Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sales of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
Contents
- ---------------------------------------
THE PORTFOLIO AT A GLANCE
Brief description of the Portfolio .. 1
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EXPENSE INFORMATION
................................. 1
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THE PORTFOLIO IN DETAIL
The Portfolio's Investment
Objective and Policies ........... 2
General Portfolio Policies .......... 3
Additional Risk Factors ............. 4
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MANAGEMENT OF THE PORTFOLIO
Investment Adviser and
Portfolio Manager ................ 6
Portfolio Transactions .............. 6
Management Expenses ................. 7
Other Service Providers ............. 7
Other Information ................... 7
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DISTRIBUTIONS AND TAXES
Distributions ....................... 9
Taxes ............................... 9
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PERFORMANCE TERMS
An Explanation of
Performance Terms ................ 9
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SHAREHOLDER'S GUIDE
Purchases .......................... 10
Redemptions ........................ 10
Shareholder Communications ......... 10
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APPENDIX A
Glossary of Investment Terms ....... 11
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 22, 1997
Janus Aspen Series
Growth and Income Portfolio
Prospectus
_________, 1997
Growth and Income Portfolio (the "Portfolio") is a no-load, diversified mutual
fund that seeks long-term growth of capital with a limited emphasis on income.
Although the Portfolio normally invests at least 25% of its assets in securities
that have income potential, it emphasizes equity securities selected for their
growth potential. The Portfolio is a series of Janus Aspen Series (the "Trust")
and currently offers two classes of Shares. The Institutional Shares are sold
under the name "Janus Aspen Series." The Trust is registered with the Securities
and Exchange Commission as an open-end management investment company. The
Portfolio is recently organized and has a limited operating history.
The Institutional Shares (the "Shares") of the Portfolio offered by this
Prospectus 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. The Portfolio may
not be available in connection with a particular contract. 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 Portfolio that a prospective
purchaser of a variable insurance contract or plan participant should consider
before allocating purchase payments or premiums to the Portfolio. 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 Portfolio is contained in the
Statement of Additional Information ("SAI") dated _______, 1997, which is filed
with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into this Prospectus. The SAI is available upon request and without
charge by writing or calling your insurance company or plan sponsor.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC NOR HAS THE SEC 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.
<PAGE>
Portfolio At A Glance
This section is designed to provide you with a brief overview of the Portfolio
and its investment emphasis. A more detailed discussion of the Portfolio's
investment objective and policies begins on page 2.
INVESTMENT OBJECTIVE:
The investment objective of the Portfolio is long-term capital growth and
current income.
PRIMARY HOLDINGS:
A diversified portfolio that emphasizes equity securities selected for their
growth potential, although the Portfolio will normally invest at least 25% of
its assets in securities that have income potential.
SHAREHOLDER'S INVESTMENT HORIZON:
The Portfolio is designed for long-term investors who seek growth of capital
with a limited emphasis on income. The Portfolio is not designed for investors
who desire a consistent level of income nor is it a short-term trading vehicle
and should not be relied upon for short-term financial needs.
FUND ADVISER:
Janus Capital Corporation ("Janus Capital") serves as the Portfolio's investment
adviser. Janus Capital has been in the investment advisory business for over 27
years and currently manages approximately $65 billion in assets.
FUND MANAGER:
David Corkins
FUND INCEPTION:
November 1997
Expense Information
The tables and example below are designed to assist participants in qualified
plans that invest in the Portfolio in understanding the various costs and
expenses that you will bear directly or indirectly as an investor in the
Portfolio. Owners of variable insurance contracts that invest in the Portfolio
should refer to the variable insurance contract prospectus for a description of
costs and expenses, as the tables and example do not reflect deductions at the
separate account level or contract level for any charges that may be incurred
under a contract.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales charges on redemptions None
Redemption fees None
Exchange fee None
ANNUAL PORTFOLIO OPERATING EXPENSES (after fee waivers and reductions)(1)
(expressed as a percentage of average net assets)
- --------------------------------------------------------------------------------
Management Fee(1) 0.68%
Other Expenses(1) 0.30%
- --------------------------------------------------------------------------------
Total Portfolio Operating Expenses(1) 0.98%
- --------------------------------------------------------------------------------
(1) The fees and expenses in the table above are based on the estimated gross
expenses before estimated expense offset arrangements that the Shares of
the Portfolio expect to incur in their initial fiscal year, net of fee
reductions or waivers from Janus Capital. Fee reductions reduce the
management fee to the level of the corresponding Janus retail fund. Other
waivers, if applicable, are first applied against the management fee and
then against other expenses. Without such waivers or reductions, the
Management Fee, Other Expenses and Total Portfolio Operating Expenses are
estimated to be 0.75%, 0.30% and 1.05%, respectively. Janus Capital may
modify or terminate the waivers or reductions at any time upon at least 90
days' notice to the Trustees.
EXAMPLE
- --------------------------------------------------------------------------------
1 Year 3 Years
- --------------------------------------------------------------------------------
Assume you invest $1,000, the Shares of the Portfolio
returns 5% annually and its expense ratio remains as listed
above. The example shows the operating expenses that you
would indirectly bear as an investor in the Shares of the
Portfolio. $10 $31
- --------------------------------------------------------------------------------
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE RETURNS
OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS 1
<PAGE>
The Portfolio in Detail
This section takes a closer look at the Portfolio's investment objectives,
policies and the securities in which it invests. Please carefully review the
"Additional Risk Factors" section of this Prospectus for a more detailed
discussion of the risks associated with certain investment techniques and refer
to Appendix A for a more detailed description of the Portfolio's investments
(and certain of the risks associated with those investments). You should
carefully consider your own investment goals, time horizon and risk tolerance
before investing in the Portfolio.
The Portfolio's investment objectives and policies are similar to those of Janus
Growth and Income Fund, a Janus retail fund. Although it is anticipated that the
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 the Portfolio and its corresponding retail fund are expected to
differ.
Policies that are noted as "fundamental" cannot be changed without a shareholder
vote. All other policies, including the Portfolio's investment objectives, are
not fundamental and may be changed by the Portfolio's Trustees without a
shareholder vote. You will be notified of any such changes that are material. If
there is a material change in the Portfolio's objectives or policies, you should
consider whether the Portfolio remains an appropriate investment for your
variable insurance contract or qualified retirement plan.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Portfolio is long-term capital growth and
current income. It is a diversified portfolio that, under normal circumstances,
pursues its objective by investing up to 75% of its assets in equity securities
selected primarily for their growth potential and at least 25% of its assets in
securities that have income potential. The Portfolio normally emphasizes the
growth component. However, in unusual circumstances, the Portfolio may reduce
the growth component of its portfolio to 25% of its assets.
TYPES OF INVESTMENTS
The Portfolio invests primarily in common stocks of domestic and foreign
companies. The Portfolio may invest to a lesser degree in other types of
securities including preferred stock, 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. The Portfolio
may purchase securities on a when-issued, delayed delivery or forward commitment
basis. The Portfolio may invest up to 25% of its assets in mortgage- and
asset-backed securities, up to 10% of its assets in zero coupon, pay-in-kind and
step coupon securities, and without limit in indexed/structured securities. The
Portfolio will invest less than 35% of its assets in high-yield/high-risk
securities.
The Portfolio may invest without limit in foreign equity and debt securities.
The Portfolio may invest directly 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. The Portfolio may use futures,
options and other derivatives for hedging purposes or for non-hedging purposes
such as seeking to enhance return. See "Additional Risk Factors" on page 4 for a
discussion of the risks associated with foreign investing and derivatives.
See Appendix A for a further description of the Portfolio's investments.
The following questions are designed to help you better understand an investment
in the Portfolio.
How are assets allocated between the growth and income component of the Fund's
portfolio?
The Portfolio may invest in a combination of common stocks, preferred stocks,
convertible securities, debt securities and other fixed-income securities. The
Portfolio may shift assets between the growth and income components of its
portfolio based on the 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.
- --------------------------------------------------------------------------------
What type of securities make up the growth component of the Fund?
The Portfolio places a stronger emphasis on the growth component and normally
invests up to 75% of its assets in such securities. The growth component of the
Portfolio is expected to consist primarily of common stocks. The portfolio
manager will invest in common stocks to the extent he believes that the relevant
market environment favors profitable investing in those securities. The
portfolio manager generally takes a "bottom up" approach to building the
portfolio. In other words, he seeks to identify individual companies with
earnings growth potential that may not be recognized by the market at large.
Although themes may emerge in the Fund, securities are generally selected
without regard to any defined industry sector or other similarly defined
selection procedure.
Because income is a part of the investment objective of the Portfolio, the
portfolio manager may also consider dividend-paying characteristics in selecting
equity securities for the Portfolio. The 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.
- --------------------------------------------------------------------------------
What types of securities make up the income component of the Portfolio?
The income component of the Portfolio will consist of securities that the
portfolio manager believes have income potential. Such securities may include
equity securities, convertible securities and all types of debt securities.
Equity securities may be included in the income component of the Portfolio if
they currently pay dividends or the portfolio manager believes they have the
potential for either increasing their dividends or commencing dividends, if none
are currently paid. Investors in the Portfolio
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS 2
<PAGE>
should keep in mind that the Portfolio is not designed to produce a consistent
level of income.
- --------------------------------------------------------------------------------
Are the same criteria used to select foreign securities?
Generally, yes. The portfolio manager seeks companies that meet his selection
criteria, regardless of country of organization or place of principal business
activity. Foreign securities are generally 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
securities. See "Additional Risk Factors" on page 4.
- --------------------------------------------------------------------------------
How does the Portfolio try to reduce risk?
Diversification of the Portfolio's assets reduces the effect of any single
holding on its overall portfolio value. The Portfolio may use futures, options
and other derivative instruments to protect the portfolio from movements in
securities prices and interest rates. The Portfolio may also use a variety of
currency hedging techniques, including forward currency contracts, to manage
exchange rate risk. See "Additional Risk Factors" on page 4. In addition, to the
extent that the Portfolio holds a larger cash position, it might not participate
in market declines to the same extent as if it had remained more fully invested
in common stocks.
GENERAL PORTFOLIO POLICIES
The Portfolio will follow the general policies listed below in investing its
portfolio assets. The percentage limitations included in these policies and
elsewhere in this Prospectus apply at the time of purchase of the security. For
example, if the 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, the Portfolio's investments may be hedged to
a greater degree and/or its cash or similar investments may increase. In other
words, the Portfolio does 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. Larger hedged positions and/or larger cash positions
may serve as a means of preserving capital in unfavorable market conditions.
Securities that the Portfolio 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. The Portfolio may
also invest in money market funds (including funds managed by Janus Capital).
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. The Portfolio qualifies as a
diversified fund under the 1940 Act and is subject to the following
requirements:
o As a fundamental policy, the Portfolio may not own more than 10% of the
outstanding voting shares of any issuer.
o As a fundamental policy, with respect to 75% of its total assets, the
Portfolio will not 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 the Portfolio's holdings of that issuer to amount to
more than 5% of the Portfolio's total assets.
o The Portfolio will invest no more than 25% of its total assets in a single
issuer (other than U.S. government securities).
Internal Revenue Service (IRS) Limitations
In addition to the diversification requirements stated above, the 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, the Portfolio will not invest 25% or more of its total
assets in any particular industry (excluding U.S. government securities).
Portfolio Turnover
The 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,
anticipated 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
investment decision. Changes are made in the Portfolio whenever its portfolio
manager believes such changes are desirable. The portfolio turnover rate is
generally not a factor in making buy and sell decisions. The Portfolio's
turnover rate is not expected to exceed 200%.
To a limited extent, the Portfolio may purchase securities in anticipation of
relatively short-term price gains. The Portfolio may also sell one security and
simultaneously purchase the same or a 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
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS 3
<PAGE>
result in taxable capital gains. Certain tax rules may restrict the Portfolio's
ability to engage in short-term trading if the security has been held for less
than three months.
Illiquid Investments
The Portfolio may invest up to 15% of its net assets in illiquid investments,
including restricted securities or private placements that are not deemed to be
liquid by Janus Capital. An illiquid investment is a security or other position
that cannot be disposed of 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 will follow guidelines established by the
Trustees of the Trust ("Trustees") in making liquidity determinations for Rule
144A securities and certain other securities, including privately placed
commercial paper.
Borrowing and Lending
The Portfolio may borrow money and lend securities or other assets, as follows:
o The Portfolio may borrow money for temporary or emergency purposes in
amounts up to 25% of its total assets.
o The Portfolio may mortgage or pledge securities as security for borrowings
in amounts up to 15% of its net assets.
o As a fundamental policy, the 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.
The Portfolio is seeking permission from the SEC to borrow money from or lend
money to 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 limits. There is no assurance that such permission will be granted.
ADDITIONAL RISK FACTORS
Special Situations
The Portfolio may invest in "special situations" from time to time. A special
situation arises when, in the opinion of the Portfolio's portfolio 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.
Foreign Securities
Investments in foreign securities, including those of foreign governments, may
involve greater risks than investing in comparable domestic securities.
Securities of some foreign companies and governments may be traded in the United
States, but most foreign securities are traded primarily in foreign markets. The
risks of foreign investing include:
o Currency Risk. The Portfolio may buy the local currency when it buys a
foreign currency denominated security and sell the local currency when it
sells the security. As long as the Portfolio holds a foreign security, its
value will be affected by the value of the local currency relative to the
U.S. dollar. When the Portfolio sells a foreign denominated security, its
value may be worth less in U.S. dollars even though the security increases
in value in its home country. U.S. dollar denominated securities of foreign
issuers may also be affected by currency risk.
o Political and Economic Risk. Foreign investments may be 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
the Portfolio's assets from that country. The Portfolio may invest in
emerging market countries. Emerging market countries involve greater risks
such as immature economic structures, national policies restricting
investments by foreigners, and different legal systems.
o Regulatory Risk. There may be less government supervision of foreign
markets. Foreign issuers may not be 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.
Foreign securities purchased indirectly (e.g., depositary receipts) are subject
to many of the above risks, including currency risk, because their values depend
on the performance of a foreign security denominated in its home currency.
Futures, Options and Other Derivative Instruments
The Portfolio may enter into futures contracts on securities, financial indices
and foreign currencies and options on such contracts ("futures contracts") and
may
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS 4
<PAGE>
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 Portfolio intends to use most
derivative instruments primarily to hedge the value of its portfolio holdings
against potential adverse movements in securities prices, foreign currency
markets or interest rates. To a limited extent, the Portfolio may also use
derivative instruments for non-hedging purposes such as seeking to increase the
Portfolio's income or otherwise seeking to enhance return. Please refer to
Appendix A to this Prospectus and the SAI for a more detailed discussion of
these instruments.
The use of derivative instruments exposes the Portfolio 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 directions that the 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 the Portfolio's
initial investment in that instrument (in some cases, the potential loss is
unlimited); and
o particularly in the case of privately negotiated instruments, the risk that
the counterparty will fail to perform its obligations, which could leave
the Portfolio worse off than if it had not entered into the position.
Although the portfolio manager believes the use of derivative instruments will
benefit the Portfolio, the Portfolio's performance could be worse than if it had
not used such instruments if the portfolio manager's judgment proves incorrect.
When the Portfolio invests in a derivative instrument, it may be required to
segregate cash and other liquid assets or portfolio securities with its
custodian 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 Securities
High-yield/high-risk securities (or "junk" bonds) are debt securities rated
below investment grade by the primary rating agencies (such as, Standard &
Poor's Ratings Services and Moody's Investors Service, Inc.).
The value of lower quality securities generally is more dependent on the ability
of the issuer to meet interest and principal payments (i.e., credit risk) than
is the case for higher quality securities. Conversely, the value of higher
quality securities may be more sensitive to interest rate movements than lower
quality securities. Issuers of 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.
Issuers of high-yield securities may be 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 issuer. Adverse economic, political or other developments may impair the
issuer's ability to service principal and interest obligations, to meet
projected business goals and to obtain additional financing, particularly if the
issuer is highly leveraged. In the event of a default, the 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 quality securities is generally less liquid than the market
for higher quality securities. Adverse publicity and investor perceptions as
well as new or proposed laws may also have a greater negative impact on the
market for lower quality securities. Unrated debt, while not necessarily of
lower quality than rated securities, may not have as broad a market as rated
securities. Sovereign debt of foreign governments is generally rated by country.
Because these ratings do not take into account individual factors relevant to
each issue and may not be updated regularly, Janus Capital may treat such
securities as unrated debt.
The market prices of high-yield/high-risk securities structured as zero coupon
or pay-in-kind securities are generally affected to a greater extent by interest
rate changes and tend to be more volatile than securities which pay interest
periodically. In addition, zero coupon, pay-in-kind and delayed interest bonds
often do not pay interest until maturity. However, the Portfolio must recognize
a computed amount of interest income and pay dividends to shareholders even
though it has received no cash. In some instances, the Portfolio may have to
sell securities to have sufficient cash to pay the dividends.
Please refer to the SAI for a description of bond rating categories.
Short Sales
The Portfolio may engage in "short sales against the box." This technique
involves selling either a security that the Portfolio owns, or a security
equivalent in kind and amount to the security sold short that the Portfolio has
the right to obtain, for delivery at a specified date in the future. The
Portfolio will enter into a short sale against the box to hedge against
anticipated declines in the market price of portfolio securities or to defer an
unrealized gain. If the value of the securities sold short increases prior to
the scheduled delivery date, the Portfolio loses the opportunity to participate
in the gain.
See Appendix A for risks associated with certain other investments.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS 5
<PAGE>
Management of the Portfolio
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to the Portfolio's investment objective and policies.
The Trustees delegate the day-to-day management of the Portfolio to the officers
of the Trust and meet at least quarterly to review the Portfolio's investment
policies, performance, expenses and other business affairs.
INVESTMENT ADVISER
Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928, is the
investment adviser to the Portfolio and is responsible for the day-to-day
management of its investment portfolio and other business affairs.
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, information processing 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 the
Portfolio's investments. Janus Capital also furnishes certain administrative,
compliance and accounting services for the Portfolio, and may be reimbursed by
the Portfolio 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 Portfolio and pays the salaries, fees and expenses of all
Portfolio officers and those Trustees who are affiliated with Janus Capital.
The Portfolio pays all of its expenses not assumed by Janus Capital, including
transfer agent and custodian fees and expenses, legal and auditing fees,
registration fees and expenses, and independent Trustees' fees and expenses and
certain other expenses. Participating insurance companies that purchase the
Portfolio's shares may perform certain administrative services relating to the
Portfolio and Janus Capital or the Portfolio may pay those companies for such
services.
PORTFOLIO MANAGER
David Corkins is Executive Vice President and portfolio manager of the Portfolio
which he has managed since its inception. He previously served as an assistant
portfolio manager of Janus Mercury Fund. He joined Janus in 1995 as a research
analyst specializing in domestic financial services companies and a variety of
foreign industries. Prior to joining Janus, he was the Chief Financial Officer
of Chase Manhattan's mortgage business. He holds a Bachelor of Arts in English
and Russian from Dartmouth and Master of Business Administration from Columbia
University.
Personal Investing
Janus Capital does not permit portfolio managers to purchase and sell securities
for their own accounts, except under the limited exceptions contained in 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 Portfolio or
Janus Capital's other advisory clients. See the SAI for more detailed
information.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of the 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 the Portfolio's
transactions and recognizing brokerage, research and other services provided to
the Portfolio and to Janus Capital. Janus Capital may consider sales of shares
of the Portfolio or other Janus funds by a broker-dealer or the recommendation
of a broker-dealer to its customers that they purchase a Portfolio's shares as a
factor in the selection of broker-dealers to execute portfolio transactions.
Janus Capital may also consider payments made by brokers effecting transactions
for the 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 Portfolio's Trustees have authorized Janus Capital to place
portfolio transactions on an agency basis with a broker-dealer affiliated with
Janus Capital. When transactions for the 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.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS 6
<PAGE>
BREAKDOWN OF MANAGEMENT EXPENSES
The Portfolio pays Janus Capital a management fee which is calculated daily. The
advisory agreement with the Portfolio spells out the management fee and other
expenses that the Portfolio must pay. The Portfolio is subject to the following
management fee schedule (expressed as an annual rate):
Average Daily Net Annual Rate
Fee Schedule Assets of Portfolio Percentage (%)
--------------------------------------------------------------------
First $300 Million 0.75*
Next $200 Million 0.70
Over $500 Million 0.65
--------------------------------------------------------------------
* Janus Capital has agreed to reduce the Portfolio's advisory fee to the
extent that such fee exceeds the effective rate of Janus Growth and Income
Fund, the Janus retail fund corresponding to the Portfolio. Janus Capital
may terminate this fee reduction at any time upon at least 90 days' notice
to the Trustees. 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 Growth and
Income Fund was ____% for the quarter ended September 30, 1997. In
addition, Janus Capital has agreed to limit the expenses of the Portfolio's
Shares to an annual rate of 1.25% of average net assets through at least
October 31, 1998.
As asset size increases, the annual rate of the management fee declines in
accordance with the above schedule. In addition, the Shares of the Portfolio
incur 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.
OTHER SERVICE PROVIDERS
The following parties provide the Portfolio with administrative and other
services.
Custodian
State Street Bank and Trust Company
P.O. Box 0351
Boston, Massachusetts 02117-0351
Transfer Agent
Janus Service Corporation
P.O. Box 173375
Denver, Colorado 80217-3375
Janus Service Corporation is a wholly-owned subsidiary of Janus Capital.
OTHER INFORMATION
Organization
The Trust is an open-end management investment company organized as a Delaware
business trust on May 20, 1993. The Portfolio has been established as a separate
series of the Trust.
The Portfolio currently offers two classes of shares, one of which, the
Institutional Shares, are offered pursuant to this prospectus. The Institutional
Shares of the Portfolio, as well as other Janus Aspen Series - Institutional
Shares are sold under the name Janus Aspen Series. The Shares offered by this
Prospectus are available only in connection with investment in and payments
under variable contracts and life insurance contracts, as well as certain
qualified retirement plans. Retirement Shares are offered by a separate
prospectus and are available only to participant directed qualified plans using
plan service providers that are compensated for providing distribution and/or
recordkeeping and other administrative services to plan participants. Because
the expenses of each class may differ, the performance in each class is expected
to differ. If you would like additional information about the Retirement Shares,
please call 1-800-525-0020.
Shareholder Meetings
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 class or
Portfolio only if a matter affects or requires the vote of only that class or
Portfolio or the interest of the class or Portfolio in the matter differs from
the interest of the other class or Portfolios of the Trust. As a shareholder,
you are entitled to one vote for each share that you own.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS 7
<PAGE>
An insurance company issuing a variable contract invested in shares of the
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.
Conflicts of Interest
Portfolio 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. Although the Portfolio
currently does not anticipate any disadvantages to policy owners arising out of
the fact that the Portfolio offers its shares to such entities, there is a
possibility that disadvantages could occur or that a material conflict may
arise. The Trustees monitor events in order to identify any anticipated
disadvantages or material irreconcilable conflicts that may arise and to
determine what action, if any, should be taken in response. If a material
disadvantage or conflict occurs, the Trustees may require one or more insurance
company separate accounts or plans to withdraw its investments in the Portfolio
or substitute shares of another Portfolio. As a result, the Portfolio may be
forced to sell securities at disadvantageous prices. In addition, the Trustees
may refuse to sell shares of the Portfolio to any separate account or may
suspend or terminate the offering of shares of the Portfolio if such action is
required by law or regulatory authority or is in the best interests of the
Portfolio's shareholders. It is possible that a qualified plan investing in the
Retirement Shares of the Portfolio could lose its qualified plan status under
the Internal Revenue Code, which could have adverse tax consequences on
insurance company separate accounts investing in the Shares. Janus Capital
intends to monitor such qualified plans and the Portfolio may discontinue sales
to a qualified plan and require plan participants with existing investments in
the Retirement Shares to redeem those investments if a plan loses (or in the
opinion of Janus Capital is at risk of losing) its qualified plan status.
Master/Feeder Option
The Trust may in the future seek to achieve the Portfolio's investment objective
by investing all of the Portfolio's assets in another investment company having
the same investment objective and substantially the same investment policies and
restrictions as those applicable to the Portfolio. It is expected that any such
investment company would be managed by Janus Capital in substantially the same
manner as the Portfolio. The shareholders of the Trust of record on April 30,
1992, and the initial shareholder(s) of the Portfolio, have voted to vest
authority to use this investment structure in the sole discretion of the
Trustees. No further approval of the shareholders of the Portfolio 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 the 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 Portfolio believes that 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 net asset value ("NAV") of the Shares of the Portfolio is determined at the
close of the regular trading session of the New York Stock Exchange (the "NYSE")
(normally 4:00 p.m., New York time) each day that the NYSE 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. Short-term instruments
maturing within 60 days are valued at amortized cost, which approximates market
value.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS 8
<PAGE>
Distributions and Taxes
- --------------------------------------------------------------------------------
DISTRIBUTIONS
To avoid taxation of the Portfolio, the Internal Revenue Code requires the
Portfolio to distribute net income and any net gains realized by its investments
annually. Income from dividends and interest and any net realized short-term
capital gains are paid to shareholders as ordinary income dividends. Net
realized long-term gains, if any, are paid to shareholders as capital gains
distributions. Each class of the 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 the Shares of the Portfolio will be
automatically reinvested into additional Shares of the Portfolio.
How Distributions Affect the Portfolio's NAV
Distributions are paid to shareholders as of the record date of the distribution
of the Portfolio, regardless of how long the Shares have been held. Dividends
and capital gains awaiting distribution are included in the daily NAV of the
Portfolio's Shares. The Share price drops by the amount of the distribution, net
of any subsequent market fluctuations. As an example, assume that on December
31, the Shares of the Portfolio declared a dividend in the amount of $0.25 per
share. If the price of the Portfolio's Shares was $10.00 on December 30, the
Share price on December 31 would be $9.75, barring market fluctuations.
- --------------------------------------------------------------------------------
TAXES
Taxes on Distributions
Because Shares of the Portfolio may be purchased only through variable insurance
contracts and qualified plans, it is anticipated that any income dividends or
capital gains distributions made by the Shares of the 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 591/2, a 10% penalty tax.
The tax status of your investment in the Shares 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 Portfolio
Dividends, interest and some capital gains received by the Portfolio on foreign
securities may give rise to withholding and other taxes imposed by foreign
countries. It is expected that foreign taxes paid by the Portfolio will be
treated as expenses of the Portfolio. Tax conventions between certain countries
and the United States may reduce or eliminate such taxes.
The Portfolio does not expect to pay any federal income or excise taxes because
it intends to meet certain requirements of the Internal Revenue Code. In
addition, the 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.
- --------------------------------------------------------------------------------
Performance Terms
This section will help you understand various terms that are commonly used to
describe the Portfolio's performance. You may see references to these terms in
our newsletters, advertisements (or those published by participating insurance
companies) and in media articles. Newsletters and advertisements may include
comparisons of the Portfolio's performance to the performance of other mutual
funds, mutual fund averages or recognized stock market indices. The Portfolio
generally measures performance in terms of total return.
Cumulative total return represents the actual rate of return on an investment
for a specified period. Cumulative total return is generally quoted for more
than one year (e.g., the life of the 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 the Portfolio's return and are
not the same as actual annual results.
The Portfolio imposes no sales or other charges that would affect total return
computations. Total return figures of the Portfolio include the effect of
deducting the 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 GROWTH AND INCOME PORTFOLIO PROSPECTUS 9
<PAGE>
Shareholder's Guide
INVESTORS MAY NOT PURCHASE OR REDEEM SHARES OF THE PORTFOLIO 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 A VARIABLE INSURANCE CONTRACT AND ON HOW TO SELECT THE
PORTFOLIO AS AN INVESTMENT OPTION 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's separate account or to your plan documents for information on how to
invest in the Shares of the Portfolio.
All investments in the Portfolio are credited to a participating insurance
company's separate account or a qualified plan immediately upon acceptance of
the investment by the Portfolio. Investments will be processed at the NAV next
calculated after an order is received and accepted by the Portfolio.
The Portfolio reserves the right to reject any specific purchase order. Purchase
orders may be refused if, in Janus Capital's opinion, they are of the size that
would disrupt the management of the Portfolio. The Portfolio may discontinue
sales of its shares if management believes that a substantial further increase
may adversely affect the Portfolio's ability to achieve its investment
objective. In such event, however, it is anticipated that existing policy owners
and plan participants invested in the Portfolio would be permitted to continue
to authorize investment in the Portfolio and to reinvest any dividends or
capital gains distribution.
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 the 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
Shareholders will receive annual and semiannual reports including the financial
statements of the Shares of the Portfolio. Each report will show the investments
owned by the Portfolio and market values thereof, as well as other information
about the Portfolio and its operations. The Trust's fiscal year ends December
31.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS 10
<PAGE>
Appendix A
GLOSSARY OF INVESTMENT TERMS
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Portfolio may invest. The
Portfolio may invest in these instruments to the extent permitted by its
investment objective and policies. The Portfolio is not limited by this
discussion and may invest in any other types of instruments not precluded by the
policies discussed elsewhere in this Prospectus. Please refer to the SAI for a
more detailed discussion of certain instruments.
I. EQUITY AND DEBT SECURITIES
Bonds are debt securities issued by a company, municipality, government 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. For example, the Portfolio may purchase commercial
paper issued under Section 4(2) of the Securities Act of 1933.
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 specified rate of return. The
term generally includes short- and long-term government, corporate and municipal
obligations that pay a specified 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 securities 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 a 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, the 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 any foreign corporations which
generate certain amounts of passive income or hold certain amounts of assets for
the production of passive income. Passive income includes dividends, interest,
royalties, rents and annuities. Income tax regulations may require the Portfolio
to recognize income associated with the PFIC prior to the actual receipt of any
such income.
Pay-in-kind bonds are debt securities that normally give the issuer an option to
pay cash at a coupon payment date or give the holder of the security a similar
bond with the same coupon rate and a face value equal to the amount of the
coupon payment that would have been made.
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 the Portfolio and a
simultaneous agreement by the seller (generally 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, the 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 the 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 will be used primarily to provide cash to satisfy unusually high
redemption requests, or for other temporary or emergency purposes.
Rule 144A securities are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
Standby commitments are obligations purchased by the Portfolio from a dealer
that give the Portfolio the option to sell a security to the dealer at a
specified price.
Step coupon bonds are debt securities that trade at a discount from their face
value and pay coupon interest. The discount
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS 11
<PAGE>
from the face value depends on the time remaining until cash payments begin,
prevailing interest rates, liquidity of the security and the perceived credit
quality of the issuer.
Strip bonds 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.
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 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.
Variable and floating rate securities have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. The floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
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 at some time in the future -
i.e., beyond normal settlement. The Portfolio does not earn interest on such
securities until settlement and bears the risk of market value fluctuations
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 discount from face value. The discount
approximates the total amount of interest the security will accrue from the date
of issuance to maturity. 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
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 Portfolio may enter into forward currency contracts to hedge against
declines in the value of securities denominated in, or whose value is tied to, a
currency other than the U.S. dollar or to reduce the impact of currency
appreciation on purchases of such securities. The Portfolio may also enter into
forward contracts to purchase or sell securities or other financial indices.
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 Portfolio 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. The Portfolio
may also buy options on futures contracts. 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, commodity prices 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. The Portfolio bears the market risk of
an investment in the underlying instruments, as well as the credit risk of the
issuer.
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).
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 Portfolio may purchase and write put and call options on securities,
securities indices and foreign currencies.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS 12
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<PAGE>
100 Fillmore Street
[Logo] JANUS Denver, Colorado 80206-4928
(800) 525-3713 Recycled Paper
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sales of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
Contents
- ---------------------------------------
THE PORTFOLIO AT A GLANCE
Brief description of the Portfolio .. 1
- ---------------------------------------
EXPENSE INFORMATION
................................. 1
- ---------------------------------------
THE PORTFOLIO IN DETAIL
The Portfolio's Investment
Objective and Policies ........... 2
General Portfolio Policies .......... 3
Additional Risk Factors ............. 4
- ---------------------------------------
MANAGEMENT OF THE PORTFOLIO
Investment Adviser and
Portfolio Manager ................ 6
Portfolio Transactions .............. 6
Management Expenses ................. 7
Other Service Providers ............. 7
Participant Administration Fee
and Distribution Fee ............. 7
Other Information ................... 7
- ---------------------------------------
DISTRIBUTIONS AND TAXES
Distributions ....................... 9
Taxes ............................... 9
- ---------------------------------------
PERFORMANCE TERMS
An Explanation of
Performance Terms ................ 9
- ---------------------------------------
SHAREHOLDER'S GUIDE
Purchases .......................... 10
Redemptions ........................ 10
Shareholder Communications ......... 10
- ---------------------------------------
APPENDIX A
Glossary of Investment Terms ....... 11
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 22, 1997
Janus Aspen Series
Growth and Income Portfolio
Retirement Shares
Prospectus
________, 1997
Growth and Income Portfolio (the "Portfolio") is a no-load, diversified mutual
fund that seeks long-term growth of capital with a limited emphasis on income.
Although the Portfolio normally invests at least 25% of its assets in securities
that have income potential, it emphasizes equity securities selected for their
growth potential. The Portfolio is a series of Janus Aspen Series (the "Trust"),
an open-end management investment company. The Portfolio is recently organized
and has a limited operating history.
The Retirement Shares of the Portfolio (the "Shares") offered by this Prospectus
are issued in connection with certain participant directed qualified retirement
plans. The Trust sells and redeems its Shares at net asset value without any
sales charges, commissions or redemption fees.
This Prospectus contains information about the Shares that a prospective plan
participant should consider before investing and should be read carefully and
retained for future reference. Additional information about the Portfolio is
contained in the Statement of Additional Information ("SAI") dated ________,
1997, which is filed with the Securities and Exchange Commission ("SEC") and is
incorporated by reference into this Prospectus. The SAI is available upon
request and without charge by writing or calling your plan sponsor.
The Shares offered by this Prospectus are not deposits or obligations of any
bank, are not endorsed or guaranteed by any bank, and are not insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
government agency.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC NOR HAS THE SEC 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.
<PAGE>
Portfolio At A Glance
This section is designed to provide you with a brief overview of the Portfolio
and its investment emphasis. A more detailed discussion of the Portfolio's
investment objective and policies begins on page 2.
INVESTMENT OBJECTIVE:
The investment objective of the Portfolio is long-term capital growth and
current income.
PRIMARY HOLDINGS:
A diversified portfolio that emphasizes equity securities selected for their
growth potential, although the Portfolio will normally invest at least 25% of
its assets in securities that have income potential.
SHAREHOLDER'S INVESTMENT HORIZON:
The Portfolio is designed for long-term investors who seek growth of capital
with a limited emphasis on income. The Portfolio is not designed for investors
who desire a consistent level of income nor is it a short-term trading vehicle
and should not be relied upon for short-term financial needs.
FUND ADVISER:
Janus Capital Corporation ("Janus Capital") serves as the Portfolio's investment
adviser. Janus Capital has been in the investment advisory business for over 27
years and currently manages approximately $65 billion in assets.
FUND MANAGER:
David Corkins
FUND INCEPTION:
November 1997
Expense Information
The tables and example below are designed to assist participants in qualified
plans that invest in the Shares of the Portfolio in understanding the various
costs and expenses that you will bear directly or indirectly as an investor in
the Shares.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales charges on redemptions None
Redemption fees None
Exchange fee None
ANNUAL OPERATING EXPENSES (after fee waivers and reductions)(1)
(expressed as a percentage of average net assets)
- --------------------------------------------------------------------------------
Management Fee(1) 0.68%
12b-1 Fee(2) 0.25%
Other Expenses(1,3) 0.55%
- --------------------------------------------------------------------------------
Total Operating Expenses(1) 1.48%
- --------------------------------------------------------------------------------
(1) The fees and expenses in the table above are based on the estimated gross
expenses before estimated expense offset arrangements that the Shares of
the Portfolio expect to incur their initial fiscal year, net of fee
reductions or waivers from Janus Capital. Fee reductions reduce the
management fee to the level of the corresponding Janus retail fund. Other
waivers, if applicable, are first applied against the management fee and
then against other expenses. Without such waivers or reductions, the
Management Fee, Other Expenses and Total Operating Expenses are estimated
to be 0.75%, 0.55% and 1.55%, respectively. Janus Capital may modify or
terminate the waivers or reductions at any time upon at least 90 days'
notice to the Trustees.
(2) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the National Association of
Securities Dealers, Inc.
(3) Includes compensation to service providers who provide recordkeeping,
subaccounting and other administrative services to plan participants who
invest in the Shares. See "Participant Administration Fee" for more
details.
EXAMPLE
- --------------------------------------------------------------------------------
1 Year 3 Years
- --------------------------------------------------------------------------------
Assume you invest $1,000, the Shares of the Portfolio
returns 5% annually and its expense ratio remains as listed
above. The example shows the operating expenses that you
would indirectly bear as an investor in the Shares of the
Portfolio. $15 $47
- --------------------------------------------------------------------------------
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE RETURNS
OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 1
<PAGE>
The Portfolio in Detail
This section takes a closer look at the Portfolio's investment objectives,
policies and the securities in which it invests. Please carefully review the
"Additional Risk Factors" section of this Prospectus for a more detailed
discussion of the risks associated with certain investment techniques and refer
to Appendix A for a more detailed description of the Portfolio's investments
(and certain of the risks associated with those investments). You should
carefully consider your own investment goals, time horizon and risk tolerance
before investing in the Portfolio.
The Portfolio's investment objectives and policies are similar to those of Janus
Growth and Income Fund, a Janus retail fund. Although it is anticipated that the
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 the Portfolio and its corresponding retail fund are expected to
differ.
Policies that are noted as "fundamental" cannot be changed without a shareholder
vote. All other policies, including the Portfolio's investment objectives, are
not fundamental and may be changed by the Portfolio's Trustees without a
shareholder vote. You will be notified of any such changes that are material. If
there is a material change in the Portfolio's objectives or policies, you should
consider whether the Portfolio remains an appropriate investment for your
qualified retirement plan.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Portfolio is long-term capital growth and
current income. It is a diversified portfolio that, under normal circumstances,
pursues its objective by investing up to 75% of its assets in equity securities
selected primarily for their growth potential and at least 25% of its assets in
securities that have income potential. The Portfolio normally emphasizes the
growth component. However, in unusual circumstances, the Portfolio may reduce
the growth component of its portfolio to 25% of its assets.
TYPES OF INVESTMENTS
The Portfolio invests primarily in common stocks of domestic and foreign
companies. The Portfolio may invest to a lesser degree in other types of
securities including preferred stock, 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. The Portfolio
may purchase securities on a when-issued, delayed delivery or forward commitment
basis. The Portfolio may invest up to 25% of its assets in mortgage- and
asset-backed securities, up to 10% of its assets in zero coupon, pay-in-kind and
step coupon securities, and without limit in indexed/structured securities. The
Portfolio will invest less than 35% of its assets in high-yield/high-risk
securities.
The Portfolio may invest without limit in foreign equity and debt securities.
The Portfolio may invest directly 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. The Portfolio may use futures, options and other
derivatives for hedging purposes or for non-hedging purposes such as seeking to
enhance return. See "Additional Risk Factors" on page 4 for a discussion of the
risks associated with foreign investing and derivatives.
See Appendix A for a further description of the Portfolio's investments.
The following questions are designed to help you better understand an investment
in the Portfolio.
How are assets allocated between the growth and income component of the Fund's
portfolio?
The Portfolio may invest in a combination of common stocks, preferred stocks,
convertible securities, debt securities and other fixed-income securities. The
Portfolio may shift assets between the growth and income components of its
portfolio based on the 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.
- --------------------------------------------------------------------------------
What type of securities make up the growth component of the Fund?
The Portfolio places a stronger emphasis on the growth component and normally
invests up to 75% of its assets in such securities. The growth component of the
Portfolio is expected to consist primarily of common stocks. The portfolio
manager will invest in common stocks to the extent he believes that the relevant
market environment favors profitable investing in those securities. The
portfolio manager generally takes a "bottom up" approach to building the
portfolio. In other words, he seeks to identify individual companies with
earnings growth potential that may not be recognized by the market at large.
Although themes may emerge in the Fund, securities are generally selected
without regard to any defined industry sector or other similarly defined
selection procedure.
Because income is a part of the investment objective of the Portfolio, the
portfolio manager may also consider dividend-paying characteristics in selecting
equity securities for the Portfolio. The 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.
- --------------------------------------------------------------------------------
What types of securities make up the income component of the Portfolio?
The income component of the Portfolio will consist of securities that the
portfolio manager believes have income potential. Such securities may include
equity securities, convertible securities and all types of debt securities.
Equity securities may be included in the income component of the Portfolio if
they currently pay dividends or the portfolio manager believes they have the
potential for either increasing their dividends or commencing dividends, if none
are currently paid. Investors in the Portfolio should keep
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 2
<PAGE>
in mind that the Portfolio is not designed to produce a consistent level of
income.
- --------------------------------------------------------------------------------
Are the same criteria used to select foreign securities?
Generally, yes. The portfolio manager seeks companies that meet his selection
criteria, regardless of country of organization or place of principal business
activity. Foreign securities are generally 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
securities. See "Additional Risk Factors" on page 4.
- --------------------------------------------------------------------------------
How does the Portfolio try to reduce risk?
Diversification of the Portfolio's assets reduces the effect of any single
holding on its overall portfolio value. The Portfolio may use futures, options
and other derivative instruments to protect the portfolio from movements in
securities prices and interest rates. The Portfolio may also use a variety of
currency hedging techniques, including forward currency contracts, to manage
exchange rate risk. See "Additional Risk Factors" on page 4. In addition, to the
extent that the Portfolio holds a larger cash position, it might not participate
in market declines to the same extent as if it had remained more fully invested
in common stocks.
GENERAL PORTFOLIO POLICIES
The Portfolio will follow the general policies listed below in investing its
portfolio assets. The percentage limitations included in these policies and
elsewhere in this Prospectus apply at the time of purchase of the security. For
example, if the 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, the Portfolio's investments may be hedged to
a greater degree and/or its cash or similar investments may increase. In other
words, the Portfolio does 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. Larger hedged positions and/or larger cash positions
may serve as a means of preserving capital in unfavorable market conditions.
Securities that the Portfolio 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. The Portfolio may
also invest in money market funds (including funds managed by Janus Capital).
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. The Portfolio qualifies as a
diversified fund under the 1940 Act and is subject to the following
requirements:
o As a fundamental policy, the Portfolio may not own more than 10% of the
outstanding voting shares of any issuer.
o As a fundamental policy, with respect to 75% of its total assets, the
Portfolio will not 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 the Portfolio's holdings of that issuer to amount to
more than 5% of the Portfolio's total assets.
o The Portfolio will invest no more than 25% of its total assets in a single
issuer (other than U.S. government securities).
Internal Revenue Service (IRS) Limitations
In addition to the diversification requirements stated above, because a class of
shares of the Portfolio is sold in connection with variable annuity contracts
and variable life insurance contracts, the 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.
Industry Concentration
As a fundamental policy, the Portfolio will not invest 25% or more of its total
assets in any particular industry (excluding U.S. government securities).
Portfolio Turnover
The 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,
anticipated 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
investment decision. Changes are made in the Portfolio whenever its portfolio
manager believes such changes are desirable. The portfolio turnover rate is
generally not a factor in making buy and sell decisions. The Portfolio's
turnover rate is not expected to exceed 200%.
To a limited extent, the Portfolio may purchase securities in anticipation of
relatively short-term price gains. The Portfolio may also sell one security and
simultaneously purchase the same or a 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 Portfolio's ability to engage in
short-term trading if the security has been held for less than three months.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 3
<PAGE>
Illiquid Investments
The Portfolio may invest up to 15% of its net assets in illiquid investments,
including restricted securities or private placements that are not deemed to be
liquid by Janus Capital. An illiquid investment is a security or other position
that cannot be disposed of 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 will follow guidelines established by the
Trustees of the Trust ("Trustees") in making liquidity determinations for Rule
144A securities and certain other securities, including privately placed
commercial paper.
Borrowing and Lending
The Portfolio may borrow money and lend securities or other assets, as follows:
o The Portfolio may borrow money for temporary or emergency purposes in
amounts up to 25% of its total assets.
o The Portfolio may mortgage or pledge securities as security for borrowings
in amounts up to 15% of its net assets.
o As a fundamental policy, the 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.
The Portfolio is seeking permission from the SEC to borrow money from or lend
money to 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 limits. There is no assurance that such permission will be granted.
ADDITIONAL RISK FACTORS
Special Situations
The Portfolio may invest in "special situations" from time to time. A special
situation arises when, in the opinion of the Portfolio's portfolio 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.
Foreign Securities
Investments in foreign securities, including those of foreign governments, may
involve greater risks than investing in comparable domestic securities.
Securities of some foreign companies and governments may be traded in the United
States, but most foreign securities are traded primarily in foreign markets. The
risks of foreign investing include:
o Currency Risk. The Portfolio may buy the local currency when it buys a
foreign currency denominated security and sell the local currency when it
sells the security. As long as the Portfolio holds a foreign security, its
value will be affected by the value of the local currency relative to the
U.S. dollar. When the Portfolio sells a foreign denominated security, its
value may be worth less in U.S. dollars even though the security increases
in value in its home country. U.S. dollar denominated securities of foreign
issuers may also be affected by currency risk.
o Political and Economic Risk. Foreign investments may be 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
the Portfolio's assets from that country. The Portfolio may invest in
emerging market countries. Emerging market countries involve greater risks
such as immature economic structures, national policies restricting
investments by foreigners, and different legal systems.
o Regulatory Risk. There may be less government supervision of foreign
markets. Foreign issuers may not be 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.
Foreign securities purchased indirectly (e.g., depositary receipts) are subject
to many of the above risks, including currency risk, because their values depend
on the performance of a foreign security denominated in its home currency.
Futures, Options and Other Derivative Instruments
The 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 Portfolio intends to use most
derivative instruments primarily to hedge the value of its portfolio
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 4
<PAGE>
holdings against potential adverse movements in securities prices, foreign
currency markets or interest rates. To a limited extent, the Portfolio may also
use derivative instruments for non-hedging purposes such as seeking to increase
the Portfolio's income or otherwise seeking to enhance return. Please refer to
Appendix A to this Prospectus and the SAI for a more detailed discussion of
these instruments.
The use of derivative instruments exposes the Portfolio 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 directions that the 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 the Portfolio's
initial investment in that instrument (in some cases, the potential loss is
unlimited); and
o particularly in the case of privately negotiated instruments, the risk that
the counterparty will fail to perform its obligations, which could leave
the Portfolio worse off than if it had not entered into the position.
Although the portfolio manager believes the use of derivative instruments will
benefit the Portfolio, the Portfolio's performance could be worse than if it had
not used such instruments if the portfolio manager's judgment proves incorrect.
When the Portfolio invests in a derivative instrument, it may be required to
segregate cash and other liquid assets or portfolio securities with its
custodian 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 Securities
High-yield/high-risk securities (or "junk" bonds) are debt securities rated
below investment grade by the primary rating agencies (such as, Standard &
Poor's Ratings Services and Moody's Investors Service, Inc.).
The value of lower quality securities generally is more dependent on the ability
of the issuer to meet interest and principal payments (i.e., credit risk) than
is the case for higher quality securities. Conversely, the value of higher
quality securities may be more sensitive to interest rate movements than lower
quality securities. Issuers of 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.
Issuers of high-yield securities may be 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 issuer. Adverse economic, political or other developments may impair the
issuer's ability to service principal and interest obligations, to meet
projected business goals and to obtain additional financing, particularly if the
issuer is highly leveraged. In the event of a default, the 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 quality securities is generally less liquid than the market
for higher quality securities. Adverse publicity and investor perceptions as
well as new or proposed laws may also have a greater negative impact on the
market for lower quality securities. Unrated debt, while not necessarily of
lower quality than rated securities, may not have as broad a market as rated
securities. Sovereign debt of foreign governments is generally rated by country.
Because these ratings do not take into account individual factors relevant to
each issue and may not be updated regularly, Janus Capital may treat such
securities as unrated debt.
The market prices of high-yield/high-risk securities structured as zero coupon
or pay-in-kind securities are generally affected to a greater extent by interest
rate changes and tend to be more volatile than securities which pay interest
periodically. In addition, zero coupon, pay-in-kind and delayed interest bonds
often do not pay interest until maturity. However, the Portfolio must recognize
a computed amount of interest income and pay dividends to shareholders even
though it has received no cash. In some instances, the Portfolio may have to
sell securities to have sufficient cash to pay the dividends.
Please refer to the SAI for a description of bond rating categories.
Short Sales
The Portfolio may engage in "short sales against the box." This technique
involves selling either a security that the Portfolio owns, or a security
equivalent in kind and amount to the security sold short that the Portfolio has
the right to obtain, for delivery at a specified date in the future. The
Portfolio will enter into a short sale against the box to hedge against
anticipated declines in the market price of portfolio securities or to defer an
unrealized gain. If the value of the securities sold short increases prior to
the scheduled delivery date, the Portfolio loses the opportunity to participate
in the gain.
See Appendix A for risks associated with certain other investments.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 5
<PAGE>
Management of the Portfolio
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to the Portfolio's investment objective and policies.
The Trustees delegate the day-to-day management of the Portfolio to the officers
of the Trust and meet at least quarterly to review the Portfolio's investment
policies, performance, expenses and other business affairs.
INVESTMENT ADVISER
Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928, is the
investment adviser to the Portfolio and is responsible for the day-to-day
management of its investment portfolio and other business affairs.
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, information processing 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 the
Portfolio's investments. Janus Capital also furnishes certain administrative,
compliance and accounting services for the Portfolio, and may be reimbursed by
the Portfolio 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 Portfolio and pays the salaries, fees and expenses of all
Portfolio officers and those Trustees who are affiliated with Janus Capital.
The Portfolio pays all of its expenses not assumed by Janus Capital, including
transfer agent and custodian fees and expenses, legal and auditing fees,
registration fees and expenses, and independent Trustees' fees and expenses and
certain other expenses. Service providers to qualified plans that purchase the
Shares receive fees for providing recordkeeping, subaccounting and other
administrative services, as described under "Participant Administration Fee and
Distribution Fee" on page 7.
PORTFOLIO MANAGER
David Corkins is Executive Vice President and portfolio manager of the Portfolio
which he has managed since its inception. He previously served as an assistant
portfolio manager of Janus Mercury Fund. He joined Janus in 1995 as a research
analyst specializing in domestic financial services companies and a variety of
foreign industries. Prior to joining Janus, he was the Chief Financial Officer
of Chase Manhattan's mortgage business. He holds a Bachelor of Arts in English
and Russian from Dartmouth and Master of Business Administration from Columbia
University.
Personal Investing
Janus Capital does not permit portfolio managers to purchase and sell securities
for their own accounts, except under the limited exceptions contained in 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 Portfolio or
Janus Capital's other advisory clients. See the SAI for more detailed
information.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of the 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 the Portfolio's
transactions and recognizing brokerage, research and other services provided to
the Portfolio and to Janus Capital. Janus Capital may consider sales of shares
of the Portfolio or other Janus funds by a broker-dealer or the recommendation
of a broker-dealer to its customers that they purchase a Portfolio's shares as a
factor in the selection of broker-dealers to execute Portfolio transactions.
Janus Capital may also consider payments made by brokers effecting transactions
for the 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 Portfolio's Trustees have authorized Janus Capital to place
portfolio transactions on an agency basis with a broker-dealer affiliated with
Janus Capital. When transactions for the Portfolio are effected with that
broker-dealer, the commissions payable by the Portfolio are credited against
certain Portfolio operating expenses serving to reduce those expenses. The SAI
further explains the selection of broker-dealers.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 6
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BREAKDOWN OF MANAGEMENT EXPENSES
The Portfolio pays Janus Capital a management fee which is calculated daily. The
advisory agreement with the Portfolio spells out the management fee and other
expenses that the Portfolio must pay. The Portfolio is subject to the following
management fee schedule (expressed as an annual rate):
Average Daily Net Annual Rate
Fee Schedule Assets of Portfolio Percentage (%)
--------------------------------------------------------------------
First $300 Million 0.75*
Next $200 Million 0.70
Over $500 Million 0.65
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* Janus Capital has agreed to reduce the Portfolio's advisory fee to the
extent that such fee exceeds the effective rate of Janus Growth and Income
Fund, the Janus retail fund corresponding to the Portfolio. Janus Capital
may terminate this fee reduction at any time upon at least 90 days' notice
to the Trustees. 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 Growth and
Income Fund was ____% for the quarter ended September 30, 1997. In
addition, Janus Capital has agreed to limit the expenses of the Portfolio's
Shares to an annual rate of 1.25% of average net assets through at least
October 31, 1998. The participant administration fee and distribution fee
described below are not included in the expense limit.
As asset size increases, the annual rate of the management fee declines in
accordance with the above schedule. In addition, the Shares of the Portfolio
incur expenses not assumed by Janus Capital, including the participant
administration fee and distribution fee described below, 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.
OTHER SERVICE PROVIDERS
The following parties provide the Portfolio with administrative and other
services.
Custodian
State Street Bank and Trust Company
P.O. Box 0351
Boston, Massachusetts 02117-0351
Transfer Agent
Janus Service Corporation
P.O. Box 173375
Denver, Colorado 80217-3375
Distributor
Janus Distributors, Inc.
100 Fillmore Street
Denver, CO 80206-4928
Janus Service Corporation and Janus
Distributors, Inc. are wholly-owned
subsidiaries of Janus Capital.
PARTICIPANT ADMINISTRATION FEE AND DISTRIBUTION FEE
Participant Administration Fee
Janus Service Corporation ("Janus Service"), the Trust's transfer agent,
receives a participant administration fee at an annual rate of up to .25% of the
average daily net assets of the Shares of the Portfolio for providing or
procuring recordkeeping, subaccounting and other administrative services to plan
participants who invest in the Shares. Janus Service expects to use this fee to
compensate qualified plan service providers for providing these services.
Distribution Fee
Under a distribution and service plan ("Plan") adopted in accordance with Rule
12b-1 under the 1940 Act, the Shares may pay Janus Distributors, Inc. ("JDI"),
the distributor of the Shares, a fee at an annual rate of up to 0.25% of the
average daily net assets of the Shares of the Portfolio. Under the terms of the
Plan, the Trust is authorized to make payments to JDI for remittance to
qualified plan service providers as compensation for distribution and
shareholder servicing performed by such service providers. The Plan permits the
compensation of such service providers at an annual rate of up to .25% of the
average daily net assets of the Shares of the Portfolio for activities which are
primarily intended to result in sales of the Shares, including but not limited
to preparing, printing and distributing prospectuses, SAIs, shareholder reports
and educational materials to prospective and existing plan participants;
responding to inquiries by qualified plan participants; receiving and answering
correspondence; and similar activities.
OTHER INFORMATION
Organization
The Trust is an open-end management investment company organized as a Delaware
business trust on May 20, 1993. The Portfolio has been established as a separate
series of the Trust.
The Portfolio currently offers two classes of shares. The Shares offered by this
Prospectus are available only to participant directed qualified plans using plan
service providers that are compensated for providing distribution and/or
recordkeeping and other administrative services provided
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 7
<PAGE>
to plan participants. Institutional Shares of the Portfolio are available only
to variable insurance contracts owners and other qualified retirement plans.
Because the expenses of each class may differ, the performance in each class is
expected to differ. If you would like additional information about the
Institutional Shares, please call 1-800-525-0020.
Shareholder Meetings
The Trust does not intend to hold annual shareholder meetings. However, special
meetings may be called for a specific class or 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 class or Portfolio only if a matter affects or requires the vote of only
that class or Portfolio or the interest of the class or Portfolio in the matter
differs from the interest of the other class or Portfolios of the Trust. As a
shareholder, you are entitled to one vote for each share that you own.
Conflicts of Interest
The Shares offered by this prospectus are available to certain participant
directed qualified plans. Institutional Shares of the Portfolio (offered by a
separate prospectus) are available only to variable annuity and variable life
separate accounts of insurance companies that are unaffiliated with Janus
Capital as well as certain qualified retirement plans. Although the Portfolio
does not currently anticipate any disadvantages to policy owners or plan
participants will develop arising out of the fact that the Portfolio offers its
shares to such entities, there is a possibility that disadvantages could occur
or a material conflict may arise. The Trustees monitor events in order to
identify any anticipated disadvantages or material irreconcilable conflicts that
may arise and to determine what action, if any, should be taken in response to
such conflicts. If a material disadvantage or conflict occurs, the Trustees may
require one or more insurance company separate accounts or plans to withdraw its
investments in the Portfolio or substitute shares of another Portfolio. If this
occurs, the Portfolio may be forced to sell securities at disadvantageous
prices. In addition, the Trustees may refuse to sell shares of the Portfolio to
any separate account or qualified plans or may suspend or terminate the offering
of shares of the Portfolio if such action is required by law or regulatory
authority or is in the best interests of the shareholders of the Portfolio.
Master/Feeder Option
The Trust may in the future seek to achieve the Portfolio's investment objective
by investing all of the Portfolio's assets in another investment company having
the same investment objective and substantially the same investment policies and
restrictions as those applicable to the Portfolio. It is expected that any such
investment company would be managed by Janus Capital in substantially the same
manner as the Portfolio. The shareholders of the Trust of record on April 30,
1992, and the initial shareholder(s) of the Portfolio, have voted to vest
authority to use this investment structure in the sole discretion of the
Trustees. No further approval of the shareholders of the Portfolio 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 the 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 Portfolio believes that 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 net asset value ("NAV") of the Shares of the Portfolio is determined at the
close of the regular trading session of the New York Stock Exchange (the "NYSE")
(normally 4:00 p.m., New York time) each day that the NYSE 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. Short-term instruments
maturing within 60 days are valued at amortized cost, which approximates market
value.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 8
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Distributions and Taxes
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DISTRIBUTIONS
To avoid taxation of the Portfolio, the Internal Revenue Code requires the
Portfolio to distribute net income and any net gains realized by its investments
annually. Income from dividends and interest and any net realized short-term
capital gains are paid to shareholders as ordinary income dividends. Net
realized long-term gains, if any, are paid to shareholders as capital gains
distributions. Each class of the 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 the Shares of the Portfolio will be
automatically reinvested into additional Shares of the Portfolio.
How Distributions Affect the Portfolio's NAV
Distributions are paid to shareholders as of the record date of the distribution
of the Portfolio, regardless of how long the Shares have been held. Dividends
and capital gains awaiting distribution are included in the daily NAV of the
Portfolio's Shares. The Share price drops by the amount of the distribution, net
of any subsequent market fluctuations. As an example, assume that on December
31, the Shares of the Portfolio declared a dividend in the amount of $0.25 per
share. If the price of the Portfolio's Shares was $10.00 on December 30, the
Share price on December 31 would be $9.75, barring market fluctuations.
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TAXES
Taxes on Distributions
Because Shares of the Portfolio may be purchased only through qualified plans,
it is anticipated that any income dividends or capital gains distributions made
by the Shares of the Portfolio will be exempt from current taxation if left to
accumulate within the qualified plan. Generally, withdrawals from qualified
plans may be subject to ordinary income tax and, if made before age 591/2, a 10%
penalty tax. The tax status of your investment in the Shares depends on the
features of your qualified plan. For further information, contact your plan
sponsor.
Taxation of the Portfolio
Dividends, interest and some capital gains received by the Portfolio on foreign
securities may give rise to withholding and other taxes imposed by foreign
countries. It is expected that foreign taxes paid by the Portfolio will be
treated as expenses of the Portfolio. Tax conventions between certain countries
and the United States may reduce or eliminate such taxes.
The Portfolio does not expect to pay any federal income or excise taxes because
it intends to meet certain requirements of the Internal Revenue Code. In
addition, because a class of shares of the Portfolio is sold in connection with
variable annuity contracts and variable life insurance contracts, the 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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Performance Terms
This section will help you understand various terms that are commonly used to
describe the Portfolio's performance. You may see references to these terms in
our newsletters, advertisements (or those published by participating insurance
companies) and in media articles. Newsletters and advertisements may include
comparisons of the Portfolio's performance to the performance of other mutual
funds, mutual fund averages or recognized stock market indices. The Portfolio
generally measures performance in terms of total return.
Cumulative total return represents the actual rate of return on an investment
for a specified period. Cumulative total return is generally quoted for more
than one year (e.g., the life of the 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 the Portfolio's return and are
not the same as actual annual results.
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 GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 9
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Shareholder's Guide
INVESTORS MAY NOT PURCHASE OR REDEEM SHARES OF THE PORTFOLIO DIRECTLY. SHARES
MAY BE PURCHASED OR REDEEMED ONLY THROUGH QUALIFIED RETIREMENT PLANS. REFER TO
YOUR PLAN DOCUMENTS FOR INSTRUCTIONS ON HOW TO SELECT THE PORTFOLIO AS AN
INVESTMENT OPTION FOR A QUALIFIED PLAN.
PURCHASES
Purchases of Shares may be made only by qualified plans. Refer to your plan
documents for information on how to invest in the Shares of the Portfolio.
All investments in the Portfolio are credited to a qualified plan immediately
upon acceptance of the investment by the Portfolio. Investments will be
processed at the NAV next calculated after an order is received and accepted by
the Portfolio.
The Portfolio reserves the right to reject any specific purchase order. Purchase
orders may be refused if, in Janus Capital's opinion, they are of the size that
would disrupt the management of the Portfolio. The Portfolio may discontinue
sales of its shares if management believes that a substantial further increase
may adversely affect the Portfolio's ability to achieve its investment
objective. In such event, however, it is anticipated that existing plan
participants invested in the Portfolio would be permitted to continue to
authorize investment in the Portfolio and to reinvest any dividends or capital
gains distribution. The Portfolio may discontinue sales to a qualified plan and
require plan participants with existing investments in the Shares to redeem
those investments if the plan loses (or in the opinion of Janus Capital is at
risk of losing) its qualified plan status under the Internal Revenue Code.
REDEMPTIONS
Redemptions, like purchases, may be effected only through qualified plans.
Please refer to the appropriate plan documents for details.
Shares of the 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 qualified plan the business day following receipt of the redemption order,
but in no event later than seven days after receipt of such order.
SHAREHOLDER COMMUNICATIONS
Shareholders will receive annual and semiannual reports including the financial
statements of the Shares of the Portfolio. Each report will show the investments
owned by the Portfolio and market values thereof, as well as other information
about the Portfolio and its operations. The Trust's fiscal year ends December
31.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 10
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Appendix A
GLOSSARY OF INVESTMENT TERMS
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Portfolio may invest. The
Portfolio may invest in these instruments to the extent permitted by its
investment objective and policies. The Portfolio is not limited by this
discussion and may invest in any other types of instruments not precluded by the
policies discussed elsewhere in this Prospectus. Please refer to the SAI for a
more detailed discussion of certain instruments.
I. EQUITY AND DEBT SECURITIES
Bonds are debt securities issued by a company, municipality, government 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. For example, the Portfolio may purchase commercial
paper issued under Section 4(2) of the Securities Act of 1933.
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 specified rate of return. The
term generally includes short- and long-term government, corporate and municipal
obligations that pay a specified 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 securities 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 a 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, the 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 any foreign corporations which
generate certain amounts of passive income or hold certain amounts of assets for
the production of passive income. Passive income includes dividends, interest,
royalties, rents and annuities. Income tax regulations may require the Portfolio
to recognize income associated with the PFIC prior to the actual receipt of any
such income.
Pay-in-kind bonds are debt securities that normally give the issuer an option to
pay cash at a coupon payment date or give the holder of the security a similar
bond with the same coupon rate and a face value equal to the amount of the
coupon payment that would have been made.
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 the Portfolio and a
simultaneous agreement by the seller (generally 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, the 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 the 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 will be used primarily to provide cash to satisfy unusually high
redemption requests, or for other temporary or emergency purposes.
Rule 144A securities are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
Standby commitments are obligations purchased by the Portfolio from a dealer
that give the Portfolio the option to sell a security to the dealer at a
specified price.
Step coupon bonds are debt securities that trade at a discount from their face
value and pay coupon interest. The discount
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 11
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from the face value depends on the time remaining until cash payments begin,
prevailing interest rates, liquidity of the security and the perceived credit
quality of the issuer.
Strip bonds 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.
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 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.
Variable and floating rate securities have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. The floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
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 at some time in the future -
i.e., beyond normal settlement. The Portfolio does not earn interest on such
securities until settlement and bears the risk of market value fluctuations
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 discount from face value. The discount
approximates the total amount of interest the security will accrue from the date
of issuance to maturity. 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
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 Portfolio may enter into forward currency contracts to hedge against
declines in the value of securities denominated in, or whose value is tied to, a
currency other than the U.S. dollar or to reduce the impact of currency
appreciation on purchases of such securities. The Portfolio may also enter into
forward contracts to purchase or sell securities or other financial indices.
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 Portfolio 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. The Portfolio
may also buy options on futures contracts. 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, commodity prices 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. The Portfolio bears the market risk of
an investment in the underlying instruments, as well as the credit risk of the
issuer.
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).
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 Portfolio may purchase and write put and call options on securities,
securities indices and foreign currencies.
JANUS ASPEN SERIES GROWTH AND INCOME PORTFOLIO PROSPECTUS - RETIREMENT SHARES 12
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100 Fillmore Street
Denver, Colorado 80206-4928
(800) 525-3713
[Logo] JANUS Shares distributed by Janus Distributors, Inc.
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