[JANUS LOGO]
Janus Aspen Series
Service Shares
PROSPECTUS
MAY 1, 2000
Aggressive Growth Portfolio
Capital Appreciation Portfolio
Growth and 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.
<PAGE>
[JANUS LOGO]
This prospectus describes four 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 or
three classes of shares. The Service Shares, (the "Shares"), are
offered by this prospectus 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.
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.
<PAGE>
Table of contents
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Equity Portfolios........................................ 2
Flexible-Income Portfolio................................ 5
Fees and expenses........................................ 7
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND
RISKS
Equity Portfolios........................................ 8
Flexible Income Portfolio................................ 11
General portfolio policies............................... 13
Risks for Equity Portfolios.............................. 15
Risks for Flexible Income Portfolio...................... 16
Risks Common to all Portfolios........................... 16
MANAGEMENT OF THE PORTFOLIOS
Investment adviser....................................... 18
Management expenses and expense limits................... 18
Investment personnel..................................... 19
OTHER INFORMATION........................................... 21
DISTRIBUTIONS AND TAXES
Distributions............................................ 23
Taxes.................................................... 23
SHAREHOLDER'S GUIDE
Pricing of portfolio shares.............................. 24
Purchases................................................ 24
Redemptions.............................................. 24
Frequent trading......................................... 25
Shareholder communications............................... 25
FINANCIAL HIGHLIGHTS........................................ 26
GLOSSARY
Glossary of investment terms............................. 27
RATING CATEGORIES
Explanation of rating categories......................... 31
</TABLE>
Table of contents 1
<PAGE>
Risk return summary
EQUITY PORTFOLIOS
The Equity Portfolios are designed for long-term investors who seek
growth of capital and who can tolerate the greater risks associated
with common stock investments.
1. WHAT ARE THE INVESTMENT OBJECTIVES OF THE EQUITY PORTFOLIOS?
--------------------------------------------------------------------------------
- AGGRESSIVE GROWTH PORTFOLIO AND CAPITAL APPRECIATION PORTFOLIO
seek long-term growth of capital.
- GROWTH AND INCOME PORTFOLIO seeks long-term capital growth and
current income.
The Portfolios' Trustees may change these objectives without a
shareholder vote and the Portfolios will notify you of any changes
that are material. If there is a material change to a Portfolio's
objective or policies, you should consider whether that Portfolio
remains an appropriate investment for you. There is no guarantee that
a Portfolio will meet its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE EQUITY PORTFOLIOS?
The portfolio managers apply a "bottom up" approach in choosing
investments. In other words, they look for companies with earnings
growth potential one at a time. If a portfolio manager is unable to
find investments with earnings growth potential, a significant portion
of a Portfolio's assets may be in cash or similar investments.
AGGRESSIVE GROWTH PORTFOLIO invests primarily in common stocks
selected for their growth potential, and normally invests at least 50%
of its equity assets in medium-sized companies.
CAPITAL APPRECIATION PORTFOLIO invests primarily in common stocks
selected for their growth potential. The Portfolio may invest in
companies of any size, from larger, well-established companies to
smaller, emerging growth companies.
GROWTH AND INCOME PORTFOLIO normally emphasizes investments in common
stocks. It will normally invest up to 75% of its assets in equity
securities selected primarily for their growth potential, and at least
25% of its assets in securities the portfolio manager believes have
income potential. Equity securities may make up part of this income
component if they currently pay dividends or the portfolio manager
believes they have potential for increasing or commencing dividend
payments.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN THE EQUITY PORTFOLIOS?
The biggest risk of investing in these Portfolios is that their
returns may vary, and you could lose money. If you are considering
investing in any of the Equity Portfolios, remember that they are each
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 a Portfolio's holdings may decrease if the value of an
individual company in the portfolio decreases. The value of a
Portfolio's holdings could also decrease if the stock market goes
down. If the value of a Portfolio's holdings decreases, that
Portfolio's net asset value (NAV) will also decrease, which means if
you sell your shares in a Portfolio you would get back less money.
The income component of GROWTH AND INCOME PORTFOLIO 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,
2 Janus Aspen Series
<PAGE>
which is the risk that an issuer of a bond will be unable to make
principal and interest payments when due.
AGGRESSIVE GROWTH PORTFOLIO AND CAPITAL APPRECIATION PORTFOLIO are
nondiversified. In other words, they may hold larger positions in a
smaller number of securities than a diversified fund. As a result, a
single security's increase or decrease in value may have a greater
impact on a Portfolio's NAV and total return.
An investment in these Portfolios is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
The following information provides some indication of the risks of
investing in the Equity Portfolios by showing how each of the Equity
Portfolios' performance has varied over time. The Portfolios' Service
Shares commenced operations on December 31, 1999. The returns shown
for the Service Shares of these Portfolios reflect the historical
performance of a different class of shares (the Institutional Shares)
prior to December 31, 1999, restated based on the Service Shares'
estimated fees and expenses (ignoring any fee and expense
limitations). The bar charts depict the change in performance from
year-to-year during the period indicated but do not include charges
and expenses attributable to any insurance product which would lower
the performance illustrated. The Portfolios do not impose any sales or
other charges that would affect total return computations. Total
return figures include the effect of each Portfolio's expenses. The
tables compare the average annual returns for the Service Shares of
each Portfolio for the periods indicated to a broad-based securities
market index.
AGGRESSIVE GROWTH PORTFOLIO
Annual Returns for Periods Ended 12/31
16.33% 27.38% 7.72% 12.53% 34.19% 123.16%
1994 1995 1996 1997 1998 1999
Best Quarter 4th-1999 58.17% Worst Quarter 3rd-1998 (15.00%)
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (9/13/93)
<S> <C> <C> <C>
Aggressive Growth Portfolio 123.16% 35.83% 33.98%
S&P MidCap 400 Index* 14.72% 23.05% 18.08%
-----------------------------------------
</TABLE>
* The S&P MidCap 400 Index is an unmanaged group of 400 domestic
stocks chosen for their market size, liquidity and industry group
representation.
Risk return summary 3
<PAGE>
CAPITAL APPRECIATION PORTFOLIO
Annual Returns for Periods Ended 12/31
57.91% 64.60%
1998 1999
Best Quarter 4th-1999 40.00% Worst Quarter 3rd-1998 (9.99%)
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year (5/1/97)
<S> <C> <C>
Capital Appreciation Portfolio 64.60% 56.39%
S&P 500 Index* 21.03% 27.40%
-----------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
GROWTH AND INCOME PORTFOLIO
Annual Returns for Periods Ended 12/31
73.09%
1999
Best Quarter 4th-1999 37.51% Worst Quarter 3rd-1999 4.30%
Average annual total return for period ended 12/31/99
-----------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year (5/1/98)
<S> <C> <C>
Growth and Income Portfolio 73.09% 54.92%
S&P 500 Index* 21.03% 19.85%
-----------------------------
</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 Equity Portfolios' past performance does not necessarily indicate
how they will perform in the future.
4 Janus Aspen Series
<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 the 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, 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 bonds, 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 bonds, 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 bonds
generally have a greater credit risk than other types of fixed-income
securities. Because of these factors, the performance and NAV of
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.
Risk return summary 5
<PAGE>
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 Portfolio's Service
Shares commenced operations on December 31, 1999. The returns shown
for the Service Shares of the Portfolio reflect the historical
performance of a different class of shares (the Institutional Shares)
prior to December 31, 1999, restated based on the Service Shares'
estimated fees and expenses on (ignoring any fee and expense
limitations). 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 Service Shares of
the Portfolio for the periods indicated to a broad-based securities
market index.
FLEXIBLE INCOME PORTFOLIO
Annual Returns for Periods Ended 12/31
(0.91%) 23.86% 9.03% 11.52% 8.85% 1.30%
1994 1995 1996 1997 1998 1999
Best Quarter 2nd-1995 6.71% Worst Quarter 2nd-1999 (1.27%)
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (9/13/93)
<S> <C> <C> <C>
Flexible Income Portfolio 1.30% 10.68% 8.36%
Lehman Brothers Gov't/Corp Bond Index* (2.15%) 7.61% 5.40%
----------------------------------------
</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.
6 Janus Aspen Series
<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 below 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. 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>
Distribution Total Annual Fund
Management (12b-1) Other Operating
Fee Fees(1) Expenses Expenses(2)
<S> <C> <C> <C> <C>
Aggressive Growth Portfolio 0.65% 0.25% 0.02% 0.92%
Capital Appreciation Portfolio 0.65% 0.25% 0.04% 0.94%
Growth and Income Portfolio 0.65% 0.25% 0.40% 1.30%
Flexible Income Portfolio 0.65% 0.25% 0.07% 0.97%
</TABLE>
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(1) Long-term shareholders may pay more than the economic equivalent of
the maximum front-end sales charges permitted by the National
Association of Securities Dealers, Inc.
(2) Expenses are based on the estimated expenses that the new Service
Shares Class of each Portfolio expects to incur in its initial fiscal
year. All expenses are shown without the effect of any expense offset
arrangements.
--------------------------------------------------------------------------------
EXAMPLE:
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
------------------
<S> <C> <C>
Aggressive Growth Portfolio $ 94 $ 293
Capital Appreciation Portfolio $ 96 $ 300
Growth and Income Portfolio $132 $ 412
Flexible Income Portfolio $ 99 $ 309
</TABLE>
Risk return summary 7
<PAGE>
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>
Aggressive Growth Portfolio Janus Enterprise Fund
Capital Appreciation Portfolio Janus Twenty Fund
Growth and Income Portfolio Janus Growth and 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.
EQUITY PORTFOLIOS
This section takes a closer look at the investment objectives of each
of the Equity Portfolios, their principal investment strategies and
certain risks of investing in the Equity Portfolios. 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 15-17 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
AGGRESSIVE GROWTH PORTFOLIO
Aggressive Growth Portfolio seeks long-term growth of capital. It
pursues its objective by investing primarily in common stocks selected
for their growth potential, and normally invests at least 50% of its
equity assets in medium-sized companies. Medium-sized companies are
those whose market capitalization falls within the range of companies
in the S&P MidCap 400 Index. Market capitalization is a commonly used
measure of the size and value of a company. The market capitalizations
within the Index will vary, but as of December 31, 1999, they ranged
from approximately $170 million to $37 billion.
CAPITAL APPRECIATION PORTFOLIO
Capital Appreciation Portfolio seeks long-term growth of capital. It
pursues its objective by investing primarily in common stocks selected
for their growth potential. The Portfolio may invest in companies of
any size, from larger, well-established companies to smaller, emerging
growth companies.
GROWTH AND INCOME PORTFOLIO
Growth and Income Portfolio seeks long-term capital growth and current
income. It normally emphasizes investments in common stocks. It will
normally invest up to 75% of its assets in equity securities selected
primarily for their growth potential, and at least 25% of its assets
in securities the portfolio manager believes have income potential.
Because of this investment strategy, the Portfolio is not designed for
investors who need consistent income.
8 Janus Aspen Series
<PAGE>
The following questions and answers are designed to help you better understand
the Equity Portfolios' principal investment strategies.
1. HOW ARE COMMON STOCKS SELECTED?
Each of the Portfolios may invest substantially all of its assets in
common stocks if its portfolio manager believes that common stocks
will appreciate in value. The portfolio managers generally take a
"bottom up" approach to selecting companies. In other words, they seek
to identify individual companies with earnings growth potential that
may not be recognized by the market at large. They make 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. Except for Growth and Income
Portfolio, realization of income is not a significant consideration
when choosing investments for the Portfolios. Income realized on the
Portfolios' investments may be incidental to their objectives. In the
case of Growth and Income Portfolio, the portfolio manager may
consider dividend-paying characteristics to a greater degree in
selecting common stock.
2. ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES?
Generally, yes. The portfolio managers seek companies that meet their
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 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 Portfolios may invest and
the Portfolios 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. As noted previously, market capitalization is
an important investment criteria for Aggressive Growth Portfolio.
Although the other Equity Portfolios offered by this Prospectus do not
emphasize companies of any particular size, Portfolios with a larger
asset base are more likely to invest in larger, more established
issuers.
4. HOW ARE ASSETS ALLOCATED BETWEEN THE GROWTH AND INCOME COMPONENTS OF GROWTH
AND INCOME PORTFOLIO'S HOLDINGS?
Growth and Income Portfolio shifts assets between the growth and
income components of its holdings based on the portfolio manager's
analysis of relevant market, financial and economic conditions. If the
portfolio manager believes that growth securities will provide better
returns than the yields then available or expected on income-producing
securities, the Portfolio will place a greater emphasis on the growth
component.
5. WHAT TYPES OF SECURITIES MAKE UP THE GROWTH COMPONENT OF GROWTH AND INCOME
PORTFOLIO?
The growth component of the Portfolio 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 9
<PAGE>
6. WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF GROWTH AND INCOME
PORTFOLIO'S HOLDINGS?
The income component of Growth and Income Portfolio is expected to
consist of securities that the portfolio manager believes have income
potential. Such securities may include equity securities, convertible
securities and all types of debt securities. Equity securities may be
included in the income component of the Portfolio if they currently
pay dividends or the portfolio manager believes they have the
potential for either increasing their dividends or commencing
dividends, if none are currently paid.
10 Janus Aspen Series
<PAGE>
FLEXIBLE INCOME PORTFOLIO
This section takes a closer look at the investment objectives of
Flexible Income Portfolio, its principal investment strategies and
certain risks of investing in the 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 16-17 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
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 bonds, 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 fund's average-weighted effective maturity and its
duration are measures of how the fund 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 its 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
Investment objectives, principal investment strategies and risks 11
<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 BOND?
A high-yield/high-risk bond (also called a "junk" bond) is a bond
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.
12 Janus Aspen Series
<PAGE>
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
The Equity Portfolios invest primarily in domestic and foreign equity
securities, which may include preferred stocks, common stocks,
warrants and securities convertible into common or preferred stocks.
The Equity Portfolios also invest in domestic and foreign equity
securities with varying degrees of emphasis on income. The 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 bonds (less than 35% of each Portfolio's
assets)
- options, futures, forwards, swaps 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, swaps 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
Investment objectives, principal investment strategies and risks 13
<PAGE>
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 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.
14 Janus Aspen Series
<PAGE>
RISKS FOR EQUITY PORTFOLIOS
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, initial
public offerings (IPOs) or companies with relatively small market
capitalizations. IPOs and other investment techniques may have a
magnified performance impact on a portfolio with a small asset base. A
portfolio may not experience similar performance as its assets grow.
The following questions and answers are designed to help you better understand
some of the risks of investing in the Equity Portfolios.
1. THE PORTFOLIOS MAY INVEST IN SMALLER OR NEWER COMPANIES. DOES THIS CREATE ANY
SPECIAL RISKS?
Many attractive investment opportunities may be smaller, start-up
companies offering emerging products or services. 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.
2. HOW DOES THE NONDIVERSIFIED STATUS OF AGGRESSIVE GROWTH PORTFOLIO AND CAPITAL
APPRECIATION PORTFOLIO AFFECT THEIR RISK?
Diversification is a way to reduce risk by investing in a broad range
of stocks or other securities. A "nondiversified" portfolio has the
ability to take larger positions in a smaller number of issuers.
Because the appreciation or depreciation of a single stock may have a
greater impact on the NAV of a nondiversified portfolio, its share
price can be expected to fluctuate more than a comparable diversified
portfolio. This fluctuation, if significant, may affect the
performance of a Portfolio.
Investment objectives, principal investment strategies and risks 15
<PAGE>
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, derivative instruments and
initial public offerings (IPOs). IPOs and other investment techniques
may have a magnified performance impact on a portfolio with a small
asset base. A portfolio may not experience similar performance as its
assets grow.
The following questions and answers are designed to help you better understand
some of the risks of investing in 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 pages 31-33 for a description of
rating categories.
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.
16 Janus Aspen Series
<PAGE>
- 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
BONDS?
High-yield/high-risk bonds (or "junk" bonds) are bonds rated below
investment grade by the primary rating agencies such as Standard &
Poor's and Moody's. The value of lower quality bonds generally is more
dependent on credit risk, or the ability of the issuer to meet
interest and principal payments, than investment grade debt bonds.
Issuers of high-yield bonds 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 bonds, 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 pages 31-33 for
a description of bond rating categories.
3. HOW DO THE PORTFOLIOS TRY TO REDUCE RISK?
The Portfolios may use futures, options, swaps 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.
Investment objectives, principal investment strategies and risks 17
<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 and paid monthly. 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 the distribution fee, 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>
Aggressive Growth Portfolio All Asset Levels 0.65 N/A
Capital Appreciation Portfolio
Growth and Income Portfolio
------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio First $300 Million 0.65 1.00(1)
Over $300 Million 0.55
------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Janus Capital has agreed to limit the Portfolio's expenses as indicated
until at least the next annual renewal of the advisory agreements. The
distribution fee described on page 21 is not included in the expense limit.
As noted in the fee table on page 7, however, the Portfolio's expenses
without waivers are not expected to exceed the expense limit.
For the fiscal year ended December 31, 1999, each Portfolio paid Janus
Capital the following management fees based upon each Portfolio's
average net assets: 0.68% for Aggressive Growth Portfolio, 0.75% for
Capital Appreciation Portfolio, 0.75% for Growth and Income Portfolio
and 0.65% for Flexible Income Portfolio. These rates were based on a
higher fee rate that was previously in effect for certain of these
Portfolios.
18 Janus Aspen Series
<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 is 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. GOFF
--------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Aggressive
Growth Portfolio, which he has managed since inception. Mr. Goff
joined Janus Capital in 1988 and has managed Janus Enterprise
Fund since its inception. Mr. Goff co-managed or managed Janus
Venture Fund from December 1993 to February 1997. He holds a
Bachelor of Arts in Economics from Yale University and he has
earned the right to use the Chartered Financial Analyst
designation.
SCOTT W. SCHOELZEL
--------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Capital
Appreciation Portfolio, which he has managed since its inception.
He is portfolio manager of Janus Twenty Fund, which he has
managed since August 1997. He previously managed Janus Olympus
Fund from its inception to August 1997. Mr. Schoelzel joined
Janus Capital in January 1994. He holds a Bachelor of Arts in
Business from Colorado College.
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 he has earned the right to use the Chartered
Financial Analyst designation.
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.
Management of the portfolios 19
<PAGE>
ASSISTANT PORTFOLIO MANAGERS
MATTHEW A. ANKRUM
--------------------------------------------------------------------------------
is an assistant portfolio manager of Aggressive Growth Portfolio.
He is also assistant portfolio manager of Janus Enterprise Fund.
Mr. Ankrum joined Janus Capital as an intern in June 1996, and
became an equity research analyst in August 1997. Prior to
joining Janus, Mr. Ankrum worked as a corporate finance analyst
at William Blair and Company from 1993 through 1995. He was also
a fixed-income research analyst at Conseco Capital Management.
Mr. Ankrum has an undergraduate degree in Business Administration
from the University of Wisconsin and a Master of Business
Administration from the University of Chicago. Mr. Ankrum has
earned the right to use the Chartered Financial Analyst
designation.
RON SACHS
--------------------------------------------------------------------------------
is an assistant portfolio manager of Aggressive Growth Portfolio.
Mr. Sachs joined Janus Capital in 1996 as a research analyst.
Prior to coming to Janus, he worked as a consultant for Bain &
Company and as an attorney for Willkie, Farr & Gallagher. Mr.
Sachs graduated from Princeton cum laude with an undergraduate
degree in economics. He obtained his law degree from the
University of Michigan. Mr. Sachs has earned the right to use the
Chartered Financial Analyst designation.
20 Janus Aspen Series
<PAGE>
Other information
CLASSES OF SHARES
Each Portfolio currently offers two or three classes of shares, one of
which, the Service Shares, are offered pursuant to this prospectus.
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 that require a fee from
Portfolio assets to procure distribution and administrative services
to contract owners and plan participants. Institutional Shares of each
Portfolio are available only in connection with investment in and
payments under variable insurance contracts, as well as certain
qualified retirement plans. Retirement Shares of certain Portfolios
are offered only to qualified plans using plan service providers that
are compensated for providing distribution and/or record keeping and
other administrative services provided to plan participants. Because
the expenses of each class may differ, the performance of each class
is expected to differ. If you would like additional information about
either the Institutional Shares or the Retirement Shares, please call
1-800-525-0020.
During the third quarter of 2000, the Retirement Shares shareholders
will be asked to approve the spin-off of the Retirement Shares into a
separate Delaware business trust, Janus Adviser Series. In connection
with this spin-off, each Portfolio will distribute all of its ordinary
income and capital gain income earned through the date of the
spin-off. The distributions will be made for all classes, including
Service Shares. It is anticipated that the spin-off and distributions
will occur during the third quarter of 2000.
DISTRIBUTION FEE
Under a distribution and service plan adopted in accordance with Rule
12b-1 under the 1940 Act, the Shares may pay Janus Distributors, Inc.,
the Trust's distributor, a fee at an annual rate of up to 0.25% of the
average daily net assets of the Shares of a Portfolio. Under the terms
of the Plan, the Trust is authorized to make payments to Janus
Distributors for remittance to insurance companies and qualified plan
service providers as compensation for distribution and shareholder
servicing performed by such entities. Because 12b-1 fees are paid out
of the Service Shares' assets on an ongoing basis, they will increase
the cost of your investment and may cost you more than paying other
types of sales charges.
CONFLICTS OF INTEREST
The Trust's shares are available only to variable annuity and variable
life separate accounts of insurance companies that are unaffiliated
with Janus Capital and to certain qualified retirement plans. Although
the Portfolios do not currently anticipate any disadvantages to owners
of variable insurance contracts 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
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 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.
Other information 21
<PAGE>
DISTRIBUTION OF EACH PORTFOLIO
Each Portfolio is distributed by Janus Distributors, Inc., a member of
the National Association of Securities Dealers, Inc. ("NASD"). To
obtain information about NASD member firms and their associated
persons, you may contact NASD Regulation, Inc. at www.nasdr.com, or
the Public Disclosure Hotline at 800-289-9999. An investor brochure
containing information describing the Public Disclosure Program is
available from NASD Regulation, Inc.
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 distributes substantially all of its
investment income at least semi-annually and its net realized gains,
if any, at least annually. 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 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
Aggressive Growth Portfolio declared a dividend in the amount of $0.25
per share. If the price of Aggressive 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 or plans 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 tax withholding or other 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 as a foreign tax credit. 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, because a class of shares of each Portfolio
are sold in connection with variable insurance contracts, 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.
The Portfolios do not permit frequent trading or market timing.
Excessive purchases of Portfolio Shares disrupt portfolio management
and drive Portfolio expenses higher. 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 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. The Portfolios may discontinue sales to a qualified
plan and require plan participants with existing investments in the
Shares to redeem those investments if the plan loses (or in the
opinion of Janus Capital, is at risk of losing) its qualified plan
status.
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.
24 Janus Aspen Series
<PAGE>
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 the business day following
receipt of the redemption order, but in no event later than seven days
after receipt of such order.
FREQUENT TRADING
Frequent trading of Portfolio shares in response in short-term
fluctuations in the market -- also known as "market timing" -- may
make it very difficult to manage a Portfolio's investments. The
Portfolios do not permit frequent trading or market timing. When
market timing occurs, a Portfolio may have to sell portfolio
securities to have the cash necessary to redeem the market timer's
shares. This can happen at a time when it is not advantageous to sell
any securities, which may harm a Portfolio's performance. When large
dollar amounts are involved, market timing can also make it difficult
to use long-term investment strategies because the portfolio manager
cannot predict how much cash a Portfolio will have to invest. When in
Janus Capital's opinion such activity would have a disruptive effect
on portfolio management, a Portfolio reserves the right to refuse
purchase orders and exchanges into a Portfolio by any person, group or
commonly controlled account. A Portfolio may notify a market timer of
rejection of a purchase or exchange order after the day the order is
placed. If a Portfolio allows a market timer to trade Portfolio
shares, it may require the market timer to enter into a written
agreement to follow certain procedures and limitations.
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
No Financial Highlights are presented for the Service Shares because
the Shares did not commence operations until December 31, 1999.
26 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 BONDS are bonds 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 bonds 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 income includes dividends, interest, royalties, rents and
annuities. To avoid taxes and interest that the
Glossary of investment terms 27
<PAGE>
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.
28 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 29
<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.
30 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 31
<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.
32 Janus Aspen Series
<PAGE>
SECURITIES HOLDINGS BY RATING CATEGORY
During the fiscal period ended December 31, 1999, 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 5%
AA 6%
A 10%
BBB 23%
BB 12%
B 19%
CCC 2%
CC 0%
C 0%
Not Rated 6%
Preferred Stock 2%
Cash and Options 15%
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 period
ended December 31, 1999.
Explanation of rating categories 33
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[JANUS LOGO]
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100 Fillmore Street
Denver, Colorado 80206-4928
janus.com
You can request other information, including a Statement of
Additional Information, free of charge, by contacting your plan
sponsor or visiting our Web site at janus.com. 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 and copy information about
the Portfolios (including the Portfolios' Statement of Additional
Information) at the Public Reference Room of the SEC or get text
only copies, after paying a duplicating fee, by sending an
electronic request by e-mail to [email protected] or by writing to
or calling the Public Reference Room, Washington, D.C. 20549-0102
(1-202-942-8090). You may also obtain reports and other information
about the Portfolios from the Electronic Data Gathering Analysis and
Retrieval (EDGAR) Database on the SEC's Web site at
http://www.sec.gov.
Investment Company Act File No. 811-7736
