EX-99.d6
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT is effective this 16th day of May 2002, by and between
XXXXXXX NATIONAL ASSET MANAGEMENT, LLC, a Michigan limited liability company and
registered investment adviser ("Adviser"), and FIRST TRUST ADVISORS L.P., an
Illinois limited partnership and registered investment adviser ("Sub-Adviser").
WHEREAS, Adviser is the investment manager for the JNL Variable Fund LLC,
JNL Variable Fund III LLC, JNL Variable Fund IV LLC, JNL Variable Fund V LLC,
JNLNY Variable Fund I LLC and JNLNY Variable Fund II LLC (the "Funds"), open-end
management investment companies registered under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the Funds are authorized to issue separate funds, each fund 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 Funds listed on Schedule A hereto
("Funds").
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 Funds 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 funds other than the Funds
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 fund 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) each Fund's Certificate of Formation, as filed with the Secretary of
the State of Delaware on October 13, 1998 (May 19, 2000 for JNL
Variable Fund IV LLC), and all amendments thereto or restatements
thereof (such Certificate of Formation, as presently in effect and as
it shall from time to time be amended or restated, is herein called
the "Certificate of Formation");
b) each Fund's Operating Agreement and amendments thereto;
c) resolutions of the Funds' Board of Managers authorizing the
appointment of Sub-Adviser and approving this Agreement;
d) the Funds' 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 Funds' 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 Funds; and
f) the Funds' 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 Funds' Board of Managers
and the Adviser, Sub-Adviser will furnish an investment program in respect
of, and make investment decisions for, all assets of the Funds and place
all orders for the purchase and sale of securities, all on behalf of the
Funds. In the performance of its duties, Sub-Adviser will satisfy its
fiduciary duties to the Funds (as set forth below), and will monitor the
Fund's investments, and will comply with the provisions of each Fund's
Certificate of Formation and Operating Agreement, as amended from time to
time, and the stated investment objectives, policies and restrictions of
the Funds. 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 Funds and to consult with each other
regarding the investment affairs of the Funds. Sub-Adviser will report to
Board of Managers 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 Funds.
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 SEC 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
Funds 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 Managers. 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 Funds, Adviser, or
Sub-Adviser, except as may be permitted under the 1940 Act;
d) will report regularly to Adviser and to the Board of Managers and will
make appropriate persons available for the purpose of reviewing with
representatives of Adviser and the Board of Managers on a regular
basis at reasonable times the management of the Funds, including,
without limitation, review of the general investment strategies of the
Funds, the performance of the Funds 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 Funds'
Board of Managers such periodic and special reports as the Board of
Managers 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 Funds all
such records and other information relative to the Funds 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 the Funds, 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 the Funds; and
h) will vote proxies received in connection with securities held by the
Funds consistent with its fiduciary duties hereunder.
4. 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 Funds.
5. 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 Funds are the property of the Funds and further agrees to
surrender promptly to the Funds any of such records upon the Funds'
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.
6. 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 Funds,
excluding the net assets representing capital contributed by Xxxxxxx
National Separate Account - I, Xxxxxxx National Separate Account III,
Xxxxxxx National Separate Account IV, Xxxxxxx National Separate Account V,
JNLNY Separate Account I and JNLNY Separate Account II, 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 Funds being managed under this Agreement at a composite
rate of compensation less than that provided for herein.
7. Services to Others. Adviser understands, and has advised the Funds' Board
of Managers, 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 Funds 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 Funds' Board of
Managers, that in some cases this procedure may adversely affect the size
of the position that the participating Funds may obtain in a particular
security. In addition, Adviser understands, and has advised Fund's Board of
Managers, 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.
The Sub-Adviser represents that it will not enter into any
advisory/sub-advisory relationships with respect to variable life insurance
or variable annuity funding options with any person or entity, other than
the persons or entities set forth on Schedule C, and affiliates of such
companies until January 1, 2003.
8. 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.
9. Indemnification. 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 Funds and
to the Funds which (1) may be based upon any misfeasance, malfeasance, or
nonfeasance by the Sub-Adviser, any of its employees or representatives, or
any affiliate of or any person acting on behalf of the Sub-Adviser, (2) may
be based upon a failure to comply with Section 3 of this Agreement, or (3)
may be based upon any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus, or any amendment or supplement
thereto, or the omission or alleged 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, if such a statement or omission was made in reliance upon
information furnished to the Adviser, the Funds, or any affiliated person
of the Adviser or Funds by the Sub-Adviser or any affiliated person of the
Sub-Adviser; 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, gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
10. Duration and Termination. This Agreement will become effective as to a Fund
upon execution or, if later, the date that initial capital for such Fund is
first provided to it and, unless sooner terminated as provided herein, will
continue in effect until May 16, 2003. 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 Funds' Board of Managers 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 Members of the Funds' Board of
Managers who are not interested persons of the Funds, 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 Funds or Adviser, or on ninety 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.)
11. 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.
12. 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.
13. 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 names "JNL Variable Fund LLC", "JNL Variable Fund III LLC", "JNL
Variable Fund IV LLC", "JNL Variable Fund V LLC", "JNLNY Variable Fund I
LLC", "JNLNY Variable Fund II LLC" and the terms "Members of the JNL
Variable Fund LLC's Board of Managers", Members of the JNL Variable Fund
III LLC's Board of Managers", Members of the JNL Variable Fund IV LLC's
Board of Managers", Members of the JNL Variable Fund V LLC's Board of
Managers", Members of the JNLNY Variable I Fund LLC's Board of Managers"
and Members of the JNLNY Variable Fund II LLC's Board of Managers" refer
respectively to the Funds created by, and the Members of the Board of
Managers, as members but not individually or personally, acting from time
to time under, the Operating Agreements, to which reference is hereby made,
and to any and all amendments thereto. The obligations of the Funds entered
in the name or on behalf thereof by any of the Members of the Funds' Board
of Managers, representatives or agents are made not individually but only
in such capacities and are not binding upon any of the Members, interest
holders or representatives of the Funds personally, but bind only the
assets of the Funds, and persons dealing with the Funds must look solely to
the assets of the Funds belonging to such Fund for the enforcement of any
claims against Funds.
14. 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 Funds 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.
15. Applicable Law. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of Michigan.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Agreement to be executed as of this 16th day of May 2002.
XXXXXXX NATIONAL ASSET MANAGEMENT, LLC
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: President
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FIRST TRUST ADVISORS L.P.
By:
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Name:
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Title:
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SCHEDULE A
DATED MAY 16, 2002
(Funds)
JNL Variable Fund LLC
JNLNY Variable Fund I LLC
First Trust/JNL The DowSM Target 5 Fund
First Trust/JNL The DowSM Target 10 Fund
First Trust/JNL The S&P(R) Target 10 Fund
First Trust/JNL Global Target 15 Fund
First Trust/JNL Target 25 Fund
First Trust/JNL Target Small-Cap Fund
First Trust/JNL Technology Sector Fund
First Trust/JNL Pharmaceutical/Healthcare Sector Fund
First Trust/JNL Financial Sector Fund
First Trust/JNL Energy Sector Fund
First Trust/JNL Leading Brands Sector Fund
First Trust/JNL Communications Sector Fund
JNL Variable Fund III LLC
JNL Variable Fund IV LLC
JNL Variable Fund V LLC
JNLNY Variable Fund II LLC
First/JNL Trust The DowSM Target 10 Fund
SCHEDULE B
DATED May 16, 2002
(Compensation)
First Trust/JNL The DowSM Target 5 Fund
First Trust/JNL The DowSM Target 10 Fund
First Trust/JNL The S&P(R) Target 10 Fund
First Trust/JNL Global Target 15 Fund
First Trust/JNL Target 25 Fund
First Trust/JNL Target Small Cap Fund
Assets Annual Rate
------ -----------
All Assets .20%
First Trust/JNL Technology Sector Fund
Average Daily Net Assets Annual Rate
------------------------ -----------
$0 to $500 million .35%
$500 million to $1 billion .30%
Over $1 billion .25%
First Trust/JNL Pharmaceutical/Healthcare Sector Fund
Average Daily Net Assets Annual Rate
------------------------ -----------
$0 to $500 million .35%
$500 million to $1 billion .30%
Over $1 billion .25%
First Trust/JNL Financial Sector Fund
Average Daily Net Assets Annual Rate
------------------------ -----------
$0 to $500 million .35%
$500 million to $1 billion .30%
Over $1 billion .25%
First Trust/JNL Energy Sector Fund
Average Daily Net Assets Annual Rate
------------------------ -----------
$0 to $500 million .35%
$500 million to $1 billion .30%
Over $1 billion .25%
First Trust/JNL Communications Sector Fund
Average Daily Net Assets Annual Rate
------------------------ -----------
$0 to $500 million .35%
$500 million to $1 billion .30%
Over $1 billion .25%
First Trust/JNL Leading Brands Sector Fund
Average Daily Net Assets Annual Rate
------------------------ -----------
$0 to $500 million .35%
$500 million to $1 billion .30%
SCHEDULE C
DATED May 16, 2002
The Ohio National Life Insurance Company
PFL Life Insurance Company
America Skandia Life Assurance Corporation
