CONTENTS
PORTFOLIOS AT A GLANCE
Brief description of each Portfolio ....................................... 2
FINANCIAL HIGHLIGHTS
A summary of financial data ............................................... 3
PERFORMANCE TERMS
An Explanation of Performance Terms ....................................... 4
THE PORTFOLIOS IN DETAIL
The Portfolios' Investment Objectives and Policies ........................ 5
General Portfolio Policies ................................................ 8
Additional Risk Factors ................................................... 10
MANAGEMENT OF THE PORTFOLIOS
Management & Investment Personnel ......................................... 12
Management Expenses ....................................................... 13
Portfolio Transactions .................................................... 13
Other Service Providers ................................................... 13
Other Information ......................................................... 14
DISTRIBUTIONS AND TAXES
Distributions and Taxes ................................................... 15
SHAREHOLDER'S GUIDE
Purchases ................................................................. 16
Redemptions ............................................................... 16
Shareholder Communications ................................................ 16
APPENDIX A
Glossary of Investment Terms .............................................. 17
APPENDIX B
Explanation of Rating Categories .......................................... 19
[LOGO]
JANUS ASPEN SERIES
Prospectus
May 1, 1995
This prospectus describes six mutual funds with a variety of investment
objectives, including growth of capital, current income and a combination of
growth and income (the "Portfolios"). Janus Capital Corporation ("Janus
Capital") serves as investment adviser to each Portfolio. Janus Capital has been
in the investment advisory business for 25 years and currently manages over $22
billion in assets.
Each Portfolio is a series of Janus Aspen Series (the "Trust"). The Trust is
registered with the Securities and Exchange Commission ("SEC") as an open-end
management investment company. Shares of the Trust are issued and redeemed only
in connection with investment in and payments under variable annuity contracts
and variable life insurance contracts (collectively "variable insurance
contracts"), as well as certain qualified retirement plans. The Trust sells and
redeems its shares at net asset value without any sales charges, commissions or
redemption fees. Each variable insurance contract involves fees and expenses not
described in this Prospectus. Certain Portfolios may not be available in
connection with a particular contract and certain contracts may limit
allocations among the Portfolios. See the accompanying contract prospectus for
information regarding contract fees and expenses and any restrictions on
purchases or allocations.
This Prospectus contains information about the Portfolios that a prospective
purchaser of a variable insurance contract should consider before allocating
purchase payments or premiums to the Portfolios. It should be read carefully in
conjunction with the separate account prospectus of the specific insurance
product that accompanies this Prospectus and retained for future reference.
Additional information about the Portfolios is contained in a Statement of
Additional Information ("SAI") filed with the SEC. The SAI dated May 1, 1995 is
incorporated by reference into this Prospectus. Copies of the SAI are available
upon request and without charge by writing or calling your insurance company.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY STATE OR
OTHER JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER IN
SUCH STATE OR OTHER JURISDICTION.
JANUS ASPEN SERIES PROSPECTUS
<PAGE>
PORTFOLIOS AT A GLANCE
This section is designed to provide you with a brief overview of the Portfolios
and their investment emphasis. A more detailed discussion of the Portfolios'
investment objectives and policies begins on page 5.
GROWTH PORTFOLIO
Focus: A diversified portfolio that seeks long-term growth of capital by
investing primarily in common stocks, with an emphasis on companies with larger
market capitalizations.
Inception: September 1993
Manager: James P. Craig
AGGRESSIVE GROWTH PORTFOLIO
Focus: A nondiversified portfolio that seeks long-term growth of capital by
investing primarily in common stocks. The common stocks held by the Portfolio
will normally have an average market capitalization between $1 billion and $5
billion.
Inception: September 1993
Manager: James P. Goff
WORLDWIDE GROWTH PORTFOLIO
Focus: A diversified portfolio that seeks long-term growth of capital by
investing primarily in common stocks of foreign and domestic companies.
Inception: September 1993
Manager: Helen Young Hayes
INTERNATIONAL GROWTH PORTFOLIO
Focus: A diversified portfolio that seeks long-term growth of capital by
investing primarily in common stocks of foreign companies.
Inception: May 1994
Manager: Helen Young Hayes
BALANCED PORTFOLIO
Focus: A diversified portfolio that seeks long-term growth of capital balanced
by current income. The Portfolio normally invests 40-60% of its assets in equity
securities selected for their growth potential and 40-60% in fixed-income
securities.
Inception: September 1993
Manager: James P. Craig
SHORT-TERM BOND PORTFOLIO
Focus: A diversified portfolio that seeks a high level of current income while
minimizing interest rate risk by investing in shorter term fixed-income
securities. Its average-weighted maturity is normally less than three years.
Inception: September 1993
Manager: Ronald V. Speaker
JANUS SPECTRUM
The spectrum below shows Janus Capital's assessment of the potential overall
risk of the Portfolios relative to one another and should not be used to compare
the Portfolios to other mutual funds or other types of investments. The spectrum
was determined based on a number of factors such as the types of securities in
which the Funds intend to invest, the degree of diversification intended and/or
permitted, and the sizes of the Portfolios and, in addition, was significantly
affected by the portfolio managers' investment styles. These factors were
considered as of the date of this prospectus and will be reassessed with each
new prospectus. Specific risks of certain types of instruments in which some of
the Portfolios may invest, including foreign securities, junk bonds and
derivative instruments such as futures contracts and options, are described
under "Additional Risk Factors" on page 10. THE SPECTRUM IS NOT INDICATIVE OF
THE FUTURE VOLATILITY OR PERFORMANCE OF A PORTFOLIO AND RELATIVE POSITIONS OF
PORTFOLIOS WITHIN THE SPECTRUM MAY CHANGE IN THE FUTURE.
[chart]
The spectrum illustrates the potential overall risk of the portfolios relative
to one another. The portfolios' risk ranges from conservative to aggressive.
Growth Portfolio is shown as moderate; Aggressive Growth Portfolio is shown as
aggressive; Worldwide Growth Portfolio is shown as moderate-aggressive;
International Growth Portfolio is shown as moderate-aggressive (but more
aggressive than Worldwide Growth Portfolio); Balanced Portfolio is shown as
moderate; and Short-Term Bond Portfolio is shown as conservative.
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
2
<PAGE>
FINANCIAL HIGHLIGHTS
The information below is for fiscal periods ending on December 31 of each year,
and has been audited by the accounting firm of Price Waterhouse LLP. Their
report is included in the Portfolios' Annual Report, which is incorporated by
reference into the SAI. Expense and income ratios and portfolio turnover rates
have been annualized for periods of less than one year. Total returns for
periods of less than one year are not annualized. A detailed explanation of the
Financial Highlights can be found on page 4.
<TABLE>
<CAPTION>
Aggressive
Growth Portfolio Growth Portfolio
1994 1993(1) 1994 1993(1)
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<S> <C> <C> <C> <C>
1. Net asset value, beginning of period $ 10.32 $ 10.00 $ 11.80 $ 10.00
Income from investment operations:
2. Net investment income 0.09 0.03 0.11 0.01
3. Net gains or (losses) on securities
(both realized and unrealized) 0.20 0.32 1.82 1.80
4. Total from investment operations 0.29 0.35 1.93 1.81
Less distributions:
5. Dividends
(from net investment income) (0.04) (0.03) (0.11) (0.01)
6. Dividends (in excess of net investment
income) -- -- -- --
7. Distributions (from capital gains) -- -- -- --
8. Total distributions (0.04) (0.03) (0.11) (0.01)
9. Net asset value, end of period $ 10.57 $ 10.32 $ 13.62 $ 11.80
10. Total return 2.76% 3.50% 16.33% 18.05%
11. Net assets, end of period (in thousands) $ 43,549 $ 7,482 $ 41,289 $ 1,985
12. Ratio of expenses to average net assets 0.88%(5) 0.25%(3) 1.05%(5) 0.25%(3)
13. Ratio of net investment income to
average net assets 1.45% 2.54% 2.18% 0.34%
14. Portfolio turnover rate 169% 162% 259% 31%
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</TABLE>
<TABLE>
<CAPTION>
International
Worldwide Growth
Growth Portfolio Portfolio
1994 1993(1) 1994(2)
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<S> <C> <C> <C>
1. Net asset value, beginning of period $ 11.89 $ 10.00 $ 10.00
Income from investment operations:
2. Net investment income 0.04 0.02 (0.09)
3. Net gains or (losses) on securities
(both realized and unrealized) 0.14 1.89 (0.19)
4. Total from investment operations 0.18 1.91 (0.28)
Less distributions:
5. Dividends
(from net investment income) -- (0.01) --
6. Dividends (in excess of net investment
income) -- (0.01) --
7. Distributions (from capital gains) -- -- --
8. Total distributions -- (0.02) --
9. Net asset value, end of period $ 12.07 $ 11.89 $ 9.72
10. Total return 1.53% 19.10% (2.80%)
11. Net assets, end of period (in thousands) $ 37,728 $ 4,856 $ 1,353
12. Ratio of expenses to average net assets 1.18%(5) 0.25%(3) 2.50%(4)
13. Ratio of net investment income to
average net assets 0.50% 0.84% (1.30%)
14. Portfolio turnover rate 217% 57% 275%
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</TABLE>
(1) September 13, 1993 (inception) to December 31, 1993.
(2) May 2, 1994 (inception) to December 31, 1994.
(3) For the period from September 13, 1993 (inception) to December 31, 1993,
the ratio of expenses to average net assets was 1.82%, 3.26% and 2.44%,
respectively, for Growth, Aggressive Growth and Worldwide Growth
Portfolios, before voluntary waiver of certain Portfolio expenses.
(4) For the period from May 2, 1994 (inception) to December 31, 1994, the ratio
of expenses to average net assets was 4.62% before voluntary waiver of
certain Portfolio expenses.
(5) Commissions payable by the Portfolio for transactions effected by a
broker-dealer affiliated with Janus Capital were credited against the
Portfolio's operating expenses. The effect of such directed brokerage
arrangement was de minimis.
<TABLE>
<CAPTION>
Balanced Portfolio Short-Term Bond Portfolio
1994 1993(1) 1994 1993(1)
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<S> <C> <C> <C> <C>
1. Net asset value, beginning of period $ 10.64 $10.00 $ 9.93 $10.00
Income from investment operations:
2. Net investment income 0.15 0.08 0.35 0.11
3. Net gains or (losses) on securities
(both realized and unrealized) (0.06) 0.64 (0.26) (0.08)
4. Total from investment operations 0.09 0.72 0.09 0.03
Less distributions:
5. Dividends (from net investment income) (0.10) (0.08) (0.30) (0.10)
6. Dividends (in excess of net investment
income) -- -- -- --
7. Distributions (from capital gains) -- -- -- --
8. Total distributions (0.10) (0.08) (0.30) (0.10)
9. Net asset value, end of period $ 10.63 $10.64 $ 9.72 $9.93
10. Total return 0.84% 7.20% 0.92% 0.30%
11. Net assets, end of period (in thousands) $ 3,153 $ 537 $ 2,902 $ 502
12. Ratio of expenses to average net assets 1.57%(4) 0.25%(2) 0.65%(3) 0.65%(2)
13. Ratio of net investment income to
average net assets 1.90% 2.69% 5.00% 3.57%
14. Portfolio turnover rate 158% 126% 256% 91%
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</TABLE>
(1) September 13, 1993 (inception) to December 31, 1993.
(2) For the period from September 13, 1993 (inception) to December 31, 1993,
the ratio of expenses to average net assets was 5.46%, and 5.33%,
respectively, for Balanced and Short-Term Bond Portfolios, before voluntary
waiver of certain Portfolio expenses.
(3) For the fiscal year ended December 31, 1994, the ratio of expenses to
average net assets was 1.40%, for Short-Term Bond Portfolio, before
voluntary waiver of certain Portfolio expenses.
(4) Commissions payable by the Portfolio for transactions effected by a
broker-dealer affiliated with Janus Capital were credited against the
Portfolio's operating expenses. The effect of such directed brokerage
arrangement was de minimis.
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
3
<PAGE>
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
This section is designed to help you better understand the information
summarized in the Financial Highlights tables. The tables contain important
historical operating information that may be useful in making your investment
decision or understanding how your investment has performed. The Portfolios'
Annual Report contains additional information about each Portfolio's
performance, including a comparison to an appropriate securities index. To
request a copy of the Annual Report, please call or write your insurance
company.
Net asset value (NAV) is the value of a single share of a Portfolio. It is
computed by adding the value of all of a Portfolio's investments and other
assets, subtracting any liabilities and dividing the result by the number of
shares outstanding. The difference between line 1 and line 9 in the Financial
Highlights tables represents the change in value of a Portfolio's shares over
the fiscal period, but not its total return.
Net investment income is the per share amount of dividends and interest income
earned on securities held by a Portfolio, less Portfolio expenses. Dividends
(from net investment income) is the per share amount that a Portfolio paid from
net investment income.
Net gain or (loss) on securities is the per share increase or decrease in value
of the securities a Portfolio holds. A gain (or loss) is realized when
securities are sold. A gain (or loss) is unrealized when securities increase or
decrease in value but are not sold. Distributions (from capital gains) is the
per share amount that a Portfolio paid from net realized gains.
Total Return is the percentage increase or decrease in the value of an
investment over a stated period of time. A total return percentage includes both
changes in NAV and income. For the purposes of calculating total return, it is
assumed that dividends and distributions are reinvested at the NAV on the day of
the distribution. A PORTFOLIO'S TOTAL RETURN CANNOT BE COMPUTED DIRECTLY FROM
THE FINANCIAL HIGHLIGHTS TABLES.
Ratio of expenses to average net assets is the total of a Portfolio's operating
expenses divided by its average net assets for the stated period.
Ratio of net investment income to average net assets is a Portfolio's net
investment income divided by its average net assets for the stated period.
Portfolio turnover rate is a measure of the amount of a Portfolio's buying and
selling activity. It is computed by dividing total purchases or sales, whichever
is less, by the average monthly market value of a Portfolio's securities.
PERFORMANCE TERMS
This section will help you understand various terms that are commonly used to
describe a Portfolio's performance. You may see references to these terms in our
newsletters or advertisements (or those published by participating insurance
companies) and in media articles. Newsletters and advertisements may include
comparisons of a Portfolio's performance to the performance of other mutual
funds, mutual fund averages or recognized stock market indices. Growth
Portfolio, Aggressive Growth Portfolio, Worldwide Growth Portfolio,
International Growth Portfolio and Balanced Portfolio generally measure
performance in terms of total return, while Short-Term Bond Portfolio generally
uses yield.
Cumulative Total Return represents the actual rate of return on an investment
for a specified period. The Financial Highlights tables on page 3 show total
return for a single fiscal period. Cumulative total return is generally quoted
for more than one year (e.g., the life of a Portfolio). A cumulative total
return does not show interim fluctuations in the value of an investment.
Average Annual Total Return represents the average annual percentage change of
an investment over a specified period. It is calculated by taking the cumulative
total return for the stated period and determining what constant annual return
would have produced the same cumulative return. Average annual returns for more
than one year tend to smooth out variations in a Portfolio's return and are not
the same as actual annual results.
Yield shows the rate of income a Portfolio earns on its investments as a
percentage of the Portfolio's share price. It is calculated by dividing a
Portfolio's net investment income for a 30-day period by the average number of
shares entitled to receive dividends and dividing the result by the Portfolio's
NAV per share at the end of the 30-day period. Yield does not include changes in
NAV.
Yields are calculated according to standardized SEC formulas and may not equal
the income on an investor's account. Yield is usually quoted on an annualized
basis. An annualized yield represents the amount you would earn if you remained
in a Portfolio for a year and that Portfolio continued to have the same yield
for the entire year.
THE PORTFOLIOS IMPOSE NO SALES OR OTHER CHARGES THAT WOULD AFFECT TOTAL RETURN
OR YIELD COMPUTATIONS. YIELD AND TOTAL RETURN FIGURES OF THE PORTFOLIOS INCLUDE
THE EFFECT OF DEDUCTING EACH PORTFOLIO'S EXPENSES, BUT MAY NOT INCLUDE CHARGES
AND EXPENSES ATTRIBUTABLE TO ANY PARTICULAR INSURANCE PRODUCT. PORTFOLIO
PERFORMANCE FIGURES ARE BASED UPON HISTORICAL RESULTS AND ARE NOT INTENDED TO
INDICATE FUTURE PERFORMANCE. INVESTMENT RETURNS AND NET ASSET VALUE WILL
FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
4
<PAGE>
THE PORTFOLIOS IN DETAIL
This section takes a closer look at the Portfolios' investment objectives,
policies and the securities in which they invest. Please carefully review the
"Additional Risk Factors" section of this Prospectus for a more detailed
discussion of the risks associated with certain investment techniques as well as
the risk spectrum on page 2. Appendix A contains a more detailed discussion of
instruments in which the Portfolios may invest. You should carefully consider
your investment goals, time horizon and risk tolerance before choosing a
Portfolio.
Each Portfolio has an investment objective and policies that are similar to
those of a Janus retail fund, as illustrated in the chart below. Although it is
anticipated that each Portfolio and its corresponding retail fund will hold
similar securities, differences in asset size and cash flow needs as well as the
relative weightings of securities selections may result in differences in
investment performance. Expenses of each Portfolio and its corresponding retail
fund are expected to differ. The variable contract owner will also bear various
insurance-related costs at the insurance company level. You should review the
accompanying separate account prospectus for a summary of contract fees and
expenses.
Policies that are noted as "fundamental" cannot be changed without a shareholder
vote. All other policies, including each Portfolio's investment objective, are
not fundamental and may be changed by the Portfolios' Trustees without a
shareholder vote. You will be notified of any such changes that are material. If
there is a material change in a Portfolio's objective or policies, you should
consider whether that Portfolio remains an appropriate investment for your
variable insurance contract or qualified retirement plan.
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Each of the Portfolios has a similar investment objective and similar investment
policies to an existing Janus retail fund.
Growth Portfolio ............................. Janus Fund
Aggressive Growth Portfolio .................. Janus Enterprise Fund
Worldwide Growth Portfolio ................... Janus Worldwide Fund
International Growth Portfolio ............... Janus Overseas Fund
Balanced Portfolio ........................... Janus Balanced Fund
Short-Term Bond Portfolio .................... Janus Short-Term Bond Fund
GROWTH PORTFOLIO, AGGRESSIVE GROWTH PORTFOLIO, WORLDWIDE GROWTH PORTFOLIO AND
INTERNATIONAL GROWTH PORTFOLIO ARE DESIGNED FOR LONG-TERM INVESTORS WHO SEEK
GROWTH OF CAPITAL ONLY AND WHO CAN TOLERATE THE GREATER RISKS ASSOCIATED WITH
COMMON STOCK INVESTMENTS.
GROWTH PORTFOLIO
The investment objective of this Portfolio is long-term growth of capital in a
manner consistent with the preservation of capital. It is a diversified
portfolio that pursues its objective by investing in common stocks of companies
of any size. This Portfolio generally invests in larger, more established
issuers.
AGGRESSIVE GROWTH PORTFOLIO
The investment objective of this Portfolio is long-term growth of capital in a
manner consistent with the preservation of capital. It is a nondiversified
Portfolio that, under normal circumstances, pursues its investment objective by
holding common stocks with an average market capitalization between $1 billion
and $5 billion.
WORLDWIDE GROWTH PORTFOLIO
The investment objective of this Portfolio is long-term growth of capital in a
manner consistent with the preservation of capital. It is a diversified
Portfolio that pursues its objective primarily through investments in common
stocks of foreign and domestic issuers. The Portfolio has the flexibility to
invest on a worldwide basis in companies and organizations of any size,
regardless of country of organization or place of principal business activity.
Worldwide Growth Portfolio normally invests in issuers from at least five
different countries, including the United States. The Portfolio may at times
invest in fewer than five countries or even a single country.
INTERNATIONAL GROWTH PORTFOLIO
The investment objective of this Portfolio is long-term growth of capital. It is
a diversified Portfolio that pursues its objective primarily through investments
in common stocks of issuers located outside the United States. The Portfolio has
the flexibility to invest on a worldwide basis in companies and other
organizations of any size, regardless of country of organization or place of
principal business activity. The Portfolio normally invests at least 65% of its
total assets in securities of issuers from at least five different countries,
excluding the United States. Although the Portfolio intends to invest
substantially all of its assets in issuers located outside the United States, it
may at times invest in U.S. issuers, and it may at times invest all of its
assets in fewer than five countries or even a single country.
TYPES OF SECURITIES
Each of these Portfolios invests primarily in common stocks of foreign and
domestic companies. However, the percentage of each Portfolio's assets invested
in common stocks will vary and each Portfolio may at times hold substantial
positions in cash equivalents or interest bearing securities. See "General
Portfolio Policies" on page 9. Each Portfolio may invest to a lesser degree in
other types of securities including preferred stocks, warrants, convertible
securities and debt securities when its portfolio manager perceives an
opportunity for capital growth from such securities or to receive a return on
idle cash. Debt and other income-producing securities that the Portfolios may
purchase include those described with respect to the Short-Term Bond Portfolio
on page 8.
Although Worldwide Growth Portfolio and International Growth Portfolio are
committed to foreign investing, Growth Portfolio and Aggressive Growth Portfolio
may also invest without limit in foreign equity and debt securities. The
Portfolios may invest directly
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
5
<PAGE>
in foreign securities denominated in a foreign currency and not publicly traded
in the United States. Other ways of investing in foreign securities include
depositary receipts or shares, and passive foreign investment companies
("PFICs"). These Portfolios may use futures, options and other derivatives for
hedging purposes or as a means of enhancing return. See "Additional Risk
Factors" on page 10 for a discussion of the risks associated with foreign
investing and derivatives. Some securities that the Portfolios purchase may be
issued on a when-issued, delayed delivery or forward commitment basis.
THE FOLLOWING QUESTIONS ARE DESIGNED TO HELP YOU BETTER UNDERSTAND AN INVESTMENT
IN GROWTH PORTFOLIO, AGGRESSIVE GROWTH PORTFOLIO, WORLDWIDE GROWTH PORTFOLIO OR
INTERNATIONAL GROWTH PORTFOLIO.
HOW ARE COMMON STOCKS SELECTED?
Each of these Portfolios may invest substantially all of its assets in common
stocks to the extent its portfolio manager believes that the relevant market
environment favors profitable investing in those securities. Portfolio managers
take a "bottom up" approach to building their portfolios. In other words, they
seek to identify individual companies with earnings growth potential that may
not be recognized by the market at large. Although themes may emerge in any
Portfolio, securities are selected without regard to any defined industry sector
or other similarly defined selection procedure. Realization of income is not a
significant investment consideration. Any income realized on these Portfolios'
investments will be incidental to its objective.
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ARE THE SAME CRITERIA USED TO SELECT FOREIGN STOCKS?
Generally, yes. Portfolio managers seek companies with earnings growth
potential, regardless of country of organization or place of principal business
activity. Foreign securities are selected on a stock-by-stock basis without
regard to any defined allocation among countries or geographic regions. However,
certain factors such as expected levels of inflation, government policies
influencing business conditions, the outlook for currency relationships, and
prospects for economic growth among countries, regions or geographic areas may
warrant greater consideration in selecting foreign stocks. See "Additional Risk
Factors" on page 10.
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WHAT IS THE MAIN RISK OF INVESTING IN A COMMON STOCK FUND?
The fundamental risk associated with any common stock fund is the risk that the
value of the stocks it holds might decrease. Stock values may fluctuate in
response to the activities of an individual company or in response to general
market and economic conditions. Historically, common stocks have provided
greater long-term returns and have entailed greater short-term risks than other
investment choices. Smaller or newer issuers are more likely to realize more
substantial growth as well as suffer more significant losses than larger or more
established issuers. Investments in such companies can be both more volatile and
more speculative. See "Additional Risk Factors" on page 10.
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WHAT IS MEANT BY "MARKET CAPITALIZATION"?
Market capitalization is the most commonly used measure of the size and value of
a company. It is computed by multiplying the current market price of a share of
the company's stock by the total number of its shares outstanding. As noted
previously, market capitalization is an important investment criteria for
Aggressive Growth Portfolio which may invest in small to medium sized companies
to a greater degree. Although Growth Portfolio, Worldwide Growth Portfolio and
International Growth Portfolio do not emphasize companies of any particular
size, Portfolios with a larger asset base are more likely to invest in larger,
more-established issuers.
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HOW DOES A DIVERSIFIED PORTFOLIO DIFFER FROM A NONDIVERSIFIED PORTFOLIO?
Diversification is a means of reducing risk by investing a Portfolio's assets in
a broad range of stocks or other securities. A "nondiversified" portfolio has
the ability to take larger positions in a smaller number of issuers. Because the
appreciation or depreciation of a single stock may have a greater impact on the
NAV of a nondiversified portfolio, its share price can be expected to fluctuate
more than a comparable diversified portfolio. Aggressive Growth Portfolio is a
nondiversified portfolio.
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HOW DO THESE PORTFOLIOS TRY TO REDUCE RISK?
Diversification of a Portfolio's assets reduces the effect of any single holding
on its overall portfolio value. A Portfolio may also use futures, options and
other derivative instruments to protect its portfolio from movements in
securities prices and interest rates. The Portfolios may use a variety of
currency hedging techniques, including forward currency contracts, to manage
exchange rate risk when investing directly in foreign markets. See "Additional
Risk Factors" on page 10. In addition, to the extent that a Portfolio holds a
larger cash position, it may not participate in market declines to the same
extent as if the Portfolio remained more fully invested in common stocks.
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
6
<PAGE>
BALANCED PORTFOLIO IS DESIGNED FOR INVESTORS WHO PRIMARILY SEEK GROWTH OF
CAPITAL WITH A DEGREE OF EMPHASIS ON INCOME. IT IS NOT DESIGNED FOR INVESTORS
WHO DESIRE A CONSISTENT LEVEL OF INCOME.
BALANCED PORTFOLIO
The investment objective of this Portfolio is long-term capital growth,
consistent with preservation of capital and balanced by current income. It is a
diversified Portfolio that, under normal circumstances, pursues its objective by
investing 40-60% of its assets in equity securities selected primarily for their
growth potential and 40-60% of its assets in fixed-income securities. This
Portfolio invests at least 25% of its assets in fixed-income senior securities,
which include corporate debt securities and preferred stocks.
TYPES OF SECURITIES
Balanced Portfolio may invest in the types of growth securities previously
described on pages 5-6. The Portfolio may also invest in the types of
income-producing securities described below for Short-Term Bond Portfolio.
Investments in junk bonds will not exceed 35% of net assets and investments in
mortgage- and asset-backed securities will not exceed 25% of assets.
THE FOLLOWING QUESTIONS ARE DESIGNED TO HELP YOU BETTER UNDERSTAND AN INVESTMENT
IN BALANCED PORTFOLIO.
HOW ARE ASSETS ALLOCATED BETWEEN THE GROWTH AND INCOME COMPONENT OF BALANCED
PORTFOLIO?
Balanced Portfolio may invest in a combination of common stocks, preferred
stocks, convertible securities, debt securities and other fixed-income
securities. Balanced Portfolio may shift assets between the growth and income
components of its portfolio based on its portfolio manager's analysis of
relevant market, financial and economic conditions. If the portfolio manager
believes that growth securities will provide better returns than the yields then
available or expected on income-producing securities, then the Portfolio will
place a greater emphasis on the growth component.
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WHAT TYPES OF SECURITIES MAKE UP THE GROWTH COMPONENT OF BALANCED PORTFOLIO?
The growth component of Balanced Portfolio is expected to consist primarily of
common stocks. The selection criteria for common stocks are described on page 6.
Because income is a part of the investment objective of Balanced Portfolio, the
portfolio manager may consider dividend-paying characteristics to a greater
degree in selecting equity securities. Balanced Portfolio may also find
opportunities for capital growth from debt securities because of anticipated
changes in interest rates, credit standing, currency relationships or other
factors.
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WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF BALANCED PORTFOLIO?
The income component of Balanced Portfolio may consist of all types of
income-producing securities, including common stocks selected primarily for
their dividend payments, preferred stocks, convertible securities and all types
of debt securities. Income-producing securities are used to produce a more
consistent total return than the portfolio manager may attain through investing
solely in growth stocks. However, Balanced Portfolio is not designed to produce
a consistent level of income.
SHORT-TERM BOND PORTFOLIO IS DESIGNED FOR THOSE INVESTORS WHO PRIMARILY SEEK
CURRENT INCOME.
SHORT-TERM BOND PORTFOLIO
The investment objective of this Portfolio is to seek as high a level of current
income as is consistent with preservation of capital. The Portfolio pursues its
objective by investing primarily in short- and intermediate-term fixed-income
securities. Under normal circumstances, it is expected that this Portfolio's
dollar-weighted average portfolio maturity will not exceed three years.
Short-Term Bond Portfolio will normally invest at least 65% of its assets in
debt securities. Subject to this policy and subject to its maturity limits, the
Portfolio may invest in a wide variety of income-producing securities including
corporate bonds and notes, government securities, preferred stock,
income-producing common stocks, debt securities that are convertible or
exchangeable into equity securities, and debt securities that carry with them
the right to acquire equity securities as evidenced by warrants attached to or
acquired with the securities.
The Portfolio may invest up to 35% of its net assets in high-yield/high-risk
bonds and may have substantial holdings of such securities. The risks of foreign
securities and high-yield bonds are described under "Additional Risk Factors" on
page 10.
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
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<PAGE>
TYPES OF SECURITIES
Subject to the specific investment policies of the portfolio discussed above,
Short-Term Bond Portfolio may also invest in mortgage- and asset-backed
securities (up to 25% of assets); zero coupon bonds (up to 10% of assets);
high-yield/high-risk bonds (up to 35% of net assets); securities purchased on a
when-issued, delayed delivery or forward commitment basis; and
indexed/structured securities. In addition, the Portfolio may use futures,
options and other derivatives for hedging purposes or for other purposes, such
as enhancing return. See "Additional Risk Factors" on page 10. When its
portfolio manager is unable to locate investment opportunities with favorable
risk/reward characteristics, the cash position of the Portfolio may increase and
the Portfolio may have substantial holdings of cash or cash equivalent
short-term obligations. See "General Portfolio Policies" on page 9.
THE FOLLOWING QUESTIONS ARE DESIGNED TO HELP YOU BETTER UNDERSTAND AN INVESTMENT
IN SHORT-TERM BOND PORTFOLIO.
HOW DO INTEREST RATES AFFECT THE VALUE OF MY INVESTMENT?
A fundamental risk associated with any fund that invests in fixed-income
securities (e.g., a bond fund) is the risk that the value of the securities it
holds will rise or fall as interest rates change. Generally, a fixed-income
security will increase in value when interest rates fall and decrease in value
when interest rates rise. Longer-term securities are generally more sensitive to
interest rate changes than shorter-term securities, but they generally offer
higher yields to compensate investors for the associated risks. A bond fund's
average-weighted maturity and its duration are measures of how the portfolio
will react to interest rate changes.
WHAT IS MEANT BY THE PORTFOLIO'S "AVERAGE-WEIGHTED MATURITY"?
The stated maturity of a bond is the date when the issuer must repay the bond's
entire principal value to an investor, such as the Portfolio. A bond's term to
maturity is the number of years remaining to maturity. A bond fund does not have
a stated maturity, but it does have an average-weighted maturity. This number is
calculated by averaging the terms to maturity of bonds held by the Portfolio
with each maturity "weighted" according to the percentage of net assets that it
represents.
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WHAT IS MEANT BY THE PORTFOLIO'S "DURATION"?
A bond's duration indicates the time it will take an investor to recoup his
investment. Unlike average maturity, duration reflects both principal and
interest payments. Generally, the higher the coupon rate on a bond, the lower
its duration will be. The duration of a bond fund is calculated by averaging the
duration of bonds held by the Portfolio with each duration "weighted" according
to the percentage of net assets that it represents. Because duration accounts
for interest payments, the Portfolio's duration is usually shorter than its
average maturity.
- --------------------------------------------------------------------------------
HOW DOES SHORT-TERM BOND PORTFOLIO MANAGE INTEREST RATE RISK?
The Portfolio may vary the average-weighted maturity of its portfolio to reflect
its portfolio manager's analysis of interest rate trends and other factors. The
Portfolio's average-weighted maturity will tend to be shorter when its portfolio
manager expects interest rates to rise and longer when its portfolio manager
expects interest rates to fall. The Portfolio may also use futures, options and
other derivatives to manage interest rate risk. See "Additional Risk Factors" on
page 10.
WHAT IS MEANT BY "CREDIT QUALITY"?
Another fundamental risk associated with all fixed-income funds is credit risk,
which is the risk that an issuer will be unable to make principal and interest
payments when due. U.S. government securities are generally considered to be the
safest type of investment in terms of credit risk. Municipal obligations
generally rank between U.S. government securities and corporate debt securities
in terms of credit safety. Corporate debt securities, particularly those rated
below investment grade, present the highest credit risk.
- --------------------------------------------------------------------------------
HOW IS CREDIT QUALITY MEASURED?
Ratings published by nationally recognized rating agencies such as Standard &
Poor's Corporation and Moody's Investor Services are widely accepted measures of
credit risk. The lower a bond issue is rated by an agency, the more credit risk
it is considered to represent. Lower rated bonds generally pay higher yields to
compensate investors for the associated risk. Please refer to Appendix B for a
description of rating categories.
GENERAL PORTFOLIO POLICIES
Unless otherwise stated, each of the following policies applies to all of the
Portfolios. The percentage limitations included in these policies and elsewhere
in this Prospectus apply only at the time of purchase of the security. For
example, if a Portfolio exceeds a limit as a result of market fluctuations or
the sale of other securities, it will not be required to dispose of any
securities.
CASH POSITION
When a Portfolio's manager believes that market conditions are not favorable for
profitable investing or when the portfolio manager is otherwise unable to locate
favorable investment opportunities, a Portfolio's investments may be hedged to a
greater degree and/or its cash or similar
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
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<PAGE>
investments may increase. In other words, the Portfolios do not always stay
fully invested in stocks and bonds. Cash or similar investments are a residual -
they represent the assets that remain after a portfolio manager has committed
available assets to desirable investment opportunities. Partly because the
portfolio managers act independently of each other, the cash positions of the
Portfolios may vary significantly. Larger hedged positions and/or larger cash
positions may serve as a means of preserving capital in unfavorable market
conditions.
Securities that the Portfolios may invest in as means of receiving a return on
idle cash include high-grade commercial paper, certificates of deposit,
repurchase agreements or other short-term debt obligations. When a Portfolio's
investments in cash or similar investments increase, a Portfolio may not
participate in stock or bond market advances or declines to the same extent that
it would if the Portfolio remained more fully invested in stocks or bonds.
DIVERSIFICATION
The Investment Company Act of 1940 (the "1940 Act") classifies investment
companies as either diversified or nondiversified. All of the Portfolios (except
Aggressive Growth Portfolio) qualify as diversified funds under the 1940 Act.
The Portfolios are subject to the following diversification requirements:
o As a fundamental policy, no Portfolio may own more than 10% of the
outstanding voting shares of any issuer.
o As a fundamental policy, with respect to 50% of the total assets of
Aggressive Growth Portfolio and 75% of the total assets of the other
Portfolios, no Portfolio will purchase a security of any issuer (other than
cash items and U.S. government securities, as defined in the 1940 Act) if
such purchase would cause a Portfolio's holdings of that issuer to amount
to more than 5% of that Portfolio's total assets.
o No Portfolio will invest more than 25% of its assets in a single issuer.
INTERNAL REVENUE SERVICE (IRS) LIMITATIONS
In addition to the diversification requirements stated above, each Portfolio
intends to comply with the diversification requirements currently imposed by the
IRS on separate accounts of insurance companies as a condition of maintaining
the tax-deferred status of variable contracts. More specific information may be
contained in the participating insurance company's separate account prospectus.
INDUSTRY CONCENTRATION
As a fundamental policy, no Portfolio will invest more than 25% of its total
assets in any particular industry. This policy does not apply to U.S. government
securities.
PORTFOLIO TURNOVER
Each Portfolio generally intends to purchase securities for long-term investment
rather than short-term gains. However, short-term transactions may result from
liquidity needs, securities having reached a price or yield objective, changes
in interest rates or the credit standing of an issuer, or by reason of economic
or other developments not foreseen at the time of the initial investment
decision. Changes are made in a Portfolio whenever its portfolio manager
believes such changes are desirable. Portfolio turnover rates are generally not
a factor in making buy and sell decisions.
To a limited extent, a Portfolio may purchase securities in anticipation of
relatively short-term price gains. A Portfolio may also sell one security and
simultaneously purchase the same or comparable security to take advantage of
short-term differentials in bond yields or securities prices. Increased
portfolio turnover may result in higher costs for brokerage commissions, dealer
mark-ups and other transaction costs and may also result in taxable capital
gains. Certain tax rules may restrict the Portfolios' ability to engage in
short-term trading if a security has been held for less than three months.
ILLIQUID SECURITIES
Each Portfolio may invest up to 15% of its net assets in illiquid securities,
including restricted securities or private placements. An illiquid security is a
security that cannot be sold quickly in the normal course of business. Some
securities cannot be sold to the U.S. public because of their terms or because
of SEC regulations. Janus Capital may determine that securities that cannot be
sold to the U.S. public but that can be sold to institutional investors ("Rule
144A Securities") or on foreign markets are liquid. Janus Capital will follow
guidelines established by the Trustees of the Trust in making liquidity
determinations for Rule 144A Securities and other securities, including
commercial paper.
BORROWING AND LENDING
Each Portfolio may borrow money and lend securities or other assets, as follows:
o Each Portfolio may borrow money for temporary or emergency purposes in
amounts up to 25% of its total assets.
o Each Portfolio may mortgage or pledge securities as security for borrowings
in amounts up to 15% of its net assets.
o As a fundamental policy, each Portfolio may lend securities or other assets
if, as a result, no more than 25% of its total assets would be lent to
other parties.
Each Portfolio intends to seek permission from the SEC to borrow money from or
lend money to each other and other funds that permit such transactions and for
which Janus Capital serves as investment adviser. All such borrowing and lending
will be subject to the above percentage limits. There is no assurance that such
permission will be granted.
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
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<PAGE>
ADDITIONAL RISK FACTORS
FOREIGN SECURITIES
INVESTMENTS IN FOREIGN SECURITIES, INCLUDING THOSE OF FOREIGN GOVERNMENTS,
INVOLVE GREATER RISKS THAN INVESTING IN COMPARABLE DOMESTIC SECURITIES.
Securities of some foreign companies and governments may be traded in the United
States, but many foreign securities are traded primarily in foreign markets. The
risks of foreign investing include:
o Currency Risk. A Portfolio must buy the local currency when it buys a
foreign security and sell the local currency when it sells the security. As
long as a Portfolio holds a foreign security, its value will be affected by
the value of the local currency relative to the U.S. dollar. In other
words, when a Portfolio sells a foreign security, its value may be worth
less in U.S. dollars even though the security increases in value in its
home country.
o Political and Economic Risk. Foreign investments are subject to heightened
political and economic risks, particularly in underdeveloped or developing
countries which may have relatively unstable governments and economies
based on only a few industries. In some countries, there is the risk that
the government may take over the assets or operations of a company or that
the government may impose taxes or limits on the removal of a Portfolio's
assets from that country.
o Regulatory Risk. Generally, there is less government supervision of foreign
markets. Foreign issuers generally are not subject to the uniform
accounting, auditing and financial reporting standards and practices
applicable to domestic issuers. There may be less publicly available
information about foreign issuers than domestic issuers.
o Market Risk. Foreign securities markets, particularly those of
underdeveloped or developing countries, may be less liquid and more
volatile than domestic markets. Certain markets may require payment for
securities before delivery and delays may be encountered in settling
securities transactions. In some foreign markets, there may not be
protection against failure by other parties to complete transactions. There
may be limited legal recourse against an issuer in the event of a default
on a debt instrument.
o Transaction Costs. Transaction costs of buying and selling foreign
securities, including brokerage, tax and custody costs, are generally
higher than those involved in domestic transactions.
INVESTMENTS IN SMALLER COMPANIES
SMALLER OR NEWER COMPANIES MAY SUFFER MORE SIGNIFICANT LOSSES AS WELL AS REALIZE
MORE SUBSTANTIAL GROWTH THAN LARGER OR MORE ESTABLISHED ISSUERS.
Smaller or newer companies may lack depth of management, they may be unable to
generate funds necessary for growth or potential development, or they may be
developing or marketing new products or services for which markets are not yet
established and may never become established. In addition, such companies may be
insignificant factors in their industries and may be subject to intense
competition from larger or more established companies. Securities of smaller or
newer companies may have more limited trading markets than the markets for
securities of larger or more established issuers, and may be subject to wider
price fluctuations. Investments in such companies tend to be more volatile and
somewhat more speculative.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
Each Portfolio may enter into futures contracts on securities, financial indices
and foreign currencies and options on such contracts ("futures contracts") and
may invest in options on securities, financial indices and foreign currencies
("options"), forward contracts and interest rate swaps and swap-related products
(collectively "derivative instruments"). The Portfolios intend to use most
derivative instruments primarily to hedge against potential adverse movements in
securities prices, foreign currency markets or interest rates. To a limited
extent, the Portfolios may also use derivative instruments for non-hedging
purposes such as increasing a Portfolio's income or otherwise enhancing return.
Please refer to Appendix A and the SAI for a more detailed discussion of these
instruments.
The use of derivative instruments exposes the Portfolios to additional
investment risks and transaction costs. Risks inherent in the use of derivative
instruments include:
o the risk that interest rates, securities prices and currency markets will
not move in the direction that a portfolio manager anticipates;
o imperfect correlation between the price of derivative instruments and
movements in the prices of the securities, interest rates or currencies
being hedged;
o the fact that skills needed to use these strategies are different from
those needed to select portfolio securities;
o inability to close out certain hedged positions to avoid adverse tax
consequences;
o the possible absence of a liquid secondary market for any particular
instrument and possible exchange-imposed price fluctuation limits, either
of which may make it difficult or impossible to close out a position when
desired;
o leverage risk, that is, the risk that adverse price movements in an
instrument can result in a loss substantially greater than a Portfolio's
initial investment in that instrument (in some cases, the potential loss is
unlimited); and
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
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<PAGE>
o particularly in the case of privately-negotiated instruments, the risk that
the counterparty will fail to perform its obligations, which could leave a
Portfolio worse off than if it had not entered into the position.
When a Portfolio invests in a derivative instrument, it may be required to
segregate cash and other high-grade liquid assets or certain portfolio
securities to "cover" the Portfolio's position. Assets segregated or set aside
generally may not be disposed of so long as the Portfolio maintains the
positions requiring segregation or cover. Segregating assets could diminish the
Portfolio's return due to the opportunity losses of foregoing other potential
investments with the segregated assets.
HIGH-YIELD/HIGH-RISK BONDS
High-yield/high-risk bonds (or "junk" bonds) are debt securities rated below
investment grade by the primary rating agencies (Standard & Poor's and Moody's).
Please refer to Appendix B for a description of bond rating categories,
including the treatment of unrated securities and securities that have received
different ratings from different agencies. The Portfolios expect that holdings
of lower rated securities, if any, will consist primarily of bonds rated in the
highest two tiers of noninvestment grade securities.
The value of lower rated securities generally is more dependent on the ability
of the company to meet interest and principal payments (i.e., credit risk) than
is the case for higher rated securities. Conversely, the value of higher rated
securities may be more sensitive to interest rate movements than lower rated
securities. Companies issuing high-yield securities may not be as strong
financially as those issuing bonds with higher credit ratings. Investments in
such companies are considered to be more speculative than higher quality
investments.
Companies issuing high-yield securities are more vulnerable to real or perceived
economic changes (for instance, an economic downturn or prolonged period of
rising interest rates), political changes or adverse developments specific to
the company. Adverse economic, political or other developments may impair the
company's ability to service principal and interest obligations, to meet
projected business goals and to obtain additional financing, particularly if the
company is highly leveraged. In the event of a default, a Portfolio would
experience a reduction of its income and could expect a decline in the market
value of the defaulted securities.
The market for lower rated securities is generally less liquid than the market
for higher rated bonds. 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 securities.
SPECIAL SITUATIONS
Each Portfolio may invest in "special situations" from time to time. A special
situation arises when, in the opinion of a Portfolio's manager, 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 a
special situation 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.
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
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<PAGE>
MANAGEMENT OF THE PORTFOLIOS
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to each Portfolio's investment objective and policies.
The Trustees delegate the day-to-day management of the Portfolios to the
officers of the Trust and meet quarterly to review the Portfolios' investment
policies, performance, expenses and other business affairs.
INVESTMENT ADVISER
Janus Capital is the investment adviser to each of the Portfolios and is
responsible for the day-to-day management of the investment portfolios and other
business affairs of the Portfolios.
Janus Capital has served as investment adviser to Janus Fund since its inception
in 1970 and currently serves as investment adviser to all of the Janus retail
funds, as well as adviser or subadviser to other mutual funds and individual,
corporate, charitable and retirement accounts.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately 83% of the
outstanding voting stock of Janus Capital, most of which it acquired in 1984.
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.
Janus Capital furnishes continuous advice and recommendations concerning each
Portfolio's investments. Janus Capital also furnishes certain administrative,
compliance and accounting services for the Portfolios, and may be reimbursed by
the Portfolios for its costs in providing those services. In addition, Janus
Capital employees serve as officers of the Trust and Janus Capital provides
office space for the Portfolios and pays the salaries, fees and expenses of all
Portfolio officers and those Trustees who are affiliated with Janus Capital.
INVESTMENT PERSONNEL
Thomas H. Bailey founded Janus Capital in 1969 and has been active in the
advisory and securities business since that time. Mr. Bailey oversees the
investment management of all Portfolios. He holds a Bachelor of Arts in Business
from Michigan State University and Master of Business Administration from the
University of Western Ontario.
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James P. Craig is the portfolio manager of Growth Portfolio and Balanced
Portfolio. Mr. Craig has been active in the investment management business for
twelve years and has managed Janus Fund since 1986, Janus Venture Fund from its
inception to December 1993 and Janus Balanced Fund since December 1993. He holds
a Bachelor of Arts in Business from the University of Alabama and a Master of
Arts in Finance from the Wharton School of the University of Pennsylvania.
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James P. Goff is the portfolio manager of Aggressive Growth Portfolio. Mr. Goff
joined Janus Capital in 1988 and has managed Janus Enterprise Fund since its
inception and has co-managed Janus Venture Fund since December 1993. He holds a
Bachelor of Arts in Economics from Yale University and is a Chartered Financial
Analyst.
Helen Young Hayes is the portfolio manager of Worldwide Growth Portfolio and
International Growth Portfolio. Ms. Hayes joined Janus Capital in 1987 and has
managed or co-managed Janus Worldwide Fund and Janus Overseas Fund since their
inceptions. She holds a Bachelor of Arts in Economics from Yale University and
is a Chartered Financial Analyst.
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Ronald V. Speaker is the portfolio manager of Short-Term Bond Portfolio. Mr.
Speaker joined Janus Capital in 1986. He has managed Janus Flexible Income Fund
since December 1991 and has managed each of Janus Intermediate Government
Securities Fund, Janus Short-Term Bond Fund and Janus Federal Tax-Exempt Fund
since inception. He holds a Bachelor of Arts in Finance from the University of
Colorado and is a Chartered Financial Analyst.
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PERSONAL INVESTING
Janus Capital permits investment and other personnel to purchase and sell
securities for their own accounts, subject to Janus Capital's policy governing
personal investing. Janus Capital's policy requires investment and other
personnel to conduct their personal investment activities in a manner that Janus
Capital believes is not detrimental to the Portfolios or Janus Capital's other
advisory clients. See the SAI for more detailed information.
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
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BREAKDOWN OF MANAGEMENT EXPENSES AND EXPENSE LIMITS
Each Portfolio pays Janus Capital a management fee. The advisory agreement with
each Portfolio spells out the management fee and other expenses that the
Portfolios must pay. Each of the Portfolios is subject to the following
management fee schedule (expressed as an annual rate):
<TABLE>
<CAPTION>
Average Daily Net Annual Rate Expense Limit
Fee Schedule Assets of Fund Percentage (%) Percentage (%)
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<S> <C> <C> <C>
Growth Portfolio First $ 30 Million 1.00* 2.5**
Aggressive Growth Portfolio Next $270 Million .75
Worldwide Growth Portfolio Next $200 Million .70
International Growth Portfolio and Over $500 Million .65
Balanced Portfolio
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Short-Term Bond Portfolio First $300 Million .65 .65
Over $300 Million .55
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</TABLE>
*Janus Capital has agreed to reduce each Portfolio's advisory fee to the extent
that such fee exceeds the effective rate of the Janus retail fund corresponding
to such Portfolio. The effective rate is the advisory fee calculated by the
corresponding retail fund as of the last day of each calendar quarter (expressed
as an annual rate). The effective rate of Janus Fund, Janus Enterprise Fund,
Janus Worldwide Fund, Janus Overseas Fund and Janus Balanced Fund were 0.65%,
0.75%, 0.68%, 0.86%, and 0.82%, respectively, for the quarter ended March 31,
1995.
**The expense limit percentage will decrease as a Portfolio's assets increase.
Please see the SAI for more information.
Differences in the actual management fees incurred by the Portfolios are due
primarily to variances in the asset sizes of the corresponding retail funds. As
asset size increases, the annual rate of the management fee rate declines in
accordance with the above schedule. The management fees paid by certain
Portfolios may be higher than those paid by most other mutual funds. In
addition, each Portfolio incurs expenses not assumed by Janus Capital, including
transfer agent and custodian fees and expenses, legal and auditing fees,
printing and mailing costs of sending reports and other information to existing
shareholders, and independent Trustees' fees and expenses.
Certain administrative services that would otherwise be provided by Janus
Capital and/or its affiliates may be performed by participating insurance
companies that purchase the Portfolios' shares and Janus Capital or the
Portfolios may pay that company for such services.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of each Portfolio are executed by
broker-dealers selected by Janus Capital. Broker-dealers are selected on the
basis of their ability to obtain best price and execution for a Portfolio's
transactions and recognizing brokerage, research and other services provided to
the Portfolio and to Janus Capital. Janus Capital may also consider payments
made by brokers effecting transactions for a Portfolio i) to the Portfolio or
ii) to other persons on behalf of the Portfolio for services provided to the
Portfolio for which it would be obligated to pay. The Trustees have authorized
Janus Capital to place portfolio transactions on an agency basis with a
broker-dealer affiliated with Janus Capital. When transactions for a Portfolio
are effected with that broker-dealer, the commissions payable by the Portfolio
are credited against certain Portfolio operating expenses. The SAI further
explains the selection of broker-dealers.
OTHER SERVICE PROVIDERS
The following parties provide the Portfolios with administrative and other
services.
Domestic Custodian
Investors Fiduciary Trust Company
127 W. 10th Street
Kansas City, Missouri 64105
Domestic Subcustodian
United Missouri Bank, N.A.
Tenth and Grand Streets
Kansas City, Missouri 64105
Foreign Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Janus Service Corporation
P.O. Box 173375
Denver, Colorado 80217
Janus Service Corporation is a wholly-owned subsidiary of Janus Capital.
JANUS ASPEN SERIES PROSPECTUS MAY 1, 1995
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<PAGE>
OTHER INFORMATION
ORGANIZATION
The Trust is a "mutual fund" that was organized as a Delaware business trust on
May 20, 1993. A mutual fund is an investment vehicle that pools money from
numerous investors and invests the money to achieve a specified objective. The
Trust consists of eight separate series, seven of which are offered by this
Prospectus.
SHAREHOLDER MEETINGS AND VOTING RIGHTS
The Trust does not intend to hold annual shareholder meetings. However, special
meetings may be called for a specific Portfolio or for the Trust as a whole for
purposes such as electing or removing Trustees, terminating or reorganizing the
Trust, changing fundamental policies, or for any other purpose requiring a
shareholder vote under the 1940 Act. Separate votes are taken by each Portfolio
only if a matter affects or requires the vote of only that Portfolio.
An insurance company issuing a variable contract invested in shares of a
Portfolio will request voting instructions from variable contract holders. Under
current law, the insurance company must vote all shares held by the separate
account in proportion to the voting instructions received. As of January 31,
1995, Janus Capital owned more than 31% of the shares of International Growth
Portfolio. Such shares represent Janus Capital's initial investment in the
Portfolio. It is anticipated that such shares will be redeemed when Janus
Capital determines that the Portfolio has reached a sufficient asset size to
operate in accordance with its investment objective.
CONFLICTS OF INTEREST
Each Portfolio's shares are available only to variable annuity and variable life
separate accounts of insurance companies that are unaffiliated with Janus
Capital and to certain qualified retirement plans. The Portfolios currently do
not foresee any disadvantages to policy owners arising out of the fact that each
Portfolio offers its shares to such entities. Nevertheless, the Trustees monitor
events in order to identify any material irreconcilable conflicts that may arise
and to determine what action, if any, should be taken in response to such
conflicts. If a conflict occurs, the Trustees may require one or more insurance
company separate accounts or plans to withdraw its investments in one or more
Portfolios and to substitute shares of another Portfolio. If this occurs, a
Portfolio may be forced to sell securities at disadvantageous prices. In
addition, the Trustees may refuse to sell shares of any Portfolio to any
separate account or may suspend or terminate the offering of a Portfolio's
shares if such action is required by law or regulatory authority or is in the
best interests of that Portfolio's shareholders.
COMBINED PROSPECTUS
In approving the use of a single combined prospectus, the Trustees considered
the possibility that one Portfolio might be liable for misstatements in this
Prospectus regarding information concerning another Portfolio.
MASTER/FEEDER OPTION
The Trust may in the future seek to achieve any Portfolio's investment objective
by investing all of that Portfolio's assets in another investment company having
the same investment objective and substantially the same investment policies and
restrictions as those applicable to that Portfolio. It is expected that any such
investment company would be managed by Janus Capital in substantially the same
manner as the existing Portfolio. The initial shareholder(s) of each Portfolio
voted to vest the authority to convert to a master/feeder structure in the sole
discretion of the Trustees. No further approval of the shareholders of the
Portfolios is required. You will receive at least 30 days' prior notice of any
such investment. Such investment would be made only if the Trustees determine it
to be in the best interests of a Portfolio and its shareholders. In making that
determination, the Trustees will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. Although management of the Portfolios believes the Trustees will
not approve an arrangement that is likely to result in higher costs, no
assurance is given that costs will be materially reduced if this option is
implemented.
THE VALUATION OF SHARES
The NAV of the shares of a Portfolio is determined at the close of the regular
trading session of the New York Stock Exchange (normally 4:00 p.m., New York
time) each day that the Exchange is open. NAV per share is determined by
dividing the total value of the securities and other assets, less liabilities,
by the total number of shares outstanding. Securities are valued at market value
or, if market information is not readily available, at their fair value
determined in good faith under procedures established by and under the
supervision of the Trustees. Money market instruments maturing within 60 days
are valued at amortized cost, which approximates market value.
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DISTRIBUTIONS AND TAXES
DISTRIBUTIONS
THE INTERNAL REVENUE CODE REQUIRES EACH PORTFOLIO TO DISTRIBUTE NET INCOME AND
ANY NET GAINS REALIZED BY ITS INVESTMENTS ANNUALLY. A PORTFOLIO'S INCOME FROM
DIVIDENDS AND INTEREST AND ANY NET REALIZED SHORT-TERM CAPITAL GAINS ARE PAID TO
SHAREHOLDERS AS DIVIDENDS. A PORTFOLIO REALIZES CAPITAL GAINS WHENEVER IT SELLS
SECURITIES FOR A HIGHER PRICE THAN IT PAID FOR THEM. NET REALIZED LONG-TERM
GAINS ARE PAID TO SHAREHOLDERS AS CAPITAL GAINS DISTRIBUTIONS. EACH PORTFOLIO
MAKES SEMIANNUAL DISTRIBUTIONS IN JUNE AND DECEMBER OF SUBSTANTIALLY ALL OF ITS
INVESTMENT INCOME AND AN ANNUAL DISTRIBUTION IN JUNE OF ITS NET REALIZED CAPITAL
GAINS, IF ANY. ALL DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS FROM A PORTFOLIO
WILL BE AUTOMATICALLY REINVESTED INTO ADDITIONAL SHARES OF THAT PORTFOLIO.
HOW DISTRIBUTIONS AFFECT A PORTFOLIO'S NAV
Distributions are paid to shareholders as of the record date of the distribution
of a Portfolio, regardless of how long the shares have been held. Dividends and
capital gains awaiting distribution are included in each Portfolio's daily NAV.
The share price of a Portfolio drops by the amount of the distribution, net of
any subsequent market fluctuations. As an example, assume that on December 31,
Growth Portfolio declared a dividend in the amount of $0.25 per share. If Growth
Portfolio's share price was $10.00 on December 30, the Portfolio's share price
on December 31 would be $9.75, barring market fluctuations.
TAXES
TAXES ON DISTRIBUTIONS
Because shares of the Portfolios may be purchased only through variable
insurance contracts and qualified plans, it is anticipated that any income
dividends or capital gains distributions made by a Portfolio will be exempt from
current taxation if left to accumulate within the variable insurance contract or
qualified plan. Generally, withdrawals from such contracts may be subject to
ordinary income tax and, if made before age 59 1/2, a 10% penalty tax. The tax
status of your investment in the Portfolios depends on the features of the
variable insurance contracts purchased from a participating insurance company.
Further information may be found in the prospectus of the separate account
offering such contract.
TAXATION OF THE PORTFOLIOS
Dividends and interest received by the Portfolios on foreign securities may give
rise to withholding and other taxes imposed by foreign countries. It is expected
that foreign taxes paid by the Portfolios will be treated as expenses of the
Portfolios. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes.
Because of their distribution policies and compliance with the provisions of the
Internal Revenue Code applicable to investment companies, it is not expected
that any of the Portfolios will be required to pay federal income taxes. In
addition, each Portfolio intends to qualify under the Internal Revenue Code with
respect to the diversification requirements related to the tax-deferred status
of insurance company separate accounts.
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SHAREHOLDER'S GUIDE
INVESTORS MAY NOT PURCHASE OR REDEEM SHARES OF THE PORTFOLIOS DIRECTLY. SHARES
MAY BE PURCHASED OR REDEEMED ONLY THROUGH VARIABLE INSURANCE CONTRACTS OFFERED
BY THE SEPARATE ACCOUNTS OF PARTICIPATING INSURANCE COMPANIES OR THROUGH
QUALIFIED RETIREMENT PLANS. REFER TO THE PROSPECTUS FOR THE PARTICIPATING
INSURANCE COMPANY'S SEPARATE ACCOUNT OR YOUR PLAN DOCUMENTS FOR INSTRUCTIONS ON
PURCHASING OR SELLING OF VARIABLE INSURANCE CONTRACTS AND ON HOW TO SELECT
SPECIFIC PORTFOLIOS AS INVESTMENT OPTIONS FOR A CONTRACT OR A QUALIFIED PLAN.
PURCHASES
Purchases of Portfolio shares may be made only by the separate accounts of
insurance companies for the purpose of funding variable insurance contracts or
by qualified plans. Refer to the prospectus of the appropriate insurance company
separate account or your plan documents for information on how to invest in each
Portfolio.
All investments in the Portfolios are credited to a participating insurance
company's separate account or a qualified plan immediately upon acceptance of
the investment by a Portfolio. Investments will be processed at the NAV next
determined after an order is received and accepted by a Portfolio.
Each Portfolio reserves the right to reject any specific purchase order.
Purchase orders may be refused if, in Janus Capital's opinion, they are of a
size that would disrupt the management of a Portfolio. Any Portfolio may
discontinue sales of its shares if management believes that a substantial
further increase may adversely affect that Portfolio's ability to achieve its
investment objective. In such event, however, it is anticipated that existing
policy owners and plan participants invested in that Portfolio would be
permitted to continue to authorize investment in such Portfolio and to reinvest
any dividends or capital gains distributions.
REDEMPTIONS
Redemptions, like purchases, may be effected only through the separate accounts
of participating insurance companies or through qualified plans. Please refer to
the appropriate separate account prospectus or plan documents for details.
Shares of any Portfolio may be redeemed on any business day. Redemptions are
processed at the NAV next calculated after receipt and acceptance of the
redemption order by the Portfolio. Redemption proceeds will normally be wired to
the participating insurance company the business day following receipt of the
redemption order, but in no event later than seven days after receipt of such
order.
SHAREHOLDER COMMUNICATIONS
Owners of variable insurance contracts and plan participants will receive annual
and semiannual reports including the financial statements of the Portfolios that
they have authorized for investment. Each report will show the investments owned
by each Portfolio and the market values thereof, as well as other information
about the Portfolios and their operations. The Trust's fiscal year ends December
31.
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APPENDIX A
GLOSSARY OF INVESTMENT TERMS
This glossary provides a more detailed description of the types of securities in
which the Portfolios may invest. The Portfolios may invest in these securities
to the extent permitted by their investment objective and policies. The
Portfolios are not limited by this discussion and may invest in any type of
security unless precluded by the policies discussed elsewhere in this
Prospectus.
I. EQUITY AND DEBT SECURITIES
Bonds are debt securities issued by a company, municipality or government
agency. The issuer of a bond is required to pay the holder the amount of the
loan (or par value) at a specified maturity and to make scheduled interest
payments.
Commercial paper is a short-term debt obligation with a maturity ranging from 1
to 270 days issued by banks, corporations and other borrowers to investors
seeking to invest idle cash. The Portfolios may purchase commercial paper issued
under Section 4(2) of the Securities Act of 1933. Janus Capital may determine
that such securities are liquid under guidelines established by the Trustees.
Common stock represents a share of ownership in a company and usually carries
voting rights and earns dividends. Unlike preferred stock, dividends on common
stock are not fixed but are declared at the discretion of the issuer's board of
directors.
Convertible securities are preferred stocks or bonds that pay a fixed dividend
or interest payment and are convertible into common stock at a specified price
or conversion ratio.
Depositary receipts are receipts for shares of a foreign-based corporation that
entitle the holder to dividends and capital gains on the underlying security.
Receipts include those issued by domestic banks (American Depositary Receipts),
foreign banks (Global or European Depositary Receipts) and broker-dealers
(depositary shares).
Fixed-income securities are securities that pay a fixed rate of return. The term
generally includes short- and long-term government, corporate and municipal
obligations that pay a fixed rate of interest or coupons for a specified period
of time and preferred stock, which pays fixed dividends. Coupon and dividend
rates may be fixed for the life of the issue or, in the case of adjustable and
floating rate securities, for a shorter period.
High-yield/High-risk bonds are securities that are rated below investment grade
by the primary rating agencies (BB or lower by Standard &Poor's and Ba or lower
by Moody's). Other terms commonly used to describe such securities include
"lower rated bonds," "noninvestment grade bonds" and "junk bonds."
Mortgage- and asset-backed securities are shares in an organized pool of
mortgages or other debt. These securities are generally pass-through securities,
which means that principal and interest payments on the underlying securities
(less servicing fees) are passed through to shareholders on a pro rata basis.
These securities involve prepayment risk, which is the risk that the underlying
mortgages or other debt may be refinanced or paid off prior to their maturities
during periods of declining interest rates. In that case, a portfolio manager
may have to reinvest the proceeds from the securities at a lower rate. Potential
market gains on a security subject to prepayment risk may be more limited than
potential market gains on a comparable security that is not subject to
prepayment risk.
Passive foreign investment companies (PFICs) are foreign investment funds or
trusts. In addition to bearing their proportionate share of a Portfolio's
expenses, shareholders may indirectly bear similar expenses of PFICs and similar
trusts.
Preferred stock is a class of stock that generally pays dividends at a specified
rate and has preference over common stock in the payment of dividends and
liquidation. Preferred stock generally does not carry voting rights.
Repurchase agreements involve the purchase of a security by a Portfolio and a
simultaneous agreement (generally with a bank or dealer) to repurchase the
security from the Portfolio at a specified date or upon demand. This technique
offers a method of earning income on idle cash. These securities involve the
risk that the seller will fail to repurchase the security, as agreed. In that
case, a Portfolio will bear the risk of market value fluctuations until the
security can be sold and may encounter delays and incur costs in liquidating the
security.
Reverse repurchase agreements involve the sale of a security by a Portfolio to
another party (generally a bank or dealer) in return for cash and an agreement
by the Portfolio to buy the security back at a specified price and time. This
technique may be used to provide cash to satisfy unusually high redemption
requests or for other temporary or emergency purposes.
Standby commitments are obligations purchased by a Portfolio from a dealer that
give the Portfolio the option to sell a security to the dealer at a specified
price.
Tender option bonds are generally long-term securities that have been coupled
with an option to tender the securities to a bank, broker-dealer or other
financial institution at periodic intervals and receive the face value of the
bond. This type of security is commonly used as a means of enhancing the
liquidity of municipal securities.
U.S. government securities include direct obligations of the U.S. government
that are supported by its full faith and credit. Treasury bills have initial
maturities of less than one year, Treasury notes have initial maturities of one
to ten years and Treasury bonds may be issued with any maturity but generally
have maturities of at least ten years. U.S. government securities also include
indirect obligations of the U.S. government that are issued by federal agencies
and government sponsored entities. Unlike Treasury securities, agency securities
generally are not backed by the full faith and credit of the U.S. government.
Some agency securities are supported by the right of the issuer to borrow from
the Treasury, others are supported by the
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discretionary authority of the U.S. government to purchase the agency's
obligations and others are supported only by the credit of the sponsoring
agency.
Warrants are securities, typically issued with preferred stock or bonds, that
give the holder the right to buy a proportionate amount of common stock at a
specified price, usually at a price that is higher than the market price at the
time of issuance of the warrant. The right may last for a period of years or
indefinitely.
When-issued, delayed delivery and forward transactions generally involve the
purchase of a security with payment and delivery due at some time in the future
- - i.e., beyond normal settlement. The Portfolios do not earn interest on such
securities until settlement and bear the risk of market value fluctuations in
between the purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in this manner.
Zero coupon bonds are debt securities that do not pay interest at regular
intervals, but are issued at a significant discount from face value. The
discount approximates the total amount of interest the security will accrue from
the date of issuance to maturity. Strips are debt securities that are stripped
of their interest (usually by a financial intermediary) after the securities are
issued. The market value of these securities generally fluctuates more in
response to changes in interest rates than interest-paying securities of
comparable maturity.
II. FUTURES, OPTIONS AND OTHER DERIVATIVES
Futures contracts are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. The Portfolios may buy and sell futures contracts on foreign currencies,
securities and financial indices including interest rates or an index of U.S.
government, foreign government, equity or fixed-income securities. An option on
a futures contract gives the buyer the right, but not the obligation, to buy or
sell a futures contract at a specified price on or before a specified date.
Futures contracts and options on futures are standardized and traded on
designated exchanges.
Indexed/structured securities are typically short- to intermediate-term debt
securities whose value at maturity or interest rate is linked to currencies,
interest rates, equity securities, indices or other financial indicators. Such
securities may be positively or negatively indexed (i.e., their value may
increase or decrease if the reference index or instrument appreciates).
Indexed/structured securities may have return characteristics similar to direct
investments in the underlying instruments and may be more volatile than the
underlying instruments. A Portfolio bears the market risk of an investment in
the underlying instruments, as well as the credit risk of the issuer.
Inverse floaters are debt instruments whose interest rate bears an inverse
relationship to the interest rate on another instrument.
Options are the right, but not the obligation, to buy or sell a specified amount
of securities or other assets on or before a fixed date at a predetermined
price. The Portfolios may purchase and write put and call options on securities,
securities indices and foreign currencies.
Forward contracts are contracts to purchase or sell a specified amount of
property for an agreed upon price at a specified time. Forward contracts are not
currently exchange traded and are typically negotiated on an individual basis.
The Portfolios may enter into forward currency contracts to hedge against
declines in the value of non-dollar denominated securities or to reduce the
impact of currency appreciation on purchases of non-dollar denominated
securities. They may also enter into forward contracts to purchase or sell
securities or other financial indices.
Interest rate swaps involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
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APPENDIX B
EXPLANATION OF RATING CATEGORIES
BOND RATING EXPLANATION
- --------------------------------------------------------------------------------
Standard & Poor's Corporation AAA Highest rating; extremely strong
capacity to pay principal and
interest.
AA High quality; very strong capacity
to pay principal and interest.
A Strong capacity to pay principal
and interest; somewhat more
susceptible to the adverse effects
of changing circumstances and
economic conditions.
BBB Adequate capacity to pay principal
and interest; normally exhibit
adequate protection parameters, but
adverse economic conditions or
changing circumstances more likely
to lead to a weakened capacity to
pay principal and interest than for
higher rated bonds.
BB, B, Predominantly speculative with
CCC, CC respect to the issuer's capacity to
meet required interest and
principal payments. BB - lowest
degree of speculation; CC - the
highest degree of speculation.
Quality and protective
characteristics outweighed by large
uncertainties or major risk
exposure to adverse conditions.
D In default.
- --------------------------------------------------------------------------------
Moody's Investors Service, Inc. Aaa Highest quality, smallest degree of
investment risk.
Aa High quality; together with Aaa
bonds, they compose the high-grade
bond group.
A Upper-medium grade obligations;
many favorable investment
attributes.
Baa Medium-grade obligations; neither
highly protected nor poorly
secured. Interest and principal
appear adequate for the present but
certain protective elements may be
lacking or may be unreliable over
any great length of time.
Ba More uncertain, with speculative
elements. Protection of interest
and principal payments not well
safeguarded during good and bad
times.
B Lack characteristics of desirable
investment; potentially low
assurance of timely interest and
principal payments or maintenance
of other contract terms over time.
Caa Poor standing, may be in default;
elements of danger with respect to
principal or interest payments.
Ca Speculative in a high degree; could
be in default or have other marked
shortcomings.
C Lowest-rated; extremely poor
prospects of ever attaining
investment standing.
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