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[JANUS LOGO]
Janus Aspen Series
Institutional Shares
PROSPECTUS
MAY 1, 2000
Growth Portfolio
Aggressive Growth Portfolio
Capital Appreciation Portfolio
Balanced Portfolio
International Growth Portfolio
Worldwide Growth 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 seven 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 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 (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.
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Table of contents
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Equity Portfolios........................................ 2
Flexible Income Portfolio................................ 7
Fees and expenses........................................ 9
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND
RISKS
Equity Portfolios........................................ 10
Flexible Income Portfolio................................ 13
General portfolio policies............................... 14
Risks for Equity Portfolios.............................. 17
Risks for Flexible Income Portfolios..................... 18
Risks Common to All Portfolios........................... 19
MANAGEMENT OF THE PORTFOLIOS
Investment adviser....................................... 21
Management expenses and expense limits................... 21
Investment personnel..................................... 22
OTHER INFORMATION........................................... 25
DISTRIBUTIONS AND TAXES
Distributions............................................ 26
Taxes.................................................... 26
SHAREHOLDER'S GUIDE
Pricing of portfolio shares.............................. 27
Purchases................................................ 27
Redemptions.............................................. 27
Frequent trading......................................... 28
Shareholder communications............................... 28
FINANCIAL HIGHLIGHTS........................................ 29
GLOSSARY
Glossary of investment terms............................. 36
RATING CATEGORIES
Explanation of rating categories......................... 40
</TABLE>
Table of contents 1
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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?
- --------------------------------------------------------------------------------
DOMESTIC EQUITY PORTFOLIOS
- GROWTH PORTFOLIO seeks long-term growth of capital in a manner
consistent with the preservation of capital.
- AGGRESSIVE GROWTH PORTFOLIO AND CAPITAL APPRECIATION PORTFOLIO
seek long-term growth of capital.
- BALANCED PORTFOLIO seeks long-term capital growth, consistent
with preservation of capital and balanced by current income.
GLOBAL/INTERNATIONAL EQUITY PORTFOLIOS
- INTERNATIONAL GROWTH PORTFOLIO seeks long-term growth of capital.
- WORLDWIDE GROWTH PORTFOLIO seeks long-term growth of capital in a
manner consistent with the preservation of capital.
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.
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.
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.
BALANCED PORTFOLIO normally invests 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets
in securities selected primarily for their income potential. The
Portfolio will normally invest at least 25% of its assets in
fixed-income securities.
INTERNATIONAL GROWTH PORTFOLIO normally invests at least 65% of its
total assets in securities of issuers from at least five different
countries, excluding the United States. Although the Portfolio intends
to invest
2 Janus Aspen Series
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substantially all of its assets in issuers located outside the United
States, it may invest in U.S. issuers and it may at times invest all
of its assets in fewer than five countries, or even a single country.
WORLDWIDE GROWTH PORTFOLIO invests primarily in common stocks of
companies of any size throughout the world. The Portfolio normally
invests in issuers from at least five different countries, including
the United States. The Portfolio may at times invest in fewer than
five countries or even a single country.
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 BALANCED 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.
INTERNATIONAL GROWTH PORTFOLIO AND WORLDWIDE GROWTH PORTFOLIO may have
significant exposure to foreign markets. As a result, their returns
and NAV may be affected to a large degree by fluctuations in currency
exchange rates or political or economic conditions in a particular
country.
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 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, but do not include fees and expenses. The
tables compare the average annual returns for the Shares of each
Portfolio for the periods indicated to a broad-based securities market
index.
Risk return summary 3
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GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
2.76% 30.17% 18.45% 22.75% 35.66% 43.98%
1994 1995 1996 1997 1998 1999
Best Quarter: 4th-1998 27.71% Worst Quarter: 3rd-1998 (10.92%)
Average annual total return for periods ended 12/31/99
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<CAPTION>
Since Inception
1 year 5 years (9/13/93)
<S> <C> <C> <C>
Growth Portfolio - Institutional Shares 43.98% 29.89% 24.28%
S&P 500 Index* 21.03% 28.54% 22.68%
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</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
AGGRESSIVE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
16.33% 27.48% 7.95% 12.66% 34.26% 125.40%
1994 1995 1996 1997 1998 1999
Best Quarter 4th-1999 59.34% Worst Quarter 3rd-1998 (14.98%)
Average annual total return for periods ended 12/31/99
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<CAPTION>
Since Inception
1 year 5 years (9/13/93)
<S> <C> <C> <C>
Aggressive Growth Portfolio - Institutional Shares 125.40% 36.23% 34.42%
S&P MidCap 400 Index* 14.72% 23.05% 18.08%
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</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.
4 Janus Aspen Series
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CAPITAL APPRECIATION PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
58.11% 67.00%
1998 1999
Best Quarter: 4th-1999 41.77% Worst Quarter: 3rd-1998 (9.98%)
Average annual total return for periods ended 12/31/99
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<CAPTION>
Since Inception
1 year (5/1/97)
<S> <C> <C>
Capital Appreciation Portfolio - Institutional Shares 67.00% 57.18%
S&P 500 Index* 21.03% 27.40%
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</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
BALANCED PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
0.84% 24.79% 16.18% 22.10% 34.28% 26.76%
1994 1995 1996 1997 1998 1999
Best Quarter: 4th-19989 20.32% Worst Quarter: 3rd-1998 (4.97%)
Average annual total return for periods ended 12/31/99
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<TABLE>
<CAPTION>
Since Inception
1 year 5 years (9/13/93)
<S> <C> <C> <C>
Balanced Portfolio - Institutional Shares 26.76% 24.68% 20.62%
S&P 500 Index* 21.03% 28.54% 22.68%
Lehman Brothers Gov't/Corp Bond Index** (2.15%) 7.61% 5.40%
---------------------------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
** Lehman Brothers Gov't/Corp Bond Index is composed of all bonds that
are of investment grade with at least one year until maturity.
Risk return summary 5
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
23.15% 34.71% 18.51% 17.23% 82.27%
1995 1996 1997 1998 1999
Best Quarter 4th-1999 58.48% Worst Quarter 3rd-1998 (17.76%)
Average annual total return for periods ended 12/31/99
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<CAPTION>
Since Inception
1 year 5 years (5/2/94)
<S> <C> <C> <C>
International Growth Portfolio - Institutional Shares 82.27% 33.25% 28.19%
Morgan Stanley Capital International EAFE(R) Index* 26.96% 12.83% 11.22%
----------------------------------------
</TABLE>
* The Morgan Stanley Capital International EAFE(R) Index is a market
capitalization weighted index composed of companies representative
of the market structure of 20 Developed Market countries in Europe,
Australasia and the Far East.
WORLDWIDE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
1.53% 27.37% 29.04% 22.15% 28.92% 64.45%
1994 1995 1996 1997 1998 1999
Best Quarter 4th-1999 42.24% Worst Quarter 3rd-1998 (16.03%)
Average annual total return for periods ended 12/31/99
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<CAPTION>
Since Inception
1 year 5 years (9/13/93)
<S> <C> <C> <C>
Worldwide Growth Portfolio - Institutional Shares 64.45% 33.60% 29.71%
Morgan Stanley Capital International World Index* 24.93% 19.76% 16.41%
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* The Morgan Stanley Capital International World Index is a market
capitalization weighted index composed of companies representative
of the market structure of 21 Developed Market countries in North
America, Europe and the Asia/Pacific Region.
The Equity Portfolios' past performance does not necessarily indicate
how they will perform in the future.
6 Janus Aspen Series
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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 the
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 7
<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 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
Annual Returns for Periods Ended 12/31
(0.91%) 23.86% 9.19% 11.76% 9.11% 1.60%
1994 1995 1996 1997 1998 1999
Best Quarter: 2nd-1995 6.71% Worst Quarter: 2nd-1999 (1.21%)
Average annual total return for periods ended 12/31/99
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<CAPTION>
Since Inception
1 year 5 years (9/13/93)
<S> <C> <C> <C>
Flexible Income Portfolio - Institutional Shares 1.60% 10.88% 8.50%
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.
8 Janus Aspen Series
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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>
Management Other Total Annual Fund
Fee Expenses Operating Expenses*
<S> <C> <C> <C>
Growth Portfolio 0.65% 0.02% 0.67%
Aggressive Growth Portfolio 0.65% 0.02% 0.67%
Capital Appreciation Portfolio 0.65% 0.04% 0.69%
Balanced Portfolio 0.65% 0.02% 0.67%
International Growth Portfolio 0.65% 0.11% 0.76%
Worldwide Growth Portfolio 0.65% 0.05% 0.70%
Flexible Income Portfolio 0.65% 0.07% 0.72%
</TABLE>
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* Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Growth,
Aggressive Growth, Capital Appreciation, Balanced, International Growth
and Worldwide Growth Portfolios. 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:
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<CAPTION>
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C>
Growth Portfolio $68 $214 $373 $835
Aggressive Growth Portfolio $68 $214 $373 $835
Capital Appreciation Portfolio $70 $221 $384 $859
Balanced Portfolio $68 $214 $373 $835
International Growth Portfolio $78 $243 $422 $942
Worldwide Growth Portfolio $72 $224 $390 $871
Flexible Income Portfolio $74 $230 $401 $894
</TABLE>
Risk return summary 9
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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
Aggressive Growth Portfolio Janus Enterprise Fund
Capital Appreciation Portfolio Janus Twenty Fund
Balanced Portfolio Janus Balanced Fund
International Growth Portfolio Janus Overseas Fund
Worldwide Growth Portfolio Janus Worldwide 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 17-20 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
DOMESTIC EQUITY PORTFOLIOS
GROWTH PORTFOLIO
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.
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.
10 Janus Aspen Series
<PAGE>
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.
BALANCED PORTFOLIO
Balanced Portfolio seeks long-term capital growth, consistent with
preservation of capital and balanced by current income. It pursues its
objective by normally investing 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets
in securities selected primarily for their income potential. This
Portfolio normally invests at least 25% of its assets in fixed-income
securities.
GLOBAL/INTERNATIONAL EQUITY PORTFOLIOS
INTERNATIONAL GROWTH PORTFOLIO
International Growth Portfolio seeks long-term growth of capital.
Normally, the Portfolio pursues its objective by investing at least
65% of its total assets in securities of issuers from at least five
different countries, excluding the United States. Although the
Portfolio intends to invest substantially all of its assets in issuers
located outside the United States, it may at times invest in U.S.
issuers and it may at times invest all of its assets in fewer than
five countries or even a single country.
WORLDWIDE GROWTH PORTFOLIO
Worldwide 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 of companies of any
size throughout the world. The Portfolio normally invests in issuers
from at least five different countries, including the United States.
The Portfolio may at times invest in fewer than five countries or even
a single country.
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 Balanced 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
Balanced 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
Investment objectives, principal investment strategies and risks 11
<PAGE>
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 BALANCED
PORTFOLIO'S HOLDINGS?
Balanced 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 BALANCED PORTFOLIO'S
INVESTMENTS?
The growth component of Balanced 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.
6. WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF BALANCED PORTFOLIO'S
HOLDINGS?
The income component of Balanced 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.
12 Janus Aspen Series
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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 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 18-20 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?
The 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 13
<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.
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 or she 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)
14 Janus Aspen Series
<PAGE>
- 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
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.
Investment objectives, principal investment strategies and risks 15
<PAGE>
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.
16 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 17
<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 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 pages 40-41 for a description of
rating categories.
18 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
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 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 40-41 for
a description of bond rating categories.
Investment objectives, principal investment strategies and risks 19
<PAGE>
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.
20 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 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 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 All Asset Levels 0.65 N/A
Aggressive Growth Portfolio
Capital Appreciation Portfolio
Balanced Portfolio
International Growth Portfolio
Worldwide Growth 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. As noted
in the fee table on page 9, 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: 0.67% for Growth Portfolio, 0.68% for Aggressive
Growth Portfolio, 0.75% for Capital Appreciation Portfolio, 0.67% for
Balanced Portfolio, 0.73% for International Growth Portfolio, 0.66%
for Worldwide Growth 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.
Management of the portfolios 21
<PAGE>
INVESTMENT PERSONNEL
PORTFOLIO MANAGERS
LAURENCE J. CHANG
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of International
Growth Portfolio and Worldwide Growth Portfolio which he has
co-managed since May 1998 and December 1999, respectively. He has
also co-managed Janus Overseas Fund and Janus Worldwide Fund
since April 1998 and September 1999, respectively. He served as
assistant portfolio manager for these Funds since 1996. Mr. Chang
joined Janus Capital in 1993 as a research analyst. He received
an undergraduate degree with honors in Religion with a
concentration in Philosophy from Dartmouth College and a Masters
Degree in Political Science from Stanford University. He has
earned the right to use the Chartered Financial Analyst
designation.
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.
HELEN YOUNG HAYES
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of Worldwide Growth
Portfolio and International Growth Portfolio which she has
managed or co-managed since inception. Ms. Hayes joined Janus
Capital in 1987 and has managed or co-managed Janus Worldwide
Fund and Janus Overseas Fund since their inceptions. She holds a
Bachelor of Arts in Economics from Yale University and she has
earned the right to use the Chartered Financial Analyst
designation.
KAREN L. REIDY
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Balanced
Portfolio as of January 2000 and an assistant portfolio manager
of Growth Portfolio since 1998. She also manages Equity Income
Portfolio, Janus Balanced Fund and Janus Equity Income Fund as of
January 2000. She is also assistant portfolio manager of Janus
Fund. Prior to joining Janus Capital in 1995, she worked for
Price Waterhouse as a manager in both the Mergers and
Acquisitions and Audit business units. In this capacity, Ms.
Reidy performed due diligence work for corporate clients and
oversaw audit engagements. She received an undergraduate degree
in Accounting from the University of Colorado in 1989 and passed
the CPA exam in 1992. She has earned the right to use the
Chartered Financial Analyst designation.
22 Janus Aspen Series
<PAGE>
BLAINE P. ROLLINS
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Growth
Portfolio as of January 2000. He previously managed Balanced
Portfolio from May 1996 to December 1999 and Equity Income
Portfolio from its inception to December 1999. Mr. Rollins joined
Janus Capital in 1990 and has managed Janus Fund since January
2000, Janus Balanced Fund from January 1996 until December 1999
and Janus Equity Income Fund from inception until December 1999.
He was an assistant portfolio manager of Janus Fund from January
1994 until December 1999. He gained experience as a fixed-income
trader and equity research analyst prior to managing Balanced
Portfolio. He holds a Bachelor of Science in Finance from the
University of Colorado 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 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 23
<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.
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 Strategic Value
Portfolio, Janus Strategic Value Fund and Janus Special
Situations Fund, each of which he has managed since inception. He
obtained a Masters of Business Administration in Finance from the
Fuqua School of Business at Duke University and a Bachelor of
Arts in Economics and Political Science from Tufts University.
Mr. Decker 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.
JOHN H. SCHREIBER
- --------------------------------------------------------------------------------
is an assistant portfolio manager of Growth 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.
24 Janus Aspen Series
<PAGE>
Other information
CLASSES OF SHARES
Each Portfolio currently offers two or three 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. Service Shares of the Portfolio
are offered 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.
Retirement Shares of certain Portfolio are offered only to qualified
plans using plan service providers that are compensated for providing
distribution and/or recordkeeping 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 the Service 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
Institutional Shares. It is anticipated that the spin-off and
distributions will occur during the third quarter of 2000.
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.
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.
Other information 25
<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
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 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 the 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.
26 Janus Aspen Series
<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 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 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
Shareholder's guide 27
<PAGE>
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.
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.
28 Janus Aspen Series
<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 11 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
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $23.54 $18.48 $15.51 $13.45 $10.57
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.07 0.05 0.15 0.17 0.28
3. Net gains or losses on securities (both realized and
unrealized) 10.24 6.36 3.34 2.29 2.90
4. Total from investment operations 10.31 6.41 3.49 2.46 3.18
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.05) (0.15) (0.17) (0.30)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) (0.14) (1.30) (0.37) (0.23) --
8. Distributions (in excess of realized gains) -- -- -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.20) (1.35) (0.52) (0.40) (0.30)
11. NET ASSET VALUE, END OF PERIOD $33.65 $23.54 $18.48 $15.51 $13.45
12. Total return 43.98% 35.66% 22.75% 18.45% 30.17%
13. Net assets, end of period (in thousands) $2,942,649 $1,103,549 $608,281 $325,789 $126,911
14. Average net assets for the period (in thousands) $1,775,373 $789,454 $477,914 $216,125 $77,344
15. Ratio of gross expenses to average net assets 0.67%(1) 0.68%(1) 0.70%(1) 0.69%(1) 0.78%(1)
16. Ratio of net expenses to average net assets 0.67% 0.68% 0.69% 0.69% 0.76%
17. Ratio of net investment income to average net assets 0.30% 0.26% 0.91% 1.39% 1.24%
18. Portfolio turnover rate 53% 73% 122% 87% 185%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.69% in 1999, 0.75% in 1998, 0.78% in 1997, 0.83% in 1996 and
0.98% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Fund.
Financial highlights 29
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $27.64 $20.55 $18.24 $17.08 $13.62
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- -- -- -- 0.24
3. Net gains or losses on securities (both realized and
unrealized) 33.46 7.09 2.31 1.36 3.47
4. Total from investment operations 33.46 7.09 2.31 1.36 3.71
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) -- -- -- -- (0.25)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) (1.40) -- -- (0.19) --
8. Distributions (in excess of realized gains) -- -- -- -- --
9. Tax return of capital distributions -- -- -- (0.01) --
10. Total distributions (1.40) -- -- (0.20) (0.25)
11. NET ASSET VALUE, END OF PERIOD $59.70 $27.64 $20.55 $18.24 $17.08
12. Total return 125.40% 34.26% 12.66% 7.95% 27.48%
13. Net assets, end of period (in thousands) $3,319,619 $772,943 $508,198 $383,693 $185,911
14. Average net assets for the period (in thousands) $1,476,445 $576,444 $418,464 $290,629 $107,582
15. Ratio of gross expenses to average net assets 0.70%(1) 0.75%(1) 0.76%(1) 0.76%(1) 0.86%(1)
16. Ratio of net expenses to average net assets 0.69% 0.75% 0.76% 0.76% 0.84%
17. Ratio of net investment income to average net assets (0.50%) (0.36%) (0.10%) (0.27%) 0.58%
18. Portfolio turnover rate 105% 132% 130% 88% 155%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.70% in 1999, 0.75% in 1998, 0.78% in 1997, 0.83% in 1996 and
0.93% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Enterprise Fund.
30 Janus Aspen Series
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997(1)
<S> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $19.94 $12.62 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.12 0.01 0.05
3. Net gains or losses on securities (both realized and
unrealized) 13.22 7.32 2.61
4. Total from investment operations 13.34 7.33 2.66
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.11) (0.01) (0.04)
6. Dividends (in excess of net investment income) -- -- --
7. Distributions (from capital gains) -- -- --
8. Distributions (in excess of realized gains) -- -- --
9. Tax return of capital distributions -- -- --
10. Total distributions (0.11) (0.01) (0.04)
11. NET ASSET VALUE, END OF PERIOD $33.17 $19.94 $12.62
12. Total return* 67.00% 58.11% 26.60%
13. Net assets, end of period (in thousands) $626,611 $74,187 $6,833
14. Average net assets for the period (in thousands) $257,422 $25,964 $2,632
15. Ratio of gross expenses to average net assets** 0.70%(2) 0.92%(2) 1.26%(2)
16. Ratio of net expenses to average net assets** 0.70% 0.91% 1.25%
17. Ratio of net investment income to average net assets** 0.76% 0.27% 1.43%
18. Portfolio turnover rate** 52% 91% 101%
- ------------------------------------------------------------------------------------------------
</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 0.79% in 1999, 0.97% in 1998 and 2.19% in 1997 before waiver
of certain fees and/or reduction of adviser's fees to the effective rate of
the corresponding retail fund (Janus Olympus Fund until May 1, 1999, Janus
Twenty Fund thereafter).
Financial highlights 31
<PAGE>
<TABLE>
<CAPTION>
BALANCED PORTFOLIO - INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $22.50 $17.47 $14.77 $13.03 $10.63
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.59 0.39 0.34 0.32 0.17
3. Net gains (or losses) on securities (both realized and
unrealized) 5.38 5.51 2.89 1.81 2.45
4. Total from investment operations 5.97 5.90 3.23 2.13 2.62
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.56) (0.38) (0.35) (0.30) (0.22)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) -- (0.45) (0.18) (0.09) --
8. Distributions (in excess of realized gains) -- (0.04) -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.56) (0.87) (0.53) (0.39) (0.22)
11. NET ASSET VALUE, END OF PERIOD $27.91 $22.50 $17.47 $14.77 $13.03
12. Total return 26.76% 34.28% 22.10% 16.18% 24.79%
13. Net assets, end of period (in thousands) $2,453,079 $882,495 $362,409 $85,480 $14,021
14. Average net assets for the period (in thousands) $1,583,635 $555,002 $176,432 $43,414 $5,739
15. Ratio of gross expenses to average net assets 0.69%(1) 0.74%(1) 0.83%(1) 0.94%(1) 1.37%(1)
16. Ratio of net expenses to average net assets 0.69% 0.74% 0.82% 0.92% 1.30%
17. Ratio of net investment income to average net assets 2.86% 2.41% 2.87% 2.92% 2.41%
18. Portfolio turnover rate 92% 70% 139% 103% 149%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.69% in 1999, 0.74% in 1998, 0.83% in 1997, 1.07% in 1996 and
1.55% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Balanced Fund.
32 Janus Aspen Series
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $21.27 $18.48 $15.72 $11.95 $9.72
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.06 0.13 0.11 0.05 0.09
3. Net gains or losses on securities (both realized and
unrealized) 17.40 3.07 2.80 4.06 2.16
4. Total from investment operations 17.46 3.20 2.91 4.11 2.25
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.14) (0.11) (0.11) (0.02)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) -- -- (0.01) (0.23) --
8. Distributions (in excess of realized gains) -- (0.27) (0.03) -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.06) (0.41) (0.15) (0.34) (0.02)
11. NET ASSET VALUE, END OF PERIOD $38.67 $21.27 $18.48 $15.72 $11.95
12. Total return* 82.27% 17.23% 18.51% 34.71% 23.15%
13. Net assets, end of period (in thousands) $810,392 $311,110 $161,091 $27,192 $1,608
14. Average net assets for the period (in thousands) $425,876 $234,421 $96,164 $7,437 $1,792
15. Ratio of gross expenses to average net assets** 0.77%(1) 0.86%(1) 0.96%(1) 1.26%(1) 2.69%(1)
16. Ratio of net expenses to average net assets** 0.76% 0.86% 0.96% 1.25% 2.50%
17. Ratio of net investment income to average net assets** 0.26% 0.73% 0.70% 0.62% (0.80%)
18. Portfolio turnover rate** 80% 93% 86% 65% 211%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total return not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
(1) The ratio was 0.84% in 1999, 0.95% in 1998, 1.08% in 1997, 2.21% in 1996 and
3.57% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Overseas Fund.
Financial highlights 33
<PAGE>
<TABLE>
<CAPTION>
WORLDWIDE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $29.09 $23.39 $19.44 $15.31 $12.07
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.07 0.16 0.16 0.16 0.11
3. Net gains or losses on securities (both realized and
unrealized) 18.65 6.59 4.14 4.27 3.19
4. Total from investment operations 18.72 6.75 4.30 4.43 3.30
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.18) (0.17) (0.17) (0.06)
6. Dividends (in excess of net investment income) -- -- (0.02) -- --
7. Distributions (from capital gains) -- -- (0.16) (0.13) --
8. Distributions (in excess of realized gains) -- (0.87) -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.06) (1.05) (0.35) (0.30) (0.06)
11. NET ASSET VALUE, END OF PERIOD $47.75 $29.09 $23.39 $19.44 $15.31
12. Total return 64.45% 28.92% 22.15% 29.04% 27.37%
13. Net assets, end of period (in thousands) $6,496,773 $2,890,375 $1,576,548 $582,603 $108,563
14. Average net assets for the period (in thousands) $3,862,773 $2,217,695 $1,148,951 $304,111 $59,440
15. Ratio of gross expenses to average net assets 0.71%(1) 0.72%(1) 0.74%(1) 0.80%(1) 0.90%(1)
16. Ratio of net expenses to average net assets 0.71% 0.72% 0.74% 0.80% 0.87%
17. Ratio of net investment income to average net assets 0.20% 0.64% 0.67% 0.83% 0.95%
18. Portfolio turnover rate 67% 77% 80% 62% 113%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.71% in 1999, 0.74% in 1998, 0.81% in 1997, 0.91% in 1996 and
1.09% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Worldwide Fund.
34 Janus Aspen Series
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE INCOME PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $12.05 $11.78 $11.24 $11.11 $9.48
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.76 0.64 0.67 0.74 0.53
3. Net gains or losses on securities (both realized and
unrealized) (0.58) 0.41 0.62 0.24 1.70
4. Total from investment operations 0.18 1.05 1.29 0.98 2.23
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.75) (0.67) (0.64) (0.72) (0.60)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) (0.07) (0.11) (0.11) (0.13) --
8. Distributions (in excess of realized gains) -- -- -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.82) (0.78) (0.75) (0.85) (0.60)
11. NET ASSET VALUE, END OF PERIOD $11.41 $12.05 $11.78 $11.24 $11.11
12. Total return 1.60% 9.11% 11.76% 9.19% 23.86%
13. Net assets, end of period (in thousands) $186,681 $129,582 $54,098 $25,315 $10,831
14. Average net assets for the period (in thousands) $161,459 $86,627 $36,547 $17,889 $5,556
15. Ratio of gross expenses to average net assets 0.72% 0.73% 0.75% 0.84% 1.07%
16. Ratio of net expenses to average net assets 0.72% 0.73% 0.75% 0.83% 1.00%
17. Ratio of net investment income to average net assets 6.99% 6.36% 6.90% 7.31% 7.46%
18. Portfolio turnover rate 116% 145% 119% 250% 236%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Financial highlights 35
<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
36 Janus Aspen Series
<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.
Glossary of investment terms 37
<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
38 Janus Aspen Series
<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.
Glossary of investment terms 39
<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>
40 Janus Aspen Series
<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.
Explanation of rating categories 41
<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 year ended
December 31, 1999.
42 Janus Aspen Series
<PAGE>
[JANUS LOGO]
1-800-525-0020
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 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
<PAGE>
[JANUS LOGO]
Janus Aspen Series
Institutional Shares
PROSPECTUS
MAY 1, 2000
Growth Portfolio
Aggressive Growth Portfolio
Capital Appreciation Portfolio
Balanced Portfolio
International Growth Portfolio
Worldwide Growth 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 six mutual funds (the "Portfolios")
with a variety of investment objectives, including growth of
capital and a combination of growth and income. Each Portfolio
of Janus Aspen Series currently offers two or three 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
(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
Fees and expenses........................................ 7
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND
RISKS
Equity Portfolios........................................ 8
General portfolio policies............................... 10
Risks.................................................... 13
MANAGEMENT OF THE PORTFOLIOS
Investment adviser....................................... 15
Management expenses and expense limits................... 15
Investment personnel..................................... 16
OTHER INFORMATION........................................... 19
DISTRIBUTIONS AND TAXES
Distributions............................................ 20
Taxes.................................................... 20
SHAREHOLDER'S GUIDE
Pricing of portfolio shares.............................. 21
Purchases................................................ 21
Redemptions.............................................. 21
Frequent trading......................................... 22
Shareholder communications............................... 22
FINANCIAL HIGHLIGHTS........................................ 23
GLOSSARY
Glossary of investment terms............................. 29
</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?
- --------------------------------------------------------------------------------
DOMESTIC EQUITY PORTFOLIOS
- GROWTH PORTFOLIO seeks long-term growth of capital in a manner
consistent with the preservation of capital.
- AGGRESSIVE GROWTH PORTFOLIO AND CAPITAL APPRECIATION PORTFOLIO
seek long-term growth of capital.
- BALANCED PORTFOLIO seeks long-term capital growth, consistent
with preservation of capital and balanced by current income.
GLOBAL/INTERNATIONAL EQUITY PORTFOLIOS
- INTERNATIONAL GROWTH PORTFOLIO seeks long-term growth of capital.
- WORLDWIDE GROWTH PORTFOLIO seeks long-term growth of capital in a
manner consistent with the preservation of capital.
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.
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.
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.
BALANCED PORTFOLIO normally invests 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets
in securities selected primarily for their income potential. The
Portfolio will normally invest at least 25% of its assets in
fixed-income securities.
INTERNATIONAL GROWTH PORTFOLIO normally invests at least 65% of its
total assets in securities of issuers from at least five different
countries, excluding the United States. Although the Portfolio intends
to invest
2 Janus Aspen Series
<PAGE>
substantially all of its assets in issuers located outside the United
States, it may invest in U.S. issuers and it may at times invest all
of its assets in fewer than five countries, or even a single country.
WORLDWIDE GROWTH PORTFOLIO invests primarily in common stocks of
companies of any size throughout the world. The Portfolio normally
invests in issuers from at least five different countries, including
the United States. The Portfolio may at times invest in fewer than
five countries or even a single country.
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 BALANCED 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.
INTERNATIONAL GROWTH PORTFOLIO AND WORLDWIDE GROWTH PORTFOLIO may have
significant exposure to foreign markets. As a result, their returns
and NAV may be affected to a large degree by fluctuations in currency
exchange rates or political or economic conditions in a particular
country.
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 an indication of the risks of
investing in the Equity Portfolios by showing how each of the Equity
Portfolios' performance has varied over time. 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 Shares of each Portfolio for the periods indicated to
a broad-based securities market index.
Risk return summary 3
<PAGE>
GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
2.76% 30.17% 18.45% 22.75% 35.66% 43.98%
1994 1995 1996 1997 1998 1999
Best Quarter: 4th-1998 27.71% Worst Quarter: 3rd-1998 (10.92%)
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>
Growth Portfolio - Institutional Shares 43.98% 29.89% 24.28%
S&P 500 Index* 21.03% 28.54% 22.68%
----------------------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
AGGRESSIVE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
16.33% 27.48% 7.95% 12.66% 34.26% 125.40%
1994 1995 1996 1997 1998 1999
Best Quarter 4th-1999 59.34% Worst Quarter 3rd-1998 (14.98%)
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 - Institutional Shares 125.40% 36.23% 34.42%
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.
4 Janus Aspen Series
<PAGE>
CAPITAL APPRECIATION PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
58.11% 67.00%
1998 1999
Best Quarter: 4th-1999 41.77% Worst Quarter: 3rd-1998 (9.98%)
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 - Institutional Shares 67.00% 57.18%
S&P 500 Index* 21.03% 27.04%
-----------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
BALANCED PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
0.84% 24.79% 16.18% 22.10% 34.28% 26.76%
1994 1995 1996 1997 1998 1999
Best Quarter: 4th-1998 20.32% Worst Quarter: 3rd-1998 (4.97%)
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>
Balanced Portfolio - Institutional Shares 26.76% 24.68% 20.62%
S&P 500 Index* 21.03% 28.54% 22.68%
Lehman Brothers Gov't/Corp Bond Index** (2.15%) 7.61% 5.40%
-----------------------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
** Lehman Brothers Gov't/Corp Bond Index is composed of all bonds that
are of investment grade with at least one year until maturity.
Risk return summary 5
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
23.15% 34.71% 18.51% 17.23% 82.27%
1995 1996 1997 1998 1999
Best Quarter 4th-1999 58.48% Worst Quarter 3rd-1998 (17.76%)
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/2/94)
<S> <C> <C> <C>
International Growth Portfolio - Institutional Shares 82.27% 33.25% 28.19%
Morgan Stanley Capital International EAFE(R) Index* 26.96% 12.83% 11.22%
----------------------------------------
</TABLE>
* The Morgan Stanley Capital International EAFE(R) Index is a market
capitalization weighted index composed of companies representative
of the market structure of 20 Developed Market countries in Europe,
Australasia and the Far East.
WORLDWIDE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
1.53% 27.37% 29.04% 22.15% 28.92% 64.45%
1994 1995 1996 1997 1998 1999
Best Quarter 4th-1999 42.24% Worst Quarter 3rd-1998 (16.03%)
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>
Worldwide Growth Portfolio - Institutional Shares 64.45% 33.60% 29.71%
Morgan Stanley Capital International World Index* 24.93% 19.76% 16.41%
----------------------------------------
</TABLE>
* The Morgan Stanley Capital International World Index is a market
capitalization weighted index composed of companies representative
of the market structure of 21 Developed Market countries in North
America, Europe and the Asia/Pacific Region.
The Equity Portfolios' past performance does not necessarily indicate
how they 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>
Management Other Total Annual Fund
Fee Expenses Operating Expenses*
<S> <C> <C> <C>
Growth Portfolio 0.65% 0.02% 0.67%
Aggressive Growth Portfolio 0.65% 0.02% 0.67%
Capital Appreciation Portfolio 0.65% 0.04% 0.69%
Balanced Portfolio 0.65% 0.02% 0.67%
International Growth Portfolio 0.65% 0.11% 0.76%
Worldwide Growth Portfolio 0.65% 0.05% 0.70%
</TABLE>
- --------------------------------------------------------------------------------
* Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Growth,
Aggressive Growth, Capital Appreciation, Balanced, International Growth
and Worldwide Growth Portfolios. 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 5 Years 10 Years
-----------------------------------------
<S> <C> <C> <C> <C>
Growth Portfolio $68 $214 $373 $835
Aggressive Growth Portfolio $68 $214 $373 $835
Capital Appreciation Portfolio $70 $221 $384 $859
Balanced Portfolio $68 $214 $373 $835
International Growth Portfolio $78 $243 $422 $942
Worldwide Growth Portfolio $72 $224 $390 $871
</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>
Growth Portfolio Janus Fund
Aggressive Growth Portfolio Janus Enterprise Fund
Capital Appreciation Portfolio Janus Twenty Fund
Balanced Portfolio Janus Balanced Fund
International Growth Portfolio Janus Overseas Fund
Worldwide Growth Portfolio Janus Worldwide 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 13-14 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
DOMESTIC EQUITY PORTFOLIOS
GROWTH PORTFOLIO
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.
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.
8 Janus Aspen Series
<PAGE>
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.
BALANCED PORTFOLIO
Balanced Portfolio seeks long-term capital growth, consistent with
preservation of capital and balanced by current income. It pursues its
objective by normally investing 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets
in securities selected primarily for their income potential. This
Portfolio normally invests at least 25% of its assets in fixed-income
securities.
GLOBAL/INTERNATIONAL EQUITY PORTFOLIOS
INTERNATIONAL GROWTH PORTFOLIO
International Growth Portfolio seeks long-term growth of capital.
Normally, the Portfolio pursues its objective by investing at least
65% of its total assets in securities of issuers from at least five
different countries, excluding the United States. Although the
Portfolio intends to invest substantially all of its assets in issuers
located outside the United States, it may at times invest in U.S.
issuers and it may at times invest all of its assets in fewer than
five countries or even a single country.
WORLDWIDE GROWTH PORTFOLIO
Worldwide 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 of companies of any
size throughout the world. The Portfolio normally invests in issuers
from at least five different countries, including the United States.
The Portfolio may at times invest in fewer than five countries or even
a single country.
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 Balanced 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
Balanced 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
Investment objectives, principal investment strategies and risks 9
<PAGE>
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 BALANCED
PORTFOLIO'S HOLDINGS?
Balanced 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 BALANCED PORTFOLIO'S
INVESTMENTS?
The growth component of the 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.
6. WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF BALANCED PORTFOLIO'S
HOLDINGS?
The income component of Balanced 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.
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 or she 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.
10 Janus Aspen Series
<PAGE>
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
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.
Investment objectives, principal investment strategies and risks 11
<PAGE>
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.
12 Janus Aspen Series
<PAGE>
RISKS
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 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.
3. 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
Investment objectives, principal investment strategies and risks 13
<PAGE>
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.
4. 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 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.
5. 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.
14 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 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 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
Fee Schedule of Portfolio Percentage (%)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Growth Portfolio All Asset Levels 0.65
Aggressive Growth Portfolio
Capital Appreciation Portfolio
Balanced Portfolio
International Growth Portfolio
Worldwide Growth Portfolio
- ----------------------------------------------------------------------------------------------------------
</TABLE>
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: 0.67% for Growth Portfolio, 0.68% for Aggressive
Growth Portfolio, 0.75% for Capital Appreciation Portfolio, 0.67% for
Balanced Portfolio, 0.73% for International Growth Portfolio and 0.66%
for Worldwide Growth Portfolio. These rates were based on a higher fee
rate that was previously in effect for these Portfolios.
Management of the portfolios 15
<PAGE>
INVESTMENT PERSONNEL
PORTFOLIO MANAGERS
LAURENCE J. CHANG
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of International
Growth Portfolio and Worldwide Growth Portfolio which he has
co-managed since May 1998 and December 1999, respectively. He has
also co-managed Janus Overseas Fund and Janus Worldwide Fund
since April 1998 and September 1999, respectively. He served as
assistant portfolio manager for these Funds since 1996. Mr. Chang
joined Janus Capital in 1993 as a research analyst. He received
an undergraduate degree with honors in Religion with a
concentration in Philosophy from Dartmouth College and a Masters
Degree in Political Science from Stanford University. He has
earned the right to use the Chartered Financial Analyst
designation.
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.
HELEN YOUNG HAYES
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of International
Growth Portfolio and Worldwide Growth Portfolio which she has
managed or co-managed since inception. Ms. Hayes joined Janus
Capital in 1987 and has managed or co-managed Janus Worldwide
Fund and Janus Overseas Fund since their inceptions. She holds a
Bachelor of Arts in Economics from Yale University and she has
earned the right to use the Chartered Financial Analyst
designation.
KAREN L. REIDY
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Balanced
Portfolio as of January 2000 and an assistant portfolio manager
of Growth Portfolio since 1998. She also manages Equity Income
Portfolio, Janus Balanced Fund and Janus Equity Income Fund as of
January 2000. She is also assistant portfolio manager of Janus
Fund. Prior to joining Janus Capital in 1995, she worked for
Price Waterhouse as a manager in both the Mergers and
Acquisitions and Audit business units. In this capacity, Ms.
Reidy performed due diligence work for corporate clients and
oversaw audit engagements. She received an undergraduate degree
in Accounting from the University of Colorado in 1989 and passed
the CPA exam in 1992. She has earned the right to use the
Chartered Financial Analyst designation.
16 Janus Aspen Series
<PAGE>
BLAINE P. ROLLINS
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Growth
Portfolio as of January 2000. He previously managed Balanced
Portfolio from May 1996 to December 1999 and Equity Income
Portfolio from its inception to December 1999. Mr. Rollins joined
Janus Capital in 1990 and has managed Janus Fund since January
2000, Janus Balanced Fund from January 1996 until December 1999
and Janus Equity Income Fund from inception until December 1999.
He was an assistant portfolio manager of Janus Fund from January
1994 until December 1999. He gained experience as a fixed-income
trader and equity research analyst prior to managing Balanced
Portfolio. He holds a Bachelor of Science in Finance from the
University of Colorado 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.
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.
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 Strategic Value
Portfolio, Janus Strategic Value Fund and Janus Special
Situations Fund, each of which he has managed since inception. He
obtained a Masters of Business Administration in Finance from the
Fuqua School of Business at Duke University and a Bachelor of
Arts in Economics and Political Science from Tufts University.
Mr. Decker has earned the right to use the Chartered Financial
Analyst designation.
Management of the portfolios 17
<PAGE>
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.
JOHN H. SCHREIBER
- --------------------------------------------------------------------------------
is an assistant portfolio manager of Growth 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.
18 Janus Aspen Series
<PAGE>
Other information
CLASSES OF SHARES
Each Portfolio currently offers two or three 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. Service Shares of the
Portfolios are offered 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. Retirement Shares of certain Portfolios are offered 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 Service Shares or
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
Institutional Shares. It is anticipated that the spin-off and
distributions will occur during the third quarter of 2000.
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.
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.
Other information 19
<PAGE> 22
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
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 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 the 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.
20 Janus Aspen Series
<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 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 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
Shareholder's guide 21
<PAGE>
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.
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.
22 Janus Aspen Series
<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 11 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
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $23.54 $18.48 $15.51 $13.45 $10.57
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.07 0.05 0.15 0.17 0.28
3. Net gains or losses on securities (both realized and
unrealized) 10.24 6.36 3.34 2.29 2.90
4. Total from investment operations 10.31 6.41 3.49 2.46 3.18
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.05) (0.15) (0.17) (0.30)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) (0.14) (1.30) (0.37) (0.23) --
8. Distributions (in excess of realized gains) -- -- -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.20) (1.35) (0.52) (0.40) (0.30)
11. NET ASSET VALUE, END OF PERIOD $33.65 $23.54 $18.48 $15.51 $13.45
12. Total return 43.98% 35.66% 22.75% 18.45% 30.17%
13. Net assets, end of period (in thousands) $2,942,649 $1,103,549 $608,281 $325,789 $126,911
14. Average net assets for the period (in thousands) $1,775,373 $789,454 $477,914 $216,125 $77,344
15. Ratio of gross expenses to average net assets 0.67%(1) 0.68%(1) 0.70%(1) 0.69%(1) 0.78%(1)
16. Ratio of net expenses to average net assets 0.67% 0.68% 0.69% 0.69% 0.76%
17. Ratio of net investment income to average net assets 0.30% 0.26% 0.91% 1.39% 1.24%
18. Portfolio turnover rate 53% 73% 122% 87% 185%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.69% in 1999, 0.75% in 1998, 0.78% in 1997, 0.83% in 1996 and
0.98% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Fund.
Financial highlights 23
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $27.64 $20.55 $18.24 $17.08 $13.62
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- -- -- -- 0.24
3. Net gains or losses on securities (both realized and
unrealized) 33.46 7.09 2.31 1.36 3.47
4. Total from investment operations 33.46 7.09 2.31 1.36 3.71
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) -- -- -- -- (0.25)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) (1.40) -- -- (0.19) --
8. Distributions (in excess of realized gains) -- -- -- -- --
9. Tax return of capital distributions -- -- -- (0.01) --
10. Total distributions (1.40) -- -- (0.20) (0.25)
11. NET ASSET VALUE, END OF PERIOD $59.70 $27.64 $20.55 $18.24 $17.08
12. Total return 125.40% 34.26% 12.66% 7.95% 27.48%
13. Net assets, end of period (in thousands) $3,319,619 $772,943 $508,198 $383,693 $185,911
14. Average net assets for the period (in thousands) $1,476,445 $576,444 $418,464 $290,629 $107,582
15. Ratio of gross expenses to average net assets 0.70%(1) 0.75%(1) 0.76%(1) 0.76%(1) 0.86%(1)
16. Ratio of net expenses to average net assets 0.69% 0.75% 0.76% 0.76% 0.84%
17. Ratio of net investment income to average net assets (0.50%) (0.36%) (0.10%) (0.27%) 0.58%
18. Portfolio turnover rate 105% 132% 130% 88% 155%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.70% in 1999, 0.75% in 1998, 0.78% in 1997, 0.83% in 1996 and
0.93% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Enterprise Fund.
24 Janus Aspen Series
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997(1)
<S> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $19.94 $12.62 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.12 0.01 0.05
3. Net gains or losses on securities (both realized and
unrealized) 13.22 7.32 2.61
4. Total from investment operations 13.34 7.33 2.66
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.11) (0.01) (0.04)
6. Dividends (in excess of net investment income) -- -- --
7. Distributions (from capital gains) -- -- --
8. Distributions (in excess of realized gains) -- -- --
9. Tax return of capital distributions -- -- --
10. Total distributions (0.11) (0.01) (0.04)
11. NET ASSET VALUE, END OF PERIOD $33.17 $19.94 $12.62
12. Total return* 67.00% 58.11% 26.60%
13. Net assets, end of period (in thousands) $626,611 $74,187 $6,833
14. Average net assets for the period (in thousands) $257,422 $25,964 $2,632
15. Ratio of gross expenses to average net assets** 0.70%(2) 0.92%(2) 1.26%(2)
16. Ratio of net expenses to average net assets** 0.70% 0.91% 1.25%
17. Ratio of net investment income to average net assets** 0.76% 0.27% 1.43%
18. Portfolio turnover rate** 52% 91% 101%
- ------------------------------------------------------------------------------------------------
</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 0.79% in 1999, 0.97% in 1998 and 2.19% in 1997 before waiver
of certain fees and/or reduction of adviser's fees to the effective rate of
the corresponding retail fund (Janus Olympus Fund until May 1, 1999, Janus
Twenty Fund thereafter).
Financial highlights 25
<PAGE>
<TABLE>
<CAPTION>
BALANCED PORTFOLIO - INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $22.50 $17.47 $14.77 $13.03 $10.63
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.59 0.39 0.34 0.32 0.17
3. Net gains (or losses) on securities (both realized and
unrealized) 5.38 5.51 2.89 1.81 2.45
4. Total from investment operations 5.97 5.90 3.23 2.13 2.62
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.56) (0.38) (0.35) (0.30) (0.22)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) -- (0.45) (0.18) (0.09) --
8. Distributions (in excess of realized gains) -- (0.04) -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.56) (0.87) (0.53) (0.39) (0.22)
11. NET ASSET VALUE, END OF PERIOD $27.91 $22.50 $17.47 $14.77 $13.03
12. Total return 26.76% 34.28% 22.10% 16.18% 24.79%
13. Net assets, end of period (in thousands) $2,453,079 $882,495 $362,409 $85,480 $14,021
14. Average net assets for the period (in thousands) $1,583,635 $555,002 $176,432 $43,414 $5,739
15. Ratio of gross expenses to average net assets 0.69%(1) 0.74%(1) 0.83%(1) 0.94%(1) 1.37%(1)
16. Ratio of net expenses to average net assets 0.69% 0.74% 0.82% 0.92% 1.30%
17. Ratio of net investment income to average net assets 2.86% 2.41% 2.87% 2.92% 2.41%
18. Portfolio turnover rate 92% 70% 139% 103% 149%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.69% in 1999, 0.74% in 1998, 0.83% in 1997, 1.07% in 1996 and
1.55% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Balanced Fund.
26 Janus Aspen Series
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $21.27 $18.48 $15.72 $11.95 $9.72
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.06 0.13 0.11 0.05 0.09
3. Net gains or losses on securities (both realized and
unrealized) 17.40 3.07 2.80 4.06 2.16
4. Total from investment operations 17.46 3.20 2.91 4.11 2.25
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.14) (0.11) (0.11) (0.02)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) -- -- (0.01) (0.23) --
8. Distributions (in excess of realized gains) -- (0.27) (0.03) -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.06) (0.41) (0.15) (0.34) (0.02)
11. NET ASSET VALUE, END OF PERIOD $38.67 $21.27 $18.48 $15.72 $11.95
12. Total return* 82.27% 17.23% 18.51% 34.71% 23.15%
13. Net assets, end of period (in thousands) $810,392 $311,110 $161,091 $27,192 $1,608
14. Average net assets for the period (in thousands) $425,876 $234,421 $96,164 $7,437 $1,792
15. Ratio of gross expenses to average net assets** 0.77%(1) 0.86%(1) 0.96%(1) 1.26%(1) 2.69%(1)
16. Ratio of net expenses to average net assets** 0.76% 0.86% 0.96% 1.25% 2.50%
17. Ratio of net investment income to average net assets** 0.26% 0.73% 0.70% 0.62% (0.80%)
18. Portfolio turnover rate** 80% 93% 86% 65% 211%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total return not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
(1) The ratio was 0.84% in 1999, 0.95% in 1998, 1.08% in 1997, 2.21% in 1996 and
3.57% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Overseas Fund.
Financial highlights 27
<PAGE>
<TABLE>
<CAPTION>
WORLDWIDE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $29.09 $23.39 $19.44 $15.31 $12.07
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.07 0.16 0.16 0.16 0.11
3. Net gains or losses on securities (both realized and
unrealized) 18.65 6.59 4.14 4.27 3.19
4. Total from investment operations 18.72 6.75 4.30 4.43 3.30
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.18) (0.17) (0.17) (0.06)
6. Dividends (in excess of net investment income) -- -- (0.02) -- --
7. Distributions (from capital gains) -- -- (0.16) (0.13) --
8. Distributions (in excess of realized gains) -- (0.87) -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.06) (1.05) (0.35) (0.30) (0.06)
11. NET ASSET VALUE, END OF PERIOD $47.75 $29.09 $23.39 $19.44 $15.31
12. Total return 64.45% 28.92% 22.15% 29.04% 27.37%
13. Net assets, end of period (in thousands) $6,496,773 $2,890,375 $1,576,548 $582,603 $108,563
14. Average net assets for the period (in thousands) $3,862,773 $2,217,695 $1,148,951 $304,111 $59,440
15. Ratio of gross expenses to average net assets 0.71%(1) 0.72%(1) 0.74%(1) 0.80%(1) 0.90%(1)
16. Ratio of net expenses to average net assets 0.71% 0.72% 0.74% 0.80% 0.87%
17. Ratio of net investment income to average net assets 0.20% 0.64% 0.67% 0.83% 0.95%
18. Portfolio turnover rate 67% 77% 80% 62% 113%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.71% in 1999, 0.74% in 1998, 0.81% in 1997, 0.91% in 1996 and
1.09% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Worldwide Fund.
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 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 29
<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.
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>
[JANUS LOGO]
1-800-525-0020
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 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
<PAGE>
[JANUS LOGO]
Janus Aspen Series
Institutional Shares
PROSPECTUS
MAY 1, 1999
Growth Portfolio
Capital Appreciation Portfolio
Balanced Portfolio
International Growth Portfolio
Worldwide Growth 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 six 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 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 (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................................ 7
Fees and expenses........................................ 9
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND
RISKS
Equity Portfolios........................................ 10
Flexible Income Portfolio................................ 13
General portfolio policies............................... 14
Risks for Equity Portfolios.............................. 17
Risks for Flexible Income Portfolios..................... 18
Risks Common to All Portfolios........................... 19
MANAGEMENT OF THE PORTFOLIOS
Investment adviser....................................... 21
Management expenses and expense limits................... 21
Investment personnel..................................... 22
OTHER INFORMATION........................................... 25
DISTRIBUTIONS AND TAXES
Distributions............................................ 26
Taxes.................................................... 26
SHAREHOLDER'S GUIDE
Pricing of portfolio shares.............................. 27
Purchases................................................ 27
Redemptions.............................................. 27
Frequent trading......................................... 28
Shareholder communications............................... 28
FINANCIAL HIGHLIGHTS........................................ 29
GLOSSARY
Glossary of investment terms............................. 35
RATING CATEGORIES
Explanation of rating categories......................... 39
</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 GROWTH PORTFOLIOS?
- --------------------------------------------------------------------------------
DOMESTIC EQUITY PORTFOLIOS
- GROWTH PORTFOLIO seeks long-term growth of capital in a manner
consistent with the preservation of capital.
- CAPITAL APPRECIATION PORTFOLIO seeks long-term growth of capital.
- BALANCED PORTFOLIO seeks long-term capital growth, consistent
with preservation of capital and balanced by current income.
GLOBAL INTERNATIONAL EQUITY PORTFOLIOS
- INTERNATIONAL GROWTH PORTFOLIO seeks long-term growth of capital.
- WORLDWIDE GROWTH PORTFOLIO seeks long-term growth of capital in a
manner consistent with the preservation of capital.
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.
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.
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.
BALANCED PORTFOLIO normally invests 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets
in securities selected primarily for their income potential. The
Portfolio will normally invest at least 25% of its assets in
fixed-income securities.
INTERNATIONAL GROWTH PORTFOLIO normally invests at least 65% of its
total assets in securities of issuers from at least five different
countries, excluding the United States. Although the Portfolio intends
to invest substantially all of its assets in issuers located outside
the United States, it may invest in U.S. issuers and it may at times
invest all of its assets in fewer than five countries, or even a
single country.
2 Janus Aspen Series
<PAGE>
WORLDWIDE GROWTH PORTFOLIO invests primarily in common stocks of
companies of any size throughout the world. The Portfolio normally
invests in issuers from at least five different countries, including
the United States. The Portfolio may at times invest in fewer than
five countries or even a single country.
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 BALANCED 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.
INTERNATIONAL GROWTH PORTFOLIO AND WORLDWIDE GROWTH PORTFOLIO may have
significant exposure to foreign markets. As a result, their returns
and NAV may be affected to a large degree by fluctuations in currency
exchange rates or political or economic conditions in a particular
country.
CAPITAL APPRECIATION PORTFOLIO is nondiversified. In other words, it
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 the 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 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, but do not include fees and expenses. The
tables compare the average annual returns for the Shares of each
Portfolio for the periods indicated to a broad-based securities market
index.
Risk return summary 3
<PAGE>
GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
2.76% 30.17% 18.45% 22.75% 35.66% 43.98%
1994 1995 1996 1997 1998 1999
Best Quarter: 4th-1998 27.71% Worst Quarter: 3rd-1998 (10.92%)
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>
Growth Portfolio - Institutional Shares 43.98% 29.89% 24.28%
S&P 500 Index* 21.03% 28.54% 22.68%
--------------------------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
CAPITAL APPRECIATION PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
58.11% 67.00%
1998 1999
Best Quarter 4th-1999 41.77% Worst Quarter 3rd-1998 (9.98%)
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 - Institutional Shares 67.00% 57.18%
S&P 500 Index* 21.03% 27.04%
--------------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
4 Janus Aspen Series
<PAGE>
BALANCED PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
0.84% 24.79% 16.18% 22.10% 34.28% 26.76%
1994 1995 1996 1997 1998 1999
Best Quarter: 4th-1998 20.32% Worst Quarter: 3rd-1998 (4.97%)
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>
Balanced Portfolio - Institutional Shares 26.76% 24.68% 20.62%
S&P 500 Index* 21.03% 28.54% 22.68%
Lehman Brothers Gov't/Corp Bond Index** (2.15%) 7.61% 5.40%
-------------------------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
** Lehman Brothers Gov't/Corp Bond Index is composed of all bonds that
are of investment grade with at least one year until maturity.
INTERNATIONAL GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
23.15% 34.71% 18.51% 17.23% 82.27%
1995 1996 1997 1998 1999
Best Quarter 4th-1999 58.48% Worst Quarter 3rd-1998 (17.76%)
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/2/94)
<S> <C> <C> <C>
International Growth Portfolio - Institutional Shares 82.27% 33.25% 28.19%
Morgan Stanley Capital International EAFE(R) Index* 26.96% 12.83% 11.22%
----------------------------------------
</TABLE>
* The Morgan Stanley Capital International EAFE(R) Index is a market
capitalization weighted index composed of companies representative
of the market structure of 20 Developed Market countries in Europe,
Australasia and the Far East.
Risk return summary 5
<PAGE>
WORLDWIDE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
1.53% 27.37% 29.04% 22.15% 28.92% 64.45%
1994 1995 1996 1997 1998 1999
Best Quarter 4th-1999 42.24% Worst Quarter 3rd-1998 (16.03%)
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>
Worldwide Growth Portfolio - Institutional Shares 64.45% 33.60% 29.71%
Morgan Stanley Capital International World Index* 24.93% 19.76% 16.41%
--------------------------------------------
</TABLE>
* The Morgan Stanley Capital International World Index is a market
capitalization weighted index composed of companies representative
of the market structure of 21 Developed Market countries in North
America, Europe and the Asia/Pacific Region.
The Equity Portfolios' past performance does not necessarily indicate
how they will perform in the future.
6 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 the
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 7
<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 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
Annual Returns for Periods Ended 12/31
(0.91%) 23.86% 9.19% 11.76% 9.11% 1.60%
1994 1995 1996 1997 1998 1999
Best Quarter: 2nd-1995 6.71% Worst Quarter: 2nd-1999 (1.21%)
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 - Institutional Shares 1.60% 10.88% 8.50%
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.
8 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>
Total Annual Fund
Management Other Operating
Fee Expenses Expenses*
<S> <C> <C> <C>
Growth Portfolio 0.65% 0.02% 0.67%
Capital Appreciation Portfolio 0.65% 0.04% 0.69%
Balanced Portfolio 0.65% 0.02% 0.67%
International Growth Portfolio 0.65% 0.11% 0.76%
Worldwide Growth Portfolio 0.65% 0.05% 0.70%
Flexible Income Portfolio 0.65% 0.07% 0.72%
</TABLE>
- --------------------------------------------------------------------------------
* Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Growth,
Capital Appreciation, Balanced, International Growth and Worldwide
Growth Portfolios. 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 5 Years 10 Years
-----------------------------------------
<S> <C> <C> <C> <C>
Growth Portfolio $ 68 $ 214 $ 373 $ 835
Capital Appreciation Portfolio $ 70 $ 221 $ 384 $ 859
Balanced Portfolio $ 68 $ 214 $ 373 $ 835
International Growth Portfolio $ 78 $ 243 $ 422 $ 942
Worldwide Growth Portfolio $ 72 $ 224 $ 390 $ 871
Flexible Income Portfolio $ 74 $ 230 $ 401 $ 894
</TABLE>
Risk return summary 9
<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>
Growth Portfolio Janus Fund
Capital Appreciation Portfolio Janus Twenty Fund
Balanced Portfolio Janus Balanced Fund
International Growth Portfolio Janus Overseas Fund
Worldwide Growth Portfolio Janus Worldwide 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 17-20 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
DOMESTIC EQUITY PORTFOLIOS
GROWTH PORTFOLIO
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.
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.
BALANCED PORTFOLIO
Balanced Portfolio seeks long-term capital growth, consistent with
preservation of capital and balanced by current income. It pursues its
objective by normally investing 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets
in securities selected primarily for their income potential. This
Portfolio normally invests at least 25% of its assets in fixed-income
securities.
10 Janus Aspen Series
<PAGE>
GLOBAL/INTERNATIONAL EQUITY PORTFOLIOS
INTERNATIONAL GROWTH PORTFOLIO
International Growth Portfolio seeks long-term growth of capital.
Normally, the Portfolio pursues its objective by investing at least
65% of its total assets in securities of issuers from at least five
different countries, excluding the United States. Although the
Portfolio intends to invest substantially all of its assets in issuers
located outside the United States, it may at times invest in U.S.
issuers and it may at times invest all of its assets in fewer than
five countries or even a single country.
WORLDWIDE GROWTH PORTFOLIO
Worldwide 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 of companies of any
size throughout the world. The Portfolio normally invests in issuers
from at least five different countries, including the United States.
The Portfolio may at times invest in fewer than five countries or even
a single country.
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 Balanced 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
Balanced 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. Although the 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.
Investment objectives, principal investment strategies and risks 11
<PAGE>
4. HOW ARE ASSETS ALLOCATED BETWEEN THE GROWTH AND INCOME COMPONENTS OF BALANCED
PORTFOLIO'S HOLDINGS?
Balanced 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 BALANCED PORTFOLIO'S
INVESTMENTS?
The growth component of the 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.
6. WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF BALANCED PORTFOLIO'S
HOLDINGS?
The income component of Balanced 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.
12 Janus Aspen Series
<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 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 18-20 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?
The 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 13
<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.
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 or she 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)
14 Janus Aspen Series
<PAGE>
- 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
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.
Investment objectives, principal investment strategies and risks 15
<PAGE>
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.
16 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 (IPO's) 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 performances 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, startup
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 CAPITAL APPRECIATION PORTFOLIO AFFECT
ITS 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 the Portfolio.
Investment objectives, principal investment strategies and risks 17
<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 performances as its
assets grow.
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 pages 39-40 for a description of
rating categories.
18 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
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 39-40 for
a description of bond rating categories.
Investment objectives, principal investment strategies and risks 19
<PAGE>
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.
20 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 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 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 All Asset Levels 0.65 N/A
Capital Appreciation Portfolio
Balanced Portfolio
International Growth Portfolio
Worldwide Growth 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. As noted
in the fee table on page 9, 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: 0.67% for Growth Portfolio, 0.75% for Capital
Appreciation Portfolio, 0.67% for Balanced Portfolio, 0.73% for
International Growth Portfolio, 0.66% for Worldwide Growth 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.
Management of the portfolios 21
<PAGE>
INVESTMENT PERSONNEL
PORTFOLIO MANAGERS
LAURENCE J. CHANG
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of International
Growth Portfolio and Worldwide Growth Portfolio which he has
co-managed since May 1998 and December 1999, respectively. He has
also co-managed Janus Overseas Fund and Janus Worldwide Fund
since April 1998 and September 1999, respectively. He served as
assistant portfolio manager for these Funds since 1996. Mr. Chang
joined Janus Capital in 1993 as a research analyst. He received
an undergraduate degree with honors in Religion with a
concentration in Philosophy from Dartmouth College and a Masters
Degree in Political Science from Stanford University. He has
earned the right to use the Chartered Financial Analyst
designation.
HELEN YOUNG HAYES
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of International
Growth Portfolio and Worldwide Growth Portfolio, which she has
managed or co-managed since inception. Ms. Hayes joined Janus
Capital in 1987 and has managed or co-managed Janus Worldwide
Fund and Janus Overseas Fund since their inceptions. She holds a
Bachelor of Arts in Economics from Yale University and she has
earned the right to use the Chartered Financial Analyst
designation.
KAREN L. REIDY
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Balanced
Portfolio as of January 2000 and an assistant portfolio manager
of Growth Portfolio since 1998. She also manages Equity Income
Portfolio, Janus Balanced Fund and Janus Equity Income Fund as of
January 2000. She is also assistant portfolio manager of Janus
Fund. Prior to joining Janus Capital in 1995, she worked for
Price Waterhouse as a manager in both the Mergers and
Acquisitions and Audit business units. In this capacity, Ms.
Reidy performed due diligence work for corporate clients and
oversaw audit engagements. She received an undergraduate degree
in Accounting from the University of Colorado in 1989 and passed
the CPA exam in 1992. She has earned the right to use the
Chartered Financial Analyst designation.
BLAINE P. ROLLINS
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Growth
Portfolio as of January 2000. He previously managed Balanced
Portfolio from May 1996 to December 1999 and Equity Income
Portfolio from its inception to December 1999. Mr. Rollins joined
Janus Capital in 1990 and has managed Janus Fund since January
2000, Janus Balanced Fund from January 1996 until December 1999
and Janus Equity Income Fund from inception until December 1999.
He was an assistant portfolio manager of Janus Fund from January
1994 until December 1999. He gained experience as a fixed-income
trader and equity research analyst prior to managing Balanced
Portfolio. He holds a Bachelor of Science in Finance from the
University of Colorado and he has earned the right to use the
Chartered Financial Analyst designation.
22 Janus Aspen Series
<PAGE>
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 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 23
<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 Strategic Value
Portfolio, Janus Strategic Value Fund and Janus Special
Situations Fund, each of which he has managed since inception. He
obtained a Masters of Business Administration in Finance from the
Fuqua School of Business at Duke University and a Bachelor of
Arts in Economics and Political Science from Tufts University.
Mr. Decker has earned the right to use the Chartered Financial
Analyst designation.
JOHN H. SCHREIBER
- --------------------------------------------------------------------------------
is an assistant portfolio manager of Growth 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.
24 Janus Aspen Series
<PAGE>
Other information
CLASSES OF SHARES
Each Portfolio currently offers two or three 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. Service Shares of the
Portfolios are offered only in connection with investment in and
payments under variable insurance contracts as well as certain
qualified plans that require a fee from Portfolio assets to procure
distribution and administrative services to contract owners and plan
participants. Retirement Shares of certain Portfolios are offered only
to qualified plans using plan service providers that are compensated
for providing distribution and/or recordkeeping 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 the
Service 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
Institutional Shares. It is anticipated that the spin-off and
distributions will occur during the third quarter of 2000.
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.
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.
Other information 25
<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
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 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 the 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.
26 Janus Aspen Series
<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 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 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
Shareholder's guide 27
<PAGE>
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.
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.
28 Janus Aspen Series
<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 11 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
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $23.54 $18.48 $15.51 $13.45 $10.57
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.07 0.05 0.15 0.17 0.28
3. Net gains or losses on securities (both realized and
unrealized) 10.24 6.36 3.34 2.29 2.90
4. Total from investment operations 10.31 6.41 3.49 2.46 3.18
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.05) (0.15) (0.17) (0.30)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) (0.14) (1.30) (0.37) (0.23) --
8. Distributions (in excess of realized gains) -- -- -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.20) (1.35) (0.52) (0.40) (0.30)
11. NET ASSET VALUE, END OF PERIOD $33.65 $23.54 $18.48 $15.51 $13.45
12. Total return 43.98% 35.66% 22.75% 18.45% 30.17%
13. Net assets, end of period (in thousands) $2,942,649 $1,103,549 $608,281 $325,789 $126,911
14. Average net assets for the period (in thousands) $1,775,373 $789,454 $477,914 $216,125 $77,344
15. Ratio of gross expenses to average net assets 0.67%(1) 0.68%(1) 0.70%(1) 0.69%(1) 0.78%(1)
16. Ratio of net expenses to average net assets 0.67% 0.68% 0.69% 0.69% 0.76%
17. Ratio of net investment income to average net assets 0.30% 0.26% 0.91% 1.39% 1.24%
18. Portfolio turnover rate 53% 73% 122% 87% 185%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.69% in 1999, 0.75% in 1998, 0.78% in 1997, 0.83% in 1996 and
0.98% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Fund.
Financial highlights 29
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997(1)
<S> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $19.94 $12.62 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.12 0.01 0.05
3. Net gains or losses on securities (both realized and
unrealized) 13.22 7.32 2.61
4. Total from investment operations 13.34 7.33 2.66
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.11) (0.01) (0.04)
6. Dividends (in excess of net investment income) -- -- --
7. Distributions (from capital gains) -- -- --
8. Distributions (in excess of realized gains) -- -- --
9. Tax return of capital distributions -- -- --
10. Total distributions (0.11) (0.01) (0.04)
11. NET ASSET VALUE, END OF PERIOD $33.17 $19.94 $12.62
12. Total return* 67.00% 58.11% 26.60%
13. Net assets, end of period (in thousands) $626,611 $74,187 $6,833
14. Average net assets for the period (in thousands) $257,422 $25,964 $2,632
15. Ratio of gross expenses to average net assets** 0.70%(2) 0.92%(2) 1.26%(2)
16. Ratio of net expenses to average net assets** 0.70% 0.91% 1.25%
17. Ratio of net investment income to average net assets** 0.76% 0.27% 1.43%
18. Portfolio turnover rate** 52% 91% 101%
- ------------------------------------------------------------------------------------------------
</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 0.79% in 1999, 0.97% in 1998 and 2.19% in 1997 before waiver
of certain fees and/or reduction of adviser's fees to the effective rate of
the corresponding retail fund (Janus Olympus Fund until May 1, 1999, Janus
Twenty Fund thereafter).
30 Janus Aspen Series
<PAGE>
<TABLE>
<CAPTION>
BALANCED PORTFOLIO - INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $22.50 $17.47 $14.77 $13.03 $10.63
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.59 0.39 0.34 0.32 0.17
3. Net gains (or losses) on securities (both realized and
unrealized) 5.38 5.51 2.89 1.81 2.45
4. Total from investment operations 5.97 5.90 3.23 2.13 2.62
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.56) (0.38) (0.35) (0.30) (0.22)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) -- (0.45) (0.18) (0.09) --
8. Distributions (in excess of realized gains) -- (0.04) -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.56) (0.87) (0.53) (0.39) (0.22)
11. NET ASSET VALUE, END OF PERIOD $27.91 $22.50 $17.47 $14.77 $13.03
12. Total return 26.76% 34.28% 22.10% 16.18% 24.79%
13. Net assets, end of period (in thousands) $2,453,079 $882,495 $362,409 $85,480 $14,021
14. Average net assets for the period (in thousands) $1,583,635 $555,002 $176,432 $43,414 $5,739
15. Ratio of gross expenses to average net assets 0.69%(1) 0.74%(1) 0.83%(1) 0.94%(1) 1.37%(1)
16. Ratio of net expenses to average net assets 0.69% 0.74% 0.82% 0.92% 1.30%
17. Ratio of net investment income to average net assets 2.86% 2.41% 2.87% 2.92% 2.41%
18. Portfolio turnover rate 92% 70% 139% 103% 149%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.69% in 1999, 0.74% in 1998, 0.83% in 1997, 1.07% in 1996 and
1.55% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Balanced Fund.
Financial highlights 31
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $21.27 $18.48 $15.72 $11.95 $9.72
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.06 0.13 0.11 0.05 0.09
3. Net gains or losses on securities (both realized and
unrealized) 17.40 3.07 2.80 4.06 2.16
4. Total from investment operations 17.46 3.20 2.91 4.11 2.25
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.14) (0.11) (0.11) (0.02)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) -- -- (0.01) (0.23) --
8. Distributions (in excess of realized gains) -- (0.27) (0.03) -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.06) (0.41) (0.15) (0.34) (0.02)
11. NET ASSET VALUE, END OF PERIOD $38.67 $21.27 $18.48 $15.72 $11.95
12. Total return* 82.27% 17.23% 18.51% 34.71% 23.15%
13. Net assets, end of period (in thousands) $810,392 $311,110 $161,091 $27,192 $1,608
14. Average net assets for the period (in thousands) $425,876 $234,421 $96,164 $7,437 $1,792
15. Ratio of gross expenses to average net assets** 0.77%(1) 0.86%(1) 0.96%(1) 1.26%(1) 2.69%(1)
16. Ratio of net expenses to average net assets** 0.76% 0.86% 0.96% 1.25% 2.50%
17. Ratio of net investment income to average net assets** 0.26% 0.73% 0.70% 0.62% (0.80%)
18. Portfolio turnover rate** 80% 93% 86% 65% 211%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total return not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
(1) The ratio was 0.84% in 1999, 0.95% in 1998, 1.08% in 1997, 2.21% in 1996 and
3.57% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Overseas Fund.
32 Janus Aspen Series
<PAGE>
<TABLE>
<CAPTION>
WORLDWIDE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $29.09 $23.39 $19.44 $15.31 $12.07
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.07 0.16 0.16 0.16 0.11
3. Net gains or losses on securities (both realized and
unrealized) 18.65 6.59 4.14 4.27 3.19
4. Total from investment operations 18.72 6.75 4.30 4.43 3.30
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.18) (0.17) (0.17) (0.06)
6. Dividends (in excess of net investment income) -- -- (0.02) -- --
7. Distributions (from capital gains) -- -- (0.16) (0.13) --
8. Distributions (in excess of realized gains) -- (0.87) -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.06) (1.05) (0.35) (0.30) (0.06)
11. NET ASSET VALUE, END OF PERIOD $47.75 $29.09 $23.39 $19.44 $15.31
12. Total return 64.45% 28.92% 22.15% 29.04% 27.37%
13. Net assets, end of period (in thousands) $6,496,773 $2,890,375 $1,576,548 $582,603 $108,563
14. Average net assets for the period (in thousands) $3,862,773 $2,217,695 $1,148,951 $304,111 $59,440
15. Ratio of gross expenses to average net assets 0.71%(1) 0.72%(1) 0.74%(1) 0.80%(1) 0.90%(1)
16. Ratio of net expenses to average net assets 0.71% 0.72% 0.74% 0.80% 0.87%
17. Ratio of net investment income to average net assets 0.20% 0.64% 0.67% 0.83% 0.95%
18. Portfolio turnover rate 67% 77% 80% 62% 113%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.71% in 1999, 0.74% in 1998, 0.81% in 1997, 0.91% in 1996 and
1.09% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Worldwide Fund.
Financial highlights 33
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE INCOME PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $12.05 $11.78 $11.24 $11.11 $9.48
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.76 0.64 0.67 0.74 0.53
3. Net gains or losses on securities (both realized and
unrealized) (0.58) 0.41 0.62 0.24 1.70
4. Total from investment operations 0.18 1.05 1.29 0.98 2.23
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.75) (0.67) (0.64) (0.72) (0.60)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) (0.07) (0.11) (0.11) (0.13) --
8. Distributions (in excess of realized gains) -- -- -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.82) (0.78) (0.75) (0.85) (0.60)
11. NET ASSET VALUE, END OF PERIOD $11.41 $12.05 $11.78 $11.24 $11.11
12. Total return 1.60% 9.11% 11.76% 9.19% 23.86%
13. Net assets, end of period (in thousands) $186,681 $129,582 $54,098 $25,315 $10,831
14. Average net assets for the period (in thousands) $161,459 $86,627 $36,547 $17,889 $5,556
15. Ratio of gross expenses to average net assets 0.72% 0.73% 0.75% 0.84% 1.07%
16. Ratio of net expenses to average net assets 0.72% 0.73% 0.75% 0.83% 1.00%
17. Ratio of net investment income to average net assets 6.99% 6.36% 6.90% 7.31% 7.46%
18. Portfolio turnover rate 116% 145% 119% 250% 236%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
34 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 35
<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.
36 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 37
<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.
38 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 39
<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.
40 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 year ended
December 31, 1999.
Explanation of rating categories 41
<PAGE>
[JANUS LOGO]
1-800-525-0020
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 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
<PAGE>
[JANUS LOGO]
Janus Aspen Series
Institutional Shares
PROSPECTUS
MAY 1, 2000
Growth Portfolio
Aggressive Growth Portfolio
Balanced Portfolio
International Growth Portfolio
Worldwide Growth 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 six 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 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 (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................................ 7
Fees and expenses........................................ 9
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND
RISKS
Equity Portfolios........................................ 10
Flexible Income Portfolio................................ 13
General portfolio policies............................... 14
Risks for Equity Portfolios.............................. 17
Risks for Flexible Income Portfolios..................... 18
Risks Common to All Portfolios........................... 19
MANAGEMENT OF THE PORTFOLIOS
Investment adviser....................................... 21
Management expenses and expense limits................... 21
Investment personnel..................................... 22
OTHER INFORMATION........................................... 25
DISTRIBUTIONS AND TAXES
Distributions............................................ 26
Taxes.................................................... 26
SHAREHOLDER'S GUIDE
Pricing of portfolio shares.............................. 27
Purchases................................................ 27
Redemptions.............................................. 27
Frequent trading......................................... 28
Shareholder communications............................... 28
FINANCIAL HIGHLIGHTS........................................ 29
GLOSSARY
Glossary of investment terms............................. 35
RATING CATEGORIES
Explanation of rating categories......................... 39
</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?
- --------------------------------------------------------------------------------
DOMESTIC EQUITY PORTFOLIOS
- GROWTH PORTFOLIO seeks long-term growth of capital in a manner
consistent with the preservation of capital.
- AGGRESSIVE GROWTH PORTFOLIO seeks long-term growth of capital.
- BALANCED PORTFOLIO seeks long-term capital growth, consistent
with preservation of capital and balanced by current income.
GLOBAL/INTERNATIONAL EQUITY PORTFOLIOS
- INTERNATIONAL GROWTH PORTFOLIO seeks long-term growth of capital.
- WORLDWIDE GROWTH PORTFOLIO seeks long-term growth of capital in a
manner consistent with the preservation of capital.
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 GROWTH 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.
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.
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.
BALANCED PORTFOLIO normally invests 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets
in securities selected primarily for their income potential. The
Portfolio will normally invest at least 25% of its assets in
fixed-income securities.
INTERNATIONAL GROWTH PORTFOLIO normally invests at least 65% of its
total assets in securities of issuers from at least five different
countries, excluding the United States. Although the Portfolio intends
to invest substantially all of its assets in issuers located outside
the United States, it may invest in U.S. issuers and it may at times
invest all of its assets in fewer than five countries, or even a
single country.
2 Janus Aspen Series
<PAGE>
WORLDWIDE GROWTH PORTFOLIO invests primarily in common stocks of
companies of any size throughout the world. The Portfolio normally
invests in issuers from at least five different countries, including
the United States. The Portfolio may at times invest in fewer than
five countries or even a single country.
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 BALANCED 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.
INTERNATIONAL GROWTH PORTFOLIO AND WORLDWIDE GROWTH PORTFOLIO may have
significant exposure to foreign markets. As a result, their returns
and NAV may be affected to a large degree by fluctuations in currency
exchange rates or political or economic conditions in a particular
country.
AGGRESSIVE GROWTH PORTFOLIO is nondiversified. In other words, it 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 the 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 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, but do not include fees and expenses. The
tables compare the average annual returns for the Shares of each
Portfolio for the periods indicated to a broad-based securities market
index.
Risk return summary 3
<PAGE>
GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
2.76% 30.17% 18.45% 22.75% 35.66% 43.98%
1994 1995 1996 1997 1998 1999
Best Quarter 4th-1998 27.71% Worst Quarter 3rd-1998 (10.92%)
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>
Growth Portfolio - Institutional Shares 43.98% 29.89% 24.28%
S&P 500 Index* 21.03% 28.54% 22.68%
----------------------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
AGGRESSIVE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
16.33% 27.48% 7.95% 12.66% 34.26% 125.40%
1994 1995 1996 1997 1998 1999
Best Quarter 4th-1999 59.34% Worst Quarter 3rd-1998 (14.98%)
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 - Institutional Shares 125.40% 36.23% 34.42%
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.
4 Janus Aspen Series
<PAGE>
BALANCED PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
0.84% 24.79% 16.18% 22.10% 34.28% 26.76%
1994 1995 1996 1997 1998 1999
Best Quarter: 4th-1998 20.32% Worst Quarter: 3rd-1998 (4.97%)
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>
Balanced Portfolio - Institutional Shares 26.76% 24.68% 20.62%
S&P 500 Index* 21.03% 28.54% 22.68%
Lehman Brothers Gov't/Corp Bond Index** (2.15%) 7.61% 5.40%
-----------------------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
** Lehman Brothers Gov't/Corp Bond Index is composed of all bonds that
are of investment grade with at least one year until maturity.
INTERNATIONAL GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
23.15% 34.71% 18.51% 17.23% 82.27%
1995 1996 1997 1998 1999
Best Quarter 4th-1999 58.48% Worst Quarter 3rd-1998 (17.76%)
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/2/94)
<S> <C> <C> <C>
International Growth Portfolio - Institutional Shares 82.27% 33.25% 28.19%
Morgan Stanley Capital International EAFE(R) Index* 26.96% 12.83% 11.22%
----------------------------------------
</TABLE>
* The Morgan Stanley Capital International EAFE(R) Index is a market
capitalization weighted index composed of companies representative
of the market structure of 20 Developed Market countries in Europe,
Australasia and the Far East.
Risk return summary 5
<PAGE>
WORLDWIDE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
Annual Returns for Periods Ended 12/31
1.53% 27.37% 29.04% 22.15% 28.92% 64.45%
1994 1995 1996 1997 1998 1999
Best Quarter 4th-1999 42.24% Worst Quarter 3rd-1998 (16.03%)
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>
Worldwide Growth Portfolio - Institutional Shares 64.45% 33.60% 29.71%
Morgan Stanley Capital International World Index* 24.93% 19.76% 16.41%
-----------------------------------------
</TABLE>
* The Morgan Stanley Capital International World Index is a market
capitalization weighted index composed of companies representative
of the market structure of 21 Developed Market countries in North
America, Europe and the Asia/Pacific Region.
The Equity Portfolios' past performance does not necessarily indicate
how they will perform in the future.
6 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 the
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 7
<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 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
Annual Returns for Periods Ended 12/31
(0.91%) 23.86% 9.19% 11.76% 9.11% 1.60%
1994 1995 1996 1997 1998 1999
Best Quarter: 2nd-1995 6.71% Worst Quarter: 2nd-1999 (1.21%)
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 - Institutional Shares 1.60% 10.88% 8.50%
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.
8 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>
Management Other Total Annual Fund
Fee Expenses Operating Expenses*
<S> <C> <C> <C>
Growth Portfolio 0.65% 0.02% 0.67%
Aggressive Growth Portfolio 0.65% 0.02% 0.67%
Balanced Portfolio 0.65% 0.02% 0.67%
International Growth Portfolio 0.65% 0.11% 0.76%
Worldwide Growth Portfolio 0.65% 0.05% 0.70%
Flexible Income Portfolio 0.65% 0.07% 0.72%
</TABLE>
- --------------------------------------------------------------------------------
* Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Growth,
Aggressive Growth, Balanced, International Growth and Worldwide Growth
Portfolios. 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 5 Years 10 Years
-----------------------------------------
<S> <C> <C> <C> <C>
Growth Portfolio $68 $214 $373 $835
Aggressive Growth Portfolio $68 $214 $373 $835
Balanced Portfolio $68 $214 $373 $835
International Growth Portfolio $78 $243 $422 $942
Worldwide Growth Portfolio $72 $224 $390 $871
Flexible Income Portfolio $74 $230 $401 $894
</TABLE>
Risk return summary 9
<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>
Growth Portfolio Janus Fund
Aggressive Growth Portfolio Janus Enterprise Fund
Balanced Portfolio Janus Balanced Fund
International Growth Portfolio Janus Overseas Fund
Worldwide Growth Portfolio Janus Worldwide 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 17-20 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
DOMESTIC EQUITY PORTFOLIOS
GROWTH PORTFOLIO
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.
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.
10 Janus Aspen Series
<PAGE>
BALANCED FUND
Balanced Portfolio seeks long-term capital growth, consistent with
preservation of capital and balanced by current income. It pursues its
objective by normally investing 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets
in securities selected primarily for their income potential. This
Portfolio normally invests at least 25% of its assets in fixed-income
securities.
GLOBAL/INTERNATIONAL EQUITY PORTFOLIOS
INTERNATIONAL GROWTH PORTFOLIO
International Growth Portfolio seeks long-term growth of capital.
Normally, the Portfolio pursues its objective by investing at least
65% of its total assets in securities of issuers from at least five
different countries, excluding the United States. Although the
Portfolio intends to invest substantially all of its assets in issuers
located outside the United States, it may at times invest in U.S.
issuers and it may at times invest all of its assets in fewer than
five countries or even a single country.
WORLDWIDE GROWTH PORTFOLIO
Worldwide 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 of companies of any
size throughout the world. The Portfolio normally invests in issuers
from at least five different countries, including the United States.
The Portfolio may at times invest in fewer than five countries or even
a single country.
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 Balanced 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
Balanced 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.
Investment objectives, principal investment strategies and risks 11
<PAGE>
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 BALANCED
PORTFOLIO'S HOLDINGS?
Balanced 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 BALANCED PORTFOLIO'S
INVESTMENTS?
The growth component of the 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.
6. WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF BALANCED PORTFOLIO'S
HOLDINGS?
The income component of Balanced 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.
12 Janus Aspen Series
<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 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 18-20 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?
The 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 13
<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.
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 or she 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)
14 Janus Aspen Series
<PAGE>
- 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
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.
Investment objectives, principal investment strategies and risks 15
<PAGE>
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.
16 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 AFFECT ITS
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 the Portfolio.
Investment objectives, principal investment strategies and risks 17
<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 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 pages 39-41 for a description of
rating categories.
18 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
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 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 39-41 for
a description of bond rating categories.
Investment objectives, principal investment strategies and risks 19
<PAGE>
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.
20 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 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 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 All Asset Levels 0.65 N/A
Aggressive Growth Portfolio
Balanced Portfolio
International Growth Portfolio
Worldwide Growth 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. As noted
in the fee table on page 9, 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: 0.67% for Growth Portfolio, 0.68% for Aggressive
Growth Portfolio, 0.67% for Balanced Portfolio, 0.73% for
International Growth Portfolio, 0.66% for Worldwide Growth 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.
Management of the portfolios 21
<PAGE>
INVESTMENT PERSONNEL
PORTFOLIO MANAGERS
LAURENCE J. CHANG
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of International
Growth Portfolio and Worldwide Growth Portfolio which he has
co-managed since May 1998 and December 1999, respectively. He has
also co-managed Janus Overseas Fund and Janus Worldwide Fund
since April 1998 and September 1999, respectively. He served as
assistant portfolio manager for these Funds since 1996. Mr. Chang
joined Janus Capital in 1993 as a research analyst. He received
an undergraduate degree with honors in Religion with a
concentration in Philosophy from Dartmouth College and a Masters
Degree in Political Science from Stanford University. He has
earned the right to use the Chartered Financial Analyst
designation.
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.
HELEN YOUNG HAYES
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of International
Growth Portfolio and Worldwide Growth Portfolio, which she has
managed or co-managed since inception. Ms. Hayes joined Janus
Capital in 1987 and has managed or co-managed Janus Worldwide
Fund and Janus Overseas Fund since their inceptions. She holds a
Bachelor of Arts in Economics from Yale University and she has
earned the right to use the Chartered Financial Analyst
designation.
KAREN L. REIDY
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Balanced
Portfolio as of January 2000 and an assistant portfolio manager
of Growth Portfolio since 1998. She also manages Equity Income
Portfolio, Janus Balanced Fund and Janus Equity Income Fund as of
January 2000. She is also assistant portfolio manager of Janus
Fund. Prior to joining Janus Capital in 1995, she worked for
Price Waterhouse as a manager in both the Mergers and
Acquisitions and Audit business units. In this capacity, Ms.
Reidy performed due diligence work for corporate clients and
oversaw audit engagements. She received an undergraduate degree
in Accounting from the University of Colorado in 1989 and passed
the CPA exam in 1992. She has earned the right to use the
Chartered Financial Analyst designation.
22 Janus Aspen Series
<PAGE>
BLAINE P. ROLLINS
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Growth
Portfolio as of January 2000. He previously managed Balanced
Portfolio from May 1996 to December 1999 and Equity Income
Portfolio from its inception to December 1999. Mr. Rollins joined
Janus Capital in 1990 and has managed Janus Fund since January
2000, Janus Balanced Fund from January 1996 until December 1999
and Janus Equity Income Fund from inception until December 1999.
He was an assistant portfolio manager of Janus Fund from January
1994 until December 1999. He gained experience as a fixed-income
trader and equity research analyst prior to managing Balanced
Portfolio. He holds a Bachelor of Science in Finance from the
University of Colorado and he has earned the right to use the
Chartered Financial Analyst designation.
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 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.
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.
Management of the portfolios 23
<PAGE>
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 Strategic Value
Portfolio, Janus Strategic Value Fund and Janus Special
Situations Fund, each of which he has managed since inception. He
obtained a Masters of Business Administration in Finance from the
Fuqua School of Business at Duke University and a Bachelor of
Arts in Economics and Political Science from Tufts University.
Mr. Decker 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.
JOHN H. SCHREIBER
- --------------------------------------------------------------------------------
is an assistant portfolio manager of Growth 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.
24 Janus Aspen Series
<PAGE>
Other information
CLASSES OF SHARES
Each Portfolio currently offers two or three 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. Service Shares of the
Portfolios are offered only in connection with investment in and
payments under certain qualified retirement plans that require a fee
from Portfolio assets to procure distribution and administrative
services to contract owners and plan participants. Retirement Shares
of certain Portfolios are offered only to qualified plans using plan
service providers that are compensated for providing distribution
and/or recordkeeping 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 the Service 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
Institutional Shares. It is anticipated that the spin-off and
distributions will occur during the third quarter of 2000.
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.
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.
Other information 25
<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
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 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 the 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.
26 Janus Aspen Series
<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 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 prices 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 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
Shareholder's guide 27
<PAGE>
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.
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.
28 Janus Aspen Series
<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 11 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
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $23.54 $18.48 $15.51 $13.45 $10.57
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.07 0.05 0.15 0.17 0.28
3. Net gains or losses on securities (both realized and
unrealized) 10.24 6.36 3.34 2.29 2.90
4. Total from investment operations 10.31 6.41 3.49 2.46 3.18
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.05) (0.15) (0.17) (0.30)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) (0.14) (1.30) (0.37) (0.23) --
8. Distributions (in excess of realized gains) -- -- -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.20) (1.35) (0.52) (0.40) (0.30)
11. NET ASSET VALUE, END OF PERIOD $33.65 $23.54 $18.48 $15.51 $13.45
12. Total return 43.98% 35.66% 22.75% 18.45% 30.17%
13. Net assets, end of period (in thousands) $2,942,649 $1,103,549 $608,281 $325,789 $126,911
14. Average net assets for the period (in thousands) $1,775,373 $789,454 $477,914 $216,125 $77,344
15. Ratio of gross expenses to average net assets 0.67%(1) 0.68%(1) 0.70%(1) 0.69%(1) 0.78%(1)
16. Ratio of net expenses to average net assets 0.67% 0.68% 0.69% 0.69% 0.76%
17. Ratio of net investment income to average net assets 0.30% 0.26% 0.91% 1.39% 1.24%
18. Portfolio turnover rate 53% 73% 122% 87% 185%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.69% in 1999, 0.75% in 1998, 0.78% in 1997, 0.83% in 1996 and
0.98% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Fund.
Financial highlights 29
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $27.64 $20.55 $18.24 $17.08 $13.62
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- -- -- -- 0.24
3. Net gains or losses on securities (both realized and
unrealized) 33.46 7.09 2.31 1.36 3.47
4. Total from investment operations 33.46 7.09 2.31 1.36 3.71
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) -- -- -- -- (0.25)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) (1.40) -- -- (0.19) --
8. Distributions (in excess of realized gains) -- -- -- -- --
9. Tax return of capital distributions -- -- -- (0.01) --
10. Total distributions (1.40) -- -- (0.20) (0.25)
11. NET ASSET VALUE, END OF PERIOD $59.70 $27.64 $20.55 $18.24 $17.08
12. Total return 125.40% 34.26% 12.66% 7.95% 27.48%
13. Net assets, end of period (in thousands) $3,319,619 $772,943 $508,198 $383,693 $185,911
14. Average net assets for the period (in thousands) $1,476,445 $576,444 $418,464 $290,629 $107,582
15. Ratio of gross expenses to average net assets 0.70%(1) 0.75%(1) 0.76%(1) 0.76%(1) 0.86%(1)
16. Ratio of net expenses to average net assets 0.69% 0.75% 0.76% 0.76% 0.84%
17. Ratio of net investment income to average net assets (0.50%) (0.36%) (0.10%) (0.27%) 0.58%
18. Portfolio turnover rate 105% 132% 130% 88% 155%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.70% in 1999, 0.75% in 1998, 0.78% in 1997, 0.83% in 1996 and
0.93% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Enterprise Fund.
30 Janus Aspen Series
<PAGE>
<TABLE>
<CAPTION>
BALANCED PORTFOLIO - INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $22.50 $17.47 $14.77 $13.03 $10.63
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.59 0.39 0.34 0.32 0.17
3. Net gains (or losses) on securities (both realized and
unrealized) 5.38 5.51 2.89 1.81 2.45
4. Total from investment operations 5.97 5.90 3.23 2.13 2.62
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.56) (0.38) (0.35) (0.30) (0.22)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) -- (0.45) (0.18) (0.09) --
8. Distributions (in excess of realized gains) -- (0.04) -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.56) (0.87) (0.53) (0.39) (0.22)
11. NET ASSET VALUE, END OF PERIOD $27.91 $22.50 $17.47 $14.77 $13.03
12. Total return 26.76% 34.28% 22.10% 16.18% 24.79%
13. Net assets, end of period (in thousands) $2,453,079 $882,495 $362,409 $85,480 $14,021
14. Average net assets for the period (in thousands) $1,583,635 $555,002 $176,432 $43,414 $5,739
15. Ratio of gross expenses to average net assets 0.69%(1) 0.74%(1) 0.83%(1) 0.94%(1) 1.37%(1)
16. Ratio of net expenses to average net assets 0.69% 0.74% 0.82% 0.92% 1.30%
17. Ratio of net investment income to average net assets 2.86% 2.41% 2.87% 2.92% 2.41%
18. Portfolio turnover rate 92% 70% 139% 103% 149%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.69% in 1999, 0.74% in 1998, 0.83% in 1997, 1.07% in 1996 and
1.55% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Balanced Fund.
Financial highlights 31
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $21.27 $18.48 $15.72 $11.95 $9.72
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.06 0.13 0.11 0.05 0.09
3. Net gains or losses on securities (both realized and
unrealized) 17.40 3.07 2.80 4.06 2.16
4. Total from investment operations 17.46 3.20 2.91 4.11 2.25
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.14) (0.11) (0.11) (0.02)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) -- -- (0.01) (0.23) --
8. Distributions (in excess of realized gains) -- (0.27) (0.03) -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.06) (0.41) (0.15) (0.34) (0.02)
11. NET ASSET VALUE, END OF PERIOD $38.67 $21.27 $18.48 $15.72 $11.95
12. Total return* 82.27% 17.23% 18.51% 34.71% 23.15%
13. Net assets, end of period (in thousands) $810,392 $311,110 $161,091 $27,192 $1,608
14. Average net assets for the period (in thousands) $425,876 $234,421 $96,164 $7,437 $1,792
15. Ratio of gross expenses to average net assets** 0.77%(1) 0.86%(1) 0.96%(1) 1.26%(1) 2.69%(1)
16. Ratio of net expenses to average net assets** 0.76% 0.86% 0.96% 1.25% 2.50%
17. Ratio of net investment income to average net assets** 0.26% 0.73% 0.70% 0.62% (0.80%)
18. Portfolio turnover rate** 80% 93% 86% 65% 211%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total return not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
(1) The ratio was 0.84% in 1999, 0.95% in 1998, 1.08% in 1997, 2.21% in 1996 and
3.57% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Overseas Fund.
32 Janus Aspen Series
<PAGE>
<TABLE>
<CAPTION>
WORLDWIDE GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $29.09 $23.39 $19.44 $15.31 $12.07
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.07 0.16 0.16 0.16 0.11
3. Net gains or losses on securities (both realized and
unrealized) 18.65 6.59 4.14 4.27 3.19
4. Total from investment operations 18.72 6.75 4.30 4.43 3.30
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.18) (0.17) (0.17) (0.06)
6. Dividends (in excess of net investment income) -- -- (0.02) -- --
7. Distributions (from capital gains) -- -- (0.16) (0.13) --
8. Distributions (in excess of realized gains) -- (0.87) -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.06) (1.05) (0.35) (0.30) (0.06)
11. NET ASSET VALUE, END OF PERIOD $47.75 $29.09 $23.39 $19.44 $15.31
12. Total return 64.45% 28.92% 22.15% 29.04% 27.37%
13. Net assets, end of period (in thousands) $6,496,773 $2,890,375 $1,576,548 $582,603 $108,563
14. Average net assets for the period (in thousands) $3,862,773 $2,217,695 $1,148,951 $304,111 $59,440
15. Ratio of gross expenses to average net assets 0.71%(1) 0.72%(1) 0.74%(1) 0.80%(1) 0.90%(1)
16. Ratio of net expenses to average net assets 0.71% 0.72% 0.74% 0.80% 0.87%
17. Ratio of net investment income to average net assets 0.20% 0.64% 0.67% 0.83% 0.95%
18. Portfolio turnover rate 67% 77% 80% 62% 113%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 0.71% in 1999, 0.74% in 1998, 0.81% in 1997, 0.91% in 1996 and
1.09% in 1995 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Worldwide Fund.
Financial highlights 33
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE INCOME PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
Periods ending December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $12.05 $11.78 $11.24 $11.11 $9.48
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.76 0.64 0.67 0.74 0.53
3. Net gains or losses on securities (both realized and
unrealized) (0.58) 0.41 0.62 0.24 1.70
4. Total from investment operations 0.18 1.05 1.29 0.98 2.23
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.75) (0.67) (0.64) (0.72) (0.60)
6. Dividends (in excess of net investment income) -- -- -- -- --
7. Distributions (from capital gains) (0.07) (0.11) (0.11) (0.13) --
8. Distributions (in excess of realized gains) -- -- -- -- --
9. Tax return of capital distributions -- -- -- -- --
10. Total distributions (0.82) (0.78) (0.75) (0.85) (0.60)
11. NET ASSET VALUE, END OF PERIOD $11.41 $12.05 $11.78 $11.24 $11.11
12. Total return 1.60% 9.11% 11.76% 9.19% 23.86%
13. Net assets, end of period (in thousands) $186,681 $129,582 $54,098 $25,315 $10,831
14. Average net assets for the period (in thousands) $161,459 $86,627 $36,547 $17,889 $5,556
15. Ratio of gross expenses to average net assets 0.72% 0.73% 0.75% 0.84% 1.07%
16. Ratio of net expenses to average net assets 0.72% 0.73% 0.75% 0.83% 1.00%
17. Ratio of net investment income to average net assets 6.99% 6.36% 6.90% 7.31% 7.46%
18. Portfolio turnover rate 116% 145% 119% 250% 236%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
34 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 35
<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.
36 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 37
<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.
38 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 39
<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.
40 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 year ended
December 31, 1999.
Explanation of rating categories 41
<PAGE>
[JANUS LOGO]
1-800-525-0020
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 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
