Janus Aspen Series
1997
Annual Report
[Logo] JANUS
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TABLE OF CONTENTS
JANUS ASPEN SERIES
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Portfolio Managers' Commentary and Schedules of Investments
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Growth Portfolio 12
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Aggressive Growth Portfolio 16
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Capital Appreciation Portfolio 20
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International Growth Portfolio 23
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Worldwide Growth Portfolio 29
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Balanced Portfolio 35
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Equity Income Portfolio 39
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Flexible Income Portfolio 42
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High-Yield Portfolio 46
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Short-Term Bond Portfolio 50
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Money Market Portfolio 52
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Notes to Schedules of Investments 53
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Statements of Assets and Liabilities 54
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Statements of Operations 54
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Statements of Changes in Net Assets 56
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Financial Highlights 58
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Notes to Financial Statements 61
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Report of Independent Accountants 65
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<PAGE>
JANUS ASPEN GROWTH PORTFOLIO Portfolio Manager, James P. Craig
Market Review
For the first six months, only the very largest, most liquid stocks drove
performance in the equity market. In fact, during the first quarter, the 100
largest stocks in the S&P 500 Index accounted for approximately 86% of the
Index's gains. As economic growth and inflation concerns moderated at mid-year,
investors rediscovered small and midsize stocks. Many larger stocks, which had
become overvalued, lost ground.
Most stocks, however, were impacted in the fourth quarter by a financial crisis
in Southeast Asia. Globally, the market discounted a wide variety of stocks,
especially technology issues, in anticipation of how the Asia debacle might
affect their future earnings. As a result, there was a rise in demand for the
companies that are better insulated from the situation in the Far East.
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Portfolio Profile December 31, 1997 December 31, 1996
Equities 91.3% 80.3%
Foreign 9.4% 14.4%
Europe 9.4% 12.0%
Top 10 Equities 27.1% 21.5%
Number of Stocks 80 124
Cash & Cash Equivalents 8.7% 19.7%
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An Updated Portfolio Strategy
I have always believed that a stock was overvalued when its price-earnings (P/E)
ratio was higher than its estimated rate of future earnings growth. I now
realize that this valuation standard no longer applies. Ours is a
liquidity-driven market because equities are the investment of choice for
retirement savings. As a result, we have entered a new era of higher P/Es.
Applying strict valuation rules in the first half caused me to sell positions
too early in some cases and not to invest quickly enough in others. In the
second half, I adjusted my strategy to the new, high-P/E environment, holding
positions a bit longer and buying more aggressively when my favorite stocks
declined.
As a result, I was faced with a much broader array of prospective investments.
Cash levels, which had hovered at 15% to 20% of assets, fell. Longer term, this
more flexible strategy will help to reduce portfolio turnover as well.
What did not change was my faith in earnings as the predictor of prices. The
Portfolio remains a mix of companies with consistent earnings patterns and
long-term potential to exceed analysts' earnings estimates.
Stock Highlights
I made a number of major adjustments to the Portfolio over the year, in
particular, reducing financial stocks. In their place, I purchased stocks of
market-dominating technology and cable companies with strong management teams.
Among the better-known names are Cisco Systems, a preemi-nent manufacturer of
networking equipment; Texas Instruments, a leading producer of semiconductors;
Microsoft, the dominant player in personal computer software; and
Tele-Communi-cations, Inc., a nationwide cable operator. Less well-known but
just as promising are Cadence Design Systems, maker of
semiconductor-manufacturing software, and Maxim Integrated Products, a
high-value-added niche supplier of analog semiconductors.
A new position in the energy sector was Schlumberger, Ltd. Although oil and
natural gas prices declined in 1997, production volumes continued to grow
rapidly, fostering strong demand for the company's drilling rigs and other
equipment and services.
Finally, we maintained our investment in pharmaceuticals because, in our view,
they still have excellent long-term potential. An aging population in the U.S.
and the opening of new markets worldwide can only add up to increased demand.
Eli Lilly and Pfizer both made strong contributions.
One pharmaceutical stock that has not yet lived up to expectations is
Warner-Lambert, which enjoyed a terrific year following the introduction of two
newly approved drugs. Both achieved almost unprecedented early acceptance and
sales. Toward year-end, however, Rezulin, a treatment for diabetes, suffered a
setback when the FDA mandated additional tests as a result of liver toxicity
issues. The downturn seems to have been temporary with the drug's benefits
appearing to outweigh the negatives. The stock bounced back in early 1998 as
sales improved. While this drug may not reach our original expectations, it
still has substantial potential.
Although the majority of the Portfolio posted gains, there were a few
disappointments. We bought Pioneer Natural Resources, created from the merger of
Parker Parsley and Mesa Petroleum, on the belief that it would increase oil and
natural gas production. Ultimately, production volumes and reserve levels failed
to reach projections, and we trimmed our position. Because current valuations
have already taken the lower production forecast into account, we are holding
the remaining position.
The Outlook
As we enter 1998, I believe it is more important than ever to invest in
businesses with solid earnings records and earnings growth potential. In light
of the recent declines in world markets, it will be difficult for some companies
to meet analysts' estimates, and I look for considerable short-term volatility.
However, companies that can successfully hit earnings targets are likely to
attract a large share of investors' interest.
I am confident that the stocks in the Portfolio have excellent potential; they
appear to be fundamentally sound investments with very predictable earnings. We
feel they should benefit from investors' continuing enthusiasm for stocks in
general, as well as the current low-interest-rate, low-inflation environment.
Thank you for your continued investment in Janus Aspen Growth Portfolio.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
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JANUS ASPEN GROWTH PORTFOLIO Portfolio Manager, James P. Craig
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Average Annual Total Return(1)
For the Periods Ended December 31, 1997
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Institutional Shares (Inception Date 9/13/93)
1 Year 22.75%
From Inception 17.71%
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S&P 500 Index
1 Year 33.35%
From Inception Date
of Institutional Shares 21.77%
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Retirement Shares (Inception Date 5/1/97)
1 Year --
From Inception 17.22%
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Note: Performance of the Retirement Shares is lower from the performance shown
on this graph for the Institutional Shares, based upon the higher fees
paid by shareholders investing in this class.
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Performance Overview(1) Source - Lipper Analytical Services, Inc. 1997.
GRAPHIC
A graphic comparison of the change in value of a hypothetical 10,000 investment
in Janus Aspen Growth Portfolio - Institutional Shares and the S&P 500 Index.
Janus Aspen Growth Portfolio - Institutional Shares is represented by a solid
black line. The S&P 500 Index is represented by a dashed black line. The "y"
axis reflects the value of the investment. The "x" axis reflects the computation
periods from inception, September 13, 1993, through December 31, 1997. The upper
right quadrant reflects the ending value of the hypothetical investment in Janus
Aspen Growth Portfolio - Institutional Shares ($20,130) as compared to the S&P
500 Index ($23,286).
(1) All returns reflect reinvested dividends. The Portfolio's securities may
differ significantly from the securities in the Index. Index returns do not
include taxes or dividends and interest payments or operating expenses
necessary to maintain a portfolio consisting of the same securities that
are in the Index. These returns do not reflect the charges and expenses of
any particular insurance product or qualified plan. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor voluntarily waives a
portion of the Portfolio's expenses. Without such waiver, the Portfolio's
total returns for each class would have been lower. Past performance does
not guarantee future results.
JANUS ASPEN GROWTH PORTFOLIO December 31, 1997
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Shares or
Principal Amount Market Value
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Common Stock - 91.3%
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Appliances - 0.2%
20,177 Electrolux A.B. - Class B $ 1,401,186
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Automotive - Truck Parts and Equipment - 1.7%
253,275 Federal-Mogul Corp. 10,257,637
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Beverages - Non-Alcoholic - 0.2%
32,550 Coca-Cola Enterprises, Inc. 1,157,559
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Cable Television - 5.5%
450,975 Comcast Corp. - Special Class A 14,233,898
699,245 Tele-Communications, Inc. - Class A* 19,535,157
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33,769,055
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Chemicals - Diversified - 5.2%
39,825 Cytec Industries, Inc.* 1,869,286
141,200 E.I. du Pont de Nemours and Co. 8,480,825
50,000 Imperial Chemical Industries PLC (ADR) 3,246,875
354,075 Monsanto Co. 14,871,150
128,210 Solutia, Inc. 3,421,604
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31,889,740
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Circuits - 3.2%
150,000 Analog Devices, Inc.* 4,153,125
100,700 Linear Technology Corp. 5,802,837
271,700 Maxim Integrated Products, Inc.* 9,373,650
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19,329,612
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Commercial Banks - 1.4%
9,475 First Empire State Corp. 4,405,875
19,275 Northern Trust Corp. 1,344,431
54,550 Star Banc Corp. 3,129,806
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8,880,112
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Computer Services - 0.6%
96,200 Gartner Group, Inc. - Class A* 3,583,450
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Computer Software - 7.3%
497,050 Cadence Design Systems, Inc.* $ 12,177,725
133,425 Microsoft Corp.* 17,245,181
311,300 Parametric Technology Co.* 14,747,838
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44,170,744
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Computers - Micro - 0.7%
53,000 Dell Computer Corp.* 4,452,000
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Containers - Paper and Plastic - 0.3%
31,575 Sealed Air Corp.* 1,949,756
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Cruise Lines - 1.2%
77,025 Carnival Corp. - Class A 4,265,260
60,375 Royal Caribbean Cruises, Ltd. 3,218,742
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7,484,002
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Data Processing and Management - 0.7%
83,775 Applied Graphics Technologies, Inc.* 4,461,019
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Diversified Financial Services - 0.8%
69,425 Associates First Capital Corp. - Class A 4,937,853
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Diversified Operations - 8.8%
573,550 CBS Corp. 16,883,878
111,100 General Electric Co. 8,151,962
105,775 Minnesota Mining and Manufacturing Co. 8,680,161
283,890 Siebe PLC** 5,581,996
140,000 Tyco International, Ltd. 6,308,750
123,700 Unilever N.V. - N.Y. Shares 7,723,519
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53,330,266
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Electronic Components - 0.9%
90,078 Philips Electronics N.V.** 5,403,186
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Electronic Components - Semiconductors - 2.7%
75,000 Intel Corp. 5,268,750
244,950 Texas Instruments, Inc. 11,022,750
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16,291,500
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See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
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JANUS ASPEN GROWTH PORTFOLIO December 31, 1997
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Shares or
Principal Amount Market Value
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Electronic Safety Devices - 0.4%
30,675 Pittway Corp. - Class A $ 2,135,747
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Fiber Optics - 0.5%
52,050 CIENA Corp.* 3,181,556
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Finance - Consumer Loans - 0.8%
25,650 Household International, Inc. 3,271,978
11,100 SLM Holding Corp. 1,544,288
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4,816,266
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Finance - Investment Bankers/Brokers - 3.0%
298,087 Charles Schwab Corp. 12,501,024
100,000 Morgan Stanley, Dean Witter, Discover and Co. 5,912,500
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18,413,524
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Food - Wholesale - 0.6%
98,725 J.P. Foodservice, Inc.* 3,646,655
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Human Resources - 0.7%
101,950 Robert Half International, Inc.* 4,078,000
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Instruments - Scientific - 1.1%
134,225 Dionex Corp.* 6,744,806
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Internet Software - 0.7%
45,100 America Online, Inc.* 4,022,356
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Life and Health Insurance - 2.0%
4,250 Schweizerishe Lebensversicherungs-und
Rentenanstalt 3,342,187
166,500 UNUM Corp. 9,053,437
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12,395,624
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Medical - Drugs - 8.4%
66,825 Bristol-Myers Squibb Co. 6,323,316
96,100 Eli Lilly and Co. 6,690,962
55,762 Glaxo Wellcome PLC** 1,331,745
150,150 Pfizer, Inc. 11,195,559
114,825 Schering-Plough Corp. 7,133,503
592,000 SmithKline Beecham PLC** 6,112,332
98,200 Warner-Lambert Co. 12,176,800
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50,964,217
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Medical - Wholesale Drug Distributors - 0.9%
68,875 Cardinal Health, Inc. 5,174,234
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Money Center Banks - 4.8%
208,525 Bank of New York Co., Inc. 12,055,352
82,700 BankAmerica Corp. 6,037,100
305,027 Barclays PLC** 8,134,606
220,256 Lloyds TSB Group PLC** 2,870,498
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29,097,556
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Multimedia - 2.2%
117,650 Meredith Corp. 4,198,634
90,000 Time Warner, Inc. 5,580,000
40,000 Walt Disney Co. (The) 3,962,500
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13,741,134
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Networking Products - 3.3%
363,225 Cisco Systems, Inc.* 20,249,794
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Oil - Field Services - 1.9%
222,075 Halliburton Co. 11,534,020
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Oil and Gas Drilling - 3.3%
120,000 Diamond Offshore Drilling, Inc. 5,775,000
171,400 Santa Fe International Corp. 6,973,837
150,000 Transocean Offshore, Inc. 7,228,125
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19,976,962
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Oil Companies - Exploration and Production - 2.2%
198,900 Burlington Resources, Inc. $ 8,913,206
146,950 Pioneer Natural Resources Co. 4,252,366
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13,165,572
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Oil Companies - Integrated - 0.6%
64,500 Royal Dutch Petroleum Co. - N.Y. Shares 3,495,094
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Oil Field Machinery and Equipment - 5.2%
279,500 Schlumberger, Ltd. 22,499,750
145,000 Smith International, Inc.* 8,899,375
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31,399,125
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Pharmacy Services - 0.8%
162,750 Omnicare, Inc. 5,045,250
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Publishing - Books - 2.0%
158,900 Elsevier N.V.** 2,570,960
72,032 Wolters Kluwer N.V.** 9,305,904
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11,876,864
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Retail - Consumer Electronics - 0.5%
100,000 CompUSA, Inc.* 3,100,000
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Retail - Discount - 0.9%
140,000 Wal-Mart Stores, Inc. 5,521,250
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Retail - Hypermarkets - 1.2%
169,625 Costco Companies, Inc.* 7,569,516
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Retail - Major Department Stores - 1.3%
116,675 Dayton Hudson Corp. 7,875,563
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Television - 0.6%
50,725 Univision Communications, Inc.* 3,541,239
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Total Common Stock (cost $480,955,544) 555,510,601
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U.S. Government Agencies - 9.0%
$25,000,000 Fannie Mae
5.56%, 3/30/98 24,666,498
29,900,000 Freddie Mac
6.00%, 1/2/98 29,895,017
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Total U.S. Government Agencies (amortized cost $54,555,239) 54,561,515
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Total Investments (total cost $535,510,783) - 100.3% 610,072,116
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Liabilities, net of Cash, Receivables and Other Assets - (0.3%) (1,779,062)
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Net Assets - 100% $608,293,054
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See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN GROWTH PORTFOLIO December 31, 1997
Summary of Investments by Country
December 31, 1997
Country % of Investment Securities Market Value
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Netherlands 4.1% $ 25,003,569
Sweden 0.2% 1,401,186
Switzerland 0.5% 3,342,186
United Kingdom 4.5% 27,278,052
United States++ 90.7% 553,047,123
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Total 100.0% $610,072,116
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++ Includes Short-Term Securities (81.7% excluding Short-Term Securities)
Forward Currency Contracts
Open at December 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
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British Pound 2/11/98 120,000 $ 197,472 $ 1,932
British Pound 2/18/98 245,000 403,025 10,299
Dutch Guilder 3/5/98 23,000,000 11,397,988 (148,294)
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Total $11,998,485 ($ 136,063)
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See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
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JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Portfolio Manager, James P. Goff
Market Review
The past year was a difficult period for small and mid-cap stocks and, until the
most recent quarter, I had been extremely dissatisfied with our results. Smaller
stocks underperformed during the first half of the year because investors
focused on owning the largest, most liquid stocks. After May, investor interest
broadened, and small and midsize stocks bounced back. As a result, we regained
some lost ground in the final quarter even as monetary problems in Asia spilled
over to affect the U.S. equity market. Despite our best efforts, we could not
keep up with the Portfolio's benchmark, the S&P MidCap 400, primarily because we
were underweighted in the two sectors that drove the market higher: energy and
technology.
Portfolio Strategy
First and foremost, I look for "all-weather" performers, companies I believe can
consistently deliver rapid earnings growth and can do so in any economic
environment. That's why I generally underweight certain areas, such as
technology and energy stocks, which tend to be more cyclical in nature. However,
toward the end of the year I took advantage of market dips to add several
positions in the technology sector that meet our criteria for growth and
predictability. While our technology holdings now account for nearly 8% of the
Portfolio, it is still significantly less than the 25% technology weighting in
the Index.
In spite of terrific earnings gains for the majority of our individual holdings,
the sectors most widely represented in the Portfolio - restaurants, retail and
wireless communications did not appreciate at anything near the rate of the
top-performing sectors of our benchmark. On average, our top 20 positions
delivered earnings growth in excess of 35%, but the market simply hasn't taken
notice.
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Portfolio Profile December 31, 1997 December 31, 1996
Equities 97.0% 94.4%
Foreign 13.6% 14.7%
Number of Stocks 68 59
Top 10 Equities 41.5% 45.8%
Cash & Cash Equivalents 3.0% 5.6%
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Stock Highlights
We've had a number of standouts, including Chancellor Media Corp. and Paychex,
Inc., both up approximately 40%. Another excellent performer was Sofamor Danek,
a leader in surgical implants for the spine. Legal issues surrounding the
company were resolved during the year, and the Food and Drug Administration
recently approved new applications for its products. With global demand on the
increase, Sofamor Danek appears to be headed toward dominance in this field.
Other top holdings - Papa John's, Omnicare and Insignia Financial Group - met or
exceeded earnings estimates, only to have their stock prices decline. Fastenal,
a distributor of nuts and bolts, also proved a disappointment. The company
introduced a variety of new products and dramatically increased its sales force,
although the additional labor costs temporarily slowed earnings. We have trimmed
our holdings slightly but still believe in the company's potential.
We expect that the technology positions added during the year (Cadence Design
Systems, Sipex Corp. and AOL, among others) should perform well going forward.
Cadence, a leader in semiconductor design, has a history of growing earnings
even during down cycles in its industry. Sipex Corp., which is growing at 50% to
100% annually, has pioneered new applications for analog semiconductors used for
backlighting in cellular phones and other purposes. For a small company, it is
extremely well-diversified; no single customer contributes more than 2% of
revenues. America Online, Inc., the dominant franchise in on-line services, now
has more than 10 million subscribers who typically tap into its content
approximately 20 hours each month.
The Outlook
Looking ahead, the strength of corporate earnings is the overriding wild card
for equities. Estimates vary, but many experts predict that the S&P 500 Index's
earnings will increase by only 5% next year versus the recent five-year average
of 20%. We've already begun to see a contraction in earnings stemming in part
from the economic slowdown and declining currencies in the Far East, and this
trend could, in all likelihood, persist.
In a less robust economic environment, companies that can continue to deliver
earnings well in excess of expectations should be awarded a premium. The key
will be owning stocks that can deliver excellent growth when earnings come under
pressure. I believe this plays to our strengths because many of our companies
have exceeded earnings estimates for some time now, and I'm confident they will
continue to do so. With a boost from the recent rally in bonds and a market now
compelled to selectively look for earnings growth, I believe our companies will
be rewarded going forward.
Thank you for your continued investment in Janus Aspen Aggressive Growth
Portfolio.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Portfolio Manager, James P. Goff
- --------------------------------------------------------------------------------
Average Annual Total Return(1)
For the Periods Ended December 31, 1997
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year 12.66%
From Inception 19.26%
- --------------------------------------------------------------------------------
S&P MidCap 400 Index
1 Year 32.25%
From Inception Date
of Institutional Shares 18.01%
- --------------------------------------------------------------------------------
Retirement Shares (Inception Date 5/1/97)
1 Year --
From Inception 27.11%
- --------------------------------------------------------------------------------
Note: Performance of the Retirement Shares is lower from the performance shown
on this graph for the Institutional Shares, based upon the higher fees
paid by shareholders investing in this class.
- --------------------------------------------------------------------------------
Performance Overview(1) Source - Lipper Analytical Services, Inc. 1997.
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Aggressive Growth Portfolio - Institutional Shares and the S&P
MidCap 400 Index. Janus Aspen Aggressive Growth Portfolio - Institutional Shares
is represented by a solid black line. The S&P MidCap 400 Index is represented by
a dashed black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, September 13, 1993,
through December 31, 1997. The upper right quadrant reflects the ending value of
the hypothetical investment in Janus Aspen Aggressive Growth Portfolio -
Institutional Shares ($21,292) as compared to the S&P MidCap 400 Index
($20,357).
(1) All returns reflect reinvested dividends. The Portfolio's securities may
differ significantly from the securities in the Index. Index returns do
not include taxes or dividends and interest payments or operating expenses
necessary to maintain a portfolio consisting of the same securities that
are in the Index. These returns do not reflect the charges and expenses of
any particular insurance product or qualified plan. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor voluntarily waives a
portion of the Portfolio's expenses. Without such waiver, the Portfolio's
total returns for each class would have been lower. Past performance does
not guarantee future results.
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 96.7%
- --------------------------------------------------------------------------------
Advertising Sales - 1.2%
160,512 Outdoor Systems, Inc.* $ 6,159,648
- --------------------------------------------------------------------------------
Advertising Services - 0.4%
49,275 Snyder Communications, Inc.* 1,798,538
- --------------------------------------------------------------------------------
Aerospace and Defense - 0.7%
124,650 OEA, Inc. 3,607,059
- --------------------------------------------------------------------------------
Airlines - 0.9%
172,050 Ryanair Holdings PLC (ADR)* 4,322,756
- --------------------------------------------------------------------------------
Cellular Telecommunications - 1.6%
791,246 PriCellular Corp. - Class A* 8,258,630
- --------------------------------------------------------------------------------
Circuit Boards - 0.4%
30,450 Sanmina Corp.* 2,062,988
- --------------------------------------------------------------------------------
Circuits - 4.0%
283,550 Maxim Integrated Products, Inc.* 9,782,475
256,850 SIPEX Corp.* 7,769,712
70,175 Vitesse Semiconductor Corp.* 2,649,106
- --------------------------------------------------------------------------------
20,201,293
- --------------------------------------------------------------------------------
Commercial Banks - 2.5%
7,750 First Empire State Corp. 3,603,750
44,250 Northern Trust Corp. 3,086,437
72,900 Regions Financial Corp. 3,075,468
49,125 Star Banc Corp. 2,818,547
- --------------------------------------------------------------------------------
12,584,202
- --------------------------------------------------------------------------------
Commercial Services - 6.2%
564,137 Paychex, Inc. 28,559,435
158,550 Profit Recovery Group International, Inc.* 2,814,263
- --------------------------------------------------------------------------------
31,373,698
- --------------------------------------------------------------------------------
Computer Services - 1.5%
1,266,049 Capita Group PLC** 7,728,513
- --------------------------------------------------------------------------------
Computer Software - 2.5%
512,225 Cadence Design Systems, Inc.* $ 12,549,513
- --------------------------------------------------------------------------------
Containers - Paper and Plastic - 1.5%
120,525 Sealed Air Corp.* 7,442,419
- --------------------------------------------------------------------------------
Cruise Lines - 2.0%
193,250 Royal Caribbean Cruises, Ltd. 10,302,641
- --------------------------------------------------------------------------------
Diversified Financial Services - 0.4%
125,175 American Capital Strategies, Ltd. 2,268,797
- --------------------------------------------------------------------------------
Electric - Generation - 3.1%
341,575 AES Corp.* 15,925,934
- --------------------------------------------------------------------------------
Electric Products - 1.6%
327,600 Littelfuse, Inc.* 8,149,050
- --------------------------------------------------------------------------------
Electronic Connectors - 1.3%
283,575 Berg Electronics Corp.* 6,451,331
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 2.4%
292,425 Charles Schwab Corp. 12,263,574
- --------------------------------------------------------------------------------
Finance - Mortgage Loan Banker - 0.8%
179,900 Capital Trust - Class A* 2,023,875
35,825 Federal Agricultural Mortgage Corp. - Class C* 2,185,325
- --------------------------------------------------------------------------------
4,209,200
- --------------------------------------------------------------------------------
Finance - Other Services - 1.4%
61,600 HealthCare Financial Partners, Inc.* 2,186,800
216,825 Medallion Financial Corp. 4,770,150
- --------------------------------------------------------------------------------
6,956,950
- --------------------------------------------------------------------------------
Food - Retail - 0.3%
23,000 Quality Food Centers, Inc.* 1,541,000
- --------------------------------------------------------------------------------
Food - Wholesale - 1.2%
163,775 J.P. Foodservice, Inc.* 6,049,439
- --------------------------------------------------------------------------------
Golf - 0.7%
113,075 Family Golf Centers, Inc.* 3,547,728
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Health Care Cost - 1.8%
148,900 AmeriPath, Inc.* $ 2,531,300
157,400 Pediatrix Medical Group, Inc.* 6,728,850
- --------------------------------------------------------------------------------
9,260,150
- --------------------------------------------------------------------------------
Human Resources - 0.3%
40,225 Robert Half International, Inc.* 1,609,000
- --------------------------------------------------------------------------------
Independent Power Producer - 1.0%
260,200 Trigen Energy Corp. 5,187,737
- --------------------------------------------------------------------------------
Internet Software - 1.0%
57,400 America Online, Inc.* 5,119,363
- --------------------------------------------------------------------------------
Investment Management and Advisory Services - 1.3%
769,778 Amvescap PLC** 6,596,035
- --------------------------------------------------------------------------------
Life and Health Insurance - 1.2%
54,350 Protective Life Corp. 3,247,412
75,725 UICI* 2,640,910
- --------------------------------------------------------------------------------
5,888,322
- --------------------------------------------------------------------------------
Medical Instruments - 1.2%
96,275 Sofamor Danek Group, Inc.* 6,263,892
- --------------------------------------------------------------------------------
Oil - Field Services - 0.2%
44,250 Hanover Compressor Co.* 904,359
- --------------------------------------------------------------------------------
Pharmacy Services - 5.7%
933,025 Omnicare, Inc. 28,923,775
- --------------------------------------------------------------------------------
Property and Casualty Insurance - 1.6%
68,975 Progressive Corp. 8,268,378
- --------------------------------------------------------------------------------
Radio - 8.3%
143,275 Chancellor Media Corp.* 10,691,896
249,500 Clear Channel Communications, Inc.* 19,819,656
250,000 Heftel Broadcasting Corp.* 11,687,500
- --------------------------------------------------------------------------------
42,199,052
- --------------------------------------------------------------------------------
Real Estate Investment and Management - 3.1%
477,600 Insignia Financial Group, Inc. - Class A* 10,984,800
150,650 Security Capital Group, Inc. - Class B* 4,896,126
- --------------------------------------------------------------------------------
15,880,926
- --------------------------------------------------------------------------------
Real Estate Investment Trusts - 0.6%
66,800 Vornado Realty Trust 3,135,425
- --------------------------------------------------------------------------------
Rental - Auto Equipment - 1.3%
169,225 Coinmach Laundry Corp.* 4,146,012
108,550 Rental Service Corp.* 2,666,259
- --------------------------------------------------------------------------------
6,812,271
- --------------------------------------------------------------------------------
Resorts and Theme Parks - 0.7%
83,575 Premier Parks, Inc.* 3,384,788
- --------------------------------------------------------------------------------
Retail - Auto Parts - 0.5%
90,525 O'Reilly Automotive, Inc.* 2,376,282
- --------------------------------------------------------------------------------
Retail - Building Products - 3.8%
498,725 Fastenal Co. 19,076,232
- --------------------------------------------------------------------------------
Retail - Catalog Shopping - 2.1%
348,775 Barnett, Inc.* 7,673,050
70,575 MSC Industrial Direct Co., Inc. - Class A* 2,990,616
- --------------------------------------------------------------------------------
10,663,666
- --------------------------------------------------------------------------------
Retail - Consumer Electronics - 0.8%
132,250 CompUSA, Inc.* 4,099,750
- --------------------------------------------------------------------------------
Retail - Pet Food and Supplies - 2.7%
575,820 Petco Animal Supplies, Inc.* 13,819,680
- --------------------------------------------------------------------------------
Retail - Pubs - 5.1%
4,746,992 Wetherspoon (J.D.) PLC** 25,775,312
- --------------------------------------------------------------------------------
Retail - Regional Department Stores - 0.4%
61,070 Fred Meyer, Inc.* 2,221,421
- --------------------------------------------------------------------------------
Retail - Restaurants - 7.1%
329,505 Papa John's International, Inc.* $ 11,491,486
1,994,581 PizzaExpress PLC** 24,482,851
- --------------------------------------------------------------------------------
35,974,337
- --------------------------------------------------------------------------------
Schools - 4.0%
416,675 Apollo Group, Inc. - Class A* 19,687,894
28,175 DeVry, Inc.* 898,078
- --------------------------------------------------------------------------------
20,585,972
- --------------------------------------------------------------------------------
Television - 1.4%
100,350 Univision Communications, Inc.* 7,005,684
- --------------------------------------------------------------------------------
Theaters - 0.6%
109,275 Regal Cinemas, Inc.* 3,046,041
- --------------------------------------------------------------------------------
Water Treatment Services - 0.3%
33,800 Culligan Water Technologies, Inc.* 1,698,450
- --------------------------------------------------------------------------------
Total Common Stock (cost $378,617,834) 491,531,201
- --------------------------------------------------------------------------------
Warrants - 0.3%
65,700 Littlefuse, Inc. - exp. 12/31/01*
(cost $677,514) 1,445,400
- --------------------------------------------------------------------------------
U.S. Government Agency - 4.2%
Freddie Mac
$21,300,000 6.00%, 1/2/98 (amortized cost $21,296,450) 21,296,450
- --------------------------------------------------------------------------------
Total Investments (total cost $400,591,798) - 101.2% 514,273,051
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (1.2%) (6,062,157)
- --------------------------------------------------------------------------------
Net Assets - 100% $508,210,894
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO December 31, 1997
Summary of Investments by Country
December 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Ireland 0.8% $ 4,322,691
United Kingdom 12.6% 64,582,710
United States ++ 86.6% 445,367,650
- --------------------------------------------------------------------------------
Total 100.0% $514,273,051
================================================================================
++ Includes Short-Term Securities (82.5% excluding Short-Term Securities)
Forward Currency Contracts
Open at December 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 1/20/98 1,000,000 $ 1,647,400 $ 34,600
British Pound 2/11/98 100,000 164,560 1,610
British Pound 2/25/98 4,015,000 6,602,668 (272,659)
British Pound 2/26/98 5,108,000 8,399,595 (46,739)
British Pound 3/4/98 2,800,000 4,602,920 (131,320)
British Pound 5/6/98 9,600,000 15,733,440 242,115
British Pound 5/11/98 4,500,000 7,373,250 164,250
- --------------------------------------------------------------------------------
Total $44,523,833 ($ 8,143)
================================================================================
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN CAPITAL APPRECIATION PORTFOLIO Portfolio Manager, Scott W. Schoelzel
Market Review
The Portfolio opened in the midst of a market rally sparked by a
best-of-all-worlds scenario: moderate economic growth, low inflation and solid
corporate earnings. Because of high demand from investors seeking quality, many
large stocks were trading at unprecedented levels. Therefore, I was somewhat
judicious in putting capital to work. As it turned out, large stocks took a
breather in late summer as investors (for the first time in many quarters)
favored smaller companies. Whenever possible, I used the temporary downturns in
the various sectors of the market to build positions at lower prices.
I continued to use this approach toward year-end, when the monetary crisis that
began in Southeast Asia impacted the U.S. market. The increased volatility left
many indexes substantially below their peaks. This instability, combined with
steady cash inflows during the period, allowed us to add some world-class
companies at more reasonable valuations. We stressed those with little overseas
exposure and/or strong, defensible franchises.
Portfolio Strategy
The Portfolio is fairly focused and employs a "barbell" approach. At one end are
very large, multinational companies with secure global market share and diverse
sources of revenue, such as Microsoft and Pfizer. At the other end is a select
group of faster-growing, small- and medium-capitalization companies like Veritas
Software Corp. and America Online. Even though the short-term risk may be higher
with some of these companies, the wide variety of market capitalizations should
help to mitigate volatility while increasing the Portfolio's long-term potential
for capital appreciation.
Regardless of its size, each company was chosen for its highly dynamic growth
prospects, historical earnings predictability, and competitive position in its
industry. In short, the Portfolio comprises companies that are or soon will be
considered "best of category." The majority belong to industries that should
benefit greatly from fundamental, long-term change in economic and demographic
trends: pharmaceuticals, healthcare, technology, tele-communications and
financial services.
- --------------------------------------------------------------------------------
Portfolio Profile December 31, 1997
Equities 81.0%
Foreign 7.2%
Top 10 Equities 42.4%
Number of Stocks 33
Cash & Cash Equivalents 19.0%
- --------------------------------------------------------------------------------
Stock Highlights
The Portfolio has a substantial weighting in large-capitalization, high-quality
pharmaceutical manufacturers, including Eli Lilly and Pfizer. All have launched
or soon will launch new products with exceptional sales potential. For instance,
Eli Lilly has received approval to introduce Evista, which treats osteoporosis
and can be used for hormone replacement therapy for women.
Among our financial stock holdings were Merrill Lynch, which dominates the
full-service brokerage business at home and abroad and has enormous market share
in international investment banking.
In the technology sector, we owned smaller companies like Dell Computer and
Saville Systems and large concerns like Intel. Despite their fundamental
strengths, nearly all of them were affected by the problems in Asia, which
resulted in a global down-turn for technology. For example, Dell declined
approximately 20%, in spite of reporting record earnings and deriving only 7% of
its sales from the Far East. As I mentioned earlier, we tried to use such
volatility to advantage. We added to our positions in several semiconductor
companies and acquired shares of Cisco Systems, a leading computer networking
company that has limited exposure in Asia.
During the period, I sold Oxford Health Plans, Inc. We had owned Oxford in other
portfolios for a number of years and had experienced outstanding gains. In the
fourth quarter, however, Oxford announced problems in converting its management
information systems that ultimately resulted in a major charge against earnings.
We truly believe we did our homework, but every so often developments like this
can take us by surprise. It's little solace, but much of the investment
community was caught off guard as well.
The Outlook
I remain cautiously optimistic as we head into 1998. The recent volatility in
global markets has certainly been unsettling and may continue to be so for
awhile. Deflation elsewhere in the world and perhaps in the U.S. is a very real
possibility but is not necessarily bad. Interest rates could trend even lower
than their current levels, which would help to support the price of equities.
Going forward, I believe that earnings for the S&P 500 and many other stocks may
well slow down. If I am correct, investors will be willing to pay a sizable
premium for stocks that can deliver high, sustainable earnings growth. I am
confident that the stocks in the Portfolio, especially the technology stocks
that were recently downtrodden, are fundamentally sound investments. Based on
our earnings estimates, I believe they will show gains once the market has
worked its way through this period of adjustment.
Thank you for your continued investment in Janus Aspen Capital Appreciation
Portfolio.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN CAPITAL APPRECIATION PORTFOLIO Portfolio Manager, Scott W. Schoelzel
- --------------------------------------------------------------------------------
Cumulative Total Return(1)
For the Periods Ended December 31, 1997
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/97)
1 Year --
From Inception 26.60%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year --
From Inception Date
of Institutional Shares 22.55%
- --------------------------------------------------------------------------------
Retirement Shares (Inception Date 5/1/97)
1 Year --
From Inception 26.20%
- --------------------------------------------------------------------------------
Note: Performance of the Retirement Shares is lower from the performance shown
on this graph for the Institutional Shares, based upon the higher fees
paid by shareholders investing in this class.
- --------------------------------------------------------------------------------
Performance Overview(1) Source - Lipper Analytical Services, Inc. 1997.
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Capital Appreciation Portfolio - Institutional Shares and the S&P
500 Index. Janus Aspen Capital Appreciation Portfolio - Institutional Shares is
represented by a solid black line. The S&P 500 Index is represented by a dashed
black line. The "y" axis reflects the value of the investment. The "x" axis
reflects the computation periods from inception, May 1, 1997, through December
31, 1997. The upper right quadrant reflects the ending value of the hypothetical
investment in Janus Aspen Capital Appreciation Portfolio - Institutional Shares
($12,660) as compared to the S&P 500 Index ($12,255).
(1) All returns reflect reinvested dividends. The Portfolio's securities may
differ significantly from the securities in the Index. Index returns do
not include taxes or dividends and interest payments or operating expenses
necessary to maintain a portfolio consisting of the same securities that
are in the Index. These returns do not reflect the charges and expenses of
any particular insurance product or qualified plan. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor voluntarily waives a
portion of the Portfolio's expenses. Without such waiver, the Portfolio's
total returns for each class would have been lower. Past performance does
not guarantee future results.
JANUS ASPEN CAPITAL APPRECIATION PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 81.0%
- --------------------------------------------------------------------------------
Computer Software - 5.8%
5,300 Accelr8 Technology Corp.* $ 143,100
1,960 Microsoft Corp.* 253,330
- --------------------------------------------------------------------------------
396,430
- --------------------------------------------------------------------------------
Computers - Integrated Systems - 3.7%
6,100 Saville Systems Ireland PLC (ADR)* 253,150
- --------------------------------------------------------------------------------
Computers - Memory Devices - 6.7%
9,000 VERITAS Software Corp.* 459,000
- --------------------------------------------------------------------------------
Computers - Micro - 0.7%
534 Dell Computer Corp.* 44,856
- --------------------------------------------------------------------------------
Cosmetics and Toiletries - 2.6%
1,000 Gillette Co. 100,437
1,000 Procter & Gamble Co. 79,813
- --------------------------------------------------------------------------------
180,250
- --------------------------------------------------------------------------------
Data Processing and Management - 2.1%
2,450 LHS Group, Inc.* 146,387
- --------------------------------------------------------------------------------
Diversified Operations - 3.0%
5,175 CBS Corp. 152,339
750 General Electric Co. 55,031
- --------------------------------------------------------------------------------
207,370
- --------------------------------------------------------------------------------
Educational Software - 3.5%
2,950 CBT Group PLC (ADR)* 242,269
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 6.1%
2,300 Intel Corp. 161,575
5,600 Texas Instruments, Inc. 252,000
- --------------------------------------------------------------------------------
413,575
- --------------------------------------------------------------------------------
Finance - Credit Card - 1.7%
1,275 American Express Co. 113,794
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 3.8%
1,770 Merrill Lynch & Co., Inc. $ 129,099
2,225 Morgan Stanley, Dean Witter, Discover and Co. 131,553
- --------------------------------------------------------------------------------
260,652
- --------------------------------------------------------------------------------
Internet Content - 2.0%
5,400 At Home Corp.* 135,675
- --------------------------------------------------------------------------------
Internet Software - 5.2%
4,000 America Online, Inc.* 356,750
- --------------------------------------------------------------------------------
Marine Services - 1.3%
6,175 TransCoastal Marine Services, Inc.* 87,994
- --------------------------------------------------------------------------------
Medical - Biomedical and Genetic - 2.1%
3,200 Incyte Pharmaceuticals, Inc.* 144,000
- --------------------------------------------------------------------------------
Medical - Drugs - 8.2%
3,700 Eli Lilly and Co. 257,612
3,034 Pfizer, Inc. 226,223
608 Warner-Lambert Co. 75,392
- --------------------------------------------------------------------------------
559,227
- --------------------------------------------------------------------------------
Money Center Banks - 4.9%
3,710 BankAmerica Corp. 270,830
498 Citicorp 62,966
- --------------------------------------------------------------------------------
333,796
- --------------------------------------------------------------------------------
Multi-Line Insurance - 0.8%
525 American International Group, Inc. 57,094
- --------------------------------------------------------------------------------
Networking Products - 2.1%
2,625 Cisco Systems, Inc.* 146,344
- --------------------------------------------------------------------------------
Oil - Field Services - 2.6%
3,375 Halliburton Co. 175,289
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN CAPITAL APPRECIATION PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Radio - 3.0%
2,675 Chancellor Media Corp.* $ 199,622
- --------------------------------------------------------------------------------
Retail - Building Products - 0.8%
950 Home Depot, Inc. 55,931
- --------------------------------------------------------------------------------
Schools - 2.0%
2,950 Apollo Group, Inc. - Class A* 139,387
- --------------------------------------------------------------------------------
Super-Regional Banks - 4.8%
2,950 U.S. Bancorp 330,216
- --------------------------------------------------------------------------------
Telecommunication Services - 1.5%
1,750 Qwest Communications International, Inc.* 104,125
- --------------------------------------------------------------------------------
Total Common Stock (cost $5,278,008) 5,543,183
- --------------------------------------------------------------------------------
U.S. Government Agency - 20.4%
Freddie Mac
$1,400,000 6.00%, 1/2/98 (amortized cost $1,399,767) 1,399,767
- --------------------------------------------------------------------------------
Total Investments (total cost $6,677,775) - 101.4% 6,942,950
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (1.4%) (96,773)
- --------------------------------------------------------------------------------
Net Assets - 100% $ 6,846,177
- --------------------------------------------------------------------------------
Summary of Investments by Country
December 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Ireland 7.1% $ 495,419
United States++ 92.9% 6,447,531
- --------------------------------------------------------------------------------
Total 100.0% $ 6,942,950
================================================================================
++ Includes Short-Term Securities (72.7% excluding Short-Term Securities)
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO Portfolio Manager, Helen Young Hayes
Market Review
Looking back on the volatility in the foreign markets, especially during the
final quarter of 1997, I am pleased with the Portfolio's results. Though we lost
ground in November and December after the currency crisis in Southeast Asia
expanded to markets worldwide, the impact was mitigated by an overweighting in
Europe and an underweighting in the Far East and Japan. Early on we determined
that Japan's government and industry were not taking the necessary measures to
end the economic malaise there, and prices in the emerging markets of Asia had
become excessive, given the structural problems in many of those countries.
Europe, in contrast, exhibited signs of economic progress. Interest rates fell
during the year, and businesses achieved productivity gains through cost cutting
and consolidations. In addition, unemployment remained sufficiently high and
consumer demand weak enough to keep any inflationary pressures under control.
Among the biggest beneficiaries of this scenario were bank and financial
services stocks.
- --------------------------------------------------------------------------------
Portfolio Profile December 31, 1997 December 31, 1996
Equities 91.6% 70.9%
Foreign 90.1% 70.8%
Number of Stocks 188 181
Top 10 Equities 22.9% 18.3%
Cash & Fixed-Income Securities 8.4% 29.1%
- --------------------------------------------------------------------------------
Portfolio Review
We emphasized a number of themes during the year. As always, our primary goal
was to acquire shares of reasonably priced, classic growth companies. Beyond
that, we stressed owning companies committed to improving shareholder value.
Our research uncovered several good opportunities among Europe's pharmaceutical
and technology industries. Among the best of the pharmaceuticals was Akzo Nobel,
a Dutch enterprise that is redefining its core business (chemicals) and moving
into the rapidly growing life sciences area. Sales of its new antidepressant,
Remeron, should help to boost Akzo Nobel's pharmaceutical business and its
profit margins in the future.
Likewise, we are very optimistic about France's Cap Gemini and Atos, key players
in the growth of information technology infrastructure. Both are benefiting from
Europe's rebounding economies as well as the challenges posed by the Year 2000
issue and a single European currency (the Euro).
Our other technology holdings, in Europe and elsewhere, did not fare so well
after late October, when the turmoil in Asia spread to other markets. For
instance, Philips Electronics, a Netherlands-based manufacturer of
semiconductors and consumer electronics with substantial business in Southeast
Asia, was a major disappointment. We trimmed our position, but opted to keep the
stock because most of the fundamental reasons to own it remain unchanged.
Enhancing shareholder value is a primary goal of management, and Philips is
determined to continue to divest unrelated and underperforming lines of business
in 1998.
Prices of nearly all our technology stocks were impacted by the fear that a
global economic slowdown will hurt the demand for products and services. We
believe instead that demand will continue to grow in both the developed and
developing regions of the world, and we viewed the reduction in prices during
the fourth quarter as a buying opportunity, adding quality, globally competitive
companies like Japan's Sony Corporation.
The Coming Months
Our outlook for the global markets remains generally positive, though we expect
the increased volatility of the past several months to linger a bit longer. With
global interest rates having trended downward since October, Europe should be
able to continue moving in the right direction. On the other hand, we are
cautious in our outlook for Southeast Asia, Korea and Japan. The continuing
slowdown, and its possible impact on China and Brazil, definitely bear watching.
I believe our emphasis on disciplined, thorough research and high-quality growth
stories will serve the Portfolio well in this environment. We will be more
selective, avoiding commodity-type businesses or those that require long periods
to improve earnings and profits, and stressing companies with clear competitive
advantages, strong franchises and high margins.
Thank you for your continued investment in Janus Aspen International Growth
Portfolio.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO Portfolio Manager, Helen Young Hayes
- --------------------------------------------------------------------------------
Average Annual Total Return(1)
For the Periods Ended December 31, 1997
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/2/94)
1 Year 18.51%
From Inception 19.32%
- --------------------------------------------------------------------------------
Morgan Stanley Capital International EAFE Index(2)
1 Year 1.78%
From Inception Date
of Institutional Shares 5.08%
- --------------------------------------------------------------------------------
Retirement Shares (Inception Date 5/1/97)
1 Year --
From Inception 10.53%
- --------------------------------------------------------------------------------
Note: Performance of the Retirement Shares is lower from the performance shown
on this graph for the Institutional Shares, based upon the higher fees
paid by shareholders investing in this class.
- --------------------------------------------------------------------------------
Performance Overview(1) Source - Lipper Analytical Services, Inc. 1997.
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen International Growth Portfolio - Institutional Shares and the
Morgan Stanley Capital International EAFE Index. Janus Aspen International
Growth Portfolio - Institutional Shares is represented by a solid black line.
The Morgan Stanley Capital International EAFE Index is represented by a dashed
black line. The "y" axis reflects the value of the investment. The "x" axis
reflects the computation periods from inception, May 2, 1994, through December
31, 1997. The upper right quadrant reflects the ending value of the hypothetical
investment in Janus Aspen International Growth Portfolio - Institutional Shares
($19,109) as compared to the Morgan Stanley Capital International EAFE Index
($11,991).
(1) All returns reflect reinvested dividends. The Portfolio's securities may
differ significantly from the securities in the Index. Index returns do not
include taxes or dividends and interest payments or operating expenses
necessary to maintain a portfolio consisting of the same securities that
are in the Index. These returns do not reflect the charges and expenses of
any particular insurance product or qualified plan. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor voluntarily waives a
portion of the Portfolio's expenses. Without such waiver, the Portfolio's
total returns for each class would have been lower. Past performance does
not guarantee future results.
(2) Net dividends reinvested are the dividends that remain to be reinvested
after foreign tax obligations have been met. Such obligations vary from
country to country. EAFE stands for Europe, Australasia, and the Far East.
Neither the U.S. market nor the emerging markets of Latin America and
Eastern Europe are represented in EAFE.
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 91.2%
- --------------------------------------------------------------------------------
Airlines - 2.2%
51,517 Deutsche Lufthansa A.G.**,+ $ 988,484
30,442 KLM Royal Dutch Air Lines N.V.** 1,126,243
93 Sairgroup*,** 127,524
17,685 SAS Danmark A/S 258,280
17,577 SAS Norske ASA - Class B 245,576
21,527 SAS Sverige A.B.** 312,011
19,400 Virgin Express Holdings PLC (ADR)* 402,550
- --------------------------------------------------------------------------------
3,460,668
- --------------------------------------------------------------------------------
Airport Development - Maintenance - 0.4%
62,738 Aeroporti di Roma S.p.A.*,+ 648,956
- --------------------------------------------------------------------------------
Appliances - 2.5%
56,933 Electrolux A.B. - Class B** 3,953,699
- --------------------------------------------------------------------------------
Athletic Footwear - 0.3%
3,982 Adidas A.G.** 523,981
- --------------------------------------------------------------------------------
Audio and Video Products - 2.2%
39,200 Sony Corp.** 3,497,279
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 0.8%
44,991 Renault S.A.*,** 1,266,149
2,673 Tata Engineering & Locomotive Co., Ltd. (GDR)+ 21,250
- --------------------------------------------------------------------------------
1,287,399
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 0.1%
13,000 Denso Corp.** 234,962
- --------------------------------------------------------------------------------
Brewery - 0.3%
60,500 Fomento Economico Mexicano, S.A. de C.V. 486,293
- --------------------------------------------------------------------------------
Broadcast Services and Programming - 0.4%
16,225 Grupo Televisa S.A. (GDR)* 627,705
1,031 Modern Times Group MTG A.B.*,** 6,172
- --------------------------------------------------------------------------------
633,877
- --------------------------------------------------------------------------------
Building - Heavy Construction - 0.2%
3,395 Compagnie Fransaise d'Etudes et
de Construction Technip** $ 358,357
- --------------------------------------------------------------------------------
Building and Construction - 0.7%
10,195 Suez Lyonnaise des Eaux** 1,128,661
- --------------------------------------------------------------------------------
Building and Construction Products - 0.1%
11,000 Matsushita Electric Works, Ltd.** 95,600
- --------------------------------------------------------------------------------
Cellular Telecommunications - 0%
1,315 Millicom International Cellular S.A.* 49,477
- --------------------------------------------------------------------------------
Chemicals - Diversified - 2.5%
19,082 Akzo Nobel N.V.**,+ 3,290,735
45,190 Imperial Chemical Industries PLC** 707,122
- --------------------------------------------------------------------------------
3,997,857
- --------------------------------------------------------------------------------
Chemicals - Specialty - 0.1%
122 Clariant A.G.** 102,047
8,083 Victrex PLC** 31,254
- --------------------------------------------------------------------------------
133,301
- --------------------------------------------------------------------------------
Closed-End Funds - 0.1%
163 Romania Investment Fund 155,986
- --------------------------------------------------------------------------------
Commercial Appliances - 1.7%
78,800 Groupe Danone (ADR) 2,817,100
- --------------------------------------------------------------------------------
Commercial Banks - 4.2%
527,362 Banca Commerciale Italiana 1,835,331
6,075 Banco Rio de La Plata S.A. (ADR)* 85,050
16,834 Bankgesellschaft Berlin A.G.** 370,751
17,874 Bayerische Vereinsbank A.G.** 1,170,033
13,211 BG Bank A/S+ 889,453
6,905 Credit Commercial de France** 473,467
64,894 Credito Italiano S.p.A. 200,849
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Commercial Banks - (continued)
18,796 Erste Bank Der Oesterreichischen
Sparkassen A.G.*,**,+ $ 935,280
101,951 Merita PLC - Class A 557,919
5,800 Uniao de Bancos Brasileiros S.A. (GDR)* 186,688
- --------------------------------------------------------------------------------
6,704,821
- --------------------------------------------------------------------------------
Commercial Services - 0.8%
47,393 BTG PLC** 526,368
4,814 Sophus Berendsen A/S - Class B 794,458
- --------------------------------------------------------------------------------
1,320,826
- --------------------------------------------------------------------------------
Computer Services - 3.6%
5,390 Atos S.A.*,** 695,269
11,387 Cap Gemini S.A.** 934,111
141,400 Capita Group PLC** 863,167
7,559 Delphi Group PLC** 84,202
51,562 Getronics N.V.** 1,643,084
76,154 Logica PLC** 1,457,283
3,863 Misys PLC** 116,954
4,060 WM-Data A.B. - Class B** 73,429
- --------------------------------------------------------------------------------
5,867,499
- --------------------------------------------------------------------------------
Computer Software - 2.6%
18,650 Dassault Systemes S.A. (ADR) 575,819
21,192 JBA Holdings PLC** 360,898
6,107 Merkantildata A.S.A. 210,409
35 NTT Data Corp.** 1,892,385
35,984 SEMA Group PLC** 876,280
2,518 TT Tieto Oy - Class B 283,452
- --------------------------------------------------------------------------------
4,199,243
- --------------------------------------------------------------------------------
Computers - Integrated Systems - 0.3%
94 Dimension Data Holdings, Ltd.*,+ 405
21,000 Fujitsu, Ltd.** 226,117
6,126 Prosolvia AB*,** 244,751
- --------------------------------------------------------------------------------
471,273
- --------------------------------------------------------------------------------
Cosmetics and Toiletries - 0.5%
17,442 Rhone-Poulenc - Class A** 781,661
- --------------------------------------------------------------------------------
Diversified Operations - 7.5%
12,419 Amer Group, Ltd. 238,323
9 Barco N.V. 1,652
43,000 Citic Pacific, Ltd. 170,929
740,480 First Pacific Co., Ltd. 358,377
14,400 Grupo Carso S.A. de C.V. - Series A1 96,276
45,444 Hays PLC** 606,062
28,000 Hutchison Whampoa, Ltd. 175,626
1,493 Kinnevik A.B. - Class B** 24,744
18,967 Lagardere S.C.A.** 627,413
7,828 Metra Oy - Class B 184,003
19,500 Quinenco S.A. (ADR)* 224,250
695,991 Rentokil Initial PLC** 3,085,468
211,210 Siebe PLC** 4,152,923
38,000 Swire Pacific, Ltd. - Class A 208,434
30,436 TI Group PLC** 233,871
98,283 Tomkins PLC** 465,739
210,951 Williams PLC** 1,173,194
- --------------------------------------------------------------------------------
12,027,284
- --------------------------------------------------------------------------------
Drug Delivery Systems - 0%
1,175 Elan Corp. PLC (ADR)* 60,145
- --------------------------------------------------------------------------------
Electric - Distribution - 0.1%
3,466 Unified Energy System (GDR)* 103,113
- --------------------------------------------------------------------------------
Electric - Integrated - 1.1%
3,550 Cemig S.A. (ADR) $ 156,200
102,375 Companhia Paranaense de Energia-Copel (ADR) 1,401,258
5,100 Mosenergo (ADR)+ 191,250
- --------------------------------------------------------------------------------
1,748,708
- --------------------------------------------------------------------------------
Electric Products - 0.3%
43,000 Hitachi, Ltd.** 307,565
3,203 Siemens A.G.** 189,717
- --------------------------------------------------------------------------------
497,282
- --------------------------------------------------------------------------------
Electronic Components - 4.2%
200,673 Electrocomponents PLC** 1,495,749
40,683 Philips Electronics N.V.** 2,440,305
39,625 Philips Electronics N.V. - N.Y. Shares** 2,397,313
7,836 Pricer A.B. - Class B*,** 145,178
11,000 Tokyo Electron, Ltd.** 353,635
- --------------------------------------------------------------------------------
6,832,180
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 0.5%
8,000 Rohm Co., Ltd.** 806,023
- --------------------------------------------------------------------------------
Electronic Measuring Instruments - 0.4%
5,884 Simac Techniek N.V.** 684,987
- --------------------------------------------------------------------------------
Electronic Parts Distributors - 0.2%
42,670 Premier Farnell PLC** 307,516
- --------------------------------------------------------------------------------
Environmental Monitoring and Detection Devices - 0.2%
39,563 Munters A.B.*,**,+ 341,561
- --------------------------------------------------------------------------------
Film Processing - 0.6%
24,032 GrandVision**,+ 989,106
- --------------------------------------------------------------------------------
Food - Catering - 0.5%
67,508 Compass Group PLC**,+ 831,972
- --------------------------------------------------------------------------------
Food - Dairy Products - 0%
2,245 Koninklijke Nutricia Verenidge Bedrijven N.V.** 68,107
- --------------------------------------------------------------------------------
Food - Diversified - 0.8%
2,832 Danone** 506,062
7,087 Raisio Group PLC* 839,432
- --------------------------------------------------------------------------------
1,345,494
- --------------------------------------------------------------------------------
Home Furnishings - 0.1%
11,067 Ekornes A.S.A. 90,821
- --------------------------------------------------------------------------------
Human Resources - 1.4%
12,947 DIS Deutscher Industrie Service A.G.*,** 540,045
88,825 Select Appointments Holdings PLC (ADR)* 1,621,056
5,480 Vedior N.V.**,+ 98,667
- --------------------------------------------------------------------------------
2,259,768
- --------------------------------------------------------------------------------
Investment Companies - 0.4%
11,601 Investor A.B. - B Shares** 565,841
- --------------------------------------------------------------------------------
Investment Management and Advisory Services - 0.1%
14,014 Amvescap PLC** 120,082
- --------------------------------------------------------------------------------
Life and Health Insurance - 1.0%
2,076 Schweizerishe Lebensversicherungs-und
Rentenanstalt** 1,632,560
214 Union des Assurances Federales** 28,102
- --------------------------------------------------------------------------------
1,660,662
- --------------------------------------------------------------------------------
Machinery - General Industrial - 2.6%
3,075 ASM Lithography Holding N.V. (ADR)* 207,563
401,345 Powerscreen International PLC** 4,034,574
- --------------------------------------------------------------------------------
4,242,137
- --------------------------------------------------------------------------------
Machinery - Pumps - 1.0%
55,650 Pfeiffer Vacuum Technology A.G. (ADR)* 1,551,244
- --------------------------------------------------------------------------------
Medical - Biomedical and Genetic - 0.5%
479 Ares-Serono Group - Class B** 791,464
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Medical - Drugs - 2.4%
731 Novartis A.G.** $ 1,187,802
142 Roche Holding A.G.** 1,412,162
7,324 SmithKline Beecham PLC** 75,619
350 SmithKline Beecham PLC (ADR)** 18,003
39,000 Takeda Chemical Industries** 1,115,819
- --------------------------------------------------------------------------------
3,809,405
- --------------------------------------------------------------------------------
Medical - Wholesale Drug Distributors - 0.1%
327 Gehe A.G.** 16,368
6,375 Grupo Casa Autrey S.A. de C.V. (ADR) 130,289
- --------------------------------------------------------------------------------
146,657
- --------------------------------------------------------------------------------
Medical Products - 0.3%
1,590 Fresenius Medical Care A.G. (ADR)* 34,582
12,670 Ortivus A.B. - B Shares*,** 423,166
- --------------------------------------------------------------------------------
457,748
- --------------------------------------------------------------------------------
Metal Processors and Fabricators - 0.7%
42,528 Assa Abloy A.B. - Class B** 1,125,595
- --------------------------------------------------------------------------------
Money Center Banks - 5.8%
8,675 Banque Nationale de Paris** 461,302
19,495 Barclays PLC** 519,902
4,720 Credit Suisse Group** 731,356
25,543 Deutsche Bank A.G.** 1,804,162
237,015 Lloyds TSB Group PLC** 3,088,911
17,348 National Westminster Bank PLC** 290,582
49,202 Skandinaviska Enskilda Banken - Class A** 623,213
1,285 Societe Generale** 175,154
940 UBS** 1,361,132
3,727 Unidanmark A/S - Class A 273,788
- --------------------------------------------------------------------------------
9,329,502
- --------------------------------------------------------------------------------
Mortgage Banks - 0.6%
17,622 Deutsche Pfandbrief & Hypothekenbank A.G.** 1,044,750
- --------------------------------------------------------------------------------
Multi-Line Insurance - 5.5%
4,039 AGF (Assurances Generales de France)** 214,107
1,557 Allianz A.G.** 403,529
7,462 AMB Aachener & Muenchener Beteiligungs-AG** 809,263
66,430 Assicurazioni Generali 1,635,617
290 Baloise Holdings, Ltd.** 537,431
39,258 Pohjola Insurance Group - Class B 1,456,274
91,052 Royal & Sun Alliance Insurance Group PLC** 918,378
40,688 Sampo Insurance Co., Ltd. - Class A 1,344,938
10,495 Skandia Forsakrings A.B.** 495,361
2,129 Zurich Versicherungs-Gesellschaft** 1,015,929
- --------------------------------------------------------------------------------
8,830,827
- --------------------------------------------------------------------------------
Office Furnishings - 0.6%
29,714 Koninklijke Ahrend Groep N.V.** 933,680
- --------------------------------------------------------------------------------
Oil - Field Services - 0.5%
12,650 Petroleum Geo-Services (ADR)* 819,088
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 1.8%
23,307 Elf Aquitaine S.A.** 2,711,980
4,900 Transocean Offshore, Inc. 236,119
- --------------------------------------------------------------------------------
2,948,099
- --------------------------------------------------------------------------------
Oil Companies - Exploration and Production - 0.3%
13,400 YPF S.A. (ADR) 458,112
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 2.3%
34,750 British Petroleum Co. PLC** 460,566
2,975 Lukoil Holding (ADR) 272,212
26,716 Total S.A.** 2,908,807
- --------------------------------------------------------------------------------
3,641,585
- --------------------------------------------------------------------------------
Oil Field Machinery and Equipment - 1.6%
32,450 Schlumberger, Ltd. 2,612,225
- --------------------------------------------------------------------------------
Paper and Related Products - 0.2%
56,100 Kimberly-Clark de Mexico, S.A. de C.V. - Class A $ 270,695
- --------------------------------------------------------------------------------
Public Thoroughfares - 1.1%
49,590 Brisa-Auto Estradas de Portugal, S.A.* 1,778,389
- --------------------------------------------------------------------------------
Publishing - Books - 3.5%
111,104 Elsevier N.V.** 1,797,634
29,866 Wolters Kluwer N.V.** 3,858,426
- --------------------------------------------------------------------------------
5,656,060
- --------------------------------------------------------------------------------
Publishing - Newspapers - 1.0%
363,576 Newsquest PLC*,**,+ 1,585,304
- --------------------------------------------------------------------------------
Real Estate Investment and Management - 0.5%
56,000 Mitsubishi Estate Co., Ltd.** 611,593
14,000 Mitsui Fudosan Co., Ltd.** 135,670
- --------------------------------------------------------------------------------
747,263
- --------------------------------------------------------------------------------
Recycling - 0.2%
16,446 Tomra Systems A.S.A. 368,085
- --------------------------------------------------------------------------------
Reinsurance - 0.2%
851 Muenchener Rueckversicherungs
-Gesellschaft A.G.** 320,892
- --------------------------------------------------------------------------------
Retail - Discount - 0.1%
44,311 Cifra S.A. de C.V. 109,379
- --------------------------------------------------------------------------------
Retail - Diversified - 0%
1,000 Ryohin Keikaku Co., Ltd.** 66,143
- --------------------------------------------------------------------------------
Retail - Pubs - 0%
14,635 J.D. Wetherspoon PLC** 79,465
- --------------------------------------------------------------------------------
Retail - Restaurants - 0.6%
11,795 Tele Pizza S.A.* 951,862
- --------------------------------------------------------------------------------
Rubber - Tires - 0.9%
20,936 Bridgestone Corp.** 455,687
18,865 Compagnie Generale des Etablissements
Michelin - Class B** 950,170
- --------------------------------------------------------------------------------
1,405,857
- --------------------------------------------------------------------------------
Security Services - 2.7%
159 Prosegur, CIA de Seguridad S.A. 1,596
141,853 Securitas A.B. - Class B** 4,290,795
- --------------------------------------------------------------------------------
4,292,391
- --------------------------------------------------------------------------------
Special Purpose Banks - 0.5%
1,174 Dexia Belgium (Credit Communal)+ 157,643
5,368 Dexia France** 621,938
- --------------------------------------------------------------------------------
779,581
- --------------------------------------------------------------------------------
Telecommunication Equipment - 2.0%
2,336 Alcatel Alsthom** 297,055
16,560 Nokia Oy - Class A 1,158,641
12,025 Northern Telecom, Ltd. 1,070,225
9,450 Oy Nokia Corp. (ADR) - Class A 661,500
- --------------------------------------------------------------------------------
3,187,421
- --------------------------------------------------------------------------------
Telecommunication Services - 1.5%
106,000 China Telecom, Ltd.*,+ 181,950
105,740 Energis PLC*,** 443,661
365,475 Freepages Group PLC*,** 192,433
15,700 Nortel Inversora S.A. (ADR) 400,350
23,826 Telefonaktiebolaget L.M. Ericsson - Class B** 896,362
9,027 Telefonaktiebolaget L.M. Ericsson (ADR)
- Class B** 336,820
- --------------------------------------------------------------------------------
2,451,576
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Telephone - Integrated - 3.1%
424 Nippon Telegraph & Telephone Corp.** $ 3,652,331
8,800 Telecom Argentina Stet S.A. (ADR) 314,600
84,554 Telecom Italia S.p.A. 541,185
5,075 Telefonica de Argentina S.A. (ADR) 189,044
14,050 Telefonica del Peru S.A. (ADR) 327,541
- --------------------------------------------------------------------------------
5,024,701
- --------------------------------------------------------------------------------
Transportation - Services - 0.3%
37,366 Stagecoach Holdings PLC** 513,375
- --------------------------------------------------------------------------------
Travel Services - 0.2%
98 Kuoni Reisen A.G. - Class B** 367,865
- --------------------------------------------------------------------------------
Total Common Stock (cost $134,776,396) 146,847,850
- --------------------------------------------------------------------------------
Foreign Bonds - 0.2%
JPY
65,000,000 STB Cayman Capital, Ltd., 0.50%
bank guaranteed notes, due 10/1/07**,+
(cost $563,820) 364,941
- --------------------------------------------------------------------------------
Preferred Stock - 0.4%
- --------------------------------------------------------------------------------
Brewery - 0%
48,000 Companhia Cervejaria Brahma 32,257
- --------------------------------------------------------------------------------
Electric - Integrated - 0.1%
4,713,000 Companhia Energetica de Minas Gerais 204,775
1,000,000 Companhia Paranaense de Energia-Copel 13,575
- --------------------------------------------------------------------------------
218,350
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 0.1%
430,000 Petroleo Brasileiro S.A. 100,329
- --------------------------------------------------------------------------------
Telecommunication Equipment - 0.2%
11,690,000 Ericsson Telecomunicacoes S.A. 374,995
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $953,392) 725,931
- --------------------------------------------------------------------------------
U.S. Government Agency - 10.2%
Freddie Mac
$16,400,000 6.00%, 1/2/98 (amortized cost $16,397,267) 16,397,267
- --------------------------------------------------------------------------------
Total Investments (total cost $152,690,875) - 102.0% 164,335,989
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (2.0%) (3,234,480)
- --------------------------------------------------------------------------------
Net Assets - 100% $161,101,509
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO December 31, 1997
Summary of Investments by Country
December 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Argentina 0.9% $ 1,447,156
Austria 0.6% 935,280
Belgium 0.1% 159,295
Brazil 1.5% 2,470,077
Canada 0.7% 1,070,225
Chile 0.1% 224,250
Denmark 1.4% 2,215,979
Finland 4.1% 6,724,483
France 11.9% 19,521,791
Germany 5.9% 9,767,802
Hong Kong 0.7% 1,095,316
India 0.0% 21,250
Ireland 0.0% 60,145
Italy 3.0% 4,861,938
Japan 8.4% 13,815,750
Luxembourg 0.0% 49,477
Mexico 1.0% 1,720,636
Netherlands 11.3% 18,546,743
Norway 1.1% 1,733,979
Peru 0.2% 327,541
Portugal 1.1% 1,778,389
Romania 0.1% 155,986
Russia 0.3% 566,576
South Africa 0.0% 405
Spain 0.6% 953,458
Sweden 8.4% 13,858,698
Switzerland 5.6% 9,267,270
United Kingdom 19.3% 31,740,484
United States ++ 11.7% 19,245,610
- --------------------------------------------------------------------------------
Total 100.0% $164,335,989
================================================================================
++ Includes Short-Term Securities (1.7% excluding Short-Term Securities)
Forward Currency Contracts
Open at December 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 2/11/98 500,000 $ 822,800 ($ 16,865)
British Pound 2/18/98 2,900,000 4,770,500 (66,106)
British Pound 2/19/98 900,000 1,480,500 21,600
Dutch Guilder 1/9/98 500,000 246,914 3,776
Dutch Guilder 2/18/98 375,000 185,671 (6,194)
Dutch Guilder 2/19/98 2,600,000 1,287,384 30,178
French Franc 2/18/98 5,543,000 922,956 (26,421)
French Franc 3/18/98 5,000,000 833,847 25,850
German Deutschemark 1/9/98 1,000,000 556,421 7,913
German Deutschemark 1/15/98 60,000 33,400 917
German Deutschemark 2/3/98 29,000 16,163 212
German Deutschemark 2/18/98 200,000 111,564 (3,636)
German Deutschemark 2/26/98 446,000 248,898 (1,532)
Japanese Yen 1/20/98 3,500,000 26,852 4,680
Japanese Yen 2/18/98 235,000,000 1,802,971 194,546
Japanese Yen 2/19/98 4,000,000 30,689 4,094
Japanese Yen 3/18/98 198,200,000 1,520,696 194,802
Japanese Yen 3/25/98 19,500,000 149,616 3,746
Japanese Yen 4/22/98 397,000,000 3,046,153 68,624
Swedish Krona 1/15/98 585,000 73,787 2,270
Swedish Krona 2/11/98 464,000 58,573 536
Swiss Franc 1/9/98 600,000 410,931 3,692
Swiss Franc 1/20/98 50,000 34,293 622
Swiss Franc 2/2/98 35,000 24,047 200
Swiss Franc 2/18/98 150,000 103,242 (1,354)
Swiss Franc 2/19/98 400,000 275,349 133
Swiss Franc 2/26/98 36,000 24,800 1,062
- --------------------------------------------------------------------------------
Total $19,099,017 $447,345
================================================================================
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Portfolio Manager, Helen Young Hayes
1997 in Review
Overall, I am pleased with the performance of the Portfolio, which held up
relatively well during the global market turmoil in the fourth quarter.
Certainly, being underweighted in the Far East and Japan and overweighted in
Europe helped us to outperform the benchmark.
Our reasons for this allocation were simple: Prices in the emerging markets of
Asia had become excessive, given the structural problems in many of those
countries. In Japan, the government was not taking the necessary steps to stem
problems within its financial industry and deal with a lingering recession,
while Japanese businesses have yet to implement the changes needed to increase
productivity and retain a competitive edge in a global marketplace.
Markets in Europe, on the other hand, were quite strong. Governments there
appear serious about reining in inflation and facing the tough decisions
required for sustainable economic growth. At the same time, businesses are
embracing the kind of restructuring that has helped American companies and the
U.S. stock market in recent years. Bank and financial services stocks in
particular benefited from the move to strengthen the economy, progress toward a
single European currency (the Euro), and a trend toward consolidation.
In November and December, however, the currency crisis in Southeast Asia spilled
over to markets worldwide, including Europe, Latin America and the United
States. The year ended with nearly universal volatility, especially for the
stocks of companies with exposure to Southeast Asia. Technology stocks were
among the hardest hit, largely in response to concerns about a potential falloff
in demand in parts of the Far East.
- --------------------------------------------------------------------------------
Portfolio Profile December 31, 1997 December 31, 1996
Equities 97.4% 88.1%
Foreign 77.8% 78.3%
Number of Stocks 205 209
Top 10 Equities 21.0% 19.8%
Cash & Cash Equivalents 2.6% 11.9%
- --------------------------------------------------------------------------------
Portfolio Review
Among the sectors that performed well for the Portfolio were pharmaceuticals and
financial services. For example, Akzo Nobel, a Netherlands-based company, is
exiting the low-return, cyclical chemical business and repositioning itself as a
life sciences company. Its drug sales are gaining momentum with new product
launches, including the release of Remeron, a new antidepressant.
Our research also revealed several good opportunities in Europe's financial
industry, where significant merger and acquisition activity is helping to cut
costs and increase profitability. We acquired shares of Zurich-based UBS prior
to the announcement of a merger with Swiss Bank Corp. and added shares of Swiss
Life, an attractively valued franchise in the Swiss life insurance market that
may be a likely takeover candidate.
Although they were among our best contributors to total return before the
monetary crisis in Asia, our technology stocks were ultimately laggards. Nearly
all were tarred by the same brush: fears of a global economic slowdown that
might depress demand for telecommunications, computer and consumer electronics
equipment.
Philips Electronics, a Dutch manufacturer of semiconductors and consumer
electronics with substantial business in Southeast Asia, was a major
disappointment. We pared back our position but did not eliminate the stock
because most of the fundamental reasons to own it remain intact. Management is
squarely focused on enhancing shareholder value and is determined to continue to
divest unrelated and underperforming divisions in 1998.
Elsewhere, however, we viewed the compression of technology stock prices as an
opportunity to add some high-quality names to the portfolio mix, including Cisco
Systems, Microsoft and Texas Instruments (U.S.) and Sony (Japan). In our view,
the fears relating to technology are overblown; demand continues to grow in both
the developed and developing regions of the world.
Looking Ahead
As we entered 1998, it was evident that the difficulties in Southeast Asia
continued to upset markets around the world. In our view, though, this is not
necessarily a negative. It should provide us ample opportunity to fortify the
Portfolio with high-quality growth stocks, including technology and
pharmaceutical issues, at more reasonable valuations than we saw last year.
Europe is on the right track and should prove a good source of restructuring and
consolidation plays. We remain cautious in our outlook on Southeast Asia, Korea
and Japan but are more positive about the prospects for Latin America. The
Brazilian real (currency) is under pressure. The market there is quite volatile
and is likely to remain so until the government takes stronger measures to curb
inflation. Mexico, in contrast, is recovering nicely from the low of 1994.
Selectivity will be the key to success in this region as well as the other
emerging markets. It will be more important than ever that we apply our in-depth
research to choose the best individual ideas.
Thank you for your continued investment in Janus Aspen Worldwide Growth
Portfolio.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Portfolio Manager, Helen Young Hayes
- --------------------------------------------------------------------------------
Average Annual Total Return(1)
For the Periods Ended December 31, 1997
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year 22.15%
From Inception 22.96%
- --------------------------------------------------------------------------------
Morgan Stanley Capital International World Index(2)
1 Year 15.76%
From Inception Date
of Institutional Shares 12.79%
- --------------------------------------------------------------------------------
Retirement Shares (Inception Date 5/1/97)
1 Year --
From Inception 14.22%
- --------------------------------------------------------------------------------
Note: Performance of the Retirement Shares is lower from the performance shown
on this graph for the Institutional Shares, based upon the higher fees
paid by shareholders investing in this class.
- --------------------------------------------------------------------------------
Performance Overview(1) Source - Lipper Analytical Services, Inc. 1997.
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Worldwide Growth Portfolio - Institutional Shares and the Morgan
Stanley Capital International World Index. Janus Aspen Worldwide Growth
Portfolio - Institutional Shares is represented by a solid black line. The
Morgan Stanley Capital International World Index is represented by a dashed
black line. The "y" axis reflects the value of the investment. The "x" axis
reflects the computation periods from inception, September 13, 1993, through
December 31, 1997. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Aspen International Growth Portfolio -
Institutional Shares ($24,278) as compared to the Morgan Stanley Capital
International World Index ($16,763).
(1) All returns reflect reinvested dividends. The Portfolio's securities may
differ significantly from the securities in the Index. Index returns do not
include taxes or dividends and interest payments or operating expenses
necessary to maintain a portfolio consisting of the same securities that
are in the Index. These returns do not reflect the charges and expenses of
any particular insurance product or qualified plan. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor voluntarily waives a
portion of the Portfolio's expenses. Without such waiver, the Portfolio's
total returns for each class would have been lower. Past performance does
not guarantee future results.
(2) Net dividends reinvested are the dividends that remain to be reinvested
after foreign tax obligations have been met. Such obligations vary from
country to country.
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 96.7%
- --------------------------------------------------------------------------------
Airlines - 1.6%
548,292 Deutsche Lufthansa A.G.**,+ $ 10,520,368
170,902 KLM Royal Dutch Air Lines N.V.** 6,322,750
78,775 Ryanair Holdings PLC (ADR)* 1,979,222
2,088 Sairgroup*,** 2,863,116
179,833 SAS Danmark A/S 2,626,369
47,033 SAS Norske ASA - Class B 657,118
- --------------------------------------------------------------------------------
24,968,943
- --------------------------------------------------------------------------------
Airport Development - Maintenance - 0.5%
730,809 Aeroporti di Roma S.p.A.*,+ 7,559,425
- --------------------------------------------------------------------------------
Appliances - 1.6%
353,938 Electrolux A.B. - Class B** 24,579,145
- --------------------------------------------------------------------------------
Athletic Footwear - 0.4%
44,794 Adidas A.G.** 5,894,331
- --------------------------------------------------------------------------------
Audio and Video Products - 1.8%
324,700 Sony Corp.** 28,968,531
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 0.9%
490,241 Renault S.A.*,** 13,796,494
40,219 Tata Engineering & Locomotive Co., Ltd. (GDR)+ 319,741
- --------------------------------------------------------------------------------
14,116,235
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 0.2%
154,000 Denso Corp.** 2,783,395
- --------------------------------------------------------------------------------
Brewery - 0.4%
791,700 Fomento Economico Mexicano, S.A. de C.V. 6,363,605
- --------------------------------------------------------------------------------
Broadcast Services and Programming - 0.6%
227,175 Grupo Televisa S.A. (GDR)* 8,788,833
31,175 Modern Times Group MTG A.B.*,** 186,633
- --------------------------------------------------------------------------------
8,975,466
- --------------------------------------------------------------------------------
Building - Heavy Construction - 0.2%
34,715 Compagnie Fransaise d'Etudes et
de Construction Technip** $ 3,664,317
- --------------------------------------------------------------------------------
Building and Construction - 0.7%
104,203 Suez Lyonnaise des Eaux** 11,536,036
- --------------------------------------------------------------------------------
Building and Construction Products - 0.1%
121,000 Matsushita Electric Works, Ltd.** 1,051,599
- --------------------------------------------------------------------------------
Cable Television - 2.1%
281,525 Comcast Corp. - Special Class A 8,885,633
877,875 Tele-Communications, Inc. - Class A* 24,525,633
- --------------------------------------------------------------------------------
33,411,266
- --------------------------------------------------------------------------------
Cellular Telecommunications - 0.1%
60,850 Millicom International Cellular S.A.* 2,289,481
- --------------------------------------------------------------------------------
Chemicals - Diversified - 5.1%
183,753 Akzo Nobel N.V.**,+ 31,688,631
160,875 E.I. du Pont de Nemours and Co. 9,662,555
310,619 Imperial Chemical Industries PLC** 4,860,490
557,175 Monsanto Co. 23,401,350
411,740 Solutia, Inc. 10,988,311
- --------------------------------------------------------------------------------
80,601,337
- --------------------------------------------------------------------------------
Chemicals - Specialty - 0.1%
1,388 Clariant A.G.** 1,160,988
146,934 Victrex PLC** 568,148
- --------------------------------------------------------------------------------
1,729,136
- --------------------------------------------------------------------------------
Circuits - 0%
21,025 Analog Devices, Inc.* 582,130
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Commercial Banks - 3.3%
2,795,305 Banca Commerciale Italiana $ 9,728,251
12,850 Banco Rio de La Plata S.A. (ADR)* 179,900
26,234 Bankgesellschaft Berlin A.G.** 577,776
193,394 Bayerische Vereinsbank A.G.** 12,659,582
139,896 BG Bank A/S+ 9,418,735
68,592 Credit Commercial de France** 4,703,266
194,304 Erste Bank Der Oesterreichischen
Sparkassen A.G.*,**,+ 9,668,475
460,598 Merita PLC - Class A 2,520,588
61,300 Uniao de Bancos Brasileiros S.A. (GDR)* 1,973,094
- --------------------------------------------------------------------------------
51,429,667
- --------------------------------------------------------------------------------
Commercial Services - 0.8%
623,335 BTG PLC** 6,923,039
167,450 Quintiles Transnational Corp.* 6,404,963
- --------------------------------------------------------------------------------
13,328,002
- --------------------------------------------------------------------------------
Computer Services - 4.5%
71,821 Atos S.A.*,** 9,264,306
157,779 Cap Gemini S.A.** 12,943,105
1,703,956 Capita Group PLC** 10,401,687
121,314 Delphi Group PLC** 1,351,360
251,259 Getronics N.V.** 8,006,667
746,890 Logica PLC** 14,292,489
322,926 Misys PLC** 9,776,701
270,600 WM-Data A.B. - Class B** 4,894,042
- --------------------------------------------------------------------------------
70,930,357
- --------------------------------------------------------------------------------
Computer Software - 6.2%
34,750 Dassault Systemes S.A. (ADR) 1,072,906
331,321 JBA Holdings PLC** 5,642,360
246,972 Merkantildata A.S.A. 8,509,126
267,200 Microsoft Corp.* 34,535,600
407 NTT Data Corp.** 22,005,738
394,800 Parametric Technology Co.* 18,703,650
45,305 SEMA Group PLC** 1,103,264
48,895 TT Tieto Oy - Class B 5,504,127
- --------------------------------------------------------------------------------
97,076,771
- --------------------------------------------------------------------------------
Computers - Integrated Systems - 0.2%
1,222 Dimension Data Holdings, Ltd.*,+ 5,273
238,000 Fujitsu, Ltd.** 2,562,661
- --------------------------------------------------------------------------------
2,567,934
- --------------------------------------------------------------------------------
Computers - Micro - 0.3%
94,725 Compaq Computer Corp.* 5,346,042
- --------------------------------------------------------------------------------
Cosmetics and Toiletries - 0.5%
180,444 Rhone-Poulenc - Class A** 8,086,572
- --------------------------------------------------------------------------------
Diversified Operations - 9.5%
159,723 Amer Group, Ltd.* 3,065,118
490 Barco N.V. 89,933
525,925 CBS Corp. 15,481,917
233,000 Citic Pacific, Ltd. 926,194
6,257,820 First Pacific Co., Ltd. 3,028,655
22,300 General Electric Co. PLC 1,636,262
181,107 Grupo Carso S.A. de C.V. - Series A1 1,210,853
1,300,578 Hays PLC** 17,345,107
395,000 Hutchison Whampoa, Ltd. 2,477,586
45,177 Kinnevik A.B. - Class B** 748,740
297,908 Lagardere S.C.A.** 9,854,563
119,450 Metra Oy - Class B 2,807,758
34,300 Minnesota Mining and Manufacturing Co. 2,814,744
7,925,774 Rentokil Initial PLC** 35,136,551
1,760,736 Siebe PLC** 34,620,524
- --------------------------------------------------------------------------------
Diversified Operations - (continued)
427,500 Swire Pacific, Ltd. - Class A $ 2,344,879
396,212 TI Group PLC** 3,044,500
1,057,858 Tomkins PLC** 5,012,927
1,184,782 Williams PLC** 6,589,108
- --------------------------------------------------------------------------------
148,235,919
- --------------------------------------------------------------------------------
Drug Delivery Systems - 0.2%
63,225 Elan Corp. PLC (ADR)* 3,236,330
- --------------------------------------------------------------------------------
Electric - Distribution - 0.1%
48,263 Unified Energy System (GDR)* 1,435,824
- --------------------------------------------------------------------------------
Electric - Integrated - 0.2%
58,325 Cemig S.A. (ADR) 2,566,300
14,775 Mosenergo (ADR)+ 554,062
- --------------------------------------------------------------------------------
3,120,362
- --------------------------------------------------------------------------------
Electric Products - 0.4%
471,000 Hitachi, Ltd.** 3,368,915
36,772 Siemens A.G.** 2,178,045
- --------------------------------------------------------------------------------
5,546,960
- --------------------------------------------------------------------------------
Electronic Components - 3.7%
486,613 Electrocomponents PLC** 3,627,049
413,821 Philips Electronics N.V.** 24,822,397
475,011 Philips Electronics N.V. - N.Y. Shares** 28,738,165
82,826 Pricer A.B. - Class B*,** 1,534,518
- --------------------------------------------------------------------------------
58,722,129
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 1.6%
28,200 Intel Corp. 1,981,050
501,550 Texas Instruments, Inc. 22,569,750
- --------------------------------------------------------------------------------
24,550,800
- --------------------------------------------------------------------------------
Electronic Parts Distributors - 0.2%
518,585 Premier Farnell PLC** 3,737,365
- --------------------------------------------------------------------------------
Film Processing - 0.7%
257,252 GrandVision**,+ 10,587,942
- --------------------------------------------------------------------------------
Finance - Consumer Loans - 0.2%
26,975 SLM Holding Corp. 3,752,897
- --------------------------------------------------------------------------------
Food - Catering - 0.6%
811,853 Compass Group PLC**,+ 10,005,314
- --------------------------------------------------------------------------------
Food - Dairy Products - 0.3%
158,505 Koninklijke Nutricia Verenidge Bedrijven N.V.** 4,808,567
- --------------------------------------------------------------------------------
Food - Diversified - 0.9%
28,578 Danone** 5,106,724
78,094 Raisio Group PLC* 9,249,982
- --------------------------------------------------------------------------------
14,356,706
- --------------------------------------------------------------------------------
Food - Retail - 0.1%
25,175 Disco S.A. (ADR)* 1,120,287
- --------------------------------------------------------------------------------
Home Furnishings - 0.1%
198,983 Ekornes A.S.A. 1,632,958
- --------------------------------------------------------------------------------
Human Resources - 0.1%
29,575 Manpower, Inc. 1,042,519
70,555 Vedior N.V.**,+ 1,270,335
- --------------------------------------------------------------------------------
2,312,854
- --------------------------------------------------------------------------------
Investment Companies - 0.4%
118,560 Investor A.B. - B Shares** 5,782,786
- --------------------------------------------------------------------------------
Investment Management and Advisory Services - 0.1%
149,931 Amvescap PLC** 1,284,721
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Life and Health Insurance - 1.2%
23,254 Schweizerishe Lebensversicherungs-und
Rentenanstalt** $ 18,286,874
2,131 Union des Assurances Federales** 279,842
- --------------------------------------------------------------------------------
18,566,716
- --------------------------------------------------------------------------------
Machinery - General Industrial - 0.5%
32,375 ASM Lithography Holding N.V. (ADR)* 2,185,313
653,897 Powerscreen International PLC** 6,573,387
- --------------------------------------------------------------------------------
8,758,700
- --------------------------------------------------------------------------------
Machinery - Pumps - 0%
4,500 Pfeiffer Vacuum Technology A.G. (ADR)* 125,438
- --------------------------------------------------------------------------------
Medical - Biomedical and Genetic - 0.2%
2,174 Ares-Serono Group - Class B** 3,592,154
- --------------------------------------------------------------------------------
Medical - Drugs - 6.7%
137,300 Bristol-Myers Squibb Co. 12,992,013
93,975 Eli Lilly and Co. 6,543,009
11,297 Novartis A.G.** 18,356,499
132,925 Pfizer, Inc. 9,911,220
2,039 Roche Holding A.G.** 20,277,450
20,025 Schering-Plough Corp. 1,244,053
457,440 SmithKline Beecham PLC** 4,723,015
91,400 SmithKline Beecham PLC (ADR)** 4,701,388
356,000 Takeda Chemical Industries** 10,185,425
125,000 Warner-Lambert Co. 15,500,000
- --------------------------------------------------------------------------------
104,434,072
- --------------------------------------------------------------------------------
Medical - Wholesale Drug Distributors - 0.4%
30,400 Cardinal Health, Inc. 2,283,800
20,200 Gehe A.G.** 1,011,099
175,325 Grupo Casa Autrey S.A. de C.V. (ADR) 3,583,205
- --------------------------------------------------------------------------------
6,878,104
- --------------------------------------------------------------------------------
Medical Products - 0.4%
31,350 Fresenius Medical Care A.G. (ADR)* 681,863
163,862 Ortivus A.B. - B Shares*,** 5,472,832
- --------------------------------------------------------------------------------
6,154,695
- --------------------------------------------------------------------------------
Metal Processors and Fabricators - 1.0%
617,490 Assa Abloy A.B. - Class B** 16,343,204
- --------------------------------------------------------------------------------
Money Center Banks - 6.0%
31,500 BankAmerica Corp. 2,299,500
86,157 Banque Nationale de Paris** 4,581,492
266,091 Barclays PLC** 7,096,243
48,093 Credit Suisse Group*,** 7,451,929
253,755 Deutsche Bank A.G.** 17,923,312
2,079,413 Lloyds TSB Group PLC** 27,100,065
172,305 National Westminster Bank PLC** 2,886,138
501,863 Skandinaviska Enskilda Banken - Class A** 6,356,810
12,919 Societe Generale** 1,760,941
9,830 UBS** 14,233,962
38,197 Unidanmark A/S - Class A 2,805,974
- --------------------------------------------------------------------------------
94,496,366
- --------------------------------------------------------------------------------
Mortgage Banks - 0.8%
212,930 Deutsche Pfandbrief & Hypothekenbank A.G.** 12,623,913
- --------------------------------------------------------------------------------
Multi-Line Insurance - 3.4%
42,856 AGF (Assurances Generales de France)** 2,271,790
15,921 Allianz A.G.** 4,126,256
284,822 Assicurazioni Generali 7,012,790
3,550 Baloise Holdings, Ltd.** 6,578,892
39,823 Pohjola Insurance Group - Class B 1,477,232
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Multi-Line Insurance - (continued)
958,046 Royal & Sun Alliance Insurance Group PLC** $ 9,663,141
164,356 Sampo Insurance Co., Ltd. - Class A 5,432,774
110,265 Skandia Forsakrings A.B.** 5,204,482
24,413 Zurich Versicherungs-Gesellschaft** 11,649,540
- --------------------------------------------------------------------------------
53,416,897
- --------------------------------------------------------------------------------
Networking Products - 2.9%
822,738 Cisco Systems, Inc.* 45,867,616
- --------------------------------------------------------------------------------
Office Furnishings - 0.6%
314,396 Koninklijke Ahrend Groep N.V.** 9,879,024
- --------------------------------------------------------------------------------
Oil - Field Services - 0.6%
29,375 Halliburton Co. 1,525,664
125,675 Petroleum Geo-Services (ADR)* 8,137,456
- --------------------------------------------------------------------------------
9,663,120
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 2.0%
242,179 Elf Aquitaine S.A.** 28,179,719
55,050 Transocean Offshore, Inc. 2,652,722
- --------------------------------------------------------------------------------
30,832,441
- --------------------------------------------------------------------------------
Oil Companies - Exploration and Production - 0.3%
160,250 YPF S.A. (ADR) 5,478,547
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 0.8%
366,381 British Petroleum Co. PLC** 4,855,903
27,550 Lukoil Holding (ADR) 2,520,825
54,434 Total S.A.** 5,926,710
- --------------------------------------------------------------------------------
13,303,438
- --------------------------------------------------------------------------------
Oil Field Machinery and Equipment - 0.8%
151,600 Schlumberger, Ltd. 12,203,800
- --------------------------------------------------------------------------------
Paper and Related Products - 0.2%
608,400 Kimberly-Clark de Mexico, S.A. de C.V. - Class A 2,935,664
- --------------------------------------------------------------------------------
Publishing - Books - 2.4%
831,067 Elsevier N.V.** 13,446,446
186,145 Wolters Kluwer N.V.** 24,048,306
- --------------------------------------------------------------------------------
37,494,752
- --------------------------------------------------------------------------------
Publishing - Newspapers - 1.1%
3,812,719 Newsquest PLC*,**,+ 16,624,637
- --------------------------------------------------------------------------------
Real Estate Investment and Management - 0.6%
705,000 Mitsubishi Estate Co., Ltd.** 7,699,520
204,000 Mitsui Fudosan Co., Ltd.** 1,976,910
- --------------------------------------------------------------------------------
9,676,430
- --------------------------------------------------------------------------------
Recycling - 0.3%
207,147 Tomra Systems A.S.A. 4,636,242
- --------------------------------------------------------------------------------
Reinsurance - 0.2%
8,698 Muenchener Rueckversicherungs
-Gesellschaft A.G.** 3,279,812
- --------------------------------------------------------------------------------
Retail - Discount - 0.1%
476,187 Cifra S.A. de C.V. 1,175,434
- --------------------------------------------------------------------------------
Retail - Diversified - 0.1%
30,800 Ryohin Keikaku Co., Ltd.** 2,037,208
- --------------------------------------------------------------------------------
Retail - Pubs - 0.2%
509,505 J.D. Wetherspoon PLC** 2,766,520
- --------------------------------------------------------------------------------
Retail - Restaurants - 1.0%
187,936 Tele Pizza S.A.* 15,166,530
- --------------------------------------------------------------------------------
Rubber - Tires - 1.0%
211,328 Bridgestone Corp.** 4,599,702
223,723 Compagnie Generale des Etablissements
Michelin - Class B** 11,268,222
- --------------------------------------------------------------------------------
15,867,924
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Security Services - 0.5%
8,269 Prosegur, CIA de Seguridad S.A. $ 83,007
265,060 Securitas A.B. - Class B** 8,017,582
- --------------------------------------------------------------------------------
8,100,589
- --------------------------------------------------------------------------------
Special Purpose Banks - 0.7%
29,337 Dexia Belgium (Credit Communal)+ 3,939,325
63,099 Dexia France** 7,310,674
- --------------------------------------------------------------------------------
11,249,999
- --------------------------------------------------------------------------------
Super-Regional Banks - 0.2%
11,575 Wells Fargo & Co. 3,928,989
- --------------------------------------------------------------------------------
Telecommunication Equipment - 1.6%
35,413 Alcatel Alsthom** 4,503,252
120,710 Nokia Oy - Class A 8,445,624
78,525 Northern Telecom, Ltd. 6,988,725
79,250 Oy Nokia Corp. (ADR) - Class A 5,547,500
- --------------------------------------------------------------------------------
25,485,101
- --------------------------------------------------------------------------------
Telecommunication Services - 2.0%
1,118,000 China Telecom, Ltd.*,+ 1,919,061
1,077,829 Energis PLC*,** 4,522,323
6,923,325 Freepages Group PLC*,** 3,645,324
194,950 Nortel Inversora S.A. (ADR) 4,971,225
312,133 Telefonaktiebolaget L.M. Ericsson - Class B** 11,742,809
144,886 Telefonaktiebolaget L.M. Ericsson (ADR)
- Class B** 5,406,059
- --------------------------------------------------------------------------------
32,206,801
- --------------------------------------------------------------------------------
Telephone - Integrated - 3.5%
4,156 Nippon Telegraph & Telephone Corp.** 35,799,731
82,800 Telecom Argentina Stet S.A. (ADR) 2,960,100
1,056,722 Telecom Italia S.p.A. 6,763,513
107,750 Telefonica de Argentina S.A. (ADR) 4,013,687
233,150 Telefonica del Peru S.A. (ADR) 5,435,309
- --------------------------------------------------------------------------------
54,972,340
- --------------------------------------------------------------------------------
Transportation - Services - 0.5%
586,656 Stagecoach Holdings PLC** 8,060,120
- --------------------------------------------------------------------------------
Travel Services - 0.3%
1,341 Kuoni Reisen A.G. - Class B** 5,033,746
- --------------------------------------------------------------------------------
Total Common Stock (cost $1,324,618,947) 1,525,387,527
- --------------------------------------------------------------------------------
Preferred Stock - 0.7%
- --------------------------------------------------------------------------------
Brewery - 0.1%
1,508,000 Companhia Cervejaria Brahma 1,013,423
- --------------------------------------------------------------------------------
Electric - Integrated - 0.2%
76,520,000 Companhia Energetica de Minas Gerais $ 3,324,721
23,000,000 Companhia Paranaense de Energia-Copel 312,226
- --------------------------------------------------------------------------------
3,636,947
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 0.1%
5,625,000 Petroleo Brasileiro S.A. 1,315,266
- --------------------------------------------------------------------------------
Telecommunication Equipment - 0.3%
130,600,000 Ericsson Telecomunicacoes S.A. 4,189,423
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $12,679,990) 10,155,059
- --------------------------------------------------------------------------------
U.S. Government Agency - 0.1%
Freddie Mac
$ 2,100,000 6.00%, 1/2/98 (amortized cost $2,099,650) 2,099,650
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 1.6%
Norwest Corp.
25,000,000 5.82%, 1/7/98 (amortized cost $24,975,750) 24,975,750
- --------------------------------------------------------------------------------
Total Investments (total cost $1,364,374,337) - 99.1% 1,562,617,986
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.9% 14,333,200
- --------------------------------------------------------------------------------
Net Assets - 100% $1,576,951,186
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO December 31, 1997
Summary of Investments by Country
December 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Argentina 1.2% $ 18,723,746
Austria 0.6% 9,668,474
Belgium 0.2% 4,029,257
Brazil 0.9% 14,694,452
Canada 0.5% 6,988,725
Denmark 1.0% 14,851,077
Finland 2.8% 44,050,702
France 10.0% 156,698,873
Germany 4.6% 71,601,794
Hong Kong 0.7% 10,696,375
India 0.0% 319,741
Ireland 0.3% 5,215,551
Italy 2.0% 31,063,977
Japan 7.9% 123,039,334
Luxembourg 0.2% 2,289,481
Mexico 1.5% 24,057,593
Netherlands 9.9% 155,216,602
Norway 1.5% 23,572,900
Peru 0.4% 5,435,309
Russia 0.3% 4,510,711
South Africa 0.0% 5,272
Spain 1.0% 15,249,537
Sweden 6.2% 96,269,643
Switzerland 7.0% 109,485,149
United Kingdom 17.8% 278,540,907
United States ++ 21.5% 336,342,804
- --------------------------------------------------------------------------------
Total 100.0% $1,562,617,986
================================================================================
++ Includes Short-Term Securities (19.8% excluding Short-Term Securities)
Forward Currency Contracts
Open at December 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 2/11/98 6,500,000 $10,696,400 ($219,245)
British Pound 2/18/98 31,000,000 50,995,000 (706,645)
British Pound 2/19/98 9,000,000 14,805,000 216,000
Dutch Guilder 2/18/98 6,500,000 3,218,300 (107,359)
Dutch Guilder 2/19/98 26,000,000 12,873,836 (78,561)
French Franc 1/20/98 5,500,000 914,244 16,067
French Franc 2/18/98 58,000,000 9,657,492 (318,673)
French Franc 3/18/98 30,000,000 5,003,085 155,099
German Deutschemark 1/9/98 10,000,000 5,564,211 79,130
German Deutschemark 1/15/98 5,000,000 2,783,345 76,413
German Deutschemark 2/3/98 300,000 167,205 2,190
German Deutschemark 2/18/98 3,100,000 1,729,235 (56,363)
Japanese Yen 1/20/98 1,237,000,000 9,490,112 1,654,032
Japanese Yen 2/18/98 1,550,000,000 11,891,938 1,342,817
Japanese Yen 3/18/98 3,290,000,000 25,242,625 3,233,595
Japanese Yen 3/25/98 350,000,000 2,685,415 111,320
Japanese Yen 4/22/98 1,490,000,000 11,432,667 248,715
Swedish Krona 1/20/98 25,000,000 3,153,818 97,157
Swedish Krona 2/2/98 22,000,000 2,776,481 73,962
Swedish Krona 2/11/98 23,662,000 2,986,947 28,966
Swiss Franc 1/20/98 6,000,000 4,115,226 74,718
Swiss Franc 2/18/98 500,000 344,139 (4,511)
Swiss Franc 2/19/98 6,000,000 4,130,240 1,991
Swiss Franc 2/26/98 1,020,000 702,673 30,086
- --------------------------------------------------------------------------------
Total $197,359,634 $5,950,901
================================================================================
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN BALANCED PORTFOLIO Portfolio Manager, Blaine P. Rollins
The Year in Review
I am pleased with the Portfolio's performance for the year, which I attribute to
a heavy emphasis on equities initially and an increased investment in
fixed-income securities during the final four months.
- --------------------------------------------------------------------------------
Portfolio Asset Mix December 31, 1997 December 31, 1996
Equities 47.8% 50.3%
Number of Stocks 65 103
Top 10 Equities 17.7% 24.0%
Fixed-Income Securities 60 32
U.S. Treasury Notes/Bonds 18.9% 15.7%
Investment-Grade Corp. Bonds 8.6% 16.0%
High-Yield Corporate Bonds 4.3% 5.6%
Foreign Corporate Bonds 0.8% --
Preferred Stock 8.3% 3.6%
Cash & Cash Equivalents 11.3% 8.8%
- --------------------------------------------------------------------------------
The fixed-income portion of the Portfolio is highly diversified, with a mix of
U.S. Treasury issues as well as investment-grade, convertible, preferred and
high-yield corporate securities. When-ever possible, I relied upon Janus'
rigorous equity research to help evaluate the potential of a security.
The year started off with considerable volatility in interest rates and a
flattening of the yield curve as short-term rates rose more than long-term
rates. I focused on relatively short-term securities, mostly in the two- to
five-year range. My objective was to limit price volatility and maintain a
competitive yield. By September, economic growth moderated, and the bond market
rallied. Yields on 10-year Treasuries dropped significantly, from 6.42% early in
January to 5.74% at year-end.
Taking advantage of the resurgence in bonds, I purchased a wide variety of new
10-year Treasuries and A-rated corporate securities, thereby lengthening the
overall maturity and duration of our fixed-income investments. The high-yield
segment of the market performed very well during the last three months and we
took advantage of sizable gains from our holdings in Time Warner, Houston
Industries and TCI Preferred Convertible.
Approximately 8.6% of the bond portfolio remains invested in well-known,
investment-grade corporate credits such as Walt Disney Co., IBM Corporation,
Lockheed Martin and Royal Caribbean Cruises, Ltd.
Stock Highlights
Our equity strategy is centered around high-quality companies that generate
large amounts of discretionary cash and invest it effectively, either in the
company itself or in high-return acquisitions that fit well with the company's
business strategy.
We owned a broad spectrum of financial stocks when the period began. Although
the majority were good contributors to the bottom line, valuations had expanded
to risky levels. We chose not to get greedy and reduced our exposure to this
area. Swiss Life, a large Swiss insurer, was an exception. I increased this
position because of the company's growing presence in the European life
insurance market. The company is also underfollowed by the investment community,
has a strong balance sheet, and was selling at very reasonable prices.
We reinvested our profits in energy, technology, cable TV and retail companies
that have very competitive, if not dominant, positions in their respective
industries.
The technology sector as a whole declined 20%-40% during the fourth quarter,
largely because of concerns about the long-term impact of the financial woes in
Southeast Asia. However, this was not necessarily bad news. The highest-quality
names fared better than most, and we were able to purchase a number of positions
in these blue-chip companies at more attractive prices. Among the top 10
holdings in the Portfolio are Cisco Systems, the leader in computer networking
equipment; Texas Instruments, a top-notch supplier of semiconductor chips; and
Microsoft, the world's premier provider of operating systems and software for
personal computers.
Like technology, oil services stocks did not perform well in the latter part of
the year. Speculation about very low inflation or even disinflation and a
worldwide economic slowdown helped to bring prices down. Nonetheless, I remain
bullish on this group. I am particularly excited by the prospects for companies
conducting deep-water offshore drilling and the companies that supply them with
drilling equipment. For instance, Halliburton Company's new technology for oil
and gas exploration is making production increasingly cost-effective.
In the retail sector, we selected companies generating strong cash flows and
solid returns on capital from their internal operations. A good example of this
is Dayton Hudson Corporation, which is benefiting from the success of its Target
stores subsidiary.
We experienced a few disappointments during the period, including Cincinnati
Bell, which we sold at a loss. The stock came under pressure because of fierce
competition in the telephone services and telemarketing business.
Current Outlook
I anticipate a good though by no means record-setting year in 1998. U.S.
industries may well be pressured as Asian govern-ments and businesses work their
way through the current difficulties. In this case, it will be very important to
own companies whose earnings stream is very visible and historically
predictable. On the other hand, interest rates should remain stable or trend
slightly lower, which would provide greater opportunities for capital
appreciation in our fixed-income investments now that the maturities have been
stretched.
Thank you for your continued investment in Janus Aspen Balanced Portfolio.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN BALANCED PORTFOLIO Portfolio Manager, Blaine P. Rollins
- --------------------------------------------------------------------------------
Average Annual Total Return(1)
For the Periods Ended December 31, 1997
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year 22.10%
From Inception 16.33%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year 33.35%
From Inception Date
of Institutional Shares 21.77%
- --------------------------------------------------------------------------------
Lehman Brothers Govt./Corp. Bond Index
1 Year 9.76%
From Inception Date
of Institutional Shares 6.31%
- --------------------------------------------------------------------------------
Retirement Shares (Inception Date 5/1/97)
1 Year --
From Inception 16.92%
- --------------------------------------------------------------------------------
Note: Performance of the Retirement Shares is lower from the performance shown
on this graph for the Institutional Shares, based upon the higher fees
paid by shareholders investing in this class.
- --------------------------------------------------------------------------------
Performance Overview(1) Source - Lipper Analytical Services, Inc. 1997.
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Balanced Portfolio - Institutional Shares, the Lehman Brothers
Government/Corporate Bond Index and the S&P 500 Index. Janus Aspen Balanced
Portfolio - Institutional Shares is represented by a solid black line. The
Lehman Brothers Government/Corporate Bond Index is represented by a dashed black
line. The S&P 500 Index is represented by a short dashed black line. The "y"
axis reflects the value of the investment. The "x" axis reflects the computation
periods from inception, September 13, 1993, through December 31, 1997. The upper
right quadrant reflects the ending value of the hypothetical investment in Janus
Aspen Balanced Portfolio - Institutional Shares ($19,138) as compared to the
Lehman Brothers Government/Corporate Bond Index ($13,002) and S&P 500 Index
($23,286).
(1) All returns reflect reinvested dividends. The Portfolio's securities may
differ significantly from the securities in the Index. Index returns do not
include taxes or dividends and interest payments or operating expenses
necessary to maintain a portfolio consisting of the same securities that
are in the Index. These returns do not reflect the charges and expenses of
any particular insurance product or qualified plan. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor voluntarily waives a
portion of the Portfolio's expenses. Without such waiver, the Portfolio's
total returns for each class would have been lower. Past performance does
not guarantee future results.
JANUS ASPEN BALANCED PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 47.8%
- --------------------------------------------------------------------------------
Aerospace and Defense - 0.1%
17,175 DONCASTERS PLC (ADR)* $ 362,822
- --------------------------------------------------------------------------------
Airlines - 0.5%
76,025 Ryanair Holdings PLC (ADR)* 1,910,128
- --------------------------------------------------------------------------------
Chemicals - Diversified - 1.6%
54,200 Monsanto Co. 2,276,400
129,165 Solutia, Inc. 3,447,091
- --------------------------------------------------------------------------------
5,723,491
- --------------------------------------------------------------------------------
Circuits - 2.6%
80,475 Linear Technology Corp. 4,637,372
143,150 Maxim Integrated Products, Inc.* 4,938,675
- --------------------------------------------------------------------------------
9,576,047
- --------------------------------------------------------------------------------
Commercial Banks - 0.9%
7,500 Northern Trust Corp. 523,125
43,725 Star Banc Corp. 2,508,722
- --------------------------------------------------------------------------------
3,031,847
- --------------------------------------------------------------------------------
Computer Services - 0.5%
51,175 Gartner Group, Inc. - Class A* 1,906,269
- --------------------------------------------------------------------------------
Computer Software - 7.1%
148,025 Cadence Design Systems, Inc.* 3,626,613
49,675 Microsoft Corp.* 6,420,494
168,150 Parametric Technology Co.* 7,966,106
193,850 Wind River Systems* 7,693,422
- --------------------------------------------------------------------------------
25,706,635
- --------------------------------------------------------------------------------
Computers - Micro - 1.0%
44,525 Dell Computer Corp.* 3,740,100
- --------------------------------------------------------------------------------
Containers - Paper and Plastic - 0.2%
12,400 Sealed Air Corp.* 765,700
- --------------------------------------------------------------------------------
Cruise Lines - 1.5%
37,725 Carnival Corp. - Class A $ 2,089,022
65,100 Royal Caribbean Cruises, Ltd. 3,470,644
- --------------------------------------------------------------------------------
5,559,666
- --------------------------------------------------------------------------------
Diversified Financial Services - 0.7%
80,050 CIT Group, Inc. - Class A* 2,581,613
- --------------------------------------------------------------------------------
Diversified Operations - 2.8%
106,575 CBS Corp. 3,137,302
53,450 Minnesota Mining and Manufacturing Co. 4,386,241
78,405 Siebe PLC** 1,541,641
17,400 Unilever N.V. - N.Y. Shares 1,086,413
- --------------------------------------------------------------------------------
10,151,597
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 2.1%
15,250 Intel Corp. 1,071,312
148,450 Texas Instruments, Inc. 6,680,250
- --------------------------------------------------------------------------------
7,751,562
- --------------------------------------------------------------------------------
Electronic Safety Devices - 0.3%
16,925 Pittway Corp. - Class A 1,178,403
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 1.2%
81,962 Charles Schwab Corp. 3,437,281
12,050 Morgan Stanley, Dean Witter, Discover and Co. 712,456
- --------------------------------------------------------------------------------
4,149,737
- --------------------------------------------------------------------------------
Finance - Other Services - 0.3%
26,675 HealthCare Financial Partners, Inc.* 946,963
- --------------------------------------------------------------------------------
Human Resources - 1.0%
67,075 Robert Half International, Inc.* 2,683,000
33,075 Romac International, Inc.* 808,270
- --------------------------------------------------------------------------------
3,491,270
- --------------------------------------------------------------------------------
Instruments - Scientific - 1.5%
105,925 Dionex Corp.* 5,322,731
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN BALANCED PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Internet Software - 0.1%
4,100 America Online, Inc.* $ 365,669
- --------------------------------------------------------------------------------
Life and Health Insurance - 2.8%
11,343 Schweizerishe Lebensversicherungs-und
Rentenanstalt 8,920,100
24,225 UNUM Corp. 1,317,234
- --------------------------------------------------------------------------------
10,237,334
- --------------------------------------------------------------------------------
Machinery - Pumps - 0.1%
13,125 Pfeiffer Vacuum Technology A.G. (ADR)* 365,859
- --------------------------------------------------------------------------------
Manufacturing - 0.2%
31,100 Roper Industries, Inc. 878,575
- --------------------------------------------------------------------------------
Medical - Drugs - 3.3%
7,100 Bristol-Myers Squibb Co. 671,837
52,625 Eli Lilly and Co. 3,664,016
34,725 Pfizer, Inc. 2,589,183
8,800 SmithKline Beecham PLC (ADR) 452,650
38,200 Warner-Lambert Co. 4,736,800
- --------------------------------------------------------------------------------
12,114,486
- --------------------------------------------------------------------------------
Money Center Banks - 2.7%
28,975 Bank of New York Co., Inc. 1,675,117
8,050 BankAmerica Corp. 587,650
113,067 Barclays PLC** 3,015,325
336,882 Lloyds TSB Group PLC** 4,390,433
- --------------------------------------------------------------------------------
9,668,525
- --------------------------------------------------------------------------------
Multimedia - 0.5%
51,950 Meredith Corp. 1,853,966
- --------------------------------------------------------------------------------
Music/Clubs - 0.4%
53,100 Steinway Musical Instruments, Inc.* 1,227,937
- --------------------------------------------------------------------------------
Networking Products - 1.6%
104,963 Cisco Systems, Inc.* 5,851,659
- --------------------------------------------------------------------------------
Oil - Field Services - 1.4%
64,875 Halliburton Co. 3,369,445
31,400 Stolt Comex Seaway S.A.* 1,570,000
- --------------------------------------------------------------------------------
4,939,445
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 1.2%
80,775 Santa Fe International Corp. 3,286,533
21,950 Transocean Offshore, Inc. 1,057,716
- --------------------------------------------------------------------------------
4,344,249
- --------------------------------------------------------------------------------
Oil Field Machinery and Equipment - 2.3%
40,875 Camco International, Inc. 2,603,227
39,450 Schlumberger, Ltd. 3,175,725
42,725 Smith International, Inc.* 2,622,247
- --------------------------------------------------------------------------------
8,401,199
- --------------------------------------------------------------------------------
Power Converters and Power Supply Equipment - 0.4%
68,125 American Power Conversion Corp.* 1,609,453
- --------------------------------------------------------------------------------
Retail - Consumer Electronics - 0.8%
91,300 CompUSA, Inc.* 2,830,300
- --------------------------------------------------------------------------------
Retail - Discount - 0.7%
80,200 Family Dollar Stores, Inc. 2,350,863
- --------------------------------------------------------------------------------
Retail - Hypermarkets - 1.6%
124,775 Costco Companies, Inc.* 5,568,084
- --------------------------------------------------------------------------------
Retail - Major Department Stores - 1.1%
59,875 Dayton Hudson Corp. 4,041,563
- --------------------------------------------------------------------------------
Retail - Regional Department Stores - 0.2%
22,350 Fred Meyer, Inc.* 812,981
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 0.2%
14,116 FFLC Bancorp, Inc. 307,023
26,450 Home Bancorp of Elgin, Inc. 472,794
- --------------------------------------------------------------------------------
779,817
- --------------------------------------------------------------------------------
Toys - 0.3%
31,575 Mattel, Inc. $ 1,176,169
- --------------------------------------------------------------------------------
Total Common Stock (cost $157,291,671) 173,274,714
- --------------------------------------------------------------------------------
Corporate Bonds - 12.3%
- --------------------------------------------------------------------------------
Aerospace and Defense - 0.3%
$1,200,000 Lockheed Martin Corp., 6.55%
company guaranteed unsecured notes,
due 5/15/99 1,206,000
- --------------------------------------------------------------------------------
Computers - Mainframe - 0.5%
2,000,000 IBM Corp., 6.375%
global notes, due 6/15/00 2,015,000
- --------------------------------------------------------------------------------
Cruise Lines 0.4%
1,300,000 Royal Caribbean Cruises, Ltd., 7.00%
senior notes, due 10/15/07 1,316,250
- --------------------------------------------------------------------------------
Diversified Financial Services - 0.6%
2,000,000 Associates Corp. of North America, 6.75%
senior notes, due 7/15/01 2,035,000
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 0.1%
300,000 Lehman Brothers Holdings, Inc., 6.85%
notes, due 10/8/99 303,519
100,000 Merrill Lynch & Co., Inc., 6.375%
notes, due 3/30/99 100,500
- --------------------------------------------------------------------------------
404,019
- --------------------------------------------------------------------------------
Finance - Leasing Companies - 0.6%
350,000 AT&T Capital Corp., 6.39%
medium term notes, due 1/22/99 351,750
1,800,000 Ryder Trucks, Inc., 10.00%
senior subordinated notes, due 12/1/06 1,804,500
- --------------------------------------------------------------------------------
2,156,250
- --------------------------------------------------------------------------------
Finance - Mortgage Loan Banker - 0.9%
3,200,000 Fannie Mae, 6.41%,
medium term notes, due 3/8/06 3,268,000
- --------------------------------------------------------------------------------
Finance - Other Services - 0.3%
1,000,000 Sears, Roebuck and Co., 6.50%
notes, due 6/15/00 1,008,750
- --------------------------------------------------------------------------------
Multi-Line Insurance - 0.3%
1,000,000 Loews Corp., 3.125%
subordinated notes, due 9/15/07 997,500
- --------------------------------------------------------------------------------
Multimedia - 2.9%
8,000,000 Time Warner, Inc., 8.11%
notes, due 8/15/06 8,676,000
2,000,000 Walt Disney Co. (The), 6.375%
senior notes, due 3/30/01 2,017,500
- --------------------------------------------------------------------------------
10,693,500
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 0.9%
2,576,000 Diamond Offshore Drilling, Inc., 3.75%
subordinated notes, due 2/15/07 3,451,840
- --------------------------------------------------------------------------------
Paint and Related Products - 0.1%
190,000 Sherwin-Williams Co., 6.25%
notes, due 2/1/00 190,713
- --------------------------------------------------------------------------------
Pharmacy Services - 1.4%
5,195,000 Omnicare, Inc., 5.00%
subordinated debentures, due 12/01/07+ 5,169,025
- --------------------------------------------------------------------------------
Retail - Office Supplies - 1.0%
4,170,000 Corporate Express, Inc., 4.50%
notes, due 7/1/00 3,653,962
- --------------------------------------------------------------------------------
Shipbuilding - 0.3%
Newport News Shipbuilding, Inc.:
750,000 8.625%, senior notes, due 12/1/06 789,375
250,000 9.25%, senior subordinated notes,
due 12/1/06 265,000
- --------------------------------------------------------------------------------
1,054,375
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN BALANCED PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Telecommunication Services - 0.8%
$ 2,415,000 Qwest Communications International, 10.875%
senior notes, due 4/1/07+ $ 2,722,912
- --------------------------------------------------------------------------------
Television - 0.4%
1,250,000 Sinclair Broadcast Group, Inc., 10.00%,
senior subordinated notes, due 9/30/05 1,312,500
- --------------------------------------------------------------------------------
Transportation - Railroad - 0.5%
2,000,000 Union Pacific Corp., 6.25%
notes, due 3/15/99 2,002,500
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $44,842,095) 44,658,096
- --------------------------------------------------------------------------------
Foreign Bonds - 0.8%
DEM
5,075,000 ITT Promedia, 9.125%
senior subordinated notes, due 9/15/07
(cost $2,863,753) 2,956,583
- --------------------------------------------------------------------------------
Preferred Stock - 8.3%
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 1.2%
90,000 Federal-Mogul Financial Trust, 7.00%+ 4,545,000
- --------------------------------------------------------------------------------
Broadcast Services and Programming - 1.7%
36,683 TCI Pacific Communications, 5.00% 6,052,695
- --------------------------------------------------------------------------------
Cable Television - 1.6%
100,000 Houston Industries, Inc., 7.00% 5,706,250
- --------------------------------------------------------------------------------
Cruise Lines - 2.0%
84,702 Royal Caribbean Cruises, Ltd., 7.25% 7,204,964
- --------------------------------------------------------------------------------
Diversified Operations - 1.1%
1,800,000 Williams Holdings PLC, 8.00%** 3,850,236
- --------------------------------------------------------------------------------
Electric - Generation - 0.5%
40,000 AES Trust II, 5.50%+ 2,055,000
- --------------------------------------------------------------------------------
Insurance Brokers - 0.2%
23,000 Hartford Capital I - Series A, 7.70% 572,125
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $26,392,405) 29,986,270
- --------------------------------------------------------------------------------
Asset Backed Securities - 0.3%
$ 320,000 Case Equipment Loan Trust, 6.45%
Series 1997 - A, Class A3, due 3/15/04 324,102
375,000 Discover Card Master Trust I, 5.40%
Series 1993-2, Class A, due 11/16/01 372,773
385,000 Standard Credit Card Master Trust, 5.50%
Series 1993-3, Class A,, due 1/7/99 382,471
- --------------------------------------------------------------------------------
Total Asset Backed Securities (cost $1,077,788) 1,079,346
- --------------------------------------------------------------------------------
Collateralized Mortgage Obligations - 0.3%
400,000 Fannie Mae, 6.50%,
Series 1997-60, Class PG, due 9/18/97 391,188
249,167 Freddie Mac, 9.00%
Pass-Through, Pool BOO623, due 6/1/06 258,032
350,000 Freddie Mac/Government National
Mortgage Association, 6.50%
Series 43, Class PG, due 12/17/22+ 351,312
- --------------------------------------------------------------------------------
Total Collateralized Mortgage Obligations
(cost $1,001,574) 1,000,532
- --------------------------------------------------------------------------------
U.S. Government Obligations - 18.9%
U.S. Treasury Notes/Bonds:
1,250,000 6.125%, due 5/15/98 1,253,037
950,000 5.875%, due 10/31/98 951,757
4,030,000 5.50%, due 11/15/98 4,026,252
170,000 6.25%, due 3/31/99 171,231
780,000 6.375%, due 4/30/99 787,145
4,100,000 6.375%, due 5/15/99 4,138,253
6,600,000 6.25%, due 5/31/99 6,652,668
950,000 6.125%, due 12/31/01 962,207
2,570,000 6.25%, due 1/31/02 2,615,283
6,500,000 6.625%, due 4/30/02 6,710,340
- --------------------------------------------------------------------------------
U.S. Government Obligations - (continued)
$ 6,600,000 5.75%, due 10/31/02 $ 6,603,564
1,890,000 6.25%, due 2/15/03 1,932,544
1,700,000 7.25%, due 5/15/04 1,834,079
1,225,000 7.50%, due 2/15/05 1,346,422
700,000 6.50%, due 5/15/05 729,386
500,000 5.875%, due 11/15/05 502,605
1,630,000 6.875%, due 5/15/06 1,743,692
525,000 7.00%, due 7/15/06 566,591
5,000,000 6.625%, due 5/15/07 5,291,400
13,000,000 6.125%, due 8/15/07 13,356,590
770,000 10.625%, due 8/15/15 1,157,287
2,480,000 9.25%, due 2/15/16 3,365,038
80,000 8.50%, due 2/15/20 104,022
3,000,000 U.S. Treasury Strips
zero coupon, due 5/15/06 1,854,510
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $67,774,822) 68,655,903
- --------------------------------------------------------------------------------
U.S. Government Agencies - 13.5%
Freddie Mac:
23,800,000 6.00%, 1/2/98 23,796,033
25,000,000 5.70%, 1/9/98 24,968,333
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (amortized cost $48,764,366) 48,764,366
- --------------------------------------------------------------------------------
Total Investments (total cost $350,008,474) - 102.2% 370,375,810
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (2.2%) (7,955,207)
- --------------------------------------------------------------------------------
Net Assets - 100% $362,420,603
- --------------------------------------------------------------------------------
Summary of Investments by Country
December 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Belgium 0.8% $ 2,956,583
Germany 0.1% 365,859
Ireland 0.5% 1,910,128
Netherlands 0.3% 1,086,413
Switzerland 2.4% 8,920,100
United Kingdom 4.1% 15,183,107
United States ++ 91.8% 339,953,620
- --------------------------------------------------------------------------------
Total 100.0% $370,375,810
================================================================================
++ Includes Short-Term Securities (78.6% excluding Short-Term Securities)
Forward Currency Contracts
Open at December 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 2/11/98 380,000 $ 625,328 ($ 21,243)
British Pound 2/18/98 46,000 75,670 (3,005)
- --------------------------------------------------------------------------------
Total $ 700,998 ($ 24,248)
================================================================================
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN EQUITY INCOME PORTFOLIO Portfolio Manager, Blaine P. Rollins
Market Review
Equity performance in 1997 can be separated into three distinct periods. During
the first four months, the market favored the largest, most liquid stocks. From
May (when the Portfolio was introduced) through October, performance broadened
significantly. Stocks of all sizes were evaluated on their individual merits,
not just their market capitalizations, and many smaller stocks posted
substantial gains. Finally, from late October through year-end, the financial
crisis in Southeast Asia impacted markets in this hemisphere, resulting in
considerable volatility and a flight to the high-quality, liquid stocks.
Portfolio Review
In building the Portfolio, I sought out companies with several characteristics:
historically predictable earnings, management that wants to increase shareholder
value, strong cash flow and consistently improving profitability. In 1997, many
of the companies that met these criteria were in the financial, technology,
retail and energy sectors.
- --------------------------------------------------------------------------------
Portfolio Asset Mix December 31, 1997
Equities 74.7%
Number of Stocks 69
Top 10 Equities 28.5%
Fixed-Income Securities
Investment-Grade Corporate Bonds 7.9%
Preferred Stock 6.2%
Cash & Cash Equivalents 11.2%
- --------------------------------------------------------------------------------
We began the year with a heavy allocation to financial stocks, primarily banks
and small thrifts. Although they performed very well on the whole, we took our
profits and trimmed most positions as the year progressed. The reason: Falling
interest rates led to a surge in loan volume. That, in turn, pushed up stock
prices for these companies. If the economy slows down, loan defaults could rise
dramatically, impacting overall credit quality and depressing stock prices.
Two exceptions were Swiss Life, the largest insurer in Switzerland, and Morgan
Stanley Dean Witter. Swiss Life (the largest holding in the Portfolio) has a
very strong balance sheet, excellent cash flow, and very reasonable valuations
relative to its earnings growth rate. In addition, I expect it to use some of
its extra cash to acquire German and French competitors. Morgan Stanley Dean
Witter represents the marriage of two outstanding organizations with
complementary strengths and markets. I look for meaningful synergies to evolve
from their merger.
During the second half of the year, my focus shifted to technology. As a whole,
this sector was hard hit by the upheaval in Asia, declining 20%-40% during the
fourth quarter. However, the highest-quality names withstood the general
downturn better than most, and we added a number of positions in these blue-chip
companies, especially in October when the market deeply discounted their future
earnings potential. Among the top 10 holdings in the Portfolio are Cisco
Systems, the leader in computer networking equipment; Texas Instruments, a
top-notch supplier of semiconductor chips; and Maxim Integrated Products, a
dominant franchise in analog semiconductors.
Like technology, oil services stocks did not perform well in the latter part of
the year. Oil prices are sensitive to inflation, and the prospect of very low
inflation or even disinflation and a worldwide economic slowdown helped to bring
prices down. Nonetheless, I remain bullish on this group. I am particularly
excited by the prospects for companies conducting deep-water offshore drilling
and the companies that supply them with drilling equipment.
With the growing uncertainty in Southeast Asia, we reexamined the extent to
which each position in the Portfolio was dependent upon those markets for sales
and revenues. As a result, we reduced or eliminated our holdings of some major
international companies, including Parker Hannifen and Philip Morris Companies.
Looking Ahead
I believe the Portfolio is well-positioned for the coming year. It contains many
top-quality companies with outstanding management teams and in industries that
stand to benefit from broad economic and secular trends. The volatility in the
market is likely to persist, so outperforming our benchmark and peers will
depend upon making sure that we own companies that can consistently meet or
exceed earnings estimates.
Thank you for your continued investment in Janus Aspen Equity Income Portfolio.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN EQUITY INCOME PORTFOLIO Portfolio Manager, Blaine P. Rollins
- --------------------------------------------------------------------------------
Cumulative Total Return(1)
For the Periods Ended December 31, 1997
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/97)
1 Year --
From Inception 34.70%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year --
From Inception Date
of Institutional Shares 22.55%
- --------------------------------------------------------------------------------
Retirement Shares (Inception Date 5/1/97)
1 Year --
From Inception 34.20%
- --------------------------------------------------------------------------------
Note: Performance of the Retirement Shares is lower from the performance shown
on this graph for the Institutional Shares, based upon the higher fees
paid by shareholders investing in this class.
- --------------------------------------------------------------------------------
Performance Overview(1) Source - Lipper Analytical Services, Inc. 1997.
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Equity Income Portfolio - Institutional Shares and the S&P 500
Index. Janus Aspen Equity Income Portfolio - Institutional Shares is represented
by a solid black line. The S&P 500 Index is represented by a dashed black line.
The "y" axis reflects the value of the investment. The "x" axis reflects the
computation periods from inception, May 1, 1997, through December 31, 1997. The
upper right quadrant reflects the ending value of the hypothetical investment in
Janus Aspen Equity Income Portfolio - Institutional Shares ($13,470) as compared
to the S&P 500 Index ($12,255).
(1) All returns reflect reinvested dividends. The Portfolio's securities may
differ significantly from the securities in the Index. Index returns do not
include taxes or dividends and interest payments or operating expenses
necessary to maintain a portfolio consisting of the same securities that
are in the Index. These returns do not reflect the charges and expenses of
any particular insurance product or qualified plan. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor voluntarily waives a
portion of the Portfolio's expenses. Without such waiver, the Portfolio's
total returns for each class would have been lower. Past performance does
not guarantee future results.
JANUS ASPEN EQUITY INCOME PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 74.7%
- --------------------------------------------------------------------------------
Advertising Sales - 0.2%
31 PubliGroupe S.A. $ 6,780
- --------------------------------------------------------------------------------
Aerospace and Defense - 0.8%
350 Alliant Techsystems, Inc.* 19,513
225 DONCASTERS PLC (ADR)* 4,753
- --------------------------------------------------------------------------------
24,266
- --------------------------------------------------------------------------------
Airlines - 1.3%
1,600 Ryanair Holdings PLC (ADR)* 40,200
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 1.6%
1,225 Federal-Mogul Corp. 49,612
- --------------------------------------------------------------------------------
Beverages - Wine and Spirits - 0.7%
600 Beringer Wine Estates Holdings, Inc. - Class B* 22,800
- --------------------------------------------------------------------------------
Cable Television - 0.1%
111 Tele-Communications, Inc. - Class A* 3,101
- --------------------------------------------------------------------------------
Chemicals - Diversified - 3.1%
1,225 Monsanto Co. 51,450
1,675 Solutia, Inc. 44,702
- --------------------------------------------------------------------------------
96,152
- --------------------------------------------------------------------------------
Circuits - 6.3%
1,500 Linear Technology Corp. 86,437
3,100 Maxim Integrated Products, Inc.* 106,950
- --------------------------------------------------------------------------------
193,387
- --------------------------------------------------------------------------------
Commercial Banks - 1.1%
575 Star Banc Corp. 32,991
- --------------------------------------------------------------------------------
Computer Services - 1.0%
825 Gartner Group, Inc. - Class A* 30,731
- --------------------------------------------------------------------------------
Computer Software - 8.3%
2,325 Cadence Design Systems, Inc.* $ 56,963
475 Microsoft Corp.* 61,394
1,100 Parametric Technology Co.* 52,113
2,075 Wind River Systems* 82,352
- --------------------------------------------------------------------------------
252,822
- --------------------------------------------------------------------------------
Computers - Micro - 1.6%
575 Dell Computer Corp.* 48,300
- --------------------------------------------------------------------------------
Cruise Lines - 1.9%
1,084 Royal Caribbean Cruises, Ltd. 57,791
- --------------------------------------------------------------------------------
Diversified Financial Services - 1.5%
1,450 CIT Group, Inc. - Class A* 46,762
- --------------------------------------------------------------------------------
Diversified Operations - 3.5%
1,525 CBS Corp. 44,892
695 Minnesota Mining and Manufacturing Co. 57,033
361 Siebe PLC 7,098
- --------------------------------------------------------------------------------
109,023
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 3.8%
175 Intel Corp. 12,294
2,320 Texas Instruments, Inc. 104,400
- --------------------------------------------------------------------------------
116,694
- --------------------------------------------------------------------------------
Electronic Measuring Instruments - 0.1%
42 Simac Techniek N.V. 4,889
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 1.6%
975 Charles Schwab Corp. 40,889
125 Morgan Stanley, Dean Witter, Discover and Co. 7,391
- --------------------------------------------------------------------------------
48,280
- --------------------------------------------------------------------------------
Food - Retail - 0.3%
150 Quality Food Centers, Inc.* 10,050
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN EQUITY INCOME PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Human Resources - 2.9%
875 Robert Half International, Inc.* $ 35,000
2,225 Romac International, Inc.* 54,373
- --------------------------------------------------------------------------------
89,373
- --------------------------------------------------------------------------------
Instruments - Scientific - 1.6%
1,000 Dionex Corp.* 50,250
- --------------------------------------------------------------------------------
Life and Health Insurance - 3.9%
153 Schweizerishe Lebensversicherungs-und
Rentenanstalt 120,319
- --------------------------------------------------------------------------------
Machinery - Pumps - 0.3%
325 Pfeiffer Vacuum Technology A.G. (ADR)* 9,059
- --------------------------------------------------------------------------------
Manufacturing - 0.1%
75 Roper Industries, Inc. 2,119
- --------------------------------------------------------------------------------
Medical - Drugs - 2.5%
200 Eli Lilly and Co. 13,925
500 Warner-Lambert Co. 62,000
- --------------------------------------------------------------------------------
75,925
- --------------------------------------------------------------------------------
Medical Products - 0.3%
225 Mentor Corp. 8,213
- --------------------------------------------------------------------------------
Money Center Banks - 2.4%
100 BankAmerica Corp. 7,300
923 Barclays PLC 24,615
3,110 Lloyds TSB Group PLC 40,531
- --------------------------------------------------------------------------------
72,446
- --------------------------------------------------------------------------------
Multimedia - 0.8%
650 Meredith Corp. 23,197
- --------------------------------------------------------------------------------
Networking Products - 3.3%
1,838 Cisco Systems, Inc.* 102,441
- --------------------------------------------------------------------------------
Oil - Field Services - 2.4%
500 Halliburton Co. 25,969
925 Stolt Comex Seaway S.A.* 46,250
- --------------------------------------------------------------------------------
72,219
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 0.7%
500 Santa Fe International Corp. 20,344
- --------------------------------------------------------------------------------
Oil Field Machinery and Equipment - 3.2%
700 Camco International, Inc. 44,581
325 Schlumberger, Ltd. 26,163
425 Smith International, Inc.* 26,084
- --------------------------------------------------------------------------------
96,828
- --------------------------------------------------------------------------------
Power Converters and Power Supply Equipment - 1.2%
1,525 American Power Conversion Corp.* 36,028
- --------------------------------------------------------------------------------
Printing - Commercial - 0.4%
500 World Color Press, Inc.* 13,281
- --------------------------------------------------------------------------------
Radio - 0.9%
600 Heftel Broadcasting Corp.* 28,050
- --------------------------------------------------------------------------------
Retail - Consumer Electronics - 1.3%
1,250 CompUSA, Inc.* 38,750
- --------------------------------------------------------------------------------
Retail - Discount - 1.2%
875 Family Dollar Stores, Inc. 25,648
325 Wal-Mart Stores, Inc. 12,817
- --------------------------------------------------------------------------------
38,465
- --------------------------------------------------------------------------------
Retail - Hypermarkets - 1.9%
1,275 Costco Companies, Inc.* 56,897
- --------------------------------------------------------------------------------
Retail - Major Department Stores - 0.7%
300 Dayton Hudson Corp. 20,250
- --------------------------------------------------------------------------------
Television - 1.7%
750 Univision Communications, Inc.* 52,359
- --------------------------------------------------------------------------------
Toys - 1.7%
850 Hasbro, Inc. $ 26,775
675 Mattel, Inc. 25,144
- --------------------------------------------------------------------------------
51,919
- --------------------------------------------------------------------------------
Transportation - Air Freight - 0.5%
225 Airborne Freight Corp. 13,978
- --------------------------------------------------------------------------------
Total Common Stock (cost $2,223,513) 2,287,341
- --------------------------------------------------------------------------------
Corporate Bonds - 7.9%
- --------------------------------------------------------------------------------
Multi-Line Insurance - 0.8%
$25,000 Loews Corp., 3.125%
subordinated notes, due 9/15/07 24,938
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 3.1%
70,000 Diamond Offshore Drilling, Inc., 3.75%
subordinated notes, due 2/15/07 93,809
- --------------------------------------------------------------------------------
Pharmacy Services - 2.1%
65,000 Omnicare, Inc., 5.00%
subordinated debentures, due 12/01/07 64,675
- --------------------------------------------------------------------------------
Retail - Office Supplies - 1.9%
65,000 Corporate Express, Inc., 4.50%
notes, due 7/1/00 56,951
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $250,080) 240,373
- --------------------------------------------------------------------------------
Preferred Stock - 6.2%
- --------------------------------------------------------------------------------
Broadcast Services and Programming - 2.1%
400 TCI Pacific Communications, 5.00% 66,000
- --------------------------------------------------------------------------------
Cable Television - 2.7%
1,425 Houston Industries, Inc., 7.00% 81,314
- --------------------------------------------------------------------------------
Cruise Lines - 0.4%
150 Royal Caribbean Cruises, Ltd., 7.25% 12,759
- --------------------------------------------------------------------------------
Electric - Generation - 1.0%
600 AES Trust II, 5.50%+ 30,825
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $165,226) 190,898
- --------------------------------------------------------------------------------
U.S. Government Agency - 10.1%
Freddie Mac
$308,000 6.00%, 1/2/98 (amortized cost $307,949) 307,949
- --------------------------------------------------------------------------------
Total Investments (total cost $2,946,768) - 98.9% 3,026,561
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 1.1% 33,712
- --------------------------------------------------------------------------------
Net Assets - 100% $3,060,273
- --------------------------------------------------------------------------------
Summary of Investments by Country
December 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Ireland 1.3% $ 40,200
Netherlands 0.2% 4,889
Switzerland 4.2% 127,098
United Kingdom 2.2% 68,015
United States++ 92.1% 2,786,359
- --------------------------------------------------------------------------------
Total 100.0% $ 3,026,561
================================================================================
++ Includes Short-Term Securities (81.9% excluding Short-Term Securities)
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Portfolio Managers, Sandy R. Rufenacht and Ronald V. Speaker
The Year in Review
The U.S. bond market went through two very distinct periods in 1997. As the year
began, declining unemployment rates, strong housing and auto sales, and rising
wages in the U.S. (all signs of rapid economic expansion) fueled concern about
higher inflation. To rein in inflationary pressures, the Federal Reserve raised
interest rates by 25 basis points (0.25%) in March.
The second half of the year proved vastly different. Growth moderated, and a
change in investor psychology was brought on by positive news on the inflation
front. Increased productivity and a decline in oil prices also contributed to
this favorable scenario. From September onward, as the Federal Reserve remained
on the sidelines, the bond market rallied.
Finally, an international currency crisis that accelerated in Southeast Asia in
late October raised concerns about global growth rates and sparked a flight to
U.S. markets, which are viewed as a "safe haven" in times of turmoil. The influx
of capital helped drive yields to near-record lows by late December. Yields on
30-year Treasury securities, which peaked at 7.17% in the first quarter, dropped
to 5.92% by year-end. Ten-year Treasuries fell from 6.42% early in January to
5.74% at year-end.
- --------------------------------------------------------------------------------
Portfolio Asset Mix December 31, 1997 December 31, 1996
Investment-Grade Corporate Bonds 26.9% 49.5%
High-Yield/High-Risk Bonds 39.9% 27.0%
U.S. Government Obligations 20.9% 11.9%
Preferred Stock 0.6% 1.3%
Cash & Cash Equivalents 11.7% 10.3%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Portfolio Profile
Weighted Average Maturity 9.2 Yrs. 8.4 Yrs.
Average Modified Duration* 5.8 Yrs. 5.5 Yrs.
30-Day Average Yield
Institutional Shares** 6.85% 7.39%
Retirement Shares** 6.32% N/A
Average Rating BBB+ BBB
- --------------------------------------------------------------------------------
* A theoretical measure of price volatility.
** Yields will fluctuate.
Portfolio Strategy
As in the past, our diverse strategy was a boon to the Portfolio. By using a
mixture of investment-grade corporate bonds, Treasury securities and carefully
chosen high-yield bonds, we were able to maximize yield, diversify risk, and
achieve some significant capital gains as interest rates declined. We also used
the Portfolio's flexibility to increase overall credit quality during the course
of the year.
Our investment-grade holdings in particular benefited from fluctuating and,
ultimately, lower rates. We took advantage of periods when yields were high and
prices low to buy top-quality names such as IBM and Ford Motor Co. When rates
later rose, we chalked up solid gains in these and other highly rated issues.
Other familiar investment-grade names include Time Warner, Coca-Cola and
WorldCom, a leading telecommunications company planning to acquire long-distance
provider MCI.
Telecommunications companies were an important part of our high-yield strategy
as well and helped us to boost income and capital appreciation as interest rates
continued to fall. Deregulation, both in the U.S. and abroad, is fostering major
changes to the telecommunications industry, including merger and takeover
activity and significant opportunities for operators.
We are particularly excited about new telecommunications possibilities outside
the U.S. Metronet, a local exchange carrier in Canada, has established itself as
a strong competitor, and helped performance during the past year.
Another area of strong performance (in both investment and high-yield) were
banks and financial services. We invested in Local Financial Corporation, an
Oklahoma-based thrift, whose high-yield bonds increased in price during the year
as the company improved its balance sheet.
Not all of our ideas worked out as well as these, however. Our position in Fox
Kids Worldwide, a television cartoon programmer, declined moderately because of
its misunderstood credit and the announcement that Disney was going to launch
its own network. The falloff occurred during a temporary downturn in the market,
and the security has not recovered as yet.
Looking to 1998
As we begin 1998, we will continue to watch the U.S. economy for signs of
inflation. We will also keep a close eye on the impact of foreign economies and
emerging-market currency problems, as well as the evolving opportunities. Toward
that end, we bolstered our research staff to take advantage of opportunities in
the international arena.
On balance, we believe that 1998 will be a good year for bond investors. At this
juncture, inflation is falling and global economic growth appears to be
decelerating from the above-average rates of recent years. We are also
encouraged by the improvement in the U.S. budget and the potential for budget
surpluses in '98 and beyond. We expect 1998 to be a favorable year for our
disciplined, diversified approach to fixed-income investing.
Thank you for your continued investment in Janus Aspen Flexible Income
Portfolio.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Portfolio Managers, Sandy R. Rufenacht and Ronald V. Speaker
- --------------------------------------------------------------------------------
Average Annual Total Return(1)
For the Periods Ended December 31, 1997
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year 11.76%
From Inception 10.05%
- --------------------------------------------------------------------------------
Lehman Brothers Govt./Corp. Bond Index
1 Year 9.76%
From Inception Date
of Institutional Shares 6.31%
- --------------------------------------------------------------------------------
Retirement Shares (Inception Date 5/1/97)
1 Year --
From Inception 9.73%
- --------------------------------------------------------------------------------
Note: Performance of the Retirement Shares is lower from the performance shown
on this graph for the Institutional Shares, based upon the higher fees
paid by shareholders investing in this class.
- --------------------------------------------------------------------------------
Performance Overview(1) Source - Lipper Analytical Services, Inc. 1997.
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Flexible Income Portfolio - Institutional Shares and the Lehman
Brothers Government/Corporate Bond Index. Janus Aspen Flexible Income Portfolio
- - Institutional Shares is represented by a solid black line. The Lehman Brothers
Government/Corporate Bond Index is represented by a dashed black line. The "y"
axis reflects the value of the investment. The "x" axis reflects the computation
periods from inception, September 13, 1993, through December 31, 1997. The upper
right quadrant reflects the ending value of the hypothetical investment in Janus
Aspen Flexible Income Portfolio - Institutional Shares ($15,083) as compared to
the Lehman Brothers Government/Corporate Bond Index ($13,002).
(1) All returns reflect reinvested dividends. The Portfolio's securities may
differ significantly from the securities in the Index. Index returns do not
include taxes or dividends and interest payments or operating expenses
necessary to maintain a portfolio consisting of the same securities that
are in the Index. These returns do not reflect the charges and expenses of
any particular insurance product or qualified plan. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Past performance does not guarantee
future results.
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Bonds - 65.8%
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 3.4%
$ 1,000,000 Ford Motor Co., 7.25%
notes, due 10/1/08 $ 1,061,250
750,000 General Motors Corp., 7.10%
notes, due 3/15/06 782,812
- --------------------------------------------------------------------------------
1,844,062
- --------------------------------------------------------------------------------
Beverages - Non-Alcoholic - 0.9%
500,000 Coca-Cola Enterprises, Inc., 6.95%
debentures, due 11/15/26 511,250
- --------------------------------------------------------------------------------
Broadcast Services and Programming - 0.9%
500,000 Fox Kids Worldwide, Inc., 9.25%
senior notes, due 11/1/07+ 483,750
- --------------------------------------------------------------------------------
Building and Construction Products - 0.8%
USG Corp.:
205,000 9.25%, senior notes, due 9/15/01 220,631
200,000 8.50%, senior notes, due 8/1/05 215,000
- --------------------------------------------------------------------------------
435,631
- --------------------------------------------------------------------------------
Cable Television - 1.9%
500,000 Century Communications Corp., 8.375%
senior notes, due 12/15/07 500,000
500,000 Galaxy Telecom, L.P., 12.375%
senior subordinated notes, due 10/1/05 550,000
- --------------------------------------------------------------------------------
1,050,000
- --------------------------------------------------------------------------------
Casino Hotels - 1.4%
750,000 Venetian Casino Resort, L.L.C., 12.25%
mortgage bonds, due 11/15/04 751,875
- --------------------------------------------------------------------------------
Casino Services - 0.9%
500,000 Isle of Capri Black Hawk, L.L.C., 13.00%
first mortgage bonds, due 8/31/04+ 505,625
- --------------------------------------------------------------------------------
Cellular Telecommunications - 0.9%
$ 500,000 Iridium, L.L.C./Capital Corp., 11.25%
senior notes, due 7/15/05 $ 493,750
- --------------------------------------------------------------------------------
Chemicals - Specialty - 0.9%
500,000 Praxair, Inc., 6.90%
notes, due 11/1/06 516,875
- --------------------------------------------------------------------------------
Commercial Banks - 3.9%
500,000 First National Bank of Omaha, 7.32%
subordinated notes, due 12/1/10 513,125
735,000 First Nationwide Holdings, Inc., 10.625%
senior subordinated notes, due 10/1/03 821,362
700,000 HUBCO, Inc., 8.20%
subordinated debentures, due 9/15/06 750,750
- --------------------------------------------------------------------------------
2,085,237
- --------------------------------------------------------------------------------
Commercial Services - 2.6%
445,000 NeoData Services, Inc., 12.00%
senior notes, due 5/1/03 476,706
910,000 Pantry, Inc. (The), 10.25%
senior subordinated notes, due 10/15/07 930,475
- --------------------------------------------------------------------------------
1,407,181
- --------------------------------------------------------------------------------
Computers - Mainframe - 2.8%
IBM Corp.:
500,000 6.45%, notes, due 8/1/07 505,625
1,000,000 7.00%, debentures, due 10/30/25 1,032,500
- --------------------------------------------------------------------------------
1,538,125
- --------------------------------------------------------------------------------
Containers - Metal and Glass - 1.6%
500,000 Crown Cork & Seal Finance PLC, 7.00% company
guaranteed notes, due 12/15/06 516,875
350,000 Owens-Illinois, Inc., 7.85%
senior notes, due 5/15/04 367,063
- --------------------------------------------------------------------------------
883,938
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Electric - Integrated - 1.3%
$600,000 El Paso Electric Co., 9.40%
first mortgage bonds, due 5/1/11 $ 681,000
- --------------------------------------------------------------------------------
Engineering - Research and Development - 1.0%
500,000 Intertek Finance PLC, 10.25%
senior subordinated notes, due 11/1/06 522,500
- --------------------------------------------------------------------------------
Finance - Auto Loans - 0.9%
500,000 General Motors Acceptance Corp., 6.625%
notes, due 10/15/05 505,625
- --------------------------------------------------------------------------------
Finance - Leasing Companies - 1.4%
750,000 Ryder Trucks, Inc., 10.00%
senior subordinated notes, due 12/1/06 751,875
- --------------------------------------------------------------------------------
Food - Diversified - 1.6%
750,000 Ralston-Ralston Purina Group, 7.875%
debentures, due 6/15/25 840,937
- --------------------------------------------------------------------------------
Food - Retail - 1.9%
750,000 Ralphs Grocery Co., 11.00%
company guarantee notes, due 6/15/05 855,000
150,000 Star Markets Co., Inc., 13.00%
senior subordinated notes, due 11/1/04 169,875
- --------------------------------------------------------------------------------
1,024,875
- --------------------------------------------------------------------------------
Funeral Services and Related Items - 0.5%
250,000 Service Corporation International, 7.70%
notes, due 4/15/09 272,500
- --------------------------------------------------------------------------------
Home Furnishings - 1.7%
450,000 Cort Furniture Rental, 12.00%
senior notes, due 9/1/00 496,125
390,000 Lifestyle Furnishings International, Inc., 10.875%
company guaranteed notes, due 8/1/06 433,875
- --------------------------------------------------------------------------------
930,000
- --------------------------------------------------------------------------------
Industrial Audio and Video Products - 0.2%
100,000 Unifrax Investment Corp., 10.50%
senior notes, due 11/1/03 103,250
- --------------------------------------------------------------------------------
Insurance Brokers - 0.9%
500,000 SIG Capital Trust I, 9.50%
company guaranteed notes, due 8/15/27+ 507,500
- --------------------------------------------------------------------------------
Life and Health Insurance - 1.6%
742,000 Delphi Financial Group, Inc., 8.00%
senior notes, due 10/1/03 767,042
120,000 Penncorp Financial Group, Inc., 9.25%
senior subordinated notes, due 12/15/03 125,400
- --------------------------------------------------------------------------------
892,442
- --------------------------------------------------------------------------------
Medical - Drugs - 1.0%
500,000 ICN Pharmaceuticals, Inc., 9.25%
senior notes, due 8/15/05 530,000
- --------------------------------------------------------------------------------
Medical - Hospitals - 1.5%
750,000 Tenet Healthcare Corp., 10.125%
senior subordinated notes, due 3/1/05 817,500
- --------------------------------------------------------------------------------
Medical - Nursing Home - 0.9%
500,000 Extendicare, Inc., 9.35%
senior subordinated notes, due 12/15/07+ 511,250
- --------------------------------------------------------------------------------
Medical Products - 0.5%
250,000 ALARIS Medical, Inc., 9.75%
company guaranteed notes, due 12/1/06+ 260,938
- --------------------------------------------------------------------------------
Money Center Banks - 1.9%
500,000 BankAmerica Corp., 7.125%
subordinated notes, due 5/1/06 520,625
500,000 Chase Manhattan Corp., 6.75%
subordinated notes, due 8/15/08 506,875
- --------------------------------------------------------------------------------
1,027,500
- --------------------------------------------------------------------------------
Multimedia - 4.4%
$ 250,000 News America Holdings, Inc., 7.70%
unsecured senior debentures, due 10/30/25 $ 261,250
1,000,000 Time Warner, Inc., 8.18%
notes, due 8/15/07 1,096,250
1,000,000 Walt Disney Co. (The), 6.75%
senior notes, due 3/30/06 1,031,250
- --------------------------------------------------------------------------------
2,388,750
- --------------------------------------------------------------------------------
Oil Companies - Exploration and Production - 1.6%
550,000 Gothic Energy Corp., 12.25%
senior notes, due 9/1/04+ 577,500
250,000 Gulf Canada Resources, Ltd., 9.25%
senior subordinated debentures,
due 1/15/04 263,125
- --------------------------------------------------------------------------------
840,625
- --------------------------------------------------------------------------------
Oil Refining and Marketing - 0.9%
500,000 Clark R & M Holdings, Inc., 8.875% senior
subordinated notes, due 11/15/07+ 503,750
- --------------------------------------------------------------------------------
Paint and Related Products - 1.0%
500,000 Sherwin-Williams Co., 6.85%
notes, due 2/1/07 520,625
- --------------------------------------------------------------------------------
Property and Casualty Insurance - 0.7%
350,000 Orion Capital Corp., 7.25%
senior notes, due 7/15/05 363,125
- --------------------------------------------------------------------------------
Radio - 1.4%
750,000 Chancellor Media Corp., 8.125%
senior subordinated notes, due 12/15/07+ 735,000
- --------------------------------------------------------------------------------
Reinsurance - 0.9%
500 Veritas Capital Trust, 10.00%
company guaranteed notes, due 1/1/28+ 508,750
- --------------------------------------------------------------------------------
Retail - Leisure Products - 0.3%
150,000 Selmer Co., Inc., 11.00%
senior subordinated notes, due 5/15/05 165,188
- --------------------------------------------------------------------------------
Satellite Telecommunications - 0.5%
250,000 Digital Television Services, L.L.C., 12.50%
company guaranteed notes, due 8/1/07 280,000
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 2.9%
900,000 Anchor Bancorp, Inc., 8.9375%
senior notes, due 7/9/03 934,875
350,000 Local Financial Corp., 11.00%
senior notes, due 9/8/04+ 371,000
250,000 Standard Federal Bancorp, 7.75%
subordinated notes, due 7/17/06 268,750
- --------------------------------------------------------------------------------
1,574,625
- --------------------------------------------------------------------------------
Steel - Producers - 2.5%
750,000 Ivaco, Inc., 11.50%
senior notes, due 9/15/05 808,125
500,000 Weirton Steel Corp., 11.375%
senior notes, due 7/1/04 525,000
- --------------------------------------------------------------------------------
1,333,125
- --------------------------------------------------------------------------------
Telecommunication Services - 1.9%
250,000 Intermedia Communications, Inc.,
zero coupon, senior discount notes,
due 5/15/06 197,500
250,000 Qwest Communications International,
zero coupon, senior discount notes,
due 10/15/07+ 169,688
600,000 Talton Holdings, Inc., 11.00%
company guaranteed notes, due 6/30/07 645,000
- --------------------------------------------------------------------------------
1,012,188
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Telephone - Local - 0.3%
$ 250,000 MetroNet Communications,
zero coupon senior discount notes,
due 11/1/07+ $ 152,813
- --------------------------------------------------------------------------------
Telephone - Long Distance - 2.0%
1,000,000 WorldCom, Inc., 7.75%
notes, due 4/1/07 1,072,500
- --------------------------------------------------------------------------------
Television - 0.5%
50,000 Allbritton Communications, 11.50%
senior subordinated debentures,
due 8/15/04 52,500
50,000 Dialog Corp. PLC, 11.00%
senior subordinated notes, due 11/15/07 52,187
150,000 Pegasus Media & Communications, Inc., 12.50%
notes, due 7/1/05 171,000
- --------------------------------------------------------------------------------
275,687
- --------------------------------------------------------------------------------
Tobacco - 0.8%
400,000 Consolidated Cigar Acquisition Corp., 10.50%
senior subordinated notes, due 3/1/03 417,000
- --------------------------------------------------------------------------------
Transportation - Services - 0.5%
250,000 CSX Corp., 7.25%
debentures, due 5/1/04 261,563
- --------------------------------------------------------------------------------
Wire and Cable Products - 1.0%
500,000 Anixter International, Inc., 8.00%
company guaranteed notes, due 9/15/03 527,500
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $34,238,200) 35,619,805
- --------------------------------------------------------------------------------
Foreign Bonds - 1.0%
DEM
900,000 ITT Promedia, 9.125%
senior subordinated notes, due 9/15/07**
(cost $507,858) 524,320
- --------------------------------------------------------------------------------
Preferred Stock - 0.6%
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 0.6%
10,000 Chevy Chase Savings, 13.00%
(cost $313,375) 305,000
- --------------------------------------------------------------------------------
U.S. Government Obligations - 20.9%
U.S. Treasury Notes/Bonds:
$ 7,250,000 6.625%, due 5/15/07 7,672,530
2,500,000 6.125%, due 8/15/07 2,568,575
1,000,000 6.625%, due 2/15/27 1,084,830
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $11,037,136) 11,325,935
- --------------------------------------------------------------------------------
Warrants - 0%
7,700 Gothic Energy Corp. - exp. 9/1/04*,+
(cost $0) 13,475
- --------------------------------------------------------------------------------
U.S. Government Agency - 9.6%
Freddie Mac
5,200,000 6.00%, 1/2/98 (amortized cost $5,199,133) 5,199,133
- --------------------------------------------------------------------------------
Total Investments (total cost $51,295,702) - 97.9% 52,987,668
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 2.1% 1,121,050
- --------------------------------------------------------------------------------
Net Assets - 100% $54,108,718
- --------------------------------------------------------------------------------
Forward Currency Contracts
Open at December 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
German Deutschemark 3/25/98 900,000 $ 503,018 $ 7,200
- --------------------------------------------------------------------------------
Total $ 503,018 $ 7,200
================================================================================
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN HIGH-YIELD PORTFOLIO
Portfolio Managers, Sandy R. Rufenacht and Ronald V. Speaker
A Strong Year
Several themes converged to make 1997 an exciting year for high-yield bonds,
which were one of the best-performing sectors of the fixed-income markets.
Interest rates, after peaking in early April, trended lower as signs of moderate
economic growth and low inflation became clearer. The steady decline in Treasury
yields and growing acceptance of high-yield bonds as viable alternative
investments combined to generate strong demand from investors.
At the same time, businesses looked to the high-yield market as a means of
financing capital improvements and acquisitions. This led to a record amount of
new issuance: $107 billion.
Surging stock prices also helped to push high-yield bonds higher. Economic
conditions that are advantageous to the stock market - a favorable business
climate, abundant capital and low, steady interest rates - are also beneficial
to high-yield issuers, and there is a strong correlation between equities and
high-yield bonds. As the stock market forged ahead, so did the high-yield
market.
Portfolio Strategy
The high-yield sector has attracted record sums for more than a year now, and
certain industries have become overvalued. In this scenario, our emphasis on
stringent, fundamental, equity-style research is critical. In-depth, hands-on
research produces a better understanding of a company's balance sheet and the
true risks of its business. It can also can uncover earnings potential and other
factors that make a bond attractive, including rating upgrade potential and
industry consolidation.
In the supermarket industry, regional operations are being acquired by larger
chains. Our approach is to own well-run companies posting good results. One of
our positions, Ralph's, traded well for some time before being acquired by Fred
Meyers in the fourth quarter. Because this consolidation was undertaken by a
bigger, stronger company with a better balance sheet, our holdings appreciated
substantially.
Likewise, the Telecommunication Act of 1996 has brought about major changes to
that industry, including significant merger and takeover activity. Local
exchange carriers, the established regional Bell operators, and the
long-distance companies are now competing head-to-head to provide local service,
giving consumers more choices and lower prices. The intense competition is
creating pressure to consolidate. For the major national long-distance
companies, acquiring a local, independent competitive access provider, or CAP,
can be the most efficient way to move into local service.
We added several telecommunications issues to the Portfolio during the year.
Among them was Teleport Communications Group Inc., one of the better-performing
CAPs. Teleport, which operates alternative local phone networks for business
customers in more than 60 major U.S. markets, was recently acquired by AT&T.
Another telecommunications holding that performed well was Nextel
Communications, a fully integrated wireless communication company. This
all-in-one (pager, cellular phone and two-way radio) nationwide network is
heavily backed by Craig McCaw, a visionary in the industry who has already sold
one company to AT&T.
Another part of our strategy was to let cash levels build from time to time so
that we could take advantage of selected oppor-tunities, including new issues.
Although this impacted the Portfolio's current yield at various points during
the past 12 months, it also made it possible for us to buy opportunistically
during temporary downturns in the market and thereby add to the Portfolio's
total return.
- --------------------------------------------------------------------------------
Portfolio Profile December 31, 1997 December 31, 1996
Weighted Average Maturity 6.8 Yrs. 8.0 Yrs.
Average Modified Duration* 4.5 Yrs. 5.1 Yrs.
30-Day Average Yield
Institutional Shares** 8.10% 8.93%
Without Reimbursement** 7.04% 5.89%
Retirement Shares** 7.68% N/A
Without Reimbursement** 6.60% N/A
Average Rating B+ B
- --------------------------------------------------------------------------------
* A theoretical measure of price volatility.
** Yields will fluctuate.
The Year Ahead
We remain optimistic about the high-yield market in general and the Portfolio in
particular. The recent volatility in Southeast Asia has affected economies and
markets worldwide, but the underpinnings for a sound U.S. economy remain in
place. Economic growth continues to be moderate and inflation is in check, so we
expect investors to continue to seek out the relatively attractive yields
offered by high-yield bonds. In the event that rates fall further, the Portfolio
is well-positioned for appreciation. If rates rise, the effect should be
mitigated by the upside potential of the many consolidation-candidate issues we
own.
Research remains the key to our strategy, and we will use our strengths in this
area to look for higher-yielding bonds that the market doesn't initially
perceive will be called. Many bonds issued in 1992 mature in 2002 but are
potentially callable today - a situation that could provide both steady income
and appreciation for our shareholders.
Thank you for your continued investment in Janus Aspen High-Yield Portfolio.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN HIGH-YIELD PORTFOLIO
Portfolio Managers, Sandy R. Rufenacht and Ronald V. Speaker
- --------------------------------------------------------------------------------
Average Annual Total Return(1)
For the Periods Ended December 31, 1997
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/96)
1 Year 15.98%
From Inception 17.24%
- --------------------------------------------------------------------------------
Lehman Brothers High-Yield Bond Index
1 Year 12.76%
From Inception Date
of Institutional Shares 13.29%
- --------------------------------------------------------------------------------
Retirement Shares (Inception Date 5/1/97)
1 Year --
From Inception 11.96%
- --------------------------------------------------------------------------------
Note: Performance of the Retirement Shares is lower from the performance shown
on this graph for the Institutional Shares, based upon the higher fees
paid by shareholders investing in this class.
- --------------------------------------------------------------------------------
Performance Overview(1) Source - Lipper Analytical Services, Inc. 1997.
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen High-Yield Portfolio - Institutional Shares and the Lehman
Brothers High-Yield Bond Index. Janus Aspen High-Yield Portfolio - Institutional
Shares is represented by a solid black line. The Lehman Brothers High-Yield Bond
Index is represented by a dashed black line. The "y" axis reflects the value of
the investment. The "x" axis reflects the computation periods from inception,
May 1, 1996, through December 31, 1997. The upper right quadrant reflects the
ending value of the hypothetical investment in Janus Aspen High-Yield Portfolio
- - Institutional Shares ($13,036) as compared to the Lehman Brothers High-Yield
Bond Index ($12,311).
(1) All returns reflect reinvested dividends. The Portfolio's securities may
differ significantly from the securities in the Index. Index returns do not
include taxes or dividends and interest payments or operating expenses
necessary to maintain a portfolio consisting of the same securities that
are in the Index. These returns do not reflect the charges and expenses of
any particular insurance product or qualified plan. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor voluntarily waives a
portion of the Portfolio's expenses. Without such waiver, the Portfolio's
total returns for each class would have been lower. Past performance does
not guarantee future results.
JANUS ASPEN HIGH-YIELD PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Bonds - 112.5%
- --------------------------------------------------------------------------------
Agricultural Operations - 3.5%
$ 100,000 Iowa Select Farms, 10.75%
senior subordinated notes, due 12/1/05 $ 102,500
- --------------------------------------------------------------------------------
Airlines - 3.4%
100,000 Trans World Airlines, 11.50%
senior notes, due 12/15/04 100,250
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 2.6%
25,000 Airxcel, Inc., 11.00%
senior subordinated notes, due 11/15/07 25,750
50,000 Stanadyne Automotive Corp., 10.25%
senior subordinated notes, due 12/15/07 49,875
- --------------------------------------------------------------------------------
75,625
- --------------------------------------------------------------------------------
Building and Construction - 1.2%
35,000 Reliant Building Products, 10.875%
senior subordinated notes, due 5/1/04 36,444
- --------------------------------------------------------------------------------
Building and Construction Products - 0.9%
25,000 Kevco, Inc., 10.375%
senior subordinated notes, due 12/1/07 25,500
- --------------------------------------------------------------------------------
Building Products - Doors and Windows - 0.9%
25,000 Desa International, Inc., 9.875%
senior subordinated notes, due 12/15/07 25,625
- --------------------------------------------------------------------------------
Cable Television - 3.2%
75,000 Adelphia Communications Corp., 9.25%
senior notes, due 10/1/02 76,500
5,000 Galaxy Telecom, L.P., 12.375%
senior subordinated notes, due 10/1/05 5,500
10,000 Rifkin Acquisition Partners, L.P., 11.125%
senior subordinated notes, due 1/15/06 10,962
- --------------------------------------------------------------------------------
92,962
- --------------------------------------------------------------------------------
Casino Hotels - 3.4%
$ 100,000 Venetian Casino Resort, L.L.C., 12.25%
mortgage bonds, due 11/15/04 $ 100,250
- --------------------------------------------------------------------------------
Casino Services - 1.7%
50,000 Isle of Capri Black Hawk, L.L.C., 13.00%
first mortgage bonds, due 8/31/04+ 50,562
- --------------------------------------------------------------------------------
Cellular Telecommunications - 4.5%
Nextel Communications, Inc.:
30,000 zero coupon, senior discount notes,
due 9/1/03 29,700
100,000 zero coupon, senior discount notes,
due 8/15/04 89,000
25,000 Telesystem International Wireless, Inc.,
zero coupon, senior discount notes,
due 11/1/07 13,844
- --------------------------------------------------------------------------------
132,544
- --------------------------------------------------------------------------------
Circuit Boards - 0.9%
25,000 Details, Inc., 10.00%
senior subordinated notes, due 11/15/05 25,625
- --------------------------------------------------------------------------------
Commercial Banks - 0.8%
First Nationwide Holdings, Inc.:
5,000 12.50%, senior notes,
due 4/15/03 5,687
15,000 10.625%, senior subordinated notes,
due 10/1/03 16,762
- --------------------------------------------------------------------------------
22,449
- --------------------------------------------------------------------------------
Commercial Services - 2.8%
80,000 Pantry, Inc. (The), 10.25%
senior subordinated notes, due 10/15/07 81,800
- --------------------------------------------------------------------------------
Finance - Leasing Companies - 3.4%
100,000 Ryder Trucks, Inc., 10.00%
senior subordinated notes, due 12/1/06 100,250
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN HIGH-YIELD PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Food - Diversified - 2.9%
$ 85,000 Richmont Marketing Specialists, 10.125%
senior subordinated notes, due 12/15/07 $ 86,275
- --------------------------------------------------------------------------------
Food - Retail - 6.4%
25,000 Quality Food Centers, Inc., 8.70%
company guaranteed notes, due 3/15/07 27,062
Ralphs Grocery Co.:
80,000 11.00%, company guarantee notes,
due 6/15/05 91,200
15,000 11.00%, senior subordinated notes,
due 6/15/05 17,100
45,000 Star Markets Co., Inc., 13.00%
senior subordinated notes, due 11/1/04 50,963
- --------------------------------------------------------------------------------
186,325
- --------------------------------------------------------------------------------
Funeral Services and Related Items - 0.6%
15,000 Prime Succession Acquisition Co., 10.75%
senior subordinated notes, due 8/15/04 16,462
- --------------------------------------------------------------------------------
Gambling - Non-Hotel Casinos - 0.9%
25,000 Casino America, Inc., 12.50%
senior notes, due 8/1/03 27,062
- --------------------------------------------------------------------------------
Gas - Transportation - 1.7%
45 Navigator Gas Transportation, 12.00%
units, due 6/30/07 50,625
- --------------------------------------------------------------------------------
Home Furnishings - 0.8%
20,000 Cort Furniture Rental, 12.00%
senior notes, due 9/1/00 22,050
- --------------------------------------------------------------------------------
Human Resources - 0.9%
25,000 COMFORCE Corp., 12.00%
senior notes, due 12/1/07+ 25,312
- --------------------------------------------------------------------------------
Industrial Audio and Video Products - 0.4%
10,000 Unifrax Investment Corp., 10.50%
senior notes, due 11/1/03 10,325
- --------------------------------------------------------------------------------
Machine Tools and Related Products - 1.7%
45,000 International Knife & Saw, Inc., 11.375%
senior subordinated notes, due 11/15/06 48,713
- --------------------------------------------------------------------------------
Machinery - Print Trade - 1.0%
25,000 Goss Graphic Systems, Inc., 12.00%
senior subordinated notes, due 10/15/06 28,313
- --------------------------------------------------------------------------------
Manufacturing - 3.2%
50,000 Foamex, L.P., 9.875%
company guaranteed notes, due 6/15/07 50,375
40,000 Plastic Specialties & Technologies, Inc., 11.25%
senior secured notes, due 12/1/03 43,500
- --------------------------------------------------------------------------------
93,875
- --------------------------------------------------------------------------------
Medical - Outpatient and Home Medical Care - 0.9%
25,000 HealthCor Holdings, Inc., 11.00%
senior notes, due 12/1/04 25,688
- --------------------------------------------------------------------------------
Mining Services - 1.8%
50,000 AEI Holding Co., Inc., 10.00%
senior notes, due 11/15/07 51,250
- --------------------------------------------------------------------------------
Networking Products - 3.5%
100 Concentric Network Corp., 12.75%
units, due 12/15/07 102,750
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 2.5%
75,000 Southwest Royalties, Inc., 10.50%
company guaranteed notes, due 10/15/04 74,063
- --------------------------------------------------------------------------------
Oil Companies - Exploration and Production - 1.8%
50,000 Gothic Energy Corp., 12.25%
senior notes, due 9/1/04+ 52,500
- --------------------------------------------------------------------------------
Paper and Related Products - 0.9%
25,000 Bear Island, L.L.C./Finance, 10.00%
senior notes, due 12/1/07 25,313
- --------------------------------------------------------------------------------
Publishing - Books - 0.9%
$ 25,000 Transwestern Publishing Co., 9.625%
senior subordinated notes, due 11/15/07 $ 25,813
- --------------------------------------------------------------------------------
Recreational Centers - 0.6%
15,000 Cobblestone Golf Group, Inc., 11.50%
senior notes, due 6/1/03 16,312
- --------------------------------------------------------------------------------
Reinsurance - 0.5%
15,000 Veritas Holdings GMBH, 9.625%
senior notes, due 12/15/03 16,050
- --------------------------------------------------------------------------------
Retail - Appliances - 0.9%
25,000 Holmes Products Corp., 9.875%
senior subordinated notes, due 11/15/07 25,500
- --------------------------------------------------------------------------------
Retail - Diversified - 0.6%
15,000 Eye Care Centers of America, Inc., 12.00%
senior notes, due 10/1/03 16,275
- --------------------------------------------------------------------------------
Retail - Drug Store - 3.5%
100,000 Community Distributors, 10.25%
senior notes, due 10/15/04 102,500
- --------------------------------------------------------------------------------
Retail - Restaurants - 1.7%
50,000 Perkins Family Restaurants, L.P., 10.125%
senior notes, due 12/15/07+ 50,625
- --------------------------------------------------------------------------------
Satellite Telecommunications - 0.6%
15,000 Digital Television Services, L.L.C., 12.50%
company guaranteed notes, due 8/1/07 16,800
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 2.7%
75,000 Local Financial Corp., 11.00%
senior notes, due 9/8/04+ 79,500
- --------------------------------------------------------------------------------
Steel - Producers - 2.3%
25,000 Ivaco, Inc., 11.50%
senior notes, due 9/15/05 26,938
25,000 Sheffield Steel Corp., 11.50%
first mortgage bonds, due 12/1/05 25,312
15,000 Weirton Steel Corp., 11.375%
senior notes, due 7/1/04 15,750
- --------------------------------------------------------------------------------
68,000
- --------------------------------------------------------------------------------
Telecommunication Equipment - 1.4%
35,000 Diamond Cable Communications PLC, zero coupon,
senior discount notes, due 12/15/05 27,256
15,000 Telex Communications, Inc., 10.50%
company guaranteed notes, due 5/1/07 14,775
- --------------------------------------------------------------------------------
42,031
- --------------------------------------------------------------------------------
Telecommunication Services - 10.6%
25,000 FWT, Inc., 9.875%
senior subordinated notes, due 11/15/07 25,625
60,000 HighwayMaster Communications, Inc., 13.75%
senior notes, due 9/15/05+ 61,050
Intermedia Communications, Inc.:
25,000 zero coupon, senior discount notes,
due 5/15/06 19,750
30,000 zero coupon, senior discount notes,
due 7/15/07 21,338
40,000 Microcell Telecommunications, Inc.,
zero coupon, senior discount notes,
due 6/1/06 26,950
10,000 Peoples Telephone Co., Inc., 12.25%
senior notes, due 7/15/02 10,600
125,000 RCN Corp., zero coupon
senior discount notes, due 10/15/07 78,594
80,000 Teleport Communications Group, Inc.,
zero coupon, senior discount notes, due 7/1/07 65,600
- --------------------------------------------------------------------------------
309,507
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN HIGH-YIELD PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Telephone - Integrated - 2.4%
$ 50,000 Esprit Telecom Group PLC, 11.50%
senior notes, due 12/15/07 $ 51,375
20 MGC Communications, Inc., 13.00%
units, due 10/1/04+ 20,100
- --------------------------------------------------------------------------------
71,475
- --------------------------------------------------------------------------------
Telephone - Local - 2.1%
50,000 American Communications Services, Inc., zero
coupon, senior discount notes, due 4/1/06 38,688
25,000 Transtel S.A., 12.50%
senior notes, due 11/1/07+ 23,437
- --------------------------------------------------------------------------------
62,125
- --------------------------------------------------------------------------------
Telephone - Long Distance - 1.8%
50,000 Primus Telecommunications Group, Inc., 11.75%
senior notes, due 8/1/04 53,375
- --------------------------------------------------------------------------------
Television - 5.8%
20,000 Allbritton Communications, 11.50%
senior subordinated debentures,
due 8/15/04 21,000
50,000 Dialog Corp. PLC, 11.00%
senior subordinated notes, due 11/15/07 52,187
10,000 Price Communications Wireless, Inc., 11.75%
senior subordinated notes, due 7/15/07 10,825
90,000 Radio One, Inc., 7.00%
senior subordinated notes, due 5/15/04 86,963
- --------------------------------------------------------------------------------
170,975
- --------------------------------------------------------------------------------
Textile - Products - 0.9%
25,000 Glenoit Corp., 11.00%
senior subordinated notes, due 4/15/07+ 26,875
- --------------------------------------------------------------------------------
Tobacco - 0.4%
10,000 Consolidated Cigar Acquisition Corp., 10.50%
senior subordinated notes, due 3/1/03 10,425
- --------------------------------------------------------------------------------
Transportation - Marine - 2.5%
75,000 Panoceanic Bulk Carriers, Ltd., 12.00%
notes, due 12/15/07 74,437
- --------------------------------------------------------------------------------
Transportation - Services - 1.1%
30,000 Atlantic Express, Inc., 10.75%
company guaranteed notes, due 2/1/04 31,800
- --------------------------------------------------------------------------------
Trucking and Leasing - 0.7%
20,000 Core-Mark International, Inc., 11.375%
senior subordinated notes, due 9/15/03 21,150
- --------------------------------------------------------------------------------
Water - 2.6%
75,000 Sparkling Spring Water Group, 11.50%
senior subordinated notes, due 11/15/07 77,063
- --------------------------------------------------------------------------------
Wire and Cable Products - 0.8%
20,000 International Wire Group, 11.75%
senior subordinated notes, due 6/1/05 21,950
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $3,231,980) 3,289,850
- --------------------------------------------------------------------------------
Foreign Bonds - 2.0%
DEM
100,000 ITT Promedia, 9.125%
senior subordinated notes, due 9/15/07
(cost $56,429) $ 58,257
- --------------------------------------------------------------------------------
Preferred Stock - 0.7%
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 0.6%
600 Chevy Chase Savings, 13.00% 18,300
- --------------------------------------------------------------------------------
Telecommunication Services - 0.1%
1 Intermedia Communications Inc., 13.50% 1,513
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $18,600) 19,813
- --------------------------------------------------------------------------------
Warrants - 0.2%
700 Gothic Energy Corp. - exp. 9/1/04* 1,225
160 Microcell Telecommunications, Inc.,
Initial - exp. 6/1/06*,+ 3,760
50 Primus Telecommunications Group, Inc.
- exp. 8/1/04* 500
- --------------------------------------------------------------------------------
Total Warrants (cost $2,100) 5,485
- --------------------------------------------------------------------------------
U.S. Government Agency - 5.6%
Freddie Mac
$165,000 6.00%, 1/2/98 (amortized cost $164,973) 164,973
- --------------------------------------------------------------------------------
Total Investments (total cost $3,474,082) - 121.0% 3,538,378
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (21.0%) (613,461)
- --------------------------------------------------------------------------------
Net Assets - 100% $2,924,917
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN SHORT-TERM BOND PORTFOLIO Portfolio Manager, Sandy R. Rufenacht
The Year in Review
Key to the Portfolio's performance was its flexibility in a changing
interest-rate environment. Fearing that higher wages and a rapid rate of
economic growth would accelerate inflation and cause the Federal Reserve to
boost short-term interest rates, investors bid down the price of securities,
thereby forcing yields higher and flattening out the yield curve (i.e.,
narrowing the difference in yields between short- and long-term securities).
Yields on the three-year Treasury note began 1997 at 6.07% and moved up during
the first four months to roughly 6.50%. Through much of the year, short-term
securities traded in this relatively narrow range but exhibited considerable
day-to-day volatility.
Though the economy remained robust, inflation did not increase (largely because
of productivity gains that held down costs), and by late in the third quarter,
the bond market began a rally that was later bolstered by the Asian monetary
crisis. As problems in the economies of several Southeast Asian "tigers" spread
to markets worldwide, there was a flight to quality issues, especially U.S.
Treasury securities. The sudden increase in demand helped to push prices of
these securities up (and yields down) to levels not seen since the 1960s. At
year-end the yield on the three-year Treasury bond stood at 5.67%.
Portfolio Strategy
Our diversified, flexible approach, which stresses maximizing yields while
controlling risk, allowed us to be very responsive to the market during the past
12 months.
The majority of the Portfolio, as the table below indicates, was invested in
investment-grade corporate securities, which have limited credit risk. Among the
latter were such well-known names as SmithKline Beecham, Sherwin-Williams and
Chrysler Financial Corp.
- --------------------------------------------------------------------------------
Portfolio Asset Mix December 31, 1997 December 31, 1996
Investment-Grade Corp. Bonds 82.5% 56.4%
U.S. Government Obligations -- 42.0%
Cash & Cash Equivalents 17.5% 1.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Portfolio Profile December 31, 1997 December 31, 1996
Weighted Average Maturity 1.9 Yrs. 2.0 Yrs.
Average Modified Duration* 1.6 Yrs. 1.8 Yrs.
30-day Average Yield
Institutional Shares** 6.15% 5.37%
Without Reimbursement** 4.94% 4.99%
Retirement Shares** 5.57% N/A
Without Reimbursement** 4.36% N/A
Average Rating A+ AA
- --------------------------------------------------------------------------------
* A theoretical measure of price volatility.
** Yields will fluctuate.
The most significant change in portfolio composition was the addition of
short-term, high-yield securities. Maintaining high cash levels at various times
during the year permitted us to buy these bonds advantageously during short-term
fluctuations with-out incurring much incremental risk. Although these high-yield
bonds generally involve greater credit risk than that associated with
investment-grade bonds, their higher coupons and relatively short terms to
maturity provide more attractive yields, lower interest-rate risk, and shorten
the Portfolio's duration. By focusing on short-term issues trading to their call
prices, we collected higher-paying coupons with a relatively high degree of
safety. (When a bond has only a few years left and is trading at or near its
call price, there is less chance that the price will fall below that level.)
One highlight in this area was All American Communications, which was acquired
by Pearson PLC and tendered at more than six points above our purchase price.
Prior to the redemption, the Portfolio benefited from its 10.88% coupon.
Key to our ability to identify high-yield issues is Janus' extensive
equity-research capability. Drawing upon the wealth of data gathered through
hands-on review of the fundamentals of hundreds of companies annually helps us
to better assess credit quality and identify the true risks of the underlying
business. This reasearch can also reveal earnings potential and other
characteristics of the company that make a bond a good buy.
Going Forward
Because of the increased diversification in the Portfolio, it did not benefit as
much as it might have from the rally in Treasury securities during November and
December. Nonetheless, we believe that broadening our holdings will serve
shareholders well in the coming months.
The recent volatility in Southeast Asia may take some time yet to rectify and is
likely to keep economic growth and inflation in the U.S. at very moderate
levels. While the jury is still out, it is possible that short-term rates could
decline further - an event that would make the high coupons on our holdings even
more valuable. If rates rise, the Portfolio is positioned to respond quickly
while maintaining a stable net asset value.
Thank you for your continued investment in Janus Aspen Short-Term Bond
Portfolio.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN SHORT-TERM BOND PORTFOLIO Portfolio Manager, Sandy R. Rufenacht
- --------------------------------------------------------------------------------
Average Annual Total Return(1)
For the Periods Ended December 31, 1997
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year 6.72%
From Inception 4.95%
- --------------------------------------------------------------------------------
Lehman Brothers Govt./Corp. 1-3 Year Bond Index
1 Year 6.66%
From Inception Date
of Institutional Shares 5.60%
- --------------------------------------------------------------------------------
Retirement Shares (Inception Date 5/1/97)
1 Year --
From Inception 4.53%
- --------------------------------------------------------------------------------
Note: Performance of the Retirement Shares is lower from the performance shown
on this graph for the Institutional Shares, based upon the higher fees
paid by shareholders investing in this class.
- --------------------------------------------------------------------------------
Performance Overview(1) Source - Lipper Analytical Services, Inc. 1997.
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Short-Term Bond Portfolio - Institutional Shares and the Lehman
Brothers Government/Corporate 1-3 Year Bond Index. Janus Aspen Short-Term Bond
Portfolio - Institutional Shares is represented by a solid black line. The
Lehman Brothers Government/Corporate 1-3 Year Bond Index is represented by a
dashed black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, September 13, 1993 through
December 31, 1997. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Aspen Short-Term Bond Portfolio - Institutional
Shares ($12,304) as compared to the Lehman Brothers Government/Corporate 1-3
Year Bond Index ($12,637).
(1) All returns reflect reinvested dividends. The Portfolio's securities may
differ significantly from the securities in the Index. Index returns do not
include taxes or dividends and interest payments or operating expenses
necessary to maintain a portfolio consisting of the same securities that
are in the Index. These returns do not reflect the charges and expenses of
any particular insurance product or qualified plan. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor voluntarily waives a
portion of the Portfolio's expenses. Without such waiver, the Portfolio's
total returns for each class would have been lower. Past performance does
not guarantee future results.
JANUS ASPEN SHORT-TERM BOND PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Bonds - 82.5%
- --------------------------------------------------------------------------------
Aerospace and Defense - 5.5%
$150,000 Lockheed Martin Corp., 6.55%
company guaranteed unsecured notes,
due 5/15/99 $ 150,750
- --------------------------------------------------------------------------------
Commercial Banks - 5.4%
150,000 First USA Bank, Inc., 5.75%
notes, due 1/15/99 149,625
- --------------------------------------------------------------------------------
Computers - Mainframe - 5.5%
150,000 IBM Corp., 6.375%
global notes, due 6/15/00 151,125
- --------------------------------------------------------------------------------
Diversified Financial Services - 11.0%
150,000 Associates Corp. of North America, 6.375%
senior notes, due 8/15/98 150,396
150,000 Chrysler Financial Corp., 6.625%
notes, due 8/15/00 151,875
- --------------------------------------------------------------------------------
302,271
- --------------------------------------------------------------------------------
Finance - Leasing Companies - 10.9%
150,000 International Lease Finance Corp., 6.125%
notes, due 11/1/99 150,000
150,000 Pitney Bowes Credit Corp., 6.25%
notes, due 6/1/98 150,262
- --------------------------------------------------------------------------------
300,262
- --------------------------------------------------------------------------------
Food - Diversified - 5.5%
150,000 Grand Metropolitan Investment Corp., 6.50%
company guaranteed notes, due 9/15/99 150,937
- --------------------------------------------------------------------------------
Hotels and Motels - 5.5%
150,000 Hyatt Equities, L.L.C., 6.80%
notes, due 5/15/00+ 151,688
- --------------------------------------------------------------------------------
Medical - Drugs - 5.6%
$ 150,000 SmithKline Beecham PLC, 6.75%
company guaranteed notes, due 10/30/01 $ 153,188
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 5.5%
150,000 Texaco Capital, Inc., 6.875%
notes, due 7/15/99 152,063
- --------------------------------------------------------------------------------
Paint and Related Products - 5.5%
150,000 Sherwin-Williams Co., 6.25%
notes, due 2/1/00 150,563
- --------------------------------------------------------------------------------
Pipelines - 5.5%
150,000 Enron Corp., 6.45%
notes, due 11/15/01 150,562
- --------------------------------------------------------------------------------
Retail - Discount - 11.1%
150,000 TJX Companies, Inc., 6.625%
notes, due 6/15/00 151,125
150,000 Woolworth Corp., 7.00%
notes, due 6/1/00 152,250
- --------------------------------------------------------------------------------
303,375
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $2,252,934) 2,266,409
- --------------------------------------------------------------------------------
U.S. Government Agency - 16.4%
Freddie Mac
449,000 6.00%, 1/2/98 (amortized cost $448,925) 448,925
- --------------------------------------------------------------------------------
Total Investments (total cost $2,701,859) - 98.9% 2,715,334
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 1.1% 29,860
- --------------------------------------------------------------------------------
Net Assets - 100% $2,745,194
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN MONEY MARKET PORTFOLIO Portfolio Manager, Sharon S. Pichler
Performance Review
For year ended 1997, Janus Aspen Money Market Portfolio produced a one year
average annual total return of 5.17% and an average annual total return of 5.21%
since inception for the Institutional class. For the Retirement Shares the
cumulative total return since inception of May 1, 1997, was 3.13%. The 7-day
current yield was 5.32% and 4.82% for the Institutional and Retirement Shares
respectively.
The Economic Perspective
Early in 1997, in anticipation of higher inflation, short-term interest rates
rose from the lows of 1996, moving closer to intermediate-term rates and thereby
flattening the yield curve. For most of the year, short-term interest rates, as
measured by the yield on one-year Treasury securities, stayed in a relatively
narrow range between approximately 5.5% and 6.0%. Less sensitive to economic
conditions than longer-term securities, short-term issues instead react to
changes in the federal funds rate, which changed only once (by 0.25%) in
mid-March.
Expectations changed late in the year, after fourth-quarter volatility in the
foreign capital markets ignited a "flight to quality." Demand for U.S. Treasury
securities, which are considered among the world's safest, highest-quality
investments, rose significantly in November and December, resulting in higher
prices and lower yields in the short-term market. At year-end, the yield on
one-year Treasuries had moved down to 5.48%, and by January 9, 1998, was down
even more dramatically to 5.08%.
In addition, as the year wound down, earlier worries about inflated stock prices
and higher inflation, which would normally cause the Federal Reserve Board to
raise rates, shifted to consideration of deflation. Federal Reserve Chairman
Alan Greenspan discussed the possibility that the monetary and market crises
that began in Thailand might cause the world economy to slow down significantly.
Overcapacity in Southeast Asia increases the likelihood that prices of many U.S.
imports will move not higher but lower. This in turn should help to keep
inflation in the United States in check, despite our robust economy and tight
labor market.
Given this scenario, we believe the next move in the federal funds rate could be
a reduction, perhaps as early as late March.
Portfolio Strategy
For much of the year, assets were invested primarily in very short-term
obligations (e.g., 1-7 days), which were providing yields close to those of
longer-term debt (e.g., six months to one year). I did not lock the Portfolio
into longer obligations unless I felt we could be adequately compensated for the
extra time exposure. At year-end, the Portfolio's weighted average maturity was
just 10 days.
As events in the global economy unfold, I may extend the Portfolio's maturity by
selectively purchasing six-month and one-year issues. In the event of a further
decline in rates, this will help us to capture a bit more upside, since
longer-term debt gains more value when rates fall. Liquidity considerations are
paramount, and we will be careful to maintain at least a 50% weighting in the
shortest-term issues. All issues involve very minimal credit risk (generally
those rated in the top two tiers by the major national rating organizations).
This will help to ensure that the Portfolio serves its purpose as a good choice
for the cash portion of your investments.
Thank you for your continued investment in Janus Aspen Money Market Portfolio.
- --------------------------------------------------------------------------------
A money market portfolio is neither insured nor guaranteed by the U.S.
government, and there can be no assurance it will be able to maintain a $1.00
share price. The adviser voluntarily waives a portion of the Portfolio's
expenses. Without such waiver, the Portfolio's total returns for each class
would have been lower.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
JANUS ASPEN MONEY MARKET PORTFOLIO December 31, 1997
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
U.S. Government Agencies - 58.4%
$2,500,000 Fannie Mae
5.70%, 1/5/98 $ 2,498,417
2,000,000 Federal Farm Credit Bank
5.75%, 1/16/98 1,995,208
Freddie Mac:
2,500,000 5.70%, 1/9/98 2,496,833
2,000,000 5.67%, 1/13/98 1,996,220
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (amortized cost $8,986,678) 8,986,678
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 20.4%
750,000 Bell Atlantic Network
5.90%, 1/22/98 747,419
500,000 CIT Holdings
5.81%, 1/15/98 498,870
500,000 General Electric Capital Corp.
5.85%, 1/8/98 499,431
500,000 Household Finance Corp.
5.92%, 1/6/98 499,589
400,000 IBM Credit Corp.
5.50%, 1/16/98 399,083
500,000 Prudential Funding Corp.
5.88%, 1/12/98 499,102
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $3,143,494) 3,143,494
- --------------------------------------------------------------------------------
Repurchase Agreement - 15.3%
$ 2,350,000 Goldman Sachs, Inc., 6.25% dated 12/31/97,
maturing 1/2/98, to be repurchased at $2,350,816
collateralized by $2,342,000 in Fannie Mae,
6.50%, 2/25/02 with value of $2,397,093 (cost
$2,350,000)*** $ 2,350,000
- --------------------------------------------------------------------------------
Total Investments (total cost $14,480,172) - 94.1% 14,480,172
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 5.9% 903,480
- --------------------------------------------------------------------------------
Net Assets - 100% $15,383,652
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
NOTES TO SCHEDULES OF INVESTMENTS
(ADR) - American Depository Receipt
(GDR) - Global Depository Receipt
DEM - German Deutschemark
JPY - Japanese Yen
* Non-income-producing security
** A portion of this security has been segregated by the custodian to cover
segregation requirements on forward currency contracts.
*** Repurchase Agreements held by the Portfolio are fully collateralized and
such collateral is in the possession of the Portfolio's custodian. The
collateral is evaluated daily to ensure its market value equals or exceeds
the current market value of the repurchase agreements including accrued
interest. In the event of default on the obligation to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds
in satisfaction of the obligation. In the event of default or bankruptcy by
the other party to the agreement, realization and /or retention of the
collateral or proceeds may be subject to legal proceedings.
+ Securities are registered pursuant to Rule 144A and may be deemed to be
restricted for resale.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
As of December 31, 1997 (All numbers Janus Aspen Janus Aspen Janus Aspen Janus Aspen
in thousands except Retirement Shares Janus Aspen Aggressive Capital International Worldwide Janus Aspen
outstanding and net asset value per Growth Growth Appreciation Growth Growth Balanced
share.) Portfolio Portfolio Portfolio(1) Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C>
Investments at cost $535,511 $400,592 $6,678 $152,691 $1,364,374 $350,008
================================================================================================================================
Investments at value $610,072 $514,273 $6,943 $164,336 $1,562,618 $370,376
Cash 132 448 51 204 1,077 385
Receivables:
Investments sold 6,077 7,056 13 1,059 21,327 5,928
Portfolio shares sold 575 339 42 25 1,129 932
Interest -- -- -- 1 -- 1,807
Dividends 371 145 1 135 1,449 166
Other assets 5 5 6 -- 9 10
Foreign currency contracts -- -- -- 447 5,951 --
- --------------------------------------------------------------------------------------------------------------------------------
Total Assets 617,232 522,266 7,056 166,207 1,593,560 379,604
- --------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Investments purchased 7,529 13,596 198 1,443 14,305 16,896
Portfolio shares repurchased 907 129 6 3,551 1,311 33
Advisory fee 326 296 4 87 854 211
Accrued expenses 41 26 2 24 139 19
Foreign currency contracts 136 8 -- -- -- 24
- --------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 8,939 14,055 210 5,105 16,609 17,183
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets $608,293 $508,211 $6,846 $161,102 $1,576,951 $362,421
================================================================================================================================
Net Assets - Institutional Shares $608,281 $508,198 $6,833 $161,091 $1,576,548 $362,409
Shares Outstanding, $.001 Par Value
(unlimited shares authorized) 32,921 24,727 541 8,716 67,406 20,751
Net Asset Value Per Share $ 18.48 $ 20.55 $12.62 $ 18.48 $ 23.39 $ 17.47
================================================================================================================================
Net Assets - Retirement Shares $ 12 $ 13 $ 13 $ 11 $ 403 $ 12
Shares Outstanding, $.001 Par Value
(unlimited shares authorized) 635 620 1,000 599 17,251 669
Net Asset Value Per Share $ 18.46 $ 20.49 $12.62 $ 18.44 $ 23.36 $ 17.47
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
<TABLE>
<CAPTION>
As of December 31, 1997 (All numbers Janus Aspen Janus Aspen
in thousands except Retirement Shares Janus Aspen Flexible Janus Aspen Short-Term Janus Aspen
outstanding and net asset value per Equity Income Income High-Yield Bond Money Market
share.) Portfolio(1) Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C>
Investments at cost $ 2,947 $ 51,296 $3,474 $ 2,702 $ 14,480
================================================================================================================================
Investments at value $ 3,027 $ 52,988 $3,538 $ 2,715 $ 14,480
Cash 49 104 2 1 2
Receivables:
Investments sold 11 -- -- -- --
Portfolio shares sold 58 168 -- -- 1,084
Interest 3 900 54 35 --
Dividends 2 -- -- -- --
Other assets 25 -- 5 3 --
Foreign currency contracts -- 7 -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total Assets 3,175 54,167 3,599 2,754 15,566
- --------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Investments purchased 107 -- -- -- --
Portfolio shares repurchased -- 23 660 1 171
Advisory fee 2 28 2 2 4
Accrued expenses 6 7 12 6 7
Foreign currency contracts -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 115 58 674 9 182
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 3,060 $ 54,109 $2,925 $ 2,745 $ 15,384
================================================================================================================================
Net Assets - Institutional Shares $ 3,047 $ 54,098 $2,914 $ 2,735 $ 15,374
Shares Outstanding, $.001 Par Value
(unlimited shares authorized) 226 4,593 247 308 15,374
Net Asset Value Per Share $ 13.46 $ 11.78 $11.78 $ 8.88 $ 1.00
================================================================================================================================
Net Assets - Retirement Shares $ 13 $ 11 $ 11 $ 10 $ 10
Shares Outstanding, $.001 Par Value
(unlimited shares authorized) 1,000 932 950 1,177 10,306
Net Asset Value Per Share $ 13.42 $ 11.77 $11.78 $ 8.88 $ 1.00
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Janus Aspen Janus Aspen Janus Aspen Janus Aspen
For the fiscal year or period ended Janus Aspen Aggressive Capital International Worldwide Janus Aspen
December 31, 1997 (All numbers in Growth Growth Appreciation Growth Growth Balanced
thousands.) Portfolio Portfolio Portfolio(1) Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest $ 3,410 $ 1,476 $ 44 $ 651 $ 3,973 $ 4,762
Dividends 4,438 1,316 4 1,070 13,770 1,808
Foreign Tax Withheld (179) (61) -- (130) (1,493) (57)
- --------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 7,669 2,731 48 1,591 16,250 6,513
- --------------------------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 3,120 3,036 13 645 7,533 1,348
Transfer agent fees and expenses 6 6 -- 1 14 2
Registration fees 4 4 1 -- 17 5
System fees 17 11 5 10 14 12
Custodian fees 161 101 9 255 905 80
Insurance expense 2 3 -- -- 10 1
Audit fees 14 13 2 8 20 8
Other expenses 4 6 2 4 8 1
- --------------------------------------------------------------------------------------------------------------------------------
Total Expenses 3,328 3,180 32 923 8,521 1,457
- --------------------------------------------------------------------------------------------------------------------------------
Less: Expense offset (9) (13) -- (1) (15) (5)
- --------------------------------------------------------------------------------------------------------------------------------
Net expenses 3,319 3,167 32 922 8,506 1,452
- --------------------------------------------------------------------------------------------------------------------------------
Less: Excess expense reimbursement -- -- (9) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net expenses after reimbursement 3,319 3,167 23 922 8,506 1,452
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income/(loss) 4,350 (436) 25 669 7,744 5,061
- --------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized
Gain/(Loss) on Investments:
Net realized gain/(loss)
from securities transactions 47,912 1,976 (146) (453) 37,500 13,514
Net realized gain/(loss)
from foreign currency transactions 27 (1,188) -- 323 9,650 (194)
Net realized gain/(loss)
from futures contracts -- -- -- (18) (316) --
Change in net unrealized appreciation
or depreciation of investments 39,125 56,805 265 10,109 135,768 15,763
- --------------------------------------------------------------------------------------------------------------------------------
Net gain on investments 87,064 57,593 119 9,961 182,602 29,083
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations $ 91,414 $ 57,157 $ 144 $ 10,630 $ 190,346 $ 34,144
================================================================================================================================
</TABLE>
STATEMENTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
Janus Aspen Janus Aspen
For the fiscal year or period ended Janus Aspen Flexible Janus Aspen Short-Term Janus Aspen
December 31, 1997 (All numbers in Equity Income Income High-Yield Bond Money Market
thousands.) Portfolio(1) Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest $ 5 $ 2,744 $ 139 $ 805 $ 506
Dividends 7 52 2 -- --
Foreign Tax Withheld -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 12 2,796 141 805 506
- --------------------------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 6 238 12 81 22
Transfer agent fees and expenses -- -- -- -- --
Registration fees 1 -- -- 1 --
System fees 4 9 10 10 10
Custodian fees 28 17 18 13 7
Insurance expense -- -- -- -- --
Audit fees 3 9 10 8 6
Other expenses 1 3 2 -- 2
- --------------------------------------------------------------------------------------------------------------------------------
Total Expenses 43 276 52 113 47
- --------------------------------------------------------------------------------------------------------------------------------
Less: Expense offset -- (2) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net expenses 43 274 52 113 47
- --------------------------------------------------------------------------------------------------------------------------------
Less: Excess expense reimbursement (34) -- (36) (32) (2)
- --------------------------------------------------------------------------------------------------------------------------------
Net expenses after reimbursement 9 274 16 81 45
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income/(loss) 3 2,522 125 724 461
- --------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized
Gain/(Loss) on Investments:
Net realized gain/(loss)
from securities transactions 75 690 66 48 --
Net realized gain/(loss)
from foreign currency transactions (4) 11 1 -- --
Net realized gain/(loss)
from futures contracts -- (18) -- -- --
Change in net unrealized appreciation
or depreciation of investments 80 1,050 39 18 --
- --------------------------------------------------------------------------------------------------------------------------------
Net gain on investments 151 1,733 106 66 --
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations $ 154 $ 4,255 $ 231 $ 790 $ 461
================================================================================================================================
</TABLE>
(1) For the period May 1, 1997 (inception) to December 31, 1997.
See Notes to Financial Statements.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Janus Aspen Janus Aspen
Janus Aspen Janus Aspen Capital International
For the fiscal year or period ended Growth Aggressive Growth Appreciation Growth
December 31 (all numbers in thousands(3)) Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997(1) 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) $ 4,350 $ 2,996 $ (436) $ (789) $ 25 $ 669 $ 46
Net realized gain/(loss) from
investment transactions 47,939 10,156 788 (12,093) (146) (148) 261
Change in unrealized net appreciation
or (depreciation) of investments 39,125 20,898 56,805 27,841 265 10,109 1,663
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets
resulting from operations 91,414 34,050 57,157 14,959 144 10,630 1,970
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions:
Net investment income (4,361) (3,002) -- -- (21) (645) (76)
Dividends (in excess of net investment income) -- -- -- -- -- -- --
Net realized gain from investment transactions (9,976) (3,331) -- (3,020) -- (59) (83)
Distributions (in excess of realized gains) -- -- -- -- -- (161) --
Tax Return of Capital -- -- -- (220) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from
dividends and distributions (14,337) (6,333) -- (3,240) (21) (865) (159)
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 244,131 183,993 204,318 210,533 9,452 185,562 26,943
Retirement Shares 10 -- 10 -- 10 10 --
Reinvested dividends and distributions
Institutional Shares 14,337 6,333 -- 3,240 21 864 159
Retirement Shares -- -- -- -- -- -- --
Shares repurchased
Institutional Shares (53,051) (19,165) (136,967) (27,710) (2,760) (62,291) (3,329)
Retirement Shares -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets from
capital share transactions 205,427 171,161 67,361 186,063 6,723 124,145 23,773
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets 282,504 198,878 124,518 197,782 6,846 133,910 25,584
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of period 325,789 126,911 383,693 185,911 -- 27,192 1,608
- ----------------------------------------------------------------------------------------------------------------------------------
End of Period $ 608,293 $ 325,789 $ 508,211 $ 383,693 $ 6,846 $ 161,102 $ 27,192
==================================================================================================================================
Net Assets consist of:
Capital (par value and paid-in surplus)* $ 485,858 $ 280,430 $ 404,537 $ 337,407 $ 6,723 $ 149,136 $ 24,992
Undistributed net investment
income/(distribution in excess)* 117 123 -- 2 4 80 12
Undistributed net realized
gain/(loss) from investments* 47,894 9,937 (9,994) (10,580) (146) (206) 207
Unrealized appreciation/(depreciation)
of investments 74,424 35,299 113,668 56,864 265 12,092 1,981
- ----------------------------------------------------------------------------------------------------------------------------------
$ 608,293 $ 325,789 $ 508,211 $ 383,693 $ 6,846 $ 161,102 $ 27,192
==================================================================================================================================
Transactions in Portfolio Shares
- Institutional Shares
Shares sold 14,157 12,447 11,104 11,507 765 10,297 1,817
Reinvested dividends and distributions 829 426 -- 176 2 46 11
- ----------------------------------------------------------------------------------------------------------------------------------
Total 14,986 12,873 11,104 11,683 767 10,343 1,828
Shares repurchased (3,068) (1,306) (7,417) (1,528) (226) (3,357) (233)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/decrease in portfolio shares 11,918 11,567 3,687 10,155 541 6,986 1,595
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding beginning of period 21,003 9,436 21,040 10,885 -- 1,730 135
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding end of period 32,921 21,003 24,727 21,040 541 8,716 1,730
==================================================================================================================================
Transactions in Portfolio Shares
- Retirement Shares(3)
Shares sold 618 -- 620 -- 1,000 595 --
Reinvested dividends and distributions 17 -- -- -- -- 4 --
- ----------------------------------------------------------------------------------------------------------------------------------
Total 635 -- 620 -- 1,000 599 --
Shares repurchased -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/decrease in portfolio shares 635 -- 620 -- 1,000 599 --
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding beginning of period -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding end of period 635 -- 620 -- 1,000 599 --
==================================================================================================================================
Purchases and Sales of Investment Securities:
(excluding Short-Term Securities)
Purchases of Securities $ 713,049 $ 279,406 $ 583,004 $ 411,187 $ 6,590 $ 193,061 $ 19,784
Proceeds from Sales of Securities 506,228 151,544 509,947 242,452 1,165 73,634 3,941
Purchases of Long-Term
U.S. Government Obligations -- -- -- -- -- -- --
Proceeds from Sales of Long-Term
U.S. Government Obligations -- -- -- -- -- -- --
==================================================================================================================================
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
Janus Aspen Janus Aspen Janus Aspen Janus Aspen
For the fiscal year or period ended Worldwide Growth Balanced Equity Income Flexible Income
December 31 (all numbers in thousands(3)) Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997(1) 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) $ 7,744 $ 2,521 $ 5,061 $ 1,270 $ 3 $ 2,522 $ 1,307
Net realized gain/(loss) from
investment transactions 46,834 11,302 13,320 1,768 71 683 324
Change in unrealized net appreciation
or (depreciation) of investments 135,768 54,851 15,763 3,680 80 1,050 277
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets
resulting from operations 190,346 68,674 34,144 6,718 154 4,255 1,908
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions:
Net investment income (9,330) (4,109) (5,104) (1,165) (2) (2,372) (1,255)
Dividends (in excess of net investment income) (1,332) -- -- -- -- -- --
Net realized gain from investment transactions (8,190) (2,028) (1,791) (278) -- (322) (272)
Distributions (in excess of realized gains) -- -- -- -- -- -- --
Tax Return of Capital -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from
dividends and distributions (18,852) (6,137) (6,895) (1,443) (2) (2,694) (1,527)
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 897,983 431,848 254,907 72,698 3,884 35,431 20,543
Retirement Shares 402 -- 10 -- 10 10 --
Reinvested dividends and distributions
Institutional Shares 18,852 6,137 7,744 1,443 2 2,693 1,527
Retirement Shares -- -- -- -- -- 1 --
Shares repurchased
Institutional Shares (94,383) (26,482) (12,969) (7,957) (988) (10,902) (7,967)
Retirement Shares -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets from
capital share transactions 822,854 411,503 249,692 66,184 2,908 27,233 14,103
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets 994,348 474,040 276,941 71,459 3,060 28,794 14,484
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of period 582,603 108,563 85,480 14,021 -- 25,315 10,831
- ----------------------------------------------------------------------------------------------------------------------------------
End of Period $1,576,951 $ 582,603 $ 362,421 $ 85,480 $ 3,060 $ 54,109 $ 25,315
==================================================================================================================================
Net Assets consist of:
Capital (par value and paid-in surplus)* $1,327,595 $ 504,741 $ 328,723 $ 79,031 $ 2,908 $ 51,530 $ 24,297
Undistributed net investment
income/(distribution in excess)* 1,556 1,586 129 114 1 208 46
Undistributed net realized
gain/(loss) from investments* 43,642 7,886 13,228 1,758 71 672 322
Unrealized appreciation/(depreciation)
of investments 204,158 68,390 20,341 4,577 80 1,699 650
- ----------------------------------------------------------------------------------------------------------------------------------
$1,576,951 $ 582,603 $ 362,421 $ 85,480 $ 3,060 $ 54,109 $ 25,315
==================================================================================================================================
Transactions in Portfolio Shares
- Institutional Shares
Shares sold 40,742 24,029 15,268 5,179 301 3,048 1,853
Reinvested dividends and distributions 819 328 470 101 -- 234 139
- ----------------------------------------------------------------------------------------------------------------------------------
Total 41,561 24,357 15,738 5,280 301 3,282 1,992
Shares repurchased (4,123) (1,479) (776) (567) (75) (941) (715)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/decrease in portfolio shares 37,438 22,878 14,962 4,713 226 2,341 1,277
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding beginning of period 29,968 7,090 5,789 1,076 -- 2,252 975
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding end of period 67,406 29,968 20,751 5,789 226 4,593 2,252
==================================================================================================================================
Transactions in Portfolio Shares
- Retirement Shares(3)
Shares sold 17,245 -- 650 -- 1,000 876 --
Reinvested dividends and distributions 6 -- 19 -- -- 56 --
- ----------------------------------------------------------------------------------------------------------------------------------
Total 17,251 -- 669 -- 1,000 932 --
Shares repurchased -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/decrease in portfolio shares 17,251 -- 669 -- 1,000 932 --
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding beginning of period -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding end of period 17,251 -- 669 -- 1,000 932 --
==================================================================================================================================
Purchases and Sales of Investment Securities:
(excluding Short-Term Securities)
Purchases of Securities $1,715,083 $ 532,495 $ 377,245 $ 95,054 $ 3,560 $ 46,074 $ 44,707
Proceeds from Sales of Securities 862,382 170,371 221,317 39,718 997 31,006 34,221
Purchases of Long-Term
U.S. Government Obligations -- -- 70,831 4,833 -- 15,463 7,738
Proceeds from Sales of Long-Term
U.S. Government Obligations -- -- 13,669 2,154 -- 7,755 6,051
==================================================================================================================================
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
Janus Aspen Janus Aspen Janus Aspen
For the fiscal year or period ended High-Yield Short-Term Bond Money Market
December 31 (all numbers in thousands(3)) Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
1997 1996(2) 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) $ 125 $ 26 $ 724 $ 389 $ 461 $ 183
Net realized gain/(loss) from
investment transactions 67 6 48 4 -- --
Change in unrealized net appreciation
or (depreciation) of investments 39 26 18 (28) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets
resulting from operations 231 58 790 365 461 183
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions:
Net investment income (117) (24) (722) (370) (461) (183)
Dividends (in excess of net investment income) -- -- -- -- -- --
Net realized gain from investment transactions (6) -- (4) (6) -- --
Distributions (in excess of realized gains) -- -- -- -- -- --
Tax Return of Capital -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets from
dividends and distributions (123) (24) (726) (376) (461) (183)
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 3,976 1,491 23,232 13,981 78,614 28,902
Retirement Shares 10 -- 10 -- 10 --
Reinvested dividends and distributions
Institutional Shares 122 24 724 376 461 184
Retirement Shares 1 -- 2 -- -- --
Shares repurchased
Institutional Shares (2,075) (766) (33,188) (5,632) (69,807) (24,715)
Retirement Shares -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets from
capital share transactions 2,034 749 (9,220) 8,725 9,278 4,371
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets 2,142 783 (9,156) 8,714 9,278 4,371
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of period 783 -- 11,901 3,187 6,106 1,735
- ----------------------------------------------------------------------------------------------------------------------------------
End of Period $ 2,925 $ 783 $ 2,745 $ 11,901 $ 15,384 $ 6,106
==================================================================================================================================
Net Assets consist of:
Capital (par value and paid-in surplus)* $ 2,783 $ 749 $ 2,646 $ 11,866 $ 15,384 $ 6,106
Undistributed net investment
income/(distribution in excess)* 12 2 39 36 -- --
Undistributed net realized
gain/(loss) from investments* 66 6 47 3 -- --
Unrealized appreciation/(depreciation)
of investments 64 26 13 (4) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
$ 2,925 $ 783 $ 2,745 $ 11,901 $ 15,384 $ 6,106
==================================================================================================================================
Transactions in Portfolio Shares
- Institutional Shares
Shares sold 343 140 2,279 1,398 78,614 28,902
Reinvested dividends and distributions 11 2 78 38 461 184
- ----------------------------------------------------------------------------------------------------------------------------------
Total 354 142 2,357 1,436 79,075 29,086
Shares repurchased (179) (70) (3,242) (561) (69,807) (24,715)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/decrease in portfolio shares 175 72 (885) 875 9,268 4,371
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding beginning of period 72 -- 1,193 318 6,106 1,735
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding end of period 247 72 308 1,193 15,374 6,106
==================================================================================================================================
Transactions in Portfolio Shares
- Retirement Shares(3)
Shares sold 893 -- 986 -- 10,000 --
Reinvested dividends and distributions 57 -- 191 -- 306 --
- ----------------------------------------------------------------------------------------------------------------------------------
Total 950 -- 1,177 -- 10,306 --
Shares repurchased -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/decrease in portfolio shares 950 -- 1,177 -- 10,306 --
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding beginning of period -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding end of period 950 -- 1,177 -- 10,306 --
==================================================================================================================================
Purchases and Sales of Investment Securities:
(excluding Short-Term Securities)
Purchases of Securities $ 6,515 $ 1,595 $ 8,593 $ 13,059 -- --
Proceeds from Sales of Securities 4,066 871 14,559 8,202 -- --
Purchases of Long-Term
U.S. Government Obligations 24 -- 12,611 24,287 -- --
Proceeds from Sales of Long-Term
U.S. Government Obligations 25 -- 16,534 21,010 -- --
==================================================================================================================================
</TABLE>
(1) Period May 1, 1997 (inception) to December 31, 1997.
(2) Period May 1, 1996 (inception) to December 31, 1996.
(3) Transactions in Portfolio Shares - Retirement Shares numbers are not in
thousands.
* See Note 3 in Notes to Financial Statements.
See Notes to Financial Statements.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
Janus Aspen
For a share outstanding throughout Growth
each fiscal year or period ended December 31 Portfolio
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993(1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.51 $ 13.45 $ 10.57 $ 10.32 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) .15 .17 .28 .09 .03
Net gains or (losses) on securities
(both realized and unrealized) 3.34 2.29 2.90 .20 .32
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.49 2.46 3.18 .29 .35
- --------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.15) (.17) (.30) (.04) (.03)
Dividends (in excess of net investment income) -- -- -- -- --
Distributions (from capital gains) (.37) (.23) -- -- --
Distributions (in excess of realized gains) -- -- -- -- --
Tax Return of Capital -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.52) (.40) (.30) (.04) (.03)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.48 $ 15.51 $ 13.45 $ 10.57 $ 10.32
==========================================================================================================================
Total return** 22.75% 18.45% 30.17% 2.76% 3.50%
==========================================================================================================================
Net assets, end of period (in thousands) $ 608,281 $ 325,789 $ 126,911 $ 43,549 $ 7,482
Average net assets for the period (in thousands) $ 477,914 $ 216,125 $ 77,344 $ 26,464 $ 3,191
Ratio of gross expenses to average net assets*(6) 0.70% 0.69% 0.78% N/A N/A
Ratio of net expenses to average net assets*(6) 0.69% 0.69% 0.76% 0.88% 0.25%
Ratio of net investment income to average net assets* 0.91% 1.39% 1.24% 1.45% 2.54%
Portfolio turnover rate* 122% 87% 185% 169% 162%
Average commission per share $ 0.0500 $ 0.0466 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (Continued)
<TABLE>
<CAPTION>
Janus Aspen
For a share outstanding throughout Aggressive Growth
each fiscal year or period ended December 31 Portfolio
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993(1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.24 $ 17.08 $ 13.62 $ 11.80 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) -- -- .24 .11 .01
Net gains or (losses) on securities
(both realized and unrealized) 2.31 1.36 3.47 1.82 1.80
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.31 1.36 3.71 1.93 1.81
- --------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) -- -- (.25) (.11) (.01)
Dividends (in excess of net investment income) -- -- -- -- --
Distributions (from capital gains) -- (.19) -- -- --
Distributions (in excess of realized gains) -- -- -- -- --
Tax Return of Capital -- (.01) -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions -- (.20) (.25) (.11) (.01)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 20.55 $ 18.24 $ 17.08 $ 13.62 $ 11.80
==========================================================================================================================
Total return** 12.66% 7.95% 27.48% 16.33% 18.05%
==========================================================================================================================
Net assets, end of period (in thousands) $ 508,198 $ 383,693 $ 185,911 $ 41,289 $ 1,985
Average net assets for the period (in thousands) $ 418,464 $ 290,629 $ 107,582 $ 14,152 $ 1,091
Ratio of gross expenses to average net assets*(6) 0.76% 0.76% 0.86% N/A N/A
Ratio of net expenses to average net assets*(6) 0.76% 0.76% 0.84% 1.05% 0.25%
Ratio of net investment income to average net assets* (0.10%) (0.27%) 0.58% 2.18% 0.34%
Portfolio turnover rate* 130% 88% 155% 259% 31%
Average commission per share $ 0.0367 $ 0.0347 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (Continued)
<TABLE>
<CAPTION>
Janus Aspen
Capital Janus Aspen
For a share outstanding throughout Appreciation International Growth
each fiscal year or period ended December 31 Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------
1997(2) 1997 1996 1995 1994(3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 15.72 $ 11.95 $ 9.72 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) .05 .11 .05 .09 (.09)
Net gains or (losses) on securities
(both realized and unrealized) 2.61 2.80 4.06 2.16 (.19)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.66 2.91 4.11 2.25 (.28)
- --------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.04) (.11) (.11) (.02) --
Dividends (in excess of net investment income) -- -- -- -- --
Distributions (from capital gains) -- (.01) (.23) -- --
Distributions (in excess of realized gains) -- (.03) -- -- --
Tax Return of Capital -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.04) (.15) (.34) (.02) --
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.62 $ 18.48 $ 15.72 $ 11.95 $ 9.72
==========================================================================================================================
Total return** 26.60% 18.51% 34.71% 23.15% (2.80%)
==========================================================================================================================
Net assets, end of period (in thousands) $ 6,833 $ 161,091 $ 27,192 $ 1,608 $ 1,353
Average net assets for the period (in thousands) $ 2,632 $ 96,164 $ 7,437 $ 1,792 $ 1,421
Ratio of gross expenses to average net assets*(6) 1.26% 0.96% 1.26% 2.69% N/A
Ratio of net expenses to average net assets*(6) 1.25% 0.96% 1.25% 2.50% 2.50%
Ratio of net investment income to average net assets* 1.43% 0.70% 0.62% (.80%) (1.30%)
Portfolio turnover rate* 101% 86% 65% 211% 275%
Average commission per share $ 0.0375 $ 0.0241 $ 0.0305 N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (Continued)
<TABLE>
<CAPTION>
Janus Aspen
For a share outstanding throughout Worldwide Growth
each fiscal year or period ended December 31 Portfolio
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993(1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.44 $ 15.31 $ 12.07 $ 11.89 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) .16 .16 .11 .04 .02
Net gains or (losses) on securities
(both realized and unrealized) 4.14 4.27 3.19 .14 1.89
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 4.30 4.43 3.30 .18 1.91
- --------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.17) (.17) (.06) -- (.01)
Dividends (in excess of net investment income) (.02) -- -- -- --
Distributions (from capital gains) (.16) (.13) -- -- (.01)
Distributions (in excess of realized gains) -- -- -- -- --
Tax Return of Capital -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.35) (.30) (.06) -- (.02)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 23.39 $ 19.44 $ 15.31 $ 12.07 $ 11.89
==========================================================================================================================
Total return** 22.15% 29.04% 27.37% 1.53% 19.10%
==========================================================================================================================
Net assets, end of period (in thousands) $1,576,548 $ 582,603 $ 108,563 $ 37,728 $ 4,856
Average net assets for the period (in thousands) $1,148,951 $ 304,111 $ 59,440 $ 22,896 $ 2,200
Ratio of gross expenses to average net assets*(6) 0.74% 0.80% 0.90% N/A N/A
Ratio of net expenses to average net assets*(6) 0.74% 0.80% 0.87% 1.18% 0.25%
Ratio of net investment income to average net assets* 0.67% 0.83% 0.95% 0.50% 0.84%
Portfolio turnover rate* 80% 62% 113% 217% 57%
Average commission per share $ 0.0337 $ 0.0345 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (Continued)
<TABLE>
<CAPTION>
Janus Aspen
For a share outstanding throughout Balanced
each fiscal year or period ended December 31 Portfolio
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993(1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.77 $ 13.03 $ 10.63 $ 10.64 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) .34 .32 .17 .15 .08
Net gains or (losses) on securities
(both realized and unrealized) 2.89 1.81 2.45 (.06) .64
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.23 2.13 2.62 .09 .72
- --------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.35) (.30) (.22) (.10) (.08)
Distributions (from capital gains) (.18) (.09) -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (0.53) (.39) (.22) (.10) (.08)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.47 $ 14.77 $ 13.03 $ 10.63 $ 10.64
==========================================================================================================================
Total return** 22.10% 16.18% 24.79% 0.84% 7.20%
==========================================================================================================================
Net assets, end of period (in thousands) $ 362,409 $ 85,480 $ 14,021 $ 3,153 $ 537
Average net assets for the period (in thousands) $ 176,432 $ 43,414 $ 5,739 $ 2,336 $ 521
Ratio of gross expenses to average net assets*(6) 0.83% 0.94% 1.37% N/A N/A
Ratio of net expenses to average net assets*(6) 0.82% 0.92% 1.30% 1.57% 0.25%
Ratio of net investment income to average net assets* 2.87% 2.92% 2.41% 1.90% 2.69%
Portfolio turnover rate* 139% 103% 149% 158% 126%
Average commission per share $ 0.0456 $ 0.0426 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (Continued)
<TABLE>
<CAPTION>
Janus Aspen
For a share outstanding throughout Flexible Income
each fiscal year or period ended December 31 Portfolio
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993(1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.24 $ 11.11 $ 9.48 $ 9.97 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) .67 .74 .53 .47 .11
Net gains or (losses) on securities
(both realized and unrealized) .62 .24 1.70 (.56) (.04)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.29 .98 2.23 (.09) .07
- --------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.64) (.72) (.60) (.40) (.10)
Distributions (from capital gains) (.11) (.13) -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.75) (.85) (.60) (.40) (.10)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.78 $ 11.24 $ 11.11 $ 9.48 $ 9.97
==========================================================================================================================
Total return** 11.76% 9.19% 23.86% (0.91%) 0.70%
==========================================================================================================================
Net assets, end of period (in thousands) $ 54,098 $ 25,315 $ 10,831 $ 1,924 $ 538
Average net assets for the period (in thousands) $ 36,547 $ 17,889 $ 5,556 $ 1,636 $ 497
Ratio of gross expenses to average net assets*(6) 0.75% 0.84% 1.07% N/A N/A
Ratio of net expenses to average net assets*(6) 0.75% 0.83% 1.00% 1.00% 1.00%
Ratio of net investment income to average net assets* 6.90% 7.31% 7.46% 5.49% 3.77%
Portfolio turnover rate* 119% 250% 236% 234% 508%
Average commission per share N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (Continued)
<TABLE>
<CAPTION>
Janus Aspen
Equity Janus Aspen
For a share outstanding throughout Income High-Yield
each fiscal year or period ended December 31 Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------
1997(2) 1997 1996(4)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.83 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) .01 .70 .43
Net gains or (losses) on securities
(both realized and unrealized) 3.46 .99 .80
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.47 1.69 1.23
- --------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.01) (.68) (.40)
Distributions (from capital gains) -- (.06) --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.01) (.74) (.40)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.46 $ 11.78 $ 10.83
==========================================================================================================================
Total return** 34.70% 15.98% 12.40%
==========================================================================================================================
Net assets, end of period (in thousands) $ 3,047 $ 2,914 $ 783
Average net assets for the period (in thousands) $ 1,101 $ 1,565 $ 459
Ratio of gross expenses to average net assets*(6) 1.25% 1.00% 1.01%
Ratio of net expenses to average net assets*(6) 1.25% 1.00% 1.00%
Ratio of net investment income to average net assets* 0.35% 7.98% 5.74%
Portfolio turnover rate* 128% 299% 301%
Average commission per share $ 0.0382 N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (Continued)
<TABLE>
<CAPTION>
Janus Aspen
For a share outstanding throughout Short-Term Bond
each fiscal year or period ended December 31 Portfolio
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993(1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.97 $ 10.03 $ 9.72 $ 9.93 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) 1.85 .42 .60 .35 .11
Net gains or (losses) on securities
(both realized and unrealized) (1.19) (.03) .31 (.26) (.08)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations .66 .39 .91 .09 .03
- --------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (1.75) (.44) (.60) (.30) (.10)
Distributions (from capital gains) -- (.01) -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (1.75) (.45) (.60) (.30) (.10)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.88 $ 9.97 $ 10.03 $ 9.72 $ 9.93
==========================================================================================================================
Total return** 6.72% 3.98% 9.54% 0.92% 0.30%
==========================================================================================================================
Net assets, end of period (in thousands) $ 2,735 $ 11,901 $ 3,187 $ 2,902 $ 502
Average net assets for the period (in thousands) $ 12,407 $ 7,168 $ 2,727 $ 1,774 $ 492
Ratio of gross expenses to average net assets*(6) 0.65% 0.66% 0.70% N/A N/A
Ratio of net expenses to average net assets*(6) 0.65% 0.65% 0.65% 0.65% 0.65%
Ratio of net investment income to average net assets* 5.83% 5.44% 6.02% 5.00% 3.57%
Portfolio turnover rate* 204% 416% 417% 256% 91%
Average commission per share N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (Continued)
<TABLE>
<CAPTION>
Janus Aspen
For a share outstanding throughout Money Market
each fiscal year or period ended December 31 Portfolio
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1995(5)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) .05 .05 .04
Net gains or (losses) on securities
(both realized and unrealized) -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations .05 .05 .04
- --------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.05) (.05) (.04)
Distributions (from capital gains) -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.05) (.05) (.04)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
==========================================================================================================================
Total return** 5.17% 5.05% 3.63%
==========================================================================================================================
Net assets, end of period (in thousands) $ 15,374 $ 6,106 $ 1,735
Average net assets for the period (in thousands) $ 8,926 $ 3,715 $ 1,543
Ratio of gross expenses to average net assets*(6) 0.50% 0.50% 0.50%
Ratio of net expenses to average net assets*(6) 0.50% 0.50% 0.50%
Ratio of net investment income to average net assets* 5.17% 4.93% 5.30%
Portfolio turnover rate* N/A N/A N/A
Average commission per share N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized for periods of less than one full year.
** Total Return not annualized for periods of less than 1 full year.
(1) Period September 13, 1993 (inception) to December 31, 1993.
(2) Period May 1, 1997 (inception) to December 31, 1997.
(3) Period May 2, 1994 (inception) to December 31, 1994.
(4) Period May 1, 1996 (inception) to December 31, 1996.
(5) Period May 1, 1995 (inception) to December 31, 1995.
(6) See footnote #5 in Notes to Financial Statements.
See Notes to Financial Statements.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
FINANCIAL HIGHLIGHTS - RETIREMENT SHARES
<TABLE>
<CAPTION>
Janus Aspen Janus Aspen Janus Aspen Janus Aspen
For a share outstanding during the Janus Aspen Aggressive Capital International Worldwide Janus Aspen
period May 1, 1997 (inception) to Growth Growth Appreciation Growth Growth Balanced
December 31, 1997 Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1997 1997 1997 1997 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.18 $ 16.12 $ 10.00 $ 16.80 $ 20.72 $ 15.38
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) .04 (.06) .12 .04 .14 .27
Net gains or (losses) on securities
(both realized and unrealized) 2.71 4.43 2.50 1.73 2.80 2.30
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.75 4.37 2.62 1.77 2.94 2.57
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.10) -- -- (.09) (.14) (.30)
Distributions (from capital gains) (.37) -- -- (.04) (.16) (.18)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.47) -- -- (.13) (.30) (.48)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.46 $ 20.49 $ 12.62 $ 18.44 $ 23.36 $ 17.47
====================================================================================================================================
Total return** 17.22% 27.11% 26.20% 10.53% 14.22% 16.92%
====================================================================================================================================
Net assets, end of period (in thousands) $ 12 $ 13 $ 13 $ 11 $ 403 $ 12
Average net assets for the period (in thousands) $ 11 $ 11 $ 12 $ 11 $ 11 $ 11
Ratio of gross expenses to average net assets*(1) 1.20% 1.32% 1.73% 1.45% 1.26% 1.32%
Ratio of net expenses to average net assets* 1.20% 1.32% 1.73% 1.45% 1.26% 1.32%
Ratio of net investment income to average net assets* 0.29% (0.62%) 1.55% 0.26% 0.16% 2.38%
Portfolio turnover rate* 122% 130% 101% 86% 80% 139%
Average commission per share $ 0.0500 $ 0.0367 $ 0.0375 $ 0.0241 $ 0.0337 $ 0.0456
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS - RETIREMENT SHARES (Continued)
<TABLE>
<CAPTION>
Janus Aspen Janus Aspen Janus Aspen Janus Aspen
For a share outstanding during the Equity Flexible Janus Aspen Short-Term Money
period May 1, 1997 (inception) to Income Income High-Yield Bond Market
December 31, 1997 Portfolio Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1997 1997 1997 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 11.41 $ 11.19 $ 10.14 $ 1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) .01 .50 .59 .56 .03
Net gains or (losses) on securities
(both realized and unrealized) 3.41 .58 .71 (.11) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.42 1.08 1.30 .45 .03
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) -- (.61) (.65) (1.71) (.03)
Distributions (from capital gains) -- (.11) (.06) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (.72) (.71) (1.71) (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.42 $ 11.77 $ 11.78 $ 8.88 $ 1.00
====================================================================================================================================
Total return** 34.20% 9.73% 11.96% 4.53% 3.13%
====================================================================================================================================
Net assets, end of period (in thousands) $ 13 $ 11 $ 11 $ 10 $ 10
Average net assets for the period (in thousands) $ 12 $ 10 $ 11 $ 10 $ 10
Ratio of gross expenses to average net assets*(1) 1.74% 1.23% 1.50% 1.20% 1.00%
Ratio of net expenses to average net assets* 1.74% 1.23% 1.50% 1.19% 1.00%
Ratio of net investment income to average net assets* 0.07% 6.39% 7.42% 5.43% 4.66%
Portfolio turnover rate* 128% 119% 299% 204% N/A
Average commission per share $ 0.0382 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized for periods of less than one full year.
** Total return not annualized for periods of less than 1 full year.
(1) See footnote #5 in Notes to Financial Statements.
See Notes to Financial Statements.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
Janus Aspen Series (the "Trust") was organized as a Delaware Trust on May 20,
1993, and is registered under the Investment Company Act of 1940 (the "1940
Act") as a no-load, open-end management investment company. The Trust offers 11
Portfolios or series of shares with differing investment objectives and
policies. Seven Portfolios invest primarily in equity securities: Janus Aspen
Growth Portfolio, Janus Aspen Aggressive Growth Portfolio, Janus Aspen Capital
Appreciation Portfolio, Janus Aspen International Growth Portfolio, Janus Aspen
Worldwide Growth Portfolio, Janus Aspen Equity Income Portfolio, and Janus Aspen
Balanced Portfolio. Three Portfolios invest primarily in income-producing
securities: Janus Aspen Flexible Income Portfolio, Janus Aspen High-Yield
Portfolio and Janus Aspen Short-Term Bond Portfolio. Janus Aspen Money Market
Portfolio invests in short-term money market securities. Each Portfolio is
diversified as defined in the 1940 Act, with the exception of the Aggressive
Growth Portfolio and Capital Appreciation Portfolio, which are nondiversified.
Institutional Shares of the Trust are issued and redeemed only in connection
with investment in and payments under variable annuity contracts and variable
life insurance contracts (collectively "variable insurance contracts"), as well
as certain qualified retirement plans. Effective May 1, 1997, the Trust issued a
new class of shares, the Retirement Shares. Retirement Shares of the Trust are
issued and redeemed only in connection with certain qualified retirement plans.
Janus Capital invested $10,000 of initial seed capital in each Portfolio of the
Retirement Shares.
Organizational costs for the Portfolio were borne by Janus Capital Corporation
(the Trust's investment adviser). Effective May 1, 1997, the Trust issued two
new series of shares, the Janus Aspen Capital Appreciation Portfolio and the
Janus Aspen Equity Income Portfolio. Janus Capital invested $10,000 of initial
seed capital in each Portfolio.
The following accounting policies have been consistently followed by the Trust
and are in conformity with accounting principles generally accepted in the
investment company industry.
Investment Valuation
Securities are valued at the closing price for securities traded on a principal
securities exchange (U.S. or foreign) and on the NASDAQ National Market.
Securities traded on over-the-counter markets and listed securities for which no
sales are reported are valued at the latest bid price (or yield equivalent
thereof) obtained from one or more dealers making a market for such securities
or by a pricing service approved by the Trustees. Short-term investments
maturing within 60 days and all money market securities in the Money Market
Portfolio are valued at amortized cost, which approximates market value. Foreign
securities are converted to U.S. dollars using exchange rates at the close of
the New York Stock Exchange. When market quotations are not readily available,
securities are valued at fair value as determined in good faith under procedures
established by the Trustees.
Investment Transactions and Investment Income
Investment transactions are accounted for as of the date purchased or sold.
Dividend income is recorded on the ex-dividend date. Certain dividends from
foreign securities will be recorded as soon as the Trust is informed of the
dividend if such information is obtained subsequent to the ex-dividend date.
Interest income is recorded on the accrual basis and includes amortization of
discounts and premiums. Gains and losses are determined on the identified cost
basis, which is the same basis used for federal income tax purposes.
Forward Currency Transactions and Futures Contracts
The Portfolios enter into forward currency contracts in order to hedge their
exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings and to lock in the U.S. dollar cost of firm purchase and
sales commitments denominated in foreign currencies. A forward currency contract
is a commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The gain or loss arising from the difference between
the U.S. dollar cost of the original contract and the value of the foreign
currency in U.S. dollars upon closing such contract is included in net realized
gain or loss on foreign currency transactions. Forward currency contracts held
by the Portfolios are fully collateralized by other securities, which are
denoted in the accompanying Schedule of Investments. Such collateral is in the
possession of the Portfolio's custodian. The collateral is evaluated daily to
ensure its market value equals or exceeds the current market value of the
corresponding forward currency contracts.
Currency gain and loss is also calculated on payables and receivables that are
denominated in foreign currencies. The payables and receivables are generally
related to security transactions and income.
Futures contracts are marked to market daily, and the variation margin is
recorded as an unrealized gain or loss. When a contract is closed, a realized
gain or loss is recorded equal to the difference between the opening and closing
value of the contract. Generally, open forward and futures contracts are marked
to market (i.e., treated as realized and subject to distribution) for federal
income tax purposes at fiscal year-end.
Foreign-denominated assets and forward currency contracts may involve more risks
than domestic transactions, including: currency risk, political and economic
risk, regulatory risk, and market risk. Risks may arise from the potential
inability of a counterparty to meet the terms of a contract and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Portfolios may enter into futures contracts and options on securities,
financial indexes and foreign currencies, forward contracts, and interest-rate
swaps and swap-related products. The Portfolios intend to use such derivative
instruments primarily to hedge or protect from adverse movements in securities
prices, currency rates or interest rates. The use of futures contracts and
options may involve risks such as the possibility of illiquid markets or
imperfect correlation between the value of the contracts and the underlying
securities that the counterparty will fail to perform its obligations.
Additional Investment Risk
A portion of the Flexible Income and High-Yield Portfolios may be invested in
lower-rated debt securities that have a higher risk of default or loss of value
because of changes in the economy or in their respective industry.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
Dividend Distributions and Expenses
Each Portfolio, except the Money Market Portfolio, makes semiannual
distributions of substantially all of its investment income and an annual
distribution of its net realized capital gains, if any. The Money Market
Portfolio makes daily distributions of its income. All dividends and capital
gains distributions from a Portfolio will be automatically reinvested into
additional shares of that Portfolio.
Each Portfolio bears expenses incurred specifically on its behalf as well as a
portion of general expenses based generally on the relative net assets of each
Portfolio.
Federal Income Taxes
No provision for income taxes is included in the accompanying financial
statements as the Portfolios intend to distribute to shareholders all taxable
investment income and realized gains and otherwise comply with the Internal
Revenue Code applicable to regulated investment companies.
2. Investment Advisory Agreement and Other Transactions With Affiliates
Investment advisory fees for each of the seven equity Portfolios are payable to
Janus Capital based upon annual rates of .75% of the first $300 million of
average net assets, .70% of the next $200 million of average net assets, and
.65% of the average net assets in excess of $500 million. Effective July 1,
1997, Janus Capital reduced the annual rate on the first $30 million of average
daily net assets from 1.00% to .75%. However, Janus Capital has voluntarily
agreed to reduce each equity Portfolio's advisory fee to the extent that such
fee exceeds the effective rate of the Janus retail fund corresponding to such
Portfolio. The effective rate is the advisory fee calculated by the
corresponding retail fund as of the last day of each calendar quarter (expressed
as an annual rate). Janus Aspen Growth Portfolio, Janus Aspen Aggressive Growth
Portfolio, Janus Aspen Capital Appreciation Portfolio, Janus Aspen International
Growth Portfolio, Janus Aspen Worldwide Growth Portfolio, Janus Aspen Balanced
Portfolio, and Janus Aspen Equity Income Portfolio advisory fees are reduced to
the effective rates of Janus Fund, Janus Enterprise Fund, Janus Olympus Fund,
Janus Overseas Fund, Janus Worldwide Fund, Janus Balanced Fund, and Janus Equity
Income Fund, respectively. The effective rate for each Portfolio for the period
ended December 31, 1997, was .65%, .72%, .71%, .66%, .65%, .74%, and .75%,
respectively. The Flexible Income and Short-Term Bond Portfolios are each
subject to advisory fees payable to Janus Capital based upon annual rates of
.65% of the first $300 million of average net assets plus .55% of average net
assets in excess of $300 million. The High-Yield Portfolio's advisory fee rate
is payable at rates of .75% of the first $300 million of average net assets plus
.65% of average net assets in excess of $300 million. The Money Market
Portfolio's advisory fee rate is .25% of average net assets. For additional
information on the specific fees for the Retirement Shares, please refer to note
4 of the financial statements.
Until at least April 30, 1998, Janus Capital has also agreed to reduce its fee
to the extent that normal operating expenses exceed 1.25% of the average net
assets of the Capital Appreciation, International Growth, and Equity Income
Portfolios, 1% of the average net assets of the Flexible Income and High-Yield
Portfolios, .65% of the average net assets of the Short-Term Bond Portfolio, and
.50% of the average net assets of the Money Market Portfolio for a fiscal year.
Janus Capital may terminate any of these fee waivers or reductions on at least
90 days notice to the Trustees
Officers and certain trustees of the Trust are also officers and/or directors of
Janus Capital; however, they receive no compensation from the Trust.
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DST Systems, Inc. (DST), an affiliate of Janus Capital through a degree of
common ownership, provides accounting systems to the Portfolios. DST Securities,
Inc., a wholly owned subsidiary of DST, provides brokerage services on certain
portfolio transactions. Brokerage commissions paid to DST Securities, Inc. serve
to reduce fees and expenses. Brokerage commissions paid, fees reduced, and the
net fees paid to DST for the period ended December 31, 1997, are noted below:
<TABLE>
<CAPTION>
DST Securities, Inc. Portfolio Expense DST Systems
Portfolio Commissions Paid* Reduction* Costs
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Aspen Growth Portfolio $2,819 $2,114 $15,421
- ---------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 6,780 5,085 13,699
- ---------------------------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio -- -- 3,876
- ---------------------------------------------------------------------------------------------------
Janus Aspen International Growth Portfolio -- -- 10,858
- ---------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 6,697 5,023 21,868
- ---------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 391 293 12,195
- ---------------------------------------------------------------------------------------------------
Janus Aspen Equity Income Portfolio 15 11 2,784
- ---------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio -- -- 9,905
- ---------------------------------------------------------------------------------------------------
Janus Aspen High-Yield Portfolio -- -- 9,069
- ---------------------------------------------------------------------------------------------------
Janus Aspen Short-Term Bond Portfolio -- -- 9,429
- ---------------------------------------------------------------------------------------------------
Janus Aspen Money Market Portfolio -- -- 9,275
- ---------------------------------------------------------------------------------------------------
</TABLE>
* The difference between commissions paid to DST Securities, Inc. and expenses
reduced constituted commissions paid to an unaffiliated clearing broker.
3. Federal Income Tax
The Portfolios have elected to treat gains and losses on forward foreign
currency contracts as capital gains and losses. Other foreign currency gains and
losses on debt instruments are treated as ordinary income for federal income tax
purposes pursuant to Section 988 of the Internal Revenue Code. As of December
31, 1997, the net capital loss carryovers noted below are available to offset
future realized capital gains and thereby reduce future taxable gains
distributions. These carryovers expire between December 31, 2004, and December
31, 2005. In 1997, the Portfolios noted below incurred "post-October" losses
during the period from November 1 through December 31, 1997. These losses will
be deferred for tax purposes and recognized in 1998.
The aggregate cost of investments and the composition of unrealized appreciation
and depreciation of investments for federal income tax purposes as of December
31, 1997, are also noted below.
<TABLE>
<CAPTION>
at December 31, 1997
----------------------------------------------------------------------------------------------------
Net Capital Loss Post-October Federal Tax Unrealized Unrealized Net Appreciation/
Portfolio Carryovers Losses Cost Appreciation (Depreciation) (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Aspen
Growth Portfolio -- ($ 336,826) $ 535,556,002 $ 91,406,750 ($16,890,636) $ 74,516,114
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen
Aggressive Growth Portfolio ($9,224,354) -- 401,374,521 120,338,785 (7,440,255) 112,898,530
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen
Capital Appreciation Portfolio (25,613) (120,295) 6,678,289 464,881 (200,220) 264,661
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen
International Growth Portfolio -- (2,607,314) 152,838,923 17,775,845 (6,278,779) 11,497,066
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen
Worldwide Growth Portfolio -- (17,297,533) 1,365,854,607 250,731,906 (53,968,527) 196,763,379
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen
Balanced Portfolio -- -- 350,008,740 24,902,659 (4,535,589) 20,367,070
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen
Equity Income Portfolio -- (2,372) 2,946,768 176,097 (96,304) 79,793
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen
Flexible Income Portfolio -- -- 51,319,358 1,712,103 (43,793) 1,668,310
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen
High-Yield Portfolio -- -- 3,474,082 78,588 (14,292) 64,296
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen
Short-Term Bond Portfolio -- -- 2,701,859 13,672 (197) 13,475
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen
Money Market Portfolio -- -- 14,480,172 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Net investment income distributions and capital gains distributions are
determined in accordance with income tax regulations that may differ from
generally accepted accounting principles. These differences are due to differing
treatments for items such as deferral of wash sales, foreign currency
transactions, net operating losses, and capital loss carryforwards. Permanent
items identified in the period ended December 31, 1997, have been reclassified
among the components of net assets as follows:
<TABLE>
<CAPTION>
Undistributed Undistributed
Net Investment Net Realized Paid-In
Portfolio Income Gains and Losses Capital
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Aspen Growth Portfolio ($ 42,360) $ 42,360 --
- -------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 435,562 (202,018) ($233,544)
- -------------------------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio -- -- --
- -------------------------------------------------------------------------------------------------
Janus Aspen International Growth Portfolio 42,338 (42,338) --
- -------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 2,792,246 (2,792,246) --
- -------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 58,783 (58,783) --
- -------------------------------------------------------------------------------------------------
Janus Aspen Equity Income Portfolio (5) 5 --
- -------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio 10,855 (10,855) --
- -------------------------------------------------------------------------------------------------
Janus Aspen High-Yield Portfolio 989 (989) --
- -------------------------------------------------------------------------------------------------
Janus Aspen Short-Term Bond Portfolio -- -- --
- -------------------------------------------------------------------------------------------------
Janus Aspen Money Market Portfolio -- -- --
- -------------------------------------------------------------------------------------------------
</TABLE>
4. Expenses
The Portfolios' expenses may be reduced through expense reduction arrangements.
Those arrangements include the use of broker commissions paid to DST Securities,
Inc. and uninvested cash balances earning interest with the Portfolios'
custodian. The Statements of Operations reflect the total expenses before any
offset, the amount of the offset, and the net expenses. The expense ratios
listed in the Financial Highlights reflect expenses prior to any expense offset
(gross expense ratio) and after expense offsets (net expense ratio).
Janus Aspen Series Retirement Shares incur a pro rata share of operating
expenses. In addition, the Retirement Shares pay a distribution fee of up to
.25% of average net assets and a participant administration fee of up to .25% of
average net assets.
5. Expense Ratios
Listed below are the expense ratios for the various Portfolios that would be in
effect, absent the waiver of certain fees and/or voluntary reduction of the
adviser's fee to the effective rate of the corresponding Janus retail fund.
<TABLE>
<CAPTION>
Institutional Shares Retirement Shares
Portfolio 1997 1996 1995 1994 1993 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Aspen Growth Portfolio 0.78% 0.83% 0.98% 1.23% 2.16% 1.28%
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 0.78% 0.83% 0.93% 1.14% 5.79% 1.34%
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio 2.19% N/A N/A N/A N/A 2.66%
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen International Growth Portfolio 1.08% 2.21% 3.57% 4.67% N/A 1.57%
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 0.81% 0.91% 1.09% 1.49% 2.71% 1.32%
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 0.83% 1.07% 1.55% 1.74% 7.92% 1.33%
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Equity Income Portfolio 5.75% N/A N/A N/A N/A 6.19%
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio 0.75% 0.84% 1.07% 1.35% 5.27% 1.23%
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen High-Yield Portfolio 3.27% 6.29% N/A N/A N/A 3.42%
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Short-Term Bond Portfolio 0.91% 0.84% 1.37% 1.40% 5.33% 1.49%
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Money Market Portfolio 0.55% 0.78% 1.07% N/A N/A 1.10%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders
of Janus Aspen Series
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Janus Aspen Growth Portfolio, Janus
Aspen Aggressive Growth Portfolio, Janus Aspen Capital Appreciation Portfolio,
Janus Aspen International Growth Portfolio, Janus Aspen Worldwide Growth
Portfolio, Janus Aspen Balanced Portfolio, Janus Aspen Equity Income Portfolio,
Janus Aspen Flexible Income Portfolio, Janus Aspen High-Yield Portfolio, Janus
Aspen Short-Term Bond Portfolio and Janus Aspen Money Market Portfolio
(constituting the Janus Aspen Series, hereafter referred to as the "Portfolios")
at December 31, 1997, the results of each of their operations, the changes in
each of their net assets and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolios' management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1997 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where securities purchased had
not been received, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
/s/ Price Waterhouse LLP
Denver, Colorado
February 2, 1998
JANUS ASPEN SERIES DECEMBER 31, 1997 ANNUAL REPORT
<PAGE>
[Logo] JANUS
P.O. Box 173375
Denver, CO 80217-3375
1-800-504-4440
1/98 Retirement Shares distributed by Janus Distributors, Inc. Member NASD
