration under the Securities Act pursuant to Section 4(2)
or Section 4(6) or pursuant to Rule 504, Rule 505, or Rule 506
under the Securities Act.
(j) "Purchase or sale of a Covered Security" includes, among other
things, the writing of an option to purchase or sell a Covered
Security.
(k) "Security Held or to be Acquired" by a Adviser means: (i) any
Covered Security which, within the most recent 15 days, is or
has been held by a Fund or other client of the Adviser or is
being or has been considered by the Adviser for purchase by a
Fund or other client of the Adviser; and (ii) any option to
purchase or sell, and any security convertible into or
exchangeable for, a Covered Security described in Section
2(k)(i) of this Code.
3. Statement of Principles
It is understood that the following general fiduciary principles govern
the personal investment activities of Access Persons:
(a) the duty to at all times place the interests of shareholders
and other clients of the Adviser first;
(b) the requirement that all personal securities transactions be
conducted consistent with this Code of Ethics and in such a
manner as to avoid any actual or potential conflict of
interest or any abuse of an individual's position of trust and
responsibility;
(c) the fundamental standard that Investment Personnel may not
take inappropriate advantage of their position; and
(d) all personal transactions must be oriented toward investment,
not short-term or speculative trading.
It is further understood that the procedures, reporting and
recordkeeping requirements set forth below are hereby adopted and certified by
the Adviser as reasonably necessary to prevent Access Persons from violating the
provisions of this Code of Ethics.
4. Procedures to be followed regarding Personal Investments by Access
Persons
(a) Pre-clearance requirement. Each Access Person must obtain
prior written approval from his or her group head (or
designee) and from the Adviser's trading desk before
transacting in any Covered Security based on certain
quidelines set forth from time to time by the Adviser's
compliance Department. For details regarding transactions in
mutual funds, see Section 4(e).
(b) Brokerage transaction reporting requirement. Each Access
Person working in the United States must maintain all of his
or her accounts and the accounts of any person of which he or
she is deemed to be a beneficial owner with a broker
designated by the Adviser and must direct such broker to
provide broker trade confirmations to the Adviser's
legal/compliance department, unless an exception has been
granted by the Adviser's legal/compliance department. Each
Access Person to whom an exception to the designated broker
requirement has been granted must instruct his or her broker
to forward all trade confirms and monthly statements to the
Adviser's legal/compliance department. Access Persons located
outside the United States are required to provide details of
each brokerage transaction of which he or she is deemed to be
the beneficial owner, to the Adviser's legal/compliance group,
within the customary period for the confirmation of such
trades in that market.
(c) Initial public offerings (new issues). Access Persons are
prohibited from participating in Initial Public Offerings,
whether or not J.P. Morgan or any of its affiliates is an
underwriter of the new issue, while the issue is in
syndication.
(d) Minimum investment holding period. Each Access Person is
subject to a 60-day minimum holding period for personal
transactions in Covered Securities. An exception to this
minimum holding period requirement may be granted in the case
of hardship as determined by the legal/compliance department.
(e) Mutual funds. Each Access Person must pre-clear transactions
in shares of closed-end Funds with the Adviser's trading desk,
as they would with any other Covered Security. See Section
4(a). Each Access Person must obtain pre-clearance from his or
her group head(or designee) before buying or selling shares in
an open-end Fund or a sub-advised Fund managed by the Adviser
if such Access Person or the Access Person's department has
had recent dealings or responsibilities regarding such mutual
fund.
(f) Limited offerings. An Access Person may participate in a
limited offering only with written approval of such Access
Person's group head (or designee) and with advance
notification to the Adviser's compliance group.
(g) Blackout periods. Advisory Persons are subject to blackout
periods 7 calendar days before and after the trade date of a
Covered Security where such Advisory Person makes,
participates in, or obtains information regarding the purchase
or sale of such Covered Security for any of their client
accounts. In addition, Access Persons are prohibited from
executing a transaction in a Covered Security during a period
in which there is a pending buy or sell order on the Adviser's
trading desk.
(h) Prohibitions. Short sales are generally prohibited.
Transactions in options, rights, warrants, or other short-term
securities and in futures contracts (unless for bona fide
hedging) are prohibited, except for purchases of options on
widely traded indices specified by the Adviser's compliance
group if made for investment purposes.
(i) Securities of J.P. Morgan. No Access Person may buy or sell
any security issued by J.P. Morgan from the 27th of each
March, June, September, and December until the first full
business day after earnings are released in the following
month. All transactions in securities issued by J.P. Morgan
must be pre-cleared with the Adviser's compliance group and
executed through an approved trading area. Transactions in
options and short sales of J.P. Morgan stock are prohibited.
(j) Certification requirements. In addition to the reporting
requirements detailed in Sections 6 below, each Access Person,
no later than 30 days after becoming an Access Person, must
certify to the Adviser's compliance group that he or she has
complied with the broker requirements in Section 4(b).
5. Other Potential Conflicts of Interest
(a) Gifts. No employee of the Adviser or the Administrator may
(i)accept gifts, entertainment, or favors from a client,
potential client, supplier, or potential supplier of goods or
services to the Adviser or the Administrator unless what is
given is of nominal value and refusal to accept it would be
discourteous or otherwise harmful to the Adviser or
Administrator; (ii)provide excessive gifts or entertainment to
clients or potential clients; and (iii) offer bribes,
kickbacks, or similar inducements.
(b) Outside Business Activities. The prior consent of the Chairman
of the Board of J.P. Morgan, or his or her designee, is
required for an officer of the Adviser or Administrator to
engage in any business-related activity outside of the Adviser
or Administrator, whether the activity is intermittent or
continuing, and whether or not compensation is received. For
example, such approval is required such an officer to become:
-An officer, director, or trustee of any corporation
(other than a nonprofit corporation or cooperative corporation
owning the building in which the officer resides);
-A member of a partnership (other than a limited
partner in a partnership established solely for investment
purposes);
-An executor, trustee, guardian, or similar fiduciary
advisor (other than for a family member).
6. Reporting Requirements
(a) Every Access Person must report to the Adviser:
(i)Initial Holdings Reports. No later than 10 days after the
person becomes an Access Person, the following information:
(A) the title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership when the person became an Access
Person; (B) the name of any broker, dealer or bank with whom
the Access Person maintained an account in which any Covered
Securities were held for the direct or indirect benefit of the
Access Person as of the date the person became an Access
Person; and (C) the date that the report is submitted by the
Access Person.
(ii)Quarterly Transaction Reports. No later than 10 days after
the end of a calendar quarter, with respect to any transaction
during the quarter in a Covered Security in which the Access
Person had any direct or indirect Beneficial Ownership: (A)
the date of the transaction, the title, the interest rate and
maturity date (if applicable), the number of shares and
principal amount of each Covered Security involved; (B) the
nature of the transaction; (C) the price of the Covered
Security at which the transaction was effected; (D) the name
of the broker, dealer or bank with or through which the
transaction was effected; and (E) the date that the report is
submitted by the Access Person.
(iii)New Account Report. No later than 10 days after the
calendar quarter, with respect to any account established by
the Access Person in which any Covered Securities were held
during the quarter for the direct or indirect benefit of the
Access Person: (A) the name of the broker, dealer or bank with
whom the Access Person established the account; (B) the date
the account was established; and (C) the date that the report
is submitted by the Access Person.
(iv)Annual Holdings Report. Annually, the following
information (which information must be current as of a date no
more than 30 days before the report is submitted): (A) the
title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect
beneficial ownership; (B) the name of any broker, dealer or
bank with whom the Access Person maintains an account in which
any Covered Securities are held for the direct or indirect
benefit of the Access Person: and (C) the date that the report
is submitted by the Access Person.
(b) Exceptions from the Reporting Requirements.
(i) Notwithstanding the provisions of Section 6(a), no Access
Person shall be required to make:
A. a report with respect to transactions effected for any account
over which such person does not have any direct or indirect
influence or control;
B. a Quarterly Transaction or New Account Report under Sections
6(a)(ii) or (iii) if the report would duplicate information
contained in broker trade confirmations or account statements
received by the Adviser with respect to the Access Person no
later than 10 days after the calendar quarter end, if all of
the information required by Sections 6(a)(ii) or (iii), as the
case may be, is contained in the broker trade confirmations or
account statements, or in the records of the Adviser.
(c) Each Access Person shall promptly report any transaction which is, or
might appear to be, in violation of this Code. Such report shall
contain the information required in Quarterly Transaction Reports filed
pursuant to Section 6(a)(ii).
(d) All reports prepared pursuant to this Section 6 shall be filed with the
appropriate compliance personnel designated by the Adviser and reviewed
in accordance with procedures adopted by such personnel.
(e) The Adviser will identify all Access Persons who are required to file
reports pursuant to this Section 6 and will inform them of their
reporting obligation.
(f) The Adviser no less frequently than annually shall furnish to a Fund's
board of directors for their consideration a written report that:
(a) describes any issues under this Code of Ethics or related
procedures since the last report to the board of directors,
including, but limited to, information about material
violations of the Code or procedures and sanctions imposed in
response to the material violations; and
(b) certifies that the Adviser has adopted procedures reasonably
necessary to prevent Access Persons from violating this Code
of Ethics.
7. Recordkeeping Requirements
The Adviser must at its principal place of business maintain records in
the manner and extent set out in this Section of this Code and must
make available to the Securities and Exchange Commission (SEC) at any
time and from time to time for reasonable, periodic, special or other
examination:
(a) A copy of its code of ethics that is in effect, or at any time
within the past five years was in effect, must be maintained
in an easily accessible place;
(b) A record of any violation of the code of ethics, and of any
action taken as a result of the violation, must be maintained
in an easily accessible place for at least five years after
the end of the fiscal year in which the violation occurs;
(c) A copy of each report made by an Access Person as required by
Section 6(a) including any information provided in lieu of a
quarterly transaction report, must be maintained for at least
five years after the end of the fiscal year in which the
report is made or the information is provided, the first two
years in an easily accessible place.
(d) A record of all persons, currently or within the past five
years, who are or were required to make reports as Access
Persons or who are or were responsible for reviewing these
reports, must be maintained in an easily accessible place.
(e) A copy of each report required by 6(f) above must be
maintained for at least five years after the end of the fiscal
year in which it is made, the first two years in an easily
accessible place.
(f) A record of any decision and the reasons supporting the
decision to approve the acquisition by Access Persons of
securities under Section 4(f) above, for at least five years
after the end of the fiscal year in which the approval is
granted.
8. Sanctions
Upon discovering a violation of this Code, the Directors of the Adviser
may impose such sanctions as they deem appropriate, including, inter alia,
financial penalty, a letter of censure or suspension or termination of the
employment of the violator.
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JANUS ETHICS RULES
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"ACT IN THE BEST INTEREST OF OUR INVESTORSCEARN THEIR CONFIDENCE WITH EVERY
ACTION"
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CODE OF ETHICS
INSIDER TRADING POLICY
GIFT POLICY
OUTSIDE EMPLOYMENT POLICY
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LAST REVISED MARCH 1, 2000
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<PAGE>
TABLE OF CONTENTS
DEFINITIONS....................................................................1
INTRODUCTION...................................................................4
CAUTION REGARDING PERSONAL TRADING ACTIVITIES.........................4
COMMUNICATIONS WITH OUTSIDE TRUSTEES/DIRECTORS........................4
CODE OF ETHICS.................................................................5
OVERVIEW..............................................................5
GENERAL PROHIBITIONS..................................................5
TRADING RESTRICTIONS..................................................6
EXCLUDED TRANSACTIONS........................................6
DISCLOSURE OF CONFLICTS......................................7
PRECLEARANCE.................................................7
TRADING BAN ON PORTFOLIO MANAGERS AND
ASSISTANT PORTFOLIO MANAGERS.................................8
BAN ON IPOs AND HOT ISSUES...................................8
60 DAY RULE..................................................8
BLACKOUT PERIOD..............................................8
FIFTEEN DAY RULE.............................................8
SEVEN DAY RULE...............................................9
SHORT SALES..................................................9
HEDGE FUNDS, INVESTMENT CLUBS, AND OTHER INVESTMENTS.........9
PRECLEARANCE PROCEDURES...............................................9
GENERAL PRECLEARANCE.........................................9
PRECLEARANCE REQUIREMENTS FOR INVESTMENT PERSONNEL..........10
PRECLEARANCE OF COMPANY STOCK...............................10
PRECLEARANCE OF TENDER OFFERS AND STOCK PURCHASE PLANS......11
FOUR DAY EFFECTIVE PERIOD...................................11
REPORTING REQUIREMENTS...............................................11
ACCOUNT STATEMENTS..........................................11
HOLDINGS REPORTS............................................12
PERSONAL SECURITIES TRANSACTION REPORTS.....................12
NON-INFLUENCE AND NON-CONTROL ACCOUNTS......................12
OTHER REQUIRED FORMS.................................................13
ACKNOWLEDGMENT OF RECEIPT FORM..............................13
ANNUAL CERTIFICATION FORM...................................13
OUTSIDE DIRECTOR/TRUSTEE REPRESENTATION FORM................13
INSIDER TRADING POLICY........................................................14
BACKGROUND INFORMATION...............................................14
WHO IS AN INSIDER?..........................................15
WHEN IS INFORMATION NONPUBLIC?..............................15
WHAT IS MATERIAL INFORMATION?...............................15
WHEN IS INFORMATION MISAPPROPRIATED?........................15
PENALTIES FOR INSIDER TRADING...............................16
WHO IS A CONTROLLING PERSON?................................16
PROCEDURES TO IMPLEMENT POLICY.......................................16
IDENTIFYING MATERIAL INSIDE INFORMATION.....................16
REPORTING INSIDE INFORMATION................................17
WATCH AND RESTRICTED LISTS..................................17
PROTECTING INFORMATION......................................18
RESPONSIBILITY TO MONITOR TRANSACTIONS......................19
RECORD RETENTION............................................19
TENDER OFFERS...............................................19
GIFT POLICY...................................................................20
GIFT GIVING..........................................................20
GIFT RECEIVING.......................................................20
CUSTOMARY BUSINESS AMENITIES.........................................20
OUTSIDE EMPLOYMENT POLICY.....................................................21
PENALTY GUIDELINES............................................................22
OVERVIEW.............................................................22
PENALTY GUIDELINES ................................................22
SUPERVISORY AND COMPLIANCE PROCEDURES.........................................23
SUPERVISORY PROCEDURES...............................................23
PREVENTION OF VIOLATIONS....................................23
DETECTION OF VIOLATIONS.....................................23
COMPLIANCE PROCEDURES................................................24
REPORTS OF POTENTIAL DEVIATIONS OR VIOLATIONS...............24
ANNUAL REPORTS..............................................24
RECORDS 24
INSPECTION..................................................25
CONFIDENTIALITY.............................................25
FILING OF REPORTS...........................................25
THE ETHICS COMMITTEE.................................................25
MEMBERSHIP OF THE COMMITTEE.................................25
COMMITTEE MEETINGS..........................................25
SPECIAL DISCRETION..........................................26
GENERAL INFORMATION ABOUT THE ETHICS RULES....................................27
DESIGNEES...................................................27
ENFORCEMENT.................................................27
INTERNAL USE................................................27
FORMS.........................................................................28
<PAGE>
JANUS ETHICS RULES
"ACT IN THE BEST INTEREST OF OUR INVESTORS - EARN THEIR CONFIDENCE WITH EVERY
ACTION"
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DEFINITIONS
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The following definitions are used throughout this document. You are responsible
for reading and being familiar with each definition.
1. "Access Person" shall mean:
1) Any trustee, director, officer or Advisory Person of the Janus Funds or
JCC;
2) Any director or officer of JDI who in the ordinary course of his or her
business makes, participates in or obtains information regarding the
purchase or sale of securities for the Janus Funds or for the advisory
clients or whose functions or duties as part of the ordinary course of
his or her business relate to the making of any recommendation to the
Janus Funds or advisory clients regarding the purchase or sale of
securities; and
3) Any other persons designated by the Ethics Committee as having access to
current trading information.
2. "Advisory Person" shall mean:
1) Any employee of the Janus Funds or JCC (or of any company in a
control relationship to the Janus Funds or JCC) who in
connection with his or her regular functions or duties, makes,
participates in or obtains information regarding the purchase
or sale of a security by the Funds or for the account of
advisory clients, or whose functions relate to the making of
any recommendations with respect to such purchases and sales;
and
2) Any natural person in a control relationship to the Funds or
JCC who obtains information concerning recommendations made to
the Funds or for the account of Clients with regard to the
purchase or sale of a security.
3. "Beneficial Ownership" shall be interpreted in the same manner as it
would be under Rule 16a-1(a)(2) under the Securities Exchange Act of
1934 in determining whether a person is subject to the provisions of
Section 16 except that the determination of direct or indirect
Beneficial Ownership shall apply to all Covered Securities which an
Access Person has or acquires. For example, in addition to a person's
own accounts the term "Beneficial Ownership" encompasses securities
held in the name of a spouse or equivalent domestic partnership, minor
children, a relative sharing your home, or certain trusts under which
you or a related party is a beneficiary, or held under other
arrangements indicating a sharing of financial interest.
4. "Company Stock" is any stock or option issued by Janus, Stilwell
Financial, Inc. ("Stilwell") or Kansas City Southern Industries, Inc.
("KCSI").
5. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act.
6. "Covered Persons" are all Directors, Trustees, officers, and full-time,
part-time or temporary employees of Janus, and persons working at Janus
on a contract basis.
7. "Covered Securities" generally include all securities (including
Company Stock), whether publicly or privately traded, and any option,
future, forward contract or other obligation involving a security or
index thereof, including an instrument whose value is derived or based
on any of the above (a "derivative"). The term Covered Security
includes any separate security, which is convertible into or
exchangeable for, or which confers a right to purchase such security.
The following investments are not Covered Securities:
o shares of registered open-end investment companies (e.g.,
mutual funds);
o direct obligations of the U.S. government (e.g., Treasury
securities), or any derivative thereof;
o securities representing a limited partnership interest in a
real estate limited partnership;
o high-quality money market instruments, such as certificates of
deposit, bankers acceptances, repurchase agreements,
commercial paper, and U.S. government agency obligations;
o insurance contracts, including life insurance or annuity
contracts;
o direct investments in real estate, business franchises or
similar ventures; and
o physical commodities (including foreign currencies), or any
derivatives thereof.
8. "Designated Compliance Representatives" are David Kowalski and Ernie
Overholt or their designee(s).
9. "Designated Legal Representatives" are Bonnie Howe and Heidi Walter or
their designee(s).
10. "Designated Trading Operations Representatives" are Lesa Finney, John
Porro, and Mark Farrell.
11. "Directors" are directors of JCC.
12. "Executive Committee" is comprised of Thomas Bailey, Jim Craig, Thomas
Early, Steve Goodbarn, Margie Hurd, and Mark Whiston.
13. "Executive Investment Committee" is comprised of Jim Craig, Jim Goff,
Helen Hayes, Warren Lammert, and Scott Schoelzel.
14. "Ethics Committee" is comprised of Thomas Early, Steve Goodbarn, David
Kowalski and Ernie Overholt.
15. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of sections 13 or 15(d) of the Securities Exchange Act of 1934.
16. "Inside Trustees and Directors" are Trustees and Directors who are also
employed by Janus.
17. "Investment Personnel" shall mean (i) a person who makes decisions
regarding the purchase or sale of securities by or on behalf of the
Janus Funds or advisory clients and any person such as an analyst or
trader who directly assists in the process, and (ii) any natural person
who controls the Janus Funds or JCC and who obtains information
concerning recommendations made to the Funds regarding the purchase or
sale of Covered Securities by the Funds.
18. "Janus" is Janus Investment Fund, Janus Aspen Series, Janus Capital
Corporation, Janus Service Corporation, Janus Distributors, Inc., Janus
Capital International Ltd., Janus International (UK) Ltd., Janus
Capital Trust Manager Ltd., Janus Universal Funds, and Janus World
Funds Plc.
19. "Janus Funds" are Janus Investment Fund, Janus Aspen Series, Janus
Universal Funds, and Janus World Funds Plc.
20. "JCC" is Janus Capital Corporation, Janus Capital International Ltd.,
Janus International (UK) Ltd. and Janus Capital Trust Manager Ltd.
21. "JDI" is Janus Distributors, Inc.
22. "JDI's Operations Manager" is Dana Stephens and/or her designee(s).
23. "Limited Offering" means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to section 4(2) or section
4(6) or pursuant to rule 504, rule 505 or rule 506 thereunder.
24. "NASD" is the National Association of Securities Dealers, Inc.
25. "Non-Access Person" is any person that is not an Access Person.
26. "Outside Directors" are Directors who are not employed by Janus.
27. "Outside Trustees" are Trustees who are not "interested persons" of the
Janus Funds within the meaning of Section 2(a)(9) of the 1940 Act.
28. "Registered Persons" are persons registered with the NASD by JDI.
29. "Security Held or to be Acquired" means any Covered Security which,
within the most recent 15 days (i) is or has been held by the Janus
Funds; or (ii) is being or has been considered by the Janus Funds or
JCC for purchase.
30. "SEC" is Securities and Exchange Commission.
31. "Trustees" are trustees of Janus Investment Fund and Janus Aspen
Series.
These definitions may be updated from time to time to reflect changes in
personnel.
<PAGE>
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INTRODUCTION
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These Ethics Rules ("Rules") apply to all Covered Persons. The Rules
apply to transactions for your personal accounts and any other accounts you
Beneficially Own. You may be deemed the beneficial owner of any account in which
you have a direct or indirect financial interest. Such accounts include, among
others, accounts held in the name of your spouse or equivalent domestic
partnership, your minor children, a relative sharing your home, or certain
trusts under which you or such persons are a beneficiary.
The Rules are intended to ensure that you (i) at all times place first
the interests of the Janus Funds, investment companies for which Janus serves as
subadviser, and other advisory clients ("Clients"); (ii) conduct all personal
trading consistent with the Rules and in such a manner as to avoid any actual or
potential conflict of interest or any abuse of your position of trust and
responsibility; and (iii) not use any material nonpublic information in
securities trading. The Rules also establish policies regarding other matters,
such as outside employment and the giving or receiving of gifts.
You are required to read and retain these Rules and to sign and return
the attached Acknowledgment of Receipt Form to Compliance upon commencement of
employment or other services. On an annual basis thereafter, you will be
required to complete an Annual Certification Form. The Annual Certification Form
confirms that (i) you have received, read and asked any questions necessary to
understand the Rules; (ii) you agree to conduct yourself in accordance with the
Rules; and (iii) you have complied with the Rules during such time as you have
been associated with Janus. Depending on your status, you may be required to
submit additional reports and/or obtain clearances as discussed more fully
below.
Unless otherwise defined, all capitalized terms shall have the same
meaning as set forth in the Definitions section.
CAUTION REGARDING PERSONAL TRADING ACTIVITIES
Certain personal trading activities may be risky not only because of
the nature of the transactions, but also because action necessary to close out a
position may become prohibited for some Covered Persons while the position
remains open. For example, you may not be able to close out short sales and
transactions in derivatives. Furthermore, if JCC becomes aware of material
nonpublic information, or if a Client is active in a given security, some
Covered Persons may find themselves "frozen" in a position. JCC will not bear
any losses in personal accounts resulting from the application of these Rules.
COMMUNICATIONS WITH OUTSIDE TRUSTEES/DIRECTORS
As a regular business practice, JCC attempts to keep Directors and
Trustees informed with respect to its investment activities through reports and
other information provided to them in connection with board meetings and other
events. In addition, Janus personnel are encouraged to respond to inquiries from
Directors and Trustees, particularly as they relate to general strategy
considerations or economic or market conditions affecting Janus. However, it is
JCC's policy not to communicate specific trading information and/or advice on
specific issues to Outside Directors and Outside Trustees (i.e., no information
should be given on securities for which current activity is being considered for
Clients). Any pattern of repeated requests by such Directors or Trustees should
be reported to the Chief Compliance Officer or the Compliance Manager.
<PAGE>
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CODE OF ETHICS
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OVERVIEW
In general, it is unlawful for persons affiliated with investment
companies, their principal underwriters or their investment advisers to engage
in personal transactions in securities held or to be acquired by a registered
investment company, if such personal transactions are made in contravention of
rules which the SEC has adopted to prevent fraudulent, deceptive and
manipulative practices. Such rules require each registered investment company,
investment adviser and principal underwriter to adopt its own written code of
ethics containing provisions reasonably necessary to prevent its employees from
engaging in such conduct, and to maintain records, use reasonable diligence, and
institute such procedures as are reasonably necessary to prevent violations of
such code. This Code of Ethics ("Code") and information reported hereunder will
enable Janus to fulfill these requirements.
GENERAL PROHIBITIONS
The following activities are prohibited for applicable Covered Persons
(remember, if you work at Janus full-time, part-time, temporarily or on a
contract basis, or you are a Trustee or Director, you are a Covered Person).
Persons who violate any prohibition may be required to disgorge any profits
realized in connection with such violation to a charitable organization selected
by the Ethics Committee and may be subject to other sanctions imposed by the
Ethics Committee, as outlined in the Penalty Guidelines.
1. Covered Persons may not cause a Client to take action, or to fail to
take action, for personal benefit, rather than to benefit such Client.
For example, a Covered Person would violate this Code by causing a
Client to purchase a security owned by the Covered Person for the
purpose of supporting or increasing the price of that security or by
causing a Client to refrain from selling a security in an attempt to
protect a personal investment, such as an option on that security.
2. Covered Persons may not use knowledge of portfolio transactions made or
contemplated for Clients to profit, or cause others to profit, by the
market effect of such transactions.
3. Covered Persons may not disclose current portfolio transactions made or
contemplated for Clients as well as any other nonpublic information to
anyone outside of Janus.
4. Covered Persons may not engage in fraudulent conduct in connection with
the purchase or sale of a Security Held or to be Acquired by a Client,
including without limitation:
1) Employing any device, scheme or artifice to defraud any
Client;
2) Making to any Client any untrue statement of material fact or
omitting to state to any Client a material fact necessary in
order to make the statements made, in light of the
circumstances under which they are made, not misleading;
3) Engaging in any act, practice or course of business which
operates or would operate as a fraud or deceit upon any
Client;
4) Engaging in any manipulative practice with respect to any
Client; or
5) Investing in derivatives to evade the restrictions of this
Code. Accordingly, individuals may not use derivatives to take
positions in securities that would be otherwise prohibited by
the Code if the positions were taken directly.
5. Investment Personnel may not serve on the board of directors of a
publicly traded company without prior written authorization from the
Ethics Committee. No such service shall be approved without a finding
by the Ethics Committee that the board service would not be
inconsistent with the interests of Clients. If board service is
authorized by the Ethics Committee, the Investment Personnel serving as
director normally should be isolated from those making investment
decisions with respect to the company involved through "Chinese Walls"
or other procedures.
TRADING RESTRICTIONS
The trading restrictions of the Code apply to all direct or indirect
acquisitions or dispositions of Covered Securities, whether by purchase, sale,
tender offers, stock purchase plan, gift, inheritance, or otherwise. Unless
otherwise noted, the following trading restrictions are applicable to any
transaction in a Covered Security Beneficially Owned by a Covered Person.
Outside Directors and Outside Trustees are exempt from certain trading
restrictions because of their limited access to current information regarding
Client investments.
Any disgorgement of profits required under any of the following
provisions shall be donated to a charitable organization selected by the Ethics
Committee, as outlined in the Penalty Guidelines. However, if disgorgement is
required as a result of trades by a portfolio manager that conflicted with that
manager's own Clients, disgorgement proceeds shall be paid directly to such
Clients. If disgorgement is required under more than one provision, the Ethics
Committee shall determine in its sole discretion the provision that shall
control.1
EXCLUDED TRANSACTIONS
Some or all of the trading restrictions listed below do not apply to
the following transactions; however, these transactions must still be reported
to Compliance (see Reporting Requirements):
o Tender offer transactions are exempt from all trading restrictions except
preclearance.
<PAGE>
o The acquisition of securities through stock purchase plans are exempt
from all trading restrictions except preclearance, the trading ban on
portfolio managers and assistant portfolio managers, and the seven day
rule. (Note: the sales of securities acquired through a stock purchase
plan are subject to all of the trading restrictions of the Code).
o The acquisition of securities through stock dividends, automatic
dividend reinvestment plans, stock splits, reverse stock splits,
mergers, consolidations, spin-offs, or other similar corporate
reorganizations or distributions generally applicable to all holders of
the same class of such securities are exempt from all trading
restrictions. The acquisition of securities through the exercise of
rights issued by an issuer pro rata to all holders of a class of
securities, to the extent the rights were acquired in the issue are
exempt from all trading restrictions.
o Non-discretionary transactions in Company Stock (e.g., the acquisition
of securities through Stilwell or KCSI's Employee Stock Purchase Plan
("ESPP") or the receipt of options in Company Stock as part of a
compensation or benefit plan) are exempt from all trading restrictions.
Discretionary transactions in Company Stock issued by JCC are exempt
from all trading restrictions. Discretionary transactions in Company
Stock issued by Stilwell or KCSI (e.g., exercising options or selling
ESPP Stock) are exempt from all trading restrictions except
preclearance (See procedures for Preclearance of Company Stock).
o The acquisition of securities by gift or inheritance is exempt from all
trading restrictions. (Note: the sales of securities acquired by gift
or inheritance are subject to all trading restrictions of the Code).
o Transactions in options on and securities based on the following
indexes are exempt from all trading restrictions: S&P 500 Index, S&P
MidCap 400 Index, S&P 100 Index, FTSE 100 Index or Nikkei 225 Index.
DISCLOSURE OF CONFLICTS
If an Investment Person is planning to invest or make a recommendation
to invest in a security for a Client, and such person has a material interest in
the security, such person must first disclose such interest to his or her
manager or the Chief Investment Officer. The manager or Chief Investment Office
shall conduct an independent review of the recommendation to purchase the
security for Clients. The manager or Chief Investment Officer may review the
recommendation only if he or she has no material interest in the security. A
material interest is Beneficial Ownership of any security (including
derivatives, options, warrants or rights), offices, directorships, significant
contracts, or interests or relationships that are likely to affect such person's
judgment.
PRECLEARANCE
Access Persons (except Outside Directors and Outside Trustees) must
obtain preclearance prior to engaging in any personal transaction in Covered
Securities. (See Preclearance Procedures below).
TRADING BAN ON PORTFOLIO MANAGERS AND ASSISTANT PORTFOLIO MANAGERS
Portfolio managers and their assistants are prohibited from trading
personally in Covered Securities. However, the following types of transactions
are exempt from this policy, but are subject to all applicable provisions of the
Rules, including preclearance:
o Purchases or sales of Company Stock;
o The sale of any security that is not held by any Client; and
o The sale of any security in order to raise capital to fund a
significant life event. For example, purchasing a home or automobile,
or paying medical or education expenses.
BAN ON IPOs AND HOT ISSUES
Covered Persons (except Outside Directors and Outside Trustees) may not
purchase securities in an initial public offering or in a secondary offering
that constitutes a "hot issue" as defined in NASD rules. Such securities may be
purchased or received, however, where the individual has an existing right to
purchase the security based on his or her status as an investor, policyholder or
depositor of the issuer. In addition, securities issued in reorganizations are
also outside the scope of this prohibition if the transaction involves no
investment decision on the part of the Covered Person except in connection with
a shareholder vote.
60 DAY RULE
Access Persons (except Outside Directors and Outside Trustees) shall
disgorge any profits realized in the purchase and sale, or sale and purchase, of
the same or equivalent Covered Securities within sixty (60) calendar days if a
Client held or traded the security during the sixty (60) calendar day period.
BLACKOUT PERIOD
No Access Person may engage in a transaction in a Covered Security when
such person knows or should have known at the time there to be pending, on
behalf of any Client, a "buy" or "sell" order in that same security. The
existence of pending orders will be checked by Compliance as part of the
Preclearance process. Preclearance may be given when any pending Client order is
completely executed or withdrawn.
FIFTEEN DAY RULE
Any Access Person (except Outside Directors and Outside Trustees) who
buys or sells a Covered Security within fifteen calendar days before such
security is bought or sold on behalf of any Client must disgorge any price
advantage realized. The price advantage shall be the favorable spread, if any,
between the price paid or received by such person and the least favorable price
paid or received by a Client during such period.2 The Ethics Committee has the
authority by unanimous action to exempt any person from the fifteen-day rule if
such person is selling a security to raise capital to fund a significant life
event. For example, purchasing a home or automobile, or paying medical or
education expenses. In order for the Ethics Committee to consider such
exemption, the life event must occur within thirty (30) calendar days of the
security transaction, and the person must provide written confirmation of the
event.
SEVEN DAY RULE
Any portfolio manager or assistant portfolio manager who buys or sells
a Covered Security within seven calendar days before or after he or she trades
in that security on behalf of a Client shall disgorge any profits realized on
such transaction.
SHORT SALES
Any Access Person who sells short a Covered Security that such person
knows or should have known is held long by any Client shall disgorge any profit
realized on such transaction. This prohibition shall not apply, however, to
securities indices or derivatives thereof (such as futures contracts on the S&P
500 index). Client ownership of Covered Securities will be checked as part of
the Preclearance process.
HEDGE FUNDS, INVESTMENT CLUBS, AND OTHER INVESTMENTS
No Access Person (except Outside Directors and Outside Trustees) may
participate in hedge funds, partnerships, investment clubs, or similar
investment vehicles, unless such person does not have any direct or indirect
influence or control over the trading. Covered Persons wishing to rely upon this
provision must submit a Certification of Non-Influence and Non-Control Form to
the Compliance Manager for approval. (See Non-Influence and Non-Control Accounts
section below.)
PRECLEARANCE PROCEDURES
Access Persons must obtain preclearance for all applicable transactions
in Covered Securities in which such person has a Beneficial Interest. A
Preclearance Form must be completed and forwarded to Compliance. Compliance
shall promptly notify the person of approval or denial of the transaction.
Notification of approval or denial of the transaction may be given verbally;
however, it shall be confirmed in writing within seventy-two (72) hours of
verbal notification. When preclearance has been approved, the person then has
four business days from and including the day of first notification to execute
the trade.
GENERAL PRECLEARANCE
General preclearance shall be obtained from an authorized person from
each of the following three groups:
o A DESIGNATED LEGAL OR COMPLIANCE REPRESENTATIVE, who will present the
personal investment to the attendees of the weekly investment meeting,
whereupon an opportunity will be given to orally object. An attendee of
the weekly investment meeting shall object to such clearance if such
person knows of a conflict with a pending Client transaction or a
transaction known by such attendee to be under consideration for a
Client. Objections to such clearance should also take into account,
among other factors, whether the investment opportunity should be
reserved for a Client. If no objections are raised, the Designated
Legal or Compliance Representative shall so indicate by signing the
Preclearance Form. Such approval shall not be required for sales of
securities not held by any Clients.
In place of this authorization, Investment Personnel are required to
obtain approvals from all Executive Investment Committee members as
noted in the section below entitled Preclearance Requirements for
Investment Personnel.
o A DESIGNATED TRADING OPERATIONS REPRESENTATIVE, who may provide
clearance if such Representative knows at the time of the request of no
pending "buy" or "sell" order in the security on behalf of a Client and
no such trades are known by such person to be under consideration.
o The COMPLIANCE MANAGER, OR A DESIGNATED LEGAL OR COMPLIANCE
REPRESENTATIVE IF THE COMPLIANCE MANAGER IS NOT AVAILABLE, who may
provide clearance if no legal prohibitions are known by such person to
exist with respect to the proposed trade. Approvals for such clearance
should take into account, among other factors, the existence of any
Watch List or Restricted List and, to the extent reasonably
practicable, recent trading activity and holdings of Clients.
No authorized person may preclear a transaction in which such person
has a Beneficial Interest.
PRECLEARANCE REQUIREMENTS FOR INVESTMENT PERSONNEL
Trades by Investment Personnel may not be precleared by presentation at
the weekly investment meeting. Instead, Investment Personnel must obtain the
following management approvals. However, such approvals shall not be required
for sales of securities not held by any Clients:
o TRADES IN EQUITY SECURITIES require prior written approval from all
members of the Executive Investment Committee, Investment Person's
manager and either Ron Speaker or Sandy Rufenacht;
o TRADES IN DEBT SECURITIES require prior written approval from all
senior fixed income portfolio managers, either Jim Craig or two other
Executive Investment Committee members, and Investment Person's
manager.
A portfolio manager may not preclear his or her own transaction.
PRECLEARANCE OF COMPANY STOCK
Officers of Janus and certain persons designated by Compliance who wish
to make discretionary transactions in Stilwell or KCSI securities, or
derivatives thereon, must preclear such transactions. A Company Stock
Preclearance Form must be completed and forwarded to Compliance. Compliance
shall promptly notify the person of approval or denial for the transaction.
Notification of approval or denial for the transaction may be given verbally;
however, it shall be confirmed in writing within seventy-two (72) hours of
verbal notification. When preclearance has been approved, the person then has
four business days from and including the day of first notification to execute
the trade.
If such persons are subject to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, trading will generally be allowed only in the
ten (10) business day period beginning seventy-two (72) hours after Stilwell or
KCSI files its quarterly results with the SEC (e.g., 10Q or 10K filing, not
earnings release). To preclear the trade, the Compliance Manager or such other
Representative shall discuss the transaction with Janus's General Counsel or
Chief Financial Officer. PRECLEARANCE OF TENDER OFFERS AND STOCK PURCHASE PLANS
Access Persons (other than Outside Directors and Outside Trustees) who
wish to participate in a tender offer or stock purchase plan must preclear such
trades only with the Compliance Manager prior to submitting notice to
participate in such tender offer or notice of participation in such stock
purchase plan to the applicable company. To preclear the trade, the Compliance
Manager shall consider all material factors relevant to a potential conflict of
interest between the Access Person and Clients. In addition, any increase of
$100 or more to a pre-existing stock purchase plan must be precleared.
FOUR DAY EFFECTIVE PERIOD
Clearances to trade will be in effect for only four trading/business
days from and including the date of the last Authorized Person's signature
(which may not be provided more than one day after the first Authorized Person's
signature). For tender offers, stock purchase plans, exercise of Company Stock
and similar transactions, the date the request is submitted to the company
processing the transaction will be considered the trade date for purposes of
this requirement. Open orders, including stop loss orders, will generally not be
allowed unless such order is expected to be completed within the four day
effective period. It is necessary to re-preclear transactions not executed
within the four day effective period.
REPORTING REQUIREMENTS
ACCOUNT STATEMENTS
ACCESS PERSONS (other than Outside Trustees) and REGISTERED PERSONS
must notify Compliance of each brokerage account in which they have a Beneficial
Interest and must arrange for their brokers or financial institutions to provide
to Compliance, on a timely basis, duplicate account statements and confirmations
showing all transactions in brokerage or commodities accounts in which they have
a Beneficial Interest. A Personal Brokerage Account Disclosure Form should be
completed for this purpose.
PLEASE NOTE THAT, EVEN IF SUCH PERSON DOES NOT TRADE COVERED SECURITIES
IN A PARTICULAR BROKERAGE OR COMMODITIES ACCOUNT (E.G., TRADING MUTUAL FUNDS IN
A SCHWAB ACCOUNT), THE REPORTING OF DUPLICATE ACCOUNT STATEMENTS AND
CONFIRMATIONS IS STILL REQUIRED. HOWEVER, IF SUCH PERSON ONLY USES A PARTICULAR
BROKERAGE ACCOUNT FOR CHECKING ACCOUNT PURPOSES, AND NOT INVESTMENT PURPOSES, HE
OR SHE MAY IN LIEU OF REPORTING DUPLICATE ACCOUNT STATEMENTS, REPORT DUPLICATE
TRADE CONFIRMATIONS AND MAKE A QUARTERLY REPRESENTATION TO COMPLIANCE INDICATING
THAT NO INVESTMENT TRANSACTIONS OCCURRED IN THE ACCOUNT DURING THE CALENDAR
QUARTER. Reporting of accounts that do not allow any trading in Covered
Securities (e.g., a mutual fund account held directly with the fund sponsor) is
not required.
Covered Persons must notify Compliance of each reportable account at
the time it is opened, and annually thereafter, including the name of the firm
and the name under which the account is carried. A Personal Brokerage Account
Disclosure Form should be completed for this purpose.
Certain transactions might not be reported through a brokerage account,
such as private placements, inheritances or gifts. In these instances, Access
Persons must report these transactions within ten (10) calendar days using a
Personal Securities Transaction Report as noted below.
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Registered Persons are reminded that they must also inform any brokerage firm
with which they open an account, at the time the account is opened, that they
are registered with JDI.
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NON-ACCESS PERSONS who engage in an aggregate of $25,000 or more of
transactions in Covered Securities within a calendar year must provide
Compliance with an Annual Transaction Report listing all such transactions in
all accounts in which such person has a Beneficial Interest. Compliance will
request this information annually and will spot check all or a portion of such
transactions or accounts.
HOLDINGS REPORTS
ACCESS PERSONS (other than Outside Trustees) must, within ten (10)
calendar days after becoming an Access Person, provide Compliance with a
Holdings Report which lists all Covered Securities beneficially held and any
brokerage accounts through which such securities are maintained. In addition,
such persons must provide a brief description of any positions held (e.g.,
director, officer, other) with for-profit entities other than Janus. The report
must contain information current as of no more than thirty (30) calendar days
from the time the report is submitted.
PERSONAL SECURITIES TRANSACTION REPORTS
ACCESS PERSONS (other than Outside Trustees) must provide a Personal
Securities Transaction Report within ten (10) calendar days after any month end
showing all transactions in Covered Securities for which confirmations are known
by such person to not have been timely provided to Janus, and all such
transactions that are not effected in brokerage or commodities accounts,
including without limitation non-brokered private placements, and transactions
in securities that are in certificate form, which may include gifts,
inheritances, and other transactions in Covered Securities.
OUTSIDE TRUSTEES need only report a transaction in a Covered Security
if such person, at the time of that transaction, knew or, in the ordinary course
of fulfilling his or her official duties as a Trustee should have known, that,
during the fifteen-day period immediately preceding the date of his or her
personal transaction, such security was purchased or sold by, or was being
considered for purchase or sale on behalf of, any Janus Fund for which such
person acts as Trustee.
SUCH PERSONS MUST PROMPTLY COMPLY WITH ANY REQUEST OF THE COMPLIANCE MANAGER TO
PROVIDE TRANSACTION REPORTS REGARDLESS OF WHETHER THEIR BROKER HAS BEEN
INSTRUCTED TO PROVIDE DUPLICATE CONFIRMATIONS. SUCH REPORTS MAY BE REQUESTED,
FOR EXAMPLE, TO CHECK THAT ALL APPLICABLE CONFIRMATIONS ARE BEING RECEIVED OR TO
SUPPLEMENT THE REQUESTED CONFIRMATIONS WHERE A BROKER IS DIFFICULT TO WORK WITH
OR OTHERWISE FAILS TO PROVIDE DUPLICATE CONFIRMATIONS ON A TIMELY BASIS.
NON-INFLUENCE AND NON-CONTROL ACCOUNTS
The Rules shall not apply to any account, partnership, or similar
investment vehicle over which a Covered Person has no direct or indirect
influence or control. Covered Persons wishing to rely upon this provision are
required to receive approval from the Ethics Committee. In order to request such
approval, a Certification of Non-Influence and Non-Control Form must be
submitted to the Compliance Manager.
Any account beneficially owned by a Covered Person that is managed by
JCC in a discretionary capacity is not covered by these Rules so long as such
person has no direct or indirect influence or control over the account. The
employment relationship between the account-holder and the individual managing
the account, in the absence of other facts indicating control, will not be
deemed to give such account-holder influence or control over the account.
OTHER REQUIRED FORMS
In addition to the Preclearance Form, Preclearance Form for Company
Stock, Personal Brokerage Account Disclosure Form, Holdings Report, Report of
Personal Securities Transactions, Annual Transaction Report, and Certification
of Non-Influence and Non-Control Form discussed above, the following forms
(available through Lotus Notes) must be completed if applicable to you:
ACKNOWLEDGMENT OF RECEIPT FORM
Each Covered Person must provide Compliance with an Acknowledgment of
Receipt Form within ten (10) calendar days of commencement of employment or
other services certifying that he or she has received a current copy of the
Rules and acknowledges, as a condition of employment, that he or she will comply
with the Rules in their entirety.
ANNUAL CERTIFICATION FORM
Each Covered Person must provide Compliance annually within thirty (30)
calendar days from date of request with an Annual Certification Form certifying
that he or she:
1) Has received, read and understands the Rules;
2) Has complied with the requirements of the Rules; and
3) Has disclosed or reported all open brokerage and commodities
accounts, personal holdings and personal securities
transactions required to be disclosed or reported pursuant to
the requirements of the Rules.
OUTSIDE DIRECTOR/TRUSTEE REPRESENTATION FORM
All Outside Directors and Outside Trustees must, upon commencement of
services and annually thereafter, provide Compliance with an Outside
Director/Trustee Representation Form. The Form declares that such persons agree
to refrain from trading in any securities when they are in possession of any
information regarding trading recommendations made or proposed to be made to any
Client by Janus or its officers or employees.
<PAGE>
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INSIDER TRADING POLICY
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BACKGROUND INFORMATION
The term "insider trading" is not defined in the federal securities
statutes, but generally is used to refer to the use of material nonpublic
information to trade in securities (whether or not one is an "insider") or to
communications of material nonpublic information to others.
While the law concerning insider trading can be complex and unclear,
you should assume that the law prohibits:
o Trading by an insider, while in possession of material nonpublic
information,
o Trading by a non-insider, while in possession of material nonpublic
information, where the information was disclosed to the non-insider
(either directly or through one or more intermediaries) in violation of
an insider's duty to keep it confidential,
o Communicating material nonpublic information to others in breach of a
duty not to disclose such information, and
o Misappropriating confidential information for securities trading
purposes, in breach of a duty owed to the source of the information to
keep the information confidential.
Trading based on material nonpublic information about an issuer does
not violate this policy unless the trader (i) is an "insider" with respect to an
issuer; (ii) receives the information from an insider or from someone that the
trader knows received the information from an insider, either directly or
indirectly, or (iii) misappropriates the nonpublic information or obtains or
misuses it in breach of a duty of trust and confidence owed to the source of the
information. Accordingly, trading based on material nonpublic information about
an issuer can be, but is not necessarily, a violation of this Policy. Trading
while in possession of material nonpublic information relating to a tender offer
is prohibited under this Policy regardless of how such information was obtained.
Application of the law of insider trading to particular transactions
can be difficult, particularly if it involves a determination about trading
based on material nonpublic information. You legitimately may be uncertain about
the application of this Policy in particular circumstances. If you have any
questions regarding the application of the Policy or you have any reason to
believe that a violation of the Policy has occurred or is about to occur, you
should contact the Chief Compliance Officer or the Compliance Manager.
The following discussion is intended to help you understand the
principal concepts involved in insider trading.
<PAGE>
WHO IS AN INSIDER?
The concept of "insider" is broad. It includes officers, directors and
employees of a company. In addition, a person can be a "temporary insider" if he
or she enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely for the
company's purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the employees of
such organizations. In addition, one or more of the Janus entities may become a
temporary insider of a company it advises or for which it performs other
services. To be considered an insider, the company must expect the outsider to
keep the disclosed nonpublic information confidential and/or the relationship
must at least imply such a duty.
WHEN IS INFORMATION NONPUBLIC?
Information remains nonpublic until it has been made public.
Information becomes public when it has been effectively communicated to the
marketplace, such as by a public filing with the SEC or other governmental
agency, inclusion in the Dow Jones "tape" or publication in The Wall Street
Journal or another publication of general circulation. Moreover, sufficient time
must have passed so that the information has been disseminated widely.
WHAT IS MATERIAL INFORMATION?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally means information for
which there is a substantial likelihood that a reasonable investor would
consider it important in making his or her investment decisions, or information
that is reasonably certain to have a substantial effect on the price of a
company's securities. Information that should be considered material includes,
but is not limited to: dividend changes, earnings estimates, changes in
previously released earnings estimates, significant merger or acquisition
proposals or agreements, major litigation, liquidation problems, and
extraordinary management developments.
Material information may also relate to the market for a company's
securities. Information about a significant order to purchase or sell securities
may, in some contexts, be deemed material. Similarly, prepublication information
regarding reports in the financial press also may be deemed material. For
example, the Supreme Court upheld the criminal convictions of insider trading
defendants who capitalized on prepublication information about The Wall Street
Journal's "Heard on the Street" column.
WHEN IS INFORMATION MISAPPROPRIATED?
The misappropriation theory prohibits trading on the basis of
non-public information by a corporate "outsider" in breach of a duty owed not to
a trading party, but to the source of confidential information. Misappropriation
of information occurs when a person obtains the non-public information through
deception or in breach of a duty of trust and loyalty to the source of the
information.
<PAGE>
PENALTIES FOR INSIDER TRADING
Penalties for trading on or communicating material nonpublic
information are severe, both for individuals involved in such unlawful conduct
and their employers or other controlling persons. A person can be subject to
some or all of the penalties below even if he or she does not personally benefit
from the violation.
Penalties include:
o Civil injunctions
o Treble damages
o Disgorgement of profits
o Jail sentences for up to 10 years
o Fines up to $1,000,000 (or $2,500,000 for corporations and other
entities)
o Civil penalties for the person who committed the violation of up to
three times the profit gained or loss avoided, whether or not the
person actually benefited, and
o Civil penalties for the employer or other controlling person of up to
the greater of $1,000,000 or three times the amount of the profit
gained or loss avoided.
In addition, any violation of the law may result in serious sanctions
by Janus, including termination of employment.
WHO IS A CONTROLLING PERSON?
Included as controlling persons are Janus and its Directors, Trustees
and officers. If you are a Director, Trustee or officer, you have a duty to act
to prevent insider trading. Failure to fulfill such a duty may result in
penalties as described above.
PROCEDURES TO IMPLEMENT POLICY
The following procedures have been established to aid the Directors,
Trustees, officers and employees of Janus in avoiding insider trading, and to
aid Janus in preventing, detecting and imposing sanctions against insider
trading.
IDENTIFYING MATERIAL INSIDE INFORMATION
Before trading for yourself or others, including the Janus Funds or
other Clients, in the securities of a company about which you may have potential
inside information, ask yourself the following questions:
o To whom has this information been provided? Has the information been
effectively communicated to the marketplace?
o Has this information been obtained from either the issuer or from
another source in breach of a duty to that source to keep the
information confidential?
o Is the information material? Is this information that an investor would
consider important in making his or her investment decisions? Is this
information that would affect the market price of the securities if
generally disclosed?
Special caution should be taken with respect to potential inside
information regarding JCC. Although JCC's shares are not publicly traded, JCC's
parent, KCSI, is a publicly traded company. KCSI owns 82% of the stock of JCC.
As a result, potential inside information regarding JCC may affect trading in
KCSI stock and should be reported pursuant to the procedures set forth below.
The following is a non-exclusive list of situations that Investment Personnel
should report immediately pursuant to the procedures below: (i) participation in
private placements; (ii) the receipt of any information from an issuer pursuant
to a confidentiality agreement; (iii) participation on or receipt of information
from a bankruptcy committee of an issuer; and (iv) receipt of information
regarding earnings or sales figures in advance of the public release of those
numbers.
REPORTING INSIDE INFORMATION
If, after consideration of the above, you believe that the information
is material and nonpublic, or if you have questions as to whether the
information is material and nonpublic, you should take the following steps:
o Do not purchase or sell the securities on behalf of yourself or others,
including Clients.
o Do not communicate the information inside or outside of Janus, other
than to the Chief Compliance Officer or the Compliance Manager.
o Immediately advise the Chief Compliance Officer or Compliance Manager
of the nature and source of such information. The Chief Compliance
Officer or Compliance Manager will review the information with the
Ethics Committee.
o Depending upon the determination made by the Ethics Committee, or by
the Chief Compliance Officer until the Committee can be convened, you
may be instructed to continue the prohibition against trading and
communication and the Compliance Manager will place the security on a
Restricted List or Watch List, as described below. Alternatively, if it
is determined that the information obtained is not material nonpublic
information, you may be allowed to trade and communicate the
information.
WATCH AND RESTRICTED LISTS
Whenever the Ethics Committee or the Chief Compliance Officer
determines that a Director, Trustee, officer or employee of Janus is in
possession of material nonpublic information with respect to a company
(regardless of whether it is currently owned by any Client) such company will
either be placed on a Watch List or on a Restricted List.
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WATCH LIST
If the security is placed on a Watch List, the flow of the information
to other Janus personnel will be restricted in order to allow such persons to
continue their ordinary investment activities. This procedure is commonly
referred to as a "Chinese Wall."
RESTRICTED LIST
If the Ethics Committee or the Chief Compliance Officer determines that
material nonpublic information is in the possession of a Director, Trustee,
officer, or employee of Janus and cannot be adequately isolated through the use
of a Chinese Wall, the company will be placed on the Restricted List. While a
company is on the Restricted List, no Investment Person shall initiate or
recommend any transaction in any Client account, and no Access Person shall be
precleared to transact in any account in which he or she has a beneficial
interest, with respect to the securities of such company. The Ethics Committee
or the Chief Compliance Officer will also have the discretion of placing a
company on the Restricted List even though no "break in the Chinese Wall" has or
is expected to occur with respect to the material nonpublic information about
the company. Such action may be taken by such persons for the purpose of
avoiding any appearance of the misuse of material nonpublic information.
The Ethics Committee or the Chief Compliance Officer will be
responsible for determining whether to remove a particular company from the
Watch List or Restricted List. The only persons who will have access to the
Watch List or Restricted List are members of the Ethics Committee, Designated
Legal or Compliance Representatives and such persons who are affected by the
information. The Watch List and Restricted List are highly confidential and
should, under no circumstances, be discussed with or disseminated to anyone
other than the persons noted above.
PROTECTING INFORMATION
Directors, Trustees, officers and employees of Janus shall not disclose
any nonpublic information (whether or not it is material) relating to Janus or
its securities transactions to any person outside Janus (unless such disclosure
has been authorized by the Chief Compliance Officer). Material nonpublic
information may not be communicated to anyone, including any Director, Trustee,
officer or employee of Janus, except as provided in this Policy. Access to such
information must be restricted. For example, access to files containing material
nonpublic information and computer files containing such information should be
restricted, and conversations containing such information, if appropriate at
all, should be conducted in private.
To insure the integrity of the Chinese Wall and to avoid unintended
disclosures, it is important that all employees take the following steps with
respect to confidential or nonpublic information:
o Do not discuss confidential information in public places such as
elevators, hallways or social gatherings.
o To the extent practical, limit access to the areas of the firm where
confidential information could be observed or overheard to employees
with a business need for being in the area.
o Avoid use of speakerphones in areas where unauthorized persons may
overhear conversations.
o Avoid use of wireless and cellular phones, or other means of
communication, which may be intercepted.
o Where appropriate, maintain the confidentiality of Client identities by
using code names or numbers for confidential projects.
o Exercise care to avoid placing documents containing confidential
information in areas where they may be read by unauthorized persons and
to store such documents in secure locations when they are not in use.
o Destroy copies of confidential documents no longer needed for a project
unless required to be saved pursuant to applicable record keeping
policies or requirements.
RESPONSIBILITY TO MONITOR TRANSACTIONS
Compliance will monitor transactions of Clients and employees for which
reports are received to detect the existence of any unusual trading activities
with respect to companies on the Watch and Restricted Lists. Compliance will
immediately report any unusual trading activity directly to the Compliance
Manager, and in his or her absence, the Chief Compliance Officer, who will be
responsible for determining what, if any, action should be taken.
RECORD RETENTION
Compliance shall maintain copies of the Watch List and Restricted List
for a minimum of six years.
TENDER OFFERS
Tender offers represent a particular concern in the law of insider
trading for two reasons. First, tender offer activity often produces
extraordinary fluctuations in the price of the target company's securities.
Trading during this time period is more likely to attract regulatory attention
(and produces a disproportionate percentage of insider trading cases). Second,
the SEC has adopted a rule which expressly forbids trading and "tipping" while
in possession of material nonpublic information regarding a tender offer
received from the tender offeror, the target company or anyone acting on behalf
of either. Janus employees and others subject to this Policy should exercise
particular caution any time they become aware of nonpublic information relating
to a tender offer.
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GIFT POLICY
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Gifts may be given (or accepted) only if they are in accordance with
normally accepted business practices and do not raise any question of
impropriety. A question of impropriety may be raised if a gift influences or
gives the appearance of influencing the recipient. The following outlines
Janus's policy on giving and receiving gifts to help us maintain those standards
and is applicable to all Inside Directors and Inside Trustees, officers and
employees of Janus.
GIFT GIVING
Neither you nor members of your immediate family may give any gift,
series of gifts, or other thing of value, including cash, loans, personal
services, or special discounts ("Gifts") in excess of $100 per year to any
Client or any one person or entity that does or seeks to do business with or on
behalf of Janus or any Client (collectively referred to herein as "Business
Relationships").
GIFT RECEIVING
Neither you nor members of your immediate family may receive any Gift
of material value from any single Business Relationship. A Gift will be
considered material in value if it influences or gives the appearance of
influencing the recipient.
In the event the aggregate fair market value of all Gifts received by
you from any single Business Relationship is estimated to exceed $250 in any
12-month period, you must immediately notify your manager. Managers that receive
such notification must report this information to the Compliance Manager if it
appears that such Gifts may have improperly influenced the receiver. If the Gift
is made in connection with the sale or distribution of registered investment
company or variable contract securities, the aggregate fair market value of all
such Gifts received by you from any single Business Relationship may never
exceed $100 in any 12-month period.
Occasionally, Janus employees are invited to attend or participate in
conferences, tour a company's facilities, or meet with representatives of a
company. Such invitations may involve traveling and may require overnight
lodging. Generally, Janus must pay for all travel and lodging expenses provided
in connection with such activities. However, if appropriate, and with prior
approval from your manager, you may accept travel related amenities if the costs
are considered insubstantial and are not readily ascertainable.
The solicitation of a Gift is prohibited (i.e., you may not request a
Gift, such as tickets to a sporting event, be given to you).
CUSTOMARY BUSINESS AMENITIES
Customary business amenities are not considered Gifts so long as such
amenities are business related (e.g., if you are accepting tickets to a sporting
event, the offerer must go with you), reasonable in cost, appropriate as to time
and place, and neither so frequent nor so costly as to raise any question of
impropriety. Customary business amenities which you and, if appropriate, your
guests, may accept (or give) include an occasional meal, a ticket to a sporting
event or the theater, greens fees, an invitation to a reception or cocktail
party, or comparable entertainment.
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OUTSIDE EMPLOYMENT POLICY
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No Inside Director, Inside Trustee, officer or employee of Janus shall
accept employment or compensation as a result of any business activity (other
than a passive investment), outside the scope of his relationship with Janus
unless such person has provided prompt written notice of such employment or
compensation to the Chief Compliance Officer (or, for Registered Persons, to
JDI's Operations Manager), and, in the case of securities-related employment or
compensation, has received the prior written approval of the Ethics Committee.
Registered Persons are reminded to update and submit their Outside Business
Activity Disclosure forms as appropriate pursuant to JDI's Written Supervisory
Procedures and applicable NASD rules.
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PENALTY GUIDELINES
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OVERVIEW
Covered Persons who violate any of the requirements, restrictions, or
prohibitions of the Rules may be subject to sanctions imposed by the Ethics
Committee. The following guidelines shall be used by the Compliance Manager for
recommending remedial actions for Covered Persons who violate prohibitions or
disregard requirements of the Rules. Deviations from the Fifteen-Day Rule are
not considered to be violations under the Rules and, therefore, are not subject
to the penalty guidelines.
Upon learning of a potential deviation from, or violation of the Rules,
the Compliance Manager will provide a written recommendation of remedial action
to the Ethics Committee. The Ethics Committee has full discretion to approve
such recommendation or impose other sanctions it deems appropriate. The Ethics
Committee will take into consideration, among other things, whether the
violation was a technical violation of the Rules or inadvertent oversight (i.e.,
ill-gotten profits versus general oversight). The guidelines are designed to
promote consistency and uniformity in the imposition of sanctions and
disciplinary matters.
PENALTY GUIDELINES
Outlined below are the guidelines for the sanctions that may be imposed
on Covered Persons who fail to comply with the Rules:
o 1st violation- Compliance will send a memorandum of reprimand to the
person, copying his or her supervisor. The memorandum will generally
reinforce the person's responsibilities under the Rules, educate the
person on the severity of personal trading violations and inform the
person of the possible penalties for future violations of the Rules;
o 2nd violation- Janus's Chief Investment Officer, James Craig, will meet
with the person to discuss the violations in detail and will reinforce
the importance of complying with the Rules;
o 3rd violation- Janus's Chairman of the Board, Thomas Bailey, will meet
with the person to discuss the violations in detail and will reinforce
the importance of complying with the Rules;
o 4th violation- The Executive Committee will impose such sanctions as it
deems appropriate, including without limitation, a letter of censure,
fines, withholding of bonus payments, or suspension or termination of
employment or personal trading privileges.
In addition to the above disciplinary sanctions, such persons may be
required to disgorge any profits realized in connection with such violation. All
disgorgement proceeds collected will be donated to a charitable organization
selected by the Ethics Committee. The Ethics Committee may determine to impose
any of the sanctions set forth in item 4 above, including termination,
immediately and without notice if it determines that the severity of any
violation or violations warrants such action. All sanctions imposed will be
documented in such person's personal trading file maintained by Janus, and will
be reported to the Executive Committee.
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SUPERVISORY AND COMPLIANCE PROCEDURES
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The Chief Compliance Officer and Compliance Manager are responsible for
implementing supervisory and compliance review procedures. Supervisory
procedures can be divided into two classifications: prevention of violations and
detection of violations. Compliance review procedures include preparation of
special and annual reports, record maintenance and review, and confidentiality
preservation.
SUPERVISORY PROCEDURES
PREVENTION OF VIOLATIONS
To prevent violations of the Rules, the Compliance Manager should, in
addition to enforcing the procedures outlined in the Rules:
1. Review and update the Rules as necessary, at least once annually,
including but not limited to a review of the Code by the Chief
Compliance Officer, the Ethics Committee and/or counsel;
2. Answer questions regarding the Rules, or refer the same to the Chief
Compliance Officer;
3. Request from all persons upon commencement of services, and annually
thereafter, any applicable forms and reports as required by the Rules;
4. Identify all Access Persons and notify them of their responsibilities
and reporting requirements;
5. Write letters to the securities firms requesting duplicate
confirmations and account statements where necessary; and
6. With such assistance from the Human Resources Department as may be
appropriate, maintain a continuing education program consisting of the
following:
1) Orienting Covered Persons who are new to Janus to the Rules,
and
2) Further educating Covered Persons by distributing memos or
other materials that may be issued by outside organizations
such as the Investment Company Institute discussing the issue
of insider trading and other issues raised by the Rules.
DETECTION OF VIOLATIONS
To detect violations of these Rules, the Compliance Manager should, in
addition to enforcing the procedures outlined in the Rules:
o Implement procedures to review holding and transaction reports,
confirmations, forms and statements relative to applicable
restrictions, as provided under the Code; and
o Implement procedures to review the Restricted and Watch Lists relative
to applicable personal and Client trading activity, as provided under
the Policy.
Spot checks of certain information are permitted as noted under the
Code.
COMPLIANCE PROCEDURES
REPORTS OF POTENTIAL DEVIATIONS OR VIOLATIONS
Upon learning of a potential deviation from, or violation of the Rules,
the Compliance Manager shall report such violation to the Chief Compliance
Officer, together with all documents relating to the matter. The Chief
Compliance Officer shall either present the information at the next regular
meeting of the Ethics Committee, or conduct a special meeting. The Ethics
Committee shall thereafter take such action as it deems appropriate (see Penalty
Guidelines).
ANNUAL REPORTS
The Compliance Manager shall prepare a written report to the Ethics
Committee and the Trustees at least annually. The written report to the Trustees
shall include any certification required by Rule 17j-1. This report shall set
forth the following information, and shall be confidential:
o Copies of the Rules, as revised, including a summary of any changes
made since the last report;
o Identification of any material issues arising under the Rules including
material violations requiring significant remedial action since the
last report;
o Identification of any material conflicts that arose since the last
report; and
o Recommendations, if any, regarding changes in existing restrictions or
procedures based upon Janus's experience under these Rules, evolving
industry practices, or developments in applicable laws or regulations.
The Trustees must initially approve these Rules within the time frame
required by Rule 17-1. Any material changes to these Rules must be approved
within six months.
RECORDS
Compliance shall maintain the following records on behalf of each Janus
entity:
o A copy of this Code and any amendment thereof which is or at any time
within the past five years has been in effect.
o A record of any violation of this Code, or any amendment thereof, and
of any action taken as a result of such violation.
o Files for personal securities transaction confirmations and account
statements, all reports and other forms submitted by Covered Persons
pursuant to these Rules and any other pertinent information.
o A list of all persons who are, or have been, required to make reports
pursuant to these Rules.
o A list of persons who are, or within the last five years have been
responsible for, reviewing transaction and holdings reports.
o A copy of each report made to the Trustees pursuant to this Code.
INSPECTION
The records and reports maintained by Compliance pursuant to the Rules
shall at all times be available for inspection, without prior notice, by any
member of the Ethics Committee.
CONFIDENTIALITY
All procedures, reports and records monitored, prepared or maintained
pursuant to these Rules shall be considered confidential and proprietary to
Janus and shall be maintained and protected accordingly. Except as otherwise
required by law or this Policy, such matters shall not be disclosed to anyone
other than to members of the Ethics Committee, as requested.
FILING OF REPORTS
To the extent that any report, form acknowledgment or other document is
required to be in writing and signed, such documents may be submitted in by
e-mail or other electronic form approved by Compliance. Any report filed with
the Chief Compliance Officer or Compliance Manager of JCC shall be deemed filed
with the Janus Funds.
THE ETHICS COMMITTEE
The purpose of this Section is to describe the Ethics Committee. The
Ethics Committee is created to provide an effective mechanism for monitoring
compliance with the standards and procedures contained in the Rules and to take
appropriate action at such times as violations or potential violations are
discovered.
MEMBERSHIP OF THE COMMITTEE
The Committee consists of Thomas A. Early, Vice President and General
Counsel; Steven R. Goodbarn, Vice President of Finance, Treasurer and Chief
Financial Officer; David Kowalski, Vice President and Chief Compliance Officer;
and Ernie C. Overholt, Compliance Manager. The Compliance Manager currently
serves as the Chairman of the Committee. The composition of the Committee may be
changed from time to time.
COMMITTEE MEETINGS
The Committee shall generally meet every four months or as often as
necessary to review operation of the compliance program and to consider
technical deviations from operational procedures, inadvertent oversights, or any
other potential violation of the Rules. Deviations alternatively may be
addressed by including them in the employee's personnel records maintained by
Janus. Committee meetings are primarily intended for consideration of the
general operation of the compliance program and substantive or serious
departures from standards and procedures in the Rules.
Such other persons may attend a Committee meeting, at the discretion of
the Committee, as the Committee shall deem appropriate. Any individual whose
conduct has given rise to the meeting also may be called upon, but shall not
have the right, to appear before the Committee.
It is not required that minutes of Committee meetings be maintained; in
lieu of minutes the Committee may issue a report describing any action taken.
The report shall be included in the confidential file maintained by the
Compliance Manager with respect to the particular employee or employees whose
conduct has been the subject of the meeting.
SPECIAL DISCRETION
The Committee shall have the authority by unanimous action to exempt
any person or class of persons or transaction or class of transactions from all
or a portion of the Rules, provided that:
o The Committee determines, on advice of counsel, that the particular
application of all or a portion of the Rules is not legally required;
o The Committee determines that the likelihood of any abuse of the Rules
by such exempted person(s) or as a result of such exempted transaction
is remote;
o The terms or conditions upon which any such exemption is granted is
evidenced in writing; and
o The exempted person(s) agrees to execute and deliver to the Compliance
Manager, at least annually, a signed Acknowledgment Form, which
Acknowledgment shall, by operation of this provision, include such
exemptions and the terms and conditions upon which it was granted.
The Committee shall also have the authority by unanimous action to
impose such additional requirements or restrictions as it, in its sole
discretion, determines appropriate or necessary, as outlined in the Penalty
Guidelines.
Any exemption, and any additional requirement or restriction, may be
withdrawn by the Committee at any time (such withdrawal action is not required
to be unanimous).
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GENERAL INFORMATION ABOUT THE ETHICS RULES
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DESIGNEES
The Compliance Manager and the Chief Compliance Officer may appoint
designees to carry out their functions pursuant to these Rules.
ENFORCEMENT
In addition to the penalties described in the Penalty Guidelines and
elsewhere in the Rules, upon discovering a violation of the Rules, the Janus
entity with which you are associated may impose such sanctions as it deems
appropriate, including without limitation, a letter of censure or suspension or
termination of employment or personal trading privileges of the violator. All
material violations of the Rules and any sanctions imposed with respect thereto
shall be reported periodically to the Directors and Trustees and the directors
of any other Janus entity which has been directly affected by the violation.
INTERNAL USE
The Rules are intended solely for internal use by Janus and do not
constitute an admission, by or on behalf of such companies, their controlling
persons or persons they control, as to any fact, circumstance or legal
conclusion. The Rules are not intended to evidence, describe or define any
relationship of control between or among any persons. Further, the Rules are not
intended to form the basis for describing or defining any conduct by a person
that should result in such person being liable to any other person, except
insofar as the conduct of such person in violation of the Rules may constitute
sufficient cause for Janus to terminate or otherwise adversely affect such
person's relationship with Janus.
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1 Unless otherwise noted, restrictions on personal transactions apply
to transactions involving Covered Securities, including any derivative thereof.
When determining the amount of disgorgement required with respect to a
derivative, consideration will be given to price differences in both the
derivative and the underlying securities, with the lesser amount being used for
purposes of computing disgorgement. For example, in determining whether
reimbursement is required when the applicable personal trade is in a derivative
and the Client transaction is in the underlying security, the amount shall be
calculated using the lesser of (a) the difference between the price paid or
received for the derivative and the closing bid or ask price (as appropriate)
for the derivative on the date of the Client transaction, or (b) the difference
between the last sale price, or the last bid or ask price (as appropriate) of
the underlying security on the date of the derivative transaction, and the price
received or paid by the Client for the underlying security. Neither preclearance
nor disgorgement shall be required if such person=s transaction is to close,
sell or exercise a derivative within five days of its expiration.
2 Personal purchases are matched only against subsequent Client
purchases and personal sales are matched only against subsequent Client sales
for purposes of this restriction.
REVISED 09/27/99
LAZARD ASSET MANAGEMENT
A DIVISION OF
LAZARD FRERES & CO. LLC. ("LAM")
CODE OF ETHICS
Set forth below is LAM's policy on personal securities transactions. As a
general rule, LAM personnel are reminded that the interests of LAM clients take
priority over the investment desires of LAM personnel. All LAM personnel must
conduct themselves in a manner consistent with LAM's requirements as set forth
in this Code of Ethics and the respective Codes of Ethics of The Lazard Funds,
Inc. and Lazard Retirement Series, Inc. as well as the Compliance Manual of
Lazard Freres & Co. LLC ("LF&Co" or the "Firm") then in effect. Please review
this Code of Ethics carefully and contact the Compliance Department if there are
any questions.
PERSONAL SECURITIES ACCOUNTS COVERED
The restrictions set forth below apply to trading for all "Personal Securities
Accounts." These include:
- - Accounts in the Managing Director's or employee's name or accounts in which
the Managing Director or employee or any Related Person has a direct or
indirect beneficial interest other than an account which is managed by
another manager, or by other LAM portfolio managers, for a fee;
- - Accounts in the name of the Managing Director's or employee's spouse;
- - Accounts in the name of children under the age of 21, whether or not living
with the Managing Director or employee, and relatives or other individuals
living with the Managing Director or employee or for whose support the
Managing Director or employee is wholly or partially responsible (together
with the Managing Director's or employee's spouse, "Related Persons");
- - Accounts in which the Managing Director or employee or any Related Person
directly or indirectly controls, participates in, or has the right to
control or participate in, investment decisions, except for trades where
the Managing Director or employee or Related Person does not provide input.
RESTRICTIONS
The following restrictions apply to trading for Personal Securities Accounts of
LAM personnel, all of which are subject to certain de minimus provisions and may
be waived upon consent of LAM's or; to the extent applicable, LF&Co's,
compliance personnel:
1. No transactions for a Personal Securities Account may be made in a security
that is on the Restricted List;
2. No security may be purchased or sold for a Personal Securities Account: (a)
if the security is currently being considered for purchase or sale for an
LAM client; or (b) if the security is being purchased or sold for an LAM
client on that day or has been purchased or sold for an LAM client within
the immediately preceding 7 calendar day period;
3. No purchase and sale, or sale and purchase, of a security for a Personal
Securities Account may occur within any 60-day period without prior
approval of Norman Eig, Herb Gullquist or Bill Butterly;
4. No transaction for a Personal Securities Account may be made in securities
offered pursuant to a public offering. Securities offered pursuant to a
private placement may not be purchased for Personal Securities Accounts
without the approval of Norman Eig, Herb Gullquist or Bill Butterly;
5. No transaction for a Personal Securities Account may be made in "deal" or
"rumor" securities, which are defined as securities of companies that are
the subject of reports or rumors of actual or anticipated extraordinary
corporate transactions or other corporate events;
6. Absent approval from the appropriate compliance personnel, Managing
Directors and employees are prohibited from engaging in the trading of
options or futures and from engaging in speculative trading as opposed to
investment activity. When such approval is given and Managing Directors and
employees effect opening transactions in options, the resulting closing
transaction will be considered effected on the day that the opening
transaction was effected for compliance purposes. The Managing Director or
employee must wait 60 days from the date of the opening transaction before
effecting the closing transaction. Managing Directors and employees are
prohibited from engaging in short sales of any security.
7. No transaction may be made in violation of the Material Non-Public
Information Policies and Procedures as outlined in Chapter X of LF&Co's
Compliance Manual; and
8. All transactions for Personal Securities Accounts must be approved by a
Managing Director of LAM, preferably the Managing Director to whom the
employee reports, and pre-cleared by Don Klein and Bill Butterly, or their
respective representatives. These approvals should be written on the trade
ticket. In addition, each Managing Director or employee should complete and
deliver to Bill Butterly, prior to the transaction, the attached personal
securities transaction form. The procedure for pre-clearing a personnel
trade is explained in greater detail below.
EXEMPTIONS
The restrictions and prohibitions contained in this Code shall not
apply to:
(a) Purchases or sales of securities which receive the prior
approval of either Norman Eig or Herbert W. Gullquist and Bill
Butterly (the approving officer having no personal interest in
such purchases or sales) because such purchases or sales are
not likely to have any economic impact on any client account
managed or advised by LAM
(b) Any securities transaction, or series of related transactions
during any 30-day period, involving 500 shares or less in the
aggregate of any security, if the issuer has a market
capitalization (outstanding shares multiplied by the current
price per share) greater than US $1 billion ("de minimus
exemption"). This provision does not provide an exemption from
the 60-day holding period.
OTHER ITEMS
1. LAM personnel may not serve on the board of directors of any corporation
(other than a not-for-profit corporation or a related Lazard entity)
without the prior approval of Norman Eig or Herb Gullquist;
2. All LAM personnel must complete quarterly Personal Security Account
transaction reports. By law, these reports must be returned to Compliance
by the tenth day following the end of the quarter. To ensure strict
compliance with these requirements, the forms should be returned by the
seventh day following the end of the quarter; and
3. Each LAM Managing Director and employee must annually certify compliance
with the LAM Code of Ethics with respect to all Personal Securities
Accounts.
SECURITIES COVERED
LAM's policies and procedures regarding personal securities trading set forth
herein apply to transactions involving all equity and debt securities, including
common and preferred stock, investment and non-investment grade debt securities,
investments convertible into or exchangeable for stock or debt securities, or
any derivative instrument relating to any such security or securities index,
including options, warrants and futures, or any interest in a partnership or
other entity that invests in any of the foregoing. Investments in mutual funds,
certificates of deposit and federal government obligations are not covered by
these policies and procedures. Any other exception to personal securities
trading policies and procedures must be approved.
TRANSACTION APPROVAL PROCEDURES
INTERNAL ACCOUNTS
To pre-clear a transaction being made in a Personal Securities Account held at
the Firm (an "Internal Account"), LAM personnel must:
1. Electronically complete and "sign" a "New Equity Order" or "New Bond Order"
trade ticket located in the Firm's Lotus-Notes e-mail application under the
heading "Employee Trades." The ticket should be directed to the employee's
supervising Managing Director, or, in the absence of the supervising
Managing Director, to another LAM Managing Director or one of the LAM
Directors designated in the database.
2. Upon review of the ticket by the designated supervisor, the employee should
receive an automatic e-mail notification informing her/him that the trade
has been approved or rejected.
3. Following the supervisor's approval, the ticket is transmitted to the
Compliance Department where it is processed and, if approved, is routed to
the trading desk for execution, provided the employee had selected the
"Direct Execution" button when completing the ticket.
The cut-off time for receipt of supervisor-approved tickets in the Compliance
Department is 9.30 a.m. each trading day. Any ticket received after this time
will be processed for execution the next trading day. It is the responsibility
of each employee to ensure that tickets sent to a supervisor for approval
receive the supervisor's timely attention.
NOTE
In completing a new ticket, if the employee de-selects the "Direct Execution"
button, the ticket will be returned to her/him after Compliance approval for
submission to the trading desk. In such case, the trade must be submitted within
2 days or it will expire and be null and void.
To assist each employee with monitoring the status of a trade ticket submitted
for approval, the system is designed to generate an e-mail notification to the
employee every time the ticket is reviewed or acted upon by the supervisor,
compliance department or the trading desk. Additionally, every supervisor's
assistant is set up to receive a summary of the each approval request sent to
the supervisor so that in the absence of the supervisor, the assistant would
advise the employee to re-rout the trade to another supervisor. For more details
on the set-up and use of the Employee Trades database, please contact David
Osunkwo at ext. 6065.
OUTSIDE ACCOUNTS
LAM personnel may not maintain a securities or commodities account (including a
foreign securities account) at any other broker or dealer or bank (an "Outside
Account") without the prior written consent of the Firm. Where such consent is
given, employees must provide the Firm with the name of the broker-dealer firm
with whom they carry their personal accounts and must request that the
broker-dealer send to Lazard, to the attention of both Donald Klein and Bill
Butterly, copies of monthly account statements and all trade confirmations.
These same principles apply to establishing an account at another brokerage
house where the employee has control over the trading in that account (such as a
discretionary account, a nominee account, an account for a general or limited
partnership, a trust account), or an account of a corporation where trading is
controlled or influenced by the LAM employee. If you already have an Outside
Account, please notify Bill Butterly as soon as possible to facilitate the
distribution and review of your monthly account statements and trade
confirmations.
Managing Directors and employees are required to report promptly to Donald Klein
and Bill Butterly any change in status or location of any account in which they
have a beneficial interest as defined above. With respect to a trust account of
which a Managing Director or employee or member of his immediate family is a
beneficiary, the Firm policy requires that the Firm receive duplicate
confirmations and monthly account statements for each such account. Similarly,
Managing Directors and employees are required to report private securities and
commodities transactions effected by or for (i) themselves, (ii) spouses and
unemancipated family members, (iii) accounts over which the employee has control
as described above, or (iv) accounts of which the employee or a member of his
family is a beneficiary, or (v) accounts of family members including accounts of
in-laws where introduced or carried by an employee or Managing Director's member
organization. Deviations from the foregoing policies will be permitted only with
the prior written approval of an appropriate individual with compliance
responsibilities.
To pre-clear a transaction being made in an outside account, LAM personnel must
follow the "Transaction Approval Procedures" relating to Internal Accounts.
NOTE:
Once a Managing Director or employee receives approval, the LAM personnel must
transmit appropriate trade instructions to their outside broker within two days,
or the approval will become null and void.
PIMCO CODE OF ETHICS
Effective as of March 31, 2000
INTRODUCTION
GENERAL PRINCIPLES
This Code of Ethics is based on the principle that you, as a director,
officer or other Advisory Employee of Pacific Investment Management Company
("PIMCO"), owe a fiduciary duty to, among others, the shareholders of the Funds
and other clients (together with the Funds, the "Advisory Clients") for which
PIMCO serves as an advisor or subadvisor. Accordingly, you must avoid
activities, interests and relationships that might interfere or appear to
interfere with making decisions in the best interests of our Advisory Clients.
At all times, you must observe the following GENERAL RULES:
1. YOU MUST PLACE THE INTERESTS OF OUR ADVISORY CLIENTS FIRST. In
other words, as a fiduciary you must scrupulously avoid
serving your own personal interests ahead of the interests of
our Advisory Clients. You must adhere to this general
fiduciary principle as well as comply with the Code's specific
provisions. Technical compliance with the Code's procedures
will not automatically insulate from scrutiny any trades that
indicate an abuse of your fiduciary duties or that create an
appearance of such abuse.
Your fiduciary obligation applies not only to your personal
trading activities but also to actions taken on behalf of
Advisory Clients. In particular, you may not cause an Advisory
Client to take action, or not to take action, for your
personal benefit rather than the benefit of the Advisory
Client. For example, you would violate this Code if you caused
an Advisory Client to purchase a Security or Futures Contract
you owned for the purpose of increasing the value of that
Security or Futures Contract. If you are a portfolio manager
or an employee who provides information or advice to a
portfolio manager or helps execute a portfolio manager's
decisions, you would also violate this Code if you made a
personal investment in a Security or Futures Contract that
might be an appropriate investment for an Advisory Client
without first considering the Security or Futures Contract as
an investment for the Advisory Client.
2. YOU MUST CONDUCT ALL OF YOUR PERSONAL INVESTMENT TRANSACTIONS
IN FULL COMPLIANCE WITH THIS CODE, THE PIMCO ADVISORS L.P.
INSIDER TRADING POLICY AND PROCEDURES (THE "INSIDER TRADING
POLICY"), AND THE PIMCO ADVISORS L.P. POLICY REGARDING SPECIAL
TRADING PROCEDURES FOR SECURITIES OF PIMCO
<PAGE>
ADVISORS L.P. (THE "SPECIAL TRADING PROCEDURES")1 AND IN SUCH
A MANNER AS TO AVOID ANY ACTUAL OR POTENTIAL CONFLICT OF
INTEREST OR ANY ABUSE OF YOUR POSITION OF TRUST AND
RESPONSIBILITY. PIMCO encourages you and your family to
develop personal investment programs. However, those
investment programs must remain within boundaries reasonably
necessary to ensure that appropriate safeguards exist to
protect the interests of our Advisory Clients and to avoid
even the APPEARANCE of unfairness or impropriety. Accordingly,
YOU MUST COMPLY WITH THE POLICIES AND PROCEDURES SET FORTH IN
THIS CODE UNDER THE HEADING PERSONAL INVESTMENT TRANSACTIONS.
In addition, you must comply with the policies and procedures
set forth in the INSIDER TRADING POLICY AND SPECIAL TRADING
PROCEDURES, which are attached to this Code as Appendix II and
III, respectively. Doubtful situations should be resolved in
favor of our Advisory Clients and against your personal
trading.
3. YOU MUST NOT TAKE INAPPROPRIATE ADVANTAGE OF YOUR POSITION.
The receipt of investment opportunities, perquisites, gifts or
gratuities from persons seeking business with PIMCO directly
or on behalf of an Advisory Client could call into question
the independence of your business judgment. Accordingly, you
must comply with the policies and procedures set forth in this
Code under the heading GIFTS AND SERVICE AS A DIRECTOR.
Doubtful situations should be resolved against your personal
interest.
THE GENERAL SCOPE OF THE CODE'S
APPLICATIONS TO PERSONAL INVESTMENT ACTIVITIES
The Code reflects the fact that PIMCO specializes in the management of
fixed income portfolios. The vast majority of assets PIMCO purchases and sells
on behalf of its Advisory Clients consist of corporate debt Securities, U.S. and
foreign government obligations, asset-backed Securities, money market
instruments, foreign currencies, and futures contracts and options with respect
to those instruments. For its StocksPLUS Funds, PIMCO also purchases futures and
options on the S & P 500 index and, on rare occasions, may purchase or sell
baskets of the stocks represented in the S & P 500. For its Convertible Bond
Fund and other Advisory Clients, PIMCO purchases convertible securities that may
be converted or exchanged into underlying shares of common stock. Other PIMCO
Funds may also invest in convertible securities. The Convertible Bond Fund and
other Advisory Clients may also invest a portion of their assets in common
stocks.
Rule 17j-1 under the Investment Company Act of 1940 requires REPORTING
of all personal transactions in Securities (other than certain Exempt
Securities) by certain persons, whether or not they are Securities that might be
purchased or sold by PIMCO on behalf of its Advisory Clients. The Code
implements that reporting requirement.
- --------
1 PIMCO expects Allianz of America ("AZOA") to acquire a majority interest in
PIMCO Advisors L.P. ("PALP") in the second quarter of 2000. When that
acquisition is consummated, the Special Trading Procedures for PALP securities
will no longer apply since PALP securities will not be publicly owned or traded.
<PAGE>
However, since the purpose of the Code is to avoid conflicts of
interest arising from personal trading activities in Securities and other
instruments that are held or might be acquired on behalf of our Advisory
Clients, this Code only places RESTRICTIONS on personal trading activities in
such investments. As a result, this Code does not place restrictions (beyond
reporting) on personal trading in most individual equity Securities. Except for
the small number of Portfolio Employees who are responsible for PIMCO's
Municipal Bond Fund, this Code also does not place restrictions (beyond
reporting) on personal trading in Tax-Exempt Municipal Bonds. Although equities
and Tax-Exempt Municipal Bonds are Securities, they are not purchased or sold by
PIMCO on behalf of the vast majority of PIMCO's Advisory Clients and PIMCO has
established special procedures to avoid conflicts of interest that might
otherwise arise from personal trading in those Securities. On the other hand,
this Code does require reporting and restrict trading in certain Futures
Contracts which, although they are not Securities, are instruments in which
PIMCO frequently trades for many of its Advisory Clients.
This Code applies to PIMCO's officers and directors as well as to all
of its Advisory Employees. The Code recognizes that portfolio managers and the
investment personnel who provide them with advice and who execute their
decisions occupy more sensitive positions than other Advisory Employees and that
it is appropriate to subject their personal investment activities to greater
restrictions.
THE ORGANIZATION OF THE CODE
The remainder of this Code is divided into three sections. The first
section concerns PERSONAL INVESTMENT TRANSACTIONS. The second section describes
the restrictions on GIFTS AND SERVICE AS A DIRECTOR. The third section
summarizes the methods for ensuring COMPLIANCE under the Code. In addition, the
following APPENDICES are also a part of this Code:
I. Definitions of Capitalized Terms.
II. The PIMCO Advisors L.P. Insider Trading Policy and Procedures.
III. The PIMCO Advisors L.P. Policy Regarding Special Trading Procedures for
Securities of PIMCO Advisors L.P. IV. Form for Acknowledgment of
Receipt of this Code.
V. Form for Annual Certification of Compliance with this Code.
VI. Form for Initial Report of Accounts.
VII. Form for Quarterly Report of Investment Transactions.
VIII. Form for Annual Holdings Report.
IX. Preclearance Request Form
X. List of PIMCO Compliance Officers.
QUESTIONS
Questions regarding this Code should be addressed to a Compliance
Officer listed on Appendix X. Those Compliance Officers compose the PIMCO
Compliance Committee.
<PAGE>
PERSONAL INVESTMENT TRANSACTIONS
IN GENERAL
Subject to the limited exceptions described below, you are required to
report all Investment Transactions in SECURITIES AND FUTURES CONTRACTS made by
you, a member of your Immediate Family or a trust in which you have an interest,
or on behalf of any account in which you have an interest or which you direct.
In addition, you must PRECLEAR certain Investment Transactions in SECURITIES AND
FUTURES CONTRACTS THAT PIMCO HOLDS OR MAY ACQUIRE ON BEHALF OF AN ADVISORY
CLIENT, INCLUDING CERTAIN INVESTMENT TRANSACTIONS IN RELATED SECURITIES.
The details of these reporting and preclearance requirements are
described below. This Code uses a number of capitalized terms, e.g. Advisory
Employee, Beneficial Ownership, Designated Equity Security, Exempt Security,
Fixed Income Security, Fund, Futures Contract, Immediate Family, Initial Public
Offering, Investment Transaction, Municipal Bond Portfolio Employee, Personal
Account, Portfolio Employee, Private Placement, Qualified Foreign Government,
Related Account, Related Security, and Security. The definitions of these
capitalized terms are set forth in Appendix I. TO UNDERSTAND YOUR
RESPONSIBILITIES UNDER THE CODE, IT IS IMPORTANT THAT YOU REVIEW AND UNDERSTAND
THE DEFINITIONS IN APPENDIX I.
REPORTING OBLIGATIONS
Notification Of Reporting Obligations
As an Advisory Employee, you are required to report accounts and
Investment Transactions in accordance with the requirements of this Code.
Use Of Broker-Dealers And Futures Commission Merchants
Unless you are an independent director, YOU MUST USE A REGISTERED
BROKER-DEALER OR REGISTERED FUTURES COMMISSION MERCHANT to engage in any
purchase or sale of a publicly-traded Security or Publicly-Traded Futures
Contract. This requirement also applies to any purchase or sale of a
publicly-traded Security or of a Publicly-Traded Futures Contract in which you
have, or by reason of the Investment Transaction will acquire, a Beneficial
Ownership interest. Thus, as a general matter, any Investment Transaction in
publicly-traded Securities or Publicly-Traded Futures Contracts by members of
your Immediate Family will need to be made through a registered broker-dealer or
futures commission merchant.
Initial Report
Within 10 days after commencing employment or within 10 days of any
event that causes you to become subject to this Code (e.g. promotion to a
position that makes you an Advisory Employee), you shall supply to a Compliance
Officer copies of the most recent statements for each and every Personal Account
and Related Account that holds or is likely to hold a Security or a Futures
Contract in which you have a Beneficial Ownership interest, as well as copies of
confirmations for any and all Investment Transactions subsequent to the
effective date of those statements. These documents shall be supplied to the
Compliance Officer by attaching them to the form appended hereto as Appendix VI.
<PAGE>
On that same form you shall supply the name of any broker, dealer, bank
or futures commission merchant and the number for any Personal Account and
Related Account that holds or is likely to hold a Security or a Futures Contract
in which you have a Beneficial Ownership interest for which you cannot supply
the most recent account statement. You shall also certify, where indicated on
the form, that the contents of the form and the documents attached thereto
disclose all such Personal Accounts and Related Accounts.
In addition, you shall also supply, where indicated on the form, the
following information for each Security or Futures Contract in which you have a
Beneficial Ownership interest, to the extent that this information is not
available from the statements attached to the form:
1. A description of the Security or Futures Contract, including
its name or title;
2. The quantity (e.g. in terms of numbers of shares, units or
contracts) and principal amount (in dollars) of the Security
or Futures Contract; and
3. The name of any broker, dealer, bank or futures commission
merchant with which you maintained an account in which the
Security or Futures Contract was held.
New Accounts
Immediately upon the opening of a NEW Personal Account or a Related
Account that holds or is likely to hold a Security or a Futures Contract, you
shall supply a Compliance Officer with the name of the broker, dealer, bank or
futures commission merchant for that account, the identifying number for that
Personal Account or Related Account, and the date the account was established.
Timely Reporting Of Investment Transactions
You must cause each broker, dealer, bank or futures commission merchant
that maintains a Personal Account or a Related Account that holds a Security or
a Futures Contract in which you have a Beneficial Ownership interest to provide
to a Compliance Officer, on a timely basis, duplicate copies of trade
confirmations of all Investment Transactions in that account and of periodic
statements for that account ("duplicate broker reports").
In addition, you must report to a Compliance Officer, on a timely
basis, any Investment Transaction in a Security or a Futures Contract in which
you have or acquired a Beneficial Ownership interest that was established
without the use of a broker, dealer, bank or futures commission merchant.
Quarterly Certifications And Reporting
At the end of the first, second and third calendar quarters, a
Compliance Officer will provide you with a list of all accounts that you have
previously identified to PIMCO as a Personal Account or a Related Account that
holds or is likely to hold a Security or Futures Contract. Within 10 days after
the end of that calendar quarter, you shall make any necessary additions,
corrections or deletions to that list and return it to a Compliance Officer with
a certification that: (a) the list, as modified (if necessary), represents a
complete list of the Personal Accounts and Related Accounts that hold Securities
or Futures Contracts in which you have or had a Beneficial Ownership interest
and for which PIMCO should have received or will receive timely duplicate broker
reports for the calendar quarter just ended, and (b) the broker, dealer, bank or
futures commission merchant for each account on the list has been instructed to
send a Compliance Officer timely duplicate broker reports for that account.
<PAGE>
You shall provide, on a copy of the form attached hereto as Appendix
VII, the following information for each Investment Transaction during the
calendar quarter just ended, to the extent that the duplicate broker reports for
that calendar quarter did not supply this information to PIMCO:
1. The date of the Investment Transaction, the title, the
interest rate and maturity date (if applicable), the number of
shares or contracts, and the principal amount of each Security
or Futures Contract involved;
2. The nature of the Investment Transaction (i.e. purchase, sale
or any other type of acquisition or disposition);
3. The price of the Security or Futures Contract at which the
transaction was effected; and
4. The name of the broker, dealer, bank, or futures commission
merchant with or through which the transaction was effected.
You shall provide similar information for the fourth calendar quarter on a copy
of the form attached hereto as Appendix VIII, which form shall also be used for
the Annual Holdings Report described below.
Annual Holdings Reports
Beginning with calendar year 2000, a Compliance Officer will provide to
you, promptly after the end of the calendar year, a list of all accounts that
you have previously identified to PIMCO as a Personal Account or a Related
Account that held or was likely to hold a Security or Futures Contract during
that calendar year. Within 10 days after the end of that calendar year, you
shall make any necessary additions, corrections or deletions to that list and
return it to a Compliance Officer with a certification that: (a) the list, as
modified (if necessary), represents a complete list of the Personal Accounts and
Related Accounts that held Securities or Futures Contracts in which you had a
Beneficial Ownership interest as of the end of that calendar year and for which
PIMCO should have received or will receive an account statement of holdings as
of the end of that calendar year, and (b) the broker, dealer, bank or futures
commission merchant for each account on the list has been instructed to send a
Compliance Officer such an account statement.
<PAGE>
You shall provide, on a copy of the form attached hereto as Appendix
VIII, the following information for each Security or Futures Contract in which
you had a Beneficial Ownership interest, as of the end of the previous calendar
year, to the extent that the previously referenced account statements have not
supplied or will not supply this information to PIMCO:
1. The title, quantity (e.g. in terms of numbers of shares, units
or contracts) and principal amount of each Security or Futures
Contract in which you had any Beneficial Ownership interest;
and
2. The name of any broker, dealer, bank or futures commission
merchant with which you maintain an account in which any such
Securities or Futures Contracts have been held or are held for
your benefit.
In addition, you shall also provide, on that same form, Investment Transaction
information for the fourth quarter of the calendar year just ended. This
information shall be of the type and in the form required for the quarterly
reports described above.
Related Accounts
The reporting and certification obligations described above also apply
to any Related Account (as defined in Appendix I) and to any Investment
Transaction in a Related Account.
It is important for you to recognize that the definitions of "Related
Account" and "Beneficial Ownership" in Appendix I may require you to provide, or
to arrange for the broker, dealer, bank or futures commission merchant to
furnish, copies of reports for any account used by or for a member of your
Immediate Family or a trust in which you or a member of your Immediate Family
has any vested interest, as well as for any other accounts in which you may have
the opportunity, directly or indirectly, to profit or share in the profit
derived from any Investment Transaction in that account.
Exemptions From Reporting
You need not report Investment Transactions in any account over which
neither you nor an Immediate Family Member has or had any direct or indirect
influence or control.
You also need not report Investment Transactions in Exempt Securities
(as defined in Appendix I) nor need you furnish, or require a broker, dealer,
bank or futures commission merchant to furnish, copies of confirmations or
periodic statements for accounts that hold only Exempt Securities. This includes
accounts that only hold U.S. Government Securities, money market interests, or
shares in open-end mutual funds. This exemption from reporting shall end
immediately, however, at such time as there is an Investment Transaction in that
account in a Futures Contract or in a Security that is not an Exempt Security.
<PAGE>
PROHIBITED INVESTMENT TRANSACTIONS
Initial Public Offerings of Equity Securities
If you are a Portfolio Employee (as defined in Appendix I), you may not
acquire Beneficial Ownership of any equity Security in an Initial Public
Offering.
Private Placements and Initial Public Offering of Debt Securities
If you are a Portfolio Employee, you may not acquire a Beneficial
Ownership interest in any Security through a Private Placement (or subsequently
sell it), or acquire a Beneficial Ownership interest in any debt Security in an
Initial Public Offering unless you have received the prior written approval of
the Chief Executive Officer of PIMCO or of a Compliance Officer listed on
Appendix X. Approval will not be given unless a determination is made that the
investment opportunity should not be reserved for one or more Advisory Clients,
and that the opportunity to invest has not been offered to you by virtue of your
position with PIMCO.
If, after receiving the necessary approval, you have acquired a
Beneficial Ownership interest in Securities through a Private Placement, you
must DISCLOSE that investment when you play a part in any consideration of any
investment by an Advisory Client in the issuer of the Securities, and any
decision to make such an investment must be INDEPENDENTLY REVIEWED by a
portfolio manager who does not have a Beneficial Ownership interest in any
Securities of the issuer.
PIMCO Advisors L.P.
You may not engage in any Investment Transaction in interests in PIMCO
Advisors L.P. ("PALP"), except in compliance with the Special Trading Procedures
applicable to such transactions.(2)
PRECLEARANCE
All Investment Transactions in Securities and Futures Contracts in a
Personal Account or Related Account, or in which you otherwise have or will
acquire a Beneficial Ownership interest, must be precleared by a Compliance
Officer unless an Investment Transaction, Security or Futures Contract falls
into one of the following categories that are identified as "exempt from
preclearance."
Preclearance Procedure
Preclearance shall be requested by completing and submitting a copy of
the preclearance request form attached hereto as Appendix IX to a Compliance
Officer. No Investment Transaction subject to preclearance may be effected prior
to receipt of written authorization of the transaction by a Compliance Officer.
The authorization and the date of authorization will be reflected on the
preclearance request form. Unless otherwise specified, that authorization shall
be effective, unless revoked, until the earlier of: (a) the close of business on
the day the authorization is given, or (b) until you discover that the
information on the preclearance request form is no longer accurate.
- -------------
2 As indicated in note 1, above, those procedures will expire and no longer be
effective after AZOA completes its acquisition of a majority interest in PALP.
<PAGE>
The Compliance Officer from whom authorization is sought may undertake
such investigation as he or she considers necessary to determine that the
Investment Transaction for which preclearance has been sought complies with the
terms of this Code and is consistent with the general principles described at
the beginning of the Code.
Before deciding whether to authorize an Investment Transaction in a
particular Security or Futures Contract, the Compliance Officer shall determine
and consider, based upon the information reported or known to that Compliance
Officer, whether within the most recent 15 days: (a) the Security, the Futures
Contract or any Related Security is or has been held by an Advisory Client, or
(b) is being or has been considered for purchase by an Advisory Client. The
Compliance Officer shall also determine whether there is a pending BUY or SELL
order in the same Security or Futures Contract, or in a Related Security, on
behalf of an Advisory Client. If such an order exists, authorization of the
personal Investment Transaction shall not be given until the Advisory Client's
order is executed or withdrawn. This prohibition may be waived by a Compliance
Officer if he or she is convinced that: (a) your personal Investment Transaction
is necessary, (b) your personal Investment Transaction will not adversely affect
the pending order of the Advisory Client, and (c) provision can be made for the
Advisory Client trade to take precedence (in terms of price) over your personal
Investment Transaction.
Exemptions From Preclearance
Preclearance shall NOT be required for the following Investment
Transactions, Securities and Futures Contracts. They are exempt only from the
Code's preclearance requirement, and, unless otherwise indicated, remain subject
to the Code's other requirements, including its reporting requirements.
Investment Transactions Exempt From Preclearance
Preclearance shall NOT be required for any of the following Investment
Transactions:
1. Any transaction in a Security or Futures Contract in an
account that is managed or held by a broker, dealer, bank,
futures commission merchant, investment adviser, commodity
trading advisor or trustee and over which you do not exercise
investment discretion, have notice of transactions prior to
execution, or otherwise have any direct or indirect influence
or control. There is a presumption that you can influence or
control accounts held by members of your Immediate Family
sharing the same household. This presumption may be rebutted
only by convincing evidence.
2. Purchases of Securities under dividend reinvestment plans.
3. Purchases of Securities by exercise of rights issued to the
holders of a class of Securities pro rata, to the extent they
are issued with respect to Securities in which you have a
Beneficial Ownership interest.
<PAGE>
4. Acquisitions or dispositions of Securities as the result of a
stock dividend, stock split, reverse stock split, merger,
consolidation, spin-off or other similar corporate
distribution or reorganization applicable to all holders of a
class of Securities in which you have a Beneficial Ownership
interest.
Securities Exempt From Preclearance
Regardless Of Transaction Size
Preclearance shall NOT be required for an Investment Transaction in the
following Securities or Related Securities, regardless of the size of that
transaction:
1. All "Exempt Securities" defined in Appendix I, i.e. U.S.
Government Securities, shares in open-end mutual funds, and
high quality short-term debt instruments.
2. All closed-end mutual funds (other than PIMCO Commercial
Mortgage Securities Trust, Inc.), and rights distributed to
shareholders in closed-end mutual funds.
3. All options on any index of equity Securities.
4. All Fixed Income Securities issued by agencies or
instrumentalities of, or unconditionally guaranteed by, the
Government of the United States.
5. All options on foreign currencies or baskets of foreign
currencies (whether or not traded on an exchange or board of
trade).
6. EXCEPT FOR DESIGNATED EQUITY SECURITIES (as defined in
Appendix I and discussed below), all equity Securities or
options, warrants or other rights to equity Securities.
7. EXCEPT FOR MUNICIPAL BOND PORTFOLIO EMPLOYEES (as defined in
Appendix I), all Tax-Exempt Municipal Bonds.
Securities Exempt from Preclearance
Depending On Transaction Size
Preclearance shall NOT be required for an Investment Transaction in the
following Securities or Related Securities if they do not exceed the specified
transaction size thresholds:
1. Purchases or sales of up to $1,000,000 (in market value or
face amount whichever is greater) per calendar month per
issuer of Fixed Income Securities issued by a Qualified
Foreign Government.
2. Purchases or sales of up to $100,000 (in market value or face
amount, whichever is greater) per calendar month per issuer of
corporate debt Securities, mortgage-backed and other
asset-backed Securities, structured notes and loan
participations, and foreign government debt Securities issued
by non-qualified foreign governments.
<PAGE>
Preclearance of Designated Equity Securities
If a Compliance Officer receives notification from a Portfolio Employee
that an equity Security or an option, warrant or other right to an equity
Security is being considered for purchase or sale by PIMCO on behalf of one of
its Advisory Clients, the Compliance Officer will send you an e-mail message or
similar transmission notifying you that this equity Security or option, warrant
or other right to an equity Security is now a "Designated Equity Security." A
current list of Designated Equity Securities (if any) will also be available on
the PIMCO intranet site. You must preclear any Investment Transaction in a
Designated Equity Security or a Related Security during the period when that
designation is in effect.
Futures Contracts Exempt From Preclearance
Regardless Of Transaction Size
Preclearance shall NOT be required for an Investment Transaction in the
following Futures Contracts, regardless of the size of that transaction (as
indicated in Appendix I, for these purposes a "Futures Contract" includes a
futures option):
1. Currency Futures Contracts.
2. U.S. Treasury Futures Contracts.
3. Eurodollar Futures Contracts.
4. Futures Contracts an any index of equity Securities.
5. Futures Contracts on physical commodities or indices thereof
(e.g. contracts for future delivery of grain, livestock, fiber
or metals whether for physical delivery or cash).
6. Privately-Traded Contracts.
Futures Contracts Exempt From Preclearance
Depending On Transaction Size
Preclearance shall NOT be required for an Investment Transaction in the
following Futures Contracts if the total number of contracts purchased or sold
during a calendar month does not exceed the specified limitations:
1. Purchases or sales of up to 50 PUBLICLY-TRADED FUTURES
CONTRACTS to acquire Fixed Income Securities issued by a
particular Qualified Foreign Government.
2. Purchases or sales of up to 10 OF EACH OTHER INDIVIDUAL
PUBLICLY-TRADED FUTURES CONTRACT if the open market interest
for such Futures Contract as reported in The Wall Street
Journal on the date of your Investment Transaction (for the
previous trading day) is at least 1,000 contracts. Examples of
Futures Contracts for which this exemption would be available
include a Futures Contract on a foreign government debt
Security issued by a non-qualified foreign government as well
as a 30-day federal funds Futures Contract.
<PAGE>
For purposes of these limitations, a Futures Contract is defined by its
expiration month. For example, you need not obtain preclearance to purchase 50
December Futures Contracts on German Government Bonds and 50 March Futures
Contracts on German Government Bonds. Similarly, you may roll over 10 September
Fed Funds Futures Contracts by selling those 10 contracts and purchasing 10
October Fed Funds Futures Contracts since the contracts being sold and those
being purchased have different expiration months. On the other hand, you could
not purchase 10 January Fed Funds Future Contracts if the open interest for
those contracts was less than 1,000 contracts, even if the total open interest
for all Fed Funds Futures Contracts was greater than 1,000 contracts.
Additional Exemptions From Preclearance
The Compliance Committee may exempt other classes of Investment
Transactions, Securities or Futures Contracts from the Code's preclearance
requirement upon a determination that they do not involve a realistic
possibility of violating the general principles described at the beginning of
the Code.
Preclearance Required
Given the exemptions described above, preclearance shall be required
for Investment Transactions in:
1. Designated Equity Securities.
2. Tax-Exempt Municipal Bonds by Municipal Bond Portfolio
Employees.
3. More than $100,000 per calendar month per issuer of corporate
debt Securities, mortgage-backed and other asset-backed
Securities, taxable municipal debt Securities, structured
notes and loan participations, and foreign government debt
Securities issued by non-qualified foreign governments.
4. More than $1,000,000 per calendar month in debt Securities of
a Qualified Foreign Government.
5. Related Securities that are exchangeable for or convertible
into one of the Securities requiring preclearance under (1),
(2), (3) or (4) above.
6. More than 50 Publicly-Traded Futures Contracts per calendar
month to acquire Fixed Income Securities issued by a
particular Qualified Foreign Government.
7. More than 10 of any other individual Publicly-Traded Futures
Contract or any Publicly-Traded Futures Contract for which the
open market interest as reported in The Wall Street Journal on
the date of your Investment Transaction (for the previous
trading day) is less than 1,000 contracts, unless the Futures
Contract is exempt from preclearance regardless of transaction
size.
<PAGE>
8. Any other Security or Publicly-Traded Futures Contract that is
not within the "exempt" categories listed above.
9. PIMCO Commercial Mortgage Securities Trust, Inc.
SHORT-TERM TRADING PROFITS
You may not profit from the purchase and sale, or the sale and
purchase, within 60 calendar days, of FIXED INCOME SECURITIES OR RELATED
SECURITIES. Portfolio Employees may not profit from the purchase and sale, or
the sale and purchase, within 60 calendar days, of DESIGNATED EQUITY SECURITIES
and Municipal Bond Portfolio Employees may not profit from the purchase and
sale, or the sale and purchase, within 60 calendar days, of TAX-EXEMPT MUNICIPAL
BONDS. Any such short-term trade must be unwound, or if that is not practical,
the profits must be contributed to a charitable organization.
This ban does NOT apply to Investment Transactions in U.S. Government
Securities, most equity Securities, mutual fund shares, index options or Futures
Contracts. This ban also does not apply to a purchase or sale in connection with
one of the four categories of Investment Transactions Exempt From Preclearance
described on pages 9-10, above.
You are considered to profit from a short-term trade if Securities in
which you have a Beneficial Ownership interest are sold for more than their
purchase price, even though the Securities purchased and the Securities sold are
held of record or beneficially by different persons or entities.
BLACKOUT PERIODS
You MAY NOT purchase or sell a Security, a Related Security or a
Futures Contract at a time when you intend or know of another's intention to
purchase or sell that Security or Futures Contract on behalf of any Advisory
Client.
As noted previously in the description of the Preclearance Process, a
Compliance Officer may not preclear an Investment Transaction in a Security or a
Futures Contract at a time when there is a pending BUY OR SELL order in the same
Security or Futures Contract, or a Related Security, until that order is
executed or withdrawn.
These prohibitions do not apply to Investment Transactions in any
Futures Contracts that are exempt from preclearance regardless of transaction
size.
<PAGE>
GIFTS AND SERVICE AS A DIRECTOR
GIFTS
You MAY NOT accept any investment opportunity, gift, gratuity or other
thing of more than nominal value from any person or entity that does business,
or desires to do business, with PIMCO directly or on behalf of an Advisory
Client (a "Giver"). You MAY, however, accept gifts from a single Giver so long
as their aggregate annual value does not exceed $500, and you MAY attend
business meals, sporting events and other entertainment events at the expense of
a Giver (without regard to their aggregate annual value), so long as the expense
is reasonable and both you and the Giver are present.
SERVICE AS A DIRECTOR
If you are an Advisory Employee, you may not serve on the board of
directors or other governing board of a publicly traded entity, other than of a
Fund for which PIMCO is an advisor or subadvisor, unless you have received the
prior written approval of the Chief Executive Officer and the Chief Legal
Officer of PIMCO. Approval will not be given unless a determination is made that
your service on the board would be consistent with the interests of our Advisory
Clients. If you are permitted to serve on the board of a publicly traded entity,
you will be ISOLATED from those Advisory Employees who make investment decisions
with respect to the Securities of that entity, through a "Chinese Wall" or other
procedures.
COMPLIANCE
CERTIFICATIONS
Upon Receipt Of This Code
Upon commencement of your employment or the effective date of this
Code, whichever occurs later, you shall be required to acknowledge receipt of
your copy of this Code by completing and returning a copy of the form attached
hereto as Appendix IV. By that acknowledgment, you will also agree:
1. To read the Code, to make a reasonable effort to understand
its provisions, and to ask questions about those provisions
you find confusing or difficult to understand.
2. To comply with the Code, including its general principles, its
reporting requirements, its preclearance requirements, and its
provisions regarding gifts and service as a director.
3. To advise the members of your Immediate Family about the
existence of the Code, its applicability to their personal
trading activity, and your responsibility to assure that their
personal trading activity complies with the Code.
4. To cooperate fully with any investigation or inquiry by or on
behalf of a Compliance Officer to determine your compliance
with the provisions of the Code.
<PAGE>
In addition, your acknowledgment will recognize that any failure to comply with
the Code and to honor the commitments made by your acknowledgment may result in
disciplinary action, including dismissal.
Annual Certificate Of Compliance
You are required to certify on an annual basis, on a copy of the form
attached hereto as Appendix V, that you have complied with each provision of
your initial acknowledgment (see above). In particular, your annual
certification will require that you certify that you have read and that you
understand the Code, that you recognize you are subject to its provisions, that
you complied with the requirements of the Code during the year just ended and
that you have disclosed, reported, or caused to be reported all Investment
Transactions required to be disclosed or reported pursuant to the requirements
of the Code.
POST-TRADE MONITORING
The Compliance Officers will review the duplicate broker reports and
other information supplied to them concerning your personal Investment
Transactions so that they can detect and prevent potential violations of the
Code. The Compliance Officers will perform such investigation and make such
inquiries as they consider necessary to perform this function. You agree to
cooperate with any such investigation and to respond to any such inquiry. You
should expect that, as a matter of course, the Compliance Officers will make
inquiries regarding any personal Investment Transaction in a Security or Futures
Contract that occurs on the same day as a transaction in the same Security or
Futures Contract on behalf of an Advisory Client.
REMEDIAL ACTIONS
If you violate this Code, you are subject to remedial actions, which
may include, but are not limited to, disgorgement of profits, imposition of a
fine, censure, demotion, suspension or dismissal. As part of any sanction, you
may be required to reverse an Investment Transaction and to forfeit any profit
or to absorb any loss from the transaction.
The Compliance Committee shall have the ultimate authority to determine
whether you have violated the Code and, if so, the remedial actions it considers
appropriate. In making its determination, the Compliance Committee shall
consider, among other factors, the gravity of your violation, the frequency of
your violations, whether any violation caused harm or the potential of harm to
any Advisory Client, your efforts to cooperate with their investigation, and
your efforts to correct any conduct that led to a violation.
REPORTS TO DIRECTORS AND TRUSTEES
Reports Of Significant Remedial Actions
The General Counsel of PIMCO Advisors L.P. and the directors or
trustees of any affected Fund that is an Advisory Client will be informed on a
timely basis of each SIGNIFICANT REMEDIAL ACTION taken in response to a
violation of this Code. For this purpose, a significant remedial action will
include any action that has a significant financial effect on the violator.
<PAGE>
Reports of Material Changes To The Code
PIMCO will promptly advise the directors or trustees of any Fund that
is an Advisory Client if PIMCO makes any material change to this Code.
Annual Reports
PIMCO's management will furnish a written report annually to the
General Counsel of PIMCO Advisors L.P. and to the directors or trustees of each
Fund that is an Advisory Client. Each report, at a minimum, will:
1. Describe any significant issues arising under the Code, or
under procedures implemented by PIMCO to prevent violations of
the Code, since management's last report, including, but not
limited to, information about material violations of the Code
or those procedures and sanctions imposed in response to
material violations; and
2. Certify that PIMCO has adopted procedures reasonably necessary
to prevent Advisory Employees from violating the Code.
RECORDKEEPING
Beginning on the effective date of this Code, PIMCO will maintain, at
its principal place of business, the following records, which shall be available
to the Securities and Exchange Commission or any representative of the
Commission at any time and from time to time for reasonable periodic, special or
other examination:
1. PIMCO's Chief Compliance Officer shall maintain, in any easily
accessible place:
(a) a copy of PIMCO's current Code and of each
predecessor of that Code that was in effect at any
time within the previous five (5) years;
(b) a record of any violation of the Code, and of any
action taken as a result of the violation, for at
least five (5) years after the end of the fiscal year
in which the violation occurred;
(c) a copy of each report made by an Advisory Employee
pursuant to this Code, including any duplicate broker
report submitted on behalf of that Advisory Employee,
for at least two (2) years after the end of the
fiscal year in which that report was made or that
information was provided;
(d) a record of all persons, currently or within the past
five (5) years, who are or were required to make
reports pursuant to this Code or who are or were
responsible for reviewing such reports; and
(e) a copy of each report to the General Counsel of PIMCO
Advisors L.P. or to the directors or trustees of each
Fund that is an Advisory Client for at least two (2)
years after the end of the fiscal year in which that
report was made.
<PAGE>
2. PIMCO shall also maintain the following additional records:
(a) a copy of each report made by an Advisory Employee
pursuant to this Code, including any duplicate broker
report submitted on behalf of that Advisory Employee,
for at least five (5) years after the end of the
fiscal year in which that report was made or that
information was provided;
(b) a copy of each report to the General Counsel of PIMCO
Advisors L.P. or to the directors or trustees of each
Fund that is an Advisory Client for at least five (5)
years after the end of the fiscal year in which that
report was made; and
(c) a record of any decision, and the reasons supporting
the decision, to approve the acquisition by a
Portfolio Employee of a Beneficial Ownership interest
in any Security in an Initial Public Offering or in a
Private Placement for at least five (5) years after
the end of the fiscal year in which such approval was
granted.
<PAGE>
APPENDIX I
DEFINITIONS OF CAPITALIZED TERMS
The following definitions apply to the capitalized terms used in the
Code:
ADVISORY EMPLOYEE
The term "Advisory Employee" means: (1) a director, officer, general
partner or employee of PIMCO who, in connection with his or her regular
functions or duties, makes, participates in, or obtains information regarding
the purchase or sale of a Security or Futures Contract by PIMCO on behalf of an
Advisory Client, or whose functions relate to the making of any recommendations
with respect to such purchases or sales, or (2) or a natural person in a control
relationship to PIMCO, or an employee of any company in a control relationship
to PIMCO, who: (a) makes, participates in, or obtains information regarding the
purchase or sale of a Security by a Fund that is an Advisory Client, or whose
functions relate to the making of any recommendations with respect to such
purchases or sales, or (b) obtains information concerning recommendations to a
Fund with regard to the purchase or sale of a Security by the Fund.
BENEFICIAL OWNERSHIP
As a GENERAL MATTER, you are considered to have a "Beneficial
Ownership" interest in a Security or a Futures Contract if you have the
opportunity, directly or indirectly, to profit or share in any profit derived
from an Investment Transaction in that Security or Futures Contract. YOU ARE
PRESUMED TO HAVE A BENEFICIAL OWNERSHIP INTEREST IN ANY SECURITY OR FUTURES
CONTRACT HELD, INDIVIDUALLY OR JOINTLY, BY YOU OR A MEMBER OF YOUR IMMEDIATE
FAMILY (AS DEFINED BELOW). In addition, unless specifically excepted by a
Compliance Officer based on a showing that your interest in a Security or
Futures Contract is sufficiently attenuated to avoid the possibility of
conflict, you will be considered to have a Beneficial Ownership interest in a
Security or Futures Contract held by: (1) a JOINT ACCOUNT to which you are a
party, (2) a PARTNERSHIP in which you are a general partner, (3) a LIMITED
LIABILITY COMPANY in which you are a manager-member, or (4) a TRUST in which you
or a member of your Immediate Family has a vested interest.
As a TECHNICAL MATTER, the term "Beneficial Ownership" for purposes of
this Code shall be interpreted in the same manner as it would be under SEC Rule
16a-1(a)(2) (17 C.F.R. ss.240.16a-1(a)(2)) in determining whether a person has a
beneficial ownership interest in a Security for purposes of Section 16 of the
Securities Exchange Act of 1934 and the rules and regulations thereunder.
DESIGNATED EQUITY SECURITY
The term "Designated Equity Security" shall mean any equity Security,
option, warrant or other right to an equity Security designated as such by a
Compliance Officer, after receiving notification from a Portfolio Employee that
said Security is being considered for purchase or sale by PIMCO on behalf of one
of its Advisory Clients.
<PAGE>
EXEMPT SECURITY
The term "Exempt Security" shall mean any Security not included within
the definition of Covered Security in SEC Rule 17j-l(a)(4) (17 C.F.R. ss.
17j-1(a)(4)), including:
1. Direct obligations of the Government of the United States;
2. Shares issued by open-end Funds; and
3. Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements. For these purposes, a "high quality
short-term debt instrument" means any instrument having a
maturity at issuance of less than 366 days and that is rated
in one of the two highest rating categories by a Nationally
Recognized Statistical Rating Organization.
FIXED INCOME SECURITY
For purposes of this Code, the term "Fixed Income Security" shall mean
a fixed income Security issued by an agency or instrumentality of, or
unconditionally guaranteed by, the Government of the United States, a corporate
debt Security, a mortgage-backed or other asset-backed Security, a taxable fixed
income Security issued by a state or local government or a political subdivision
thereof, a structured note or loan participation, a foreign government debt
Security, or a debt Security of an international agency or a supranational
agency. For purposes of this Code, the term "Fixed Income Security" shall not be
interpreted to include a U.S. Government Security or any other Exempt Security
(as defined above) nor shall it be interpreted to include a Tax-Exempt Municipal
Bond (as defined below).
FUND
The term "Fund" means an investment company registered under the
Investment Company Act.
FUTURES CONTRACT
The term "Futures Contract" includes (a) a futures contract and an
option on a futures contract traded on a United States or foreign board of
trade, such as the Chicago Board of Trade, the Chicago Mercantile Exchange, the
London International Financial Futures Exchange or the New York Mercantile
Exchange (a "Publicly-Traded Futures Contract"), as well as (b) a forward
contract, a swap, a cap, a collar, a floor and an over-the-counter option (other
than an option on a foreign currency, an option on a basket of currencies, an
option on a Security or an option on an index of Securities) (a
"Privately-Traded Contract"). Consult with a Compliance Officer prior to
entering into a transaction in case of any doubt. For purposes of this
definition, a Publicly-Traded Futures Contract is defined by its expiration
month, i.e. a Publicly-Traded Futures Contract on a U.S. Treasury Bond that
expires in June is treated as a separate Publicly-Traded Futures Contract, when
compared to a Publicly-Traded Futures Contract on a U.S. Treasury Bond that
expires in July.
<PAGE>
IMMEDIATE FAMILY
The term "Immediate Family" means any of the following persons who
RESIDE IN YOUR HOUSEHOLD OR DEPEND ON YOU FOR BASIC LIVING SUPPORT: your spouse,
any child, stepchild, grandchild, parent, stepparent, grandparent, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including any adoptive relationships.
INITIAL PUBLIC OFFERING
The term "Initial Public Offering" means an offering of securities
registered under the Securities Act of 1933 (15 U.S.C. ss. 77a), the issuer of
which, immediately before the registration, was not subject to the reporting
requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934 (15
U.S.C. ss. 78m or ss. 78o(d)).
INVESTMENT TRANSACTION
For purposes of this Code, the term "Investment Transaction" means any
transaction in a Security or Futures Contract in which you have, or by reason of
the transaction will acquire, a Beneficial Ownership interest, and includes,
among other things, the writing of an option to purchase or sell a Security.
MUNICIPAL BOND PORTFOLIO EMPLOYEE
The term "Municipal Bond Portfolio Employee" shall mean any Portfolio
Employee (as defined below) who makes investment decisions for the PIMCO
Municipal Bond Fund or any other Advisory Client that purchases or sells
Tax-Exempt Municipal Bonds. Municipal Bond Portfolio Employees shall be subject
to "Chinese Wall' arrangements that will preclude them from sharing information
with other Advisory Employees concerning their investment decisions relating to
Tax-Exempt Municipal Bonds or their analyses or opinions regarding individual
Tax-Exempt Municipal Bonds.
PERSONAL ACCOUNT
The term "Personal Account" means the following accounts that hold or
are likely to hold a Security (as defined below) or a Futures Contract (as
defined above) in which you have a Beneficial Ownership interest: any account in
your individual name; any joint or tenant-in-common account in which you have an
interest or are a participant; any account for which you act as trustee,
executor, or custodian; any account over which you have investment discretion or
otherwise can exercise control (other than non-related clients' accounts over
which you have investment discretion), including the accounts of entities
controlled directly or indirectly by you; and any other account in which you
have a Beneficial Ownership interest (other than such accounts over which you
have no investment discretion and cannot otherwise exercise control).
<PAGE>
PORTFOLIO EMPLOYEE
The term "Portfolio Employee" means: (1) a portfolio manager or any
employee of PIMCO (or of any company in a control relationship with PIMCO) who,
in connection with his or her regular functions or duties, makes or participates
in making recommendations regarding the purchase or sale of securities by a
Fund, or (2) any natural person who controls PIMCO and who obtains information
concerning recommendations made to a Fund that is an Advisory Client regarding
the purchase or sale of Securities by the Fund. For these purposes, "control"
has the same meaning as in Section 2(a)(9) of the Investment Advisers Act (15
U.S.C. ss. 80a-2(a)(9)).
PRIVATE PLACEMENT
The term "Private Placement" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to Section 4(2) or
Section 4(6) (15 U.S.C. ss. 77d(2) or ss. 77d(6)) or pursuant to SEC Rules 504,
505 or 506 (17 C.F.R. ss.ss. 230.504, 230.505, or 230.506) under the Securities
Act of 1933.
QUALIFIED FOREIGN GOVERNMENT
The term "Qualified Foreign Government" means a national government of
a developed foreign country with outstanding Fixed Income Securities in excess
of fifty billion dollars. A list of Qualified Foreign Governments will be
prepared as of the last business day of each calendar quarter, will be available
from the Chief Compliance Officer, and will be effective for the following
calendar quarter.
RELATED ACCOUNT
The term "Related Account" means any account, other than a Personal
Account, that holds a Security or Futures Contract in which you have a
Beneficial Ownership interest.
RELATED SECURITY
The term "Related Security" shall mean any option to purchase or sell,
and any Security convertible into or exchangeable for, a Security that is or has
been held by PIMCO on behalf of one of its Advisory Clients or any Security that
is being or has been considered for purchase by PIMCO on behalf of one of its
Advisory Clients.
SECURITY
As a GENERAL MATTER, the term "Security" shall mean any stock, note,
bond, debenture or other evidence of indebtedness (including any loan
participation or assignment), limited partnership interest or investment
contract OTHER THAN AN EXEMPT SECURITY (as defined above). The term "Security"
includes an option on a Security, on an index of Securities, on a currency or on
a basket of currencies, including such an option traded on the Chicago Board of
Options Exchange or on the New York, American, Pacific or Philadelphia Stock
Exchanges, as well as such an option traded in the over-the-counter market. The
term "Security" shall not include a Futures Contract or a physical commodity
(such as foreign exchange or a precious metal).
<PAGE>
As a TECHNICAL MATTER, the term "Security" shall have the meaning set
forth in Section 2(a)(36) of the Investment Company Act of 1940 (15 U.S.C. ss.
80a-2(a)(36)), which defines a Security to mean:
Any note, stock, treasury stock, bond debenture, evidence of
indebtedness, certificate of interest or participation in any profit-sharing
agreement, collateral-trust certificate, preorganization certificate of
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security (including a certificate of deposit) or on any group or index of
securities (including any interest therein or based on the value thereof), or
any put, call, straddle, option, or privilege entered into on a national
securities exchange relating to foreign currency, or, in general, any interest
or instrument commonly known as a "security", or any certificate of interest or
instrument commonly known as a "security", or any certificate of interest or
participation in, temporary or interim certificate for, receipt for, guarantee
of, warrant or right to subscribe to or purchase, any of the foregoing, except
that the term "Security" shall not include any Security that is an Exempt
Security (as defined above), a Futures Contract or a physical commodity (such as
foreign exchange or precious metal).
TAX-EXEMPT MUNICIPAL BOND
The term "Tax-Exempt Municipal Bond" shall mean any Fixed Income
Security exempt from federal income tax that is issued by a state or local
government or a political subdivision thereof.
<PAGE>
APPENDIX II
INSIDER TRADING POLICY AND PROCEDURES
PIMCO ADVISORS L.P.
Effective as of May 1, 1996
SECTION I. POLICY STATEMENT ON INSIDER TRADING.
A. POLICY STATEMENT ON INSIDER TRADING.
PIMCO ADVISORS L.P. ("PALP"), ITS AFFILIATED SUBPARTNERSHIPS, PIMCO
PARTNERS, G.P. ("PIMCO GP") AND PIMCO FUNDS DISTRIBUTORS LLC ("PFD")
(collectively the "Company" or "PIMCO Advisors") FORBID ANY OF THEIR OFFICERS,
DIRECTORS OR EMPLOYEES FROM TRADING, EITHER PERSONALLY OR ON BEHALF OF OTHERS
(such as, mutual funds and private accounts managed by PALP or its affiliated
Subpartnerships), ON THE BASIS OF MATERIAL, NON-PUBLIC INFORMATION OR
COMMUNICATING MATERIAL, NON-PUBLIC INFORMATION TO OTHERS IN VIOLATION OF THE
LAW. THIS CONDUCT IS FREQUENTLY REFERRED TO AS "INSIDER TRADING."
The term "insider trading" is not defined in the federal securities
laws, but generally is used to refer to the use of material, non-public
information to trade in securities or to communications of material, non-public
information to others in breach of a fiduciary duty.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
(1) trading by an insider, while in possession of material,
non-public information; or
(2) trading by a non-insider, while in possession of material,
non-public information, where the information was disclosed to
the non-insider in violation of an insider's duty to keep it
confidential; or
(3) communicating material, non-public information to others in
breach of a fiduciary duty.
This communication applies to every such officer, director and employee
and extends to activities within and outside their duties at PIMCO Advisors.
Every officer, director and employee must read and retain this policy statement.
Any questions regarding this policy statement and the related procedures set
forth herein should be referred to a Compliance Officer of PALP or the
applicable subpartnership.
The remainder of this memorandum discusses in detail the elements of
insider trading, the penalties for such unlawful conduct and the procedures
adopted by the Company to implement its policy against insider trading.
<PAGE>
1. TO WHOM DOES THIS POLICY APPLY?
This Policy applies to all employees, officers and directors (direct or
indirect) of the Company ("Covered Persons"), as well as to any transactions in
any securities participated by family members, trusts or corporations controlled
by such persons.
In particular, this Policy applies to securities transactions by:
o the Covered Person's spouse;
o the Covered Person's minor children;
o any other relative living in the Covered Person's household;
o a trust in which the Covered Person has a beneficial interest,
unless such person has no direct or indirect control over the
trust;
o a trust as to which the Covered Person is a trustee;
o a revocable trust as to which the Covered Person is a settlor;
o a corporation of which the Covered Person is an officer,
director or 10% or greater stockholder; or
o a partnership of which the Covered Person is a partner
(including most investment clubs), unless the Covered Person
has no direct or indirect control over the partnership.
2. WHAT IS MATERIAL INFORMATION?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of a company's securities.
Although there is no precise, generally accepted definition of
materiality, information is likely to be "material" if it relates to significant
changes affecting such matters as:
dividend or earnings expectations;
write-downs or write-offs of assets;
additions to reserves for bad debts or contingent liabilities;
expansion or curtailment of company or major division operations;
proposals or agreements involving a joint venture, merger,
acquisition, divestiture, or leveraged buy-out;
new products or services;
exploratory, discovery or research developments;
criminal indictments, civil litigation or government investigations;
disputes with major suppliers or customers or significant
changes in the relationships with such parties;
labor disputes including strikes or lockouts;
substantial changes in accounting methods;
<PAGE>
major litigation developments;
major personnel changes;
debt service or liquidity problems;
bankruptcy or insolvency;
extraordinary management developments;
public offerings or private sales of debt or equity securities;
calls, redemptions or purchases of a company's own stock;
issuer tender offers; or recapitalizations.
Information provided by a company could be material because of its
expected effect on a particular class of the company's securities, all of the
company's securities, the securities of another company, or the securities of
several companies. Moreover, the resulting prohibition against the misuses of
"material" information reaches all types of securities (whether stock or other
equity interests, corporate debt, government or municipal obligations, or
commercial paper) as well as any option related to that security (such as a put,
call or index security).
Material information does not have to relate to a company's business.
For example, in Carpenter v. U.S., 108 U.S. 316 (1987), the Supreme Court
considered as material certain information about the contents of a forthcoming
newspaper column that was expected to affect the market price of a security. In
that case, a reporter for The Wall Street Journal was found criminally liable
for disclosing to others the dates that reports on various companies would
appear in the Journal and whether those reports would be favorable or not.
3. WHAT IS NON-PUBLIC INFORMATION?
In order for issues concerning insider trading to arise, information
must not only be "material," it must be "non-public." "Non-public" information
is information which has not been made available to investors generally.
Information received in circumstances indicating that it is not yet in general
circulation or where the recipient knows or should know that the information
could only have been provided by an "insider" is also deemed "non-public"
information.
At such time as material, non-public information has been effectively
distributed to the investing public, it is no longer subject to insider trading
restrictions. However, for "non-public" information to become public
information, it must be disseminated through recognized channels of distribution
designed to reach the securities marketplace.
To show that "material" information is public, you should be able to
point to some fact verifying that the information has become generally
available, for example, disclosure in a national business and financial wire
service (Dow Jones or Reuters), a national news service (AP or UPI), a national
newspaper (The Wall Street Journal or The New York Times), or a publicly
disseminated disclosure document (a proxy statement or prospectus). The
circulation of rumors or "talk on the street," even if accurate, widespread and
reported in the media, does not constitute the requisite public disclosure. The
information must not only be publicly disclosed, there must also be adequate
time for the market as a whole to digest the information. Although timing may
vary depending upon the circumstances, a good rule of thumb is that information
is considered non-public until the third business day after public disclosure.
<PAGE>
Material, non-public information is not made public by selective
dissemination. Material information improperly disclosed only to institutional
investors or to a fund analyst or a favored group of analysts retains its status
as "non-public" information which must not be disclosed or otherwise misused.
Similarly, partial disclosure does not constitute public dissemination. So long
as any material component of the "inside" information possessed by the Company
has yet to be publicly disclosed, the information is deemed "non-public" and may
not be misused.
Information Provided in Confidence. Occasionally, one or more
directors, officers, or employees of companies in PIMCO Advisors may become
temporary "insiders" because of a fiduciary or commercial relationship. For
example, personnel at PALP or a subpartnership may become insiders when an
external source, such as a company whose securities are held by one or more of
the accounts managed by PALP or a subpartnership, entrusts material, non-public
information to the Company portfolio managers or analysts with the expectation
that the information will remain confidential.
As an "insider," the Company has a fiduciary responsibility not to
breach the trust of the party that has communicated the "material, non-public"
information by misusing that information. This fiduciary duty arises because the
Company has entered or has been invited to enter into a commercial relationship
with the client or prospective client and has been given access to confidential
information solely for the corporate purposes of that client or prospective
client. This obligation remains whether or not the Company ultimately
participates in the transaction.
Information Disclosed in Breach of a Duty. Analysts and portfolio
managers at PIMCO Advisors must be especially wary of "material, non-public"
information disclosed in breach of a corporate insider's fiduciary duty. Even
where there is no expectation of confidentiality, a person may become an
"insider" upon receiving material, non-public information in circumstances where
a person knows, or should know, that a corporate insider is disclosing
information in breach of the fiduciary duty he or she owes the corporation and
its shareholders. Whether the disclosure is an improper "tip" that renders the
recipient a "tippee" depends on whether the corporate insider expects to benefit
personally, either directly or indirectly, from the disclosure. In the context
of an improper disclosure by a corporate insider, the requisite "personal
benefit" may not be limited to a present or future monetary gain. Rather, a
prohibited personal benefit could include a reputational benefit, an expectation
of a quid pro quo from the recipient or the recipient's employer by a gift of
the "inside" information.
A person may, depending on the circumstances, also become an "insider"
or "tippee" when he or she obtains apparently material, non-public information
by happenstance, including information derived from social situations, business
gatherings, overheard conversations, misplaced documents, and "tips" from
insiders or other third parties.
<PAGE>
4. IDENTIFYING MATERIAL INFORMATION?
Before trading for yourself or others, including investment companies
or private accounts managed by PALP or its affiliated Subpartnerships, in the
securities of a company about which you may have potential material, non-public
information, ask yourself the following questions:
i. Is this information that an investor could consider important
in making his or her investment decisions? Is this information
that could substantially affect the market price of the
securities if generally disclosed?
ii. To whom has this information been provided? Has the
information been effectively communicated to the marketplace
by being published in Reuters, The Wall Street Journal or
other publications of general circulation.
Given the potentially severe regulatory, civil and criminal sanctions
to which you and PIMCO Advisors and its personnel could be subject, any
director, officer and employee uncertain as to whether the information he or she
possesses is "material, non-public" information should immediately take the
following steps:
i. Report the matter immediately to a Compliance Officer or the
Chief Executive Officer of PALP;
ii. Do not purchase or sell the securities on behalf of yourself
or others, including investment companies or private accounts
managed by PALP or the applicable affiliated subpartnership;
and
iii. Do not communicate the information inside or outside the
Company, other than to a Compliance Officer or the Chief
Executive Officer of PALP.
After a Compliance Officer or the Chief Executive Officer has reviewed
the issue, you will be instructed to continue the prohibitions against trading
and communication or will be allowed to trade and communicate the information.
5. PENALTIES FOR INSIDER TRADING.
Penalties for trading on or communicating material, non-public
information are severe, both for individuals involved in such unlawful conduct
and their employers. A person can be subject to some or all of the penalties
below even if he or she does not personally benefit from the violation.
Penalties include:
civil injunctions
treble damages
disgorgement of profits
jail sentences
fines for the person who committed the violation of up to three times
the profit gained or loss avoided, whether or not the person actually
benefited, and
fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit gained
or loss avoided.
<PAGE>
In addition, any violation of this policy statement can be expected to
result in serious sanctions by PIMCO Advisors, including dismissal of the
persons involved.
SECTION II. PROCEDURES TO IMPLEMENT PIMCO ADVISORS' POLICY.
A. PROCEDURES TO IMPLEMENT THE POLICY AGAINST INSIDER TRADING.
The following procedures have been established to aid the officers,
directors and employees of PIMCO Advisors in avoiding insider trading, and to
aid the Company in preventing, detecting and imposing sanctions against insider
trading. Every officer, director and employee of PIMCO Advisors must follow
these procedures or risk serious sanctions, including dismissal, substantial
personal liability and criminal penalties.
TRADING RESTRICTIONS AND REPORTING REQUIREMENTS
1. No employee, officer or director of the Company who possesses material,
non-public information relating to the Company or any of its affiliates
or subsidiaries, may buy or sell any securities of the Company or
engage in any other action to take advantage of, or pass on to others,
such material, non-public information.
2. No employee, officer or director of the Company who obtains material,
non-public information which relates to any other company or entity in
circumstances in which such person is deemed to be an insider or is
otherwise subject to restrictions under the federal securities laws may
buy or sell securities of that company or otherwise take advantage of,
or pass on to others, such material, non-public information.
3. No employee, officer or director of the Company shall engage in a
securities transaction with respect to the securities of PIMCO
Advisors, except in accordance with the specific procedures published
from time to time by the company.
4. Each employee, officer or director of the Company shall submit reports
of every securities transaction involving securities of PIMCO Advisors
to a Compliance Officer in accordance with the terms of the Company's
Code of Ethics as they relate to any other securities transaction.
5. No Employee (as such term is defined in the applicable Code of Ethics)
shall engage in a securities transaction with respect to any securities
of any other company, except in accordance with the specific procedures
set forth in the Company's Code of Ethics.
6. Employees shall submit reports concerning each securities transaction
in accordance with the terms of the Code of Ethics and verify their
personal ownership of securities in accordance with the procedures set
forth in the Code of Ethics.
<PAGE>
7. Because even inadvertent disclosure of material, non-public information
to others can lead to significant legal difficulties, officers,
directors and employees of the Company should not discuss any
potentially material, non-public information concerning the Company or
other companies, including other officers, employees and directors,
except as specifically required in the performance of their duties.
B. CHINESE WALL PROCEDURES.
The Insider Trading and Securities Fraud Enforcement Act requires the
establishment and strict enforcement of procedures reasonably designed to
prevent the misuse of "inside" information.1 Accordingly, you should not discuss
material, non-public information about the Company or other companies with
anyone, including other employees, except as required in the performance of your
regular duties. In addition, care should be taken so that such information is
secure. For example, files containing material, non-public information should be
sealed; access to computer files containing material, non-public information
should be restricted.
C. RESOLVING ISSUES CONCERNING INSIDER TRADING.
The federal securities laws, including the laws governing insider
trading, are complex. If you have any doubts or questions as to the materiality
or non-public nature of information in your possession or as to any of the
applicability or interpretation of any of the foregoing procedures or as to the
propriety of any action, you should contact a Compliance Officer. Until advised
to the contrary by a Compliance Officer, you should presume that the information
is material and non-public and you should NOT trade in the securities or
disclose this information to anyone.
- --------
1 The antifraud provisions of United States securities laws reach insider
trading or tipping activity worldwide which defrauds domestic securities
markets. In addition, the Insider Trading and Securities Fraud Enforcement Act
specifically authorizes the SEC to conduct investigations at the request of
foreign governments, without regard to whether the conduct violates United
States law.
<PAGE>
APPENDIX III
PIMCO ADVISORS L.P.
POLICY REGARDING SPECIAL TRADING PROCEDURES
FOR SECURITIES OF PIMCO ADVISORS L.P.
Effective as of May 1, 1996
INTRODUCTION
PIMCO Advisors L.P. (as defined below) has adopted an Insider Trading
Policy and Procedures applicable to all personnel which prohibits insider
trading in any securities, and prohibits all employees from improperly using or
disclosing material, non-public information, a copy of which has been supplied
to you.
For the purposes of this memorandum, the term the "Company" shall
include PIMCO Advisors L.P. ("PALP"), PIMCO Partners, G.P. ("PIMCO GP"), PIMCO
Funds Distributors LLC ("PFD") and any entity in relation to which PALP acts as
a general partner or owns 50% or more of one the issued and outstanding stock.
PERSONS TO WHOM THIS SPECIAL TRADING POLICY APPLIES
This Policy applies to all employees of the Company and, in the case of
PALP, the inside members of the Operating Board and the Equity Board ("Covered
Persons"), as well as to any transactions in securities participated in by
family members, trusts or corporations controlled by a Covered Person. In
particular, this Policy applies to securities transactions by:
a. the Covered Person's spouse;
b. the Covered Person's minor children;
c. any other relatives living in the Covered Person's household;
d. a trust in which the Covered Person has a beneficial interest, unless
such Covered Person has no direct or indirect control over the trust;
e. a trust as to which the Covered Person is a trustee;
f. a revocable trust as to which the Covered Person is a settlor;
g. a corporation of which the Covered Person is an officer, director or
10% or greater stockholder; or
h. a partnership of which the Covered Person is a partner (including most
investment clubs), unless the Covered Person has no direct or indirect
control over the partnership.
The family members, trust and corporations listed above are hereinafter
referred to as "Related persons." SECURITIES TO WHICH THIS SPECIAL TRADING
POLICY APPLIES
<PAGE>
Unless stated otherwise, the following Special Trading Procedures apply
to all transactions by Covered Persons and their Related Persons involving any
class or series of units of limited partner interest of PALP or other securities
of PALP, including options and other derivative securities (such as a put, call
or index security) in relation to such securities (the "PALP Securities").
SPECIAL TRADING PROCEDURES RELATING TO SECURITIES OF PIMCO ADVISORS L.P.
1. TRADING WINDOWS
There are times when the Company may be engaged in a material
non-public development or transaction. Even if you are not aware of this
development or transaction, if you trade PALP's Securities before such
development or transaction is disclosed to the public, you might expose yourself
and the Company to a charge of insider trading that could be costly and
difficult to refute. In addition, such a trade by you could result in adverse
publicity to you or the company.
Therefore, the following rule shall apply: each Covered Person and all
of such person's Related Persons may only purchase or sell PALP Securities
during four "trading windows" that occur each year. The four trading windows
consist of the months of February, May, August and November. TRADING ON THE
BASIS OF MATERIAL NON-PUBLIC INFORMATION OR COMMUNICATING MATERIAL NON-PUBLIC
INFORMATION TO OTHERS AT ANY TIME, INCLUDING IN A TRADING WINDOW, IS A VIOLATION
OF THE LAW AND A VIOLATION OF THIS POLICY.
In accordance with the procedure for waivers described below, in
special circumstances a waiver may be given to allow a trade to occur outside of
a trading window.
Employees of PALP should be aware that there are potential tax
consequences for such employees resulting from the ownership of PALP Securities.
Each such employee contemplating purchasing PALP Securities should discuss the
matter with such employee's tax advisor.
The exercise of options to purchase PALP Securities for cash are not
Covered to the procedures outlined above, but the securities so acquired may not
be sold except during a trading window and after all other requirements of this
policy have been satisfied.
2. POST-TRADE REPORTING
All Covered Persons shall submit to a Compliance Officer a report of
every securities transaction in PALP Securities in which they and any of their
Related Persons have participated as soon as practicable following the
transaction and in any event not later than the fifth day after the end of the
month in which the transaction occurred. The report shall include: (1) the date
of the transaction and the title and number of shares or principal amount of
each security involved; (2) the nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition); (3) the price at which the
transaction was effected; and (4) the name of the broker/dealer with or through
whom the transaction was effected. In addition, on an annual basis, each Covered
Person must confirm the amount of PALP Securities which such person and his her
Related Persons beneficially own.
<PAGE>
Each Covered Person (and not the Company) is personally responsible for
insuring that his or her transactions comply fully with any and all applicable
securities laws, including, but not limited to, the restrictions imposed under
Section 16(b) of the Securities and Exchange Act of 1934 and Rule 144 under the
Securities Act of 1933.
3. RESOLVING ISSUES CONCERNING INSIDER TRADING
If you have any doubts or questions as to whether information is
material or non-public, or as to the applicability or interpretation of any of
the foregoing procedures, or as to the propriety of any action, you should
contact a Compliance Officer before trading or communicating the information to
anyone. Until these doubts or questions are satisfactorily resolved, you should
presume that the information is material and non-public and you should NOT trade
in the securities or communicate this information to anyone.
4. MODIFICATIONS AND WAIVERS
The Company reserves the right to amend or modify this policy statement
at any time. Waiver of any provision of this policy statement in a specific
instance may be authorized in writing by a Compliance Officer and either the
Chief Executive Officer of PALP or any member of the Operating Committee of
PALP, and any such waiver shall be reported to the Equity and Operating Boards
of PALP at the next regularly scheduled meeting of each.
<PAGE>
APPENDIX IV
ACKNOWLEDGMENT OF RECEIPT
OF THE
CODE OF ETHICS
AND THE
INSIDER TRADING POLICY AND PROCEDURES OF
PACIFIC INVESTMENT MANAGEMENT COMPANY
I hereby certify that I have received the attached Code of Ethics and
Insider Trading Policy and Procedures. I hereby agree to read the Code, to make
a reasonable effort to understand its provisions and to ask questions about
those provisions I find confusing or difficult to understand. I also agree to
comply with the Code, including its general principles, its reporting
requirements, its preclearance requirements, and its provisions regarding gifts
and service as a director. I also agree to advise members of my Immediate Family
about the existence of the Code of Ethics, its applicability to their personal
trading activity, and my responsibility to assure that their personal trading
activity complies with the Code of Ethics. Finally, I agree to cooperate fully
with any investigation or inquiry by or on behalf of a Compliance Officer to
determine my compliance with the provisions of the Code. I recognize that any
failure to comply in all aspects with the Code and to honor the commitments made
by this acknowledgment may result in disciplinary action, including dismissal.
Date: ------------------------------- --------------------------------
Signature
--------------------------------
Print Name
<PAGE>
APPENDIX V
ANNUAL CERTIFICATION OF COMPLIANCE
WITH THE
CODE OF ETHICS OF
PACIFIC INVESTMENT MANAGEMENT COMPANY
I hereby certify that I have complied with the requirements of the Code
of Ethics and Insider Trading Policy and Procedures that have applied to me
during the year ended December 31, 200_. In addition, I hereby certify that I
have read the Code and understand its provisions. I also certify that I
recognize that I am subject to the provisions of the Code and that I have
disclosed, reported, or caused to be reported all transactions required to be
disclosed or reported pursuant to the requirements of the Code. I recognize that
any failure to comply in all aspects with the Code and that any false statement
in this certification may result in disciplinary action, including dismissal.
Date: ------------------------------- --------------------------------
Signature
--------------------------------
Print Name
<PAGE>
APPENDIX VI
INITIAL REPORT OF ACCOUNTS
PURSUANT TO THE
CODE OF ETHICS OF
PACIFIC INVESTMENT MANAGEMENT COMPANY
In accordance with the Code of Ethics, I have attached to this form
copies of the most recent statements for each and every Personal Account and
Related Account that holds or is likely to hold a Security or Futures Contract
in which I have a Beneficial Ownership interest, as well as copies of
confirmations for any and all Investment Transactions subsequent to the
effective dates of those statements.1
In addition, I hereby supply the following information for each and
every Personal Account and Related Account in which I have a Beneficial
Ownership interest for which I cannot supply the most recent account statement:
(1) Name of employee:
-----------------------------
(2) If different than #1, name of the person
in whose name the account is held:
-----------------------------
(3) Relationship of (2) to (1):
-----------------------------
(4) Firm(s) at which Account is maintained:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
-----------------------------
(5) Account Number(s):
-----------------------------
-----------------------------
-----------------------------
-----------------------------
-----------------------------
(6) Phone number(s) of Broker or Representative:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
-----------------------------
<PAGE>
(7) Account holdings:
Name of Security Quantity Principal Amount Custodian
1.
------------------- -------------- --------------- --------------
2.
------------------- -------------- --------------- --------------
3.
------------------- -------------- --------------- --------------
4.
------------------- -------------- --------------- --------------
5.
------------------- -------------- --------------- --------------
(Attach additional sheets if necessary)
I also supply the following information for each and every Security or
Futures Contract in which I have a Beneficial Ownership interest, to the extent
this information is not available elsewhere on this form or from the statements
and confirmations attached to this form. This includes Securities or Futures
Contracts held at home, in safe deposit boxes, or by an issuer.
<TABLE>
<CAPTION>
Person Who Description
Owns the Security of the Security
Or Futures Contract Or Futures Contract Quantity Principal Amount Custodian
------------------- ------------------- -------- ---------------- ---------
<S> <C> <C> <C> <C>
1.
------------------- ----------------- ----------------- ----------------- -----------------
2.
------------------- ----------------- ----------------- ----------------- -----------------
3.
------------------- ----------------- ----------------- ----------------- -----------------
4.
------------------- ----------------- ----------------- ----------------- -----------------
5
------------------- ----------------- ----------------- ----------------- -----------------
</TABLE>
(Attach additional sheets if necessary.)
I hereby certify that this form and the attachments (if any) identify
all of the Personal Accounts, Related Accounts, Securities and Futures Contracts
in which I have a Beneficial Ownership interest as of this date.
-------------------------------
Signature
-------------------------------
Print Name
Date:
--------------------
Attachments
<PAGE>
APPENDIX VII
PACIFIC INVESTMENT MANAGEMENT COMPANY
PIMCO FUNDS DISTRIBUTORS LLC
QUARTERLY REPORT OF INVESTMENT TRANSACTIONS
FOR THE QUARTER ENDED , 2000
================================================================================
Please mark one of the following:
No reportable Investment Transactions have occurred.
Except as indicated below, all reportable Investment Transactions were
made through Personal Accounts and Related Accounts identified on the attached
list, which, except as indicated, represents a complete list of the Personal
Accounts and Related Accounts that hold Securities or Futures Contracts in which
I have or had a Beneficial Ownership interest and for which PIMCO should have
received or will receive timely duplicate broker reports for the calendar
quarter just ended.1 I hereby certify that the broker, dealer, bank or futures
commission merchant for each such account has been instructed to send a
Compliance Officer timely duplicate broker reports for that account.
The following information for Investment Transactions during the calendar
quarter just ended does not appear on the duplicate broker reports referenced
above.
<TABLE>
<CAPTION>
Transaction Title, Interest Rate and Maturity Number of Shares or Contracts Nature of Transaction Transaction Broker, Dealer,
Date Date of Security or Futures Contract And Principal Amount (i.e., Buy or Sell) Price Bank or FCM
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SPECIAL NOTE TO PIMCO FUNDS DISTRIBUTORS LLC REGISTERED REPS AND ACCESS PERSONS:
You will not have to fill out an extra form for each quarter for PIMCO Funds
Distributors LLC.
SIGNED:
----------------------------
PRINT NAME:
------------------------
DATE:
------------------------------
- --------
1 The Code of Ethics uses various capitalized terms that are defined in Appendix
I to the Code. The capitalized terms used in this Report have the same
definitions.
<PAGE>
1. Please see the CODE OF ETHICS for a full description of the Investment
Transactions that must be reported.
2. TRANSACTION DATE. In the case of a market transaction, state the trade
date (not the settlement date).
3. TITLE OF SECURITY OR FUTURES CONTRACT. State the name of the issuer and
the class of the Security (e.g., common stock, preferred stock or
designated issue of debt securities). For Fixed Income Securities,
please provide the Security's interest rate and maturity date. For a
Futures Contract, state the title of any Security subject to the
Futures Contract and the expiration date of the Futures Contract.
4. NUMBER OF SHARES OR CONTRACTS AND PRINCIPAL AMOUNT. State the number of
shares of Securities, the face amount of Fixed Income Securities or the
units of other securities. For options, state the amount of securities
subject to the option. Provide the principal amount of each Security or
Futures Contract. If your ownership interest was through a spouse,
relative or other natural person or through a partnership, trust, other
entity, state the entire quantity of Securities or Futures Contracts
involved in the transaction. You may indicate, if you wish, the extent
of your interest in the transaction.
5. NATURE OF TRANSACTION. Identify the nature of the transaction (e.g.,
purchase, sale or other type of acquisition or disposition).
6. TRANSACTION PRICE. State the purchase or sale price per share or other
unit, exclusive of brokerage commissions or other costs of execution.
In the case of an option, state the price at which it is currently
exercisable. No price need be reported for transactions not involving
cash.
7. BROKER, DEALER, BANK OR FCM EFFECTING TRANSACTION. State the name of
the broker, dealer, bank or FCM with or through which the transaction
was effected.
8. SIGNATURE. Sign and date the report in the spaces provided.
9. FILING OF REPORT. A report should be filed NOT LATER THAN 10 CALENDAR
DAYS after the end of each calendar quarter with:
PIMCO
ATTN: Compliance Officer
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
10. DUPLICATE BROKER REPORTS. Please remember that duplicates of all trade
confirmations, purchase and sale reports, and periodic statements must
be sent to the firm by your broker. You should use the address above.
<PAGE>
APPENDIX VIII
PACIFIC INVESTMENT MANAGEMENT COMPANY
PIMCO FUNDS DISTRIBUTORS LLC
ANNUAL HOLDINGS REPORT AND
FOURTH QUARTER REPORT OF INVESTMENT TRANSACTIONS
================================================================================
FOR THE YEAR AND QUARTER ENDED DECEMBER 31, 2000
================================================================================
I hereby certify that, except as indicated below, all Securities or
Futures Contracts in which I had a Beneficial Ownership interest at the end of
the 2000 calendar year were held in Personal Accounts or Related Accounts
identified on the attached list, for which PIMCO should have received or will
receive an account statement of holdings as of the end of that calendar year.1 I
hereby certify that the broker, dealer, bank or futures commission merchant for
each such account has been instructed to send a Compliance Officer timely
duplicate broker reports, including a statement of holdings in that account as
of the end of the calendar year.
The following information describes other Securities or Futures Contracts in
which I had a Beneficial Ownership interest as of the end of the 2000 calendar
year:
Title, Interest Rate and Maturity Number of Shares Broker, Dealer,
Date of Security or or Contracts And Bank or FCM
or Futures Contract Principal Amount
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ----------
1 The Code of Ethics uses various capitalized terms that are defined in
Appendix I to the Code. The capitalized terms used in this Report have the same
definitions.
<PAGE>
Except as indicated below, all reportable Investment Transactions
during the quarter ended December 31, 2000, were made through Personal Accounts
and Related Accounts identified on the attached list, which, except as
indicated, represents a complete list of the Personal Accounts and Related
Accounts that hold Securities or Futures Contracts in which I have or had a
Beneficial Ownership interest and for which PIMCO should have received or will
receive timely duplicate broker reports for the calendar quarter just ended.
The following information for Investment Transactions during the calendar
quarter just ended does not appear on the duplicate broker reports referenced
above.
<TABLE>
<CAPTION>
Transaction Title, Interest Rate and Maturity Number of Shares or Contracts Nature of Transaction Transaction Broker, Dealer,
Date Date of Security or Futures Contract And Principal Amount (i.e., Buy or Sell) Price Bank or FCM
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SPECIAL NOTE TO PIMCO FUNDS DISTRIBUTORS LLC REGISTERED REPS AND ACCESS PERSONS:
You will not have to fill out an extra form for each year for PIMCO Funds
Distributors LLC.
SIGNED:
----------------------------
PRINT NAME:
------------------------
DATE:
------------------------------
<PAGE>
1. Please see the CODE OF ETHICS for a full description of the Investment
Transactions that must be reported.
2. TRANSACTION DATE. In the case of a market transaction, state the trade
date (not the settlement date).
3. TITLE OF SECURITY OR FUTURES CONTRACT. State the name of the issuer and
the class of the Security (e.g., common stock, preferred stock or
designated issue of debt securities). For Fixed Income Securities,
please provide the Security's interest rate and maturity date. For a
Futures Contract, state the title of any Security subject to the
Futures Contract and the expiration date of the Futures Contract.
4. NUMBER OF SHARES OR CONTRACTS AND PRINCIPAL AMOUNT. State the number of
shares of Securities, the face amount of Fixed Income Securities or the
units of other securities. For options, state the amount of securities
subject to the option. Provide the principal amount of each Security or
Futures Contract. If your ownership interest was through a spouse,
relative or other natural person or through a partnership, trust, other
entity, state the entire quantity of Securities or Futures Contracts
involved in the transaction. You may indicate, if you wish, the extent
of your interest in the transaction.
5. NATURE OF TRANSACTION. Identify the nature of the transaction (e.g.,
purchase, sale or other type of acquisition or disposition).
6. TRANSACTION PRICE. State the purchase or sale price per share or other
unit, exclusive of brokerage commissions or other costs of execution.
In the case of an option, state the price at which it is currently
exercisable. No price need be reported for transactions not involving
cash.
7. BROKER, DEALER, BANK OR FCM EFFECTING TRANSACTION. State the name of
the broker, dealer, bank or FCM with or through which the transaction
was effected.
8. SIGNATURE. Sign and date the report in the spaces provided.
9. FILING OF REPORT. A report should be filed NOT LATER THAN 10 CALENDAR
DAYS after the end of each calendar quarter with:
PIMCO
ATTN: Compliance Officer
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
10. DUPLICATE BROKER REPORTS. Please remember that duplicates of all trade
confirmations, purchase and sale reports, and periodic statements must
be sent to the firm by your broker. You should use the address above.
<PAGE>
Appendix IX
PRECLEARANCE REQUEST FORM
This form must be submitted to a Compliance Officer before executing
any Investment Transaction for which preclearance is required under the PIMCO
Code of Ethics. Before completing this form, you should review the PIMCO Code,
including the terms defined in that Code. The capitalized terms used in this
form are governed by those definitions. In addition, the Code provides
information regarding your preclearance obligations under the Code, and
information regarding the Transactions, Securities and Futures Contracts that
are exempt from the Code's preclearance requirement.1
No Investment Transaction subject to preclearance may be effected prior
to receipt of written authorization of that Investment Transaction by a
Compliance Officer. Unless otherwise specified, that authorization shall be
effective, unless revoked, until the earlier of (a) the close of business on the
date authorization is given, or (b) until you discover that information on this
preclearance request form is no longer accurate.
(1) Your Name:
(2) If the Investment Transaction will be in someone else's name or in the
name of a trust, the name of that person or trust:
The relationship of that person or trust to you:
(3) Name of the firm (e.g., broker, dealer, bank, futures commission
merchant) through which the Investment Transaction will be executed:
The relevant account number at that firm:
(4) Issuer of the Security or identity of the Futures Contract for which
preclearance is requested:
The relevant CUSIP number or call symbol:
(5) The maximum number of shares, units or contracts for which preclearance
is requested, or the market value or face amount of the Fixed Income
Securities for which preclearance is requested:
(6) The type of Investment Transaction for which preclearance is
requested (check all that apply): [] Purchase [] Sale [] Market
Order
[] Limit Order (Price Of Limit Order:[])
PLEASE ANSWER THE FOLLOWING QUESTIONS TO THE BEST OF YOUR KNOWLEDGE AND
BELIEF:
(a) Do you possess material nonpublic information regarding the Security or
Futures Contract identified above or regarding the issuer of that
Security? [] Yes [] No
(b) Is the Security or Futures Contract identified above held by any PIMCO
Advisory Client or is it a Related Security (as defined in the PIMCO
Code)? [] Yes [] No
(c) Is there a pending buy or sell order on behalf of a PIMCO Advisory
Client for the Security or Futures Contract identified above or for a
Security for which the Security identified above is a Related
Security?[] Yes [] No
- ----------
1 Preclearance is required for any Investment Transaction in Securities, Related
Securities or Futures Contracts in a Personal Account or a Related Account in
which you have or will acquire a Beneficial Ownership interest.
<PAGE>
(d) Do you intend or do you know of another's intention to purchase or sell
the Security or Futures Contract identified above, or a Security for
which the Security identified above is a Related Security, on behalf of
a PIMCO Advisory Client?[] Yes [] No
(e) Has the Security or Futures Contract identified above or a Related
Security been considered for purchase by a PIMCO Advisory Client within
the most recent 15 days? (Note: rejection of any opportunity to
purchase the Security or Futures Contract for an Advisory Client would
require an affirmative response to this question.) [] Yes [] No
(f) If you are a Portfolio Employee, is the Security being acquired in an
Initial Public Offering?2 [] Yes [] No
(g) If you are a Portfolio Employee, are you acquiring or did you acquire
Beneficial Ownership of the Security in a Private Placement?3 [] Yes []
No
(h) If you are seeking preclearance of a purchase or sale of Securities,
have you purchased or sold the same or similar Securities, or have you
acquired or disposed of a Beneficial Ownership interest in the same or
similar Securities, within the past 60 calendar days?4 [] Yes [] No
BY EXECUTING THIS FORM, YOU HEREBY CERTIFY THAT YOU HAVE REVIEWED THE PIMCO CODE
OF ETHICS AND BELIEVE THAT THE INVESTMENT TRANSACTION FOR WHICH YOU ARE
REQUESTING PRECLEARANCE COMPLIES WITH THE GENERAL PRINCIPLES AND THE SPECIFIC
REQUIREMENTS OF THE PIMCO CODE.
-----------------------------------
Employee Signature
-----------------------------------
Print or Type name
-----------------------------------
Date Submitted
- ----------
2 Under the PIMCO Code, Portfolio Employees generally are not permitted to
acquire Securities in an Initial Public Offering.
3 The PIMCO Code applies special rules to the acquisition of Securities through
a Private Placement and to the disposition of Securities acquired through a
Private Placement.
4 Under the PIMCO Code, you may not profit from short-term trades in Fixed
Income Securities. A Portfolio Employee may not profit from short-term trades in
Designated Equities Securities and a Municipal Bond Portfolio Employee may not
profit from short-term trades in Tax-Exempt Municipal Bonds. This rule does not
apply to transactions in U.S. Government Securities, mutual fund shares, index
options or Futures Contracts.
<PAGE>
You are authorized to execute the Investment Transaction described above. Unless
indicated otherwise below, this authorization remains effective, unless revoked,
until: (a) the close of business today, or (b) until you discover that the
information on this request form is no longer accurate.
-------------------------------------------------
Compliance Officer
-------------------------------------------------
Date of Authorization
<PAGE>
APPENDIX X
COMPLIANCE OFFICERS
PACIFIC INVESTMENT MANAGEMENT COMPANY
March 31, 2000
PIMCO's Compliance Officers, as of March 31, 2000, are:
Denise C. Seliga
(Chief Compliance Officer)
Mohan V. Phansalkar
Ernest L. Schmider
Richard M. Weil
PPM HOLDINGS, INC.
PPM AMERICA, INC.
PPM FINANCE, INC.
PPM AMERICA FUNDS
CODE OF ETHICS AND CONDUCT
As an investment adviser, PPM America, Inc. ("PPMA") owes its clients
and shareholders of the PPM America Funds ("PPM Funds") the highest duty of
diligence and loyalty. Accordingly, one of the fundamental policies of PPMA is
to avoid any conflict of interest. In furtherance of this fundamental policy,
this Code of Ethics and Conduct ("Code") has been adopted by PPMA, by PPMA's
immediate parent company, PPM Holdings, Inc., by PPMA's affiliated company, PPM
Finance, Inc., and by the PPM Funds. PPMA, PPM Holdings and PPM Finance are
referred to collectively in the Code as "PPM". The PPM Funds have separately
adopted a Code of Ethics for the disinterested trustees.
The Code applies to each employee of PPM, including all executive
officers of PPMA, PPM Holdings or PPM Finance, and to all access persons of the
PPM Funds (each referred to collectively in the Code as an "Employee"). Each
Employee should consult with the Chief Compliance Officer of the PPM Company
with which the Employee is affiliated regarding any question about the Code or
other issues relating to PPM's fiduciary obligations to its clients before
taking any action. Please also remember that PPM has developed Policy and
Procedures Regarding Inside Information and Chinese Walls ("Inside Information
Policy"). Please refer to the Inside Information Policy as appropriate.
I. GENERAL STANDARDS
A. FAIR DEALING. Each Employee shall act in a manner consistent with
the obligation of PPM and each person covered by the Code to deal fairly with
all clients when taking investment action. Any investment ideas developed by an
Employee in the course of the Employee's work for PPM shall be made available
for use by PPM's clients prior to any personal trading or investment by any
Employee based on such ideas, including trading or investment by an Employee
directly or indirectly.
B. PERSONAL SECURITIES TRANSACTIONS. No Employee may purchase or sell
any security in which the Employee has a beneficial interest except in
accordance with this Code. See Appendix A for examples of situations in which a
person covered by the Code will be deemed to have a beneficial interest in a
security for purposes of the Code. Specific prohibitions and reporting
requirements are contained in Sections III and IV of the Code.
C. GIFTS, FAVORS, AND GRATUITIES. An Employee may not accept any gift,
favor, gratuity or invitation offered by any broker, client, approved company
(i.e., a company whose securities are held by a PPM client, including PPM
Funds), supplier, or other person or organization with whom PPM has a business
relationship, that creates a conflict between the Employee's personal financial
interest and the interests of PPM's clients. Specifically, an Employee may not
accept any such gift, favor, gratuity or invitation except those extended as a
customary courtesy of business life. Prohibited gifts or gratuities include the
receipt of any credit facility, personal investment opportunities or other
special treatment from any broker or dealer that is not available from that
broker or dealer to similarly situated customers not in the securities or
investment management business.
No Employee should offer any gift, favor, gratuity, or invitation that
influences decision-making or otherwise creates a conflict of interest on the
part of the intended recipient.
D. CONFIDENTIALITY. Information relating to any client's portfolio or
activities is strictly confidential and shall not be disclosed, orally or in
writing, to anyone outside PPM, unless that Employee has been specifically
authorized to release that information. For further guidance in this regard,
consult PPM's Press Policy and policy regarding Confidential Information and
Non-Competition.
E. SERVICE AS A DIRECTOR. No Employee shall serve on the board of
directors (or equivalent) of any company with a class of publicly-held
securities, unless such service has been authorized by PPM's Management
Committee. Board service increases the likelihood of possession of material,
non-public information. Please refer to PPM's Inside Information Policy.
F. EXEMPTIONS FROM THE CODE'S PROVISIONS. The purpose of the Code is to
prevent the damage that might result from a conflict between the interests of an
Employee of PPM and PPM's clients, not to impose undue financial burdens on
persons subject to the Code. For that reason, the Chief Compliance Officer has
the authority to grant an exemption, in advance of any proposed transaction,
from any provision of this Code except the provisions requiring reporting of
personal securities transactions if, in the judgment of the Chief Compliance
Officer, compliance with the provision of the Code would result in serious
financial hardship to the Employee and the requested exemption would not result
in any breach by PPM of its duties to its clients. EXEMPTION OF A PROPOSED
TRANSACTION FROM THE CODE IS EXPECTED TO BE GRANTED VERY RARELY.
II. TRANSACTIONS COVERED BY THE CODE
AND EXEMPT TRANSACTIONS
The Code regulates personal securities transactions as a part of the
effort by PPM to detect and prevent conduct that might create an actual or
potential conflict of interest with a client. The Code flatly prohibits certain
transactions and establishes reporting requirements for all transactions except
those listed as exempt in Section II.B.
A. TRANSACTIONS COVERED BY THE CODE. Every transaction in a security by
or for the benefit of an Employee is subject to the Code.
Security is defined very broadly for purposes of the Code. Transactions
involving options, warrants, and futures contracts are subject to the same
restrictions and procedures as those set forth in this Code with respect to the
underlying securities.
The Code covers transactions in the personal account of an Employee,
the account of any member of the Employee's immediate family (including spouse,
minor children or any relative living in the Employee's home), any other account
in which the Employee has a direct or indirect financial or "beneficial"
ownership interest, or in any nonclient account controlled by or under the
influence of the Employee. As required by the Securities and Exchange
Commission, beneficial interest is defined broadly; see Appendix A to the Code
for examples of ownership arrangements covered by the Code. Having a beneficial
interest in a security for purposes of the Code is not necessarily the same
thing as ownership for other purposes (including, for example, tax purposes).
If you have any question about whether a transaction is covered by the
Code, contact the Chief Compliance Officer before taking any action.
B. EXEMPT TRANSACTIONS. The following transactions are exempt from the
reporting provisions of this Code:
1. purchases or sales effected in any account over which
an Employee has no direct or indirect influence or
control or in any account of the Employee which is
managed on a discretionary basis by a person other
than the Employee and with respect to which the
Employee does not in fact influence or control
purchase or sale transactions;
2. purchases or sales which are involuntary on the part
of the Employee (for example, the redemption of a
debt security by the issuer);
3. purchases which are part of an automatic dividend
reinvestment plan;
4. purchases of securities by exercising rights that
were issued pro rata to all holders of a class of
securities, but only if the Employee acquired the
rights directly from the issuer (and not by purchase
from someone other than the issuer), and sales of
rights that were acquired by the Employee by pro rata
issuance directly from the issuer; and
5. transactions involving: shares of registered open-end
mutual funds; securities issued by the United States
Government; bankers' acceptances; bank certificates
of deposit; commercial paper; short-term debt
securities issued or guaranteed by any agency or
instrumentality of the United States Government; or
other money market instruments designated by PPMA.
<PAGE>
III. PERSONAL INVESTMENT RULES
A. PROHIBITED TRANSACTIONS. The following transactions are
prohibited:
1. FRONT-RUNNING. No Employee shall engage in
"front-running" an order or recommendation, even if
the Employee is not handling either the order or the
recommendation and even if the order or
recommendation is for someone other than a client of
PPM. Front-running consists of executing a
transaction in the same or underlying securities,
options, rights, warrants, convertible securities, or
other related securities, in advance of block or
large transactions of a similar nature likely to
affect the value of the securities, based on the
knowledge of the forthcoming transaction or
recommendation.
2. SECURITIES ON RESTRICTED LISTS; INSIDE INFORMATION
POLICY. No Employee may purchase or sell any security
prohibited by the Inside Information Policy,
including:
a. any security on the Firm Wide Restricted
List; and
b. for Employees designated in the Inside
Information Policy as members of the Private
Information Investment and Access Groups,
any security on the Private Information
Restricted List.
See the Inside Information Policy for more
information and definitions.
3. BLACKOUT PERIOD FOR CLIENT TRANSACTIONS. No Employee
may purchase or sell any security which: (a) is being
purchased or sold on behalf of a client (i.e., an
order has been entered but not executed for a
client), (b) has been purchased or sold by a client
within the prior seven calendar days, or (c) is being
planned for purchase or sale on any client's behalf
within the next seven days.
Notwithstanding the prohibition in the preceding
paragraph, no blackout period will apply to any
Exempt Transaction, as defined in Section II.B. of
the Code, or to any transaction in a security which
is being purchased or sold, has been purchased or
sold, or is being planned for purchase or sale, on
behalf of a PPMA client by a foreign affiliate of or
subadviser to PPMA.
4. PRE-APPROVAL OF PERSONAL SECURITIES TRANSACTIONS. No
Employee may initiate, recommend, or in any other way
participate in a personal securities transaction in a
security that is not an Exempt Transaction (as
defined in this Code) unless that transaction has
been pre-approved as described in III.B., below.
5. INITIAL PUBLIC OFFERINGS. No Employee may purchase
any equity security or any security convertible into
an equity security in an initial public offering
("IPO") of that security.
6. PRIVATE PLACEMENTS. No Employee may purchase any
security in a private placement without the prior
written approval of the Chief Compliance Officer.
7. SHORT SALES. No Employee may sell short any security
that is held in any PPMA client account.
8. DEALING WITH CLIENTS. No Employee may sell or
purchase any security to or from a client portfolio.
9. BETS. No Employee shall make a wager or bet of any
kind on the change in the price of any security or
the value of any securities index.
B. PROCEDURES FOR PRE-APPROVAL OF PERSONAL SECURITIES TRANSACTIONS.
1. TRANSACTIONS FOR WHICH PRE-APPROVAL IS REQUIRED.
Except for Exempt Transactions (as defined in Section
II.B., above), each Employee MUST obtain written
approval to initiate, recommend, or in any other way
participate in a personal securities transaction of
any kind (including purchases, sales, exercises and
exchanges) from the Chief Compliance Officer of PPMA
or any other person designated by the Chief
Compliance Officer.
2. HOW TO REQUEST PRE-APPROVAL. Requests by an Employee
for prior approval of personal securities
transactions must be made in writing on PPM's
standard Personal Trade Information form ("PTI"). A
copy of the PTI is attached as Appendix B. In
requesting pre-approval, an Employee must disclose
any relationship between the security proposed to be
purchased and any security held or planned to be
acquired by any PPM client (for example, the security
proposed to be purchased has been made available
because of purchases of the same or related
securities by PPM clients).
3. APPROVAL BY A COMPLIANCE OFFICER. The reviewing
Compliance Officer shall mark his response on the
PTI, give two copies to the Employee and give the
other copy to the Chief Compliance Officer. A
Compliance Officer will generally approve a personal
securities transaction if, in the judgment of the
Compliance Officer:
a. the transaction is not prohibited by the
Code;
b. the transaction does not violate PPM's
Inside Information Policy; and
c. the transaction does not involve a conflict
of interest or potential for a conflict of
interest.
4. EXECUTING A PRE-APPROVED TRANSACTION. Pre-approval of
a securities transaction is effective for three New
York Stock Exchange trading days following the date
approval is granted.1 If an Employee becomes aware of
a significant change in the circumstances on which
approval was based before the transaction is
executed, the member shall bring that change in
circumstances to the attention of the Compliance
Officer who approved the transaction to determine
whether the previously granted approval should be
revoked or modified.
If the transaction is executed, the Employee shall
submit to the Chief Compliance Officer a copy of the
completed PTI within two business days of execution
of the transaction, showing the terms of the
transaction as executed. If the transactions is not
executed, the PTI should be returned to the Chief
Compliance Officer showing that the transaction was
not completed.
5. EFFECT OF PRE-APPROVAL. The approval of any personal
securities transaction by a Compliance Officer does
not relieve an Employee of that Employee's
Responsibilities under the federal securities laws,
including those relating to insider trading, or PPM's
policies, including this Code.
C. REPORTS OF PERSONAL INVESTMENTS AND TRANSACTIONS.
1. ACCOUNT AND HOLDINGS REPORT. Upon entering employment
with PPM and annually thereafter, every Employee must
submit to the Chief Compliance Officer a Personal
Securities Accounts and Holdings Report ("Personal
Securities Report") (a copy of which is attached as
Appendix C) with respect to every security and
securities account in which the Employee has or
expects to have a beneficial interest and every
nonclient account for which he or she exercises
influence or control over investment decisions.
As to securities accounts, the Personal Securities
Report requires the Employee to identify the
brokerage firm at which each such account is
maintained, the title of the account, the account
number, and the names and addresses of all
individuals with a beneficial interest in the
account. When an Employee opens a new securities
account, closes an existing account, or no longer has
influence or control over an account, the Employee
shall promptly notify the Chief Compliance Officer in
writing.
As to securities holdings, the Personal Securities
Report requires disclosure of the name of the
security, the type of security, the number of shares
or principal amount (for debt securities), the nature
of the Employee's interest in the security, and the
brokerage firm where it is held. An Employee need not
report securities obtained in Exempt Transactions as
described in Section II.B., above.
- ----------
1 Accordingly, approval for limit orders must be renewed every three
business days until the order is filled or withdrawn.
<PAGE>
The annual submission of the Personal Securities
Report is due by February 28 of each year, reporting
each Employee's securities accounts and holdings as
of December 31 of the prior year. The Chief
Compliance Officer shall keep a copy of all Personal
Securities Reports.
2. TRANSACTION REPORTING. Each Employee shall report all
completed personal securities transactions to the
Chief Compliance Officer by completing the PTI in
accordance with the procedures set forth in Section
III.B., above.
3. CONFIRMATIONS AND STATEMENTS. Each Employee is
responsible for arranging to have confirmations and
monthly account statements for each account listed by
the Employee in the Employee's Personal Securities
Report sent by the broker or other entity holding the
account to the Chief Compliance Officer.
IV. ADMINISTRATION OF THE CODE
A. COMMUNICATIONS.
1. INITIAL COMMUNICATION AND CERTIFICATION. Upon
adoption of the Code or the commencement of
employment, each Employee of PPM is provided with a
copy of the Code. At that time, each Employee also is
scheduled to discuss the Code with the Chief
Compliance Officer. Each Employee is required to
acknowledge his or her understanding of the Code's
prohibitions and requirements by signing a Compliance
Certificate and returning it to the Chief Compliance
Officer for retention in PPM's files.
2. ANNUAL CERTIFICATION. Each year PPM recirculates the
Code to its Employees and requires that each of them
sign a Compliance Certificate and return the executed
copy to the Chief Compliance Officer.
3. QUESTIONS. Persons subject to the Code are encouraged
to direct any questions that may arise concerning the
Code and its prohibitions to the Chief Compliance
Officer.
B. REVIEW OF PERSONAL SECURITIES TRANSACTIONS.
1. REVIEW OF CONFIRMATIONS. Within five business days
after the receipt of a confirmation, the Chief
Compliance Officer or someone under his supervision
shall match the confirmation with the appropriate
PTI, to ensure that all trades have received prior
authorization, if required.
If a confirmation discloses a securities transaction
which was required to be pre-approved, but for which
no prior written approval was obtained, or which was
executed after the prior approval expired, the Chief
Compliance Officer shall discuss the circumstances of
the transaction and the reason for the failure to
follow required procedures with the Employee and
shall make a written record of the matter. A copy of
that record shall be retained in that Employee's
personal securities transactions file. This action
does not preclude any other sanction for violation of
the Code.
2. MONTHLY REVIEW. On a monthly basis, the Chief
Compliance Officer or someone under his supervision
shall review each Employee's personal securities
transactions, using the PTIs, confirmations, and
other account documentation to look for indications
of improper personal securities transactions. The
Chief Compliance Officer shall discuss any
questionable transactions with the Employee who
effected the trade and make such other inquiries as
the Chief Compliance Officer in his discretion deems
appropriate. The Chief Compliance Officer shall make
a written record of any determination made and the
reasons underlying that determination.
C. RECORDKEEPING. The Chief Compliance Officer or someone under his
supervision shall maintain the records listed below for a period of five years
at PPM's principal place of business in an easily accessible place:
1. LIST OF PERSONS COVERED BY THE CODE. A list of all
Employees, which shall constitute a list of all
persons subject to the Code during the period.
2. COMPLIANCE CERTIFICATES. Compliance Certificates
signed by all Employees acknowledging receipt of
copies of the Code and acknowledging that they are
subject to it, and, in the case of Employees subject
to the Code in prior periods, certifying that he or
she complied with the Code during that prior period.
3. THE CODE. A copy of each code of ethics that has been
in effect at any time during the period.
4. REPORTS. A copy of each Personal Securities Report,
PTI, confirmation and monthly statement submitted by
an Employee and a record of any known violation and
action taken as a result thereof during the period.
D. ANNUAL REVIEW OF PROCEDURES. The Code shall be reviewed by PPM's
management on an annual basis to assess its effectiveness, in conjunction with
PPM's other policies and procedures, in preventing improper and illegal personal
securities trading by PPM's Employees.
V. VIOLATIONS OF THE CODE
If the Chief Compliance Officer determines that a violation or possible
violation of any of the provisions of this Code has occurred, the Chief
Compliance Officer shall report that determination to the President of PPMA (or,
if the violation of the Code is believed to involve the President, appropriate
executive officers of PPM Limited). The Chief Compliance shall discuss the
matter with the Employee. If the President of PPMA agrees with the determination
of the Chief Compliance Officer, the Chief Compliance Officer shall promptly
report such violation to the Board of Directors of PPMA and/or to the Board of
Trustees of PPM Funds. PPMA's Board of Directors may impose such sanctions
against the Employee as it deems appropriate under the circumstances. Such
sanctions may include unwinding a transaction, forfeiture of any profit from a
transaction, reduction in salary, censure, suspension or termination of
employment.
Violations of this Code may also violate the federal securities laws.
Sanctions for violations of the federal securities laws, particularly violations
of the antifraud provisions, include fines, money damages, injunctions,
imprisonment, and bars from certain types of employment in the securities
business.
<PAGE>
Appendix A
EXAMPLES OF BENEFICIAL OWNERSHIP
You will be deemed to have a beneficial interest in a security for
purposes of the Code in the circumstances listed below.
1. Securities held by you for your own benefit, whether such securities
are in bearer form, registered in your own name, or otherwise;
2. Securities held by others for your benefit (regardless of whether or
how such securities are registered), such as, for example, securities held for
you by custodians, brokers, relatives, executors, or administrators;
3. Securities held by a pledgee for your account;
4. Securities held by a trust in which you have an interest. A
remainder interest will confer beneficial ownership only if you have power to
exercise or share investment control over the trust.
5. Securities held by you as trustee or co-trustee, where either you or
any member of your immediate family (i.e., spouse, children or descendants,
stepchildren, parents and their ancestors, and stepparents, in each case
treating a legal adoption as blood relationship) has an interest in the trust.
6. Securities held by a trust of which you are the settlor, if you have
the power to revoke the trust without obtaining the consent of all the
beneficiaries and have or share investment control;
7. Securities held by any non-public partnership in which you are a
partner to the extent of your interest in partnership capital or profits;
8. Securities held by a personal holding company controlled by you
alone or jointly with others;
9. Securities held in the name of your spouse unless legally separated,
or in the name of you and your spouse jointly;
10. Securities held in the name of your minor children or in the name
of any immediate family member of you or your spouse (including an adult child)
who is presently sharing your home. This applies even if the securities were not
received from you and the income from the securities is not actually used for
the maintenance of your household;
11. Securities held in the name of any person other than you and those
listed in paragraphs (9) and (10), above, if by reason of any contract,
understanding, relationship, agreement, or other arrangement you obtain benefits
substantially equivalent to those of ownership;
12. Securities held in the name of any person other than you, even
though you do not obtain benefits substantially equivalent to those of ownership
(as described in (11), above), if you can vest or revest title in yourself.
<PAGE>
Appendix B
PERSONAL TRADE INFORMATION
CONFIDENTIAL
Employee Name:
------------------------------------------
- --------------------------------------------------------------------------------
PART A: PRE-CLEARANCE
Securities Description:
Buy |_| Sell |_|
Quantity1:
Is this security or transaction related in any way to a security being
held, purchased or sold by PPM on behalf of a client?
No |_| Yes |_|
Give Details
-----------------------------------------------------------
PRE-APPROVAL SIGNATURE: DATE:
Reminder: Pre-approval is valid for only 3 NYSE trading days following
the date of pre-approval.
- --------------------------------------------------------------------------------
PART B: TRADE DETAIL
Buy |_| Sell |_|
Trade Date: Quantity: Price per Unit:
Broker:
Check here if the transaction was NOT executed: |_|
Employee Signature: Date:
- --------------------------------------------------------------------------------
PART C: REVIEW
Reviewer's Notes:
Reviewer's Initials: Date of Review:
- ----------
1 For equity securities, enter the number of shares. For debt securities,
enter the par value.
<PAGE>
Appendix C
PERSONAL SECURITIES ACCOUNTS AND HOLDINGS REPORT
In accordance with PPM's Code of Ethics and Conduct (the "Code"),
please provide a list of all of your securities accounts and securities holdings
in which you have a beneficial interest. More detailed instructions are set
forth below. You will be asked to complete this report upon entering PPM's
employment and annually thereafter. In addition, during the course of the year,
if you open a new account or otherwise obtain a beneficial interest in a
securities account, the Code requires that you report that new account in
writing to the Chief Compliance Officer. If you have any question as to whether
a security account or holding should be reported on this Report, you should
consult with the Chief Compliance Officer.
1. Please provide a list identifying all securities accounts in which you have a
beneficial interest. See Appendix A to the Code for examples of situations in
which you will be deemed to have a beneficial interest in a security. If you
have any question as to whether an account should be reported, you should
consult with the Chief Compliance Officer.
- --------------------------------------------------------------------------------
NAME OF ACCOUNT Account Number Name of Brokerage Firm
- ------------------------- ---------------------- -------------------------------
- ------------------------- ---------------------- -------------------------------
- ------------------------- ---------------------- -------------------------------
- ------------------------- ---------------------- -------------------------------
- ------------------------- ---------------------- -------------------------------
- ------------------------- ---------------------- -------------------------------
- ------------------------- ---------------------- -------------------------------
- ------------------------- ---------------------- -------------------------------
- ------------------------- ---------------------- -------------------------------
- ------------------------- ---------------------- -------------------------------
- ------------------------- ---------------------- -------------------------------
- ------------------------- ---------------------- -------------------------------
NOTE: CONTINUE LISTING AS NECESSARY ON ADDITIONAL SHEETS
2. Please provide a list of all securities in which you have a
beneficial interest. See Appendix A to the Code for examples of situations in
which you will be deemed to have a beneficial interest in a security. You need
not include securities that you obtained in Exempt Transactions as defined in
the Code. If you do not have any securities holdings to report, write NONE.
INSTEAD OF FILLING OUT THIS FORM, YOU MAY ATTACH COPIES OF THE MOST RECENT
STATEMENTS OF EACH OF THE ACCOUNTS LISTED ABOVE.
- --------------------------------------------------------------------------------
Number of
Shares or
Type of Principal(2) Brokerage Firm
NAME OF SECURITY Security(1) Amount Where Held
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
- ------------------- ----------------- ---------------- -------------------------
NOTE: CONTINUE LISTING AS NECESSARY ON ADDITIONAL SHEETS
I CERTIFY THAT THE STATEMENTS MADE BY ME ON THIS FORM ARE TRUE,
COMPLETE, AND CORRECT TO THE BEST OF MY KNOWLEDGE AND BELIEF AND ARE MADE IN
GOOD FAITH.
Date Signature
- ----------
1 Insert the following symbol as pertinent to indicate the type of
security held: C-common stock, P-preferred stock, O-option, W-warrant,
D-debt security, and X-other.
2 For Debt Securities.
<PAGE>
PPM AMERICA, INC.
COMPLIANCE CERTIFICATE
- -------------------------
Name (print or type)
This is to certify that the attached Code of Ethics and Conduct
("Code") was distributed and explained to me at a meeting held on
, 199 . I have read and understand the Code. I certify
that I will comply with these policies and procedures during the course of my
employment by PPM and that, since my last Compliance Certification (if any), I
have complied with the Code. Moreover, I agree to promptly report to the Chief
Compliance Officer any violation or possible violation of these policies and
procedures. I UNDERSTAND THAT VIOLATION OF THE CODE SHALL BE GROUNDS FOR
DISCIPLINARY ACTION OR DISMISSAL AND MAY ALSO BE A VIOLATION OF FEDERAL AND/OR
STATE SECURITIES LAWS.
- ------------------------------ ----------------------------------
Date Signature
<PAGE>
PROFESSIONAL CONDUCT
POLICY AND PROCEDURES REGARDING
INSIDE INFORMATION AND CHINESE WALLS
I. INTRODUCTION
The problem of insider trading poses a significant threat to investor
confidence in the fairness and integrity of the securities markets. The business
of PPM America, Inc. ("PPMA"), and therefore the business of its parent company,
PPM Holdings, Inc., and its affiliated company, PPM Finance, Inc., depends on
that confidence.
A person found guilty of insider trading may be fined as much as three
times the profit gained or loss avoided or $1 million, whichever is greater, and
jailed for up to 10 years. Investment advisers, broker/dealers and their
"controlling persons" are required to establish and enforce written policies and
procedures that are reasonably designed to prevent the misuse of inside
information.
"Controlling persons" includes not only an employer but also an
employee who has supervisory responsibility over another employee. A controlling
person who fails to take adequate steps to prevent insider trading may be
subject to potential civil liability. THIS MEANS THAT PPMA'S OFFICERS AND
DIRECTORS, PERSONALLY, ARE AT RISK OF INCURRING CIVIL PENALTIES IF EMPLOYEES
UNDER THEIR SUPERVISION VIOLATE THE INSIDER TRADING LAWS. The term controlling
persons also could include PPMA's direct and indirect parent companies and each
of their officers and directors.
This Statement of Policies and Procedures Regarding Inside Information
and Chinese Walls (the "Statement") includes a prohibition of insider trading
that applies to all directors, officers and employees of PPMA, PPM Holdings,
Inc. and PPM Finance, Inc. (which are referred to collectively in the Statement
as "PPM"). The Statement also includes procedures that are intended to block the
flow, and potential misuse, of inside information from those employees of PPM
whose duties bring them into contact with non-public information (called the
Private Information Investment and Access Groups in this Statement) to other
employees of PPM. PPM's Chief Compliance Officer will from time to time identify
those employees, or groups of employees, of PPM who are to be considered part of
the Private Information Investment and Access Groups. The members of those
Groups are included as Appendix A and B to this Statement.
The Statement MUST be strictly adhered to by all directors, officers,
and employees of PPM. Failure to observe the policies and procedures outlined in
this Statement could result in your dismissal or removal from office, could
constitute a criminal act in violation of federal and/or state securities laws
and could subject both you and PPM to liability. The rules included in this
Statement apply to your conduct both in connection with your services to PPM and
in all other contexts.
If you have any questions about this Statement you should consult the
Chief Compliance Officer of PPM.
II. DEFINITIONS
A. INSIDE INFORMATION. Inside information is information that is both
MATERIAL and NON-PUBLIC.
1. Material information is any information for which there is a
substantial likelihood that a reasonable investor would
consider it important in making an investment decision, or
information that is reasonably certain to have a substantial
effect on the price of an issuer's securities. Information
that should be considered material includes, but is not
limited to: dividend changes, earnings estimates, changes in
previously released earnings estimates, significant merger or
acquisition proposals or agreements, major litigation,
liquidation problems, and extraordinary management
developments.
Material information does not have to relate to an issuer's
business, but need only be expected to affect the market price
of the security.
2. Non-public information is any information that has not been
effectively communicated to the market place. One must be able
to point to some fact to show that information is generally
public (for example, inclusion of the information in a filing
with the SEC, or appearance in a publication of general
circulation).
B. SECURITIES. The term securities as used in this Statement applies to
all types of investments, including but not limited to common stocks, preferred
stocks, bonds, warrants, puts, calls, options, futures and commodities.
Securities, for this purpose, do not include (i) direct obligations of the
United States or (ii) investments in open-end mutual funds. Transactions in
securities include both "long" and "short" sales.
C. TRADING. Trading means buying, selling, or tendering a security, or
participating in a decision, or exerting influence on a decision, to buy, sell
or tender a security, for yourself or in any security in which you have a
beneficial interest. See Appendix C for examples of ownership arrangements that
would be deemed to give you a beneficial interest in the securities owned.
Trading also includes transactions in securities over which you have
investment discretion (including client accounts), even if you have no ownership
interest in the securities. Trading also includes participating in any trade as
a TIPPER or TIPPEE.
D. TIPPING. Tipping is the act of disseminating material non-public
information.
E. PRIVATE INFORMATION INVESTMENT GROUP. The Private Information
Investment Group includes those employees of PPM investment groups identified by
the Chief Compliance Officer from time to time as people whose duties make it
reasonably likely that they will come into possession of inside information
during the course of performing their investment responsibilities. The Chief
Compliance Officer will identify all members of the Private Information
Investment Group on Appendix A to this Statement. Appendix A will be revised by
the Chief Compliance Officer as necessary.
F. PRIVATE INFORMATION ACCESS GROUP. The Private Information Access
Group includes those employees of PPM identified by the Chief Compliance Officer
from time to time as people whose duties make it possible that they could become
aware of inside information during the course of performing their PPM related
job duties. The Chief Compliance Officer will identify all members of the
Private Information Access Group, on Appendix B to this Statement. Appendix B
will be revised by the Chief Compliance Officer as necessary.
G. RESTRICTED LISTS. PPM maintains two lists of issuers of securities
in which trading is restricted:
1. Firm Wide Restricted List. The Firm Wide Restricted List is
circulated to all persons covered by this Statement. Trading
restrictions relating to an issuer on the Firm Wide Restricted
List apply to all PPM directors, officers and employees.
2. Private Information Restricted List. Copies of the Private
Information Restricted List are circulated to members of the
Private Information Investment and Access Groups. Trading
restrictions relating to an issuer on the Private Information
Restricted List apply only to members of the Private
Information Investment and Access Groups. See III (E.) below.
III. POLICIES RELATING TO INSIDE INFORMATION
In order to prevent the possible misuse of inside information, all PPM
directors, officers and employees must follow these rules:
A. ACTIONS TO TAKE IF YOU HAVE INSIDE INFORMATION. If you receive
inside information you must immediately notify the Chief Compliance Officer or
another person so designated, who will be responsible for ensuring that the Firm
Wide Restricted List or Private Information Restricted List, as appropriate, is
updated.
B. NO TIPPING. No PPM director, officer or employee may communicate
inside information to others (i.e., tipping).
C. NO TRADING ON INSIDE INFORMATION. No PPM director, officer or
employee may trade in a security while in possession of inside information about
that security or the issuer of that security.
Great care must be taken that no trading be done in "deal" or "rumor"
securities if you are in possession of any information that may be considered
material non-public information other than the general rumors always found in
the marketplace. Deal or rumor securities are securities of issuers which are or
may be involved in a material transaction or event, such as a merger, proxy
battle, bankruptcy proceeding, etc. Such securities and issuers typically
receive wide exposure in financial industry publications or other media and
therefore are subject to greater scrutiny by regulatory authorities.
D. FIRM WIDE RESTRICTED LIST. In addition to the trading restrictions
set forth above, trading in the securities of issuers placed on the Firm Wide
Restricted List is ABSOLUTELY PROHIBITED, whether for yourself or for clients.
E. PRIVATE INFORMATION RESTRICTED LIST.
1. Personal transactions. Members of the Private Information
Investment and Access Groups are prohibited from personally
trading in a security of a company on the Private Information
Restricted List.
2. Client transactions. A member of the Private Information
Investment Group may engage in a transaction on behalf of a
client involving a security of a company on the Private
Information Restricted List ONLY if the transaction is not a
public market transaction and the counterparty is in the same
position as the client, or PPM on behalf of the client, with
respect to access to information about the issuer. IF YOU ARE
UNCERTAIN ABOUT WHETHER A PROPOSED TRANSACTION ON BEHALF OF A
CLIENT MEETS THE STANDARDS SET FORTH ABOVE, CONSULT THE CHIEF
COMPLIANCE OFFICER BEFORE ENTERING INTO ANY SUCH TRANSACTION.
F. INFORMATION BLOCKING. Each PPM director, officer or employee must
follow the information blocking procedures contained in Section IV. of this
Statement.
G. PERSONAL SECURITIES TRADING. All personal securities transactions
must be in compliance with PPM's Code of Ethics and Conduct.
IV. INFORMATION BLOCKING PROCEDURES
A. POLICY. The following Procedures are intended by PPM to block the
flow, and potential misuse, of material non-public information from members of
the Private Information Investment and Access Group's from all other PPM
employees and related organizations. From time to time, members of the Private
Information Investment Group may serve on formal or informal creditors'
committees in efforts to restructure, reorganize or liquidate the issuer of a
security held by a PPM client. In the course of that work and in connection with
due diligence and workout efforts and otherwise, members of the Private
Information Investment Group are likely to come into possession of inside
information. Compliance with these procedures is essential to permitting PPM to
continue to perform its ordinary business functions without undue restriction
resulting from the activities of the Private Information Investment Group.
<PAGE>
B. PROHIBITED COMMUNICATIONS.
1. No Disclosure Before Execution. Information about transactions
in securities initiated by employees who are NOT members of
the Private Information Investment Group may not be shared
with members of the Private Information Investment Group in
advance of execution.
2. No Communication of Inside Information. No member of the
Private Information Investment Group shall communicate, any
inside information in the presence or within the hearing of
any person not a member of that Group other than the President
or the Chief Compliance Officer of PPM. In turn, neither the
President, nor the Chief Compliance Officer of PPM shall
communicate any inside information (communicated to them in
their capacity as such) in the presence or within hearing of
any person not otherwise authorized to receive such
information. Further, no member of the Private Information
Access Group who obtains inside information shall communicate
such information to anyone within PPM other than the President
or Chief Compliance Officer.
C. PHYSICAL SECURITY.
1. The offices occupied by members of the Private Information
Investment Group, and in which the records and files relating
to the operations of members of that Group are maintained,
shall be physically separate from the offices occupied by
people who are not members of that Group. Keys to the offices
and records storage areas of members of the Private
Information Investment Group shall be held only by members of
that Group and the Private Information Access Group.
2. All business of members of the Private Information Investment
Group conducted within the offices of PPM shall be conducted
within the offices of those Group members or the designated
common conference room areas within PPM's offices, provided
that members of the Private Information Investment Group
conducting business in a common conference room area have an
obligation to ensure that all material non-public information
is secure at all times.
3. Access to the files of members of the Private Information
Investment Group within PPMA's computer systems shall be
limited to members of that Group and certain members of the
Finance and Administration Group. Access to the files of
employees who are not members of the Private Information
Investment Group shall be restricted so as not to be
accessible to members of the Private Information Investment
Group.
4. Members of the Private Information Access Group possessing any
inside information should at all times maintain such
information in a secure location or in computer files which
are inaccessible to other PPM staff.
V. REVIEW PROCEDURES AND ENFORCEMENT
A. REVIEW OF TRANSACTIONS. The Chief Compliance Officer, or someone
under his supervision, shall review all reports of personal securities
transactions received under the Code of Ethics and Conduct and all client
transactions for indications of improper securities transactions. The Chief
Compliance Officer shall discuss any questionable transactions with the person
who effected the trade and make such other inquiries as the Chief Compliance
Officer, at his discretion, deems appropriate. The Chief Compliance Officer
shall make a written record of any determination made and the reasons underlying
that determination.
B. ENFORCEMENT. If the Chief Compliance Officer determines that a
violation or possible violation of any of the provisions of this Statement has
occurred, the Chief Compliance Officer shall report that determination to the
President of PPM. The President of PPM shall review the Chief Compliance
Officer's determination and shall discuss the matter with the person claimed to
have violated the Statement. If the President of PPM agrees with the
determination of the Chief Compliance Officer, the Chief Compliance Officer
shall promptly report such violation to the Board of Directors of the PPM
company or companies with which the person is associated. The Board of Directors
may impose such sanctions against the person as it deems appropriate under the
circumstances. Such sanctions may include unwinding a transaction, forfeiture of
any profit from a transaction, reduction in salary, censure, suspension,
termination of employment, or removal from the Board of Directors of PPM.
As described in the introductory provisions of this Statement,
violations of the Statement may also violate the federal securities laws.
VI. OTHER POLICIES
The policies and procedures contained in this Statement are in addition
to those contained in PPM's Employee Guide to Personnel Policies (the "Guide").
You are required to read and understand the Guide. Particular attention should
be given to Section VII of the Guide containing PPM's (a) Code of Ethics and
Conduct; (b) policy regarding Confidential Information and Non-Competition; and
(c) policy regarding Inside Information and Prudential Share Dealings.
PLEASE INDICATE THAT YOU HAVE READ AND UNDERSTOOD THIS STATEMENT BY
COMPLETING THE COMPLIANCE CERTIFICATE(S) ATTACHED AS APPENDIX D OF THIS
DOCUMENT.
<PAGE>
Appendix A
LIST OF MEMBERS OF
PRIVATE INFORMATION INVESTMENT GROUP
AS OF OCTOBER 22, 1997
o All employees of the Private Finance Group
o All employees of the Special Investments Group
<PAGE>
Appendix B
LIST OF MEMBERS OF
PRIVATE INFORMATION ACCESS GROUP
AS OF OCTOBER 22, 1997
o President of PPM
o Administrative Assistant to President of PPM
o All members of the Finance and Administration Group
o All members of the Human Resources Group
o Vice President Corporate Finance
<PAGE>
Appendix C
EXAMPLES OF BENEFICIAL OWNERSHIP
You will be deemed to have a beneficial interest in a security for
purposes of the Code in the circumstances listed below.
1. Securities held by you for your own benefit, whether such securities
are in bearer form, registered in your own name, or otherwise;
2. Securities held by others for your benefit (regardless of whether or
how such securities are registered), such as, for example, securities held for
you by custodians, brokers, relatives, executors, or administrators;
3. Securities held by a pledgee for your account;
4. Securities held by a trust in which you have an income or remainder
interest, unless your only interest is to receive principal (a) if some other
remainderman dies before distribution or (b) if some other person can direct by
will a distribution of trust property or income to you;
5. Securities held by you as trustee or co-trustee, where either you or
any member of your immediate family (i.e., spouse, children or descendants,
stepchildren, parents and their ancestors, and stepparents, in each case
treating a legal adoption as blood relationship) has an income or remainder
interest in the trust.
6. Securities held by a trust of which you are the settlor, if you have
the power to revoke the trust without obtaining the consent of all the
beneficiaries;
7. Securities held by any non-public partnership in which you are a
partner;
8. Securities held by a personal holding company controlled by you
alone or jointly with others;
9. Securities held in the name of your spouse unless legally separated,
or in the name of you and your spouse jointly;
10. Securities held in the name of your minor children or in the name
of any relative of you or your spouse (including an adult child) who is
presently sharing your home. This applies even if the securities were not
received from you and the income from the securities is not actually used for
the maintenance of your household;
11. Securities held in the name of any person other than you and those
listed in paragraphs (9) and (10), above, if by reason of any contract,
understanding, relationship, agreement, or other arrangement you obtain benefits
substantially equivalent to those of ownership;
12. Securities held in the name of any person other than you, even
though you do not obtain benefits substantially equivalent to those of ownership
(as described in (11), above), if you can vest or revest title in yourself.
<PAGE>
Appendix D
INSIDE INFORMATION AND CHINESE WALL POLICY
COMPLIANCE CERTIFICATE
- --------------------------------------------------------------------------------
Name (print or type)
This is to certify that the attached Statement of Policies and
Procedures Regarding Inside Information and Chinese Walls (the "Statement") was
distributed and explained to me at a meeting held on , 199_. I have read and
understand the Statement. I certify that I have complied with these policies and
procedures during the course of my employment and that I will continue to adhere
to these policies and procedures in the future. I agree to promptly report any
violation or possible violation of these policies and procedures to the Chief
Compliance Officer. I UNDERSTAND THAT VIOLATION OF THE ABOVE-REFERENCED POLICIES
AND PROCEDURES SHALL BE GROUNDS FOR DISCIPLINARY ACTION OR DISMISSAL AND MAY
ALSO BE A VIOLATION OF FEDERAL AND/OR STATE SECURITIES LAWS.
Date:
-----------------------
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
CERTIFICATION FOR MEMBERS OF PPM'S
PRIVATE INFORMATION INVESTMENT AND ACCESS GROUPS
I have read and understand the special policies contained in this
Statement relating to blocking the flow of information from the Private
Information Investment and Access Groups to other PPM Groups. I acknowledge that
I may have access to certain inside information, and agree to fulfill the
obligations placed on me to prevent the disclosure of information in violation
of the provisions or intent of the Statement.
Date:
-------------------
- --------------------------------------------------------------------------------
Signature
Code of Ethics
It is the personal responsibility of every Putnam employee to avoid any conduct
that could create a conflict, or even the appearance of a conflict, with our
clients, or to do anything that could damage or erode the trust our clients
place in Putnam and its employees. 44156 4/2000
<PAGE>
Table of Contents
Overview ...........................................................iii
Preamble ...........................................................vii
Definitions: Code of Ethics..............................................ix
Section I. Personal Securities Rules for All Employees..................1
A. Restricted List..........................1
B. Prohibited Purchases and Sales...........6
C. Discouraged Transactions.................9
D. Exempted Transactions...................10
Section II. Additional Special Rules for Personal Securities Transactions
of Access Persons and Certain Investment Professionals......13
Section III. Prohibited Conduct for All Employees........................19
Section IV. Special Rules for Officers and Employees of Putnam
Europe Ltd..................................................29
Section V. Reporting Requirements for All Employees....................31
Section VI. Education Requirements......................................35
Section VII. Compliance and Appeal Procedures............................37
Appendix A ............................................................39
Preamble ........................................41
Definitions: Insider Trading.........................43
Section 1. Rules Concerning Inside Information.....45
Section 2. Overview of Insider Trading.............49
Appendix B. Policy Statement Regarding Employee Trades in Shares of
Putnam Closed-End Funds.....................................55
Appendix C. Clearance Form for Portfolio Manager Sales Out of
Personal Account of Securities Also
Held by Fund (For compliance with "Contra-Trading"Rule).....57
Appendix D. Procedures for Approval of New Financial Instruments........59
Index ............................................................61
<PAGE>
Overview
Every Putnam employee is required, as a condition of continued employment, to
read, understand, and comply with the entire Code of Ethics. This Overview is
provided only as a convenience and is not intended to substitute for a careful
reading of the complete document.
It is the personal responsibility of every Putnam employee to avoid any conduct
that could create a conflict, or even the appearance of a conflict, with our
clients, or do anything that could damage or erode the trust our clients place
in Putnam and its employees. This is the spirit of the Code of Ethics. In
accepting employment at Putnam, every employee accepts the absolute obligation
to comply with the letter and the spirit of the Code of Ethics. Failure to
comply with the spirit of the Code of Ethics is just as much a violation of the
Code as failure to comply with the written rules of the Code.
The rules of the Code cover activities, including personal securities
transactions, of Putnam employees, certain family members of employees, and
entities (such as corporations, trusts, or partnerships) that employees may be
deemed to control or influence.
Sanctions will be imposed for violations of the Code of Ethics. Sanctions may
include bans on personal trading, reductions in salary increases or bonuses,
disgorgement of trading profits, suspension of employment, and termination of
employment.
- -- Insider trading:
Putnam employees are forbidden to buy or sell any security while either
Putnam or the employee is in possession of non-public information ("inside
information") concerning the security or the issuer. A violation of
Putnam's insider trading policies may result in criminal and civil
penalties, including imprisonment and substantial fines.
- -- Conflicts of interest:
The Code of Ethics imposes limits on activities of Putnam employees where
the activity may conflict with the interests of Putnam or its clients.
These include limits on the receipt and solicitation of gifts and on
service as a fiduciary for a person or entity outside of Putnam.
For example, Putnam employees generally may not accept gifts over $50 in
total value in a calendar year from any entity or any supplier of goods or
services to Putnam. In addition, a Putnam employee may not serve as a
director of any corporation without prior approval of the Code of Ethics
Officer, and Putnam employees may not be members of investment clubs.
- -- Confidentiality:
Information about Putnam clients and Putnam investment activity and
research is proprietary and confidential and may not be disclosed or used
by any Putnam employee outside Putnam without a valid business purpose.
<PAGE>
- -- Personal securities trading:
Putnam employees may not buy or sell any security for their own account
without clearing the proposed transaction in advance with the Code of
Ethics Administrator.
Certain securities are excepted from this requirement (e.g., Marsh &
McLennan stock and shares of open-end (not closed-end) Putnam Funds). The
Code of Ethics Officer will permit employees to purchase or sell up to
1,000 shares of stock of an issuer whose capitalization exceeds $5
billion, but such purchases or sales must still be cleared.
Clearance must be obtained in advance, between 11:30 a.m. and 4:00 p.m.
EST on the day of the trade. Clearance may be obtained between 9:00 a.m.
and 4:00 p.m. on the day of the trade for up to 1,000 shares of stock of
an issuer whose capitalization exceeds $5 billion. A clearance is valid
only for the day it is obtained. The Code also strongly discourages
excessive trading by employees for their own account (i.e., more than 10
trades in any calendar quarter). Trading in excess of this level will be
reviewed with the Code of Ethics Oversight Committee.
- -- Short Selling:
Putnam employees are prohibited from short selling any security, whether
or not it is held in a Putnam client portfolio, except that short selling
against the S&P 100 and 500 indexes and "against the box" are permitted.
- -- Confirmations of trading and periodic account statements:
All Putnam employees must have their brokers send confirmations of
personal securities transactions, including transactions of immediate
family members and accounts over which the employee has investment
discretion, to the Code of Ethics Officer. Employees must contact the Code
of Ethics Administrator to obtain an authorization letter from Putnam for
setting up a personal brokerage account.
- -- Quarterly and annual reporting:
Certain Putnam employees (so-called "Access Persons" as defined by the SEC
and in the Code of Ethics) must report all their securities transactions
in each calendar quarter to the Code of Ethics Officer within 10 days
after the end of the quarter. All Access Persons must disclose all
personal securities holdings upon commencement of employment and
thereafter on an annual basis. You will be notified if these requirements
apply to you. If these requirements apply to you and you fail to report as
required, salary increases and bonuses will be reduced.
<PAGE>
- -- IPOs and private placements:
Putnam employees may not buy any securities in an initial public offering
or in a private placement, except in limited circumstances when prior
written authorization is obtained.
- -- Procedures for Approval of New Financial Instruments:
No new types of securities or instruments may be purchased for any Putnam
fund or other client account without the prior approval of the Risk
Management Committee.
- -- Personal securities transactions by Access Persons and certain investment
professionals:
The Code imposes several special restrictions on personal securities
transactions by Access Persons and certain investment professionals, which
are summarized as follows:
-- "60-Day Holding Period". No Access Person shall profit from the
purchase and sale, or sale and purchase, of any security or related
derivative security within 60 calendar days.
-- "7-Day" Rule. Before a portfolio manager places an order to buy a
security for any portfolio he manages, he must sell from his personal
account any such security or related derivative security purchased
within the preceding 7 calendar days and disgorge any profit from the
sale.
-- "Blackout" Rules. No portfolio manager may sell any security or
related derivative security for her personal account until 7 calendar
days have passed since the most recent purchase of that security or
related derivative security by any portfolio she manages. No
portfolio manager may buy any security or related derivative security
for his personal account until 7 calendar days have passed since the
most recent sale of that security or related derivative security by
any portfolio he manages.
-- "Contra-Trading" Rule. No portfolio manager may sell out of her
personal account any security or related derivative security that is
held in any portfolio she manages unless she has received the written
approval of a CIO and the Code of Ethics Officer.
-- No manager may cause a Putnam client to take action for the
manager's own personal benefit.
-- SIMILAR RULES LIMIT PERSONAL SECURITIES TRANSACTIONS BY ANALYSTS,
CO-MANAGERS, AND CHIEF INVESTMENt OFFICERS. PLEASE READ THESE RULES
CAREFULLY. YOU ARE RESPONSIBLE FOR UNDERSTANDING THE RESTRICTIONS.
This Overview is qualified in its entirety by the provisions of the Code of
Ethics. The Code requires that all Putnam employees read, understand, and comply
with the entire Code of Ethics.
<PAGE>
Preamble
It is the personal responsibility of every Putnam employee to avoid any conduct
that would create a conflict, or even the appearance of a conflict, with our
clients, or embarrass Putnam in any way. This is the spirit of the Code of
Ethics. In accepting employment at Putnam, every employee also accepts the
absolute obligation to comply with the letter and the spirit of the Code of
Ethics. Failure to comply with the spirit of the Code of Ethics is just as much
a violation of the Code as failure to comply with the written rules of the Code.
Sanctions will be imposed for violations of the Code of Ethics, including the
Code's reporting requirements. Sanctions may include bans on personal trading,
reductions in salary increases or bonuses, disgorgement of trading profits,
suspension of employment and termination of employment.
Putnam Investments is required by law to adopt a Code of Ethics. The purpose of
the law is to prevent abuses in the investment advisory business that can arise
when conflicts of interest exist between the employees of an investment adviser
and its clients. Having an effective Code of Ethics is good business practice,
as well. By adopting and enforcing a Code of Ethics, we strengthen the trust and
confidence reposed in us by demonstrating that, at Putnam, client interests come
before personal interests.
Putnam has had a Code of Ethics for many years. The first Putnam Code was
written more than 30 years ago by George Putnam. It has been revised
periodically, and was re-drafted in its entirety in 1989 to take account of
legal and regulatory developments in the investment advisory business. Since
1989, the Code has been revised regularly to reflect developments in our
business.
The Code that follows represents a balancing of important interests. On the one
hand, as a registered investment adviser, Putnam owes a duty of undivided
loyalty to its clients, and must avoid even the appearance of a conflict that
might be perceived as abusing the trust they have placed in Putnam. On the other
hand, Putnam does not want to prevent conscientious professionals from investing
for their own account where conflicts do not exist or are so attenuated as to be
immaterial to investment decisions affecting Putnam clients.
When conflicting interests cannot be reconciled, the Code makes clear that,
first and foremost, Putnam employees owe a fiduciary duty to Putnam clients. In
most cases, this means that the affected employee will be required to forego
conflicting personal securities transactions. In some cases, personal
investments will be permitted, but only in a manner which, because of the
circumstances and applicable controls, cannot reasonably be perceived as
adversely affecting Putnam client portfolios or taking unfair advantage of the
relationship Putnam employees have to Putnam clients.
<PAGE>
The Code contains specific rules prohibiting defined types of conflicts. Because
every potential conflict cannot be anticipated in advance, the Code also
contains certain general provisions prohibiting conflict situations. In view of
these general provisions, it is critical that any individual who is in doubt
about the applicability of the Code in a given situation seek a determination
from the Code of Ethics Officer about the propriety of the conduct in advance.
The procedures for obtaining such a determination are described in Section VII
of the Code.
It is critical that the Code be strictly observed. Not only will adherence to
the Code ensure that Putnam renders the best possible service to its clients, it
will ensure that no individual is liable for violations of law.
It should be emphasized that adherence to this policy is a fundamental condition
of employment at Putnam. Every employee is expected to adhere to the
requirements of this Code of Ethics despite any inconvenience that may be
involved. Any employee failing to do so may be subject to such disciplinary
action, including financial penalties and termination of employment, as
determined by the Code of Ethics Oversight Committee or the Chief Executive
Officer of Putnam Investments.
<PAGE>
Definitions: Code of Ethics
The words given below are defined specifically for the purposes of Putnam's Code
of Ethics.
Gender references in the Code of Ethics alternate.
Rule of construction regarding time periods. Unless the context indicates
otherwise, time periods used in the Code of Ethics shall be measured
inclusively, i.e., including the dates from and to which the measurement
is made.
Access Persons. Access Persons are (i) all officers of Putnam Investment
Management, Inc. (the investment manager of Putnam's mutual funds), (ii)
all employees within Putnam's Investment Division, and (iii) all other
employees of Putnam who, in connection with their regular duties, have
access to information regarding purchases or sales of portfolio securities
by a Putnam mutual fund, or who have access to information regarding
recommendations with respect to such purchases or sales.
Code of Ethics Administrator. The individual designated by the Code of Ethics
Officer to assume responsibility for day-to-day, non-discretionary
administration of this Code. The current Code of Ethics Administrator is
Laura Rose, who can be reached at extension 11104.
Code of Ethics Officer. The Putnam officer who has been assigned the
responsibility of enforcing and interpreting this Code. The Code of Ethics
Officer shall be the General Counsel or such other person as is designated
by the President of Putnam Investments. If the Code of Ethics Officer is
unavailable, the Deputy Code of Ethics Officer (to be appointed by the
Code of Ethics Officer) shall act in his stead.
Code of Ethics Oversight Committee. Has oversight responsibility for
administering the Code of Ethics. Members include the Code of Ethics
Officer, the Head of Investments, and other members of Putnam's senior
management approved by the Chief Executive Officer of Putnam.
Immediate family. Spouse, minor children, or other relatives living in the same
household as the Putnam employee.
Policy Statements. The Policy Statement Concerning Insider Trading Prohibitions
attached to the Code as Appendix A and the Policy Statement Regarding
Employee Trades in Shares of Putnam Closed-End Funds attached to the Code
as Appendix B.
Private placement. Any offering of a security not to the public, but to
sophisticated investors who have access to the kind of information which
would be contained in a prospectus, and which does not require
registration with the relevant securities authorities.
Purchase or sale of a security. Any acquisition or transfer of any interest in
the security for direct or indirect consideration, and includes the
writing of an option.
<PAGE>
Putnam. Any or all of Putnam Investments, Inc., and its subsidiaries, any one of
which shall be a "Putnam company."
Putnam client. Any of the Putnam Funds, or any advisory, trust, or other client
of Putnam.
Putnam employee (or "employee"). Any employee of Putnam.
Restricted List. The list established in accordance with Rule 1 of Section I.A.
Security. Any type or class of equity or debt security and any rights relating
to a security, such as put and call options, warrants, and convertible
securities. Unless otherwise noted, the term "security" does not include:
currencies, direct and indirect obligations of the U.S. government and its
agencies, commercial paper, certificates of deposit, repurchase
agreements, bankers' acceptances, any other money market instruments,
shares of open-end mutual funds (including Putnam open-end mutual funds),
securities of The Marsh & McLennan Companies, Inc., commodities, and any
option on a broad-based market index or an exchange-traded futures
contract or option thereon.
Transaction for a personal account (or "personal securities transaction").
Securities transactions: (a) for the personal account of any employee; (b)
for the account of a member of the immediate family of any employee; (c)
for the account of a partnership in which a Putnam employee or immediate
family member is a general partner or a partner with investment
discretion; (d) for the account of a trust in which a Putnam employee or
immediate family member is a trustee with investment discretion; (e) for
the account of a closely-held corporation in which a Putnam employee or
immediate family member holds shares and for which he has investment
discretion; and (f) for any account other than a Putnam client account
which receives investment advice of any sort from the employee or
immediate family member, or as to which the employee or immediate family
member has investment discretion.
<PAGE>
Section I. Personal Securities Rules for All Employees
A. Restricted List
RULE I
No Putnam employee shall purchase or sell for his personal account any
security without prior clearance obtained through Putnam's Intranet
pre-clearance system or from the Code of Ethics Administrator. No
clearance will be granted for securities appearing on the Restricted
List. Securities shall be placed on the Restricted List in the following
circumstances:
(a) when orders to purchase or sell such security have been entered for
any Putnam client, or the security is being actively considered for
purchase or sale for any Putnam client;
(b) with respect to voting securities of corporations in the banking,
savings and loan, communications, or gaming (i.e., casinos)
industries, when holdings of Putnam clients exceed 7% (for public
utilities, the threshold is 4%);
(c) when, in the judgment of the Code of Ethics Officer, other
circumstances warrant restricting personal transactions of Putnam
employees in a particular security;
(d) the circumstances described in the Policy Statement Concerning
Insider Trading Prohibitions, attached as Appendix A.
Reminder: Securities for an employee's "personal account" include
securities owned by certain family members of a Putnam employee. Thus,
this Rule prohibits certain trades by family members of Putnam employees.
See Definitions.
Compliance with this rule does not exempt an employee from complying with
any other applicable rules of the Code, such as those described in
Section III. In particular, Access Persons and certain investment
professionals must comply with the special rules set forth in Section II.
EXCEPTIONS
A. "Large Cap" Exception. If a security appearing on the Restricted
List is an equity security for which the issuer has a market
capitalization (defined as outstanding shares multiplied by current
price per share) of over $5 billion, then a Putnam employee may
purchase or sell up to 1,000 shares of the security per day for his
personal account. This exception does not apply if the security
appears on the Restricted List in the circumstances described in
subpart (b), (c), or (d) of Rule 1.
<PAGE>
B. Investment Grade Or Higher Fixed-Income Exception. If a security
being traded or considered for trade for a Putnam client is a
non-convertible fixed-income security which bears a rating of BBB
(Standard & Poor's) or Baa (Moody's) or any comparable rating or
higher, then a Putnam employee may purchase or sell that security
for his personal account without regard to the activity of Putnam
clients. This exception does not apply if the security has been
placed on the Restricted List in the circumstances described in
subpart (b), (c), or (d) of Rule 1.
C. Pre-Clearing Transactions Effected by Share Subscription. The
purchase and sale of securities made by subscription rather than on
an exchange are limited to issuers having a market capitalization of
$5 billion or more and are subject to a 1,000 share limit. The
following are procedures to comply with Rule 1 when effecting a
purchase or sale of shares by subscription:
(a) The Putnam employee must pre-clear the trade on the day he
or she submits a subscription to the issuer, rather than on
the actual day of the trade since the actual day of the
trade typically will not be known to the employee who
submits the subscription. At the time of pre-clearance, the
employee will be told whether the purchase is permitted (in
the case of a corporation having a market capitalization of
$5 billion or more), or not permitted (in the case of a
smaller capitalization issuer).
(b) The subscription for any purchase or sale of shares must be
reported on the employee's quarterly personal securities
transaction report, noting the trade was accomplished by
subscription.
(c) As no brokers are involved in the transaction, the
confirmation requirement will be waived for these
transactions, although the Putnam employee must provide the
Legal and Compliance Department with any transaction
summaries or statements sent by the issuer.
<PAGE>
SANCTION GUIDELINES
A. Failure to Pre-Clear a Personal Trade
1. First violation: One month trading ban with written warning
that a future violation will result in a longer trading ban.
2. Second violation: Three month trading ban and written notice
to Managing Director of the employee's division.
3. Third violation: Six month trading ban with possible longer or
permanent trading ban based upon review by Code of Ethics
Oversight Committee.
B. Failure to Pre-Clear Securities on the Restricted List
1. First violation: Disgorgement of any profit from the
transaction, one month trading ban, and written warning that a
future violation will result in a longer trading ban.
2. Second violation: Disgorgement of any profit from the
transaction, three month trading ban, and written notice to
Managing Director of the employee's division.
3. Third violation: Disgorgement of any profit from the
transaction, and six month trading ban with possible longer or
permanent trading ban based upon review by Code of Ethics
Oversight Committee.
NOTE: These are the sanction guidelines for successive failures to
pre-clear personal trades within a 2-year period. The Code of
Ethics Oversight Committee retains the right to increase or
decrease the sanction for a particular violation in light of the
circumstances. The Committee's belief that an employee
intentionally has violated the Code of Ethics will result in more
severe sanctions than outlined in the guidelines above. The
sanctions described in Paragraph B apply to Restricted List
securities that are: (i) small cap stocks (i.e., stocks not
entitled to the "Large Cap" exception) and (ii) large cap stocks
that exceed the daily 1,000 share maximum permitted under the
"Large Cap" exception. Failure to pre-clear an otherwise permitted
trade of up to 1,000 shares of a large cap security is subject to
the sanctions described above in Paragraph A.
IMPLEMENTATION
A. Maintenance of Restricted List. The Restricted List shall be maintained
by the Code of Ethics Adinistrator.
B. Consulting Restricted List. An employee wishing to trade any security
for his personal account shall first obtain clearance through Putnam's
Intranet pre-clearance system. The system may be accessed from your
desktop computer through Internet access software and following the
directions provided in the system. The current address of the Intranet
pre-clearance system can be obtained from the Code of Ethics
Administrator. Employees may pre-clear all securities between 11:30
a.m. and 4:00 p.m. EST, and may pre-clear purchases or sales of up to
1,000 shares of issuers having a market capitalization of more than $5
billion between 9:00 a.m. and 4:00 p.m. EST. Requests to make personal
securities transactions may not be made using the system or presented
to the Code of Ethics Administrator after 4:00 p.m.
<PAGE>
The pre-clearance system will inform the employee whether the security
may be traded and whether trading in the security is subject to the
"Large Cap" limitation. The response of the pre-clearance system as to
whether a security appears on the Restricted List and, if so, whether
it is eligible for the exceptions set forth after this Rule shall be
final, unless the employee appeals to the Code of Ethics Officer, using
the procedure described in Section VII, regarding the request to trade
a particular security.
A CLEARANCE IS ONLY VALID FOR TRADING ON THE DAY IT IS OBTAINED. Trades
in securities listed on Asian or European stock exchanges, however, may
be executed WITHIN ONE BUSINESS DAY AFTER PRE-CLEARANCE IS OBTAINED.
If a security is not on the Restricted List, other classes of
securities of the same issuer (e.g., preferred or convertible preferred
stock) may be on the Restricted List. It is the employee's
responsibility to identify with particularity the class of securities
for which permission is being sought for a personal investment.
If the Intranet pre-clearance system does not recognize a security, or
if an employee is unable to use the system or has any questions with
respect to the system or pre-clearance, the employee may consult the
Code of Ethics Administrator. The Code of Ethics Administrator shall
not have authority to answer any questions about a security other than
whether trading is permitted. The response of the Code of Ethics
Administrator as to whether a security appears on the Restricted List
and, if so, whether it is eligible for the exceptions set forth after
this Rule shall be final, unless the employee appeals to the Code of
Ethics Officer, using the procedure described in Section VII, regarding
the request to trade a particular security.
C. Removal of Securities from Restricted List. Securities shall be removed
from the Restricted List when: (a) in the case of securities on the
Restricted List pursuant to Rule 1(a), they are no longer being
purchased or sold for a Putnam client or actively considered for
purchase or sale for a Putnam client; (b) in the case of securities on
the Restricted List pursuant to Rule 1(b), the holdings of Putnam
clients fall below the applicable threshold designated in that Rule, or
at such earlier time as the Code of Ethics Officer deems appropriate;
or (c) in the case of securities on the Restricted List pursuant to
Rule 1(c) or 1(d), when circumstances no longer warrant restrictions on
personal trading.
<PAGE>
COMMENTS
1. Pre-Clearance. Subpart (a) of this Rule is designed to avoid the
conflict of interest that might occur when an employee trades for
his personal account a security that currently is being traded or is
likely to be traded for a Putnam client. Such conflicts arise, for
example, when the trades of an employee might have an impact on the
price or availability of a particular security, or when the trades
of the client might have an impact on price to the benefit of the
employee. Thus, exceptions involve situations where the trade of a
Putnam employee is unlikely to have an impact on the market.
2. Regulatory Limits. Owing to a variety of federal statutes and
regulations in the banking, savings and loan, communications, and
gaming industries, it is critical that accounts of Putnam clients
not hold more than 10% of the voting securities of any issuer (5%
for public utilities). Because of the risk that the personal
holdings of Putnam employees may be aggregated with Putnam holdings
for these purposes, subpart (b) of this Rule limits personal trades
in these areas. The 7% limit (4% for public utilities) will allow
the regulatory limits to be observed.
3. Options. For the purposes of this Code, options are treated like the
underlying security. See Definitions. Thus, an employee may not
purchase, sell, or "write" option contracts for a security that is
on the Restricted List. A securities index will not be put on the
Restricted List simply because one or more of its underlying
securities have been put on the Restricted List. The exercise of an
options contract (the purchase or writing of which was previously
pre-cleared) does not have to be pre-cleared. Note, however, that
the sale of securities obtained through the exercise of options must
be pre-cleared.
4. Involuntary Transactions. "Involuntary" personal securities
transactions are exempted from the Code. Special attention should be
paid to this exemption. (See Section I.D.)
5. Tender Offers. This Rule does not prohibit an employee from
tendering securities from his personal account in response to an
any-and-all tender offer, even if Putnam clients are also tendering
securities. A Putnam employee is, however, prohibited from tendering
securities from his personal account in response to a partial tender
offer, if Putnam clients are also tendering securities.
<PAGE>
B. Prohibited Purchases and Sales
RULE I
Putnam employees are prohibited from short selling any security,
whether or not the security is held in a Putnam client portfolio.
EXCEPTIONS
Short selling against the S&P 100 and 500 indexes and "against the box"
are permitted.
RULE 2
No Putnam employee shall purchase any security for her personal account
in an initial public offering.
EXCEPTION
Pre-existing Status Exception. A Putnam employee shall not be barred by
this Rule or by Rule 1(a) of Section I.A. from purchasing securities
for her personal account in connection with an initial public offering
of securities by a bank or insurance company when the employee's status
as a policyholder or depositor entitles her to purchase securities on
terms more favorable than those available to the general public, in
connection with the bank's conversion from mutual or cooperative form
to stock form, or the insurance company's conversion from mutual to
stock form, provided that the employee has had the status entitling her
to purchase on favorable terms for at least two years. This exception
is only available with respect to the value of bank deposits or
insurance policies that an employee owns before the announcement of the
initial public offering. This exception does not apply, however, if the
security appears on the Restricted List in the circumstances set forth
in subparts (b), (c), or (d) of Section I.A., Rule 1.
IMPLEMENTATION
A. General Implementation. An employee shall inquire, before any
purchase of a security for her personal account, whether the
security to be purchased is being offered pursuant to an initial
public offering. If the security is offered through an initial
public offering, the employee shall refrain from purchasing that
security for her personal account unless the exception applies.
B. Administration of Exception. If the employee believes the exception
applies, she shall consult the Code of Ethics Administrator
concerning whether the security appears on the Restricted List and
if so, whether it is eligible for this exception.
<PAGE>
COMMENTS
1. The purpose of this rule is twofold. First, it is designed to
prevent a conflict of interest between Putnam employees and Putnam
clients who might be in competition for the same securities in a
limited public offering. Second, the rule is designed to prevent
Putnam employees from being subject to undue influence as a result
of receiving "favors" in the form of special allocations of
securities in a public offering from broker-dealers who seek to do
business with Putnam.
2. Purchases of securities in the immediate after-market of an initial
public offering are not prohibited, provided they do not constitute
violations of other portions of the Code of Ethics. For example,
participation in the immediate after-market as a result of a special
allocation from an underwriting group would be prohibited by Section
III, Rule 3 concerning gifts and other "favors."
3. Public offerings subsequent to initial public offerings are not
deemed to create the same potential for competition between Putnam
employees and Putnam clients because of the pre-existence of a
market for the securities.
RULE 3
No Putnam employee shall purchase any security for his personal account
in a limited private offering or private placement.
COMMENTS
1. The purpose of this Rule is to prevent a Putnam employee from
investing in securities for his own account pursuant to a
limited private offering that could compete with or
disadvantage Putnam clients, and to prevent Putnam employees
from being subject to efforts to curry favor by those who seek
to do business with Putnam.
2. Exemptions to the prohibition will generally not be granted
where the proposed investment relates directly or indirectly
to investments by a Putnam client, or where individuals
involved in the offering (including the issuers, broker,
underwriter, placement agent, promoter, fellow investors and
affiliates of the foregoing) have any prior or existing
business relationship with Putnam or a Putnam employee, or
where the Putnam employee believes that such individuals may
expect to have a future business relationship with Putnam or a
Putnam employee.
3. An exemption may be granted, subject to reviewing all the
facts and circumstances, for investments in:
<PAGE>
(a) Pooled investment funds, including hedge funds, subject to the
condition that an employee investing in a pooled investment
fund would have no involvement in the activities or
decision-making process of the fund except for financial
reports made in the ordinary course of the fund's business.
(b) Private placements where the investment cannot relate, or be
expected to relate, directly or indirectly to Putnam or
investments by a Putnam client.
4. Employees who apply for an exemption will be expected to
disclose to the Code of Ethics Officer in writing all facts
and relationships relating to the proposed investment.
5. Limited partnership interests are frequently sold in private
placements. An employee should assume that investment in a
limited partnership is barred by these rules, unless the
employee has obtained, in advance of purchase, a written
exemption under the ad hoc exemption set forth in Section
I.D., Rule 2. The procedure for obtaining an ad hoc exemption
is described in Section VII, Part 4.
6. Applications to invest in private placements will be reviewed
by the Code of Ethics Oversight Committee. This review will
take into account, among other factors, the considerations
described in the preceding comments.
RULE 4
No Putnam employee shall purchase or sell any security for her personal
account or for any Putnam client account while in possession of material,
nonpublic information concerning the security or the issuer.
EXCEPTIONS
NONE. Please read Appendix A, Policy Statement Concerning Insider
Trading Prohibitions.
RULE 5
No Putnam employee shall purchase from or sell to a Putnam client any
securities or other property for his personal account, nor engage in any
personal transaction to which a Putnam client is known to be a party, or
which transaction may have a significant relationship to any action taken
by a Putnam client.
EXCEPTIONS
None.
IMPLEMENTATION
It shall be the responsibility of every Putnam employee to make inquiry
prior to any personal transaction sufficient to satisfy himself that the
requirements of this Rule have been met.
<PAGE>
COMMENT
This rule is required by federal law. It does not prohibit a Putnam
employee from purchasing any shares of an open-end Putnam fund. The
policy with respect to employee trading in closed-end Putnam funds is
attached as Appendix B.
C. Discouraged Transactions
RULE I
Putnam employees are strongly discouraged from engaging in naked option
transactions for their personal accounts.
EXCEPTIONS
None.
COMMENT
Naked option transactions are particularly dangerous, because a Putnam
employee may be prevented by the restrictions in this Code of Ethics from
"covering" the naked option at the appropriate time. All employees should
keep in mind the limitations on their personal securities trading imposed
by this Code when contemplating such an investment strategy. Engaging in
naked options transactions on the basis of material, nonpublic
information is prohibited. See Appendix A, Policy Statement Concerning
Insider Trading Prohibitions.
RULE 2
Putnam employees are strongly discouraged from engaging in excessive
trading for their personal accounts.
EXCEPTIONS
None.
COMMENTS
1. Although a Putnam employee's excessive trading may not itself
constitute a conflict of interest with Putnam clients, Putnam
believes that its clients' confidence in Putnam will be
enhanced and the likelihood of Putnam achieving better
investment results for its clients over the long term will be
increased if Putnam employees rely on their investment-- as
opposed to trading-- skills in transactions for their own
account. Moreover, excessive trading by a Putnam employee for
his or her own account diverts an employee's attention from
the responsibility of servicing Putnam clients, and increases
the possibilities for transactions that are in actual or
apparent conflict with Putnam client transactions.
2. Although this Rule does not define excessive trading,
employees should be aware that if their trades exceed 10
trades per quarter the trading activity will be reviewed by
the Code of Ethics Oversight Committee.
D. Exempted Transactions
RULE I
Transactions which are involuntary on the part of a Putnam employee are
exempt from the prohibitions set forth in Sections I.A., I.B., and I.C.
EXCEPTIONS
None.
COMMENTS
1. This exemption is based on categories of conduct that the
Securities and Exchange Commission does not consider
"abusive."
2. Examples of involuntary personal securities transactions
include:
(a) sales out of the brokerage account of a Putnam employee as a
result of bona fide margin call, provided that withdrawal of
collateral by the Putnam employee within the ten days previous
to the margin call was not a contributing factor to the margin
call;
(b) purchases arising out of an automatic dividend reinvestment
program of an issuer of a publicly traded security.
3. Transactions by a trust in which the Putnam employee (or a member of
his imediate family) holds a beneficial interest, but for which the
employee has no direct or indirect influence or control with respect
to the selection of investments, are involuntary transactions. In
addition, these transactions do not fall within the definition of
"personal securities transactions." See Definitions.
4. A good-faith belief on the part of the employee that a transaction
was involuntary will not be a defense to a violation of the Code of
Ethics. In the event of confusion as to whether a particular
transction is involuntary, the burden is on the employee to seek a
prior written determination of the applicability of this exemption.
The procedures for obtaining such a determination appear in Section
VII, Part 3.
RULE 2
Transactions which have been determined in writing by the Code of Ethics
Officer before the transaction occurs to be no more than remotely
potentially harmful to Putnam clients because the transaction would be
very unlikely to affect a highly institutional market, or because the
transaction is clearly not related economically to the securities to be
purchased, sold, or held by a Putnam client, are exempt from the
prohibitions set forth in Sections I.A., I.B., and I.C.
EXCEPTIONS
N.A.
IMPLEMENTATION
An employee may seek an ad hoc exemption under this Rule by following the
procedures in Section VII, Part 4.
COMMENTS
1. This exemption is also based upon categories of conduct that the
Securities and Exchange Commission does not consider "abusive."
2. The burden is on the employee to seek a prior written determination
that the proposed transaction meets the standards for an ad hoc
exemption set forth in this Rule.
<PAGE>
Section II. Additional Special Rules for Personal Securities Transactions of
Access Persons and Certain Investment Professionals
Access Persons (including all Investment
Professionals and other employees as defined on page ix)
RULE I ("60-DAY" RULE)
No Access Person shall profit from the purchase and sale, or sale and purchase,
of any security or related derivative security within 60 calendar days.
EXCEPTIONS
None, unless prior written approval from the Code of Ethics Officer is obtained.
Exceptions may be granted on a case-by-case basis when no abuse is involved and
the equities of the situation support an exemption. For example, although an
Access Person may buy a stock as a long-term investment, that stock may have to
be sold involuntarily due to unforeseen activity such as a merger.
IMPLEMENTATION
1. The 60-Day Rule applies to all Access Persons, as defined in the Definitions
section of the Code.
2. Calculation of whether there has been a profit is based upon the market
prices of the securities. THE CALCULATION IS NOT NET OF COMMISSIONS OR
OTHER SALES CHARGES.
3. As an example, an Access Person would not be permitted to sell a security
at $12 that he purchased within the prior 60 days for $10. Similarly, an
Access Person would not be permitted to purchase a security at $10 that
she had sold within the prior 60 days for $12. If the proposed transaction
would be made at a loss, it would be permitted if the pre-clearance
requirements are met. See, Section I, Rule 1.
COMMENTS
1. The prohibition against short-term trading profits by Access Persons is
designed to minimize the possibility that they will capitalize
inappropriately on the market impact of trades involving a client
portfolio about which they might possibly have information.
2. Although Chief Investment Officers, Portfolio Managers, and Analysts may
sell securities at a profit within 60 days of purchase in order to comply
with the requirements of the 7-Day Rule applicable to them (described
below), the profit will have to be disgorged to charity under the terms of
the 7-Day Rule.
3. Access Persons occasionally make a series of transactions in securities
over extended periods of time. For example, an Access Person bought 100
shares of Stock X on Day 1 at $100 per share and then bought 50 additional
shares on Day 45 at $95 per share. On Day 75, the Access Person sold 20
shares at $105 per share. The question arises whether the Access Person
violated the 60-Day Rule. The characterization of the employee's tax basis
in the shares sold determines the analysis. If, for personal income tax
purposes, the Access Person characterizes the shares sold as having a
basis of $100 per share (i.e., shares purchased on Day 1), the transaction
would be consistent with the 60-Day Rule. However, if the tax basis in the
shares is $95 per share (i.e., shares purchased on Day 45), the
transaction would violate the 60-Day Rule.
Certain Investment Professionals
RULE 2 ("7-DAY" RULE)
(a) Portfolio Managers: Before a portfolio manager places an order to buy a
security for any Putnam client portfolio that he manages, he shall sell any such
security or related derivative security purchased in a transaction for his
personal account within the preceding seven calendar days.
(b) Co-Managers: Before a portfolio manager places an order to buy a security
for any Putnam client he manages, his co-manager shall sell any such security or
related derivative security purchased in transaction for his personal account
within the preceding seven calendar days.
(c) Analysts: Before an analyst makes a buy recommendation for a security, he
shall sell any such security or related derivative security purchased in a
transaction for his personal account within the preceding seven calendar days.
(d) Chief Investment Officers: The Chief Investment Officer of an investment
group must sell any security or related derivative security purchased in a
transaction for his personal account within the preceding seven calendar days
before any portfolio manager in the CIO's investment group places an order to
buy such security for any Putnam client account he manages.
EXCEPTIONS
None.
COMMENTS
1. This Rule applies to portfolio managers and Chief Investment Officers with
respect to any purchase (no matter how small) in any client account managed
or overseen by that portfolio manager or CIO (even so-called "clone
accounts"). In particular, it should be noted that the requirements of this
rule also apply with respect to purchases in client accounts, including
"clone accounts," resulting from "cash flows." To comply with the
requirements of this rule, it is the responsibility of each portfolio
manager and CIO to be aware of the placement of all orders for purchases of
a security by client accounts that he or she manages or oversees for 7 days
following the purchase of that security for his or her personal account.
2. An investment professional who must sell securities to be in compliance
with the 7-Day Rule must absorb any loss and disgorge to charity any profit
resulting from the sale.
3. This Rule is designed to avoid even the appearance of a conflict of
interest between an investment professional and a Putnam client. A more
stringent rule is warranted because, with their greater knowledge and
control, these investment professionals are in a better position than other
employees to create an appearance of manipulation of Putnam client accounts
for personal benefit.
4. "Portfolio manager" is used in this Section as a functional label, and is
intended to cover any employee with authority to authorize a trade on
behalf of a Putnam client, whether or not such employee bears the title
"portfolio manager." "Analyst" is also used in this Section as a
functional label, and is intended to cover any employee who is not a
portfolio manager but who may make recommendations regarding investments
for Putnam clients.
RULE 3 ("BLACKOUT RULE")
a) Portfolio Managers: No portfolio manager shall: (i) sell any security or
related derivative security for her personal account until seven calendar days
have elapsed since the most recent purchase of that security or related
derivative security by any Putnam client portfolio she manages or co-manages; or
(ii) purchase any security or related derivative security for her personal
account until seven calendar days have elapsed since the most recent sale of
that security or related derivative security from any Putnam client portfolio
that she manages or co-manages.
(b) Analysts: No analyst shall: (i) sell any security or related derivative
security for his personal account until seven calendar days have elapsed since
his most recent buy recommendation for that security or related derivative
security; or (ii) purchase any security or related derivative security for his
personal account until seven calendar days have elapsed since his most recent
sell recommendation for that security or related derivative security.
(c) Chief Investment Officers: No Chief Investment Officer shall: (i) sell any
security or related derivative security for his personal account until seven
calendar days have elapsed since the most recent purchase of that security or
related derivative security by a portfolio manager in his investment group; or
(ii) purchase any security or related derivative security for his personal
account until seven calendar days have elapsed since the most recent sale of
that security or related derivative security from any Putnam client portfolio
managed in his investment group.
EXCEPTIONS
None.
COMMENTS
1. This Rule applies to portfolio managers and Chief Investment Officers with
respect to any transaction(no matter how small) in any client account
managed or overseen by that portfolio manager or CIO (even so-called
"clone accounts"). In particular, it should be noted that the requirements
of this rule also apply with respect to transactions in client accounts,
including "clone accounts," resulting from "cash flows." In order to
comply with the requirements of this rule, it is the responsibility of
each portfolio manager and CIO to be aware of all transactions in a
security by client accounts that he or she manages or oversees that took
place within the 7 days preceding a transaction in that security for his
or her personal account.
2. This Rule is designed to prevent a Putnam portfolio manager or analyst
from engaging in personal investment conduct that appears to be counter to
the investment strategy she is pursuing or recommending on behalf of a
Putnam client.
3. Trades by a Putnam portfolio manager for her personal account in the "same
direction" as the Putnam client portfolio she manages, and trades by an
analyst for his personal account in the "same direction" as his
recommendation, do not present the same danger, so long as any "same
direction" trades do not violate other provisions of the Code or the
Policy Statements.
RULE 4 ("CONTRA TRADING" RULE)
(a) Portfolio Managers: No portfolio manager shall, without prior clearance,
sell out of his personal account securities or related derivative securities
held in any Putnam client portfolio that he manages or co-manages.
(b) Chief Investment Officers: No Chief Investment Officer shall, without prior
clearance, sell out of his personal account securities or related derivative
securities held in any Putnam client portfolio managed in his investment group.
EXCEPTIONS
None, unless prior clearance is given.
IMPLEMENTATION
A. Individuals Authorized to Give Approval. Prior to engaging in any such
sale, a portfolio manager shall seek approval, in writing, of the proposed
sale. In the case of a portfolio manager or director, prior written
approval of the proposed sale shall be obtained from a chief investment
officer to whom he reports or, in his absence, another chief investment
officer. In the case of a chief investment officer, prior written approval
of the proposed sale shall be obtained from another chief investment
officer. In addition to the foregoing, prior written approval must also be
obtained from the Code of Ethics Officer.
B. Contents of Written Approval. In every instance, the written approval form
attached as Appendix C (or such other form as the Code of Ethics Officer
shall designate) shall be used. The written approval should be signed by
the chief investment officer giving approval and dated the date such
approval was given, and shall state, briefly, the reasons why the trade
was allowed and why the investment conduct pursued by the portfolio
manager, director, or chief investment officer was deemed inappropriate
for the Putnam client account controlled by the individual seeking to
engage in the transaction for his personal account. Such written approval
shall be sent by the chief investment officer approving the transaction to
the Code of Ethics Officer within twenty-four hours or as promptly as
circumstances permit. Approvals obtained after a transaction has been
completed or while it is in process will not satisfy the requirements of
this Rule.
COMMENT
This Rule, like Rule 3 of this Section, is designed to prevent a Putnam
portfolio manager from engaging in personal investment conduct that appears to
be counter to the investment strategy that he is pursuing on behalf of a Putnam
client.
RULE 5
No portfolio manager shall cause, and no analyst shall recommend, a Putnam
client to take action for the portfolio manager's or analyst's own personal
benefit.
EXCEPTIONS
None.
COMMENTS
1. A portfolio manager who trades in, or an analyst who recommends,
particular securities for a Putnam client account in order to support the
price of securities in his personal account, or who "front runs" a Putnam
client order is in violation of this Rule. Portfolio managers and analysts
should be aware that this Rule is not limited to personal transactions in
securities (as that word is defined in "Definitions"). Thus, a portfolio
manager or analyst who "front runs" a Putnam client purchase or sale of
obligations of the U.S. government is in violation of this Rule, although
U.S. government obligations are excluded from the definition of
"security."
2. This Rule is not limited to instances when a portfolio manager or analyst
has malicious intent. It also prohibits conduct that creates an appearance
of impropriety. Portfolio managers and analysts who have questions about
whether proposed conduct creates an appearance of impropriety should seek
a prior written determination from the Code of Ethics Officer, using the
procedures described in Section VII, Part 3.
<PAGE>
A
Section III. Prohibited Conduct for All Employees
RULE I
All employees must comply with applicable laws and regulations as well as
company policies. This includes tax, antitrust, political contribution, and
international boycott laws. In addition, no employee at Putnam may engage in
fraudulent conduct of any kind.
EXCEPTIONS
None.
COMMENTS
1. Putnam may report to the appropriate legal authorities conduct by Putnam
employees that violates this rule.
2. It should also be noted that the U.S. Foreign Corrupt Practices Act makes
it a criminal offense to make a payment or offer of payment to any non-U.S.
governmental official, political party, or candidate to induce that person
to affect any governmental act or decision, or to assist Putnam's obtaining
or retaining business.
RULE 2
No Putnam employee shall conduct herself in a manner which is contrary to the
interests of, or in competition with, Putnam or a Putnam client, or which
creates an actual or apparent conflict of interest with a Putnam client.
EXCEPTIONS
None.
COMMENTS
1. This Rule is designed to recognize the fundamental principle that Putnam
employees owe their chief duty and loyalty to Putnam and Putnam clients.
2. It is expected that a Putnam employee who becomes aware of an investment
opportunity that she believes is suitable for a Putnam client who she
services will present it to the appropriate portfolio manager, prior to
taking advantage of the opportunity herself.
RULE 3
No Putnam employee shall seek or accept gifts, favors, preferential treatment,
or special arrangements of material value from any broker-dealer, investment
adviser, financial institution, corporation, or other entity, or from any
existing or prospective supplier of goods or services to Putnam or Putnam Funds.
Specifically, any gift over $50 in value, or any accumulation of gifts which in
aggregate exceeds $50 in value from one source in one calendar year, is
prohibited. Any Putnam employee who is offered or receives an item prohibited by
this Rule must report the details in writing to the Code of Ethics Officer.
EXCEPTIONS
None.
COMMENTS
1. This rule is intended to permit only proper types of customary business
amenities. Listed below are examples of items that would be permitted
under proper circumstances and of items that are prohibited under this
rule. These examples are illustrative and not all-inclusive.
Notwithstanding these examples, a Putnam employee may not, under any
circumstances, accept anything that could create the appearance of any
kind of conflict of interest. For example, acceptance of any consideration
is prohibited if it would create the appearance of a "reward" or
inducement for conducting Putnam business either with the person providing
the gift or his employer.
2. This rule also applies to gifts or "favors" of material value that an
investment professional may receive from a company or other entity being
researched or considered as a possible investment for a Putnam client
account.
3. Among items not considered of "material value" which, under proper
circumstances, would be considered permissible are:
(a) Occasional lunches or dinners conducted for business purposes;
(b) Occasional cocktail parties or similar social gatherings conducted for
business purposes;
(c) Occasional attendance at theater, sporting or other entertainment
events conducted for business purposes; and
(d) Small gifts, usually in the nature of reminder advertising, such as
pens, calendars, etc., with a value of no more than $50.
4. Among items which are considered of "material value" and which are prohibited
are:
(a) Entertainment of a recurring nature such as sporting events, theater,
golf games, etc.;
(b) The cost of transportation to a locality outside the Boston
metropolitan area, and lodging while in another locality, unless such
attendance and reimbursement arrangements have received advance
written approval of the Code of Ethics Officer;
(c) Personal loans to a Putnam employee on terms more favorable than
those generally available for comparable credit standing and
collateral; and
(d) Preferential brokerage or underwriting commissions or spreads or
allocations of shares or interests in an investment for the personal
account of a Putnam employee.
5. As with any of the provisions of the Code of Ethics, a sincere belief by
the employee that he was acting in accordance with the requirements of
this Rule will not satisfy his obligations under the Rule. Therefore, an
employee who is in doubt concerning the propriety of any gift or "favor"
should seek a prior written determination from the Code of Ethics Officer,
as provided in Part 3 of Section VII.
RULE 4
No Putnam employee may pay, offer, or commit to pay any amount of consideration
which might be or appear to be a bribe or kickback in connection with Putnam's
business.
EXCEPTIONS
None.
COMMENT
Although the rule does not specifically address political contributions, Putnam
employees should be aware that it is against corporate policy to use company
assets to fund political contributions of any sort, even where such
contributions may be legal. No Putnam employee should offer or agree to make any
political contributions (including political dinners and similar fund-raisers)
on behalf of Putnam, and no employee will be reimbursed by Putnam for such
contributions made by the employee personally.
RULE 5
No contributions may be made with corporate funds to any political party or
campaign, whether directly or by reimbursement to an employee for the expense of
such a contribution. No Putnam employee shall solicit any charitable, political
or other contributions using Putnam letterhead or making reference to Putnam in
the solicitation. No Putnam employee shall personally solicit any such
contribution while on Putnam business.
EXCEPTIONS
None.
COMMENT
1. Putnam has established a political action committee (PAC) that contributes
to worthy candidates for political office. Any request received by a
Putnam employee for a political contribution must be directed to Putnam's
Legal and Compliance Department.
2. This rule does not prohibit solicitation on personal letterhead by Putnam
employees. Nonetheless, Putnam employees should use discretion in
soliciting contributions from individuals or entities who provide services
to Putnam. There should never be a suggestion that any service provider
must contribute to keep Putnam's business.
RULE 6
No unauthorized disclosure may be made by any employee or former employee of any
trade secrets or proprietary information of Putnam or of any confidential
information. No information regarding any Putnam client portfolio, actual or
proposed securities trading activities of any Putnam client, or Putnam research
shall be disclosed outside the Putnam organization without a valid business
purpose.
EXCEPTIONS
None.
COMMENT
All information about Putnam and Putnam clients is strictly confidential. Putnam
research information should not be disclosed unnecessarily and never for
personal gain.
RULE 7
No Putnam employee shall serve as officer, employee, director, trustee or
general partner of a corporation or entity other than Putnam, without prior
approval of the Code of Ethics Officer.
EXCEPTION
Charitable or Non-profit Exception. This Rule shall not prevent any Putnam
employee from serving as officer, director, or trustee of a charitable or
not-for-profit institution, provided that the employee abides by the spirit of
the Code of Ethics and the Policy Statements with respect to any investment
activity for which she has any discretion or input as officer, director, or
trustee. The pre-clearance and reporting requirements of the Code of Ethics do
not apply to the trading activities of such charitable or not-for-profit
institutions for which an employee serves as an officer, director, or trustee.
COMMENTS
1. This Rule is designed to ensure that Putnam cannot be deemed an affiliate
of any issuer of securities by virtue of service by one of its officers or
employees as director or trustee.
2. Certain charitable or not-for-profit institutions have assets (such as
endowment funds or employee benefit plans) which require prudent
investment. To the extent that a Putnam employee (because of her position
as officer, director, or trustee of an outside entity) is charged with
responsibility to invest such assets prudently, she may not be able to
discharge that duty while simultaneously abiding by the spirit of the Code
of Ethics and the Policy Statements. Employees are cautioned that they
should not accept service as an officer, director, or trustee of an
outside charitable or not-for-profit entity where such investment
responsibility is involved, without seriously considering their ability to
discharge their fiduciary duties with respect to such investments.
RULE 8
No Putnam employee shall serve as a trustee, executor, custodian, any other
fiduciary, or as an investment adviser or counselor for any account outside
Putnam.
EXCEPTIONS
Charitable or Religious Exception. This Rule shall not prevent any Putnam
employee from serving as fiduciary with respect to a religious or charitable
trust or foundation, so long as the employee abides by the spirit of the Code of
Ethics and the Policy Statements with respect to any investment activity over
which he has any discretion or input. The pre-clearance and reporting
requirements of the Code of Ethics do not apply to the trading activities of
such a religious or charitable trust or foundation.
Family Trust or Estate Exception. This Rule shall not prevent any Putnam
employee from serving as fiduciary with respect to a family trust or estate, so
long as the employee abides by all of the Rules of the Code of Ethics with
respect to any investment activity over which he has any discretion.
COMMENT
The roles permissible under this Rule may carry with them the obligation to
invest assets prudently. Once again, Putnam employees are cautioned that they
may not be able to fulfill their duties in that respect while abiding by the
Code of Ethics and the Policy Statements.
RULE 9
No Putnam employee may be a member of any investment club.
EXCEPTIONS
None.
COMMENT
This Rule guards against the danger that a Putnam employee may be in violation
of the Code of Ethics and the Policy Statements by virtue of his personal
securities transactions in or through an entity that is not bound by the
restrictions imposed by this Code of Ethics and the Policy Statements. Please
note that this restriction also applies to the spouse of a Putnam employee and
any relatives of a Putnam employee living in the same household as the employee,
as their transactions are covered by the Code of Ethics (see page x).
RULE I0
No Putnam employee may become involved in a personal capacity in consultations
or negotiations for corporate financing, acquisitions or other transactions for
outside companies (whether or not held by any Putnam client), nor negotiate nor
accept a fee in connection with these activities without obtaining the prior
written permission of the president of Putnam Investments.
EXCEPTIONS
None.
RULE II
No new types of securities or instruments may be purchased for a Putnam fund or
other client account without following the procedures set forth in Appendix D.
EXCEPTIONS
None.
COMMENT
See Appendix D.
RULE I2
No employee may create or participate in the creation of any record that is
intended to mislead anyone or to conceal anything that is improper.
EXCEPTIONS
None.
COMMENT
In many cases, this is not only a matter of company policy and ethical behavior
but also required by law. Our books and records must accurately reflect the
transactions represented and their true nature. For example, records must be
accurate as to the recipient of all payments; expense items, including personal
expense reports, must accurately reflect the true nature of the expense. No
unrecorded fund or asset shall be established or maintained for any reason.
RULE I3
No employee should have any direct or indirect (including by a family member or
close relative) personal financial interest (other than normal investments not
material to the employee in the entity's publicly traded securities) in any
business, with which Putnam has dealings unless such interest is disclosed and
approved by the Code of Ethics Officer.
RULE I4
No employee shall, with respect to any affiliate of Putnam that provides
investment advisory services and is listed below in Comment 4 to this Rule, as
revised from time to time (each an "NPA"),
(a) directly or indirectly seek to influence the purchase, retention, or
disposition of, or exercise of voting, consent, approval or similar rights with
respect to, any portfolio security in any account or fund advised by the NPA and
not by Putnam,
(b) transmit any information regarding the purchase, retention or disposition
of, or exercise of voting, consent, approval or similar rights with respect to,
any portfolio security held in a Putnam or NPA client account to any personnel
of the NPA,
(c) transmit any trade secrets, proprietary information, or confidential
information of Putnam to the NPA without a valid business purpose,
(d) use confidential information or trade secrets of the NPA for the benefit of
the employee, Putnam, or any other NPA, or
(e) breach any duty of loyalty to the NPA by virtue of service as a director or
officer of the NPA.
COMMENT
1. Sections (a) and (b) of the Rule are designed to help ensure that the
portfolio holdings of Putnam clients and clients of the NPA need not be
aggregated for purposes of determining beneficial ownership under Section
13(d) of the Securities Exchange Act or applicable regulatory or
contractual investment restrictions that incorporate such definition of
beneficial ownership. Persons who serve as directors or officers of both
Putnam and an NPA would take care to avoid even inadvertent violations of
Section (b). Section (a) does not prohibit a Putnam employee who serves as
a director or officer of the NPA from seeking to influence the
modification or termination of a particular investment product or strategy
in a manner that is not directed at any specific securities. Sections (a)
and (b) do not apply when a Putnam affiliate serves as an adviser or
subadviser to the NPA or one of its products, in which case normal Putnam
aggregation rules apply.
2. As a separate entity, any NPA may have trade secrets or confidential
information that it would not choose to share with Putnam. This choice
must be respected.
3. When Putnam employees serve as directors or officers of an NPA, they are
subject to common law duties of loyalty to the NPA, despite their Putnam
employment. In general, this means that when performing their duties as
NPA directors or officers, they must act in the best interest of the NPA
and its shareholders. Putnam's Legal and Compliance Department will assist
any Putnam employee who is a director or officer of an NPA and has
questions about the scope of his or her responsibilities to the NPA.
4. Entities that are currently non-Putnam affiliates within the scope of this
Rule are: Cisalpina Gestioni, S.p.A., PanAgora Asset Management Inc.,
PanAgora Asset Management Ltd., Nissay Asset Management Co., Ltd., and
Thomas H. Lee Partners, L.P.
RULE I5
No employee shall use computer hardware, software, data, Internet, electronic
mail, voice mail, electronic messaging ("e-mail" or "cc: Mail"), or telephone
communications systems in a manner that is inconsistent with their use as set
forth in policy statements governing their use that are adopted from time to
time by Putnam. No employee shall introduce a computer "virus" or computer code
that may result in damage to Putnam's information or computer systems.
EXCEPTIONS
None.
COMMENT
1. Internet and Electronic Messaging Policies. As more and more employees of
Putnam Investments use the Internet to connect with Putnam's customers,
vendors, suppliers and other key organizations, it is important that all
Putnam employees understand the appropriate use guidelines and how to
protect assets of Putnam and its clients whenever using the Internet.
Internet access is provided to designated employees to connect with
worldwide information resources for the benefit of the company and its
clients. Such access is not intended for personal use. Employees using the
Internet or any electronic messaging system must do so in a responsible,
ethical and lawful manner.
o Putnam has adopted a Policy and Guidelines on Internet Use. A copy of this
policy statement is included in the Putnam Employee Handbook and is
available online (you may contact Putnam's Human Resources Department for
the on-line address). Failure to comply with this policy statement is a
violation of Putnam's Code of Ethics.
2. System Security Policy Statement. It is the policy of Putnam Investments
to secure its computer hardware, software, data, electronic mail, voice
mail and Internet access by placing strict controls and restrictions on
their access and use.
o Putnam has adopted a System Security Policy Statement. This policy
statement governs the use of computer hardware and software, data,
electronic mail, voice mail, Internet and commercial online services,
computer passwords and logon Ids, and workstation security. A copy of this
policy statement is included in the Putnam Employee Handbook and is
available online (you may contact Putnam's Human Resources Department for
the on-line address). Failure to comply with this policy statement is a
violation of Putnam's Code of Ethics.
3. Computer Virus Policy and Procedure. Putnam has adopted a Computer Virus
Policy and Procedure. This policy sets forth guidelines to prevent
computer viruses, procedures to be followed in the event a computer may be
infected with a virus, and a description of virus symptoms. A copy of this
policy statement is included in the Putnam Employee Handbook and is
available online (you may contact Putnam's Human Resources Department for
the on-line address). Failure to comply with this policy statement is a
violation of Putnam's Code of Ethics.
<PAGE>
Section IV. Special Rules for Officers and Employees of Putnam Europe Ltd.
RULE I
In situations subject to Section I.A., Rule 1 (Restricted List Personal
Securities Transactions), the Putnam Europe Ltd. ("PEL") employee must obtain
clearance not only as provided in that rule, but also from PEL's Compliance
Officer or her designee, who must approve the transaction before any trade is
placed and record the approval.
EXCEPTIONS
None.
IMPLEMENTATION
Putnam's Code of Ethics Administrator in Boston (the "Boston Administrator") has
also been designated the Assistant Compliance Officer of PEL and has been
delegated the right to approve or disapprove personal securities transactions in
accordance with the foregoing requirement. Therefore, approval from the Code of
Ethics Administrator for PEL employees to make personal securities investments
constitutes approval under the Code of Ethics and also for purposes of
compliance with IMRO, the U.K. self-regulatory organization that regulates PEL.
The position of London Code of Ethics Administrator (the "London Administrator")
has also been created (Jane Barlow is the current London Administrator). All
requests for clearances must be made by e-mail to the Boston Administrator
copying the London Administrator. The e-mail must include the number of shares
to be bought or sold and the name of the broker(s) involved. Where time is of
the essence clearances can be made by telephone to the Boston Administrator but
they must be followed up by e-mail.
Both the Boston and London Administrators will maintain copies of all clearances
for inspection by senior management and regulators.
RULE 2
No PEL employee may trade with any broker or dealer unless that broker or dealer
has sent a letter to the London Administrator agreeing to deliver copies of
trade confirmations to PEL. No PEL employee may enter into any margin or any
other special dealing arrangement with any broker-dealer without the prior
written consent of the PEL Compliance Officer.
EXCEPTIONS
None.
IMPLEMENTATION
PEL employees will be notified separately of this requirement once a year by the
PEL Compliance Officer, and are required to provide an annual certification of
compliance with the Rule.
All PEL employees must inform the London Administrator of the names of all
brokers and dealers with whom they trade prior to trading. The London
Administrator will send a letter to the broker(s) in question requesting them to
agree to deliver copies of confirms to PEL. The London Administrator will
forward copies of the confirms to the Boston Administrator. PEL employees may
trade with a broker only when the London Administrator has received the signed
agreement from that broker.
RULE 3
For purposes of the Code of Ethics, including Putnam's Policy Statement on
Insider Trading Prohibitions, PEL employees must also comply with Part V of the
Criminal Justice Act 1993 on insider dealing.
EXCEPTIONS
None.
IMPLEMENTATION
To ensure compliance with U.K. insider dealing legislation, PEL employees must
observe the relevant procedures set forth in PEL's Compliance Manual, a copy of
which is sent to each PEL employee, and sign an annual certification as to
compliance.
<PAGE>
Section V. Reporting Requirements for All Employees
Reporting of Personal Securities Transactions
RULE I
Each Putnam employee shall ensure that broker-dealers send all confirmations of
securities transactions for his personal accounts to the Code of Ethics Officer.
(For the purpose of this Rule, "securities" shall include securities of The
Marsh & McLennan Companies, Inc., and any option on a security or securities
index, including broad-based market indexes.)
EXCEPTIONS
None.
IMPLEMENTATION
1. Putnam employees must instruct their broker-dealers to send confirmations
to Putnam and must follow up with the broker-dealer on a reasonable basis
to ensure that the instructions are being followed. Putnam employees
should contact the Code of Ethics Administrator to obtain a letter from
Putnam authorizing the setting up of a personal brokerage account.
Confirmations should be submitted to the Code of Ethics Administrator.
(Specific procedures apply to employees of Putnam Europe Ltd. ("PEL").
Employees of PEL should contact the London Code of Ethics Administrator.)
Failure of a broker-dealer to comply with the instructions of a Putnam
employee to send confirmations shall be a violation by the Putnam employee
of this Rule.
COMMENTS
1. "Transactions for personal accounts" is defined broadly to include more
than transaction in accounts under an employee's own name. See
Definitions.
2. A confirmation is required for all personal securities transactions,
whether or not exempted or excepted by this Code.
3. To the extent that a Putnam employee has investment authority over
securities transactions of a family trust or estate, confirmations of
those transactions must also be made, unless the employee has received a
prior written exception from the Code of Ethics Officer.
<PAGE>
RULE 2
Every Access Person shall file a quarterly report, within ten calendar days of
the end of each quarter, recording all purchases and sales of any securities for
personal accounts as defined in the Definitions. (For the purpose of this Rule,
"securities" shall include securities of The Marsh & McLennan Companies, Inc.,
and any option on a security or securities index, including broad-based market
indexes.)
EXCEPTIONS
None.
IMPLEMENTATION
All employees required to file such a report will receive a blank form at the
end of the quarter from the Code of Ethics Administrator. The form will specify
the information to be reported. The form shall also contain a representation
that employees have complied fully with all provisions of the Code of Ethics.
COMMENT
1. The date for each transaction required to be disclosed in the quarterly
report is the trade date for the transaction, not the settlement date.
2. If the requirement to file a quarterly report applies to you and you fail
to report within the required 10-day period, salary increases and bonuses
will be reduced in accordance with guidelines stated in the form.
Reporting of Personal Securities Holdings
RULE 3
Access Persons must disclose all personal securities holdings to the Code of
Ethics Officer upon commencement of employment and thereafter on an annual
basis.
EXCEPTIONS
None.
COMMENT
These requirements are mandated by SEC regulations and are designed to
facilitate the monitoring of personal securities transactions. Putnam's Code of
Ethics Administrator will provide Access Persons with the form for making these
reports and the specific information that must be disclosed at the time that the
disclosure is required.
Other Reporting Policies
The following rules are designed to ensure that Putnam's internal Control and
Reporting professionals are aware of all items that might need to be addressed
by Putnam or reported to appropriate entities.
RULE 4
If a Putnam employee suspects that fraudulent or other irregular activity might
be occurring at Putnam, the activity must be reported immediately to the
Managing Director in charge of that employee's business unit. Managing Directors
who are notified of any such activity must immediately report it in writing to
Putnam's Chief Financial Officer or Putnam's General Counsel.
RULE 5
Putnam employees must report all communications from regulatory or government
agencies (federal, state, or local) to the Managing Director in charge of their
business unit. Managing Directors who are notified of any such communication
must immediately report it in writing to Putnam's Chief Financial Officer or
Putnam's General Counsel.
RULE 6
All claims, circumstances or situations that come to the attention of a Putnam
employee must be reported through the employee's management structure up to the
Managing Director in charge of the employee's business unit. Managing Directors
who are notified of any such claim, circumstance or situation that might give
rise to a claim against Putnam for more than $100,000 must immediately report in
writing it to Putnam's Chief Financial Officer or Putnam's General Counsel.
RULE 7
All possible violations of law or regulations at Putnam that come to the
attention of a Putnam employee must be reported immediately to the Managing
Director in charge of the employee's business unit. Managing Directors who are
notified of any such activity must immediately report it in writing to Putnam's
Chief Financial Officer or Putnam's General Counsel.
RULE 8
Putnam employees must report all requests by anyone for Putnam to participate in
or cooperate with an international boycott to the Managing Director in charge of
their business unit. Managing Directors who are notified of any such request
must immediately report it in writing to Putnam's Chief Financial Officer or
Putnam's General Counsel.
<PAGE>
Section VI. Education Requirements
Every Putnam employee has an obligation to fully understand the requirements of
the Code of Ethics. The Rules set forth below are designed to enhance this
understanding.
RULE I
A copy of the Code of Ethics will be distributed to every Putnam employee
periodically. All Access Persons will be required to certify periodically that
they have read, understood, and will comply with the provisions of the Code of
Ethics, including the Code's Policy Statement Concerning Insider Trading
Prohibitions.
RULE 2
Every investment professional will attend a meeting periodically at which the
Code of Ethics will be reviewed.
<PAGE>
Section VII. Compliance and Appeal Procedures
1. Assembly of Restricted List. The Code of Ethics Administrator will
coordinate the assembly and maintenance of the Restricted List. The list
will be assembled each day by 11:30 a.m. EST. No employee may engage in a
personal securities transaction without prior clearance on any day, even
if the employee believes that the trade will be subject to an exception.
Note that pre-clearance may be obtained after 9:00 a.m. for purchases or
sales of up to 1,000 shares of issuers having a market capitalization in
excess of $5 billion.
2. Consultation of Restricted List. It is the responsibility of each employee
to pre-clear through the Intranet pre-clearance system or consult with the
Code of Ethics Administrator prior to engaging in a personal securities
transaction, to determine if the security he proposes to trade is on the
Restricted List and, if so, whether it is subject to the "Large Cap"
limitation. The Intranet pre-clearance system and the Code of Ethics
Administrator will be able to tell an employee whether a security is on
the Restricted List. No other information about the Restricted List is
available through the Intranet pre-clearance system. The Code of Ethics
Administrator shall not be authorized to answer any questions about the
Restricted List, or to render an opinion about the propriety of a
particular personal securities transaction. Any such questions shall be
directed to the Code of Ethics Officer.
3. Request for Determination. An employee who has a question concerning the
applicability of the Code of Ethics to a particular situation shall
request a determination from the Code of Ethics Officer before engaging in
the conduct or personal securities transaction about which he has a
question.
If the question pertains to a personal securities transaction, the request
shall state for whose account the transaction is proposed, the
relationship of that account to the employee, the security proposed to be
traded, the proposed price and quantity, the entity with whom the
transaction will take place (if known), and any other information or
circumstances of the trade that could have a bearing on the Code of Ethics
Officer's determination. If the question pertains to other conduct, the
request for determination shall give sufficient information about the
proposed conduct to assist the Code of Ethics Officer in ascertaining the
applicability of the Code. In every instance, the Code of Ethics Officer
may request additional information, and may decline to render a
determination if the information provided is insufficient.
The Code of Ethics Officer shall make every effort to render a
determination promptly.
No perceived ambiguity in the Code of Ethics shall excuse any violation.
Any person who believes the Code to be ambiguous in a particular situation
shall request a determination from the Code of Ethics Officer.
4. Request for Ad Hoc Exemption. Any employee who wishes to obtain an ad hoc
exemption under Section I.D., Rule 2, shall request from the Code of
Ethics Officer an exemption in writing in advance of the conduct or
transaction sought to be exempted. In the case of a personal securities
transaction, the request for an ad hoc exemption shall give the same
information about the transaction required in a request for determination
under Part 3 of this Section, and shall state why the proposed personal
securities transaction would be unlikely to affect a highly institutional
market, or is unrelated economically to securities to be purchased, sold,
or held by any Putnam client. In the case of other conduct, the request
shall give information sufficient for the Code of Ethics Officer to
ascertain whether the conduct raises questions of propriety or conflict of
interest (real or apparent).
The Code of Ethics Officer shall make every effort to promptly render a
written determination concerning the request for an ad hoc exemption.
5. Appeal to Code of Ethics Officer with Respect to Restricted List. If an
employee ascertains that a security that he wishes to trade for his
personal account appears on the Restricted List, and thus the transaction
is prohibited, he may appeal the prohibition to the Code of Ethics Officer
by submitting a written memorandum containing the same information as
would be required in a request for a determination. The Code of Ethics
Officer shall make every effort to respond to the appeal promptly.
6. Information Concerning Identity of Compliance Personnel. The names of Code
of Ethics personnel are available by contacting the Legal and Compliance
Department.
<PAGE>
Appendix A
Policy Statement Concerning Insider Trading Prohibitions
<PAGE>
Preamble
Putnam has always forbidden trading on material nonpublic information ("inside
information") by its employees. Tougher federal laws make it important for
Putnam to restate that prohibition in the strongest possible terms, and to
establish, maintain, and enforce written policies and procedures to prevent the
misuse of material nonpublic information.
Unlawful trading while in possession of inside information can be a crime.
Today, federal law provides that an individual convicted of trading on inside
information go to jail for some period of time. There is also significant
monetary liability for an inside trader; the Securities and Exchange Commission
can seek a court order requiring a violator to pay back profits and penalties of
up to three times those profits. In addition, private plaintiffs can seek
recovery for harm suffered by them. The inside trader is not the only one
subject to liability. In certain cases, "controlling persons" of inside traders
(including supervisors of inside traders or Putnam itself) can be liable for
large penalties.
Section 1 of this Policy Statement contains rules concerning inside information.
Section 2 contains a discussion of what constitutes unlawful insider trading.
Neither material nonpublic information nor unlawful insider trading is easy to
define. Section 2 of this Policy Statement gives a general overview of the law
in this area. However, the legal issues are complex and must be resolved by the
Code of Ethics Officer. If an employee has any doubt as to whether she has
received material nonpublic information, she must consult with the Code of
Ethics Officer prior to using that information in connection with the purchase
or sale of a security for his own account or the account of any Putnam client,
or communicating the information to others. A simple rule of thumb is if you
think the information is not available to the public at large, don't disclose it
to others and don't trade securities to which the inside information relates. If
an employee has failed to consult the Code of Ethics Officer, Putnam will not
excuse employee misuse of inside information on the ground that the employee
claims to have been confused about this Policy Statement or the nature of the
information in his possession.
If Putnam determines, in its sole discretion, that an employee has failed to
abide by this Policy Statement, or has engaged in conduct that raises a
significant question concerning insider trading, he will be subject to
disciplinary action, including termination of employment.
THERE ARE NO EXCEPTIONS TO THIS POLICY STATEMENT AND NO ONE IS EXEMPT.
<PAGE>
Definitions: Insider Trading
Gender references in Appendix A alternate.
Code of Ethics Administrator. The individual designated by the Code of Ethics
Officer to assume responsibility for day-to-day, non-discretionary
administration of this Policy Statement.
Code of Ethics Officer. The Putnam officer who has been assigned the
responsibility of enforcing and interpreting this Policy Statement. The
Code of Ethics Officer shall be the General Counsel or such other person
as is designated by the President of Putnam Investments. If he is
unavailable, the Deputy Code of Ethics Officer (to be appointed by the
Code of Ethics Officer) shall act in his stead.
Immediate family. Spouse, minor children or other relatives living in the same
household as the Putnam employee.
Purchase or sale of a security. Any acquisition or transfer of any interest in
the security for direct or indirect consideration, including the writing
of an option.
Putnam. Any or all of Putnam Investments, Inc., and its subsidiaries, any one of
which shall be a "Putnam company."
Putnam client. Any of the Putnam Funds, or any advisory or trust client of
Putnam.
Putnam employee (or "employee"). Any employee of Putnam.
Security. Anything defined as a security under federal law. The term includes
any type of equity or debt security, any interest in a business trust or
partnership, and any rights relating to a security, such as put and call
options, warrants, convertible securities, and securities indices. (Note:
The definition of "security" in this Policy Statement varies significantly
from that in the Code of Ethics. For example, the definition in this
Policy Statement specifically includes securities of The Marsh & McLennan
Companies, Inc.)
Transaction for a personal account (or "personal securities transaction").
Securities transactions: (a) for the personal account of any employee; (b)
for the account of a member of the immediate family of any employee; (c)
for the account of a partnership in which a Putnam employee or immediate
family member is a partner with investment discretion; (d) for the account
of a trust in which a Putnam employee or immediate family member is a
trustee with investment discretion; (e) for the account of a closely-held
corporation in which a Putnam employee or immediate family member holds
shares and for which he has investment discretion; and (f) for any account
other than a Putnam client account which receives investment advice of any
sort from the employee or immediate family member, or as to which the
employee or immediate family member has investment discretion.
Officers and employees of Putnam Europe Ltd. ("PEL") must also consult the
relevant procedures on compliance with U.K. insider dealing legislation
set forth in PEL's Compliance Manual (see Rule 3 of Section IV of the Code
of Ethics).
<PAGE>
Section 1. Rules Concerning Inside Information
RULE I
No Putnam employee shall purchase or sell any security listed on the Inside
Information List (the "Red List") either for his personal account or for a
Putnam client.
IMPLEMENTATION
When an employee contacts the Code of Ethics Administrator seeking clearance for
a personal securities transaction, the Code of Ethics Administrator's response
as to whether a security appears on the Restricted List will include securities
on the Red List.
COMMENT
This Rule is designed to prohibit any employee from trading a security while
Putnam may have inside information concerning that security or the issuer. Every
trade, whether for a personal account or for a Putnam client, is subject to this
Rule.
RULE 2
No Putnam employee shall purchase or sell any security, either for a personal
account or for the account of a Putnam client, while in possession of material,
nonpublic information concerning that security or the issuer, without the prior
written approval of the Code of Ethics Officer.
IMPLEMENTATION
In order to obtain prior written approval of the Code of Ethics Officer, a
Putnam employee should follow the reporting steps prescribed in Rule 3.
COMMENTS
1. Rule 1 concerns the conduct of an employee when Putnam possesses material
nonpublic information. Rule 2 concerns the conduct of an employee who
herself possesses material, nonpublic information about a security that is
not yet on the Red List.
2. If an employee has any question as to whether information she possesses is
material and/or nonpublic information, she must contact the Code of Ethics
Officer in accordance with Rule 3 prior to purchasing or selling any
security related to the information or communicating the information to
others. The Code of Ethics Officer shall have the sole authority to
determine what constitutes material, nonpublic information for the
purposes of this Policy Statement. An employee's mistaken belief that the
information was not material nonpublic information will not excuse a
violation of this Policy Statement.
RULE 3
Any Putnam employee who believes he may have received material, nonpublic
information concerning a security or the issuer shall immediately report the
information to the Code of Ethics Officer and to no one else. After reporting
the information, the Putnam employee shall comply strictly with Rule 2 by not
trading in the security without the prior written approval of the Code of Ethics
Officer and shall: (a) take precautions to ensure the continued confidentiality
of the information; and (b) refrain from communicating the information in
question to any person.
EXCEPTION
This rule shall not apply to material, nonpublic information obtained by Putnam
employees who are directors or trustees of publicly traded companies, to the
extent that such information is received in their capacities as directors or
trustees, and then only to the extent such information is not communicated to
anyone else within the Putnam organization.
IMPLEMENTATION
1. In order to make any use of potential material, nonpublic information,
including purchasing or selling a security or communicating the
information to others, an employee must communicate that information to
the Code of Ethics Officer in a way designed to prevent the spread of such
information. Once the employee has reported potential material, nonpublic
information to the Code of Ethics Officer, the Code of Ethics Officer will
evaluate whether information constitutes material, nonpublic information,
and whether a duty exists that makes use of such information improper. If
the Code of Ethics Officer determines either (a) that the information is
not material or is public, or (b) that use of the information is proper,
he will issue a written approval to the employee specifically authorizing
trading while in possession of the information, if the employee so
requests. If the Code of Ethics Officer determines (a) that the
information may be nonpublic and material, and (b) that use of such
information may be improper, he will place the security that is the
subject of such information on the Red List.
2. An employee who reports potential inside information to the Code of Ethics
Officer should expect that the Code of Ethics Officer will need
significant information to make the evaluation described in the foregoing
paragraph, including information about (a) the manner in which the
employee acquired the information, and (b) the identity of individuals to
whom the employee has revealed the information, or who have otherwise
learned the information. The Code of Ethics Officer may place the affected
security or securities on the Red List pending the completion of his
evaluation.
3. If an employee possesses documents, disks, or other materials containing
the potential inside information, an employee must take precautions to
ensure the confidentiality of the information in question. Those
precautions include (a) putting documents containing such information out
of the view of a casual observer, and (b) securing files containing such
documents or ensuring that computer files reflecting such information are
secure from viewing by others.
<PAGE>
Section 2. Overview of Insider Trading
A. Introduction
This section of the Policy Statement provides guidelines for employees as
to what may constitute inside information. It is possible that in the
course of her employment, an employee may receive inside information. No
employee should misuse that information, either by trading for her own
account or by communicating the information to others.
B. What constitutes unlawful insider trading?
The basic definition of unlawful insider trading is trading on material,
nonpublic information (also called "inside information") by an individual
who has a duty not to "take advantage" of the information. What does this
definition mean? The following sections help explain the definition.
1. WHAT IS MATERIAL INFORMATION?
Trading on inside information is not a basis for liability unless the
information is material. Information is "material" if a reasonable
person would attach importance to the information in determining his
course of action with respect to a security. Information which is
reasonably likely to affect the price of a company's securities is
"material," but effect on price is not the sole criterion for
determining materiality. Information that employees should consider
material includes but is not limited to: dividend changes, earnings
estimates, changes in previously released earnings estimates,
reorganization, recapitalization, asset sales, plans to commence a
tender offer, merger or acquisition proposals or agreements, major
litigation, liquidity problems, significant contracts, and
extraordinary management developments.
Material information does not have to relate to a company's business.
For example, a court considered as material certain information about
the contents of a forthcoming newspaper column that was expected to
affect the market price of a security. In that case, a reporter for
The Wall Street Journal was found criminally liable for disclosing to
others the dates that reports on various companies would appear in
the Journal's "Heard on the Street" column and whether those reports
would be favorable or not.
2. WHAT IS NONPUBLIC INFORMATION?
Information is nonpublic until it has been effectively communicated
to, and sufficient opportunity has existed for it to be absorbed by,
the marketplace. One must be able to point to some fact to show that
the information is generally public. For example, information found
in a report filed with the Securities and Exchange Commission, or
appearing in Dow Jones, Reuters Economic Services, The Wall Street
Journal, or other publications of general circulation would be
considered public.
3. WHO HAS A DUTY NOT TO "TAKE ADVANTAGE" OF INSIDE INFORMATION?
Unlawful insider trading occurs only if there is a duty not to "take
advantage" of material nonpublic information. When there is no such
duty, it is permissible to trade while in possession of such
information. Questions as to whether a duty exists are complex,
fact-specific, and must be answered by a lawyer.
a. Insiders and Temporary Insiders. Corporate "insiders" have a
duty not to take advantage of inside information. The concept
of "insider" is broad. It includes officers, directors, and
employees of a corporation. In addition, a person can be a
"temporary insider" if she enters into a special confidential
relationship with a corporation and as a result is given
access to information concerning the corporation's affairs. A
temporary insider can include, among others, accounting firms,
consulting firms, law firms, banks and the employees of such
organizations. Putnam would generally be a temporary insider
of a corporation it advises or for which it performs other
services, because typically Putnam clients expect Putnam to
keep any information disclosed to it confidential.
EXAMPLE
An investment adviser to the pension fund of a large
publicly-traded corporation, Acme, Inc., learns from an Acme
employee that Acme will not be making the minimum required
annual contribution to the pension fund because of a serious
downturn in Acme's financial situation.
The information conveyed is material and nonpublic.
COMMENT
Neither the investment adviser, its employees, nor clients can
trade on the basis of that information, because the investment
adviser and its employees could be considered "temporary
insiders" of Acme.
b. Misappropriators. Certain people who are not insiders (or
temporary insiders) also have a duty not to deceptively take
advantage of inside information. Included in this category is
an individual who "misappropriates" (or takes for his own use)
material, nonpublic information in violation of a duty owed
either to the corporation that is the subject of inside
information or some other entity. Such a misappropriator can be
held liable if he trades while in possession of that material,
nonpublic information.
EXAMPLE
The chief financial officer of Acme, Inc., is aware of Acme's
plans to engage in a hostile takeover of Profit, Inc. The
proposed hostile takeover is material and nonpublic.
COMMENT
The chief financial officer of Acme cannot trade in Profit,
Inc.'s stock for his own account. Even though he owes no duty
to Profit, Inc., or its shareholders, he owes a duty to Acme
not to "take advantage" of the information about the proposed
hostile takeover by using it for his personal benefit.
c. Tippers and Tippees. A person (the "tippee") who receives
material, nonpublic information from an insider or
misappropriator (the "tipper") has a duty not to trade while in
possession of that information if he knew or should have known
that the information was provided by the tipper for an improper
purpose and in breach of a duty owed by the tipper. In this
context, it is an improper purpose for a person to provide such
information for personal benefit, such as money, affection, or
friendship.
EXAMPLE
The chief executive officer of Acme, Inc., tells his daughter
that negotiations concerning a previously-announced acquisition
of Acme have been terminated. This news is material and, at the
time the father tells his daughter, nonpublic. The daughter
sells her shares of Acme.
COMMENT
The father is a tipper because he has a duty to Acme and its
shareholders not to "take advantage" of the information
concerning the breakdown of negotiations, and he has conveyed
the information for an "improper" purpose (here, out of love
and affection for his daughter). The daughter is a "tippee" and
is liable for trading on inside information because she knew or
should have known that her father was conveying the information
to her for his personal benefit, and that her father had a duty
not to "take advantage" of Acme information.
A person can be a tippee even if he did not learn the
information directly from the tipper, but learned it from a
previous tippee.
EXAMPLE
An employee of a law firm which works on mergers and
acquisitions learns at work about impending acquisitions. She
tells her friend and her friend's stockbroker about the
upcoming acquisitions on a regular basis. The stockbroker tells
the brother of a client on a regular basis, who in turn tells
two friends, A and B. A and B buy shares of the companies being
acquired before public announcement of the acquisition, and
regularly profit from such purchases. A and B do not know the
employee of the law firm. They do not, however, ask about the
source of the information.
COMMENT
A and B, although they have never heard of the tipper, are
tippees because they did not ask about the source of the
information, even though they were experienced investors, and
were aware that the "tips" they received from this particular
source were always right.
C. Who can be liable for insider trading?
The categories of individuals discussed above (insiders, temporary
insiders, misappropriators or tippees) can be liable if they trade while
in possession of material nonpublic information.
In addition, individuals other than those who actually trade on inside
information can be liable for trades of others. A tipper can be liable if
(a) he provided the information in exchange for a personal benefit in
breach of a duty and (b) the recipient of the information (the "tippee")
traded while in possession of the information.
Most importantly, a controlling person can be liable if the controlling
person "knew or recklessly disregarded" the fact that the controlled
person was likely to engage in misuse of inside information and failed to
take appropriate steps to prevent it. Putnam is a "controlling person" of
its employees. In addition, certain supervisors may be "controlling
persons" of those employees they supervise.
EXAMPLE
A supervisor of an analyst learns that the analyst has, over a long
period of time, secretly received material inside information from Acme,
Inc.'s chief financial officer. The supervisor learns that the analyst
has engaged in a number of trades for his personal account on the basis
of the inside information.
The supervisor takes no action.
COMMENT
Even if he is not liable to a private plaintiff, the supervisor can be
liable to the Securities and Exchange Commission for a civil penalty of
up to three times the amount of the analyst's profit.
(Penalties are discussed in the following section.)
D. Penalties for Insider Trading
Penalties for misuse of inside information are severe, both for
individuals involved in such unlawful conduct and their employers. A
person who violates the insider trading laws can be subject to some or
all of the penalties below, even if he does not personally benefit from
the violation. Penalties include:
-- jail sentences (of which at least one to three years must be served)
-- criminal penalties for individuals of up to $1,000,000, and for
corporations of up to $2,500,000
-- injunctions permanently preventing an individual from working in the
securities industry
-- injunctions ordering an individual to pay over profits obtained from
unlawful insider trading
-- civil penalties of up to three times the profit gained or loss avoided
by the trader, even if the individual paying the penalty did not trade or
did not benefit personally
-- civil penalties for the employer or other controlling person of up to
the greater of $1,000,000 or three times the amount of profit gained or
loss avoided
-- damages in the amount of actual losses suffered by other participants
in the market for the security at issue.
Regardless of whether penalties or money damages are sought by others, Putnam
will take whatever action it deems appropriate (including dismissal) if Putnam
determines, in its sole discretion, that an employee appears to have committed
any violation of this Policy Statement, or to have engaged in any conduct which
raises significant questions about whether an insider trading violation has
occurred.
<PAGE>
Appendix B. Policy Statement Regarding Employee Trades in Shares of Putnam
Closed-End Funds
1. Pre-clearance for all employees
Any purchase or sale of Putnam closed-end fund shares by a Putnam employee must
be pre-cleared by the Code of Ethics Officer or, in his absence, the Deputy Code
of Ethics Officer. A list of the closed-end funds can be obtained from the Code
of Ethics Administrator. Trading in shares of closed-end funds is subject to all
the rules of the Code of Ethics.
2. Special Rules Applicable to Managing Directors of Putnam Investment
Management, Inc. and officers of the Putnam Funds
Please be aware that any employee who is a Managing Director of Putnam
Investment Management, Inc. (the investment manager of the Putnam mutual funds)
and officers of the Putnam Funds will not receive clearance to engage in any
combination of purchase and sale or sale and purchase of the shares of a given
closed-end fund within six months of each other. Therefore, purchases should be
made only if you intend to hold the shares more than six months; no sales of
fund shares should be made if you intend to purchase additional shares of that
same fund within six months.
You are also required to file certain forms with the Securities and Exchange
Commission in connection with purchases and sales of Putnam closed-end funds.
Please contact the Code of Ethics Officer or Deputy Code of Ethics Officer for
further information.
3. Reporting by all employees
As with any purchase or sale of a security, duplicate confirmations of all such
purchases and sales must be forwarded to the Code of Ethics Officer by the
broker-dealer utilized by an employee. If you are required to file a quarterly
report of all personal securities transactions, this report should include all
purchases and sales of closed-end fund shares.
Please contact the Code of Ethics Officer or Deputy Code of Ethics Officer if
there are any questions regarding these matters.
<PAGE>
Appendix C. Clearance Form for Portfolio Manager Sales Out of Personal Account
of Securities Also Held by Fund (For compliance with "Contra-Trading" Rule)
TO: Code of Ethics Officer
FROM:
DATE:
RE: Personal Securities Transaction of
This serves as prior written approval of the personal securities transaction
described below:
NAME OF PORTFOLIO MANAGER CONTEMPLATING PERSONAL TRADE:
SECURITY TO BE TRADED:
AMOUNT TO BE TRADED:
FUND HOLDING SECURITIES:
AMOUNT HELD BY FUND:
REASON FOR PERSONAL TRADE:
SPECIFIC REASON SALE OF SECURITIES IS INAPPROPRIATE FOR FUND:
(Please attach additional sheets if necessary.)
CIO APPROVAL: DATE:
LEGAL/COMPLIANCE APPROVAL: DATE:
<PAGE>
Appendix D. Procedures for Approval of New Financial Instruments
1. Summary
a. Putnam has adopted procedures for the introduction of new
instruments and securities, focusing on, but not limited to,
derivatives.
b. No new types of securities or instruments may be purchased for
any Putnam fund or other client account without the approval of
Putnam's New Securities Review Committee ("NSRC").
c. Putnam publishes from time to time a list of approved
derivatives. The purchase of any derivative not listed is
prohibited without specific authorization from the NSRC.
2. Procedures
a. Introduction. The purchase and sale of financial instruments
that have not been used previously at Putnam raise significant
investment, business, operational, and compliance issues. In
order to address these issues in a comprehensive manner, Putnam
has adopted the following procedures for obtaining approval of
the use of new instruments or investments. In addition, to
provide guidance regarding the purchase of derivatives, Putnam
publishes from time to time a list of approved derivatives.
Only derivatives listed may be used for Putnam funds or
accounts unless specifically authorized by the NSRC.
b. Process of approval. An investment professional wishing to
purchase a new type of investment should discuss it with the
Investment Division's Administrative office (the current
contact is Julie Malloy). Investment Division Administration
will coordinate a review of a new instrument by appropriate
NSRC members from an investment, operational and compliance
perspective, including the review of instruments by the
Administrative Services Division of PFTC. Based on this
review, the NSRC will then approve or disapprove the proposed
new investment. Investment professionals must build in
adequate time for this review before planned use of a new
instrument. Further, the approval of the NSRC is only a
general one. Individual fund and account guidelines must be
reviewed in accordance with standard compliance procedures to
determine whether purchase is permitted. In addition, if the
instrument involves legal documentation, that documentation
must be reviewed and be completed before trading. The NSRC may
prepare a compliance and operational manual for the new
derivative.
3. Violations
a. Putnam's Operating Committee has determined that adherence to
rigorous internal controls and procedures for novel securities
and instruments is necessary to protect Putnam's business
standing and reputation. Violation of these procedures will be
treated as violation of both compliance guidelines and Putnam's
Code of Ethics. Putnam encourages questions and expects that
these guidelines will be interpreted conservatively.
<PAGE>
Index
"7-Day Rule"
for transactions by managers, analysts and CIOs, 14 "60-Day Rule", 13 Access
Persons definition, ix special rules on trading, 13, 32 Analysts
special rules on trading by, 13
Appeals
Procedures, 37
Bankers'acceptances
excluded from securities, x
Blackout rule
on trading by portfolio managers, analysts and CIOs, 15
Boycotts
reporting of requests to participate, 33
Bribes, 21
CDs
excluded from securities, x
Claims against Putnam
reporting of, 33
Clearance
how long pre-clearance is valid, 4
required for personal securities transactions, 1
Closed-end funds
rules on trading, 55
Commercial paper
excluded from securities, x
Commodities (other than securities indices)
excluded from securities, x
Computer use
compliance with corporate policies required, 27
Confidentiality
required of all employees, 22
Confirmations
of personal transactions required, 31
Conflicts of interest
with Putnam and Putnam clients prohibited, 19
Contra-trading rule
transactions by managers and CIOs, 17
Convertible securities
defined as securities, x
Currencies
excluded as securities, x
Director
serving as for another entity prohibited, 23
Employee
serving as for another entity prohibited, 23
Excessive trading (over 10 trades)
by employees strongly discouraged, 10
Exemptions
basis for, 10
Family members
covered in personal securities transactions, x, 43
Fiduciary
serving as for another entity prohibited, 23
Fraudulent or irregular activities
reporting of, 33
Gifts
restrictions on receipt of by employees, 19
Government or regulatory agencies
reporting of communications from, 33
Holdings
disclosure of by Access Persons, 32
Initial public offerings/IPOs
purchases in prohibited, 6
Insider trading
policy statement and explanations, 39
prohibited, 9
Investment clubs
prohibited, 24
Investment Grade Exception
for clearance of fixed income securities on Restricted List, 2
Involuntary personal securities transactions
exempted, 10
exemption defined, 6
Large Cap Exception
for clearance of securities on Restricted List, 1
Marsh & McLennan Companies stock
excluded from securities, x
Money market instruments
excluded from securities, x
Mutual fund shares (open end)
excluded from securities, x
Naked options
by employees discouraged, 9
New financial instruments
procedures for approval, 59
Non-Putnam affiliates (NPAs)
transactions and relationships with, 25
Officer
serving as for another entity prohibited, 23
<PAGE>
Options
defined as securities, x
relationship to securities on Restricted or Red Lists, 5
Partner
serving as general partner of another entity prohibited, 23
Partnerships
covered in personal securities transactions, x, 43
Personal securities transaction
defined, x, 43
Pink sheet reports
quarterly reporting requirements, 32
Political contributions, 22
Portfolio managers
special rules on trading by, 13
Private offerings or placements
purchases of prohibited, 7
Putnam Europe Ltd.
special rules for, 29
Repurchase agreements
excluded from securities, x
Sale
defined, x, 43
Sanctions, vii
for failure to pre-clear properly, 3
Shares by subscription
procedures to preclear the purchase and sales of Shares by Subscription, 2
Short sales
by employees prohibited conduct, 6
Solicitations
by Putnam employees restricted, 21
Tender offers
partial exemption from clearance rules, 6
Trustee
serving as for another entity prohibited, 23
Trusts
covered in personal securities transactions, x, 43
U.S. government obligations
excluded from securities, x
Violations of Law
reporting of, 33
Warrants
defined as securities, x
PERSONAL INVESTMENT POLICY
FOR
SSB CITI ASSET MANAGEMENT GROUP - NORTH AMERICA
AND CERTAIN REGISTERED INVESTMENT COMPANIES
SSB Citi Asset Management Group ("SSB Citi")1, and those U.S.-registered
investment companies advised or managed by SSB Citi that have adopted this
policy ("Funds"), have adopted this policy on securities transactions in order
to accomplish two goals: first, to minimize conflicts and potential conflicts of
interest between employees of SSB Citi and SSB Citi's clients (including the
Funds), and between Fund directors or trustees and their Funds, and second, to
provide policies and procedures consistent with applicable law, including Rule
17j-1 under the Investment Company Act of 1940, to prevent fraudulent or
manipulative practices with respect to purchases or sales of securities held or
to be acquired by client accounts. ALL U.S. EMPLOYEES OF SSB CITI, INCLUDING
EMPLOYEES WHO SERVE AS FUND OFFICERS OR DIRECTORS, AND ALL DIRECTORS OR TRUSTEES
("DIRECTORS") OF EACH FUND, ARE COVERED PERSONS UNDER THIS POLICY. OTHER COVERED
PERSONS ARE DESCRIBED IN SECTION II BELOW.
I. STATEMENT OF PRINCIPLES - All SSB Citi employees owe a fiduciary duty
to SSB Citi's clients when conducting their personal investment
transactions. Employees must place the interests of clients first and
avoid activities, interests and relationships that might interfere with
the duty to make decisions in the best interests of the clients. All
Fund directors owe a fiduciary duty to each Fund of which they are a
director and to that Fund's shareholders when conducting their personal
investment transactions. At all times and in all matters Fund directors
shall place the interests of their Funds before their personal
interests. The fundamental standard to be followed in personal
securities transactions is that Covered Persons may not take
inappropriate advantage of their positions.
All personal securities transactions by Covered Persons shall adhere to
the requirements of this policy and shall be conducted in such a manner
as to avoid any actual or potential conflict of interest, the
appearance of such a conflict, or the abuse of the person's position of
trust and responsibility. While this policy is designed to address both
identified conflicts and potential conflicts, it cannot possibly be
written broadly enough to cover all potential situations. In this
regard, Covered Persons are expected to adhere not only to the letter,
but also the spirit of the policies contained herein.
Employees are reminded that they also are subject to other Citigroup
policies, including policies on insider trading, the purchase and sale
of securities listed on any applicable SSB Citi restricted list, the
receipt of gifts and service as a director of a publicly traded
company. Employees must never trade in a security or commodity while in
possession of material, non-public information about the issuer or the
market for those securities or commodities, even if the employee has
satisfied all other requirements of this policy.
The reputation of SSB Citi and its employees for straightforward
practices and integrity is a priceless asset, and all employees have
the duty and obligation to support and maintain it when conducting
their personal securities transactions.
<PAGE>
3
II. APPLICABILITY - SSB CITI EMPLOYEES - This policy applies to all U.S.
employees of SSB Citi, including part-time employees. Each employee,
including employees who serve as Fund officers or directors, must
comply with all of the provisions of the policy applicable to SSB Citi
employees unless otherwise indicated. Certain employees are considered
to be "investment personnel" (i.e., portfolio managers, traders and
research analysts (and each of their assistants)), and as such, are
subject to certain additional restrictions outlined in the policy. All
other employees of SSB Citi are considered to be "advisory personnel."
Generally, temporary personnel and consultants working in any SSB Citi
business are subject to the same provisions of the policy as full-time
employees, and their adherence to specific requirements will be
addressed on a case-by-case basis.
The personal investment policies, procedures and restrictions referred
to herein also apply to an employee's spouse and minor children. The
policies also apply to any other account over which the employee is
deemed to have beneficial ownership. This includes: accounts of any
immediate family members sharing the same household as the employee;
accounts of persons or other third parties for whom the employee
exercises investment discretion or gives investment advice; a legal
vehicle in which the employee has a direct or indirect beneficial
interest and has power over investment decisions; accounts for the
benefit of a third party (e.g., a charity) which may be directed by the
employee (other than in the capacity of an employee); and any account
over which the employee may be deemed to have control. For a more
detailed description of beneficial ownership, see Exhibit A attached
hereto.
These policies place certain restrictions on the ability of an employee
to purchase or sell securities that are being or have been purchased or
sold by an SSB Citi managed fund or client account. The restrictions
also apply to securities that are "related" to a security being
purchased or sold by an SSB Citi managed fund or client account. A
"related security" is one whose value is derived from the value of
another security (e.g., a warrant, option or an indexed instrument).
FUND DIRECTORS - This policy applies to all directors of Funds that
have adopted this policy. The personal investment policies, procedures
and restrictions that specifically apply to Fund directors apply to all
accounts and securities in which the director has direct or indirect
beneficial ownership. See Exhibit A attached hereto for a more detailed
description of beneficial ownership.
SECURITIES are defined as stocks, notes, bonds, closed-end mutual
funds, debentures, and other evidences of indebtedness, including
senior debt, subordinated debt, investment contracts, commodity
contracts, futures and all derivative instruments such as options,
warrants and indexed instruments, or, in general, any interest or
instrument commonly known as a "security."
III. ENFORCEMENT - It is the responsibility of each Covered Person to act in
accordance with a high standard of conduct and to comply with the
policies and procedures set forth in this document. SSB Citi takes
seriously its obligation to monitor the personal investment activities
of its employees. Any violation of this policy by employees will be
considered serious, and may result in disciplinary action, which may
include the unwinding of trades, disgorgement of profits, monetary fine
or censure, and suspension or termination of employment. Any violation
of this policy by a Fund director will be reported to the Board of
Directors of the applicable Fund, which may impose such sanctions as it
deems appropriate.
IV. OPENING AND MAINTAINING EMPLOYEE ACCOUNTS - All employee brokerage
accounts, including spouse accounts, accounts for which the employee is
deemed to have beneficial ownership, and any other accounts over which
the employee and/or spouse exercise control, must be maintained either
at Salomon Smith Barney ("SSB") or at Citicorp Investment Services
("CIS").2 For spouses or other persons who, by reason of their
employment, are required to conduct their securities, commodities or
other financial transactions in a manner inconsistent with this policy,
or in other exceptional circumstances, employees may submit a written
request for an exemption to the Compliance Department. If approval is
granted, copies of trade confirmations and monthly statements must be
sent to the Compliance Department. In addition, all other provisions of
this policy will apply.
V. EXCLUDED ACCOUNTS AND TRANSACTIONS - The following types of
accounts/transactions need not be maintained at SSB or CIS, nor are
they subject to the other restrictions of this policy:
1. Accounts at outside mutual funds that hold only shares of
open-end funds purchased directly from that fund company.
Note: transactions relating to closed-end funds are subject to
the pre-clearance, blackout period and other restrictions of
this policy;
2. Estate or trust accounts in which an employee or related
person has a beneficial interest, but no power to affect
investment decisions. There must be no communication between
the account(s) and the employee with regard to investment
decisions prior to execution. The employee must direct the
trustee/bank to furnish copies of confirmations and statements
to the Compliance Department;
3. Fully discretionary accounts managed by either an internal or
external registered investment adviser are permitted and may
be custodied away from SSB and CIS if (i) the employee
receives permission from the Regional Director of Compliance
and the unit's Chief Investment Officer, and (ii) there is no
communication between the manager and the employee with regard
to investment decisions prior to execution. The employee must
designate that copies of trade confirmations and monthly
statements be sent to the Compliance Department;
4. Employees may participate in direct investment programs which
allow the purchase of securities directly from the issuer
without the intermediation of a broker/dealer provided that
the timing and size of the purchases are established by a
pre-arranged, regularized schedule (e.g., dividend
reinvestment plans). Employees must pre-clear the transaction
at the time that the dividend reinvestment plan is being set
up. Employees also must provide documentation of these
arrangements and direct periodic (monthly or quarterly)
statements to the Compliance Department; and
5. In addition to the foregoing, the following types of
securities are exempted from pre-clearance, blackout periods,
reporting and short-term trading requirements: open-ended
mutual funds; open-end unit investment trusts; U.S. Treasury
bills, bonds and notes; mortgage pass-throughs (e.g. Ginnie
Maes) that are direct obligations of the U.S. government;
bankers acceptances; bank certificates of deposit; commercial
paper; and high quality short-term debt instruments (meaning
any instrument that has a maturity at issuance of less than
366 days and that is rated in one of the two highest rating
categories by a nationally recognized statistical rating
organization, such as S&P or Moody's), including repurchase
agreements.
VI. SECURITIES HOLDING PERIOD/SHORT-TERM TRADING - Securities transactions
must be for investment purposes rather than for speculation.
Consequently, employees may not profit from the purchase and sale, or
sale and purchase, of the same or equivalent securities within sixty
(60) calendar days, calculated on a First In, First Out (FIFO) basis
(i.e., the security may be sold on the 61st day). Citigroup securities
received as part of an employee's compensation are not subject to the
60-day holding period. All profits from short-term trades are subject
to disgorgement. However, with the prior written approval of both a
Chief Investment Officer and the Regional Director of Compliance, and
only in rare and/or unusual circumstances, an employee may execute a
short-term trade that results in a significant loss or in break-even
status.
VII. PRE-CLEARANCE - All SSB Citi employees must pre-clear all personal
securities transactions (see Section V for a listing of accounts,
transactions and securities that do not require pre-clearance). A copy
of the pre-clearance form is attached as Exhibit B. IN ADDITION,
EMPLOYEES ARE PROHIBITED FROM ENGAGING IN MORE THAN TWENTY (20)
TRANSACTIONS IN ANY CALENDAR MONTH, EXCEPT WITH PRIOR WRITTEN APPROVAL
FROM THEIR CHIEF INVESTMENT OFFICER, OR DESIGNEE. A transaction must
not be executed until the employee has received the necessary approval.
Pre-clearance is valid only on the day it is given. If a transaction is
not executed on the day pre-clearance is granted, it is required that
pre-clearance be sought again on a subsequent day (i.e., open orders,
such as limit orders, good until cancelled orders and stop-loss orders,
must be pre-cleared each day until the transaction is effected). In
connection with obtaining approval for any personal securities
transaction, employees must describe in detail any factors which might
be relevant to an analysis of the possibility of a conflict of
interest. Any trade that violates the pre-clearance process may be
unwound at the employee's expense, and the employee will be required to
absorb any resulting loss and to disgorge any resulting profit.
In addition to the foregoing, the CGAM NA Director of Global Equity
Research, or his designate, must approve all personal securities
transactions for members of the CGAM Research Department prior to
pre-clearance from the Compliance Department as set forth in this
section. Pre-approval by the Director of Research, or his designate, is
in addition to and does not replace the requirement for the
pre-clearance of all personal securities transactions.
VIII. BLACKOUT PERIODS - No Covered Person shall purchase or sell, directly
or indirectly, any security in which he/she has, or by reason of the
transaction acquires, any direct or indirect beneficial ownership if
he/she has knowledge at the time of such transaction that the security
is being purchased or sold, or is being considered for purchase or
sale, by a managed fund or client account or in the case of a Fund
director, by the director's Fund. In addition, the following Blackout
Periods apply to the categories of SSB Citi employees listed below:
1. Portfolio Managers and Portfolio Manager Assistants - may not
buy or sell any securities for personal accounts seven (7)
calendar days before or after managed funds or client accounts
he/she manages trade in that security.
2. Traders and Trader Assistants - may not buy or sell any
securities for personal accounts three (3) calendar days before
or seven (7) calendar days after managed funds or client
accounts he/she executes trades for trade in that security.
3. Research Analysts and Research Assistants - may not buy or sell
any securities for personal accounts: seven (7) calendar days
before or after the issuance of or a change in any
recommendation; or seven (7) calendar days before or after any
managed fund or client account about which the employee is
likely to have trading or portfolio information (as determined
by the Compliance Department) trades in that security.
4. Advisory Personnel (see Section II for details) - may not buy
or sell any securities for personal accounts on the same day
that a managed fund or client account about which the employee
is likely to have trading or portfolio information (as
determined by the Compliance Department) trades in that
security.
5. Unit Trust Personnel - all employees assigned to the Unit Trust
Department are prohibited from transacting in any security when
a SSB Citi-sponsored Unit Trust portfolio is buying the same
(or a related) security, until seven business days after the
later of the completion of the accumulation period or the
public announcement of the trust portfolio. Similarly, all UIT
employees are prohibited from transacting in any security held
in a UIT (or a related security) seven business days prior to
the liquidation period of the trust.
Employees in categories 1, 2 and 5 above may also be considered
Advisory Personnel for other accounts about which the employee is
likely to have trading or portfolio information (as determined by
the Compliance Department).
Any violation of the foregoing provisions will require the
employee's trade to be unwound, with the employee absorbing any
resulting loss and disgorging any resulting profit. Advisory
personnel are subject to the unwinding of the trade provision;
however, they may not be required to absorb any resulting loss (at
the discretion of the Compliance Department and the employee's
supervisor). Please be reminded that, regardless of the provisions
set forth above, all employees are always prohibited from
effecting personal securities transactions based on material,
non-public information.
Blackout period requirements shall not apply to any purchase or
sale, or series of related transactions involving the same or
related securities, involving 500 or fewer shares in the aggregate
if the issuer has a market capitalization (outstanding shares
multiplied by the current price per share) greater than $10
billion and is listed on a U.S. Stock Exchange or NASDAQ. Note:
Pre-clearance is still required. Under certain circumstances, the
Compliance Department may determine that an employee may not rely
upon this "Large Cap/De Minimis" exemption. In such a case, the
employee will be notified prior to or at the time the
pre-clearance request is made.
IX. PROHIBITED TRANSACTIONS - The following transactions by SSB Citi
employees are prohibited without the prior written approval from the
Chief Investment Officer, or designee, and the Regional Compliance
Director:
1. The purchase of private placements; and
2. The acquisition of any securities in an initial public
offering (new issues of municipal debt securities may be
acquired subject to the other requirements of this policy
(e.g., pre-clearance).)
X. TRANSACTIONS IN OPTIONS AND FUTURES - SSB Citi employees may buy or
sell derivative instruments such as individual stock options, options
and futures on indexes and options and futures on fixed-income
securities, and may buy or sell physical commodities and futures and
forwards on such commodities. These transactions must comply with all
of the policies and restrictions described in this policy, including
pre-clearance, blackout periods, transactions in Citigroup securities
and the 60-day holding period. However, the 60-day holding period does
not apply to individual stock options that are part of a hedged
position where the underlying stock has been held for more than 60 days
and the entire position (including the underlying security) is closed
out.
XI. PROHIBITED RECOMMENDATIONS - No Covered Person shall recommend or
execute any securities transaction by any managed fund or client
account, or, in the case of a Fund director, by the director's Fund,
without having disclosed, in writing, to the Chief Investment Officer,
or designee, any direct or indirect interest in such securities or
issuers, except for those securities purchased pursuant to the "Large
Cap/De Minimis" exemption described in Section VIII above. Prior
written approval of such recommendation or execution also must be
received from the Chief Investment Officer, or designee. The interest
in personal accounts could be in the form of:
1. Any direct or indirect beneficial ownership of any securities
of such issuer;
2. Any contemplated transaction by the person in such securities;
3. Any position with such issuer or its affiliates; or
4. Any present or proposed business relationship between such
issuer or its affiliates and the person or any party in which
such person has a significant interest.
XII. TRANSACTIONS IN CITIGROUP SECURITIES - Unless an SSB Citi employee is a
member of a designated group subject to more restrictive provisions, or
is otherwise notified to the contrary, the employee may trade in
Citigroup securities without restriction (other than the pre-clearance
and other requirements of this policy), subject to the limitations set
forth below.
Employees whose jobs are such that they know about Citigroup's
quarterly earnings prior to release may not engage in any
transactions in Citigroup securities during the "blackout
periods" beginning on the first day of a calendar quarter and
ending on the second business day following the release of
earnings for the prior quarter. Members of the SSB Citi
Executive Committee and certain other senior SSB Citi
employees are subject to these blackout periods.
Stock option exercises are permitted during a blackout period
(but the simultaneous exercise of an option and sale of the
underlying stock is prohibited). With regard to exchange
traded options, no transactions in Citigroup options are
permitted except to close or roll an option position that
expires during a blackout period. Charitable contributions of
Citigroup securities may be made during the blackout period,
but an individual's private foundation may not sell donated
Citigroup common stock during the blackout period. "Good `til
cancelled" orders on Citigroup stock must be cancelled before
entering a blackout period and no such orders may be entered
during a blackout period.
No employee may engage at any time in any personal
transactions in Citigroup securities while in possession of
material non-public information. Investments in Citigroup
securities must be made with a long-term orientation rather
than for speculation or for the generation of short-term
trading profits. In addition, please note that employees may
not engage in the following transactions:
Short sales of Citigroup securities;
Purchases or sales of options ("puts" or "calls") on Citigroup
securities, except writing a covered call at a time when
the securities could have been sold under this policy;
Purchases or sales of futures on Citigroup securities; or
Any transactions relating to Citigroup securities that might reasonably
appear speculative.
The number of Citigroup shares an employee is entitled to in
the Citigroup Stock Purchase Plan is not treated as a long
stock position until such time as the employee has given
instructions to purchase the shares of Citigroup. Thus,
employees are not permitted to use options to hedge their
financial interest in the Citigroup Stock Purchase Plan.
Contributions into the firm's 401(k) Plan are not subject to
the restrictions and prohibitions described in this policy.
XIII. ACKNOWLEDGEMENT AND REPORTING REQUIREMENTS - SSB CITI EMPLOYEES - All
new SSB Citi employees must certify that they have received a copy of
this policy, and have read and understood its provisions. In addition,
all SSB Citi employees must:
1. Acknowledge receipt of the policy and any modifications
thereof, in writing (see Exhibit C for the form of
Acknowledgement);
2. Within 10 days of becoming an SSB Citi employee, disclose in
writing all information with respect to all securities
beneficially owned and any existing personal brokerage
relationships (employees must also disclose any new brokerage
relationships whenever established). Such information should
be provided on the form attached as Exhibit D;
3. Direct their brokers to supply, on a timely basis, duplicate
copies of confirmations of all personal securities
transactions (Note: this requirement may be satisfied through
the transmission of automated feeds);
4. Within 10 days after the end of each calendar quarter, provide
information relating to securities transactions executed
during the previous quarter for all securities accounts (Note:
this requirement may be satisfied through the transmission of
automated feeds);
5. Submit an annual holdings report containing similar
information that must be current as of a date no more than 30
days before the report is submitted, and confirm at least
annually all brokerage relationships and any and all outside
business affiliations (Note: this requirement may be satisfied
through the transmission of automated feeds or the regular
receipt of monthly brokerage statements); and
6. Certify on an annual basis that he/she has read and understood
the policy, complied with the requirements of the policy and
that he/she has pre-cleared and disclosed or reported all
personal securities transactions and securities accounts
required to be disclosed or reported pursuant to the
requirements of the policy.
FUND DIRECTORS - Fund Directors shall deliver the information required
by Items 1 through 4 of the immediately preceding paragraph, except
that a Fund director who is not an "interested person" of the Fund
within the meaning of Section 2(a)(19) of the Investment Company Act of
1940, and who would be required to make reports solely by reason of
being a Fund Director, is not required to make the initial and annual
holdings reports required by Item 2. Also, a "non-interested" Fund
Director need not supply duplicate copies of confirmations of personal
securities transactions required by Item 3, and need only make the
quarterly transactions reports required by Item 3 as to any security if
at the time of a transaction by the Director in that security, he/she
knew or in the ordinary course of fulfilling his/her official duties as
a Fund Director should have known that, during the 15-day period
immediately preceding or following the date of that transaction, that
security is or was purchased or sold by that Director's Fund or was
being considered for purchase or sale by that Director's Fund.
DISCLAIMER OF BENEFICIAL OWNERSHIP - The reports described in Items 2
and 3 above may contain a statement that the reports shall not be
construed as an admission by the person making the reports that he/she
has any direct or indirect beneficial ownership in the securities to
which the reports relate.
XIV. HANDLING OF DISGORGED PROFITS - Any amounts that are paid/disgorged by
an employee under this policy shall be donated by SSB Citi to one or
more charities. Amounts donated may be aggregated by SSB Citi and paid
to such charity or charities at the end of each year.
XV. CONFIDENTIALITY - All information obtained from any Covered Person
pursuant to this policy shall be kept in strict confidence, except that
such information will be made available to the Securities and Exchange
Commission or any other regulatory or self-regulatory organization or
to the Fund Boards of Directors to the extent required by law,
regulation or this policy.
XVI. OTHER LAWS, RULES AND STATEMENTS OF POLICY - Nothing contained in this
policy shall be interpreted as relieving any person subject to the
policy from acting in accordance with the provision of any applicable
law, rule or regulation or, in the case of SSB Citi employees, any
statement of policy or procedure governing the conduct of such person
adopted by Citigroup, its affiliates and subsidiaries.
XVII. RETENTION OF RECORDS - All records relating to personal securities
transactions hereunder and other records meeting the requirements of
applicable law, including a copy of this policy and any other policies
covering the subject matter hereof, shall be maintained in the manner
and to the extent required by applicable law, including Rule 17j-1
under the 1940 Act. The Compliance Department shall have the
responsibility for maintaining records created under this policy.
XVIII. MONITORING - SSB Citi takes seriously its obligation to monitor the
personal investment activities of its employees and to review the
periodic reports of all Covered Persons. Employee personal investment
transaction activity will be monitored by the Compliance Department.
All noted deviations from the policy requirements will be referred back
to the employee for follow-up and resolution (with a copy to be
supplied to the employee's supervisor). Any noted deviations by Fund
directors will be reported to the Board of Directors of the applicable
Fund for consideration and follow-up as contemplated by Section III
hereof.
XIX. EXCEPTIONS TO THE POLICY - Any exceptions to this policy must have the
prior written approval of both the Chief Investment Officer and the
Regional Director of Compliance. Any questions about this policy should
be directed to the Compliance Department.
XX. BOARD REVIEW - Fund management and SSB Citi shall provide to the Board
of Directors of each Fund, on a quarterly basis, a written report of
all material violations of this policy, and at least annually, a
written report and certification meeting the requirements of Rule 17j-1
under the 1940 Act.
XXI. OTHER CODES OF ETHICS - To the extent that any officer of any Fund is
not a Covered Person hereunder, or an investment subadviser of or
principal underwriter for any Fund and their respective access persons
(as defined in Rule 17j-1) are not Covered Persons hereunder, those
persons must be covered by separate codes of ethics which are approved
in accordance with applicable law.
XXII. AMENDMENTS - SSB CITI EMPLOYEES - Unless otherwise noted herein, this
policy shall become effective as to all SSB Citi employees on March 30,
2000. This policy may be amended as to SSB Citi employees from time to
time by the Compliance Department. Any material amendment of this
policy shall be submitted to the Board of Directors of each Fund for
approval in accordance with Rule 17j-1 under the 1940 Act.
FUND DIRECTORS - This policy shall become effective as to a Fund upon
the approval and adoption of this policy by the Board of Directors of
that Fund in accordance with Rule 17j-1 under the 1940 Act or at such
earlier date as determined by the Secretary of the Fund. Any material
amendment of this policy that applies to the directors of a Fund shall
become effective as to the directors of that Fund only when the Board
of Directors of that Fund has approved the amendment in accordance with
Rule 17j-1 or at such earlier date as determined by the Secretary of
the Fund.
March 15, 2000
<PAGE>
14
EXHIBIT A
EXPLANATION OF BENEFICIAL OWNERSHIP
You are considered to have "Beneficial Ownership" of Securities if you have or
share a direct or indirect "Pecuniary Interest" in the Securities.
You have a "Pecuniary Interest" in Securities if you have the opportunity,
directly or indirectly, to profit or share in any profit derived from a
transaction in the Securities.
The following are examples of an indirect Pecuniary Interest in Securities:
1. Securities held by members of your immediate family sharing the
same household; however, this presumption may be rebutted by
convincing evidence that profits derived from transactions in these
Securities will not provide you with any economic benefit.
"Immediate family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, and includes any adoptive relationship.
2. Your interest as a general partner in Securities held by a general or limited
partnership.
3. Your interest as a manager-member in the Securities held by a limited
liability company.
You do not have an indirect Pecuniary Interest in Securities held by a
corporation, partnership, limited liability company or other entity in which you
hold an equity interest, unless you are a controlling equityholder or you have
or share investment control over the Securities held by the entity.
The following circumstances constitute Beneficial Ownership by you of Securities
held by a trust:
1. Your ownership of Securities as a trustee where either you or members
of your immediate family have a vested interest in the principal or
income of the trust.
2. Your ownership of a vested interest in a trust.
3. Your status as a settlor of a trust, unless the consent of all of the
beneficiaries is required in order for you to revoke the trust.
The foregoing is a summary of the meaning of "beneficial ownership". For
purposes of the attached policy, "beneficial ownership" shall be interpreted in
the same manner as it would be in determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 and the rules
and regulations thereunder
<PAGE>
SSB CITI ASSET MANAGEMENT GROUP ("SSB CITI") EXHIBIT B EMPLOYEE
TRADE PRE-APPROVAL FORM
(PAGE 1)
INSTRUCTIONS:
o All employees are required to submit this form to the Compliance
Department prior to placing a trade.
The Compliance Department will notify the employee as to whether or not
pre-approval is granted. Pre-approval is effective only on the date granted.
I. EMPLOYEE INFORMATION
- ------------------------------------------ -------------------------------------
Employee Name: Phone Number:
- ------------------------------------------ -------------------------------------
Account Title:
- ------------------------------------------ -------------------------------------
Account Number:
- ----------------------------------------------------------- --------------------
Managed Account(s)/Mutual Fund(s)
for which employee is a Covered Person:
- ----------------------------------------------------------- --------------------
II. SECURITY INFORMATION
IPO q q PRIVATE PLACEMENT q q
Yes No Yes No
<TABLE>
<CAPTION>
- ------------------------- --------------------- --------- ----------- ----------------------- -------------- ------------------
Security Name Security Type-e.g., Ticker Buy/Sell If Sale, Date First No. Large Cap Stock?2
common stock, etc. Acquired1 Shares/Units
- ------------------------- --------------------- --------- ----------- ----------------------- -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------- --------------------- --------- ----------- ----------------------- -------------- ------------------
- ------------------------- --------------------- --------- ----------- ----------------------- -------------- ------------------
- ------------------------- --------------------- --------- ----------- ----------------------- -------------- ------------------
</TABLE>
III. YOUR POSITION WITH THE FIRM:
(Please check one of the following)q Portfolio Manager / Portfolio
Manager Assistant
q Research Analyst / Research Analyst
Assistant
q Trader / Trader Assistant
q Unit Trust Personnel
q Other (Advisory Personnel)
NOTE: o All Portfolio Managers must complete the reverse side of this
form.
o All RESEARCH ANALYSTS and RESEARCH ANALYST ASSISTANTS located
in Connecticut must provide an
additional form signed by RAMA KRISHNA or one of his designees.
IV. CERTIFICATION
I certify that I will not effect the transaction(s) described above unless and
until pre-clearance approval is obtained from the Compliance Department. I
further certify that, except as described on an attached page, to the best of my
knowledge, the proposed transaction(s) will not result in a conflict of interest
with any account managed by SSB Citi (including mutual funds managed by SSB
Citi). I further certify that, to the best of my knowledge, there are no pending
orders for any security listed above or any related security for any Managed
Accounts and/or Mutual Funds for which I am considered a Covered Person. The
proposed transaction(s) are consistent with all firm policies regarding employee
personal securities transactions.
SIGNATURE DATE
- ----------------------------------------------------
FOR USE BY THE COMPLIANCE DEPARTMENT
- ----------------------------------------------------
q q
ARE SECURITIES RESTRICTED? Yes No
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
q q Reason not granted:
PRE-APPROVAL GRANTED? Yes No
- --------------------------------------- --------------------- -------------
COMPLIANCE DEPARTMENT SIGNATURE: Date: Time:
- --------------------------------------- --------------------- -------------
1. All securities sold must have been held for at least 60 days.
2. For purposes of SSB Citi's personal trading policies, a Large Cap Exemption
applies to transactions involving 500 or fewer shares in aggregate and the
stock is one that is listed on a U.S. stock exchange or NASDAQ and whose
issuer has a market capitalization (outstanding shares multiplied by
current price) of more than $10 billion.
SSB CITI ASSET MANAGEMENT GROUP ("SSB CITI")
PAGE 2 - PORTFOLIO MANAGER CERTIFICATION
All portfolio managers must answer the following questions in order to obtain
pre-approval. All questions must be answered or the form will be returned. If a
question is not applicable, please indicate "N/A".
1. Have your client accounts purchased or sold the securities (or related
securities) in the past seven calendar days?
Yes [] No []
2. Do you intend to purchase or sell the securities (or related
securities) for any client accounts in the next seven calendar days?
Yes [] No []
3. Do any of your client accounts currently own the securities (or related
securities)? Yes [] No []
3a. If yes, and you are selling the securities for your personal
account, please explain why the sale of the securities was
rejected for client accounts but is appropriate for your
personal account:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. Have you, in the past 7 calendar days, considered purchasing the
securities (or related securities) for your client accounts? Yes [] No
[]
4a. If yes, and you are purchasing securities for your personal
account, please explain why the purchase of the securities is
appropriate for your account but has been rejected for your
client accounts:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4b. If no, and you are purchasing securities for your personal
account, please explain why the purchase of the securities has
not been considered for your client accounts:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTIFICATION
I certify that I will not effect the transaction(s) described above unless and
until pre-clearance approval is obtained from the Compliance Department. I
further certify that, except as described on an attached page, to the best of my
knowledge, the proposed transaction(s) will not result in a conflict of interest
with any account managed by SSB Citi (including mutual funds managed by SSB
Citi). I further certify that, to the best of my knowledge, there are no pending
orders for any security listed above or any related securities for any Managed
Accounts and/or Mutual Funds for which I am considered a Covered Person. The
proposed transaction(s) are consistent with all firm policies regarding employee
personal securities transactions.
SIGNATURE DATE
- ----------------------------------------------------
FOR USE BY THE COMPLIANCE DEPARTMENT
- ----------------------------------------------------
q q
Yes No
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
q q Reason not granted:
PRE-APPROVAL GRANTED? Yes No
ARE SECURITIES RESTRICTED?
- ------------------------------------------- --------------------- --------------
COMPLIANCE DEPARTMENT SIGNATURE: Date: Time:
- ------------------------------------------- --------------------- --------------
<PAGE>
PERSONAL INVESTMENT POLICY EXHIBIT C
FOR
SSB CITI ASSET MANAGEMENT GROUP - NORTH AMERICA
AND CERTAIN REGISTERED INVESTMENT COMPANIES
ACKNOWLEDGMENT
I acknowledge that I have received and read the Personal Investment Policy
for SSB Citi Asset Management Group - North America and Certain Registered
Investment Companies dated March 15, 2000. I understand the provisions of
the Personal Investment Policy as described therein and agree to abide by
them.
EMPLOYEE NAME (PRINT):
SIGNATURE:
DATE:
---------------------------- ----------- --------------------- --------------
SOCIAL SECURITY NUMBER: DATE OF HIRE:
---------------------------- ----------- --------------------- --------------
JOB FUNCTION & TITLE: SUPERVISOR:
---------------------------- ----------- --------------------- --------------
-----------------------------------------------------------------------------
LOCATION:
-----------------------------------------------------------------------------
---------------------------- ----------- --------------------- --------------
FLOOR AND/OR ZONE: TELEPHONE NUMBER:
---------------------------- ----------- --------------------- --------------
NASD REGISTERED EMPLOYEE (Please check one) q q
Yes No
-----------------------------------------------------------------------------
If REGISTERED, list Registration \ License:
-----------------------------------------------------------------------------
This Acknowledgment form must be completed and returned no later than March
30, 2000 to the Compliance Department - Attention: Vera Sanducci-Dendy, 388
Greenwich Street, 23rd Floor, New York, NY 10013.
<PAGE>
EXHIBIT D
SSB CITI ASSET MANAGEMENT GROUP - NORTH AMERICA PERSONAL INVESTMENT POLICY
FINANCIAL SERVICES FIRM DISCLOSURE AND INITIAL REPORT OF SECURITIES HOLDINGS
THIS REPORT MUST BE SIGNED, DATED AND RETURNED WITHIN 10 DAYS OF EMPLOYMENT TO
THE COMPLIANCE DEPARTMENT -
ATTENTION: VERA SANDUCCI-DENDY, 388 GREENWICH STREET, 23RD FLOOR
- --------------------------------------------------------------------------------
EMPLOYEE NAME: DATE OF EMPLOYMENT:
---------------------- ----------------------
- --------------------------------------------------------------------------------
BROKERAGE ACCOUNTS:
|_| I do not have a beneficial interest in any account(s) with any
financial services firm.
|_| I maintain the following account(s) with the financial services firm(s)
listed below (attach additional information if necessary-e.g., a
brokerage statement). Please include the information required below for
any broker, dealer or bank where an account is maintained which holds
securities for your direct or indirect benefit as of the date you began
your employment.
Name of Financial Service(s) Firm and Address Account Title Account
Number
SECURITIES HOLDINGS:
Complete the following (or attach a copy of your most recent statement(s))
listing all of your securities holdings, with the exception of open-ended mutual
funds and U.S Government securities if:
o You own securities which are held by financial services firm(s) as
described above. If you submit a copy of a statement, it must include all
of the information set forth below. Please be sure to include any
additional securities purchased since the date of the brokerage statement
which is attached. Use additional sheets if necessary.
o Your securities are not held with a financial service(s) firm (e.g., dividend
reinvestment programs).
<TABLE>
<CAPTION>
- ----------------------- ------------------- ---------------- ------------------ ---------------- ---------------------------
Title of Security Ticker Symbol # of Shares Principal Amt. Held Since Financial Services Firm
- ----------------------- ------------------- ---------------- ------------------ ---------------- ---------------------------
- ----------------------- ------------------- ---------------- ------------------ ---------------- ---------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------- ------------------- ---------------- ------------------ ---------------- ---------------------------
- ----------------------- ------------------- ---------------- ------------------ ---------------- ---------------------------
- ----------------------- ------------------- ---------------- ------------------ ---------------- ---------------------------
- ----------------------- ------------------- ---------------- ------------------ ---------------- ---------------------------
- ----------------------- ------------------- ---------------- ------------------ ---------------- ---------------------------
</TABLE>
|_| I have no securities holdings to report.
I certify that I have received the SSB Citi - North America Personal Investment
Policy and have read it and understood its contents. I further certify that the
above represents a complete and accurate description of my brokerage account(s)
and securities holdings as of my date of employment.
Signature: Date of Signature:
----------------------- -----------------
1 The investment advisory entities of SSB Citi covered by this policy include:
Salomon Brothers Asset Management Inc.; SSB Citi Fund Management LLC; Smith
Barney Asset Management Division of Salomon Smith Barney Inc.; Travelers
Investment Management Company; and the Citibank Global Asset Management Division
of Citibank, N.A. and Citicorp Trust, N.A.-California.
2 This requirement will become effective as to all employees on a date to be
determined by the Compliance Department and may be subject to a phase-in
implementation process.
55 Water Street
New York, NY 10041
Standard & Poor's
Memorandum
To All Employees of SPIAS, Marketscope, From Alan J. Waller
Personal Wealth and Outlook
Dept. Dept. S&P Investment
Advisory Services
Floor 42/44 Floor/Ext. 43 / 3-3414
Subject Revised Personal Trading Policy Date November 9, 1999
As you know, The McGraw-Hill Companies enjoys a worldwide reputation for
integrity and honesty. To strengthen that reputation, effective December
1, 1999, new regulations are outlined in the attached revision to the
Standard & Poor's Investment Services (formerly Retail Market Division)
Statement of Policy and Procedures Governing Employees' Securities
Transactions. The revised policy affects all employees of SPIAS,
Marketscope, Outlook, and Personal Wealth. Please read the attached tables
I and II for highlights.
To implement the revised policy, please follow these directions:
1. Begin to instruct brokers (stocks and bonds) and closed-end mutual funds
to send duplicate confirmations and statements to me at 55 Water St., 43rd
floor.
2. Anticipating a lag in processing by brokers/funds, please continue to
submit the reporting slips found in the Statement of Policy and Procedures
through December 14, 1999. Effective December 15, 1999 only broker
confirmations will be accepted.
<PAGE>
Revised Personal Trading Policy - Page 2
3. Please complete Attachment I to report existing brokerage accounts. If you
do not have brokerage accounts to report, please write NONE on the form
and return it to me.
4. Within seven days of receiving this memo, please mail the acknowledgement
and Attachment I to me at 55 Water St., 43rd floor.
Thank you for your continued support.
Cc: George Gulla David Stafford
Del Johnson Jack Zwingli
Philippe Liautaud
Shauna Morrison
<PAGE>
REVISED PERSONAL TRADING POLICIES
ANALYTICAL DEPARTMENT (PAGE 1 OF 2)
NOTE: THE WORD "STOCK" INCLUDES STOCK-BASED SECURITIES SUCH AS OPTIONS,
WARRANTS, AND CONVERTIBLE DEBT.
Effective December 1, 1999, all S&P equity analysts are prohibited from
purchasing STARS stocks that are part of the Industry Group ("Group") as
to which he/she provides coverage. Consistent with existing policy, all
other Group stock transactions must be pre-cleared by the Compliance
Officer. Also, S&P equity analysts are prohibited from purchasing any
Group stock within 30 days of such stock being included in the STARS
system. If an analyst recommends that a stock that he/she owns be added to
the STARS system, the analyst should first notify his/her supervisor and
the Compliance Officer in writing or by e-mail and obtain approval before
the recommendation is added to the STARS system.
Analysts are prohibited from purchasing a stock that is not part of
his/her Group at any time within 30 days of such stock being included in
the STARS system. All other non-Group stock transactions must be
pre-cleared by the Compliance Officer.
All other Analytical Services employees (e.g., administrative staff) must
pre-clear all stock transactions.
These rules apply to members of the employee's family (including the
spouse, minor children and adults living in the same household as such
person) and trusts of which he/she is trustee or in which he/she has a
"beneficial interest." "Beneficial interest" includes securities held in
the name of another person if (i) by reason of a contract, understanding
or relationship the employee obtains benefits substantially equivalent to
the ownership of securities or (ii) the employee can cause legal ownership
to be transferred to him/her immediately or at some future time.
To assist the Compliance Officer, the following rules are established in
connection with the reporting by S&P equity analysts of their securities
trades:
1. Report all current brokerage (stock and bond) accounts and subsequent
openings and closings. (See Attachment I.)
<PAGE>
REVISED PERSONAL TRADING POLICIES
ANALYTICAL DEPARTMENT (PAGE 2 OF 2)
2. A statement must be submitted for each account at June 30 and December 31
within 30 days of the semi-annual reporting dates. To transition to the
new policy, the first statement should be as of November 30, 1999 and
should be submitted by December 30, 1999. Each account is subject to
verification by the Compliance Officer.
3. Stock transactions must be reported through duplicate confirmations from
the broker. Effective December 15, 1999, the reporting form in the
Statement of Policy and Procedures Governing Employees' Securities
Activities will no longer be accepted.
4. When an analyst is notified that he/she will switch the Group as to which
he/she supplies coverage, the following procedures will apply:
A. From the time of notification up to 30 days after coverage ceases, the
analyst cannot purchase or otherwise acquire stocks in his/her former
Group, or stocks the analyst has previously identified as potential new
STARS recommendations for the former Group. All other transactions for the
former Group must be pre-cleared by the Compliance Officer.
B. Thirty days after the analyst ceases coverage of the former Group, he/she
may resume transactions in those stocks subject to the rules established
for non-Group stocks in the Statement of Policy and Procedures Governing
Employees' Securities Activities, as amended.
C. Effective upon the above referenced notification, the analyst cannot
purchase or otherwise acquire existing stocks included in the new Group or
the stocks of companies previously identified as potential new STARS
recommendations by the prior analyst that covered such Group. Consistent
with existing policy, all other transactions for the new Group must be
pre-cleared by the Compliance Officer.
5. Use Attachment II for pre-clearance requests. Upon approval by the
compliance officer of any proposed securities trade, the individual will
have seven (7) days in which to effect the trade. If he or she does not
effect the trade within such seven (7)- day period, he or she must consult
with and obtain the approval of the Compliance Officer again.
<PAGE>
REVISED PERSONAL TRADING POLICIES
ANALYSTS COVERING:
PORTFOLIO ACTIVITIES (E.G., ARIZONA, PLATINUM, BEAR STEARNS AND JACKSON
NATIONAL LIFE)
STOCK SCREENS
EMERGING AND SPECIAL SITUATIONS
S&P FOCUS STOCK OF THE WEEK
(PAGE 1 OF 2)
NOTE: THE WORD "STOCK" INCLUDES STOCK-BASED SECURITIES SUCH AS OPTIONS,
WARRANTS, AND CONVERTIBLE DEBT. NOTE: MUTUAL FUND RESTRICTIONS APPLY TO
QUANTITATIVE SERVICES. Effective December 1, 1999, analysts of S&P
Investment Advisory Services, Outlook, Online Advisor, Personal Wealth,
and Marketscope and its employees who regularly have access to information
related to the above referenced activities prior to publication or
dissemination to clients or the public must pre-clear all stock and
closed-end mutual fund trades. Also, an analyst may not trade a stock or
closed-end mutual fund within the 30-day period preceding or subsequent to
the date the security was recommended by the analyst for inclusion in a
portfolio, screen or publication (print or electronic).
If an analyst recommends a stock or closed-end mutual fund that he/she
owns or traded within the thirty-day window specified above, the analyst
should notify his/her supervisor and the Compliance Officer in writing or
by e-mail and obtain approval before the recommendation is offered to a
client or published. These rules do not apply to purchases of SPDRs and
similar exchange traded funds, open-end mutual funds, variable annuities,
and bond funds.
Consistent with existing policy, a trade that runs counter to the
analyst's latest recommendation or screen with respect to a security will
not be permitted, unless the analyst demonstrates that such trade is
necessary due to exigent personal circumstances.
<PAGE>
REVISED PERSONAL TRADING POLICIES
ANALYSTS COVERING:
PORTFOLIO ACTIVITIES, STOCK SCREENS, EMERGING AND SPECIAL SITUATIONS, S&P
FOCUS STOCK OF THE WEEK (PAGE 2 OF 2)
All other employees (e.g., administrative staff) of S&P Investment
Advisory Services, Outlook, Online Advisor, Personal Wealth, and
Marketscope, must pre-clear all stock and closed-end mutual fund
transactions.
These rules apply to members of the employee's family (including the
spouse, minor children and adults living in the same household as such
person) and trusts of which he/she is trustee or in which he/she has a
"beneficial interest." "Beneficial interest" includes securities held in
the name of another person if (i) by reason of a contract, understanding
or relationship the employee obtains benefits substantially equivalent to
the ownership of securities or (ii) the employee can cause legal ownership
to be transferred to him/her immediately or at some future time.
To assist the Compliance Officer, the following rules are established in
connection with the reporting by analysts and employees covered by this
section of their securities trades:
1. Report all current brokerage and closed-end mutual fund accounts and
subsequent openings and closings. (See Attachment I.)
2. A statement must be submitted for each account as of June 30 and December
31 within 30 days of the semi-annual reporting dates. To transition to the
new policy, the first statement should be as of November 30, 1999 and
should be submitted by December 30, 1999. Each account is subject to
verification by the Compliance Officer.
3. Transactions can only be reported through duplicate confirmations from the
broker or mutual fund. Effective December 15, 1999, the reporting form in
the Statement of Policy and Procedures governing Employees' Securities
Activities will no longer be accepted.
4. Use Attachment II for pre-clearance requests. Upon approval by the
compliance officer of any proposed securities trade, the individual will
have seven (7) days in which to effect the trade. If he or she does not
effect the trade within such seven (7)- day period, he or she must consult
with and obtain the approval of the Compliance Officer again.
<PAGE>
S&P INVESTMENT SERVICES ATTACHMENT I
ACCOUNT REPORTING FORM
NOTE: COMPLETE FOR BROKERAGE AND CLOSED-END MUTUAL FUND ACCOUNTS.
Employee Name:
------------------------------------------
Department:
------------------------------------------
Extension:
------------------------------------------
I am reporting a(n): account opening [] account closing []
(check one)
current account []
Account type (check one): Broker[] Closed-end mutual fund[]
Broker/Fund Name:
-------------------------------------------
Broker/Fund Contact:
----------------------------------------
Broker/Fund Address:
----------------------------------------
Broker/Fund Telephone #:
------------------------------------
Name(s) of Account Holder(s):
-------------------------------
Account Number:
---------------------------------------------
Date Account Opened/Closed:
---------------------------------
(Circle one)
----------------------------- -------------------
Employee Signature Date
This form must be completed for the analyst and members of the analyst's
family (including the spouse, minor children and adults living in the same
household as such person) and trusts of which he/she is trustee or in
which he/she has a "beneficial interest." "Beneficial interest" includes
securities held in the name of another person if (i) by reason of a
contract, understanding or relationship the employee obtains benefits
substantially equivalent to the ownership of securities or (ii) the
employee can cause legal ownership to be transferred to him/her
immediately or at some future time.
Return this form to the Compliance Officer, Alan Waller, 55 Water St.,
43rd floor.
<PAGE>
S&P INVESTMENT SERVICES ATTACHMENT II
PRE-CLEARANCE FORM
Employee Name:
-------------------------------------
Department:
----------------------------------------
Extension:
-----------------------------------------
Name of Account Holder
-----------------------------
I request pre-clearance to trade the following:
Name Ticker Buy Sell
---------------------------- ------------- --- ---
Name Ticker Buy Sell
---------------------------- ------------- --- ---
Name Ticker Buy Sell
---------------------------- ------------- --- ---
Name Ticker Buy Sell
---------------------------- ------------- --- ---
Name Ticker Buy Sell
---------------------------- ------------- --- ---
Check as applicable:
[] I previously recommended the stock(s) on these dates: (if more than one
stock, schedule below)
[] I did not previously recommend the stock(s).
Check one:
The above account holder [] DOES [] DOES NOT currently own the above
stock(s).
Note: Upon approval by the compliance officer of any proposed securities
trade, the individual will have seven (7) days in which to effect the
trade. If he or she does not effect the trade within such seven (7) day
period, he or she must consult with and obtain the approval of the
Compliance Officer again.
----------------------------- -------------------
Employee Signature Date
Return this form to the Compliance Officer, Alan Waller, 55 Water St.,
43rd floor.
<PAGE>
STANDARD & POOR'S INVESTMENT SERVICES
STATEMENT OF POLICIES AND PROCEDURES
GOVERNING EMPLOYEES' SECURITIES ACTIVITIES
ACKNOWLEDGEMENT
I HAVE READ AND UNDERSTAND THE ATTACHED REVISION TO THE STANDARD & POOR'S
INVESTMENT SERVICES (FORMERLY RETAIL MARKET DIVISION) STATEMENT OF POLICY
AND PROCEDURES GOVERNING EMPLOYEES' SECURITIES TRANSACTIONS, AND I WILL
COMPLY IN ALL RESPECTS WITH THE PROCEDURES SET FORTH THEREIN.
PLEASE SIGN YOUR NAME AND INSERT THE INFORMATION REQUESTED IN THE SPACES
PROVIDED BELOW. THEN RETURN THIS ACKNOWLEDGEMENT WITHIN SEVEN DAYS TO ALAN
WALLER, COMPLIANCE OFFICER, 55 WATER ST., 43RD FLOOR. YOU SHOULD RETAIN A
COPY OF THIS DOCUMENT FOR YOUR RECORDS.
---------------------- -------------------- ----------------
(PRINT NAME) (DEPARTMENT) (DATE)
---------------------- ----------------------
EXTENSION (SIGNATURE)
<PAGE>
Appendix C
STANDARD & POOR'S INVESTMENT ADVISORY SERVICES, INC.
INSIDER TRADING STATEMENT OF POLICY AND PROCEDURES
FOR OFFICERS, DIRECTORS AND EMPLOYEES
A. STATEMENT OF POLICY
As noted in The McGraw-Hill Companies' Code of Business Ethics, The
McGraw-Hill Companies enjoys a worldwide reputation for integrity and honesty.
The Code, a copy of which has been received by every employee of Standard &
Poor's Investment Advisory Services, Inc. ("SPIAS"), summarizes general
standards of conduct that are applicable to all employees of The McGraw-Hill
Companies and SPIAS.
SPIAS has established this Statement of Policy and Procedures
especially for its officers, directors and employees (i) to ensure the
compliance by such persons with applicable laws, rules and regulations and (ii)
to avoid even the appearance of conflict of interest or impropriety relating to
the standard of conduct of such persons with regard to their personal securities
transactions.
In addition, the reputation and goodwill of SPIAS are of paramount
importance, and in part reflect the strength of the Standard & Poor's franchise.
The reputation and goodwill carry responsibility - the responsibility to provide
judgments and opinions in connection with providing investment advice,
evaluating securities and performing related investment advisory activities that
are formed in accordance with the highest professional standards, that are fair
and accurate and are not affected by conflicts of interest. This Statement of
Policy and Procedures is intended to guide us in this endeavor.
Generally, it is illegal to trade in securities while you are in
possession of material non-public information that might affect the value of
those securities, or to transmit that information to others who trade in or
cause someone to trade in those securities. All officers, directors and
employees of SPIAS, each of whom is subject to this Statement of Policy and
Procedures, are therefore forbidden from trading, either themselves or
indirectly by transmitting material non-public information to others, while in
possession of material non-public information affecting the securities to be
traded.
Because the law of insider trading involves a number of complex legal
interpretations, SPIAS requires that every officer, director and employee confer
with the Compliance Officer before such person enters into any securities
transaction involving information that such person believes may be non-public
and material. The Compliance Officer, in consultation with The McGraw-Hill
Companies' Legal Department, will determine whether proceeding with the proposed
transaction may involve substantial risk that the transaction would violate the
law.
<PAGE>
Every officer, director and employee of SPIAS must follow the
procedures described below or risk serious sanctions, including dismissal,
substantial personal liability and possible criminal penalties, including jail
sentences. Every officer, director and employee of SPIAS must read, sign and
retain a copy of this Statement of Policy and Procedures. Any questions
regarding this Statement of Policy and Procedures should be referred to Alan
Waller, SPIAS's Compliance Officer or The McGraw-Hill Companies' Legal
Department. In Alan Waller's absence or unavailability, Jim Branscome, Ken Shea
and Thomas Gizicki will be SPIAS's alternate Compliance Officers.
B. PROCEDURES TO IMPLEMENT POLICY STATEMENT
1. IDENTIFYING INSIDE INFORMATION
Before trading for yourself or others in the securities of a company
about which you may have any material non-public, or "inside" information, ask
yourself the following questions:
a) Is the information material? That is, is it information that an
investor would consider important in making his or her investment decision? Is
this information that would materially affect the market price of the securities
if generally disclosed?
b) Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to the marketplace
by, for example, being published in one of S&P's publications (including time
for receipt by subscribers), in The Wall Street Journal or other publications of
general circulation or over an electronic distribution network?
If, after consideration of the above, you believe that the information
is material and non-public, if you have questions as to whether the information
may be material and non-public or if you have any other concerns in this area,
you should take the following steps:
i. Report the matter immediately to SPIAS's Compliance Officer.
ii. Do not purchase or sell the securities on behalf of yourself
or others.
iii. Do not communicate the information inside or outside SPIAS,
other than to the Compliance Officer.
iv. After the Compliance Officer has reviewed the issue, you will
be instructed to continue the prohibitions against trading and
communication, or you will be allowed to trade and communicate
the information.
If after consideration of the items set forth above, you have any doubt
as to whether information is material or non-public, or if there is any
unresolved question as to the applicability or interpretation of the foregoing
procedures, or as to the propriety of any action, you must discuss it with the
Compliance Officer, Alan Waller, before trading on or communicating the
information to anyone. Moreover, it is incumbent upon you to promptly update or
correct information previously conveyed to the Compliance Officer with regard to
the items set forth above as soon as you discover that such information is or
has become inaccurate.
<PAGE>
2. PERSONAL SECURITIES TRADING--CLEARANCE REPORTING
All officers, directors and employees of SPIAS shall refrain from
selling or purchasing, and shall cause the members of his/her family (including
the spouse, minor children and adults living in the same household as such
person) and trusts of which he/she is trustee or in which he/she has a
beneficial interest, to refrain from selling or purchasing any security if such
person has received any non-public information regarding such security until
such information has been made public. Non-public information includes, but is
not limited to, knowledge about a pending significant transaction or other
information that could impact the value of a company's securities.
As used in this Statement of Policy and Procedures, "beneficial
interest" includes securities held in the name of another person if (i) by
reason of a contract, understanding or relationship the employee obtains
benefits substantially equivalent to the ownership of securities or (ii) the
employee can cause legal ownership to be transferred to him/her immediately or
at some future time.
In the case of printed products, employees having any direct or
indirect knowledge of any forthcoming change in a STARS ranking or buy, sell or
switch recommendation or other non-public information may not act on such
knowledge until the fourth business day after the publication is mailed to
subscribers. In the case of electronic products, an employee may not act until
twenty-four (24) hours after public dissemination of such information. With
respect to the information transmitted via both print and electronic products
(e.g., The Outlook, Emerging & Special Situations, Stock Reports, Personal
Wealth, and Marketscope), the employee may not act until the later to occur of
the embargo periods referred to above, i.e., the fourth business day after the
print publication is mailed to subscribers. In the case of Stock Reports, if a
stock's STARS ranking changes, then the employee may not act until the fourth
business day after The Outlook issue reporting the change is mailed to
subscribers.
Notwithstanding the above, all employees of Analytical Services,
Quantitative Services, Marketscope, Personal Wealth, The Outlook, and Portfolio
Services must abide by the appropriate embargo period for each published STARS
change. Practically speaking, these employees must wait until the fourth
business day after The Outlook issue covering the change is mailed to
subscribers.
Also, any employee who receives restricted stock memos must abide by
the embargo periods covered in those memos. Trading in restricted stocks must be
pre-cleared by the Compliance Officer.
<PAGE>
IN ADDITION, EACH AND EVERY OFFICER, DIRECTOR AND EMPLOYEE OF SPIAS
SHALL SUBMIT TO THE COMPLIANCE OFFICER, ALAN WALLER, A REPORT OF EVERY
SECURITIES TRANSACTION (INCLUDING OPEN ORDERS SUCH AS STOP-LOSS OR PRICE BASED
ORDERS BUT NOT INCLUDING OPEN-END MUTUAL FUND TRANSACTIONS) IN WHICH HIS/HER
FAMILY (INCLUDING SPOUSE, MINOR CHILDREN AND ADULTS LIVING IN THE SAME HOUSEHOLD
AS SUCH PERSON) AND TRUSTS OF WHICH HE/SHE IS TRUSTEE OR IN WHICH HE/SHE HAS A
BENEFICIAL INTEREST HAVE PARTICIPATED, WITHIN THE APPLICABLE TIME FRAME
SPECIFIED BELOW. EACH AND EVERY OFFICER, DIRECTOR AND EMPLOYEE OF SPIAS WHO
PARTICIPATES IN A SECURITIES EVALUATION SERVICE OR WHO REGULARILY HAS ACCESS TO
INFORMATION FROM THSE SERVICES PRIOR TO PUBLICATIONS OR OTHER DISSEMINATION TO
CLIENTS OR TO THE PUBLIC SHALL SUBMIT A SECURITIES TRANSACTION REPORT TO THE
COMPLIANCE OFFICER WITHIN TWO (2) BUSINESS DAYS AFTER THE DATE ON WHICH THE
RELEVANT TRANSACTION WAS EFFECTED. ANY OTHER PERSON SUBJECT TO THIS STATEMENT OF
POLICY SHALL SUBMIT A SECURITIES TRANSACTION REPORT TO THE COMPLIANCE OFFICER
WITHIN SEVEN (7) BUSINESS DAYS AFTER THE DATE ON WHICH THE RELEVANT TRANSACTION
WAS EFFECTED. EACH REPORT SHALL IDENTIFY THE ACCOUNT HOLDER AND INCLUDE THE NAME
OF THE SECURITY, DATE OF TRANSACTION, QUANTITY, PRICE, PRINCIPAL AMOUNT AND
BROKER-DEALER THROUGH WHICH THE TRANSACTION WAS EFFECTED. ATTACHED HERETO IS A
STANDARD FORM REPORT THAT WHEN COMPLETED WITH THE APPROPRIATE INFORMATION SHALL
BE CONSIDERED SUFFICIENT FOR THESE PURPOSES. THIS REPORT MAY BE PROVIDED TO THE
COMPLIANCE OFFICER IN HARD COPY (I.E., PRINT) OR VIA E-MAIL IN THE FORMAT ON
PAGE 9. ALTERNATIVELY, THIS REQUIREMENT MAY BE SATISFIED BY SENDING DUPLICATE
CONFIRMATIONS OF SUCH TRADES TO THE COMPLIANCE OFFICER.
Each pre-clearance submission and report of a securities transaction
shall be kept confidential by the Compliance Officer. The information in a
report shall not be disclosed to anyone without the written consent of the
employee, except that such reports shall be made available to SPIAS or The
McGraw-Hill Companies' management as necessary for them to comply with their
legal obligations, and the Securities and Exchange Commission, the New York
Stock Exchange, the National Association of Securities Dealers and other similar
agencies and their respective staffs as required by law or regulation.
The Compliance Officer will distribute annually to each officer,
director and employee of SPIAS a request for acknowledgment that the employee
has complied with the personal securities trading reporting requirements set
forth in this Statement of Policy. Employees will be asked to sign such
acknowledgment and return same to the Compliance Officer within one week of
receipt.
<PAGE>
3. RESTRICTING ACCESS TO MATERIAL NON-PUBLIC INFORMATION
Information in your possession that you identify as potentially
material and non-public may not be communicated to anyone, including persons
within SPIAS, except as provided in Section 2 above. In addition, care should be
taken so that such information is secure. For example, files containing material
non-public information should be sealed; access to computer files containing
material non-public information should be restricted. Examples of material
non-public information include knowledge of a pending change in a stock's STARS
ranking or that a buy, sell, or switch recommendation is under consideration or
is about to be made in an S&P securities evaluation service or that a security
is under consideration to be added to or replaced from an S&P stock index.
4. CONDUCT RELATED TO GIVING OF INVESTMENT ADVICE
Investment advice is to be given only through or from an S&P
publication or product, except in cases where the employee reiterates advice
already provided in the latest issue of a publication or product. Employees must
not state or intimate that any opinion or comment may be embodied in a
forthcoming publication or other release, and no employee shall give any
subscriber, client or any other person a preference in obtaining information
that is not available to others. In no event should an employee or officer whose
functions do not involve giving investment advice attempt to do so.
No employee shall solicit, accept or receive, directly or indirectly,
any gift or compensation other than from S&P or McGraw-Hill in connection with
his or her employment, without the approval of the Compliance Officer or the
officer in charge of his/her department.
No employee shall borrow from or be indebted to any subscriber, client
or supplier of SPIAS, excluding (i) loans from lending institutions, such as
banks or insurance companies and (ii) margin accounts with brokers made in the
usual course of the employee's business and on ordinary commercial terms.
No employee shall guarantee any customer against security transaction
losses or in any way represent to a customer or subscriber that he/she or S&P
will guarantee the customer against such losses. No employee shall furnish
advice or extend services on behalf of SPIAS except as he/she may be
specifically instructed by his/her supervisor or other appropriate authority
within SPIAS. No employee shall recommend or influence any client or subscriber
in the selection of any broker, dealer or underwriter.
Employees engaged in securities evaluation services should not respond
to any inquiries from outside lawyers or reply to subpoenas or other legal
process without first reviewing the matter with a senior officer of SPIAS and
McGraw-Hill's Legal Department. In this regard, reference is made to the
McGraw-Hill Legal Department policy memorandum of January 1994 covering
responses to inquiries from outside lawyers, a copy of which is attached at the
back of this document.
<PAGE>
5. REPORTING VIOLATIONS OF THIS STATEMENT OF POLICY
As is consistent with The McGraw-Hill Companies' Code of Business
Ethics, an officer, director or employee of SPIAS who observes or gains
knowledge of any violation of this Statement of Policy and Procedures shares a
responsibility to inform his/her supervisor or the Compliance Officer in
confidence.
* * *
Nothing herein should be read to supplant or modify the obligations
imposed on all employees that are set forth in The McGraw-Hill Companies' Code
of Business Ethics. Any questions regarding this Statement of Policy and
Procedures should be addressed to the Compliance Officer or The McGraw-Hill
Companies' Legal Department.
<PAGE>
STANDARD & POOR'S INVESTMENT ADVISORY SERVICES, INC.
STATEMENT OF POLICIES AND PROCEDURES
GOVERNING EMPLOYEES' SECURITIES ACTIVITIES
Acknowledgement
---------------
I have read and understand the Statement of Policy and Procedures, and
I have complied and will comply in all respects with the procedures set forth
therein.
PLEASE SIGN YOUR NAME AND INSERT THE INFORMATION REQUESTED IN THE
SPACES PROVIDED BELOW. THEN RETURN THIS ACKNOWLEDGEMENT TO ALAN WALLER, SPIAS's
COMPLIANCE OFFICER, 25 BROADWAY/18th Floor. YOU SHOULD RETAIN A COPY OF THIS
DOCUMENT FOR YOUR RECORDS.
- ---------------------- ---------------------- ----------------
(Print Name) (Department) (Date)
- ----------------------
(Signature)
<PAGE>
STANDARD & POOR'S INVESTMENT ADVISROY SERVICES, INC.
CONFIDENTIAL SECURITIES TRANSACTION REPORT
Date of Transaction
-------------
Name of Account Holder (if other than employee)
-----------------------------------------------
Today, I/the person named above ( ) purchased ( ) sold
( ) other-explain below:
- -------------------- ---------- --------------- ----------
Security Symbol Number of Shares Price
per Share
- -------------------- ---------------
Total Principal Amount Broker
- ------------------- ------------------- --------------
Employee Name Employee's Signature Date
- ------------------ -------------------
Department Extension
All employees must complete and return this form to Alan Waller, Compliance
Officer of SPIAS's, 25 Broadway/18th floor. Alternatively, a duplicate
confirmation of the trade or an e-mail version of this form can be provided (see
following page for e-mail version of this form, which can be obtained from the
Compliance Officer, in an Excel file layout).
<PAGE>
STANDARD & POOR'S- INVESTMENT ADVISORY SERVICES INC.
CONFIDENTIAL SECURITIES TRANSACTION REPORT
<TABLE>
<CAPTION>
- ----------------- -------------------------------- ---------------- --------- ------------- -------- --------- ----------- --------
DATE EMPLOYEE NAME OF
ACCOUNT HOLDER
- ----------------- -------------------------------- ---------------- --------- ------------- -------- --------- ----------- --------
BUY
LAST FIRST DEPT. LAST FIRST SELL TRANSACTION STOCK NUMBER OF SHARE
TRANSACTION NAME NAME NAME EXT. NAME NAME *OTHER DATE NAME SYMBOL SHARES PRICE
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
- ----------------- -------- ------- -------- ------ -------- ------- --------- ------------- -------- --------- ----------- --------
</TABLE>
<TABLE>
<CAPTION>
- ----------------- --------------- ------------------
DATE
- ----------------- --------------- ------------------
TOTAL
TRANSACTION PRINCIPAL BROKER
AMOUNT
- ----------------- --------------- ------------------
<S> <C> <C>
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
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- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
- ----------------- --------------- ------------------
</TABLE>
* PLEASE EXPLAIN "OTHER" TRANSACTION
EFFECTIVE MARCH 1, 2000
CODE OF ETHICS
T. ROWE PRICE ASSOCIATES, INC.
AND ITS AFFILIATES
CODE OF ETHICS
OF
T. ROWE PRICE ASSOCIATES, INC.
AND ITS AFFILIATES
TABLE OF CONTENTS
Page
GENERAL POLICY STATEMENT....................................................1-1
Purpose and Scope of Code of Ethics..................................1-1
Who is Subject to the Code...........................................1-1
Price Associates' Status as a Fiduciary..............................1-2
What the Code Does Not Cover.........................................1-2
Compliance with the Code.............................................1-2
Questions Regarding the Code.........................................1-2
STANDARDS OF CONDUCT OF PRICE ASSOCIATES AND ITS EMPLOYEES..................2-1
Allocation of Client Brokerage.......................................2-1
Antitrust ....................................................2-1; 8-1
Compliance with Copyright Laws.......................................2-1
Computer Security...............................................2-1; 7-1
Conflicts of Interest................................................2-1
Relationships with Profitmaking Enterprises....................2-1
Service with Nonprofitmaking Enterprises.......................2-2
Relationships with Financial Service Firms.....................2-2
Investment Clubs...............................................2-2
Confidentiality......................................................2-3
Internal Operating Procedures and Planning.....................2-3
Clients, Fund Shareholders, and TRP Brokerage Customers........2-3
Investment Advice..............................................2-3
Investment Research............................................2-4
Understanding as to Clients' Accounts and Company Records
at time of Employee Termination..............................2-4
Corporate Responsibility........................................2-4; 5-1
Employment of Former Government Employees............................2-5
Employment Practices.................................................2-5
<PAGE>
Equal Opportunity...............................................2-5
Harassment......................................................2-5
Drug and Alcohol Abuse..........................................2-5
Past and Current Litigation...........................................2-6
Financial Reporting...................................................2-6
Health and Safety in the Workplace....................................2-6
Illegal Payments......................................................2-6
Marketing and Sales Activities........................................2-6
Policy Regarding Acceptance and Giving of Gifts and Gratuities........2-6
Receipt of Gifts................................................2-7
Giving of Gifts.................................................2-7
Additional Requirements for the Giving of Gifts in Connection
with the Broker/Dealer........................................2-7
Entertainment...................................................2-8
Research Trips..................................................2-9
Political Activities..................................................2-9
Protection of Corporate Assets.......................................2-10
Quality of Services..................................................2-10
Record Retention.....................................................2-10
Referral Fees........................................................2-10
Release of Information to the Press..................................2-10
Responsibility to Report Violations..................................2-10
Service as Trustee, Executor or Personal Representative..............2-11
Speaking Engagements and Publications................................2-11
Trading in Securities with Inside Information...................2-11; 3-1
STATEMENT OF POLICY ON MATERIAL, INSIDE (NON-PUBLIC) INFORMATION.............3-1
STATEMENT OF POLICY ON SECURITIES TRANSACTIONS...............................4-1
STATEMENT OF POLICY ON CORPORATE RESPONSIBILITY..............................5-1
STATEMENT OF POLICY WITH RESPECT TO COMPLIANCE
WITH COPYRIGHT LAWS.......................................................6-1
STATEMENT OF POLICY WITH RESPECT TO COMPUTER SECURITY
AND RELATED ISSUES........................................................7-1
STATEMENT OF POLICY ON COMPLIANCE WITH
ANTITRUST LAWS 8-1
March, 2000
<PAGE>
CODE OF ETHICS
OF
T. ROWE PRICE ASSOCIATES, INC.
AND ITS AFFILIATES
INDEX
Page
Access Persons...............................................................4-3
Activities, Political........................................................2-9
Alcohol Abuse................................................................2-5
Allocation of Client Brokerage...............................................2-1
Antitrust...............................................................2-1; 8-1
Approved Company Rating Changes.............................................4-11
Assets, Protection of Corporate.............................................2-10
Association of Investment Management and Research ("AIMR")...................2-6
Brokerage Accounts....................................................4-11; 4-12
Chinese Wall.................................................................3-6
Client Brokerage, Allocation of..............................................2-1
Client Limit Orders.........................................................4-16
Code of Ethics, Compliance with..............................................1-2
Code of Ethics, Purpose and Scope of.........................................1-1
Code of Ethics, Questions Regarding..........................................1-2
Code of Ethics, Who is Subject to............................................1-1
Co-Investment by Employees with Client Investment Partnerships..............4-14
Computer Security.......................................................2-1; 7-1
Conduct, Standards of, Price Associates and its Employees....................2-1
Confidentiality..............................................................2-3
Confidentiality of Computer Systems Activities and Information...............7-1
Conflicts of Interest........................................................2-1
Copyright Laws, Compliance with.........................................2-1; 6-1
Corporate Assets, Protection of.............................................2-10
Corporate Responsibility................................................2-4; 5-1
Drug Abuse...................................................................2-5
Employee Co-Investment with Client Investment Partnerships..................4-14
Employees, Standards of Conduct..............................................2-1
<PAGE>
Employment of Former Government Employees....................................2-5
Employment Practices.........................................................2-5
Entertainment................................................................2-8
Equal Opportunity............................................................2-5
Exchange - Traded Index Options.............................................4-16
Executor, Service as........................................................2-11
Fees, Referral..............................................................2-10
Fiduciary, Price Associates' Status as a ....................................1-2
Financial Reporting..........................................................2-6
Financial Service Firms, Relationships with..................................2-2
Front Running................................................................4-1
General Policy Statement.....................................................1-1
Gifts, Giving................................................................2-7
Gifts, Receipt of............................................................2-7
Government Employees, Employment of Former...................................2-5
Harassment...................................................................2-5
Health and Safety in the Workplace...........................................2-6
Illegal Payments.............................................................2-6
Information, Release to the Press...........................................2-10
Initial Public Offerings.....................................................4-9
Inside Information, Trading in Securities with..............................2-11
Interest, Conflicts of.......................................................2-1
Internet, Access to..........................................................7-2
Investment Clubs.......................................................2-2; 4-14
Investment Personnel.........................................................4-3
Large Company Exemption for Securities Transactions.........................4-15
Margin Accounts.............................................................4-15
Marketing and Sales Activities...............................................2-6
Non-Access Persons...........................................................4-4
Nonprofitmaking Enterprises, Service with....................................2-2
Options and Futures.........................................................4-16
Payments, Illegal............................................................2-6
Personal Securities Holdings, Disclosure of by Access Persons...............4-18
Personal Representative, Service as.........................................2-11
Political Activities.........................................................2-9
Press, Release of Information to the........................................2-10
Price Associates, Standards of Conduct.......................................2-1
<PAGE>
Price Associates' Stock, Transactions in.....................................4-5
Prior Clearance of Securities Transactions
(other than Price Associates' stock).......................................4-8
Private Placement, Investment In............................................4-10
Private Placement Memoranda..................................................3-7
Profitmaking Enterprises, Relationships with.................................2-1
Protection of Corporate Assets..............................................2-10
Publications................................................................2-11
Quality of Services.........................................................2-10
Questions Regarding the Code.................................................1-2
Rating Changes, Approved Company............................................4-11
Record Retention............................................................2-10
Referral Fees...............................................................2-10
Release of Information to the Press.........................................2-10
Reporting, Financial.........................................................2-6
Reporting, Price Associates' Stock Transactions..............................4-6
Reporting, Securities Transactions (other than Price Associates' stock).....4-12
Research Trips...............................................................2-9
Responsibility, Corporate...............................................2-4; 5-1
Restricted List..............................................................3-7
Retention, Record...........................................................2-10
Safety and Health in the Workplace...........................................2-6
Securities Transactions, Reporting of (other than Price Associates' stock)..4-12
Services, Quality of........................................................2-10
Short Sales.................................................................4-17
Sixty (60) Day Rule.........................................................4-17
Software Programs, Application of Copyright Law..............................7-5
Speaking Engagements........................................................2-11
Standards of Conduct of Price Associates and its Employees...................2-1
Statement, General Policy....................................................1-1
Temporary Workers, Application of Code to...............................1-1; 4-2
Termination of Employment....................................................2-4
Trading Activity............................................................4-15
Trips, Research..............................................................2-9
Trustee, Service as.........................................................2-11
Violations, Responsibility to Report........................................2-10
Watch List...................................................................3-6
March, 2000
<PAGE>
CODE OF ETHICS
OF
T. ROWE PRICE ASSOCIATES, INC.
AND ITS AFFILIATES
GENERAL POLICY STATEMENT
PURPOSE AND SCOPE OF CODE OF ETHICS. In recognition of T. Rowe Price Associates,
Inc.'s ("PRICE ASSOCIATES") commitment to maintain the highest standards of
professional conduct and ethics, the firm's Board of Directors has adopted this
Code of Ethics ("CODE") composed of Standards of Conduct and the following
Statements of Policy ("STATEMENTS"):
1. Statement of Policy on Material, Inside (Non-Public) Information
2. Statement of Policy on Securities Transactions
3. Statement of Policy on Corporate Responsibility
4. Statement of Policy with Respect to Compliance with Copyright Laws
5. Statement of Policy with Respect to Computer Security and Related
Issues
6. Statement of Policy on Compliance with Antitrust Laws
The purpose of this Code is to help preserve our most valuable asset - the
reputation of Price Associates and its employees.
WHO IS SUBJECT TO THE CODE. Price Associates, its subsidiaries and their
officers, directors and employees are all subject to the Code, as are all Rowe
Price-Fleming International, Inc. ("RPFI") and T. Rowe Fleming Asset Management
Limited ("TRFAM") personnel (officers, directors, and employees) who are
stationed in Baltimore. In addition, the following persons are also subject to
the Code:
1. All temporary workers hired on the Price Associates payroll ("TRPA
TEMPORARIES");
2. All agency temporaries, whose assignments at Price Associates exceed
four weeks or whose cumulative assignments exceed eight weeks over a
twelve-month period;
3. All independent or agency-provided consultants whose assignments exceed
four weeks or whose cumulative assignments exceed eight weeks over a
twelve-month period AND whose work is closely related to the ongoing
work of Price Associates' employees (versus project work that stands
apart from ongoing work); and
4. Any contingent worker whose assignment is more than casual in nature or
who will be exposed to the kinds of information and situations that
would create conflicts on matters covered in the Code.
PRICE ASSOCIATES' STATUS AS A FIDUCIARY. The primary responsibility of Price
Associates as an investment adviser is to render to its clients on a
professional basis unbiased and continuous advice regarding their investments.
As an investment adviser, Price Associates has a fiduciary relationship with all
of its clients, which means that it has an absolute duty of undivided loyalty,
fairness and good faith toward its clients and mutual fund shareholders and a
corresponding obligation to refrain from taking any action or seeking any
benefit for itself which would, or which would appear to, prejudice the rights
of any client or shareholder or conflict with his or her best interests.
WHAT THE CODE DOES NOT COVER. The Code was not written for the purpose of
covering all policies, rules and regulations to which employees may be subject.
As an example, T. Rowe Price Investment Services, Inc. ("INVESTMENT SERVICES")
is a member of the National Association of Securities Dealers, Inc. ("NASD")
and, as such, is required to maintain written supervisory procedures to enable
it to supervise the activities of its registered representatives and associated
persons to ensure compliance with applicable securities laws and regulations,
and with the applicable rules of the NASD and its regulatory subsidiary, NASD
Regulation, Inc. ("NASDR").
COMPLIANCE WITH THE CODE. Strict compliance with the provisions of this Code is
considered a basic condition of employment with the firm. An employee may be
required to surrender any profit realized from a transaction which is deemed to
be in violation of the Code. In addition, any breach of the Code may constitute
grounds for disciplinary action, including dismissal from employment. Employees
may appeal to the Management Committee any ruling or decision rendered with
respect to the Code.
QUESTIONS REGARDING THE CODE. Questions regarding the Code should be referred as
follows:
1. Standards of Conduct of Price Associates and its Employees: the
Chairperson of the Ethics Committee or the Director of Human Resources.
2. Statement of Policy on Material, Inside (Non-Public) Information: Legal
Department.
3. Statement of Policy on Securities Transactions: The Chairperson of the
Ethics Committee or his or her designee.
4. Statement of Policy on Corporate Responsibility: Corporate
Responsibility Committee.
5. Statement of Policy with Respect to Compliance with Copyright Laws:
Legal Department.
6. Statement of Policy with Respect to Computer Security and Related
Issues: Legal Department.
7. Statement of Policy on Compliance with Antitrust Laws: Legal
Department.
March, 2000
<PAGE>
5-40
STANDARDS OF CONDUCT OF PRICE ASSOCIATES AND ITS EMPLOYEES
ALLOCATION OF CLIENT BROKERAGE. The firm's policies with respect to the
allocation of client brokerage are set forth in Part II of Form ADV, Price
Associates' registration statement filed with the Securities and Exchange
Commission ("SEC"). It is imperative that all employees -- especially those who
are in a position to make recommendations regarding brokerage allocation, or who
are authorized to select brokers who will execute securities transactions on
behalf of our clients -- read and become fully knowledgeable concerning our
policies in this regard. Any questions regarding our firm's allocation of client
brokerage should be addressed to the Chairperson of the Brokerage Control
Committee.
ANTITRUST. The U.S. antitrust laws are designed to ensure fair competition and
preserve the free enterprise system. Some of the most common antitrust issues
with which an employee may be confronted are in the areas of pricing (adviser
fees) and trade association activity. To ensure its employees' understanding of
these laws, Price Associates has adopted a Statement of Policy on Compliance
with Antitrust Laws. All employees should read and understand this Statement.
(See page 8-1).
COMPLIANCE WITH COPYRIGHT LAWS. To protect Price Associates and its employees,
Price Associates has adopted a Statement of Policy with Respect to Compliance
with Copyright Laws. All employees should read and understand this Statement
(see page 6-1).
COMPUTER SECURITY. Computer systems and programs play a central role in Price
Associates' operations. To establish appropriate computer security to minimize
potential for loss or disruptions to our computer operations, Price Associates
has adopted a Statement of Policy with Respect to Computer Security and Related
Issues. All employees should read and understand this Statement (see page 7-1).
CONFLICTS OF INTEREST. A direct or indirect interest in a supplier, creditor,
debtor or competitor may conflict with the interests of Price Associates. All
employees must avoid placing themselves in a "compromising position" where their
interests may be in conflict with those of Price Associates or its clients.
RELATIONSHIPS WITH PROFITMAKING ENTERPRISES. A conflict may occur when
an employee of Price Associates is also employed by another firm,
directly or as a consultant or independent contractor; has a direct
financial interest in another firm; has an immediate family financial
interest in another firm; or is a director, officer or partner of
another firm.
Employees of our firm sometimes serve as directors, officers, partners,
or in other capacities with profitmaking enterprises not related to
Price Associates or its mutual funds. Employees are generally
prohibited from serving as officers or directors of corporations which
are approved or are likely to be approved for purchase in our firm's
client accounts.
An employee may not accept outside employment that would require him or
her to become registered (or dually registered) as a representative of
an unaffiliated broker/dealer, investment adviser, or an insurance
broker or company. An employee may also not become independently
registered as an investment adviser.
An employee who is contemplating obtaining another interest or
relationship that might conflict or appear to conflict with the
interests of Price Associates, such as accepting employment with or an
appointment as a director, officer or partner of an outside
profitmaking enterprise must receive the prior approval of the Ethics
Committee. Upon review by the Ethics Committee, the employee will be
advised in writing of the Committee's decision. Decisions by the Ethics
Committee regarding outside directorships in profitmaking enterprises
will be reviewed by the Management Committee before becoming final.
Outside business interests that will not conflict or appear to conflict
with the interests of the firm need not be reviewed by the Ethics
Committee, but must be approved by the Employee's supervisor.
Certain employees may serve as directors or as members of Creditors
Committees or in similar positions for non-public, for-profit entities
in connection with their professional activities at Price Associates.
An employee must obtain the permission of the Management Committee
before accepting such a position and must relinquish the position if
the entity becomes publicly held, unless otherwise determined by the
Management Committee.
SERVICE WITH NONPROFITMAKING ENTERPRISES. Price Associates encourages
its employees to become involved in community programs and civic
affairs. However, employees should not permit such activities to affect
the performance of their job responsibilities. Approval by the
Chairperson of the Ethics Committee must be obtained before an employee
accepts a position as a trustee or member of the Board of Directors of
any non-profit organization.
RELATIONSHIPS WITH FINANCIAL SERVICE FIRMS. In order to avoid any
actual or apparent conflicts of interest, employees are prohibited from
investing in or entering into any relationship, either directly or
indirectly, with corporations, partnerships, or other entities which
are engaged in business as a broker, a dealer, an underwriter, and/or
an investment adviser. As described above, this prohibition extends to
registration and/or licensure with an unaffiliated firm. This
prohibition, however, is not meant to prevent employees from purchasing
publicly traded securities of broker/dealers, investment advisers or
other companies engaged in the mutual fund industry. Of course, all
such purchases are subject to prior clearance and reporting procedures,
as applicable. This policy does not preclude an employee from engaging
an outside investment adviser to manage his or her assets.
If any member of an employee's immediate family is employed by, has a
partnership interest in, or has an equity interest of .5% or more in a
broker/dealer, investment adviser or other company engaged in the
mutual fund industry, the relationship must be reported to the Ethics
Committee.
INVESTMENT CLUBS. Access Persons (defined on p. 4-3 of the Code) must
receive the prior approval of the Chairperson of the Ethics Committee
before forming or participating in a stock or investment club.
Transactions in which Access Persons have beneficial ownership or
control (see p. 4-4) through investment clubs are subject to the firm's
Statement of Policy on Securities Transactions. Non-Access Persons
(defined on p. 4-4) do not have to receive prior approval to form or
participate in a stock or investment club and need only obtain prior
clearance of transactions in Price Associates' stock. As described on
p. 4-16, an exemption from prior clearance for an Access Person (except
for transactions in Price Associates' stock) is generally available if
the Access Person has beneficial ownership solely by virtue of his or
her spouse's participation in the club and has no investment control or
input into decisions regarding the club's securities transactions.
CONFIDENTIALITY. The exercise of confidentiality extends to four major areas of
our operations: internal operating procedures and planning; clients, fund
shareholders and TRP Brokerage customers; investment advice; and investment
research. The duty to exercise confidentiality applies not only when an employee
is with the firm, but also after he or she terminates employment with the firm.
INTERNAL OPERATING PROCEDURES AND PLANNING. During the years we have
been in business, a great deal of creative talent has been used to
develop specialized and unique methods of operations and portfolio
management. In many cases, we feel these methods give us an advantage
over our competitors, and we do not want these ideas disseminated
outside our firm. Accordingly, employees should be guarded in
discussing our business practices with outsiders. Any requests from
outsiders for specific information of this type should be cleared with
your supervisor before it is released.
Also, from time to time management holds meetings with employees in
which material, non-public information concerning the firm's future
plans is disclosed. Employees should never discuss confidential
information with, or provide copies of written material concerning the
firm's internal operating procedures or projections for the future to,
unauthorized persons outside the firm.
CLIENTS, FUND SHAREHOLDERS, AND TRP BROKERAGE CUSTOMERS. In many
instances, when clients subscribe to our services, we ask them to
disclose fully their financial status and needs. This is done only
after we have assured them that every member of our organization will
hold this information in strict confidence. It is essential that we
respect their trust. A simple rule for employees to follow is that the
names of our clients, fund shareholders, or TRP Brokerage customers or
any information pertaining to their investments must never be divulged
to anyone outside the firm, not even to members of their immediate
families, and must never be used as a basis for personal trades over
which the employee has beneficial interest or control.
INVESTMENT ADVICE. Because of the fine reputation our firm enjoys,
there is a great deal of public interest in what we are doing in the
market. There are two major considerations that dictate why we must not
provide investment "tips":
o From the point of view of our clients, it is not fair to give
other people information which clients must purchase.
o From the point of view of the firm, it is not desirable to
create an outside demand for a stock when we are trying to buy
it for our clients, as this will only serve to push the price
up. The reverse is true if we are selling.
In light of these considerations, employees must never disclose to
outsiders our buy and sell recommendations, securities we are
considering for future investment, or the portfolio holdings of our
clients or mutual funds.
The practice of giving investment advice informally to members of your
immediate family should be restricted to very close relatives. Any
transactions resulting from such advice are subject to the prior
approval (Access Persons only) and reporting requirements (Access
Persons AND Non-Access Persons) of the Statement of Policy on
Securities Transactions. Under no circumstances should an employee
receive compensation directly or indirectly (other than from Price
Associates or an affiliate) for rendering advice to either clients or
non-clients.
INVESTMENT RESEARCH. Any report circulated by a research analyst is
confidential in its entirety and should not be reproduced or shown to
anyone outside of our organization, except our clients where
appropriate.
UNDERSTANDING AS TO CLIENTS' ACCOUNTS AND COMPANY RECORDS AT TIME OF
EMPLOYEE TERMINATION. The accounts of clients, mutual fund
shareholders, and TRP Brokerage customers are the sole property of
Price Associates. This applies to all clients for whom Price Associates
acts as investment adviser, regardless of how or through whom the
client relationship originated and regardless of who may be the
counselor for a particular client. At the time of termination of
employment with Price Associates, an employee must: (1) surrender to
Price Associates in good condition any and all materials, reports or
records (including all copies in his or her possession or subject to
his or her control) developed by him or her or any other person which
are considered confidential information of Price Associates (except
copies of any research material in the production of which the employee
participated to a material extent); and (2) refrain from communicating,
transmitting or making known to any person or firm any information
relating to any materials or matters whatsoever which are considered by
Price Associates to be confidential.
Employees must use care in disposing of any confidential records or
correspondence. Confidential material that is to be discarded should be torn up
or, if a quantity of material is involved, you should contact Document
Management for instructions regarding proper disposal.
CORPORATE RESPONSIBILITY. As a major institutional investor with a fiduciary
duty to its clients, including its mutual fund shareholders, Price Associates
has adopted a Statement of Policy on Corporate Responsibility (see page 5-1).
The purpose of this Statement is to establish formal standards and procedures to
guide Price Associates with respect to its responsibilities to deal with matters
of corporate and social responsibilities which may affect the companies in which
client assets are invested.
EMPLOYMENT OF FORMER GOVERNMENT EMPLOYEES. Federal laws and regulations govern
the employment of former employees of the U.S. Government and its agencies,
including the SEC. In addition, certain states have adopted similar statutory
restrictions. Finally, certain states and municipalities which are clients of
Price Associates have imposed contractual restrictions in this regard. Before
any action is taken to discuss employment by Price Associates of a former
government employee, guidance must be obtained from the Legal Department.
EMPLOYMENT PRACTICES
EQUAL OPPORTUNITY. Price Associates is committed to the principles of
Equal Employment. We believe our continued success depends on talented
people, without regard to race, color, religion, national origin,
gender, age, disability, sexual orientation, Vietnam era military
service or any other classification protected by federal, state or
local laws.
This commitment to Equal Opportunity covers all aspects of the
employment relationship including recruitment, application and initial
employment, promotion and transfer, selection for training
opportunities, wage and salary administration, and the application of
service, retirement, and employee benefit plan policies.
All members of T. Rowe Price staff are expected to comply with the
spirit and intent of our Equal Employment Opportunity Policy.
If you feel you have not been treated in accordance with this policy,
contact your immediate supervisor, your manager or a Human Resources
Representative. No retaliation will be taken against any employee who
reports an incident of alleged discrimination.
HARASSMENT. Price Associates intends to provide employees a workplace
free from any form of harassment. This includes sexual harassment
which, banned by and punishable under the Civil Rights Act of 1964, may
result from unwelcome advances, requests for favors or any verbal or
physical conduct of a sexual nature. Such actions or statements may or
may not be accompanied by explicit or implied promises of preferential
treatment or negative consequences in connection with one's employment.
Harassment might include uninvited sex-oriented conversations,
touching, comments, jokes, suggestions or innuendos. This type of
behavior can create a stressful, intimidating and offensive atmosphere;
it may adversely affect morale and work performance.
Any employee who feels offended by the action or comments of another,
or any employee who has observed such behavior, should report the
matter, in confidence, to his or her immediate supervisor. If that
presents a problem, report the matter to the Director of Human
Resources or another person in the Human Resources Department. All
complaints will be investigated immediately and confidentially. Any
employee who has behaved in a reprehensible manner will be subject to
disciplinary action in keeping with the gravity of the offense.
DRUG AND ALCOHOL ABUSE. Price Associates has adopted a Statement of
Policy, available from Human Resources, to maintain a drug-free
workplace and prevent alcohol abuse. This policy fosters a safe,
healthful and productive environment for its employees and customers
and protects Price Associates' property, equipment, operations and
reputation in the community and the industry.
PAST AND CURRENT LITIGATION. As a condition of employment, each new employee is
required to answer a questionnaire regarding past and current civil and criminal
actions and certain regulatory matters. Price Associates uses the information
obtained through these questionnaires to answer questions asked on federal and
state registration forms and for insurance and bonding purposes. Each employee
is responsible for keeping answers on the questionnaire current. If an employee
becomes party to any proceeding that could lead to his or her conviction for any
felony or misdemeanor (other than traffic or other minor offenses) or becomes
the subject of a regulatory action by the SEC, a state, a foreign government or
any domestic or foreign self-regulatory organization relating to securities or
investment activities, he or she should notify the Legal Department promptly.
FINANCIAL REPORTING. Price Associates' records are maintained in a manner that
provides for an accurate record of all financial transactions in conformity with
generally accepted accounting principles. No false or deceptive entries may be
made and all entries must contain an appropriate description of the underlying
transaction. All reports, vouchers, bills, invoice, payroll and service records
and other essential data must be accurate, honest and timely and should provide
an accurate and complete representation of the facts.
HEALTH AND SAFETY IN THE WORKPLACE. Price Associates recognizes its
responsibility to provide employees a safe and healthful workplace and proper
facilities to help them do their jobs effectively.
ILLEGAL PAYMENTS. State, federal and foreign laws prohibit the payment of
bribes, kickbacks, inducements or other illegal gratuities or payments by or on
behalf of Price Associates. Price Associates, through its policies and
practices, is committed to comply fully with these laws. The Foreign Corrupt
Practices Act makes it a crime to corruptly give, promise or authorize payment,
in cash or in kind, for any service to a foreign official or political party in
connection with obtaining or retaining business. If an employee is solicited to
make or receive an illegal payment, he or she should contact the Legal
Department.
MARKETING AND SALES ACTIVITIES. All written and oral marketing materials and
presentations (including performance data) must be in compliance with applicable
SEC, NASD, and Association of Investment Management and Research ("AIMR")
requirements. All advertisements, sales literature and other written marketing
materials (whether they be for the Price Funds, non-Price funds, or various
advisory or brokerage services) must be reviewed and approved by the advertising
section of the Legal Department prior to use. All performance data distributed
outside the firm, including total return and yield information, must be obtained
from the Performance Group before distribution.
POLICY REGARDING ACCEPTANCE AND GIVING OF GIFTS AND GRATUITIES. The firm, as
well as its employees and members of their families, should not accept or give
gifts that might in any way create or appear to create a conflict of interest or
interfere with the impartial discharge of our responsibilities to clients or
place our firm in a difficult or embarrassing position. Such gifts would include
gratuities or other accommodations from or to business contacts, brokers,
securities salespersons, approved companies, suppliers, clients, or any other
individual or organization with whom our firm has a business relationship, but
would not include certain types of business entertainment as described later in
this section.
RECEIPT OF GIFTS. Personal contacts may lead to gifts which are offered
on a friendship basis and may be perfectly proper. It must be
remembered, however, that business relationships cannot always be
separated from personal relationships and that the integrity of a
business relationship is always susceptible to criticism in hindsight
where gifts are received.
Under no circumstances may employees accept gifts from any business or
business contact in the form of cash or cash equivalents. Gift
certificates may only be accepted if used; they may not be converted to
cash except for nominal amounts not consumed when the gift certificate
is used.
There may be an occasion where it might be awkward to refuse a token
non-cash expression of appreciation given in the spirit of friendship.
In such cases, the value of all gifts received from a business contact
should not exceed $100 in any twelve-month period. The value of a gift
directed to the members of a department as a group may be divided by
the number of the employees in that Department. Gifts received which
are unacceptable according to this policy must be returned to the
givers.
GIVING OF GIFTS. An employee may never give a gift to a business
contact in the form of cash or cash equivalents, including gift
certificates. Token gifts may be given to business contacts, but the
aggregate value of all such gifts given to the business contact may not
exceed $100 in any twelve-month period without the permission of the
Chairperson of the Ethics Committee. If an employee believes that it
would be appropriate to give a gift with a value exceeding $100 to a
business contact in a specific situation, he or she must submit a
written request to the Chairperson of the Ethics Committee. The request
should specify:
o the name of the giver;
o the name of the intended recipient and his or her employer;
o the nature of the gift and its monetary value;
o the nature of the business relationship; and
o the reason the gift is being given.
NASD regulations prohibit exceptions to the $100 limit for gifts given
in connection with Investment Services' business. Baltimore/Legal
Compliance will retain a record of all such gifts.
ADDITIONAL REQUIREMENTS FOR THE GIVING OF GIFTS IN CONNECTION WITH THE
BROKER/DEALER. NASD Conduct Rule 3060 imposes stringent reporting
requirements for gifts given to any principal, employee, agent or
similarly situated person where the gift is in connection with
Investment Services' business with the person's employer. Examples of
gifts that fall under this rule would include any gift given to an
employee of a company to which our firm provides investment products
such as mutual funds (e.g., many 401(k) plans) or to which we are
marketing investment products. Under this NASD rule, gifts may not
exceed $100 (without exception) and persons associated with Investment
Services, including its registered representatives, must report EACH
such gift.
The NASD reporting requirement is normally met when an item is ordered
electronically from the Corporate Gift website. If a gift is obtained
from another source, it must be reported to Baltimore/Legal Compliance.
The report to Baltimore Legal/Compliance must include:
o the name of the giver;
o the name of the recipient and his or her employer;
o the nature of the gift and its monetary value;
o the nature of the business relationship; and
o the date the gift was given.
ENTERTAINMENT. Our firm's $100 limit on the acceptance and giving of
gifts not only applies to gifts of merchandise, but also covers the
enjoyment or use of property or facilities for weekends, vacations,
trips, dinners, and the like. However, this limitation does not apply
to dinners, sporting events and other activities which are a normal
part of a business relationship. To illustrate this principle, the
following examples are provided:
First Example: The head of institutional research at brokerage
firm "X" (whom you have known and done business with for a
number of years) invites you and your wife to join her and her
husband for dinner and afterwards a theatrical production.
Second Example: You are going to New York for a weekend with
your wife. You wish to see a recent Broadway hit, but are told
it is sold out. You call a broker friend who works at company
"X" to see if he can get tickets for you. The broker says yes
and offers you two tickets free of charge.
Third Example: You have been invited by a vendor to a
multi-day excursion to a resort where the primary focus is
entertainment as opposed to business. The vendor has offered
to pay your travel and lodging for this trip.
In the first example, it would be proper for you to accept the
invitation.
With respect to the second example, it would not be proper to solicit a
person doing business with the firm for free tickets to any event. You
could, however, accept the tickets if you pay for them at their fair
value or, if greater, at the cost to the broker.
With respect to the third example, trips of substantial value, such as
multi-day excursions to resorts, hunting locations or sports events,
where the primary focus is entertainment as opposed to business
activities, would not be considered a normal part of a business
relationship. Generally, such invitations may not be accepted unless
our firm or the employee pays for the cost of the excursion and the
employee has obtained approval from his or her Division Head.
The same principles apply if an employee wishes to entertain a business contact.
Inviting business contacts and, if appropriate, their guests, to an occasional
meal, sporting event, the theater, or comparable entertainment is acceptable as
long as it is neither so frequent nor so extensive as to raise any question of
propriety. If an employee wishes to pay for a business guest=s transportation
(e.g., airfare) and/or accommodations as part of business entertainment, he or
she must first receive the permission of the Chairperson of the Ethics
Committee.
RESEARCH TRIPS. Occasionally, brokers or portfolio companies invite employees of
our firm to attend or participate in research conferences, tours of portfolio
companies' facilities, or meetings with the management of such companies. These
invitations may involve traveling extensive distances to and from the sites of
the specified activities and may require overnight lodging. Employees may not
accept any such invitations until approval has been secured from their Division
heads. As a general rule, such invitations should only be accepted after a
determination has been made that the proposed activity constitutes a valuable
research opportunity which will be of primary benefit to our clients. All travel
expenses to and from the sites of the activities, and the expenses of any
overnight lodging, meals or other accommodations provided in connection with
such activities, should be paid for by our firm except in situations where the
costs are considered to be insubstantial and are not readily ascertainable.
Employees may not accept reimbursement from brokers or portfolio companies for:
travel and hotel expenses; speaker fees or honoraria for addresses or papers
given before audiences; or consulting services or advice they may render.
Likewise, employees may neither request nor accept loans or personal services
from brokers or portfolio companies.
POLITICAL ACTIVITIES. Employees are encouraged to participate and vote in all
federal, state and local elections. All officers and directors of Price
Associates are required to disclose certain Maryland local and state political
contributions on a semi-annual basis (a Political Contribution Questionnaire is
sent to officers and directors each January and July).
No political contribution of corporate funds, direct or indirect, to any
political candidate or party, or to any other organization that might use the
contribution for a political candidate or party, or use of corporate property,
services or other assets may be made without the written approval of the Legal
Department. These prohibitions cover not only direct contributions but also
indirect assistance or support of candidates or political parties through
purchase of tickets to special dinners or other fund raising events, or the
furnishing of any other goods, services or equipment to political parties or
committees.
PROTECTION OF CORPORATE ASSETS. All employees are responsible for taking
measures to ensure that Price Associates' assets are properly protected. This
responsibility not only applies to our business facilities, equipment and
supplies, but also to intangible assets such as proprietary, research or
marketing information, corporate trademarks and servicemarks, and copyrights.
QUALITY OF SERVICES. It is a continuing policy of Price Associates to provide
investment products and services which: (1) meet applicable laws, regulations
and industry standards; (2) are offered to the public in a manner which ensures
that each client/shareholder understands the objectives of each investment
product selected; and (3) are properly advertised and sold in accordance with
all applicable SEC, state and NASD rules and regulations.
The quality of Price Associates' investment products and services and operations
affects our reputation, productivity, profitability and market position. Price
Associates' goal is to be a quality leader and to create conditions that allow
and encourage all employees to perform their duties in an efficient, effective
manner.
RECORD RETENTION. Under various federal and state laws and regulations, Price
Associates is required to produce, maintain and retain various records,
documents and other written (including electronic) communications. Each employee
is responsible for adhering to Price Associates' record maintenance and
retention policies.
REFERRAL FEES. Federal securities laws strictly prohibit the payment of any type
of referral fee unless certain conditions are met. This would include any
compensation to persons who refer clients or shareholders to us (e.g., brokers,
registered representatives or any other persons) either directly in cash, by fee
splitting, or indirectly by the providing of gifts or services (including the
allocation of brokerage). No arrangements should be entered into obligating
Price Associates or any employee to pay a referral fee unless approved by the
Legal Department.
RELEASE OF INFORMATION TO THE PRESS. All requests for information from the media
concerning T. Rowe Price Associates' corporate affairs, mutual funds, investment
services, investment philosophy and policies, and related subjects should be
referred to the Public Relations Department for reply. Investment professionals
who are contacted directly by the press concerning a particular fund's
investment strategy or market outlook may use their own discretion, but are
advised to check with the Public Relations Department if they do not know the
reporter or feel it may be inappropriate to comment on a particular matter.
RESPONSIBILITY TO REPORT VIOLATIONS. Every employee who becomes aware of a
violation of this Code is encouraged to report, on a confidential basis, the
violation to his or her supervisor. If the supervisor appears to be involved in
the wrongdoing, the report should be made to the next level of supervisory
authority or to the Director of the Human Resources Department. Upon
notification of the alleged violation, the supervisor is obligated to advise the
Legal Department.
It is Price Associates' policy that no adverse action will be taken against any
employee who reports a violation in good faith.
SERVICE AS TRUSTEE, EXECUTOR OR PERSONAL REPRESENTATIVE. Employees may serve as
trustees, co-trustees, executors or personal representatives for the estates of
or trusts created by close family members. Employees may also serve in such
capacities for estates or trusts created by nonfamily members. However, if an
Access Person expects to be actively involved in an investment capacity in
connection with an estate or trust created by a nonfamily member, he or she must
first be granted permission by the Ethics Committee. If an employee serves in
any of these capacities, securities transactions effected in such accounts will
be subject to the prior approval (Access Persons only) and reporting
requirements (Access Persons AND Non-Access Persons) of our Statement of Policy
on Securities Transactions.
If any employees presently serve in any of these capacities for nonfamily
members, they should report these relationships in writing to the Ethics
Committee.
SPEAKING ENGAGEMENTS AND PUBLICATIONS. Employees are often asked to accept
speaking engagements on the subject of investments, finance, or their own
particular specialty with our organization. This is encouraged by the firm, as
it enhances our public relations, but you should obtain approval from the head
of your Division before you accept such requests. You may also accept an offer
to teach a course or seminar on investments or related topics (for example, at a
local college) in your individual capacity with the approval of the head of your
Division and provided the course is in compliance with the Guidelines found in
Investment Services= Compliance Manual.
Before making any commitment to write or publish any article or book on a
subject related to investments or your work at Price Associates, approval should
be obtained from your Division head.
TRADING IN SECURITIES WITH INSIDE INFORMATION. The purchase or sale of
securities while in possession of material, inside information is prohibited by
state and federal laws. Information is considered inside and material if it has
not been publicly disclosed and is sufficiently important that it would affect
the decision of a reasonable person to buy, sell or hold stock in a company,
including Price Associates' stock. Under no circumstances may an employee
transmit such information to any other person, except to other employees who are
required to be kept informed on the subject. All employees should read and
understand the Statement of Policy on Material, Inside (Non-Public) Information
(see page 3-1).
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY
ON
MATERIAL, INSIDE (NON-PUBLIC) INFORMATION
INTRODUCTION. "Insider trading" is a top enforcement priority of the Securities
and Exchange Commission. In 1988, the Insider Trading and Securities Fraud
Enforcement Act (the "ACT") was signed into law. This Act has had a far reaching
impact on all public companies and especially those engaged in the securities
brokerage or investment advisory industries, including directors, executive
officers and other controlling persons of such companies. While the Act does not
provide a statutory definition of "insider trading," it contained major changes
to the previous law. Specifically, the Act:
WRITTEN PROCEDURES. Requires SEC-registered brokers, dealers and
investment advisers to establish, maintain and enforce written policies
and procedures reasonably designed to prevent the misuse of material,
non-public information by such persons.
CIVIL PENALTIES. Imposes severe civil penalties on brokerage firms,
investment advisers, their management and advisory personnel and other
"controlling persons" who fail to take adequate steps to prevent insider
trading and illegal tipping by employees and other "controlled persons."
Persons who directly or indirectly control violators, including entities
such as Price Associates and their officers and directors, face penalties
to be determined by the court in light of the facts and circumstances, but
not to exceed the greater of $1,000,000 or three times the amount of
profit gained or loss avoided as a result of the violation.
CRIMINAL PENALTIES. Provides as penalties for criminal securities law
violations:
o Maximum jail term -- from five to ten years;
o Maximum criminal fine for individuals -- from $100,000 to $1,000,000;
o Maximum criminal fine for entities -- from $500,000 to $2,500,000.
PRIVATE RIGHT OF ACTION. Establishes a statutory private right of action
on behalf of contemporaneous traders against insider traders and their
controlling persons.
BOUNTY PAYMENTS. Authorizes the SEC to award bounty payments to persons
who provide information leading to the successful prosecution of insider
trading violations. Bounty payments are at the discretion of the SEC, but
may not exceed 10% of the penalty imposed.
PURPOSE OF STATEMENT OF POLICY. The purpose of this Statement of Policy
("STATEMENT") is to comply with the Act's requirement to establish, maintain,
and enforce written procedures designed to prevent insider trading. This
Statement explains: (i) the general legal prohibitions and sanctions regarding
insider trading; (ii) the meaning of the key concepts underlying the
prohibitions; (iii) the obligations of each employee of Price Associates in the
event he or she comes into possession of material, non-public information; and
(iv) the firm's educational program regarding insider trading. Price Associates
has also adopted a Statement of Policy on Securities Transactions (see page
4-1), which requires both Access Persons (see p. 4-3) and Non-Access Persons
(see p. 4-4) to obtain prior clearance with respect to their transactions in
Price Associates' stock and requires Access Persons to obtain prior clearance
with respect to all pertinent securities transactions. In addition, both Access
Persons and Non-Access Persons are required to report such transactions on a
timely basis to the firm.
THE BASIC INSIDER TRADING PROHIBITION. The "insider trading" doctrine under
federal securities laws generally prohibits any person (including investment
advisers) from:
o trading in a security while in possession of material, non-public
information regarding the issuer of the security;
o tipping such information to others;
o recommending the purchase or sale of securities while in possession of
such information;
o assisting someone who is engaged in any of the above activities. Thus,
"insider trading" is not limited to insiders of the company whose
securities are being traded. It can also apply to non-insiders, such
as investment analysts, portfolio managers and stockbrokers. In
addition, it is not limited to persons who trade. It also covers
persons who tip material, non-public information or recommend
transactions in securities while in possession of such information.
POLICY OF PRICE ASSOCIATES ON INSIDER TRADING. It is the policy of Price
Associates and its affiliates to forbid any of their officers, directors, or
employees, while in possession of material, non-public information, from trading
securities or recommending transactions, either personally or in its proprietary
accounts or on behalf of others (including mutual funds and private accounts),
or communicating material, non-public information to others in violation of
federal securities laws.
"NEED TO KNOW" POLICY. All information regarding planned, prospective or ongoing
securities transactions must be treated as confidential. Such information must
be confined, even within the firm, to only those individuals and departments who
must have such information in order for Price Associates to carry out its
engagement properly and effectively. Ordinarily, these prohibitions will
restrict information to only those persons who are involved in the matter.
TRANSACTIONS INVOLVING PRICE ASSOCIATES' STOCK. Officers, directors and
employees are reminded that they are "insiders" with respect to Price Associates
since Price Associates is a public company and its stock is traded in the
over-the-counter market. It is therefore important that employees not discuss
with family, friends or other persons any matter concerning Price Associates
which might involve material, non-public information, whether favorable or
unfavorable.
SANCTIONS. Penalties for trading on material, non-public information are severe,
both for the individuals involved in such unlawful conduct and their employers.
An employee of Price Associates who violates the insider trading laws can be
subject to some or all of the penalties described below, even if he or she does
not personally benefit from the violation:
o Injunctions;
o Treble damages;
o Disgorgement of profits;
o Criminal fines;
o Jail sentences;
o Civil penalties for the person who committed the violation (which
would, under normal circumstances, be the employee and not the firm)
of up to three times the profit gained or loss avoided, whether or not
the individual actually benefitted; and
o Civil penalties for Price Associates (and other persons, such as
managers and supervisors, who are deemed to be controlling persons) of
up to the greater of $1,000,000 or three times the amount of the
profit gained or loss avoided.
In addition, any violation of this Statement can be expected to result in
serious sanctions being imposed by Price Associates, including dismissal of the
person(s) involved.
BASIC CONCEPTS OF INSIDER TRADING. The four critical concepts in insider trading
cases are: (1) fiduciary duty/misappropriation, (2) materiality, (3) non-public,
and (4) possession. Each concept is discussed below.
FIDUCIARY DUTY/MISAPPROPRIATION. In two decisions, Dirks v. SEC and Chiarella v.
United States, the United States Supreme Court held that insider trading and
tipping violate the federal securities law if the trading or tipping of the
information results in a breach of duty of trust or confidence.
A typical breach of duty arises when an insider, such as a corporate officer,
purchases securities of his or her corporation on the basis of material,
non-public information. Such conduct breaches a duty owed to the corporation's
shareholders. The duty breached, however, need not be to shareholders to support
liability for insider trading; it could also involve a breach of duty to a
client, an employer, employees, or even a personal acquaintance. For example,
courts have held that if the insider receives a personal benefit (either direct
or indirect) from the disclosure, such as a pecuniary gain or reputational
benefit, that would be enough to find a fiduciary breach.
The concept of who constitutes an "insider" is broad. It includes officers,
directors and employees of a company. In addition, a person can be a "temporary
insider" if he or she enters into a confidential relationship in the conduct of
a company's affairs and, as a result, is given access to information solely for
the company's purpose. A temporary insider can include, among others, a
company's attorneys, accountants, consultants, and bank lending officers, as
well as the employees of such organizations. In addition, any person may become
a temporary insider of a company if he or she advises the company or provides
other services, provided the company expects such person to keep any material,
non-public information disclosed confidential.
Court decisions have held that under a "misappropriation" theory, an outsider
(such as an investment analyst) may be liable if he or she breaches a duty to
anyone by: (1) obtaining information improperly, or (2) using information that
was obtained properly for an improper purpose. For example, if information is
given to an analyst on a confidential basis and the analyst uses that
information for trading purposes, liability could arise under the
misappropriation theory. Similarly, an analyst who trades in breach of a duty
owed either to his or her employer or client may be liable under the
misappropriation theory. For example, the Supreme Court upheld the
misappropriation theory when a lawyer received material, non-public information
from a law partner who represented a client contemplating a tender offer, where
that lawyer used the information to trade in the securities of the target
company.
The situations in which a person can trade while in possession of material,
non-public information without breaching a duty are so complex and uncertain
that the only safe course is not to trade, tip or recommend securities while in
possession of material, non-public information.
MATERIALITY. Insider trading restrictions arise only when the information that
is used for trading, tipping or recommendations is "material." The information
need not be so important that it would have changed an investor's decision to
buy or sell; rather, it is enough that it is the type of information on which
reasonable investors rely in making purchase, sale, or hold decisions.
RESOLVING CLOSE CASES. The Supreme Court has held that, in close cases,
doubts about whether or not information is material should be resolved in
favor of a finding of materiality. You should also be aware that your
judgment regarding materiality may be reviewed by a court or the SEC with
the 20-20 vision of hindsight.
EFFECT ON MARKET PRICE. Any information that, upon disclosure, is likely
to have a significant impact on the market price of a security should be
considered material.
FUTURE EVENTS. The materiality of facts relating to the possible
occurrence of future events depends on the likelihood that the event will
occur and the significance of the event if it does occur.
ILLUSTRATIONS. The following list, though not exhaustive, illustrates the
types of matters that might be considered material: a joint venture,
merger or acquisition; the declaration or omission of dividends; the
acquisition or loss of a significant contract; a change in control or a
significant change in management; a call of securities for redemption; the
borrowing of a significant amount of funds; the purchase or sale of a
significant asset; a significant change in capital investment plans; a
significant labor dispute or disputes with subcontractors or suppliers; an
event requiring a company to file a current report on Form 8-K with the
SEC; establishment of a program to make purchases of the company's own
shares; a tender offer for another company's securities; an event of
technical default or default on interest and/or principal payments;
advance knowledge of an upcoming publication that is expected to affect
the market price of the stock.
These illustrations are equally applicable to Price Associates as a public
company and should serve as examples of the types of matters that
employees should not discuss with persons outside the firm. Remember, even
though you may have no intent to violate any federal securities law, an
offhand comment to a friend might be used unbeknownst to you by such
friend to effect purchases or sales of Price Associates' stock. If such
transactions were discovered and your friend were prosecuted, your status
as an informant or "tipper" would directly involve you in the case.
NON-PUBLIC VS. PUBLIC INFORMATION. Any information which is not "public" is
deemed to be "non-public." Just as an investor is permitted to trade on the
basis of information that is not material, he or she may also trade on the basis
of information that is public. Information is considered public if it has been
disseminated in a manner making it available to investors generally. An example
of non-public information would include material information provided to a
select group of analysts but not made available to the investment community at
large. Set forth below are a number of ways in which non-public information may
be made public.
DISCLOSURE TO NEWS SERVICES AND NATIONAL PAPERS. The U.S. stock exchanges
require exchange-traded issuers to disseminate material, non-public
information about their companies to: (1) the national business and
financial newswire services (Dow Jones and Reuters); (2) the national
service (Associated Press); and (3) The New York Times and The Wall Street
Journal.
LOCAL DISCLOSURE. An announcement by an issuer in a local newspaper might
be sufficient for a company that is only locally traded, but might not be
sufficient for a company that has a national market.
INFORMATION IN SEC REPORTS. Information contained in reports filed with
the SEC will be deemed to be public.
INFORMATION IN BROKERAGE REPORTS. Information published in bulletins and
research reports disseminated by brokerage firms will, as a general
matter, be deemed to be public.
If Price Associates is in possession of material, non-public information with
respect to a security before such information is disseminated to the public
(i.e., such as being disclosed in one of the public media described above),
Price Associates and its employees must wait a sufficient period of time after
the information is first publicly released before trading or initiating
transactions to allow the information to be fully disseminated.
CONCEPT OF POSSESSION. It is important to note that the SEC takes the position
that the law regarding insider trading prohibits any person from trading in a
security in violation of a duty of trust and confidence WHILE in possession of
material, non-public information regarding the security. This is in contrast to
trading ON THE BASIS of the material, non-public information. To illustrate the
problems created by the use of the "possession" standard, as opposed to the
"caused" standard, the following three examples are provided:
FIRST, if the investment committee to a Price mutual fund were to obtain
material, non-public information about one of its portfolio companies from
a Price equity research analyst, that fund would be prohibited from
trading in the securities to which that information relates. The
prohibition would last until the information is no longer material or
non-public.
SECOND, if the investment committee to a Price mutual fund obtained
material, non-public information about a particular portfolio security but
continued to trade in that security, then the committee members, Price
Associates, and possibly management personnel might be liable for insider
trading violations.
THIRD, even if the investment committee to the Fund does not come into
possession of the material, non-public information known to the equity
research analyst, if it trades in the security, it may have a difficult
burden of proving to the SEC or to a court that it was not in possession
of such information.
TENDER OFFERS. Tender offers are subject to particularly strict regulation under
the securities laws. Specifically, trading in securities which are the subject
of an actual or impending tender offer by a person who is in possession of
material, non-public information relating to the offer is illegal, regardless of
whether there was a breach of fiduciary duty. Under no circumstances should you
trade in securities while in possession of material, non-public information
regarding a potential tender offer.
PROCEDURES TO BE FOLLOWED WHEN RECEIVING MATERIAL, NON-PUBLIC INFORMATION.
Whenever an employee comes into possession of material, non-public information,
he or she should immediately contact the Legal Department and refrain from
disclosing the information to anyone else, including persons within Price
Associates, unless specifically advised to the contrary.
Specifically, employees may not:
o Trade in securities to which the material, non-public information
relates;
o Disclose the information to others;
o Recommend purchases or sales of the securities to which the
information relates.
If the Legal Department determines that the information is material and
non-public, it will decide whether to:
o Place the security on a Watch List ("WATCH LIST") and restrict the
flow of the information to others within Price Associates in order to
allow Price Associates' investment personnel to continue their
ordinary investment activities. This procedure is commonly referred to
as a CHINESE WALL; or
o Place the security on a Restricted List ("RESTRICTED LIST") in order
to prohibit trading in the security by both clients and employees.
The Watch List is highly confidential and should, under no circumstances, be
disseminated to anyone except authorized personnel in the Legal Department. The
Restricted List is also highly confidential and should, under no circumstances,
be disseminated to anyone outside Price Associates.
The employee whose possession of or access to inside information has caused the
inclusion of an issuer on the Watch List may never trade or recommend the trade
of the securities of that issuer without the specific prior approval of the
Legal Department.
If an employee receives a private placement memorandum and the existence of the
private offering and/or the contents of the memorandum is material and
non-public, the employee should contact the Legal Department for a determination
of whether the issuer should be placed on the Watch or Restricted List.
SPECIFIC PROCEDURES RELATING TO THE SAFEGUARDING OF INSIDE INFORMATION.
To ensure the integrity of the Chinese Wall, and the confidentiality of
the Restricted List, it is important that ALL EMPLOYEES take the following steps
to safeguard the confidentiality of material, non-public information:
o Do not discuss confidential information in public places such as
elevators, hallways or social gatherings;
o To the extent practical, limit access to the areas of the firm where
confidential information could be observed or overheard to employees
with a business need for being in the area;
o Avoid using speaker phones in areas where unauthorized persons may
overhear conversations;
o Where appropriate, maintain the confidentiality of client identities
by using code names or numbers for confidential projects;
o Exercise care to avoid placing documents containing confidential
information in areas where they may be read by unauthorized persons
and store such documents in secure locations when they are not in use;
and
o Destroy copies of confidential documents no longer needed for a
project.
Price Associates has adopted specific written procedures, Procedures
Pertaining to the Administration of the Statement of Policy on Material, Inside
(Non-Public) Information ("PROCEDURES") to deal with those situations where
employees of the firm are in possession of material, non-public information with
respect to securities which may be in or are being considered for inclusion in
the portfolios of clients managed by other areas of the firm and when tender
offer financing information is received. These Procedures also describe the
procedures for managing relationship conflicts in the municipal area. These
Procedures have been designed to isolate and keep confidential material,
non-public information known to one investment group or employee from the
remainder of the firm. They are considered a part of this Statement and will be
distributed to all appropriate personnel.
EDUCATION PROGRAM. While the probability of research analysts and portfolio
managers being exposed to material, non-public information with respect to
companies considered for investment by clients is greater than that of other
employees, it is imperative that all employees have a full understanding of this
Statement, particularly since the insider trading restrictions also apply to
transactions in the stock of Price Associates.
To ensure that all employees are properly informed of and understand Price
Associates' policy with respect to insider trading, the following program has
been adopted.
INITIAL REVIEW FOR NEW EMPLOYEES. All new employees will be given a copy of
the Code, which includes this Statement, at the time of their employment
and will be required to certify that they have read it. A representative of
the Legal Department will review the Statement with each new portfolio
manager, research analyst, and trader, as well as with any person who joins
the firm as a vice president of Price Associates, promptly after his or her
employment.
DISTRIBUTION OF STATEMENT. Any time this Statement is materially revised,
copies will be distributed to all employees.
ANNUAL REVIEW WITH RESEARCH ANALYSTS, COUNSELORS AND TRADERS. A
representative of the Legal Department will review this Statement at least
annually with portfolio managers, research analysts, and traders.
ANNUAL CONFIRMATION OF COMPLIANCE. All employees will be asked to confirm
their understanding of and adherence to this Statement on an annual basis.
QUESTIONS. If you have any questions with respect to the interpretation or
application of this Statement, you are encouraged to discuss them with your
immediate supervisor or the Legal Department.
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY
ON
SECURITIES TRANSACTIONS
BACKGROUND INFORMATION.
LEGAL REQUIREMENT. In accordance with the requirements of the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940 and the Insider Trading and Securities Fraud
Enforcement Act of 1988, T. Rowe Price Associates, Inc. ("PRICE
ASSOCIATES") and the mutual funds ("TRPA FUNDS") which it manages have
adopted this Statement of Policy on Securities Transactions
("STATEMENT"). Both Rowe Price-Fleming International, Inc. ("RPFI") and
T. Rowe Fleming Asset Management Limited ("TRFAM") have also adopted
Statements of Policy on Securities Transactions. Funds sponsored and
managed by Price Associates or RPFI will be referred to as the "PRICE
FUNDS."
PRICE ASSOCIATES' FIDUCIARY POSITION. As an investment adviser, Price
Associates is in a fiduciary position which requires it to act with an
eye only to the benefit of its clients, avoiding those situations which
might place, or appear to place, the interests of Price Associates or
its officers, directors and employees in conflict with the interests of
clients.
PURPOSE OF STATEMENT. The Statement was developed to help guide Price
Associates' employees and independent directors and the independent
directors of the Price Funds in the conduct of their personal
investments and to:
o eliminate the possibility of a transaction occurring that the
Securities and Exchange Commission or other regulatory bodies
would view as illegal, such as FRONT RUNNING (see definition
below);
o avoid situations where it might appear that Price Associates or
the Price Funds or any of their officers, directors or employees
had personally benefited at the expense of a client or fund
shareholder or taken inappropriate advantage of their fiduciary
positions; and
o prevent, as well as detect, the misuse of material, non-public
information.
Employees and the independent directors of Price Associates and the
Price Funds are urged to consider the reasons for the adoption of this
Statement. Price Associates' and the Price Funds' reputations could be
adversely affected as the result of even a single transaction considered
questionable in light of the fiduciary duties of Price Associates and
the independent directors of the Price Funds.
FRONT RUNNING. Front Running is illegal. It is generally defined as the
purchase or sale of a security by an officer, director or employee of an
investment adviser or mutual fund in anticipation of and prior to the
adviser effecting similar transactions for its clients in order to take
advantage of or avoid changes in market prices effected by client
transactions.
PERSONS SUBJECT TO STATEMENT. The provisions of this Statement apply as
described below to the following persons and entities. Each person and entity is
classified as either an Access Person or a Non-Access Person as described below.
The provisions of this Statement may also apply to an Access Person's or
Non-Access Person's spouse, minor children, and certain other relatives, as
further described on page 4-4 of this Statement. Access Persons are subject to
all provisions of this Statement. Non-Access Persons are subject to the general
principles of the Statement and its reporting requirements, but are exempt from
prior clearance requirements except for transactions in Price Associates' stock.
The persons and entities covered by this Statement are:
PRICE ASSOCIATES. Price Associates, each of its subsidiaries and their
retirement plans, and the Price Associates Employee Partnerships.
PERSONNEL. Each officer, inside director and employee of Price
Associates and its subsidiaries, including T. Rowe Price Investment
Services, Inc., the principal underwriter of the Price Funds.
CERTAIN TEMPORARY WORKERS. These workers include:
o All temporary workers hired on the Price Associates payroll
("TRPA TEMPORARIES");
o All agency temporaries whose assignments at Price Associates
exceed four weeks or whose cumulative assignments exceed eight
weeks over a twelve-month period;
o All independent or agency-provided consultants whose assignments
exceed four weeks or whose cumulative assignments exceed eight
weeks over a twelve-month period AND whose work is closely
related to the ongoing work of Price Associates' employees
(versus project work that stands apart from ongoing work); and
o Any contingent worker whose assignment is more than casual in
nature or who will be exposed to the kinds of information and
situations that would create conflicts on matters covered in the
Code.
RPFI PERSONNEL. As stated in the first paragraph, a Statement of Policy
on Securities Transactions has been adopted by RPFI. Under that
Statement, all RPFI personnel (officers, directors and employees)
stationed in Baltimore will be subject to this Statement.
TRFAM PERSONNEL. As stated in the first paragraph, a Statement of Policy
on Securities Transactions has been adopted by TRFAM. Under that
Statement, all TRFAM personnel (officers, directors, and employees)
stationed in Baltimore will be subject to this Statement.
RETIRED EMPLOYEES. Retired employees of Price Associates who continue to
receive investment research information from Price Associates.
INDEPENDENT DIRECTORS OF PRICE ASSOCIATES AND THE PRICE FUNDS. The independent
directors of Price Associates include those directors of Price Associates who
are neither officers nor employees of Price Associates. The independent
directors of the Price Funds include those directors of the Price Funds who are
not deemed to be "interested persons" of Price Associates.
Although subject to the general principles of this Statement, including the
definition of "beneficial ownership," independent directors are subject only to
modified reporting requirements. The independent directors of the Price Funds
are exempt from prior clearance requirements. The independent directors of Price
Associates are exempt from the prior clearance requirements except for Price
Associates' stock.
ACCESS PERSONS. Certain persons and entities are classified as "ACCESS
PERSONS" under the Code. The term "ACCESS PERSON" means:
o Price Associates;
o any officer (vice president or above) or director (excluding
independent directors) of Price Associates or the Price Funds;
o any employee of Price Associates or the Price Funds who, in
connection with his or her regular functions or duties, makes,
participates in, or obtains or has access to information
regarding the purchase or sale of securities by a Price Fund or
other advisory client, or whose functions relate to the making
of any recommendations with respect to the purchases or sales;
or
o any person in a control relationship to Price Associates or a
Price Fund who obtains or has access to information concerning
recommendations made to a Price Fund or other advisory client
with regard to the purchase or sale of securities by the Price
Fund or advisory client.
All Access Persons are notified of their status under the Code.
INVESTMENT PERSONNEL. An Access Person is further identified as
"INVESTMENT PERSONNEL" if, in connection with his or her regular
functions or duties, he or she "makes or participates in making
recommendations regarding the purchase or sale of securities" by a Price
Fund or other advisory client.
The term "Investment Personnel" includes, but is not limited to:
o those employees who are authorized to make investment decisions
or to recommend securities transactions on behalf of the firm's
clients (investment counselors and members of the mutual fund
advisory committees);
o research and credit analysts; and
o traders who assist in the investment process.
All Investment Personnel are deemed Access Persons under the Code. All
Investment Personnel are notified of their status under the Code.
Investment Personnel are prohibited from investing in initial public
offerings.
NON-ACCESS PERSONS. Persons who do not fall within the definition of Access
Persons are deemed "NON-ACCESS PERSONS".
QUESTIONS ABOUT THE STATEMENT. You are urged to seek the advice of the
Chairperson of the Ethics Committee when you have questions as to the
application of this Statement to individual circumstances.
TRANSACTIONS SUBJECT TO STATEMENT. Except as provided below, the provisions of
this Statement apply to transactions that fall under either one of the following
two conditions:
FIRST, you are a "BENEFICIAL OWNER" of the security under the Rule 16a-1 of the
Securities Exchange Act of 1934 ("EXCHANGE ACT"), as defined below.
SECOND, if you CONTROL or direct securities trading for another person or
entity, those trades are subject to this Statement even if you are not a
beneficial owner of the securities. For example, if you have an exercisable
trading authorization of an unrelated person's or entity's brokerage account, or
are directing another person's or entity's trades, those transactions will be
subject to this Statement to the same extent your personal trades would be,
unless exempted as described below.
DEFINITION OF BENEFICIAL OWNER. A "beneficial owner" is any person who, directly
or indirectly, through any contract, arrangement, understanding, relationship,
or otherwise, has or shares in the opportunity, directly or indirectly, to
profit or share in any profit derived from a transaction in the security.
A person has beneficial ownership in:
o securities held by members of the person's immediate family
SHARING THE SAME HOUSEHOLD, although the presumption of
beneficial ownership may be rebutted;
o a person's interest in securities held by a trust, which may
include both trust beneficiaries or trustees with investment
control;
o a person's right to acquire securities through the exercise or
conversion of any derivative security, whether or not presently
exercisable;
o a general partner's proportionate interest in the portfolio
securities held by a general or limited partnership;
o certain performance-related fees other than an asset-based fee,
received by any broker, dealer, bank, insurance company,
investment company, investment adviser, investment manager,
trustee or person or entity performing a similar function; and
o a person's right to dividends that is separated or separable
from the underlying securities. Otherwise, right to dividends
alone shall not represent beneficial ownership in the
securities.
A shareholder shall not be deemed to have beneficial ownership in the portfolio
securities held by a corporation or similar entity in which the person owns
securities if the shareholder is not a controlling shareholder of the entity and
does not have or share investment control over the entity's portfolio.
REQUESTS FOR EXEMPTIONS. If you have beneficial ownership of a security, any
transaction involving that security is presumed to be subject to the relevant
requirements of this Statement, UNLESS you have no control over the transaction.
Such a situation MAY arise, for example, if you have delegated investment
authority to an independent investment adviser, or your spouse has an
independent trading program in which you have no input. Similarly, if your
spouse has investment control over, but no beneficial ownership in, an unrelated
account, an exemption may be appropriate.
If you are involved in an investment account for a family situation, trust,
partnership, corporation, etc., which you feel should not be subject to the
Statement's relevant prior approval and/or reporting requirements, you should
submit a written request for clarification or exemption to Baltimore
Legal/Compliance (Attn. D. Jones). Any such request for clarification or
exemption should name the account, your interest in the account, the persons or
firms responsible for its management, and the basis upon which the exemption is
being claimed. Exemptions are NOT self-executing; any exemption must be granted
through Baltimore Legal/Compliance.
TRANSACTIONS IN STOCK OF PRICE ASSOCIATES. Because Price Associates is a public
company, ownership of its stock subjects its officers, inside and independent
directors, and employees to special legal requirements under the Federal
securities laws. Each officer, director and employee is responsible for his or
her own compliance with these requirements. In connection with these legal
requirements, Price Associates has adopted the following rules and procedures:
INDEPENDENT DIRECTORS OF PRICE FUNDS. The independent directors of the
Price Funds are prohibited from owning the stock of Price Associates.
QUARTERLY EARNINGS REPORT. Generally, all employees and independent
directors of Price Associates must refrain from initiating transactions
in Price Associates' stock in which they have a beneficial interest from
the sixth trading day following the end of the quarter (or such other
date as management shall from time to time determine) until the third
trading day following the public release of earnings. Employees and
independent directors will be notified in writing through the Office of
the Secretary of Price Associates ("SECRETARY") from time to time as to
the controlling dates.
PRIOR CLEARANCE. Employees and independent directors of Price Associates
are required to obtain clearance prior to effecting any proposed
transaction (including gifts and transfers) involving shares of Price
Associates' stock owned beneficially or through the Employee Stock
Purchase Plan. Requests for prior clearance must be in writing on the
form entitled, "Notification of Proposed Transaction" (available from
Corporate Records Department) and be submitted to the Secretary who is
responsible for processing and maintaining the records of all such
requests. This would include sales of stock purchased through Price
Associates Employee Stock Purchase Plan ("ESPP"). Purchases effected
through the ESPP are automatically reported to the Secretary. Receiving
prior clearance does not relieve employees and independent directors of
Price Associates from conducting their personal securities transactions
in full compliance with the Code, including its prohibition on trading
while in possession of material, inside information. Transactions in
Price Associates' stock are subject to the 60-Day Rule except for
transactions effected through the ESPP and certain options exercises.
See p. 4-18.
========================================================================
ALL EMPLOYEES AND INDEPENDENT DIRECTORS OF PRICE ASSOCIATES MUST OBTAIN
PRIOR CLEARANCE OF ANY TRANSACTION INVOLVING PRICE ASSOCIATES' STOCK
FROM THE OFFICE OF THE SECRETARY OF PRICE ASSOCIATES.
========================================================================
INITIAL DISCLOSURE OF HOLDINGS. Each new employee must report to the
Secretary any shares of Price Associates' stock of which he or she has
beneficial ownership no later than 10 days after his or her starting
date of employment.
DIVIDEND REINVESTMENT PLANS. Purchases of Price Associates' stock owned
outside of the ESPP and effected through a dividend reinvestment plan
need not receive prior clearance if the Secretary's office has been
previously notified by the employee that he or she will be participating
in that plan. Reporting of transactions effected through that plan need
only be made quarterly, except that employees who are subject to Section
16 of the Securities Exchange Act of 1934 reporting must report such
transactions monthly.
EFFECTIVENESS OF PRIOR CLEARANCE. Prior clearance of transactions in
Price Associates' stock is effective for five (5) business days from and
including the date the clearance is granted, unless (i) advised to the
contrary by the Secretary prior to the proposed transaction, or (ii) the
person receiving the approval comes into possession of material,
non-public information concerning the firm. If the proposed transaction
in Price Associates' stock is not executed within this time period, a
new clearance must be obtained.
REPORTING OF DISPOSITION OF PROPOSED TRANSACTION. Covered persons must
notify the Secretary of the disposition (whether the proposed
transaction was effected or not) of each transaction involving shares of
Price Associates' stock owned directly within two business days of its
execution, or within seven business days of the date of prior clearance,
if not executed.
INSIDER REPORTING AND LIABILITY. Under current rules, certain officers,
directors and 10% stockholders of a publicly traded company ("INSIDERS")
are subject to the requirements of Section 16. Insiders include the
directors and certain managing directors of Price Associates.
SEC REPORTING. There are three reporting forms which insiders are
required to file with the SEC to report their purchase, sale and
transfer transactions in, and holdings of, Price Associates' stock.
Although the Secretary will provide assistance in complying with these
requirements as an accommodation to insiders, it remains the legal
responsibility of each insider to assure that the applicable reports are
filed in a timely manner.
o FORM 3. The initial ownership report by an insider is required
to be filed on Form 3. This report must be filed within ten
days after a person becomes an insider (i.e., is elected as a
director or appointed as managing director) to report all
current holdings of Price Associates' stock. Following the
election or appointment of an insider, the Secretary will
deliver to the insider a Form 3 for appropriate signatures and
will file such Form with the SEC.
o FORM 4. Any change in the insider's ownership of Price
Associates' stock must be reported on a Form 4 unless eligible
for deferred reporting on year-end Form 5. The Form 4 is due
by the 10th day following the end of the month in which the
ownership change occurred. Following receipt of the Notice of
Disposition of the proposed transaction, the Secretary will
deliver to the insider a Form 4, as applicable, for
appropriate signatures and will file such Form with the SEC.
o FORM 5. Any transaction or holding which is exempt from
reporting on Form 4, such as option exercises, small purchases
of stock, gifts, etc. may be reported on a deferred basis on
Form 5 within 45 days after the end of the calendar year in
which the transaction occurred. No Form 5 is necessary if all
transactions and holdings were previously reported on Form 4.
LIABILITY FOR SHORT-SWING PROFITS. Under Federal securities laws,
profit realized by certain officers, as well as directors and 10%
stockholders of a company (including Price Associates) as a
result of a purchase and sale (or sale and purchase) of stock of
the company within a period of less than six months must be
returned to the firm upon request.
OFFICE OF THRIFT SUPERVISION ("OTS") REPORTING. Price Associates is the
holding company of T. Rowe Price Savings Bank, which is regulated by the
OTS. OTS regulations require that the Managing Directors of Price
Associates, as well as any vice president in charge of any Price
Associates' affiliate, file reports regarding their personal holdings of
the stock of Price Associates and of the stock of any non-affiliated
savings banks or savings and loan holding companies. Although the
Secretary will provide assistance in complying with these requirements
as an accommodation, it remains the responsibility of each person
required to file such reports to ensure that such reports are filed in a
timely manner.
PRIOR CLEARANCE REQUIREMENTS (OTHER THAN PRICE ASSOCIATES' STOCK) FOR ACCESS
PERSONS.
ALL ACCESS PERSONS must obtain prior clearance before directly or indirectly
initiating, recommending, or in any way participating in, the purchase or sale
of a security in which the Access Person has, or by reason of such transaction
may acquire, any beneficial interest or which he or she controls, unless
exempted below. NON-ACCESS PERSONS are NOT required to obtain prior clearance
before engaging in any securities transactions, except for transaction in Price
Associates' stock.
=================================================================
ALL EMPLOYEES AND INDEPENDENT DIRECTORS OF PRICE ASSOCIATES MUST
OBTAIN PRIOR CLEARANCE OF ANY TRANSACTION INVOLVING PRICE
ASSOCIATES' STOCK FROM THE OFFICE OF THE SECRETARY OF PRICE
ASSOCIATES.
=================================================================
Where required, prior clearance must be obtained regardless of whether the
transaction is effected through TRP Brokerage or through an unaffiliated
broker/dealer. Receiving prior clearance does not relieve Access Persons from
conducting their personal securities transactions in full compliance with the
Code, including its prohibition on trading while in possession of material,
inside information, and with applicable law, including the prohibition on Front
Running (see page 4-1 for definition of Front Running). Please note that the
prior clearance procedures do NOT check compliance with the 60-Day Rule (p.
4-17).
TRANSACTIONS (OTHER THAN IN PRICE ASSOCIATES' STOCK) EXEMPT FROM PRIOR
CLEARANCE. The following transactions are exempt from the prior clearance
requirements:
MUTUAL FUNDS AND VARIABLE INSURANCE PRODUCTS. Purchases or
redemptions of shares of any open-end investment companies,
including the Price Funds, and variable insurance products.
UNIT INVESTMENT TRUSTS. Purchases or sales of shares in unit
investment trusts.
U.S. GOVERNMENT OBLIGATIONS. Purchases or sales of direct
obligations of the U.S. Government.
PRO RATA DISTRIBUTIONS. Purchases effected by the exercise of
rights issued pro rata to all holders of a class of securities
or the sale of rights so received.
MANDATORY TENDERS. Purchases and sales of securities pursuant to
a mandatory tender offer.
SPOUSAL PAYROLL DEDUCTION PLANS. Purchases by an Access Person's
spouse pursuant to a payroll deduction plan, provided the
Compliance Department has been previously notified by the Access
Person that the spouse will be participating in the payroll
deduction plan.
EXERCISE OF STOCK OPTION OF CORPORATE EMPLOYER BY SPOUSE.
Transactions involving the exercise by an Access Person's spouse
of a stock option issued by the corporation employing the
spouse.
DIVIDEND REINVESTMENT PLANS. Purchases effected through an
established Dividend Reinvestment Plan ("DRP"), provided the
Compliance Department is first notified by the Access Person
that he or she will be participating in the DRP. An Access
Person's purchase of share(s) of the issuer to initiate
participation in the DRP or an Access Person's purchase of
shares in addition to those purchased with dividends (a
"CONNECTED PURCHASE") AND any sale of shares from the DRP MUST
receive prior clearance.
SYSTEMATIC INVESTMENT PLANS. Purchases effected through a
systematic investment plan involving the automatic investment of
a set dollar amount on predetermined dates, provided the
Compliance Department has been previously notified by the Access
Person that he or she will be participating in the plan. An
Access Person's purchase of securities of the issuer to initiate
participation in the plan AND any sale of shares from such a
plan MUST receive prior clearance.
INHERITANCES. The acquisition of securities through inheritance.
GIFTS. The giving of or receipt of a security as a gift.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE (OTHER THAN PRICE ASSOCIATES' STOCK)
FOR ACCESS PERSONS. ALL Access Persons should follow the procedures set forth
below before engaging in the transactions described.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR INITIAL PUBLIC OFFERINGS
("IPOS"):
NON-INVESTMENT PERSONNEL. Access Persons who are NOT Investment
Personnel ("NON-INVESTMENT PERSONNEL") may purchase securities
that are the subject of an IPO ONLY if prior written approval has
been obtained from the Chairperson of the Ethics Committee or his
or her designee ("DESIGNEE"), which may include N. Morris, S.
McCafferty or A. Brooks. An IPO is an offering of securities
registered under the Securities Act of 1933 when the issuer of
the securities, immediately before the registration, was not
subject to certain reporting requirements of the Securities
Exchange Act of 1934.
In considering such a request for approval, the Chairperson will
determine whether the proposed transaction presents a conflict of
interest with any of the firm's clients or otherwise violates the
Code. The Chairperson will also determine whether the following
conditions have been met:
1. The purchase is made through the Non-Investment
Personnel's regular broker;
2. The number of shares to be purchased is commensurate
with the normal size and activity of the Non-Investment
Personnel's account; and
3. The transaction otherwise meets the requirements of the
NASD's rules on free riding and withholding.
Non-Investment Personnel will not be permitted to purchase shares in an
IPO if any of the firm's clients are prohibited from doing so.
Therefore, Non-Investment Personnel MUST check with the Equity Trading
Desk the day the offering is priced before purchasing in the IPO. This
prohibition will remain in effect until the firm's clients have had the
opportunity to purchase in the secondary market once the underwriting is
completed -- commonly referred to as the aftermarket.
INVESTMENT PERSONNEL. Investment Personnel may NOT purchase
securities in an IPO.
NON-ACCESS PERSONS. Although Non-Access Persons are not required
to receive prior clearance before purchasing shares in an IPO,
any Non-Access Person who is a registered representative of
Investment Services should be aware that NASD rules may restrict
his or her ability to buy shares in a "hot issue," which is a
new issue that trades at a premium in the secondary market
whenever that trading commences.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR PRIVATE PLACEMENTS. Access
Persons may not invest in a private placement of securities, including
the purchase of limited partnership interests, unless prior written
approval has been obtained from the Chairperson of the Ethics Committee
or a Designee. In considering such a request for approval, the
Chairperson will determine whether the investment opportunity (private
placement) should be reserved for the firm's clients, and whether the
opportunity is being offered to the Access Person by virtue of his or
her position with the firm. The Chairperson will also secure, if
appropriate, the approval of the proposed transaction from the
chairperson of the applicable investment steering committee.
CONTINUING OBLIGATION. An Access Person who has received
approval to invest in a private placement of securities and who,
at a later date, anticipates participating in the firm's
investment decision process regarding the purchase or sale of
securities of the issuer of that private placement on behalf of
any client, must immediately disclose his or her prior
investment in the private placement to the Chairperson of the
Ethics Committee and to the chairperson of the appropriate
investment steering committee.
PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR ALL OTHER SECURITIES
TRANSACTIONS. Requests for prior clearance by Access Persons for all
other securities transactions requiring prior clearance may be made
orally, in writing, or by electronic mail (e-mail address "Personal
Trades," which appears under "Trades" in the electronic mail address
book) to the Equity Trading Department of Price Associates, which will
be responsible for processing and maintaining the records of all such
requests. All requests must include the name of the security, the number
of shares or amount of bond involved, whether a foreign security is
involved, and the nature of the transaction, i.e., whether the
transaction is a purchase, sale or short sale. Responses to all requests
will be made by the Trading Department documenting the request and its
approval/disapproval.
Requests will normally be processed on the same day; however, additional
time may be required for prior clearance of transactions in foreign
securities.
EFFECTIVENESS OF PRIOR CLEARANCE. Prior clearance of a securities
transaction is effective for three (3) business days FROM AND INCLUDING
the date the clearance is granted, regardless of the time of day when
clearance is granted. If the proposed securities transaction is not
executed within this time, a new clearance must be obtained
REASONS FOR DISALLOWING ANY PROPOSED TRANSACTION. A proposed securities
transaction will be disapproved by the Trading Department and/or the Chairperson
of the Ethics Committee if:
PENDING CLIENT ORDERS. Orders have been placed by Price
Associates or RPFI to purchase or sell the security.
PURCHASES AND SALES WITHIN SEVEN (7) CALENDAR DAYS. The security
has been purchased or sold by any client of Price Associates or,
in the case of a foreign security, for any client of either
Price Associates or RPFI, within seven calendar days immediately
prior to the date of the proposed transaction. For example, if a
client transaction occurs on Monday, an Access Person may not
purchase or sell that security until Tuesday of the following
week. If all clients have eliminated their holdings in a
particular security, the seven-day restriction is not applicable
to an Access Person's transactions in that security.
APPROVED COMPANY RATING CHANGES. A change in the rating of an
approved company as reported in the firm's Daily Research News
has occurred within seven (7) calendar days immediately prior to
the date of the proposed transaction. Accordingly, trading would
not be permitted until the eighth (8) calendar day.
SECURITIES SUBJECT TO INTERNAL TRADING RESTRICTIONS. The
security is limited or restricted by Price Associates or RPFI as
to purchase or sale for client accounts.
REQUESTS FOR WAIVERS OF PRIOR CLEARANCE DENIALS. If an Access Person's request
for prior clearance has been denied, he or she may apply to the Chairperson of
the Ethics Committee for a waiver. All such requests must be in writing and must
fully describe the basis upon which the waiver is being requested. Waivers are
NOT routinely granted.
BROKERAGE CONFIRMATIONS AND PERIODIC ACCOUNT STATEMENTS. ALL ACCESS PERSONS AND
NON-ACCESS PERSONS must request broker-dealers executing their transactions to
send to the attention of Compliance, Legal Department, T. Rowe Price Associates,
Inc., P.O. Box 17218, Baltimore, Maryland 21297-1218 a duplicate confirmation
with respect to each and every reportable transaction, including Price
Associates' stock, and a copy of all periodic statements for all securities
accounts in which the Access Person or Non-Access Person is considered to have
beneficial ownership and/or control (see Page 4-4 for a discussion of beneficial
ownership and control concepts).
NOTIFICATION OF BROKER/DEALER ACCOUNTS. ALL ACCESS PERSONS AND NON-ACCESS
PERSONS must give written notice to Baltimore Legal/Compliance before opening or
trading in a securities account with any broker/dealer, including TRP Brokerage.
NEW EMPLOYEES. New employees must give written notice to Baltimore
Legal/Compliance of any existing securities accounts maintained with any
broker/dealer when joining the firm (no later than 10 days after the
starting date).
OFFICERS, DIRECTORS AND REGISTERED REPRESENTATIVES OF INVESTMENT
SERVICES. The NASD requires each associated person of T. Rowe Price
Investment Services, Inc. to:
o Obtain approval from Investment Services (request should be in
writing and be directed to Baltimore Legal/Compliance) before
opening or placing the initial trade in a securities account
with any broker/dealer; and
o Provide the broker/dealer with written notice of his or her
association with Investment Services.
TRANSACTION REPORTING REQUIREMENTS (OTHER THAN PRICE ASSOCIATES' STOCK
TRANSACTIONS). ALL Access Persons AND Non-Access Persons must report all
securities transactions unless the transaction is exempted from reporting below.
TRANSACTIONS EXEMPT FROM REPORTING. The following transactions are
exempt from the reporting requirements:
MUTUAL FUNDS AND VARIABLE INSURANCE PRODUCTS. The purchase or
redemption of shares of any open-end investment companies,
including the Price Funds, and variable insurance products,
except that any employee who serves as the president or
executive vice president of a Price Fund must report his or her
beneficial ownership or control of shares in that Fund to
Baltimore Legal/Compliance through electronic mail to Dottie
Jones.
STOCK SPLITS AND SIMILAR ACQUISITIONS. The acquisition of
additional shares of existing corporate holdings through the
reinvestment of income dividends and capital gains in mutual
funds, stock splits, stock dividends, exercise of rights,
exchange or conversion.
U.S. GOVERNMENT OBLIGATIONS. Purchases or redemptions of direct
obligations of the U.S. Government.
DIVIDEND REINVESTMENT PLANS. The purchase of securities with
dividends effected through an established DRP. If, however, a
Connected Purchase or a sale must receive prior clearance (see
p. 4-9), that transaction must also be reported.
TRANSACTIONS THAT MUST BE REPORTED. Other than the transactions
specified above as exempt, ALL Access Persons AND Non-Access Persons are
required to file a report of the following securities transactions:
CLEARED TRANSACTIONS. Any transaction that is subject to the
prior clearance requirements, including purchases in initial
public offerings and private placement transactions. Although
Non-Access Persons are not required to receive prior clearance
for securities transactions (other than Price Associates'
stock), they MUST report any transaction that would have been
required to be prior cleared by an Access Person.
UNIT INVESTMENT TRUSTS. The purchase or sale of shares of a Unit
Investment Trust.
PRO RATA DISTRIBUTIONS. Purchase effected by the exercise of
rights issued pro rata to all holders of a class of securities
or the sale of rights so received.
INHERITANCES. Acquisition of securities through inheritance.
GIFTS. Acquisition or disposition of securities by gift.
MANDATORY TENDERS. Purchases and sales of securities pursuant to
a mandatory tender offer.
SPOUSAL PAYROLL DEDUCTION PLANS/SPOUSAL STOCK OPTION.
Transactions involving the purchase or exchange of securities by
the spouse of an Access Person or Non-Access Person pursuant to
a payroll deduction plan or the exercise by the spouse of an
Access Person or Non-Access Person of a stock option issued by
the spouse's employer. REPORTING OF SPOUSAL PAYROLL DEDUCTION
PLAN TRANSACTIONS NEED ONLY BE MADE QUARTERLY; REPORTING OF A
SPOUSAL STOCK OPTION EXERCISE MUST BE MADE WITHIN TEN DAYS OF
THE EXERCISE.
SYSTEMATIC INVESTMENT PLANS. Transactions involving the purchase
of securities by an Access Person or Non-Access Person pursuant
to a systematic investment plan. REPORTING OF SYSTEMATIC
INVESTMENT PLAN TRANSACTIONS NEED ONLY BE MADE QUARTERLY.
REPORT FORM. If the executing broker/dealer provides a confirmation or
similar statement directly to Baltimore Legal/Compliance, you do not
need to make a further report. All other transactions must be reported
on the form designated "T. Rowe Price Associates, Inc. Employee's Report
of Securities Transactions," a supply of which is available from
Baltimore Legal/Compliance.
WHEN REPORTS ARE DUE. You must report a securities transaction within
ten (10) days after the trade date or within (10) days after the date on
which you first gain knowledge of the transaction (for example, a
bequest) if this is later. Reporting of transactions involving either
systematic investment plans or the purchase of securities by a spouse
pursuant to a payroll deduction plan, however, may be reported
quarterly.
TRANSACTION REPORTING REQUIREMENTS FOR THE INDEPENDENT DIRECTORS OF PRICE
ASSOCIATES AND THE INDEPENDENT DIRECTORS OF THE PRICE FUNDS. The independent
directors of Price Associates and the independent directors of the Price Funds
are subject to the same reporting requirements as Access Persons and Non-Access
Persons except that reports need only be filed quarterly. Specifically: (1) a
report for each securities transaction must be filed with Baltimore/Legal
Compliance no later than ten (10) days after the end of the calendar quarter in
which the transaction was effected; and (2) a report must be filed for each
quarter, regardless of whether there have been any reportable transactions.
Baltimore/Legal Compliance will send the independent directors of Price
Associates and the Price Funds a reminder letter and reporting form
approximately ten days prior to the end of each calendar quarter.
MISCELLANEOUS RULES REGARDING PERSONAL SECURITIES TRANSACTIONS. These rules vary
in their applicability depending upon whether you are an Access Person.
The following rules apply to ALL Access Persons AND Non-Access Persons and,
where indicated, to the independent directors of Price Associates and the Price
Funds.
DEALING WITH CLIENTS. Access Persons, Non-Access Persons and the
independent directors of Price Associates and the Price Funds may not,
directly or indirectly, sell to or purchase from a client any security.
This prohibition does not preclude the purchase or redemption of shares
of any mutual fund that is a client of Price Associates.
CLIENT INVESTMENT PARTNERSHIPS.
CO-INVESTING. Access Persons and Non-Access Persons, including
employee partnerships, and the independent directors of Price
Associates and the Price Funds are not permitted to co-invest in
client investment partnerships of Price Associates, RPFI, or
their affiliates, such as Strategic Partners, Threshold, and
International Partners.
DIRECT INVESTMENT. The independent directors of the Price Funds
are not permitted to invest as limited partners in client
investment partnerships of Price Associates, RPFI, or their
affiliates.
INVESTMENT CLUBS. These restrictions vary depending upon the person's
status, as follows:
NON-ACCESS PERSONS. A Non-Access Person may form or participate
in a stock or investment club without approval of the Chairperson
of the Ethics Committee. Only transactions in Price Associates'
stock are subject to prior clearance requirements. Club
transactions must be reported just as the Non-Access Person's
individual trades are reported.
ACCESS PERSONS. An Access Person may not form or participate in a
stock or investment club unless prior written approval has been
obtained from the Chairperson of the Ethics Committee. All
transactions by such a stock or investment club in which an
Access Person has beneficial ownership or control are subject to
the same prior clearance and reporting requirements applicable to
an individual Access Person's trades. However, if the Access
Person has beneficial ownership solely by virtue of his or her
spouse's participation in the club and has no investment control
or input into decisions regarding the club's securities
transactions, he or she may request the waiver of prior clearance
requirements of the club's transactions (except for transactions
in Price Associates' stock) from the Chairperson of the Ethics
Committee as part of the approval process.
MARGIN ACCOUNTS. While brokerage margin accounts are discouraged, you
may open and maintain margin accounts for the purchase of securities
provided such accounts are with brokerage firms with which you maintain
a regular brokerage account.
TRADING ACTIVITY. You are discouraged from engaging in a pattern of
securities transactions which either:
o Is so excessively frequent as to potentially impact your ability
to carry out your assigned responsibilities, or
o Involves securities positions that are disproportionate to your
net assets.
At the discretion of the Chairperson of the Ethics Committee,
written notification of excessive trading may be sent to your
supervisor.
The following rules apply ONLY to ACCESS PERSONS:
LARGE COMPANY EXEMPTION. Although subject to prior clearance,
transactions involving securities in certain large companies, within the
parameters set by the Ethics Committee (the "EXEMPT LIST"), will be
approved under normal circumstances, as follows:
TRANSACTIONS INVOLVING EXEMPT LIST SECURITIES. This exemption
applies to transactions involving no more than $20,000 or the
nearest round lot (even if the amount of the transaction
MARGINALLY exceeds $20,000) per security per week in securities
of companies with market capitalizations of $5 billion or more,
unless the rating on the security as reported in the firm's Daily
Research News has been changed to a 1 or a 5 within the seven (7)
calendar days immediately prior to the date of the proposed
transaction. If such a rating change has occurred, the exemption
is not available.
TRANSACTIONS INVOLVING OPTIONS ON EXEMPT LIST SECURITIES. Access
Persons may not purchase uncovered put options or sell uncovered
call options unless otherwise permitted under the "Options and
Futures" discussion on p. 4-16. Otherwise, in the case of options
on an individual security on the Exempt List (if it has not had a
prohibited rating change), an Access Person may trade the GREATER
of 5 contracts or sufficient option contracts to control $20,000
in the underlying security; thus an Access Person may trade 5
contracts even if this permits the Access Person to control more
than $20,000 in the underlying security. Similarly, the Access
Person may trade more than 5 contracts as long as the number of
contracts does not permit him or her to control more than $20,000
in the underlying security.
These parameters are subject to change by the Ethics Committee.
EXCHANGE-TRADED INDEX OPTIONS. Although subject to prior clearance, an
Access Person's transactions involving exchange-traded index options,
within the parameters set by the Ethics Committee, will be approved
under normal circumstances. Generally, an Access Person may trade the
GREATER of 5 contracts or sufficient contracts to control $20,000 in the
underlying securities; thus an Access Person may trade 5 contracts even
if this permits the Access Person to control more than $20,000 in the
underlying securities. Similarly, the Access Person may trade more than
5 contracts as long as the number of contracts does not permit him or
her to control more than $20,000 in the underlying security.
These parameters are subject to change by the Ethics Committee.
CLIENT LIMIT ORDERS. The Equity Trading Desk may approve an Access
Person's proposed trade even if a limit order has been entered for a
client for the same security, if:
o The Access Person's trade will be entered as a market order; and
o The client's limit order is 10% or more away from the market at
the time of approval of the Access Person's trade.
OPTIONS AND FUTURES. Please consult the specific section on
Exchange-Traded Index Options (p. 4-16) for transactions in those
options.
========================================================================
BEFORE ENGAGING IN OPTIONS AND FUTURE TRANSACTIONS, ACCESS PERSONS
SHOULD UNDERSTAND THE IMPACT THAT THE 60-DAY RULE MAY HAVE UPON THEIR
ABILITY TO CLOSE OUT A POSITION WITH A PROFIT (SEE PAGE 4-17).
========================================================================
OPTIONS AND FUTURES ON SECURITIES AND INDICES NOT HELD BY PRICE
ASSOCIATES' OR RPFI'S CLIENTS. There are no specific restrictions
with respect to the purchase, sale or writing of put or call
options or any other option or futures activity, such as multiple
writings, spreads and straddles, on securities of companies (and
options or futures on such securities) which are not held by any
of Price Associates' or RPFI's clients.
OPTIONS ON SECURITIES OF COMPANIES HELD BY PRICE ASSOCIATES' OR
RPFI'S CLIENTS. With respect to options on securities of
companies which are held by any of Price Associates' or RPFI's
clients, it is the firm's policy that an Access Person should not
profit from a price decline of a security owned by a client
(other than an Index account). Therefore, an Access Person may:
(i) purchase call options and sell covered call options and (ii)
purchase covered put options and sell put options. An Access
Person may not purchase uncovered put options or sell uncovered
call options, even if the issuer of the underlying securities is
included on the Exempt List, unless purchased in connection with
other options on the same security as part of a straddle,
combination or spread strategy which is designed to result in a
profit to the Access Person if the underlying security rises in
or does not change in value. The purchase, sale and exercise of
options are subject to the same restrictions as those set forth
with respect to securities, i.e., the option should be treated as
if it were the common stock itself.
OTHER OPTIONS AND FUTURES HELD BY PRICE ASSOCIATES' OR RPFI'S
CLIENTS. Any other option or futures transaction with respect to
domestic or foreign securities held by any of Price Associates'
clients or with respect to foreign securities held by RPFI's
clients will be approved or disapproved on a case-by-case basis
after due consideration is given as to whether the proposed
transaction or series of transactions might appear to or actually
create a conflict with the interests of any of Price Associates'
or RPFI's clients. Such transactions include transactions in
futures and options on futures involving financial instruments
regulated solely by the CFTC.
SHORT SALES. Short sales by Access Persons are subject to prior
clearance. In addition, Access Persons may not sell any security short
which is owned by any client of Price Associates or RPFI, except that
short sales may be made "against the box" for tax purposes. A short sale
"against the box" is one in which the seller owns an amount of
securities equivalent to the number he or she sells short. All short
sales, including short sales against the box, are subject to the 60-Day
Rule described below.
THE 60-DAY RULE. Access Persons are prohibited from profiting from the
purchase and sale or sale and purchase of the same (or equivalent)
securities within 60 calendar days. An "equivalent" security means any
option, warrant, convertible security, stock appreciation right, or
similar right with an exercise or conversion privilege at a price
related to the subject security, or similar securities with a value
derived from the value of the subject security. Thus, for example, the
rule prohibits options transactions on or short sales of a security
within 60 days of its purchase. In addition, the rule applies regardless
of the Access Person's other holdings of the same security or whether
the Access Person has split his or her holdings into tax lots. For
example, if an Access Person buys 100 shares of XYZ stock on March 1,
1998 and another 100 shares of XYZ stock on March 1, 2000, he or she may
not sell ANY shares of XYZ stock at a profit for 60 days following March
1, 2000. The 60-Day Rule "clock" restarts EACH time the Access Person
trades in that security.
EXEMPTIONS FROM THE 60-DAY RULE. The 60-Day Rule does not apply to:
o any transaction by a Non-Access Person except for transactions
in Price Associates' stock not exempted below;
o any transaction exempt from prior clearance (see p. 4-8);
o the purchase and sale or sale and purchase of exchange traded
index options;
o any transaction in Price Associates' stock effected through the
ESPP; and
o the exercise of "in the money" Price Associates' stock options
and the subsequent sale of the derivative shares.
Prior clearance procedures do NOT check compliance with the
60-Day Rule when considering a trading request. Access Persons
are responsible for checking their compliance with this rule
before entering a trade.
Access Persons may request a waiver from the 60-Day Rule. Such
requests should be directed in writing to the Chairperson of the
Ethics Committee. These waivers are NOT routinely granted.
INVESTMENTS IN NON-LISTED SECURITIES FIRMS. Access Persons may not
purchase or sell the shares of a broker/dealer, underwriter or federally
registered investment adviser unless that entity is traded on an
exchange or listed as a NASDAQ stock or permission is given under the
Private Placement Procedures (see p.
4-10).
OWNERSHIP REPORTING REQUIREMENTS - ONE-HALF OF ONE PERCENT OWNERSHIP. If an
employee or an independent director of Price Associates or an independent
director of the Price Funds owns more than 1/2 of 1% of the total outstanding
shares of a public or private company, he or she must immediately report in
writing such fact to Baltimore Legal/Compliance, providing the name of the
company and the total number of such company's shares beneficially owned.
DISCLOSURE OF PERSONAL SECURITIES HOLDINGS BY ACCESS PERSONS. Upon commencement
of employment, appointment or promotion (no later than 10 days after the
starting date), each Access Person must disclose in writing all current
securities holdings in which he or she is considered to have beneficial
ownership and control ("Securities Holdings Report") (see page 4-4 for
definition of the term Beneficial Owner). The form to provide the Securities
Holding Report will be provided upon commencement of employment, appointment or
promotion and should be submitted to Baltimore Legal/Compliance.
All Investment Personnel and Managing Directors are also required to file a
Securities Holding Report on an annual basis, in conjunction with the annual
verification process. Effective January 2001, this requirement will be extended
to ALL Access Persons, pursuant to federal law.
CONFIDENTIALITY OF RECORDS. Price Associates makes every effort to protect the
privacy of all persons and entities in connection with their Securities Holdings
Reports and Reports of Securities Transactions.
SANCTIONS. Strict compliance with the provisions of this Statement is considered
a basic provision of association with Price Associates and the Price Funds. The
Ethics Committee and Baltimore Legal/Compliance are primarily responsible for
administering this Statement. In fulfilling this function, the Ethics Committee
will institute such procedures as it deems reasonably necessary to monitor each
person's and entity's compliance with this Statement and to otherwise prevent
and detect violations.
VIOLATIONS BY ACCESS PERSONS, NON-ACCESS PERSONS AND DIRECTORS OF PRICE
ASSOCIATES. Upon discovering a material violation of this Statement by
any person or entity other than an independent director of a Price Fund,
the Ethics Committee will impose such sanctions as it deems appropriate
and as are approved by the Management Committee or the Board of
Directors including, INTER ALIA, a letter of censure or suspension, a
fine, a suspension of trading privileges or termination of employment
and/or officership of the violator. In addition, the violator may be
required to surrender to Price Associates, or to the party or parties it
may designate, any profit realized from any transaction that is in
violation of this Statement. All material violations of this Statement
shall be reported to the Board of Directors of Price Associates and to
the Board of Directors of any Price Fund with respect to whose
securities such violations may have been involved.
VIOLATIONS BY INDEPENDENT DIRECTORS OF PRICE FUNDS. Upon discovering a
material violation of this Statement by an independent director of a
Price Fund, the Ethics Committee shall report such violation to the
Board on which the director serves. The Price Fund Boards will impose
such sanctions as they deem appropriate.
VIOLATIONS BY BALTIMORE EMPLOYEES OF RPFI OR TRFAM. Upon discovering a
material violation of this Statement by a Baltimore-based employee of
RPFI or TRFAM, the Ethics Committee shall report such violation to the
Board of Directors of RPFI or TRFAM, as appropriate. A material
violation by a Baltimore-based employee of RPFI shall also be reported
to the Board of Directors of any RPFI Fund with respect to whose
securities such violations may have been involved.
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY
ON
CORPORATE RESPONSIBILITY
PRICE ASSOCIATES' FIDUCIARY POSITION. As an investment adviser, T. Rowe Price
Associates, Inc. ("PRICE Associates") is in a fiduciary relationship with each
of its clients. This fiduciary duty obligates Price Associates to act with an
eye only to the benefit of its clients. Accordingly, when managing its client
accounts (whether private counsel clients, mutual funds, limited partnerships,
or otherwise), Price Associates' primary responsibility is to optimize the
financial returns of its clients consistent with their objectives and investment
program.
DEFINITION OF CORPORATE RESPONSIBILITY ISSUES. Concern over the behavior of
corporations has been present since the Industrial Revolution. Each generation
has focused its attention on specific issues. Concern over the abuses of the use
of child labor in the 1800's was primarily addressed by legislative action which
mandated corporate America to adhere to new laws restricting and otherwise
governing the employment of children. In other instances, reform has been
achieved through shareholder action -- namely, the adoption of shareholder
proposals. The corporate responsibility issues most often addressed during the
past decade have involved:
o Ecological issues, including toxic hazards and pollution of the
air and water;
o Employment practices, such as the hiring of women and minority
groups;
o Product quality and safety;
o Advertising practices;
o Animal testing;
o Military and nuclear issues; and
o International politics and operations, including the world debt
crisis, infant formula, and child labor laws.
CORPORATE RESPONSIBILITY ISSUES IN THE INVESTMENT PROCESS. Price Associates
recognizes the legitimacy of public concern over the behavior of business with
respect to issues of corporate responsibility. Price Associates' policy is to
carefully review the merits of such issues that pertain to any issuer which is
held in a client portfolio or which is being considered for investment. Price
Associates believes that a corporate management's record of identifying and
resolving issues of corporate responsibility is a legitimate criteria for
evaluating the investment merits of the issuer. Enlightened corporate
responsibility can enhance a issuer's long term prospects for business success.
The absence of such a policy can have the converse effect.
<PAGE>
CORPORATE RESPONSIBILITY COMMITTEE. Since 1971, Price Associates has had a
Corporate Responsibility Committee, which is responsible for:
o Reviewing and establishing positions with respect to corporate
responsibility issues that are presented in the proxy statements
of portfolio companies; and
<PAGE>
2-13
o Reviewing questions and inquiries received from clients and
mutual fund shareholders pertaining to issues of corporate
responsibility.
QUESTIONS REGARDING CORPORATE RESPONSIBILITY. Should an employee have any
questions regarding Price Associates' policy with respect to a corporate
responsibility issue or the manner in which Price Associates has voted or
intends to vote on a proxy matter, he or she should contact a member of the
Corporate Responsibility Committee or Price Associates' Proxy Administrator.
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY
WITH RESPECT TO COMPLIANCE WITH COPYRIGHT LAWS
PURPOSE OF STATEMENT OF POLICY. To protect the interests of Price Associates and
its employees, Price Associates has adopted this Statement of Policy with
Respect to Compliance with Copyright Laws ("STATEMENT" to: (1) inform its
employees regarding the legal principles governing copyrights, trademarks, and
service marks; and (2) ensure that Price Associates' various copyrights,
trademarks, and service marks are protected from infringement.
DEFINITION OF TRADEMARK, SERVICE MARK, AND COPYRIGHT
TRADEMARK. A trademark is normally a word, phrase, or symbol used to
identify and distinguish a product or a company. For example, KLEENEX is
a trademark for a particular brand of facial tissues.
SERVICE MARK. A service mark is normally a word, phrase, or symbol used
to identify and distinguish a service or the provider of a service. For
example, INVEST WITH CONFIDENCE is a registered service mark which
identifies and distinguishes the mutual fund management services offered
by Price Associates. The words "trademark" and "service mark" are often
used interchangeably, but as a general rule a trademark is for a
tangible product, whereas a service mark is for an intangible good or
service. Because most of Price Associates' business activities involve
providing services (e.g., investment management; transaction processing
and account maintenance; information, etc.), most of Price Associates'
registered marks are service marks.
COPYRIGHT. In order to protect the authors and owners of books,
articles, drawings, music, or computer programs and software, the U.S.
copyright law makes it a crime to reproduce, IN ANY MANNER, any
copyrighted material without the express written permission of the
author or publisher. Under current law, all original works are
copyrighted at the moment of creation; it is no longer necessary to
register a copyright. Copyright infringements may result in judgments of
actual damages (i.e., the cost of additional subscriptions), as well as
punitive damages, which can be as high as $100,000 per infringement.
REGISTERED TRADEMARKS AND SERVICE MARKS. Once Price Associates has registered a
trademark or service mark with the U.S. Patent and Trademark Office, it has the
exclusive right to use that mark. In order to preserve rights to a registered
trademark or service mark, Price Associates must (1) use the mark on a
continuous basis and in a manner consistent with the Certificate of
Registration; (2) place an encircled "R" ((R)) next to the mark in the first, or
most prominent, occurrence in all publicly distributed media; and (3) take
action against any party infringing upon the mark.
ESTABLISHING A TRADEMARK OR SERVICE MARK. The Legal Department has the
responsibility to register and maintain all trademarks and service marks and
protect them against any infringement. If Price Associates or a subsidiary
wishes to utilize a particular word, phrase, or symbol as a trademark or service
mark, the Legal Department must be notified as far in advance as possible so
that a search may be conducted to determine if the proposed mark has already
been registered or used by another entity. Until clearance is obtained from the
Legal Department, no new mark should be used. This procedure has been adopted to
ensure that Price Associates does not unknowingly infringe upon another
company's mark. Once a proposed mark is cleared for use, it must be accompanied
by the abbreviations "TM" or "SM," as appropriate, until it has been registered.
All trademarks and service marks which have been registered with the U.S. Patent
and Trademark Office must be accompanied by an encircled "R" when used in any
public document. These symbols need only accompany the mark in the first or most
prominent place it is used in each publicly circulated document. Subsequent use
of the same trademark or service mark in such material does not need to be
marked. The Legal Department maintains a written summary of all Price
Associates' registered and pending trademarks and service marks. All registered
and pending trademarks and service marks are also listed in the T. Rowe Price
Style Guide. If you have any questions regarding the status of a trademark or
service mark, you should contact the Legal Department.
INFRINGEMENT OF PRICE ASSOCIATES' REGISTERED MARKS. If an employee notices that
another entity is using a mark similar to one which Price Associates has
registered, the Legal Department should be notified immediately so that
appropriate action can be taken to protect Price Associates' interests in the
mark.
REPRODUCTION OF ARTICLES AND SIMILAR MATERIALS FOR INTERNAL DISTRIBUTION, OR FOR
DISTRIBUTION TO SHAREHOLDERS, CLIENTS AND OTHERS OUTSIDE THE FIRM. In general,
the reproduction of copyrighted material is a federal offense. Exceptions under
the "FAIR USE" doctrine include reproduction for scholarly purposes, criticism,
or commentary, which ordinarily do not apply in a business environment.
OCCASIONAL copying of a relatively small portion of a newsletter or magazine to
keep in a file, circulate to colleagues with commentary, or send to a client
with commentary is generally permissible under the "fair use" doctrine. Written
permission from the author or publisher must be obtained by any employee wishing
to reproduce copyrighted material for INTERNAL OR EXTERNAL distribution,
including distribution via the Internet or the T. Rowe Price Associates'
intranet. It is the responsibility of each employee to obtain permission to
reproduce copyrighted material. Such permission must be in writing and forwarded
to the Legal Department. If the publisher will not grant permission to reproduce
copyrighted material, then the requestor must purchase from the publisher either
additional subscriptions to the periodical or the reprints of specific articles.
The original article or periodical may be circulated as an alternative to
purchasing additional subscriptions or reprints.
PERSONAL COMPUTER SOFTWARE PROGRAMS. Software products and on-line information
services purchased for use on Price Associates' personal computers are generally
copyrighted material and may not be reproduced without proper authorization from
the software vendor. See the T. Rowe Price Associates, Inc. Statement of Policy
With Respect to Computer Security and Related Issues for more information.
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY WITH RESPECT TO
COMPUTER SECURITY AND RELATED ISSUES
PURPOSE OF STATEMENT OF POLICY. The central and critical role of computer
systems in our firm's operations underscores the importance of ensuring the
integrity of these systems. The data stored on our firm's computers, as well as
the specialized software programs and systems developed for the firm's use, are
extremely valuable assets and very confidential.
This Statement of Policy ("STATEMENT") establishes a comprehensive computer
security program which has been designed to:
o prevent the unauthorized use of or access to our firm's computer
systems (collectively the "SYSTEMS"), including the firm's
electronic mail ("E-MAIL") and voice mail systems;
o prevent breaches in computer security;
o maintain the integrity of confidential information; and
o prevent the introduction of computer viruses into our Systems
that could imperil the firm's operations.
In addition, the Statement describes various issues that arise in connection
with the application of U.S. Copyright Law to computer software.
Any material violation of this Statement may lead to sanctions, which may
include dismissal of the employee or employees involved.
CONFIDENTIALITY OF SYSTEMS ACTIVITIES AND INFORMATION. Systems activities and
information stored on our firm's computers (including e-mail and voice mail) may
be subject to monitoring by firm personnel or others. All such information,
including messages on the firm's e-mail and voice mail systems, are records of
the firm and the sole property of the firm. The firm reserves the right to
monitor, access, and disclose for any purpose all information, including all
messages sent, received, or stored through the Systems. The use of the firm's
computer Systems is for the transaction of firm business and is for authorized
users only. All firm policies apply to the use of the Systems. See Employee
Handbook.
By using the firm's Systems, you agree to be bound by this Statement and consent
to the access to and disclosure of all information, including e-mail and voice
mail messages, by the firm. Employees do not have any expectation of privacy in
connection with the use of the Systems, or with the transmission, receipt, or
storage of information in the Systems.
Information entered into our firm's computers but later deleted from the Systems
may continue to be maintained permanently on our firm's back-up tapes. Employees
should take care so that they do not create documents or communications that
might later be embarrassing to them or to our firm. This policy applies to
e-mail and voice mail, as well to any other communication on a System.
SECURITY ADMINISTRATION. Enterprise Security in T. Rowe Price Investment
Technologies, Inc. ("TRPIT") is responsible for identifying security needs and
overseeing the maintenance of computer security, including Internet-related
security issues.
AUTHORIZED SYSTEMS USERS. In general, access to any type of System is restricted
to authorized users who need access in order to support their business
activities. Access for mainframe, LAN and external Systems must be requested on
a "Systems Access Request" form. A hard copy can be printed from the Enterprise
Security intranet site or obtained from Enterprise Security. Access requests and
changes must be approved by the appropriate supervisor or manager in the user's
department.
AUTHORIZED APPLICATION USERS. Access to specific computer applications (i.e.,
Finance, Retirement Plan Services systems, etc.) can also be requested. Many
application systems have an additional level of security, such as extra
passwords. If a user wants access to an application or data that is outside the
normal scope of his or her business activity, additional approval may be
required from the "Owner" of such application or data. The "Owner" is the
employee who is responsible for making judgments and decisions on behalf of the
firm with regard to the application or data, including the authority to decide
who may have access.
USER-IDS, PASSWORDS, AND OTHER SECURITY ISSUES. Once a request for access is
approved, a unique "User-ID" will be assigned the user. Each User-ID has a
password that must be kept confidential by the user. For most systems, passwords
must be changed on a regular schedule and Enterprise security has the authority
to determine the password policy. User-IDs and passwords may not be shared.
Users can be held accountable for work performed with their User-IDs. Personal
computers must not be left logged on and unattended unless screen savers with
passwords or software-based keyboard locks are utilized. Enterprise Security
recommends that GroupWise e-mail accounts be password protected.
EXTERNAL COMPUTER SYSTEMS. Our data processing environment includes access to
data stored not only on our firm's computers, but also on external systems, such
as DST. Although the security practices governing these outside systems are
established by the providers of these external systems, requests for access to
such systems should be directed to Enterprise Security. User-IDs and passwords
to these systems must be kept confidential by the user.
ACCESS TO THE INTERNET AND OTHER ON-LINE SERVICES. Access to the Internet
(including, but not limited to, e-mail, remote FTP, Telnet, World Wide Web,
Gopher, remote administration, secure shell, and using IP tunneling software to
remotely control Internet servers) presents special security considerations due
to the world-wide nature of the connection and the security weaknesses present
in Internet protocols and services. The firm can provide authorized employees
and other staff with access to Internet e-mail and other Internet services (such
as the World Wide Web) through a direct connection from the firm's network.
Access to the Internet or Internet services from our firm's computers, including
the firm's e-mail system, is permitted only for legitimate business purposes.
Such access must be requested through Enterprise Security, approved by the
employee's supervisor, and provided only through firm approved connections. All
firm policies apply to the use of the Internet or Internet services. See
Employee Handbook.
USE OF INTERNET. In accordance with firm policies, employees are
prohibited from accessing inappropriate sites, including, but not
limited to, adult and gambling sites. Firm personnel monitor Internet
use for visits to inappropriate sites and for inappropriate use. Should
employees have questions regarding what constitutes an inappropriate
site or inappropriate use, they should discuss it first with their
manager who may refer the question to Human Resources. Inappropriate
use of the Internet, or accessing inappropriate sites, may lead to
sanctions, which may include dismissal of the employee or employees
involved.
DIAL-OUT ACCESS. Using a modem or an Internet connection on a firm
computer housed at any of the firm's offices to access an Internet
service provider using one's home or personal account is prohibited,
unless this account is being used by authorized personnel to service
Price Associates' connection to the Internet. When Internet access is
granted, the employee will be asked to reaffirm his or her
understanding of this Statement.
Unauthorized modems are not permitted. Dial-out access that circumvents
the Internet firewall or proxy server, except by authorized personnel in
the business of Price Associates, is prohibited.
ON-LINE SERVICES. Access to America OnLine ("AOL"), CompuServe, or
other commercial on-line service providers is not permitted from a firm
computer except for a legitimate business purpose approved by the
employee's supervisor and with software obtained through the Help Desk
at x4357 (select menu option 1).
PARTICIPATION ON BULLETIN BOARDS. Because communications by our firm or
any of its employees on on-line service bulletin boards are subject to
federal, state and NASD advertising regulations, unsupervised
participation can result in serious securities violations. Certain
designated employees have been authorized to use AOL to monitor and
respond to inquiries about our firm and its investment services and
products. Any employee other than those assigned to this special group
must first receive the authorization of a member of the Board of T.
Rowe Price Investment Services, Inc. and the Legal Department before
initiating or responding to a message on any computer bulletin board
relating to the firm, a Price Fund or any investment or brokerage
option or service. This policy applies whether or not the employee
intends to disclose his or her relationship to the firm, whether or not
our firm sponsors the bulletin board, and whether or not the firm is
the principal focus of the bulletin board.
E-MAIL USE. Access to the firm's e-mail system is permitted only for
legitimate business purposes. All firm policies apply to the use of
e-mail. Firm personnel may monitor e-mail usage for inappropriate use.
Should employees have questions regarding what constitutes
inappropriate use, they should discuss it first with their manager who
may refer the question to Human Resources. Inappropriate use of e-mail
may lead to sanctions, which may include dismissal of the employee or
employees involved.
E-mail services, other than those provided or approved by Price
Associates, may not be used for business purposes. In addition,
accessing e-mail services not provided or approved by Price Associates
from firm equipment for any reason could allow the introduction of
viruses or malicious code into the network, or lead to the compromise
of confidential data.
Employees should understand that e-mail sent through the Internet is
not secure and could be intercepted by a third party.
DIAL-IN ACCESS. The ability to access our firm's computer Systems from a remote
location is also limited to authorized users. Phone numbers used to access our
firm's computer Systems are confidential. A security system that uses a one-time
password or other strong authentication method must be employed when accessing
our firm's network from a remote computer. Authorization for remote access can
be requested by completing a "Systems Access Request" form. Any employee who
requires remote access should contact the Help Desk at x4357 (select menu option
1) for desktop setup.
VIRUS PROTECTION. A computer virus is a program designed to damage or impair
software or data on a computer system. Software from any outside source may
contain a computer virus or similar malicious code. Types of carriers and
transmission methods increase daily and currently include diskettes, CDs, file
downloads, executables, and e-mail attachments. A comprehensive malicious code
prevention and control program is in place throughout Price Associates. This
program provides policy and procedures for anti-virus controls on all systems.
More information about the anti-virus program can be found on the TRPIT
Intranet.
Introducing a virus or similar malicious code into the Price Associates Systems
by engaging in prohibited actions, such as downloading non-business related
software, or by failing to implement recommended precautions, such as updating
virus scanning software on remote machines, may lead to sanctions, which may
include dismissal of the employee or employees involved.
VIRUS SCANNING SOFTWARE. As part of the TRPIT's anti-virus program,
virus scanning software is installed on the majority of applicable
platforms. This software is designed to detect and eradicate malicious
code and viruses. All desktop computers have the corporate standard
anti-virus scanning software installed and running. This software is
installed and configured by the Distributed Processing Support Group
and runs constantly. Virus scanning software updates are automatically
distributed to the desktops as they become available. Desktop virus
scanning software can also be used by the employee to scan diskettes,
CDs, directories, and attachments "on demand". Contact the Help Desk at
x4357 (select menu option 3) for assistance.
E-MAIL. An e-mail anti-virus gateway scans the content of inbound and
outbound e-mail for viruses. Infected e-mail and attachments will be
cleaned when possible and quarantined when not cleanable. Updating of
the e-mail gateway anti-virus software and pattern files is done
automatically.
PORTABLE AND REMOTE COMPUTERS. Laptops and other computers that
remotely access the TRPIT network are also required to have the latest
anti-virus software and pattern files. IT IS THE RESPONSIBILITY OF EACH
USER TO ENSURE THAT HIS OR HER PORTABLE COMPUTER'S ANTI-VIRUS SOFTWARE
IS REGULARLY UPDATED. The Help Desk has instructions available. Contact
the Help Desk at x4357 (select menu option 3) to obtain further
information.
DOWNLOADING OR COPYING. The user of a PC with a modem or with an
Internet connection has the ability to connect to other computers or
on-line services outside of the firm's network and there may be
business reasons to download or copy software from those sources.
Downloading or copying software, which includes documents, graphics,
programs and other computer-based materials, from any outside source is
not permitted unless it is for a legitimate business purpose because
downloads and copies could introduce viruses and malicious code into
the Systems.
OTHER CONSIDERATIONS. Users must log off the System each night. Unless
the user logs off, virus software on each workstation cannot pick up
the most current virus scanning downloads or the most current software
updates for the user's System. Employees must call the Help Desk at
x4357 (select menu option 3) when viruses are detected so that it can
ensure that appropriate tracking and follow-up take place. Do not
forward any "virus warning" mail received to other staff until you have
contacted the Help Desk, since many of these warnings are hoaxes. When
notified that a user has received "virus warning" mail, the Help Desk
will contact Enterprise Security, whose personnel will check to
determine the validity of the virus warning.
APPLICATION OF U.S. COPYRIGHT LAW TO SOFTWARE PROGRAMS. Software products and
on-line information services purchased for use on Price Associates' personal
computers are generally copyrighted material and may not be reproduced without
proper authorization from the software vendor. This includes the software on CDs
or diskettes, any program manuals or documentation, and data or software
retrievable from on-line information systems. Unauthorized reproduction of such
material or information, or downloading or printing such material, is a federal
offense, and the software vendor can sue to protect the developer's rights. In
addition to criminal penalties such as fines and imprisonment, civil damages can
be awarded in excess of $50,000.
GUIDELINES FOR USING PERSONAL COMPUTER SOFTWARE
ACQUISITION AND INSTALLATION OF SOFTWARE. Only Distributed Processing
Support Group approved and installed software is authorized. Any
software program that is to be used by an employee of Price Associates
in connection with the business of the firm must be ordered through the
Help Desk at x4357 (select menu option 1) and installed by the
Distributed Processing Support Group of TRPIT.
LICENSING. Software residing on firm LAN servers will be either: (1)
maintained at an appropriate license level for the number of users, or
(2) made accessible only for those for whom it is licensed.
ORIGINAL CDS, DISKETTES AND COPIES. In most cases, software is installed
by the Distributed Processing Support Group and original software CDs
and diskettes are not provided to the user. In the event that original
CDs or diskettes are provided, they must be stored properly to reduce
the possibility of damage or theft. CDs and diskettes should be
protected from extreme heat, cold, and contact with anything that may
act as a magnet or otherwise damage them. Employees may not make
additional copies of software or software manuals obtained through the
firm.
RECOMMENDATIONS, UPGRADES, AND ENHANCEMENTS. All recommendations
regarding computer hardware and software programs are to be forwarded to
the Help Desk at x4357 (select menu option 1), which will coordinate
upgrades and enhancements.
QUESTIONS REGARDING THIS STATEMENT. Any questions regarding this Statement
should be directed to Enterprise Security in TRPIT.
March, 2000
<PAGE>
T. ROWE PRICE ASSOCIATES, INC.
STATEMENT OF POLICY
ON
COMPLIANCE WITH ANTITRUST LAWS
PURPOSE
To protect the interests of the company and its employees, Price
Associates has adopted this Statement of Policy on Compliance with Antitrust
Laws ("STATEMENT") to:
(1) Inform employees about the legal principles governing
prohibited anticompetitive activity in the conduct of Price
Associates' business; and
(2) Establish guidelines for contacts with other members of the
investment management industry to avoid violations of the
antitrust laws.
THE BASIC ANTICOMPETITIVE ACTIVITY PROHIBITION
Section 1 of the Sherman Antitrust Act (the "ACT") prohibits
agreements, understandings, or joint actions between companies that constitute a
"restraint of trade," i.e., reduce or eliminate competition.
This prohibition is triggered only by an agreement or action among two
or more companies; unilateral action never violates the Act. To constitute an
illegal agreement, however, an understanding does not need to be formal or
written. Comments made in conversations, casual comments at meetings, or even as
little as "a knowing wink," as one case says, may be sufficient to establish an
illegal agreement under the Act.
The agreed upon action must be anticompetitive. Some actions are "per
se" anticompetitive, while others are judged according to a "rule of reason."
o Some activities have been found to be so inherently
anticompetitive that a court will not even permit the argument
that they have a procompetitive component. Examples of such per se
illegal activities are agreements between competitors to fix
prices or divide up markets in any way, such as exclusive
territories.
o Other joint agreements or activities will be examined by a court
using the rule of reason approach to see if the procompetitive
results of the arrangement outweigh the anticompetitive effects.
Permissible agreements among competitors may include a buyers'
cooperative, or a syndicate of buyers for an initial public
offering of securities. In rare instances, an association of
sellers (such as ASCAP) may be permissible.
<PAGE>
There is also an exception for joint activity designed to influence
government action. Such activity is protected by the First Amendment to the U.S.
Constitution. For example, members of an industry may agree to lobby Congress
jointly to enact legislation that may be manifestly anticompetitive.
PENALTIES FOR VIOLATING THE SHERMAN ACT
A charge that the Act has been violated can be brought as a civil or a
criminal action. Civil damages can include treble damages, plus attorneys fees.
Criminal penalties for individuals can include fines of up to $350,000 and three
years in jail, and $100 million or more for corporations.
SITUATIONS IN WHICH ANTITRUST ISSUES MAY ARISE
To avoid violating the Act, any agreement with other members of the
investment management industry regarding which securities to buy or sell and
under what circumstances we buy or sell them, or about the manner in which we
market our mutual funds and investment and retirement services, must be made
with the prohibitions of the Act in mind.
TRADE ASSOCIATION MEETINGS AND ACTIVITIES. A trade association is a
group of competitors who join together to share common interests and
seek common solutions to common problems. Such associations are at a
high risk for anticompetitive activity and are closely scrutinized by
regulators. Attorneys for trade associations, such as the Investment
Company Institute, are typically present at meetings of members to
assist in avoiding violations.
Permissible Activities:
o Discussion of how to make the industry more competitive.
o An exchange of information or ideas that have procompetitive or
competitively neutral effects, such as: methods of protecting
the health or safety of workers; methods of educating customers
and preventing abuses; and information regarding how to design
and operate training programs.
o Collective action to petition government entities.
Activities to be Avoided:
o Any discussion or direct exchange of current information about
prices, salaries, fees, or terms and conditions of sales. Even
if such information is publicly available, problems can arise if
the information available to the public is difficult to compile
or not as current as that being exchanged.
EXCEPTION: A third party consultant can, with appropriate
safeguards, collect, aggregate and disseminate some of this
information, such as salary information.
o Discussion of future business plans, strategies, or arrangements
that might be considered to involve competitively sensitive
information.
o Discussion of specific customers, markets, or territories.
o Negative discussions of service providers that could give rise
to an inference of a joint refusal to deal with the provider (a
"BOYCOTT").
INVESTMENT-RELATED DISCUSSIONS
PERMISSIBLE ACTIVITIES: Buyers or sellers with a common
economic interest may join together to facilitate securities
transactions that might otherwise not occur, such as the
formation of a syndicate to buy in a private placement or
initial public offering of a issuer's stock, or negotiations
among creditors of an insolvent or bankrupt company.
Competing investment managers are permitted to serve on
creditors committees together and engage in other similar
activities in connection with bankruptcies and other judicial
proceedings.
ACTIVITIES TO BE AVOIDED: It is important to avoid anything
that suggests involvement with any other firm in any threats
to "boycott" or "blackball" new offerings, including making
any ambiguous statement that, taken out of context, might be
misunderstood to imply such joint action. Avoid careless or
unguarded comments that a hostile or suspicious listener might
interpret as suggesting prohibited coordinated behavior
between T. Rowe Price and any other potential buyer.
EXAMPLE: After an Illinois municipal bond default
where the state legislature retroactively abrogated
some of the bondholders' rights, several investment
management complexes organized to protest the state's
action. In doing so, there was arguably an implied
threat that members of the group would boycott future
Illinois municipal bond offerings. Such a boycott
would be a violation of the Act. The investment
management firms' action led to an 18-month
Department of Justice investigation. Although the
investigation did not lead to any legal action, it
was extremely expensive and time consuming for the
firms and individual managers involved.
<PAGE>
If you are present when anyone outside of T. Rowe Price
suggests that two or more investors with a grievance against
an issuer coordinate future purchasing decisions, you should
immediately reject any such suggestion. As soon as possible
thereafter, you should notify the Legal Department, which will
take whatever further steps are necessary.
BENCHMARKING. Benchmarking is the process of measuring and comparing an
organization's processes, products and services to those of industry
leaders for the purpose of adopting innovative practices for
improvement.
o Because benchmarking usually involves the direct exchange of
information with competitors, it is particularly subject to the
risk of violating the antitrust laws.
o The list of issues that may and should not be discussed in the
context of a trade association also applies in the benchmarking
process.
o All proposed benchmarking agreements must be reviewed by the T.
Rowe Price Legal Department before T. Rowe Price agrees to
participate in such a survey.
March, 2000
