<PAGE>
[JANUS LOGO]
Janus Aspen Series
PROSPECTUS
MAY 1, 1999
Growth Portfolio
Equity Income Portfolio
Flexible Income Portfolio
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED OF THESE SECURITIES OR PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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[JANUS LOGO]
This prospectus describes three mutual funds (the "Portfolios")
with a variety of investment objectives, including growth of
capital, current income and a combination of growth and income.
Each Portfolio of Janus Aspen Series currently offers two
classes of shares. The Institutional Shares, (the "Shares"), are
sold under the name of "Janus Aspen Series" and are offered by
this prospectus in connection with investment in and payments
under variable annuity contracts and variable life insurance
contracts, as well as certain qualified retirement plans.
Janus Aspen Series sells and redeems its Shares at net asset
value without sales charges, commissions or redemption fees.
Each variable insurance contract involves fees and expenses that
are not described in this Prospectus. Certain Portfolios may not
be available in connection with a particular contract and
certain contracts may limit allocations among the Portfolios.
See the accompanying contract prospectus for information
regarding contract fees and expenses and any restrictions on
purchases or allocations.
This prospectus contains information that a prospective
purchaser of a variable insurance contract or plan participant
should consider in conjunction with the accompanying separate
account prospectus of the specific insurance company product
before allocating purchase payments or premiums to the
Portfolios.
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Table of contents
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Growth Portfolio......................................... 2
Equity Income Portfolio.................................. 4
Flexible Income Portfolio................................ 6
Fees and expenses........................................ 8
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND
RISKS
Growth Portfolio......................................... 9
Equity Income Portfolio.................................. 10
Flexible Income Portfolio................................ 12
General portfolio policies............................... 13
Risks for Growth Portfolio and Equity Income Portfolio... 16
Risks for Flexible Income Portfolio...................... 16
Risks common to all portfolios........................... 17
MANAGEMENT OF THE PORTFOLIOS
Investment adviser....................................... 19
Management expenses and expense limits................... 19
Investment personnel..................................... 20
OTHER INFORMATION........................................... 22
DISTRIBUTIONS AND TAXES
Distributions............................................ 23
Taxes.................................................... 23
SHAREHOLDER'S GUIDE
Purchases................................................ 24
Redemptions.............................................. 24
Shareholder communications............................... 25
FINANCIAL HIGHLIGHTS........................................ 26
GLOSSARY
Glossary of investment terms............................. 29
RATING CATEGORIES
Explanation of rating categories......................... 33
</TABLE>
Table of contents 1
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Risk return summary
GROWTH PORTFOLIO
Growth Portfolio is designed for long-term investors who seek growth
of capital and who can tolerate the greater risks associated with
common stock investments.
1. WHAT IS THE INVESTMENT OBJECTIVE OF GROWTH PORTFOLIO?
- --------------------------------------------------------------------------------
- GROWTH PORTFOLIO seeks long-term growth of capital in a manner
consistent with the preservation of capital.
The Portfolio's Trustees may change this objective without a
shareholder vote and the Portfolio will notify you of any changes
that are material. If there is a material change to the Portfolio's
objective or policies, you should consider whether the Portfolio
remains an appropriate investment for you. There is no guarantee
that the Portfolio will meet its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF GROWTH PORTFOLIO?
The portfolio manager applies a "bottom up" approach in choosing
investments. In other words, he looks for companies with earnings
growth potential one at a time. If the portfolio manager is unable to
find investments with earnings growth potential, a significant portion
of the Portfolio's assets may be in cash or similar investments.
Growth Portfolio invests primarily in common stocks selected for their
growth potential. Although the Portfolio can invest in companies of
any size, it generally invests in larger, more established companies.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN GROWTH PORTFOLIO?
The biggest risk is that the Portfolio's returns may vary, and you
could lose money. If you are considering investing in Growth
Portfolio, remember that it is designed for long-term investors who
can accept the risks of investing in a portfolio with significant
common stock holdings. Common stocks tend to be more volatile than
other investment choices.
The value of the Portfolio may decrease if the value of an individual
company in the portfolio decreases. The value of the Portfolio could
also decrease if the stock market goes down. If the value of the
Portfolio decreases, its net asset value (NAV) will also decrease,
which means if you sell your shares in the Portfolio you would get
back less money.
An investment in the Portfolio is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
2 Janus Aspen Series
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The following information provides some indication of the risks of
investing in Growth Portfolio by showing how Growth Portfolio's
performance has varied over time. The bar chart depicts the change in
performance from year-to-year during the period indicated, but does
not include charges and expenses attributable to any insurance product
which would lower the performance illustrated. The Portfolio does not
impose any sales or other charges that would affect total return
computations. Total return figures include the effect of the
Portfolio's expenses. The table compares the average annual returns
for the Shares of the Portfolio for the periods indicated to a
broad-based securities market index.
GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual returns for periods ended 12/31
A BAR CHART showing total Annual Returns for Growth Portfolio -
Institutional Shares from 1994 through 1998:
2.76% 30.17% 18.45% 22.75% 35.66%
1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with
the actual return printed above the bar.
Best Quarter 4th-1998 27.71% Worst Quarter 3rd-1998 (10.92%)
Average annual total return for periods ended 12/31/98
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<TABLE>
<CAPTION>
Since Inception
1 year 5 years (9/13/93)
<S> <C> <C> <C>
Growth Portfolio - Institutional Shares 35.66% 21.41% 20.91%
S&P 500 Index* 28.74% 24.08% 23.06%
----------------------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
The Growth Portfolio's past performance does not necessarily indicate
how it will perform in the future.
Risk return summary 3
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EQUITY INCOME PORTFOLIO
Equity Income Portfolio is designed for investors who primarily seek
growth of capital with some emphasis on income. It is not designed for
investors who desire a consistent level of income.
1. WHAT ARE THE INVESTMENT OBJECTIVES OF EQUITY INCOME PORTFOLIO?
- --------------------------------------------------------------------------------
- EQUITY INCOME PORTFOLIO seeks current income and long-term growth
of capital.
The Trustees may change this objective without a shareholder vote and
the Portfolio will notify you of any changes that are material. If
there is a material change to the Portfolio's objective or policies,
you should consider whether the Portfolio remains an appropriate
investment for you. There is no guarantee that the Portfolio will meet
its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF EQUITY INCOME PORTFOLIO?
The portfolio manager applies a "bottom up" approach in choosing
investments. In other words, he looks for equity and income-producing
securities that meet his investment criteria one at a time. If the
portfolio manager is unable to find such investments, a significant
portion of the Portfolio's assets may be in cash or similar
investments.
Equity Income Portfolio normally emphasizes investments in common
stocks, and growth potential is a significant investment
consideration. Normally, it invests at least 65% of its assets in
income-producing equity securities.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN EQUITY INCOME PORTFOLIO?
The biggest risk is that the Portfolio's returns may vary, and you
could lose money. If you are considering investing in Equity Income
Portfolio, remember that it is designed for long-term investors who
can accept the risks of investing in a portfolio with significant
common stock holdings. Common stocks tend to be more volatile than
other investment choices.
The value of the Portfolio may decrease if the value of an individual
company in the portfolio decreases. The value of the Portfolio could
also decrease if the stock market goes down. If the value of the
Portfolio decreases, its NAV will also decrease, which means if you
sell your shares in the Portfolio you would get back less money.
The income component of the Portfolio's holdings includes fixed-income
securities. A fundamental risk to the income component is that the
value of these securities will fall if interest rates rise. Generally,
the value of a fixed-income portfolio will decrease when interest
rates rise, which means the Portfolio's NAV may likewise decrease.
Another fundamental risk associated with fixed-income securities is
credit risk, which is the risk that an issuer of a bond will be unable
to make principal and interest payments when due.
An investment in the Portfolio is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
4 Janus Aspen Series
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The following information provides some indication of the risks of
investing in Equity Income Portfolio by showing how the Portfolio's
performance has varied over time. The bar chart depicts the
performance during the period indicated, but does not include charges
and expenses attributable to any insurance product which would lower
the performance illustrated. The Portfolio does not impose any sales
or other charges that would affect total return computations. Total
return figures include the effect of the Portfolio's expenses. The
table compares the average annual returns for the Shares of the
Portfolio for the period indicated to a broad-based securities market
index.
EQUITY INCOME PORTFOLIO - INSTITUTIONAL SHARES
A BAR CHART showing Total Annual Returns for Equity Income
Portfolio - Institutional Shares for 1998:
Annual returns for periods ended 12/31
46.24%
1998
The percentage is represented by a bar of proportionate size with
the actual return printed above the bar.
Best Quarter 4th-1998 28.51% Worst Quarter 3rd-1998 (7.18%)
Average annual total return for periods ended 12/31/98
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<TABLE>
<CAPTION>
Since Inception
1 year (5/1/97)
<S> <C> <C>
Equity Income Portfolio - Institutional Shares 46.24% 50.20%
S&P 500 Index* 28.74% 31.38%
-----------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
Equity Income Portfolio's past performance does not necessarily
indicate how it will perform in the future.
Risk return summary 5
<PAGE>
FLEXIBLE INCOME PORTFOLIO
Flexible Income Portfolio is designed for long-term investors who
primarily seek current income.
1. WHAT IS THE INVESTMENT OBJECTIVE OF FLEXIBLE INCOME PORTFOLIO?
- --------------------------------------------------------------------------------
- FLEXIBLE INCOME PORTFOLIO seeks to obtain maximum total return,
consistent with preservation of capital.
The Trustees may change this objective without a shareholder vote and
the Portfolio will notify you of any changes that are material. If
there is a material change to the Portfolio's objective or policies,
you should consider whether it remains an appropriate investment for
you. There is no guarantee that the Portfolio will meet its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF FLEXIBLE INCOME PORTFOLIO?
In addition to considering economic factors such as the effect of
interest rates on the Portfolio's investments, the portfolio manager
applies a "bottom up" approach in choosing investments. In other
words, he looks mostly for income-producing securities that meet his
investment criteria one at a time. If the portfolio manager is unable
to find such investments, a significant portion of the Portfolio's
assets may be in cash or similar investments.
Flexible Income Portfolio invests primarily in a wide variety of
income-producing securities such as corporate bonds and notes,
government securities and preferred stock. As a fundamental policy,
the Portfolio will invest at least 80% of its assets in
income-producing securities. The Portfolio may own an unlimited amount
of high-yield/high-risk fixed-income securities, and these securities
may be a big part of the portfolio.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN FLEXIBLE INCOME PORTFOLIO?
Although Flexible Income Portfolio may be less volatile than funds
that invest most of their assets in common stocks, the Portfolio's
returns and yields will vary, and you could lose money.
The Portfolio invests in a variety of fixed-income securities. A
fundamental risk is that the value of these securities will fall if
interest rates rise. Generally, the value of a fixed-income portfolio
will decrease when interest rates rise, which means the Portfolio's
NAV will likewise decrease. Another fundamental risk associated with
fixed-income funds is credit risk, which is the risk that an issuer
will be unable to make principal and interest payments when due.
Flexible Income Portfolio may invest an unlimited amount of its assets
in high-yield/high-risk securities, also known as "junk" bonds which
may be sensitive to economic changes, political changes, or adverse
developments specific to the company that issued the bond. These
securities generally have a greater credit risk than other types of
fixed-income securities. Because of these factors, the performance and
NAV of the Flexible Income Portfolio may vary significantly, depending
upon its holdings of junk bonds.
An investment in the Portfolio is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
6 Janus Aspen Series
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The following information provides some indication of the risks of
investing in Flexible Income Portfolio by showing how Flexible Income
Portfolio's performance has varied over time. The bar chart depicts
the change in performance from year-to-year during the period
indicated, but does not include charges and expenses attributable to
any insurance product which would lower the performance illustrated.
The Portfolio does not impose any sales or other charges that would
affect total return computations. Total return figures include the
effect of the Portfolio's expenses. The table compares the average
annual returns for the Shares of the Portfolio for the periods
indicated to a broad-based securities market index.
FLEXIBLE INCOME PORTFOLIO - INSTITUTIONAL SHARES
A BAR CHART showing Total Annual Returns for Flexible Income
Portfolio - Institutional Shares for 1994 through 1998:
Annual returns for periods ended 12/31
(0.91%) 23.86% 9.19% 11.76% 9.11%
1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with
the actual return printed above the bar.
Best Quarter 2nd-1995 6.71% Worst Quarter 1st-1996 (1.08%)
Average annual total return for periods ended 12/31/98
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<CAPTION>
Since Inception
1 year 5 years (9/13/93)
<S> <C> <C> <C>
Flexible Income Portfolio - Institutional Shares 9.11% 10.32% 9.87%
Lehman Brothers Gov't/Corp Bond Index* 9.47% 7.30% 6.90%
----------------------------------------
</TABLE>
* Lehman Brothers Gov't/Corp Bond Index is composed of all bonds that
are of investment grade with at least one year until maturity.
Flexible Income Portfolio's past performance does not necessarily
indicate how it will perform in the future.
Risk return summary 7
<PAGE>
FEES AND EXPENSES
SHAREHOLDER FEES, such as sales loads, redemption fees or exchange
fees, are charged directly to an investor's account. All Janus funds
are no-load investments, so you will not pay any shareholder fees when
you buy or sell shares of the Portfolios. However, each variable
insurance contract involves fees and expenses not described in this
prospectus. See the accompanying contract prospectus for information
regarding contract fees and expenses and any restrictions on purchases
or allocations.
ANNUAL FUND OPERATING EXPENSES are paid out of a Portfolio's assets
and include fees for portfolio management, maintenance of shareholder
accounts, shareholder servicing, accounting and other services. You do
not pay these fees directly but, as the example on the next page
shows, these costs are borne indirectly by all shareholders.
This table and example are designed to assist participants in
qualified plans that invest in the Shares of the Portfolios in
understanding the fees and expenses that you may pay as an investor in
the Shares. The information shown is based upon gross expenses
(without the effect of expense offset arrangements) for the fiscal
year ended December 31, 1998. OWNERS OF VARIABLE INSURANCE CONTRACTS
THAT INVEST IN THE SHARES SHOULD REFER TO THE VARIABLE INSURANCE
CONTRACT PROSPECTUS FOR A DESCRIPTION OF FEES AND EXPENSES, AS THE
TABLE AND EXAMPLE DO NOT REFLECT DEDUCTIONS AT THE SEPARATE ACCOUNT
LEVEL OR CONTRACT LEVEL FOR ANY CHARGES THAT MAY BE INCURRED UNDER A
CONTRACT.
<TABLE>
<CAPTION>
Total Annual Fund Total Annual Fund
Operating Expenses Operating Expenses
Management Other Without Waivers Total With Waivers
Fee Expenses or Reductions* Waivers and Reductions or Reductions*
<S> <C> <C> <C> <C> <C>
Growth Portfolio 0.72% 0.03% 0.75% 0.07% 0.68%
Equity Income Portfolio 0.75% 1.11% 1.86% 0.61% 1.25%
Flexible Income Portfolio 0.65% 0.08% 0.73% N/A 0.73%
</TABLE>
- --------------------------------------------------------------------------------
* All expenses are stated both with and without contractual waivers and
fee reductions by Janus Capital. Fee reductions for Growth and Equity
Income Portfolios reduce the Management Fee to the level of the
corresponding Janus retail fund. Other waivers, if applicable, are first
applied against the Management Fee and then against Other Expenses.
Janus Capital has agreed to continue the waivers and fee reductions
until at least the next annual renewal of the advisory agreement.
- --------------------------------------------------------------------------------
EXAMPLE:
THE FOLLOWING EXAMPLE IS BASED ON EXPENSES WITHOUT WAIVERS OR
REDUCTIONS. This example is intended to help you compare the cost of
investing in the Portfolios with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in each of the
Portfolios for the time periods indicated then redeem all of your shares
at the end of those periods. The example also assumes that your
investment has a 5% return each year, and that the Portfolios' operating
expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-----------------------------------------
<S> <C> <C> <C> <C>
Growth Portfolio $ 77 $240 $ 417 $ 930
Equity Income Portfolio $189 $585 $1,006 $2,180
Flexible Income Portfolio $ 75 $233 $ 406 $ 906
</TABLE>
8 Janus Aspen Series
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Investment objectives, principal investment
strategies and risks
Each of the Portfolios has a similar investment objective and similar
principal investment strategies to a Janus retail fund:
<TABLE>
<S> <C>
Growth Portfolio Janus Fund
Equity Income Portfolio Janus Equity Income Fund
Flexible Income Portfolio Janus Flexible Income Fund
</TABLE>
Although it is anticipated that each Portfolio and its corresponding
retail fund will hold similar securities, differences in asset size,
cash flow needs and other factors may result in differences in
investment performance. The expenses of each Portfolio and its
corresponding retail fund are expected to differ. The variable
contract owner will also bear various insurance related costs at the
insurance company level. You should review the accompanying separate
account prospectus for a summary of fees and expenses.
GROWTH PORTFOLIO
This section takes a closer look at the investment objective of Growth
Portfolio, its principal investment strategies and certain risks of
investing in Growth Portfolio. Strategies and policies that are noted
as "fundamental" cannot be changed without a shareholder vote.
Please carefully review the "Risks" section of this Prospectus on
pages 16-18 for a discussion of risks associated with certain
investment techniques. We've also included a Glossary with
descriptions of investment terms used throughout this Prospectus.
INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES
Growth Portfolio seeks long-term growth of capital in a manner
consistent with the preservation of capital. It pursues its objective
by investing primarily in common stocks selected for their growth
potential. Although the Portfolio can invest in companies of any size,
it generally invests in larger, more established companies.
The following questions and answers are designed to help you better understand
Growth Portfolio's principal investment strategies.
1. HOW ARE COMMON STOCKS SELECTED?
The Portfolio may invest substantially all of its assets in common
stocks if the portfolio manager believes that common stocks will
appreciate in value. The portfolio manager generally takes a "bottom
up" approach to selecting companies. In other words, he seeks to
identify individual companies with earnings growth potential that may
not be recognized by the market at large. He makes this assessment by
looking at companies one at a time, regardless of size, country of
organization, place of principal business activity, or other similar
selection criteria. Realization of income is not a significant
consideration when choosing investments for the Portfolio. Income
realized on the Portfolio's investments will be incidental to its
objectives.
2. ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES?
Generally, yes. The portfolio manager seeks companies that meet his
selection criteria, regardless of where a company is located. Foreign
securities are generally selected on a stock-by-stock basis without
regard to any defined allocation among countries or geographic
regions. However, certain factors such as expected
Investment objectives, principal investment strategies and risks 9
<PAGE>
levels of inflation, government policies influencing business
conditions, the outlook for currency relationships, and prospects for
economic growth among countries, regions or geographic areas may
warrant greater consideration in selecting foreign securities. There
are no limitations on the countries in which the Portfolio may invest
and the Portfolio may at times have significant foreign exposure.
3. WHAT DOES "MARKET CAPITALIZATION" MEAN?
Market capitalization is the most commonly used measure of the size
and value of a company. It is computed by multiplying the current
market price of a share of the company's stock by the total number of
its shares outstanding. Although Growth Portfolio does not emphasize
companies of any particular size, a Portfolio with a larger asset base
is more likely to invest in larger, more established issuers.
EQUITY INCOME PORTFOLIO
This section takes a closer look at the investment objective of Equity
Income Portfolio, its principal investment strategies and certain
risks of investing in Equity Income Portfolio. Strategies and policies
that are noted as "fundamental" cannot be changed without a
shareholder vote.
Please carefully review the "Risks" section of this Prospectus on
pages 24-27 for a discussion of risks associated with certain
investment techniques. We've also included a Glossary with
descriptions of investment terms used throughout this Prospectus.
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES
Equity Income Portfolio seeks current income and long-term growth of
capital. It pursues its objective by normally emphasizing investments
in common stock, and growth potential is a significant investment
consideration. The Portfolio tries to provide a lower level of
volatility than the S&P 500 Index. Normally, it invests at least 65%
of its assets in income-producing equity securities including common
and preferred stocks, warrants and securities that are convertible to
common or preferred stocks.
The following questions and answers are designed to help you better understand
Equity Income Portfolio's principal investment strategies.
1. HOW DOES EQUITY INCOME PORTFOLIO TRY TO LIMIT PORTFOLIO VOLATILITY?
Equity Income Portfolio seeks to provide a lower level of volatility
than the stock market at large, as measured by the S&P 500. The lower
volatility sought by this Portfolio is expected to result primarily
from investments in dividend-paying common stocks and other equity
securities characterized by relatively greater price stability. The
greater price stability sought by Equity Income Portfolio may be
characteristic of companies that generate above average free cash
flows. A company may use free cash flows for a number of purposes
including commencing or increasing dividend payments, repurchasing its
own stock or retiring outstanding debt. The portfolio manager also
considers growth potential in selecting this Portfolio's securities
and may hold securities selected solely for their growth potential.
2. HOW ARE COMMON STOCKS SELECTED FOR EQUITY INCOME PORTFOLIO IN COMPARISON TO
GROWTH PORTFOLIO?
Because income is a part of the investment objective of Equity Income
Portfolio, the portfolio manager may consider dividend-paying
characteristics to a greater degree in selecting common stocks for the
Portfolio.
10 Janus Aspen Series
<PAGE>
3. WHAT TYPES OF SECURITIES MAKE UP THE GROWTH COMPONENT OF EQUITY INCOME
PORTFOLIO'S INVESTMENTS?
The growth component of Equity Income Portfolio's investments is
expected to consist primarily of common stocks, but may also include
warrants, preferred stocks or convertible securities selected
primarily for their growth potential.
Investment objectives, principal investment strategies and risks 11
<PAGE>
FLEXIBLE INCOME PORTFOLIO
This section takes a closer look at the investment objective of
Flexible Income Portfolio, its principal investment strategies and
certain risks of investing in Flexible Income Portfolio. Strategies
and policies that are noted as "fundamental" cannot be changed without
a shareholder vote.
Please carefully review the "Risks" section of this Prospectus on
pages 16-18 for a discussion of risks associated with certain
investment techniques. We've also included a Glossary with
descriptions of investment terms used throughout this Prospectus.
INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES
In addition to considering economic factors such as the effect of
interest rates on the Portfolio's investments, the portfolio manager
applies a "bottom up" approach in choosing investments. In other
words, he looks mostly for income-producing securities that meet his
investment criteria one at a time. If the portfolio manager is unable
to find such investments, much of the Portfolio's assets may be in
cash or similar investments.
Flexible Income Portfolio seeks to obtain maximum total return,
consistent with preservation of capital. It pursues its objective by
primarily investing in a wide variety of income-producing securities
such as corporate bonds and notes, government securities and preferred
stock. As a fundamental policy, the Portfolio will invest at least 80%
of its assets in income-producing securities. The Portfolio may own an
unlimited amount of high-yield/high-risk securities, and these may be
a big part of the portfolio. This Portfolio generates total return
from a combination of current income and capital appreciation, but
income is usually the dominant portion.
The following questions and answers are designed to help you better understand
Flexible Income Portfolio's principal investment strategies.
1. HOW DO INTEREST RATES AFFECT THE VALUE OF MY INVESTMENT?
Generally, a fixed-income security will increase in value when
interest rates fall and decrease in value when interest rates rise.
Longer-term securities are generally more sensitive to interest rate
changes than shorter-term securities, but they generally offer higher
yields to compensate investors for the associated risks. High-yield
bond prices are generally less directly responsive to interest rate
changes than investment grade issues and may not always follow this
pattern. A bond portfolio's average-weighted effective maturity and
its duration are measures of how the portfolio may react to interest
rate changes.
2. HOW DOES FLEXIBLE INCOME PORTFOLIO MANAGE INTEREST RATE RISK?
Flexible Income Portfolio may vary the average-weighted effective
maturity of its assets to reflect the portfolio manager's analysis of
interest rate trends and other factors. The Portfolio's
average-weighted effective maturity will tend to be shorter when the
portfolio manager expects interest rates to rise and longer when the
portfolio manager expects interest rates to fall. The Portfolio may
also use futures, options and other derivatives to manage interest
rate risks.
3. WHAT IS MEANT BY THE PORTFOLIO'S "AVERAGE-WEIGHTED EFFECTIVE MATURITY"?
The stated maturity of a bond is the date when the issuer must repay
the bond's entire principal value to an investor. Some types of bonds
may also have an "effective maturity" that is shorter than the stated
date due to prepayment or call provisions. Securities without
prepayment or call provisions generally have an effective maturity
equal to their stated maturity. Dollar-weighted effective maturity is
calculated by
12 Janus Aspen Series
<PAGE>
averaging the effective maturity of bonds held by the Portfolio with
each effective maturity "weighted" according to the percentage of net
assets that it represents.
4. WHAT IS MEANT BY THE PORTFOLIO'S "DURATION"?
A bond's duration indicates the time it will take an investor to
recoup his investment. Unlike average maturity, duration reflects both
principal and interest payments. Generally, the higher the coupon rate
on a bond, the lower its duration will be. The duration of a bond
portfolio is calculated by averaging the duration of bonds held by a
fund with each duration "weighted" according to the percentage of net
assets that it represents. Because duration accounts for interest
payments, the Portfolio's duration is usually shorter than its average
maturity.
5. WHAT IS A HIGH-YIELD/HIGH-RISK SECURITY?
A high-yield/high-risk security (also called a "junk" bond) is a debt
security rated below investment grade by major rating agencies (i.e.,
BB or lower by Standard & Poor's or Ba or lower by Moody's) or an
unrated bond of similar quality. It presents greater risk of default
(the failure to make timely interest and principal payments) than
higher quality bonds.
GENERAL PORTFOLIO POLICIES
Unless otherwise stated, each of the following policies applies to all
of the Portfolios. The percentage limitations included in these
policies and elsewhere in this Prospectus apply at the time of
purchase of the security. So, for example, if a Portfolio exceeds a
limit as a result of market fluctuations or the sale of other
securities, it will not be required to dispose of any securities.
CASH POSITION
When a portfolio manager believes that market conditions are
unfavorable for profitable investing, or when he is otherwise unable
to locate attractive investment opportunities, the Portfolios' cash or
similar investments may increase. In other words, the Portfolios do
not always stay fully invested in stocks and bonds. Cash or similar
investments generally are a residual - they represent the assets that
remain after a portfolio manager has committed available assets to
desirable investment opportunities. However, a portfolio manager may
also temporarily increase a Portfolio's cash position to protect its
assets or maintain liquidity. Partly because the portfolio managers
act independently of each other, the cash positions of the Portfolios
may vary significantly.
When a Portfolio's investments in cash or similar investments
increase, it may not participate in market advances or declines to the
same extent that it would if the Portfolio remained more fully
invested in stocks or bonds.
OTHER TYPES OF INVESTMENTS
Growth Portfolio invests primarily in domestic and foreign equity
securities, which may include preferred stocks, common stocks,
warrants and securities convertible into common or preferred stocks.
Equity Income Portfolio also invests in domestic and foreign equity
securities with varying degrees of emphasis on income. Growth and
Equity Income Portfolios may also invest to a lesser degree in other
types of securities. These securities (which are described in the
Glossary) may include:
- debt securities
- indexed/structured securities
- high-yield/high-risk securities (less than 35% of each Portfolio's
assets)
Investment objectives, principal investment strategies and risks 13
<PAGE>
- options, futures, forwards and other types of derivatives for
hedging purposes or for non-hedging purposes such as seeking to
enhance return
- securities purchased on a when-issued, delayed delivery or forward
commitment basis
Flexible Income Portfolio invests primarily in fixed-income securities
which may include corporate bonds and notes, government securities,
preferred stock, high-yield/high-risk fixed-income securities and
municipal obligations. The Portfolio may also invest to a lesser
degree in other types of securities. These securities (which are
described in the Glossary) may include:
- common stocks
- mortgage- and asset-backed securities
- zero coupon, pay-in-kind and step coupon securities
- options, futures, forwards and other types of derivatives for
hedging purposes or for non-hedging purposes such as seeking to
enhance return
- securities purchased on a when-issued, delayed delivery or forward
commitment basis
ILLIQUID INVESTMENTS
Each Portfolio may invest up to 15% of its net assets in illiquid
investments. An illiquid investment is a security or other position
that cannot be disposed of quickly in the normal course of business.
For example, some securities are not registered under U.S. securities
laws and cannot be sold to the U.S. public because of SEC regulations
(these are known as "restricted securities"). Under procedures adopted
by the Portfolios' Trustees, certain restricted securities may be
deemed liquid, and will not be counted toward this 15% limit.
FOREIGN SECURITIES
The Portfolios may invest without limit in foreign equity and debt
securities. The Portfolios may invest directly in foreign securities
denominated in a foreign currency and not publicly traded in the
United States. Other ways of investing in foreign securities include
depositary receipts or shares, and passive foreign investment
companies.
SPECIAL SITUATIONS
Each Portfolio may invest in special situations. A special situation
arises when, in the opinion of a Portfolio's manager, the securities
of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments
creating a special situation might include, among others, a new
product or process, a technological breakthrough, a management change
or other extraordinary corporate event, or differences in market
supply of and demand for the security. A Portfolio's performance could
suffer if the anticipated development in a "special situation"
investment does not occur or does not attract the expected attention.
PORTFOLIO TURNOVER
The Portfolios generally intend to purchase securities for long-term
investment although, to a limited extent, a Portfolio may purchase
securities in anticipation of relatively short-term price gains.
Short-term transactions may also result from liquidity needs,
securities having reached a price or yield objective, changes in
interest rates or the credit standing of an issuer, or by reason of
economic or other developments not foreseen at the time of the
investment decision. A Portfolio may also sell one security
14 Janus Aspen Series
<PAGE>
and simultaneously purchase the same or a comparable security to take
advantage of short-term differentials in bond yields or securities
prices. Changes are made in a Portfolio's holdings whenever its
portfolio manager believes such changes are desirable. Portfolio
turnover rates are generally not a factor in making buy and sell
decisions.
Increased portfolio turnover may result in higher costs for brokerage
commissions, dealer mark-ups and other transaction costs and may also
result in taxable capital gains. Higher costs associated with
increased portfolio turnover may offset gains in a Portfolio's
performance.
Investment objectives, principal investment strategies and risks 15
<PAGE>
RISKS FOR GROWTH PORTFOLIO AND EQUITY INCOME PORTFOLIO
Because the Portfolios may invest substantially all of their assets in
common stocks, the main risk is the risk that the value of the stocks
they hold might decrease in response to the activities of an
individual company or in response to general market and/or economic
conditions. If this occurs, a Portfolio's share price may also
decrease. A Portfolio's performance may also be affected by risks
specific to certain types of investments, such as foreign securities,
derivative investments, non-investment grade debt securities or
companies with relatively small market capitalizations.
The Portfolios may invest in smaller or newer companies which have
some special risks. Smaller or newer companies may suffer more
significant losses as well as realize more substantial growth than
larger or more established issuers because they may lack depth of
management, be unable to generate funds necessary for growth or
potential development, or be developing or marketing new products or
services for which markets are not yet established and may never
become established. In addition, such companies may be insignificant
factors in their industries and may become subject to intense
competition from larger or more established companies. Securities of
smaller or newer companies may have more limited trading markets than
the markets for securities of larger or more established issuers, and
may be subject to wide price fluctuations. Investments in such
companies tend to be more volatile and somewhat more speculative.
RISKS FOR FLEXIBLE INCOME PORTFOLIO
Because the Portfolio invests substantially all of its assets in
fixed-income securities, it is subject to risks such as credit or
default risks, and decreased value due to interest rate increases. The
Portfolio's performance may also be affected by risks to certain types
of investments, such as foreign securities and derivative instruments.
The following questions and answers are designed to help you better understand
some of the risks of investing in the Flexible Income Portfolio.
1. WHAT IS MEANT BY "CREDIT QUALITY" AND WHAT ARE THE RISKS ASSOCIATED WITH IT?
Credit quality measures the likelihood that the issuer will meet its
obligations on a bond. One of the fundamental risks associated with
all fixed-income funds is credit risk, which is the risk that an
issuer will be unable to make principal and interest payments when
due. U.S. government securities are generally considered to be the
safest type of investment in terms of credit risk. Municipal
obligations generally rank between U.S. government securities and
corporate debt securities in terms of credit safety. Corporate debt
securities, particularly those rated below investment grade, present
the highest credit risk.
2. HOW IS CREDIT QUALITY MEASURED?
Ratings published by nationally recognized statistical rating agencies
such as Standard & Poor's Ratings Service and Moody's Investors
Service, Inc. are widely accepted measures of credit risk. The lower a
bond issue is rated by an agency, the more credit risk it is
considered to represent. Lower rated bonds generally pay higher yields
to compensate investors for the associated risk. Please refer to
"Explanation of Rating Categories" on page 55 for a description of
rating categories.
16 Janus Aspen Series
<PAGE>
RISKS COMMON TO ALL PORTFOLIOS
The following questions and answers discuss risks that apply to all Portfolios.
1. HOW COULD THE PORTFOLIOS' INVESTMENTS IN FOREIGN SECURITIES AFFECT THEIR
PERFORMANCE?
The Portfolios may invest without limit in foreign securities either
indirectly (e.g., depositary receipts) or directly in foreign markets.
Investments in foreign securities, including those of foreign
governments, may involve greater risks than investing in domestic
securities because the Portfolios' performance may depend on issues
other than the performance of a particular company. These issues
include:
- CURRENCY RISK. As long as a Portfolio holds a foreign security, its
value will be affected by the value of the local currency relative
to the U.S. dollar. When a Portfolio sells a foreign denominated
security, its value may be worth less in U.S. dollars even if the
security increases in value in its home country. U.S. dollar
denominated securities of foreign issuers may also be affected by
currency risk.
- POLITICAL AND ECONOMIC RISK. Foreign investments may be subject to
heightened political and economic risks, particularly in emerging
markets which may have relatively unstable governments, immature
economic structures, national policies restricting investments by
foreigners, different legal systems, and economies based on only a
few industries. In some countries, there is the risk that the
government may take over the assets or operations of a company or
that the government may impose taxes or limits on the removal of a
Portfolio's assets from that country.
- REGULATORY RISK. There may be less government supervision of foreign
markets. As a result, foreign issuers may not be subject to the
uniform accounting, auditing and financial reporting standards and
practices applicable to domestic issuers and there may be less
publicly available information about foreign issuers.
- MARKET RISK. Foreign securities markets, particularly those of
emerging market countries, may be less liquid and more volatile than
domestic markets. Certain markets may require payment for securities
before delivery and delays may be encountered in settling securities
transactions. In some foreign markets, there may not be protection
against failure by other parties to complete transactions.
- TRANSACTION COSTS. Costs of buying, selling and holding foreign
securities, including brokerage, tax and custody costs, may be
higher than those involved in domestic transactions.
2. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
SECURITIES?
High-yield/high-risk securities (or "junk" bonds) are securities rated
below investment grade by the primary rating agencies such as Standard
& Poor's and Moody's. The value of lower quality securities generally
is more dependent on credit risk, or the ability of the issuer to meet
interest and principal payments, than investment grade debt
securities. Issuers of high-yield securities may not be as strong
financially as those issuing bonds with higher credit ratings and are
more vulnerable to real or perceived economic changes, political
changes or adverse developments specific to the issuer.
The junk bond market can experience sudden and sharp price swings.
Because Flexible Income Portfolio may invest a significant portion of
its assets in high-yield/high-risk securities, investors should be
willing to tolerate a corresponding increase in the risk of
significant and sudden changes in NAV.
Please refer to "Explanation of Rating Categories" on page 33 for a
description of bond rating categories.
Investment objectives, principal investment strategies and risks 17
<PAGE>
3. HOW DO THE PORTFOLIOS TRY TO REDUCE RISK?
The Portfolios may use futures, options and other derivative
instruments to "hedge" or protect their portfolios from adverse
movements in securities prices and interest rates. The Portfolios may
also use a variety of currency hedging techniques, including forward
currency contracts, to manage exchange rate risk. The portfolio
managers believe the use of these instruments will benefit the
Portfolios. However, a Portfolio's performance could be worse than if
the Portfolio had not used such instruments if a portfolio manager's
judgement proves incorrect. Risks associated with the use of
derivative instruments are described in the SAI.
4. I'VE HEARD A LOT ABOUT HOW THE CHANGE TO THE YEAR 2000 COULD AFFECT COMPUTER
SYSTEMS. DOES THIS CREATE ANY SPECIAL RISKS?
The portfolio managers carefully research each potential investment
before making an investment decision and, among other things, consider
Year 2000 readiness when selecting portfolio holdings. However, there
is no guarantee that the information a portfolio manager receives
regarding a company's Year 2000 readiness is completely accurate. If a
company has not satisfactorily addressed Year 2000 issues, the
Portfolio's performance could suffer.
18 Janus Aspen Series
<PAGE>
Management of the portfolios
INVESTMENT ADVISER
Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928, is
the investment adviser to each of the Portfolios and is responsible
for the day-to-day management of the investment portfolios and other
business affairs of the Portfolios.
Janus Capital began serving as investment adviser to Janus Fund in
1970 and currently serves as investment adviser to all of the Janus
retail funds, acts as sub-adviser for a number of private-label mutual
funds and provides separate account advisory services for
institutional accounts.
Janus Capital furnishes continuous advice and recommendations
concerning each Portfolio's investments. Janus Capital also furnishes
certain administrative, compliance and accounting services for the
Portfolios, and may be reimbursed by the Portfolios for its costs in
providing those services. In addition, Janus Capital employees serve
as officers of the Trust and Janus Capital provides office space for
the Portfolios and pays the salaries, fees and expenses of all
Portfolio officers and those Trustees who are affiliated with Janus
Capital.
Participating insurance companies that purchase the Portfolios' shares
may perform certain administrative services relating to the Portfolios
and Janus Capital or the Portfolios may pay those companies for such
services.
MANAGEMENT EXPENSES AND EXPENSE LIMITS
Each Portfolio pays Janus Capital a management fee which is calculated
daily. The advisory agreement with each Portfolio spells out the
management fee and other expenses that the Portfolios must pay. Each
of the Portfolios is subject to the following management fee schedule
(expressed as an annual rate). In addition, the Shares of each
Portfolio incur expenses not assumed by Janus Capital, including
transfer agent and custodian fees and expenses, legal and auditing
fees, printing and mailing costs of sending reports and other
information to existing shareholders, and independent Trustees' fees
and expenses.
<TABLE>
<CAPTION>
Average Daily
Net Assets Annual Rate Expense Limit
Fee Schedule of Portfolio Percentage (%) Percentage (%)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Portfolio First $300 Million 0.75 N/A(1)
Next $200 Million 0.70
Over $500 Million 0.65
- ------------------------------------------------------------------------------------------------------------------
Equity Income Portfolio First $300 Million 0.75
Next $200 Million 0.70 1.25(1)(2)
Over $500 Million 0.65
- ------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio First $300 Million 0.65 1.00(2)
Over $300 Million 0.55
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Janus Capital has agreed to reduce Growth and Equity Income Portfolio's
management fee to the extent that such fee exceeds the effective rate of the
Janus retail fund corresponding to such Portfolio. Janus Capital has agreed
to continue such waivers until at least the next annual renewal of the
advisory contracts. The effective rate is the management fee calculated by
the corresponding retail fund as of the last day of each calendar quarter
(expressed as an annual rate). The effective rates of Janus Fund and Janus
Equity Income Fund were 0.65% and 0.72%, respectively, for the quarter ended
March 31, 1999.
(2) Janus Capital has agreed to limit the Portfolio's expenses as indicated
until at least the next annual renewal of the advisory contracts.
Management of the portfolios 19
<PAGE>
INVESTMENT PERSONNEL
PORTFOLIO MANAGERS
DAVID J. CORKINS
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Growth and
Income Portfolio which he has managed since its inception. He is
Executive Vice President and portfolio manager of Janus Growth
and Income Fund which he has managed since August 1997. He
previously served as an assistant portfolio manager of Janus
Mercury Fund. He joined Janus in 1995 as a research analyst
specializing in domestic financial services companies and a
variety of foreign industries. Prior to joining Janus, he was the
Chief Financial Officer of Chase U.S. Consumer Services, Inc., a
Chase Manhattan mortgage business. He holds a Bachelor of Arts in
English and Russian from Dartmouth and received his Master of
Business Administration from Columbia University in 1993.
JAMES P. CRAIG, III
- --------------------------------------------------------------------------------
is Chief Investment Officer of Janus Capital. He is Executive
Vice President and portfolio manager of Growth Portfolio, which
he has managed since inception. He has managed Janus Fund since
1986 and has co-managed Janus Venture Fund since February 1,
1997. Mr. Craig previously managed Janus Venture Fund from its
inception, to December 1993, Janus Balanced Fund from December
1993 to December 1995 and Balanced Portfolio from September 1993
through April 1996. He holds a Bachelor of Arts in Business from
the University of Alabama and a Master of Arts in Finance from
the Wharton School of the University of Pennsylvania.
RONALD V. SPEAKER
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Flexible
Income Portfolio which he has managed or co-managed since its
inception. He previously served as co-manager of High-Yield
Portfolio, from its inception to May 1998. He managed Short-Term
Bond Portfolio from its inception through April 1996. Mr. Speaker
joined Janus Capital in 1986. He has managed or co-managed Janus
Flexible Income Fund since December 1991 and previously managed
both Janus Short-Term Bond Fund and Janus Federal Tax-Exempt Fund
from inception through December 1995. He previously managed or
co-managed Janus High-Yield Fund from its inception to February
1998. He holds a Bachelor of Arts in Finance from the University
of Colorado and is a Chartered Financial Analyst.
In January 1997, Mr. Speaker settled an SEC administrative action
involving two personal trades made by him in January of 1993.
Without admitting or denying the allegations, Mr. Speaker agreed
to civil money penalty, disgorgement, and interest payments
totaling $37,199 and to a 90-day suspension which ended on April
25, 1997.
20 Janus Aspen Series
<PAGE>
ASSISTANT PORTFOLIO MANAGERS
DAVID C. DECKER
- --------------------------------------------------------------------------------
is an assistant portfolio manager of Growth Portfolio. He is also
an assistant portfolio manager of Janus Fund. He is Executive
Vice President and portfolio manager of Janus Special Situations
Fund. Mr. Decker received a Masters of Business Administration in
Finance from the Fuqua School of Business at Duke University and
a Bachelor's Degree in Economics and Political Science from Tufts
University. He is a Chartered Financial Analyst.
JOHN H. SCHREIBER
- --------------------------------------------------------------------------------
is an assistant portfolio manager of Equity Income Portfolio. Mr.
Schreiber joined Janus Capital in 1997 as an equity research
analyst. Prior to coming to Janus he was an equity analyst with
Fidelity Investments. Mr. Schreiber holds a Bachelor of Science
degree in mechanical engineering from the University of
Washington and an MBA from Harvard University. He is a candidate
for the Chartered Financial Analyst designation.
Management of the portfolios 21
<PAGE>
Other information
CLASSES OF SHARES
Each Portfolio currently offers two classes of Shares, one of which,
the Institutional Shares, are offered pursuant to this prospectus and
are sold under the name Janus Aspen Series. The Shares offered by this
Prospectus are available only in connection with investment in and
payments under variable insurance contracts as well as certain
qualified retirement plans. Retirement Shares of each Portfolio are
offered by separate prospectus and are available only to qualified
plans using plan service providers that are compensated for providing
distribution and/or recordkeeping and other administrative services.
Because the expenses of each class may differ, the performance of each
class is expected to differ. If you would like additional information
about the Retirement Shares, please call 1-800-525-0020.
CONFLICTS OF INTEREST
The Shares offered by this prospectus are available only to variable
annuity and variable life separate accounts of insurance companies
that are unaffiliated with Janus Capital and to certain qualified
retirement plans. Retirement Shares of the Portfolios (offered through
a separate prospectus) are available to certain qualified plans.
Although the Portfolios do not currently anticipate any disadvantages
to policy owners because each Portfolio offers its shares to such
entities, there is a possibility that a material conflict may arise.
The Trustees monitor events in order to identify any disadvantages or
material irreconcilable conflicts and to determine what action, if
any, should be taken in response. If a material disadvantage or
conflict occurs, the Trustees may require one or more insurance
company separate accounts or qualified plans to withdraw its
investments in one or more Portfolios or substitute Shares of another
Portfolio. If this occurs, a Portfolio may be forced to sell its
securities at disadvantageous prices. In addition, the Trustees may
refuse to sell Shares of any Portfolio to any separate account or
qualified plan or may suspend or terminate the offering of a
Portfolio's Shares if such action is required by law or regulatory
authority or is in the best interests of that Portfolio's
shareholders. It is possible that a qualified plan investing in the
Retirement Shares of the Portfolios could lose its qualified plan
status under the Internal Revenue Code, which could have adverse tax
consequences on insurance company separate accounts investing in the
Shares. Janus Capital intends to monitor such qualified plans and the
Portfolios may discontinue sales to a qualified plan and require plan
participants with existing investments in the Retirement Shares to
redeem those investments if a plan loses (or in the opinion of Janus
Capital is at risk of losing) its qualified plan status.
YEAR 2000
Preparing for Year 2000 is a high priority for Janus Capital, which
has established a dedicated group to address this issue. Janus Capital
has devoted considerable internal resources and has engaged one of the
foremost experts in the field to help achieve Year 2000 readiness.
Janus Capital does not anticipate that Year 2000-related issues will
have a material impact on its ability to continue to provide the
Portfolios with service at current levels; however, Janus Capital
cannot make any assurances that the steps it has taken to ensure Year
2000 readiness will be successful. In addition, there can be no
assurance that Year 2000 issues will not affect the companies in which
the Portfolios invest or worldwide markets and economies.
22 Janus Aspen Series
<PAGE>
Distributions and taxes
DISTRIBUTIONS
To avoid taxation of the Portfolios, the Internal Revenue Code
requires each Portfolio to distribute net income and any net gains
realized on its investments annually. A Portfolio's income from
dividends and interest and any net realized short-term gains are paid
to shareholders as ordinary income dividends. Net realized long-term
gains are paid to shareholders as capital gains distributions.
Each class of each Portfolio makes semi-annual distributions in June
and December of substantially all of its investment income and an
annual distribution in June of its net realized gains, if any. All
dividends and capital gains distributions from Shares of a Portfolio
will automatically be reinvested into additional Shares of that
Portfolio.
HOW DISTRIBUTIONS AFFECT NAV
Distributions, other than daily income dividends, are paid to
shareholders as of the record date of the distribution of a Portfolio,
regardless of how long the shares have been held. Undistributed income
and realized gains are included in the daily NAV of a Portfolio's
Shares. The Share price of a Portfolio drops by the amount of the
distribution, net of any subsequent market fluctuations. For example,
assume that on December 31, the Shares of Growth Portfolio declared a
dividend in the amount of $0.25 per share. If the price of Growth
Portfolio's Shares was $10.00 on December 30, the share price on
December 31 would be $9.75, barring market fluctuations.
TAXES
TAXES ON DISTRIBUTIONS
Because Shares of the Portfolios may be purchased only through
variable insurance contracts and qualified plans, it is anticipated
that any income dividends or capital gains distributions made by the
Shares of a Portfolio will be exempt from current taxation if left to
accumulate within the variable insurance contract or qualified plan.
Generally, withdrawals from such contracts may be subject to ordinary
income tax and, if made before age 59 1/2, a 10% penalty tax. The tax
status of your investment depends on the features of your qualified
plan or variable insurance contract. Further information may be found
in your plan documents or in the prospectus of the separate account
offering such contract.
TAXATION OF THE PORTFOLIOS
Dividends, interest and some gains received by the Portfolios on
foreign securities may be subject to withholding of foreign taxes. The
Portfolios may from year to year make the election permitted under
Section 853 of the Internal Revenue Code to pass through such taxes to
shareholders. If such election is not made, any foreign taxes paid or
accrued will represent an expense to the Portfolios which will reduce
their investment income.
The Portfolios do not expect to pay any federal income or excise taxes
because they intend to meet certain requirements of the Internal
Revenue Code. In addition, each Portfolio intends to qualify under the
Internal Revenue Code with respect to the diversification requirements
related to the tax-deferred status of insurance company separate
accounts.
Distributions and taxes 23
<PAGE>
Shareholder's guide
INVESTORS MAY NOT PURCHASE OR REDEEM SHARES OF THE PORTFOLIOS
DIRECTLY. SHARES MAY BE PURCHASED OR REDEEMED ONLY THROUGH VARIABLE
INSURANCE CONTRACTS OFFERED BY THE SEPARATE ACCOUNTS OF PARTICIPATING
INSURANCE COMPANIES OR THROUGH QUALIFIED RETIREMENT PLANS. CERTAIN
PORTFOLIOS MAY NOT BE AVAILABLE IN CONNECTION WITH A PARTICULAR
CONTRACT AND CERTAIN CONTRACTS MAY LIMIT ALLOCATIONS AMONG THE
PORTFOLIOS. REFER TO THE PROSPECTUS FOR THE PARTICIPATING INSURANCE
COMPANY'S SEPARATE ACCOUNT OR YOUR PLAN DOCUMENTS FOR INSTRUCTIONS ON
PURCHASING OR SELLING OF VARIABLE INSURANCE CONTRACTS AND ON HOW TO
SELECT SPECIFIC PORTFOLIOS AS INVESTMENT OPTIONS FOR A CONTRACT OR A
QUALIFIED PLAN.
PRICING OF PORTFOLIO SHARES
Investments will be processed at the NAV next determined after an
order is received and accepted by a Portfolio or its agent. In order
to receive a day's price, your order must be received by the close of
the regular trading session of the New York Stock Exchange any day
that the NYSE is open. Securities of the Portfolios are valued at
market value or, if a market quotation is not readily available, at
their fair value determined in good faith under procedures established
by and under the supervision of the Trustees. Short-term instruments
maturing within 60 days are valued at amortized cost, which
approximates market value. See the SAI for more detailed information.
To the extent a Portfolio holds securities that are primarily listed
on foreign exchanges that trade on weekends or other days when the
Portfolios do not price their shares, the NAV of a Portfolio's shares
may change on days when shareholders will not be able to purchase or
redeem the Portfolio's shares.
PURCHASES
Purchases of Shares may be made only by the separate accounts of
insurance companies for the purpose of funding variable insurance
contracts or by qualified plans. Refer to the prospectus of the
appropriate insurance company separate account or your plan documents
for information on how to invest in the Shares of each Portfolio.
Participating insurance companies and certain other designated
organizations are authorized to receive purchase orders on the
Portfolios' behalf.
Each Portfolio reserves the right to reject any specific purchase
order. Purchase orders may be refused if, in Janus Capital's opinion,
they are of a size that would disrupt the management of a Portfolio.
Although there is no present intention to do so, the Portfolios may
discontinue sales of their shares if management and the Trustees
believe that continued sales may adversely affect a Portfolio's
ability to achieve its investment objective. If sales of a Portfolio's
Shares are discontinued, it is expected that existing policy owners
and plan participants invested in that Portfolio would be permitted to
continue to authorize investment in that Portfolio and to reinvest any
dividends or capital gains distributions, absent highly unusual
circumstances.
REDEMPTIONS
Redemptions, like purchases, may be effected only through the separate
accounts of participating insurance companies or through qualified
plans. Please refer to the appropriate separate account prospectus or
plan documents for details.
Shares of any Portfolio may be redeemed on any business day.
Redemptions are processed at the NAV next calculated after receipt and
acceptance of the redemption order by the Portfolio or its agent.
Redemption proceeds will normally be wired to the participating
insurance company the business day following receipt of the redemption
order, but in no event later than seven days after receipt of such
order.
24 Janus Aspen Series
<PAGE>
SHAREHOLDER COMMUNICATIONS
Shareholders will receive annual and semiannual reports including the
financial statements of the Shares of the Portfolios that they have
authorized for investment. Each report will show the investments owned
by each Portfolio and the market values thereof, as well as other
information about the Portfolios and their operations. The Trust's
fiscal year ends December 31.
Shareholder's guide 25
<PAGE>
Financial highlights
The financial highlights tables are intended to help you understand
the Institutional Shares' financial performance for each of the five
most recent fiscal years or the life of the Portfolio if less than
five years. Items 1 through 9 reflect financial results for a single
Share. Total return in the tables represents the rate that an investor
would have earned (or lost) on an investment in each of the
Institutional Shares of the Portfolios (assuming reinvestment of all
dividends and distributions) but does not include charges and expenses
attributable to any insurance product. This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the
Portfolios' financial statements, is included in the Annual Report,
which is available upon request and incorporated by reference into the
SAI.
<TABLE>
<CAPTION>
GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- ---------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $18.48 $15.51 $13.45 $10.57 $10.32
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.05 0.15 0.17 0.28 0.09
3. Net gains or losses on securities (both realized
and unrealized) 6.36 3.34 2.29 2.90 0.20
4. Total from investment operations 6.41 3.49 2.46 3.18 0.29
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.05) (0.15) (0.17) (0.30) (0.04)
6. Tax return of capital distributions -- -- -- -- --
7. Distributions (from capital gains) (1.30) (0.37) (0.23) -- --
8. Total distributions (1.35) (0.52) (0.40) (0.30) (0.04)
9. NET ASSET VALUE, END OF PERIOD $23.54 $18.48 $15.51 $13.45 $10.57
10. Total return 35.66% 22.75% 18.45% 30.17% 2.76%
11. Net assets, end of period (in thousands) $1,103,549 $608,281 $325,789 $126,911 $43,549
12. Average net assets for the period (in thousands) $789,454 $477,914 $216,125 $77,344 $26,464
13. Ratio of gross expenses to average net assets 0.68%(6) 0.70%(5) 0.69%(4) 0.78%(3) N/A
14. Ratio of net expenses to average net assets 0.68% 0.69% 0.69% 0.76% 0.88%(1)(2)
15. Ratio of net investment income to average net
assets 0.26% 0.91% 1.39% 1.24% 1.45%
16. Portfolio turnover rate 73% 122% 87% 185% 169%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Commissions payable by the Portfolio for transactions effected by a
broker-dealer affiliated with Janus Capital were credited against the
Portfolio's operating expenses. The effect of such directed brokerage
arrangement was de minimis.
(2) The ratio was 1.23% before waiver of certain fees and/or reduction of
adviser's fees to the effective rate of Janus Fund.
(3) The ratio was 0.98% before waiver of certain fees and/or reduction of
adviser's fees to the effective rate of Janus Fund.
(4) The ratio was 0.83% before waiver of certain fees and/or reduction of
adviser's fees to the effective rate of Janus Fund.
(5) The ratio was 0.78% before waiver of certain fees and/or reduction of
adviser's fees to the effective rate of Janus Fund.
(6) The ratio was 0.75% before waiver of certain fees and/or reduction of
adviser's fees to the effective rate of Janus Fund.
26 Janus Aspen Series
<PAGE>
<TABLE>
<CAPTION>
EQUITY INCOME PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------
Periods ending
December 31
1998 1997(1)
<S> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $13.46 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.02 0.01
3. Net gains (or losses) on securities (both realized and
unrealized) 6.16 3.46
4. Total from investment operations 6.18 3.47
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.02) (0.01)
6. Tax return of capital distributions -- --
7. Distributions (from capital gains) (0.21) --
8. Total distributions (0.23) (0.01)
9. NET ASSET VALUE, END OF PERIOD $19.41 $13.46
10. Total return* 46.24% 34.70%
11. Net assets, end of period (in thousands) $9,017 $3,047
12. Average net assets for the period (in thousands) $5,629 $1,101
13. Ratio of gross expenses to average net assets** 1.25%(3) 1.25%(2)
14. Ratio of net expenses to average net assets** 1.25% 1.25%
15. Ratio of net investment income to average net assets** 0.17% 0.35%
16. Portfolio turnover rate** 79% 128%
- ------------------------------------------------------------------------------------
</TABLE>
* Total return not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
(1) May 1, 1997 (inception) through December 31, 1997.
(2) The ratio was 5.75% before waiver of certain fees and/or reduction of
adviser's fees to the effective rate of Janus Equity Income Fund.
(3) The ratio was 1.86% before waiver of certain fees and/or reduction of
adviser's fees to the effective rate of Janus Equity Income Fund.
Financial highlights 27
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE INCOME PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $11.78 $11.24 $11.11 $9.48 $9.97
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.64 0.67 0.74 0.53 0.47
3. Net gains or losses on securities (both realized and
unrealized) 0.41 0.62 0.24 1.70 (0.56)
4. Total from investment operations 1.05 1.29 0.98 2.23 (0.09)
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.67) (0.64) (0.72) (0.60) (0.40)
6. Tax return of capital distributions -- -- -- -- --
7. Distributions (from capital gains) (0.11) (0.11) (0.13) -- --
8. Total distributions (0.78) (0.75) (0.85) (0.60) (0.40)
9. NET ASSET VALUE, END OF PERIOD $12.05 $11.78 $11.24 $11.11 $9.48
10. Total return 9.11% 11.76% 9.19% 23.86% (0.91%)
11. Net assets, end of period (in thousands) $129,582 $54,098 $25,315 $10,831 $1,924
12. Average net assets for the period (in thousands) $86,627 $36,547 $17,889 $5,556 $1,636
13. Ratio of gross expenses to average net assets 0.73% 0.75% 0.84% 1.07% N/A
14. Ratio of net expenses to average net assets 0.73% 0.75% 0.83% 1.00% 1.00%(1)
15. Ratio of net investment income to average net assets 6.36% 6.90% 7.31% 7.46% 5.49%
16. Portfolio turnover rate 145% 119% 250% 236% 234%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 1.35% before waiver of certain fees incurred by the Portfolio.
28 Janus Aspen Series
<PAGE>
Glossary of investment terms
This glossary provides a more detailed description of some of the
types of securities and other instruments in which the Portfolios may
invest. The Portfolios may invest in these instruments to the extent
permitted by their investment objectives and policies. The Portfolios
are not limited by this discussion and may invest in any other types
of instruments not precluded by the policies discussed elsewhere in
this Prospectus. Please refer to the SAI for a more detailed
discussion of certain instruments.
I. EQUITY AND DEBT SECURITIES
BONDS are debt securities issued by a company, municipality,
government or government agency. The issuer of a bond is required to
pay the holder the amount of the loan (or par value of the bond) at a
specified maturity and to make scheduled interest payments.
COMMERCIAL PAPER is a short-term debt obligation with a maturity
ranging from 1 to 270 days issued by banks, corporations and other
borrowers to investors seeking to invest idle cash. The Portfolios may
purchase commercial paper issued in private placements under Section
4(2) of the Securities Act of 1933.
COMMON STOCKS are equity securities representing shares of ownership
in a company and usually carry voting rights and earns dividends.
Unlike preferred stock, dividends on common stock are not fixed but
are declared at the discretion of the issuer's board of directors.
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed
dividend or interest payment and are convertible into common stock at
a specified price or conversion ratio.
DEBT SECURITIES are securities representing money borrowed that must
be repaid at a later date. Such securities have specific maturities
and usually a specific rate of interest or an original purchase
discount.
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based
corporation that entitle the holder to dividends and capital gains on
the underlying security. Receipts include those issued by domestic
banks (American Depositary Receipts), foreign banks (Global or
European Depositary Receipts) and broker-dealers (depositary shares).
FIXED-INCOME SECURITIES are securities that pay a specified rate of
return. The term generally includes short-and long-term government,
corporate and municipal obligations that pay a specified rate of
interest or coupons for a specified period of time, and preferred
stock, which pays fixed dividends. Coupon and dividend rates may be
fixed for the life of the issue or, in the case of adjustable and
floating rate securities, for a shorter period.
HIGH-YIELD/HIGH-RISK SECURITIES are securities that are rated below
investment grade by the primary rating agencies (e.g., BB or lower by
Standard & Poor's and Ba or lower by Moody's). Other terms commonly
used to describe such securities include "lower rated bonds,"
"noninvestment grade bonds" and "junk bonds."
MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of
mortgages or other debt. These securities are generally pass-through
securities, which means that principal and interest payments on the
underlying securities (less servicing fees) are passed through to
shareholders on a pro rata basis. These securities involve prepayment
risk, which is the risk that the underlying mortgages or other debt
may be refinanced or paid off prior to their maturities during periods
of declining interest rates. In that case, a portfolio manager may
have to reinvest the proceeds from the securities at a lower rate.
Potential market gains on a security subject to prepayment risk may be
more limited than potential market gains on a comparable security that
is not subject to prepayment risk.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign
corporations which generate certain amounts of passive income or hold
certain amounts of assets for the production of passive income.
Passive
Glossary of investment terms 29
<PAGE>
income includes dividends, interest, royalties, rents and annuities.
To avoid taxes and interest that the Portfolios must pay if these
investments are profitable, the Portfolios may make various elections
permitted by the tax laws. These elections could require that the
Portfolios recognize taxable income, which in turn must be
distributed, before the securities are sold and before cash is
received to pay the distributions.
PAY-IN-KIND BONDS are debt securities that normally give the issuer an
option to pay cash at a coupon payment date or give the holder of the
security a similar bond with the same coupon rate and a face value
equal to the amount of the coupon payment that would have been made.
PREFERRED STOCKS are equity securities that generally pay dividends at
a specified rate and have preference over common stock in the payment
of dividends and liquidation. Preferred stock generally does not carry
voting rights.
REPURCHASE AGREEMENTS involve the purchase of a security by a
Portfolio and a simultaneous agreement by the seller (generally a bank
or dealer) to repurchase the security from the Portfolio at a
specified date or upon demand. This technique offers a method of
earning income on idle cash. These securities involve the risk that
the seller will fail to repurchase the security, as agreed. In that
case, a Portfolio will bear the risk of market value fluctuations
until the security can be sold and may encounter delays and incur
costs in liquidating the security.
REVERSE REPURCHASE AGREEMENTS involve the sale of a security by a
Portfolio to another party (generally a bank or dealer) in return for
cash and an agreement by the Portfolio to buy the security back at a
specified price and time. This technique will be used primarily to
provide cash to satisfy unusually high redemption requests, or for
other temporary or emergency purposes.
RULE 144A SECURITIES are securities that are not registered for sale
to the general public under the Securities Act of 1933, but that may
be resold to certain institutional investors.
STANDBY COMMITMENTS are obligations purchased by a Portfolio from a
dealer that give the Portfolio the option to sell a security to the
dealer at a specified price.
STEP COUPON BONDS are debt securities that trade at a discount from
their face value and pay coupon interest. The discount from the face
value depends on the time remaining until cash payments begin,
prevailing interest rates, liquidity of the security and the perceived
credit quality of the issuer.
STRIP BONDS are debt securities that are stripped of their interest
(usually by a financial intermediary) after the securities are issued.
The market value of these securities generally fluctuates more in
response to changes in interest rates than interest-paying securities
of comparable maturity.
TENDER OPTION BONDS are generally long-term securities that are
coupled with an option to tender the securities to a bank,
broker-dealer or other financial institution at periodic intervals and
receive the face value of the bond. This type of security is commonly
used as a means of enhancing the security's liquidity.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S.
government that are supported by its full faith and credit. Treasury
bills have initial maturities of less than one year, Treasury notes
have initial maturities of one to ten years and Treasury bonds may be
issued with any maturity but generally have maturities of at least ten
years. U.S. government securities also include indirect obligations of
the U.S. government that are issued by federal agencies and government
sponsored entities. Unlike Treasury securities, agency securities
generally are not backed by the full faith and credit of the U.S.
government. Some agency securities are supported by the right of the
issuer to borrow from the Treasury, others are supported by the
discretionary authority of the U.S. government to purchase the
agency's obligations and others are supported only by the credit of
the sponsoring agency.
30 Janus Aspen Series
<PAGE>
VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates
of interest and, under certain limited circumstances, may have varying
principal amounts. These securities pay interest at rates that are
adjusted periodically according to a specified formula, usually with
reference to some interest rate index or market interest rate. The
floating rate tends to decrease the security's price sensitivity to
changes in interest rates.
WARRANTS are securities, typically issued with preferred stock or
bonds, that give the holder the right to buy a proportionate amount of
common stock at a specified price, usually at a price that is higher
than the market price at the time of issuance of the warrant. The
right may last for a period of years or indefinitely.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD TRANSACTIONS generally
involve the purchase of a security with payment and delivery at some
time in the future - i.e., beyond normal settlement. The Portfolios do
not earn interest on such securities until settlement and bear the
risk of market value fluctuations in between the purchase and
settlement dates. New issues of stocks and bonds, private placements
and U.S. government securities may be sold in this manner.
ZERO COUPON BONDS are debt securities that do not pay regular interest
at regular intervals, but are issued at a discount from face value.
The discount approximates the total amount of interest the security
will accrue from the date of issuance to maturity. The market value of
these securities generally fluctuates more in response to changes in
interest rates than interest-paying securities.
II. FUTURES, OPTIONS AND OTHER DERIVATIVES
FORWARD CONTRACTS are contracts to purchase or sell a specified amount
of a financial instrument for an agreed upon price at a specified
time. Forward contracts are not currently exchange traded and are
typically negotiated on an individual basis. The Portfolios may enter
into forward currency contracts to hedge against declines in the value
of securities denominated in, or whose value is tied to, a currency
other than the U.S. dollar or to reduce the impact of currency
appreciation on purchases of such securities. They may also enter into
forward contracts to purchase or sell securities or other financial
indices.
FUTURES CONTRACTS are contracts that obligate the buyer to receive and
the seller to deliver an instrument or money at a specified price on a
specified date. The Portfolios may buy and sell futures contracts on
foreign currencies, securities and financial indices including
interest rates or an index of U.S. government, foreign government,
equity or fixed-income securities. The Portfolios may also buy options
on futures contracts. An option on a futures contract gives the buyer
the right, but not the obligation, to buy or sell a futures contract
at a specified price on or before a specified date. Futures contracts
and options on futures are standardized and traded on designated
exchanges.
INDEXED/STRUCTURED SECURITIES are typically short- to
intermediate-term debt securities whose value at maturity or interest
rate is linked to currencies, interest rates, equity securities,
indices, commodity prices or other financial indicators. Such
securities may be positively or negatively indexed (i.e. their value
may increase or decrease if the reference index or instrument
appreciates). Indexed/structured securities may have return
characteristics similar to direct investments in the underlying
instruments and may be more volatile than the underlying instruments.
A Portfolio bears the market risk of an investment in the underlying
instruments, as well as the credit risk of the issuer.
INTEREST RATE SWAPS involve the exchange by two parties of their
respective commitments to pay or receive interest (e.g., an exchange
of floating rate payments for fixed rate payments).
INVERSE FLOATERS are debt instruments whose interest rate bears an
inverse relationship to the interest rate on another instrument or
index. For example, upon reset the interest rate payable on a security
may go down when the underlying index has risen. Certain inverse
floaters may have an interest rate reset
Glossary of investment terms 31
<PAGE>
mechanism that multiplies the effects of change in the underlying
index. Such mechanism may increase the volatility of the security's
market value.
OPTIONS are the right, but not the obligation, to buy or sell a
specified amount of securities or other assets on or before a fixed
date at a predetermined price. The Portfolios may purchase and write
put and call options on securities, securities indices and foreign
currencies.
32 Janus Aspen Series
<PAGE>
Explanation of rating categories
The following is a description of credit ratings issued by two of the
major credit ratings agencies. Credit ratings evaluate only the safety
of principal and interest payments, not the market value risk of lower
quality securities. Credit rating agencies may fail to change credit
ratings to reflect subsequent events on a timely basis. Although Janus
Capital considers security ratings when making investment decisions,
it also performs its own investment analysis and does not rely solely
on the ratings assigned by credit agencies.
STANDARD & POOR'S
RATINGS SERVICES
<TABLE>
<S> <C>
BOND RATING EXPLANATION
-----------------------------------------------------------------------------------------
Investment Grade
AAA......................... Highest rating; extremely strong capacity to pay principal
and interest.
AA.......................... High quality; very strong capacity to pay principal and
interest.
A........................... Strong capacity to pay principal and interest; somewhat more
susceptible to the adverse effects of changing circumstances
and economic conditions.
BBB......................... Adequate capacity to pay principal and interest; normally
exhibit adequate protection parameters, but adverse economic
conditions or changing circumstances more likely to lead to
a weakened capacity to pay principal and interest than for
higher rated bonds.
Non-Investment Grade
BB, B, CCC, CC, C........... Predominantly speculative with respect to the issuer's
capacity to meet required interest and principal payments.
BB - lowest degree of speculation; C - the highest degree of
speculation. Quality and protective characteristics
outweighed by large uncertainties or major risk exposure to
adverse conditions.
D........................... In default.
</TABLE>
Explanation of rating categories 33
<PAGE>
MOODY'S INVESTORS SERVICE, INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
-----------------------------------------------------------------------------------------
Investment Grade
Aaa......................... Highest quality, smallest degree of investment risk.
Aa.......................... High quality; together with Aaa bonds, they compose the
high-grade bond group.
A........................... Upper-medium grade obligations; many favorable investment
attributes.
Baa......................... Medium-grade obligations; neither highly protected nor
poorly secured. Interest and principal appear adequate for
the present but certain protective elements may be lacking
or may be unreliable over any great length of time.
Non-Investment Grade
Ba.......................... More uncertain, with speculative elements. Protection of
interest and principal payments not well safeguarded during
good and bad times.
B........................... Lack characteristics of desirable investment; potentially
low assurance of timely interest and principal payments or
maintenance of other contract terms over time.
Caa......................... Poor standing, may be in default; elements of danger with
respect to principal or interest payments.
Ca.......................... Speculative in a high degree; could be in default or have
other marked shortcomings.
C........................... Lowest-rated; extremely poor prospects of ever attaining
investment standing.
</TABLE>
Unrated securities will be treated as noninvestment grade securities
unless a portfolio manager determines that such securities are the
equivalent of investment grade securities. Securities that have
received ratings from more than one agency are considered investment
grade if at least one agency has rated the security investment grade.
34 Janus Aspen Series
<PAGE>
SECURITIES HOLDINGS BY RATING CATEGORY
During the fiscal period ended December 31, 1998, the percentage of
securities holdings for Flexible Income Portfolio by rating category
based upon a weighted monthly average was:
<TABLE>
<CAPTION>
FLEXIBLE INCOME PORTFOLIO
----------------------------------------------------------------------------------------
<S> <C>
BONDS-S&P RATING:
AAA 24%
AA 4%
A 13%
BBB 18%
BB 13%
B 15%
CCC 1%
CC 0%
C 0%
Preferred Stock 2%
Cash and Options 10%
TOTAL 100%
----------------------------------------------------------------------------------------
</TABLE>
No other Portfolio described in this Prospectus held 5% or more of its
assets in bonds rated below investment grade for the fiscal year ended
December 31, 1998.
Explanation of rating categories 35
<PAGE>
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36 Janus Aspen Series
<PAGE>
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Explanation of rating categories 37
<PAGE>
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<PAGE>
[JANUS LOGO]
1-800-29JANUS
100 Fillmore Street
Denver, Colorado 80206-4928
janus.com
You can request other information, including a Statement of
Additional Information, Annual Report or Semiannual Report, free of
charge, by contacting your insurance company or plan sponsor or
visiting our Web site at janus.com. In the Portfolios' Annual
Report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Portfolios'
performance during their last fiscal year. Other information is also
available from financial intermediaries that sell Shares of the
Portfolios.
The Statement of Additional Information provides detailed
information about the Portfolios and is incorporated into this
Prospectus by reference. You may review the Portfolios' Statement of
Additional Information at the Public Reference Room of the SEC or
get text only copies for a fee, by writing to or calling the Public
Reference Room, Washington, D.C. 20549-6009 (1-800-SEC-0330). You
may obtain the Statement of Additional Information for free from the
SEC's Web site at http://www.sec.gov.
Investment Company Act File No. 811-7736
